House of Representatives
23 August 1966

25th Parliament · 1st Session

  1. House of Representatives
  2. 25th Parliament
  3. 1966

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

page 269

PETITIONS

Aborigines

Mr. BEATON presented a petition from certain citizens of the Commonwealth praying that the Commonwealth Government repeal the Wards’ Employment Ordinance and legislate to provide at least the basic wage for all Aboriginal workers in the Northern Territory.

Petition received and read.

Mr. LUCHETTI presented a petition from certain citizens of the Commonwealth praying that action be taken, through Constitution alteration referendum proposals, to give the Commonwealth power to make laws for the advancement of the Aboriginal people and prevent the making of laws which would discriminate against any person born or naturalised in Australia.

Petition received and read.

Social Services

Dr. J. F. CAIRNS presented a petition from certain electors of the Commonwealth praying that the Commonwealth Government take measures to control prices, to improve the standard of living of social service pensioners and combine with State Governments to ensure that rent assisted pensioners receive value for rental paid.

Petition received and read.

Mr. WHITLAM presented a petition from certain electors of the Commonwealth praying that the Government implement Article 25 of the Universal Declaration of Human Rights by providing increased social services and housing benefits for the aged, the invalid, the widowed and their dependants.

Petition received and read.

Similar petitions were presented by Mr. Wentworth, Mr. Pollard, Mr. Ian Allan, Mr. Opperman, Mr. Costa, Mr. Bosnian, Mr. Beaton, Mr. Uren and Mr. J. R. Fraser.

Petitions severally received.

page 269

PRESIDENT OF THE SENATE

Mr HAROLD HOLT:
Prime Minister · Higgins · LP

– During the parliamentary recess an event occurred which, I am sure, this chamber would wish torecord and applaud. Australians are always happy to show recognition of record breakers, Mr. Speaker. You, in your turn, have been the recipient of the congratulations and good wishes of this House on your own remarkable achievement in the record term for which you have been Speaker of this Parliament. It is a record which grows harder to match as day proceeds upon day. May you retain that record for as far ahead as one can reasonably foresee.

During the parliamentary recess the President of the Senate, Senator Sir Alister McMullin, also broke a record. On 24th June last he achieved a record term of office as President of the Senate, having then served for 12 years 9 months and 17 days. He thus surpassed the previous longest term recorded by Senator Thomas Givens of Queensland, who held that office from 1913 to 1926.

This Parliament has therefore achieved the rarest of doubles. You,Mr. Speaker, having established a record term, and the President of the Senate having now established a record term, I doubt whether we shall find another Parliament in the history of the Federation which will be able to produce such a conjunction of the planets. The fact that both our presiding officers have served for record terms is a tribute both to you, Mr. Speaker, and to Mr. President.

I am sure that all will join with me in extending good wishes and congratulations to Sir Alister McMullin. He became President of the Senate on 8th September 1953, only two and a half years after his election as a senator, so it will be evident that his personality and his suitability for the position had impressed his qualities upon his colleagues at that time. As President he has tackled his responsibilities and tasks with enthusiasm and devotion. He has proceeded with wisdom and discretion, earning him the continuing confidence of the Senate. I am sure we all agree that he has done much to promote and encourage a better understanding of the Senate and its role in the government of this country.

During his term of office Sir Alister has ably represented Australia many times at overseas meetings and ceremonies and has served on many committees. He has been Chairman of the Commonwealth Parliamentary Association and in that capacity has kept Australia’s name high and our relations warm and close with many Commonwealth countries through the years. We are fortunate to have men of such calibre presiding in the chambers of this Parliament. In honouring him today we feel that we have our own good fortune. Mr. Speaker, in your continued presence in your own high office.

Mr CALWELL:
Leader of the Opposition · Melbourne

– Mr. Speaker, I have no need to pander to you; 1 do not pander to anybody. If we had had the numbers you would never have been Speaker, but we have paid our tributes to you because of the way in which you have discharged your duties. When you retire at the end of this sessional period we will find a more appropriate time to say in a personal way the things that we like to say about you. We will say them and we will say them with truth and sincerity.

I do not know (he President of the Senate very well. I have met him on a few occasions over the last 17 years. But any man who manages to survive the wrath of the electorate and the wrath of the majority in the Senate, however he does it, is entitled to some commendation. I think the President of the Senate has persuasive abilities, although he has failed with me on a few occasions over the site of the new Parliament House. He is a man devoted to the cause to which he directs his abilities. He works very hard and energetically.

I cannot join with the Prime Minister (Mr. Harold Holt) in extending all the wishes he has extended because the policy of our party is to abolish the Senate. I know that there are formidable difficulties in achieving even this desirable objective. I hope that none of my colleagues who are sitting in the senatorial gallery will have a heart attack because I reiterate what our policy is. We work inside a parliamentary system and it is right and proper that when people establish records they should be recognised. If I had been in the Parliament when Senator Givens achieved that great distinction of living in the senatorial chair so long, I would not have been paying any tributes to him because 1 remember his association with conscription. 1 do not think the Opposition of those days would have paid any compliments to him. Honorable members are laughing. This is a place where one speaks freely, where one says what is in his mind, and J am not) suppressing any of my feelings. 1 have a personal regard for the President of the Senate. I wish him well. He has a charming wife who helps him very greatly in the discharge of his obligations. He cooperates with this House and with the Executive in arranging the times of business and all that sort of thing. 1 wish I could convince him that it is right and proper that the proceedings of this House should be broadcast more frequently and those of the Senate perhaps less frequently. But I have never been able to achieve anything in that direction or in relation to anything about which I have spoken to him. To be quite serious, we wish Sir Alister McMullin long life and every happiness. We shall do our best to terminate his existence as President of the Senate on 26th November.

Mr SPEAKER:

– I came in for a little mention. 1 thank the Prime Minister (Mr. Harold Holt) and the Leader of the Opposition (Mr. Calwell) for what they have said. I assure them that I will direct the attention of the President to the “Hansard” report of their comments.

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QUESTION

VIETNAM

Mr WHITLAM:
WERRIWA, NEW SOUTH WALES

– I ask the Minister for Defence why he departed from well established practice by announcing the number of Australians killed and wounded in the latest and heaviest engagement in Vietnam before the relatives were notified. What justification was there for causing distress to the relatives of all men in Vietnam during the many hours before the names of all the casualties were announced? What arrangements have been made concerning news stories from allied sources and reports of Vietcong losses in engagements where Australian troops have been involved?

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

– I sincerely hope that the House and indeed the people of Australia well understand that all of us concerned with this sad matter would want to allay as early as possible, and to the maximum extent possible, the anxiety of relatives of our servicemen in Vietnam. In normal circumstances the Department of the Army, which would deal with the announcement of casualties, would seek to make no announcement of an action until it had been possible to notify the next of kin of casualties of that unhappy fact. But we ought to look at the circumstances which surround this new and sometimes odd kind of war in which we are involved. In this war not only would Australians be involved but the United States of America would have a part in some actions. Whereas on most other occasions there has been a steady announcement of casualties because of continuous action, in the Vietnamese war casualties might be tied individually to particular actions.

In the case in question, during the afternoon of Friday last commercial and national radio stations in this country were receiving and broadcasting stories of the activity which began late on Thursday. I shall come to perhaps the reasons for this in a moment. By afternoon it became quite clear that some of the exaggerated figures of Vietcong losses might well have persuaded many Australian people, particularly relatives of servicemen, to fear that there was an enormous list of Australian casualties. So at 8.40 p.m. when, after consultation with officers of the Department of Defence and the Department of the Army, it became clear that this fear would be abroad I took it on myself to announce the number of casualties, well knowing that this would precede by a considerable number of hours the notification of next of kin. I did so in an effort to allay widespread concern that there might have been a heavier casualty list.

I pointed out that this was a different kind of war, that it was being carried on in circumstances entirely different from any we have met heretofore. I think it will be understood that there are vastly more news men in Saigon and Vietnam than we have seen in any concentrated theatre of military action before. At the same time, there are vastly more easily accessible means of communicating news out of the theatre of operations than we have had in the past and it is not always possible to impose the kind of censorship and the timed release of news that we have had on other occasions. My friend, the Minister for the Army, and I will look into the procedures by which news from Saigon is released. However, I think it must be accepted that not on every occasion will it be possible to hold the release of news of an activity such as that which occurred on Friday until it has been possible to notify individually the nextofkin of casualties. We will do our best, but I am afraid that no assurance can be given that we will be able to follow the practice that has been followed on other occasions.

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QUESTION

WEST IRIAN

Mr HAWORTH:
ISAACS, VICTORIA

– I direct to the Minister for Territories a question regarding certain communicable diseases that could enter the Territory of Papua and New Guinea from West New Guinea. I refer especially to the main human diseases such as cholera, smallpox, plague and rabies. Now that relations between Australia and Indonesia are again cordial, will the Minister, with his colleagues, arrange to hold discussions with the Indonesian Government at the earliest opportunity to devise ways and means by which Australia can assist Indonesia with its health problem in West Irian and, if necessary, invoke aid from the World Health Organisation?

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

– To my knowledge and to the knowledge of the Administration of Papua and New Guinea, none of the diseases mentioned by the honorable member is extant in West Irian. Certainly instances of these diseases arise in the western areas of Indonesia, but the Administration of Papua and New Guinea has, in a sense, a double safeguard against the possible introduction of the disease into the Territory. The Indonesian Government imposes quarantine measures on all movements from the western islands to the eastern islands of Indonesia and to West Irian. I would point out that relations with the West Irian authorities have always been cordial. We have had considerable cooperation from the West Irian authorities. They would advise us should there be an outbreak of any of these diseases and our own Administration in the Territory is prepared at all times and has at readiness measures, including the use of vaccines, to overcome any outbreak of the diseases. In the second part of his question, the honorable member mentioned assistance to the Indonesian Government to suppress the diseases. I think this would be more properly directed to my colleague, the Minister for External Affairs.

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QUESTION

WATER CONSERVATION

Mr LUCHETTI:
MACQUARIE, NEW SOUTH WALES

– My question is addressed to the Prime Minister. Has he received an approach from the New South Wales Government for financial assistance for a five year water conservation plan for that State? If he has received a request for funds to implement a conservation scheme, has it been considered? Has his Government given further thought to the establishment of a. national conservation organisation in which the skilled and experienced staff and workmen of the Snowy Mountains Hydro-electric Authority would be used?

Mr HAROLD HOLT:
LP

– The interest of all Governments, Commonwealth and State, in water conservation is, I think, well recognised. I would like to study the various points of detail put to me by the honorable member and also the policy implications raised in his question. 1 will then give him a considered reply.

page 272

QUESTION

SOCIAL SERVICES

Mr JESS:
LA TROBE, VICTORIA

– I desire to ask the Minister for Social Services a question. If an Australian citizen who is liable to report for national service fails to do so, is he entitled to a special benefit? What is the special benefit? Who is eligible? Under what Act is it authorised?

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

– The granting of any form of benefit by the Commonwealth Government is made under the terms of the Social Services Act. The range of benefits covers situations which are categorised by certain prerequisites. The basic requirement in the case of the unemployment benefit is that the person concerned be ready, willing and able to be employed. A person who is called up for national service and who, as I understand the terms of the honorable member’s question, is for some reason not recruited into the armed forces, presumably is not within the category of being able to work. In that sense, he would not strictly be entitled to the unemployment benefit. The special benefit to which the honorable member referred is a discretionary payment provided for in section 124 of the Social Services Act. This benefit is made available to certain persons at the discretion of the Director-General of Social Services. It is not a benefit to which any particular individual is entitled as of right, but is paid at the discretion of the Government.

page 272

QUESTION

COMMONWEALTH SUPERANNUATION FUND

Mr CURTIN:
KINGSFORD-SMITH, NEW SOUTH WALES

– Will the Treasurer advise the House whether the Government intends to increase the value of the Commonwealth superannuation unit? Is the Treasurer aware that superannuation unit for which Commonwealth public servants contribute is still valued at $1.75 while the unit for which New South Wales public servants contribute is valued at $2.25? Does the right honorable gentleman believe that this situation places the Commonwealth employees at a very grave disadvantage? If so, when does he propose to take some action to bring the value of Commonwealth superannuation units into line with the value of New South Wales superannuation units?

Mr McMAHON:
Treasurer · LOWE, NEW SOUTH WALES · LP

– The question involves a matter of policy and I am not in a position at the moment to make any statement about it. If the Government intends to make a change in this matter it will announce it first in this House.

page 272

QUESTION

CITIZEN MILITARY FORCES

Mr IAN ALLAN:
GWYDIR, NEW SOUTH WALES

– I ask the Minister for Defence a question. I refer to the creation of special units of the Citizen Military Forces which enable those who would otherwise be precluded from serving in the C.M.F. to perform their service by entering camp for 33 days a year. Will the Minister now consider extending the provisions of this scheme to embrace all three Services, so that those young men who wish to serve in units associated with the Navy or the Air Force may do so?

Mr FAIRHALL:
LP

– I think 1 should point out to the honorable member that the Navy and the Air Force do not stand in the same need of reserve forces as does the Army. In those circumstances, there are very limited citizen components of the service to which he refers. I will look further at the matter, but in the circumstances I would not hold out a lot of hope that what’ the honorable member seeks would be practicable.

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QUESTION

SOCIAL SERVICES

Mr SEXTON:
ADELAIDE, SOUTH AUSTRALIA

– Will the Minister for Social Services say what influenced the Government in not easing the income means test for pensioners and persons on fixed incomes? Will he tell the Parliament the costs that would be involved in easing this means test? If the figures are not readily available, will the Minister ascertain the costs involved in raising permissible income limits in the respective cases from, first, S7 to $8 a week; secondly, $7 to $9 a week; and thirdly, $7 to SIO a week?

Mr SINCLAIR:
CP

-I do not think the first part of the honorable member’s question warrants a reply at question time. As to the possibility of future extension of the means test, this, of course, is something which th,e Government considers regularly during Budget deliberations and the amount of pension is determined according to the funds that the Government has at its command. To determine the amount of benefit that is to be paid in a particular year, many factors are taken into account by the Government. The predominant factor is the area of need within the community, and the Commonwealth social service system has been itemised on that basis. There have been various orders of costs and rather than rely on my memory, although 1 have a figure in my mind, 1 would prefer lo reply to the honorable member in writing on that aspect.

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QUESTION

WOOL

Mr MACKINNON:
CORANGAMITE, VICTORIA

– My question is addressed to the Minister for National Development. I understand that a report has been prepared by a committee appointed by his Department following an investigation into the cost of handling wool between wool stores and points of shipment for overseas destinations after it has been sold. Will the Minister consider making the contents of this report available for the information of honorable members?

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

– This report was prepared by the National Materials Handling Bureau which is a section of my Department. I would be only too happy to make a copy available to any honorable member who requires it.

page 273

QUESTION

THE BUDGET

Mr BEATON:
BENDIGO, VICTORIA

– I direct my question to the Prime Minister. Has his Government decided to hold talks with the Liberal Premiers of Victoria and New South Wales about their very vocal disagreement with the provisions of the Budget? If so, when will these talks be held? Who will represent the Commonwealth at the talks? If State works and services are to be curtailed, how can his Treasurer justify the claim that the Budget is expansionary?

Mr HAROLD HOLT:
LP

– As to the latter part of the honorable gentleman’s question which invites comment, there is a debate on the Budget before the chamber and no doubt honorable members on both sides, including Government spokesmen, will be offering their views on these matters. On the question which he put to me relating to the Premiers of Victoria and New South Wales, I had a talk yesterday morning in Melbourne with Sir Henry Bolte.

Mr Cope:

– Who won?

Mr HAROLD HOLT:

– Well, here I am in good order and condition and I have no doubt that Sir Henry remains his usual ebullient self. He put to me some of the financial difficulties which face his Government in its budgeting. I may say that the request for this meeting had been made to me by the Deputy Premier, acting as Premier, during Sir Henry’s absence and Sir Henry had made some reference to this on his return to Australia, so the request was of some duration. Having regard to what had intervened I discussed with my colleague, the Treasurer, whether there had been some change in circumstances as a result of this which would make such a talk unnecessary. He felt that it would be useful for me to go on with the talk and I was able to report the substance of it to my colleagues in Cabinet this morning. When Sir Henry was concluding his talk with me he said that, although he had had that opportunity, both he and Mr. Askin would like to go ahead with an earlier proposal that the two of them see me. I said I would discuss that request with my colleagues in Cabinet, and we had some talk about it this morning. There are certain aspects which we wish to pursue further before making an announcement, but as soon as I am in a position to make an announcement I will do so. 1 might add that it was made clear to me that no meeting was sought prior to the introduction by both Governments of their budgets.

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QUESTION

MINISTER FOR SCIENCE

Mr IRWIN:
MITCHELL, NEW SOUTH WALES

– 1 direct a question to the Prime Minister. Will he consider appointing a Minister for Science? If the answer is “ Yes “ will he consider the honorable member for Mackellar for the post?

Mr HAROLD HOLT:
LP

– The importance of science in the modern world is well understood by the Government. Of course, we have the Commonwealth Scientific and Industrial Research Organisation and many other activities in which science plays a prominent part. Whether in the proliferation of matters which the Commonwealth Government is called upon to deal science has assumed in our administrative affairs a priority which would justify such a proposal is a matter on which J have no firm view, lt could be taken into consideration. The honorable member has put before me the name of my colleague, the honorable member for Mackellar, and if a Minister for Science were to be appointed 1 can think of no-one in this chamber more adequately equipped than that honorable member, in fact. I once presumed to describe the honorable member as a human cyclotron and I do not know of anybody in this place who has a more active, fertile and informed mind than the honorable member.

page 274

QUESTION

COMMONWEALTH ELECTIONS

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA

– I address a question to the Prime Minister and preface it by stating that I understand that several conscripts in Vietnam have expressed interest in standing as candidates at the next Federal election in protest, and in opposition to the Minister for the Army and certain Government candidates of military age. Can the Prime Minister give an assurance that the same opportunities and facilities will be provided for these servicemen to stand as candidates and to conduct their campaigns in Australia as were given to their counterparts in the Second World War?

Mr HAROLD HOLT:
LP

– I should imagine that there would be no difficulty in following past practice in this regard. I confess that 1 have not looked at the matter in recent times, but prompted by the honorable members question I shall do so. I have little doubt that most of those who would seek to stand would be standing against Labour candidates.

page 274

QUESTION

TRADE

Mr HALLETT:
CANNING, WESTERN AUSTRALIA

– I ask the Minister for Trade and Industry a question, lt is reported that the Government of Malaysia has cancelled Commonwealth preferences on certain items, ls this a fact, and can the Minister tell the House how this is likely to affect Australian trade?

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

– Last week the Minister for Finance of the Government of Malaysia announced the cancellation of certain Commonwealth preferences on about half the total number of items on which preference to Commonwealth countries is accorded by that Government. The explanation given to mc is that items on which preferences were abolished were items generally looked to for the raising of revenue and therefore the abolition of preferences would have the effect of increasing revenue derived from import duties. T make it clear immediately that none of the preferences that are cancelled is a preference that exists as the result of current trade treaties. Australia exports to Malaysia currently about $40 million worth a year and of this about $5 million a year would be affected by the cancellation of the preferences, and of. that S5 million about S2.5 million would relate to sugar. I think about SI million a year would relate to motor vehicles and about’ S300.000 to alcoholic beverages. These are items on which many countries impose import duties for revenue purposes. Officers of the Department of Trade and Industry are currently studying the implications of the tariff action that has been taken. If there is anything further to report, I shall report it to the House. I add that Australia is enjoying a favorable balance of trade with Malaysia, at present amounting to about SA10 million a year.

page 274

QUESTION

PUBLIC SERVICE

Mr E JAMES HARRISON:
BLAXLAND, NEW SOUTH WALES

– My question is directed to the Prime Minister. I ask: Has the right honorable gentleman available any information about what is happening at the Government level on matters so vitally affecting the Commonwealth Public Service as, first, the amendment to the Commonwealth Employees’ Furlough Act proposed as far back as October 1964 by himself when Treasurer; secondly, the question of preserving permanent employment for females in the Public Service who marry; and thirdly, the very important question of four weeks’ annual leave for Commonwealth public servants?

Mr HAROLD HOLT:
LP

– I have some information on the furlough matter, which the honorable gentleman raised with me in, I think, April of this year - a considerable time ago. My consideration of the comprehensive draft Cabinet submission on the Commonwealth Employees’ Furlough Act is to be finalised shortly. In the light of further Government decisions on amendments of the furlough provisions of the Public Service Act, I am now bringing that submission to finality, seeking decisions on a number of proposals for amendment of the Commonwealth Employees’ Furlough Act, including one relating to the particular matter in which the honorable member is interested. Just when that can be done, I cannot say at this stage.

Mr E James Harrison:

– What about the question of four weeks’ leave?

Mr HAROLD HOLT:

– I shall see that the consideration extends to all the matters that the honorable gentleman has brought to my notice.

page 275

QUESTION

SOCIAL SERVICES

Sir KEITH WILSON:
STURT, SOUTH AUSTRALIA

– 1 wish to address a question to the Minister for Social Services. To prevent any misunderstanding, will he indicate the conditions that aliens will have to fulfil to enable them to receive the age pension after the changes in social services provisions announced by the Treasurer in his Budget speech?

Mr SINCLAIR:
CP

– The first prerequisite is that the necessary legislation will have to be passed by the Parliament. The Government’s intention is that the restriction on aliens at present embodied in section 19 of the Social Services Act shall be deleted. There will remain, of course, the residential qualifications that are applicable to all residents of Australia, be they natural born

Australians or persons who have come to this country to live. The basic extension will remove the suggestion that a person may be penalised purely on the basis of his nationality.

page 275

QUESTION

ROYAL AUSTRALIAN AIR FORCE

Mr GRIFFITHS:
SHORTLAND, NEW SOUTH WALES

– My question is addressed to the Minister for Air. I ask: Has he yet received a report on what actually caused last week’s Sabre jet crash at Merewether? Was the pilot flying off course, as the Minister claimed, and is he aware that Royal Australian Air Force jet aircraft are still flying over the city of Newcastle on training exercises and are using the same flight pattern as the honorable member for Newcastle claimed had been flown by the ill fated plane? In view of the fact that it appears that’ a stigma has been cast on the record of the dead pilot, and as he cannot speak for himself, will the Minister ascertain the facts and inform the Parliament so that the record may be corrected if necessary? Will he also instruct the Commanding Officer at Williamtown that flying exercises over Newcastle must cease immediately, thereby removing the ever present danger of death and mass destruction of property that now haunts many people of that city?

Mr HOWSON:
Minister Assisting the Treasurer · FAWKNER, VICTORIA · LP

– I still have not received the full report of the court of inquiry. Therefore, 1 cannot yet answer all the questions asked by the honorably member. I can say that, generally, the instructions given to pilots flying from Williamtown require them to carry out their major exercises over the sea. I repeat that the exercise being carried out last Tuesday night was one that would be covered by this instruction. As to the damage to civilian property, which, as I said on the last occasion when I dealt with this matter, I regret sincerely, an officer of my Department has been in the district throughout the weekend and, as I think the honorable member for Newcastle and the honorable member for Shortland both know, pretty well all the matters raised on the previous occasion have now been examined and most of the damage has already-

Mr Griffiths:

– Just tell me why they were flying over the city. They flew over my home on Saturday.

Mr SPEAKER:

– Order! The honorable member for Shortland is out of order in making that comment.

Mr HOWSON:

– The questions relating to destruction of property have already been examined and arrangements are being made for damage to be repaired as rapidly as possible. The other matters about which I have Deen asked by the honorable member for Shortland will be dealt with when I receive a, full report from the court of inquiry, which is still sitting. When I receive this report I will let the honorable member have an answer.

AlRCRAFT NOISE.

Mr BOSMAN:
ST GEORGE, NEW SOUTH WALES

– My question is directed to the Minister for Civil Aviation, is he aware that a bill was introduced in the United States Congress last month to allow the Federal Aviation Agency of the United States to restrict the certification of airliners which do not comply with noise limitation requirements? Does he also know that the bill will attack noise on a wide variety of fronts and that it will include a number of measures in line with recommendations that were submitted to this House in May of this year? ls the Minister prepared to introduce in this Parliament legislation similar to the United States legislation I have referred to, so that the Department of Civil Aviation may have effective power in this field over airliners operating in Australia?

Mr SWARTZ:
Minister for Civil Aviation · DARLING DOWNS, QUEENSLAND · LP

– I did read a report regarding some legislation that was being introduced into the United States Congress, but my understanding is that the bill is before the Congress at the present time for debate. We do not know at this stage whether it will be passed in its present form and accepted by the Cabinet at a later stage. As to control over noise, there is sufficient power already available to my Department to handle this problem as it affects airports in Australia, up to the point of the actual fitting of noise suppressors to aircraft. As I pointed out to the House when this subject was raised previously, whilst a tremendous amount of research is being carried out. principally in the United States but certainly also in some other countries, no suitable noise suppressor, particularly for rear engined aircraft, has yet been made available to the industry. Re search is progressing, however, and we are keeping very closely in touch with the situation. A special section has been established within my Department to deal with this problem of noise and we are looking at every aspect of it, particularly in its relation to major international airports, such as the one in Sydney and the one that will later come into operation in Melbourne, but also as it affects other airports such as those in Brisbane, Adelaide and Perth. Everything is being done at present to design flight patterns to overcome the noise problem. I can assure the honorable member that we are not content with the present situation. We will maintain close contact with developments overseas and try to improve the present system so that it will be more effective in the future.

page 276

QUESTION

VIETNAM

Mr FAIRHALL:
LP

– I agree with the honorable gentleman that it would be a good thing if we had any difficulties about this question cleared up. 1 shall treat his question as being on the notice paper and get him a detailed answer.

page 276

AUDITOR-GENERAL’S REPORT

Mr SPEAKER:

– I present the following paper -

Audit Act - Finance - Report of the AuditorGeneral for year 1965-66, accompanied by the Treasurers Statement of Receipts and Expenditure.

Ordered to be printed.

page 277

INTERNATIONAL FINANCE CORPORATION BILL 1966

Second Reading

Debate resumed from 17th August (vide page 108), on motion by Mr. McMahon -

That the Bill be now read a second time.

Mr SPEAKER:

– BeforeI call on the honorable member for Melbourne Ports to resume the debate, I remind the House that on Wednesday last I agreed that this Bill and the International Monetary Agreement Bill might be debated conjointly.

Mr CREAN:
Melbourne Ports

When these measures were introduced last’ week, we agreed that they ought to be taken together and we are now considering them together. The principal Bill has as its purpose the amending of the International Finance Corporation Act 1955-63 to take account of recent amendments to the Articles of Agreement of theInternational Finance Corporation - known shortly as the I.F.C. - enabling that Corporation to supplement its existing resources by borrowing from the International Bank for Reconstruction and Development, which is rather familiarly known as the J.B.R.D. For the most part, the measure is a technical one. The International Finance Corporation is one of the various agencies established in the post war period to facilitate development in undeveloped areas. Because of a limitation of funds on its part and because, apparently, of a surplus of funds in the other organisation - the I.B.R.D. - the sensible device of allowing the smaller one to borrow from the bigger one has been suggested. We can see nothing wrong with that as a mechanical device. This debate does afford the House an opportunity - and it does not get many such opportunities - to look at this sort of question and the very real and perplexing problems of imbalances in world trade that are occasioned because we have what are called developed areas and underdeveloped areas, and because of the magnitude of the differences between economic growth in developed areas and economic growth in underdeveloped areas. The differences of performance are tremendous.

There are disparities, for instance, in the standards of living of the average of the richest countries and the average of the poorer countries. The standard of living in the one can be ten, twenty, thirty or as high as forty times that in the other. People living in a particular country are, of course, never satisfied with their own standard of living. They are disposed to ask: “How could anybody possibly live on a lower standard than mine?” However, there are considerable variations between what might be called the average standard in, let us say, the United States of America, the United Kingdom, Scandanavia, Australia and Canada and the average standard in. India, China and countries in that part of the world vaguely described as South East Asia. Various mechanisms have been evolved by countries which have an abundance of capital with the idea of improving this situation by doing something to assist countries with a lack of capital. The International Bank for Reconstruction and Development, which was set up in 1945 or 1946, was one of the first of those mechanisms. It was followed by the International Finance Corporation and the International Development Agency. These are banking mechanisms to channel capital, and the assistance which capital can give, from developed to undeveloped areas.

The Treasurer (Mr. McMahon) said in his second reading speech that the International Bank for Reconstruction and Development had made loans, I think, of the magnitude of $9.5 billion. That seems to be quite a large sum until we match it, as I hope to be able to do, with some of the problems that really have to be faced at the moment. The Treasurer indicated that, since the establishment of this Bank, most of its loans have been made for the purposes of basic public facilities such as power, transport, heavy industry and irrigation, which, he said, are the foundations of economic growth. By 31st December 1965 the Bank had made loans amounting to $U.S. 9,519 to 59 member countries. That has been done in the course of 10 to 15 years of active development on the part of the Bank. However, in order to put this kind of thing into perspective I think we need to look at some of the rather interesting material contained in the last annual report of the International Bank, which was tabled in this House at the beginning of the year. It is the report for the period 1964-65. In its report the Bank says that in 1964 alone the total net flow of finance - this includes private finance, official bilateral finance and funds made available to multilateral institutions - amounted to $U.S.9.5 billion, or approximately the same amount as had been utilised by the Bank in the whole of its existence. That gives some idea of the magnitude of the sums that are required and, on the other hand, indicates the deficiencies in existing official mechanisms. Because there are deficiencies in existing official mechanisms in many respects, the gap has been filled by loans made directly from one country to another. Sometimes they have been made with good motives, sometimes with lesser motives and sometimes with all kinds of strings attached to them. The Bank went on to note in a further reference to this matter that, although the annual flow had been S91 billion, overall there was still a shortage of funds which the Bank estimated at about $4 billion per annum. It stated -

A preliminary Bank inquiry, carried out country by country and based on the judgment and experience of the Bank’s country specialists and area economists, suggests that the developing countries could effectively use, on the average over the next five years, some $3 billion to $4 billion more of external capital per year than has been provided in the recent past.

In other words, the developing countries could take another 50 per cent, of the annual sums currently being given to them. Offsetting the capital that is received by one mechanism or another, there is an adverse item to which the Bank drew attention, lt said -

At the same time, payments of interest, dividends and profits by the developing countries to the industrial ones rose sharply and were over 40 per cent, of the total net capital flows.

In other words, whilst the developing countries ostensibly are receiving $9.5 billion per annum in one form of aid or another, about 40 per cent, of that sum - that is nearly S4 billion - has been taken away to pay the interest on loans accumulated previously. That interest burden is roughly equivalent to the aggregate shortage for the system as a whole. It is much the same kind of circumstances, applying to the underdeveloped countries as a whole, as that which faces a developed country when it relies unduly on foreign investment. A point is reached at which the new investment that is coming in has to be matched by an outflow to service the debt that has accumulated over the years.

Somehow, a breakthrough has to be made in solving this very significant problem because, when all is said and done, one of the things that cause turmoil in the world today is the disparities that exist between developed and underdeveloped areas. All sorts of plans have been put forward to solve this problem and to bring the distressed areas nearer to the standards that the more fortunate parts of the world enjoy. I wish to quote some words that are contained in a recent article in a journal called the “ Round Table “, which is a publication devoted to furthering the interests of the Commonwealth of Nations as an institution. The issue of the “ Round Table “ for July 1966 contains an article written by Mrs. Barbara Ward and entitled “Aid in Distress “. Mrs. Barbara Ward is well known as a writer on international affairs and particularly on this important problem of the disparities between the rich and the poor.

She points out in that article that if we go back approximately 100 years in Great Britain we come to the time when Benjamin Disraeli, who subsequently became Prime Minister, wrote a novel entitled “ The Two Nations “. In it he drew attention to the disparities in Britain in the 1850’s or thereabouts between the rich and the poor. Disraeli said that, there were virtually two nations separated by an almost insuperable gulf. It has taken countries such as Britain over 100 years to overcome that problem. Yet, we are disposed sometimes to wonder how a problem such as this, which is of much greater magnitude and involves many more millions of people starting from an initially much lower standard, can be breached in anything like a reasonable span of time.

Sometimes it is rather glibly asserted that this could be done almost overnight provided enough capital was available. Of course, this is a simplification of the real problem because it involves fundamental changes in the nature of the economy of the countries concerned. These are virtually subsistence countries with surpluses of labour in one sense. Insofar as we are concerned, these countries are highly inefficient. But the problem that they face is this: If manpower is released from agriculture where does it find an alternative occupation? Mrs. Barbara Ward points out that in order to achieve in the United Kingdom in 1940 the conditions that had existed in 1860 and the subsequent years of the nineteenth century, there would have had to be what were for all practical purposes economic revolutions. Fundamental changes in thinking would have needed to occur and, above all, a will on the part of the community to want to make those changes. She suggests that that kind of willingness or endeavour unfortunately is not apparent in the Western world at the moment.

But she does draw this rather striking alternative. She says - lt does not matter that the “ orthodoxy “ is itself irrational. What is an orthodoxy that can comfortably swallow the spending of SI20.000 million a year on arms?

That is the approximate magnitude of the world expenditure on armaments. Mrs. Ward continues -

What is an orthodoxy that can argue against the “ manipulation “ of raw material prices when the market permits variations of two and three hundred per cent, in a couple of years?

Anybody who lives in the State of Queensland knows that that has occurred so far as sugar is concerned over the last 18 months. She continues -

That can accept without question the sudden expansions made possible by such “ acts of nature” as the Korean War? Above all, what is one to say of an orthodoxy that, in spite of the world’s manifest ability to absorb such instabilities and such arms-induced expansion without disaster over the last decade, now cries inflation and bankruptcy if the suggestion is made that economic assistance be restored to 1 per cent, of Atlantic income. . .

If the Western world or the developed areas were to contribute approximately 1 per cent’, of their gross national product which, in the case of Australia, would amount to a sum approximating $200 million, they would be doing something to grapple with this problem. Those sums also should be channelled through some international agency rather than come directly to one country from another because when aid is given directly by one country to another there can sometimes be dangers. The aid can be given for ulterior rather than for enlightened purposes. Therefore, the money should be channelled through international organisations.

There is a multiplicity of such organisations already in existence, but what inhibits most of them from doing the work that they should do is the availability of total funds.

Mrs. Ward makes the suggestion that we should do something with the same initiative or the same will to create as occasionally we seem to have to destroy when we are faced with war. She says that in the world at the moment’, with the possible exception of Germany where there is that creation known as the Berlin Wall, all the tension points are in what we call the undeveloped parts - Vietnam, Laos and various parts of Africa. All the tension points, apart from that particular one in Western Germany, exist in the undeveloped areas, lt is primarily because of the existence of those tensions that the world as a whole - and this includes not only the western world but also the Union of Soviet Socialist Republics and China - is prepared to spend sums as large as $120 billion a year yet lacks the initiative to find sums of the magnitude of £9 billion to $10 billion a year. It is really a crazy situation. It is surely a situation which, if looked at properly, appals the communities that call themselves civilised.

Mrs. Ward says that the modernisation of the two-thirds of the human race that are in this condition will not take much less than 60 to 80 years, lt is a problem that will be with us for a long time, even if we begin to tackle it now. Sixty to eighty years is roughly the time - that it took the developed parts of the world to go from the breakdown of feudalism and the beginnings of modern capitalism to what might be called the age of affluence. In Mrs. Ward’s view, because of the institutional, educational and infra-structural problems, it will probably take the same span of years before the standard of living in the undeveloped parts of the world will even nearly become equal to that of the other parts. But a beginning ought to be made, because it is appalling that such conditions still exist.

When we discussed similar measures before, I referred to a matter that I do not want to discuss this afternoon; but one of the real things that bedevils the free flow of trade, and in many respects what also has to be observed about the development even of the undeveloped parts of the world, is that basically nine-tenths of the development that has to take place in those areas must occur as a result of the initiative of the people in them rather than from assistance that can be given from elsewhere. The marginal assistance and the sort of equipment that otherwise might not bc available just about make up the volume of outside assistance. Basically the main drive has to come from within and it has to come by virtually changing an economy. 1 have had a look at some of these things over a long period of years and it is very hard to find any example where what is basically a subsistence economy has made a successful transition, let alone a transition at all, from that state of subsistence to something a little higher. China to some extent is trying to do it, and India and Pakistan are trying to do it; but in every instance the progress unfortunately is painfully slow. One of the things that restricts the ability of these countries to move faster than they otherwise might is that for the most part, like anybody else, they want international trade, but that international trade has to come almost entirely from the sale of primary products and not sophisticated manufactured goods. As has been pointed out by Mrs. Ward, fluctuations in prices can occur through no cause attributable to the countries producing the commodities concerned. A manufacturing country is able to gauge its cost of production - so much for material, so much for labour, so much for capital, so much for overhead and so on. In primary producing countries the position is regulated not by the cost of production but by the demand for its commodities in other parts of the world, and sometimes the processes by which that demand is controlled are far from honest or ethical; they tend to be manipulated. We had a recent experience with the price of copper. Anybody who contended that a variation of that kind in the price of a commodity is legitimate rather than rigged or contrived would have a great deal of explaining to do. That is the kind of thing that often limits the ability of undeveloped countries to improve their position.

Quite often, as the material in the annual report of the Bank points out, there can be a flow of capital of perhaps a few million dollars in’.0 a country in one year, but the real value of that capital is lost because the price of, say, rubber falls a few pence per lb., or the price of tin or some other commodity falls to an extent sufficient to cancel out the amount of new money the inflow of capital was supposed to bring in. Such problems are becoming the subject of extensive discussion at a world level. Attempts are being made to evolve some new financial mechanism that will better meet the situation. Mrs. Ward points out, rather picturesquely -

But it takes only a little ingenuity of the type shown in the Stamp Plan . . .

The Stamp Plan is one of the five or six plans for reforming world currency. There are the Stamp Plan, the Triffin Plan, the Bernstein Plan, the Committee of Ten and so many others, all variants dealing with the same thing - . . to sec that if the International Monetary Fund, working in conjunction with the World Bank and the International Development Association, were to issue annual credits equivalent, say, to a 3 to 4 per cent, increase in world trade-

World trade is flowing at the rate of about $186 billion a year, so three per cent, or 4 per cent, of that would be $5 billion or S6 billion. That is the sort of extension required at a world level to accommodate the increases in international trade. It would require, she says, little ingenuity to -

  1. . issue annual credits equivalent, say, to a 3 to 4 per cent, increase in world trade, and lodge them with the Bank as a basis for “ soft loans “ to developing countries ‘ -

A soft loan is a loan offered at a low rate of interest rather than the market rate of interest - an absolutely invaluable element of purchasing power in the shape of desperately scarce foreign exchange would have been pumped into the economics most in need of such support.

Unfortunately, the existing mechanism quite often works to rob the countries most in need of support of the foreign exchange they require and to hand it to the more powerful groups who are able to rig the markets, and therefore the prices of primary commodities on which these needy countries are dependent. I hope that some day in this Parliament the opportunity will be given to explore this situation in detail.

The Austraiian Government ought to indicate its views on the reform of the mechanisms of international exchange. Both the previous Treasurer - now the Prime Minister (Mr. Harold Holt) - and the present Treasurer have attended meetings at the levels at which these sorts of things are discussed. It is about time that one of them presented a White Paper setting out the Government’s views on some of these proposals. This would not be an easy thing and I am not suggesting that the Government should immediately be nailed if it exercised a preference for one plan rather than another. But the adoption of any plan al all would show an appreciation that something has to be done.

Why should a country as advanced industrially as Great Britain periodically encounter balance of payments crises? It is simply because other countries which would trad£ with Great Britain are inhibited or prevented from doing so because foreign exchange is not available. One alternative - and it is a very uncertain one - is to resort to barter rather than multilateral arrangements. This would be primitive economics rather than modern economics. At least we have reached the stage where some probing of this problem is taking place. There is a realisation that, taking the world as a whole, somehow we have to do at the level of international economics what we do at the level of internal economics. When we find internal deficiencies we use fiscal and monetary powers to see that assistance is given to underdeveloped areas. This remedy should be applied on an international basis. We have whole nations which are undeveloped in terms of more sophisticated economies. Somehow we have to be able to create credit and distribute it costlessly to the areas that need it. This must be done even if it means a little bit of foregoing of affluence on the part, of the more fortunate countries. We have to measure the cost of this against the price we have to pay if we do not do it. Instead of paying perhaps $5 or $6 a head per annum, we are prepared to pay $120 a head per annum to defend ourselves against the situations that arise from poverty. I suppose this illustrates how strange we, as human beings, can sometimes be.

Dr. PATTERSON (Dawson) 13.58].- The purpose of the Bill is to amend the International Finance Corporation Act to allow the International Finance Corporalion to borrow more freely from the International Bank for Reconstruction and Development, principally because loans made by the International Finance Corporation do not necessarily require a government guarantee, whereas loans made by the International Bank for Reconstruction and Development do need a government guarantee. The member countries of the Bank have agreed that this provides an excellent opportuntiy to expand the potential or the resources of the International Finance Corporation. An additional $400 million will be made available to the Corporation to allow it to help countries, particularly the underdeveloped countries, to expand their private industries. The Corporation is principally concerned with mining and industrial pursuits. It has, 1 think, up to the present, financed activities in approximately 34 countries involving commitments of approximately SI 37 million.

The overall purpose of the amendment to the Articles of Agreement of the International Finance Corporation and of the International Bank therefore will be to allow the Corporation not only to supervise all the operations of the World Bank and the International Development Association in the industrial and mining fields, but also to delve more deeply into the problems of the underdeveloped areas, particularly in the field of private industry. Of course, the major benefit to the underdeveloped countries will be that the International Finance Corporation will not need government guarantee before making loans. There is always a problem in getting government guarantee for loans to private industry. With the addition of $400 million to the resources of the International Finance Corporation, it can be expected that we will see a major increase in its lending activities throughout the world, particularly to underdeveloped countries.

The interesting point about the Corporation is that because no government guarantee is necessary before loans are made, it has to enter into a highly risky field, particularly when making loans to underdeveloped countries such as Africa and South America. We know that the Corporation has incurred major losses in these fields. For example, a plant in Lima, Peru, has cost the Corporation approximately $300,000. This amount has had to be written off to the reserves for losses. Similarly, $170,000 has had to be written off to the reserves for losses on account of the Berry plant in Columbia. The losses incurred by the Durasol del Peru project and the Berry venture in Columbia demonstrate that the International Finance Corporation is prepared to take risks. In fact, it is prepared to take greater risks than the ordinary banking institutions usually do. I think that this is a very commendable objective of this world organisation.

I believe that nobody would disagree with the statement that the International Bank for Reconstruction and Development, the International Development Organisation and the International Finance Corporation are doing a good job in stimulating trade and attempting to solve some of the major problems confronting the underdeveloped countries. It is often difficult for Australians to understand the definition of underdeveloped countries. The root of the problem is that we consider the people rather than the wealth of the country. If one divides the wealth of a country by the population, one can usually measure whether a country is a developing country or a developed country. For example, noone could argue that Australia is a developed country. In terms of our natural resources, we are most certainly one of the underdeveloped countries, but in terms of our population and gross national product, in world classification we are a developed country. If we in Australia could adopt a policy of laissezfaire and, one might say, live happily ever after, forgetting all about migration, this would be an extremely rich country because we have the resources, especially now that we have discovered certain minerals and fuel. This could be a very rich country in terms of population. Australia is unlike India and other Asian countries, where the greatest problems are poverty and the controlling of population growth, in that one of our greatest problems is to get more people. Possibly the most important asset we have today is our people, but we just have not got enough of them. Therefore, Australia is in the paradoxical position of being classified as a developed country when it is really an underdeveloped country so far as the potential for development of resources is concerned.

The International Bank for Reconstruction and Development has helped Australia. From memory, I think something like S400 million, which includes SI 00 million for the Snowy Mountains Hydro-electric Authority, has already been made available. Australia’s subscription to the International Finance Corporation is a little over S2 million. This gives us a voting strength of approxi mately 2 per cent. The United States of America, which has a subscription commitment of $35 million, has a voting strength of 30 per cent. It will be seen, therefore, that major countries such as the United States of America and the United Kingdom dominate to a large degree the policies and lending habits of the International Finance Corporation and the International Bank for Reconstruction and Development.

As I have said, the types of enterprises to which the International Finance Corporation contributes are mainly in the fields of industrial development, petroleum and mining. For example, the iron and steel manufacturing industries account for 35 per cent, of the total commitment of approximately £135 million. Food processing accounts for 23 per cent., pulp and paper manufacturing 19 per cent., construction materials 17 per cent., textiles 14 per cent, and chemicals 12 per cent. Another major function of the International Finance Corporation is to lend monies to the various development finance companies in the underdeveloped countries. These loans amount to approximately 17 per cent, of the total subscriptions to date.

According to the reports of the International Bank for Reconstruction and Development, the major problem in the underdeveloped countries is how to grow fast enough to increase export earnings to the point where those underdeveloped countries are in a position to import the basic goods which they need for their growth. We find that in the underdeveloped countries the growth of industrial ventures has been most dynamic. In this field, the rate of growth has averaged approximately 7 per cent, a year. In some countries it has been as high as 15 per cent. The most important rates of growth have been in the fields of petroleum and minerals. We can see that in many countries, particularly in South America and Africa, industrial pursuits are going ahead at a satisfactory rate, but the major problem is that most of these countries are basically primary producing countries and that the average rate of growth of their primary production has been fairly disappointing. Over the last five years, it has averaged only about 2i per cent, per annum, compared to 7 per cent, for industrial ventures.

In order to give some idea of the position, let me say that the latest report of the -International Finance Corporation discloses that the total import bill of the underdeveloped countries for food is approximately $4 billion, plus an additional $1 billion for surplus disposals under the American Public Law 480. There is a very wide economic gap in the underdeveloped countries because of their inability to produce sufficient food for their own requirements. Further, the types of products which they produce have been subjected to such severe fluctuations in export prices that, the terms of trade have moved substantially against them. This applies particularly to coffee, cocoa and sugar. We in Australia are well aware of the disastrous fall that has taken place in sugar prices in the last three years. The world market price for sugar was well over £100 sterling a ton in 1963, but today it is only about £16 sterling a ton. Unless Australia, and, more importantly, the underdeveloped countries have a stable price for their primary products they will suffer a deterioration in their terms of trade. If their terms of trade deteriorate, their only course is to try to increase production to offset falls in prices. As I have pointed out, the rate of growth in primary production has been most disappointing. It has been only approximately 2i per cent, per annum.

We in Australia well know, just as do the underdeveloped countries, that capacity to pay for imports places a very important restraint on rate of growth. If the future growth of the external earnings of the developing countries is not rapid enough, those countries will be faced with great difficulty in financing their imports. That is why most of the underdeveloped countries are prepared to diversify. Here again, we see a similarity between them and Australia in that we have been relying too heavily on primary products. Primary products are still the backbone of the economy of this country, and they will remain so for a long time, but, unlike the underdeveloped countries, Australia has found it necessary to diversify and to move into the fields of industrialisation and manufacturing. There are a ‘number of reasons for this. O’ne is that manufacturing industries are heavier employers of labour in terms of capital input than is agriculture. With the development of mechanisation in agriculture, in the developing countries in particular, has come a drift of population to the cities.

The underdeveloped countries have found it necessary to diversify. This has been the experience of India, Colombo and Chile, all of whom have moved further into the development of manufacturing industries in preference to relying primarily on agriculture. Nevertheless, the International Bank for Reconstruction and Development does point out the tremendous scope which exists for increasing primary production in those countries. One of the greatest difficulties to overcome is related to institutional factors. This is a major headache to organisations like the International Bank for Reconstruction and Development and the International Finance Corporation. Institutional problems in agriculture are well known. I refer to inflexible problems associated with land tenure, customs and religion. For example, in India, thousands of millions of people are starving and yet meat is going to waste there. This custom is well known to the developed countries of the world and can be overcome only by the countries concerned. It is recognised that the potential exists and that there is scope for the underdeveloped countries to become more efficient in terms of manpower and resource inputs. lt is essential, as has been pointed out by the International Finance Corporation and the International Bank, for the underdeveloped countries to be able to harness their resources in order to make a greater contribution to agricultural production. The International Bank for Reconstruction and Development has very efficient teams which move into the underdeveloped countries to carry out feasibility studies and make the necessary recommendations, particularly in the field of agriculture. The International Finance Corporation now has the full responsibility for supervising and controlling all of the industrial enterprise financed either by the International Bank for Reconstruction and Development or the International Development Association. It is given the responsibility of carrying out feasibility studies in respect of further industrial assistance. The developed countries are, of course, assisting in this problem in the underdeveloped countries.

Other international organisations exist than the International Finance Corporation and the International Bank. Among the developed countries Australia, as we know, is playing its part. In 1963 approximately $96 million was made available to underdeveloped countries. This amount has increased to over SI 00 million at present. In comparison, however, some countries are decreasing their contributions to the underdeveloped countries. In 1961 France provided over $940 million. Its present contribution is just over $800 million. The contribution of the United Kingdom is increasing. It has increased from $450 million in 1961 to about $500 million at present. The United States of America is by far the largest contributor to the underdeveloped countries. It has contributed annually a huge sum of about S3,500 million to the underdeveloped countries. Its contribution is stable, although it has decreased slightly, relatively speaking, over the last two financial years.

We should’ study closely the activities of the World Bank and the International Finance Corporation. We have not read too much about them in the Press and there is not much to be gleaned from the various publications available. These organisations are extremely important to the underdeveloped countries. I think Australia can learn a lot from the techniques used by the International Bank for Reconstruction and Development, particularly because the techniques for analysing agricultural problems in the underdeveloped countries are applicable to Australia. There is no difference in principle between examining the feasibility of constructing a major dam in Egypt and examining the feasibility of constructing a major dam in the northern part of Australia.

The Vernon Committee implied that we do not possess in Australia highly skilled teams comparable to those at the disposal of the International Bank. That Committee recommended the establishment of a special projects division which would have a measure of independence and would carry out feasibility studies in order to put forward comprehensive plans for the future development of our natural resources. For example, instead of a civil engineer making a feasibility study of a dam site and recommending the need to harness water, the actual appraisal of development projects would be carried out in a systematic and efficient manner if we were to follow the techniques used by the International Bank.’ In studying an irrigation project, the International Bank has a team which consists of engineers, hydrologists, climatologists, agriculturists, agricultural economists and soil experts; in other words, people skilled in studying all aspects of the problem, each one having his own responsibilities. The end result is a drawing together of all of the problems and the necessary lines of action to formulate a recommendation, whether favorable or not.

I believe that in Australia we could profit by studying the techniques of the International Bank for Reconstruction and Development, because it is in the field of agricultural development that we can learn so much. I shall quote an example to illustrate my point. In a recent publication by the World Bank, Bohm says - although this is not necessarily the policy of the World Bank - after a lot of practical experience, that possibly the best method of financing irrigation or dam projects in underdeveloped countries is to allow the users of water to have the water free of charge until the projects can stand on their own feet and the actual recipients of water are able to pay a price for it. This is in marked contrast to the attitude being adopted by some economists in Australia towards dedevelopment projects, particularly water. They would argue that the farmers should have to pay right from the outset the full cost for water which would include, of course, not only the capital costs but also depreciation, maintenance and amortisation. It is plain that we can learn a lot from the International Bank in these fields.

I believe that this is an excellent measure because it allows the International Finance Corporation to have a very large increase in its funds. The International Finance Corporation, because it does not have to have a government guarantee, is quite free to enter more deeply into the fields of industrial activity of underdeveloped countries and to assist them in overcoming the very serious economic problems which confront them today.

Mr CONNOR:
Cunningham

.- I rise to support my colleague in support of the Bill. The question of international trade has already caused two world wars.

It was the underlying cause of World War I and World War II. We are now faced with a set of trade problems which could ultimately, if they are not solved, lead in turn to World War III. Anything that can be done by way of the International Monetary Fund in accordance with the terms of its charter to stimulate and rationalise international trade and put it on a fair and reciprocal basis must naturally be welcomed by any nation in its parliament. Today we seem to be approaching a new period of international tension which has been caused by international trade competition. The period of post-war reconstruction has ended. The devastation of World War II has been repaired. Modern technology is producing goods on a scale and in a degree which is beyond the collective capacity of the world to consume or, alternatively, beyond the capacity of world finance to stimulate its exchange as between the people of the different nations. One of the objectives of the International Monetary Fund is to ensure that there is a balanced growth of international trade, to promote exchange stability and, above all, to avoid competitive exchange depreciation.

There seem to be three different groups of countries. First there are those which are highly industrialised. In a world of modern technology they are the countries with the greatest economic strength. Then there are the primary producing countries. In that respect Australia is somewhat ambivalent in terms of its international trade. Although Australia is still a primary producing country, internally we aspire to be, and have made some progress towards being, a relatively highly industrialised nation. But of the primary producing countries in general there are two distinct groups, those which have potentially viable economies and those which, recently liberated from colonial domination as a result of World War II, will need international assistance for many years to come.

It has been one of the characteristics of world economy since the end of World War II that the manufacturing and industrialised nations should dominate and in fact exploit the primary producing countries. We, even in this country, are relatively on a treadmill of primary production. We have to produce more and more and, as can be verified by reference to the terms of trade over the last 25 years, we have to produce more and more to achieve the same results. In fact, we have to produce rather more than that to get a little ahead of what we need in terms of the international market. As a result of the liberation of Asia from colonial control and, to a large extent, of Africa, we find that there are a number of economies which are utterly unable to achieve any form of economic balance, which are not viable and which, in turn, have been forced to revert to the overt economic control of the former exploiting country, or another one which has chosen to step into its place. We find in some of the countries of Africa where there has been over-reliance on a particular commodity that that country is utterly at the mercy of the industrialised country which is prepared to purchase its production at its price, on its terms and in such quantities as it may choose to acquire.

The world today is very definitely divided into trading groups. One of those, of course, is the European Common Market and another is the European Free Trade Area, the group of seven which is pivoted around Britain. Our future is very much at stake in the ultimate decision of Britain to enter the European Common Market or to do otherwise. In the recent recess the Minister for Trade and Industry (Mr. McEwen) went abroad. He has come back and he has not had a lot to say openly, but in what he has said he has put the best possible face upon the situation. But there has been an obvious tone of disquiet in his public statements since his return, and justifiably so. This is because Britain, to us, is the largest free market for food in the world. Britain is our traditional market for primary produce. The alternative, if Britain goes into the Common Market, is for us to turn to trade with Japan. In doing so we would find ourselves in a completely different situation from the one which has prevailed for so many generations in our relations with the United Kindom. Whereas Britain, as a world power, has had a world currency which has been accepted for purposes of international exhange, that does not apply with Japan. In fact, quite the reverse would be the position. Trade with Japan is literally a case of organised bartering.

At the present time we are being subjected to very great pressure because of the alleged imbalance of our trading relations with that country. In point of fact, if we exclude exports of wool to Japan, it will be found that there is a balance in our trading relations. The question which arises is whether the Japanese are purchasing our wool because they like the colour of our eyes or because it is in their interests to do so having regard to the profit they can make from it and the fact that there is no other source from which it can ‘be obtained. Nevertheless, the pressure is well and truly on. Some months ago in this House I had occasion to make a passing reference to Australian and Japanese trading relations. It does appear to me that, if the Japanese can consummate their plans, we are to be put in the same position as we were in an earlier generation in relation to the United Kingdom: Hewers of wood and drawers of water or, to put it more commercial terms, that we should supply raw materials, that we should be a quarry and a farm and in return, that we should be a market for the products of their factories.

The matter was originally raised some months ago by the Australia-Japan Trade Council and the term “ agreed specialisation “ was used. It was suggested that we, as a country, should consider whether some of our industries were completely economic, whether we would have the economies of scale which would justify us continuing to protect or develop certain smaller industries or whether it would be in our best mutual trading interests if we were to agree to allow the Japanese manufacturers to supersede the Australian factories and for us to purchase their products. That might have been very good in certain circumstances, but let it be said also that as a result of the fall of Singapore in 1941 we were forced to think in terms of developing Australian industry for defence purposes. It was because of Japanese aggression that we were forced to do so. That being so, there are quite a number of Australian industries which in themselves may not necessarily be wholly economic but which we need to retain for defence production purposes.

In addition to that the further question which must be considered is what is Australia’s particular destiny as a nation. This question aarises because, for the first time, with the predicament that Britain is in, we have to stand on our own feet and really think for ourselves. Are we to accept within the trading nations of the Pacific and Indian Oceans a role subordinate to the Japanese?

I think not. It is quite conceivable that in Britain’s present dilemma a very considerable portion of her population will want to leave her shores, that they and appropriate industries should be transported here and that, in rum, it will be our destiny to be a major manufacturing and trading nation of the Pacific.

The matter has been taken a good deal further in a publication which I received last week from the Australia-Japan Trade Council. In it there is quite a subtle and cleverly reasoned article by Mr. Amaya who is the commercial attache at the Japanese Consulate-General in Sydney. The article is very subtly produced as being an expression of his own ideas, but it covers 12 pages and virtually monopolises the issue in question. The gravamen of Mr. Amaya’ s proposals is that Japan has 6 million farming families which exist on 15 million acres of land. That poses quite a dilemma for the Japanese farmers and the Japanese people. By obtaining more foodstuffs from Australia, Japan might be able to liberate some of these people or to transfer the majority of them to her highly efficient factories and so make the best use of Japanese science and technology. That would be very good for the Japanese, but where would it leave us? Here a very obvious approach is being made for the sympathy and support of the Australian Country Party and its sectional interests, which it is suggested should be advanced at the expense of Australian industries. Australian industry already is at a very great disadvantage in relation to Japan, because of the depreciation of the Japanese yen in the period of postwar reconstruction. In 1949 the rate of exchange was fixed at 1,008 yen to the fi sterling.

Let me return to my main theme. Mr. Amaya takes the subject of agreed specialisation much further and suggests that we should look at such countries as Sweden, Switzerland and Holland, that our industries should be of comparable size and development, but that if we were to go beyond that we might be exceeding the limits of our capacity. If that is so, we can only expect to be economic satellites of Japan forever. Whilst it is natural to Australia’s interests to trade with Japan - I would be the last to oppose it - let us remember that the Japanese economy is a brittle one and is working under a forced draught. Japan has had quite a number of minor economic crises. Essentially trade with Japan means reciprocity. ]f we sell the Japanese raw materials and food, we must accept their manufactured goods in return. That is the dilemma that Australia faces.

Consequently, Australia must be prepared to look for alternative markets. One of the most obvious markets is Indonesia. Supporters of the Government might counter that by saying that at the present time Indonesia’s economy is in a hopeless mess and that the degree of inflation there is probably worse than in any of the other major nations. It is quite possible for us to do a good deal by way of entering into reciprocal trade with Indonesia. At the present time we are purchasing approximately 24 per cent, of our crude oil and petroleum from Indonesia. We purchase 60 per cent, from the Persian Gulf - from the various Arabian sheikhdoms and Iran and Iraq. The latest figures I have show that our annual purchases of petroleum and crude oil from that area are worth $120 million. In return we export goods worth only $12 million. Most of those countries are only semiautonomous and are under the direct control of, and in direct association with, British and American oil companies. There is no earthly reason why we should not be purchasing all our petroleum requirements from Indonesia. In return, we would have an opportunity to sell to Indonesia steel, meat, wheat and other temperate zone foods that we are capable of producing, as well as machinery and other manufactured goods. If we fail to do that, the Japanese will get in on that market. The Japanese, because of their economic stress, are prepared to offer long terms and to give trade credits to such a country, but in the process of doing so they would get a total mortgage over the whole of the assets and the future of the country.

Let us look also at’ the general tightness in world trade and finance. Let us look at some of the so-called miracle countries and the position they are in. I shall take, first, the most notable case - West Germany. At the present time no country is in a more difficult position in relation to capital availability than is the West German Republic. The Government of that country has virtually ceased borrowing for developmental purposes because the best interest rate at which it can borrow is 7 per cent. Such firms as the Volkswagen company and the Bayer chemical company have had to pay 10 per cent, internally for relatively small loans like SUS121 million. Let us look at the United States of America. The prime mortgage rate there has been increased recently to 6 per cent. When we add to that the exchange rate between Australia and the United States, we would have to pay an interest rate of 7± per cent, if we wanted to borrow there. I should be interested to know exactly the terms on which our defence expenditure is to be financed with the United States. My information is that the interest rate will be of the order of 7 per cent. That is a pretty high rate of interest for a country of the credit rating of Australia which is the 11th trading country in the world today.

I invite honorable members to look at the position in Britain, the £1 sterling, and Australia’s overseas reserves. It seems that only about $A850 million - the figure is unofficial - is being held in sterling. That is about two-thirds of our overseas reserves. I would be the last’ to advocate a withdrawal of that money. Anyone in the kindergarten class on economics would know what the result would be. I believe that a case can be advanced for Australia to participate in discussions with Britain about the future of sterling. Recently one of the leading British financial journals advocated Australia’s becoming a member of the group of ten. That group embraces the 10 so-called major financial countries, which have been given recently the responsibility by the International Monetary Fund of deciding whether a better form of international currency can be arranged. We are entitled, particularly as we are the largest holders of sterling, to be in that group. It is to the discredit of the Government that it has not been prepared to apply for membership and to insist upon being admitted. Whatever is decided by that group will largely determine the economic and financial trading arrangements of the so-called free capitalist democracies.

It has been suggested - I shall not be rash enough to say that this is the answer to the problem - that the fixation of the price of gold at $US35 per ounce has played a considerable part in the contraction of world currency. There is a definite shortage of world currency for trading purposes. The value of world trade has increased fantastically since the end of World War II, despite present difficulties. That being so, there must be a better lubricant or some means of ensuring that there is a free flow of .trade. The arbitrary fixation of the value of gold at $US35 per ounce needs at least to be re-examined. Possibly a case can be advanced for the revaluation of gold.

We must consider also in our future trade relations that we could conceivably trade with quite a number of countries in Asia provided we could extend credit on a basis that is obviously now beyond our capacity. It would be utterly impossible for many of the Asian countries that have been released from colonial controls to trade with Australia on a reciprocal basis in the foreseeable future. Because of this Government’s sins of omission and commission in the past 13 or 14 years, we have been depending on an inflow of overseas capital to balance our trade activities. We face problems because of the controls that have been placed on both United States of America and United Kingdom investment in Australia. One thing we can do to correct the position is to process our wool, to weave it into cloth and to sell the cloth on the world’s markets. It has always seemed to me to be the height of economic stupidity for this country not to extract the utmost value from wool. The Lord Chancellor of Great Britain sits on the Woolsack traditionally to symbolise the wealth that was obtained from wool when Britain was a major producer of that commodity. We in Australia should extract the maximum profit we can from wool. After all, we export two thirds of the world’s total supply. I support the Bill and suggest that some of my observations merit the consideration of the Government.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

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

page 288

INTERNATIONAL MONETARY AGREEMENTS BILL 1966

Second Reading

Consideration resumed from 17th August (vide page 108), on motion by Mr. McMahon -

That the Bill be now read a second time.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

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

page 288

PHOSPHATE FERTILISERS BOUNTY BILL 1966

Second Reading

Debate resumed from 16th August (vide page 66). on motion by Mr. Howson -

That the Bill be now read a second time.

Mr POLLARD:
Lalor

.- I suppose it is rare for a measure of this importance to come before the Parliament without an adequate debate taking place. Unfortunately, it seems that, because a bill has a title that is somewhat obscure, the vastly important features of it are overlooked. It is not an exaggeration to say that included amongst perhaps the six most important factors that influence and benefit primary production in Australia today is the fertiliser industry and all that surrounds it, and it should be given a high priority indeed. The soils in this country are notably lacking in phosphates, potash and several other elements that are essential to plant growth. The end result of using artificial fertilisers on Australian soils has been an enormous increase in primary production.

This is, after all. a bounty measure. People are apt to say: “ Why should the Government give a bounty to primary producers? “ However, in the economic sense, the amount of the bounty is returned to the general economy probably many times over. The introduction of the bounty of £3 or S6 a ton on superphosphate by this Government in 1963 - which was not the first introduction of the bounty, of course - has meant that the amount of superphosphate used since 1963 has increased by not less than 46 per cent. It is estimated that by the end of the coming season the amount of superphosphate used will have increased by something like 64 per cent. This shows that the primary producers generally have been encouraged by the bounty to use a greater quantity of fertiliser, with the inevitable substantial increase in their incomes. Not only has the increased use of superphosphate meant a substantial increase in the incomes of primarly producers; it has also meant a substantial increase in the use of the railway systems that carry the increased production of wheat, stock, vegetables and other primary products. The Commissioner of Taxation takes a rake off from the substantial increase in the taxable incomes of many primary producers. It is not hard to argue the case for the payment of a superphosphate bounty to primary producers.

The history of the bounty is interesting and I think I should mention it. In 1941. the Labour Government of the day introduced a fertiliser bounty. I think it was 20s. a lon. By 1949, the bounty had increased to about 50s. a ton in most of the States and 55s. a ton in Western Australia. Unfortunately, in 1951 the present Government, for reasons unknown to me, discontinued the bounty. The Minister for Commerce and Agriculture at that time excused the Government’s action by saying that the superphosphate bounty had fulfilled its purpose. But the real fact was that the need for the superphosphate bounty was then as great as, if not greater than, ever. Our population was being substantially increased by the inflow of migrants and also by the great postwar increase of our native population. We needed to import vast quantities of goods and our ability to pay for the goods we imported came, and probably always will come, from the export of primary products. The excuse was a shallow one and, fortunately, better counsels prevailed.

In 1961, in the rural policy which I outlined on behalf of the Labour Party, I said that a Labour government, if returned to office, realising the value of the superphosphate industry to the country and particularly to primary producers, would provide for a bounty payment of S6 a ton. We were not returned, unfortunately, but in policy speeches prior to the 1963 elections the Government Parties promised, for the first time since they had taken office, that if returned they would provide for a bounty of S6 a ton on superphosphate. The impact of an Opposition on a Government is marvellous. It is effective. But Labour did something more on that occasion. We promised to provide a bounty not only on superphosphate but also, in related amounts - everybody knows what that means - on every other form of fertiliser used by primary producers. Some time ago when speaking in Bendigo the Minister for Trade and Industry (Mr. McEwen) prophesied that his Government would introduce, as it now proposes to do, a Bill to provide for a bounty on nitrogenous fertilisers. It is to the credit of the Labour movement in this country that these things have been achieved.

Mr Luchetti:

– We are always out in front.

Mr POLLARD:

– Always in front. Let me return to the Bill. The Minister’s second reading speech was notorious for its brevity. He simply informed us that the measure provides for a re-enactment for another three years of the S6 a ton superphosphate bounty. The Bill refers to the substantially increased usage of superphosphate, but it does noi refer by a solitary word to the erosion of the value of the existing bounty due to the way the price of superphosphate has increased since 1963. This increase in price is of a substantial order. In 1963 the price of bulk superphosphate was $12.45 a ton. Today the price is $19.95 - an increase of $7.50. So price increases have outstripped bounty payments by $1.50. This represents a substantial deterioration in the value of the bounty. In 1963 the price of bagged superphosphate was SI 5.85 a ton. Today it is $25.05 a ton. It will be seen that as regards bagged superphosphate price increases have outstripped bounty payments by £3.20 a ton. In 1963 the Minister told us that the value of the bounty was approximately one third of the ex-works market price. Though I am not as good a mathematician as Sir Henry Bolte claims to be, I have made a rapid calculation and it appears to me that the bounty is now only 7 per cent, of the ex-works price of bulk superphosphate and about 8 per cent of the price of bagged superphosphate.

Mr Beazley:

– Does the honorable member think that the farmers will stage a mutiny on the bounty?

Mr POLLARD:

– If sufficient farmers were like me there would be a mutiny. It would be a vociferous mutiny of a nonviolent kind. We would make ourselves heard more clearly than do some members of Parliament today. In fact, there has been a partial revolt inasmuch as in Victoria another co-operative fertiliser factory has been set up, but this does not solve everything. It is notable that whenever the big boys in the fertiliser industry gel togetherI say this in case the honorable member for Mallee (Mr. Turnbull) should chide me - a simultaneous announcement is made that as from a certain date the price of fertiliser will be such and such and to the amazement of everybody the Victorian co-operative phosphate company falls into line and charges the new price. The farmer shareholders in the Victorian co-operative fertiliser enterprise cop all the profits - sufficient to recoup within three years their capital investment. I will deal further with this matter later, but in passing I acknowledge that we will probably be reminded that this industry spends millions of dollars constructing valuable works and providing up to date plant. It does, but if it is efficient, and it probably is, it will generate within itself sufficient funds to meet its extensive increased expenditure such as has been incurred in the last few years.

My knowledge of the superphosphate industry goes back for a long period of time. The industry has always been well organised. I understand that it is not an economic proposition to produce fertiliser unless you can do so in vast quantities at an individual works. The fertiliser industry has become more and more owned by two or three big concerns. I recollect, going back to 1929, that there were three firms operating in Victoria producing superphosphate. They were Wischer and Co., the Mount Lyell Company and Cuming Smith. They were big figures in the industry and as far as I know the businesses were entirely owned and operated in Australia by Australians. In 1929 they merged into a group which was known as Commonwealth Fertilisers and Chemicals. By 1961 the group had been mopped up by Imperial Chemical Industries of Australia and New Zealand

Ltd. in what has been termed a multimillion pounds deal. Of course, it was said that all this was for the benefit of the primary producer but it has yet to be shown that any real benefit has ever been passed on to him. This sort of thing proceeds apace. We are told nothing about it in the Minister’s second reading speech. No attempt is made to justify the price increase. We are not given the whys and wherefores of the increase that has been announced. In his second reading speech the Minister was duty bound to give us some reason for an increase in price which has so seriously eroded the value of the superphosphate bounty payments. The Press has told us that it is due to an increase in the price of sulphur. It is true that there has been an increase in the price of sulphur. The Press has told us also that it is due to an increase in the price we pay to the Nauruans for the rock phosphate we obtain from Nauru.

Mr HOWSON:
FAWKNER, VICTORIA · LP

– That was in my speech also.

Mr POLLARD:

– Well, the Minister did not emphasise it, and” it should be emphasised over and over again. I have not a shadow of doubt that there has been an increase in other costs as well. What perplexes me is that the Government has never assured this House that it has utilised the powers that are inherent and specifically stated in the 1963 Act. By that Act the Government has the power to demand and obtain the books, accounts and so on of the fertiliser companies which are being used as a medium for the distribution of this bounty. It seems to be accepted that these companies are completely honest in this respect, but, of course, honesty in big business depends upon interpretation, and the interpretation that some people, in the fertiliser industry would place upon the factors which they said justified an increase in price of £X or Xs. a ton might be entirely different from the interpretation placed on those factors by a competent auditor or a representative of the Government who examined a company’s accounts. I should like some assurance from the Minister that the powers conferred by .the 1963 Act have been utilised.

Mr Howson:

– May I again refer the honorable member to my speech? In the third paragraph I said: “ The Government is satisfied that this is being done “.

Mr POLLARD:

– The Government is satisfied that this is being done. It is satisfied that the bounty is not being utilised as a means by which the fertiliser companies snatch a little extra profit. If the little extra profit is only 5s. a ton, it is worthwhile. I point out to the Minister that the methods adopted by the fertiliser companies in this country in 1929 were so obscure and so doubted that even the Bruce-Page Government charged the Tariff Board - I have the the report here - with the responsiblity of inquiring into whether fertilisers were being sold in Australia at reasonable prices. No doubt the companies concerned said that they were selling fertilisers at reasonable prices, but an impartial authority found on that occasion in 1929 that they were charging 5s. a ton in excess of what they should have been charging. Perhaps the fertiliser companies in 1966 think an extra 5s. a ton on nearly 4 million tons of superphosphate would not make much difference to the users of that commodity, but even a reactionary government like the Bruce-Page Government thought it was a worthwhile saving. Surely the present Government should have conducted an investigation to see whether the progressive price increases over the past 12 months were justifiable.

I know that the Minister will probably say that the Tariff Board is now conducting a comprehensive inquiry into the chemical industry in Australia. I see that he nods his head. That inquiry also covers sulphuric acid, but the notable difference between the reference to the Tariff Board in 1929 and the reference to the Tariff Board in 1963 is that in 1929 there was a specific request that the Board investigate whether superphosphate or fertiliser chemicals were being sold at reasonable prices. No such specific request was contained in the reference to the Tariff Board in 1963. Another point worth mentioning is that the Tariff Board received the previous reference on 27th February 1929 and had its report in the Government’s hands in December of the same year. The present Government forwarded its reference on chemicals to the Tariff Board on 30th October 1963 but it has not yet received the Board’s report. In the interim, the farmers of this country are being bled by the fertiliser companies.

Of course, no one would say that those companies are altogether dishonest but, after all, the business of the board of directors of every company operating in Australia is to extract the maximum profit from the users of the particular commodity and to pay the highest dividend to their shareholders without reducing consumption of the product. The fertiliser industry in Australia is in the particularly happy position that, irrespective of the price of fertiliser, provided it is within reasonable bounds, the wheatgrower or the stock breeder has no alternative to paying the price. He might not use quite as much of the product but he will pay the price. He has no alternative if he wants to obtain a return from his investment.

Let us in passing look at the operations of these companies and their tendency towards mergers. I shall deal first with I.C.I.A.N.Z. and point out that quarrying in Australia by overseas organisations must be borne in mind. I.C.I.A.N.Z. has Australian and British assets of £700 million. In a Press report of 12th November 1965 it was stated that this company, the major shareholder in which is Imperial Chemical Industries, United Kingdom, earned a peak profit of £5,300,000, sales having increased by £82 million to £112 million. It was pointed out that sales and profit for the year included results from newly acquired subsidiaries, which were Australian Fertilisers Ltd. and its main subsidiary A.C.F. and Shirleys Fertilisers Ltd., Queensland. Since 1959 I.C.I.A.N.Z. has acquired the entire capital of Commonwealth Fertilisers and Chemicals Ltd., which was a merger of Cuming Smith and Company, Mr Lyell Chemical Company and Wischer and Company.

The Melbourne “ Age “ of 3rd June 1961 stated that following the move by I.C.I.A.N.Z. to buy Commonwealth Fertilisers and Chemicals Ltd., shares rose from 10s. to 60s. Of course, it is perfectly legitimate for big business to say: “Now that our shares are worth 60s. instead of 10s. we must extract from the primary producers a price that we can justify on the market price of our shares “. Merrily the company proceeded to do that, because it is the big boy in the industry. In 1964 I.C.I.A.N.Z. increased fourfold its holdings in Australian Fertilisers Ltd. by buying the holdings of EZ Industries, Mr Lyell Investments Ltd. and Cuming Smith interests in Australian Fertilisers Ltd. These three companies each had 13.3 per cent, holdings in Australian Fertilisers Ltd. Those holdings were mopped up. That deal lifted the I.C.I.A.N.Z. holdings in Australian Fertilisers Ltd. to 53 per cent, of issued capital of £2,013,210. This greatly enlarged interest in Australian Fertilisers Ltd. will strengthen the I.C.I.A.N.Z. equity in A.C.F. and Shirleys Fertilisers, which is, in turn, 50 per cent, owned by Australian Fertilisers Ltd.

Now let us see how A.CF- and Shirleys Fertilisers stands. The company is owned 50.5 per cent, by Australian Fertilisers Ltd., which in turn is owned 53.3 per cent, by I.C.I.A.N.Z. In the year to February 1965 A.C.F. and Shirleys, this subsidiary of I.C.I.A.N.Z, lifted its profit by £29,429 to a record of £309,723 and paid a dividend of 8$ per cent, on the higher capital.

According to a Press report published in July 1966 A.C.F. spent $5 million on capital works and it contributed to the development of associated companies in the 13 months up to March 1966. A Press report of 9th September 1966 indicated that A.C.F.-Shirleys issued S2 million of debentures to finance the expansion of its work in Queensland and that in association with I.C.I.A.N.Z. it would make synthetic ammonia. Its capacity was to be 250 tons a day. Press reports in 1965 stated that Wallaroo-Mount Lyell Fertilisers Ltd, the Adelaide Chemical & Fertiliser Co. Ltd. and other fertiliser companies had forecast increased sales. A 5 per cent, interim dividend payment had been confirmed and the final dividend would make 10 per cent, for the year. Sales had increased following a 10s. rebate a ton on deliveries before December 1965. Boral Ltd, one of the big American concerns, through its holdings in Mount Lyell investments has an 8 per cent, holding in Wallaroo-Mount Lyell Fertilisers Ltd. I should explain that Boral Ltd. is the largest American manufacturer of fertilisers. It has a huge interest in oil refining and in the making of packaging, bags and so forth. It has been trying hard to get a big grip on the Australian fertiliser Industry.

Let us now consider the situation of Cresco Fertilisers Ltd. Cresco of South Aus tralia has works in Geelong, Victoria, as well as in South Australia and Western Australia. It has been the subject of intense competition for its purchase. The great contenders were W. R. Grace & Co. - probably one of the largest manufacturers of fertilisers in the United States of America - and Esso Standard Oil (Aust.) Ltd, which is a subsidiary of the Standard Oil Company (New Jersey). W. R. Grace Aust. Pty. Ltd. is a wholly owned subsidiary of the giant American fertiliser group, W. R. Grace & Co. of New York. Cresco produces 500,000 tons of superphosphate a year from plants in Victoria. South Australia and Western Australia. During the course of a takeover contest between W. R. Grace and Esso for Cresco, shares went up from 50s. to 90s. Is anyone going to tell me that a company that pays 90s. for shares that were previously 50s. and which originally were 20s. is not going to get its pound of flesh by increasing the cost to the primary producers of this country? It is interesting to note that the losing competitor, Esso, now has a 50-50 share in the successful natural gas strike ofl” the coast of Gippsland. Its finance manager has said that Esso intends to enter the fertiliser industry. It is well known that natural gas is a fruitful and cheap source for the production of sulphate of ammonia. If the conservative governments of Australia, including this negligent Government, are going to be so remiss that they allow the natural gas deposits of Australia to remain in the hands of private enterprise, the farmers are going to pay a lot more for sulphate of ammonia than they would have to pay if these deposits were in the hands of public enterprise.

According to a Press report of 20th September 1965, Cresco’s profits retreated from £217,600 to £166,423 after a solid fall in taxation from £150.000 to £93.000. The lower results equalled an earning rate of 19.1 per cent, on higher capital compared with 33.2 per cent, in the previous year. I point out that 19 per cent, is not bad. Cresco has a 25 per cent, interest in Nairne Pyrites Ltd. with Wallaroo-Mount Lyell Fertilisers Ltd.. Adelaide Chemical & Fertiliser Co. Ltd. and the Broken Hill Pty. Co. Ltd. - and has a 33 per cent, interest in Sulphuric Acid Ltd. Cresco reserves of £1,800,000 are double paid capital, and investments at cost showed in the books at £360,175. These investments include shares in listed companies at £180,133 against a market value of £529,462. W. R. Grace has traded in Australia - and W. R. Grace is the successful purchaser of Cresco - since 1936 and is said to be involved in a joint venture with Mount Morgan Ltd. at Gladstone - Mount Morgan Grace Pty. Ltd. The proposal is to build a £7 million nitrogenous fertiliser plant at Gladstone. The web is weaved further when we consider other operations. LC.I.A.N.Z. has joined with C.R.A., Boral and Mitsui and built a 600 ton a day ammonia fertiliser plant at Silverwater near Newcastle. C.R.A. is a company primarily overseas owned. I.C.I.A.N.Z. is, of course, based in Great Britain. Here again I.C.I.A.N.Z., a big and efficient company, holds a 51 per cent, equity; C.R.A., American and English owned, holds 20 per cent.; Boral and its subsidiary Paccal holds 20 per cent, and Mitsui, 6 per cent. Paccal will provide petroleum gas feed stock. The plant will be developed by I.C.I.A.N.Z. at a cost of $12 million. This plant will produce 500,000 tons of superphosphate a year. This is another clear illustration of how this industry is developing with American and British capital.

Greenleaf Fertilisers Ltd. has established a new plant at Newcastle as a subsidiary of the Sulphate Corporation Pty. Ltd. of N.S.W. It has acquired the fertiliser interests of the Sulphide Corporation which is owned 75 per cent, by C.R.A. and 25 per cent, by the new Broken Hill Co. Further finance for the project’s £5 million plant will come from £2 million payable over 15 years from the Australian Mutual Provident Society and £li million from an English Scottish and Australian Bank Ltd. loan. The Sulphide Corporation plant is at Cockle Creek, as New South Wales people know, and has a superphosphate capacity of 500,000 tons a year. Last year Cockle Creek produced 168,794 tons of sulphuric acid and the Sulphide Corporation lifted its net profit from £585,421 to £1,115,159 in the year ended December 1964. I should explain that some of that profit may have been derived from other activities. The combined production of superphosphate from Greenleaf Fertilisers Ltd., I.C.I.A.N.Z., C.R.A., Boral and Mitsui amounted to 1 million tons and the shareholders’ funds rose to £10 million.

I should not omit reference to Cuming Smith and Co. Ltd. which was probably one of the pioneer companies in ‘this industry and which is a very big concern. On 27th July 1966 it confirmed a 15 per cent, annual dividend. The market value of shares fell from £14.8 million to £11.3 million in the year ended December 1965 despite a book value rise from £4.5 million to £5.1 million. The company’s portfolio mainly comprises substantial interest in I.C.I.A.N.Z. and A. QF. and Shirleys Fertilisers Ltd. Directors pointed out that income from I.C.I.A.N.Z. rose during the year when Cuming Smith’s holdings in Australian Fertilisers Ltd. were boosted through the exchange of its interests in Australian Fertilisers Ltd. This, together with a dividend from Cuming Smith, British Petroleum and Western Australian Farmers Superphosphate Ltd., was the main reason for the higher profit during the year. Cuming Smith has a one third interest in C.S.B.P. and Western Australian Farmers Superphosphate Ltd. At 4th September 1964, the Cuming Smith Co., held 2,358,081 20s. shares in I.C.I.A.N.Z. following the sale of its 268,533 20s. ordinary shares in Australian Fertilisers Ltd. to I.C.T.A.N.Z. in 1964.

Cuming Smith and Co. purchased a one third share in the new Cuming Smith British Petroleum-Westralian Farmers Superphosphates Ltd., which is now known as C.S.B.P. and Farmers Ltd. Net earnings for the year were £1,020,562, a return of just under 23 per cent, on issued capital of £4.5 million. Cuming Smith had a large holding in Cuming Smith-Mount Lyell Farmers Fertilisers Ltd. Mount Lyell Investments, which was taken over by Boral in 1.963, recently sold its 1,306,104 shares in the Western Australian Company to Cuming Smith and Co. and Mount Lyell Fertilisers at a book profit of £2.263,7.12. At March 1965, Cuming Smith and Co.’s investments in listed companies were shown at a book value of £2,244,027 and had a market value of £7,381,543 at balance date. Cuming Smith and Co. in the year ended December 1964 received dividends of £133,533 from Imperial Chemical Industries of Australia and New Zealand Ltd. Net profit increased to £250,636, returning 15.7 per cent, on capital. That is a very interesting story.

In today’s Press. I noticed a report under the heading, “C.S.B.P, Farmers profit up 17 p.c.” It stated-

C.S.B.P. and Farmers Ltd, Western Australia’s major fertiliser and superphosphate manufacturer, lifted group profit 17.5 per cent, in the year to June 30.

That was 30th June of this year -

Profit rose from $1,134,164 to $1,333,749, although earning rate - on higher average capital - held steady at 14.4 per cent.

Directors have held ordinary dividend at 7 per cent., requiring $646,291 compared with $506,400 in 1964-65.

Result was after tax $1,574,878 (previous year, $1,226,000) and depreciation $936,811. . . .

C.S.B.P. and Farmers is jointly owned by Cuming Smith and Co. Ltd, British Petroleum Co. of Aust. Ltd. and Westralian Farmers Superphosphates Ltd.

The Chairman, Mr. M. A. Cuming - .may 1 say that he is perhaps one of the wizards of the fertiliser industry - says in his report with the annual accounts that construction of the company’s $12 million fertiliser complex at Kwinana is well under way.

Cumins Smith and Westralian Farmers Superphosphates have merged with British Petroleum, which is to provide <he feedstock in future for the manufacture of nitrogenous fertilisers adjacent to its refinery at a fertiliser complex jointly owned with Cuming Smith, lt is within, the hounds of reasonable prophecy that with the finding of gas at Barrow Island, Gingin and other places in Western Australia, the B.P. refinery will become the repository for the gas from these fields and that nitrogenous fertilisers will be made from this gas.

My complaint is that, if I intelligently understand the situation, the justification advanced for rising prices is increased prices of sulphur and the sulphuric acid which is produced therefrom and which is required for the manufacture of fertilisers, the increase in the price of rock phosphate and perhaps even increases in wages and other costs. But f am not satisfied that this Government has investigated in the thorough manner which is justified and which was chosen by the Tariff Board in 1929 the question of whether increased prices are justified on the basis of the costs that have been stated as the justification for raising prices.

In October of last year, in this House, I addressed to the Minister for Primary Industry (Mr. Adermann) a question in which 1 asked whether he was aware of the bidding between two United States companies for the shareholding of Cresco Fertilisers Ltd. and whether this competitive bidding would inevitably increase the price of fertilisers. The Minister replied in these terms -

The offers and counter offers to acquire the shareholding of Cresco Fertilisers Ltd. have been given a good deal of publicity in the newspapers but the Government has no constitutional powers-

It is time it got some - to intervene in what is essentially a normal commercial matter.

This Government does not intervene in what is a normal commercial matter when the skilled judges of the Commonwealth Conciliation and Arbitration Commission say that the country can afford a basic wage increase of $2 a week. It does not interfere when, after the Commission’s judgment has been given, all kinds of people unjustifiably increase the prices of the commodities which they sell and on which the $2 a week wage increase will be spent. The Minister, in his reply to my question, continued -

Under the Phosphate Fertilisers Bounty Act my colleague, the Minister for Customs and Excise, investigates price movements of phosphate fertilisers to ensure that the full benefit of the bounty is passed on to the purchasers. “ Oh, yeah,” is all that I can say about that. I ask whether the Minister is prepared to lay on the table in this House the papers related to the matters about which I have asked questions. Let us look at the powers conferred on the Minister for Customs and Excise under the Phosphate Fertilisers Bounty Act 1963. The provisions of this Act may have been observed in spirit, but J very much doubt whether close investigations were conducted. Section 14 makes provision with respect to accounts in these terms - (2.) A producer of bountiable products is not entitled to bounty unless he furnishes to the Comptroller-General, in respect of each financial year in which bounty is payable -

a manufacturing account and trading account and such other information in relation to the bountiable products and fertiliser mixtures as the Minister requires;-

I have no doubt that returns concerning the amount of bounty drawn and the tonnage involved were supplied. What about the other information? Under the terms of this section, the following is required also -

  1. a certificate signed by the producer that the documents referred to in the last preceding paragraph are true and correct in every particular and a certificate, signed by an auditor, that those documents are true and correct to the best of the auditor’s knowledge and belief.

Section 16 provides that for the purposes of the. Act an authorised person may at all reasonable times enter premises. There is nothing wrong with that, lt does not concern costs very much unless there is some doubt about whether serious errors in bookkeeping have occurred. Section 16 provides that an authorised person may enter premises and inspect or take slock, inspect processes of production, lake samples and, more important still, inspect the accounts, books and documents relating to the production and sale of bountiable products or fertiliser mixtures. Sub-section (2.) reads -

The occupier or person in charge of any registered premises or of premises referred to in paragraph (b) of the last preceding sub-section-

That paragraph refers to premises where bountiable products or fertiliser mixtures on which bounty has been claimed or is likely to be claimed are stored - shall provide the authorised person with all reasonable facilities and assistance for the effective exercise of his powers under this section.

All I have to say, Mr Speaker, is that this-

Mr SPEAKER:

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

Mr WENTWORTH:
Mackellar

, - Mr. Speaker, it was amusing and perhaps a little pathetic to find the honorable member for Lalor (Mr. Pollard) claiming that statements made by Opposition members were responsible for the adoption of the Government’s successful policy on fertilisers. Here, I am reminded of the story told by one of the philosophers - I think it was Hume - which concerned a cock who always used to crow before the sun rose and who persuaded the hens and indeed himself that his crowing brought the sunrise. The honorable member for Lalor seems to be like that cock.

The Government’s policy on the phosphate fertilisers bounty has been good and successful. It is of particular importance at the present time when the diminution of food stocks held in the United States and elsewhere may be ushering in a period of world famine, with a consequent very great need, an even greater need than exists today, to increase food production throughout the world.

Under this Government’s policy the consumption of superphosphate in Australia has increased dramatically. From the 1.3 million tons a year, which was the production and consumption of superphosphate in Australia when this Government took office, consumption has increased until it amounted in 1964-65, the last year for which statistics are available, to 3.2 million tons. The quantity has thus increased in a few years from 1.3 million tons to 3.2 million tons. Over the last four years the consumption in millions of tons has increased from 2.3 to 2.5 to 2.7 and finally to 3.2. These figures show a continuous and consistent and sensible Government policy. Perhaps the figures I have read may even underestimate the true extent of the movement because, coincident with the increase in the use of superphosphate there has been an increase in the consumption of nitrogenous and other fertilisers. So I think the Government can justly take some credit for these good results, and it is certainly heartening to see that ils policy is to be continued.

There is, however, one part of Australia to which I would like to direct some particular remarks in the hope that the Government may even now think about giving a little further attention to it because of the peculiar responsibilities that the Government must accept in connection with this area. I refer to the Northern Territory. As J. have said, the consumption of superphosphate throughout Australia is now something in excess of 3 million tons a year. The annual consumption in the Northern Territory is something less than 1,000 tons. These figures show a tremendous disparity. In the Northern Territory, an area which is the Government’s prime responsibility because it does not have a State government to look after it, there is, for all practical purposes, no use of superphosphate at all. I think that when considering the reason for this we must acknowledge the influence of the high price that is charged in the Northern Territory. The price at Darwin for bulk superphosphate is something over 41 dollars a ton, while the price at Port Kembla would be about 20± dollars a ton. I am sure that it is this price disparity that has resulted in such a minimal use of superphosphate in the Northern Territory. lt is perfectly true that the Government recently has introduced a scheme for subsidising the use of superphosphate in the Northern Territory to bring the price down to the figure prevailing in the eastern States, but only in respect of purchases of ten tons or less and only in respect of experimental uses. For reasons that I shall give in a moment I do not think that this arrangement goes far enough. I believe we should be doing more than this, and I hope that something more will be done either in this Bill when it comes before the Senate or by presenting an amended Bill to this House at a later date. It is not competent, of course, for a private member to move an amendment in this particular matter, for constitutional reasons. Opportunities are available in the Northern Territory, and those opportunities must be measured against the increasing incidence of hunger in the world, and with this in mind 1 ask honorable members to take, with me, a brief look at the situation in the Northern Territory.

First Jet us consider rainfall. The rainfall in the Northern Territory, contrary to popular conception, is much better than it is, for example, in New South Wales. I have in my hand maps which were prepared by the Library research service earlier this afternoon. They are maps of the Northern Territory and of the Slate of New South Wales, drawn to the same scale. They show the areas with a rainfall of more than 30 inches, of between 20 and 30 inches, and of between 10 and 20 inches. I would like to have these maps incorporated in “ Hansard “ but I am told that for technical reasons it is impossible for this to be done.

Mr Erwin:

– What do they show?

Mr WENTWORTH:

– They show the average rainfall over the longest periods for which figures are available. Honorable members will see that the area in the Northern Territory enjoying a rainfall of more than 30 inches is considerably greater than the area of New South Wales that has the same rainfall. They will see that the area having from 20 to 30 inches of rain is very con siderably greater than the comparable rainfall area in New South Wales.

Mr Turnbull:

– What about Victoria?

Mr WENTWORTH:

– Victoria is a pocket handkerchief. The whole of Victoria is less in area than the part of the Northern Territory which has 30 inches of rain or more. The area of the Northern Territory having a rainfall of between 10 and 20 inches is a little greater than the comparable rainfall area in New South Wales. So in terms of absolute rainfall the Northern Territory is more favoured than the State of New South Wales. I can tell honorable members also that the rainfall in the Northern Territory is much more regular. Even the Northern Territory - and I refer particularly to the high rainfall sections at the top - suffers an occasional drought, but it is very occasional. It is only in perhaps one year in 25 that the monsoon fails. There is a much more certain regularity of rainfall in the Northern Territory than can be claimed for New South Wales or, indeed, for any other part of Australia.

So here we have a high rainfall and a regular rainfall - probably the best in Australia. But there is one catch. Almost all of the rain in the top part of the Northern Territory falls in the monsoon months of December, January and February. There is perhaps a little rain in November and a little in March, but for most of the year the Northern Territory has a dry climate. Ii is virtually rainless. I have been thinking particularly of the part of the Northern Territory that comes under the influence of monsoonal rains, the part where the rainfall is very regular, but even in that area the distribution of the rainfall covers only a very few months of the year. 1 shall come back to the significance of this in a moment.

Of course production requires soil as well as rainfall. 1 have had the opportunity in recent weeks of visiting the northern part of the Northern Territory and examining some of the country. There is a tremendous agricultural and pastoral opportunity in that region. There are rich black soil plains extending for miles. I know that a great deal of the country is mountainous and unusable, but the part that it is usable, the part that is good, is very extensive. It is much greater in area, for example, than the whole of Victoria, and there is no reason why, when one looks at the position overall, the pastoral turnoff from the Northern Territory should not be as great as that from New South “ Wales. If we accept anything less we are defeatist.

Until recently the distribution of the rainfall, being bunched, as it were, in the few summer months, represented a bar to proper pastoral development. I do not think this is true any longer, because Townsville lucerne, which requires superphosphate to start it off and to maintain it in good form, will, with perhaps the addition of some of the new grasses like Urochloa, provide the answer. This is not because Townsville lucerne produces so much more fodder but because it is capable of ousting some of the useless native grasses, and it has an important advantage. If properly fenced and used it will retain its nutritive value in those crucial months towards the end of the dry - August, September and October - when there is no food from the normal pastures. This is something which will be ushering in a complete pastoral revolution in the Northern Territory. People do not understand the opportunities that exist up there and that will be realised by the application of techniques that are now feasible.

It is, of course, not only the pastures themselves that matter. We have a lot to learn as well about proper management of pastures under monsoonal conditions. There are other things too. There is the abandonment of the open range system, the maintenance of which is an economic blot and a shame on the Northern Territory. There is the use of fences - the new technique of suspension fences with high tension wire. There must be a realisation that under nearly every one of these plains there exists shallow underground water which can give stock water at a low price in those crucial dry months. These are things which together make the difference. The Government has come to the party and is coming to the party more and more with its system of beef roads. Together with transport we have the question of markets. There is the question of outlets in killing works at Katherine and Darwin, for example. Perhaps there are even more radical things that can be done in regard to outlets.

I say that with these things, given cheap superphosphate, there is no reason why the cattle turn-off from the Northern Territory should not be multiplated by a figure of 20. We are on the verge of what can be an immense source of wealth, the kind of thing that is comparable with the pastoral turn-off from New South Wales. Of course; we are not going to get it overnight, but it is here for the taking and it does require cheap superphosphate to start it off. It will not come without cheap fertiliser. It is at this point that I want to put before the House a principle which I think should actuate the Government. If you have a situation where, given a cheap fertiliser, there will be big economical use, and concurrently with that you have a situation wherein big economical use makes possible cheap production, it is up to the Government to start a “ benefit spiral “. This is the proper way for the Government to intervene.

Let the Government now - not at some future time but now - say that in the Northern Territory we will have a subsidy, as we give a petrol subsidy now, for example, so that the price of superphosphate will be brought down to the point where it would be if there were a bulk demand and bulk local manufacture. This is a very simple principle, because it means that the subsidy cuts itself out. I am not suggesting that this special subsidy for the Northern Territory should in any way be permanent. It is only a starter on the motor car engine; it is not the engine itself. This is a benefit spiral that lies within our grasp and will cost us practically nothing. One thousand tons a year of fertiliser at the present moment - what is the subsidy on that? Peanuts. It may be said that the amount needed for subsidy will grow. So it will, but when it grows, and as it grows, local production will become possible, and when local production becomes possible the price comes down and the subsidy becomes unnecessary. This is something that will be self-liquidating. That is the general principle that I put before the Government now.

How dear would it be? That is, what would be the kind of price we would expect to pay for the manufacture of superphosphate in the Northern Territory if there were a big demand? Let us look at this.

In simple terms, superphosphate is made by pouring sulphuric acid on phosphatic rock. The rock comes from Christmas Island and Nauru, sources which are nearer to the Northern Territory than to the eastern States. What about the sulphuric acid? Small amounts of sulphuric acid are being made at Rum Jungle, but this is not the scale of production I have in mind, although it might be a temporary palliative. I suggest to the Government that it take a look in this regard at the McArthur River. At a point about 35 miles south of Borroloola there is a tremendous 200 million tons deposit of fairly low grade lead, zinc and silver ore. Mount Isa Mines Ltd. is at present investigating and developing it. It is not yet a certainty, because there are metallurgical problems associated with it. The metal is very finely divided in the ore and there is a problem about proper method of extraction. It is highly likely that this trouble will be overcome and that we will have here one of the great mines of the world. This mine, in order to work, will need a port which will be, I understand, on Central Island just off Borroloola. When it does work, there will be a first class port and also, going up the chimney, every day, there will be many hundreds of tons of sulphur dioxide and sulphur dioxide is what sulphuric acid is made from.

So it seems to me that the Government might be very much interested in assisting this venture at McArthur River on the ground that if it goes it will revolutionise the superphosphate position all round the Gulf of Carpentaria - in northern Queensland and, of course, in the Northern Territory. The Government can, I think, help substantially by giving assurances at this stage that if the venture goes forward it will come to the party with the necessary port facilities. This is the kind of thing that the Government can very properly do. The beneficiaries of a good port in the Gulf there would include, of course, the whole of the Barkly Tableland cattle industry. They would include the users of superphosphate, whether the factory be there or at Darwin or wherever else an economic place could be found. The superphosphate would come from the sulphuric acid which would be almost a byproduct of the works at McArthur River.

Why not try to put the pieces of this jigsaw puzzle together? The prize is a pastoral turnoff from the Northern Territory and indeed from Cape York Peninsula and adjacent parts of northern Queensland which would rival the pastoral production of the whole of New South Wales today. That is big money. I ask honorable members to look at the rainfall maps which are available to them in the library and which will show them the kind of opportunity which lies there in the north.

It may well be that nitrogenous fertilisers will be needed also and that the big potential of natural gas which we know of in Western Australia and the Gulf of Papua, and which probably exists elsewhere around the Gulf of Carpentaria, can also be utilised. This, to the extent of my knowledge at present, is a speculative matter. However I do ask the Government to say now - not some time in the future, but now - that superphosphate will be available at Darwin at the same price as superphosphate at Port Kembla. This is a very simple principle and one which will not cost much at present, because there is very little superphosphate used, and will not cost much in the long run, because when consumption goes up it will be possible to manufacture in bulk in the north and produce superphosphate at a price which will enable the special Government subsidy simply to be terminated. This is the kind of constructive policy which one would hope that our Government would adopt.

Debate (on motion by Mr. Mortimer) adjourned.

Sitting suspended from 5.57 to 8 p.m.

page 298

APPROPRIATION BILL (No. 1) 1966-67

Second Reading. (Budget Debate.)

Debate resumed from 16th August (vide page 63), on motion by Mr. McMahon -

That the Bill be now read a second time.

Mr CALWELL:
Leader of the Opposition · Melbourne

– I move -

That all words after “ That “ be omitted with a view to inserting the following words in place thereof - “ the House condemns the Budget because - 1. It fails to recognise the injustices wrought upon wage earners because real wages have fallen as prices have risen faster than wages.

It makes inadequate adjustments to social service payments.

lt fails to recognise the serious crisis in education.

lt does not acknowledge the lack of con fidence on the part of the business community in the future growth of the economy.

It does not recognise the need of further basic development, public and private, in addition to the need for adequate defence, and that balanced development can only take place by active encouragement to Australian industry and co-operation wilh the Stales.

It does nothing to relieve our dependence on a high rate of foreign investment to finance the deficit in our balance of payments.”

This is the first Budget presented by the Treasurer (Mr. McMahon). His performance in presenting it was so bad and its contents were so depressing and unsatisfactory that it must assuredly be his last. His best friends have called it a “ do nothing” Budget, a “timid” Budget, a “lack lustre” Budget and a “half speed ahead “ Budget. To use any of these or any of the other terms by which it has been described is really praising it. It is an unimaginative and banal document that is based on injustice for millions of good Australians, old and young. The claims of this great body of citizens have been ignored when they have not been treated with contempt, lt is a document that reveals the incompetence not only of the Treasurer but also of his colleagues. It is even worse than most of the budgets introduced by his predecessors since the Chifley Government was defeated.

The Treasurer and the Government have failed completely to face up to their national responsibilities in the crucial fields of defence, education, health, pensions, housing, northern development, child endowment, the abolition of the means test, maternity allowances, wage and salary justice and the control of prices and interest rates. The Treasurer has ensured that the States will have to increase taxes, but, like Pontius Pilate, he has endeavoured to wash his hands of that responsibility. Either he is being deceitful, or he is even more foolish than we are accustomed to think he is, if he continues to claim that he did not expect that the effect of his Budget would mean forcing up rail and bus fares and freights, hospital charges and gas and elec tricity charges in most States, and particularly in New South Wales and Victoria.

There seems to have been a rather curious dialogue taking place between the Treasurer and the Premier of Victoria about the “ Arithmetic of the Budget “ - as to whether this Budget is in deficit or in surplus. Presumably the Treasurer regards his Budget as being expansionary and presumably, therefore, in deficit. The Premier of Victoria maintains that this expansion at the Federal level is possible only because of contraction at the level of the States. The Premier of New South Wales agrees with the Premier of Victoria. Certainly, the position of the States is one of overall deficits as the Reserve Bank in its report made available on Thursday last - on 18th August, just two days after the Treasurer made his Budget speech - observes -

Most States finished the year with much larger revenue deficits than they had expected.

My comment on that is: Unlike the Commonwealth, however, the States do not have the luxury of being able to go to the Reserve Bank to finance their deficits costlessly. Either they have to fund it this year at the expense of next year’s loan allocation, and at an exorbitant interest rate of nearly 9 per cent., or they have to raise taxes, mostly inequitable and indirect, or raise charges on public hospitals and public utilities. This undoes any expansion that is supposed to take place at the Commonwealth level because higher taxes at State levels, or higher charges of public utilities, leave less consumer purchasing power. However accurate his arithmetic, this fundamental economic reality seems to have been overlooked by the Federal Treasurer. The situation is very succinctly stated by the writer of the column “ Canberra Observed “ in the issue of the “Financial Review” for Friday, 19th August, in the following words -

Indicated increases in State taxes and utility charges will not affect the overall strategy of the Commonwealth Budget as it is envisaged by the Federal Treasury.

But the increased charges and taxes will have a considerable effect on the assessment of the Budget’s expansionary potential by those who took the Treasury figures attached to the Budget speech at their face value.

The consolidation of the accounts of the public sector as a whole, which will not be available until the end of the year, will show that the expansionary factors within the Commonwealth accounts are offset to a degree by the action of the State Governments.

Past experience, however, makes it risky to take the Treasurer’s figures at their face value. Last year, for instance, at this same relative time, the excess of expenditure over revenue was estimated at Sill million. In fact, the amount of the excess of expenditure over receipts was S251 million - a difference of a mere S140 million.

This difference arose for two sets of reasons: First, because Commonwealth taxation receipts were less than estimated. In my view, this occurred because some of the assumptions - or guesses, if you like - underlying that Budget were wrong. The other set of reasons was changes in expenditure above those originally contemplated in the 1965-66 Budget. The tax measures of that particular Budget were deflationary, their impact was regressive and they operated to reduce further the real purchasing power of the great masses of the Australian people whose standards had already been eroded by rising prices. Between June 1964 and June 1965 - that is, in the 12 months prior to that 1965-66 Budget - the consumer price index had risen from 127 to 132.1 - by over 5 per cent - and the food component of the index from 128.5 to 135.9 - that is, by over 7 per cent. I hate to bore the House with these figures, but they are important. In the subsequent 12 months - that is during the period of the 1965-66 Budget - the consumer price index has risen another 3.7 per cent, which means a rise in prices of nearly 9 per cent, in two years.

As I have indicated, the tax measures in the 1965-66 Budget - last year’s Budget - were for the most part progressive and they operated to reduce the real purchasing power of those on wages and salaries and those on fixed incomes including pensioners. These were the people who had been penalised already by price increases. Now, when the purchasing power of the great majority of the community declines, and wage earners are predominant in the community, business activity declines. Manufacturers only make profits when they sell the goods they produce, and they will not produce more if they do not feel that they are going to sell more; and if they are not going to produce more, they do not give orders either for materials or for capital goods. It also seems necessary to point out to this Government that real purchasing power declines, even when wages seem to be higher, if those wages have not risen as fast as prices have risen. This simple arithmetic is common sense but this sort of common sense was not applied at the time of the last Budget, nor was it applied during the currency of that Budget by any attempt to reverse its miscalculations. I heard the Treasurer the other night dealing with this very issue when he met the Press on a television station in Melbourne.

These miscalculations are all too apparent in the White Paper on National Income and Expenditure for 1965-66, which accompanied this year’s Budget. The document shows that whilst what is called the gross national product or G.N.P. - to quote from the Treasure’s own document, “ The market value of goods and services produced in Australia” - rose by 4i per cent, in the same period prices had risen by 4 per cent, and the number of people engaged in producing the national product had increased by 3 per cent. When these factors are combined, there has been actually a decline in the gross national product of something like 2 per cent. We on the Opposition side could perhaps call it “ negative productivity “. In fact, the position was little better in the previous year because, whilst the gross national product in that year rose by 9 per cent, prices had risen by 5 per cent, and the number of workers by 4 per cent.

The Government is disposed to attribute this stagnation to the drought which brought a decline in farm incomes of the order of S300 million, but even if this sum, which is 1.5 per cent, of the gross national producr, had been added, We would still have had comparative stagnation. Official sources seem to be rather ambivalent about the drought; the Reserve Bank, for instance, quaintly describes it as “moderation from natural causes “. But on the other hand, it is a convenient excuse for the Government to put forward for the economy not doing better. However, the stagnation in the economy is stark enough when we look at the expenditure side of the National Income and Expenditure Statement, and I quote a few extracts to justify our indictment -

In 1965-66, the rate of increase in gross fixed capital expenditure decreased markedly. Private gross fixed capital expenditure increased by about 8 per cent, in 1965-66 compared with 16 per cent, in 1964-65.

I ask: does the Government realise this? Increased productivity, for the most part can only come out of new capital equipment, yet stagnation exists. The statement goes on -

Expenditure on dwellings declined by 1 per cent, after increasing in 1964-65, by 18 per cent.

This must mean that many genuine home seekers are being forced out of the market. Does the Government appreciate this fact? The statement also says - that the principal components of personal consumption expenditure showed mixed trends in J 965-66. Expenditure on food increased by 7 per cent.; on tobacco, cigarettes and alcoholic drinks, by 7 per cent. But by contrast, purchases of motor vehicles fell by 10 per cent., compared with an 8 per cent, increase in 1964-65, and purchases of household durables fell fractionally compared with an increase of 7 per cent, in 1964-65. The importance of the motor car in the Australian economy is known well enough, as is also the manufacture of consumer durables. But stagnation is apparent in both fields. I have elaborated on these matters because they are central to the theme that I raised earlier - the importance to the health of the economy of adequate consumer purchasing power or, if honorable members like it expressed in professional jargon, the course of internal demand.

The majority of consumer units in the Australian community are wage earners and their families. The wages that most of them receive are not fixed individually by themselves, but are the subject of regulation in the Arbitration Court, a system of wage limitation that has been in existence now for 60 years. We seem to be facing a situation of extreme cynicism about the justice of this system, because the benefits which are supposed to flow from increases in wages which the machinery of the Arbitration Commission determines are taken away by price increases which are beyond any regulation. Wages are rigidly fixed, at a rate the Government intends, but prices are allowed to rise as fast and as high as those who own and control our industries determine. I must confess to being as much puzzled by the Treasurer’s arithmetic as he is puzzled by that of his Liberal Party colleagues who, for the time being, are the Premiers of New South Wales and Victoria respectively. My interpretation of the Consumer Price Index is that it has risen 9 per cent, in the last two years. I ask the Treasurer to note the fact. He claims that it “ has risen by only about 9 per cent, during the last five years “. The Treasurer includes the three years following the 1960-61 credit squeeze, the years of absence of economic growth and then adds two years of fairly rapid price rises after which he strikes an average over the five previous years. This is a piece of legerdemain if ever there was one.

To put the position factually, let me quote the Consumer Price Index over the last five years as taken from the July 1966 issue of the Commonwealth Bureau of Census and Statistics publication “ Monthly Review of Business Statistics “. This, of course, is not a Liberal Party publication intended only to deceive and mislead. The quotation is as follows -

The important point to observe is that prices are now rising fairly rapidly. After all, a 5 per cent, rise in a year takes five cents of value out of every dollar, and until July of this year the wage for the year had not been adjusted. Then an increase of $2.00 was made in the basic wage, which increased it from $30.80 to $32.80. This was an increase of less than. 7 per cent., which would not restore to the basic wage in July 1966 the purchasing power it had in July 1964. Yet this increase in the wage has already been followed by increased prices both public and private. Some of the increases were dishonestly imposed in anticipation.

I do not believe that this situation can be tolerated much longer by a community which says it believes in a just wage system and which claims to want industrial peace. There is only one way by which all wage and salary earners, all pensioners and those living on fixed incomes, and all primary producers, can be protected against legalised thieving through high price .rises and intolerably high interest rates, and that is by the carriage of a referendum to give the Federal Parliament power to legislate in respect of both. A Labour Government will give the people such a referendum immediately it takes office.

Let me turn now to the question of our internal economic development and the balance of overseas payments. The Treasurer asserts that defence preparations compete for resources with other requirements and so difficult choices have to be made. I think he spelt it out before a very weak panel in Melbourne the other night when he met the Press. “ We have had,” he says in his speech, “ to put aside some popular and desirable measures,” but he tries to imply that the resources and capacity of the economy are growing fast. The Labour Party cannot accept this complacent, assumption.. Apart from our dissatisfaction with the distribution of what is being produced, we are critical of the balance in the development of the economy, as well as of its unhealthy dependence upon foreign investment. The Governor of the Reserve Bank, in his annual report, to which I have already referred - it was presented on. Thursday last, two days after the Treasurer spoke - noted:

The Australian balance of payments seems likely to continue in substantial current account deficit for some time to come, and reliance on a high rate of inflow of capital to help finance this deficit leaves us vulnerable to changes in the international financial climate.

I shall return to this subject later, but i say again that it was. perhaps, unfortunate for the Treasurer that he did not have the report of the Reserve Bank available to him before he prepared his Budget, because it seems to me that the report draws attention to certain weaknesses in the economy; weaknesses which the Budget does nothing to strengthen or eliminate.

Tn many respects, our economy is still more of a milk bar economy than it should be. By this I mean it is still geared to one or two prosperity industries rather than having established any proper sense of national priorities in its development. In fact, it is regrettable to have to say that the general direction of our development is to an increasing degree being determined by firms controlled from outside Australia and that when the internal economy does experience difficulties, which in large measure are caused by circumstances of our own making, there is insufficient of our total economy to which remedies can be applied.

At the moment, two of what are glibly called soft spots in the Australian economy, are the motor car industry and the consumer durable industries. The motor car industry, which is also entirely controlled by interests outside of Australia, has become our greatest pace setter. When it booms the economy booms: when it sags the economy sags. At the moment the motor car industry is not in a healthy condition and some leading firms have indicated that some thousands of their employees are likely to be laid off within the next month or so.

The financing of sales of the motor car industry, however, is largely in the hands of financial intermediaries called fringe bankers, who are declared to be outside, the control of normal banking institutions. They are so described by this Government. If there had been a Labour Government in power at any lime over the last 17 years we would have passed an act to bring the hire purchase companies under the control of our banking legislation and we would have left it to the High Court of Australia to decide whether or not the legislation was constitutional. This Government says, regardless of what the High Court might think, that there is no power under our Constitution to legislate in respect of hire purchase companies. ] mention this merely to indicate that there are significant sections of our economy that are difficult to control and. when either boom or bust conditions have to be regulated, as they have to be from time to lime, the areas in which fiscal control and monetary control can operate are severely limited.

We believe that the Treasurer has failed to recognise the need to stimulate the economy by sensible, moderate, expansionary measures. Let us look more closely, however, at what the Treasurer has called the central problem of the Budget, the fact that defence commitments severely limit what can be done in the fields of pensions, education, health, housing development and the ultimate abolition of the means test. There are some elements of a confidence trick in the way the Treasurer uses his defence commitments. Whilst I am prepared to concede that a dollar spent on defence limits our ability to spend a dollar somewhere else, this begs the whole question that better directed development in the past would have brought us more dollars now or a higher gross national product than in fact we have.

What are the perspectives, Mr. Deputy Speaker, of our difficulty? For psychological, rather than for economic reasons, S 1,000 million sounds a much greater sum than £500 million would have sounded, lt will, however, be less than 5 per cent, of the gross national product this year, as against slightly less than 4 per cent, last year. Nor does this year’s Budget clearly demonstrate how much of this year’s defence expenditure is merely payment for late deliveries from last year, or how much of the total will be represented in overseas rather than internal expenditure, lt certainly does not indicate how differently the economy would have been affected if the defence vote was spent internally. The overseas component is probably over $250 million. The projected increase of S250 million this year at best is a little over 1 per cent of the gross national product, which means, in essence, that the economy is so delicately poised that it would be severely upset if anything more than I per cent, of the gross national product were pre-empted for other than defence purposes. This does not indicate much faith in the future expansion of the economy. lt seems also to argue about “ economic stimulus “, rather than doing the things that ought to be done because of their intrinsic worth. We do not deny that higher real wages or higher social service payments injected into the community will stimulate the economy; but wages and social services are paid so that people may live as citizens in a civilised community, not that they exist to stimulate the economy. We believe also that higher real standards can come only out of greater productivity, which has been missing in the last five years in Australia. We do not cat dollars, but we cannot eat without dollars. Over a million Australians, more or less, are not getting enough to eat, enough clothes to wear or enough decent houses to live in.

Wherein, then, is the Budget deficient? In the first place, it severely underestimates the continuing impact of the drought. The

Reserve Bank’s report for 1965-66 makes these observations -

Losses of livestock in the drought have not yet been accurately assessed. Information on cattle numbers is particularly imprecise, but it is estimated that sheep numbers, which in the preceding two years had been increasing at a rate of about 6 million per annum, fell by over 13 million during 1965-66 as a result of drought deaths and reduced natural increase. . . . Serious enough in themselves, the effect of these losses on wool production will continue for some time, lt will be some years before flock compositions and numbers in drought affected areas recover to pre-drought levels. Meat production will also be affected to the extent that producers reduce their rates of slaughtering in an endeavour to build up livestock numbers. Crop production should, however, quickly recover, given a return to favourable seasonal conditions

I want, Sir, to make the following observation. If the number of cattle and sheep are not increased meat prices of all sorts will rise, and the people who buy these foods will be badly affected. All of these factors will contribute to a continued decline in export earnings and to rising - certainly not falling - meat prices at home, as 1 have indicated.

Secondly, the Budget severely underestimates the lack of confidence in the business sections of the community about the future. It is a do-nothing Budget as far as industry is concerned. In the defence field the Government prepares to buy off the hook in the United States without much regard to final price instead of encouraging local growth in aircraft, ships and army vehicles and equipment. Nothing is done to encourage modernisation of industry or to extend research. The Minister for Air (Mr. Howson) - a likeable personality and all that - cannot tell yet how much the Fill aircraft is going to cost. The price was estimated at something like $4 million originally. It is now up to $9 million, and we still do not know what the final price will be.

Thirdly, the Government complacently assumes that meagre wage increases and a little improvement - I emphasise little - in age and invalid pensions, which are in themselves insufficient to compensate for price increases, are still sufficient automatically to promote and provoke an expansion of business activity. Fourthly, the Budget ignores the financial plight of the States which are still constitutionally responsible for the expansion of - I use a new word which I discovered - infrastructure without which basic development cannot expand.

Education, especially in the primary, secondary and technical sectors, is still neglected. The Government seems blithely unaware of the need to blueprint plans for development, north and south, east and west in this great continent, and even in the sea, now that the flow of natural gas in Bass Strait can reduce our dependence on imported fuels. The Government refuses to recognise that these vast resources cannot be adequately developed unless financial assistance is forthcoming from the Commonwealth. There is a lack of initiative on the part of the Government as well as a lack of grasp of the potential of this situation. The Government which should be giving the lead seems more disposed to find reasons for turning down worthwhile propositions. These include the handling of the Ord River scheme, the use of iron ore deposits and our aluminium deposits. And then there are the recent price increases in copper which the Government has failed to deal with. All of these are examples of the Government’s unnational attitude. The uncertain future of the Snowy Mountains Hydro-electric Authority experts in matters connected with the basic question of development is of crucial importance.

Fifthly, the Government seems unaware of the economic plight of low income family groups whose low income is depressed by high prices, high taxes, direct or indirect, high interest rates and rising building costs, which make modern housing an impossibility for them to obtain. The Labour Party believes that the pension payable to a married couple, even after the increase in the Budget, is still inadequate to allow those persons totally dependent on it to live at a decent standard and so a first priority of a Labour Government would be to raise the amounts payable to those now receiving pensions to a more satisfactory level. When .1 say all pensioners, whether age. invalid and widow, and those in receipt of repatriation benefits, I include the great range of pensioners. What the Government has done in this Budget is regarded by all these people as an insult rather than as a benefit.

Distinct anomalies also exist in the pensions field because of the operation of the means test, particularly in respect of the permissible amount which a pensioner can earn. This amount was fixed at £3 10s. or S7.00 for a single person and double that amount for married pensioners in 1954 twelve years ago. We believe that this permissible income should be increased, and in addition, that the medical entitlement card should be made available progressively to those who are eligible by reason of age but disqualified by reason of means. This benefit will be given progressively. The ultimate abolition of the means test, whilst not beyond the financial capacity of the economy to sustain, cannot be achieved equitably unless a revision is made in existing lax structures. A Labour Government would favour the establishment of a comprehensive committee of inquiry to examine how to finance all aspects of such a scheme for the abolition of the means lest, including the desirability or otherwise of a contributory scheme.

Mr Barnard:

– This Government was going to bring down a report on how to abolish the means lest within three years.

Mr CALWELL:

– That is what the present Government parties promised in 1949, at the same time that they promised to put. value back into the £1, but they have done neither of those things. I am grateful to the honorable member for Bass for the interjection. Our policy has always been the progressive abolition of the means test. Had we won in any of the elections which took place since 1949 we would have done more to abolish the means test than the present Government has done over that long period. The Treasurer has announced that his Government has no intention of abolishing the means test. I heard him say that last Sunday night in a television interview. He said that the policy of the Government was to liberalise it little by little, but he still did not contemplate its ultimate abolition within any given period of time. I am sure that 1 have not misrepresented him. If I have, he would have said so.

The Labour Party is opposed to the inadequate and insufficient policies of the Government in many matters affecting the Australian economy and the development of our nation, but we are strongly opposed to certain aspects of the Government’s foreign policy. We are opposed to Australia’s participation in the Vietnam war - a cruel, dirty war, as President Johnson has called it. Why and how Australia became involved in Vietnam is a mystery. We are not there under any specific treaty obligation. We are there ostensibly because one of the several military dictatorships in South Vietnam invited us to invade their country. Really, we are there because the United States wanted us there. The United States want as many other countries as can be convinced to send troops to South Vietnam. The British refused, the Canadians refused, and so we and the New Zealanders are the only white nations that have joined with the Americans in a venture that the Americans would now be glad to terminate. I offer no criticism of the United States in anything I have said on this issue. That is the business of the United States and the United States alone; but it is the business of this Parliament to discuss and decide what the attitude of Australia should be towards our participation in the war in Vietnam.

The Holt Government and its supporters would, I am sure - I pay them this tribute - all like to get out of the filthy mess in which they have involved the nation. They have sent conscripts to South Vietnam because nobody of military age in Australia will volunteer for service there. There are, in fact, no volunteers in Vietnam. The members of the Regular Army were given no say as to whether or not they would volunteer for Vietnam. The unforunate conscripts whose names are now figuring increasingly large in the casualty lists certainly had no choice.

Every Government supporter is worried, because they have all said in speeches, inside and outside this Parliament, that they do not like the idea of conscripting our youths. They say that nobody likes conscription for service in Vietnam. But they then add that there was no alternative because there were no volunteers. Our view is that conscription for service in Vietnam is immoral, unjust and a violation of human rights. We say that the arguments used by Government supporters to justify the Government’s policy of out-Heroding Herod indicate how they feel about their consciences. Members of the Opposition can sleep safely with their consciences, because they have never supported our involvement in Vietnam. They will therefore never have to answer before the Australian people, or before Almighty God ultimately, for something that is inherently wrong. We shall never have to answer for the death or suffering of any Australian soldier.

We pay our tribute to the courage and the heroism of those who are serving in Vietnam and for the manner in which they have maintained the highest traditions of Australian fighting men, but I am sure they would rather be home than where they are, and the next Federal Labour Government will bring all of them back to Australia at the earliest practicable moment. We will do this in consultation with our allies and we will do so in such a way that no Australian lives or the lives of any of our allies will be endangered by our actions.

We believe that Australia’s participation in an Asian war, which is not even a declared war and which is based on the flimsy pretext that Vietnam is the battle ground of freedom and the spot where Chinese Communism must be stopped, is the worst mistake Australia has ever made in foreign affairs. Before World War II and during World War II our political opponents demanded that Australia should follow Britain. They were very anti-American between 1941 and 1943, because I was here and I saw it. They were opposed and indeed hostile to the call for assistance that Prime Minister Curtin made to President Franklin Delano Roosevelt in 1942. They wanted to follow Britain in 1942 but now they want to follow Britain no longer. All they want to do is lecture Britain because she will not send troops to Vietnam. The people who used to hang on to Mother England’s apron strings are now swinging along on Uncle Sam’s coat tails, lt is a sorry performance. We have had the Prime Minister’s statement that he and his Government “ go all the way with L.B.J.” That means, of course, that when the time arrives to bomb the dams and the canals in Vietnam, which the distinguished Ambassador of the United States has told us will be the next stage in the escalation of the war, the Australian Government, led by Prime Minister Holt, will cheer in good old Mafeking fashion.

We have read of the recent peregrinations of the Minister for External Affairs (Mr. Hasluck) and the views he expressed. He told the Indonesians recently that he was not Father Christmas. The Indonesians had no idea what he was talking about, because they do not believe in Father Christmas. In this Parliament last week the Minister said that he was not prepared to fall on his face before Communist China. Whoever asked him to fall on his face before Communist China or any other power. European or Asian? Nobody on this side of the House wants the Minister or any other member of the Government to fall on his face before any power, Communist or non-Communist, and certainly not before Communist China. We want this Government to pursue an independent Australian foreign policy such as the one followed with such great success by Prime Minister Curtin and Prime Minister Chifley and Dr. Evatt, our Minister for External Affairs during the years of World War II and the immediate postwar period. I tell the Minister for External Affairs, and I tell the Prime Minister, too, to get off their knees when they are talking to the United States. We want them to pursue the same independent policy at all times as the Curtin and Chifley Governments pursued.

A Budget speech is not an election policy speech, but there is nothing wrong in the Leader of the Opposition using the Budget debate to indicate what his party will do when it becomes the government. However, what is said in the Budget speech can only be an indication of the contents of a policy speech. The twenty-fifth Parliament is dying and in about 1.2 weeks, another Parliament will be elected. I lake advantage, therefore, of the opportunity to say, in addition to what I have already indicated, that there are many aspects of our community life that have been neglected by the present Government and that urgently need correction.

Very briefly I want to refer to child endowment and maternity allowances, health and education. We think child endowment payments should be increased. We indict the Government for doing very little about child endowment since it took office in 1949. The purchasing power of child endowment payments has certainly not been maintained. Maternity allowances are far too low and have not been revised for many years. This is another gross injustice to the family. A Labour Government will increase maternity allowances. Viewing the position in retrospect, I feel it is a pity that the Chifley Government did not include the matter of health in the social services amendment of the Constitution which it carried in 1946. Be that as it may, our health and hospital services are quite inadequate and this is another domain in the field of social services where Labour would act.

On the question of education, I want to emphasize that what is provided under that heading in this Budget is insufficient and gives no benefit whatsoever to children in our primary and secondary schools. The Labour Party will announce proposals in its policy speech which will cover Commonwealth assistance for teacher training in all primary and secondary schools. We will hold an inquiry into all aspects of education, primary and secondary and technical, and affecting both government and nongovernment systems of education. We will make emergency grants as we promised in 1.963 to Slate Education Departments to help them overcome the problem of crowded schools, swollen classes and sub-standard conditions and other matters.

We will make grants to supplement teachers’ salaries in non-government primary and secondary schools so that no child capable of receiving a higher education will be denied its rights, both in its own interests and the interests of the nation.

Our policy on all matters will be decided by the Federal Parliamentary Labour Parly in due course.

In the belief that the people earnestly desire a change of government because they want and demand fundamental changes of direction and emphasis on many matters of nationwide importance, the Labor Party enters the campaign for the election of the 26th Parliament of the Commonwealth on the 26th day of November next united, determined and confident.

Mr Cope:

– The Government’s ranks are not united.

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

– Order!

Mr Daly:

– They cannot even agree on margarine.

Mr DEPUTY SPEAKER:

– -Order

Mr Duthie:

– Why don’t you have a look at those on your right, Mr. Deputy Speaker?

Mr DEPUTY SPEAKER:

– Order! I remind the honorable member for Wilmot of She Standi’ng Orders.

Mr Duthie:

– Yes, but why don’t you have a look at your own side?

Mr DEPUTY SPEAKER:

– Order! 1 name the honorable member for Wilmot.

Mr Calwell:

– I ask you. Mr. Deputy Speaker, to note the fact that there was a little excitement following my declaration of war on the Government. If it excited one of my own supporters, I ask you lo bear with him.

Mr DEPUTY SPEAKER:

– I remind the honorable member for Wilmot of the Standing Orders. Instead of heeding the warning from the Chair, the honorable member made further comments. However, in the circumstances, 1 will accede to the request of the Leader of the Opposition and ask the honorable member for Wilmot to keep within the Standing Orders, ls the amendment seconded?

Mr Whitlam:

– I second the amendment and reserve my right to speak later.

Mr BURY:
Minister for Labour and National Service · Wentworth · LP

– The Leader of the Opposition (Mr. Calwell) - and let us congratulate htm - remains optimistic to the very end. He started by forecasting that this will be the Treasurer’s last Budget as well as his first. I predict, Sir, that the Treasurer (Mr. McMahon) will deliver many more budgets in this House. He is the latest in a succession of outstanding Liberal-Country Party Treasurers in the last 17 years. Nevertheless, this is a very notable occasion for the Leader of the Opposition. If he sticks to his previous reported statements, this must be the last occasion upon which he leads the attack on the Budget. If by some calamity next year he is Prime Minister, he will be the major person responsible for the Budget. If not, he will then have been succeeded by who knows what. We look forward greatly on this side of the House to knowing whether we will have a left wing fire eater, a smooth guy with two bob each way or a dinky-di leader in the true stalwart tradition.

In the course of the honorable gentleman’s remarks he made one or two curious statements. I refer first to his reference to the consumer price index. I do not know from where the Leader of the Opposition obtained the figure of 9 per cent, as the rise in the last year. I think I am not misquoting him. It was a rather curious statement because in fact the rise in the last five years - between June 1961 and June 1966 - has been of the order of 9 per cent. That is in five years, lt is a little below the percentage increase in prices in the last year in which the Labour Party had control of the treasury bench.

On this occasion we really should examine the credentials of the honorable gentleman as a prospective occupant of the office of Prime Minister. He obviously felt far more at home when he got off the mundane subject of national housekeeping. Let us dwell primarily on what he said in the economic field. This is a Budget debate, and we are nol studying particularly the number of times on which in the last year his various policies and shades of policy in regard to Vietnam or foreign affairs have changed, or the speed with which he would whisk men out of Vietnam, or when we would leave there, or the extent to which he would change the colour and nature of their gaiters so that they could be distinguished in some peculiar way from men of other forces. However, we might notice in passing that apparently he would pull out the Australian forces from Vietnam as soon as possible. I think he said that tonight. There seems to be a little conflict here with what the Deputy Leader of the Opposition (Mr. Whitlam) said in a television interview the other day. He said that he would leave our Regular Army troops in Vietnam but that no more national servicemen would be sent. In view of the current Army position in which national servicemen are a basic part of the Regular Army and are completely intertwined with it, that is a very curious statement. It would certainly take the honorable gentleman a long time to sort them out.

Returning to the economic policy of the Leader of the Opposition, at this time last year we were dealing with an economy which was passing through a somewhat heated phase. We faced the necessity of diverting resources to defence in a large way besides providing for very heavy additional outlay in the fields of education, social services and basic government works. So we decided, rightly, to impose considerable additional taxation, both on persons directly and on so-called indirect items which touch most of us - but not the austere characters. I refer to alcohol, tobacco and petrol. On that occasion the Leader of the Opposition opposed an increase in taxation. In fact, he moved an amendment to that effect. For a long time after the Budget was introduced last year, the honorable gentleman in his speeches and statements outside and in anything that he said in this House remained relatively silent on economic matters. Naturally, he feels more at home in dealing with the delicious political items he included at the end of his speech tonight than he docs when reading out his screed about the economy, which occupied most of his speech.

For a long time after last year’s Budget he remained relatively silent on economic matters and concentrated on other issues. At the end of June, however, he returned to the economic field during a Press conference at Parliament House. By way of background let it be said that by this time the economic scene had changed and there was a good deal of evidence of slackness in some industries. In fact, we in the Government at that time were concerned with whether some stimulus was desirable and, if so, how much. But not so the honorable gentleman. By that time his thoughts had gone into reverse gear. The report of his Press conference which appeared in the “ Australian “ of 29th June - and that is hardly a newspaper which is averse to the Labour cause - stated that the honorable gentleman had said that Labour would increase taxation when it regained power at the next Federal elections.

Mr Mortimer:

– On the higher income brackets

Mr BURY:

– Yes. Later on he amplified that statement by saying that the increased taxation would have to come not from the basic wage earners but from those people on higher incomes. That is fair enough. Only a minority of the prople in this country’s workforce are on the basic wage - a very small minority. In order to make an effective impact, the proposed increase in taxation would certainly need to have a widespread effect on the majority of our people.

In the “ Daily Telegraph “ of 1st August the Leader of the Opposition is reported to have said that Australia is at present one of the lowest taxed countries in the world. Apparently there is plenty left for the honorable gentleman to milk. 1 might say that his experience varies very greatly from that of most other people. I know a fairly large number of wage and salary earners personally. 1 know very few of them feel that the weekly tax dip into their pay envelopes is too modest or too light. But at least we could do the honorable gentleman justice by praising him for making his intentions perfectly clear. Nevertheless, it is a curious exercise in economic logic. Last year, when we faced an incipient boom and a huge increase in government expenditure, the honorable gentleman was opposed to any tax increases. Ten months later, when some slackness was evident, apparently he was not only prepared to accept tax increases but also to add to them and magnify their effects. At least the electorate has been told in very clear terms what an Australian Labour Party victory would mean - more taxes. This attitude towards taxation marks a very fundamental difference between the Government and Opposition parties. We aim to keep taxation as low as is practicable. Personal income tax is already high and steeply progressive, expecially in the middle ranges. If we are to make economic progress, it is essential to foster a dynamic spirit of hard work and to avoid the excesses of the welfare state.

The majority of individuals arc certainly imbued with strong feelings of self-interest. If we are to encourage successfully people to aim at a higher degree of education and qualifications to improve themselves progressively through life, personal inducement must be kept strong. If the rewards of extra effort are to be taxed out of individuals’ hands, they will progressively prefer leisure to extra work. One might well ask. without being very dogmatic or sure of the affairs of other countries, whether in Britain today, where the financial demands of the State have gone very far but continue to rise to greater heights, British industry might have more dynamism and thrust and might do better in the world if greater personal rewards were available to those who make the pace.

In recent years we have become engulfed in varying degrees in the rising tide of government expenditure. This year Budget expenditure reaches a figure of almost $6,000 million. This is an increase of $600 million on last year’s expenditure, including an increase of $252 million or 34 per cent, in our defence outlay. Besides this, expenditure from the National Welfare Fund this year will be more than SI, 000 million. Commonwealth expenditure on education has trebled in five years and State expenditure on education has been increasing by roughly 25 per cent, every two years. In this process of rising Government expenditure, all for basic essential purposes, we do need, as I am sure that all honorable members on this side of the House would agree, to keep a stern weather eye on the ultimate effect on the individual of rising Government expenditure, if the individual is not properly rewarded, he will not put forward his best efforts and, if he does not do so, the resources available lo meet our expanding demands will not increase at the rate for which we had all hoped. 1 shall turn for a moment from some of the matters raised by the Leader of the Opposition and return to the Budget. The aims of this Budget are to maintain growth, preserve stability, maximise use of resources and provide adequate defence. These are the scores on which it must be judged. The central problem facing any government and treasurer is that resources are strictly limited. Sound economic policy must aim to keep expenditure high enough to maintain full employment but not so high as to invoke the evil effects of inflation. The key aspect overall is the supply of labour and we look at this in the budgetary sense from an overall viewpoint. The experience of particular industries and districts at any one time can prove to be a very misleading guide to the economy as a whole for which the Treasurer has to provide. It is worth noting that, with the exception of 1964-65, in 1965-66 we had the lowest monthly average of registered unemployed as a percentage of the work force for any year since 1956-57. In the second half of the financial year just ended, when gross national product increased more slowly than in the first half, the monthly average was still only 1.2 per cent., the same as in July 1966. At the end of July 1966 the figure for unfilled vacancies was only about 22,000 below the number of persons registered. This gap has closed even further since and is certainly well within any reasonably accepted limits of full employment.

In spite of the balanced current situation, the supply of most skilled tradesmen is still inadequate to meet demand. At the end of July J 966 there were almost as many vacancies for building tradesmen as there were tradesmen registered in these trades. In the metal and electrical trades, six vacancies were registered for every tradesman registered. Naturally regions vary from State to Slate and the number registered was considerably higher in some States. The employment situation is not uniform throughout Australia. In Western Australia the registered unemployed total only 1.1 per cent, of the work force. But, overall, the employment situation, even now, is verging on a tight position in most Slates and in most places, though not all. Even in Queensland there has been recently a marked improvement. It is quite obvious that a more expansionary and more stimulatory budget than the one just presented could well create an intolerable situation on the labour market, especially in Western Australia where development is proceeding at a very high rate.

Over the 12 months to June 1966, civilian employment and that of the defence forces increased by about 1.15,000. Over the 12 months ended in June 1966 the increase in civilian employment was shared by almost all fields of activity. Certainly, in line wilh the course set by the Budget last year, this employment varied very much from industry to industry, the smallest increase being in manufacturing where it was only .6 per cent. But the building industry and most other industries, in addition to community and business services, showed a very marked increase. Overtime worked in larger private factories, although less widespread than a year ago, still remains high in almost all industries surveyed, lt is estimated that in the week ended 24th June, not so long ago, overtime was still being worked by more than one third of employees in factories - 33.8 per cent, compared with 37.6 per cent, in June 1965. Those working overtime averaged 8.1 hours in the week ended 24th June, compared wilh 8.3 hours in the corresponding week of 1965.

In framing the Budget the Government has given careful consideration to the level of activity in a number of key industries. To take as an example the building industry, which is an” important indicator of economic activity and a user of resources, in 1964-65 the value of building approvals was close to 51,800 million - a record year. Even in 1965-66, in which at one stage home building was subject to some slackness, the figure was only 3.2 per cent, lower than in the previous record year. The housing industry has received some useful stimulus since the beginning of 1966 and this has certainly helped to improve prospects for building activity.

I turn to the motor industry which was referred to by the Leader of the Opposition. This industry is certainly a very large employer of labour and a major user of materials, but it is quite nonsense to suggest, as the Leader of the Opposition did, that the economy swings around the motor industry. Instead, if there is any relationship, the position is vice versa. The fact is that the motor industry has been facing some difficulties. But these difficulties arise often quite apart from the state of general economic activity. In every advanced country - particularly in the United States of America - the motor car industry is subject to cycles of demand, fashion and purchasing at different times which move sometimes at a considerable variance with the general level of the rest of the economy. Whatever happens to the economy at large, we will still have to face considerable future fluctuations in the motor industry.

Another sector of the economy which has had a very strong influence on the Budget is the rural sector. Farm incomes, one of the great kernels of Australian economic activity, fell by 25 per cent, in the previous year. This loss, due to drought conditions, has had very far reaching effects on the economy, both direct and indirect. Yet, despite its seriousness and most depressing effects, we have still enjoyed a very high level of employment. To offset this unfortunate development, assistance has been given by the Commonwealth to New South Wales and Queensland to the extent of $35 million budgeted under this heading compared with §21. 7 million last year. Some of these expansionary forces will certainly be assisted by the recent basic wage increase. The effects of this increase are by no means fully felt yet. lt can reasonably be expected that some increase in consumer expenditure will result. It has been estimated that the increase in the basic wage will place an additional sum of S250 million a year in the hands of wage earners. It is not yet known what additional effect the margins case will have on incomes.

In sum, the Budget now before the House is an expansionary one within carefully defined limits. The expansionary forces are contained in increased outlays on defence, not all of which will be spent in Australia, and on social services, education and other development works of the Commonwealth, drought relief payments and so on. The essence of any Budget is the allocation of resources between competing demands. It is inevitable that any enthusiast for a particular line of expenditure, whether it is education or some development project, must in part remain unsatisfied. It is quite impossible physically to accommodate all the separate demands, although in themselves they might be, and usually are, highly desirable. Because resources are limited, choice is inevitable. That is a basic point which the Leader of the Opposition is never prepared to face up to.

We are still in the midst of a big transfer of resources to defence and public investment. The former is vital to our security and the latter to our future growth. As the result of a combination of good management and good fortune we have already been able to achieve a marked shift in the application of resources and without serious dislocation. It would have been quite impossible to achieve this transfer of resources for our defence effort and government works if throughout the year every existing industry in the country had been humming with overtime and therefore had been absorbing labour and supplies which were urgently needed elsewhere. The task of redeploying our resources and at the same time keeping them fully employed is a highly complex one. It is not enough just to concentrate on full employment. We need to pay increasing attention to the structure of the economy and the use we make of our resources. The standard of living and the resources available for all purposes depend in the long run much more on the structure and efficiency of the economy than on the intensity of activity at any one time. We have a limited population, and manpower is likely to remain short of requirements regardless of what we achieve in the immigration field. Therefore, it is of the utmost importance to promote efficiency and economy in the use of manpower.

My Department has made a major effort fo stimulate efforts to reduce unit costs of production by improvements in the efficient use of the resources of production - that is, capital, materials, methods and manpower. Some very notable gains have been achieved. We have 155 productivity groups operating in all States. Increased efficiency has already meant a saving of approximately $li million per annum. It has represented a considerable saving in terms of manpower. It is estimated that improvements in productivity last year saved 800,000 man hours. That is equivalent to adding approximately 400 effective workers to the work force without cost, all of whom are badly needed.

Undoubtedly the present time is a watershed in our political and economic affairs. We have become sharply conscious of our new geo-political position in the world and we realise how short a period we have in which to stand effectively on our own feet. The situation to the north of Australia and the difficulties which are faced by Britain mean that we are impelled lo take on a rising burden which will absorb increasing proportions of our gross national product. In three years we have had to increase the defence bill by 90 per cent. To carry this burden other things must yield place. In some measure it will take resources from every sector of the economy, including investment, development and especially personal consumption. Apart from providing for expenditure on defence, there are other ways in which we must play an increasing part internationally, particularly in South East Asia. There will certainly be a rising bill for economic and social assistance. Our consciousness of this development is well exemplified by the large number of members of this House who visited South East Asia during the recent recess.

This Budget is dominated by defence and our new political situation. We have to seek our security and to safeguard our future by helping to keep at bay the forces of totalitarian dictatorship which, in whatever guise or creed or colour they might appear, are a menace to free men everywhere. That is a situation which unfortunately the Leader of the Opposition is not prepared to face up to. To succeed in this task requires a judicious blend of armed force and economic assistance - force because peaceful progress is impossible without law and order, and economic assistance to create the economic and social conditions which are basic to freedom and political stability. Ultimately, however, our salvation will depend on how well and effectively we can develop Australia. We must pursue policies which deploy our capital and manpower where they can best be used to yield the most effective results. This Budget is well designed to promote these objectives, lt will help our aspirations and also keep them within the bounds of reality.

Mr CREAN:
Melbourne Ports

– I was rather disappointed that the Minister for Labour and National Service (Mr. Bury) should have striven to perpetuate the mistake which the Treasurer (Mr. McMahon) obviously ill advisedly made when he stated in his Budget Speech that the consumer price index had risen by only 9 per cent, during the last 5 years. J ask him and his colleagues to look at the index a little more closely and, if that statement is regarded as being wrong, to check with their professional colleague in the Department of the Treasury who produced the document entitled “ The Australian Economy 1966”. At page 7 he said this -

Between the December quarters of 1961 and 1965 the Consumer Price Index rose by 9 per cent.

He went on lo say -

Most of this increase occurred in two years, 1964 and 1965. . .

I do not want to labour that point any further, except to say that it is fundamental to a proper appraisal of this Budget to note that prices rose by 5 per cent, in the first year and by 4 per cent, last year whereas previously they had not risen. Prices had not risen because the economy was inactive.

I sometimes think that this Government will be remembered as the one which claimed to put value back into the £1 but which halved the value of the £1 and then halved the half and called it a dollar This dollar is equal to one quarter of By that standard this Budget is gigantic. This Budget provides for the expenditure of almost 6,000 million new dollars or 1,500 million old pounds. Occasionally some of these things should be put into perspective. The Treasurer said that the argument about expenditure on defence and expenditure on development was the central problem of the Budget. That argument hinges upon the impact of defence expenditure upon the economy as a whole. Projected defence expenditure in the Budget is S 1,000 million. The gross national product during the course of this year should rise to about $23,000 million. In other words, defence expenditure, assuming that all of it were raised in this country, would account for less than 5 per cent, of the gross national product at a time when Australia is supposed to be facing all sorts of serious difficulties.

Surely the problem is how we should evaluate real defence expenditure. Because real defence expenditure is a certain amount, the Government claims that it has not been able to do certain other things. The thesis of the Leader of the Opposition (Mr. Calwell) was that it is true that if part of a given total is spent on a particular purpose, such as defence, the ability to spend money on another purpose is limited. This is an economic truism. But the Leader of the Opposition went on to say that, if the resources of our economy had been better husbanded, especially during the last five years, we would have had a greater capacity in the economy to devote to defence or to such other purposes as we chose. Surely these are the matters about which we should be arguing.

I suggest that those people who in 1966 think that Australia is making a tremendous effort in the defence of what it calls the free world, related to its gross national product, should look at the figures shown in the statement in the Budget papers headed “ Summary of Budget Results “. There they will see set out for every year from 1951-52 to an estimate for 1966-67 the amount that Australia has expended on defence. I ask them, as a simple exercise, to look at the defence expenditure for 1952-53. In my recollection, this was scarcely a year of intense emergency. Defence expenditure in that year was $430 million. In another document associated with the Budget, we find that the gross national product for that year was $8,353 million. Honorable members can work out the sum for themselves. They will find that in 1952-53 the economy was devoting as much of its resources - more in essence - to defence as it claims to be devoting now. But the Government now says that, because it is devoting this amount to defence, its ability to do certain other things is limited. I call the attention of the House to a statement contained in one of the documents brought down with the Budget last year. It was a n,ew statement - it has become a famous statement - called “ Statement No. 6 “.

Mr Hayden:

– It does not say very much this year.

Mr CREAN:

– Precisely. I take this from page 1 1 of the document “ National Accounting Estimates of Public Authority Receipts and Expenditure “, which was circulated last week. It said -

As was said in Statement No. 6 attached to last year’s Budget Speech-

These are the important words - “ the economic effects of a Budget can thus be adequately assessed only in the context of the totality of trends in the economy as a whole “.

This Budget has been framed in defiance of a proper assessment of the totality of trends in the economy as a whole. This is almost the end of August, getting into September. I ask honorable members opposite whether they believe that the Australian economy at the end of August 1966 looks like an economy that is surging forward to a Christmas boom. Can they find any business people who share their complacency about the state of the nation at the moment? I have not sufficient time to refer to all the statements that I would like to refer to, but I think that at least the references I have made should be noted.

In July 1966 - not very long ago - the Victorian Chamber of Manufactures sent a pamphlet to all honorable members. It said -

All branches of Victorian industry experienced little real growth during the past twelve months and no worthwhile expansion is anticipated in the remaining months of this year.

That is in the last six months of the year -

These were the findings of this Chamber’s survey of industry taken this month. The survey was conducted among Chairmen of 83 branches of industry for use by A.C.M.A. at the Round of Economic Consultations with the Federal Government. . . .

These findings contrast sharply with the generally optimistic Treasury survey of the economy released last month by the Federal Treasurer. . . .

A comparison of the findings of both surveys makes it obvious that the only segment of the community enjoying boom conditions is the public authority sector. This is clearly being fostered to the detriment of private enterprise.

This Government claims to believe in private enterprise, but it should say: “ Thank God for public enterprise “. Surely this ought to make the Government examine some of the assumptions that seem to be apparent in the Budget. We on this side of the House maintain that, if the Government believes it ought to spend this amount on defence., the amount in itself is nol a sufficiently large sum to preclude other desirable things from being done in the economy at the same time. Perhaps when the defence items are being examined more fully I will go into this.

The Leader of the Opposition, also said that it is difficult to ascertain, despite the wealth of published material, what the impact of defence expenditure is either in the Budget or in the economy as a whole. I hope some Minister who speaks later in the debate will explain the situation a little more adequately and a little more satisfactorily than did the Minister for Labour and National Service, who has already spoken. I direct attention again to the rather interesting document headed “ National Accounting Estimates of Public Authority Receipts and Expenditure “ which was presented with the Budget. This brings me to the question: How do we evaluate real defence expenditure? The publication “ The Australian Economy 1966” states-

Tn the last half of 1965 defence expenditure surged upwards.

That was prior to the end of 1965 - about December J 965, at the turn of the year and with the entry into the concluding half of the financial year. The publication also states -

It reached an annual rate close lo $800 million.

If some sort of stimulus to internal expenditure is supposed to be coming from defence expenditure, that stimulus was operating at the beginning of January 1966. The people who are complaining about the pace of the economy are not complaining about its pace in January, February and March of 1966; they are complaining about its pace in May, June, July and August 1966 and they have some apprehensions about the pace of the economy in the next few months. What is supposed to be the real impact of defence expenditure in the economy? The document from which I have quoted states -

However, following normal conventions, imports of any such equipment procured from overseas are recorded in the balance of payments estimates at the time of delivery, any differences of timing between imports and payments for imports being allowed for in the capital account of the balance of payments. Because of such timing differences, payments on equipment purchased overseas, as recorded in the Budget, differ from deliveries, as recorded in the balance of payments accounts.

What is the Si. 000 million? Is it deliveries or is it projections, because according to whether it is deliveries or projections it makes serious differences to the assessments of the outcome of the internal impact of this Government. In the same document there is a table which shows that while ostensibly we are arguing about $1,000 million in. this Budget for defence, the only sum apparently that comes into the argument is S830 million. That is apparently the internal effect of it. Reference is made to domestic expenditure, plus expenditure overseas on services, plus deliveries of equipment procured overseas, so there is nothing like even the impact this year of $1,000 million out of the projected gross national product.

Things of this kind are in my opinion confidence tricks perpetrated on the people. The Government says that it cannot increase pensions or child endowment; that it cannot give more money to the States because it is so busily engaged in this gigantic defence effort. The effort is gigantic in terms of dollars, which are midget pounds, and gigantic because nearly one-fifth of the proposed defence expenditure is not in the Budget at all. What sort of chicanery is this? With all the documentation available to us in this House we should have had a more honest picture but, notwithstanding that prices scarcely changed for three years and changed by 9 per cent, over two years, the Treasurer is prepared to claim that over five years prices have risen by only 9 per cent.

Central to our thesis attacking the Government is the argument that the decline in consumer purchasing power is the real reason for the slowness in the economy. I could quote all kinds of statistics to support my argument. For instance, hire purchase activities are declining. Sales of homes are declining. Employment is stagnant. Yet we are apparently to be told that the economy is at this delicate stage. Perhaps it is at the stage referred to some years ago by the Minister for Trade and Industry (Mr. McEwen) - on a razor’s edge. I should think that being on a razor’s edge is pretty uncomfortable. Probably there is a danger that you will fall off the razor’s edge. Surely we demand better in 1966 of a Government that wants to represent us for the next three years. Surely we demand a better assessment of the probabilities for the next few months than the soothing syrup we have been given in the Budget. I have read articles in newspapers. I have seen projections coming this way and going that way. All I would say is that if the argument is about balance, my interpretation of the balance is that unless real consumer purchasing power is stimulated, the economy will go down; it will not go up. Surely, as the Leader of the Opposition said, there are some sections in a community whose welfare should not depend on whether the economy can be stimulated. Do you pay pensions to people because the payment will stimulate the economy or do you pay it because you think that as citizens who have wrought in the years of their strength they are entitled in the years of their decline to some reasonable standards in the community to which they belong? Surely, judged on that kind of standard, you cannot be happy about the circumstances of many people today.

The “ Treasury Information Bulletin “ entitled “ National Accounting Estimates of Public Authority Receipt and Expenditure”, dated August 1966, states - . . (he estimated outcome of the Budget includes the probable effect of the economy on the Budget as well as that of the Budget on the economy. 1 am one who thinks that the Budget should be used to influence the economy and that is the kind of test I want to apply to this Budget. In my view the influences of the Budget this year in the direction of making the economy stronger do not exist, and such influences have not been looked at systematically for the past four or five years. The Government claims that between 1952-53 and 1966-67 there has been a great increase in productivity and growth. If in 1952-53, when circumstances were not as grim as they perhaps are today, we could afford to devote a certain proportion of our gross national product to defence - I am not arguing about the merits of devoting this percentage or that percentage of the gross national product to defence - why can we not afford to devote the same proportion to defence now? The fact is that we are devoting a smaller percentage of our gross national product to defence now than we were in 1952-53.

If the Government claims that its expenditure on defence restricts its ability to spend in other directions, all I can say is that there is a lot wrong with the distribution of the gross national product. Apparently some people are getting too much and others are getting too little. 1 suggest that those who are ge’.ting too much are in the minority and those who are getting too little are in the majority. Well, on 26th November 1966 both sides of the Parliament will claim that they want to represent the majority. If the Government wants to represent the majority it should look at some of the problems that obsess the majority now. As I said last week in the debate on the Loan (Housing) Bill (No. 2), and as the Leader of the Opposition delineated tonight, we are facing a situation in which the real standards of the great majority in the community - the wage earners and retired people on fixed incomes - are declining. It may be in terms of a few more mouths to feed. It may be that costs of certain products are rising. It may be that they should rise. But surely if we are intelligently using the resources available to us and using the latest methods available we should be able to improve standards for the individual. If the figures can be relied upon, in the last two years individual standards have fallen - and those were two years of recovery after a slump. What kind of record is that for anybody to want to defend? Surely it points to the real factor that in Australia development and capital expenditure, public and private, are at present tapering off instead of expanding.

My colleague, the honorable member for Dawson (Dr. Patterson) said this afternoon that when we talk about developed and undeveloped parts of Australia we must realise that, at least in terms of the economy, this country of ours still needs a good deal of developing. The Minister for Territories (Mr. Barnes) who is at present in the House comes from Queensland. He should know that in his own State alone there are plenty of areas awaiting development. It will be a long time before we in Australia run out of ideas for capital improvements in the years ahead. Every State that has any rural potential can present a list of rivers that it thinks should be dammed or should be prevented from flooding. The agronomists tell us that Australia cannot afford to waste a single drop of water. These are the kinds of developmental tasks that can be done.

If we are to increase our export trade our greatest potential lies in the development of our mineral resources. The development of mineral resources today cannot take place except in terms of capital expenditure of the order, not of a few million dollars but of a few hundred million dollars. We have resources of coal, we have resources of iron, we have resources of other rare metals and now apparently we have also found - through the initiative of foreigners - that we have sufficient natural gas just off our shores to revolutionise the fuel and power industry of this country within the next few years.

But what have we seen? We have seen a sordid haggle between a private organisation and a State Government whose Premier is saying how good he was at mental arithmetic in 1936 when his people want to know what his vision is for 1976. Abundant natural gas supplies have been found off the shores of Victoria and a pipeline of only about 30 or 40 miles is required to feed the gas into a reticulation system which has been developed by public enterprise sensibly over the past 15 years. But there is an argument about the payment of an additional halfpenny or penny a unit for the raw material and about the expenditure of $60 million or $100 million over a period of four or five years to construct a pipeline.

Instead of the job being done k is being argued about. This is the kind of thing that has been typical of government activity in this community in the past five or six years. The Government is like an inverted Micawber looking for something to turn down. It has no vision for the future development of this country. If those members of the Government who think this country has to be defended would sometimes pay a little attention to what sane defence really is they would find that it is industrial potential at home rather than aggression abroad.

I have received the August 19th issue of the “ Canberra Letter “, a publication of the Associated Chambers of Manufactures of Australia. This paper was prepared after the Budget had been delivered so the people who are responsible for it have had their thoughts about the situation after the presentation of the Budget and not before, as in the case of other groups. This is what the “ Canberra Letter “ has to say -

The large increase in defence expenditure provides an opportunity for the Commonwealth to give a boost to local industries by directing more of this expenditure to Australian manufacturers. Results of past increases have been disappointing so far as local industry is concerned. Whether the 1966-67 increases will have sufficient impact on local industries to restore them to a more acceptable level of operation remains to be seen.

I am afraid T must add that it will be unseen. The article continues -

A.C.M.A.-

The Associated Chambers of Manufactures of Australia - would have more confidence on this point if Commonwealth purchasing policy was more positively directed to domestic supplies than it is at present.

Manufacturing industry continues to await expression of the contribution required of it in achieving national strategic targets . . . One heartening conclusion of the Budget Speech is that the Treasurer undertook to constantly review the situation.

All I would ask is this: How can the Treasurer constantly review the situation? Surely there are limits to how he, as a Treasurer, can review it because the instruments with which he works unfortunately are blunt and of slow application. The Treasurer will review the situation when the body economic is dead or dying and it will then be too late. What was expected from this Budget was a stimulus but there was not stimulus, with the minor exception of an inadequate adjustment in age pensions. When the Government analyses, as it must, analyse, the real impact of the defence expenditure, it should ask itself what this Budget has done to change in any sense the things to which those who are in charge of industry have pointed. The workers in industry who receive wages know that they are finding difficulty in maintaining their standards because there has been no surge forward. Industry should be buoyant but it is not. It can scarcely be said to be surging forward to the brightest Christmas it has ever had. A remedy that could have been applied has not been applied. At least the Government is giving to the people of Australia in the next few months an opportunity to judge for themselves whether the economic destiny of this country should remain any longer in its hands.

Mr HALLETT:
Canning

.- The Treasurer (Mr. McMahon) was faced with a rather difficult task in preparing the Budget for 1966-67. On the one hand, the eastern States of this great nation have been going through some very difficult times as the result of extreme drought conditions. On the other hand, we have been confronted with a difficult defence situation. The effect of drought on our economy as a whole is still being underestimated. As I have said previously, it is impossible for anyone to arrive at the total cost of drought, especially a drought of the magnitude of that which has been experienced during the past two or three years. However, certain figures are available to us. We know that in 1.965-66 rural production fell by something like 10 per cent. - wool production was down by some 8 per cent, and wheat production by 30 per cent. I think stock losses were mentioned earlier this evening. Sheep numbers, instead of increasing by some 6 million, have fallen by about 13 million. Instead of our production increasing as it would in normal circumstances, thus enabling us to take our place in world affairs, it has fallen considerably.

I still think that the part primary industry plays in the development of Australia is underestimated. We have heard some discussion this evening about manufactured goods, factories and so on. Just where do we go if we cannot maintain our export production? If we cannot main tain our exports our factories cannot continue to grow because we will not be able to import the necessary raw materials, machine tools and so on. I mention two commodities this evening - wool and wheat - where production figures are down. This situation has been brought about simply by the drought conditions that have existed during the last two or three years and which were still prevailing when the Budget was brought into the House. I understand that the situation has changed in the last week, and we hope that we will have sufficient rains during the spring to at least alleviate the undesirable situation. Wheat production does not gain as much export money for Australia as does wool production, but it is responsible for the circulation of a tremendous amount. The decrease in wheat production has undoubtedly affected secondary industries and manufacturing industries. Not only have the industries manufacturing machinery used for wheat production been affected but so too have the motor car industry and other production industries within Australia. If the present situation were to continue our budgetary position would deteriorate still further.

In my own State of Western Australia there has been a rapid development of another export industry - iron ore. This industry will assist tremendously our economic situation in future years. Vast sums have been spent in the last year or two in developing the Western Australian iron ore deposits. Exports have now commenced from a number of ports. All this activity emphasises the importance of directing adequate capital into fields of production and to secure production.

Several honorable members have suggested ways to develop Australia. The honorable member for Gwydir (Mr. Ian Allan) brought forward a plan for the development of the Darling River basin, which has a tremendous potential. Had such schemes been implemented in past years the effects of the drought that has continued in the eastern States for the last two or three years would not have been so severe. We must look to such projects for our development. They would stimulate not only primary industries but all industries, directly and indirectly. In Western Australia various submissions have been made concerning the Ord River scheme, which is a big and important project, but the situation needs to be well analysed before further work is undertaken on the major project at the Ord River. I have no doubt that ultimately the project will proceed, but the economics of the scheme and the type of production to be developed must be determined before the work continues. I have been saying for some time that beef production must play a big part in this scheme. Beef production in Australia and overseas is lower than we would like to see it, and prices are high. I feel that beef production has a great future in Australia. Northern Western Australia, and the north of Australia generally, have a great potential. Water supplies in the north could be harnessed. However, in harnessing these water resources we seem to run into difficulties.

Over the years the Snowy Mountains scheme has taken shape. This scheme is a wonderful asset for the whole nation, but when we seek to develop projects of this magnitude constitutional problems always seem to rear their head and we have not yet overcome them. We should not have such problems in a country like Australia, where our main aim should be to develop our resources. I believe that it is time the Commonwealth and the States came to an agreement on some positive way in which, collectively, they could go ahead and plan for the future together. A CommonwealthStates water resources development fund, for instance, could be brought into being for a start in an effort to provide a means by which the Commonwealth and the States could use their collective resources and plan for the future. There are tremendous possibilities in some projects that are waiting to be undertaken, Sir. When we look at the matter more closely, we find that even projects contained wholly within one State affect other States, as has happened with the Snowy Mountains Hydro-electric Scheme. This need be no handicap to future development and the planning of major projects.

As I mentioned earlier, Sir, defence plays an important part in this Budget. In my view, defence is the number one responsibility of the Commonwealth Government. Already during this sessional period, we have heard a lot about this subject, and there was a great deal of debate on it during the last sessional period. Let us not underestimate our responsibilities in this field. I believe that honorable members generally agree that defence is the Commonwealth’s number one responsibility. If this is so and if we are to play our part as a signatory to various agreements and treaties and as a member of various international organisations such as the South East Asia Treaty Organisation, as we have already done in more than one field, surely we must equip ourselves as a nation to honour the agreements into which we have entered. To be a party to an agreement or a treaty is one thing. To fulfil it is quite another. 1 believe that at this stage of the Australian nation’s history, this aspect of affairs is of major importance to us.

The Budget that we are now considering also provides for increases in social service benefits. No doubt, honorable members on both sides of the House will agree with me that there are still some areas in which we must endeavour to give more assistance. This applies not only to those who depend specifically on social services. I am thinking particularly of those in the community generally who depend on fixed incomes. There are many people who have been independent in the past and who retired some years ago on what seemed a reasonable income but who now find themselves in considerable difficulty. Any assistance that we could give them would be well worth while and only right and proper. We have in this country a policy of protection of industry, Sir, and I fully agree with it. We want to develop industry. Secondary industry is protected by tariffs and to some extent primary industries are protected by measures such as bounties. But in the field of social services, those who depend on fixed incomes are now in a position in which they cannot gain in income as the economy gains momentum. As a consequence, they are at a definite disadvatnage Therefore, we should do our utmost to help them.

I notice that the Budget makes increased provision for capital expenditure by the Post Office, which it is estimated will increase this financial year to $202,700,000, or $21.5 million more than was spent last financial year. Much of this additional expenditure, I hope and expect, will be devoted to extending telephone services throughout Australia, as well as the general services provided by the Postmaster-General’s Department. I have spoken in this House on many occasions, and particularly some two or three years ago, about the need to extend telephone facilities. Perhaps development is going ahead more rapidly in certain fields in Western Australia than it is in other parts of the Commonwealth. As I have said before, we in Western Australia are developing something like one million acres of land each year. This represents a colossal programme, not only for those who are directly engaged in the work of development, but also for organisations such as the Postmaster-General’s Department, which have the task of providing and maintaining communications. Therefore, I am pleased that the Government, in this Budget, is providing additional funds for that Deparment This is important to our cost structure. If adequate means of communication are not provided, the cost structure in country areas rises tremendously. In these modern times communications are extremely important.

In agricultural industry, about which I wish to say something this evening, assistance has been given in many fields. The superphosphate bounty was fixed some time ago at §6 a ton, and the cost of that bounty in this 1966-67 Budget is something like $28 million. This bounty has been of tremendous assistance not only to agricultural industry but also to all other sections of industry because, as I have explained when speaking of the wheat industry, if production is on an even keel it generates a tremendous amount of capital wealth within the nation. I am also pleased to note that this year there is a nitrogen bounty of $80 a ton, which will cost in 1966-67 about. $4,750,000. This is a very important provision in the present stage of our development. As has been mentioned, it will provide a tremendous lift for the sugar industry which has been in trouble in recent times as a result of declining prices in overseas markets. No doubt the sugar industry will welcome this assistance with open arms. lt will also be of great assistance to the fruit and vegetable industries which are also very important for this nation. The fruit industry is a big export income earner and any assistance that can be given to it will be of great benefit not only to the fruit industry itself, but also to the nation as a whole.

These bounties will be of tremendous benefit to large areas of this country that are in the process of being developed. In Western Australia, for example, there are extensive areas of light lands which some years ago were thought to be of little or no use and which today are being brought into production in a very big way. In those areas nitrogenous fertilisers are being used to very beneficial effect. One big problem facing developers of such areas was the high price structure, and the reduction of the cost of nitrogenous materials will benefit handsomely not only those actually using the materials but also the nation as a whole, because the increased production will help with our balance of payments problem.

The Government has also arranged for petroleum products to be made available at lower cost to people in inland centres. As we know, the Government has arranged that petrol will nowhere cost more than 4d. a gallon above the cost in the capital, cities. This is a significant step towards improving our cost structure. Then there is the Farm Development Loan Fund of $50 million which I. notice has made available some $5 million in the first few months of its activities. This fund is of tremendous importance at this stage of our development. lt has made capital available to many farmers and given them opportunities to put their farms on a more economic basis.

But 1 am still alarmed at the fact that with all the Government’s efforts to assist agricultural industries, those industries are still faced with a rising cost structure which is a severe handicap for industries which have to sell their products overseas. Much has been said recently about shipping costs. Transport charges generally represent the biggest single factor in our cost structure. Because of our geographical situation in the southern hemisphere we find ourselves with very long hauls to get our products to the markets in the north. When I first came to this House I spoke of requirements in this field and of the necessity of introducing new techniques into the shipping industry. 1 am glad to say that some of these new techniques, such as containerisation, now seem to be well established. We have seen the container system operating in various parts of the world. Actually we have seen it operating on the coast of Australia, at Melbourne and Fremantle, to the fullest extent with a complete container ship. To use another illustration, we have also seen it operated by the Matson Line trading between the west coast of America and Hawaii. This service has been running for some years now. lt is perhaps a good example of what can happen when one is game enough, shall we say, to spend a few million dollars in establishing a new concept in transport. The Matson Line spent something like S60 million - perhaps a little more, but that is near enough - to shift one way 2i million tons of cargo and to return the other way with 11 million tons of cargo. This seems a tremendous amount of money, but it was a case of either doing this or going out of business. That is what it amounts to.

In our sphere freights have risen considerably since that time with the use of the original method of shifting cargoes. In the case of the Matson Line, with the new container system, there was not a rise but a reduction in freights of about 15 per cent. In some instances the drop was as much as 30 per cent., but the average was about 15 per cent. I believe that the introduction of this system to Australia will mean the difference between conducting export at a profit and a situation wherein freight rates will be so high that we shall be almost priced out of markets. This does not apply, of course, to bulk cargoes, which are on a different basis altogether, but it does apply to such cargoes as wool. In the last day or two there has been another freight rise. This has been continuing over the years, and our economy just cannot stand it if we are to continue to sell overseas as we have been doing. I am glad to see that this system will be in wider operation in Australia before very long.

Another aspect that I should like to mention is the subsidy on superphosphate, which is rather an important item in relation to costs. It is so important to agriculture in Australia that it is about time we had a thorough look at where we are going in relation to superphosphate manufacture here. Have we ever made a survey of the total production costs from the time we lift the rock to the time when we apply the super to the ground? To my knowledge, we have not. In the main, of course, this is the responsibility of the States, so perhaps

I may say that it is time that the States, together with the Commonwealth - because it is interested in the form of a bounty at the moment - had a look at four important matters. The first is the method of shipping rock to Australia. They should see whether this is being done efficiently and to the best advantage. Secondly, they should have a look at the ports through which this rock goes, to see if, indeed the best and most efficient methods are being used. Thirdly, they should have a look at our manufacturing centres to see whether these are correctly placed either adjacent to a wharf structure or inland as the case may be. Fourthly, they should have a look at the distribution of superphosphate throughout Australia.

All of these factors are very important. Primary producers cannot withstand the continual price rises that we have seen in this industry. Whether these can be justified would be discovered in an inquiry. I believe that it is the responsibility of the States and the Commonwealth to go into this question. If we do not, I suggest, we shall either have to raise our subsidy in the very near future or stand another cost rise. Nobody wants to see costs rising as rapidly as they have been recently. Superphosphate is most important to the development of this country. Without superphosphate we cannot possibly achieve development.

Let me sum up at this point. I have taken out figures in relation to farm income. 1 shall not bore the House with the figures as I do not like to do this, but it is relevant to look at this situation. In 1952 farm income amounted to something like $888 million; the net value of rural production was $1,566 million and the rural debt was $558 million. So the rural debt was 63 per cent, of farm income. Ten years later, in 1962, prior to the drought taking effect, farm income was $924 million, the net value of rural production was $2,022 million and the rural debt was $1,084 million, which amounts to 113 per cent, of farm income. Since that time we have suffered, in the Eastern States, two or three years of drought, and this is why I am concerned about the cost structure in this industry. I know we must have greater amounts of capital in order to farm economically - of course we must. But we must also look at the other side of the question to see what is happening in relation to incomes. Furthermore, I am a little disturbed, and in the few minutes left to me I want to raise the matter of research.

We all know - it has been mentioned in this House on many occasions - of the importance of scientific research. Had it not been for such research many millions of acres in this country would not be producing anything today, and there are many more millions of acres of land which can produce if we give it the opportunity. But I find, in the Bill, that according to the estimates relating to research the appropriation in 1965-66 was somewhat larger than the expenditure in many fields. As an example, 1 mention Division No. 150, item 3 - 01, agricultural research, animal health and reproduction. The appropriation here was underspent, if I read the figures correctly - and no doubt 1 will be given some explanation by somebody if I “do not- by some £61,000. This might not seem very much, but in this field alone we have tremendous problems in Australia.

I spelt out earlier tonight some of the losses in sheep and we all know the price of sheep today and how sheep are moving across the country at great expense. 1 cannot imagine with all this field of research thai we want to do in this instance - I have taken only this one for the moment - how the appropriation could be underspent. ls the reason that we have not sufficient research workers? What is the reason? That is the question I ask, because I know that in Western Australia we are vitally short of capital to do this sort of work. There is a committee at present working in Western Australia, endeavouring to establish another station on which this work can be carried out successfully, and no doubt one of the greatest problems will be to find sufficient finance. I feel that as these appropriations were made we should have some information as to why they were not spent. What is the reason for it? I am not suggesting that we should spend money in any field unnecessarily, and I. am sure the Department concerned would not do that. Has the Department some problems? What are they? If we have not sufficient research workers let us try to do something to get them, because it is important to build up our stock numbers. Item 2 - 02, plant industry, is also underspent to the tune of $122,000-odd. Here, again, is a very important field and here, again, I ask the same question: Why have these particular appropriations not been put to use as was no doubt expected when the Budget was brought down in 1965-66?

There are other instances of underexpenditure and 1 have mentioned only two, but I feel that they are all extremely important. The appropriations would not be made unless these things were important. I therefore say that if we want economy in our present agricultural scene and if we want results from our agriculture and from our exports, we must not hesitate to spend money on research. When it is available, as it was last year, it is only natural that I should ask why it was not put to use. The shortage of stock in Australia is well known. So f believe that this is quite an important item.

In closing I wish to refer to a problem confronting many people today. It is related to the agricultural industries perhaps more than to other industries because vast amounts of money are involved. I am referring to the probate situation, which worries people throughout Australia very greatly. We have a situation in which rather fictitious values are placed on farming land. In order to make an economic unit, a farmer may buy 1,000 acres or an appropriate area of land next to his property. He is prepared to pay a greater amount than the normal market value of that land. But that is the figure that is adopted in valuations made in that area for probate purposes. Many other matters in relation to probate are worrying people throughout Australia. I believe that some line must be drawn in relation to the terrific burden that probate places on many people today. Members of a family may have fought and striven to build up a property, and when the father dies the family is left with this tremendous problem of fictitious values being placed on land for probate purposes. Mr. Deputy Speaker, I support the Budget and congratulate the Treasurer on the job of work that he has done.

Mr HAYDEN:
Oxley

.- As the Treasurer (Mr. McMahon) delivered his Budget last week in a rather laboured manner and certainly not in an enthusiastic manner, it was obvious that a groan of despair was going up from all sides of the House. That groan of despair has continued throughout Australia up to the present time. The reason for it is that so much had been expected of the Treasurer and of the Budget. The expectations had been based partly on the argument that he was the first Treasurer in the history of this Government to have economic qualifications and so would be in a position to place himself outside of the control, pressures, directions and intimidations for which the Treasury has become so well renowned over the years. But, as he proceeded, it became increasingly obvious that that was not so and that in fact the Treasury was in full control of what was being presented to the House as direction for the economy of this country for the next 12 months.

Really, not even modest expansion is provided for in this Budget, as I hope to show as 1 go along. Indeed, there is a very real fear that the economy could slip back again in the current year. The best that one can say about the Budget is that it is uninspiring and unimaginative. Perhaps it primes the pump; but surely the indifferent standards that were achieved last year are not the ones at which we should be aiming this year in a young country such as Australia, with the resources that we have available and with so much to be done. What is needed is a government that is prepared to take positive action and to give some sort of physical direction to growth so that worthwhile and positive growth rates will be achieved instead of the negative ones that have been flung upon the national platter so frequently.

One of the big problems which faces the Government at the moment and with which it refuses to grapple in a positive way by contributing worthwhile economic planning to ensure that welfare standards are preserved, is that defence expenditure has now risen to about 5 per cent, of the gross national. product, or of the total expenditure of the country. With the Vietnam war continuing, the consequent drain on finances and further commitments for military hardware from overseas, including the spiralling cost of the multi-million dollar FI IIA, which is now called “ Fairhall’s folly “ - the cost has risen from about $4 million to about $9 million each - it is quite apparent that Australia’s defence expenditure as a pro portion of total expenditure will not come down, at least for the next couple of years. Indeed, the Government would find it very hard to reduce our defence expenditure at any stage if it intended to do so. What I desire to say is not meant to criticise the expenditure on defence. It is necessary. The Labour Party supports this expenditure. But what I am going to say is criticism of the Government which, in syphoning off this capital investment for defence expenditure, is prepared to sacrifice the private sector of the economy. In doing this, the Government is prepared to cut back welfare standards for the bulk of the people in our community.

The indicators that this has happened already are abundant from a reading of the performance of the economy in the past 12 months. Looking at our gross national product, we find that in the past 12 months it increased by 4 per cent. only. In this same period, although our gross national product increased by 4 per cent., costs rose by 3 per cent, and the civil work force increased by 3 per cent. also. So, in actual fact, real growth fell back 2 per cent., because of the policies of this Government. This fall back in real growth can be seen in other fields. We find that to shore up capital expenditure in the public sector, the private sector has been cut back. So we see personal consumption dampened down by the purposeful policies of this Government in its resort to regressive taxation.

I wish to refer now to the White Paper on the economy for 1966, as provided by the Treasury. Incidentally, it is worth noting here that although the Treasurer, as he battled through his Budget speech, endeavoured to put a brave, confident and even moderately optimistic face on what was to happen in the ensuing 12 months, the papers that the Treasury has prepared are far from confident. At best, these papers are restrained. The White Paper on the economy for 1966 is an extremely restrained paper. Any optimism is largely based on providential expectations which may be realised and which, again, may not be realised. I want to say something about this matter a little later.

On this subject of personal comsumption a very definite slide back has taken place over the past few years as a result of the economic policies of this Government.

According lo the While Paper, in 1959-60 terms, personal consumption increased by 6.4 per cent. in 1962-63, by 4.8 per cent, in the following year, and by 3.9 per cent, in the year after that. In the financial year just concluded - 1965-66 - the Treasury White Paper says that a further slide down will take place. If one can believe the calculations of the financial writers in certain of the daily newspapers, this slide down is quite a significant one. In the last financial year, this increase was only 5 per cent, for the first three-quarters of that year, as compared with 7 per cent, in the first three-quarters of the previous year. In actual fact, the aggregate increase for personal consumption in monetary terms is the lowest since the period of the credit squeeze. So, actually, the Government has nothing to feel confident about in this field.

What I am concerned about, and what the general public and the business world are concerned about, is: What does the Government intend to do to stimulate private consumption? This is a most important section of the economy. It is a section that gives stimulus to investment and to growth. The Treasury, in several of its papers, if 1 recollect correctly, resorts to blaming the drought for most of the stagger that has developed in the economy.- The Treasury goes on to add in its latest White Paper that another reason is the high degree of voluntary saving in the community. I wonder just what is meant by this expression. lt would be wonderful if the Treasury were frank, candid and straightforward in expressing the problems which beset the Australian economy. In fact, they are quite devious in the way they try to avoid some of the shortcomings which have cropped up and which need explanation.

In this particular case they say - and I again repeat - that one of the problems in the community which has caused the stagger in the economy, apart from the drought, has been the high degree of voluntary saving. Fairly obviously, what they mean is that consumption is down because they wanted it down; investment is down because consumption has slid down; and because investment has slid, growth has tumbled. After all. investment assists growth, and growth on the other hand is a dynamic force leading to further investment.

What the Treasury has done however is to interfere with this circular beneficial effect in the community which is set off by consumer spending and to set it back. In this case, it has hit it on the head fairly savagely.

I would have thought that the atmosphere for the new Budget would have been an easy one to command for an adept Treasurer, as we have been assured the new one is. He is not adept, of course, as we have now discovered very definitely. But we were assured that he was and therefore we would have been reasonably expecting that he would have commanded the economic situation to prevent the slide-down which the economy has suffered in so many sectors during the last 12 months. Unfortunately, he did not display this initiative. So we find that the work force is not being fully utilised. We find that overtime is down. This is terribly important because overtime is a factor which allows people to indulge in the purchase of a few extra luxuries - perhaps an extra radio set, or to pay off the refrigerator or a television set or perhaps to make a down payment on a second car, or to pay off the first car which is far more likely. But a cut back in overtime means a cut back in consumer expenditure on. these sorts of things. The Parliamentary Library statistical service has provided me with a comparison of hours worked and overtime worked per employee as revealed in a survey carried out by the Department of Labour and National Service. For each of the months of the last year from January to June, compared with each of the corresponding months of the previous financial year, there is a very significant deterioration in the amount of overtime worked. We find that the investment increase is only about half this year of what it was the previous year. Of course, as I mentioned, this particularly applies to the private sector. Surely these are things which we would have liked the Treasurer to have discussed in his Budget Speech the other night. We would have liked to have heard propositions as to how he hoped to improve the situation in each of these various fields, because they are all important in the contribution they make to our economic growth.

If we go past the Treasurer, however, and look at the White Paper, “The Australian Economy 1966”, we get a clear indication that it is not the intention of the Government - and it is certainly not the intention of the Treasury - to allow any worthwhile positive growth to occur in the economy in this current year. I will quote some of the statements made. One is quite justified in interpreting what I said from these statements. Referring to private investment excluding housing, it was stated in the White Paper -

Nevertheless, it would be rather surprising if the high rate of increase, which has gone on for three years, were not now slackening off in some degree.

I would not have thought that this would have been a desirable development in view of the state of the Australian economy and the type of things we have to achieve. As much as one might like to see some sort of easing off and reduction of the tremendous amount of investment that has occurred in some sectors of the economy, such as the motor car sector, the fact is that while the economy is allowed to have a free, rather sloppy play, as it does with this lack of initiative towards direction by the Government, it is better for over investment in the motor industry to continue rather than have a savage cut back and a dislocation of the trend of the economy as it now operates under this Government’s policy. The Government is doing nothing to provide a lift for the motor car industry in which activity fell by 9 per cent, last year. Referring again to the private investment sector excluding housing, the White Paper went on -

The drift of the foregoing is then that public authority spending will go on rising, even if not quite as fast as in the current year, but that the rise in private capital expenditure is on the wane.

This, of course, is the whole basis of my concern. The private sector is to be completely sacrificed, if necessary, to shore up the public sector. This is a very dangerous policy for the Treasury to undertake, and I am surprised that the Treasurer is prepared so completely to endorse what has been foisted upon him by Sir Roland Wilson who, incidentally, I noticed, for the first time in five years, took the precaution of watching closely his new performer on the night the Budget was presented, no doubt to make sure he went through the hoops according to instruction.

Another argument which the Treasury resorts to in discussing the problems of the economy - this is one of those providential expectations on which it is laying heavy emphasis - is that if the drought is overcome and there is a pick up in farm incomes in the community, then consumer spending will be sufficiently stimulated to pick up the private sector. All the evidence that I can amass on this subject indicates something quite to the contrary. First of all the Vernon Committee report will show this. Of course, the Treasury probably, for obvious reasons, would not care to pay much regard to this report as an impressive source of information. The Vernon Committee says that farm incomes do not affect consumption but that their influence is felt in the field of savings rather than personal consumption. Anyway if one looks at the real burden which primary producers have carried during the course of the drought he will discover that most of them are fairly heavily in debt. Any lift in farm incomes will be used in acquitting these debts rather than in stimulating the consumer demand within the Australian economy. So it is doubtful whether in fact a lift out of the drought would be enough to refloat the economy.

I was reminded, by reading on the 4th of this month and again today, comments by the rural economic expert, Mr. Connors, who writes for the “Australian Financial Review “, of just how serious the problems are for the rural sector of the Australian economy. Even though we have had rains, the late plantings of wheat which have taken place in some areas following the rain will require exceptionally good further rains to guarantee a successful harvest. On top of this I am reminded again by this article - and I know from my own experience - that in the livestock sector the drought caused many producers to get rid of their breeders and stores. Getting rid of their stores is not all that bad, but the problem here is that the stores were sold below their store value because they were sold for slaughter and were not in the condition of fat cattle. The graziers received low prices in selling their stock for slaughter whereas they would have received higher prices if the cattle had been sold as stores. Not many people wanted stores during the drought. The first result of this is that farmers must set aside at least some of their income to purchase replacements and the low incomes will not be high enough to allow them to make a rapid replacement. The sale of breeders is the most serious aspect. It means that the rate of replacement is going to be very slow and most expensive. I understand that in some sheep areas ewes up to five years old are now being purchased for breeding purposes. This would have been unheard of a few years ago because there is not much breeding left in a ewe of five years of age.

The sugar industry in Queensland is having very important “ multiplier “ effects on the economy of that State and we cannot blame the drought for the problems that are occurring there. They are the result of the incompetence., bungling and shortsighted political opportunism of the State Government which largely have caused the problems of the industry. These problems are now being compounded by the fact that there is a significantly large surplus of sugar in stock on the world markets. Brazil recently dumped more than 600 thousand tons and this will have to be shifted before we can even expect a price rise on the world market. I think that the Treasury is far too optimistic, after having made a sober assessment of what the rural sector can provide, if it thinks that this sector is going to provide the necessary stimulation to lift the economy out of the trough into which it has slipped, by way of increased consumer demand.

I want to look from two angles at what the contribution of this Budget is in terms of this so-called multiplier effect, if in fact, it does exist. The Treasury obviously subscribes to it because the Treasury frequently mentions it in its papers. In 1965-66 the total Government outlay increase was $468 million. This year the total Government outlay increase was S475 million which was an increase of $7 million. I have seen it claimed that a multiplier effect of about 2 exists in Great Britain. Let us suppose that it exists in Australia. This would mean another $14 million in final expenditure in the economy, or a .7 per cent, increase above the gross national product level of the year just concluded.

I point out, though, that in actual fact last year we lost 2 per cent, growth, so getting a .7 per cent, increase above that level has made no real growth contribution at all. In addition, we expect a growth rate in civilian employment of approximately 3 per cent. Really, then. .7 per cent, is a negligible contribution to the economy of the country. The stimulation then will have to come from the private sector if the economy is going to pick up above this most deplorable insufficient level which was netted for the country last year. But we cannot see this happening, because the Government does not want the economy to pick up significantly, for it wants to keep the private sector under tight restraint.

Turning to transfer payments in the most important sector, that is, the age pensioners and other social service recipients, I find that the increase in payments to these people is less than 2 per cent, above the level of last year. This has been soon swallowed up in rising costs. So we have practically nothing here. Provision is made in the Budget for increased expenditure on works and development, but already the State Governments are complaining that the increase provided to them has been swallowed up in rising costs. Therefore, we are not going to see anything develop here, lt is obvious that the private sector will not contribute to the growth, lt is obvious that the public sector has nothing worth while to offer. It looks’ as though this is a Budget of stagnation. This is a very serious matter and something that we should not allow to happen in this country. The growth will not come from concessions on air conditioners and fans, although they may be desirable to the people who produce them. In national terms, this offers little to the country.

Another view of the Budget and what it offers in terms of growth through the socalled multiplier effect is that although the total Government outlay increase was S475 million last year, the multiplier effect is reduced considerably. I want to make another complaint about the devious manner in which Treasury presents ils papers. I have searched the papers backwards and forwards but it is absolutely impossible to discover precisely how much expenditure will be exported from this country immediately as payments for various services from overseas sources. This is important. The Treasurer claims that there is a deficit which is going to stimulate the economy. He claims that there will be multiplier effects which will generate growth. What he has not told the people in actual fact is that almost immediately a fair swag of this money will go out of the country and be lost to the economy and the multiplier effects will not take place.

The Budget speech refers to$1 13 million defence credits in the United States. The Army in Vietnam and the Malaysian defence arrangements will cost us $10.4 million, and the Royal Australian Air Force Malaysian commitment will cost us $3.13 million, making a total of approximately$127 million. These figures are precisely stated. External aid, however, has now been increased to $103.3 million. We are to spend $20.7 million on Papua and New Guinea and provision is made for some national service training barracks in this figure. In addition, there will be an extra expenditure on military equipment from the United States and the United Kingdom. The amounts arc unknown, but they ought to be stated for the benefit of the people who want to know what is happening in the economy. I would say that as a conservative estimate, approximately $150 million is going straight out of the country. The Leader of the Opposition put the figure at more than $200 million. I would not be surprised if this figure, too, probably understates the level.

If we subtract the export expenditure from increased government outlay, we have $325 million increased Government outlay over last year, but with a multiplier effect of 2, it only amounts to $650 million being pumped through the economy. We can, incidentally, subtract the reverse multiplier of any State taxes which are being threatened. So the more we look at this matter and the more we do our simple arithmetic, we see less being done by the Government. How short is this of a modest goal? Let us say there was a 3 per cent, actual growth rate in 1965-66 above the 1964- 65 level, because the 1965-66 level fell. First of all we have to make allowance for this slip back of 2 per cent, in 1965- 68. It is expected that employment in the civilian sector is going to increase by 3 per cent, this year. This gives us 5 per cent. When we add to this our modest hope of a 3 per cent, actual growth rate the total 8 per cent, above 1965-66 will represent only $1,700 million above last year’s level, based on present prices. The private sector is to achieve the difference between this and the Government’s con tribution to the multiplier effects. In other words, the private sector is to achieve the difference between $1,700 million and the $650 million to be contributed by the Government. This makes the private sectors contribution $1,050 million, or a 5 per cent, increase. This is not going to come and there is no evidence of any desire or intention on the part of the Government that this should take place. There is grave doubt that this budget can do more than let the economy stand still. In fact it could easily slide back in terms of growth.

The other matter I wish to mention is the lack of stability of prices. The Government has not acted in connection with the rise in copper prices and the rise in steel prices. Why, plumbing costs alone in large contracts will increase by 10 per cent, because of the rise in copper prices. The price of galvanised iron has already increased by 5 per cent. Some of the people, who are going to meet these increased costs are the basic wage earners seeking housing. So we see already how the basic wage increase is not going to have any stimulatory effect.

External pressures will also be felt this year. We are going to get the shock waves from places like the United Kingdom, West Germany, Holland, Belgium, Switzerland and a number of other countries. In fact, I shall enumerate the countries which are now undertaking deflationary economic policies. They are the United States of America, Canada, South Africa, Britain, France - there they call it cautious reflation - West Germany, where they are having a credit squeeze, Holland where it is called credit restraint and Belgium where they have a euphemistically entitled stabilisation policy. Sweden, Norway, Switzerland and Finland are also applying economic restraints. In addition to this, Denmark, Yugoslavia and New Zealand are experiencing trouble in handling their respective economies. We are going to feel the shock waves of this in that these people are not going to trade as much as they did before. If they do not cut back on their regular trading with us, they will be cutting back on their trading with other people and these other people will cut back their trade with the people with whom we trade or with the intermediaries through which we trade.

We are goi’ng to have internal problems in raising investment because already the giant Broken Hill Pty. Co. Ltd. is seeking to raise $40 million at interest rates ranging between 6 per cent, and 7 per cent, and Australian Paper Manufacturers Ltd. wants to raise $10 million at interest ranging from 7i per cent, to li per cent. This heavy soaking up of domestic capital on a tightening market is going to make investment money scarce in the country because money is getting tight in the United Slates and the United Kingdom and capital flow from these sources to us will be cut back. Add to this our own Government’s restraint in the private sector and the picture for this year is not a good one.

The facet on which I wish to conclude is our heavy reliance on overseas investment. At present, 90 per cent, of our investment is funded by domestic savings. The shortage of about 10 per cent, comes from foreign sources. We are one of the highest saving and investment countries in the world. This is pointed out in the Vernon Committee’s report. We save about 23 per cent, of our gross national product and a little over 24 per cent, of our gross national product goes into investment. We make up the difference from the inflow of capital, which represents about 2 per cent, of our gross national product. We could achieve more effective growth from investment if we reallocated our resources per medium of a planned economy, for in spite of our high savings and investment rates the growth from them is low in comparison. If we look at the high concentration of effort at the tertiary level we find thai this accounts for about 50 per cent, of our total investment and about 60 per cent, of our work force. We can afford to reallocate resources from this sector. Here I am talking about the “ milk bar section “ of the economy which we will have to cut back.

Most importantly, I want to recommend that we ought to act, and act urgently, to establish a Commonwealth investment corporation, a corporation that will be run with the autonomy of the Commonwealth Banking Corporation, the capital funds for this corporation to come from the proceeds of a development tax on company profits. The funds that this investment corporation amasses will be invested in the capital market in selected new equities or fixed interest issues by Australian companies. Our aim is Government support for domestic enterprises aimed at developing this country for Australians. We want to help Australian business. Incidentally, this need has become very urgent because capital overseas is tightening up very significantly due to the inflationary policies to which I have referred. In addition, there seems to be an indication in the mineral industry that the investment boom in that sector is starting to ease. We will have problems such as we are experiencing at Mr Newman, where the overseas member of a consortium has withdrawn. We will need to raise money locally to replace the capital of the withdrawing member. The way to do it would be through our own finance corporation.

Australia should reject totally the concept of private banks and insurance companies jumping on the band wagon and setting up their own organisation to finance investment in fields where they are already shareholders and where they will have autonomous monopoly control without answerability or responsibility to the people such as a semi-government investment corporation would have. The case for a government sponsored investment organisation to operate in the mineral industry is extremely pressing. We have lost too much control of Australian minerals to allow this trend to continue. We have to get rid of the silly myth that we are heavily dependent on the inflow of capital from overseas to develop this country. There is one main reason why the Government is so keen to continue the inflow of investment from overseas. It is because every year we have a trading deficit on current account and the inflow of capital from overseas helps to prop up the shortcomings of government action in this field. In fact, it is interesting to note that last year we had an inflow of overseas capital of $870 million, yet we ended the year with a net inflow of $21 million on monetary movements.

Last year’s abnormally high figure was due to the inflow of United Kingdom “ funk “ money fleeing the credit policies of Great Britain. It will not occur again this year. Incidentally, it was not expected last year by the Treasury. We have to act now. The need is urgent. For too long we have been selling this country and surrendering the future heritage of young Australians. We have been giving away the opportunity to achieve the prosperous standards which should be achieved and could be achieved if only we were to take steps to see that investment is put into the fields where the growth pattern will be more remunerative than it is at present, if only we would fund investment from a Commonwealth investment coprporation instead of selling out to overseas capital the future promise of Australia.

Mr DEPUTY SPEAKER (Hon W C Haworth:
ISAACS, VICTORIA

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

Mr Kevin Cairns:
LILLEY, QUEENSLAND · LP

– Tonight we have been privileged to listen to three dissertations on the Budget; one by the Leader of the Opposition (Mr. Calwell); one by our good friend the honorable member for Melbourne Ports (Mr. Crean), the shadow Treasurer whose shadow grows longer every year; and one by the honorable member for Oxley (Mr. Hayden). They have not been able to produce as many adjectives this year as they did last year. The honorable member for Oxley has taken it unto himself this year to repeat the adjectives that the Leader of the Opposition was wont to use in 1965.

For a few moments I shall deal with each of the contributions to which I have referred, to see how they fit in with the general comments that have been made about the Budget. The honorable member for Oxley persists in arguments concerning economic growth and persists also in making the same kinds of errors that he made in 1965. Last year he had incorporated in “ Hansard “ a table which had to be viewed a couple of limes in order to establish that it was in fact saying what he meant it to say. The honorable member engages in an exercise in which he does not call growth what everybody else would call growth; that is gross national product, national income, net national product or anything of that nature. He begins by having a look at the changes in gross national product; then he subtracts the change in the consumer price index, then he subtracts a figure relating to the rate of growth of the work force, and somehow or other he calls the resulting figure growth.

Anybody, even a simple person such as myself would know that this would be a very rough estimate or measure of productivity. It is not a measure of growth in the sense that the term “ growth “ is used in any of the national income accounts or in any document worth its salt. I am pleased to see that the honorable member for Oxley has left the chamber while this is going on.

The honorable member for Oxley then engaged in a bit of simple arithmetic with respect to the defence vote. Of course, our very good friend the shadow Treasurer, the honorable member for Melbourne Ports (Mr. Crean), engaged in this also. The shadow Treasurer, however, engaged in it in a rather more sophisticated way than did his protege. This is understandable.

Mr Duthie:

– lt was very devastating, though.

Mr Kevin Cairns:
LILLEY, QUEENSLAND · LP

– Let us see hew devastating it really was. The honorable member for Melbourne Ports gave us a little bit of history with respect to the defence vote. He went back to 1952 and 1953 and looked at this expenditure in relation to the gross national product. This was fair enough. But then he looked at this Budget, knowing that a Budget is a document which states the guide lines for a deliberate change in the economy, and he forgot the principles upon which a Budget depends. If the defence vole changes the direction of a Budget, it is not the relationship of the defence vote to the estimated total product but the changes in total expenditures under the defence vote that bring about the change of direction, lt is the changes that we are concerned with; it is the alterations in the direction of the allocation of resources in the economy with which we are concerned. It was amazing that the shadow Treasurer should engage in this kind of exercise, because the Treasurer (Mr. McMahon) had already indicated the way in which this extra money was to be used. The Treasurer indicated that there is to be an increase of about $600 million in expenditure and that 34 per cent, of that increase is related to defence. Irrespective of whether that, is to be related to domestic expenditure on defence - this is examined in a later document - to defence outside Australia, to expenditure on defence at the point of delivery or to items of a recurrent nature, this is the change of direction in the expenditure on defence. There has been a massive change in the direction of the expenditure on defence in this country. This vote gives the guide lines for the change in direction of the Budget and shows the underlying philosophy of the Budget. This is a philosophy which, quite plainly and clearly, is not supported by the Opposition or by the Leader of the Opposition (Mr. Calwell), the alternative Prime Minister. This kind of expenditure on defence has not been supported by the members of the Opposition in the past.

Then the shadow Treasurer engaged in another sort of exercise. He is concerned with development. This is fair enough. Everybody is keen on development. Some honorable members from parts of Queensland talk about development, but when they want to dam a river or put in an irrigation system they never make a measure of the opportunity costs of the investment or of the alternative uses to which the money could be put. I have not yet seen this done validly. When people propose that a river be dammed or an irrigation system be put in, let them tell us the alternative uses to which the amount of money involved could be put. After all, it is somebody’s taxation; it could be somebody’s social service payment, child endowment or age pension. There are certain alternative uses for resources, but of course these people never mention them. I challenge them to make a complete analysis of some of the projects which have been put forward, an analysis in terms of alternative uses and opportunity costs. Another opportunity will be given to them to make this kind of case.

The Leader of the Opposition - we are progressing in a way; we are going up the scale - engaged in his usual rhetoric. He said that the Budget consisted of a certain amount of legalised thieving, that it was a “half speed ahead” Budget. He has forgotten the adjective “ stop-go “. It is “ half speed ahead “ now as he races away towards an election.

What were some of the propositions which the Leader of the Opposition advanced in regard to this Budget? He had to have a dip into the rather simulated differences which certain State Premiers have with the Commonwealth Treasurer.

Everybody knows that if the States impose additional taxes, that if the yield from taxes in Victoria and New South Wales is altered, this alteration will have an effect on the overall movement of the economy. We know also, as was indicated in the Treasurer’s Budget Speech, that if there are alterations in the movement of the economy this Government is willing to take appropriate measures to deal with the situation. Already the Commonwealth Treasurer has taken certain interceptive drought relief measures which are quite unique in Australia’s economic history. Such measures have been taken in the past. They have been taken this year in regard to Queensland in order to keep economic activity and employment high. The Treasurer has shown that he is willing to take interceptive measures. He has adopted similar measures in regard to housing. A flexible approach has been adopted to the economic management of this country.

There will be compensating effects if certain changes occur. The Treasurer said very clearly in his Budget Speech -

We must always keep in mind the possibility of significant changes occurring both at home and abroad which could affect the prospect of achieving our goals. We do say that we will bc ready to meet the changes and shall do our best to see that our objectives are achieved.

There we see the simple flexible approach which will be the response to changes in various sectors of the Australian economy, whether they be at the local authority level, the State level or the Commonwealth level.

The Leader of the Opposition made another point. He became very concerned about the level of private fixed capital expenditure. Crocodile tears welled up as honorable members opposite expressed concern. Even the honorable member for Oxley (Mr. Hayden) decided to climb on to the band wagon. I should like to refer to the report of the Reserve Bank, to which the Leader of the Opposition referred five or six times in his speech. The honorable gentleman knew there had been a reduction in the last financial year, and he chose that year as his base. This is what the report of the Reserve Bank states at page 6 -

Private fixed capital expenditure was again bouyant overall, despite a drop in rural investment, but the rate of increase receded from the very high 1964-65 level to about the rate achieved in 1962-63 and 1963-64.

I suggest that the Leader of the Opposition and whoever helped him should have extended their analysis over a longer period.

Throughout the criticism of the Budget little concern was expressed about the full employment of human resources. This factor should form part of any approach to a Budget document. The Government can be extremely proud of the fact that, in spite of a massive decline in rural income and its significant effect on disposable income, particularly in big provincial cities and towns, it has allowed human requirements to override everything else. We cannot say often enough that never before in the history of this country when there has been a decline in the rural sector has full employment been maintained so effectively, with one or two soft spots for a few months. This is something of which we can all be extremely proud. People from Queensland and from the north west and west of New South Wales., where the effects of these factors were serious, ought to be especially proud of what has been achieved.

The Leader of the Opposition contradicted himself again. We knew that there had been a decline in the rural sector. He went on to say that the decline in the rural sector had not been at the level that people had said. He made some quotation concerning this. Later on he blamed the Government for not knowing the severity of the effects of the drought and the decline in the rural sector. Again I will quote the report of the Reserve Bank, which he was so fond of using. The Bank, at page 7 of its report, said -

Losses of livestock in the drought have not yet been accurately assessed. Information on cattle numbers is particularly imprecise but it is estimated that sheep numbers which, in the preceding two years, had been increasing at a rate of about 6 million per annum, fell by over 1.1 million during 1965-66 as a result of drought deaths and reduced natural increase.

Wool production also was reduced and the report contained a catalogue of the grave effects of the drought on the rural sector. But in order to play politics the Leader of the Opposition tried to imply that any difficulty in the economy over the past year was not due to significant changes in the rural sector. He may play politics with these matters, but when he contradicts himself in the same speech he gets himself into trouble. I suggest that the Leader of the

Opposition placed himself in serious trouble in this respect.

The comments of the Leader of the Opposition on the changes in taxation intrigued me. especially in view of the criticisms of the increase in taxation which was imposed last year. While the Minister for Labour and National Service (Mr. Bury) was speaking, an Opposition member interjected that many of Labours proposals would be financed merely by changing the level of taxation on the higher incomes. There is not to be a change in the overall level of taxation in order to finance Labour’s proposals, but only a change in the structure of the taxation system. The shadow Treasurer is in the chamber now. He will be speaking and writing on other occasions. 1 challenge him to state the precise changes in the taxation structure that will yield Labour the resources that it will need. He should publish the precise changes that will be effected in the taxation structure. There is no point in saying that the higher income levels will be taxed at a higher rate: I his will not yield sufficient for Labour’s purposes. In order to finance the proposals that were made by the Opposition during the election campaign in 1963 and have been made since, taxation right down the line must be increased. The Opposition should state how it will do this. After all, very responsible members of the Opposition are here tonight and they must have thought these matters through.

I want to refer to one or two other aspects of the Budget which are worth considering. In 1963 the Government indicated that over the next five years it would achieve a rate of growth in the economy of 25 per cent, in real terms. H was referring to the years 1964 to 1968 inclusive. This rate of growth will be achieved without the slightest trouble, lt will be achieved notwithstanding that our expenditure on defence will impede economic growth by about I per cent, a year between now and 1968. This rate of growth will be achieved without any problems.

Now I come to social services, about which the Opposition has spoken. Its speakers have waxed indignant about pensions and about child endowment. But when members of the Labour Party are in opposition it is like building those dams - they can make their proposals for, and their promises of, an irrigation system for everybody but they do not have to make good their promises. It is worth while looking at what the party opposite does when and where it has some responsibility. Let us look at the field of pensions. If the Labour Party is in opposition in every State and in the Commonwealth nobody can catch up with it, but we in Queensland are fortunate. We have a Labour City Council, which has some responsibilities towards pensioners. The Council has some excess resources available to it. What did it do about pensioners? What is its record? The honorable member for Moreton (Mr. Killen) knows it well, because he has befriended so many pensioners in the area and he is well liked there. Within the last 12 months the Brisbane City Council has increased pensioners’ fares by one of the largest amounts ever applied in the Brisbane city area. The Council has also increased rates. Formerly certain discounts in respect of rates were available to pensioners notwithstanding that they paid their rates rather late in the day. These discounts have been abolished. The Brisbane City Council has done all those things. Where it has a responsibility the party opposite does not and cannot do the things that it says it would do when it plays on the aspirations and hopes of the people. It is tragic that the Labour Party should so mislead the people in these respects.

There are one or two other matters to which I should refer because they underlie the overall direction that a budget should take. We know that this year the Budget must gear the economy to absorb between 130.000 and 140,000 people into the work force. Jobs will be found for about 130,000 people. We know that the budget is one of the basic engines for keeping the economy going. Problems of which we cannot be completely ignorant are developing. These have been mentioned before and will be mentioned again. A budget is a yearly document but it is concerned also with the long term. What I have to say contradicts the statements of very eminent gentlemen such as Professor Borrie; nevertheless it must be said. From 1976 onwards the number of people becoming available for the work force will create increasing problems. These problems will become greater with the passage of each year. I am referring to the decline that has taken place in the birthrate in the last five years.

We are concerned with the Budget as an economic document. We are concerned with the social engineering of the Budget. We are concerned also with the manpower aspect that must underlie any gearing of the economy. In 1976, 1977 and 1978 we will be in serious trouble. What we can do to remedy the situation is very problematical. People such as Professor Borrie think that a rate of natural increase of the order of 1 per cent, is sufficient, in my opinion a rate of natural increase in the Australian community of the order of .1 per cent, is unsatisfactory. A situation in which more than half of our population increase comes from migration is not a situation that I like or support. We have a culture of our own which we must keep. We do not want our work force or our culture to be swamped because our birthrate is declining. This is something worth considering because it applies to the future. Insofar as changed social attitudes accompanied by a changed economic attitude towards endowment can bring about an alteration in this rate of natural increase, one would strive towards that objective. This is something we should look forward to in the future.

Now let me turn to pensions and the means test. We want our work force to be fully employed. According to the Department’s surveys, even at the present time an average of 2.7 hours a week overtime is being worked in the larger factories. This is not bad under present conditions. We still have a situation in which we want the maximum number of people to enter the work force each year. It is a tragedy that so many people over the age of 65 years who desire to work are unable, for various reasons, to work. Consideration should be given to the proposal that, for pension purposes, incomes of between $8 and $10 a week be exempt. I point out that this is apart from the present measures. If this request were granted it would be a help to people who can work and who desire to work after reaching retiring age. It would help widows who wish to go to work to add to the family income and to keep the family together, lt would also be socially useful for them and economically useful for the country. There are no social or economic impediments to this. From very rough calculations I estimate that it would not cost the economy a great deal. In fact, the economy would benefit if one looks at the proposition in terms of tax returns. In a situation in which our resources of manpower are fully used and where we have other resources which desire to be fully used, the maximum opportunity should be given to people who desire to work.

We have looked at the Budget, ils overall guide lines and the performance of the Government over recent years. There have been rises in the consumer price index. There have been significant rises in the gross national product, or the national income, however you desire to measure it. Quite clearly this is a defence budget. But because it has been affected by certain rises that have preceded it - I instance the basic wage rise - and because certain rises have come from the Budget, in pensions for instance, it is clear also that there will be a significant rise in consumption. As the Treasury indicated last June, consumption must be an engine for promoting economic growth during the coming year.

Having regard to these factors and in view of the fact that the Budget overall has a philosophy which desires that we spend adequately on defence, a philosophy which acknowledges the essential characteristics of a Commonwealth Budget and a philosophy which provides that even without massive changes in disposable incomes following the drought jobs will be found for those directly affected, the Budget should be supported because it will assure economic growth and will open the door to flexibility during the coming year.

Debate (on motion by Mr. Duthie) adjourned.

House adjourned at 11.25 p.m.

page 332

ANSWERS TO QUESTIONS UPON NOTICE

The Following answers to questions upon notice were circulated -

Water Conservation. (Question No. 1650.)

Dr Patterson:
DAWSON, QUEENSLAND

n asked the Minister for National Development, upon notice -

Is it a fact that a responsible Bundaberg and District Irrigation Committee requested financial assistance from the Commonwealth for urgently required water storages to minimise the serious effects of drought in the cane areas, and that this request was refused?

Mr Fairbairn:
LP

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

In a letter dated 19th August 1965, Mr. B. Anderson, Chairman of the Bundaberg and District Irrigation Committee, asked the then Prime Minister for support in the provision of largescale water storage works and irrigation schemes in the lower Burnett region. Mr. Anderson was advised that, under the division of powers in the Constitution, the matter raised by his Committee was one for the Queensland Government’. The Commonwealth considers the provision of financial assistance in respect of public works projects in the States only on the basis of requests by the State Government’s concerned. It would not be appropriate for the Commonwealth to deal directly with local bodies in the States on such matters.

Australian Representation in Malta. (Question No. 1841.)

Mr Whitlam:

m asked the Minister for External Affairs, upon notice -

  1. Why has no High Commission been set up in Malta?
  2. Which Commonwealth countries have had a representative in Australia longer than Malta?
Mr Hasluck:
Minister for External Affairs · CURTIN, WESTERN AUSTRALIA · LP

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

  1. The Australian Government is at present considering its representation in Malta.
  2. Malta became independent’ on 21st September 1964. The first High Commissioner for Malta in Australia took up his duties on 16th June 1965. At that date other Commonwealth countries which had missions in Australia were Britain, Canada, Ceylon, India, Malaysia, New Zealand, and Pakistan. For many years before independence Malta had a Commissioner in Australia, primarily to look after the welfare of Maltese migrants. Australia has had a Migration Mission in Malta since September 1961.

Sales Tax. (Question No. 1872.)

Mr L R Johnson:
HUGHES, NEW SOUTH WALES

son asked the Treasurer, upon notice -

  1. Is a paraplegic ineligible to receive an exemption from sales tax on the purchase of a motor vehicle unless the vehicle is to be used to transport the person to and from gainful employment?
  2. Has consideration been given to extending exemption from sales tax to cover persons who seek to buy a vehicle for the sole purpose of providing recreational outings to paraplegics, many of whom are unable, because of their condition, to take employment?
Mr McMahon:
LP

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

  1. Certain classes of persons suffering from disabilities resulting from war service are entitled to exemption from sales tax on motor vehicles for use in their personal transportation whether or not the vehicles are for use in transporting them to and from gainful employment. The persons eligible for this exemption, who may or may not be paraplegics, are those who, as a result of service in the Defence Force or in any other armed forces of Her Majesty -

    1. have lost a leg or both arms or are deemed for Repatriation pension purposes to have had a leg or both arms amputated; or
    2. are in receipt of special pensions under the Second Schedule to the Repatriation Act in respect of blindness, total and permanent incapacity or tuberculosis.

Paraplegics who do not qualify under the provision applicable to disabled ex-servicemen are not eligible for exemption from sales tax on motor vehicles unless the vehicles are for use in transporting them to and from gainful employment. Exemption is also conditional on the person being certified by the Director-General of Social Services, or his delegate, to have lost the use of one or both legs to such an extent that he is permanently unable to use public transport.

  1. The Government has, on a number of occasions, considered requests for exemption from sales tax on motor vehicles for use by various classes of disabled person’s who are not eligible for exemption under the existing provisions. Because of the wide range of disabilities suffered by these persons and of the use made of the vehicles, it has not been found practicable to widen these provisions.

Immigration. (Question No. 1873.)

Mr L R Johnson:

son asked the Minister for Immigration, upon notice -

  1. Does a migrant, upon naturalisation, lose his right to nominate relations under the Assisted Passage Scheme?
  2. If so, why, and does this deter migrants from applying for naturalisation?
Mr Opperman:
Minister for Immigration · CORIO, VICTORIA · LP

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

  1. No.
  2. See answer to 1.

Taxation. (Question No. 1892.)

Mr Webb:
STIRLING, WESTERN AUSTRALIA

b asked the Treasurer, upon notice -

What amount in taxation did (a) Ansett Transport Industries and (b) Trans-Australia Airlines pay for the years ending on the 30th June 1964, 1965 and 1966?

Mr McMahon:
LP

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

The secrecy provisions of the taxation laws preclude the Commissioner of Taxation from divulging this information.

Use of Drugs by Transport Drivers. (Question No. 1899.)

Mr Webb:

b asked the Minister for Shipping and Transport, upon notice -

  1. Has his attention been drawn to a statement by at Melbourne magistrate wherein he criticised truck operators who forced their drivers to run to impossible schedules?
  2. If so, will he take steps to initiate the introduction of uniform legislation in all Stales to prevent the use of pep pills by truck drivers?
Mr Freeth:
Minister for Shipping and Transport · FORREST, WESTERN AUSTRALIA · LP

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

  1. I have not seen the particular report referred to, but 1 am aware that there has been a number of recent prosecutions arising out of truck drivers being in possession of methedrine “ Pep Pills “. I am informed that the practice is not confined to employee drivel’s, but also occurs amongst drivers operating their own trucks.
  2. Action to control the use of drugs by transport operators is essentially a matter for State authorities, and legislation exists in some States enabling prosecutions to be launched.

The working of excessively long hours seems to be one of the main causes of the use of drugs by drivers and although there is State legislation regulating hours, a considerable problem of proof and enforcement exists. This is particularly the case in respect of interstate journeys, in which the difficulty is increased by reason of variations in State legislation.

The problem has frequently been discussed :n the Austraiian Transport Advisory Council, and action was initiated some years ago with a view to achieving uniformity, at least among the States mainly affected, not only in regard to the hours themselves, but a!so in regard to the keeping of log books, which provide an effective aid to enforcement.

At the last meeting of the Council in July, it was indicated that it was likely that New South Wales. Victoria and South Australia would achieve uniform legislation in respect of hours of driving and maintenance of official log books in the near future.

Queensland and Western Australia have special problems in this matter as many of the long journeys there are in outback areas.

Immigration. (Question No. 1903.)

Mr Webb:

b asked the Minister for Immigration, upon notice -

Are eligible British migrants advised that they are liable to be conscripted for overseas service before migrating to Australia?

Mr Opperman:
LP

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

Yes. British migrants aged 18 years and up to 20 years and the responsible parent of families which include youths of 15 years of age and upwards receive a leaflet informing them fully of the Australian national service scheme, including the requirement to register and the liability, if called up, for service- in Australia and overseas.

Sales Tax. (Question No. 1920.)

Mr Webb:

b asked the Treasurer, upon notice -

  1. Have the Australian Soap and Allied Products Manufacturers ask:d for the abolition of sales rax on soaps, dentifrices and detergents?
  2. Have they pledged themselves to pass on to the consumer the benefit of any sales tax remission?
  3. As this would assist in reducing the cost of living, will he agree to the manufacturers’ request?
Mr McMahon:
LP

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

  1. Yes, representations for the abolition of sales tax on soaps, dentifrices and detergents were made to me by the Australian Soap and Allied Products Manufacturers.
  2. In a brochure issued by the manufacturers, it is staved that the industry pledges itself to pass on to the consumer the benefit of any sales tax remission.
  3. This matter was considered during the preparation of the Budget but’, as I mentioned in my Budget speech, the Government’s heavy current and prospective expenditure commitments precluded any general tax reductions this year.

Television. (Question No. 1744.)

Dr Patterson:

n asked the PostmasterGeneral, upon notice -

What was the cost, or what is the estimated cost, of (a) each high-powered national television station that has already been installed in country areas, (b) future planned high-powered television stations and (c) the relevant road work for each project?

Mr Hulme:
Postmaster-General · PETRIE, QUEENSLAND · LP

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

Note 1. - With the exception of Broken Hill which has an output of 5kW vision and 1kW sound, the above stations have an effective radiated power of 100kW vision and 20kW sound.

Although in some cases the costs shown are final, some are provisional as all claims permissible under contracts have not yet been finalised.

Only one station would be classed as in the planning stage, namely Cairns. The remainder are now operating or will commence operation before the end of 1966, with the exception of Mackay which will open in the second half of 1967. In the case of Cairns, a low power temporary station commenced operation in July, 1966, and will remain in service until the high powered station has been constructed.

The figures shown above are net, after allowing for contributions by commercial licensees in areas where the sharing of facilities is taking place.

Broadcasting. (Question No. 1911.)

Mr Collard:
KALGOORLIE, WESTERN AUSTRALIA

d asked the PostmasterGeneral, upon notice -

  1. Is there any intention of establishing radio transmitting stations north of Carnarvon in Western Australia?
  2. If so, where and when will they be established and what will be their power and estimated radius of satisfactory reception?
Mr Hulme:
LP

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

  1. Yes. Three new national broadcasting stations have been approved for the north-west of Western Australia.

Accurate estimates of stations’ expected coverage on a radical basis are not practicable as broadcast reception varies in different directions with a number of factors. However, it is expected that the Port Hedland station will also serve the Pilbara-Mount Holdsworthy, Roebourne and Marble Bar areas, the station near Derby will serve Derby, Cockatoo Island and Koolan Island and the Broome station will serve that centre only.

Cite as: Australia, House of Representatives, Debates, 23 August 1966, viewed 22 October 2017, <http://historichansard.net/hofreps/1966/19660823_reps_25_hor52/>.

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