Download Fragment

Tuesday, 14 April 1964

Mr POLLARD (Lalor) .- The House is discussing a bill for an act to approve the raising, by way of loan, of moneys in the currency of the United States of America to be lent to Qantas Empire Airways Limited, and for purposes connected therewith. The Opposition is not objecting to the Parliament taking the necessary steps to enable Australia's international airline, Qantas, to arrange for the provision of funds with which to bring its fleet up to world standard and to continue the high standard of efficiency that it has maintained hitherto. It was well said here this afternoon that Qantas is the best paying proposition of all the international airlines. As one who has travelled on a variety of airlines, I say that in my opinion it is the most efficient and the most satisfactory airline from the passenger's point of view.

Mr Cope - And the safest.

Mr POLLARD - Yes. We hope that it will continue to be the safest.

What we members of the Opposition are questioning is the wisdom of this Parliament consenting to the borrowing of the requisite money, to wit £11,-200,000, from United States lending institutions, namely the Morgan Guaranty Trust Company of New York, the Chase Manhattan Bank of New York, the Irving Trust Company of New York and the Continental Illinois National Bank and Trust Company of Chicago. This money is to be borrowed and to be passed over to Qantas. It is to be borrowed at interest rates varying from 3i per cent, in the first year to Si per cent, at the end of eight years, to wit in 1972; plus any additional costs that may be imposed on the lending instrumentalities by the Congress of the United States, and plus the cost of raising the loan. The interest will be £550,000 per annum in round figures.

Whilst we agree with the purpose of this measure, we say that Australia is strong enough financially to back the raising of finance for Qantas from its own resources and from its earnings in other countries. We appreciate that it is of no use to offer Australian currency to suppliers of aircraft in the United States because they will say " That is no good to us; we want dollars ". So dollars, sterling or Swiss francs have to be found. We believe that the resources of Australia, backed by our present international reserves, are sufficient to enable us to finance this loan from revenue or some other appropriate source within the confines of Australia. That would save Australia the interest which will accrue at the rate of £550,000 per annum and would enable us to stand on our own feet and to have a bit of human dignity.

The Treasurer (Mr. Harold Holt), in the short explanatory speech that he made this afternoon, said amongst other things that this procedure followed a well established pattern. It was a well established pattern in the early days of the State parliaments and in the early days of federation to depend on overseas countries for supplies of money and all sorts of things to a much greater extent than we do now. Surely, when we know that we can obtain the requisite funds from our own resources, it is our function to do so and to avoid entering the shops of the New York and Chicago pawnbrokers. Of course, they are excellent people if you want to borrow money but I am one of those old-fashioned people - I do not suppose that I am very different from the ordinary Australian - who hate to have mortgages around their necks. I have had mortgages as long as boa constrictors in my time. The average Australian householder is always looking forward to the day when he has the freehold title to his house and land.

Mr Kelly - Freehold?

Mr POLLARD - Yes, freehold. I do not want the honorable member for Wakefield to draw any red herrings across the trail. I am saying that the average Australian farmer looks forward to the day when he will have paid off his hire-purchase commitments on his machinery and when he will not owe anything to any man. That ought to be the financial policy of every municipal body, every State government and the Commonwealth Government. That should be the ambition-

Dr Mackay - Rubbish!

Mr POLLARD - Of course, the old supporters of usury, who believe in the perpetuation and multiplication of debt, who believe that the burden that is weighing down the whole of mankind should be continued for ever and ever, and who believe that no government or human institution should ever endeavour to alleviate that horrific burden, say " Rubbish ". When anybody wants to deprive the money-lender of his means of livelihood and to achieve a situation in which it is unnecessary for anybody to borrow money, honorable members opposite say " Rubbish ".

Every sensible person, every housewife, every owner of a soundly-based industrial concern knows that it is a good plan to endeavour to meet your obligations annually.

Dr Mackay - Should there not be any loan money for young people?

Mr POLLARD - You were a parson once; but now I suppose you support usury. I am ashamed if that is your attitude. Sound business people look forward to the day when they will have paid off their commitments and will be able to meet their annual obligations out of their earnings. They establish depreciation funds, out of which they hope to meet the cost of installation of new machinery and new equipment. That is a very desirable procedure.

There have been times of substantial prosperity in the history of Australia when the Commonwealth has been well able to meet the cost of governmental purchases and to pay for Commonwealth undertakings out of income tax and other sources of revenue. Somebody will express dissent, but let me tell the House that as recently as 1949, a former government of this country set in motion the Snowy Mountains project-

Mr Turnbull - It turned one sod.

Mr POLLARD - Never mind about the honorable member for Mallee, Mr. Speaker. The Snowy Mountains project is a great national work which will confer benefits on the people of Australia for many years to come. In the initial stages of that scheme, Commonwealth revenues, although not as good as they are now, were substantially healthy, despite the facts that we had recently emerged from a disastrous war, that we had heavy commitments and that taxation was pretty high. In the initial stages of the Snowy Mountains scheme, the annual commitments were met out of the revenues of the Commonwealth. Our successor, the present Government, to its eternal credit, for a substantial number of years continued to meet the annual expenditure on that scheme out of revenue and not out of borrowings. But in more recent years it has slipped and now it is borrowing money overseas to meet the costs of money it has borrowed to finance the Snowy Mountains scheme.

There are occasions when borrowing is essential; but this Commonwealth Government, presiding over the destinies of a nation whose annual wealth of production is, in round figures, £3,000,000,000, is now borrowing a mere £11,000,000. Is it beyond the resources of the Commonwealth to pay this amount in cash? Of course it is not. This is a simple matter, even if at the end of the financial year the Government finds its Budget is slightly out of joint. When framing the 1962-63 Budget, the Government, with rather a gloomy outlook - perhaps a justifiable outlook at that time - thought it would be short of the revenue required to meet its commitments. So it informed the Parliament that it was budgeting for a deficit of approximately £130,000,000. Where did it intend to get the £130,000,000, if it was short of this amount? Honorable members may work this out for themselves, but I suggest it would be the same source from which it could get the £11,000,000 now required to provide Qantas Empire Airways Ltd. with the finance to purchase the Boeing aircraft it wants. In addition, our overseas reserves are much stronger than they have been and the Government would have no difficulty in obtaining the foreign currency it required. It would, of course, need dollars for the purchase, or perhaps sterling is now convertible to dollars - I am not quite sure of this.

The Treasurer accused us of not knowing that overseas reserves are not available just for the asking. They are reserves of foreign currency earned by the exporters of this country and held by the banking system. They belong, after all, to all the people of Australia. Arrangements could be made through the present banking system in an emergency or in certain circumstances for the Commonwealth Government to obtain access to the foreign currency that forms our overseas balances. No one will deny that. It is of no use for the Treasurer to tell us that overseas reserves are some mystical fund that no one can touch. Some one suggested that the money required for the purchase of these aircraft could be obtained from our healthy overseas reserves. The honorable member for Mallee (Mr. Turnbull), who should know better, said, " No, you cannot touch these reserves. What would happen if there were a drought? " In those words he denied the truth of the statement made by the Treasurer.

Mr Turnbull - The Treasurer said the same thing.

Mr POLLARD - Of course the honorable member denied the statement of the Treasurer. The Treasurer said, " Some members of the Opposition are assuming that some of the money is available." You implied that the money was available when you said that these overseas balances would be a protective shield if we had a drought. You are at loggerheads with each other.

Mr Turnbull - How can-

Mr POLLARD - Don't apologize, I know what you said. You said that the overseas reserves should not be called upon for this purpose because they were the great sheet anchor that would be needed if there were a disastrous drought and a diminution of our overseas earnings, didn't you?

Mr Turnbull - Yes.

Mr POLLARD - The Treasurer accused Opposition members of assuming that the overseas reserves would be available for this purpose. If they were available for use during a disastrous drought or a diminution of overseas earnings they could be available if it were feasible or necessary to use them for this other purpose. You contradict each other.

Let us look at another angle of this matter. Every one knows that to-day in Australia a farmer could go to the Commonwealth Development Bank of Australia and say: "I have ample security. What about a loan for development purposes? I want to buy a tractor or some other machinery costing £1,500." The officer would look at his security and probably say: "All right. Here is a loan for so many years at a flat rate of interest." The interest would probably be 4± per cent. Similarly, a captain of industry could go to the Commonwealth Bank and say; "I want £100,000 to enable me to install up to date equipment in my industrial plant". He would probably get the loan if his security were right.

The Commonwealth of Australia could be put in a similar position. The Government could say: " Here is an immense continent with enormous resources and with enormously increased earning power whose overseas earnings are very buoyant and whose reserves have accumulated to the enormous sum of £800,000,000 ". I know that no act enables the Government to compel the Commonwealth Bank to advance money in these circumstances, but the bank can be motivated by other machinery. Is it not sensible to say to the Commonwealth Trading Bank or to the Commonwealth Development Bank or the Reserve Bank: " You hold this overseas currency. Arrange to let us have a loan for a mere £11,000,000 to enable the most efficient international transport agency in the world, that is, Qantas Empire Airways Limited, to purchase the most modern aircraft that the world has ever produced." I do not really believe that these are the world's best aircraft; I would prefer British aircraft, but that is another question. The security for the loan is the accumulation by Qantas of plant, equipment, buildings, capital and good will, and this would be an immense security. Surely in these circumstances it is not beyond the Government to make the necessary arrangements.

The Australian community for a long time, particularly in more recent years, has been living, and encouraged to live, on a beg and borrow policy. Every strata of the community is obsessed with hire purchase and purchase on terms. Companies presided over by people of great distinction with knighthoods and other honours and with famous records have been puffing up the economy by resorting to debentures and all sorts of hollow securities until some of them have bitten the dust. The Commonwealth Government is pursuing the same policy. We can see this loan-raising and loan-mongering business in the Treasurer's second» -reading speech. If this Government remains in office long enough this sort of policy will have to continue in perpetuity. The Treasurer said in his «second -reading speech -

We no sooner get that repaid than we start the wheels turning again and borrow another plaster quite unmindful of the contentions of the supporters of the Government that this country has never been more prosperous, that it has never earned more international exchange than it is earning at the present time, and that we have never had bigger overseas balances at our disposal. Despite this extremely favourable situation, of which we are continually reminded by the honorable members, the Government has to go to the New York loan market and pay 4i per cent., eventually rising to 5 per cent., for moneys that could be raised by another method, so avoiding the unfortunate accumulation of interest burdens. The honorable member for Evans (Dr. Mackay) evidently wishes to say something. I would like to hear what he has to say.

Dr Mackay - We have got where we are by the method that you have just described.

Mr POLLARD - The honorable member's alibi for his support of this motion is that he has got here by the method I have just described, the method of, in effect, borrow, borrow, borrow. Let me remind him that the Bruce-Page Government got here by exactly that method, but that government is here no longer and it left a plaster of debt hanging around the necks of the people that it took succeeding governments 25 years to remove. Let me remind the honorable member of the power of international exchanges and credit balances because it is his Government that has the taxation weapon. In the time of the Chifley Government we made a straight gift of £15,000,000 to the British Government in its hour of great distress. That was in 1949. We wiped off £25,000,000 of the money which the Government owed on the United Kingdom money market. I asked the late revered Ben Chifley why we did not liquidate the whole of our liabilities to the United Kingdom, and he gave me a straight answer. He said that we did not do so because the position of the United Kingdom was desperate, and if we liquidated all our debt the United Kingdom Government would no longer be able to derive revenue from us in the form of interest payments on outstanding loans. The situation has changed and there is now no reason why we should place ourselves more firmly in the hands of the American money-lenders when we could, by efficient management on the part of the Treasurer and this Government, which has its expert advisers to assist it, raise the necessary £11,000,000 in our own circles. We should not perpetuate the evil system that has- been more and more widely accepted in our community, and which is all wrong.

We cannot wipe out this system of borrow, boom and bust overnight, but we can, at least, make a start. In every part of our community, from the home right through to this Government, we should try to pay our way by using our own revenue. I will support the Opposition's amendment,

Question put -

---