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Wednesday, 20 March 1957


Mr MENZIES (Kooyong) (Prime Minister) . - It is very difficult to answer the Leader of the Opposition (Dr. Evatt). He flits from flower to flower, and therefore one never quite knows what point it is that he has taken, or what argument it is that he has decided to stand upon. Therefore. I must apologize in advance for not hein<* clear on those matters, but I have, in the course of his speech - before I come to matters of substance - made a note or two about the points that he has been, as I understand it, endeavouring to make.

I must say that I congratulate him on having said that the Government has an inflationary policy. This, I think, is something that the people of Australia will reflect about not without interest, because if any man in the whole history of this country has twice unsuccessfully put an inflationarypolicy before the people it is the right honorable gentleman himself. He has made it abundantly clear, if I may use that phrase, which I know he used in common with me recently, that his cure for inflation is more inflation. He made that quite plain in 1954. Now, having had that rejected by the people, he comes along and succeeds in the remarkable dialectical feat of saying that the Government has an inflationary policy. Of course, sir, he knows - if he knows anything about this matter at all - that the Government has been pursuing a counter-inflationary programme and endeavouring, as was said in the GovernorGeneral's Speech yesterday, to reconcile the fighting of inflation with the production of progress in Australia.

The right honorable gentleman made another point. He said that the profit motive dominated everything in Australia. I do not understand what that means. Neither does he. The truth of the matter is that the United States of America is the one country which has understood, for years past, that one of the reasons for success in developmental industry is the honest earning of profits, and it is because of that that all the other free countries of the world, including ourselves, find it possible to go to the United States and say, " Can you help us? Can you wretched people, debased by the profit motive; can you people who have encouraged private enterprise; can you people who have produced the greatest productive genius of the century, help us? But. of course, understand that we do not approve of people making profits! " I admire people who make profits. One of these days I will have a go at it myself.

Then the right honorable gentleman said that the States got inadequate tax reimbursements. I am sorry to have to refer to this, which is rather an old thing in this House. Yet, it has been said again that the States get an inadequate tax reimbursement. After all, the right honorable gentleman was for a number of years No. 2 in a Labour government, and occasionally sounded as if he might be No. I. But he was there, and it was under his late respected Prime Minister, whose name he invokes so frequently, that the formula was designed which determined what the tax reimbursement should be for the States from the -Commonwealth under a uniform tax system. Let us make no mistake about this. The late distinguished Prime Minister, as Treasurer, proposed to the State Premiers and had accepted by all of them a formula under which the amount of money to be paid by way of tax reimbursement to the States should be determined. It is a very interesting thing that his legal adviser, his prospective successor, his collaborator in these events, should now say that our payments are inadequate, when the fact is that every year since we came into office we have added to the Chifley formula sums of money ranging from £10,000,000 to £30,000,000. At the end of it all, the Leader of the Opposition, having what the French call the wit of the staircase, has discovered, after the event, that it was wrong. He has the nerve to put this up in what I believe is described as a noconfidence motion.

Then, working back over this rather arid field, he permitted himself to attack the policy of migration. The policy of migration is always, among people of intelligence, an object of discussion. There is this view, there is that view. But on the whole I had thought, in common with the distinguished honorable member for Melbourne (Mr. Calwell), that whatever price one had to pay for migration, it was worth paying so that this country might have, as it has now, 10,000,000 people, not the 7,000,000 gloomily forecast in my own time - in 1938. The honorable member for Melbourne was, if he will allow me to say so, the father of the immigration programme, a father who was backed by his brother-in-law, my distinguished colleague, the Minister for Labour and National Service (Mr. Harold Holt). I wonder how the honorable member feels when he finds his own leader - that is technically the right expression - attacking a policy with which I venture to say the name of the honorable member for Melbourne will be permanently and honorably associated. Yet that is a point that has been made.

Then, of course, having gone all over that, the Leader of the Opposition was pleased to refer to my statement, as he said, of 7th March. Unless he has heard a tape recording of my interview he does not know what I said on 7th March because some very odd variations of it have been published. As I understood him to-night, he said that I talked rubbish about manpower and materials. Therefore, perhaps I might be permitted to say to honorable members and to such of the people of this country as may be listening and such others as may read the record of the proceedings in this House, that what I said was - and I repeat it - that the limitation on a housing programme in Australia is the limitation of man-power and the limitation of materials and that anybody who is so naive as to believe that new man-power and new materials can be created by increasing the supply of money is merely adding to inflation. Having said that, I repeat it, and 1 repeat it with great goodwill because 1 happen to believe that no greater injury can be done to the ordinary people of my native land than to make them-

Opposition members interjecting,


Mr MENZIES - Well, it is my native land, oddly enough! Is it yours? Of course it is my native land, and 1 happen to believe, contrary to the opinion of some of these genteel characters in the back row, that no greater harm can be done to the ordinary people than to put up the cost of the homes that they want to buy. Let us face up to that.

The honorable member for Lalor (Mr. Pollard), whom I hear interjecting, has, in reality, a lot of affection for me, as I have for him, and I am sure he does not mean to say that what he wants is houses, irrespective of cost. I am sure that he wants the people who want homes to get them at a price they can afford to pay. There we have something which entirely disposes of this rather cheap remark to the effect that man-power and materials do not matter and that only money matters. I say that all three matter and that, to the limit of man-power and to the limit of materials, money ought to be available to combine in doing a job for the home-loving people of Australia.

Honorable members opposite make a great mistake if they think that, by making noises, they will prevent the people of Australia from listening to a calm exposition of this problem. Before I go any further. 1 must say that the Leader of the Opposition ventured into waters in which he is not entirely at home. He talked about the bond rate. He said that when Labour was in office, the rate was 34 per cent, and he said that this Government did not support the market and that, therefore, the interest rate has risen. I merely want to tell him, for his private consumption and his private thought, that this Government, through its instrumentalities, laid out more money in the market to preserve the interest rate than his Government ever thought of doing. That is completely true, and if he knew anything about this problem, he would know it was true. But he now feels able to stand up and say that this Government did not support the market. That is wickedly untrue.


Dr Evatt - It is true, and the Prime Minister knows it.


Mr MENZIES - The Leader of the Opposition, if he were cross-examined, either would be found to be utterly incompetent on this matter or would be bound to admit that this Government has done more to sustain the market and preserve the interest rate than all the Labour governments in the history of Australia put together.

Having said that, I pass on to one point which he made and which might be regarded as relevant. He said that the committee meeting under the chairmanship of the honorable member for East Sydney (Mr. Ward) - a highly impartial body - had succeeded, much to its surprise, in establishing that there was gross unemployment of building labour, I think that was the effect of it.


Mr Barnard - He did not use the word " unemployment " at all.


Mr MENZIES - It is not surprising that, if one sets out to have a judicial inquiry designed entirely to produce a result, one should get that result. That is something that the honorable member from Tasmania might think about. In relation to building labour, I just mention a fact. All I want to say is that a few years ago, as every honorable member knows, the demand for building labour was rather greater than the supply. In other words, there was over-full employment. Any honorable member who is honest with himself will remember that an excessive turn-over of building labour, a bidding up of rates paid for skilled labour,, and very high costs prevailed, and that any one who obtained a firm tender price for a house was fortunate. What has happened is not the development of gross unemployment in the building industry, but rather that the whole matter has come more into balance. I am indebted to the Department of Labour and National Service for the figures that 1 shall now cite. I shall take New South Wales, the State in which the whole of this argument began in its most vigorous form. At this moment, out of the many thousands of people who are normally employed in the building industry, there are 693 applicants for employment and 618 vacancies registered with the department.


Mr Ward - Those are false figures.


Mr MENZIES - The honorable member, who disbelieves every one except himself, says these are false figures. Of course, Mr. Speaker, as honorable members and the people will realize, the truth is that these figures are produced, not by politicians, but by objectively minded civil servants and statisticians, and that at this moment in the building industry in New South Wales, the State in which most complaint has arisen, the vacancies broadly balance the number of applicants for employment. In other words, we have full employment.


Mr Ward - Absolute rubbish!


Mr SPEAKER -Order! I ask the honorable member for East Sydney to remain silent.


Mr MENZIES - I did not suppose for one moment that the honorable member for East Sydney would believe statistics unless they happened to agree with him. But these figures are compiled from perfectly official sources. If any more evidence were needed, it would be found in the average earnings of workers engaged in building construction. In December, 1954, the average wage was £18 2s. a week, and to-day the average is £21 2s. a week. Is this proof of unemployment? Is this proof of under-demand for labour? lt is quite the contrary.


Mr Edmonds - What are union officials in Canberra saying?


Mr MENZIES - I did not ask the honorable member to agree with me. All I ask is that he listens. If he reads my remarks in " Hansard " to-morrow, which would be much better, he will realize that these figures demonstrate that, by and large, we are in a pretty fair position of balance in the building industry. I am not overstating my case. All I am saying is that that is just about right.


Mr George Lawson - What is the position in Queensland?


Mr MENZIES - If I were the honorable member, 1 should not say much about Queensland. I have not enough time to tell him about Queensland, but I am sure that one of my colleagues will do so, and I am ready to tell him all about it privately on a suitable occasion. If I were he, I should not build up the situation in Queensland too much.

Now let us go back to where all this began. 1 made a policy speech in 1955, which honorable members opposite may remember.


Mr Edmonds - The right honorable gentleman made one in 1949, too.


Mr MENZIES - I know, but I am talking now about the one made in 1955 for the election at which the Government's majority in this House was increased from seven to 27. Therefore, I think I may speak about it freely. In that policy speech, made only about sixteen months ago, I pointed out that the Opposition was hardly qualified to be critical. I said, as I now remind the Leader of the Opposition, that the Labour government saw 202,000 houses and flats completed in Australia in its five post-war years. I said that that was good; and so it was. But in the first five completed financial years of the present Government's administration, we saw 388,000 houses and flats completed, and the figures are now much greater.


Mr HAROLD HOLT (HIGGINS, VICTORIA) - Nearly double the Labour figure.


Mr MENZIES - In effect, twice as many houses and flats were provided foi Australia in our five years as in five years of the Labour government's term. As for war service homes - the kind of thing that this Government will always have in mind from year to year - 22,000 houses were completed in five years under the Labour government, and 68,000 in five years under the present Government. I said on behalf of the Government in my policy speech in 1955 that the housing arrears were being handsomely reduced, and that was true.


Mr Hulme - It is still true.


Mr MENZIES - And it is still true. That does not mean that there is not a shortage of houses. Of course, it does not. But it does mean that the arrears of housing over and above the normal annual demand by newly-married people is much more manageable and will entirely disappear in the course of only a few years. In the 1955 policy speech, I then went on to talk of home-ownership and to foreshadow a new housing agreement with the States under which home-ownership would be financially encouraged. That housing agreement has since been completely negotiated and executed, and is operating. But I regret to say - and this may be noted by some honorable members - that the last State government to ratify it was the Government of New South Wales, the State in which the housing position is least advantageous. That Government thought so little of this magnificent agreement that it did not ratify it until November, 1956. We put that policy before the people, sir. They approved it, and the majority of the members of this House can testify to that fact. Yet in the last few weeks, there has been a sudden campaign in some sections of the press and' elsewhere designed to convince the people that there is a housing crisis. Insofar as this is a campaign of exaggeration, it can, of course, be ignored, since intemperate advocacy, I am happy to say, always defeats itself in this country. But, insofar as it represents genuine feelings of apprehension on the part of sensible people, it deserves an answer and a precise expression of our attitude.

First, I want to make it clear that, for some strange reason, it is said by some people that this Government is unsympathetic with the very proper, strong, and inevitable desires of our people to have adequate housing. There is no foundation whatever for any such charge. My Government has, by encouragement, by example and by action, done more about housing the Australian people than any previous government in the history of the Commonwealth of Australia. The figures establish that claim. No denunciation can dislodge it. We are perfectly content to be judged, not by our words, but by our performance.

But this does not mean that we regard the problem as solved. The housing issue is at once a human and an economic problem. As a human problem it transcends almost all others since a home is the foundation of civilized society, and the home demands a house. This is completely true. We shall not rest until we find that this greatest human need has been satisfied. But there is also an economic problem. One of the great obstacles to home ownership, though home ownership has improved out of all sight since we come into office - 54 per cent, then, and 65 per cent, to-day - is the exorbitant price of building. No industry is more vital than that of building. No industry is more hag-ridden by restrictive practices and by soaring costs. The wholesale price of building materials has been rising for years past and, as I have said, average wages paid have been and are still rising.

Under these circumstances any government, even one possessing a degree of authority, which we cannot, under the Constitution, possess, would be at pains to see that the cost of a home did not keep rising out of proportion to the income of the prospective home owner. That brings us to the central economic truth, which is that the problem is not simply one of money but is essentially one of materials and of labour, particularly labour, and especially skilled labour. The great task is to preserve some balance between all these elements. That is why we refused to be stampeded into any crisis treatment of a problem which, more than any other, requires sober judgment and a clear understanding of the importance of not building too much false debt into the new home.

The Commonwealth Government, which lacks general responsibility for housing and has, indeed, no general authority over it, has a clear responsibility for war service homes, for housing in the Territories and services, and an accepted obligation under its housing agreements with the States. Under all three headings it has been finding between £60,000,000 and £70,000,000 a year, out of a total expenditure of something over £200,000,000 - about one-third of the total housing finance. All that can be said is that the Commonwealth contribution, so far from falling, has tended torise. Any decline in housing finance has occurred in the private sector of the economy.

The trading banks have reduced their lending, not under directive by the Commonwealth Bank or the Commonwealth Government, but because housing loans are not attractive to a trading bank, and I think most of us understand that. There is some reason to believe that other sources, such as the assurance companies, have been diminishing their support for home building. The savings bank gives rise to a problem about which I shall say something in a moment.

The Commonwealth Government cannot very easily seek to exercise compulsory authority over private lenders. But we are constantly watching this position through the relevant Ministers and our most skilled officers, because we regard it as important - we would like all lending authorities to understand this also - that there should be no violent fluctuations in the housing programme and that constantly, while avoiding an inflation of costs, we should be able to look forward, as we do, to the relatively early elimination of arrears and the concentration of house construction upon normal, current, annual demand.

It is my belief that the position now existing in New South Wales and Victoria, where it is perhaps more observable than in other States, is not permanent. There has been, for reasons that I will describe, some interruption of the normal housing activity in those places but - again for reasons that I shall give - it will tend to rectify itself. It certainly provides no foundation for exaggeration or pessimism.

As the activities of the Commonwealth are similar in every State, and our policy is constant throughout, marked variations between the States are perhaps to be explained by circumstances peculiar to some States, and not to others. For example, apart from the ordinary annual demand, the estimated housing deficiency - that is, the backlog or arrears of demand for housing - at the end of June, 1947, was 250,000. That deficiency was, of course, quite intelligible because of the practical suspension of housing construction during the war. I am not complaining about that. There it was. It was one of the facts of

Australian life. In the nine years which ended at 30th June, 1956, not only had the whole of the new current demand for houses been met but the deficiency, or backlog, had been reduced from 250,000 to 115,000. That was a very remarkable achievement in nine years.

But the interesting thing is - and I shall take a couple of examples which show that I am not playing the party game on this matter - that in Western Australia the deficiency over that period was reduced from 15,000 to 4,000, and in South Australia from 24,000 to 7,500. I have taken just those two cases because those States are controlled by governments of a different political complexion, although, of course, this was not so right through the nine-year period. The figures indicate that the arrears of housing in those two States are well on the way to elimination.

In Victoria, which has had a considerable population growth - greater in percentage than has New South Wales - as well as a great industrial expansion, the deficiency has been reduced from 68,000 to 32,000. But in New South Wales, which has had a smaller population growth over this period than any other State in Australia', the deficiency, which was 107,000, is still 60,000. That is very remarkable, particularly when one considers that over that period the increase of population in Western Australia has been the highest in Australia. The population in Western Australia has increased since 1949 by 33 per cent, and the population in New South Wales, from which this complaint comes, has increased by 19 per cent, over that period of years - the lowest population increase in Australia.

There may be many reasons for that. The policies of the New South Wales Government, as we know, have not encouraged either the building of houses for rental or the sub-dividing of existing houses and the letting-in of tenants. That is another matter; that is a matter for New South Wales. In addition to this, the co-operative building society movement is probably much more advanced in New South Wales than in any other State, and any delays in the reticulation of funds through building societies may, therefore, be more significant. Those delays, may I say, are not to our account but to the account of the New South Wales Government.

But there is another matter which seems to me to be of great and perhaps unrealized importance. In the last few years, we have seen an enormous expansion in nonresidential building; that is, in the construction of factories, schools, office buildings, shops, hospitals, and so on. Such construction is vastly important because a community that is growing demands and needs a balanced ration of these things. The resources of the building industry are not infinitely elastic and, therefore, increases in non-residential buildings have a tendency to affect residential buildings. 1 shall give a simple illustration in the case of New South Wales. It will suffice to show that talk of crisis and of slump is grossly exaggerated. I deny a crisis; I deny a slump. As I told my press conference on 7th March, I constantly admit the existence of a problem of housing which will be perpetual - until some day it is solved. The fact is that New South Wales has had a pretty fair share of non-residential building. The value of non-residential building for Australia in the year before last was £149,000,000, and in the current year it will be £167,000,000. That is a tremendous programme. Of course, it attracts the attention of the building industry. People cannot construct city buildings, factories, hospitals and schools and at the same time build houses unless the supply of people who do this kind of work is inexhaustible. That is one matter which has been, I think, gravely overlooked in the assessment of the present position.

I am told - and quite rightly - that 5,000 houses fewer will be built in the current financial year in Australia than were built in the previous financial year. That, I believe, is true. I believe that, having regard to all the circumstances that exist, there will be a better figure in future. But instead of 78,000 - a high figure in itself - there will be 73,000 dwellings completed. That is quite true, but in the case of nonresidential building the advance has been of the order that I have described. Indeed, I think I should say that, taking New South Wales as the example, the number of tradesmen engaged on new building of all kinds in mid-December, 1 955 - fifteen months ago - was 39,243, but in mid-December just concluded, despite what has been said, it was not 39,243 but 41,964, or call it in round figures 42,000.


Mr Cope - Does that include the St. Mary's project?


Mr MENZIES - St. Mary's does not explain that, of course, as the honorable member knows. That is the number of people engaged on new building. These are figures not without importance. Perhaps I should add one or two more. I do not want to be tedious and I am afraid my time is running out. However, statements have been made about the position of the savings banks, and a suggestion has been made that by some strange mechanism the Commonwealth Government is anxious not to have houses built. It is a strange idea, having regard to this superb record, that we should not want to have houses built, and that we should suddenly become inhuman. But the suggestions have been made that the Commonwealth Savings Bank has not done its share. One year ago there began in operation in Australia what I shall call private savings banks - savings banks attached to the ordinary trading banks. The fact is that within one year of the constitution of the first of them, they have taken deposits amounting to £90,000,000. The Commonwealth Savings Bank's own deposits increased by £5,000,000. Therefore, the capacity for the Commonwealth Savings Bank to make advances out of new deposits has fallen and for a while the new savings banks appear to be lending rather less than their fair share. But these things are inevitable in a period of transition and I am happy to say that on the figures that have been put to me, I should think it quite clear that the amount of money for housing from the total savings bank structure in Australia at the end of this financial year will be as great as it was in the previous financial year.

I just want to bring the matter to a point by saying this: There has been a good dea of talk about alleged instructions given by the central bank and alleged instructions given by the Commonwealth Government. The plain truth is that the Commonwealth Government is very proud of the rate oi home construction in Australia. The plain fact is that the Commonwealth Government will not willingly see it fall away. The fact is that the central bank has pursued quite civilized directives on this matter. If there has been a fall in trading bank advances for homes, it has not been the result of a direction on the part of-


Mr SPEAKER - Order! The right honorable gentleman's time has expired.







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