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Wednesday, 15 March 1961

Mr MACKINNON (Corangamite) . - The motion that has been submitted by the Leader of the Opposition (Mr. Calwell) embraces three subjects, and I think it is advisable to refresh our memories on them. First, the motion refers to the general state of the Australian economy; secondly, to the condition of our overseas balance of payments and our overseas funds; and thirdly, the problem of employment and unemployment in relation to the general economy. One would have thought that in such an important debate as this, which concerns all the people of Australia, the Opposition as a potential government would produce in an election year something for the edification and education of the public. One would expect to hear expressed some of the thoughts that the Opposition would apply to the problems that are specifically mentioned in the motion; but it is particularly interesting at this time to recall the events that took place in this chamber just before I rose to speak. I was led to believe by the actions of the Opposition that it felt it did not want to discuss this important motion. Honorable members opposite indicated that they would far rather engage in frivolous witticisms about a very valuable committee of this House, and so divert the public mind from the mare's nest of their own making.

In an election year, I would have expected from the Oppsosition something intelligible - something the public could bite into. I would have expected to hear something about Labour's policy on the problems that face Australia. In fact, on studying the speech of the Leader of the Opposition and the speeches of several of his supporters, I have found evidence of their confusion in arriving at what they consider to be the real problem. It is obvious that in the mind of the Leader of the Opposition, the problem is one of imports and the balance of payments. He believes that is the be all and end all of our present economic problems. In his speech, the honorable gentleman said - . . there has been only one economic problem that matters, and that is that imports have been too high.

Later, the honorable gentleman said -

The Government has one problem that transcends all others. It is the problem of the flood of imports.

The honorable gentleman also said -

.   . the core of all our troubles is the state of our overseas balances.

I presume from those statements that the Leader of the Opposition discards inflation as a basic problem. I maintain - and I think I echo the sentiments of many of my colleagues in this matter - that the problem of balance of payments is purely a symptom of a far deeper problem that we have to solve, and that is the internal inflation that has built up gradually, particularly since the Korean war. not only in Australia but in the world generally. The import appetite we have displayed in the last nine or twelve months is only a corollary of this inflationary process within the economy.

I find some difficultyin accepting the implication that the more intelligent members of the Opposition really agree with their leader in his diagnosis of the complaint. It is rather interesting to note that when the Government takes steps to introduce remedial measures, many Opposition members raise their hands in horror and so also, to an extent, does the general public. In fact, when we analyse the basis of our economy to-day, we find there are many people who are interested in the inflationary type of enterprise, the get-rich-quick, buildandbust propositions. So it is obvious that when any steps towards corrective action are taken, many people have their toes trodden on.

Owing to the obvious intellectual weakness of political Labour in Australia, the responsibility has fallen on our principal newspapers to take up the task of criticizing the Government on the actions rt has taken. In many cases, their criticism has been profound, wise and also very helpful in dealing with the situation. I believe that in general, the press of Australia has much to commend it for being objective on the subject although, as has been pointed out by the Treasurer (Mr. Harold Holt) in this debate, there has been a tendency among certain elements to distort the relevant facts and figures.

I repeat that 1 believe the press has a responsibility in these circumstances because it is obvious that the muddled arguments that have been pushed up by the Opposition in this debate could not lead the Australian public to have any great confidence in either the basic philosophy of the Opposition or the standard of its criticism. So the responsibility has devolved on the press of Australia; and I believe its criticism is helpful provided it is constructive and objective and does not paint an exaggerated picture which might or might not bring on a condition which nobody in this country wants. I refer particularly to the panic criticism which is basic in the creation of lack of confidence.

As everybody knows, our country has set itself some tremendous tasks for very good and valid reasons. First, with the distinct approval of the people of Australia, we are aiming at a high increase in population. That, in itself, involves various considerations, particularly the strain of an ambitious immigration policy on our internal economy. Secondly, we believe that the people sunport us in seeking a high rate of commercial and industrial development and an increase in our export potential. I do not think anybody in this House will argue about that. Thirdly, we all hope that in conjunction with these other developments, we will be able to develop our social and cultural interests so that the people of Australia generally will move towards a better way of life. We are trying to do this within the framework of a very high standard of living and a principle of full employment. This is a matter to which 1 want to devote some time.

I bear out the remarks of the honorable member for Lalor (Mr. Pollard) that no one in Australia, if he is sincere, can see any advantage, for political or other reasons, in promoting unemployment. All political parties are committed to a policy of full employment. The Government's record over the past eleven years has been one of continued success in that direction. But since the Government's fiscal or commercial policies or the overseas crisis raise the threat of unemployment, resistance based on the fear of unemployment is shown to those policies. The honorable member for St. George (Mr. Clay) referred yesterday to the use of threatened unemployment as a means of blackmailing the Government. To be quite frank, T suppose there is a certain amount of that going on. There can be no doubt that it does take place, and this Government, or any government, would have to be resolute and courageous to stand up to this threat which implies in the minds of the public that there is a tendency to encourage unemployment.

The Government must also use its best means to ensure that alternative avenues of employment are found for those unfortunate people who, through either overseas crises, conditions of industry or Government fiscal policy are thrown out of work. I think that action has been exemplified in the present activities of the Department of Labour and National Service. It is very well demonstrated, I believe, by figures recently issued by that department.

I wish to refer now to the editorial appearing in to-day's Melbourne " Age ", which T regard as one of the greatest and most significant journals in Australia, if not in the world. I might add that the " Age " has not been entirely complimentary in its remarks about the Government's activities, particularly in the fiscal region, in the last six or nine months. However, there is an interesting comment in this editorial which I should like to read to the House: -

There has been a short-term upheaval in a section of the labour market and this has brought distress, but the situation is better than it was this time two years ago and immeasurably better than it was in other countries.

I think if we accept that statement as factual - and everybody knows, from figures that have been cited in this debate, the magnitude of the unemployment problem throughout the world - we will realize the importance of what the Department of Labour and National Service and the Minister are doing in handling the transposition of people who, unfortunately, through Government action, have lost their employment.

As a member representing a large constituency I realize the vast importance of maintaining an extensive local market. For instance, to refer to the position of only one primary industry, the importance of the local market to the sale of our dairy products cannot be over-estimated. A large local market, with people in a position to buy our local products, is of tremendous value to Australia's industry as a whole, and particularly to those primary industries which must naturally rely to a large extent on sales to people within Australia. However, over-full employment brings considerable pressures in its train at a time of rapid development, particularly such a time as that which we have gone through in the last ten years. Obviously, if we are to cater for our natural-born increase, as well as the large number of immigrants being brought here and seeking employment, an expansion of secondary industry must take place. It is quite obvious that the primary industries and State and Commonwealth services and departments cannot provide significant numbers of job opportunities for the vast numbers of people who are increasing our work-force each year. So we must rely on an expansion of secondary industry to help solve this problem of making jobs available. In these circumstances any adverse set of conditions, caused either by overseas influences or by governmental policy, must react immediately on the employment position. The problem of employment, as everybody in Australia realizes, is one that must be studied closely all the time, and I am glad to be associated with a government that has, over the years, shown its capacity to deal with that problem.

The next subject I wish to deal with is that of import licensing. It is rather interesting, in the light of what the Leader of the Opposition (Mr. Calwell) and the honorable member for Melbourne Ports (Mr. Crean) said about the paramount importance of the re-introduction of selective import licensing, to read again the remarks of the previous Leader of the Opposition (Dr. Evatt), in 1952, when he said -

We look forward to the time when the system can be removed and when there can be substituted for it a proper system of tariff duties, so that the trade of the country can run free.

That is, I believe, a true statement of what Australia's policy should be, but Labour's panacea for our ills at present is the reintroduction of import licensing. It is rather interesting to note in this regard that the greatest increase in importations has been in those items which, before the lifting of import restrictions, were not subject to restriction.

The huge increase of imports results from the vast pent-up spending power accumulated through our internal inflation. Of course, there has been some luxury spending. Of course, there have probably been too many large and flashy American cars imported. But in total these importations have been insignificant in the overall figures. As has been pointed out on a number of occasions during this debate, had Australia's exports remained at the 1953 values, they would be worth this year £1,300,000,000 instead of £880,000,000. This is a significant fact, and one from which there is no escaping. At the moment, unfortunately, we are on the wrong end of the stick.

I supported the lifting of import restrictions at the time the Government announced its intention to do so, because I believed it would have a good influence on the price structure in Australia. I thought that after the first rush the demand for imports would level out at a reasonable figure. So far,

I have been proved wrong, I think for two reasons. The first one is that it was impossible to estimate accurately the amount of spending money that was available in Australia. Secondly, the psychological effect of some of the talk that has been indulged in since the lifting of import restrictions has been to create in the minds of the public a belief that sooner or later these restrictions will have to be re-imposed. If you are engaged in a certain activity involving imported goods, and you think you may be left out on a limb, it is natural that you will take all sorts of steps to protect yourself against an expected eventuality. No one wants to be left out when, at some time in the future, a quota figure is established on a base year which may be the current year, or may be last year or next year. I think this belief in an ultimate reimposition of import restrictions has probably encouraged the flood of imports more than any other factor, and it has been brought about to a large extent by much of the talk that has been going on about this matter.

I understand also that the policy of the Reserve Bank to restrict loans from Australian sources for overseas purchasing has been circumvented to some extent by overseas exporters who themselves have made financial accommodation available.

I would like to recount a couple of experiences which I had in connexion with import licensing, one some years ago and one more recently. They show what an anomalous position we can get ourselves into. Some years ago I was approached by a concern which was engaged in making clothing in one of the important towns in my electorate. It was having difficulty in obtaining the right kind of lining material, which could be obtained only from overseas. I was asked if it were possible to do something to relieve the situation of the firm, because it was faced with the possibility of having to close down, and it employed some 120 people. Thank goodness, owing to the wisdom of the Minister

We were able to overcome the difficulty, and the firm was able to carry on. That is one side of the picture. More recently T have been asked by another concern in my electorate to try to do something about reimposing import restrictions, because a cer tain kind of product of this firm is being undercut by imported goods.

How to reconcile all these differing views I do not know, but I am led to the conclusion, and 1 still affirm, that the Government's policy is right, and that the tariff system is the only proper system by which the problem can be solved. If tariff machinery can be devised to work speedily - and the system was greatly strengthened by legislation introduced in this House last year - 1 think it is by far the most equitable and logical method of ensuring the protection of industry. Furthermore, it is fairly obvious that import licensing did encourage the establishment of uneconomic industries which have had some effect on our increasing cost structure.

I should like to refer now to investment in government loans. I believe that the old system which operated for a number of years would be of advantage at this time. Provision should be made for the acceptance at face value of government loans in payment of federal estate duty. I do not claim that it should be possible for an executor to buy bonds on the market and to use those bonds in settlement of estate duty, but there is plenty of room in our federal financial structure for acceptance of the principle that, say, the executors of an original investor in a lew loan, or of a person who has held bonds for a number of years, should be able to use those bonds in settlement of estate duty. I know that at present it is possible to take up special bonds for that purpose, but I must remind the House that special bonds are limited to £5,000, and that is not the kind of investment that I have in mind when discussing this subject.

I pass now to the question of our overseas balances. The Deputy Leader of the Opposition referred to the run-down in our overseas balances as throwing away £400,000,000. Does he seriously suggest that we have actually thrown away £400,000,000? Does he seriously suggest that some of that amount is not represented by the value of the equipment that we have introduced into Australia and the capital works that have been carried out during the last ten years? His suggestion is fanciful and in keeping with a lot of the tenets of his argument.

Many Government members have pointed out that a reduction in prices of our main exports cannot be anticipated accurately. If we are to curb our expansion programme during this period of our development for fear that something might happen, our progress inevitably will be retarded. I think that is fairly axiomatic. We have followed a policy of trying to build up overseas reserves. Overseas reserves have no real value if they are not to be used when required to enable us to continue our development. That is what we are doing. The reserves are built up to meet that very contingency and we expect them to be available if and when they are required.

I mentioned earlier that when the Government adopts measures to deal with internal and external financial problems it is a certainty that some one will be disadvantaged. No one likes the good-time atmosphere of booming conditions to be slowed down or stopped, except that unfortunate section of the community whose incomes are fixed and do not keep pace with rising costs. The solution of our immediate economic problems will emerge as the effect of the present measures are felt. Things may get worse before they get better, but as the representative of a constituency which is vastly affected by falls in overseas prices without corresponding falls in the cost structure, I welcome the policies which are aimed at curbing inflation so that after a shake-out we can get on with the task of making Australia physically and economically strong.

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