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Tuesday, 9 May 1961

Mr UREN (Reid) .- Mr. Deputy Speaker,the honorable member for Henty (Mr. Fox) says that members of the Australian Labour Party are not the only persons who are concerned about unemployment in this country. He says that he is concerned about it. May I remind him that Labour governments have been the only governments ever to give full employment to the people of Australia. The Menzies Government has not faced up to that responsibility. If it wishes to do so, let it do something to solve this problem of growing unemployment. We know that there are at present more than 80,000 persons registered as unemployed. We know, too, that there are in fact more than that number of persons unemployed, because a great number of married women, for example, who have lost their employment are not registered, although employment is an economic necessity for them because of this Government's policy.

We could say a lot to-night in making a survey of the Government's economic policy. We could recall that this is a government of inflation. We know that it has increased indirect taxes and promoted inflation throughout the years. This Government has tried in all sorts of ways to control that inflation, but it has not been able to do so. In 1952, it introduced import restrictions in an attempt to curb inflation, but in February, 1960, it virtually removed those restrictions.

The matters with which 1 wish to deal are, in brief, the failure of the Government to stabilize the balance of payments and its failure to deal with the situation caused by the indiscriminate inflow of new capital from overseas - an inflow that is not being controlled by this Government. Since this administration has been in office it has built up a deficit of £1,800,000,000 in our balance of payments. That represents partly an excess of imports over exports, which is totally against the best interests of Australia. The deficit has been made up partly, also, of new capital brought in from overseas and undistributed profits of overseas companies_ on operations in this country. These undistributed profits are just an indirect tax levied by these great monopolies on the Australian consuming public, and the overseas companies reinvest these funds in Australia. Portfolio capital, also, has come in from overseas. I remind the Treasurer (Mr. Harold Holt), who is now at the table, that this is a dangerous kind of investment. We know that the money invested in this way is hot. On top of all this, we have raised foreign loans, because this Government will beg, borrow or steal from anywhere in the world in order to get money. However, I shall deal with that more fully later.

As a last resort, this Administration turns to the International Monetary Fund. The Government has now scraped the bottom of the barrel and has borrowed from the fund. But it has not obtained only small loans. I know that Government supporters say that the Chifley Government borrowed from the fund. We do not deny that fact. We do not deny that in the dying hours of the last Chifley Government, in October, 1949, the dollar reserves of the entire sterling bloc, including the United Kingdom, were low, and consequently the Chifley Government, as a member of the British Commonwealth team, borrowed 20,000,000 United States dollars, which was equivalent to about £9,000,000 Australian, to help reduce the dollar deficit of the sterling bloc.

We have been told that the Labour Government signed the Bretton Woods Agreement. That has been said by many Government supporters. We do not deny that fact. As a matter of fact, there was great discussion in the Australian Labour Party as to whether the Labour Government should sign that agreement. A certain body of opinion within the party considered that the signing of that agreement would not be in the best interests of Australia, and another body of opinion thought that the signing of the agreement would be in Australia's interests. The party, by a decision of the majority, determined that it would enter into the agreement.

When Mr. Chifley, in March, 1947, made his second-reading speech on the International Monetary Agreements Bill 1947, which ratified the Bretton Woods Agreement, he said that Australia was entering into this agreement in order to assist the backward nations of the world - the under-developed nations. Some Government supporters seem to think that the Bretton Woods Agreement was concerned only with the International Monetary Fund, but that is far from the truth. The agreement was concerned with two main financial structures - the International Bank for Reconstruction and Development and the International Monetary Fund.

Mr Harold Holt - Did not the Chifley Government borrow from the International Monetary Fund?

Mr UREN - We know that Mr. Chifley said that he would never borrow from the International Bank because Australia was entering into the Bretton Woods Agreement in order to assist the backward nations of the world. But what has this Administration done? It has borrowed a total of 318,000,000 United States dollars, or about £142,000,000 in Australian money, from the International Bank. Until a year or so ago, it was the biggest borrower from the bank. Only recently have India and another country passed Australia's borrowings, and Australia now is the third greatest borrower from the bank.

Let me remind Government supporters that the Bretton Woods Agreement has been developed a stage further with the formation of the International Finance Corporation. That is another financial organization established under this agreement, which I may perhaps describe as an interna.tional bank agreement. And there has been yet another development in the field of international finance. On 4th May of last year, the Treasurer introduced in this House - perhaps many years later than was desirable - the International Development Association Bill 1960, which has at long last been established for the purpose of assisting the backward nations to develop their own countries. We know that originally the International Bank was to assist in this task.

The Menzies Administration has been so greedy and so eager to make good the deficit of £1,800,000,000 in its 'balance of payments, which has built up since 1949, that it borrowed large sums from the bank in order to fill the gap. We have heard much sniping by Government supporters at the Australian Labour Party. A few moments ago, I heard the Treasurer mumble something about the Chifley Government having borrowed from the International Monetary Fund. Of course it borrowed from the fund, and I have already told the House why. In October, 1949, the Chifley Government borrowed £9,000,000 from the fund to assist the sterling bloc, not to improve Australia's overseas balances. In doing that it was doing something as a member of the Commonwealth team and was not worrying solely about Australia. As honorable members opposite well know, that amount was repaid within a couple of years. Then the Menzies Government found itself in difficulty in August, 1952, and it had to resort to borrowing 30,000,000 dollars, or £A 13,000,000 from the International Monetary Fund.

Let us compare those amounts with the amount that the Government has scraped the bottom of the barrel to obtain now. On this occasion the Treasurer has just made a few statements, and during question time the honorable members for Yarra (Mr. Cairns) and Wills (Mr. Bryant) had to pummel him to ascertain the provisions of this agreement. The Treasurer did not know. One would think that the man who has control of the Treasury would know such important things as that, but he did not have the information at his finger-tips. He had to go to his back-room Treasury boys to get the information. As a result, on 4th May he tabled these documents which have given us the information. We now know that the agreement with the International Monetary Fund contains certain provisos and has strings attached to it in much the same way as the Minister for Labour and National Service (Mr. McMahon) wants to attach strings to the provision of long-service leave for members of the Waterside Workers Federation. The Government wants to control the waterside workers of this country in the same way as the International Monetary Fund, the financial clique of Wall-street, wants to control the economic conditions of this country.

On this occasion the amount that we have to borrow from the International Monetary Fund is 175,000,000 United States dollars or £A78,000,000. The Treasurer has also told us that there is a further stand-by, another loan of 100,000,000 United States dollars or £45,000,000 Australian, available to us. Let us compare those amounts with the £9,000,000 that the Chifley Government borrowed in the interests of the British Commonwealth in 1949 and the amount that the Menzies Government borrowed in 1952 to overcome its balance-of -trade problem. The Government is scratching, lt has been scratching for a long time. As I said earlier, an amount of £1,800,000,000 has been borrowed from whatever source the Government could get money, and it has encouraged an inflow of foreign capital from any country it could get it. I reminded the Treasurer earlier that this hot money coming into Australia is dangerous because, as he knows quite well, it can slip out just as easily as it slips in.

It is interesting to note how portfolio foreign investment in Australia has grown during the years since 1947-48. Under the Chifley Government the inflow of foreign investment was controlled, and in that year it was only £1,600,000. It was kept to a fairly low figure under the Menzies Government until about the mid 'fifties. Even in 1957- 58 the inflow of hot money or portfolio capital was only £7,600,000. It rose from that figure in 1957-58 to £19,800,000 in 1958-9. But what has happened now? A bulletin on Australia's balance of payments which has been issued only in the last couple of days discloses that last year, 1959-60, the inflow of hot money or portfolio capital rose to £34,000,000. I believe that there should be some concern about the way the Government is getting this money at pawnbroker rates from whatever source it can.

Let us look at the money that has been borrowed by the Menzies Government during its term of office. Apart from borrowing 318,000,000 dollars from the International Bank for Reconstruction and Development, this Government has borrowed £342,000,000 sterling from Great Britain, 15,000,000 dollars from Canada, 180,000,000 Swiss francs, and 271,000,000 dollars from the United States of America. Those figures were given by the Treasurer in answer to a question asked by me. They were the figures as at 30th lune last. Since then he has negotiated a loan of 27,000,000 dollars from New York, a loan of about £20,000,000 from London, another loan from Canada and yet another Swiss loan. Those are some of the loans that have gone to make up the deficit of £1,800,000,000 which this Government has accumulated during its ten years of office.

Let us have a look at the loan market generally. The amount of overseas borrowings for general Commonwealth and State Government securities at 31st December, 1949, was £522,000,000. By 30th June, 1960, that amount had risen to £696,000,000. That represents a net increase in overseas borrowings by this Government of £174,000,000. The figures for the internal debt are interesting. Under the Chifley Government, at 31st December, 1949, the internal debt stood at £2,661,000,000. On 30th June, I960, it was £3,885,000,000. That represents an increase of £1,224,000,000 in the internal debt under this Government. That is yet another example of the failure of this Government.

Let us look at the inflow of new capital under the Menzies Government. 1 take my figures from the annual bulletin on overseas investment for 1958-59. An examination of the figures discloses that between the years 1947-48 and 1958-59, £945,000,000 has been invested in Australia by overseas investors, of which £596,000,000 was direct new investment and £349,000,000 was reinvested from profits made by overseas companies operating in Australia. That amount of £349,000,000, the undistributed profit, is in fact a tax levied on the Australian consumers. In Dr. Coombs' own words, these major companies that have control of the distribution of goods in this country place that tax in their cost structure and on the price of their goods so that in fact the consumers are paying for the future development of many overseas companies which are operating in Australia.

Under the Menzies Government there is no control over overseas investment in this country. Since 1949, the Government has encouraged overseas investment, whether for the manufacture of lipstick, soft drinks or any other product, or the building of luxury hotels. The Government has not been selective in attracting overseas investment in Australia. I defy the Treasurer to give me an example of the Government being selective. There is no such example. The Government is concerned only to encourage foreign investment in order to reduce the difference between the values of our imports and exports. The Government is only concerned about attracting the money into Australia. Although that will present a great problem in the future, all the Government is worried about is settling the present issue. It does not worry about the future. Our trading deficit is a Frankenstein's monster which has been built up, and another government will have the difficult job of dealing with the problem in the future. The Government is concerned only with making up the difference between the cost of our imports and our earnings from exports.

Let us examine the great wealth that is being made by overseas investors in this country as a result of two double taxation agreements - that with the United Kingdom and that with the United States of America. It may be said by honorable members opposite that the double taxation agreement with the United Kingdom was entered into by the Chifley Administration. It was; but at the time Mr. Chifley entered into that agreement he was faced with the task of taking the Australian economy into the post-war era, and he was also concerned with full employment for the people. He entered into that double taxation agreement in order to encourage British equipment and technical know-how to come to this country and help to develop it. However, I am sure that had he been here to see the great savings made by British investors as the result of this double taxation agreement Mr. Chifley would have reviewed the agreement. Only a fool would not see, from an examination of the relevant figures, that the agreement was working against the best interests of Australia.

The figures disclose that since 1947-48 new capital inflow from the United Kingdom has amounted to £421,000,000. In the same period capital outflow in the form of dividends was £258,000,000. That is to say, we have had a gross gain of £163,000,000. At even a conservative estimate the tax saving by United Kingdom investors has been between £80,000,000 and £90,000,000, leaving us with a net capital gain from the United Kingdom of £73,000,000 to £83,000,000. The new capital inflow from the United States from 1947-48 was only £94,000,000, but it is interesting to note that the outflow in the form of dividends was £99,600,000 - a loss to Australia of £5,600,000 in the period.

When the Menzies Administration entered into the double taxation agreement with the United States it said it was doing so in order to encourage more new capital into the country. I stress that. It wanted an inflow of new capital. It is interesting to note that whilst the capital inflow from the United States between 1947-48 and 1952-53 was £32,700,000 the capital outflow in the same period was only £16,000,000. But the capital inflow since 1953 has been only £61,700,000 whilst the capital outflow has been £83,600,000. There has been a gain to the American investors of about £21,000,000.

Before the double taxation agreement with the United States was signed, the tax paid by American companies to the Australian Government was 7s. in the £1. Indi viduals paid Id. in the £1 on the first £100 of dividends, and up to 180d. in the £1 on £8,000 and above. The tax on dividends after the agreement was signed was 15 per cent., or 3s. in the £1 for companies and individuals. At a conservative estimate American investors during the period saved £19,800,000 in round figures at the expense of the Australian taxpayer. Australia suffered to the extent of £40,000,000.

The Treasurer may be a little bored and may not be at all concerned with this problem, but this indiscriminate inflow of foreign capital into Australia will lead to a very sorry story in the future, because this money is being invested at pawnbroker rates now, and we as a Labour government in the future will have to face the problem. This Government goes round getting money in any corner possible. It has its back to the wall at the moment, because it has to go to the International Monetary Fund for help out of its troubles. During its term of office the Government has allowed our imports to exceed our exports by £1,800,000,000, and has had to borrow money from overseas to make up the difference. I will say that at least borrowing money straight-out is better than the indiscriminate inflow of hot capital, which is being directed into non-essential industries and is working against the best interests of Australia. The Goverment is a government of inflation because it uses indirect taxation as a main means of gaining revenue, thus passing the tax burden on to the mass consumers. I heard the Treasurer say that I was talking rubbish. I am not talking rubbish, because the plain fact is that this Government has allowed the burden of taxation to bear, through indirect taxes, more and more on the worker, since it is the workers who pay the bulk of indirect taxes. This Government has raised the depreciation allowance on plant from 4.4 per cent., as it was during the last year of the Chifley Administration, to 7.7 per cent, this year. It would not be so bad if the benefit of depreciation allowances were in respect of plant for essential industries instead of plant for non-essential industries which make the wealthy wealthier.

The Government is completely smug. All it is concerned about is helping the big interests which it represents. I have said on many occasions that the Menzies Government is a 5 per cent, government. It represents the top 5 per cent, of the community. lt allows this 5 per cent, in the top bracket to get away with great wealth through tax evasion. It allows great capital gains to be made, untaxed. The " Hansard " record contains details of the great wealth that is being accumulated by certain sections of the community. Under this Government, Australia's economic position is going from worse to still worse, and only a Labour administration will get the nation out of the trouble. I am quite sure that when this Government is game enough to go to the people the election will be disastrous for it. The honorable member for Griffith (Mr. Chresby), who is now interjecting, will be saying farewell to this Parliament. He is a " oncer " and will not be back here after the next general election. The Brisbane City Council election has made clear where members of the Labour Party in this House will be after the next general election. They will be seated on the opposite side of the chamber. We are quite well aware of the great problems as a government we will inherit from this Government. When the honorable member for Melbourne Ports (Mr. Crean) takes over from the derelict who is now Treasurer he will have a difficult job to straighten out the nation's accounts, which are an all-time low. This Government is like all antiLabour governments. A Labour government handed over to it a buoyant economy and a Treasury in good condition but, by begging, borrowing and stealing, it has run the economy down. When we take over again, we will be faced with the task of building up the economy once more.

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