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Wednesday, 29 June 1938


Mr PROWSE (Forrest) (1:35 AM) .I was extremely interested in the speech of the honorable member for Henty (Sir Henry Gullett), who said that two matters were of paramount importance at the present time. I agree with him that defence - one of the subjects mentioned - is most important, and that in expenditure on defence money is likely to be squandered. Beyond saying that it is necessary to exercise strict supervision over defence expenditure in order to ensure that the country will get value for the money expended, I shall not discuss defence matters.

Immigration and the effective occupation of this country are, as the honorable member for Henty said, of great importance to Australia. Had I not known the honorable member for Henty and were I unacquainted with his administrative actions, and also his actions in this chamber, I should have said that the honorable gentleman's statement was the most statesmanlike of any that I have heard in this chamber. I agree with every word that he said, but, coming from him,I recognize a tremendous inconsistency.


Mr Brennan - I thought that his speech was almost treasonable.


Mr PROWSE - I am sorry that the honorable member for Henty is not here. On the hustings several years ago he said that if the governments of Australia had given to the development of primary industries half the attention that they had given to secondary industries, the wealth of this country would be double, if not treble what it is to-day. A review of the actions of the honorable member for Henty will show that he has not given to the development of primary industries the attention that he has given to secondary industries in this country. I am reminded that, "He that knowethto do good and doeth it not, to him it is sin ". According to the honorable member for Henty, if the parliaments of this country had devoted more attention to the great primary industries, instead of strangling them by another policy, the wealth and prosperity of Australia would be double, if not treble, what it is to-day. Although the honorable member for Henty knows that to be true, he has adopted a different attitude, and therefore " to him it is sin ". Australia has had plenty of advice on this subject. It will be admitted that during the 19 years that I have been a member of this House I have warned the Parliament against overdoing the protectionist policy whereby secondary industries develop at the cost of the great exporting primary industries. That policy has placed Australia in an insular position. The honorable member declared recently that Australia had almost reached a dead end as regard's its population. When our population reaches 8,000,000 in a year or two, according to recent vital statistics, we shall have reached the limit of population and must expect torecede. It was contended that, without a greater population, we could not effectively occupy this country and hold it in the present spirit of the world. I agree with the honorable member. The "Big Four", who visited Australia some years ago, offered some advice to the Australian Government. Later, further advice was offered to it by Sir Otto Niemeyer, who was invited here by the Scullin Labour Government. Both the " Big Four " and Sir Otto Niemeyer warned Australia of the consequences of its fiscal policy. Surely this Parliament will give heed to such advice. The " Big Four " made the following statement in their report: -

The amount covered by taxation rose by68 per cent. (from £5,786,676 to £9,711,749), while the total interest charge rose by a little over 50 per cent. (from £20,807,026 to £31 , 373,271 ). The inference, which is confirmed by such observations as we have been able to make, is that this position results from heavy expenditure of loan capital by the States on developmental undertakings which have not proved to be self-supporting and have imposed a heavy burden on the general community and consequently on the cost of living and production.

It is interesting to note the time devoted to this issue by those four eminent economists. Their report also stated -

No act of Parliament can alter this basic truth. That a new country is justified in borrowing money for reproductive workshas always been recognized, but results must be achieved and production must advance in proportion to the public debt incurred.

That is an important statement. I can remember hearing members of Parliament say in my youthful days that they approved of the borrowing of money for reproductive works. That principle has not been observed in our borrowings during recent years. In paragraph 44 of their report, the " Big Four " stated -

But all measures designed for the increase of Australia's wealth production and power of absorbing new population tend to be defeated if there are strong forces within her which operate so to raise her costs of production that she cannot sell her products in the markets of the world, and is restricted within the limitations of her own home market. Here we approach the most vexed, and the most important of all Australian questions, that of the combined effects of the protective Customs Tariff and of the legislative enactments, both of the Commonwealth and of the States, for the fixing of wages and conditions of labour, which we will call, for brevity, the arbitration acts.

There is much more in that strain, but I shall quote only two further passages.


Mr HOLLOWAY (MELBOURNE, VICTORIA) - It is the same old story.


Mr PROWSE - The honorable member for Melbourne Ports (Mr. Holloway) must recognize facts. The population of this country is not increasing at a rate which will enable it to be effectively occupied. Let us examine the cause.


Mr Anthony - The population of the cities is increasing.


Mr PROWSE - By reason of the policies that I have been endeavouring to describe, and which the " Big Four " have described. They said further: -

We have felt much force in the oft-repeated complaint that successive increases in the tariff which affect prices and the coat of living, following upon, or being followed by, successive advances in the cost of labour as the result of decisions under the arbitration acts have involved Australia in a vicious circle of ever ascending costs and prices, and that this condition of affairs is crippling Australia's progress and her power of supporting increased population. There lies no task before the Australian people more urgent than that of in some way breaking the vicious circle and of bringing down costs of production, as is being done in the other industrial countries of the world, without lowering the standard of living of the workers as measured not by money, but by real wages, which are the reward of labour in the form of goods and services.

I can recall the honorable member for Melbourne Ports reminding honorable members of this House that it was not necessary to quote the wages paid in any country; what was needed was to ascertain the purchasing power of those wages. These four economists speak of real wages. If £1 will purchase under certain conditions as much as £2 will purchase under other conditions, surely the £1 is worth as much as the £2.But if, by increasing wages, tariffs, and the cost of living, a vicious circle is established, naturally Australia is placed in an insular position. As those four men have said, our market is limited to Australia's requirements, costs being so high that we cannot sell our products in other countries, and therefore our people cannot be given employment. That is the position in a nutshell. One of the most serious difficulties which Australia has to face at the moment is the high cost of production of our goods. For many years, costs of production generally have been increasing, and unfortunately these increases appear to have been maintained. If Australia were entirely isolated from and independent of overseas sources of supply, and if it were also independent of overseas markets for the disposal of some of itsproducts, high costs of production would matter less; but seeing that Australia is not isolated but is dependent to a large extent upon overseas markets, the seriousness of the position lies in the fact that the cost of production in competing countries has declined, while in Australia it has risen, thus increasing the already wide margin between this country and others. Australia has been brought into this insular position, and almost to a dead stand-still in regard to population, largely by those causes to which the "Big Four" and Sir Otto Niemeyer directed our attention - the tariff, the Arbitration Court, and the Navigation Act. I take it that the advocates of those agencies thought that they would bring great benefits to the working people and effect the solidarity and selfcontainment of Australia. Actually, however, they have placed this country in an insular and stagnant position, and brought it to the end of its tether. There was a time when there was either no tariff or a low tariff, and we had valuable markets for our secondary products in New Zealand, Fiji, and other parts of the world. To-day, 97 i per cent, of our exports arc of primary commodities. Despite all the efforts that have been made for the development of secondary industries, they are unable to export and Sell any of their products in order to bring new money into this country cr to establish its credit abroad by production for export to other countries. As the " Big Four " said, production costs are too high to enable that to be done. The working man thinks that he is better off, but he is not.. By reason of the limitation of the market to Australia, costs are increased and the effective occupation of this country is prevented. If that state of affairs bc continued, we. cannot continue to bold Australia. The honorable member for Henty (Sir Henry Gullett) has urged that, more people be brought here, and he has referred to what happened in other eras. The cry after the war was, "Go on the land, my boy". The sum of £30,000.000 was provided for the settlement of mcn on the land. The slogan was - Three M's : Men, money and markets. T tell this House that we need only one of those - markets. If we have those, wc shall get tho men and the money. The five economists, who volunteered their services to the BrucePage Government, were asked to assess the handicap imposed upon our export industries by the development of secondary industries, and reported that the handicap at that time, under a much lower tariff than we have to-day, was 9 per cent. I warn this House, not threateningly, that if the 40-hour week be added to the tariff, the Navigation Act, the Arbitration Court, and strikes, this country will suffer a further reverse so long as other countries are working under different conditions. Honorable members -probably read in the Argun, of the 10th instant, the following comment from Geneva. : -

Italy had a 60-hour week, a delegate said at tin- International Labour Conference yesterday., when the question of a 40-hour week was discussed, Mr. Goldie., representing Canadian employers, said tiwi, it would be suicidal to introduce a 40-hour week at, tue moment when Italy had a (10-hour week with out, counting overtime. A _ similar situation existed in Germany, he said. The representative of Danish employes said that the 40-hour week in France had decreased production and increased the mat of living.

That is quite natural. I am sure that no honorable member is so unthinking as to fail to realize that the loss of 2,000,000 working hours caused by the adoption of a 40-hour week must have the effect of increasing the cost of living and of everything produced in this country, thus placing it in a more isolated position and making more impossible the production of goods for sale, outside Australia. Although the working nian and his advocates think that it would be greatly to his benefit, I arn bold enough to say that it would injure him. I confidently assert that f do the working man the greatest favour and kindness when I warn him and this House against the adoption of a 40-hour week whilst his competitors in other countries are working longer hours. Y7e have had an experience of the effect of such a policy. Mr. 'Lang, doubtless with the best of intentions, decreased the working hours and improved the pay conditions of the workmen of New South "Wales. There was a movement to secure the co-operation of the Melbourne Trades Hall Council, but that body was too sensible to fall in with the idea, because the workmen of Victoria were in excellent employment and the manufacturers were beating their rivals in New South Wales " to a frazzle ". If that be the effect as between one State and another, surely the effect must be the same internationally.


Sir Frederick Stewart - Anybody would think that Australia was to be the first country to adopt the 40-hour week, instead of which, unless we are careful, it will be the last.


Mr PROWSE - I have given reasons for the views that I am expounding. The honorable member for Henty (Sir Henry Gullett) and the honorable member for Parramatta (Sir Frederick Stewart), perhaps out of the greatness of their hearts, contend that good would be done. The honorable member for Henty is largely responsible for the position in which Australia finds itself to-day, and of which he complains. One set of people opposes immigration to this country, on the ground that there is no labour for immigrants. Others say that we have no right to try to hold Australia if we do not increase its population. According to the honorable member for Henty, our population is likely to come to a standstill at a total of 8,000,000 ; it may even recede. If that be so, there is something wrong. After all, what has been the result of all this inordinate help which has been given to the secondary industries of Australia? Honorable members have seen in the Sydney Sunday Sun of the 26th June a list of profits made and dividends paid by certain companies last year and this year. The dividends are enormous when compared with those of our great exporting industries. Those industries are being strangled by the load of costs placed on them. Only last week a measure was passed which willincrease the load; I refer to the National Health and Pensions InsuranceBill. Every honorable member has, been circularized during the last few days by the Australian Glass Company, pleading for greater protection. This poverty-stricken concern last year made a profit of £231,199, and paid a dividend of 15 per cent. This year its profits amounted to £287,628, and it again paid a dividend of 15 per cent., yet it is circularizing honorable members to secure their support for further protection!


Mr Mulcahy - The honorable member knows that the company which made those profits is not the company which issued the circular.


Mr PROWSE - Is it not reasonable to expect the company to expend its profits in every branch of its undertaking before asking for greater help from the exporting industries of this country, which have established the national credit. I am not antagonistic to secondary industries in this country; I believe that we should encourage them. But, as Sir Otto Neimeyer pointed out, we are attempting too much in an endeavour to make Australia self-contained, and to establish a position in this respect that has never existed in any other country and never will. Such a policy places too great a burden on our primary industries. It has forced other countries to close their doors to our exports, and to make reprisals generally, by instituting higher tariff duties against our goods. Our trade diversion policy, sponsored by the honorable member for Henty (Sir Henry Gullett) when he was Minister directing negotiations for trade treaties, forced other countries to close their markets to Australian primary products. Previously, Australia had an annual favorable trade balance of £40,000,000 with Italy, France, Germany, Belgium and Japan, but, to-day, each of those countries discriminates against our goods. Belgium, ' for instance, used to buy £9,000,000 worth of Australian products, whilst we bought only £900,000. worth of Belgian goods. Like 30 or 40 otherboodling companies, a glass manufacturing concern set up in business in Australia simply in order to make profits for a few shareholders, but under the smoke-screen that it was giving employment to large numbers of Australians, it secured tariff protection against Belgian glass. That protection was gained solely at the expense of our exporting industries. No one could expect Belgium to accept such treatment complacently, and, consequently, it refused to take barley from South Australia and meat from Western Australia until it received fairer treatment at our hands. A similar position arose in respect of Japanese purchases of wool, and the sale of Australian apples in Germany, whilst France, because we refuse to buy perfumes and other commodities from it, placed a duty of 4s. 6d. a bushel on Australian wheat. We also offended Italy in respect of our trade. To-day, we cannot claim one nation, outside the British Empire, as our friend. Seventeen years ago I was bold enough to suggest that the best step this country could take in order to rehabilitate itself economically would be for all our people to accept a reduction of 33£ per cent, of their incomes and of prices generally. I held that if that were done, Australia would go ahead by leaps and hounds, the working man would be better off, the purchasing power of the people would be increased, and we would be enabled to recover export markets in other countries in return for purchasing their goods. I have no desire to deprive the honorable member for Wimmera (Mr. Wilson) of any praise which he may receive from the honorable member for Batman (Mr. Brennan), but I feel that this Government is acting too tardily in malting available the money to the farmers appropriated by Parliament in respect of rural debt adjustment. From the remarks of the honorable member for Batman, one would be led to believe that members of the Country party are not the least concerned in this matter. I point out that on the 28th April, I asked the Treasurer (Mr. Casey) the following question: -

Will the Treasurer say why the allocation lor rural debt adjustment for the ensuing year has been reduced by £500,000?

And the Treasurer replied -

The money found by the Commonwealth Government for rural debt adjustment comes out of loan fund. The Loan Council from time to time, but particularly at its April-May meeting, considers the total amount of loan money that is available in Australia for all purposes, because all of it comes out of the one pool. Tlie Loan Council at its recent meeting considered the matter of tho amount available in the ensuing year, covering the public works of all tlie governments, defence requirements, and rural debt adjustment. What appeared to all the members present to be a reasonable allocation of the loan money available for those three different purposes was. arrived at. It included -an amount of f2,0d0.000 for farmers' debt adjustment. That went against the Commonwealth account. That was the only loan money that the Commonwealth drew from the common pool, the balance having been made available for State works. I may say, without divulging what happened at the loan council meeting, that this amount was allocated without dissent from any one premier.


Mr Holloway - That statement justifies the remarks made by the honorable member for Batman.


Mr PROWSE - I am not trying to shield the Government in this respect. However, I do not condemn it, because it at least appointed a royal commission to investigate the wheat industry and its proposal in respect of rural debt adjustment was based on a recommendation of that commission. Thus it has accomplished much in helping the wheat farmer. My commendation of its efforts, however, is qualified to the extent that it is not disbursing expeditiously the money for rural debt adjustment. Many farmers have had their debts adjusted, and it is in the interests of this country as a whole that such action ha3 been taken. I have no desire to indulge in carping criticism of the Government, but merely stress the absolute necessity for keeping our farmers on the land. This fact was recognized by the royal commission which inquired into the wheat industry. During the depression 6,000 farmers in Western Australia went off the land to seek employment in the cities, or, as happened in many cases, to swell the ranks of the unemployed. Such a trend is not good for any country. The royal commission which inquired into the wheat industry pointed out that many farmers were on the verge of bankruptcy, and that if they had only their own interests to consult they would immediately abandon their holdings. Every honorable member realizes how disastrous it would be for this nation if any substantial proportion of our primary producers deserted the land. This country would not have been confronted with the depression had it not been for the fall of prices of our exportable commodities. It is only when prices of those commodities rise that politicians are able to say with any certainty that we have prospects of better times. We depend absolutely on our primary industries.

This Parliament recently passed three measures in respect of the marketing of dried fruits, dairy products and wheat, and these measures were supplemented by State legislation. The validity of the

Commonwealth legislation, however, was upset by the .Privy Council in the James case, and in an endeavour to remedy the position which then developed, the people were asked by referendum to invest the Commonwealth with greater powers in respect of marketing. Those proposals were rejected, and I regret to say that many honorable members who supported them, on the floor of this House, went on the hustings, and advised the people to vote against them. This is indicativeof the degree of sympathy which the rural interests receive from -many honorable members. Our 'primary producers aru subjected to world competition, and are forced to sell wheat, for instance, on overseas markets at prices barely in excess of the cost of production. However, honorable members opposite voted against the imposition of a law to provide' a home-consumption price for wheat on the plea that they could not a-gree to any tax being placed on the bread of the poor. That, is the sort of cry that is raised against the farmer by those honorable members who, nevertheless, are such enthusiastic supporters of secondary industry that they are prepared to allow a concern like General Motors-Holden's to make, in one year, a profit of 66 per cent., or over £1,000,000, on an investment of £1,500,000. The honorable member for West Sydney (Air. Beasley) opposed the referendum proposals on the grounds that they meant the conscription of the people's food. What is the difference between conscription in that respect, conscription of labour, and conscription of manufactured goods' through the tariff? If a man happens to be a wheatfarmer, he is nevertheless, entitled to a standard of living equal to tha-t enjoyed by any other section of the people. Consequently, we should have thought that the honorable member for West Sydney would have told his supporters that the referendum proposals represented only a fair deal for the farmers. T admit that the then honor.orable member for Capricornia said that if our secondary industries were to be enabled, through high tariff protection, to enjoy an Australian market for their goods, and we were to set up arbitration courts, in order to ensure a reasonable standard of living and fair conditions of employment for the worker, then it was only right that the primary producer should be enabled to enjoy a standard of living equal to that of other sections of the community.

That was a fair statement. The Labour Government of Western Australia, after having introduced legislation into the State Parliament to implement the Commonwealth Government's marketing scheme, turned round and said that our primary industries should be assisted by means of bounties from the general revenue, and by the imposition of excise duties. The loader of the United Australia party in Western Australia adopted the same attitude. It is true that the Commonwealth has power to deal with the situation in that way, but it is not a satisfactory method. The working men of this country would not like to have their wages fixed for only twelve months, nor would the manufacturers like to have customs duties determined for only twelve months. Workers and manufacturers alike would object to an annual revision of wages and customs duties, respectively. Such a procedure would convert their interests into a kind of political football. lt is unreasonable, therefore, that primary producers should he asked to submit to an annual review of their industries. Tho sooner this Parliament and ' the country as a whole recognize the necessity r.o give the primary-producing community a fair deal, and to permit trade to flow freely between Australia and other countries, the better it will be for our people. 1 listened with great interest to the speech delivered on Tuesday by the honorable member for Henty (Sir Henry Gullett) on immigration. If that honorable gentleman would practise the doc.trine that he preaches we should think better of him. Australia is one of the finest countries of the world. It offers unique opportunities to newcomers, and immigration, as the honorable member for Henty said, is one of the most important subjects that wo could discuss.







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