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Tuesday, 23 May 1939

Mr HOLT (Fawkner) (Assistant Minister for Supply and Development) . - The vast expansion of our defence programme in recent years has rendered inevitable certain adjustments of administrative machinery, not only of the Department of Defence, but also of practically all Commonwealth departments. In 1932, our defence expenditure totalled £3,200,000. For the present financial year the estimated expenditure is in the neighbourhood of £26,000,000. There has been that constant cumulative increase until we are now faced with a record peace-time expenditure for defence. It is obvious, and has been obvious for many months, that a department which had been handling an average annual expenditure of less than £10,000,000 could not, as then constituted, carry the load of almost treble the amount. Consequently, the Government's announcement of the creation of the new Department of Supply and Development was, I believe, received with the widest approval.

The variety of subjects dealt with by honorable members, in the course of this debate, the length of the debate itself, and the public interest which it has aroused, have provided more than sufficient evidence of the necessity for the bill.

Mr McEwen - A very big proportion of this defence expenditure was formerly handled by the Works Department which the Government has now abolished.

Mr HOLT - The honorable member for Indi (Mr. McEwen) secured an extension of his time in order to place his views before the House. If he does not interrupt me I shall not ask for that privilege. Under the bill, as the honorable gentleman has pointed out, the Government takes very wide powers. I suggest, however, that that is essential - even inevitable. It is necessary to make provision for supplies for all branches of the defence forces; to take measures to ensure that there are adequate reserves of essential commodities which to-day are either imported or cannot be manufactured within a reasonable time in Australia, or for which we have to make provision within this country in the future. The scope of the matters to be dealt with and the degree of uncertainty as to the extent of the problems which will arise have, I repeat, rendered inevitable the taking of very broad powers under this measure

The fear which has been expressed in some quarters that the exercise of these powers will be abused is, I suggest, entirely groundless. The bill itself contains certain checks. Two are to be found in clause 5 which specifies the various functions of the Department of Supply and Development. In the first place of the subject-matters enumerated only those which the Governor-General directs may be dealt with by the department. Towards the end of that clause there is a provision that the Governor-General may determine the extent to which any of the matters specified may be administered by the department. Thus there is a very real check, at the outset, on the exercise of the powers conferred by this measure, and the responsibility rests, not only on the department, but also on the Government. Furthermore, there is a definite limit of time placed upon thu functioning of the department itself. The life of the department is limited by the bill to a period of five years and it will not be possible to extend it without the approval of Parliament. Also, the regulations under which these powers may be exercised must come before Parliament regularly for approval.

Some honorable members have expressed the fear that these powers may be used to ride rough-shod over existing government policy in respect of the establishment of secondary industries. Here again, I suggest, the fears are without substantial basis. This Government is fully conscious of its obligations under the Ottawa Agreement. It ha3 shown repeatedly its desire to use the machinery provided in the Tariff Board Act, and honorable members are well aware that any action which it may take in connexion with Australian industries must eventually come before this Parliament for approval. Those honorable members who have expressed the greatest concern in this respect are well aware - and I assure them that the Government also is conscious of the fact - that the continued existence of the Ministry is dependent, in the last analysis, upon their support. There is, surely, a real assurance in that comforting fact!

Several honorable members have expressed the opinion that, in making some provision for the manufacture of munitions by private enterprise, the Government is violating some fundamental principle of civic morality. I suggest that a common-sense approach to this problem will lead to no other conclusion than that the policy being adopted by the Government in this connexion is the correct one. It ensures that Australia's peace-time requirements of munitions and defence equipment will be obtained from government establishments. In time of war, of course, the demand for these supplies will be greatly increased. Surely no one will contend that in time of peace we should maintain, as government establishments, the necessary industries for producing the enormously expanded requirements that would be needed in time of war !

It has .been suggested also that greater use should be made of government workshops. But I think that most honorable members will agree that the Government's policy is a sound one. The Government has declared that Australia's peace-time requirements shall be supplied from government workshops, but that to meet emergency requirements in time of war it will utilize private industrial establishments. Therefore, it has been necessary to put these private industries on such a basis that, should the emergency arise, they can with the least possible delay and with the least possible dislocation be converted to the production of government requirements. The further suggestion has been made that, since the Government has decided to establish annexes, it should make fuller use of. State government workshops. Need I point out that in time of war all State railway workshops would be working to capacity, whereas many private industries which to-day are producing peace-time requirements, some of which are luxury items and certainly not all are necessities, would be comparatively idle? Under the Government's scheme, many of these establishments could rapidly bo converted to the production of munitions and other defence requirements.

Another fear which has been expressed is that the Government may be exploited by industries converted to war-time needs in respect of the prices charged for their commodities. The information given to the House by my colleague the Minister for Defence (Mr. Street) should do much to allay this fear. As honorable members are no doubt a ware, it is intended to set up an advisory panel of accountants. Let there be no misunderstanding as to the function of this body It is not suggested that these gentlemen should do the work of cost accounting for the whole of 'the activities of the defence establishments, whether conducted by the Government or by private enterprise. It, is intended that the members of this panel, all of who are men of standing in their own profession - many possess specialized skill in cost accounting, which is a particular branch of accountancy - will examine the present checks which the Government is exercising. If they consider these checks to be inadequate, they will be at liberty to suggest alternatives, or improvements, and it will be a responsibility of the Government and of the new Department of Supply to see that machinery for limiting any exploitation of the people is introduced and is working effectively. The Government gives Parliament and the people of Australia the sincere assurance that action will be taken to restrict any attempt to make what is virtually blood money out of defence preparations of the Commonwealth.

Mr Fadden - Who will decide that?

Mr HOLT - That will be the responsibility of the Government, which will be answera'ble to this House and to the people of the Commonwealth if they do not approve of what is done in that regard.

Mr Fadden - Why not make the necessary provision in the bill?

Mr HOLT - No authority except the Government can effectively accept that responsibility.

Practically every speaker has stressed the desirability of making proper provision for adequate supplies of oil fuel and other fuels - ha® stressed the encouragement and development of that particular phase of our requirements. The Government can withstand any charge of either negligence in the past or lack of appreciation of the urgency of this problem so far as the future is concerned. It has made financial provision- in the past in respect of operations designed to discover oil in this country; it has kept functioning a permanent body - the (Ml Advisory Committee - to advise it on matters relating to oil supplies; and it has the standing committee on liquid fuels, whose particular task is to give advice in respect of substitutes for petroleum products. In addition, on the defence side more particularly, there is functioning at the present time an oil sub-committee of the Principal Supply Officers Committee, and a further sub-committee of that committee which is concerned with ma tters of storage and of rationing for defence needs. Consequently, adequate machinery is in existence to deal with this particular subject.

Then there are the preparations which are going ahead for the production of oil from shale at Newnes. I deplore, on behalf of the Government, suggestions made earlier in' this debate questioning the bona fides of those who are conducting that particular' enterprise. It has been suggested that, in effect, the undertaking at Newnes is possibly only a " blind " or a " cover-up " for some of the big oil companies, and that the sincerity of the undertaking given by those in charge of the enterprise to produce oil fuel from shale within a reasonable time is open to question. I give an emphatic denial to any such suggestion. At the present time, 403 men are working at Newnes on this project, and 150 additional men are working on the improvement of the road from Capertee bo the Newnes field. Plant which could not be obtained in Australia has beeen ordered abroad, and a considerable quantity of plant is also being manufactured locally. 1 pay tribute to the public-spiritedness of the gentlemen in charge of the enterprise, who have invested £166,000 in a highly speculative undertaking. In addition, as honorable members are aware, the agreement contains a penalty clause which provides that, failing production by the 1st January of next year, a penalty may be imposed amounting to one-tenth of the capital invested.

Mr Beasley - Penalties may be waived, as was the case with the last syndicate.

Mr HOLT - Only with the approval of this Parliament. On all sides there have been suggestions ranging from bold statement to sly innuendo that allegedly sinister influences are retarding the development of the oil industry in the Commonwealth.

Mr Lazzarini - There is nothing " alleged " in them.

Mr HOLT - Are we to assume, then, that there is some gigantic conspiracy, in which are involved not only the oil companies but also the Commonwealth Government and the State Governments, many of whom are either composed of or arc controlled . by members of the same political colour as honorable members opposite? In the States of Tasmania, Queensland and Victoria, all of which have been mentioned as possible fields for the production of considerable quantities of oil, there are either Labour governments or, as is the case in Victoria^ a government subject to considerable pressure by Labour members. Is it suggested that there is a gigantic conspiracy in which they are involved, or is the accusation levelled against them that they have been either dilatory or negligent in respect of this particular matter?

One other matter upon which I desire to touch I should not have regarded seriously had it not been raised by the honorable member for West Sydney (Mr. Beasley), who led the debate for the Opposition. He suggested that, in the acquirement of goods for defence and other governmental purposes, the present administration is influenced by an inferiority complex, and that apparently, in its view, the Australian-made article does not meet our requirements, either on account of its quality or from some other cause, with the result that to a far greater degree than is necessary we are going outside the Commonwealth for our supplies. With every respect for. the honorable gentleman, and a proper appreciation of the very able and informative speech that he made, I suggest that that is one accusation which he cannot substantiate.

As was pointed out by the Minister for Defence, at least 82 per cent. of our total defence expenditure is to be incurred within the Commonwealth. If the honorable gentleman cares to make a tour of inspection of the Government establishments at Maribyrnong and Footscray, I believe that he will regard as a revelation the degree to which resources for our self-containment and security are being developed. The degree to which we have been able to produce goods which in the past we deemed to be completely out- side either our mechanical or our productive resources, is one of the most remarkable features of the post-depression period. I point not only to the manufacture of our own munitions requirements, not only to the arrangements with the British Government for the manufacture of aircraft that will be returned to Great Britain to help to meet the requirements of that Government, but also to the encouragement that is being given to the establishment of such important industries as the new tinned plate industry, which has been referred to the Tariff Board for inquiry and report. Perhaps I may here pause for a moment to review the criticism, not only unmeasured but also, I suggest, irresponsible, which has been levelled at what is popularly known as " big business " in this country. It is rather an extraordinary characteristic of some aspects of Australian politics that, whilst success in any other profession or calling in life, even that of politics, evokes a certain degree of admiration and respect, success in a commercial or business sphere inspires the wildest, most flagrant expression of suspicion. In this matter we might not only exercise some measure of restraint, but also give credit where credit is duc. In one breath honorable members like the honorable member for West Sydney accuse the Government of not developing industries sufficiently, and in the next breath, roundly and utterly condemn those men who at this very moment are making a splendid job of the development of the secondary industries of this country. Some recognition should be accorded to those leaders of industry, many of whom are now making their expert services available to the Government voluntarily and in an entirely honorary capacity.

The only other point on which I desire to touch i3 that which relates to the making of surveys of our material resources. Some honorable members have affirmed that, whereas it is apparently the intention of the Government to attach to the National Register Bill a schedule setting out in detail the information to he sought, no such provision is made in this measure. There are very good reasons for that, which doubtless will be given to the House in considerable detail during the committee stage. I now give to the House the assurance that the Government has every intention to exercise fully the power to bo given to the new department in this regard. I could produce for the inspection of honorable members a printed questionnaire which has already gone out to secondary industries. Whilst in a survey of this kind it may be found desirable to send out a questionnaire to different industries, and we may require to touch on different aspects in respect of those industries, it may not be considered necessary to seek information from every establishment registered as a factory. I understand that there are in the Commonwealth about 25,000 registered establishments which, technically, come under the heading of " factories ". The elimination of those that employ uo more than four hands would reduce the number to about 12,000. Therefore, it may "be found that the questionnaire need not be sent to more than a relatively limited number of industrial establishments. One reason why it has been found necessary to take this power is that the response to the questionnaire already sent out has been very disappointing; only about one-third of those sent out were returned in any degree of completion, and even those are on the average about 40 per cent, incomplete. Therefore, in order to obtain a proper survey of the material resources essential for the planning of reserves and, if necessary, the substitution of some materials for others that we now have to import, such information must be. obtained.

In conclusion, I point out to the House that the objects underlying the introduction of this measure are, first, to improve the administrative machinery dealing with our defence preparedness; and secondly, to plan ahead, not only for the possible future defence requirements of this country, but also for its proper development, insofar as it will, by its passage, advance that development aud promote our security, it is fairly entitled to the approval and the commendation of members of all parties. In that, spirit, and in the confident belief that, such will be the result of the operation of the measure, if agreed to, I commend it to the consideration of honorable members.

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