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Thursday, 11 November 1948

Mr SPENDER (Warringah) . - Authority is sought to make a grant to the United Kingdom of £10,000,000 to be paid out of our overseas reserve and adjusted internally by payment through the Commonwealth Bank of Australia. The. Opposition is completely in agreement with the purpose of the grant, which is to assist the United Kingdom in its overseas difficulties and in the part which it is playing in the recovery of Western Europe. No honorable member will deny that it is our duty to furnish every possible assistance to Great Britain. We are mindful of the fact that our liberty is due in no small measure to the great sacrifices made by the British people during the war and in the postwar period. Indeed, it is remarkable, having regard to the tremendous sacrifices made by Great Britain during the war, that that country is still able and prepared to play a leading part in the rehabilitation of Western Europe. Great Britain's interests in Western Europe are very great. First, it. must encourage the rehabilitation of the trade of Europe, and in that it is playing its part handinhand with the United States of America. Secondly, the United Kingdom needs to establish the stability of sterling, a matter in which this country has a direct and vital interest because our economy is so largely dependent on that of Great Britain. When we see Great Britain limiting her imports, developing her export markets, sharing her dollars, which she greatly needs, and which have been made available to her by the United States of America, with other countries, and at the same time maintaining a standard of armed preparation, which is very substantial indeed, particularly when compared with that of this country, every support will come from this side of the House for any aid that Australia proposes to extend to Great Britain. .

The problems of Great Britain, in terms of currency relate to dollars and sterling, because, in truth,some countries of Western Europe are, in many instances, as short of sterling as of dollars. In Paris recently, there were discussions about how best the matter of the shortage of sterling could be solved.

Hand in hand with the dollar advance being made by the United States of America, if. was provided that Great Britain should receive 1,263,000 dollars. As part of that arrangement, it. was provided that Great Britain should release, I think, the sum of £78,000,000 sterling to Western European countries, and, in addition, agree to unlock balances of sterling aggregating £55,000,000, which had previously been blocked, in accordance with arrangements 'between Great Britain and other countries. The fact that Great Britain was prepared, despite its desperate circumstances, to make available £133,000,000 sterling to the Western European countries to aid them in their rehabilitation, itself reflects Great Britain's belief in its ability to expand and endure. This proposed grant of £10,000,000 Australian currency to aid Great Britain has the complete approval of members on this side of the House. But it is not sufficient 'for us merely to approve. In terms of money, the grant is not sufficient. A mere £10,000,000 is but a drop in the total ocean of Britain's needs. If we are dealing only with the amount, I should say that £10,000,000 is insufficient, having regard to the problem that Great Britain has to face. I prefer to approach the matter, not so much from the point of view of currency as from what Australia can do to aid Great Britain. It is my belief - and I cannot imagine that this belief would not be shared by the Prime Minister (Mr. Chifley) - that increased production is the key of assistance to Great Britain, and the key of assistance in the rehabilitation of the countries of Western Europe. It is upon this particular aspect that Government policy has fallen down. Let us examine where we stand in terms of international currency, which has a bearing upon the economy of Australia. We are short of dollars. During the last twelve months we have been reducing the dollar deficit, which has always existed in the life of this country. Before the war, when sterling was readily convertible -to dollars, that matter presented no difficulty, but since dollars have become a hard currency of the world, and it is not possible to readily convert sterling to dollars, that is a real problem of this country-

Mr Chifley - And to a lot of other countries, too.

Mr SPENDER - I do not dispute that, 'but I am concerned particularly with how we are to approach such a problem here. In the last twelve months, in terms of dollars, we have cut down our imports to such a level that .1 believe it can truthfully be said they are below our basic needs for production and the expansion of our own economy. We have reduced them to the lowest possible proportions, with, I think, very serious consequences to the economy of Australia. The question that arises from that is whether we propose to continue, indefinitely, these restrictions, and if so, what will be the consequence to Australia. Under our arrangement with Great Britain as I understand it, that country desires Australia to live within its current incomeand. in short, is reluctant to see us draw upon the overseas balances of sterling which we have created.

M.r.Chifley. - That is the accumulated balances.

Mr SPENDER - And which now stand to our credit. We are, therefore, confronted with the need to live within our current income, in respect of sterling, and also in respect of dollars, and to reduce our imports from, the dollar area-:. That has a very serious bearing upon our ability to produce. Before I go on to develop the consequences of that course of action I shall make a few observations about the lag of production in this country, because that is of first-class importance. Our primary products may safely be said, taking the picture by and large-

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