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Wednesday, 17 October 1956

Mr R W HOLT (WANNON, VICTORIA) .- The object of the bill is to authorize the provision of loan funds amounting to £8,500,000 for expenditure on the land settlement of ex-servicemen eligible for settlement under the provisions of the Commonwealth legislation and the complementary State legislation. In 1945, the Commonwealth and the States entered into an agreement by which the Commonwealth undertook to provide financial aid and certain facilities to the States, in accordance with the conditions under which they elected to conduct their land settlement schemes.

Victoria, Queensland and New South Wales elected to operate as what we call principal States, whilst the other three States elected to operate as agent States. A principal State accepts all responsibility for the administration of its land settlement scheme, whilst an agent State accepts responsibility for administering its scheme in accordance with the policy and general procedure prescribed by the Commonwealth. In the agent States - South Australia, Western Australia and Tasmania - the Commonwealth acquires land for war service land settlement, under powers referred to it by those States, but the principal States - Victoria, Queensland and New South Wales - acquire the land and retain the sovereignty of it that is vested in them by the Constitution. They administer their schemes in accordance with the broad terms laid down in the agreement with the Commonwealth into which they entered in 1945.

Victoria elected to proceed as a principal State. Some of the difficulties in the administration of the scheme that have emerged spring from that election. The difficulties are not confined to Victoria. Needless to say, honorable members or. this side support the bill as far as it goes, but in relation to one or two matters we think it could go further than it does, and it is on those matters that I shall dwell.I shall deal specifically with Victoria, because it is the Victorian scheme with which I am most familiar, but I point out that the difficulties that have emerged in Victoria have emerged elsewhere, particularly in New South Wales. The Victorian war service land settlement legislation was passed in 1945 and early in 1946. At that time, a Labour Government was in power, and the scheme was administered first by Mr. L. W. Galvin, the then Minister for Lands. The legislation had been thoroughly considered and was drafted only after an extensive exchange of views between the Victorian Government, the returned servicemen's league and other bodies interested in the settlement of ex-servicemen on the land The object was to avoid the pitfalls and dangers that had been encountered in administering the land settlement schemes that were put into operation after World War I.

The Commonwealth desired that the scheme should be operated on the basis of perpetual leasehold tenure, but the Victorian Government, exercising its discretion, decided to proceed on the basis of freehold tenure. That decision has given rise to extreme difficulties in the administration of the scheme in Victoria. Generally speaking, the Commonwealth and the States agree that the land settlement of ex-servicemen is a Commonwealth responsibility - in other words, that it is fundamentally and basically a matter of rehabilitation. There is no question of the Commonwealth desiring to reward ex-servicemen for services they rendered to the country. The object is that the Commonwealth shall help them to make up for the opportunities which they missed as a result of their war service.

AsI have said, the decision of the Victorian Government to proceed on the basis of freehold tenure has given rise to difficulties. The Minister for Primary Industry (Mr. McMahon) said in his second-reading speech that the Commonwealth contributes to the States one-half of the amount by which costs of acquisition and development exceed the valuation agreed upon by the Commonwealth and States. The difficulty that has arisen in Victoria is that, so far, there has been no agreement between the Commonwealth and the State on valuations. Failure to reach agreement leads to injustice and grave administrative difficulties. In Victoria, before a settler can acquire his interim lease and his purchase lease, a valuation must be placed on the property. The payments that he is required to make are based on the final valuation. Therefore, it is necessary that a valuation be placed on the property before he takes what we call effective occupation. If it were necessary to wait until agreement had been reached between the Commonwealth and Victoria, no permanent settlement would be carried out in that State under the war service land settlement legislation. Consequently, Victoria has been forced to determine valuations for settlers, trusting to luck that later the Commonwealth authority will agree with them.

It was not possible in the initial stages of the scheme to foresee all the difficulties that would arise later. The valuations that the Victorian authority has made will be maintained. Victoria will not break faith with its settlers. It would be iniquitous if a settler took over a block of land on the basis of a certain valuation and was told later that the valuation had been increased. Any man contemplating the purchase of land desires that there shall be certainty about the price that he will be required to pay for it. It may be essential to wait for the Commonwealth to decide whether a proposition is financially sound, but we cannot expect the man who is going to pay for the land to wait indefinitely for a valuation. " Although Victoria has had to determine valuations in advance, the Commonwealth has adopted the attitude, " We shall wait and see. If the settler can pay off the lot, he should do so, so it is desirable that we wait ". When only land is being bought, and that land is under perpetual lease tenure, there are some grounds for adopting that attitude. The Commonwealth agreed, subsequently, I believe, to accept optional perpetual lease. In other words, the settler may elect to continue as a perpetual lessee, or he may, at some time, elect to pay off the amount and convert the land to freehold tenure. At that stage, one can see no difficulty in holding back the valuation until certainty is reached. In Victoria, it was imperative that a valuation be made before effective settlement.

A second practice of departmental administration of the act which has developed relates to the writing down of values of structures. It has been decided that, by agreement with the States, the Commonwealth and the State concerned will each contribute one half of the inflated costs of structural improvements over 1946 values. The value of structural improvements has increased considerably since 1946, but, unfortunately, in several States a practice has developed of not only writing down or writing off the excess value of structural improvements over the 1946 value, but of also adding that amount to the value of the land. This means that, while in effect there is a write-off of the excess value of structural improvements on the property, the amount written off is being written back on to the value of the land, and the price of the land is thereby increased. I submit that this practice is a most reprehensible one, because, if the land is held under perpetual lease, the settler will be paying rent in perpetuity on the increased valuation of the land, which really defeats the whole object of the agreement entered into between the State and the Federal authorities to share equally the inflated costs of structural improvements over 1946 values. The effect has been to increase considerably the amount due by the settler. Honorable members may think that structural improvements do not comprise the main cost. Certainly, they do not. The other important factors are the cost of land and the cost of stocking. To stock a property costs nearly as much as to acquire the land. We learned that from experience of the single unit farm scheme.

By way of making a comparison, I direct attention to the figures which are included in the report of the Victorian Soldier Settlement Commission for the year ended 30th June, 1955. Land acquired prior to 1st July, 1947, amounted to 233,208 acres, at an average cost of £9 an acre, and a total cost of £2,134,554. By 1949, the average cost had risen to £9 15s. an acre. I am now speaking, in the main, of grazing land. In the year ended 30th June, 1951, there was a considerable rise to £14 10s. an acre. In that year, 85,826 acres were acquired, at a cost of £2,018,018. In the year ended 30th June, 1954, costs were around £23 10s. and £25 an acre. Taking as a base year 1949, when land sales controls were lifted, the price of land has doubled, but the cost of structural improvements, buildings, fencing, bores, and dams in country areas has more than doubled, and this increase has thus outstripped the increase in the cost of land. So in that respect, too, inflation has had an adverse effect on the scheme.

Mr Anderson - The price of wool rose.

Mr R W HOLT (WANNON, VICTORIA) - The way the prices for primary products have decreased over the last four years should be a matter of some concern to this Government. I would not view the returns received from primary production with much sanguinity. The other point I want to make is in regard to the Murray valley irrigation scheme. There again, what has happened is revealed by costs. In this irrigation area in 1949 the cost of an improved unit was £9,000. By 1955-56 under conservative governments it had risen to £14,000, although the price of the land had remained substantially the same, because it was acquired in or about 1946-47. The land factor has thus remained the same and the increase therefore reflects the rise in the cost of structural improvements and the work which is required to bring the properties to productive capacity before they can be made available. Whereas land values have barely doubled, the cost of structural improvements has more' than doubled.

Mr MALCOLM FRASER (WANNON, VICTORIA) - It depends on the type of land which is being bought.

Mr R W HOLT (WANNON, VICTORIA) - Exactly. The figures which I have cited from the report of the Victorian Soldier Settlement Commission for the year ended 30th June, 1955, apply to all lands, grazing, agricultural, and irrigated. A further criticism, of course, arises from an invidious position in which the commission finds itself. By virtue of the earnest endeavour of that State, in accordance with the terms of its original act, to facilitate soldier settlement, succeeding Victorian governments of all political persuasions have voluntarily placed themselves in a position where there is a continual drain on their budgets and also where other essen- tial services have had to be curtailed in order to implement the scheme with the expedition originally desired.

The Minister, in his second-reading speech, included a table showing the funds expended to date on land settlement by the Commonwealth and the States. I said at the outset that all parties agree that rehabilitation through land settlement is a combined Commonwealth and State matter. Under the Victorian scheme, at 30th June, 1956, a total area of 1,194,853 acres had been acquired and 5,355 men had been settled on the land, of whom 2,648 had been settled under the general or closer settlement scheme, and 2,707 under the single unit farm scheme. The total amount expended by Victoria, as at 30th September, 1956, was £49,010,262, not £38,111,145, as stated by the Minister. The reason for the difference between the two sets of figures is that the single-unit farms allocated under the old section 18 scheme, I think it was, after World War I., are included. Although this is a Commonwealth matter, an additional £11,000,000 has been made available by Victoria, from the State's own resources, over and above the Commonwealth contribution. Victoria has agreed to make that money available for single-unit farms at 2 per cent., which means that the State budget, without any assistance from the Commonwealth, is required to make good the difference between the rate at which the money is borrowed and the rate at which it is lent to settlers.

This single-unit farms scheme has had the effect of placing on the land, under good conditions, those who are in a better financial situation than are others, and it has meant that the closer settlement scheme has been available to the less fortunate financially. It has resulted in the number of people effectively settled being doubled. This scheme was made possible by the insertion in the act of a provision requiring that all sales of single-unit farms must obtain the consent of the Minister within 21 days of the signing of the contract of sale. Within that period, ex-servicemen eligible for settlement could object to the sale, and the vendor, if willing to do so, could sell the property to one of those ex-servicemen. Otherwise, there would be no sale. The State authorized loans of up to 90 per cent, of the valuation of the land by the soldier settlement authorities.

By this means, we have been able to settle effectively more than 5,000 people on the land in Victoria, for which the State government has not been reimbursed. It has subsidized such settlement out of its own budget. Because an additional £11,000,000 has been made available from the resources of the State, essential services, such as roads, schools, hospitals, transport and the like, have had to suffer. Victoria has settled ex-service personnel from all States of the Commonwealth, but because it desires to do a thorough job of land settlement, it should not be unduly penalized.

I stress the point that the agent States, in the main, have concentrated on settlement on Crown land, or virgin land, the object being to bring new lands into production, with a view to increasing primary production. Our object in Victoria was to place as many ex-servicemen as possible on the land, and, for that reason, we acquired some improved properties - large holdings which were not being used to their full capacity.


Mr R W HOLT (WANNON, VICTORIA) - Not always, no, but in many cases that was so. I personally inspected a number of properties in the western district of Victoria, and because they were not being fully utilized by the owners, I saw no reason why they should not be handed over. The complaint has been made that the Victorian scheme does not increase production sufficiently. I have before me figures - I think they were supplied by me to the former honorable member for Wannon, Mr. McLeod, years ago - which show that the production of properties taken over for soldier settlement has trebled.

A factor which militates gravely against the administration of the act is the persistence by Commonwealth officers in the attitude " We shall wait and see before we strike a valuation". All that that does is to perpetuate the very difficulty which the framers of the original agreement of 1945 wanted to avoid - a scheme whereby the efficient, hard-working farmer, who was able to pay the full cost of acquisition, was penalized, compared with the less efficient and, perhaps, less industrious man, because a greater amount would have to be written off to keep the latter settler on the land. That is why we in Victoria have placed on the agreement with the Commonwealth the interpretation that the valuation should be based on a fair return, having regard to the type of production over a long period of years prior to the time at which the valuation was made.

The last matter with which I wish to deal, concerning the agent States and the practice of settling people on Crown land, is the terrific cost which this entails. Leaving out of consideration the single unit farms scheme in Victoria, we find_that closer settlement has cost approximately £14,400 a block. In Western Australia, which I agree is not so favorably situated, and where it takes a longer period of time to bring virgin land into production, the cost, arrived at simply by dividing the loan funds that have been made available by the number of men settled on the land, is between £33,000 and £35,000 a block, and in South Australia £22,000 a block. That, I know, includes irrigation schemes and matters of that kind. In Victoria, of course, we were sufficiently fortunate to be able to buy land for irrigation schemes, when it was wheat-growing land, at £15 or £12 an acre, and which is now worth, perhaps, £200 an acre. The difficulty with settlement on Crown or virgin land is that it takes too long, as may be seen from the number of settlers who have been allotted blocks, compared with the progress in Victoria and New South Wales. It takes too long to bring farms into production and to give the settlers an effective occupation. In terms of the actual money involved, therefore, settlement based, as in Victoria, on the acquisition of relatively large unproductive estates is far better.

In respect of that kind of settlement, 1 suggest that the Government should give genuine consideration to the establishment of a revolving investment fund from which, from time to time, capital could be made available to complete soldier settlement. The activities of the various soldier settlement authorities in the States could then be extended to include closer settlement. In the meantime, exports of secondary, manufactured commodities could be boosted with a view to maintaining a balanced economy. Exportable surpluses of primary products would be available in five, six or eight years' time, as the Crown land projects came into full production. By that means, we could have not only exservicemen, but also the sons of farmers settling on the land - young settlers who would be given land on the basis of efficiency only, after full and open inquiry. The man who was most likely to become an efficient farmer would get the best land available. Money could be made available purely and simply for purposes of settlement, and as it was repaid by the settlers it could be reinvested. That is what we on this side of the chamber would like to see in respect of land settlement, instead of this system under which it is left entirely to the States to determine the degree of assistance they will give, because under that system the State which provides generous assistance penalizes itself unduly and must stint its other services. Different circumstances apply in the various States. For instance, Western Australia is not so richly endowed by nature as are some of the eastern States. Western Australia should not be penalized because it has less suitable land than Victoria or New South Wales. Victoria should not be prejudiced because of its desire to make a really good go of soldier settlement and to settle large numbers on the land. If we had such a scheme as the one I mentioned of a rolling fund available for investment on land settlement, when the soldier settler personnel cut out, it could be used for closer settlement. I am not drawing comparisons between States with any desire to show Victoria in a more favorable or unfavorable light than other States. I merely mention that to stress the need for capital in soldier settlement and for closer settlement to proceed at as fast a pace as we can proceed with it for the sake of our economy and national existence.

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