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Tuesday, 23 October 1956

Mr WARD (East Sydney) .- The powers contained in this legislation, in the hands of a government such as the one that is at present in office, are most dangerous. It may be argued by members of the Government that these powers have been in possession of governments for many years past but, as with many other powers, it is the use and the purpose to which the powers are put that determine whether they are for evil or good.

The honorable member for Balaclava (Mr. Joske) said that the policy df the Government wds to borrow up to the limit. Other speakers have tried to imply that the development of our economy is involved in the success or otherwise of this loan. But the honorable member for Balaclava did not say that this loan needed to have any relationship whatsoever to any particular developmental project. He said that we had to borrow as much as we could get overseas, without limit. I think that is a very dangerous policy for this country to pursue. As a matter of fact, it comes rather strangely from a government that has been talking about our balance of payments difficulties.

Is it not realized that every time the Government raises a loan overseas and thereby increases the overseas indebtedness of tins country, it increases our liability for the payment of interest which has to be met every year by exporting the produce of this country? Every new loan makes an additional charge upon our export income. The more the Government borrows overseas, unless there is a relative increase in the production of export industries, the greater difficulties does it create in regard to the balance of payments of this country. That is the view held by Dr. Coombs, the Governor of the Commonwealth Bank, who pointed out not so very long ago that if one carried this idea of overseas borrowing too far, it could become very embarrassing in future for the Government of the Commonwealth. But evidently this Government does not worry about that, because it has set out on the old policy of " borrow and bust ".

Anybody would imagine, to hear the honorable member for Corangamite (Mr. Mackinnon) speak, that all that we had imported into this country as a result of overseas loans was farming machinery, which could not be manufactured in Australia, or heavy earth-moving equipment which we needed for great developmental projects. It may be true that some of that equipment has been bought out of the proceeds of overseas borrowing, but it is not possible to ascertain from the Treasury how these overseas funds are expended - on what items these overseas borrowings are used. The Treasury has stated that it is impossible to dissect into various categories the imports into Australia and so determine which particular goods and equipment were brought in as the result of overseas borrowings.

It has been shown that iri some periods in which we have been borrowing overseas, the imports of newsprint into this country have vastly increased. Has anybody argued that increased imports of newsprint will assist the development of this country? Of course not! Therefore, I say that the policy pursued by Labour in this matter is a more realistic one than that pursued by the Government and it is more to the advantage of the Australian nation and the Australian community.

When Labour was in office, despite the fact that great demands were made upon the resources of this country, it was able to reduce our overseas indebtedness by approximately £100,000,000. We reduced the interest bill by approximately £18.000.000 a year, a sizeable contribution to meeting the difficulties that then faced the Australian community. How can it be argued by any honorable member that greater indebtedness will ensure future prosperity for Australia? The Government is following a false and contradictory policy. While restricting credit in Australia, tying up resources, and slowing down the building of homes, roads and bridges, it speaks of the necessity to borrow overseas in order to speed up developmental work in this country. Its whole policy is really to slow down developmental work.

The Government's arguments are fantastic. What does it propose to do? The Australian people might have some measure of protection if the Government were pledged to bring a draft loan agreement before this Parliament for ratification. We could then learn the purpose for which the loan was to be used, but that is not proposed. In this very simple looking bill, which is being handled by probably the simplest Minister in the Government in order to create the impression that it is harmless, we find that the Government seeks from the Parliament an open cheque. It wishes to borrow overseas without limitation, and without consulting this Parliament further. It wants to borrow at interest rates, and under conditions, which will be determined not by the Parliament but by the Federal Treasurer. That is a most dangerous procedure, and one that the Parliament ought to disapprove of very strongly.

I want now to make one or two remarks about development which has been mentioned by Government supporters. What the honorable member for Scullin (Mr. Peters) said was perfectly true. When the Government borrows overseas it does not physically transfer currency from another country to Australia. The loan takes the form of imports. The remarks of the honorable member for Corangamite (Mr. Mackinnon) might have some bearing on the situation if these imports were restricted to essential equipment for developmental purposes, but they are not. The Government could bring into this country, in quantity as it has already done, cheap toys produced in Japan, and further affect an industry that has been built up by ex-servicemen. The Government could flood the country with all types of goods, including textiles, which can be manufactured in Australian factories by Austraiian workmen. If more loans are raised overseas unemployment in this country will be accentuated. If the loans were used to remove import restrictions as they exist to-day, further non-essential goods could be brought into this country and more men would be thrown out of work. This is a very dangerous piece of legislation and for that reason I support the Opposition in urging its rejection.

Question put -

That the bill be now read a second time.

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