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Thursday, 21 March 1957

Mr CAIRNS (Yarra) .- The speech of the Governor-General reviewed the record of the Government in a most favorable manner and the Address-in-Reply approves of this review. The Opposition has decided, however, that the Government has thoroughly earned censure in relation to its housing record. Why does the Opposition take that view? It is because it believes there is a most serious crisis in housing which strikes at the very foundations of our community. No one disputes the fundamental importance of housing lo the community. The Opposition believes that the serious crisis in housing has occurred because insufficient homes have been built in Australia. As a result of this insufficiency of housing we have over-crowding, to begin with. We have rack-renting which has forced up rents to as much as half the basic wage. We have impossible contracts of sale under which many people, through sheer force of necessity, have undertaken to meet repayments of as much as £10 a week out of relatively low average family earnings. The housing problem has delayed many marriages and contributed substantially to child delinquency. It has created a situation in which severe losses will be inevitable unless over-full employment is maintained in order to allow tenants and buyers to keep up these excessive weekly payments. This is implicit in the situation.

The crisis has resulted, among other things, in a wrecking of the immigration programme and a breaking-up of the support for immigration throughout Australia. I want to remind the House that it is not the Australian Labour party that has caused a reduction of the immigration programme. Reference to immigration statistics will show that, and I propose to cite the relevant figures, because this is a consequence of the housing crisis and associated causes. In 1949, when the Labour Government was in office, an intake of 150,000 immigrants a year was attained. In 1950, the intake was 152,000. In 1951, immediately after the present Government came into office, the figure fell to 111,000. In 1952, we received 94,000 immigrants. In 1953, the intake was only 43,000. In 1954, it totalled 68,000. In 1955, it was 94,000. In 1956, the total intake was 88,000 immigrants, which is a trifle more than half the intake in 1949, when Labour was in office. This reduction of the intake has wrecked the immigration programme. It is a consequence of the causes that have created the housing crisis. That crisis is not new or recent. It goes back as far as World War I., and probably earlier. In the 1920's, construction was never adequate, for reasons that have applied also during the 1950's. The building industry collapsed between 1929 and 1937. By 1937, what was widely called a national housing scandal existed. What has been called a new age of housing began in 1937. Mr. J. A. Gray, a member of the Victorian Parliament, said in that year -

There has been a remarkable change in public opinion in the last five or six years. Our view used to be that people should find their own housing level.

Those words were used only a few minutes ago by the Minister for the Interior (Mr. Fairhall), who kept on saying that we must go back to a situation and that is the situation of 1937. Of course we must go back, according to his view, to a policy which Mr. Gray said in 1937 was outdated. Mr. Gray continued -

We now recognize that the housing of the people is a matter for the community as a whole - a matter for an enlightened society possessed of a social conscience.

Where is there any evidence that honorable members opposite have a social conscience?

The result of this development of a social conscience in 1937 was the establishment of State housing authorities throughout Australia. In 1939 Australia was plunged into a total war before the State housing authorities and the new social conscience were able to have much effect upon the situation. It was impossible to build or even to repair houses between 1940 and 1945, and we emerged from the war with a more desperate need for housing than ever before. In 1 944, the Commonwealth Housing Commission made a report in which it announced a conservative estimate of the deficiency of houses, which it placed at 300,000. What has happened since? Approximately 620,000 houses have been built during a period in which Australia's population has increased by 2,048,994. There was a deficiency of at least 300,000 houses in 1945. How do we stand now? To house the population increase of 2,048,994, at an average of 3.75 persons to a house, which was the rate prevailing in 1947, we should have needed about 550,000 houses. At an average of 3.55 persons to a house - the rate prevailing in 1954 - we should have needed about 630,000 houses. Therefore, it cannot be said that since 1945 we have built more homes than we needed to meet the needs of the additional population. There is still a real deficiency of at least 300,000 houses.

Let me contrast this conclusion with the report made by the Department of National Development - referred to as the Spooner report - on which the Government's case is specifically based. The Government's view that there is no housing crisis is founded on that report, and if there is anything wrong with the report, there is something wrong with the Government's attitude. The report concludes that the deficiency was 115,350 houses in 1956. But I remind the House that in the foreword at the first page of the report it is admitted that the quality of existing housing has been largely ignored, and slum clearance has not been considered. When these two factors are taken into account, there is no real conflict between the actual deficiency of at least 300,000 homes and the figure of 1 15,360 reached in the report, because the difference of approximately 185,000 houses is certainly no more than must be allowed for if the two vital considerations of the quality of existing housing and slum clearance are taken into account. There are 2,449,500 houses in

Australia. At the 1954 census, it was estimated that' more than 10 per cent, of them were sub-standard. We need, therefore, about 244,000 houses to replace those substandard dwellings, and that figure is considerably in excess of the 185,000 that I have mentioned. Therefore, there is no possible doubt that the current deficiency is at least 300,000 homes.

The Spooner report admits that the current yearly need is about 60,000 houses. The question to be answered is: How many more years will the million and more people who are waiting for these 300,000 houses be forced to continue waiting? The Government says that, at its present rate of building, they will have to wait about ten years. I submit that nothing less than a real determination to overcome the deficiency within, say,, five years, and at the same timet to meet current needs, can possibly be acceptable. We; should need to construct. 120,000 houses, a year - 60,000 to meet current, needs, and- 60,000 to go towards making, good the deficiency - to overcome the. deficiency within five years.. A national plan: for the attainment of this, objective, asoutlined, in, the amendment, should be. adopted by the Government if it wishes to retain its right to occupy the treasury bench.

Men: and- materials are available to build many houses, despite the denial of the Prime Minister (Mr.. Menzies) in his infamousstatement of 7th March, to which he still adheres, but the number would not be nearly enough to> attain the target of 120,000 houses, a year. Men and materials can be made available if the appropriate taxation and monetary policy is applied. The present Government's policy of accepting the capitalist market as the supreme allocator of resources has distorted the Australian economy in the very opposite direction - the highest bidder shall be the purchaser and the highest profit shall rule. Labour says, that national aims must be set, and that the necessary steps to achieve them must be taken. In this instance the matter at issue is housing.

It is not necessary to go in for any new or reconsidered definition of Labour's position. I need only quote the statement of William Guthrie Spence in 1909 to demonstrate that. His face appears in a picture on the wall of the Opposition1 party room, and he is wearing a beard. He wrote that the purpose of Labour is - gradually and disconnectedly that of extending the interference of the State (the democratically elected State), into private industry in order to achieve national aims.

The national aims that are relevant in the present case are housing, the construction of a national system of railways and roads, far more schools and hospitals and new capital equipment to raise productivity. These cannot be achieved if things are to be left to the market alone - if resources are to be allocated by the demand of high and excessive profits. -Houses, railways, schools, hospitals, roads in particular, and the coal industry, which was mentioned a few moments ago by the Minister for the Interior (Mr. Fairhall), are all in exactly the same position. They cannot pay the rates of profit which would allow them to become the highest bidder, or nearly so, in the capitalist market. As the Prime Minister admitted last night- -

The great task is to preserve some balance between all" these elements-

That is, between the more essential things like housing, railways, roads, schools and' hospitals on the one hand and luxury hotels, shops, flats and petrol' service stations on the other.

The Government: has- recognized each year its responsibility in regard to this, but it has done little about it. The honorable member for Wentworth (Mr. Bury), who has not yet been here long enough to pick up the political jargon of his colleagues, spoke very clearly when he referred to the " long list of rotten fruits of inflation in the Governor-General's Speech " and concluded, "The only final solution, sir, is to tackle inflation".

The Treasurer (Sir Arthur Fadden) said in his 1956 budget speech - rr may well be indeed that we are only now reaching the most difficult stage, of the long struggle to control inflation.

The struggle has been seven years long, and now the honorable member for Wentworth, says, " It is time to tackle inflation ". This Government has not shown, and never will! show, any real signs of tackling inflations It is a two-sided problem. It involves con>trol of vast increases in purchasing power. If they are not controlled there are consequent distortions of the economy.. This, was well recognized by the Treasurer in 1950 when he said in his budget speech -

This rise in wool prices- which added £383,000,000 to export proceeds - could be very disruptive unless firmly controlled. To make a further great addition to the volume of purchasing power, not matched by an equivalent quantity of additional goods, would increase competition for available supplies and divert resources still further from developmental into less essential uses. This would tend to disperse and weaken the national effort at a time when it should be more and more concentrated.

These people who are so worried about dispersing the national effort in times of emergency should surely see that it is time to start worrying about what is happening now.

The rise in wool prices to which the Treasurer referred was not controlled. In the following year the national income jumped by £400,000,000. The banks were allowed to increase their advances by £160,000,000 and, in one year, prices rose by 22.6 per cent. Exactly what the Treasurer anticipated has happened. There has been a disruptive effect upon the economy, a diversion of resources from developmental to less essential uses, and a dispersal and weakening of the economy. Under this Government money demand determines everything.

This distortion of the economy could not have taken place without a change in the sources of money demand. This is shown clearly in the relevant shares of the gross national product. In 1951-52 farm income was 11.6 per cent., in the following year 13.9 per cent., then 11.8 per cent., 9.7 per cent., and now 8 per cent, in the current year. That represents a fall from 13.9 per ment, to 8 per cent. In 1951-52 wages and salaries represented 49.2 per cent., in the following year 48.5 per cent., then 47.8 per cent., 48 per cent., and 47.4 per cent, in the current year. Business income - and this is the rub - was 28 per cent, in 1951-52. 27.4 per cent, in the following year, 29.4 per cent, in 1953-54. 30.9 per cent, in 1954-55 and 31.8 per cent, this year. This represents a significant increase of 4.4 per cent, between 1952 and 1956 in the business income share. This fundamental diversion of income distribution is behind all our housing troubles.

There has also been a change in savingsand in the holding of funds for investment. In 1952-53 personal savings represented 12.1 per cent, of the gross national product. They were down to 8.1 per cent, in the following year, 5.5 per cent, in 1954-55 and 5.3 per cent, in 1955-56. On the other hand, business savings rose from 8.7 per cent. in. 1952-53 to 11.1 per cent, in the following year, 11.6 per cent, in 1954-55 and 14.3 per cent, this financial year. This diversion of income, followed by a change in the distribution of saving, put the control of investable funds in the hands of large business concerns and the trading banks.

Dr Evatt - There has been a complete redistribution of income.

Mr CAIRNS - That is so. As we see it, that is the crux of the housing problem. Last night the Prime Minister said, in justification of the trading banks, that they had reduced their lending, not under direction of the Commonwealth Bank or the Commonwealth Government, but because housing loans were not attractive to a trading bank. Neither are railways, roads, schools, hospitals, power loans or the coal" industry.

In addition to permitting this maldistribution of income, the Government has allowed the trading banks to increase interest rates. The honorable member for Melbourne Ports (Mr. Crean) has pointed" out that an increase of 2 per cent, in theinterest rate had exactly the same effect upon discouraging housing as would an increase of 40 per cent, in costs. The tradingbanks and the insurance companies have in the last two or three years, with the encouragement of the Government, changed the whole pattern of their lending. Instead of lending at normal overdraft rates through trading banks they have set up other departments around the corner called Esanda. Limited and Custom Credit through which they loan money at anything from 10 per cent, to 20 per cent. They are loaning in that way money that should be available at ordinary rates.

What has happened to housing construction as a result of all this? I would like todirect the careful attention of honorable members to these figures: After the war home-building, under a sound financial policy, grew gradually until the number of houses under construction in 1949-50 was 65,000. In the following year it was 80,000, and, in 1951-52, 82,000. That happened under the influence of an income distribution and financial policy that was laid down substantially by the Chifley Government. As soon as the post-inflationary redistribution of income, which was facilitated by this Government, came into operation there was a fall in the number of homes under construction. In 1952-53 it was 69,714. In the next year it was 69,573, in the following year 65,359 and in 1955-56, 60,687. At December, 1956 it was 60,062. There are 22,000 fewer houses under construction than in 1951-52, yet this Government says that there is no housing crisis! This remarkable fall in the number of houses under construction is associated, as one would expect, with a remarkable increase in the volume of other building. A maldistribution of income is followed by a redistribution of resources to match that redistribution of income. As money goes to the well-to-do, so the building resources go to the welltodo. Let us look at the building figures and compare the value of houses with the value of other types of construction. We find that in 1949-50 the value of houses under construction was £116,000,000. The value of other buildings such as hotels, flats and service stations, was £61,000,000. The proportion of houses to the total was 66 per cent. In 1951-52, the figures were £187,000,000 worth of houses and £125,000,000 of other buildings. The proportion of houses to the total was 60 per cent. Now the redistribution becomes effective. In 1955-56 we find only £174,000,000 worth of houses under construction, or £13,000,000 less than in 1951-52, but the value of other building has risen to £220,000,000, or almost double what it was in 1951-52. The proportion of the value of houses to the total value of buildings has fallen to 44 per cent.

When the Prime Minister calls for a balance in the use of our resources, is this the kind of balance he wants? Does he want home-building to fall from 66 per cent, of total building to 44 per cent, of total building? Is that the kind of situation he says does not represent a housing crisis? We say that this is an unsound balance and is found not only in the housing industry but in transport and in social services such as schools and hospitals. We say it is found in an industry like the coal industry, which was lamented at great length a few minutes ago by the Minister for the Interior (Mr. Fairhall). We say that this kind of maldistribution cannot be corrected unless we return to a fair and reasonable distribution of income. We cannot restore a balance to the economy unless we are willing to tax excess profits and excess income.

Mr Hulme - How will the honorable member do that? Would he outline a scheme?

Mr CAIRNS - -How do we do that? As soon as we attempt to touch excess profits or the large concerns that the honorable member for Petrie (Mr. Hulme) represents, he raises constitutional or other difficulties. I shall point out some of the income distributions that exist now. We have heard much about excess taxation and about this being a country which has no room for higher taxation. I shall cite a few figures taken from the 1953-54 report of the Commissioner of Taxation. The upper 1 per cent, of people, of whom there were 34,000 in this country, had an income in 1953-54 of £204,000,000.

Mr Ian Allan - How much tax did they pay?

Mr CAIRNS - That represented 8.7 per cent, of income before taxation. One per cent, of the people had 8.7 per cent, of the income before taxation. What difference did taxation make? It reduced their income to 5.2 per cent, of the total. The upper 5 per cent., of whom there were 173,000 - -every one of them voting for the Liberal party, no doubt - had an income of £515,000,000. That represented 21.9 per cent, of income before taxation and 16.8 per cent, of income after taxation. Immediately attention is paid to figures such as those I have cited it will be seen that ample room exists for increased taxation and the kind of mal-distribution of income that is behind the housing crisis and every other crisis becomes apparent.

Mr Hulme - That sounds like Dr. Burton's " Capital Levies ".

Mr CAIRNS - I do not suppose the honorable member has ever read that book. The particular problem of housing requires taxation of land values because if more money is to be made available for homebuilding the price of land will be increased considerably and most of the benefits will go to those few people who own the land. They will get the money back, anyway. It is necessary to make more funds available when these things have been checked and when the proper balance has been achieved. The Government needs to make more money available and the trading banks should also make more money available. Under section 27 of the banking legislation, power is given to control advances. I suppose that the honorable member for Petrie is thinking up a constitutional problem that might be involved in it. But let us try it out; let us give the trading banks instructions to supply funds to meet the needs of the people.

Mr.ACTING DEPUTY SPEAKER (Mr. Lawrence). - Order! The honorable members time has expired.

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