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Wednesday, 3 April 1957

Mr CALWELL (Melbourne) .- Mr. Deputy Speaker,this bill is in keeping with this Government's policy of chasing around the world trying to get a few pounds here and there to help this country to keep going, although Australia is being advertised everywhere as being remarkably prosperous. We have been told by the Prime Minister (Mr. Menzies) on numerous occasions that this nation never knew such prosperity as it is enjoying to-day. If that be true, strangely enough, at the same time, the Government is seeking to raise whatever loans it can wherever it can possibly raise them.

The Opposition is in a difficulty with regard to this legislation. It does not know how justified is the expenditure involved in the purchase of seven Boeing jet aircraft. The Opposition wants to see the Australian air fleets, whether they be Qantas or other airlines operating inside Australia, equipped with the latest and most efficient aircraft. True it is that the responsibility of a government is to see that our aircraft are as good as those of any other country, if only for reasons of competition. Moreover, the primary reason of safety demands that we should equip our airlines with the best aircraft available.

The Opposition does not oppose the second reading of this legislation, although it is not happy with the principle of overseas borrowing, or with the terms upon which the Government has borrowed under this legislation. The bill has two purposes: It authorizes the raising of money, and it validates an agreement long since made, under which some of the money has already been expended. Parliament is being asked in a nonchalant sort of way to give its approval to what the Government has done. We were provided with no effective opportunity of protesting, if we so desired, against the raising of the money. Our signatures are on the agreements and to throw out or repudiate this legislation, particularly as it affects an important instrumentality like flying machines, would lead the country into very great difficulties.

This is a peculiar piece of legislation in that it proposes to authorize the borrowing of money from two sources for one purpose. The purpose is the purchase of seven Boeing jet aircraft, four propeller-driven Super Constellations, and other ancillary equipment and spare parts. We are borrowing 27,000,000 dollars from the International Bank for Reconstruction and Development, and from what is so nicely described as a group of institutional lenders.

Mr Luchetti - " Institutional " is a good word.

Mr CALWELL - Yes, it is. The phrase is entirely euphemistic. When we look at the second schedule to the bill we find that these institutional lenders consist of J. P. Morgan and Company (Incorporated) and a number of their friends. Why did not the Treasurer (Sir Arthur Fadden) say in the first place that the Government had gone to the company of J. P. Morgan, that extraordinarily generous philanthropist in American history, whose firm helped to create so much misery - if it did also help some development - in the United States in the final decades of the nineteenth century? We are borrowing 17,000,000 dollars from this small group of institutional lenders and we are borrowing 9,230.000 dollars from the bank. The Government says-I think rightly, and that is another reason why the Opposition does not desire to test the measure by a vote - that an agreement has been effected between the Commonwealth and Qantas whereby Qantas will assume full responsibility for meeting payments of principal, interest and all other costs of the borrowing. The Treasurer rightly says that, in these circumstances, there will be no call on Commonwealth cash resources in the long run because of this borrowing. At the moment, the Commonwealth has raised the money and, as the Treasurer's speech indicates, some of it has been spent. But when Qantas begins to earn money from the operation of the aircraft, it will be in a position to pay back its indebtedness.

I hope - and I think every honorable member hopes - that the Director-General of Civil Aviation and the chief executive officers of Qantas on their trip to America will be able to make agreements with the United States for a trans-America crossing of Qantas planes. That would certainly save a good deal of dollar expenditure by travellers, would ease the strain on the Australian economy and, if the carriage of passengers were permitted in America, could win additional dollars for us.

As I have said, we on this side of the House do not know enough about the technicalities of the problem. We do not know, for instance, whether Qantas, in buying these jet-engined aircraft from the United States, is making the best possible purchase in all the circumstances. We do not know whether comparable British jet machines, which would give us as good service as the American machines, could have been bought. If such machines are available, it seems to us that the strain upon our dollar reserves would have been relieved by the purchase of aircraft in Great Britain instead of in the United States. The state of the British economy at the present time is such that we would naturally desire to help it rather than spend our money in a country where there are buoyant conditions generally and where they have no need to look to us to help them maintain economic stability.

Mr Townley - England has just bought American machines.

Mr CALWELL - And America has bought British machines. America bought a number of Viscount airliners, which are turbo-prop machines. America may be buying British machines, but I should have imagined that, after all the investigations that have been made into the safety of the British machine called the Comet, that aircraft would have been equally as suitable on our long-distance flights as are American machines.

Mr Townley - The Comet is not comparable.

Mr CALWELL - The Minister informs me that the Comet is not comparable, and 1 accept his judgment because I know he has a knowledge of aircraft which we do not pretend to have. It seems to us, on ihe face of it anyhow, that there must be some British machines that would be as nearly comparable or would not be far away in standards from those of the American machines.

I notice the Treasurer said that, after a most intensive study of all types of machines available. Qantas has chosen the Boeing 707/138 as being most suited to its needs. Presumably it was because Qantas itself asked for these machines, rather than that the Government was convinced that they were the best machines, that Qantas has been provided with the money to purchase them and, as a consequence, this agreement has been made.

The other argument advanced by the Government in support of the purchase of the Boeing jets and the Super Constellations covered by this agreement is that the scheduled delivery date in 1959 fits in particularly well with the inevitable replacement of the present fleet of Super Constellations. If other machines could have been obtained from Britain by the same date, I suppose - I do not know - that the Government would have considered the purchase of the British machines. However, the Government does not say that British machines would not be available at that time, but seems to indicate by implication that the British machines could not bc obtained until a later date.

The Government says that the proposed terms and conditions of the borrowing were submitted to members of the Australian Loan Council and that they concurred fully in this purchase. I should like to know, and I am sure that other honorable members are equally inquisitive, whether the Government told the members of the Australian Loan Council any more than it is telling the Parliament about this particular purchase, or whether the members of the Australian Loan Council - that is the Treasurers of the various States - were so uninterested in all these matters that they gave a prompt approval without knowing anything more about this proposal than the message contained in the Treasurer's correspondence with them. Perhaps the Government would table that correspondence before the measure passes through committee, so that we may know whether we are being told any more or any less than the State Treasurers were told.

The Treasurer has said that this is the first loan received by Australia from the International Bank for Reconstruction and Development for purposes other than general development. When the fourth loan raised from the International Bank in 1955 was considered by the Parliament, the Treasurer said that 27,000,000 dollars of the moneys raised by previous loans had been used for both overseas and domestic air routes. We have borrowed money on previous occasions and lent it to airline companies, and. as the Treasurer said, som, of that money was used for overseas airlines. The Parliament, therefore, has been misled to that extent by the Treasurer in his speech.

We are continuing to borrow from America, as 1 have said, because this bill is ancillary to a later bill dealing with the fifth loan that has been negotiated with this particular bank. The bank treats us not generously but just as harshly as it treats any other country that might default or has defaulted. We are required to pay the usual commission charge of 1 per cent, under the articles of agreement of the bank, and that 1 per cent., I understand, goes to a fund which covers losses that may be incurred because some other borrower countries may default. We are good borrowers from this bank - too good from the Opposition's point of view. Indeed, I think we have borrowed more money than any other country from this bank. When the next measure comes before us, I shall have more to say about the matter.

Included in the interest rate of 4i per cent, is the usual commission charge of 1 per cent, that I have mentioned. The loan is repayable over nine years, and another provision has been introduced.

We are to pay back the group of institutional lenders first. They are to get their money back before the bank is repaid. Messrs. J. P. Morgan and Company and their associates will begin to receive their repayments in December, 1960. A final payment will be made to these private lenders about June, 1964, after which repayments to the International Bank itself will commence, and the repayments to the bank will be payable over the period between June. 1964, and December, 1966. There is a commitment charge with the bank. I am not able to read the figure correctly from the roneoed copy of the Treasurer's speech that has been given to me, but it appears to be something like three-quarters of I per cent, of the principal amount of the loan remaining to be withdrawn. When I compare that figure with the commitment charge for the accommodation received from the private bankers. I find that the latter charge is only one-half of 1 per cent. There could be a reason for the difference, [f so, the Minister for Immigration (Mr. Townley), who is sitting at the table and who has knowledge of aircraft and aircraft operations, may explain why there is a difference.

I have explained, as briefly as I can, just what our position is with regard to this measure. Let me summarize it. We do not like borrowing overseas. We are opposed to it. We want to get our country out of the hands of the money lenders of New York and London as quickly as we can, because we remember past history, and we remember when the Australian people suffered heavily in bad times because financial accommodation was withdrawn. With those qualifications, we do not oppose this measure, because we believe thai Qantas must be equipped as well as any other airline company with the best aircraft that are available. We do not like these repayment terms, because we have reached the stage in this country when we have to borrow as many dollars a year as we can to pay to the United States of America the interest on money that we borrowed previously. If we continue on those lines, it will not be long before we are properly broke, despite the fact that we are living in what is allegedly the most prosperous period of the nation's existence.

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