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Wednesday, 10 April 1957

Mr JOSKE (Balaclava) .- Mr. Speaker,this bill provides for the raising of a loan from the International Bank for Reconstruction and Development. The bill has been brought in by the Acting Prime Minister (Sir Arthur Fadden) in his capacity as Treasurer of the Government, lt will authorize a further loan from the International Bank. Australia has previously obtained from the bank four loans, totalling 258,000,000 dollars. At a time when the Treasurer has just achieved a record term in office as Treasurer of the Commonwealth, it must give him considerable pleasure to be able to announce to the Parliament that he has been able to obtain a further loan from this very important overseas organization. As the Treasurer indicated, the moneys provided by this loan will be used for certain very important public purposes, such as programmes in forestry, agriculture, road and rail transport, and industry.

It is only from the International Bank that Australia has been able to obtain dollar loans, and it is most important that we should negotiate substantial dollar loans in order to enable us to purchase equipment that can be obtained only from dollar countries. In the past, the proceeds of these loans have been used to purchase equipment of the greatest value, such as heavy earthmoving machinery, diesel-electric locomotives, agricultural machinery to improve our agricultural production and the efficiency of our farms, and road-making machinery to enable us to undertake road works that would otherwise have been impossible. In this debate, the Opposition has shown that it is extremely unwilling for Australia to obtain moneys from overseas. Opposition members have from time to time chided the Government for its alleged failure to improve our roads and railways. Indeed, only yesterday, the honorable member for Stirling (Mr. Webb) proposed the discussion of transport problems as a matter of urgent public importance. Yet, when the Government has the opportunity to obtain overseas funds for these purposes, the Opposition has not hesitated to oppose this measure.

The bill is a most useful one. Over the years, it has been the practice for Australia to obtain from overseas as much money as possible. Indeed, this country's early development was greatly assisted by overseas loans. However, the practice of obtaining money from other countries ceased for some time, and it was not until 1950, shortly after the Menzies Government took office, that the practice of negotiating loans overseas was again resorted to. The first loan from the International Bank was obtained in that year. One may very well contrast the present state of affairs with that existing in 1949 under the Labour Government. To-day, we enjoy wonderful prosperity, and during the years that the present Government has been in office, we have made great progress generally. When Labour went out of office in 1949, we were suffering from acute shortages and were not getting ahead with the development of the country as satisfactorily as we should have been doing. The overseas loans negotiated by this Government have enabled us to obtain from dollar sources valuable equipment and machinery that we should otherwise not have been able to get. It has been said in this debate that the International Bank should serve the sole purpose of helping under-developed countries, and that Australia's negotiation of dollar loans from the bank has in fact deprived under-developed countries of financial aid that they should be receiving.

Mr Cairns - Who said that?

Mr JOSKE - It has been said in this debate, and it may be said again.

Mr Cairns - The honorable member should bring himself up to date.

Mr JOSKE - If I brought myself up to date, I should have to say a lot of disagreeable things about the honorable member that I should not care to say.

Mr Whitlam - The honorable member need not think that the honorable member tor Yarra would worry about that.

Mr JOSKE - I do not think that he would worry. 1 was going to say that the International Bank does in fact make very substantial loans to under-developed countries, and has already lent to Asian and African countries a far greater than that lent to Australia, although Australia is the greatest individual borrower from the bank. We may say. in other terms, that Australia is the bank's most favoured borrower. That indicates the bank's confidence in this country, and the criticism that we have heard to the effect that we are trying to cadge loans from the International Bank can be regarded only as very cheap. The truth of the matter is that the bank is most happy to have Australia as a substantial borrower, and it has shown continued confidence in us by agreeing to make this further loan. The whole purpose of the International Bank is to promote vital development throughout the world, and especially in this part of it. The bank is aware .that inflation is world wide, and it does not like it, and if it is satisfied that a country is not taking the proper action to deal with inflation and to limit it a* much as possible within its own borders, it does not regard that country as suitable for the advancement of financial assistance. The fact that the bank has shown so much confidence in Australia as to make a further loan indicates that it regards as satisfactory the efforts taken by this Government to deal with inflation and considers that we have made good progress in tackling what is a world-wide problem.

I turn now to the economic benefits of these overseas loans. I propose to deal with this aspect of the matter first from the stand-point of the balance of payments, which presents a very serious problem foi Australia in view of the nature of its economy. The balance of payments problem is sometimes stated in simple terms an a question of whether exports exceed imports, or vice versa, but it is well known that that is an oversimplification of the problem and that various invisible items on both sides of the ledger must be taken into account. Invisible items that add to the cost of imports are expenses such as freight and insurance, which amount to more than £100,000,000 annually. On the other hand, there are invisible items on the export side of the ledger, particularly capital flowing into this country through private investment and public borrowing. The more money that we can obtain by public borrowing, the mee likely it is that the balance of payments will be favorable and that we shall avoid the difficulties that we have experienced during the last twelve months or so owing to the decline of our overseas balances. Therefore, from the stand-point of the balance of payments, it is of great importance that we obtain public borrowings from overseas.

Let me now deal with import restrictions. Our balance of payments trouble has forced us to impose severe import restrictions. This Government has heartily disliked such a policy, because it has some very grave disadvantages. Gu.ce restrictions have been imposed, it is difficult to get rid of them. They injure business, ultimately increase costs, and are, in fact, highly inflationary. We do not get so many goods into the country, the same amount of money chases fewer goods and, consequently, inflation races on.

The Government's policy in the last two budgets and also in what has been called " the little budget " has been deflationary. On the one hand we have had import restrictions which are inflationary, and, on the other, the Government's great and successful attempt to introduce a policy of deflation. With more money coming from overseas, the Government is helped in dealing with this problem of import controls. The problem is always to keep import restrictions at a reasonable level over a period of time. One of the great disadvantages of our type of economy is that sometimes heavy import restrictions have to be clamped on, and that very often one is tempted to take them off as soon as one thinks this can be done. This produces a considerable degree of instability, which does great damage. But now we have a far more favorable balance of payments. We know that this year we will get a splendid wool cheque. We know the amount of wool on the sheep's back, and approximately what it will bring next year. We can, therefore, plan for a substantial period ahead. That should avoid the necessity to clamp restrictions on again shortly after they have been lifted. Now that we have eased restrictions we should be able to maintain them at their present level and plan for a substantial period ahead.

Such a policy is aided by the type of loan which we are getting through the International Bank; but if one looks at the economic situation somewhat more broadly than is required by a consideration of the balance of payments problem, one realizes that great efforts have been made in this country to bring about development. We have had a considerable development plan and, in addition, a huge immigration programme. More immigration means that more housing must be provided and more employment found. This means that there is a need for more plant and equipment.

We have endeavoured to build up a huge manufacturing industry and this, again, calls for more plant and equipment. In other words, as much new money as possible should be poured into this country. The object of the present Government has been to provide full employment and high working standards, while maintaining a high standard of social services in order to bring about the high state of prosperity which this type of policy involves. We must bring in considerable sums of money from overseas by way of public borrowing. We need have no fear for the future of this country. Those who say that in past times we have had difficulty in paying back om overseas loans simply have no confidence in the future of Australia.

Mr Costa - Some have never beer repaid.

Mr JOSKE - Over the years, this country has borrowed much money, and has paid much of it back. Honorable members opposite have told me to come out of the past, but sometimes it is well to get back into the past. My experience of the Labour part? is that it will never come out of the past In this matter one should not venture into the realm of fantasy, as did the honorable member for Melbourne (Mr. Calwell) when he described the Government as going around " cadging ". I have used the word " fantasy ". Perhaps " moonshine " would be a better word. I would like to see the honorable member come out of his moonshine and get into a bit of sunshine. In considering the future of our country, we should be men of courage. We should not be afraid to bargain in respect of the future of Australia, or be afraid that some day wc might not be able to repay our loans. This is one way in which we can advance th, prosperity and greatness of this country. The policy of overseas borrowing, which the Menzies Government has successfully undertaken, should be continued. An> criticism of what the Menzies Government has done in this matter should be directed to the fact that it has perhaps not obtained enough money from overseas. Some business men would certainly say that; but the Government has done a great deal to bring money here from dollar sources, and use it to good purpose. We may well hope that the money that has come from the bank in the past will prove to be merely a first instalment, and thai we shall see much more in the future.

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