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Wednesday, 1 May 1957

Mr DAVIS (Deakin) .- The thoughtful speech of the honorable member for Wills (Mr. Bryant) illustrates, I think, the truth of the contention of my friend, the honorable member for Isaacs (Mr. Haworth), that there are a great many features of this agreement on which honorable members on both sides of the House can agree in this important debate. Nevertheless, there are matters on which the Government and the Opposition disagree, and will continue to disagree. In the rapidly changing world that we have to accept to-day, agreements of this kind are continually affected by changing world conditions, and I agree with the honorable member for Isaacs that, in the interests of Australia as a whole, Government supporters and Opposition members alike should endeavour to increase the area of agreement rather than to extend the disagreement between them.

The outstanding feature of the remarks of the honorable member for Wills was his approach to the question of controls - an approach with which we on this side of the House disagree. I found little to quarrel at in the honorable member's introductory remarks, but I cannot accept his suggestion that if we wish to reduce the production costs of our exports, particularly from secondary industries, we must control prices and other things. Such a suggestion clearly indicates a division between Government and Opposition that is not likely to be narrowed. It has been said before, and I think it should be said again, that consideration of the implications and consequences of an agreement such as this, entered into by a responsible government, must involve careful scrutiny of the background to the agreement. As the honorable member for Wills said, we cannot afford to overlook the changing world conditions that have conspired to produce the circumstances that rendered this new agreement necessary. I do not think that we can afford to disregard the fact that one of the circumstances affecting the pattern of world trade is the paramount need of so many nations for selfsufficiency, or near self-sufficiency, as a result of the unsettled state of the world caused by Communist Russia's threat to various countries at different times. '

We cannot ignore the fact that a principal factor in trade negotiations and agreements between countries is the question of the balance of payments. This is a problem that is not peculiar to Australia, but is common to all countries. We must realize that the dollar is the most highly valued international currency to-day. This is a factor that restricts trade in some ways, and perhaps, in a limited sense, expands trade between some countries. I agree with the honorable member for Isaacs that we cannot afford to ignore the influence of recent events in the Middle East, particularly in relation to the Suez Canal, on world trade, and the possible consequences, not only in the near future, but also, perhaps, in the relatively far distant future. All those factors play some part in trade negotiations, and they must be considered if we wish to get a true picture of the background to this agreement. We must consider also the internal situation in Australia and the reasons for it. It is obvious, of course, that a new trade agreement between the United Kingdom and Australia, or at least a modification of the previous agreement, has been needed for a long time. It has been made more urgent by the growth of our population, which is still increasing.

The expansion of secondary industry in this country, which has been mentioned generally, is another major factor. It is significant that secondary industry has expanded, the production of manufactured goods, and industrial employment have increased, and the total output of primary products has increased, but fewer people are engaged in primary production to-day than were engaged some years ago. This is of great significance, and it is an important feature of the background to trade agreements such as this, lt is obvious, Mr. Deputy Speaker, that we now have a far larger home market than we had five or ten years ago, and that this market will expand considerably in the future at much the same rate as it has done in the last few years. lt was said in my youth, with some truth - and 1 think it still holds true - that the best market for both primary and secondary products is the home market. We must not forget that. It is of the utmost significance that agriculture, the pastoral industry and secondary industry are much more highly mechanized than they were five or ten years ago. It is significant also that, in the process of mechanization, there is a large import content. That is of basic importance, because it affects one of the prime costs in industry - the cost of the machines necessary for the processing of goods. It is on that aspect that we must look at the question of imports. It is a fallacy, or an oversimplification, to say that as Australian industries mount, imports will decrease. That is not necessarily so. History has shown that, as secondary industries increase, the need for imports of machines, tools and raw materials necessary for our manufactures also increases.

The vital factor in these discussions is: To import we must export. It has been said often, and every one accepts it as the truth, that almost all our exports are primary products - wool, wheat, meat and the like. The secondary industries that we have developed are, in the main, consumers of imported goods, which are paid for by the export of primary produce. That is the background that must be faced by any government when it considers trade agreements. The Minister for Trade (Mr. McEwen) and the Government, when they started these long and, I am sure, laborious negotiations, also had limitations imposed upon them by the existence of the Ottawa Agreement and the General Agreement on Tariffs and Trade. That was the sort of compelling need that faced them. They were the factors that brought about that which the honorable member for Wills described as a not completely satisfactory document. I ask the honorable member for Wills and those who criticize this agreement: In what way and where in the existing circumstances would they expect that an agreement more satisfactory to Aus tralia could have been obtained? Admittedly, it is the right of the Opposition tocriticize, but it seems to me that, on this discussion at least, little constructive criticism has been offered.

In the agreement, two main factors, in general, are involved. Referring to the export trade, the Minister said -

In developing its constructive approach to the problem of increasing exports, the Government has planned a systematic and comprehensive review of Australia's trade relationships with other countries. In this programme, trade with the United Kingdom, which is our greatest trading, partner, naturally comes under early review.

Again, one must look at the tangled problem of international trade and ask, " Where can a start be made? " That seems to me the logical place to start, and I have not heard that contention challenged. The Minister then went on to outline - and the agreement confirms his outline - that there were two main aspects, speaking in general terms. The first was the advantages to Australia gained in trade with the United Kingdom. The second was the contribution made by the agreement to increased trade, and particularly to increased export trade with other countries. There has been some little argument on those points.

I have not the competence of my friend, the honorable member for Wimmera (Mr. Lawrence) to speak on the problem of wheat, but it seems to me that the honorable member for Lalor (Mr. Pollard), who led for the Opposition on this matter, missed the main point. In his speech, the facts of which have not been challenged, the Minister said that in pre-war years we exported to England about 1,000,000 tons of wheat a year. In the last three years, the average has fallen to 550,000 tons. Under the present agreement, the figure for the next five years will be at least 750,000 tons a year with provision for high-protein wheat above that figure, if we can export it and if the United Kingdom can buy it. Here is a substantial and practical yardstick of measurement. In 1954, the United Kingdom bought from us only 13,000,000 bushels of wheat. The assurance in this agreement of a market for at least 28,000,000 bushels represents a marked and practical contribution to our problems and a guarantee of security to the basic primary industry, which must be given if the basic primary industry is to be maintained. If we cannot maintain the basic primary industry, we cannot build on that foundation the -secondary industries of which Opposition members have spoken so glibly on occasions. Maybe they are the unpleasant facts of life, but they are still the facts which faced this Government or which would face any other government. 1 wish to refer in brief to one of the points made by the honorable member for "Wills. He spoke of the high level of production costs and, as I understood him, said that the solution was price and other controls. That seems to me to be an absurd argument. All restrictions applied to an expanding trade are a contradiction not only in terms but indeed in practice. As the Minister pointed out, under the agreement we give a minimum preference on producer goods to the United Kingdom. In other words, the minimum preference extended to the United Kingdom for producer goods, which would be made up in this country, has been fairly substantially reduced. As secondary industries must import goods, particularly from the United Kingdom, as part of their process of manufacture, then a reduction in the preference extended to those goods means a really considerable contribution to a reduction in our cost structure. Even if it be not as substantial as some would wish, it is still something that cannot be disregarded. Indeed, I feel that it is in fact appreciated by all honorable members, whether they sit -on the Government side or the Opposition -side.

The Minister mentioned the flexibility that comes to Australia under the agreement to negotiate and bargain with other countries. In all probability, we will gain from the competition that arises between "foreign countries and the United Kingdom. "We will gain further from the practice, which 1 understand is now being considered by the Minister, of reducing duty on foreign goods not produced in this country but essential to the requirements of industry in this country. Again, that is a contribution to our internal economy that is reflected not only in our cost of living, but also in our cost pyramid structure. As every one must agree, that has a beneficial effect on our overseas trade.

So, sir, in looking at this agreement from the general point of view as well as the particular, I think it would be safe and fair ito say that here is a marked contribution for the next five years to the security of many of our primary industries, which are themselves essential to the economy on which secondary production can be built. It is a contribution to that export of primary and secondary goods which is essential if our economy is to remain stable. In the final analysis, it is a sound basis for negotiation, bargaining or agreement with those countries with which we at the present time trade but little. I am assured by those who have had a far wider experience in the actual handling of trade and exports than I have had that there are innumerable items of Australian produce that could be exported to the markets of South-East Asia - our near East - if two conditions could apply. The first is a reduction in costs - even relatively slight - and the second is an assurance to Australian processors and manufacturers of a continuity of government policy for a reasonable period. Probably one of the great contributions that the Government could now make to the stability and progress of Australian industry, on the basis of this proposed five-year agreement, would be to give to the manufacturers a clear, defined and stated policy for the life of this agreement, based on the terms of the agreement, modified perhaps by agreements which will follow with other countries. I am sure that in this world of constant change this is one of the few things to which we may look forward with some confidence. I, as you may have gathered, sir, support the agreement.

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