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Tuesday, 24 November 1959

Mr BURY (Wentworth) .- At least I can agree with the honorable member for Melbourne Ports (Mr. Crean) when he states that we would be better off if we had more information. Our documentation at the moment is quite insufficient to enable us to follow all the trends in detail. If it were better my own feeling is that far from discouraging this process of foreign investment in Australia we would go even further perhaps in some direction to increase it. Of course, there can be no meeting point between one side which wishes to discourage foreign investment in Australia and a government which wishes to promote it.

The honorable member for Melbourne Ports has stressed some objections to foreign ownership of Australian industry. Let us take the motor industry. The motor industry in Australia is very largely owned and certainly controlled by overseas companies. This has been very largely a postwar growth, although it has its origins in earlier times. Does the honorable member for Melbourne Ports want a big motor industry in Australia or not? If he does he must pay for it. If he does not, let him be frank and say that he wants to be socialistic and stay in the backwoods. Where do you get a motor industry - out of some socialistic text-book? You get a motor industry built up by the people who know all about itv by investors who are acquainted with its operations. Over the years, by its efforts, by making big profits and by ploughing them back, not only has the American motor industry grown in this country, but also a whole train of Australian industry has followed in its wake. Where would we be in the motor industry without foreign control and foreign ownership? The motor industry is probably the one industry above all others that is owned overseas and controlled overseas. But does that hurt us? What does the American manufacturer do in Australia? He employs large resources and large numbers of Australians. In every direction he makes the Australian economy more efficient. If he is to bring his capital and know-how from his own country, where he runs naturally much less risk, to an overseas country, he naturally wants a higher return.

The honorable member for Melbourne Ports resents the process of ploughing back of profits - building up of capital. It is true, of course, that it would be better if more new money came into the country. But it is only as a result of this ploughing back process indulged in by the General Motors organization in Australia since the war that we have our present large motor industry. If we move away from the motor industry and look at other industries it will be seen that almost every sector of industry in Australia is dependent on know-how coming in from overseas companies. Why should these companies be a threat to us? By investing in a foreign country they give hostages to fortune. They are in the position where a hostile government in this country could take action highly dangerous to them. Such action could at any time destroy their investment. One reason why they have come to Australia in preference to other countries is that here there is a firm foundation where they can expect right and proper treatment over the years.

I agree with the honorable member for Melbourne Ports that we would all like to see more of these companies owned and controlled by Australians. We would like to see more Australians on the boards of these overseas companies. We would like to see as many Australian shareholders as possible sharing in the capital assets and profits of these companies. But you cannot control this process in detail, because if you fiddle around with regulations and restrictions you take away the inducement for overseas investors to come to Australia and develop our industries. In the long run the way to keep Australia independent in the field of industry is to improve our educational facilities, our training methods and the general standard of our population. That is the way in which we shall be able to maintain our independence. We are much more likely to be able to do that if we have a large sector of foreign investment and a continual process of development - which can come only if foreign interests invest in Australia and develop our country - than if we try to live within our own means and resources and so retard the whole process of our development.

Apart from the general progress of Australian industry which is so highly dependent on overseas investment, we have to consider the funds which will become available. The honorable member for Melbourne Forts dismissed the idea of a great increase in receipts and higher overseas funds as an unimportant consideration. Does the honorable member suggest that we can continue our present rate of development and that we can maintain our present high standard of living without this capital inflow? He spoke about our current level of import restrictions, but he does not seem to realize that without the continual inflow of raw materials from overseas and other items that are indispensable to Australian industry, we would not be able to continue operations. We have been able to continue our present rate of development, not only because of the direct effect on our industries of the import of raw materials but also because of the additional financial resources that have been made available to us. Although the honorable member for Melbourne Ports did not say it in so many words, presumably he is opposed to this capital inflow. If overseas investment were cut off our immigration programme would suffer, our general development would suffer, and the high standard of living which we currently enjoy would suffer.

The honorable member quoted at length from the London " Times " and pointed out how advantageous this new withholding tax arrangement would make investment in

Australia. I hope that is the reason why he read those extracts from the London " Times " because the obvious aim of this legislation is to facilitate and increase the capital inflow to Australia by making this country a still more attractive place for overseas investors. Far from deploring the arrangement we should applaud it because, unless we can make Australian investment more attractive for the foreign investor than corresponding investment in his own country, there will be no inducement for him to send his capital to Australia.

The honorable member for Melbourne Ports referred to the danger of take-overs - a subject to which we referred a few days ago. It is possible for foreign investors, by weight of their capital investment, to obtain a dominant interest in existing Australian industries. I agree with the honorable member that this is something which needs watching. But, in many cases, it will have beneficial results because local companies will be forced to publicize their accounts to a greater extent than previously and this eventually must lead to a revision of our company law. In many States, and particularly in New South Wales, the company law is obsolete but the threat of a take-over has, in one or two cases, forced the directors of Australian industries, who like to keep their shareholders in the outer darkness so far as company affairs are concerned, to publish statements showing their true assets and earning powers. Unfortunately this Government has not control of the situation, but I am quite sure that if it had the final say company laws would be brought up to date very quickly. Do not let us foist on to this Government the blame for the very backward state of company law in many States.

In the end there can be nothing to reconcile the viewpoint of honorable gentlemen opposite with the viewpoint of honorable members on this side of the chamber. We agree that more information should be made available. We should know more precisely what the proposal will cost and what effects it will have upon us. The more facts that are published and the more comprehensive the analysis that is made, the more sensibly can we debate these matters because we cannot possibly debate them fully and sensibly unless we are in possession of the full facts.

However, we must not overlook the very powerful and continuing benefits which result from this huge flow of overseas investment. If we are to go ahead, it is quite apparent that we must do what other countries have done. The introduction of the withholding tax system is not new, in fact, we have copied it from Canada, the United States and other countries. The system is simple in operation and has advantages for the foreign investor. It has attracted him to other countries, and we can only hope that it will attract him to invest in increasing measure in Australia.

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