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Wednesday, 30 November 1960

Mr HOWSON (Fawkner) .- It has been fairly obvious, as the debate on this bill has proceeded, that the argument has been mainly directed to the need for maintaining the stability of our balance of payments. Whilst Opposition members have tended to castigate the Government, they have given very little intimation of what policy they would pursue in order to meet the problem. The main constructive points were, I think, contained in the speech of the honorable member for Fremantle (Mr. Beazley). It was fairly obvious that he would advocate two things: First, a return to import licensing, and secondly, the hoarding of our overseas reserves.

The honorable member accused the Government of frittering away, in the period from 1953 to 1959, a total of £1,000,000,000 in overseas funds. He said that our accumulated trade deficit on current account during that period amounted to this figure. Presumably, we can read into this that he would have applied stringent import licensing to reduce our imports during the seven years by £1,000,000,000. If that had been done, according to the honorable member, an extra £1,000,000,000 would have been added to our overseas reserves, which now stand at £500,000,000, making a total of £1,500,000,000. Is it really the attitude of the Opposition that we should at this stage maintain overseas balances at that colossal amount? That is the first question that should be put to the Opposition. Should we have adopted a policy of rigid import licensing over the whole of this period of seven years, neglected any form of capital development and resorted solely to piling up larger and larger overseas balances? After all, that surely must be the implication contained in the remarks of the honorable member for Fremantle. To my mind, the Government has a duty to maintain the stability of our balance of payments as far as that is possible, for the balance of payments is the main indicator of the state of our economy. I also believe that constant adjustments must be made from day to day, and from month to month, because if our exports exceed our imports and there is a surplus in current account we build up our overseas balances instead of using the money to develop the economy and the capital of the nation as greatly and as rapidly as our national security demands. The Opposition would have us board our overseas reserves and refrain from making use of borrowings and capital investment from overseas. I would liken the attitude of honorable members opposite to that portrayed in the parable of the talents in that, instead of using the talents which have been given to them, Opposition members would seem to be digging a hole, putting their talents into it and refraining from using them.

Mr Bandidt - There is no talent in the Opposition.

Mr HOWSON - That is an even harsher observation than I would have expected from the honorable member for Wide Bay. The Government has always taken the view that we should develop our national resources as rapidly as we can afford to and that, if overseas nations are prepared to invest in this country, we should use the proceeds of such investment for capital improvements which will develop and strengthen the resources of our nation. And we have done that. But we must be quite sure that we do not allow our balance of payments to run into a deficit because, if we do so, we cannot meet our external commitments and we then become confronted with problems of the type with which we are faced now. Therefore, I believe that the Government has been acting wisely and correctly over the last few years in constantly making slight alterations to and adjustments of our economy in order to avoid running into a deficit while at the same time seeing to it that any surplus that arises either in our current account or from external borrowing is applied to the maximum possible useful extent for national development. The bill we are now considering is a typical example of that policy, for another slight alteration to our economy is necessary now. How much better this is than an inflexible policy which would involve major adjustments at the end of a much longer period!

The honorable member for Melbourne Ports (Mr. Crean) suggested that this action should have been taken sooner and that the trends in imports were surely visible at an earlier date. I am not quite so certain that the trends which he has in mind were visible some months ago. After all, the decisions upon which the Budget was framed must have been taken in June and July of this year - nearly five months ago. The latest import figures available at that time surely must have been those for May and, by May, we had had only little more than two months in which to gauge the effect of the removal of import licensing in February. It is well known that it takes at least six months before the effects of any change of import licensing policy will be shown in the monthly returns. Anybody who has studied the import figures for the whole period during which import licensing was in force will know that it was at least six months before the full effect of any change in import licensing policy could be seen. In those circumstances, I think it would have been almost impossible for a government which had to arrive at decisions in June or July of this year to be certain of the likely trend of imports during this current period. The figures that were available to the Government in March, April and May did not portray the trends that are so well demonstrated in those for July, August and September and, to a greater extent, those for October.

Let us examine the figures relating to the importation of certain selected items during the July-September quarter of 1960 as compared with those for the corresponding period in 1959. First, they show that the total value of imports for the JulySeptember quarter of 1960 was £280,000,000, which represents an annual rate of £1,120,000,000 as compared with a quarterly rate of £205,000,000, or an annual rate of £820,000,000 for the corresponding period last year. Let us examine in particular the figures relating to importation of those consumer goods which come under the heading, "Food, beverages and tobacco ". The honorable member for Melbourne Ports made great play on the importation of frogs' legs in aspic and other things his wife sees when she does her weekly shopping in Melbourne, but I point out that the total value of imports coming under the heading " Food, beverages and tobacco " for the June-September quarter, I960, increased by only 11 per cent, to £9.500.000 as compared with £8,500,000 for the corresponding period last year. I do not think that frogs' legs and the other things that have been hammered at by the Opposition were responsible for a great proportion of that increase. Even if they had been, the increase under the heading to which I have referred was very small when compared with the increase in our total exports for that quarter. Again, the importation of clothing increased by only £700.000, from £1,200,000 to £1,900,000. The increase in the total value of consumer goods was only from £36,400,000 to £48.000.000 and the actual proportion which consumer goods represented to our total importations declined from 17.7 per cent, in the July-September quarter, 1959, to 17.1 per cent, in the corresponding period this year. It will be seen, therefore, that the increase in our imports bill was not due to any great extent to the importation of many of the items that have been mentioned by the Opposition. On the other hand, there were big increases in the imports of such things as structural steel and three other items related to the building industry. The value of structural steel imported increased by over 1,000 per cent., from £100,000 to £1,200,000, while that of timber imported increased from £3,500,000 to £7,500,000, an increase of well over 100 per cent. Again, the value of floor coverings, which gives some indication of the extent of our building activities, increased by almost 100 per cent., from £1,472,000 to £2,759,000. All those items give some indication of the extent of the increase in activity in the building industry.

Let us have a look at the other major increases that have occurred in those items which go into the manufacturing of cars, trucks and tractors. The value of imports of steel plate has risen from £800,000 to £6,000,000 - an increase of nearly 650 per cent, over the period, being part of the total increase in the value of iron and steel imports from £4,000,000 to £14,000,000. The value of motor vehicles imported complete has gone up from £800,000 to £1,700,000. The same position applies in respect of tractors and aluminium. All these items showed colossal increases during the quarter compared with the same quarter last year. No other items in our import bill have shown increases of anything like these amounts.

The total imports of materials for manufacture - particularly in the building trades and the automotive trade - have shown an increase, over that period, of over £50,000,000, out of a total import bill of £280,000,000. The increase in that time was £75,000,000 and over £50,000,000 of that was accounted for by these manufacturing materials.

Even more important than this, because it relates to matters which the honorable member for Fremantle referred when dealing with the question of a possible diversion of labour, is the great increase in imports of components for motor cars - not only the cars themselves and not only the steel. We must have regard to what happened in the past. Last year the registrations of cars were running at an annual rate of 250,000, and the rate has now increased to 330,000. In October the rate reached nearly 340,000. It is wellknown that the makers of components for cars in Australia could cope with an annual registration rate of 250,000, but when the rate was raised to 330,000 registrations annually the manufacturers of components were unable to meet the requirements of the automotive industry. The whole of the increase, therefore, had to be met by importing components.

The Australian industry was not geared to increase its rate of production of components for the automotive industry rapidly enough to cope with the increased sales of motor vehicles. That is why there has been an increase in the imports not only of completed cars but also of so many components which otherwise would have been manufactured in Australia. I think it is important that members of the Opposition should realize this rather important point. To my mind, therefore, the effect of this tax will not be to cause widespread unemployment in the automotive industries, and particularly in those industries which are by far the largest and which manufacture components of cars. The greatest effect will be felt in the assembly lines, but certainly not where the large bulk of workers is employed. As I see it, any reduction in the rate of registration of new cars will be felt first in a decrease in the imports of components for cars, leaving the Australian industry to carry on at the normal rate.

Mr Clyde Cameron (HINDMARSH, SOUTH AUSTRALIA) - Do you want to see our car imports reduced?

Mr HOWSON - I want to see a greater proportion of the cars used in Australia made in Australia and that is what I think will occur as the result of this legislation. We still have a greater car population than any other country in the world except the United States of America, Canada and New Zealand. We also throw away our cars more rapidly than most other nations do. It is a well-known fact that to-day hirepurchase companies will not accept as a risk a used car manufactured before 1950 and therefore, to all intents and purposes, most cars over that age are to-day almost worthless.

There is another fact that we can learn from events overseas. The sales tax on cars in the United Kingdom - the purchase tax, as it is called there - was raised to 50 per cent., which is higher than the tax here. One of the results of that increase in tax was that it encouraged the export of cars from the United Kingdom. Certain automotive companies in Australia have recently been improving the rate of export of cars from this country. We therefore hope that the effect of this legislation will be the same as the effect of that in the United Kingdom, and that the export of cars during the coming months will increase.

If we can reduce the rate of new car registrations to what it was at this time last year, we will reduce imports to a very great extent and will not greatly affect the employment of people in this industry in Australia. There will still be plenty of cars to go round and to meet essential needs. By raising the sales tax to 40 per cent, and reducing this class of imports to an extent, we will provide sufficient resources for other sections of our economy that are in need of a portion of our precious external reserves at the present time. To my mind, the way of achieving these ends at present, as suggested to the Government, is a very much better way than that which was advocated last night by the honorable member for Fremantle. I, therefore, support the bill.

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