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Wednesday, 30 November 1960

Mr DEPUTY SPEAKER - Permission is not granted.

Mr DALY - You will note, Mr. Deputy Speaker, the fear on the part of the Government and its supporters to have the details given in this document recorded in " Hansard " for the benefit of people who like to read what is happening in this Parliament. However, honorable members opposite need not think that by their refusal to allow the document to be incorporated in " Hansard " the details that it contains will be hidden from the light of day. These details will be made known to the public despite the action of the Government's supporters. I have a shrewd idea that the contents of this document will be presented to the electors at the next general election. The facts will be there for the public to see, even if they are not incorporated in " Hansard ". I also state that from here on, for an indefinite period while I am in this Parliament, I shall object to anything being incorporated in " Hansard " by any member on the other side of the House, irrespective of who he may be. I will do so in order to remind honorable members opposite of what has happened to-day.

The measure before us has been made necessary by the Government's removal of import restrictions. A statement made in the issue of 18th November, 1960, of " Canberra Letter ", which is issued by the Associated Chambers of Manufactures of Australia, makes it quite clear, 1 think, that that is the real crux of the situation. This was the statement -

Virtual abandonment of import licensing has proved a costly experiment. It has been admitted that the rate of imports is much higher than the Government's advisers and anticipated (but no higher than many others forecasted). It was expected that there would be a slowing down after the initial flood of imports; but there are no signs whatsoever of this happening. November imports will again be sky high.

This is just another step, as a leading British economist said, in the weird and wonderful methods adopted by this Government to counter the drain on its overseas reserves.

Why is not the Government honest enough to say to the Parliament, " We made a mistake when we removed import restrictions "? I have always said that if Australian manufacturers are to undertake programmes for the production of quality goods at a reasonable price, there must always be a great measure of protection and, in addition, selective controls on imports. When all is said and done, why should all these luxury goods such as those mentioned by the honorable member for Hindmarsh be brought into the country? Who wants to eat worms in jelly if a man will be forced out of business in

Marrickville as a result of imports of these goods? What kind of a policy is it that allows imports of all kinds of luxury goods, and manufactured goods that could very well be made in Australia, thereby providing employment for the Australian people? What kind of a policy is it that allows these goods to be imported and requires people who use motor cars and other kinds of transport to meet terrific increases in sales tax in order to make good the Government's shortcomings in these matters?

We have in this country to-day an amazing situation in which the Government has not expanded the markets for Australian goods in any countries except those that are behind the iron curtain. The honorable member for Mcpherson said that we were at war with Russia. But if Russia had not been buying the wool produced by supporters of the Australian Country Party, the Government would probably have raised the sales tax on motor cars to 50 or 60 per cent, instead of 40 per cent. This Government's great drive for export markets in order to build up our overseas reserves has started and finished with the Communist countries that I listed in this Parliament the other evening. Those are the only countries that are buying our goods in any quantity, despite the Government's so-called export drive.

The honorable member for Richmond (Mr. Anthony) stated in this House that the Government was endeavouring to obtain markets overseas for our goods and said, " Let the Holden company build more cars and export them. That is what we require. Why should the home market take all the cars that are available? " I say, in the first place, that the Australian people are entitled to cars. Holden motor cars are at present being exported by Australia, and in order to counteract the drain on our resources we have as a consequence toimport great quantities of steel. Whether we like it or not, one of the great monopolies in this country - the Broken HillProprietary Company Limited - is limiting, its production. It does not want competition in the steel industry or greater production, and it is falling down in the discharge of its responsibilities to thisnation. This company is failing to meet, the home demand, as it could well do. It: could at the same time produce steel for export and gain for us valuable export markets.

As a consequence of the company's attitude, we have to obtain iron and steel from Japan. At the present time, this is scandalous in the extreme. Our overseas reserves are being whittled down because the Broken Hill Proprietary Company Limited does not wish to meet the demands of the home market and produce for export to the markets which we could obtain abroad. All this ballyhoo about the great demand for steel in Australia being responsible for current steel imports is quite wrong. The simple fact is that the Broken Hill Proprietary Company Limited and subsidiaries do not wish to expand their output. They are quite content to maintain thenpresent monopoly control. The time is approaching when the national government in this country will have to adopt a truly national approach to our problems and see that another steel enterprise is established in order that Australia may obtain the great returns that are available in the export field and also meet the demand in the home market. I should like to know what the Government is doing in this matter. This is a classic example of the things that it ought to turn its attention to. We in this country are able to manufacture the cheapest steel in the world - and we are able to make it more efficiently than steel can be made elsewhere. Yet we are told that we cannot manufacture enough even to meet our own needs, much less to export and earn overseas funds. These matters require investigation, and I should like to know what the Government is doing about them.

It is all very well for the honorable member for Richmond to say that motor cars and other products should be exported, but we should not export such products if as a consequence we have to import goods that could be made here and should be readily available. We should not spend our overseas funds in that way. That sort of thing is the cause of the trouble that we are at present having with respect to our overseas reserves. I should like to know what prompted the Government to rush in and remove all controls on imports as it did. Surely a Liberal Party-Australian Country

Party Government ought to have realized that we in Australia could not at present produce all the goods that are being imported from overseas and pay for them without draining our overseas balances. This Government must have realized that any fall in wool prices or in the prices of other primary products, or any similar event, would inevitably lead to the reduction of our overseas balances. The Government should have known, from its experience in 1951, that when import restrictions were removed all kinds of goods would be brought into the country. This has been exemplified by imports of various goods which have been mentioned in this debate with the result that our overseas reserves have been reduced by many millions of pounds, the ultimate result being further restrictions of several kinds.

The real crux of the matter is that the Government now refuses to recognize its mistake and is venting its spleen on the motor industry of this country, which is being asked to make full retribution for something which has been the Government's own fault. The Government blames the motor industry for its own deficiencies in administration. I see no reason why the responsible Ministers should not acknowledge the facts instead of rushing in with legislative measures of this kind and imposing additional taxes which will serve only to increase the cost of living and perhaps to obtain for the Government additional revenue. The Government does this sort of thing but makes no contribution to the solution of our economic problems. As I have said, I see no reason why a particular industry should be singled out for treatment of the kind which is being meted out to the motor industry.

What is the remedy for the fall in our overseas balances? What proposals has the Government to stabilize our overseas reserves and counteract the fall in the prices of wool and other export commodities? Its only solution is to adopt this weird and wonderful method of increasing the sales tax in order to try to prevent the import of certain commodities which are used in the manufacture of motor cars. This measure represents but a drop in the ocean. I think that a more practical approach would have been to look for more markets overseas and to adopt a system of selective controls on imports, with the particular object of preventing the import of luxury goods which are useless in the extreme and which are costing the country millions of pounds - imports which will ultimately cause many business people in this country to go to the wall.

No satisfactory explanation has been given as to why the motor industry was singled out to bear the full brunt of the consequences of the Government's incompetence. Let us look at what has happened to this industry since the present Government took office. In November, 1946, the sales tax on passenger motor cars was 10 per cent. On 8th September, 1949, the rate was reduced to 8i per cent. Since that time, the rate has progressively been increased by the present Government. On 13th October, 1950, this tax-reduction Government raised the rate to 10 per cent., and on 27th September, 1951, to 20 per cent. On 10th September, 1953, the rate was reduced to 16i per cent. But, on 15th March, 1956, this tax-reduction Government again increased the rate - on that occasion to 30 per cent. Now we have the masterpiece! The Liberal Party of Australia and the Australian Country Party have united in a masterly piece of tax reduction by raising the sales tax on motor cars to the all-time record level of 40 per cent.

Mr Barnes - What about utilities?

Mr DALY - That is one of the strangest questions that I have ever been asked. It is just about as silly as is the Government's effort in imposing on poker machines sales tax at the same rate as is levied on children's toys. Utilities are of only slight significance compared to the overall number of passenger motor cars - the vast majority of motor vehicles in this country.

The Chamber of Automotive Industries of New South Wales has distributed a remarkable circular, the like of which has not been seen for a long time. Among other things, it states -

In the 1959-60 year, the Federal Government collected total taxation of £144,000,000 from the Australian motoring community.

In sales tax alone, motorists contributed £77,000,000, which was 47 per cent, of sales tax collected from all sources. The dealer didn't pay this - you did.

Similar comments are made throughout the publications of the automotive industry. The November, 1960, issue of "Automotive Topics ", which has been sent to me, points out that in 1956, when the little Budget was introduced, the Prime Minister said unequivocally that the 30 per cent, sales tax then imposed on motor vehicles was " a temporary restraint on the motor industry ". Yet, to-day, this temporary restraint has been extended by this Government and is now 40 per cent. All of this means that the Government is taking it out on the motor industry for no reason except to cover its own incompetence.

These matters are of importance, because other remedies than the imposition of higher sales tax could have been adopted. There can be no excuse at a time when the Government knows that inflation is out of hand to increase substantially the price of motor cars. In a country of the size of Australia, the motor industry should be encouraged to develop. Those who manufacture vehicles and those who distribute them should be encouraged and the indirect burden on this means of transport should be reduced. Instead of that, we have an incompetent administration that fails to give effect to policies, abandons import restrictions, misjudges the state of the economy, fails to develop overseas markets and does not give adequate consideration to the great problems that face this young country in world competition. Controls that would have maintained stability in our overseas balances were abandoned overnight. Now, when the Government sees that it is in difficulties, it takes advantage of the prosperity of the motor vehicle industry and imposes the most vicious sales tax ever imposed on the transport system of this country. These matters require investigation.

We on this side of the House object strongly to this form of taxation. Sales tax is a most vicious tax. It falls equally on the millionaire and on the basic wage earner. It is a flat rate tax. That is why the Labour Government set out to eliminate sales tax completely and by 1949 had succeeded to the extent that only a small number of items attracted sales tax at the rate of 81 per cent. This Government, elected on a promise to reduce taxation, has substantially increased it, and this form of taxation is now part and parcel of the system of raising income. The Government refuses to admit that it is in economic trouble to-day because it abandoned import licensing a few months ago and because it has failed to honour the promise to abolish this form of taxation that it gave when it was elected in 1949. Every Government supporter who has spoken has been on the defensive and has refused to admit that the Government was elected on a promise to reduce taxation.

People in the business world well divorced from my politics have attacked the Government for its incompetence. Its methods have been described as weird and wonderful. The Treasurer (Mr. Harold Holt) has said that, except for the Government's flexibility, the country may have been in the throes of a depression, and the Prime Minister has shown that he is worried about the state of the economy. This Government's economic policy is one of stops and starts, and its activities in the field of finance have brought us to the stage where it has had to impose this increased sales tax. I join Opposition members in opposing the measure. I regret that a great industry like the motor vehicle industry is to-day suffering under this further increase of taxation simply because this Government has proved that it is incompetent to handle the economic affairs of the country. Clearly, the Government deserves the condemnation that has been levelled at it from one end of the nation to the other. It will be interesting to observe whether it realizes the need for flexibility by changing its economic policies and giving effect to policies which will really safeguard our industries, our people and the nation generally.

Mr. E.JAMES HARRISON (Blaxland) [4.491. - I would have thought that when a measure of this character was introduced, designed, so we are told by the Treasurer (Mr. Harold Holt), to assist realistically in stabilizing the economy at a time when inflation is galloping. Government supporters would have been anxious to jump into the collar and establish that this legislation is a force capable of achieving the Treasurer's objective. The very fact that such legislation as this is introduced before the ink is dry on the Budget papers for 1960-61 must show one of two things: Either the Treasurer and his advisers were right off the beam in their assessment of our economic state or the Cabinet was disinclined to face the realities of the situation. When legislation of this type is introduced so quickly, attacking one industry with the hope - it is only a hope - that the economy will be steadied and when we are told that the building industry will be attacked in some other way, I conclude that the Government is tinkering dangerously with a situation in which prices are being forced upwards.

The worst feature of this type of legislation is that it is singular in character. We went to a great deal of trouble to encourage the establishment in this country of a motor car industry. It is historical that when the production of motor cars was first commenced under Labour, every one said that the venture would fail and that the industry could not be established. It was said, for instance, that the price of the Australian product would be so high that the industry would not be able to withstand the competition of the imported vehicles and that the Tariff Board would be unable to protect the industry sufficiently to enable it to succeed. All these arguments and others were advanced against the establishment of the motor car industry in Australia. Despite the misgivings of so many people, we have seen the industry established with Australian labour working under awards prescribing Australian wages and Australian conditions. Though we on this side of the House criticize the huge profits made by the industry, the profits show clearly that the Australian worker, the Australian material and the Australian method of production are better than those in any other part of the world. Clearly, the industry has flourished.

Let us look at what the motor car industry is doing for Australia. I have heard many debates in this House in which the need for good roads has been mentioned and in which we have been told of the failure of this Government to meet the requirements for roads in Australia. It seems to me that the motor car industry, in addition to becoming a flourishing industry and providing many employment opportunities, has played a tremendously important part in recent times in developing the country. Now this industry, which was induced to come to Australia, which has been encouraged and which has nourished, is singled out for attack. There is little use the Prime Minister (Mr. Menzies) and his Ministers saying that industries should be encouraged to come to Australia, if those industries will be attacked in this way when the Government fails to meet its obligation to maintain economic stability. Surely this thought is more likely to frighten industry away than to attract it.

I have heard it said that industries do not come to Australia because they fear that a Labour government may come into office. But no industry would picture a Labour government imposing a sales tax of 40 per cent, on an Australian commodity produced for sale in Australia. This has been done by this Government, we are told, to steady the economy. How will this steady the economy? I have never heard such unbalanced reasoning. lt was suggested, for instance, that one of the purposes of the Government's action was to regulate the use of steel. It was said that this would result in a two-fold benefit in that it would mean, first, that more steel would be available to Australian industry, and, secondly, that the necessity for importing steel from overseas would be avoided. (I remind honorable members that the steel industry has been built up in Australia under monopoly control and I also remind those members of the Country Party who talk about shortages of fencing posts that this Government is only playing with the real problems confronting Australia's development. Members of the Country Party seek to justify the introduction of legislation of this type by arguing that an increase of 10 per cent, in the sales tax on motor cars will mean that more fencing posts will be available to the farmers of Brewarrina and in this way help the future development of the country.

Mr Barnes - We may have no fencing posts.

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