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Wednesday, 15 March 1961


Mr SWARTZ (Darling Downs) . - The honorable member for Port Adelaide (Mr. Thompson) devoted most of his time to an endeavour to prove the thesis that the Government has not been supporting manufacturing industries in Australia. In fact, from some of his remarks, one would gather the impression that the Government had been supporting the big importers - to use his own words - to the detriment of the manufacturers. Perhaps he does rot realize the situation that exists in Australia, and perhaps he has not examined statistics very carefully. If he does, he will learn that the greatest period of Australia's industrial development has been during the life of this Government. The national product from our secondary industries in the last financial year rose to over £4,000,000,000, an increase of over 60 per cent, since this Government came to office. That is a complete refutation of the thesis that the honorable member has been trying to prove. In addition, in every State - even in his own State of South Australia - many thousands of additional factories have been constructed in recent years.

An examination of the pattern of trade in the post-war period, particularly during the life of this Government, indicates that whereas in the pre-war period approximately 85 per cent, of our imports were manufactured goods, to-day only 17 per cent, fall into this category. This indicates quite clearly the tremendous support and encouragement that this Government has given to manufacturing industries and the success that has been achieved.

The honorable member for Port Adelaide followed the pattern which has been set by the Opposition during this debate, and made gloomy forecasts of unemployment. I have heard such forecasts regularly ever since I have been in this place, during Budget debates, debates on our financial position, and debates of this kind. The Opposition has been propounding the same theme for years, perhaps in the hope that something will eventuate which will give it some political advantage and assist it at the next election. The Opposition should remember that some years ago one of its spokesmen stated that it would be better for the economy of Australia if we had approximately 5 per cent, of our workforce unemployed.


Mr Mackinnon - That statement was made by the honorable member for Parkes, was it not?


Mr SWARTZ - I think it was. When we compare the records of governments, we see that the best record of employment in the history of this country has been achieved during the life of this Government and we are very proud of that record. It is something in which we all have a very definite and personal interest, no matter on what side of the House we sit. We should all strive to maintain our good record.

Our objective should be to achieve stability in our economy. I shall refer to this matter in greater detail at a later stage. At this point I should like to clarify a statement that the honorable member for Port Adelaide made in relation to the importation of Japanese motor vehicles following the lifting of import restrictions. If the honorable member had been following the situation very carefully during the past years he would have known that motor vehicles had been on a replacement system for a number of years before import licensing was lifted almost entirely in February of last year, so there would have been nothing to prevent such trade developing provided it had been on an orthodox basis. In fact, there has been no change in the system in relation to motor vehicles, and I am sure the honorable member overlooked the point that I have made.

We should appreciate also that Australia is not the only country that is facing some economic difficulties. We know that the United Kingdom and the United States also are facing problems of varying magnitude. In this modern age, with the lessons of the past before us, government economic policies must be flexible in tactics while still adhering to certain broad economic objectives. To maintain a static economic policy these days would be to court disaster because conditions of inflation and depression can only be avoided by constant vigilance and constant action by governments. If the Opposition policy of " do nothing " were adopted during a period of boom, there would be the inevitable period of bust with its grim economic and social consequences.

The great nations of the Western world have to-day adopted the principle of flexibility and have applied this principle to their economic policies. As a result, apart from minor setbacks there has been a period of great advancement in the free world which we are endeavouring to share with the underdeveloped countries.

In Australia the broad economic objectives of this Government can be classified as, first, national development on a steadily expanding basis year by year. The second objective is a planned immigration programme, which is vital if we are to have continuing industrial development. I am sure we all agree with the existing immigration programme and the existing quota. Thirdly, although some adjustments are required from time to time, the Government has the objective of a continuing high level of employment which we classify to-day as full employment. Fourthly, we believe also that our policies should be continually examined and improved, where practicable, in relation to our social services. Fifthly, we believe in the principle of home ownership, and that there should be an adequate level of homebuilding. Associated with all these things is stability of the economy, which means stability of costs and prices. These objectives, you may say, pose some economic opposites, and yet, as a nation, we have in the post-war decade been actually achieving them. At the same time we have been passing through a pioneering phase of our history and have increased our living standards until to-day we have the second highest living standard in the world, a fact of which we can all feel duly proud.

I think it can be fairly claimed that the economic Objectives of the Government over recent years have brought about a period in Australia's history such as has never previously been enjoyed. The Australian economy, like the economies of most other countries of the Western world today, is always difficult to hold in balance, and there are a number of specific reasons for that in our case. First of all, we must appreciate that we are a relatively small nation, with a population of a little over 10,000,000 and yet, at the same time, as far as our economy is concerned, we are a great trading nation. In fact, we are within the first ten trading nations of the world to-day; and that is a tremendous effort to be sustained by a nation with the population and physical resources that we have.

We must also appreciate that a very high proportion of our gross national product is exported. In fact, the proportion of our gross national product that is exported is more than three times that exported from the United States of America, and far more than is exported from that other great trading nation, Japan. There are peculiar conditions associated with our economy, which must be examined very carefully in relation to the existing situation. One of them is that over 80 per cent, of our exports are made up of primary commodities. In 1959-60 primary commodities amounted to 86 per cent, of our exports. The volume of production varies in accordance with seasonal conditions and prices of certain commodities fluctuate rather violently over a period of years. The proportion of the gross national product exported from Australia has ranged from as low as 10 per cent, in 1946 to 27 per cent, during the Korean war, and is running at present at about 14 per cent.

We know also another factor which has some influence in relation to our consideration of the present circumstances, and that is the predominance of wool in our export earnings. At the present time wool still constitutes about 44 per cent, of our total exports of primary produce and we have experienced quite violent fluctuations in the price of wool over the years. Wool prices have ranged widely from a low level in 1949 to a peak in 1951 and reached the lowest level for a period' of ten years in 1959-60.

Those are circumstances over which no one in this House has any control, but we must take them into consideration in an examination of the economic situation. When we look at the terms of trade we find that, as is the case with most of the primary produce exporting countries, in Australia to-day the terms of trade have been running against us, and perhaps more against us, because of our size as a trading nation, than against most other nations. I am referring to the terms of trade where we are to-day paying more pro rata for our imports and are receiving less for an increased volume of exports. That is a situation which is serious from our point of view, but is perhaps more serious for some of the under-developed countries which are going through the process of expansion and development in the early stage of their independence.

This situation has been recognized to a substantial degree internationally, and some action has been taken in international circles to deal with it and to assist us in that regard. One example of that is the fact that the International Monetary Fund, selecting 1953 as the year and a base figure of 100, has given consideration to our position in relation to terms of trade and has allowed us a borrowing capacity of approximately 400,000,000 dollars, which is about £211,000,000 Australian, a figure out of proportion to the rate allocated to many of the more highly industrialized countries.

At the same time we are faced with the situation that while we are increasing steadily - and in some cases rapidly - the total volume of our exports, we are going through a phase where world commodity prices are causing a drop in our total earnings during this, particular year. It is a fact, as has already been stated in this House, that the volume of exports in anticipation this year will return about £880,000,000. This volume of exports, if the prices of 1953 had prevailed, would have produced an income of approximately £1,350,000,000. That indicates the problem which we have to face and over which we in this country have no control, but we have taken some strong action in the international field to correct this grave problem of commodity price falls.

In 1958, as honorable members know, Australia was particularly vocal at the Montreal conference of British Commonwealth nations and was responsible for this matter being brought forward and ventilated there. The result was that an international committee was set up to examine this situation. With co-operation between British Commonwealth countries and the United States of America, we hope that ultimately some solution will be found to this overriding problem, which will become increasingly difficult as the years go by.

This Government has instituted a positive policy of export promotion, not only for our own traditional primary commodities, but also for the products of secondary industry. This diversification of export earnings is vital to the future growth of our economy. Reference was made by the honorable member for Port Adelaide to-night to the removal of approximately 40 per cent, of the remaining import controls in February of last year. He quoted one reason why he thought the Government had taken that action. He was partly right in that regard, and I think his examination of that matter was reasonably sound and quite fair, but there were a number of other reasons which actuated the Government at that time.

The first point was that the Government had undertaken, on instituting quantitive controls by import licensing, that it would remove them as soon as practicable. That had been the stated policy of the Government year by year during the operation of import licensing controls. It will be recalled that while those controls were in operation the Government was continually criticized by the Opposition for retaining them. The Opposition advocated on many occasions that the controls should be removed because they were inequitable, bureaucratic and arbitrary in their results. That was a criticism, I think, which was voiced by sections of the business community as well, and to some extent I agree with it. That was one of the reasons why, in accordance with the policy that had been enunciated by the Government, import licensing controls were substantially removed at that time.

The second point is that Australia, under international obligations under the General Agreement on Tariffs and Trade and other commitments by bi-lateral agreements with other countries, agreed to refrain from licensing imports except for balanceofpayments reasons. If our balance of payments reaches a position where we can no longer justify the continuation of import licensing we have an obligation, under our international commitments, to remove licensing as such. In fact, it is in our own interests to do so because Australia has been perhaps the most vocal nation at Gatt in protesting against the alleged illegal actions of West Germany, France and other nations which have been continuing import licensing beyond the point at which we considered they could justify it on balanceofpayments grounds. So that on that ground, if upon no other, we had very compelling reasons for removing a substantial part of the remainder of the controls we had at the time. It must be remembered, also, that in February, 1960, our front-line overseas reserves were approximately £500,000,000 and our drawing quota from the International Monetary Fund - our second line reserve - was about £211,000,000. Therefore, we had no real justification for continuing beyond that period the import licensing controls as they existed at that time.

The honorable member for Port Adelaide (Mr. Thompson) referred to inflationary pressures and to the additional competition that could be injected into the community by an increased flow of goods and materials which would substantially assist industry and, although not to the degree that he imagines, the importers as well. That has had some definite effect, as we have seen with the passing months. We should also realize, however, that in February, 1960, more than 50 per cent, of our total imports were already running free - that is to say, they could be freely imported under the exempt list or on a replacement basis. This meant that there were restrictions on only 10 per cent, of our imports after the removal of the additional 40 per cent. I mention these matters to clarify the position and to indicate why the Government took the action it did at the time, and I am sure most members of the business community and of industry in general supported that action.

Let me now clarify the position with relation to the type of goods being imported into the country. At the end of last year - which is the latest period for which figures are available - 75,7 per cent, of the money expended on imports was expended on the importation of essential equipment and materials which mainly went to industry. Only 17.5 per cent, of the total expenditure went on consumer goods, and 6.8 per cent, went on the remainder. That proportion has changed slightly since then. To-day, the percentage spent on essential materials and equipment is a little higher than it was at the end of last year and that spent on consumer goods is a little lower, which indicates a reverse trend to that which was suggested to-night. It also indicates that Australian manufacturers are themselves absorbing the greater part of the import expenditure, as they have always done.


Mr Curtin - Why are we importing steel?


Mr SWARTZ - It is interesting to note the change that has taken place in connexion with the importation of steel and to emphasize the boom that existed in the motor car and commercial building industries. In November, 1959, we were importing steel and steel products to the value of £14,900,000 annually, and in November, 1960, that figure had increased to £70,100,000, indicating a boom which had to be controlled. There again, the action which was taken by the Government and which is now being criticized by the Opposition was designed to correct an imbalance that was creeping into the economy.

As I have not much time left, let me conclude by referring to the fact that the Government is embarking on export promotion to an unprecedented degree in an endeavour to build up our export earnings and to overcome our vital difficulties. Our great primary industries have benefited from stabilization schemes and our industries generally from trade agreements which have been negotiated to secure access to important markets. The Government, through its expanded trade commissioner service, trade publicity programmes, trade missions and a wide variety of specific export measures, in full partnership with industry and commerce, has vigorously promoted Australia's trade interests abroad. These efforts are now being intensified, and a new bias is to be given to developmental works which offer prospects of increasing exports or import savings. This is a positive policy of vital importance to future economic stability in this country.

So, with the knowledge that its economic policies over recent years have succeeded in maintaining a period of unprecedented development, the Government is now convinced that the present policy will restore health to the economy and enable the rate of development and full employment to be maintained in the future.

Debate (on motion by Mr. Cope) adjourned.







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