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Thursday, 16 March 1961


Dr Donald Cameron (OXLEY, QUEENSLAND) . - The motion before the House is one of censure against the Government and relates to the economic measures which were introduced by the Treasurer (Mr. Harold Holt) in November. If a censure motion is to be moved, it is not enough just to say that what the Government is doing is wrong. The Opposition has to show why it is wrong and must be prepared to state the right course to pursue. With one exception with which I will deal, the Opposition has put forward no alternative whatever.

I think that most honorable members would agree that the speech made by the honorable member for Fremantle (Mr. Beazley) was the most effective Opposition speech in this debate, not excepting those made by the Leader of the Opposition (Mr. Calwell) and the Deputy Leader of the Opposition (Mr. Whitlam). He spoke, as he generally does, with thought, feeling and sincerity. But I think that although he did more than any other member of his party to put forward some alternatives to the Government's measures, he fell into two errors. The first one was his statement that all the Government's measures had one objective, which was to restore the balance of payments. Having made this error to start with, he was led into making further errors as he went along. In fact, this was not the whole objective of the Government's measures. Let me remind the House of the words used by the Treasurer when he introduced these measures. He said that their purpose was -

.   . to make stability real in terms of costs and prices, and to achieve internal balance between demand and supply and external balance between overseas receipts and expenditures.

That indicates that there was a very great deal more than a mere attempt to redress the balance of payments. It is important that our minds should be clear about that. The second error into which the honorable member for Fremantle fell was to put forward, on behalf of his party, as other Opposition members in the midst of a great many other irrelevancies have put forward, the suggestion that troubles began with the lifting of import restrictions and that they would be redressed if import restrictions were re-imposed. As far as I can see, after listening to this debate and reading " Hansard ", that is the only alternative that any member of the Opposition has put forward.

I want to spend some time in discussing this question of import restrictions. In fact the whole question involves very much more than merely improving the balanceofpayments position. To imagine that our present economic difficulties can be overcome by re-imposing import restrictions betrays a lack of understanding of what is happening in the economy. The stability of costs and prices, of course, is an even more important matter, and its achieve ment must, in fact, have priority over efforts to overcome the difficulties associated with the balance of payments. I hope that members of the Opposition can bring themselves to understand, although they do not give much indication of being able to do so, that on our ability to trade, which in turn depends on our level of costs and prices, depends not only the improvement of our standards of living, but even the maintenance of our present standards. Therefore it is essential that we preserve to this country its ability to trade.

The Opposition, as I have said, has one suggestion, and that is that we restore import restrictions. Many people, and not only the members of the Opposition, think that this would provide a solution to our problems. Persons other than members of the Opposition in this Parliament have put forward this suggestion. The kind of argument that is produced goes like this: When we had import licensing we were not experiencing these troubles; as soon as we abandoned this system the troubles began; therefore, if you bring back the system of import licensing you will get rid of our troubles. This is a completely superficial point of view, and, in fact, it does not accord with the facts. Let us consider what actually happened, and put the picture into perspective. In February, 1960, when import licensing was removed, if not completely, then to the extent of about 90 per cent., a tremendous increase in imports occurred - in that very same month. It was so large an increase in that month that, if maintained throughout the year, we would have had imports running at the value of about £1,000,000,000 per annum. But this increase was not brought about by the removal of import licensing regulations. The increase occurred at the same time. It was the result of a banked-up demand, of a tremendous number of orders placed before import restrictions were in fact removed. The flow of imports does not start immediately or within a week or two of the removal of import licensing. In fact, the demand for imports was already there, and this additional flow of imports was the result of orders placed long before.

To ease the supply position in the face of rising demand, and following the price rises of 1959, it became necessary to remove the system of import licensing. What would have been the result of not doing so? Obviously there would have been a much greater increase in the cost and price structure, As it was, costs in 1960 rose by about 4 per cent., but without the flow of imports to satisfy the demand represented by this rise, of course the increase would have been very much greater still. Would that have done the country any good? Would it have done the working man any good? Of course it would not. The first point I want to make, therefore, and a point I hope all of us will understand, is that it was necesary to remove import licensing, and that the cause of the flow of imports was not the removal of import licensing. In fact, I have demonstrated that it could not have possibly been the cause. The cause of the flow of imports was the enormous demand for additional goods, a demand incapable of being satisfied by internal production.

Let me give the House one example of a commodity for which this demand existed. T refer to steel. Between the second half of 1959 and the second half of 1960 our balance of trade in steel changed from an export surplus to a large deficit, the extent of deterioration during that period being £58,000,000. If this excess demand had not been allowed to satisfy itself by a free access to imports, we would inevitably have been faced with disruptive shortages and a much steeper rise in internal costs and prices than we have in fact experienced. The fact was that demand had spilt over into imports in this way,

I am building up a case to demolish the Opposition's suggestion that we should reimpose import licensing.


Mr Uren - Of course we should.


Dr Donald Cameron (OXLEY, QUEENSLAND) - Yes, of course that is what the Opposition wants. I have given the House an outstanding illustration of the build-up of demand, by referring to our trade in steel. We have to deal with causes, not with symptoms, and the cause in this case was demand.


Mr Peters - I thought you said it was costs.


Dr Donald Cameron (OXLEY, QUEENSLAND) - The costs were the consequence of the demand, of course. The Opposition wants to have import licensing back. What would be the result of re-introducing import licensing now? The first thing that would happen, of course, would be that we would have a shortage of supplies. This would increase still further the gap between the demand and the volume of goods available. Let me say this about import licensing: Whenever it has been applied it has never been sufficiently effective of itself.

The other point that Opposition speakers have made in this debate is that credit restrictions should not have been imposed. This is what they say: Put back import licensing and take off credit restrictions. Let me remind these gentlemen that import licensing has never been effective by itself. It has always had to be supported by restrictions of one kind or another. In fact, when import licensing was imposed in 1952 it was by no means the first occasion on which the system had been used in Australia. It was used - and, of course, quite properly used - during the war and in the post-war years, but with accompanying restrictions to make it effective. There were all sorts of restrictions - not just restrictions of credit, but also restrictions of exchange and rationing. In fact, the Labour Party wanted to nationalize the banks to impose further restrictions. It is a fact, of course, that import licensing was necessary in those days, but do not let us delude ourselves into imagining that it operated without a great many supporting controls and restrictions, or that we can re-impose it now and make it effective, while taking off what is popularly called the credit squeeze. We could not do so. The Labour Party's plan would put us into a far worse position than we are in now.

Import licensing, moreover, brings its own problems. Let me read to the House what the present Leader of the Opposition (Mr. Calwell) had to say about import licensing when it was introduced in 1952 -

Import restrictions require administrative and arbitrary decisions, which afford vast opportunities for inefficiency and human failings. Import licences are always based upon a "base" year, and small businessmen are thereby placed at a grave disadvantage compared with big importing houses.

Yet the honorable gentleman wants to re-introduce it -

Direct controls of this kind make goods scarce without raising their import prices, so that either big profits can be made by those importers who have licences, or goods at a low price become scarce, which creates a need for queues, rationing, waiting lists and purchases by preference. An importer may try to sell his quota and make his profit in that way. Import restrictions give rise to a temptation, if not an easy opportunity, to indulge in black marketing.

So much for the system that the Leader of the Opposition now wants to have reintroduced. What would happen, of course, is that factories would not be able to work to capacity, because we would have to ration the goods going to them. Would that be a good thing for the working man? It is no use talking about selective import licensing. If we were to attempt to apply what is called selective import licensing we would select out of this £1,000,000,000 worth of goods that I mentioned perhaps £200,000,000 worth. In fact it would be less than that; it would be something less than a fifth of our total imports. Out of that we would have to take perhaps a half for absolutely essential items on which import licensing could not be imposed, such as tea, pharmaceutical substances, antibiotics, surgical appliances and things of that kind. They would all have to be taken out, so that finally there would be far less than one-fifth of our total imports to which selective import licensing could really be applied. During this debate, we have heard a great deal of rubbish about frogs legs in aspic and so on. Such things are the mere minutiae - they have no effect on the situation at all. If the Labour Party cannot think of anything better than that to talk about, it has not much of an argument at all. The plain fact is that if this so-called selective import licensing were imposed, there would not be enough room in. the nonessential area for reducing the import bill to an extent that would make any real impact on overseas balances. import licensing would have to be spread into those areas where, inevitably, manufacturing and employment would be affected.

The honorable member for Fremantle (Mr. Beazley) had something to say about employment under import licensing the other night. Let me remind the House that when import licensing was imposed in 1952, one of the Labour Party's great complaints against it was that it would create unemployment. All that the suggested alternative policy would do would be to add to the internal inflation. It would cut at the roots of our export drive. I have already pointed out that if we cannot export and trade, our living standards will be in danger. The

Opposition has not offered any constructive alternative policy. It has not given any thought to the problem at all. The only suggestion honorable members opposite have been able to make is that we ought to do something of a restrictive nature. The Opposition lives in a world of restrictive and constrictive thought. It is not possible to foster prosperity behind a great wall of import protection erected on top of our tariff system.

Let me refer now to tariffs, about which the honorable member for Grayndler (Mr. Daly) had a good deal to say. Of course we believe in tariffs. The Australian industrial system operates behind a wall of tariffs. Every government believes in tariffs. This Government has pointed out over and over again that the proper protection for Australian industry is the tariff, not import licensing. If there are industries in this country which are convinced that import licensing will surely be re-introduced and, because of that belief, neglect to take the proper precaution of using the tariff procedures and find themselves in trouble because of that neglect, they will have only themselves to blame. The tariff procedure is there for industry to use.

Nar is it true to say that the tariff procedure operates slowly. There are at least 50 industry panels operating under an accelerated procedure, through which industries can approach the Minister for Trade. As he pointed out to this House the other day, all they have to do is make out a prima facie case for their requests to be urgently considered. That is the proper mechanism, the proper way to protect Australian industry. That is the proper way to safeguard employment in Australia.

Of course, nobody likes to apply the measures that are being applied at the present time. If there were pleasant measures that could be applied, then, of course, we would be applying them. To talk about the present measures as if there were real alternatives is completely incorrect. Even the Opposition knows that there are no real alternatives to the measures which the Government has been taking. Every one knows at heart that they had to be taken. The Government does not impose them merely for the fun of doing so. Mere common sense would demonstrate that in an election year no government would be doing such a thing if there were another and easier way out. There is, in fact, no pleasant way of reducing a boom. We have before us the historical facts of the cycle of boom and slump, and they make quite plain to us what happens to countries where governments are afraid to take action when boom conditions upset their economies. There are no pleasant measures that can be taken. If measures are to be taken, then they must be measures which are effective. If a government refuses to take effective measures, then, of course, the economy must be left to go through the cycle of boom and slump, which produces consequences much worse than anything that will come out of following the measures which this Government is now putting into operation.

Now let me sum up the position. What we are debating to-day is a motion by which the Opposition, in effect, seeks to declare that the Government's measures are wrong. I hope I have demonstrated this afternoon that not only are the Government's measures right, but that they are inevitably necessary when the economy of a country is approaching a boom in the circumstances in which our economy was moving at the end of last year. Not only are they the right measures, but they are the inevitable measures. This Government, which has the interests of the country at heart, had the courage to take them, and I have no doubt that, having done so, the result which will come - perhaps not quite as quickly as one might like - will put the Australian economy on a firm, stable basis for future expansion. Do not let any one forget that during the period of almost twelve years for which this Government has held office the expansion of the Australian economy, and the improvement in the conditions of the labour force and the living standards of the people, have been immeasurable. This is not the first time we have taken unpopular measures to ensure that we consolidate the base for future expansion. I have no doubt it will happen again, just as I have no doubt that when the time comes for the Australian people to decide whether this Government was right or wrong, they will once again affirm their confidence in a government which has looked after them so well for the last twelve years.







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