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Thursday, 23 March 1961

Mr POLLARD (Lalor) .- I raise this matter in the hope that the Government will take heed and adopt some measures more appropriate to the existing financial situation than those it has adopted hitherto. Any one who moves amongst the primary producers or has close contact with them cannot be other than disheartened when listening to stories of their experiences as they have tried to obtain credit for the expansion of their activities, for the purchase of equipment or to meet obligations arising from the purchase of their farms.

In the quarter of an hour that I am allowed I cannot deal with all these subjects, butI shall give one instance in particular. A farmer I know recently went to the supplier of agricultural machinery to buy certain equipment. The manufacturer quoted a price and the farmer asked how much discount he would be allowed if he paid cash. The salesman said, " Two and a half per cent ". The farmer replied, " You are a bit light, are you not, in these days of financial difficulties? You are being saved all the trouble of arranging hire purchase or preparing a number of documents." The salesman said, "It is quite true that there are difficulties. As a matter of fact, we find it very difficult now to arrange hire purchase contracts for our clients." In other words, even the hire purchase companies are finding it difficult to obtain enough finance, though they offer exorbitant rates of interest to people who invest money with them.

When one endeavours to find out the reason for all this, one is inevitably forced back to the picture that confronts him in the newspapers every day of the week. The picture has become larger since the Government commenced its credit squeeze in November, 1960, with an increase in bank overdraft interest rates. That was followed almost immediately by an increase in the interest rates of pastoral companies, which provide a good deal of financial accommodation for primary producers. This can be established by documentary evidence. The Government's credit squeeze has been continued with increasing intensity. Any honorable member who is interested can do what I did last night. I went carefully through the advertising columns of the Melbourne " Herald ". I fond that hire-purchase companies which are offshoots of the trading banks have increased the rates of interest they offer in an effort to induce people to lend them money. People who are unable to obtain their needs from the trading banks are now compelled to go to the hire-purchase companies, which are offshoots of the trading banks. I point out that the trading banks are controlled by the Treasurer and by the Commonwealth government of the day, but hire-purchase companies are not.

In looking at newspaper advertisements, I found that the Industrial Acceptance Corporation Limited, which is, I think, an offshoot of the Australian and New Zealand Bank Limited, is offering 8 per cent, for ten years and 7 per cent, for six years. An offshoot of the Bank of New South Wales is offering 6i per cent, for four years and 5f per cent, for twelve months. Esanda Limited, an offshoot of the English Scottish and Australian Bank Limited, is offering 7 per cent, for six to ten years, and so on. The net result of all this is that primary producers who are unable to obtain from the trading banks the overdrafts that they seek are forced to go to the institutions which charge higher interest rates and obtain hire-purchase finance from them. These institutions which find that they can get people to subscribe money to them at interest rates of 8 per cent., 9 per cent., 10 per cent, and even higher, charge the hard-pressed primary producers the higher rates of interest.

This is the sort of thing that we find in financial affairs generally throughout Australia since the Government applied the credit squeeze. I have here an advertisement by the holding company of an industrial concern which is undoubtedly one of the greatest in Australia and which is unable to obtain its overdraft requirements from any of the trading banks or the Commonwealth banks. I refer to Thiess Holdings Limited, which, in a very expensive advertisement in the Melbourne " Herald " last evening, offered 81 per cent, interest over a term of ten years and 8 per cent, interest over terms of four or seven years. Who does the Government think will ultimately pay the high interest rates on money obtained on these terms? The ultimate cost will be paid by public authorities, governments and people for whom this company undertakes work. Added to the 8i per cent, interest will be the company's profits and all the other components which make up the ultimate cost. Inevitably, this will force up the prices of commodities and will lead to an increase in the basic wage and in margins. As a result, the costs of the primary producer will be inflated and finally he will be unable to export at a profit.

Next, I come to an advertisement by Alliance Acceptance Company Limited - a concern financed with American capital. It is not quite so generous, but it probably thinks that because its offer is backed by dollars it will be attractive to the public. It advertises for deposits over a term ranging from five to ten years at 8 per cent. Lo and behold, the next advertisement is one by Ansett Transport Industries Limited, offering 9 per cent, for a term ranging from four to ten years. This is a company which has financed the purchase of its aircraft on a guarantee by the Government, which, if it is drawn against, will no doubt be subject to a substantially lower rate of interest. Who will ultimately pay the interest that is being offered by these companies? Similar offers are advertised by Lombard Australia Limited, and also by the National Bank of Australasia Limited and J. B. Were and Son, who are offering units in an income trust at 10s. each.

Competing against these high rates of interest are public instrumentalities such as the Melbourne and Metropolitan Board of Works,, which is trying to raise a loan at 5i per cent, interest. What hope has a public instrumentality of filling such a loan? What hope is there for government bonds? If it were n<** for all this sort of thing, the deposits of the savings banks all over Australia would have increased, but we find that the proportionate investment of savings bank deposits is not increasing at the rate at which it should increase, and, inevitably, money for public works and the like is short. That is the effect of the credit squeeze, and this Government bears the responsibility for it.

Let me now deal with that part of the terms of this proposal for discussion which relates to inflation, and with its effect on the primary producers of Australia. I have here the indexes of prices received and paid by farmers, compiled no doubt by the Commonwealth Statistician, and published in the " Quarterly Review of Agricultural Economics " - the journal of the Bureau of Agricultural Economics. These figures are related to a base index of 100 which represents the average of the five years ended June, 1950. On that base, the index of prices received had risen, at June, 1960, to 177 - an increase of 77 per cent, since June, 1950. But the index of prices paid, or total expenditure, by farmers, including interest charges, wages, marketing expenses and the like, had risen by June, 1960, to 231 - an increase of 131 per cent. We have to take into consideration the effect of the exceptionally high wool prices of the 1950- 51 season. Making allowance for these phenomenal prices, we see that the expenses of the primary producers increased by about twice as high a percentage as did the prices received by them between June, 1950, and June, 1960. That is all a direct outcome of the ineptitude of this Government and its inability to deal with the problems of the primary producers and the nation.

Let me now turn to another factor mentioned in the terms of this proposal for discussion - the Government's failure to deal with the manipulation of wool marketing. In case there may be any doubt about the importance of this problem to the economy of Australia and to every man, woman and child in the country, all of whom are feeling the impact of the manipulation of the wool market, let me mention what the Minister for Trade (Mr. McEwan) who is at present Acting Prime Minister, said when addressing representatives of the National Farmers Union of Australia on 11th November, 1960. Referring to the decline in wool prices, he said -

This fall in value is the real problem, the one vital thing in our existence over which we have no control at all and can only seek to influence.

The journal " Muster ", in a report of an address by the right honorable gentleman to the Federal Council of the Australian Country Party in Canberra on 29th November of last year, stated that he had warned overseas wool-buyers that Australia would not condone manipulation to depress the price of wool below its fair value. He was there referring to a statement in the " Financial Times ", London, to the effect that the Bradford processing interests and the Communist countries and Japan were working together to prevent competition in wool-buying in Australia and in other parts of the world. The Minister emphasized the importance of this problem, and said that the position of wool in the national economy was such that woolgrowers and the nation could not condone manipulation of wool prices.

What has this Government done about this problem, the solution of which the Minister said was vital? It has done almost nothing. The right honorable gentleman said that this was the one great problem. That is not strictly true, because there are others, and notably that of inflation. The right honorable gentleman said that the Government would not condone manipulation of the wool market. It has now had Mr. Justice Cook's report for long enough, and it could use certain powers which it has. Furthermore, a section of the wool-growers has been asking for something to be done. But the Government's excuse for doing nothing is lack of unanimity among the growers. To cap everything, what did the Government finally do? It appointed a committee to inquire into wool marketing, and denied it the one power that it requires if it is to probe properly every aspect of this evil manipulation of the wool market and make adequte findings. The committee has been denied power to compel the production of documents and papers and to examine witnesses on oath.

Mr Turnbull - The committee can ask for the information that it wants.

Mr POLLARD - The honorable member lamely says that the committee can ask. However, I have been a member of committees of inquiry from time to time and I know how a witness deals with an embarrassing question when he knows that the committee before which he is appearing has no power of compulsion. He smiles blandly and says, "That is an awkward one ". The committee can do nothing about it. This situation is not right in view of the allegations that have been made and the findings of Mr. Justice Cook.

The fact is that in the records of the wool-brokers throughout Australia there is documentary evidence, which they will not produce voluntarily, indicating exactly what directions they have been given by every buyer concerning every lot of wool that he has bought over the last ten or twelve years. Does the Government really think that any broker will say to the Wool Marketing Committee of Inquiry, " We are producing for your examination all our books giving details of the orders of buyers, including the dates of purchase and thendirections as to the destination of each lot. This will show you the people to whom we are supplying wool "? The Government can name any firm of wool-brokers that it likes, including Elder Smith and Company Limited, New Zealand Loan and Mercantile Agency Company Limited and Goldsbrough Mort and Company Limited. None of them will do this. The first woolbroker to produce all this information to the committee would be on the outer with all hrs colleagues for ever. He would be accused of giving the game away. Furthermore, any wool-broker would feel that he was committing a breach of confidence if he gave this information without being compelled to do so.

The prevention of the manipulation of the wool market which was alleged in the " Financial Times ", and which was established in Mr. Justice Cook's report, is too important to be passed over lightly and pushed aside by denying to the committee of inquiry these powers which I have mentioned. The Acting Prime Minister (Mr. McEwen), in a letter to me, gave an excuse for the denying of this power to the committee. He said that the Cabinet had considered what powers should be vested in the committee and that it had finally decided that if additional powers were wanted the committee could ask for them. Does the Government really think that any committee would make such a request after the Government had considered the matter and refused to give it these powers?

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