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Thursday, 23 March 1961

Mr HAROLD HOLT (HigginsTreasurer) . - The matter proposed for discussion by the honorable member for Lalor (Mr. Pollard) involves three elements. The honorable member alleges that harm is being done to Australian primary producers by the Government's policy of credit restriction. Then he alleges failure on the part of the Government to solve the problem of inflation, and thirdly, he alleges failure to protect the woolgrowers against market manipulation. In the fifteen minutes available to me I shall devote my attention to the first two of these three elements, and my colleague, the Minister for Primary Industry (Mr. Adermann), will, while no doubt touching on the other aspects, concentrate his attention on the third element.

Since the November measures were announced by me on behalf of the Government I have had a number of curious experiences. There was a time when honorable gentlemen opposite used to allege that I and others who sit with me on this side of the House were the spokesmen for the big interests, as they termed them, of Australia. Well, they have put that charge in the background for the time being, because they found that we, from a sense of public responsibility and in the national interest, decided that it was necessary to take action which has proved quite unpopular with many spokesmen for the big interests of this country.

In the days when honorable members opposite were concerned with matters closer to their hearts, and when they concentrated on putting forward the sectional views of members of the trade union movement, they were disposed to lump farmers and graziers with those big interests in a single category as representatives of capitalist influences and capitalist groups. Now they have come forward with this matter for discussion, but not with any statement of policy. You may search through the speech delivered by the spokesman for the Labour Party on this occasion and you will not find any policy recommendations which any Government could seriously consider, or which would represent to any fair-minded observer an alternative line of policy to be adopted if, by some stroke of misfortune, these honorable gentlemen were to find themselves in chargeof the administration of this country.

The farmers and graziers, the men and women who work on the land in Australia, know who speaks faithfully for them in this House when policy matters are decided. They know that if the measures which the Government adopted in November were designed to improve the situation and strengthen the security of any section of the Australian community, they were designed to do just those things for the people who derive their incomes from the land. There is no section which has greater concern with stability of costs and prices, and with resistance to inflationary pressures, than the rural producers. They do not have the shelter of tariff protection. They have to sell their goods on the markets of the world, and they are vulnerable, in a degree to which probably no other section of the Australian community is vulnerable, to rises in the levels of costs, prices and wages, because these would weaken their competitive position.

Of course, this Government has recognized these facts, and in the measures which we introduced in November we emphasized, in a way which could not be misunderstood by any one having to do with the provision of finance, either through the banking system or outside it, that we attached the greatest importance to ensuring that our rural industries should be supplied with adequate financial resources to carry on export production and rural production generally. That was made clear by me in the statement which I gave to the House in November of last year. In the statement that I made on that occasion I included this comment -

We see no ground, based on national credit policy, for an overall attack on current loans to primary industry, loans which have been made for housing, and the many smaller overdrafts which have not been unduly or unreasonably increased in the last year or so. This would be attacking the problem at the wrong end. But there are those who have heavily increased their borrowing limits, or who have called heavily on notional limits established in the past, and who in the process have contributed to those developments we are now seeking to check. These are the avenues where we will expect the main attention to be given.

Not only was that clearly understood at the time; the Governor of the Reserve Bank, in a communication dated 24th November to the general managers of the trading banks, quoted the passage from my statement, giving some elaboration of it. Included in his directive was this passage -

Banks should bear in mind the need for appropriate finance for export production especially in the rural and mining industries and give special consideration to the needs of rural customers affected by adverse seasonal conditions.

Mr Allan Fraser (EDEN-MONARO, NEW SOUTH WALES) - Are the banks following that directive?

Mr HAROLD HOLT - The policy of the Government was clearly made known by me. It was clearly conveyed by the Governor of the Reserve Bank to the trading banks. The honorable member for Eden-Monaro interjects and asks whether the trading banks are carrying out that directive. Honorable members on this side of the House did not wait until this point of time to raise this matter. They have tried to find out for themselves what has been going on. For my part, I have kept closely in touch with the position, through the Governor of the Reserve Bank and through the Secretary to the Treasury. On at least two occasions, at my instance, the Secretary to the Treasury has caused this matter to be discussed at meetings of the board of the Reserve Bank. At my own direct instance the Governor of the Reserve Bank took the matter up generally with the general managers of the trading banks. When the Government parties met, long before the House commenced this sessional period, I think on 7th February of this year, this was a matter that we discussed very fully. I think I can say without violating party confidences that after my measures had been announced-'in this House, the principal matter of discussion the following day, in our joint party meeting, was this necessity to ensure that adequate rural credit would be made available. When we came together in February we reviewed what had happened. I invited honorable members from all parts of Australia to tell me their experiences and to produce any concrete instances in which, after full investigation, it could be fairly said that there had been unsatisfactory treatment of rural borrowers.

Mr Allan Fraser (EDEN-MONARO, NEW SOUTH WALES) - Did you find any?

Mr HAROLD HOLT - We found so little material of this kind that we felt we should pursue it further with the Governor of the Reserve Bank to see what had been his experience and what had been the experiences of the trading banks. I was able, when the House again met in session, to quote an extract from a letter which had been conveyed to me, through the Secretary to the Treasury, from the Reserve Bank, in which the Governor, reporting upon his discussions with the general managers of the trading banks, said -

The Governor is in a position to assure the Government and any other parties through whom complaints are received that the trading banks are carefully giving effect to the current qualitative credit policy, including preferential treatment to the rural industries and other export producers. This policy is adequately known throughout their institutions, and branch managers are fully aware of the need for appropriate discriminatory application of it, and the head offices of the banks stand ready to examine any complaints directed to them by their customers.

So not only were the banks claiming that they were giving effect to the Government's directive, but they said that in any case of doubt, or wherever it was felt that reasonable treatment was not being given, their head offices would deal promptly with the matter.

The honorable member for Lalor (Mr. Pollard) and other Opposition members who claim to have concrete cases know that I quoted this passage in the House some time ago. But how many of them invited the persons concerned to put their case to the head office? If they did so, what has been the outcome? Since the statement to which I have referred was made, I have not had one such matter brought to my notice by any member of the Government parties.

Here is another point which shows our regard for the well-being of rural producers in this matter: When it became evident that some upward movement in interest rates was necessary and, indeed, unavoidable, we took adequate measures to ensure that favorable and preferential and discriminatory rates of interest were chargeable to rural producers compared with other classes of borrowers. Now, more recently, with the incentive scheme that we have announced for export producers, we have shown a further earnest of our determination to build up the export income of this country. The Government has announced a series of important projects in the outback areas of various States. Again, this is proof of our determination that in the years ahead we will do the things that are necessary to build up the export income of Australia.

We recognize that our capacity to expand manufacturing industries and to improve the living standards of the people is directly related to our export income, which is largely earned by our rural producers. Last year, 86 per cent, of our total export income was earned by primary production. We are fully sensitive of the need to maintain export income at a steadily increasing level in the years ahead.

I should have liked a lot more time to deal with the allegation that we have not done anything to check inflation. The irony of the matter is that the very credit restrictions which the Opposition is using as a stick with which to beat us were designed principally to check inflation.

How did honorable gentlemen opposite assist us between the time that we announced the measures of February, 1960, then the measures of our deflationary Budget, and finally the measures of November last, to hold inflation in check? What policy emerged from them? Neither their Leader, their Deputy Leader nor any one else, except the honorable member for East Sydney (Mr. Ward), who came late into the debate, has sought to make any positive contribution of policy. When the one contribution came it was largely a proposal to impose the kind of controls which proved so ineffective in checking inflation when Labour was in office in the years after the war. As I have said before, when we took over, inflation was running at a rate of between 9 and 10 per cent, per annum under a Labour government. There had been controls over capital issues, controls over profits, controls over prices and, at an earlier point, controls over man-power. Sir. honorable gentlemen opposite who are interjecting can try to upset my remarks if they care. They cannot deny the facts. During those years, inflation was running at a rate which, if it had continued at that level until to-day, would have been completely disastrous and ruinous to the rural producers. On this side of the House are representatives of rural areas almost out-numbering the total strength of the Opposition. This is proof of the support that we get from rural areas.

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