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Thursday, 23 March 1961

Mr CREAN (Melbourne Ports) . - Before I refer to the interesting arguments of the honorable member for Barker (Mr. Forbes) on whether or not taxation should be used for social purposes, on behalf of the Opposition I support the amendment that has been moved by the Leader of the Opposition (Mr. Calwell), urging that the additional tax that was collected between November and February be refunded. Despite the arguments of the honorable member for Barker, we urge that we believe that the legislation before the House is an admission of a mistake by the Government. The magnitude of that mistake gives an indication of the damage governments can do when they make mistakes. The magnitude of this mistake is shown by the fact that about 50,000 or 60,000 Australians who bought motor cars during the period from November to February paid approximately £80 to £100 too much for them and the Commonwealth Treasury gained about £5,000,000 of revenue in the process.

When the measure to increase the sales tax on motor vehicles was introduced in this House in November last year, the Australian Labour Party opposed it. We said that it was an unnecessary double-barrelled measure.

Mr Forbes - You did not say that at the time.

Mr CREAN - We said that at the time. I led on behalf of the Opposition on that occasion, and I ask the honorable member to read "Hansard" for 29th November, 1960. The Opposition insisted that the credit squeeze in itself would be sufficient to achieve what the Government says the sales tax measure has achieved, namely, halting the sale of motor cars. We believe that, if the increased tax had stood alone, people who needed motor cars probably would have paid the extra £80 to £100 of sales tax, if the credit had been available. But because credit had been shut off the sales tax measure was unnecessary. Consistently, we now say that because the Government has belatedly realized that it made a mistake, morally it is bound to refund to the people who were the victims of the Government's mistake - I suggest that it would not be difficult to find the 50,000 or 60,000 of them - the sums of £80 to £100 which they paid in additional sales tax, amounting in total to £5,000,000.

The Treasurer (Mr. Harold Holt) has said that there is no precedent for this sort of thing. I would agree with him if he said merely that there is no precedent; because I suggest that no government in Australia has previously repealed one of its own emergency measures three months after it was imposed. This shows the ineptitude or the stupidity of the Government three months ago in not foreseeing the true situation.

Mr Duthie - lt was the shortest application of a sales tax on record.

Mr CREAN - It was the shortest in the history of Australia. I challenge the Treasurer to find a precedent for the Government's action. It introduced a measure as a matter of urgency and emergency, and repealed it three months later. There is no precedent for such an action. The Government made a mistake and it has a moral obligation to do what it can to re-imburse those who were the victims of its mistake.

In a sense, that is all that need be said here; but I would like to take up the challenge that was thrown out by the honorable member for Barker. I listened courteously to his speech, but I regret that he has left the chamber. No doubt he can read my speech in " Hansard " even if he did not read the previous one to which I have referred. If he had read that speech, he would have known that the Opposition argued three months ago that the sales tax portion of the Government's economic measures introduced in November was unnecessary. In effect, the Government loaded a double-barrelled gun. The first shot was the credit squeeze, which still applies. The second barrel was loaded with the sales tax and was used after the first shot had already laid the victim out.

This is an interesting case study of the lack of application by the Government to the problems of economic growth and development in the Australian community. There was a great deal of undistributed middle in the syllogism used by the honorable member for Barker. To hear him, one would think that there was no sales tax on motor cars before November last year. According to his argument, it was merely the difference between the 30 per cent, and 40 per cent, rates of sales tax that achieved the objective he claimed had been achieved. All that has been achieved by the measure, so far as I can see, is that more than 1,000 persons have been dismissed from the motor car industry. The repercussions have not stopped there but have flowed into other branches of industry, and some 80,000 Australians are without jobs in a community which calls for economic development of all kinds. The Australian Labour Party believes that the Government is irresponsible and that there should not be a single Australian unemployed if he is able and willing to work.

Mr Harold Holt - You will live to regret that statement.

Mr CREAN - I might live to regret it, but I think you should be a little less casual about the situation.

Mr Harold Holt - I have given much earnest attention to it.

Mr CREAN - You might have done so; but if you had given some earnest attention to some of these matters a long time ago, it might have been more significant. I am sorry the honorable member for Barker is not in the chamber, as J want to quote from an official publication of the Department of Trade entitled "The Australian Motor Vehicle Industry " and published in March, 1959 - two years ago.

It points to the fact that in March, 1959, when this document was printed, the Australian motor car industry had a certain capacity. I quote from the document at page 11 -

Excluding vehicles for which demand is insufficient to warrant local production or assembly, the Australian vehicle industry now has adequate capacity in terms of manufacture and/or assembly to meet all demands. Present capacity-

I ask honorable members to note that this was two years ago - -is approximately 335,000 motor vehicles a year. . . .

That was obvious, apparently, .to the Department of Trade two years ago; yet in November, 1960, when the sales of motor vehicles in Australia matched the capacity of the motor vehicle industry in March, 1959 - namely, 335,000- the Government began to get alarmed about it. It said that it was alarmed because of the drain that the motor car industry makes on imports generally. It makes a drain for two good reasons. The first is the importation of petroleum. A motor car is not much good without petrol, and imports of petrol total about £100,000,000 a year. Components of motor vehicles account for something like another £100,000,000 a year in the aggregate. Again, I .ask honorable members to note a statement published in this document, "The Australian Motor Vehicle Industry ", two years ago on import licensing. It .states-

As from April, 1957-

That is almost four years ago - there was a general relaxation of import licensing and the motor vehicle industry was granted certain important concessions. Within an annual ceiling, these concessions allow vehicles to be imported on a sales replacement basis instead of by quotas .calculated on a base year of imports.

In other words as far hack as 1957, the motor car industry was given more favorable treatment regarding import licensing than were other branches of industry which relied on a quota. The motor car industry could show that because of its sales increase it was able to get a higher level of imports. That goes back to April, 1957 - four years ago. The Government encouraged the investment of foreign capital and other capita! in Australia to get a motor car industry with a capacity of 335,000 vehicles in 1959, and by way of assistance it relaxed import controls on motor vehicles. That happened before the general relaxation of import licensing in February, 1960.

This highlights the sort of thing that the Government ought to be doing. It should be using import licensing sensibly and selectively. The Treasurer has mentioned the record of this Government with regard to full employment or high employment. If one thing stands out more in 1961 than it has for many years it is the dependence upon maintaining a high level of employment in Australia for proper expansion of the secondary industries, of which the motor car industry is a singular and conspicuous example.

The motor car is being used not only for pleasure. It is also being .used commercially and on the farm to increase primary production. The Government has encouraged the growth of the industry. Ancillary to its growth are increases in imports of petrol and components. If our export earnings are limited, as we know they are, is it not rational that we should do something to allocate those earnings properly in order to get the best that we can get from imports? If we require a certain amount of petroleum and a certain amount of components to make motor vehicles, does that not lead to the conclusion that the rest of our imports should be chosen selectively and that some ought to he .banned altogether? But, of course, this Government does not look at this matter in a comprehensive fashion at all. It goes along haphazardly from day to day. For the life of me, I could never follow the logic in the argument that removing import licensing would produce lower prices in the Australian economy. That was one of the supposed attacks upon the evils of inflation which have been with us as Jong as "we have had this Government. It is conterminous with the Government.

That solution disrupted the whole of our internal economy and we had to face up to the measures that were brought down here in November, 1960. The thing that was wrong with those measures was that instead of re-imposing import controls, the relaxing of which had led to a flood of goods from overseas, the Government adopted the stupid device of a credit squeeze that hit everything, the innocent equally with the guilty, and supplemented it with the increase of sales tax. So we were hit hard by the charges from a double-barrel weapon. Now, belatedly, the Government recognizes one mistake, but it will not admit its greatest mistake, which was made in February, 1960 - the general relaxing of import controls.

Because of the nature of the Australian economy, with its dependence for export earnings upon primary products which are relatively few in number but are great in aggregate, this country cannot afford to squander imports. It has to be rational and logical in the allocation of those imports. This Government has been everything but rational or logical in its approach to these matters. It gears up an industry and encourages the industry to gear up to a certain capacity. Then, because of the trend in imports, the Government becomes alarmed when the capacity is reached, despite the fact that as far back as four years ago it released import controls in this section of the economy.

I am not arguing at this stage that if it had been conceived in 1957 that there ought to be limits in the growth of the motor car industry - as the honorable member for Barker suggests, apparently, that it was conceived in November, I960- the Government should have taken entirely different steps in 1957. For once I agree with the honorable member for Mackellar (Mr. Wentworth), who suggested last night that there was nothing very sensible about shutting down activity in one industry if at the same time the capacity of another was not opened up. But that is going on in the Australian economy at the moment. It is not as though the resources being released from the motor car industry by what the honorable member for Barker calls the achievement of the Government's objective are leading to increased activity somewhere else. At the moment there is an atmosphere of stagnation and a feeling of pessimism about the future of the Australian economy. Not for quite a long time have we been so apprehensive about what the next few months will bring. "Economists of note have predicted that unemployment may reach a figure of 200,000 by the end of June. I hope that that prediction is wrong, After all, what is achieved by having 200,000 people unemployed, in an economy such as ours, when so much requires to be done? In terms of the things to be done, whether by way of public development or investment in certain basic industries, Australia ought to be short of man-power rather than having too much of it.

At the moment, the fact that we appear to have 80,000 too many in the work force would seem to be justification for the Government to look closer and ask whether there is not something wrong with its economic theories. I think that everything has been wrong with the economic theorizing by this Government and it ill-behoves the Treasurer to say that when at some future time we look back to this period, it will be hard to match the record of this Government in respect of full employment. It will be hard to match the Government's record regarding inflation and a number of other things! Certain measures were taken in this Parliament three months ago. One of these, but only a minor one, which in a sense was unnecessary, is now being repealed. Other measures, ancillary to it, which in the view of this side of the House were wrong, are going on as before. Nothing that this bill does will change the general situation of stagnation.

The honorable member for Barker said that of all political parties the Labour Party should be the last to argue that taxation ought not to be used for social ends. I would agree with him, although my colleague, the honorable member for Warringah (Mr. Bland) might not agree with the honorable member for Barker about that. But that does not mean that a particular tax measure taken at a particular time is necessarily the right measure. In my view, this was an entirely wrong measure.

Taxation, in conjunction with monetary and other measures, can be used to secure social direction, and I would think the most significant lesson to be learned from the measures that have recently been taken is that the term "economic control" can no longer be considered a dirty word in the context of the Australian economy. Economic control is necessary in any economy such as the Australian economy in order that, in terms of limited resources, we get the maximum national development. The arguments in this House ought not to centre round whether there ought to be controls or no controls. Primarily, they ought to be about what kind of controls there should be.

The honorable member for Barker, a member of the Liberal Party, has suggested that taxation, properly and sensibly applied, can be an instrument of social control. I should think that the implication behind all these measures is that, in 1961, the Government recognizes that too much of the resources of the Australian community has been allowed to go into the one channel - the motor car industry. If that is the view of the Government in 1961, I suggest that a good deal of damage to the Australian economy would have been obviated if this trend had been seen as far back as April, 1957, when the relaxation of import controls favoured and encouraged the development of the motor car industry to the stage where it was capable of producing 335,000 vehicles a year. As we have said on former occasions, if the Government's argument were - and I ask honorable members to note the " if " - that the sales of motor cars must be reduced in order to release machinery and man-power for use elsewhere, such as to build schools instead of motor cars, that might be a conscious enough social choice. But it is stupid to reduce the capacity of the motor car industry if you do not build schools or do something else with the machinery and man-power so released. It is clear from a careful analysis of the present circumstances of the Australian economy that the recession or damping down in some sections of the economy is not being accompanied by a stepping up or increase in activities in other directions. Rather is there stagnation. Unfortunately, when economies begin to roll downhill they roll very quickly, and they are not always retrieved as easily as they were allowed to get out of hand. We say that the Australian economy is out of hand because this Government does not know where it is going.

This measure is, to say the least, a recognition of one mistake. When compared with an Australian budget df £1,500,000,000, perhaps £5,000,000 does not sound very much, but £100 still is of some significance to the individual Australian. Between 50,000 and 60,000 people have each had to pay £100 because of this mistake by the Government. That is one mistake the magnitude of which can be measured, and I suggest that the Government should try to measure the magnitude of the effect that 80,000 people being out of work in any one week has upon the Australian economy. The effect is even greater when there is a continuation of this position for more than a week. That is the situation we have in Australia at the moment, and it calls for a change of policy on the part of the Government, just as much as the position of the motor car industry necessitated the change of front illustrated by this measure.

Mr Turnbull - I wish to make a personal explanation.

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