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Thursday, 27 April 1961

Mr E JAMES HARRISON (Blaxland) . - In all the time that I have been in this House, Mr. Deputy Speaker, I do not suppose I have ever heard such a carefully prepared speech as that delivered by the honorable member for Swan (Mr. Cleaver).

Mr Chresby - And a jolly good one, too.

Mr E JAMES HARRISON - Such speeches usually are, if they are prepared by Treasury officials or people close to the Treasury, because such people are best fitted to prepare statements on this subject. The aspect of the honorable member's speech which most caught my attention was that care was taken not to make any reference at all to what the Treasurer (Mr. Harold Holt) had said in November last. Great care also was taken to avoid reference to the weaknesses that have existed in the control of private superannuation funds. No reference was made to matters that were mentioned by the Treasurer in November last, such as the action that would have to be taken in regard to companies that were not playing their part in furthering the national interest. So much care was taken by the honorable member to avoid reference to those matters that his speech will be remembered as one prepared for him by somebody else, prepared in a way calculated to give voice to matters that the Treasurer wants the public to be told about to-day instead of the matters that he referred to in November last.

The only reference by the honorable member for Swan to the November statement of the Treasurer was to the effect that by 1960 the trend of events indicated that something like this would have to be done. That is not in accordance with the facts, Mr. Deputy Speaker. In November last, the Treasurer stated that certain measures would have to be implemented quickly to try to correct the unstable condition of the economy. We must not forget the nature of those measures. First, there was the proposal to increase sales tax on motor vehicles and, secondly, insurance companies and private superannuation funds were to be compelled to contribute to Government loans. Those measures were indicated by the trends of 1960, and those were the measures that had to be watered down in 1961. The honorable member for Swan knows very well that during the last fortnight, the Premier of Western Australia, the State from which the honorable member comes, has stated that certain things are essential for the development of that State. However, the provision of funds to enable those things to be done has been denied Western Australia by this Government. The honorable member should be saying that the Treasurer's approach of November last was the correct approach, rather than delivering the kind of prepared speech that we heard from him to-day.

As was stated by the honorable member for Melbourne Ports (Mr. Crean), who led the debate from this side, of the House, the Opposition does not intend to oppose this legislation because of the urgent need for it and because the Government has indicated that the legislation represents the limit to which it is prepared to go at this time, in calling upon life insurance companies and private superannuation funds to contribute to government loans. As the honorable member for Swan rightly said, those organizations have enjoyed great taxation advantages over the years. Of course, there may not be a ready response on their part. Goodness knows, this Government has met with many failures over the years. I remember that at one time - so many years ago now that it is a matter of history - the Prime Minister (Mr. Menzies) called a conference of all interested parties with a view to seeing whether something could be done to stabilize the Australian economy. Despite that, the economic situation has continued to go from bad to worse and, as I have said, in November last the Treasurer was obliged to direct attention to the, great difficulty that the Government was experiencing in finding the money that was necessary for the continued development of the nation. If I remember correctly, he stated that great sums of taxation revenue had to be used to finance Commonwealth and State works.

That is the background of this legislation. The Government found, towards the end of last year, that the time had arrived to consider requiring life insurance companies and private superannuation funds to contribute to Commonwealth loans. As the honorable member for Swan has said, between 1949 and 1959 only £81,000,000 was contributed to loans by insurance companies which now hold £1,000,000,000 worth of assets in this country. The honorable member also said that only £4,000,000 of that sum had come under Commonwealth control. The situation had developed in such a way that the companies and funds surely must have known that they were inviting legislation that would compel them to return to the state of affairs that they were prepared to accept during the war years.

We must remember that between 1949 and 1959 the companies increased their assets by a total of £562,000,000. I do not blame them for doing so. Nevertheless, during the time that they were increasing their assets by that vast sum, they were prepared to contribute, only £4,000,000 to Commonwealth loans for the advancement of this country. They did that at a time when call after call had been made, not only by members of the Government but also by the Opposition, the trade unions and representatives of industry, for a clear recognition of the developmental needs of the country. As honorable members will remember, earlier to-day in this chamber we heard that money was short for a national project in Queensland. An approach was made to the International Bank but funds could not be obtained to finance the project. Then we had to rely on our own resources to raise a mere £20,000,000 while companies that have accumulated immense wealth to the tune of £562,000,000 contribute a mere £4,000,000 towards the development of this country. I suppose it can be said that rather than blame the companies we should blame the lack of control of interest rates and profiteering that has gone on over the last ten years. That is the basic cause of the trouble. If we go to Circular Quay we can see a great 25-story building shooting up. The insurance company which owns the building regards it as much more important, from its own point of view, to erect such a huge building than to contribute something towards Commonwealth funds to be used on the water conservation scheme that Western Australia needs so badly. It is high time that there were new thoughts on the problem of what is best in the interests of the development of this country.

This morning, we heard quite a lengthy but interesting speech from a member of the Country Party who was a former Cabinet Minister in the New South Wales Parliament. He complained of the increasing rate of expenditure in the cities. Make no mistake about this - the insurance companies have been the principal offenders in pouring money into great buildings in capital cities. One has only to go to Melbourne, Sydney or Adelaide to see evidence of the immense amount of money that is being poured into capital investment. For what reason are the insurance companies and others doing this? They are doing it because that kind of investment provides a much better return than does investment in government bonds.

The position during the war years was much different from what it is now. At that time, 68 per cent, of the companies' funds were invested in government bonds but only, in the main, because interest rates were pegged at 3i per cent. When this Government came to office and an advantage could be obtained by investing in other ways at higher interest rates, investment in government bonds fell away. I have some doubts about the proposal contained in this measure. There is only one way in which it will work. I know that the honorable member for Swan said that under this new arrangement life insurance companies will be able to avoid taxation completely. But what will they avoid? All that they will avoid will be taxation at the rate of ls. 6d. in the £1, a concession that they have enjoyed for 28 years. The concession is so small in relation to the return that they can obtain from investment in other directions that I shall want to see the predicted increase in investment iq government bonds before I shall be convinced that the Treasurer was wrong in November, 1960, and is right in April, 1961.

I support the remarks of the honorable member for Melbourne Ports in relation to private superannuation funds. These organizations are mushrooming in this country. Because of its change of policy since last November, the Government is placing those funds that already exist and have assets to the tune of £300,000,000 in an advantageous position compared with those that will be established in the future. Any new fund that wants to supplement its investments to the extent that the old funds already have supplemented theirs must conform to the Government's wishes, or be taxed. The Government's new policy means that the funds which already have assets of £300,000,000 always will he in a privileged position. I support the statement of the honorable member for Melbourne Ports that it is time the position was examined more closely. These private superannuation funds have grown to the stage where if there were a downward trend in the commercial side of our economic life - no one wants to see it - some of them would be found to be based on nothing more than book entries, because there is no control over them. They are different from any fund that is controlled by the trade union movement. In New South Wales - I think this applies generally - the superannuation and provident funds of the .trade union movement are subject to the same control as are the friendly societies. Surely that is little enough to expect with all these private funds that .are in existence and are coming .into existence.

In my view, it is completely wrong to allow a fund to operate, to which the workers contribute something and to which the employers contribute something or nothing, as the case may be, that is not subject to control at some level. Not even a balance sheet of these funds is required, and one can assume that 80 per cent, of the workers who contribute to them have never seen a book of rules or a constitution. They are merely told by the employer the value of the fund. I know of one fund the contributors to which are handed a slip of paper which indicates that if they live to a specified agc the amount to which they will be entitled will be so much more than was expected when the last report on the fund was made. When I knew that this debate was coming on, 1 asked a number of workers for a copy of the rules of the superannuation funds to which they were contributing, but there are no rules. The funds are simply set up by the employers. If a close examination were made of the operations of these private superannuation funds it may be found that they have been established as a means of circumventing taxation. I join with the honorable member for Melbourne Ports in calling for a closer examination of these private superannuation funds because I feel sure that if there is a downward trend the position that was revealed in the Beale organization will be found to obtain elsewhere. That brings me to what the Treasurer said towards the conclusion of his contribution last night. He stated -

Some of the life companies and the privately managed funds may still prefer not to take advantage of the new arrangements. That will be their business. But I feel confident that the majority of the funds and companies will recognize the value of the taxation advantages which will in the future be available from increased investment in public authority securities. We may expect to receive much greater subscriptions to Commonwealth and semi-governmental loans from them in the years to come.

I hope that those years are not too far distant because it is tragic in this year of 1961 that any real Australian development should be retarded because of lack of funds in the Commonwealth Treasury. It is wrong, too, that 66 per cent, of the money that is necessary to meet .our commitments under the Commonwealth-States works programme should come from taxation revenue. After all, when we talk about whether compulsion in this form should -be used, we should remind ourselves that taxation in this country to-day on the civilian level is compulsory. What we are doing at present is to reduce by taxation the normal living standard of those on the basic wage who have families of two or three children to maintain. Then some of the taxation that has been taken from the lower wage groups is diverted to that proportion of Commonwealth revenue - amounting to about 66 per cent, of it - that is needed for national development on a Commonwealth and State level.

I think it is wrong to use compulsion to collect from direct taxation about 66 per cent, of the money that is required for capital works when the income of the life companies and superannuation funds amounting to about £100,000,000 a year could be tapped. An honorable member said earlier by way .of interjection, " What about the guarantee that has been given to the policy holders? " J do not know of any better guarantee for a policy holder than government securities. So when it is a matter of raising 66 .per cent., or thereabouts, of the funds needed for Commonwealth and State capital works from compulsory taxes or from compulsory investments .by the .life .companies and the superannuation funds, I personally come down on the side of the proposal that was outlined by ,the Treasurer in November. His proposal then was that those companies, and superannuation .and provident funds, be compelled to lend a fixed proportion of their funds by investing in -Government securities.

I do not say that in the belief that compulsion in any form is a necessary ingredient of progress in a community. But Australia is developing so quickly that only two things should -prevent our progress. One is unavailability of manpower and the other is unavailability of material. I am thinking in terms of some of the works that require to be done in Australia. I am thinking, as I have said earlier, of the money needed for a railway project in Queensland. I am thinking of the statements made to me by the Premier of Western Australia who spoke of the dire need 'for an extension of the water conservation scheme in that State if Western Australia is to contribute to the national wealth all that it could give through exports of meat and other produce. I am thinking also .of the report I saw that 1,299 persons were drawing the .dole in Rockhampton as at 1st April. While we have such a position developing iia Queensland we see the Fitzroy

River, a waterway equal to the Snowy River, without one weir along its course. When I think of these things, and of our need for progress, I can only wonder at the Government's cockeyed way of thinking.

All honorable members will agree that the Commonwealth Government carries tremendous responsibilities in finding money for capital works since it has accepted the responsibility for the collection of uniform income taxation and of other revenue from fields that should contribute funds for national development. When I consider these things, I find myself consistently reverting to support of the policy that was advocated by the Treasurer last November. Time will prove - and before long - whether the change in the Treasurer's thinking is correct, or whether the doubts that he expressed almost in his last words on this matter last night will materialize. Perhaps this change of thought was imposed on the right honorable gentleman by somebody else. In any case, I disagree with the proposition that we should leave this matter where, as the Treasurer said -

Some of the life companies and the privatelymanaged funds may still prefer not to take advantage of the new arrangements.

If that happens, I hope that the Treasurer and the Government will revert to the policy advanced last November when the Government announced that it would get the funds it required compulsorily. There is no good reason why we should not follow in the next decade the pattern of contributions to Commonwealth funds that was adopted in the period between 1939 and 1949. That would give us the contribution we need towards the nation's development. The period from now until 1970 will be the testing time which will decide whether we or somebody else will hold Australia. We should decide now whether there should not be some forms of compulsion to provide the funds we need for capital works. These could include action to force back interest rates to a point where money will become the servant of the .people instead of a medium of investment in the hands of companies and certain individuals. But if, instead, the Government prefers to let interest rates run on so that private investments will continue to be more attractive than the investment of money in the development of Australia, I say again that I support the proposal that was made by the Treasurer last November for some form of compulsory contribution to national funds. What was good enough from 1939 to 1949 should be good enough in the vital period of Australia's progress that extends from now until 1970.

Those who have a realistic approach to these matters will be able to hear later to-day a speech by the Prime Minister (Mr. Menzies) on certain developments to the north of Australia. I believe that we have only a limited time in which to develop Australia and take advantage of the great potentialities that are exemplified in the Fitzroy River basin and the development of Western Australia. If we - as a national Parliament - throw away these opportunities and waste the time available to us by denying the financial assistance for which many instrumentalities are crying out, it is we who finally must accept the responsibility for our failure to develop Australia. I make no apology for that statement. I have moved across the face of Australia in the past three weeks and have seen many projects that are crying out for Commonwealth assistance. I attended a conference of the Commonwealth Parliamentary Association, and those who made the strongest plea for new thinking by those in authority who control the purse strings in Canberra were a representative of the Australian Country Party from Queensland and the delegates fom Western Australia, including the Premier of that State. I support them in their contention that the money should come from Commonwealth sources, and I support the proposal that was submitted by the Treasurer last November in preference to the proposition contained in the legislation that is now before the House. We support the legislation-

Mr Uren - Only in respect of the 30 per cent, provision.

Mr E JAMES HARRISON - I am dealing with the question of compulsion in comparison with the proposed voluntary contribution that is implicit in this bill. The important question is: Was the Treasurer right in the method of contributions he advocated last November, or is he right now? It is my hope that what he suggested almost in the last words of his speech will not materialize. I hope that no companies will fail to contribute towards the money that is required. They will be induced to come into this scheme only if a cold calculation of the figures shows that the rebates will be of more financial value to them than will the return from investing their money in some other way. That has been their approach to this question right through the piece. If that had not been the approach, this type of legislation would never have been necessary.

The honorable member for Swan (Mr. Cleaver) says that this is good legislation. It will be good only insofar as it provides the funds which the Treasurer says this Government so urgently needs to meet the works programmes of the States and the Commonwealth. After hearing the Treasurer say that money is urgently required, and knowing what is happening in the areas to which I have referred, I must say frankly that I am hopeful, as is the honorable member for Melbourne Ports (Mr. Crean), that the Government will give much deeper thought to this question of private superannuation funds. If this legislation does not succeed in furnishing the Government with its requirements, I hope that the Treasurer will not hesitate to return to his former approach and put the development of Australia above the interests of financial organizations in this country.

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