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Tuesday, 9 May 1961


Mr FAILES (Lawson) .- The honorable member for Wilmot (Mr. Duthie) has taken advantage of the debate on the Supply Bill to air his views on matters that relate principally to his own State of Tasmania. He chose timber for his principal subject. I believe it is quite correct that the timber industry is not able to produce as much now as it has done at various times. There are certain reasons for that. The honorable member attempted to lay the blame at the door of the Commonwealth Government, mainly because of the lack of import controls. It has been stated frequently in this House and is fairly well known to the public, I think, that import controls were never intended to act in replacement of the tariff. The tariff is the method by which Australia has always protected a local industry. Quite recently, the Tariff Board issued a report in which it refused to recommend any increase in the tariff on timber for many reasons. One of them was that the Australian industry could not supply the demands for timber, and consequently some timber was always imported.

Those of us with some knowledge of timber know also that Oregon and timbers of that sort are used in preference to other timbers, and as Oregon pine is a timber of remarkable virtue, it has been imported for a great many years and is still being imported. Consequently, the Tariff Board has indicated that the timber industry is able to stand on its own feet with the protection that it now enjoys.

One point the honorable member for Wilmot has overlooked is that in one State alone, the great obstacle to the success of the timber industry for many years has been the imposition of royalties and the level of freights. This has been emphasized quite recently in a statement comparing the freights charged in New South Wales to deliver timber to Sydney and those charged in Victoria. It was shown that, mile for mile and ton for ton, New South Wales carried an unreasonable burden of freight costs on timber delivered from the mills to the city. I live in a timber area, and to my personal knowledge, royalties have been a bone of contention in the timber industry for a great many years.

I do not say that the State does not need the royalties it charges. I do not say the State is unreasonable in its charges; but the fact is that when it charges a particularly high royalty, that is one of the burdens that the timber industry has to bear. If it did not have to bear that burden, I believe it would have been in a position to-day to stand the adjustment required at a time like this when the industry is going through a rather difficult period. So those two items should not be overlooked when we consider the position of the timber industry, and all the blame is not to be laid on the measures that have been introduced by the Commonwealth Government.

I admit that some reason for the position in the timber industry accrues from the measures we have taken, but on the other hand if those measures had not been taken, the most disastrous effects might have been felt not only in the timber industry but in every other industry in Australia as well. The Commonwealth Government, understanding this position, adopted certain economic measures of which we are well aware.

The debate to-night is on Supply. Two items which are brought forward are the Additional Estimates of expenditure for general purposes and the Additional Estimates for new works and capital works and services involving capital expenditure. In introducing these bills, the Treasurer made two statements. One was that the purpose of the bills was to obtain parliamentary authority for certain expenditure for which provision was not made in the 1960-61 Estimates. I will not weary the House by going through them, but honorable members will notice that provision is made for a number of items including an amount for cattle tick eradication and control, grants towards the building of homes for the aged, the Commonwealth scholarship scheme, a contribution towards the United Nations Force in the Congo and other purposes. These are items which have cropped up since the introduction of the Budget in 1960, and for which additional funds will be necessary. That is why this bill is brought before us. "When speaking during the debate on the

Appropriation (Works and Services) Bill, the Treasurer (Mr. Harold Holt) said -

However, it is expected that the- total expenditure-

I emphasize that this is additional expenditure - on capital works and services will not exceed the Budget estimate of-

The point is that this is not additional expenditure in the ordinary sense of the term; this is expenditure which comes more or less within our Budget estimate.

Another point which. I wish to impress upon honorable members is that these works and services are paid for out of Consolidated Revenue. They are not paid for out of loan money because, over the years, the Commonwealth has declined to participate in loan raisings through the Australian Loan Council. The Commonwealth Government has recognized that the States require all the loan money they can possibly get, and when loan money has been scarce, the Commonwealth has been prepared to allow the States to have the benefit of the full amounts raised by way of loan. Indeed, as the loan money has been insufficient for their needs, the Commonwealth has made money available to the States out of its own revenues. In addition, it has paid for its own capital works out of Consolidated Revenue. Some might argue that this is not good policy, but I emphasize that, had the Commonwealth Government taken its share of the loan funds available - I think, its allocation was 20 per cent. - the States would have been extremely short of money.

Before discussing the raising of loans for State governments and semigovernmental authorities, I point out that the state of our economy has been the subject of a great deal of discussion by people in many walks of life. As it is not unusual for honorable members to quote extracts from various authorities in this chamber, I quote from " Canberra Comment " the following statement by Mr. Ian Connell in the course of reviewing the national economy in his presidential address to the 57th Annual Conference of the Associated Chambers of Commerce of Australia in Adelaide recently -

The balance of payments problem was not a new one and was certainly not caused by the removal of import controls.

We have heard a. great deal in this House about the damage the removal of import controls has done to industry in Australia over the past twelve months, but this. man, who is well qualified to- comment on the subject, says that the balance of. payments problem has certainly not been caused by the removal of. import controls. He goes on to say -

It had, in fact, been- mainly due to the combined effects of a fall in export prices and the increased demand for imported raw materials and capital equipment resulting from the internal boom which developed rapidly in 1959-60.

Further on, he said -

Nor can the problem be considered to have reached critical proportions. Indeed, the fall in reserves is likely to be little if any more than was anticipated when the controls were lifted.

That very authoritative statement is worthy of the most earnest consideration of all honorable members. We have heard much criticism of the Government's action on two counts. The first is its removal of import controls, with all their disabilities, with all their obnoxious features, with all the opportunities they open up for unfair and undesirable practices; yet the leader of the Chamber of Commerce says that he does not consider that the removal of import controls was the major cause of our difficulties. On the contrary, after considering our present position, and after giving due weight to the measures taken and proposed by the Government to correct our balance of payments position, the manufacturers have engaged in the strongest piece of lobbying that one could imagine. The Treasurer referred to it in this House about a week ago, and I do not propose to say any more about it now. But there is one body of people who, having had the ball at their feet for many years, apparently made no attempt to increase their efficiency to face up to harder times. For years they have lived on the products of the primary industries, which have supplied 80 per cent, of our overseas credits. I refer to the manufacturers who have imported many of the things they need in industry, and it ill becomes them at this stage, when primary producing industries are in dire straits because of low world prices over which neither they nor the Government have any control, to suggest that they will take every possible step to defeat the Government's effort to remedy the present economic position for the good of all in Australia-

In contrast to that attitude I refer to the strong support which one of the federal leaders of the grazing industry, Mr. Scott, is giving the Government's measures. Immediately the Government announced the steps it proposed to take to deal with the position, Mr. Scott urged all his members not to be squeamish, but to get solidly behind the Government in its efforts to help them. That is the support we want if we are to solve our problems.

For many years now, the grazier has been producing wool at an unprofitable price. As a result, the industry has asked for an inquiry into marketing methods. The Commonwealth Government has granted that inquiry into the marketing of wool, and so successful has the inquiry been so far that experts have come from England to give the Government the benefit of their knowledge of the wool industry, of the selling side in particular.

Another primary industry which has not enjoyed any prosperity recently is the wheat industry. Certainly it is in a better position than the wool industry in that wheat-growers have a guaranteed price for part of their crop. The average person believes that this guarantee means that the grower will receive 15s. 2d. for every bushel of wheat he delivers. That is not so. The grower will receive the guaranteed price for all wheat used for home consumption and for 100,000,000 bushels exported, but for all wheat exported above that quantity growers will be paid the ruling world market prices. The net result is that, the world market price being lower, the eventual return to the grower is averaged down to something below the guaranteed 15s. 2d. a bushel. So that, while we have one section of the people urging that there be no cut whatever in conditions of employment, and while another section is arguing that there should be no cut whatever in conditions of industry, the two main supports of the Australian economy - the wool-growing industry and the wheat-growing industry - are in dire straits, indeed. The latest quote on the London market for wheat was 13s. 8d. a bushel f.o.b. port. Those who think in terms of a 15s. 2d. guarantee for all wheat delivered should remember that.

To-day, the reimposition of import controls is being advocated most strongly by those who were most vociferous in their objection to them in the past. The moment their particular industries begin to suffer, they cry out for the reimposition of the very controls to which they objected in the past. Nobody wants controls. Even the Labour Party dislikes controls. All it does is advocate the imposition of controls upon other people, but it resists any attempt to impose controls upon its activities. Labour Party members do not want to have things regulated for them any more than do honorable members on the Government side of the House.

The Commonwealth to-day needs the confidence of the people and of the State Governments. The people should know that Australia is not in a jam but is in a sound position, and that if we pull together we will get somewhere.

I should like to comment now on the partnership that should exist between the Commonwealth and the States. Too often we hear criticism to the effect that the Commonwealth holds the purse-strings and controls the finances of the country. Every one should know, and I hope the Treasurer will have the opportunity to tell those who do not know, about the partnership that exists between the Commonwealth and the States in such matters as rebates of income tax collections. It is known that in years gone by the States and the Commonwealth levied their own income tax, and that by agreement during the war years the Commonwealth assumed the right to collect taxes and the responsibility to distribute a share of those taxes amongst State Governments according to an agreed formula.

It should be known also, and I hope that it is known that the Australian Loan Council was the product of the brains of our colleague, the right honorable member for Cowper (Sir Earle Page), who in the late 'twenties conceived the idea that by establishing a common pool for governmental borrowing, competition would be avoided and interest rates kept down. But to-day the States are not playing the game by the agreements to which they are parties. They accuse the Commonwealth Government of ruling the financial market, of holding the pursestrings, of controlling the States and of suppressing them in the performance of the ordinary functions of government. They allege that the Commonwealth withholds the finance that is necessary for the proper conduct of their affairs. If any honorable members have any doubts about my statements, I shall read an extract from the " Hansard " report of the New South Wales Parliament which will be sufficient to show what is going on. But first I want to say that not so very long ago a county council in my electorate suffered because it found in late January or early February that it had run out of money. I do not want to mention in this place all the reasons why the county council ran out of money, but the fact remains that it had received an allocation of funds to carry out certain works during the twelve months, but a little more than half-way through the year it made a statement which was published in the newspapers. It was in these terms -

Council has decided to stop all new construction works following a refusal by the Federal Government-

Federal Government, mark you - to make supplementary loan grants to the States . . . The County Council had been promised a further loan allocation of £85,000-

The council does not say by whom the promise was made, but I suggest that it was made by the State Government - if the Federal authorities granted New South Wales a supplementary loan allocation, and lenders for that sum were available. However, at the Loan Council meeting in Canberra last week the Federal Treasurer- " Federal Treasurer ", let me emphasize - refused the requests of several State Treasurers for a supplementary loan allocation for the 1960-61 financial year. As a result of that decision it was no longer possible to continue with rural extensions and other large scale works. The majority of the Ulan County Council's outdoor staff will be given two weeks notice and then stood down until further loans are permitted by the Federal authorities.

I take the strongest exception to local government and semi-governmental bodies blaming the Commonwealth Government for something for which it definitely has no responsibility. I hope that the Treasurer will make a statement indicating how the Loan Council works, its functions and the contributions that it makes to State governments and semi-governmental authorities. It is well understood that these bodies must have finance, but there is machinery by which it can be obtained. If that machi nery works correctly and if the States make their requisition for funds with a realization of the nation's economic and financial position, we shall all get along a lot better than we have been. But instead we see the kind of statement that I have just read.

I stated earlier that I would read an extract from the " Hansard " report of the New South Wales Parliament in relation to local government borrowing. On Wednesday, 15th February, 1961, a member of the Legislative Assembly asked this question -

I ask the Minister for Local Government and Minister for Highways whether the Ulan County Council electricity undertaking yesterday gave dismissal notices to 40 employees. Was this attributable to the failure of the Loan Council to grant approval for local-government borrowing, though lenders are available? If this is so, can the Minister say what action he may be able to take to prevent the spread of unemployment in localgovernment undertakings?

I will say for the honorable member who asked that question that he referred only to the Loan Council which, as all honorable members know, consists of representatives of all States and of the Commonwealth Government. The New South Wales Minister for Local Government and Minister for Highways replied to the question in these terms -

I noticed in this morning's press that officials of the Ulan County Council stated that it would be necessary to suspend about 45 of their employees. . . . The subject of loan funds was dealt with by the Loan Council in Canberra last week, and the Premier and Deputy Premier and Treasurer put the case for New South Wales for an allocation of about £4,750,000 for localgovernment borrowing. However, the Loan Council rejected their overtures for the £4,750,000.

He then stated -

All honorable members must be amazed, as I was, that such a decision should have been made by the Loan Council.

Then he was prompted, by way of interjection, by no less a person than the Deputy Premier and Treasurer who said -

By the Federal Treasurer.

He insinuated that the decision was made by the Federal Treasurer and not by the Loan Council. The Minister for Local Government and Minister for Highways then went on to say -

My colleague the Deputy Premier and Treasurer points out to me that at the Loan Council discussion the Federal Treasurer told representatives of the States that Federal Cabinet had predetermined this matter before the Loan Council met and that the Federal Cabinet's decision was that there should be no further approvals for localgovernment borrowings throughout the Commonwealth of Australia. Therefore, I cannot hold out any hope for the allocation of additional funds to local-government bodies in this State; I just do not have them, and therefore I am unable to approve them.

I do not know whether those words are true, but I have always understood that Loan Council meetings are held in camera. Yet the Deputy Premier of one of the States makes a statement in open session of Parliament indicating what occurred within the Loan Council! Some years ago I remember being here with some friends on business and we sat in the visitors' gallery while a Loan Council meeting was in progress because we were interested to know what happened during the meetings. At the request of one Premier we were asked to leave, and I believe the Premier was right in making the request. Yet a responsible person in a State parliament is prepared to tell the parliament everything that occurred within the Loan Council which is supposed to conduct its deliberations in camera!


Mr Calwell - Not everything.


Mr FAILES - Perhaps not everything, but I can assure the Leader of the Opposition (Mr. Calwell) that if he cares to read No. 42 of the " Hansard " reports for the New South Wales Parliament he will see that very little was left to the imagination. Whether the Deputy Premier erred in a slight degree or in a large degree makes no difference. His actions were shockingly culpable, particularly when one considers the responsible position that he holds. In reply to a supplementary question, the Minister for Local Government and Minister for Highways stated -

The decision will remain until the Loan Council meets again and reverses its decision of last week. The Premier and the Treasurer asked the Federal Treasurer to take the matter back to Federal Cabinet for its reconsideration, and the Federal Treasurer refused point-blank to comply with their request.

If the Minister for Local Government did not obtain that information from the Premier or the Deputy Premier, I do not know from whom he obtained it. But I am sure that he got it from the source to which I have referred because on the following day an urgency motion in these terms was introduced into the House -

That, in the opinion of this House, the decision by the Commonwealth Government-

Again, the Commonwealth Government, mark you - to refuse to agree to any increase in the current year's borrowing allocations for local government authorities will lead to serious unemployment problems in many parts of the State and will accentuate the general recession which is already being brought about by the Commonwealth Government's " credit squeeze " and its other restrictive economic measures.

I could read on through the debate on that urgency motion and quote many instances in which the Deputy Premier of New South Wales made direct statements about matters which had occurred within the Australian Loan Council, and direct charges and allegations that the Commonwealth Government had refused to give local government bodies any assistance at all, although we know that in fact the decision was made by the Loan Council and not by the Commonwealth Government.

So I say: Have the States played the game and tried to help the Commonwealth Government in dealing with the problems that beset the States from time to time? We know very well that more money is required for local government. We know that more money is required for education. Under the terms of this bill, the Commonwealth Government is providing for a subsidy for higher education in the universities. We know that more money is required for roads. Undeniably, more money is required for them. We divert from the taxation that we collect from the people of this country a handsome subsidy for roads. The same thing applies to hospitals. We have arranged for a considerable hospital subsidy to be paid to hospitals under the national health scheme. The State governments get the benefit of this. But they still require more. I know it and I admit it. But I object to their attitude in not making their requests in a reasonable way which, I believe, would receive the support of the people of Australia.

Water supplies, also, are urgently needed. The honorable member for Wilmot (Mr. Duthie) complained that this Government had not done anything about water supplies. I point out that, after all, water supplies in the main are the responsibility of the State governments, except where schemes are so great in size as is the Snowy Mountains scheme, where more than one State is involved. The Commonwealth has contributed out of revenue £14,000,000 a year to the Snowy Mountains scheme. Is not that an achievement? The honorable member asked, "What are this Government's achievements? " The Government's achievements in that scheme alone have been colossal, and they are probably greater than have been those of any other government in this country for a great number of years.

What has this Government achieved in aviation? We have seen the improvements that have been made to airports, and in the flow of air traffic as a result of the assistance given to the airlines. In the field of railways, there has been the duplication by means of a standard-gauge line of the railway between Albury and Melbourne. I have already mentioned the Snowy Mountains scheme. At present, we are considering a proposal for the development of the far inland that embraces not only water supplies but roads. All these things, I point out, have been provided for out of revenue and not out of loan funds. All the loan moneys being raised in this Commonwealth are being used for the benefit of the States.

What are the greatest problems that we have to face to-day owing to rising costs? Have the States helped us there? Have they contributed anything at all? I do not want to be critical of them, because my whole story is that we need co-operation from all the States which make up this Commonwealth. We need co-operation by the States with the Federal Government in dealing with the problems that beset the whole of the country. But, unfortunately, until now, we have not been getting it. We have not been getting the co-operation of a great number of the people. We have seen a demonstration to-day by members of a union to whom it is proposed to give great benefits by means of a measure to be enacted during this week, I understand. Those unionists gave up .heir work for the day and came to Canberra to stage their demonstration. The members of that union have done nothing over the last year or so but frustrate the efforts of people to ship exports from this country - exports of tremendous value in the critical situation in which we are placed. So I ask: Will the States co-operate? Will they help to build up the confidence of the people of Australia in this Government, which is responsible for trying to solve all these problems with which the country is faced? The Opposition may say, as it has said before, " It is not our pigeon, and we do not care ". That is a matter for the Opposition, but I ask that the States co-operate and make fair demands in respect of their financial requirements. I ask, furthermore, that they ensure that they get fair value and a fair return for the expenditure that they make. Finally, I ask the people whether they will co-operate, because the position can be only as serious as the nation will allow it to become.







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