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Wednesday, 9 March 1966

Mr PETERS (Scullin) .- The report of the Vernon Committee is a vast volume. The report cost between £100,000 and £200,000 of the taxpayers' money to produce. It took three years to compile. It was compiled by economists and businessmen whose attitude towards political issues was, generally, the attitude of the Government. The Government selected the members of the Committee.

As has been pointed out, it is impossible to deal with every issue that is brought forward in the report. However, one section of the report deals with our overseas commitments and the inflow of foreign capital to Australia. I am particularly interested in those matters. My interest is such that when the announcement was made that certain people would constitute a committee to inquire into them, I sent to the committee quite a lot of the information that I had at my disposal, pointing out the amount of foreign capital that had been flowing into this country and the type that it was, and giving the opinions that had been expressed by members on this side and on the other side of the House, including the Deputy Prime Minister and Minister for Trade and Industry (Mr. McEwen), in connection with the influence of that inflow of foreign capital upon the economy of Australia.

The Vernon Committee made a report in connection with the inflow of capital. It did, of course, what was the obvious thing to do. First, it investigated the extent of the inflow of capital to Australia. It discovered that £2,499 million of overseas capital was invested in Australia between 1947 and 1964. Since 1964, another £258 million had been invested. This makes a total of £2,707 million. But people may ask: "What do thousands of millions of pounds mean in relation to the wealth of this community? " Well, 34 of the municipalities of Melbourne, including the City of Melbourne itself, are valued for municipal purposes at approximately £1,800 million. Therefore, the value of the foreign capital invested in this country is nearly twice the value of the whole of the Melbourne metropolitan area, including buildings and lands. The Committee also pointed out that it was estimated that 25 per cent, to 33 per cent, of the industrial undertakings of this country were under foreign ownership. The Committee said that with a continuance of annual new investment in companies at the same rate as in the year 1963-64 - that was £201 million a year - the percentage of foreign ownership will rise from the current figure of about 25 per cent, to 54 per cent, by 1975.

At the rate of £201 million per annum inflow of foreign capital, within 10 years - that is by 1975 - Australian industries will be 54 per cent, foreign owned. To demonstrate the conservatism of that estimate let me show how the inflow of foreign capital has increased during the last 15 years. In each five year period it has doubled. It increased from £300 million to £600 million and has now reached nearly £1,200 million. As the Vernon Committee pointed out, overseas investment in Australia last year amounted to £201 million. In other words the industries of Australia were taken over by foreign interests to the extent of £201 million. If that rate of capital inflow continues, by 1975, according to the report of the Vernon Committee, 54 per cent, of Australia's industrial undertakings will be foreign owned.

During the first six months of this financial year more than £200 million of foreign capital has flowed into Australia. That means that in 1965-66 the inflow of foreign capital will approximate £500 million and not £201 million. If at the rate of £201 million per annum Australian industry will become 54 per cent, foreign owned in a period of 10 years, I leave it to the mathematicians of this House to work out what proportion of our industries will become foreign owned if the increase in the inflow of foreign capital during the next two years continues in the geometrical progression of the past few years.

Let me quote some official figures in connection with our overseas trading operations. For the September quarter of 1 964-65 we had an adverse balance of payment of £97 million. For the September quarter of 1965-66 our adverse balance was £158 million. In other words the adverse balance of payments for the September quarter of 1965-66 is £61 million worse than it was for the previous year. For the December quarter of 1965-66 the adverse balance of payments was £120 million. For the same quarter of 1964-65 it was only £74 million. There has been an increase of £46 million as between the December quarter of 1964- 6* >"

At the end of this financial year our adverse balance of trade will be greater than at any time in our history - even greater than it was in 1952. That position must be met. How will it be met? It will be met by the inflow of capital from overseas, by foreign interests taking over more and more Australian industries. As I have said, at the rate at which they are being taken over now, much more than 54 per cent, of them will be foreign owned by 1975. I believe that closer to 70 per cent, of Australian industries will be foreign owned by 1975. Further, the majority of Australian industries will be dominated by outside financial groups long before 1975.

I know there are people who say " Well what does that matter? What does it matter whether someone within this country owns our assets or whether someone outside this country owns them? " Let me answer that question in this way: According to figures supplied by the Commonwealth Statistician, at present we are sending overseas £201 million a year. If the foreign content of Australian industries doubles or more than doubles within 10 years and if the present dividend rates remain the same as they are now, or even nearly the same, then there will go overseas not £201 million a year, not twice £201 million a year, but much more than that. When this money goes overseas it will be lost to Australian industries, ft will not be used for the development of Australia. It will not pass from hand to hand within Australia, from industry to industry, from shopkeeper to shopkeeper and be subject to taxation which would mean that the people of this country would pay lower taxes. No. It will go overseas and will help to develop other countries of the world.

There is another feature which is most disconcerting. Whoever owns the industries of this country will dominate. the economy of this country; whoever dominates the economy of this country will dominate the Government of this country. These interests will determine who will work and where the people will work. They will determine what goods will be sold within this country and what goods will be sold outside this country. They will determine what goods will be exported and what goods will be imported. To a large extent, they are already determining these things. In the end result, this dependence upon foreign investment in Australia which is increasing daily will, in the words of the Deputy Prime Minister (Mr. McEwen), rob the people of this country of their freedom. He said that dependence on foreign capital means the destruction of the freedom of the people who depend on it.

The members of the Vernon Committee said, in effect: " We are amazed at the amount of foreign capital. We think action should be taken." They pointed to other countries which already take action to restrict and determine the kinds of overseas capital that are invested in them. They said that that should be done in Australia, too. They added that the State and Commonwealth Governments should not actively encourage any more investment. Of course, this Government encourages the investment of foreign capital by concessions of every description. Freight concessions, taxation concessions, provisions in connection with opportunities for reasonable access to shipping facilities and all kinds of inducements of that nature are provided. Now the Government even goes so far as to permit indentured labour to come from other countries, such as Japan, in order to develop this country. So foreign capital not only develops Australia but also brings other nationals to do the developing and exploiting of it.

The Vernon Committee said that the annual rate of new foreign investment should not be more than £150 million a year. Last financial year it was £201 million. In the first six months of this year it was more than £200 million. So this year it will be about £400 million, which is more than £250 million greater than the Vernon Committee said should be permitted. The Com- mittee went on to say that the formal approval which the Reserve Bank gives to non-sterling foreign investment should be extended to the sterling bloc to aid potential control of overseas investment, that takeovers of Australian enterprises by foreign companies should be approved by the Government, and that the Reserve Bank should maintain a register of all overseas investment. Not only the Vernon Committee but also other bodies throughout the nation are now waking up to the fact that there is a great danger in this inflow of overseas capital and in the takeover of industry after industry by overseas people.

I have given the House some figures and the Vernon Committee has provided some figures. Whilst they are official figures, they are not the real figures. They relate to industrial stocks that have been purchased by foreign interests. As the official documents point out, they do not include the value of leasehold - 57,000 square miles of leasehold land in the Northern Territory is held by foreign investors - or the farming estates in the south that are held by foreign investors such as the Governor of the State of New York and Linkletter, the American television personality. Nor do they include the vast amount of real estate in the capital cities and country towns of Australia which is owned by Chinese interests in Hong Kong and other international interests. As the Vernon Committee says, the first thing that we should do is maintain a proper register of ownership of all kinds of industry and all kinds of real estate by overseas interests, so that the people will know from day to day exactly how much of this land that we call our country remains in the hands of Australian residents and how much is, in reality, in the possession of overseas people.

Debate (on motion by Mr. Hallett) adjourned.

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