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Wednesday, 16 March 1966


Mr CONNOR (Cunningham) .- I rise to support the amendment moved by the Leader of the Opposition (Mr. Calwell). He has correctly placed in their proper sequence and magnitude the various items on which the amendment is based. I propose to deal firstly with clause 2, sub-clause (a), which refers to the failure of the Government to maintain the purchasing power of the Australian community. At the present time we have a further episode of a continuous serial production, commonly known as the Australian basic wage application, being heard by the Commonwealth Conciliation and Arbitration Commission. The advocate for the Australian Council of Trade Unions, Mr. Hawke, had some very scathing and illuminating comments to make recently to which I fully subscribe.

The wage earners of this country are literally caught in a trap. We are a National Parliament in name but not in powers. This Government certainly does not take a national outlook on the rights and welfare of all the people, the wage earners in particular. As Mr. Hawke correctly pointed out, it is taking every conceivable advantage of an antiquated Federal constitution. On every occasion when the basic wage case comes up for hearing, when there is a further application made after the usual intervening increase in living costs, the Government sallies forth, abandons all pretence of impartiality and briefs counsel to appear on its behalf in opposition.

When the theory of relativity was first propounded by Einstein and subsequently applied, it was considered that in physics the only constant was the speed of light. The only economic constant of Australia is that the basic wage will be pegged, and the only moral certainty in Australia is that it will be pegged at a figure which is below the true, just and fair cost of living. Today the 40-hour week, which is of general application in Australia, and is the normal working week, is, in fact, a farce. Unless and until the average worker can obtain overtime to the tune of six or eight hours a week, he has not the slightest hope of maintaining his wife and average family of two or three children in anything like decent, civilised comfort.

Worse than that, we have the Government asking the Commission to exercise sub-legislative functions. What it could nut will not do itself - it could apply to the Australian electorate by referendum for the power to control prices, particularly prices associated with the cost of living - it asks the Commission to do for it. In the last 12 months, the average worker in Australia has lost, in actual purchasing power, at least £3 15s. a week. That is made up in this way. These figures were supplied gratuitously by this Government at the time of the Budget debate. The increase in indirect taxation, deliberately designed to curb consumption, amounts to £19 Ss. per capita. For the average family of five, that comes to a little over 35s. a week. The workers were denied another 15s. a week in the 1965 basic wage case and there has been an increase of at least another 15s. or 16s. a week in normal prices since then. With the deliberate cheating that has gone on associated with the introduction of decimal currency, they have lost another 10s. weekly. 1 make the total £3 15s. a week. In the United States of America President Johnson is exercising some excellent controls - controls of a quasi-personal nature which he calls guide lines - in relation to both wages and prices. Here, the only controls exercised are controls over wages. Those are the only guide lines we have in Australia. I do not say that I subscribe wholly to the Johnson technique, but here, as always, the scales are weighted very heavily against the worker.

I have the honour to represent the major steel producing constituency in Australia, and I am particularly alarmed at the impact of Japanese steel imports on certain forms of employment. For the first time in 30 years, it has been necessary for John Lysaght (Australia) Pty. Ltd. to appeal to the Minister for Customs and Excise to apply the dumping section of the customs and excise legislation. For the first time in 25 years, Broken Hill Proprietary Co. Ltd. is being under-cut by certain lines of Japanese steel on the Australian market. The types of steel to which I refer in particular are sheet, plate, hoop and strip. The rub is that the low priced Japanese steel is being made from iron ore which is at present costing Japanese companies about 25 per cent, more than will the iron ore they will be importing into Japan from north-west Australia shortly. So the competition will intensify. The figures are alarming.

We hear a delightful line of economic pap handed out by the Prime Minister (Mr. Harold Holt) in relation to stimulating the export trade. In the first four months alone of the fiscal year 1965-66, net imports of steel into Australia were valued at £6.7 million. This is at the rate of £20 million a year. John Lysaght (Australia) Pty. Limited, in applying for the application of the dumping provisions, finds itself in difficulty in that it is unable to prove what is the actual cost of production in Japan. Domestic prices in Japan are hard to obtain. They do not have the same listing as in Australia. I will come to that in a moment.

In 1963, Broken Hill Proprietary Co. Ltd. warned the Tariff Board that by 1965 Japan's ambitious programme of steel production would create a considerable problem for the world steel industry. That problem has eventuated today. For last year, the total production of steel in Japan was 44 million tons. The Japanese home consumption of steel is of the order of 32 million tons. In other words Japan has an export surplus of some 12 million tons to dump on the world market. The sheet metal works of John Lysaght (Australia) Proprietary Ltd. at Port Kembla are the major works of that type in Australia. To my certain knowledge, over 1,600 men are employed there, and the jobs, the financial security and indeed the very existence of these men are threatened. It is true that there are other factors. It is true that the drought and the drop in the motor trade have had some effect on the position, but something has to be done to protect legitimate Australian industries.

One of the main reasons for Japan's competitive advantage goes back to the year 1949. One critic said, and said quite aptly, that one of the most certain ways to prosperity in the modern world is to be defeated in a world war. Today we find that Japan, Germany and Italy all have economies which have boomed since the end of World War II. The real reason is not that they were defeated but that they started the postwar period free of the illusion that there was some sort of mystical prestige attached to the exchange value of their currencies. The defeated nations, in effect, have said that by devaluing their currencies they would give themselves a very great competitive advantage in price competition on the world market. If you want the proof of that, Sir, you will find it in a comment that was made by Professor Tsuru, a Japanese economist, who gave the Dyason Lectures in Australia in 1964. He said quite openly that the main reason for the rapid recovery of Japan after the war was the fact that she had pegged her currency in 1949 at 360 yen to the dollar or 1,008 yen to the pound sterling. Japan has kept its exchange rate at that level and by doing so has gained terrific commercial leverage.

This undervaluation of the Japanese yen has had far reaching disruptive effects on the Australian internal economy. Japanese manufacturers, of course, have a triple advantage. They have low real wages. They have all the advantages of economies of scale. In addition, they have the advantage of the undervaluation of the yen. The governments of other Western countries, unlike the present Australian Government, have reserved the right, despite the provisions of the General Agreement on Tariffs and Trade, to impose discriminatory tariffs or quantitative restrictions on imports from Japan. Australia, of course, by its rigid adherence to the Agreement's rule against discrimination, has produced some very serious and curious consequences. Japan's luck is still holding, for the Agreement ensures that in Australia protective tariffs shall be so arranged as to enable only goods from countries with undervalued currencies to compete with local production. Dumping duties can seldom be applied to goods from Japan, the country of the undervalued yen. The remedy, of course, lies with the International Monetary Fund. One of its functions undoubtedly should have been to achieve the upward revaluation of undervalued national currencies.

It has been correctly said, Sir, that he who goes to sup with the devil needs a very long spoon. We in .Australia are starting to feel the real impact of the Japanese Trade Agreement. I know that the spokesmen of the Australian Country Party will come out like hornets in attack and will defend that Agreement. They do this because it suits their particular purposes. By the same token, we must consider the position that Australia may be in. We have just emerged from the economic tutelage of Britain. We are no longer merely a supplier of raw materials - a hewer of wood and a drawer of water. We are no longer a captive market for British manufactures. But let us not substitute Japan for Britain. Australian industry needs to be protected. We have not the economics of size. We have not the advantage of the technologies that the Japanese possess. Until we have gained in size and strength, we need the utmost protection.

The effects of Japanese competition can be devastating in my constituency. Notoriously, it is a district of low wages. The steel industry in general pays low wages because of the very high proportion of unskilled and semi-skilled labour that is employed. Because of the mushroom growth of the area, there has not been a corresponding growth of associated light industries that would at least enable the wives of steel workers to go out and earn some extra money to supplement the family budget. I do not advocate that they should have to do this, of course. The average man in the steel industry in my electorate today is in a pitiable condition. Overtime has been restricted. Indeed, it has been virtually cut out. As a consequence, steel workers are back on the completely inadequate earnings of the 40 hour week and retail business is suffering.

Most of the steel workers, because they came into an area of mushroom growth, were not able to obtain adequate housing and have had to commit themselves to mortgages beyond their financial competence to build their own homes. Many of them, lacking sufficient deposits, have had to put themselves in the hands of hire purchase companies in order to obtain second mortgages, and these have been subject to exorbitant interest rates. Anyone who wants to know the real position in my constituency should go to the office of the Public Solicitor in Wollongong and see there the stream of people whose wages have been garnisheed and whose furniture has been repossessed or who are in other ways being badgered by the usurers for the payment of money advanced on second mortgage at excessively high rates of interest. The prospect is appalling, and the worsening of the situation will intensify. If this Government and the Treasurer (Mr. McMahon) cannot ascertain the true cost of production, other forms of relief must be applied. I emphasise that strongly, Sir.

I now turn to another matter. Earlier today, I addressed to the Minister for Trade and Industry (Mr. McEwen) a question about the impact of restrictive franchises on Australian exports. He had some difficulty at the time in recalling the terms of a letter that he wrote to me on 15th July of last year. For the information of honorable members, I shall quote them. It stated -

You will recall that I undertook to have a further look at the question you addressed to me in the House on 11th May last concerning export franchise restrictions imposed by overseas firms on their Australian subsidiaries and associates.

As I said at the time, the Department of Trade and Industry has commenced collecting and analysing a great deal of information relating to Australian firms with overseas links.

I have delayed writing to you until the position regarding the study had become clearer. The job is turning out to be somewhat bigger and more complex than originally thought and it will be some months before the Department will be in a position to release worthwhile information. I have asked the Department to forward such information to you as soon as it is available.

The question that I asked today was part of a pattern. I compliment the Minister and his Department on the excellent survey of overseas investment in Australian manufacturing industry which has just been made and the results of which have just been published. But it does not complete the picture, for it does not deal with overseas investment in private property, in primary production or in commerce. More than that, it does not adopt the eminently sensible suggestion of the Committee of Economic Inquiry, or Vernon Committee, that there be kept a register of overseas investment. The coping stone of the edifice, which is needed to complete the picture, if I may change my metaphor, Sir, obviously is an honest and genuine attempt to assess the impact on Australia's export trade of restrictive franchises. The Vernon Committee in a preliminary comment stated that the need for additional exports and the difficulties in the way of an expansion of rural exports placed the export burden more heavily than before on Australian manufacturing industry. The Committee added -

Under these conditions, any impediments placed in the way of Australian manufacturing exports are bound to aggravate an already difficult position.

The Committee went on to state that the Department of Trade and Industry had collected further information on this subject from some 700 companies on a confidential basis in 1961-62. Those 700 companies between them had entered into 1,100 agreements relating to the export of their products. Rather more than half of the franchise limitations were written into licensing agreements and the great bulk of these restrictions were imposed by foreign companies in the United States of America. The restrictions took various forms such as the restriction of areas of export and even of the volume of exports and in certain instances production was restricted to outmoded models of particular products.

Sir, howin the name of the Almighty is it possible for Australia with economic hobbles of that description ever to enter seriously into the competitive export trade? It is the function of this Government, and its bounden duty in the national interest, to investigate this matter and to provide these figures; otherwise it is a matter of economic absurdity to try to tell the Australian people that our export potential is a good one. There is sufficient manipulation already in the export price for iron ore on which this Government is relying so heavily. The Japanese are prepared to sell iron ore to themselves at cost to reduce Australia's foreign exchange revenue and also to swindle this Government out of its legitimate income tax. Proper action should be taken in the matter.







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