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Tuesday, 12 May 1970

Mr Kevin Cairns (LILLEY, QUEENSLAND) - The honourable member for Lang (Mr Stewart) has given us an interesting treatise upon the Gladstone power station agreement and as part of his treatise he has developed the philosphy of the Australian Labor Party concerning development. A little later I shall deal with some of the propositions he put concerning the revolving development fund and the support of that fund. I shall have something to say concerning the Labor Party's attitude to interest rates. The honourable member read lengthy quotations from some economic journals concerning development, which quotations I suggest he did not quite understand. If he read again the quotations which he gave he would come to the conclusion that they do not mean quite what he would like them to mean. 1 suggest that if somebody helps him with a speech in the future, he should make sure that that person goes to the authorities which would be most helpful. As the honourable member for Lang now sits on the front bench opposite, that may be a significant line for him to follow in future.

The Gladstone Power Station Agreement Bill is concerned with the giant power station to be erected in the vicinity of Gladstone and for which the Commonwealth has pledged up to nearly 50% of the finance by way of loans. It has pledged 80/155ths of the finance, which is near enough to 50%. This money has been provided under certain conditions. We ought to direct our minds to these conditions a little later. Before doing so all of us must appreciate, above all, that this power station will become part of the economic complex in Australia. It will become part of the developmental and industrial complex of Australia. I suggest that we ought to ask these questions: Firstly, what are the economic principles involved which enable this project to proceed? Secondly, what is the aim of this project? Thirdly, will this project accomplish the aims which we seek?

I suggest that these 3 questions are appropriate to this debate. Of all the power stations developed in this country in recent years this one is concerned rather preeminently with 2 of the vital supports of the Australian economy. They are the development of the balance of trade in our favour and the maintenance of a high rate of appropriate capital inflow in Australia's favour. 1 would like to direct attention to these 2 aspects. As we know from looking at the most recent balance of payment statistics, in recent quarters the balance of trade has been in Australia's favour. In September last it was $56m in our favour; in December it was $77m in our favour; for the March quarter it was in our favour to the extent of SI 64m. But we know that over an entire series of quarters in previous years the balance of trade has not always been in our favour. Therefore any project designed to enable exports to occur, which would not otherwise have been possible, is beneficial to the country. Therefore this power station, more than any other power station which has received Commonwealth support in recent years, is going to benefit Australia.

Everybody is delighted about this but we must go a little further. We see from the balance of payments statistics that Australia has run into some difficulties with capital inflow. Over those same quarters capital inflow has decreased very markedly. People must appreciate that the present level of capital inflow is not adequate. This applies particularly to members of the Opposition who have sought always to place strictures upon capital inflow. What do we do about this? What relationship have these factors to the power station being developed in the Gladstone region? They have a great deal of relationship. The development of a power station in that region will act as an attraction to overseas capital and this will bring about a capital inflow which would not have occurred otherwise. If this power station is to generate power at a cost of between .3c and 4c per unit this can come about only with the involvement of a high load factor. Demand for power and the high load factor arise only as a result of a high rate of overseas capital investment in industries such as the alkali industry and the aluminium industry. Such industries will make it possible to achieve that load factor.

This is where we come to the basic difference between the philosophy of the Opposition and that of the Government. Without this high rate of capital inflow it would not be possible to establish this power station.

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