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Tuesday, 14 September 1971
Page: 1259


Mr Lionel Bowen (KINGSFORD-SMITH, NEW SOUTH WALES) (Smith) - This Budget is a rather savage one from all aspects as far as the people are concerned. A number of speeches have been made in an endeavour to indicate that the Government is operating on a sound basis, that there is no problem with the economy and that this is a credit to the Government which has been in power for the past 22 years. The Prime Minister (Mr McMahon) has endeavoured to say that this is a good record, that it is something of which the Government is proud. Yet if we look at what might be termed his own financial statement - the Treasury Information Bulletin - as recently as July last we find a comparison between the present period and the previous 12 months. We there see in relation to unemployment that there has been virtually an increase. We now have the startling figures that as at 31st August last there were 61,848 unemployed as against 47,000 unemployed a year earlier. In that same statistical review it can be seen that bank credit liquidity has virtually tightened and that the number of houses completed has decreased. On page 36 of the Bulletin it says:

The numbers of houses and flats completed in the June quarter of 1971 was 34,078, 7.3 per cent less than in the corresponding quarter of 1970.

And so it continues right through the financial statement issued as recently as July last showing that there has been a general rundown of the economy, a general tightening of the economy, that bank loans are fewer, that fewer houses have been completed and that unemployment is greater. What are the remedies? The Prime Minister says that things will improve. It may be that the number of unemployed will go to 100,000 but that will not be too bad because it is seasonal and we will be able to cope with the situation. In one of the Prime Minister's speeches he referred to the bad decision made by the Commonwealth Conciliation and Arbitration Commission in December last when it granted to the wage earner - the lowest unit in the economy as far as the Treasury is concerned - a 6 per cent increase. When wc look at the profit margins of companies over the past 12 months we find that many have been greater than 6 per cent. Why is it that the Prime Minister and the Treasury, with all the statistics at their disposal, have never once referred to the decision made by the Commonwealth Conciliation and Arbitration Commission? Why is it that they merely castigate the Commission and, in fact, insult it? Honourable members might recall that when the Prime Minister was reminded that he had suggested that members of the Commission had no integrity he denied it. But it stands in black and white in Hansard of 18th February 1971. The Prime Minister then said:

So the Commission must have its integrity and its authority re-established. This is a problem that must be looked at by the Government.

He said that in February 1971. Recently we had the present Treasurer (Mr Snedden) saying there is an outrageous inflationary trend occurring because of the very heavy demand made for wages which was unjustifiable, was causing tremendous pressure, which should not be encouraged but should be discouraged. The Prime Minister on the 7th of this month said that the real problem in the economy virtually is that the 6 per cent given by the Arbitration Commission in December last should not have been given. Let us place on record what the members of the Commission said when they granted the 6 per cent wage increase in December last. They said:

As to the form of the increase we are conscious of the desirability of doing what we can for the lower paid workers but we are also aware of the problems which might arise . . .

They then went on to say that in dealing with the lower paid worker they wanted to give him justice. They said:

Making the best value judgment we can we consider an increase of 6 per cent to be economically sustainable and industrially just. This percentage will be applied to the award wages and salaries of all adults, male and female, though not to the minimum rate for adult males which we deal with separately. ... we emphasise that the above percentage is a percentage increase of award wages and not of wages actually paid.

They then went on to say: . . we are prepared again to give the minimum wage earner special treatment and to increase the minimum wage by {4.00 per week. For instance, the figure in the Metal Trades Award for Sydney will be $47 JIO per week . . .

We know full well that no family can live on that and the Commission, I would say. had every right to say that the 6 per cent increase was economically sustainable and industrially just. We should bear in mind the fact that the percentage was related only to the award and not to over-award payments. As I have endeavoured to illustrate by way of questions, municipal employees in my electorate did nol get 6 per cent at all; they got about 1 .5 per cent. Why? The simple reason is that they are presently getting over-award payments. Those overaward payments were taken into consideration and deducted from the 6 per cent increase. Some really got only a 50c or Si increase. How is it then that when the Treasury is unable to cope with a situation it blames the situation on the Arbitration Commission? Why is it that the Prime Minister said that members of the Commission lacked integrity? Honourable members should bear in mind that the Commonwealth gave evidence before the Commission and submitted its figures. Surely its case would have been strong enough to support what has been said by the Prime Minister. In the final analysis of the situation members of the Commission said:

Figures before us indicate that every increase of 1 per cent in award wages will increase the national wages bill by approximately $120m per annum. On that basis the 6 per cent we have decided upon will add about $720m to that bill.

A fair statement. Those figures were derived from the evidence submitted to the Commission. The Commonwealth itself was a party to the case and must surely be bound by the decision. But the Government castigated the members of the Commission in February and has continued to do so up to the present time for the outrageous decision they made and has said that they should not have granted this 6 per cent increase because of the dreadful result it has had on the economy. The real issue is that we are not grappling with the situation, whether it be cost-push or demand inflation. As honourable members who represent electorates like my own know, the people have a real struggle to live. If we look at the cost of living as it affects them we will see tremendous increases but this Government is not really interested in them. If we look at the Consumer Price Index at a time before the Commission made its decision we will see a very heavy increase in the housing group, particularly in rental accommodation. We will see that the greatest increase, particularly in Sydney, is in the housing index. That cannot be denied. Rents are skyrocketing and people have to have accommodation and on that basis we can say that a good portion of the average wage goes on rents. I think it was at the time of the Chifley Government that some investigation was made as to what was a fair percentage for a worker to pay in rent and it was said that rent should certainly not exceed one-quarter of his income. In many cases in my electorate people are paying almost half their income in rent. The Government professes to be interested in the pensioners but when it increased pensions it did not say that there would be a means test which would result in many pensioners being denied the increase. These are the people existing in circumstances of real poverty. In my electorate alone there would be 300 people receiving food from the Meals on Wheels organisation. Somebody has to go around and give them a meal. Somebody has to contribute voluntarily by preparing the meal. Admittedly the Government makes some token contribution, but it is nowhere near the actual cost. If the people concerned said tomorrow that they could not afford the time to provide these meals, what would happen to those 300 people? That number could be multiplied 3 or 4 times because there are many people who do not wish to avail themselves of that facility and to signal the situation of poverty in which they find themselves.

Let me refer to the affluence side of the situation. I do not particularly want to attack what I might term an Australian company, but I will mention it. I refer to Broken Hill Pty Co. Ltd which controls steel and other products. When that company increased the price of steel by 7 per cent all the Treasurer could do was wring his hands and say: "This is dreadful. I am very worried about it, but obviously they had to do it in the course of their cost structure.' Admittedly BHP is not making as much profit out of steel as it is out of oil. Some figures furnished to me indicate that the net profit for the BHP group for the year ended May 1971 totalled $69.2m, of which $22m was contributed by Hematite Petroleum Pty Ltd which covers the oil and gas operations. The rate of profit on issued capital and reserves for Hematite was 38.6 per cent compared with 6.7 per cent for the BHP group.

Let us look at what has been termed in this debate the very small profit given to the shareholders. I have had a look at the statistics relating to BHP shareholding. Anyone who was fortunate enough to be a shareholder in that company, say, in 1960 and who had 1,000 shares would have gained a further 1,360 shares if he had taken up the bonus issues made since then.


Mr Calder - What is the matter with that7


Mr Lionel Bowen (KINGSFORD-SMITH, NEW SOUTH WALES) - There is nothing the matter with that at all, but what right has the worker to those shares? None. He is being penalised for a percentage. The ordinary dividend on BHP shares, calculated as a percentage of net profit, after tax, was 55. 8 per cent last year. I take this opportunity to say to the honourable member for the Northern Territory (Mr Calder) who is interjecting - he is a wealthy man, interested only in profit and not interested in the worker - that 1,360 shares have been virtually given to a present shareholder on the basis that he was a shareholder in 1960. As the result of the industry of the. workers those 1,360 shares are worth $19,040 today. That is not a bad result from the workers in that company.

Let us look at what happened the other day when we were talking about the control of companies by foreign investors. The Prime Minister said that it is thought to be a good thing for us to have a capital inflow. Of course, he is the Prime Minister who favours high interest rates and says that having a high interest rate is the way to control an economy. He said that this will dampen down enthusiasm. But what it means is that the capital inflow accelerates. Last year, admittedly, there was a direct investment of $42 lm, which we would think was good. But the actual amount paid out on that and other previous investments was $543m and there was an undistributed profit of $286m. So we are slowly getting into a desperate situation.

The figures show that the undistributed profit plus an amount of money already remitted is $829m, and all we received as new money was $421m. Let us take the last 3 years, to avoid isolating one year The amount of new money in that period was $ 1,143m. The amount of income paid in that period, and the undistributed portion, totalled $2,222m. In other words, it was about double the previous amount. Al this accelerating rate it will not be long before we remit overseas twice as much money as comes in. This is supposed to be a good thing from the point of view of capital inflow. I think it goes without saying - in fact many speeches have been made about it here - that from the Australian point of view the important thing in protecting Australian industry is to have an Australian shareholding. It is very important to encourage the worker to have a share in the business. If he is not able to buy the shares, why cannot the Australian Industries Development Corporation and other subscribe to them for him? Why can he not have a share in the dividends?

Another interesting matter that has been highlighted as being a way to handle inflation is the investment allowance. I do not necessarily support it, but it was encouraged by the Treasurer as being the panacea to cure all ills that occurred in the 1961 recession. In 1962 the investment allowance was introduced by the present Prime Minister as being one way to overcome unemployment. That allowance has been done away with now. lt is interesting to look at what might be termed the credibility of the Treasurer or the Prime Minister in relation to the gloomy predictions that are always made to see whether they can be related to any prior announcement.

In June 1968 the present Prime Minister, who was then the Treasurer, painted a gloomy picture. He said that we have to look at the danger signals that are emerging and to live within our means. He went on to say:

In respect of plant and equipment - and on this, of course, depends the improvement in our productivity - we did design the Budget so as not to have any increased burden placed upon the manufacturing industries. ... Up until the early part of the financial year investment in plant and equipment was not increasing al the rate we wanted it to increase but in the December and March quarters there has been a change and we think it is now running at the rate of 3 per cent higher than the corresponding period of last year. 1 do not think any of us would want those figures to turn down.

Now he has done away with the allowance, which is an incredible result when one thinks of the Treasurer of 1968 talking about the investment allowance and saying that it should be encouraged. This is typical of the 2 attitudes of mind that he has adopted. In February 1965 the former Prime Minister, the right honourable member for Higgins (Mr Gorton), when he was a senator and the Minister for Works - we did not realise he held that portfolio until recently - was asked in a debate whether Australian industry and mining were in danger of foreign domination. On 17th February 1965 he said that it was not. He said:

There is no real problem. If you have a look at the overall content of Australian industry you will find only a percentage of it is controlled by foreign investment.

The real issue is that, when one looks at the percentage of this control one finds that foreign interests own a lot of the major factors. The right honourable member said these things although he admitted that he did not know much about it. At the seminar at which he spoke he was attacked by no less a personage than Mr J. G. Wilson, who is the Manager of Australian Paper Manufacturers Ltd. I am delighted to know that that firm is iri my electorate, but I do not think that its management would be voting for the Labor Party. Mr Wilson said: 1 am dismayed with what Senator Gorton bas said. i will show you in this seminar that the percentage is enormous - oil exploration and production 85 per cent, telecommunications 83 per cent, bauxite 75 per cent, iron ore except BHP 75 per cent, pharmaceutical 97 per cent.

Those figures relate to foreign control of our industries. Mr Wilson made these very valid points. He almost deserves a knighthood for it. He said that one of the disadvantages of foreign control is that the interests of the foreign investors do not necessarily coincide with Australia's interests. If you have got a worldwide organisation interested in maximising profits this can be harmful to Australia, he said. Some foreign countries impose on their Australian subsidiaries restrictions which are detrimental to Australia - for example, restriction on imports or exports. Australian mineral resources controlled by foreign companies are not necessarily exploited in the best interests of Australia - for example, iron ore, bauxite and mineral sands. Few companies in Australia under foreign control undertake research work because they prefer to do it overseas. These results are adverse to Australia, Mr Wilson said. He then went on to make a number of other points.

The situation is that in 196S the then Senator Gorton said that there was nothing really wrong. More recently he said that there is a lot wrong now and we have to do something about it. He gave the example of Nabarlek. The uranium result at Nabarlek is not as good as we thought. Nobody is able to find out how that happened. Remember that the taxpayer through this Budget subscribes $8.6m as a subsidy for petroleum exploration. The Bureau of Mineral Resources, in other words, virtually pinpoints where these assets are. The Nabarlek deposit allegedly was found by a nurse who lives in Darwin. It is known that the reserves and the value are there. It is a matter of someone being directed to the point where they are. In the main the person who goes there is the foreign investor. He is the one who gets all the gain and we stand here and applaud him for allegedly helping us.

Our Bureau of Mineral Resources should be taking an active part in developing these resources, not just finding them and saying that they are there. Look at the tragedy of Woodside Oil. A gentleman came along to see us recently and said: 'In Rankin No. 1 there is a tremendous deposit of natural gas. We need money to exploit it. We asked Mobil Oil whether they would give us the money and they said they would give us Si 5m but we could not take that money up because we have a partner, Burmah Oil, which is virtually an offsider of BP, another big interest in the petroleum industry. They have said that we cannot take that money up because they want a 50.3 per cent control of the company'. This is what will happen. He says that if this company gets control it will never really develop this deposit against its own interest and in competition with its oil wells elsewhere. Is this not a tragedy for the nation? From the point of view of a Budget why is it that we are not promoting Australia's natural wealth and promoting at least the worker. The waiting list for housing commission homes is expanding. There are not enough homes. This is a real tragedy, a real indictment. From that point of view this Government no longer deserves the confidence of the people.







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