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Thursday, 26 November 1936

Senator Sir GEORGE PEARCE (Western Australia) (Minister for External Affairs) [4.54]. - in reply - An interesting and somewhat lengthy debate has taken place upon the second reading of this bill, and, because of the exigencies of time and the importance of proceeding with the consideration of this measure in committee, I hope that honorable senators will not expect me to deal, with all points which have been raised.

The Leader of the Opposition (Senator Collings) referred to the measures that are being taken to discover oil in Papua and New Guinea. An attempt is being made to make it appear that the Government, by pandering to outside capitalistic interests, has caused exclusion of bona fide Australians who desire to prospect for oil in the territories. As briefly as possible, I shall tell to honorable senators the story of the search for oil in Papua and New Guinea. In the first place Papua and New Guinea have always been open to any bona fide prospector. But they did not go there. A previous Commonwealth Government then invited the Anglo-Persian Oil Company - the British Government being a shareholder in the company, and the

Commonwealth being a partner with the company in Commonwealth Oil Refineries Limited - to undertake in the territories boring operations for oil. On that enterprise a sum of £300,000 was expended; oil was discovered but not in commercial quantities. Ordinances were passed to encourage people to undertake the search for oil, and all these poor . bona fide Australians who were anxious to find oil - who, we were told, were waiting with their swags on their back ready to proceed with the work, but were only blocked by the nefarious companies at the last minute - had years in which to make at attempt to do so. All the concern of Senator Collings for the prospector was unnecessary. But the Government is anxious to find oil in New Guinea, Papua or Australia itself. Representations were made to the Government - not by American interests, I assure Senator Collings, but by a genuine Australian company. If the honorable senator has any doubts on that score I invite him to consult the share register in order to obtain the list of shareholders in the company.

Senator Collings - I have obtained them. I quoted them in this chamber.

Senator Sir GEORGEPEARCE.Oil Search Limited is a genuine Australian company. This is the nefarious company which suggested to the Government that an amendment of the ordinance was necessary in order to encourage bona fide companies to search for oil. The company contended that if its geologists, when wandering around the territories, found some indications of oil, they would at once be surrounded by a number of .parasitic companies, who would take up areas in the vicinity and wait while the company itself carried on the prospecting operations. Oil Search Limited, therefore, asked to be protected from such a possibility, by being given permits to cover the preliminary prospecting. Legislation for that purpose was passed; Oil Search Limited is the company which requested it. I assure the Leader of the Opposition and the honorable member for Fremantle (Mr. Curtin) in the House of Representatives that that is how the legislation originated. The legislation having come into force, Oil Search Limited and Oriomo Oil

Limited, another Australian company, and two other concerns made application for permits. The Government passed a law for both territories that no company could obtain a permit unless two-thirds of its shareholders were British. Two companies were formed - one I believe is allied to the Shell group and the other to the Vacuum group - but I emphasize that their shareholders are two-thirds British. These companies exclude no investor. They have taken up areas, of which nobody was in possession; in fact, nobody had tried to obtain possession of them. These two companies as well as Oil Search Limited and Oriomo Oil Limited have been granted permits to search for a period of twelve months. In the case of the companies promoted by the Shell and Vacuum groups, there is an obligation to spend £15,000 in the first six months and a similar sum in the second half of the year in the search for oil. The permit can be cancelled by the Administrator of New Guinea or the Lieutenant-Governor of Papua, as the case may be, if he has reason to believe that the companies concerned are not genuinely carrying out their work of prospecting. These enterprises hold permits for twelve months under those conditions. That is the monopoly - a good word to be used on the soap box - which we are told by Senator Collings has been granted to these companies. Similar permits have been granted to Oil Search Limited and Oriomo Oil Limited except that the amount of money which they are obliged to spend is considerably less than the obligation imposed on the other companies. The reason for this is that Oil Search Limited has already spent a considerable sum of mon /. After the companies have carried oat their preliminary prospecting and decided where they will settle down for drilling purposes, they will be compelled to relinquish the greater part of the area for which they hold permits. That is the substance of the arrangement which has been made with these so-called great monopolies.

Senator Hardycriticized the "War Pensions Entitlement Tribunal. The honorable senator's indictment against this body was that over a period so many cases had been heard and so many appeals had been rejected. Presumably, the hon orable senator does not contend that because a man makes an appeal to the tribunal it must necessarily be granted. The very fact that the applicant has made an appeal shows that his case should be inquired into by some authority. Senator Hardy appeared to believe, and the conclusion he drew from the large number of rejections, was that one of the reasons for the rejections was the presence of two lawyers on the Entitlement Tribunal. In his judgment, the tribunal should not include two lawyers. The inference was that if two lawyers had not sat on the tribunal the rejections would have been fewer. It is interesting to note that in the period to which the honorable senator alluded only one lawyer sat on the Entitlement Tribunal. At the present time there are two lawyers on this tribunal.

Senator Hardy - Does the right honorable senator approve the appointment of two lawyers to the tribunal?

Senator Sir GEORGE PEARCE - I suppose that I must have approved of it, because I am a member of the Cabinet which made the appointments.

Senator Hardy - The honorable senator was a member of the Cabinet which put one lawyer on the War Pensions Assessment Tribunal and another on the War Pensions Entitlement Tribunal. Later the second man was transferred to the Entitlement Tribunal, thus giving it a majority of legal members.

Senator Sir GEORGE PEARCE - I do not propose to enter into these details ; but obviously the number of rejections was not caused by the presence of two lawyers on the tribunal. I understand that consideration is being given to the appointment of another temporary tribunal because of the congestion of appeals at the present time. I shall bring Senator Hardy's remarks in that connexion under the notice of the Minister for Repatriation (Mr. Hughes).

Senator Brand, Senator DuncanHughes, Senator AllanMacDonald, Senator Sampson and others delivered very interesting speeches upon the subject of defence. I should like to say something under that heading if I were Minister for Defence; but I am only the spokesman for that gentleman. Som« of the remarks of honorable senators upon this subject have been brought under his notice and he has requested me to make a statement in reply.

Senator ALLAN MACDONALD (WESTERN AUSTRALIA) - The right honorable senator had experience as Minister for Defence.

Senator Sir GEORGE PEARCE - I could give a most interesting address on that aspect. One senator quoted a statement by Colonel Mullen, of Tasmania, that universal military training had reduced larrikinism. Perhaps it would be relevant to the subject if I were to say that after universal military training had been in operation for two years, the Commonwealth Government of the day - I remind Senator Collings that it was a Labour Government - requested the governments of the States to obtain reports from the superintendents of every police district throughout Australia as to the effect of universal military training on the behaviour of young men generally. I emphasize that such reports uniformly stated that the introduction of universal military training had had a beneficial effect on the morals and behaviour of the young men. No superintendent was more outspoken in this regard, or made a more definite report on the subject, than the superintendent of the Newcastle district, New South Wales. He stated that before the introduction of universal military training larrikinism had been so bad in some districts of Newcastle that a decent woman could rarely walk down the streets without hearing filthy language from the gangs of young men hanging about the streets. He proceeded to say that larrikinism has entirely disappeared from the streets and that the improved conduct of the youth of the district exceeded all expectations.

The Minister for Defence has supplied the following statement in reply to the observations that have been made during this debate: -

The present peace strength of the militia of 35,000 is regarded as the minimum number required to enable the existing army organization to be maintained, so that commanders, staffs, leaders, and a nucleus of specialists may bo trained. Should a definite threat of aggression against this country ever become a serious probability, it would bc necessary, immediately, to increase the peace strength of the militia to a figure that would bc a very much higher proportion of the mobilization requirements.

Trained leaders and men alone do not produce an efficient army. War materials, equipment and ammunition in large quantities are essential, and the production of these material requirements is a more lengthy and costly proceeding than the training of personnel. It is, therefore, necessary to strike a balance between the requirements of trained personnel and war material, having in view the financial and international situation. The Government, in pursuing its present policy, considers that it is making the best solution of the problem.

The Government and the Military Board are taking measures that it is anticipated will considerably increase the effective length of service of individual militiamen.

The suggestion that the physical development of the youths of this country, should be undertaken, is very commendable, but this would entail considerable expenditure in training staff and facilities, and unless it were carried out under some form of universal and compulsory training, would probably be very limited in its scope. Again, it becomes a question of priority of expenditure between personnel and war material.

In view of the present total amount allocated for rifle club reserves, it is considered that the allowance of ls. Od. per efficient for members of militia rifle clubs is adequate for the purpose. Should it be possible to allocate extra money for rifle club purposes in the future, consideration will be given to the increase of efficiency allowances, in common with other items of expenditure under the vote which have similarly been curtailed.

With the £18,000 provided by the Government to increase the scale of free ammunition, an additional 50 rounds of Mark VII. has been provided for each efficient member of rifle clubs. This brings the total free issues up to 150 rounds per efficient member from the 1st July, 1936. No part of the f 18,000 is being absorbed by free issues of Mark VI. ammunition - in fact, the free issue of Mark VI. was reduced from 100 rounds to 50 rounds per efficient member when the extra 50 rounds of Mark VII. was authorized. The Mark VI. ammunition on issue to clubs is not of pre-war make. It was actually manufactured in 1917. Results of periodical tests carried out by qualified officers of the department show that this ammunition is still fully serviceable, i.e., it is very safe to fire, and accurate. Only fully serviceable ammunition is issued to clubs.

Honorable senators will pardon me if I do not pursue the subject of defence further at this juncture, as I desire to refer to a number of other matters.

Senator Paynespoke of the position of the apple industry. His remarks will be placed before the Minister for Commerce (Dr. Earle Page).

It was suggested by Senator Allan MacDonald that the " S " class destroyers should be retained for the training of naval reserves. Our destroyers of the " W " class are more modern than those of the " S " class, and when vessels become as obsolete as are the " S " class destroyers it is a costly business to keep them in commission. The repair bill mounts up as the age of a warship increases. The sloops that are to be built are intended to be used in times of peace for the training of naval reserves, for which purpose they are specially adapted. The old destroyers would not be useful for patrol purposes. They would be unsuitable for use in a tropical climate, apart from being costly to maintain.

I am entirely in sympathy with Senator Cooper, who spoke of the serious drought experienced in a portion of Queensland. A similar calamity has overtaken settlers in a large portion of Western Australia.

Senator Leckiedealt with trade with the Netherlands East Indies, and pointed out that a falling off had occurred in the quantity of Australian butter sold in the Dutch East Indies in proportion to Dutch butter. From figures I have obtained, it appears that Dutch butter may be displacing butter from Canada or the United .States of America.

Senator Leckie - No; it may be displacing Japanese or Danish butter.

Senator Sir GEORGE PEARCE - The following table shows the quantities and the value in Australian currency of butter exported from Australia to the Dutch East Indies since 1930-31: -

Obviously there has been no great displacement of Australian butter.

Senator J.V. MacDonald trotted out some of the old platform stuff about war profiteers. He said that those who subscribed to the war loans had done very well. I remind him, however, that the war profiteer did not have a particularly good time in Australia. A severe war profits tax was imposed during the Great War, and it operated after the war in respect of profits made during the war. It was one of the most severe taxes ever imposed in Australia.

I can speak from personal experience, as Minister for Defence, about the prices paid for uniforms and equipment supplied to the troops. Little profiteering could have occurred in that regard, as strong measures were taken to prevent it. I remind honorable senators of what was done at that time, because loose statements are sometimes accepted as the truth. The Commonwealth Government had a woollen factory of its own, and we knew the. prices at which flannels and khaki could be produced. We paid to private contractors prices based on the cost of production in our own factory. We also had a uniform factory, and we gave to those who made up the garments prices based on the cost at which these goods could be made in the Commonwealth clothing factory. No profiteering occurred in regard to uniforms, similar precautions were taken in connexion with the supplies of harness and other equipment used by the Australian Light-horse. The prices paid for these goods was based on the cost of production at the Commonwealth saddlery factory. I have accounted for the prices of a considerable proportion of the defence equipment.

It is said that capitalists in Australia made a good deal of profit by subscribing to the war loans. By referring to page 3.7 of the eighteenth report of the Commissioner of Taxation, honorable senators will find that the total number of income taxpayers in Australia in 1934-35 was 220,240. Under Commonwealth law, every person with a taxable income of over £250 pays tax. Is every such person a bloated capitalist? If so, there are 220,240 of them in the Commonwealth. The No. 14 Year-Booh states at page 696 that, during the war, £213,490,810 was subscribed to war loans by no fewer than 742,747 persons. Were they all bloated capitalists? There were three times as many of them as there were income taxpayers throughout. Australia. There must have been either half a million " bloated capitalists " who were dodging the federal income tax, or half a million more subscribers to the war loans than there were income taxpayers.

The population of Australia in 1918, at the close of the war, was about 5,000,000, of whom slightly over 2,000,000 were adults. As the subscribers to the war loans numbered about 750j'000, one in every three of the total adult population subscribed to those loans: Yet Senator J. V. MacDonald described them as bloated capitalists !

Senator J V MACDONALD (QUEENSLAND) - That is not what I said. A great deal of exploitation and profiteering occurred during the war, as the right honorable gentleman well knows.

Senator Sir GEORGE PEARCE - There is a practical difficulty in the way of supplying machine-guns to rifle clubs. A machine-gun is not an article that can be left lying about. When I was Minister for Defence there were times, as Senator Brand knows, when in certain districts we had to take the breach blocks out of machine-guns and put them in a safe place. It is necessary to have a permanent personnel to keep machine-guns under lock and key. That is why we cannot make a universal distribution of these weapons. In localities where the members of rifle clubs are within convenient distance of centres where these weapons are housed, it may be possible for them to be trained in their use.

I was disappointed to hear the criticism by Senator Marwick of the- administration of the office of the High Commissioner in London.

Senator Marwick - I referred to thecost of the office.

Senator Sir GEORGE PEARCE - I suggest that the honorable senator has lost sight of the fact that Australia has to play a nation's part in the international centres of the world, the greatest of which is London. I draw attention to the wonderful work which has been performed by Mr. Bruce and his staff at Australia House in connexion with the conversion of our overseas debt.

Senator Collings - He has not performed anything wonderful.

Senator Sir GEORGEPEARCE.Work of that kind cannot be done unless the High Commissioner is capable of carrying out the delicate negotiations that are necessary, and has competent officers under him, and adequate office accommodation for them. I remind Senator Marwick that the Commonwealth is responsible for the whole of the State debts in London, including floating debts, and ' that all transactions in connexion with them have to be carried out by the High Commissioner and the staff at Australia House. Moreover, Australia as a member of the League of Nations has entered into a number of . international commitments.

Senator Collings - But it has not done anything to give effect to the 40- hour week.

Senator Sir GEORGEPEARCE.The staff at Australia House must be able to supply Mr. Bruce with adequate data on the various matters which arise from time to time. Australia has a responsibility to the Mandates Commission in respect of New Guinea and other mandated territories, and must furnish a report on them to the commission each year. Adequate representation is necessary if Australia's case is to be properly presented by the High Commissioner when he attends to give an account of this country's stewardship. There are, in addition, the diplomatic and service connexions with the British Government. The purchase of the huge quantities of defence and postal material in Europe, and the correspondence in connexion with the many international treaties to which Australia is a party, cause a great deal of work, with all of which Australia House is actively associated. When we think of the manifold responsibilities that Australia has undertaken as a nation we cannot say that too much money is expended in the upkeep of Australia House, or that the allowance to the man who represents Australia in London, and has to maintain at the heart of the Empire a position commensurate with the dignity of the Commonwealth, is excessive.

Senator Marwick - I did not question the allowance to the High Commissioner.

Senator Sir GEORGE PEARCE - When Senator Marwick becomes more familiar with the work of the High Commissioner and his staff, he will', I think, modify the views that he has expressed here to-day.

I had hoped that there would be sufficient time for me to make a statement relating to my own Department of External Affairs, but I shall reserve it until the bill is in committee.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clause 1 agreed to.

Clauses 2 and 3 postponed.

Clause 4 agreed to.

First schedule agreed to.

Second schedule.

Proposed vote- The Parliament - £123,520 - agreed to.

Prime Minister's Department.

Proposed vote,£403,150.

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