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Tuesday, 27 April 1965

Senator McKENNA - Undoubtedly something could have been done. We urged that something be done. If time permits, at a later stage of this debate I will say what we think should be done. Some action should have been taken long before. At the moment I merely instance one point. The obvious and the most happy way to obtain the result that we want in our balance of payments is to increase exports, not only of our primary industries but also of our secondary industries.

I think I am correct in saying that it took this Government 11 years - until 1961, and we remember all the economic measures of that time - to provide real incentives to Australian manufacturers to enter the export trade. There were taxation concessions, long term credits, insurance provisions and that type of thing. The Government waited too long to take that action. The obvious and the best way of overcoming our difficulties is to increase exports. I say to the honorable senator who interjected that that is still the best and the safest way. It is much preferable to borrowing or to having foreign capital, come in to take away a permanent slice of Australian earnings. Borrowing or perhaps permitting the inflow of private capital may be unavoidable when you are facing some form of international bankruptcy if you do not balance -your accounts.

Senator Wright - Has the honorable senator at hand a statement of the present taxation arrangements for dividends repatriated to America?

Senator McKENNA - No, I have not the taxation agreements before me. However, I point out to the honorable senator that one of the measures which the United Kingdom Government contemplates is the re-negotiation of all double taxation agreements to which it is a party. This would have the effect of making things easy for it to tax its own corporations as it desires. We will be faced with that position in the very near future.

Senator Wright - I wondered whether we had restricted ourselves in the taxability of American capital and earnings here.

Senator McKENNA - That is an aspect that I would not care to talk about at the moment because I have not the facts in my mind, but I note that the American President does not appear to have in mind at present any re-writing of double taxation agreements.

So that it will not be thought that we of the Labour Party had a narrow or distorted view of the need for capital inflow I should like to read three extracts from the speech I made on 9th March 1961. They will put our view in perspective. The first is -

I recognize the need for the development of industrial activity in this country. There is a certain virtue in that, but one cannot shut one's eyes to the great dangers, such as the danger that we shall lose control of our own industries.

The second extract ifr-

This capital inflow is a complete gamble. The Government has gambled successfully on it year after year, but the year or the day that it dries up we shall be bankrupt. We shall be bankrupt if we fail to attract about £200 million a year.

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