Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 2 October 1974
Page: 1608


Senator GEORGES (Queensland) -I rise to enter the debate on the Budget. Tonight I wish to take the opportunity which the debate on the Budget presents to speak on several matters which are of concern to me. But before I do so I indicate to the Senate the reason why I support the Budget strongly and why it did not follow the traditional approach to control inflation. I was one of several persons who believed that at this time we ought not take a big stick to the economy. I was one who did not believe that the economy should be thrashed to the point where many people, many groups of people and many companies would suffer. I believed- I expressed myself once before on this matter in the Senatethat there needed to be a new understanding of inflation and a new understanding of the method to control inflation. I believed that it was highly undesirable to use the methods that had been used in the past, to attack the economy with draconic measures which would result in suffering not only for those who were guilty of exploitation and manipulation but also for those who were innocent of anything other than the desire to work hard and to apply themselves diligently.

I am not one who supports the time honoured methods, which the Department of the Treasury has presented in the past, of a shake out in the economy, a total restriction on credit and all sorts of measures which would make it difficult for people to operate. Of course this would mean the collapse and destruction of many institutions, financial and otherwise. The end result of that sort of policy was suffering for many people at a very low level who were not in the position to anticipate the consequences of such a policy. It involved not only the individual worker but also the subcontractor and the small businessman who were not in a position to have foreknowledge of what was to come and who were being used, perhaps, by those in higher places. So the people's small capital and effort were being used by the great manipulators within our economy so that when the crash came those at the top were able to use the various devices to escape their obligations, to retire within the limitations of their companies and to survive the consequences of their act. But those down below had to pay the piper. They had to suffer unpaid pledges and losses of payment for contracts entered into. So for those reasons I oppose the traditional methods and support the method which is used in the present Budget, to ease into the situation and to take those softer methods which will enable us to adjust to and face the attack on inflation.

The consequences of inflation have been imposed upon us for several reasons. Inflation has a base in the actions of those who operate externally and- this cannot be denied- it has been caused by the monetary policies of concerns which are so large now that they spread across many State and national boundaries. The monetary policies which have become common since the last war have developed apace. They have accelerated lately and, to a certain extent, they have been the cause of the inflation which we face. Admittedly, some of the things which we ourselves- the previous Government and this Government- have done to the economy have added to inflation. But I believe the basic cause of inflation- I think I am supported in this- is external. The shake out which is occurring at the present time because of the credit restrictions which have been imposd is severe enough. It would have been even more severe if we had used other methods. It is severe because certain financial institutions have failed. The tragedy of it- there needs to be caution here- is that this time it is the hire purchase companies which are suffering the consequences of financial mismanagement.

In 1968, 1969 and 1970 it was the share market which suffered. What I am afraid of and what I caution is that the next group of financial institutions to suffer will be the housing societies. Today I saw that in Victoria the housing societies sought and gained an extra 2 per cent in the rate of interest. The housing societies- like the hire purchase companies in the past- are engaging in practices which to me are not viable, which appear to be actuarily unsound and which, in a short period, will place them in financial trouble. As I see it, the housing societies have come into the market and have become pacesetters for increased interest rates to the detriment of the whole community, even though the increased interest rates strike first at home buyers. But the housing societies, by competing on the open market with increased interest rates, have forced other financial institutions to enter into that area of competition. What I consider ought to be debated is whether this competition in higher interest rates ought to be permitted. There ought to be some limitation on the right to advertise, to compete and to promote higher interest rates.


Senator Baume - But it started with the bond rate.


Senator GEORGES - It could have started with the bond rate but here there is an imbalance. There is dangerous competition between the banking institutions, which have what I think are called the lender of last resort facilities, and the housing societies which, at the present time, have not. The housing societies for so long have remained outside the control of the Reserve Bank of Australia, as have the hire purchase institutions. But what horrifies me is the ability of housing societies to enter into competition and to advertise lavishly. I am not speaking of one, two or three housing societies but a multiplicity of them. They can enter into the advertising area and compete one against the other by offering a higher interest rate. If the interest rate is justified it ought not be allowed as a means of competition in the way that it is at the present time. Let us look at some of the smaller housing societies which are insecure and whose insecurity could lead to the insecurity of the larger housing societies. They have been inviting deposits at high interest rates. Their future depends on the continuing flow of deposits so that if they are in difficulty with the level of deposits they seek a higher interest rate in order to attract deposits. It is unhealthy and it is dangerous.

But what happens to the deposits? The deposits are no longer being used for the purpose for which the housing societies were created. The deposits which the housing societies are receiving at present are not flowing to the home borrower, because he can no longer afford the terms which the housing societies are demanding. It is difficult for a person on an income of less than $200 a week to obtain a loan from building societies. At present the building societies are having difficulty in obtaining sufficient borrowers to use up the deposits which they are gaining by competing through higher interest rates. Where is the money going? It is going into short term deposits. At present they are able to gain advantage of the high interest rates which banks and other institutions are providing for short term deposits, but this is coming to an end.

The high interest rates that the banking institutions and finance corporations have been able to offer to the housing societies are starting to fall. I think it is necessary for the Parliament to consider an inquiry into the soundness of the policies which are now being followed by the various building societies. To me they appear so actuarially unsound that even what I am saying now weakens their position. I remember that the Treasurer (Mr Crean) stated clearly in a short speech that the housing societies are actuarialy unsound because they borrow short on a daily recall basis and lend long. What happened after he made that statement? A week later he had to endeavour to recover from that statement because there was a run on housing society deposits. That demonstrates the need for us to look at the basic causes of inflation, that we should accept the principles of the Budget which are that the social reforms which society needs shall not be in any way limited. However, at the same time we should not deny the fact that inflation is running at an undesirably high level.

Do not let us have any politics about this problem. I have here a booklet that somehow was left in my drawer after a debate about 18 months ago. It is titled: 'Speaker's Notes- The Australian Labor Party- Federal Elections 9 December 1961 '. In support of its arguments it contains some statistics taken from the Quarterly Summary of Australian Statistics December 1960 setting out the inflation rate from 1950 onwards. In 1950 when the Menzies Government came into power the inflation rate was 10.2 per cent. In 195 1 the inflation rate was 20.7 per cent. Let us not get into party political arguments about the extent of inflation. Let neither side deny that inflation exists. It does exist, and at a higher rate than is desirable but it has also done so in the past. It reached 20.7 per cent in 1951 when the Liberal Party was in its second year in office.

I will use the flexibility I am permitted in the debate on the Budget to move to another matter so that I will not have to speak tonight after the motion is moved to adjourn the Senate. Generally speaking we use the adjournment debate to raise certain matters but honourable senators will accept that over the past year I have been, shall we say, rather restrained. I have not imposed upon senators by causing them to stay beyond the hour that the Parliament normally adjourns.


Senator Webster - It has been very good of you, and we appreciate it.


Senator GEORGES -Before you say how good I am you should listen to what I have to say. Honourable senators will recall that about 12 months ago I became involved in a disputation concerning the Department of Aboriginal Affairs.


Senator Webster - It was about turtle farming.


Senator GEORGES - It was. Before I proceed to that point I want to make my position clear. Large sums of money are collected from the citizens of this country. As I have said before, some people work exceedingly hard, some work beyond the normal 40 hours a week, some find that their wives have to work, some find that they have to engage in private enterprise in order to make ends meet. The higher is their accumulated income for the year the higher is the taxation that they pay. It is necessary for the Parliament to see that the moneys raised by taxation from the people are fully accounted for and are not in any way wasted or dissipated. I do not think anyone will disagree with that proposition. For that reason I believe that the most important committee that we have in Parliament is the Public Accounts Committee which supervises public expenditure and investigates conditions or revelations which the Auditor-General makes known from time to time.

The Public Accounts Committee has a responsibility before that, and so also do the Estimates committees, for the investigation of the expenditure of public moneys. About 12 months ago I disclosed a breakdown in the accountability of moneys expended by the Department of Aboriginal Affairs in an area supervised and controlled by a company called Applied Ecology Pty Ltd. The statements that I made at that time were subsequently supported by the AuditorGeneral. In order to support the criticism that I made I accepted a position on the board of Applied Ecology. I accepted that I should not criticise without accepting the responsibility to correct the malpractices that I believed were occurring. At that time I made certain criticisms which should have been accepted as valid, coming from a member of Parliament, but that did not happen. What did occur was that an attempt was made to discredit not only the material that I presented for examination but also to discredit me personally. I was then subjected to a continuing attack to have me removed from the board of Applied Ecology.


Senator Webster - From where did those attacks come?


Senator GEORGES - I was subjected to continuing attempts to have me removed as chairman of the board of Applied Ecology. To the credit of my Party those attempts were resisted and I was allowed to remain a director of Applied Ecology. What did we find when we began to investigate the operations of Applied Ecology? We discovered that not only was money being wasted but there was also no way in which accountability could be made either by Parliament or by any other group. When I joined the board of Applied Ecology Mr Gordon Bryant, the previous Minister for Aboriginal Affairs, also appointed to the board Mr Jim Neill, a qualified and leading accountant in Canberra, and Mr Ray Thorburn, a member of the House of Representatives. Honourable senators will be fascinated to learn that at the time we joined the board there was not even an assets register to show some sort of control over the assets that had been purchased. There was absolutely no way in which we could account for substantial expenditures. It took us months to go back through dockets to establish just what had been purchased, where it was located and who was in control of it. It took us months to set up an accounting system which could be audited, supervised and scrutinised at any time by a member of Parliament or the public, and which could show what was being expended and where the expenditure was going. In spite of all these efforts there was a continual attempt to remove me from the chairmanship and membership of the Board of Applied Ecology.

Last week or the week before- the days go quickly- we had the annual general meeting of Applied Ecology. I had accepted reality and decided to resign as Chairman of Applied Ecology because of continual friction with the Department of Aboriginal Affairs concerning the program and the direction the program should take. I accepted that this continuing friction would not assist the economic position of 130 Torres Strait Islanders and Aboriginals. If I remained as Chairman, and in continual conflict with the Department over the direction which the program should take, these people would suffer. I had some discussions with one of the new directors, Mr Les Smart, a very highly qualified accountant from Victoria, who had been appointed to the Board by the Minister for Aboriginal Affairs (Senator Cavanagh). Mr Smart was part of the team appointed by the former Special Minister of State, now the Minister for Foreign Affairs (Senator Willesee), to investigate the turtle project. I discussed the matter with Mr Smart and 1 agreed that I should move from the position of Chairman to the position of Executive Director and so remove the cause of friction, but it was agreed that I would be able to carry out a commitment to the Torres Strait Islanders and the Aboriginal people. Apparently this did not satisfy the head of the Department who I believe carried out a continuing campaign against me. In fact the head of the Department canvassed the newly appointed directors to have me removed as Chairman. I was prepared to put up with this. But I was not prepared to put up with a letter which I received on 20 September 1974, which I would like to quote. This letter, signed by the Minister for Aboriginal Affairs, was a clear revelation to the Board and me that the head of the Department, whom I hold responsible for the contents of this letter, had no concept of what we were doing, what was needed or the social injustices which had been imposed on certain Aboriginal and Torres Strait Island communities. But the head of the Department was determined still to have his own way.


Senator Webster - Why do you blame the head, not the Minister?

Senator McLaren- Mr President,I raise a point of order. I ask for your ruling on whether Senator Webster, who is the Chairman of Committees, is in order in continually interjecting when he is not in his right place in the Senate.







Suggest corrections