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Monday, 20 May 1957

Sir EARLE PAGE (Cowper) .- I am always interested in listening to the Acting Leader of the Opposition (Mr. Calwell) speak on these financial matters, because he is always a very interesting clinical case. He always seems to me to suffer from what is known in the medical profession as partial amnesia; that is to say, he forgets all the things that anybody else has done and remembers only the things that his own party has done. During the last eight years this Government has increased by some £50,000,000 a year the amount paid to improve the health of the community. I remember that a non-Labour government, in the 1920's, was the first government to raise the pensioners' allow ance to £1 - which was the first time that the ratio of the pension or allowance to the basic wage had been more favorable than when the pension was introduced. I remember that the property qualification which I imposed in 1923 remained unchanged until 1945 - a period of some 22 years, although Labour governments had been in office for quite a considerable portion of that time. I remember, as well, that the present Government has made available approximately £1,500,000 for the provision of homes for the aged - something which is very highly appreciated. So one sees how much the honorable member forgets. I do not wish to comment on the other remarks that the honorable member made because I wish to suggest something that may possibly give us an opportunity to get those amenities that the Acting Leader of the Labour party spoke of. He painted a gloomy picture and said that we could not do this or that because we wanted more people and more money.

I wish to deal with one aspect of our financial system which I think needs altering very much and I am glad to see that the economic survey that has been issued by the Government deals with it. The survey criticizes the financing of our public works from revenue. That policy means, in effect, that this generation not only had to carry the whole weight of the war while it was being waged, but also has to carry the burden of interest and sinking fund charges that the war has involved. Apparently it is being asked, as well, by all governments, to carry, for 40 or 50 years, out of taxation, the cost of buildings and amenities that the governments are planning to provide for the people. That seems to me to be something like piling Pelion on Ossa. It is making the burden too hard to carry, and the time has come to deal with this matter.

The economic survey raises the question fairly acutely, and I shall quote exactly what it says. Haying said that the present system must be subject to criticism, the survey states -

It is not easy to contemplate the possibility that measures of that kind - which, I may say, have been put into operation since the end of the war by all the governments that have been in existence since then - may have to be continued in the future. A remedy must be sought.

That is a blank statement, " a remedy must be sought " -

The situation would have been sounder, as well as happier, had the money all come by way of loans from community savings ... the policy has been self-defeating in that the higher levels of taxation it has made necessary have reduced savings and also reduced output by discouraging effort and enterprise.

This Supply Bill, which has now been brought down, is characteristic of those which have been brought down over the last thirteen or fourteen years. The idea seems to be to borrow some moneys and to raise the rest through taxation. I suggest that it is time to examine this question so that the budget may contain measures based on the advice given in the economic survey. I suggest that the right way to approach this problem is that which I suggested last year. We should try to see if we can handle the great production enterprises of this country by employing overseas capital, using a charter or a franchise for 50 or 60 years, during which time the money would be found and the men coming out here would find work. The money necessary to complete the work would be certain to be available from the very start, and we should be really able to do the job.

I ask honorable members to consider the operations of the Post Office alone, and what has been wrong with the way it has been run for many years? The only time it was on a sound working basis was during the regime of the Bruce-Page Government, when I made £25,000,000 available for capital works for a five-year programme. Now it is operating on allocations that are made from year to year. The same is true of our State undertakings. Although provision is made in their annual budgets, the money is not there all through the year to spend, and it is not always possible to know with certainty what part should be done or how to get the best men for the jobs. Therefore the States do not get results that they should get.

Mr Ward - The States do not know what they are going to get.

Sir EARLE PAGE - That may be. Before this system came in, the same thing happened to the States. There was this business of budgeting year by year. Way back in 1929 we induced the Premiers Conference to agree to the general principle of using long-term franchises or charters that I suggest to-day, and which I hope will be incorporated in the next budget. This would enable us to deal with this matter of annual budgets and to reduce the taxation that is being levied at present for capital works. On this point of reducing taxation, the economic survey contained another statement which I wish to read. It is the last reference I shall make to this document. It said -

This problem of financing expansion-

We all desire expansion. I am 100 per cent, in agreement with the statement of the Acting Leader of the Opposition about getting more people and more development in Australia. I am satisfied that if we do not get more people into this empty continent, we will lose it. Therefore, we should take steps to ensure that we get expansion. The statement says -

This problem of financing expansion, in both public and private sectors, is unquestionably the core of the whole problem of growth. The level of output, upon which the rate of growth in all its aspects depends, must be governed largely by the adequacy or otherwise of our capital facilities and equipment. We shall, however, defeat our own efforts to provide that equipment unless we can find means and methods of paying for it which, on the one hand, avoid inflation and, on the other hand, do not subtract from potential savings and do not discourage effort and enterprise.

That is the advice given to us by the economic survey which has just been produced by the Government. I commend to the Government a study of those two sections which I have quoted before the budget is brought down, because I am satisfied that something has to be done to deal with this question. I should like, for a minute or two, to enumerate the advantages that will come from having some means whereby we can handle these undertakings in a workmanlike way, such as the way in which we have to handle our lives. We send our children to school with the idea that they will be there for four, five, six or seven years - not one year. We do not dream of budgeting for them from year to year, as governments do, but we look at their education as a whole. We must handle this matter in the proper way. Later on I shall tell honorable members about the machinery that I think is necessary.

The first advantage is to enlarge the Australian capital structure. If the population is increased by 24 per cent, in the next ten years - as has happened in the last ten years - our economy as a whole must expand on the same scale. Electricity and water services must expand faster. As has been said already, on the electricity side Australia is lagging hopelessly behind other countries. We have nothing like the number of electrical men, as we may call them, to put behind our working men as are available in other countries. These must be made available to industry if we want to increase competitive production. Australian consumption of electricity per head is a little over 1,000 units a year, compared with 3,500 units in the United States of America, 4,500 in Canada, 6,000 in Scandinavia and about 4,000 in Great Britain. We have to make up that lag for a start. When that has been done, we shall have to get going as fast as we can to make certain that, as our population increases, our development in the fields of electricity and water increases also.

The whole history of development reveals that electricity supply lends itself to the charter or franchise arrangement. One must envisage the finished job, not just the first or second year's work. One must take into account the fact that output and consumption will probably grow by 20 per cent, or 30 per cent, every year. Such an arrangement helps our trade balance because, in effect, we are importing capital. It helps to remove the necessity for the curtailment of imports, and the protection of Australian industry is then a matter which this Parliament, through the Tariff Board, can deal with on its merits.

Thirdly, capital would come in on a long-term loan basis. If it is a 50-year franchise, the money remains for the whole of that time, and the debt is paid off year by year. Certainly, the whole of the investment capital cannot be suddenly withdrawn. Stability of that kind is needed in Australia so that we can rid ourselves of constant import fluctuations. As our exports consist largely of primary produce there are, because of seasonal conditions, great fluctuations in export income. A bad drought, or floods, gravely affect that income and we then have not the means to buy indispensable imports. A steady inflow of capital helps to remove or mitigate such a position.

Again, overseas franchise capital is much more readily obtained than is capital sought by way of Government loan or bonds. The figures reveal that in the last five years Government loans from overseas sources have totalled £91,000,000, but identifiable private capital amounting to £248,000,000 has been attracted and, in addition, profits amounting to £140,000,000, some derived from that capital, have been ploughed back into the Australian economy. Those figures show that four times as much private capital comes in for non-Government as compared with Government purposes. The inflow of foreign capital is accompanied by men sent here to look after the investment. We gain invisible capital - skilled men, technicians, men with " know-how ". They, in turn, look around at the country near their own particular project and see there further opportunities for development. In this way, enormous progress is made and further capital brought into Australia.

Above all, the work must be undertaken as a whole, and not on a basis of yearly progress. Housing could quite possibly be dealt with in this way. Only last week the Carpenters Union of America offered 500,000 dollars to the Carpenters Union of Victoria for this purpose. They said, "We will lend you this money for houses. All we ask is that the Government should make certain that 25,000 dollars comes back to us each year for 30 years. We are willing to leave this money in your country with your houses ". Three or four years ago there was a similar opportunity to build 3,000 houses here in Canberra. They would have been paid for by the rents gathered over a period of 25 or 30 years. It would not have involved any Government investment.

Mr Ward - Why were not those houses built?

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