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Tuesday, 9 May 1961

Mr DEPUTY SPEAKER - Order! The honorable member should not interject.

Mr Uren - The honorable member knows that there was more to the fund than that.

Mr DEPUTY SPEAKER -Order! The honorable member for Reid should maintain order. If he continues to interject, I shall be forced to name him.

Mr KILLEN - Mr. Chifley,who was at the time Prime Minister and Treasurer, in his second-reading speech on the International Monetary Agreements Bill 1947, said -

Like ourselves, the United Kingdom Government is pursuing a full employment policy, and, as a further and final safeguard, the United Kingdom Government sought and obtained from the fund a ruling that " steps necessary to protect a member country from chronic or persistent unemployment arising from pressure upon its balance of payments are among the measures necessary to correct a fundamental disequilibrium ".

Mr. Chifleywent on to say later

Further, in return for the exchange undertakings given, a member is assured of assistance from the fund in time of need . . .

I thick that that language is perfectly expilicit. So, if there is any surrender of national sovereignty involved in the recent transaction wilh the International Monetary Fund, should not the charge be levelled al the Labour Government that it laid the basis for this in 1947? The significant thing that one notices on reading the debate on the International Monetary Agreements Bill 1947 is how few Labour members spoke. There seemed to be a touch of shyness about them. I have never known such strange inarticulateness. But one of the more loquacious members in this Parliament who was then a member of this House - the present honorable member for Grayndler (Mr. Daly) - had something to say about the bill. His words of wisdom, as he would modestly describe them, were - r cannot see that Australia can lose anything by becoming a member of the International Monetary Fund, but I can see that we may lose a great deal if we do not link up with it.

How does the honorable member for Yarra like these words? It was the ratification of the Bretton Woods Agreement in 1947 that has enabled this Government to draw on the International Monetary Fund. And not only this Government has drawn o~ the fund. Previous governments, also, have drawn on the fund. The Labour Government led by Mr. Chifley drew on it. On 20th October, 1949, announcing that borrowing in a statement made to this House, Mr. Chifley said -

Various possibilities were considered, but the Government finally decided that, in all the circumstances, the most appropriate course would be to purchase from the International. Monetary Fund the dollars required to meet a proportion of our current commitments.

He went on later to say -

The position will be kept under close review by the Government and. the question of further drawings will be considered as necessary.

If the charge made by the honorable member for Yarra and by the Leader of the Opposition that this Government is abandoning its sovereignty to the International Monetary Fund is valid, so was there an abandonment of sovereignty in 1947 when the Labour Government ratified the Bretton Woods Agreement, and so was there an abandonment of sovereignty in 1949 when the Labour Government drew on the fund.

The honorable member for Yarra has gone out of his way this evening in a most incautious fashion to chastise the Minister for Labour and National Service (Mr. McMahon) and to belittle the Minister's observations. The Minister, with his great respect for technical accuracy, described the transaction with the International Monetary Fund not as a loan but as a purchase. The honorable member for Yarra said, " Oh, no, this is a loan ". Well, let him mark the words of one who at one time led the Labour Party and presided over' a Labour government. I refer again to Mr. Chifley, who said that a drawing from the fund is not a loan in the ordinary sense of the term. He went on to describe the mechanism of the fund. This is, I suppose, history in a sense; but it is important history because the relevance of the arguments used by the Leader of the Opposition and those who speak for him must be assessed against the background of the past. There has always been something of a " thing " in the minds of Labour members of the Parliament regarding loans. It is significant, for example, to take one's mind back to the dollar loan that the Government secured in 1952. Listen to the words of wisdom of that greying, elderly member of this House, the honorable member for East Sydney (Mr. Ward), regarding, the loan. He said -

The Government has set. out to destroy Australian secondary industry and it is proposing to bring into this country by means of overseas commitments a large quantity of equipment.

That was said by the honorable member for. East Sydney on 19th September, 1952.

On the same day that bold centurion, the honorable member for Parkes (Mr Haylen), had this to say -

I do not think that any sane--

I repeat the word " sane " -

Australian considers that there is any grave danger in borrowing dollars at this particular time.

Was he by implication accusing the honorable member for East Sydney of being unbalanced or, worse still, insane? Not only did the honorable member for Parkes say that the honorable member for East Sydney was wrong, but he also said that he could not see that any sane Australian would consider that there was any grave danger in borrowing dollars at that time. Although on occasions, no doubt, I have said some harsh or moderately harsh things about the honorable member for East Sydney, I have never said that he was insane.

It is a great pity that the Treasurer, in his statement to this House on Thursday last, proceeded from the assumption, first, that he was dealing with intelligent, rational individuals in the Opposition in this Parliament, and secondly, that he was dealing with a community tolerably well informed regarding the mechanics of the International Monetary Fund. Unhappily, on both counts the Treasurer's assumption was wrong. To judge from the arguments that have been used by the Opposition this evening it was a display of the utmost graciousness on the Treasurer's part to even consider that the Opposition was rational and intelligent. Members of the Opposition have displayed neither rationality nor intelligence this evening. Judging from some of the remarks that have been made outside this House regarding the transaction under debate, the degree of knowledge concerning the International Monetary Fund is practically nil.

What the honorable member for Yarra did this evening was to take hold of the Treasurer's statement and the memorandum, and the various letters that have passed between the Secretary to the Treasury, Sir Roland Wilson, and Mr. Jacobson of the International Monetary Fund and, as has been typical of many people in this House, consider them in utter isolation. He did not bother to pause to consider them with a relevance to the International Monetary Fund. With the utmost respect to all the critics of this transaction, I submit, Mr. Deputy Speaker, that it is completely futile to try to understand the transaction unless you take into account the articles of the International Monetary Fund agreement. To take a portion of a policy memorandum and twist and distort it is a gross and, to my mind, an unforgivable form of intellectual dishonesty.

What is the effect of the agreement? As I say. for better or worse this agreement was ratified under a Labour government. Article 1 of the articles of agreement of the International Monetary Fund sets out the purposes of the fund, and no person could conscientiously come to the conclusion that the purposes of the fund postulate some sinister policy either for the present or the future. Indeed, paragraph (v) or article 1 states that one of the purposes of the fund is -

To give confidence to members by making the Fund's resources available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.

Again for the benefit of the honorable member for Yarra, who hasleft the chamber, I notice, let me say that paragraph (ii) states another purpose of the fund as -

To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.

Is there anything wrong with those two purposes? I should doubt very much whether there was any individual in this Parliament who would describe the two purposes I have recited as wrong.

Now we come to this transaction - the purchase of the equivalent of £78,000,000 Australian from the International Monetary Fund. The fund understandably wants something in the nature of a broad undertaking. We are not tied to that, we are not bound to it, we are not handcuffed to it. We are not committed to it in such a way that, as the honorable member for Yarra claimed this evening, this country's sovereignty is brought into jeopardy or, worse still, abandoned. That is drivel of the worst order. Understandably, the International Monetary Fund wants some indication that it is dealing with rational, logical and responsible individuals. What is the fact? This country has purchased from the International Monetary Fund the equivalent of £78,000,000 Australian in foreign currency. What if a government, having done this, embarks on a mischievous and irresponsible financial policy? What sort of security has the International Monetary Fund in those circumstances? What about the other members of the fund? These are not the international financiers to which the honorable member for Yarra so sneeringly referred. He talked nonsense. The honorable member is as wide away from the mark as his leader is in his prophecies. As I interpret the policy statement, the fund wants a broad indication of policy to be followed during the substantial period that the transaction is in force. The honorable member for Yarra started to read one of the critical paragraphs in the Treasury memorandum, and with typical courtesy I said to him, " Look here, read the rest of it ". I doubt very much whether he would have read the rest of it had he not been prodded into doing so. Let us look at the critical words in this paragraph. The statement about firm control over the liquidity position of the banks - that is, up to the end of June, 1962 - is completely governed by the words " consistent with the maintenance of financial stability ". When the honorable gentleman was confronted with those words, he tried to twist their meaning. He is like the Marxists. He has a dialect of his own, and sees things in a different way from those who normally give to the words " consistent with the maintenance of financial stability " an ordinary, sensible and usual interpretation. If the honorable member for Yarra is right in the interpretation he has given to them, and if this country did follow the policy he suggested, it would mean that we would be breaching Article 1 of the International Monetary Fund agreement, because Article 1, as I recited it to the House, states in clear, explicit language that it is to be the aim of every member of the fund to maintain high levels of employment.

Before I leave the International Monetary Fund statement, I should like to say that, for my part, I see absolutely nothing in the policy memorandum nor in any of the documents that could even vaguely bring one to the conclusion reached by the Leader of the Opposition. One is entitled to doubt that the Leader of the Opposition has read the International Monetary Fund agreement because no person could read the agreement and come to the stupid conclusion to which he came in the House this evening.

With regard to imports, the honorable member for Yarra made an incredible statement which he based on the authority of Professor Karmel. He said that we were faced with the alternatives of unemployment and import restrictions. This is a completely false dichotomy. If the honorable member is to base his argument on the authority of one profesor of economics I am entitled to base a rebuttal on the authority of one professor of economics. Professor Cochrane of the University of Melbourne - the honorable member's own professor 1 believe - takes a diametrically opposite view to that of the honorable member and of Professor Karmel whose authority the honorable member invoked this evening with the same love and attention as he invokes his own authority. lt is nonsense of the first order to say that we are faced either with import restrictions or with unemployment. Let us assume that we had a normal season in the sense that prices for our commodities overseas were at about the 1953 level. If we had our present volume of expotts we would not have an unfavourable balance of payments in those circumstances. Under those conditions, could any honorable member opposite justify import restrictions on the basis that we had a favourable balance of payments? And if we had a favourable balance of payments, am I to understand that what the honorable member for Yarra said would still apply - that we would have either unemployment or import restrictions?

The great tragedy of import restrictions is that thousands of people came to accept them as a form of tariff protection. This is quite wrong. Only a short time ago the former leader of the Chamber of Manufactures in Queensland accosted me on the matter of import licensing and said that we should bring it back. I said, "You know, quite a number of members of your chamber have come to regard import licensing as a form of tariff protection." Without batting an eyelid, he said to me, " It is the best form of tariff protection we have ever had." There is something fundamentally dishonest in this approach.

Many thousands of people in industry have cutivated this idea, nurtured it and continued to feed it. The entire Australian community has come to regard import licensing as quite respectable, as though it should flow on like the brook and nevestop. Can any honorable member say with a clear conscience that import licensing never produced any inequities, never gave rise to any administrative injustice? Can any member say that he was not aware of any racket - the buying and selling of import licences and the adding of the extra cost to the price of the goods? Clearly in the face of rational, readily available argument stands the argument of the honorable member for Yarra. It is a grievously false argument which amounts to utter humbug.

What the honorable gentleman and his leader failed to say to-night was that the basic economic problem of this country stems from development. Unless we are prepared to continue to develop this country, then, in the plainest physical sense, we will not be allowed to hold this country. We are up against a world background of massive unrest, of great distress, great poverty and hunger. Do not imagine that we can hold this country unless we are prepared to develop it. Because the Government, for the last twelve years, has been possessed with the idea of building an Australia for the future, we have run into these difficulties. They are not insoluble. They can be solved, but they will never be solved by miserable, little minds like that of the Leader of the Opposition, who continually cries poor and who would make a star turn at any gathering of morticians. This country has no room for pessimism, but it has a great call for the warming, stimulating element of optimism.

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