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Wednesday, 20 May 1970

Mr JEFF BATE (Macarthur) - In answer to the last comment made by the honourable member for Melbourne Ports (Mr Crean) I ask him whether he has considered that the line built by the Hamersley organisation will be committed fully when the company finishes its development of its new mine and that it could not spare any of its rolling stock or any of its facilities for anybody else because of the enormous size of its operations. May I say that such operations by companies are possible only under a free enterprise government. I will develop this idea in a moment.

If the Party for which the honourable member speaks were in power no development would take place in Australia at all because of the fear of nationalisation of the means of production, distribution and exchange. It is no good for the Opposition to try to laugh these remarks off. These are the facts of life. The Australian Labor Party went out of office in 1949 because it began to nationalise the banks. Now, when this tremendous expansion and boom is occurring in Australia, the Labor Party wants to monkey around with those developments. The fact is that these things have taken place only because we have a free enterprise system.

In 1953, the then Prime Minister, Mr Menzies as he then was, said, as reported at page 121 of Hansard of 19th February 1953:

We are deeply committed, as a government, to the principle of fair competition in the banking system.

He also said:

We stand for fair competition. . . . 1 wish to address the whole of my remarks to 'fair competition'. Mr Menzies continued: . . between it . . .

He was referring to the Commonwealth Bank: . . and the other trading banks in the country. The light way to achieve that competition is, first, to give it a separate legal existence-

That is, the central banking part of the Commonwealth Bank: . . and, secondly, to make it subject to precisely the same rules as are those institutions which are competing with it for business.

He said further that his Government believed in:

.   . the continued operation of the Australian banking system in fair and open competition within the framework of the central bank policy. We believe that that policy and central bank authority are of great importance.

Mr Menziessaid that he believed in the administration of central banking policy with true, genuine competition between the banks. His words were: 'true, genuine competition between the banks'. This is the philosophy and the kind of system that brought the Liberal Party into power in 1949.

Again, when introducing the Banking Bill in 1953, which followed the Commonwealth Bank Bill 1953, Mr Menzies said:

As I have said in relation to the earlier Bill, the Government is pledged to preserve competition on a fair and equitable basis as an essential ingredient of the banking system in Australia.

In that same speech he said:

We believe that a strong competitive banking system is one of the pillars of the economic freedom of the individual, and we are resolved to remove any potential threat to that system which is at present inherent in the banking law. At the same time, we recognise the tremendously important part played by the central bank and the need of that bank of adequate powers to perform its task.

Now, the same thing was followed right through to 1957. The then Leader of the Country Party, Sir Arthur Fadden, when he was Treasurer, when speaking on the Reserve Bank Bill 1957 said:

The chief purpose of this Bill is to establish the central bank for the Australian monetary and banking system as an institution which will not be directly associated with the conduct of banking business in competition with the private banks.

He said further:

But we also believe that the private trading banks have a vital part to play in the Australian banking system and the Australian economy; and there can be no doubt either that the great majority of Australian people believe this too.

That system, which this Government introduced in 1953 and then confirmed with the Reserve Bank Bill and the establishment of the Reserve Bank in 1957, has been a kind of economic freedom which has meant that Australia would prosper. We have seen tremendous prosperity in the last decade based on this system of free enterprise banking under the control of the Reserve Bank which is responsible for the flow of money in Australia. I believe that the Australian Industry Development Corporation is not meant to work with the Reserve Bank. It is meant to work outside the Reserve Bank. Although I find it difficult to believe that it is not a bank, if it is not a bank what will it do with these funds which it receives through this legislation? lt will have to bank those funds in some private bank. Immediately that happens it should become subject to the control of the Reserve Bank. 1 feel moved to speak in this way in opposition to this Bill. I cannot support this Bill. Some honourable members here may remember that in 1956 I was moved to rise in this place and ask for leave to bring in a Bill for an Act to amend the Commonwealth Banking Act 1945-1953 so as to provide for separate administration of the separate banking functions of the Commonwealth Bank of Australia. At that time, the Government parties held a Party meeting. The then Prime Minister, Mr Menzies, agreed following that move, which was made on 10th May 1956, to have a 3- day meeting on the question of the Reserve Bank in February 1957. Following this Party meeting, the Government introduced the Reserve Bank Bill. We now have the Reserve Bank of Australia operating in every State of Australia.

The Reserve Bank has been able to avoid severe inflation and severe recessions because it had a system of skimming off what were held to be funds which were too available at certain times, it skimmed those funds off and put them into statutory reserve deposits. The Bank of New South Wales, during the Second World War, when it believed that there was too much money and too much danger of inflation, voluntarily deposited its surplus funds with the Commonwealth Bank. This led to the system of statutory reserve deposits which 14 years later became enshrined in the conduct of the business of the Reserve Bank of Australia. This was done to prevent too much money being in circulation, to prevent over-employment and to prevent prices rising and affecting people not able to cope with high prices.

The Reserve Bank has been able to do this, lt has been able to achieve it by getting trust between the private trading banks and the Reserve Bank and by having the principle of fair competition enshrined in its charter. This principle was stated over and over again in the speeches I have quoted and is in our philosophy on banking. So, under this economic freedom and our free enterprise banking system, we have seen develop the Hamersley and Comalco undertakings and all of these other big mineral concerns. They have added to Australia's prosperity and to our export income. We have seen in operation this system of which I have given some of the philosophy and some of the kinds of principles which were stated by Mr Menzies, as he then was, and by the former Leader of the Country Party, Sir Arthur Fadden, when he was Treasurer. These have been successful. Certainly we are in a time of change. Certain attitudes of people are changing. We heard the Canadian Prime Minister yesterday giving effect to this kind of thinking. But there are certain principles which cannot be changed. One principle which cannot be changed is that you cannot allow too large an amount of money to come in which will raise prices against our export returns, raise prices against pensioners, and raise prices against people who are on fixed incomes. This cannot be allowed because it means economic torture, and hardship for people who ought not to have to put up with it.

So I believe that these principles which 1 have announced, and which 1 have repeated here tonight, cannot be changed. I believe that the moment we set up a corporation like this, which is held to be not subject to the ukase, to the orders, to the counsel of the Reserve Bank and which can go on its own, we interfere with the free enterprise banking system which has been so successful. I believe we cannot interfere with it without great danger. In what way is this Corporation different from the banks which have been operating and which have been successful? Incidentally, it is quite interesting to note that 20 years ago some of the Labor speakers - and I know of one who is not far away from here - said we should run a steam roller over the private banks and we should make them disgorge their money for the good of the people. That was the kind of demagogic talk we heard from certain people. The honourable member for Eden-Monaro (Mr Allan Fraser) may remember some of those to whom I refer. That kind of criticism, which of course is nonsense, has ceased. There is not the same criticism of the free enterprise banks because they have done a job for Australian development. The Labor Party spokesmen have not been attacking the free enterprise banks because I believe that the honourable member for Melbourne Ports (Mr Crean) and other honourable members have been able to understand the operations of this system. They have come to applaud the operations of the system. It is a good one and cannot be lightly changed without severe damage to the whole of the economy.

First of all, let us look at the capital of the Australian Resources Development Bank. Let us take it as a kind of comparison with this new Corporation which is said to bc not a bank. 1 do not quite understand why it is not a bank. I think there has been some confusion about this. When it gets funds from overseas where does it put them? Does it get a load of bullion and put it into its own coffers, or does it get a cheque from overseas and put it into a private bank? In that case it would immediately become subject to the operations of the Reserve Bank which has to control the flow of credit. The authorised capital of the Australia Resources Development Bank is $ 1 Om, . comprising 10,000 shares of $1,000 each. Paid up capital is

S3m. comprising 3,000 shares fully paid. The Bank has power to borrow or raise money. The Corporation has a capital of Si 00m which is taken from the taxpayers. The taxpayers will pay this whether they like it or not. They will pay $25m a year for 5 years. This money does not come from investors. It does not come from people who are interested in mining or commerce in Australia. It comes from the taxpayers. So immediately that happens there is unfair competition for capital because the taxpayers of Australia, if this becomes law - and I will not support it - will put in $25m.

Mr Les Johnson (HUGHES, NEW SOUTH WALES) - How will you vote on it?

Mr JEFF BATE - One of the important reasons why I would not support it is that the honourable member is Supporting it. He signed the pledge for the socialisation of the means of production, distribution and exchange. Honourable members opposite can see that by getting this part of the legislation into operation it is a start in carrying out their pledge. Some honourable members opposite feel a little guilty about not being able to carry out their pledge of socialisation of the means of production, distribution and exchange. But through this Bill - I heard honourable members on the other side say this today - and with a few little changes to it they can socialise banking. They can socialise banking with the taxpayers money and by plundering all of the people who tried to develop Australia and have risked their capital. There have been some very big risks taken and there are still some very big risks being taken. Does the Labor Party think by voting for this Bill it is carrying out part of its pledge to socialise the means of production, distribution and exchange? Socialisation of the means of exchange is one of three ways of socialising a country. Of course, this will please all kinds of friends. There is no need to nominate who they are. The honourable member who has interjected tells me he is a left winger, so he will be able to please the left wingers. No left wing country has been able to produce as Australia has under a free enterprise system.

Mr Sherry - What about Sweden?

Mr JEFF BATE - I am very glad to get a laugh from one of our new young members. No other country, Russia and China included, has been able to reach our standards of living. If honourable members have read the last Soviet statement which was made on 18th May they will have seen the terror that is occurring in the Kremlin because of the economic failure in Russia. There is no spur or competition to try because everybody has a job. The honourable member has the kind of laugh which we usually get from the chaps with the red ties in the Domain. When we say something about free enterprise we get this kind of approach. But could this man produce anything? Could he run a business? Could he work in a bank? Could he do anything that shows initiative or the strength of the new methods adopted in running concerns such as Hamersley and Comalco? We get the chap who says: 'Let us have the dictatorship of the proletariat'. We are reminded of the people who went to the big Russian show where there were 3 or 4 cars. They sa:d: 'Who do these belong to?' The reply was: 'They belong to the directors'. When they came to the Australian show there were 1.000 cars. They asked again: 'Who do they belong to?' The answer came: 'They belong to the workers'. So the workers run the cars here; the directors run the cars in Russia. That is the kind of thinking and the approach of the honourable gentleman opposite who has the tolerant laugh. It is typical of a certain class of people in relation to the running of the Labor Party.

So we gel the situation where this Australian Industry Development Corporalion is to make big industrial concerns in Australia go ahead. I do not know why anybody should think that we are not doing well in Australia. I think that the operations of the Hamersley company, of Mount Newman and of Mount Goldsworthy and the people who got on to the rich iron ore - Robe River is nol so rich - and the people who got the best deal they could with the Western Australian Government and the Commonwealth Government, have made a great contribution to Australia's prosperity and have saved us from what would have been a failure of our balance of payments. There is no doubt that these concerns have saved us from this situation. They have done so under a Liberal free enterprise government. They have done it under the free enterprise banking system with the spur of strong competition. But in the future where will the competition come from with this $100m in 5 years of taxpayers money? As far as I know interest will not be paid on this amount. The rules were that Qantas Airways Limited, Trans-Australia Airlines and other organisations had to make allowance for taxation. As far as I know this Corporation does not have to do so. it is able to lend 5 times the amount of its capital. That means it can lend S500m. 1 do not know from whom it gets the other $400m. Perhaps it puts $25m into a private trading bank and says: 'Give us $125m now'. If that is correct, what about the other people who want funds from the private trading bank? They will be closed off because the Reserve Bank will say: 'You can lend only so much'. The private trading banks have agreed to abide by what the Reserve Bank says.

So in that case this extra money will shut off borrowing by, say, the Hamersley company which may want to extend its operations, lt will not be able, to do so unless it can get the funds from overseas. Somebody has said: 'We will get money from the oil rich sheiks.' But these oil rich sheiks will not put money into Australia unless they have a guarantee of immediate expropriation. This Corporation would be a great thing to have their money in. If it started to lend it out to start some great business it would have to pay it back tomorrow. I do not see what it would get from them. We are told in some of these statements that the 12% interest overseas is lessened. I do not know what it comes down to. But if 12% were paid for overseas money which until recently prevented the Australian Development Resources Bank from borrowing, how would the Corporation start a show in Australia making a profit out of borrowing at 12%? lt would have to charge 15% because it would have to pay the bank clerks and the people in the Corporation. 1 do not see how that one would work. Perhaps honourable members who have been here a few weeks will turn out to be much more expert than I am on these matters.

There was on 20th May, or the day before, a meeting of the Victorian Employers Federation, the' Australian Bankers Association, the Victorian Chamber of Manufactures, the Council of Fire and Accident Underwriters of Australia, the

Metal Trades Industry Association, Victorian Branch, and the Melbourne Chamber of Commerce. I must say that after the last couple of years I am much more friendly to Victorians than I used to be and I respect Victorians. That meeting was held to discuss the Australian Industry Development Corporation Bill. Mr Allen, the President of the Melbourne Chamber of Commerce, said: . . it was the unanimous opinion of these groups that in its present form the Bill be immediately deferred to allow time for further detailed study of certain sections which required amendment.

We have just heard that the off-shore mineral rights legislation has been deferred for a while. Sweet reasonableness has prevailed. The people who are involved in this ought to have the chance to have another look at it. I think that the honourable member for Moore (Mr Maisey) is aware of this. I can see by the way he is nodding his head that he is fully in favour of deferring that legislation. I think that the proposal now before the House should be deferred until we know a little more about it. This is an incredibly confused and technical piece of interference with Australian free enterprise banks. Mr Allen said, according to a Press release:

.   . that the meeting was of the belief that unless this action was taken-

That is, the deferral - the role of private enterprise in Australia would be seriously weakened and he called upon the Government to recognise the responsible and earnest request of these private enterprise bodies.

Do they know nothing about these affairs? Are these earnest men who have suddenly awakened to the dangers in this proposal? The answer would be over on the other side of this chamber, because they are the men who have sworn to socialise the means of exchange and their enthusiastic reception of this legislation is almost the kiss of death, not only to this matter but to the future, to competitive strength and to the kind of energy that is generated by competition, business and the enormous thrust of the great mining companies. All that will begin to wither on the vine. I have not the slightest doubt that that is what is in the wind. None of this great boom that has taken place in Australia would have occurred if that alternative government were sitting on this side of the House because anybody who had any prospects of iron ore and the rest of it would know that that government would steal it from them by nationalisation of the means of distribution, production and exchange. Then we have the Associated Chambers of Commerce. Do these men know nothing about it? Mr Lambert, Deputy President of that organisation, in a Press release said:

Nothing that has been said by the proponents of the Australian Industry Development Corporation Bill has changed ACCA's view that the Corporation will duplicate existing facilities.

Let me say that the Minister who presented this Bill to the House has always earned my greatest respect and admiration. He is a very great Australian with a very great image but the minute that he or anybody else cuts across what 1 think is an immutable principle of the operation of free enterprise in any of its forms, I must claim the right to oppose it.

Mr Daly - As long as it will not defeat the Government.

Mr JEFF BATE - Well, of course, by some kind of a trick the Opposition might vote for something that it does not believe in just to get some kind of an upheaval on the Government side but it immediately dishonours the vote. I have seen this happen here plenty of times. The Opposition has voted for something in which it did not believe in order to get some low-down political advantage and-

Mr Daly - As long as you do not defeat the Government you are a rebel.

Mr JEFF BATE - You can laugh it off.

Mr Daly - You are a rebel if you do not defeat the Government.

Mr JEFF BATE - But you do not get away with that stuff when there are questions of principle involved, and your principles are to socialise the means of production, distribution and exchange, unless you are a liar, and I do not think you are. I think you mean to keep that pledge and you have said that you will vote for this and that means it is helping you to carry out your pledge, and therefore you are honest about it. Although the Minister for Trade and Industry (Mr McEwen), in his second reading speech, indicated that the Corporation must not seek a controlling interest in enterprise with which it becomes involved, the Bill states in clause 8 (3.) (c):

The Corporation shall endeavour, so far as practicable, to avoid becoming or remaining in a position where it is able to control or nv.mage the affairs of a company to which it provides assistance.

I can imagine the Labor Parly loving that bit, because this is the provision that Russia has. It sends out to country areas thousands of miles away directors to run some concern and they make a mess of it.

Mr Daly - I rise to a point of order. Mr Deputy Speaker, 1 draw your attention to the fact that the honourable member is inferring that this is dreadful Socialist legislation. I point out that it has been introduced by a Liberal Government.

Mr DEPUTY SPEAKER (Mr Maisey)Order!There is no point of order.

Mr JEFF BATE - Similarly, it is stated in the second reading speech that the Corporation must dispose of its equity holdings which are no longer necessary to its policy objectives. The Bill, on the other hand, in clause 8 (4) only says: the corporation shall endeavour to dispose of those shares.

I wonder how it will' feel if it has some beauties which are earning a lot of money and it can relieve the taxpayer of his $ 10Om lt might keep those shares but it 'shall endeavour to dispose of those shares'. It could offer them at $100, receive an offer of only $89 and then say: 'Well, we will not sell.' But it shall endeavour to dispose of them. The Associated Chambers of Commerce has stated:

ACCA considers that it should be mandatory that the Corporation dispose of shares at the earliest possible opportunity.

Clause 8 (6.) of the Bill is a magnificent provision. I am glad that the AttorneyGeneral (Mr Hughes) is present tonight because he ought to have a go at this one. I am quite sure that the Minister for Trade and Industry and the Attorney-General would not be a party to this. I wonder who wrote this one. Clause 8 sub-clause 6 states:

The exercise of any powers by the Corporation is not invalid, and shall not be called in question, by reason of any failure of the Corporation to comply with any of its obligations under this section.

Mr Daly - David Fairbairn.

Mr JEFF BATE - That is a beauty. In other words, what it says to the layman - and I am sure it does not say this to the Attorney-General, as we must get him out ot this - is that-

Mr Hughes - Do not worry. I do not feel as if I want it to look that way.

Mr JEFF BATE - I do not think you do and for that reason I wish you knew. That sub-clause means that the Corporation can do anything it likes and it cannot be called into question by reason of any failure to comply with any of its obligations under this section. This Bill introduces so many new principles and cuts across so many immutable and unchangeable ones that this is the kind of thing which, after being brought in, should be examined in the same way as we dealt with the proposal on the 3-mi)e limit. There is too much haste about this matter. We have had some kind of leak from a Cabinet meeting which was held some months ago and suddenly the Bill appeared. Anything which I have said about the Bill does not apply to the Minister for Trade and Industry. I still have the greatest admiration and respect for him. as most other people have. He is a very great Australian. He has been driven to do this by some lack of the Australian component. Perhaps it was the Robe River one which took so many years to get going because the Australian component was not available and because this area was not quite as rich as the Hamersley and Hamersley Range areas which are almost incredibly rich.

There is no need for Australia to sell all its metal or ore to one country. Other countries want Australian ore. There is a tremendous demand for it and we can sell it, but the people who started are now in the box seat and it will be much more difficult for others, and it will be difficult for this Corporation to work. I do not support the Bill.

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