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Wednesday, 15 September 1971
Page: 1332

Mr BEAZLEY (Fremantle) - Inflation is always deplored, but inflation always takes place. I would remind the Minister for the Interior (Mr Hunt), who has just resumed his seat, that when the present Government assumed office the basic wage was £5 18s a week, which is less than $12 a week. The standard wage now would be well over $50 a week. That is a reflection of the movement of prices. Since inflation is a condition of rising prices, the Government has been in its 22 years in office characterised by continuous inflation. Wage earners do not gain from inflation, nor do farmers. But there are people who gain from inflation. Holders of real estate gain from inflation, many businesses gain from inflation and, let us face it, governments gain from inflation. Inflation is popular with all governments, which is why it is taking place in all countries of the world. It is popular with governments because that is how they get out of debt. A person who lent £100 to the Chifley Government in 1945 lent it 25 weeks of the then basic wage. If he now got back $200 he would be getting back 4 weeks of the present basic wage. The Government is an enormous beneficiary from the process of inflation. That is fundamentally why inflation never stops.

An ordinary listener to the proceedings of this Parliament may be surprised to hear it said that the economy is actually nobody's political propaganda; but that is the position. The Government is not responsible for the collapse of wool prices nor is it responsible for the market position of primary industry in the world. However, honourable gentlemen opposite were not loath to claim the credit for the boom prices that we enjoyed some years ago and the prosperity that resulted, which was fortuitously due to the boom prices. Without any hesitation the Government took to itself to claim credit for that situation. Having trained so many of its supporters to think in that way. it should not be in any way surprised today if many of them now consider that the Government must also be responsible for the depressed condition of prices in the rural industry.

There is no doubt that the Minister was correct when he continually stressed the importance to Australia of rural industries. It is a fact that every $1,000 worth of public expenditure on supporting an industry produces about $2,500 worth of exports if it goes in the direction of rural industries - that is, by way of all the forms of subsidies, rail freights and what have you - and $400 worth of exports if it goes in the direction of secondary industries. In view of that comparison, I have no doubt about the importance of rural industries to Australia.

The Government has been claiming - perhaps a little more falteringly lately - to be responsible for full employment. It should be remembered that the Chifley Government had full employment without an inflow of capital. There are many countries in the world which would regard it as laughable to claim great virtue for maintaining a high level of employment when there is an inflow of foreign capital of one billion 380 million dollars. I am using the American billion, which is $ 1,000m - which represents more than $100 per head of population in Australia. The formula adopted is to say that that is a tribute to our virtuous and stable governments. I am willing to bet that the money will continue to flow into Western Australia, with the virtuous and stable Mr Tonkin in office, so long as there is the virtuous and stable iron ore, bauxite and nickel in the ground in that State.

The capital inflow is not coming into this country because people passionately admire the governments of this country, neither the Conservative Government here nor the the Labor governments in 2 of the States. Capita] goes where it can get the resources and where it expects to get a return. So let us be done with a lot of these claims about the virtue of the Government in quite fortuitous circumstances. That reminds me of a political campaign in the United States when someone said to the youth in reference to Senator Goldwater: Why can't you be like Senator Goldwater and inherit a department store?' Why do we not say to New Zealand: 'Why can't you be like clever Australia and have billions of tons of iron ore. nickel and bauxite in your soil?' Obviously that is something beyond the reach of any government. The basic things in the Australian economy have nothing to do with the policies of any government of course, they have nothing to do with the policies of any opposition, either. So let us try to discuss some of these things a little more objectively.

There are questions as to the handling of certain aspects of our industry. For instance, the Government speaks of farmers being affected by costs. Notice the terminology in which the word 'costs' is used. Somehow or other one can slide costs on to wages in that instance much easier than one could if one were to say that farmers are affected by prices. If one were to say that farmers are affected by prices the question of whether the Government can do anything about prices might arise. The Government denied for many years that it could. It has now attempted to do io in connection with a number of aspects - unfair trading practices, resale price maintenance and so on. They are costs and costs are prices, but the Government prefers to use the word costs' because it can blame wages. Compare the alacrity with which the Minister for the Interior spoke about wages as a factor for the farmer and the reluctance with which the Minister for Trade and Industry (Mr Anthony) spoke about freights as a factor in farmers' costs. When a shipping combine decided to hike the prices it charged for Australian exports the Minister for Trade and Industry wrung his hands, but he made it perfectly clear that the Government intends to do nothing about the matter. It does not intend to do anything with the national shipping line or anything else about an overseas combine which has gone into collusion.

I warn the Government that it may very well find that Japan will do in the field of minerals what it has now done to the wool industry. Japanese buyers have played a very significant part in the organisation of the downward movement in wool prices. That is their business. I merely note it. But the same thing could happen with bauxite. The governments of Australia are behaving as if they were completely foreign to one another. We have an enormous development of bauxite in Queensland under the auspices of the Government of Queensland, we have an enormous development of bauxite at Gove in the Northern Territory under the auspices of the Commonwealth Government and we are going to get enormous developments of bauxite in the Kimberleys and near Perth under the auspices of the Government of Western Australia. It is perfectly competent for Japan to enter into contracts with these various companies that have nothing to do with one another to take a couple of years' supply of bauxite or alumina and then afterwards to stand back and pick and choose between them and play them against one another to force the price of alumina down. I venture to predict that this is what will happen.

One sees a magnificent organisation at Gove which has $300m invested in it, or 1,500 Swiss Francs, largely from Alusuisse, a Swiss company. One sees there the longest conveyor belt in the world, 16 miles long, but along that conveyor belt goes only bauxite. If the price of alumina falls this organisation will not be able to send nickel or manganese along that conveyor belt because it is geared to the production of one thing. It is more tightly bound than is the wool grower and, therefore, is more vulnerable to a policy that plays off the Australian States against one another or plays off Brazil against Australia than is the wool grower to any sort of organisation of the wool market between buyers. The one disadvantage of rural industry, of course, is that the terms of trade always tend to turn against it. This is what has created the Common Market in Europe and this is what has created the steel determination to protect the farmer in those economies where the farmer sells nearly all his goods internally. We could guarantee all Australian agriculture if we did not export most of its products.

What is the difference between secondary industry and primary industry in this respect? If there is a fall in the demand for cars, half a dozen car manufacturers can agree among themselves to reduce production, to lay off staff and to ride out the slump. If there is a fall in demand for wheat, wool or any primary product the first instinct of the farmer is to produce more to keep his income up and this very markedly has a tendency to lead to a further reduction in price. He is handing over the value of his increased productivity, his more efficient production, to the consumer nations, and this is why the terms of trade persistently turn against agriculture. This was pointed out by the economist Prebisch, and it is called the Prebisch effect. It has been one of the things producing the chronic political instability of Africa. Ghana and Nigeria in a decade quadrupled their production of cocoa and coffee and they received less for 4 times as much as they originally received for the unit 1 quantity at the beginning. They had to run very hard to stand still; they had to produce more and more simply to get the same return. Of course, they came to a point where they could not do so any longer and that economic instability was one factor underlying their general political instability.

I want to turn now from this aspect of the Australian economy to make one or two comments on defence. I think it is time we knew what is to be done about the FU 1 aircraft. It looks to me as though we will have instalment No. 10 for the next election. It periodically bobs up at every election. At the last election the Government did not want to have a politician commenting on the Fill so it got a retired air marshall, Sir Valston Hancock I think it was, to write in the 'Sydney Morning Herald' that it was still the most marvellous aeroplane of our age, the best thing on wings since the angels. He omitted to say, of course, that there are 2 classes of angels, those under Lucifer which crashed and those under Michael which remained airborne. I do not know which category of angels it comes into but it seems to me that it would be the Lucifer category. Anyway, we could have had the TSR2 instead of the Fill.

Mr Graham - It would not have worked.

Mr BEAZLEY - The honourable member for North Sydney says that it would not have worked but I do not think delivery would have been postponed for quite so long as the Fill. If this aircraft will not fly I hope the Government will spare us another election on it, and tell us what it feels should be the substitute for the Fill.

I want to comment also on one other aspect of defence. There is now very clearly a changed strategy developing in the Indian Ocean and if there is a changed strategy developing in the Indian Ocean another look needs to be taken at the Royal / stralian Navy. I invite the Government's attention to the fact that the aircraft carriers, HMAS Sydney' and HMAS 'Melbourne', were master strokes of the Chifley Government, but as the Chiefley Government is now somewhat remote in history, the 2 Australian aircraft carriers are historic old ladies. If the Government still believes in the usefulness of such vessels, and probably there is a continuing usefulness of the aircraft carrier for the pursuit of submarines, it is about time the Government started looking at the purchase of another aircraft carrier, possibly one of those much more modern British carriers which may or may not continue in service for the United Kingdom.

While on the subject of the Indian Ocean I would like to make a comment on the subject that was raised today in question time by the honourable member for Holt (Mr Reid) in his persistent effort to get a more generous approach from the Government towards the disaster of the Pakistani refugees. India has spent on the refugees 120 crores of rupees. A crore is 10 million rupees, so that is about $ A 1.1 5m. From abroad has come 8.2 crores of rupees. This means that one-fifteenth of the cost has come in aid from all other countries to India. I think this is insufficiently generous. I do not want to get into the technicalities of whether India wants wheat or not but since it has had to ruin many of its plans in order to carry the burden of these people one thing it could very well do with is foreign exchange. I commend to the Government the suggestion of the honourable member for Holt that a gift of SI Om might be a well worthwhile Australian gesture towards the stability of the Indian sub-continent.

Another matter I would like to draw to the Government's attention is that it had a former Minister for External Affairs, now the Governor-General, who in the Bihar famine crisis - this is very little realised in Australia - sent $35m in aid to India. The wonders of the $1.5m for the present crisis rather pale into insignificance when compared to the action that Sir Paul Hasluck took when he was Minister for External Affairs. I admire anybody who can twist the Treasury's arm to the tune of S3 5m. I remember once meeting Sir Paul in the streets of Perth after he made this gesture which saved the lives of millions of people in India. It really did. It represented 580,000 tons of wheat. I said to the gentleman who was then the honourable member for Curtin: 'Paul, if I were to bung a brick into the nearest shop window I guarantee I would get coast to coast publicity, but your action which has saved the lives of several million people does not cause a ripple'. It is a very strange scale of values that we have in our commentaries and I think it has had the unfortunate effect that the Government does not register in its own mind its previous generosity as a precedent for what it might do today for the situation in India.

The last point I would like to make in the brief time available to me relates 'o the unemployment position which is developing in the country and the possibility of assisting the farmer and rural communities. I ask the Government to investigate the possibility of commencing public works in the country, especially roads, and of giving financial aid to shire councils for urgent works that they all have. This may employ smaller farmers. It may employ people in the country towns who have lost work because of the slackness, and the expenditure in the country may be a defensive, temporary assistance for rural areas which are affected by the downward movement in the rural prices at the present time. This also was done during the late drought. In point of fact there were some shire councils that were rather better off in the drought period than they have been in periods of normal prosperity.

I had wished to speak on some constitutional questions in Papua New Guinea. (Extension of time granted.) I thank the Minister for Defence (Mr Fairbairn) for moving for an extension of time. I am very surprised at this unwonted generosity. I can now discuss the points that I wanted to discuss about the constitution of Papua New Guinea. There is one human problem in Papua New Guinea which I think is urgent.

One of the things we should remember is that the number of employed people in Papua New Guinea is a very small percentage of the population. The great bulk of the population of Papua New Guinea are self employed, growing their own food and so on, and this is rather fortunate for them. It is also rather fortunate for them in many areas where they can have their own gardens. It has been pointed out by research economists in Papua New Guinea that Australian industry and affluent Australian agriculture in Papua New Guinea are in fact subsidised out of the subsistence economy of the natives. That is to say we can only sustain the low wages that are paid because they are feeding themselves from their own economy, maintaining themselves in physical efficiency as a labour force, and by their own efforts they are subsidising people who are far more affluent than themselves. But there are areas that are exceptions to this. Port Moresby is an exception to this. You might be all right, if you have your own garden around Rabaul, getting a wage of $7 or $7.50 a week, but if you are getting $7 a week in Port Moresby and living in a shanty and not near your own gardens it very probably means tuberculosis for yourself, tuberculosis for your children and a very unsatisfactory condition.

I am disturbed at the inability of members of the House of Assembly to see these things. They are being trained in an automatic respectable reflex action. The price of everything is important except the price of labour. You only have to sit and listen to their debates to see that they have been trained and trained to regard any increase in wages as the last disaster and any increase in the price of anything else as something very desirable. If that goes on, it will create a problem for the House of Assembly in the future if, when Papua New Guinea governs itself, it governs itself on those assumptions.

The second thing I want to say is that land is the vital question in Papua New Guinea. Land is almost a sacred object. Our land is like our skin' is one saying they have. 'Money goes but the land remains' is another saying they have - a very wise one perhaps from their point of view. This means that the acquisition of land from them for mining purposes has always encountered resistance. There is a burning grievance that back in 1884 the Germans took the land of the Tolai and it was passed from the former German expatriates to other expatriates and that it really belongs to them. I do not want to go into the merits or demerits of this. I merely point out that is is an instance of the importance of land in their thinking and' that each crisis we have run into has at base a crisis built upon the fact that they regard land as vitally important.

Mr Graham - They will have to overcome rivalry between the tribes first, do you not think?

Mr BEAZLEY - If we go back to the tribal wars of the past, I do not know. Perhaps all those things can be sorted out. All I want to say is that the problem in Papua New Guinea is this local particular loyalty. The Tolai have no loyalty to the Bainings and vice versa. This is the problem 1 want to discuss in a minute. I accept entirely what the honourable member has to say about rivalries between tribes. I am concerned about this just as a fact of life and as a problem we have to deal with, but what I have undoubtedly found is that there is a resentment against the Highland majority, which is regarded as a manipulated Highland majority that would sit in the House of Assembly and pass measures for the taking of other people's land in Bougainville but would resist tooth and nail anybody's attempt to take their land.

If we govern on these assumptions we are governing divisively. There must be a settlement between those things.

There were utter disasters in Nigeria because the British on the whole favoured the Muslim north, which was quiescent and conservative and caused them very much less trouble than the Ibos and Yorubas in other regions and it produced the particularism and distinctiveness that became so disastrous for Nigeria in later time. I have said this in the House before, and I fear we are doing the same thing in Papua New Guinea. We are not conscious of it but I fear that this is what we are doing.

I also fear our conservatism in our own belief about the Westminster system of government. The parties in this House correspond with broad economic groups. There are overlaps and exceptions, but by and large the Country Party represents the rural community and the farmer; by and large the Liberal Party represents the metropolitan middle class and business; by and large the Australian Labor Party represents the wage earner. There is no real corresponding structure in Papua New Guinea, hence there is not the basic party structure unless it is artificially fostered in the House of Assembly of Papua New Guinea. The classic Westminster system in its greatest days was a stately gavotte between liberals and conservatives who had some differences on how best to run a free enterprise economy but had a deep fundamental unity about the survival of the nation state.

There is not that deep fundamental unity of nationalism in Papua New Guinea. There is this tendency to fragmentation. New Guinea nationalism is an idea in our mind. They never thought of it in 1884. They were not thinking of it in 1945. They have begun to think of it because it is a suggestion coming from without; it is not coming up from within them. I believe that in these circumstances there is not much tendency to unity, nor is there much tendency to disunity except on the question of land. People always say that it is hard where there is so little education to maintain national unity. I do not think it is the uneducated villager who threatens national unity. He gets on with his life. He is not particularly concerned with what is going on in Port Moresby, whether there is an expatriate government or whether it will be their own government in the future. His horizons are limited. He is not a threat to anything. The threat is this fear of the more advanced peoples on their land questions.

I think that the party system in Papua New Guinea is entirely artificial. We have some features of the Swiss system in Papua New Guinea now. The Swiss system is for everybody in the parliament to elect the Ministry so that the Swiss Federal Council has liberals, conservatives, socialists and what-have-you in its Cabinet. Somehow or other they work out a policy on that basis. There is a President who is elected annually. Nobody in Switzerland - I have just come from Switzerland - can tell you who the President is. He is the chairman of the Council of Ministers for any given year and in that year he receives the credentials of the diplomats and acts as the head of state. It is rather a tragedy that Africa did not have that sort of presidency as its model because those who became presidents and prime ministers in Africa proceeded to make themselves dictators. The modesty of the Swiss position might have been one of the best correctives for Africa, and it may well be one of the best correctives for Papua New Guinea. 1 think that the classless society like Papua New Guinea an all party Parliament or an all elements of opinion Parliament, with an elected Cabinet and an annual President might be the best system. A cantonal system, or a federal system, would enable the people of the canton of Bougainville to be sure that the government in Port Moresby would not be able to take their land. The people in the canton of the Gazelle Peninsula or New Britain could be quite sure that they themselves would settle the problems facing them. Otherwise, the attempt to impose unity on them in the manner of conflict that we have been exhibiting may well be disastrous for the future of Papua New Guinea.

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