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Wednesday, 10 April 1957

Mr WHITLAM (Werriwa) .- I did not learn from the honorable member for Balaclava (Mr. Joske) or from any of the speakers on the Government side last week, the answers to the two questions which the Opposition has raised again and again. For want of those answers the Opposition will not support this bill. We want to know, first, what we are going to buy with the money which we are borrowing and. secondly, how we are going to pay the money back. The Opposition would take no less enthusiastic a view than does the honorable member for Balaclava of the prosperity and greatness that this country - and all the countries of the world - can derive from international trade and borrowing. What worries us. however, is that the more dollars we borrow the less balanced will be our trade with the dollar area, and the more difficult will it become to pay back that particular debt.

The Opposition did not oppose, but in fact supported, the companion bill, the Loan (Qantas Empire Airways Limited) Bill, which was passed through this place last week, because it set out precisely why we were borrowing dollars. We were told precisely how the dollars were to be repaid. We are buying aircraft, and parts for those aircraft, in order that Australia's international airline can successfully compete in the sterling and dollar areas. We were told how much the planes would cost, and were convinced that they were necessary. We were also convinced, by the dollar earnings that Qantas has previously made, that it will be able, by the use of these planes, to repay the loan. Still more will Qantas be able to repay the loan if it is given the reciprocal rights of travel on the mainland of the United States of America that we have always been prepared to give to United States aircraft here.

This bill does not tell us what we are going to spend the dollars on. We are given no inkling of how we are to repay this money, or the dollars owing under the four preceding bills. The honorable member for Balaclava said - and it was his only reference to it that I remember in his speech, to which I paid considerable attention - that this loan would be used for roads and railways. That is more than the Treasurer (Sir Arthur Fadden) said with any precision.

Mr Casey - It is for developmental matters generally.

Mr WHITLAM - I quite appreciate that, but. as the right honorable gentleman will recall, the Treasurer said on 20th March last -

Although the goods to be procured have noi. as yet, been precisely determined, an allocation of the new 50.000,000 dollars loan among the four programmes has been tentatively agreed on with the International Bank.

The honorable member for Balaclava left the same imprecision and tentativeness as the Treasurer left three weeks ago. I think that if we are to use these dollars for roads - and I see that 12.800,000 dollars are to be spent for that purpose- and for railways -and I see 4,000.000 dollars are to be spent for that purpose - we should be told what particular road equipment or rail equipment is to be purchased. But we are not told. In respect of the previous loans from the world bank, we have been given that information.

In the 1950 bill, the Treasurer devoted some pages to show how the money would be spent in the various categories - tractors and other agricultural equipment, industrial crawler tractors and earth-moving equipment, locomotives and railway rolling-stock, mining machinery and equipment, and machinery for the development of productive capacity in major manufacturing industries in Australia. In each of those five categories, he set out in a paragraph an account of why it was necessary to have that equipment and why we would get it from the dollar area.

In the schedule to the 1952 bill, there ls set out, with some particularity, the precise projects that we had in mind. The names of the companies and the addresses of the various developmental projects are listed. In respect of the agricultural and land settlement programme, the actual sites of all the developmental projects are listed for each of the six States. In respect of the coal-mining programme, we are given the exact site and the expected increase in production in the various coal-fields in the four States there mentioned. In regard to the iron and steel programme, we are given the precise extensions of production which are contemplated with the equipment which is to be used in Port Kembla, Newcastle and Kwinana. In the electric power programme, we are told the exact kind of equipment and how many kilowatts it will produce at the power stations in all six States. In the railway programme, we are given a somewhat more generalized account of which railway commissioners will benefit from the equipment. In the non-ferrous metals and industrial minerals programme, we are given precisely the location of the project and the various minerals to be developed as a result of the loan. All of it is very precisely set out in close type covering four pages in the schedule to the 1952 bill.

In the 1954 bill, once again the schedule sets out the location, at least, of the agricultural programmes and the recipients of help under the railway and air transport programmes. In the 1955 bill, the schedule again mentions the precise location of the agricultural programmes and the amount and the beneficiaries under the railway and air transport programmes. Admittedly, the other programmes in the 1955 bill are referred to in general terms.

The current bill, however, is the first since 1952 in which we are not told the location, the nature of the development, the anticipated benefits to Australia and why it is sought to spend dollars on these developments. In 1950, the bill did not give those details, but the Treasurer supplied them in his speech. On this occasion, the bill does not give us the information in the schedule and the Treasurer has not given it in his second-reading speech. Can we, therefore, be blamed for refusing to support a bill when the Australian people and we, their representatives, have not been told why it is necessary to borrow the money and on what we will spend the money.

Let me cite some doubts which occur to me, because I seek to inquire into these -details, concerning the programmes hitherto. It appears to me that our developmental programmes have led us into a cul-de-sac in regard to dollar expenditure. Let me cite the railway programme. All our railways are carrying out an extensive programme of dieselization. We believe that in the acceleration of that programme lie the solvency of our railways and the reduction of costs in Australia to a very large extent. It seems, however, that the diesel locomotives being manufactured in Australia are manufactured on licence from companies in the United States. The two companies in the suburbs of Sydney which manufacture diesel locomotives - A. E. Goodwin Limited and the Clyde Engineering Company Proprietary Limited - are manufacturing locomotives on licence from America. It seems that while those locomotives are manufactured or at least assembled in Australia, it is necessary to import a great number of components and spares and to remit, of course, licence-fees for the plans which we use to manufacture them here.

It may be too late to do anything about il, but it appears to me unfortunate that, in order to modernize our railways, we have to incur a continuing and increasing dollar expenditure. The United States was not the first country to manufacture diesel locomotives; it was not the first country to mass produce diesel locomotives. I should have thought that it would have been perfectly open to us to secure licences to manufacture diesel locomotives from other countries with which our currency is convertible and with which our balance of trade is more favorable or at least on equal terms. It may be too late to do anything about that, but it is one question that arises if this is to be a continuing feature of the loan programmes. In five successive loans, we have borrowed money from the world bank to pay for the dieselization of our railways. Is it too late to do anything in Australia to ensure that future dieselization will result in a cessation or * diminution of our dollar expenditure?

I come now to the other matter that was referred to tentatively by the honorable member for Balaclava - road transport. 1 should have thought that roads would be one thing that Australia could make completely. Certain bulldozers and other piece* of heavy equipment may have to be imported, or may be imported more quickly than we can manufacture them, but I doubt whether that exception involves an expenditure of 12,800,000 dollars in this loan. I note that in the previous four loans we have borrowed 42.000.000 dollars from the world bank for road development We are proposing now to borrow another 12.800.000 dollars for that purpose. This appears to me to be a completely unconscionable amount to be borrowing for the development of our roads. There are other countries in the world than the United States of

America from which we could secure - if we have to get it overseas - this heavy roadmaking equipment. Again I ask: Can we not have some explanation as to why it is necessary to obtain this machinery from dollar sources? I should imagine that many of the Scandinavian countries, West Germany, France and the United Kingdom, are well able to produce heavy earth-moving equipment and the other road-making equipment which at present we import from the United States. Is it that those countries of Western Europe, with which we have a tolerable trade balance, are unable to produce those goods or are unable to deliver them? Why are we not told?

I pass now to a third subject, the development of various power-house programmes, ft would appear to me that in this instance above all the excuse that we have for borrowing dollars is the least valid. All the countries of Western Europe that I have mentioned - and in this case I would add Italy - have been engaged in electrical generation by thermal and hydro-electrical means for a very long time. Our secondbest customer, Japan, has been engaged for some decades in the production of electricity and of electrical equipment. I referred to Japan as our second-best customer because that country now buys more from us than France does. Japan is second among our customers only to the United Kingdom itself. Why can we not seek to obtain electrical equipment from that country? Is it that Japan does not produce electrical equipment that is as efficient as that produced in other industrialized countries, or is it that Japan cannot deliver such equipment? Once again, why are we not told?

I come now to the other question that prompts our refusal to support this bill on the information that has been given to us. it is this: How are we to pay back this money? Let me cite to the House the amounts of loans obtained under previous legislation, and the amounts of capital and interest that we are obliged to repay. In August, 1950, we borrowed 100,000,000 dollars. As from 1955, when the annual interest and principal combined reached the static amount for which we are obligated until 1975, when the loan will be finally repayable, we have to pay 7,356,000 dollars a vear. In July, 1952, we borrowed 50,000,000 dollars. We have to pay it back by 1972, and as from this year our interest and principal payments combined amount to 4,497,000 dollars a year. In March, 1954, we borrowed 54,000,000 dollars. We must pay that back by 1969, and our annual interest and principal payments combined, as from this year, amount to 5,778,000 dollars. In March, 1955, we borrowed 54,500,000 dollars. We have to pay that amount back by 1970, and as from next year we shall be obliged to make annual interest and principal repayments of 5,790,000 dollars. The loan of 50,000,000 dollars proposed under this bill must be repaid by 1972. and as from 1959 the annual interest and principal payments combined will amount to 5,200,000 dollars. Let me summarize the repayments that we shall have to make in this year, next year, and then from 1959 until 1969, both years inclusive. This year our annual interest and principal payments will amount to 17,63 1,000. dollars.

Mr Costa - Does that amount include exchange?

Mr WHITLAM - Yes. Next year those interest and principal payments will amount to 23,421,000 dollars. From 1959 until 1969 our annual interest and principal payments under the five loans will amount to 28,621,000 dollars.

Honorable members will notice that between August, 1950, and December last, when this fifth loan was negotiated, we have raised five loans, amounting in all to 258,500,000 dollars. On that amount our annua] payments to the bank, as from 1 959, will be 28^621,000 dollars. If past performances are taken as a guide, by 1958 we will have entered into another loan of 50,000,000 dollars, and the amount of repayments will increase, of course, by another 5,000,000 or 6,000.000 dollars a year. If we continue at our present rate of borrowing, in another six years' time we will be in the position of having to raise a loan every year in order to pay off the principal and interest that we are obliged to pay on our existing loans. We are reaching a position from which there is no return. We are now borrowing to pay off previous borrowings, and I refer to these loans alone, quite apart from other dollar payments that we have to make.

My colleague, the honorable member for Melbourne Ports (Mr. Crean) has already referred to the amount of dollar payments that we have to make each year. I do not overlook the fact, of course, that the payments to be made as a result of this bill and cognate bills are made to a world bank, a bank from which governments borrow, and which, of course, is itself run by governments. But we make the borrowings from the bank, and we have always made the borrowings in dollars. Nearly all the other customers of the bank have made the borrowings in dollars. We and they make these borrowings in order to pay for the things that we buy from the United States of America, or to remit dividends to the United States. Therefore, it is useful to study our dollar balance of payments, and the obligations we already have to companies that are owned substantially by United States interests. I shall cite some of the figures that the honorable member for Melbourne Ports gave the House the other day, in order to show how embroiled we are becoming. The honorable member for Balaclava takes pride in the amount of borrowing that we are undertaking, but let us see the imbalance of the position. In 1948-49, the last complete year of office of the Labour government, the investment income actually remitted to the United States and Canada by companies operating in Australia was £A. 2, 600,000. In 1953-54, that amount had increased to £A. 13,300,000. The undistributed income, being the income that could have been remitted to the United States whenever the companies operating here so wished, increased from £A.2,000,000 in 1948-49 to £A. 17, 100,000 in 1953-54. Adding together the remitted income and the undistributed income, one sees that the total increase was from £A.4,600,000 to £A.30,400.000 in that period. I cite the figures from the " Quarterly Review of Agricultural Economics" for April of last year.

Other figures which touch on this position are given in another part of the same article from which I am quoting. The investment income payable overseas by companies operating in Australia rose, in the three years ended June, 1950, from 5 per cent, of the f.o.b. value of Australian exports to those countries, to 18.7 per cent, in 1953-54. That is the actual remitted amount, but if one added to it the undistributed profits, as one must in order to envisage the total payable income, the percentage of the f.o.b. value of Australian exports to the United States and Canada, represented by the income remitted or remittable to those countries, rose from an average of 10.8 for the three years ending June, 1950, to 42.6 in 1953-54. I have not the later figures. The last year I have quoted in each case has been 1953-54, but you can well see, sir, from the very rapid increase in the percentages I have quoted, that the percentage would now be greater still.

When one considers the advisability of entering into this further loan with the World Bank - this further annual commitment of dollars - one has to do so in the light of the private investments in Australia of people who take out dollars each year, or who are entitled to take out dollars each year. It is little consolation to take the attitude taken by the honorable member for Balaclava and say that the World Bank finds Australia a good place to invest money. That is taking the traditional banker's view - that you lend money to people who are already well established and who will give you the best return on your money. But the World Bank is officially called, of course, the International Bank for Reconstruction and Development. Australia did not need reconstruction when the bank was formed. The only countries which have received loans for reconstruction from the bank have been the countries of Europe. But as to development, Australia is now the largest borrower of all the customers of the bank, not because its needs for development are greatest, which should be the criterion under the bank's charter, but because it apparently takes the attitude, enunciated by the honorable member for Balaclava, that you should see who are your best customers, who will give you the best return, and lend more to them. That is, you should accentuate the disequilibrium in the world by saying that to those that have, more shall be given by the World Bank, and that to those that have not, less shall be given by the World Bank. That is not carrying out the charter of the bank.

I have referred also to our other dollar expenditures: that is. expenditures which flow from the fact that many United States citizens and corporations have invested in Australia. In many ways we should be grateful for that investment, but I think it is not too late to say that it is a pity that the United States investors have not taken the attitude that British investors took last century, when sterling was in the position of the dollar in the middle of this twentieth century, that investors should buy from the countries and the corporations in which they invest. Whereas Britain invested in the United States and was largely responsible for the capital development of the United States, and whereas Britain invested in India and Pakistan and was largely responsible for the capital development of those countries, Britain traded with the United States, India and Pakistan and bought from them. But the United States, regrettably, does not buy from the countries in which it invests. In fact, it actively competes with them and forces the donation and sale of its primary products in competition with the sale of the primary products of the countries in which it invests. Those countries can only pay the profits that the United States corporations make if they sell their primary products in dollars, lt is becoming increasingly difficult for Australia, and all countries which depend for their export earnings on primary produce, to get the dollars to repay loans such as this, and to pay the dividends on the investments made by private United States citizens and corporations in this and other countries.

If we are to have, as the honorable member for Balaclava said, a great and prosperous country, we can only have it if every other country of the world is great and prosperous. Every country of the world will be great and prosperous according to the amount, very largely, of international trade and international investment; but there must be two-way trade. People who borrow from the world bank, or from other countries, must be able to earn the currency to repay the loans. Australia, and all other countries which are the recipients of these loans and of these investments, are finding it increasingly difficult to repay the loans and to pay the interest on the investments. This bank, from which we have obtained a fifth loan, should truly be a bank for development. Australia, a relatively well-developed country, has shown by the amount of its borrowings that it is receiving a degree of consideration from the bank which will not enable our neighbours and our other prospective cus- tomers to have the greatness and prosperity to which not only we but also they are entitled no less.

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