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Wednesday, 18 February 1959

Mr CREAN (Melbourne Ports) .- Mr. Deputy Speaker,I should like to add my congratulations to those that have already been offered to the two new members who yesterday went through the ordeal of making what is called " a maiden speech ". I hope that the speeches that they made yesterday will be the first of many sound contributions that they will make to the debates in this place.

The honorable member for Paterson (Mr. Fairhall) said that what had impressed him most about the Governor-General's Speech was the economy of words with which it dealt with matters of great importance. By contrast, I should say that what impressed me was the rather fulsome description that it gave of the exploits of the Skylark, Black Knight and Blue Streak missiles and the possibilities of the peaceful use of outer space. These may be matters for some conjecture in the future, but 1 think that the people of Australia were looking for a statement by the Government of its policy on matters of more fundamental and immediate urgency to the majority of Australians. His Excellency's Speech mentioned a committee to be appointed to examine one thing and another committee to examine something else. I suggest, however, that the business of a government that has just been returned to office with a substantial majority is to govern the country and to give more serious attention to the very important problems with which the country is confronted. Those important problems were hinted at by the two new members who moved and seconded the motion for the adoption of the Address-in-Reply to the

Governor-General's Speech. The honorable member for Kalgoorlie (Mr. Browne), who moved the motion, referred to something which the Americans are not likely to do. The United States of America controls the price of gold at 35 dollars an ounce, and has most of the world's supplies of that valuable metal. The honorable member said he hoped that the Americans would be generous enough to raise the price to 50 dollars an ounce.

The honorable member for Wide Bay (Mr. Bandidt), who seconded the motion for the adoption of the Address-in-Reply, pointed to something which is of great significance - the wide fluctuations in the prices of primary products in Australia to-day. What he said about pineapples may be said with much more force about Australia's great staple commodity - wool. I think that most honorable members receive this publication, " Woo] Facts ", which is prepared and distributed by the Australian Wool Growers Council. The latest issue, which is dated 16th February, indicates in all its stark reality the great impact upon the Australian economy of variations in the price of wool. In the seven months ended 31st January, 1958, 751,000,000 lb. of greasy wool realized £212,000,000. In the seven months ended 31st January, 1959, 752,000,000 lb. of greasy wool, or 1,000,000 lb. more than in the previous period, realized £145,000,000, or £67,000,000 less than was earned in the earlier period. Almost the same quantity of wool was exported in each period, but the percentage of Australia's total export income earned by wool declined from 45 per cent, to 37 per cent. It is from our export earnings, to which wool is the principal contributor, that Australia has to pay for its imports.

One can only be alarmed by the complacency with which this Government regards what is called the balance of payments problem. Instead of facing up to the fundamental issues and endeavouring to secure justice, equity and stability in the prices of our great primary products, this Government and the Premiers of some of the States are hawking around the world in an endeavour to borrow from other countries, thereby using capital items to make good to-day's shortcomings of income, and storing up for Australia great difficulties in the future. There ought to be some systematic examination of how much money is coming into this country by means of what the Commonwealth Statistician calls simply " balancing items ". He can measure the imports of goods and services, and exports. After a few months, he can measure what are called the invisible items - freight and the like. But when he looks at the level of our London balances to-day compared with twelve months ago, he says that the difference is represented by capital inflow, and no analysis is made to see where that capital is going.

It may be that, in some fields, this country requires imports of capital from other parts of the world, but capital is being imported into Australia to-day to do what Australia is quite competent to do for itself. Why should Australia want to get money from the United States, London or anywhere else for the construction of a departmental store in Bourke-street or a luxury hotel at the top of Collins-street? What we want is bricks, cement, steel and building labour, and we have these things in abundance in this country. There may be certain items of plant and equipment - I suggest that they are less numerous than we sometimes imagine - which cannot at present be manufactured in Australia, and which we need. This borrowing that has been undertaken should be allocated for the provision of such items. What overseas investors are looking for in Australia to-day is not necessarily investment in the basic industries which Australia most needs. What overseas investors are looking for is the kind of investment that gives the quickest and greatest return. American money to-day talks in terms of a return of from 20 to 25 per cent, on the capital invested. American investors plough back money extracted from the hides of the buyers in Australia and expect to earn 20 or 25 per cent., not on the original capital, but on what they call the equity of the shareholders. This country in future years will have to pay a very large invisible item in dollars and sterling for dividends and other earnings, not on the initial capital, but on the capital which has been accumulated from the prices taken from the purchasers of the goods in the Australian community.

I suggest that the time has come for a more fundamental examination of these problems. There ought to be some participation by Australians in the control of many of these industries. Why should an industry be allowed to come into this country and, merely because its promoters say, " We have 1,000,000 dollars " or " We have 2,000,000 dollars", get a convenient site and make use of the railways, the power, and the irrigation, developed in this country over the years? These people are welcomed because they bring their millions of dollars, and the money is used to buy something else altogether. In terms of aggregate investment year by year in Australia, foreign investment is only a very small proportion, but because of the strategic outposts which it seizes upon, it has a significance out of all relation to its true contribution to the Australian welfare. That is the kind of problem that ought to be looked at by this Government.

The Government should use loans, if it wants to do so, to bring in particular pieces of equipment. It should buy the know-how, if it likes, separately. But it should not give these people the franchise to exploit the Australian population for ever afterwards, which is the main difference between that kind of capital and the traditional loan and other borrowing. That is a problem of crucial significance to Australia at its present stage of development. If we were getting a fairer price for our wool, pineapples, and various other primary products, we would not have to hawk round the world for these investments. We would be able to buy, in a rational and sensible manner, the equipment that we lack; the control of it afterwards would be in Australian hands and subject to Australian laws, and the fruits of it would go to the Australian community in one way or another. This is one field in which the Government has been recreant to its trust to the Australian people, and in my view it is more important than the circling round Woomera of the Skylark, Blue Knight, or Blackjack, or whatever the next one is to be called.

Another matter which requires a great deal more illumination than has been given by this Government is the loan market, both here and overseas, and the policies being pursued by the Government. The honorable member for Paterson (Mr. Fairhall) said that a policy of financial delinquency was being pursued to-day by certain of the Australian States. He was using the opportunity, of course, to get in a little sly election propaganda for New South Wales. I would say that the difficulty that faces the Australian States is not one of financial delinquency on their part. It is a difficulty caused by the financial erosion or inflation which has been allowed to go pretty well unchecked by this Government over its eight or nine years of office.

Six or seven months ago we had before us a document about which there was great debate. I refer to the Murray committee's report on the future of university education in Australia, which dealt with the serious difficulty which Australia faces in obtaining the necessary number of university graduates during the next five or ten years. We will not get university graduates in sufficient numbers unless we have primary schools, secondary schools and technical schools from which to send students to the universities in the first place. There may be odd geniuses who, left on the sidewalk, can acquire a university degree without a few years of intermediate education, but the majority of Australians are not geniuses. They have as much capacity as has anybody else in any other part of the world, given the opportunity.

In Victoria, where there is not a Labour government but a Liberal government, we had the spectacle in the first week in February, when the schools resumed, of high schools that should have been completed not being completed. Technical schools that were supposed to have been ready then will not be open till the middle of the second term. We have schools, so-called, that are occupying church halls and temporary huts in various parts of the metropolitan area. I could do as did the honorable member for Paterson, and blame the Liberal Government in Victoria, but I do not intend to do that. I think that the blame lies on the Commonwealth Government because of the improper allocation of those funds about which the honorable member spoke and which are derived from uniform taxation. I believe that uniform taxation is the most sensible method that can be evolved in Australia for the collection of revenue. Income tax is a tax that does not lend itself to a sharing in its collection, but a more equitable and more sensible formula must be worked out for the distribution of what is collected, and the same applies to loan or capital funds.

I believe that it has been a sound policy to use the revenues of this country for capital works. This has been done over the last fifteen years, not only by this Government but also by previous governments. But I do not think it is right that the Commonwealth should first determine how much it requires for its ordinary purposes of government leaving the Loan Council at its annual wrangle to decide how much is to be allocated to the States. I believe that all the public works undertaken in Australia, whether by the Commonwealth or the States, should be undertaken on a properly planned basis. At the moment the Commonwealth can largely determine, without any challenge, how much it wants to spend, let us say, on postal works every year, but the States, for their important function of education, can have only what is arrived at in the bargaining after the Commonwealth's share is taken out. I suggest that that is wrong. It is wrong that the Commonwealth should be able independently to erect a new post office in a town where children are denied a school because education is a State function. I think it is more important to teach children than to sell stamps, but that is the kind of thing that is going on at the moment, because these works are being planned in accordance with rules of financial stringency rather than on a priority of needs. Now, the question of where this money, over and above the revenue, is to be raised - the question of the loan market - also requires some serious consideration by the Government.

Three years ago, it was suggested on this side of the House that there should be an issue of a special kind of bond that could not, or would not, lose its capital value, that would guarantee to the small investor that if, for a good and sufficient reason, he had to cash his bond after three months or six months, he would not be involved in a capital loss as a result of doing so. Very belatedly, a few weeks before the last general election, the Government introduced such a scheme, and has given this kind of bond the name of " special bond ". I have been reading in newspapers in the last few weeks very large and impressive advertisements urging the public to invest in these special bonds. In the same newspapers one finds advertisements inserted by hire-purchase agencies urging the public to sell their Commonwealth bonds and get a bigger yield by buying hire-purchase securities. What kind of financial stupidity is it that enables the interest rate to get higher and higher progressively in this way? The fact is that, on the one hand, the Government is bidding for money from small investors whilst at the same time financial institutions are saying to those who have invested in Commonwealth bonds, " That is an inadequate return. Cash your Commonwealth bonds and put the money in our short-term securities for six months, twelve months, eighteen months or two years, and we will give you a greater yield than you will get from a Government security."

Again, who is it that pays the higher interest? It is taken out of the hide of the poor consumer of ordinary goods, and there seems to be no end as to what will be financed in this country by means of hire purchase of one kind or another.

When I was at my home in Middle Park the other day, a hawker knocked at my door. He was bearing a very impressive catalogue. He said, " Peter Kaye is broadening his activities now. He is not only selling television sets and motor cars on hire purchase, but if you want to do so you can buy this winter's blankets on hire purchase, or a new set of linen or cutlery or anything else." Those of you who come from Victoria will know the ramifications of Peter Kaye. I told him that I was not interested in his proposition, but that is the sort of stupid thing that is going on at the moment. The proper price for goods is being inflated by the cost of financing, by the cost of employing hawkers, by interest rates and so on. This state of affairs is allowed to continue unchallenged by the Government, which claims that it has not the constitutional power to do anything about the matter. But the Government has never made any attempt to establish at law whether it has the constitutional power. It has relied only on the opinion of the Attorney-General's Department that it has no such power. That department has been wrong in the past on certain issues. Why does not the Government make some attempt to control hire purchase, and let some of those philanthropists in the hirepurchase business challenge it, instead of allowing the hire-purchase interests to exploit the public as they are doing now7

The Government is endeavouring to raise, by means of loans, money with which to provide more schools, more power and more irrigation, and it has to face competition from people who are selling television sets, blankets and so on at more than just prices under hire-purchase arrangements.

Which is the most urgent priority, and where does the responsibility of a government begin and end in these matters? During the last general election campaign, the Government took unto itself great credit for the financial reputation enjoyed by Australia in the overseas loan markets. The Prime Minister (Mr. Menzies) proudly said in Tasmania, I think, during one election meeting, that an Australian loan floated in London had been oversubscribed in ten minutes, or something of the kind. No wonder it was oversubscribed! It was a loan to convert a previous loan raised ten years before at an interest rate of 3 per cent. It was to be converted at a discount of £2 per cent., and the interest rate was to be nearly 6 per cent. Is it any wonder that there is success when such terms are offered? That is the kind of thing that is being done as part of the deliberate financial policy of this Government.

The amount of interest at 3 per cent, that was formerly payable on a loan of £A.20,000,000, or £16,000,000 sterling, was £600.000 a year, but when the loan is converted to a 6 per cent, loan the annual interest charge alone, without any amortization, is £1,200,000 a year - another £600,000 in interest that has to be paid every year. And it is to this that the Government proudly points as the result of a sound financial policy, and as an indication of the prestige that Australia enjoys overseas.

I have not time at the moment to enlarge further on this matter, but I ask honorable members w'.io arc interested in the subject to look at page thirteen of the last report of the Auditor-General of the Commonwealth, where they may read about the conversion in London of a loan only a few months ago. His comments make very illuminating reading about the financial policy and lack of wisdom on the part of this Government.

Meanwhile, the national debt of Australia rises to an astronomical figure. Bit by bit, the interest rate is also rising. Ten years ago, most of the public loan in this country was being raised at an interest rate of a little more than 3 per cent. To-day, the Government is finding difficulty in raising loans at more than 51 per cent. Just pause and think what the gradual conversion of nearly £4,000,000,000 in loans, raised at interest charges of just over 3 per cent., to an interest rate of more than 5 per cent., means to the taxpayers of Australia, and then wonder at the futility of talking about reducing taxation.

The Government has not faced the fundamental problem - the problem of doing justice to the ordinary wage-earner in Australia who depends upon a fixed wage and who hopes for reasonable wages and reasonable prices.

Mr DEPUTY SPEAKER -Order! The honorable gentleman's time has expired.

Sitting suspended from 5.53 to 8 p.m.

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