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Wednesday, 30 November 1960

Mr E JAMES HARRISON (BLAXLAND, NEW SOUTH WALES) - Last night one member of the Liberal Party said that there would be no retrenchment in the motor car industry, and he mentioned place after place in State after State to support his assertion. What benefit will come from this bill? Did the 1956 increase in sales tax on motor cars give us any additional fencing posts? If it did not, what has happened in the intervening four years to make this legislation any more effective in that way? I submit that by such measures as the 1956 increase in sales tax and the one now proposed, the Government is not attacking the root of the problem. If the upward trend in motor car sales is worrying the Government, that is one factor of which it should have been aware quite early in the piece. To support that, I refer to the publication " The Motor Vehicle Industry ", one of the industry study series, issued by the Department of Trade in 1959. This document was published early in the year and the information contained in it would have been available to the Government before the Budget for 1959 was framed. On page 21 of this document appears the following statement: -

In 1957-58, the supply of vehicles to the Australian market was about 240,000. Less than 5,000 of these were imported as completely built-up vehicles-

Less than 5,000 of the 240,000!-

The others were produced or assembled in Australia using varying quantities of Australian-made components.

The current demand for motor vehicles is about 238,000 a year, and, on short-term estimates, could rise to 245,000 by the end of 1959. In the long term, the demand should reach at least 330,000 within the next ten years.

As compared with this, local assembly and manufacturing capacity is approaching 335,000 a year, and if present plans of all the companies eventuate, capacity in the next few years will be about 375,000. This does not include companies which have announced their intention of manufacturing in Australia but have not yet formulated specific plans.

These facts were known to the Department of Trade in 1959. Since the publication of this document, we have had the 1959 Budget and the 1960 Budget. With that information at its disposal in 1959, the Government budgeted for a surplus, and, in 1 960, it said, " We will remedy the position by budgeting for a deficit".

Mr Barnes - What was the price of wool in 1959?

Mr E JAMES HARRISON - If that is what is worrying the members of the Country Party, I refer them to this very document which deals with that point. In it we find reference to import licensing, and it is worth quoting for it should convince the honorable member that the Department of Trade is of the opinion that the more effective way of controlling the position is to impose import licensing in preference to adopting the policy now being applied by the Government. On page 20 of the document to which I have already referred, we find this statement -

In order to halt the decline in the overseas monetary reserves of Australia, import licensing controls were extended on March 8, 1952, to cover all goods imported into Australia from outside the dollar area. For some years, imports from the dollar area have been subject to special restrictions.

Import restrictions are of particular significance. The motor vehicle industry, as all companies, are dependent to some degree on imported components. This is an obvious inducement for the various producers to increase the Australian content of their vehicles to gain the maximum benefit from the exchange available. In the period when dollar expenditure was the main limiting factor, it stimulated, those companies with North American affiliations to expand their Australian activities and it also had the result of diverting some of their dollar spending to the sterling area.

I emphasize that this report was published in 1959 and was in the hands of the Government at that time. All the information contained in it was available to the Government through its own Department of Trade. The statement continues -

Fluctuations in the level of Australia's balance of payments have caused variations from time to time in the severity of import restrictions. In general, imports of unassembled vehicles have fared better than " built-up " units in terms of exchange allocations.

I quote this part of the report because I think it is time that members of the Country Party carefully analysed some of the information prepared1 by the Government's own officers. All this information was available from the Department of Trade at the time.

I now come to a most relevant part of this publication issued in 1959. It reads -

As from April, 1957, there was a general relaxation of import licensing and the motor vehicle industry was granted certain important concessions.

As far back as 1957 the motor vehicle industry was being given special attention in connexion with this very point. The statement continues -

Within an annual ceiling these concessions allow vehicles to be imported on a sales replacement basis instead of by quotas calculated on a base year of imports. Certain additional licensing facilities are available to those companies which have demonstrated their intention to increase substantially the Australian content of their vehicles.

I am mentioning these matters because when members of the Country Party and the Government use the price of wool as a reason for these spasmodic actions by the Government, it indicates clearly to me that they have not analysed the information prepared by government departments. The report to which I have referred has this to say about the alterations made in 1957 -

The new system of sales replacement tends to enable the industry to meet the requirements of the market for particular vehicles. In the past, some car firms have held quite substantial stocks of vehicles and unused licences whereas others had very little stock and were selling all the vehicles they were entitled to import. The ultimate objective of sales replacement is that licences will be issued to accord with sales achieved.

So, in 1959, a report prepared by the Department of Trade gave a clear businesslike and1 logical method of approach to a consideration of die motor car industry in Australia. Despite this report of 1959, when somebody got a bee in his bonnet and decided that the big thing to do was immediately to release everybody from import control restrictions, motor cars and their parts went into the field. That is what happened, despite the properly organized arrangements that the department spoke of in this report. That is where the trouble commences - the disinclination on the part of this Government-

Mr Crean - The implication is that this remedy is in the wrong place.

Mr E JAMES HARRISON - That is right. If the policy prescribed in 1951 had not been interfered with, there would have been no difficulty with motor car sales in 1960. The Government itself broke down the very machinery which it had set up in the motor car industry. When a government disregards its own principles as has been done this year and when the Treasurer brings in this type of legislation, we rise in our places to protest because the implications are that this Government pays no attention to its own principles for any longer than it takes to discard them. The answer to the proper control of the motor car industry is contained in this 1959 report. Proper control of the motor car industry, if it is required, is not to be attained in this fashion. If what was said by Government spokesmen last night - that there is to be no retrenchment in this industry and that nobody in it will lose his job - is true, all the Government is doing now is to turn a deficit budget into a credit budget.

Mr Barnes - In what way?

Mr E JAMES HARRISON - By means of the additional revenue it will get from the increased sales tax. That will be the result, if the information supplied to the House - that there will be no retrenchment or loss of work - is correct. After looking at the realities of the situation, does any one here think that this imposition of increased sales tax on motor cars will affect greatly the supply of steel on the Australian market? Does it mean that Australia's production of steel is so neatly balanced that some reduction in the number of motor cars produced will enable the needs of farmers to be met? If that is the type of thinking the Government is indulging in and if that is the type of organization to which it is driving industry, I suggest that the steel industry will ask itself, "If this Government attacks the motor industry at this point, who is to say that we will not be next, if this proposal does not work? "

Why does this policy not work? This Government began to lose proper control of the economy of this country when it extended to the private banks the right to establish savings banks. If we look at the records, we shall find that since 1956 the private banking companies, now said by the Treasurer to be already in debt - my understanding is that all but one of them are in the red - are in that position through financing the purchase of motor cars. This results from the relaxation of control of the private banks by this Government.

Let us look at the figures to see what has happened in a few years. In 1956, savings accounts deposits with the private banks amounted to £41,000,000 and in June, 1959, the figure was £203,000,000. Let us see what Esanda has done to the economy of this country. Anybody can walk into an office of Esanda and get a loan for the purchase of a motor car but not a loan for the purchase of a house. That is where the financial stability of this country commences to crumble. This Government could not withstand the financial pressure that was put on it by the financial and private banking institutions. If members on the Government side of the House look at the figures in this year's " Commonwealth Year Book", they must realize that the Government in that manner pulled the safety plug out of the hole in Australia's financial structure. Whatever money is flowing, the present proposal will not correct the position, because motor cars have become part of normal home life in Australia.

In one of to-day's newspapers we read that, despite the fact that the Government has brought down this measure and intends to bring down other legislation, Esanda has bigger and* better advertisements than ever before in its history, calling for more money. The type of advice that Esanda and other private banking institutions will be giving to would-be purchasers of motor cars will be: Do not take any notice of the Government's statement that the increased sales tax is a temporary measure. We were told, in 1956, that the imposition at that time was a temporary measure, and it was not. The latest increase is here to stay." The history of this Government shows that, once having imposed a sales tax, it never reduces the impost, and that will be so in this instance. Esanda will say to people, " You had better get in now and buy your motor car, because next year the sales tax might be 45 per cent."

This Government is moving from one slippery rock to another. When it jumped on to this slippery rock and proposed to increase the sales tax on motor cars, all it did was to shake the confidence of investors in Australia. That will be the only effect of this proposal. It will shake business confidence in Australia. On Monday last a business man said to me, " Jim, where is this Government going? " And he is not one of our supporters. He said, "If I had £500,000 to-morrow I could spent the lot on mink coats and bring them into this country, but if I had £500,000 and wanted another £500,000 with which to import something to promote development, 1 could not get the loan". That is the type of thinking and the type of reality that this Government is creating among the business fraternity.

In the opinion of the Labour Party there is only one limit to development and that is the maximum use of man-power and materials on every working day in every year. I invite members of the Government to look at the report to which I have referred. I think that since my friend the honorable member for Melbourne Ports (Mr. Crean) led for the Opposition in this debate, members of the Government have looked at this document, and I believe that is why they are not rising to their feet to defend this measure. If they read this document they will realize how stupid this legislation is and how incompetent it shows the Government to be in respect of this industry. Once the confidence of the Australian investor is shaken - this applies to him even more than to the overseas investors - he will no longer trust this type of government. Once the point is reached, in the development of a young country such as ours, where the confidence of the people who are going to make investments is Shaken, the foundations of progress are shaken, and the country starts to slip back. It must be remembered that at no time can the development of a young country such as this stand still. It either moves forward or slips back. Now the Government introduces legislation which will affect every phase of transport, even taxi-cabs. There is a limit to the life of any car that is used for public transport purposes. The Government's sales tax proposals mean that if a taxi is worn out the owner will pay an additional £100 when he replaces it, but if a haulier's truck wears out he will not have to pay any additional amount when he replaces it. The Government has a lopsided approach to this question. It should never have been dealt with in this way.

The Government has ways and means to deal with the present inflationary situation other than to take the easy course and attack a particular industry by imposing an increased sales tax on the products of that industry. But ever since it came to office the Government has avoided consistently the introduction of any legislation that migh hurt its real friends. That rs why, in another field, one section of the industry is being attacked. As the honorable member for Melbourne Ports said, if the Government had done the decent or the honest thing it would not have used this bludgeoning legislation. If the motor industry is at fault - which I do not admit - the fault goes back to the time when the Government gave the green light to the private banking companies to do as they wished with their funds. The Government allowed them to finance the sale of motor cars instead of homes. If it wanted to do something about the motor industry, the pattern was prescribed in the Government's own documents. That pattern had proved successful on previous occasions. Because this legislation is sectional and is ill founded, no one can be sure whether it will be of value.

Honorable members opposite have said that there will be no retrenchments as a consequence of the increased sales tax. They have suggested that the production of motor cars will continue undiminished. If that is correct, my friends in the Country Party corner will still not get the fence posts that they need.

For those reasons, and for so many others which I have not time to mention but which demonstrate the inability of the Government to govern or to do anything to steady the inflationary trend that gradually has been becoming stronger since it came to office, we on this side of the House take the correct course of opposing the legislation because increasing sales tax is not the way to deal with the present difficult situation.

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