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Wednesday, 7 December 1960

Mr HAROLD HOLT (HigginsTreasurer) (12:51 PM) . - in reply - I do not propose to reply at great length at this hour. The House will be relieved to learn that it is not proposed to take this bill into committee to-night, but I hope that at a later hour this morning honorable members will be sufficiently refreshed to examine some of the details of the measure more closely. I think it would be more appropriate to deal with the queries raised by honorable members, particularly the honorable member for Wentworth (Mr. Bury) and the honorable member for Mitchell (Mr. Wheeler).

This debate has revealed a wide range of viewpoints as between the two members on the Government side whom I have mentioned and some of the dedicated socialists on the Opposition benches. Whilst it would be engaging and not without interest in other circumstances to debate at greater length some of the propositions put forward on the other side, I shall content myself with directing attention to one aspect which was prominently featured by the honorable member for Melbourne Ports (Mr. Crean), who led the debate for the Opposition, the honorable member for Reid (Mr. Uren), who followed him, and the honorable member for Yarra (Mr. Cairns), who proudly carries at all times the banner of extreme radicalism for the more advanced socialists on his side of the chamber.

We heard from the honorable member for Melbourne Ports what is really the cardinal point of the attack levelled by the Opposition over the economic situation in

Australia to-day. Lest there be any continuing attempt to misrepresent my own point of view may I say that this measure is not brought forward as a broad attack upon hire-purchase companies or the hirepurchase system. We as a government recognize, of course, the value of hirepurchase companies in the Australian economy, and the necessity for a hire-purchase system in order to promote the purchase of durable consumer goods and so improve the living standards of the people. What we have said, as a government - and I believe this view is supported by the honorable gentleman on our side of the House - is that a situation of strain has become evident and that excesses have developed, particularly in the hire-purchase fields and in areas of speculative activity. Not all speculative activity is by any means evil in itself. Certainly hire-purchase activity is not an evil thing in itself, but there are problems of degree which, in point of time in the history of our economy, require certain measures to be taken. The Government has acknowledged quite frankly that there is a situation of strain in certain areas of the economy - a strain which our measures are designed to reduce.

Having said that, by way of general comment, I come to the particular aspect of which the honorable gentlemen opposite have made so much. The honorable member for Melbourne Ports put it that we, as a government, had permitted an interest rate structure to be created which enabled unmoral - he repeated this word several times - rates of interest to be charged.

Mr Cairns - Immoral.

Mr HAROLD HOLT - He used the word " unmoral ".

Mr Cairns - No, " immoral ". We do not say that you have no morals, but only that you do not take any notice of them.

Mr HAROLD HOLT - I accept the correction. The honorable member for Melbourne Ports used the word " immoral " several times. The honorable member for Yarra spoke of usurious rates of interest, and the same theme ran right through the speeches of the three spokesmen for the

Opposition. In my statement to the House I spoke of the permanent measure that we had in mind being directed against excessive borrowings at excessive rates of interest, and it is apparent from what I have said that the Government does recognize that excessive rates of interest at a particular time could have harmful effects on the community and the economy generally. If we wish to test the standard which honorable gentlemen opposite would apply we have not a great deal of evidence to go on, because they have not been in the position of responsibility for several years now. There is, however, some evidence that can be quoted, and in closing the debate I should like to put it before the House by way of reply to what has come so freely from honorable gentlemen opposite. That evidence is supplied by an interesting document. My memory stirred when I heard honorable gentlemen opposite make their attack, and I sent for this document in order to refresh my recollection of the times with which it deals and the conclusions that were then reached. On 24th February, 1941, a board of inquiry comprising as chairman, Harold William Chancellor, and having as members Joseph Benedict Chifley, George Stanley Colman and Marshal James McMahon, was appointed to inquire into hire-purchase and the cash order system. The board was appointed for the purpose of inquiring into and reporting on the following matters: -

(1)   The system of trading in Australia by means of cash orders and hire purchase agreements including the business and operations of any person who issues cash orders or enters into hire purchase transactions as lessor, vendor or owner, or finances, either directly or indirectly, hire purchase transactions.

(2)   The conditions under which such trading, business and operations should be carried on.

The first point that I ask honorable gentlemen to note is that Mr. Chifley, who shortly afterwards became Treasurer of the Commonwealth, was a member of this board of inquiry. The second thing I ask them to note is that the Curtin Ministry took office on 7th October, 1941, and that this report, according to the imprint, was ordered to be printed on 12th November, 1941. In other words, it is a document that was ordered to be printed by the Curtin Ministry at a time when Mr.

Chifley was Treasurer, and it embodies views to which Mr. Chifley had subscribed, first, as a member of the board of inquiry itself, and secondly - a reasonable inference - as Treasurer of the Commonwealth at the time the report was to be printed.

Mr Duthie - What are you trying to prove?

Mr HAROLD HOLT - I am coming to that. I think this the real point, and it is not without interest to honorable members: In the concluding pages of this report, under the heading " Finance Charges ", appears the following finding -

The finance charges as set out in paragraph 77 are not unreasonable and there appears to be sufficient free competition among the finance companies to act as a brake on excessive charges. There was some evidence of occasional higher charges.

I shall not weary the House to-night by reading all of paragraph 77 which sets out the flat rates of interest which were to apply to certain classes of hire-purchase transactions because succeeding paragraphs state the position more clearly for our purpose. Paragraph 134 is in these terms -

Any fixation of rates could not conveniently be made on the basis of flat rates for each year as these vary considerably in practice according to the intervals of the instalments, as mentioned in the footnote to paragraph 77.

Paragraph 135 reads -

To meet this it could be laid down that the added charges expressed as a true rate of interest per annum on the unpaid balance shall not exceed the rates as may be specified. Suggested rates for this purpose would be -


Those are the rates that were recommended by this committee of which Mr. Chifley was a member. That was the Labour Government's idea of reasonable rates of interest for hire-purchase companies to charge at that time. I should be very surprised if we did not find that the rates being charged to-day are somewhat lower than those. It must be borne in mind also that the long-term bond rate at that time was 31 per cent, whereas the rate to-day is 5 per cent. So if, in the eyes of the Labour government of the day, the rates of interest that I have mentioned were considered reasonable when the long-term bond rate was 3i per cent., I invite honorable gentlemen opposite to tell us their idea of reasonable hire-purchase interest rates now when the long-term bond rate is 5 per cent. I think that gives us a rather more realistic picture of what Labour in government regards as reasonable in contrast to some of the poppycock that we have heard from the Opposition to-night.

Question resolved in the affirmative.

Bill read a second time, and committed pro forma; progress reported.

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