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Tuesday, 14 March 1961

Mr POLLARD (Lalor) .- Every good Australian, in this Parliament or out of it, must be perturbed at the position of the Australian economy to-day. I have heard it said unworthily in this debate by several honorable members on the Government side that the Labour Party would like to see unemployment grow out of the existing crisis. I repudiate that allegation. Nobody with any human instincts would want to see his fellow citizens suffer the horrors of unemployment simply to gain political advantage. The suggestion to which I have referred is not worthy of those who made it. The Labour movement was the advocate and planner of a policy of full employment. In an attempt to cope with the current financial situation, the present Government has deliberately and admittedly initiated economic measures that, in their very nature, must result in some unemployment in Australia. To be fair to the Government, it must be said that it claims the unemployment will be only temporary and of a passing nature. But in my electorate, I have seen 500 men dismissed from the Ford motor works and they have nowhere to go for employment. Hundreds of workers in other electorates have suffered the same fate, and I know from experience that as a few men lose their jobs, there is a snowball effect and ultimately many thousands suffer the pangs of unemployment.

The Labour movement adopted a policy of full employment, lt began when the Labour movement and the trade unions adopted the slogan of " the right to work ". The policy of full employment grew from that. In 1945, the first white paper on full employment was issued by the Chifley Government. Subsequently, Dr. Evatt was sent to a United Nations conference in San Francisco with instructions from the Chifley Labour Government to try to have incorporated in the United Nations Charter a declaration by all member nations that they would endeavour to implement, by every means possible, a policy of full employment within their own countries. That step was of immense psychological and practical importance. It has even influenced this Government, which knows only too well that if unemployment should grow, its future is not very bright, nor is the future of anybody else.

Why is Australia in its present economic situation? When this Government was elected to office late in 1949, it announced with a flourish of trumpets - and has continued to announce ever since - hs abhorrence and detestation of policies involving controls. It is antagonistic to planning. But inevitably, as a result of that attitude and, until recently, the practice of that policy, Australia has drifted into very serious economic difficulties. After all. the nation is not so very different from an individual or the head of a household. The moment he becomes too deeply involved in debt, he faces grave difficulties. A study of events shows that when Sir Arthur Fadden - who was then Mr. Fadden - delivered his Budget speech in this Parliament on 20th October, 1950, he said that Australia's overseas reserve funds totalled £650,000,000. That was a very healthy figure. It followed twelve months of this Government's occupancy of the treasurybench and, in reality, was a balance standing to the credit of the Australian people as a result of the administration of the Labour Government in the immediate postwar period. That was the most difficult economic period that the country had experienced. To-day, our overseas reserves, compared with £650,000,000 in 1950, have dwindled to less than half of that amount. On to-day's money values, Australia's overseas credit balance in 1950 was worth £1,300,000,000; to-day our balance stands at less than £300,000,000. It has dwindled progressively as this Government has refrained from doing the things it should have done. The exact figure is about £299,000,000, but for the sake of easy arithmetic, let us call it £300,000,000. In terms of purchasing power, that £300,000,000 is worth only £150,000,000 compared with the value of money in 1950 when the Labour Government handed over the management of the country's affairs.

Mr Anthony - What currency are you using?

Mr POLLARD - The £1 to-day under this Government is worth 10s. or less compared with the £1 in 1950. That is all. No one will argue otherwise. A balance of £300,000,000 to-day in terms of the purchasing power of the Australian £1 in 1950 is worth only £150,000,000. It will buy only half the labour, the goods or the services.

Since 1950, inflation and depreciation have continued apace. Fortunately for the Government, until recently we had ten long years of good harvests, ample supplies of primary products and reasonable prices overseas. To-day, because of two developments - first, the increase in inflation, and secondly, some substantial falls in the prices of exported products - the Government finds itself in serious economic difficulties. Some say that these difficulties are due to inflation; some say they are due to falls in the prices of goods exported. Some say they are due to a combination of both. Let us see what some of the leaders of the Government say.

Mr Fox - What do you say?

Mr POLLARD - Never mind what I say; I will tell you what some of your leaders have said. The Acting Prime Minister (Mr. McEwen), as Minister for Trade at that time, said in an address to the National Farmers Union on 11th November, 1960 -

Our problem is not the pace of the rise in costs at the moment-

He qualified his statement in that way - but the fall in the value of the products that we sell in export markets. If our wool had not fallen as sharply as it has, a cost increase of 1 per cent, per annum as it is running at the moment would not be talked about as something threatening to the existence of the wool indusrty. This fall in value is the real problem, the one vital thing in our existence over which we have no control at all and can only seek to influence.

In other words, he dodged the real problem of inflation in our own internal economy. He said that the only real problem " at the moment " - he isolated the present period from the remainder of the eleven years during, which the Government has been in office - is the fall in the price of export products.

Let us examine the right honorable gentleman's statement. I have told the House of the gallop in inflation. When the Minister claims that our problem in 1960 is due only to a fall in export prices, let me remind honorable members that it costs 4s. 3d. to produce a pound of butter in Australia to-day, while in 1949 it cost 2s. 2d. It costs 15s. 4d. now to produce a bushel of wheat, while the cost was only 7s. Id. in 1949. These figures prove my statement that inflation has resulted in an increase of internal costs of the order of 100 per cent, since 1949-50.

If honorable members opposite are disinclined to believe my statements. let me quote for them some remarks made by the honorable member for Bradfield (Mr. Turner), a Government supporter, who said recently in this House -

At the present time, of course, governments are perpetuating a gigantic swindle in borrowing good money and returning bad. I imagine no government would find the Treasury prepared to give up the profits of this fraudulent transaction. Fear and anxiety are gripping at the hearts of tens of thousands of thrifty people in this community, as they watch the erosion of their savings.

The economist for the " Sydney Morning Herald " then comes into the picture. In discussing the situation in the wool industry he refers first to fifteen years of inflation. That is twelve years of this Government's and three of the Chifley Government's, so that the odds are all for the Chifley Government and against this Government. Could not this Government halt Chifley's inflation, or the inflation of which it accused the Labour

Government? Could not it check that inflation in twelve years? Of course it could not, although it maintained that it was going to cure that inflation. The economist for the " Sydney Morning Herald " said -

Fifteen years of inflation, together with the readjustment of export prices to the lowest levels since 1957 have brought this industry to its present state.

Let me make a comment with regard to the Government's assurance to the Australian people that it abhors controls, that it does not believe in them - although my belief is that what it does not believe in is planning. What did the Government do? Soon after it came to office it called the bankers in and said to them, "Now, boys, things are blowing up a bit. Inflation is on the way. Let us have an agreement amongst you people, so that you will not over-lend and will not increase overdrafts." They said, " All right, Bob ", and away they went. Then the Bank of New South Wales, or the Australia and New Zealand Bank Limited, or whichever one it was, scabbed on its mates. It started to let the money go. Then they all bolted, and away she went. The next thing that happened was that the Government said again, " Let us get the hirepurchase boys in; they are making it a bit of a welter." The Prime Minister called them together and said, "Now, boys, it is getting a bit tough. You are over-doing it. A lot of money is getting loose. What about an arrangement? " They said, " Good-oh, Bob ", and then some of their members scabbed, and away she went again.

Mr Bryant - That is free enterprise.

Mr POLLARD - Yes, that is what they call free enterprise. But worst of all is this Government's inactivity in the credit crisis situation. This is something for which it should be indicted. Whereas in 1949 the Labour Government had exercised some fairly rigid control over interest rates, after that time interest rates have gone ever and ever onward and upward. The Government has found, as we found, that it has no control over interest rates charged outside the banking system. The Commonwealth Treasurer controls the rates of interest charged by the various private enterprise banks, but the private enterprise banks set up lending and borrowing organizations at the other end of their counters, as it were, over which the Commonwealth Treasurer has made no effort to exercise control. The Government probably excuses itself by saying that it has no constitutional powers. It should be remembered, however, that when we sought constitutional powers and endeavoured to bring all banks under the control of the nation, the then Opposition, which later formed the present Government, opposed us.

What has been the result? I will show the House what the result has been by referring to various advertisements in one of to-day's newspapers. First, there is an advertisement by the Industrial Acceptance Corporation Limited. I believe that the new member for Calare (Mr. England) told the House when he came into this Parliament that as a result of the Government's new policy the Industrial Acceptance Corporation Limited is not lending any more money in his electorate. But if you look at this newspaper you will see what that company does to get money. It advertises registered first mortgage debenture stock at 8 per cent, for ten years, or 7 per cent, for six years. Then there is an advertisement by Esanda, which is a subsidiary of the English, Scottish and Australian Bank Limited, outside the control of the Government. It advertises an interest rate of 7 per cent, on registered first mortgage debenture stock for six to ten years, or 7i per cent, over the same period on registered unsecured notes. Then we turn to an advertisement by Cox Brothers (Australia) Limited, which says, "Investment opportunity, 8 per cent., deposit investment plan."

Then I turn to an advertisement by Waltons Credit Corporation Limited. I notice that since the Government's credit squeeze came on and the banks were allowed to increase interest rates, these organizations outside the banking system have started to offer the public higher interest rates for their money. We have the Waltons firm offering Si per cent, on registered redeemable notes. There is another advertisement by Reid Murray Acceptance Limited, offering registered first mortgage debenture stock at 9 per cent.

Then I come to Pinnock Manufacturing Company Limited. This company has hit the limit, with registered fixed deposit notes at 10 per cent, for five to ten years, or 9i per cent, for four years. The Australia and New Zealand Bank Limited, which, of course, is just scratching, publishes an advertisement which commences, "The wise way to secure your nest egg", and then shows a chain and a lock around a great big egg. This bank is able to offer, according to the policy of this Government, only 4i per cent, on interest-bearing deposits, for twelve months, but that is substantially more than any bank or other lending institution should be offering to anybody. I have another advertisement here by the Melbourne and Metropolitan Board of Works, offering an interest rate of 5i per cent. In that case the money is wanted for public utilities.

What does it all amount to? When these people offer such high rates of interest and, incidentally, attract a good deal of money, the result is that instead of investing their money in loans to the Melbourne and Metropolitan Board of Works or -in Government stocks or bonds, or putting it in the Commonwealth Bank or in private banks at the rates of interest fixed by the Government, the people are lending to institutions such as those I have mentioned. This inflates the whole economy, because in whatever direction the money is invested, whether it be in home-building or in manufacturing industry or in any other kind of enterprise, the payment of these high interest rates forces ever upwards the prices of commodities, labour and services. The end effect on wool growers and other primary producers, and on everybody else in the country, is disastrous. But the Government cannot see this. The Government knows that costs are increasing; that interest rates are pressing ever upwards, so further increasing costs, but all it can see is the working man who needs a higher wage because the interest on his loan has risen, and the farmer who is in difficulties because the interest on his advance from, say, the Industrial Acceptance Corporation has risen. The wage and salary earners have to approach the court for an increase in their pay to enable them to keep pace with the situation that has developed under this evil system. Then what do we find? At present our Prime Minister (Mr. Menzies) is in the vicinity of Buckingham Palace.

Mr Harold Holt - He is in the vicinity of every other Commonwealth Prime Minister, and you know it.

Mr POLLARD - This is funny. This is the only opportunity that Government members have had to make a gibe at me. They have not been able to say anything about the other statements that I have made because they know them to be true, and this statement is true, too! The Prime Minister is in the vicinity of Buckingham Palace. What is wrong with that?

Mr Opperman - The way you said it.

Mr POLLARD - The way I said it! The Prime Minister leaves his Treasurer (Mr. Harold Holt) to take the kicks that have been directed at him by the Australian community for the way that he has mismanaged our economy. The Acting Prime Minister, like the Prime Minister, also has spent a good deal of his time touring the world and interviewing all kinds of people. I am not saying that they do not do some good things and I am not saying that the trips have been wholly unnecessary, but they have overdone it.

Mr Harold Holt - You did not have a bad record yourself.

Mr POLLARD - I have never said that I disagree entirely with overseas travel, but I do say that it is most unsatisfactory for a Prime Minister, a Minister for Trade and a Treasurer to be touring the world when their own house is on fire; when there are serious economic difficulties in their own country; when the Treasurer has had to implement policies with which the Prime Minister agreed and which are causing serious unemployment and disturbance in this country; and when our international reserves are diminishing so rapidly. By the end of this financial year our overseas reserves will be in the vicinity of £300,000,000 or £400,000,000 which, added to the deficit of fi, 125,000,000 already accrued from 1953-54 up to and including 1959-60 will make the positron very serious. It is all right, from the Prime Minister's point of view, to pin-point the working class and to have his representative appear in court and, in effect, say to Their Honours, "We do not think that wages in this country should be increased ". In other words, the Government's argument is, " We do not think the workers should be given a sufficient income to enable them to catch up with the increases in the cost of living for which we, as a Government, are responsible ".

The Government has had the report of the Constitutional Review Committee for the past eighteen months. The committee recommended that a referendum be held to seek additional Commonwealth powers to control interest rates and capital issues and to seek a more effective marketing system to enable wool-growers and other primary producers to get a better deal. That recommendation was subscribed to by the six Government supporters on the committee, but the Government has not done one solitary thing about the report, and it never will. It rs in the invidious position that whatever measures it takes to-day will hurt one or two sections of the community. If it hurts its own supporters, they will kick it at the next election; if it hurts the working class it will not receive from the Australian Democratic Labour Party the solid preferences that it has received in the past because the old hip-pocket nerve will be touched and the workers' votes will go to the Labour Party which, every time it has had the opportunity, has inscribed for itself in the annals of this country a record of progress, prosperity and sound government. I join with the Leader of the Opposition in the censure motion which has been launched against the Government.

Mr SPEAKER (Hon John McLeay

Order! The honorable member's time has expired.

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