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Wednesday, 14 September 1949

Dr EVATT (Barton) (AttorneyGeneral and Minister for External Affairs) . - Honorable members must agree that the debate has shown first that the problem of the importation and rationing of petrol is merely incidental to the general dollar problem and also that even the dollar problem is not a purely Australian problem. Thirdly, the dollar problem affecting us in Australia is essentially a British Commonwealth problem, and has been treated as such by this Government and by every member of the British Commonwealth. If these points are made good, they will show clearly that the actions of the Government throughout warrant not the censure but the endorsement of the House.

I shall deal with the first point relating to the importation and the rationing of petrol. It is perfectly clear that it is not a question, as has been suggested by the honorable member for Warringah (Mr. Spender) in regard to the production of gold, of simply looking around to find some sources of production which may be increased. The degree to which production is increased in this country is immaterial unless dollars can be obtained for the resultant output. Therefore, the suggestion of the honorable member for Warringah that this problem would be solved at once by a mere increase of the production of gold in Australia, irrespective of all the other circumstances - the dollar problem generally and the British Commonwealth position - has no substance whatever. The Leader of the Australian Country party (Mr. Fadden) said, among other things, that the Government has adopted this policy because of the preference it has for rationing petrol. He said that the Government wanted to ration" petrol simply to enable it to control' the people of this country. That statement is absurd, as well as completely incorrect. What government would! wish to ration' petrol if supplies were freely available? Petrol rationing is difficult to administer. It was undertaken in time of war' because' of the overriding interests of the' nation at that period. Therefore, the question is not one of rationing at all. The Prime Minister (Mr. Chifley) has stated the position with absolute frankness and fairness. He said that if Australia as a part of the British Commonwealth is to tackle the' dollar problem causing a restriction upon imports, petrol rationing must automatically follow. If the importation of petrol must be limited by the availability of dollars to Australia, then the decision must be either petrol rationing or uncontrolled sales in circumstances which would result in only a few people getting supplies, and the ordinary member of the community being denied a fair share. The problem,- as the motion suggests, relates,- not to a policy of rationing of petrol, but to the bringing of petrol into this country.

I submit that the following facts have been established in connexion with what I might call the Australian dollar deficit. The facts are incontrovertible, clear and undisputed. . First,, we do not sell, enough goods to Canada and the United States of America to cover the goods and services that we want to buy from those countries.

Mr Abbott - Does the right honorable gentleman believe in bilateralism ?

Dr EVATT - No; we want a broader approach. These facts must be understood and appreciated in their entirety before a proper conclusion can be drawn. Secondly) throughout the twenty years between the two world wars, we had a deficit with the United States of America and Canada, even taking into account the exports of gold to the United States of America. Thirdly, only in the exceptional years of the second world war, when the American forces, were here, and we were receiving American lend-lease aid, did we show a1 surplus. Fourthly, Australia's dollar deficit fluctuates widely from year to year. Earnings vary widely because of fluctuations in the volume and value of wool' export's to the United States.

It is not correct to say, as the right honorable member for Cowper (Sir Earle Page) said, that wool is everywhere worth dollars. It is not. It is worth what it brings in the relevant currency of the buyer. American demand for Australian wool has fallen. There has been a good deal of unemployment in the United States of America and there has been a consequent decline in the sale of wool to that country. Wool cannot produce dollars as and where the seller of the wool wishes.

Mr HARRISON (WENTWORTH, NEW SOUTH WALES) - Many countries have shipped wool to the United States of America after buying it from us.

Dr EVATT - What the honorable member for Wentworth (Mr. Harrison) has said, is true; but it is irrelevant and quite .beside the point.- It is true that some profiteering took place in respect of Australian wool,- but as was pointed out by the Prime Minister during his mission to the United Kingdom last year, that has been checked. Having mentioned these four points, I should like to state shortly the Australian trade deficits in certain key areas after allowing for sales of gold. In the period from 1936-37 to 1938-39, the three years immediately preceding the outbreak of World War II., Australia had a deficit of 36,000,000 dollars in its trade with Canada and the United States of America. In 1946-47 the dollar deficit amounted to 54,000,000 dollars and in the following year it was 164,000,000 dollars. The latest available figures show that in 1948-49 there was an estimated deficit of 72,000,000 dollars. It must be clear to the House and it will be clear to the people that if Australia had said, " We are hot interested in any other country. We look upon this matter purely from an isolationist point of view ", we should have had in the last three years an aggregate deficit of 2-90,000,000 dollars, or an average deficit of more than 90,000,000 dollars in each of the three years. If Australia were segregated from the British Commonwealth we could not obtain any dollars with which to meet such a situation as confronts us at present. That is why dollar deficits are financed by converting into dollars surplus sterling earned from trading with other parts of the world. Before the war the United Kingdom could convert as much sterling into dollars as was required by Australia. Because of the general dollar shortage, that is now impossible. The limited dollar resources of the sterling area are held in a sterling area dollar pool. But for that fact Australia's position would be hopeless. It is not merely a question of sentiment - although sentiment does play its part - but as the Prime Minister has indicated a matter of hard fact. The policy of the present United Kingdom Government has been criticized by many speakers on the Opposition side of the House. That government, however, continues to meet all our dollar requests on the one reasonable condition that we co-operate with the United Kingdom and other members of the Commonwealth in conserving dollars. The Minister for Post-war Reconstruc (Mr. Dedman) recently visited Great Britain and an agreement was made between all members of the British Commonwealth in relation to the conservation of dollars for the mutual advantage of the whole of the Commonwealth and the sterling area. The whole of- the problem comes back to this question: Are we going to stick to that agreement or are we going to repudiate it? That is the essence of the problem. Repudiation, apart from being completely alien to our policy, would be completely futile and would not put us in a better position at all. It was agreed at the London conference that Australia would take action to achieve results comparable to those to be achieved by the United Kingdom. The United Kingdom has announced that the 1949-50 dollar imports are to be cut to 75 per cent, of the 1948-49 level. The Australian Government has reduced allocations for dollar import licences for the September quarter of this year by the maximum amount possible without causing severe disruption to Australian industry. There has not been disruption. There was a large volume of temporary unemployment during the coal strike, but that has been reduced to an infinitesimal figure, which should be disregarded, as was indicated by the Minister for Labour and National Service (Mr. Holloway) in the statement that he made to the House last week. Now, we again have full employment.

The aim of the policy agreed upon at the conference in the United Kingdom was to reduce dollar expenditure on imports to 75 per cent, of the 1948 level. However, it is clear that a full 25 per. cent, saving in dollar expenditure is not possible in the present financial year because of the commitments on outstand*ing licences and, as I have stated, the Government is investigating the possibilities of borrowing. The honorable member for Warringah made a sneering reference in his speech to the International Monetary Fund. That fund may well turn out to be enormously helpful to Australia in dealing with the extraordinary problem of balance of payments, and it may well meet the very situation for which it was devised. I agree with what the right honorable member for Cowper (Sir Earle Page) said about the war-time position. I join in his tribute to Mr. Beasley, who had' to save almost every gallon of petrol during the terrible crisis of the war. But the situation to-day is quite different. During the war, the lend-lease agreement with the United States of America did what a writer expressed graphically when he wrote that President Roosevelt "took the dollar sign out of the relationships between the allied countries ". The tragedy of the post-war period was the suddenness with which the lend-lease arrangements were terminated after all the sacrifices that had been made by the British people, not solely on our account and their account, but on account of all the democracies of the world. Other forms of assistance had to be substituted, on the footing, however, that the currency that mattered in the world was the dollar. The dollar sign has returned to international trade. The honorable member for New England (Mr. Abbott) was correct when he suggested that our objective should be multilateralism. When we signed the lend-lease agreement, the United States of America insisted, as far as we were concerned, upon a stipulation tending towards multilateralism, not bilateralism. The whole assumption was that it would not be a currency that would stop international trade as is the position to-day. But that is not the immediate problem. It is the problem behind the problem. That type of problem was discussed, I have no doubt, between the representatives of the United States of America and Great Britain at the recent Washington conference. We have to get something that will be a substitute in world trade for what President Roosevelt arranged in the crisis of war and in the great lend-lease plan.

It is a remarkable paradox that what is essentially a currency problem should interfere with the free flow of trade. I believe that, through international cooperation, the objective that we all have at heart will be achieved. There is no other way. It was possible for President Roosevelt to achieve that objective only because of the war. But it may be possible for President Truman to do something of the same character; and all his recent speeches indicate that he is following broadly the principles laid down by the late president, who was one of the leaders of the allied forces in time of war. I do not wish to repeat any arguments that have already been used, but it is obvious that, if what I have said is correct, our very lifeblood, as far as dollars are concerned, depends upon British Commonwealth co-operation. Therefore, far from criticizing the Chifley Government for what it has done, the people of Australia ought to be and will be grateful for the action that has been taken by the Prime Minister. Consider the alternative. As the figures that I have read to the House prove beyond question, the alternative would have been catastrophe for many Australian industries, some of which have been enumerated by my colleagues during this debate. It is quite logical for members of the Opposition to attack members of the British Government as they have done. I do not think that they have done so because they are opposed to Great Britain. I think that they have done so because they do not agree with the policy of the British Labour Government.

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