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Friday, 16 September 1949

Mr BEAZLEY (Fremantle) .- The honorable member for New England (Mr. Abbott), for the first minute of his speech, threatened to be coherent, but, after that, when he was solving the dollar problem for us, and telling us, incidentally, that Scots are foreigners, he became very confused. The fundamentals of the position in which Australia is to-day with respect to its need for dollars were touched' upon by the Minis ter for Post-war Reconstruction (Mr. Dedman) when he stated that the world's dollar problem is caused by the unbalance between the enormous volume of American exports and the volume of American imports. The honorable member for New England has stated that American investors ari concerned at the nature of governments in the United Kingdom and Australia and hence are not investing in the sterling area. That statement does not square with the volume of American investment that is occurring in the parts of the British Empire in which American investors consider that they will receive a reasonable return for their investments. Investment has nothing to do with the nature of governments. As a matter of cold fact, the volume of American investment in British enterprises now is far greater than it was in 1939. That in itself constitutes an aggravation of the dollar crisis for Great Britain, because it will have to pay the interest on those American investments by means of exports.

There are four factors involved in the dollar crisis. The first is the unbalance between American exports and imports. That was aggravated by the war but has been modified by the generous American policy of making gifts. The Australian Country party, if the honorable member for New England spoke for it, which I can hardly believe, has changed its attitude in the last three years. When the United States of America was making gifts in the immediate post-war years, at the stage when it had made gifts amounting to 8,000,000,000 dollars to the rest of the world, thereby solving the dollar crisis of that time because other countries did not have to pay for imports from the United States of America with goods of their own, the right honorable member for Cowper (Sir Earle Page) rose to his feet in this chamber and advocated a policy of rigid imperial preference. That policy would lock the Australian economy entirely within the sterling area. This morning the honorable member for New England, in the one coherent thread in his statement, criticized the way in which the Australian Government had tied Australia to the sterling area, and suggested that we should have redirected many of our exports with a view to earning dollars.

I am not disputing that he has a case for that contention. I merely say to honorable members opposite that the right honorable member for Cowper found it convenient to pretend that he thought that there was going to be a lowering of world tariff barriers as a result of the Havana conference when he stated in this House, with full Australian Country party support, that he advocated a rigid policy of imperial preference. The point that must be frankly faced, is that some sacrifices are being made by Australia for reasons of high policy. The fundamental changes that have occurred in the economic position of Britain in the decade since 1939 have nothing whatever to do with the political colour of any particular British government. Before the war Britain received £230,000,000 sterling worth of goods from overseas investments which, at to-day's values, would represent about £500.000,000 worth. It received these goods literally for nothing because they represented interest on investments that Britain had accumulated abroad for a century. It was a conservative government in Great Britain which, quite rightly in view of the exigencies of the war, sold up, for instance, £700,000,000 worth of British investments in the United States. That £700,000,000 worth of factories and other equipment was handed over to United States interests as payment for arms. It is childish to pretend, therefore, that the diminished volume of imports from the United States that Great Britain can now finance as a result of its sale of those interests has anything to do with the conservatism of Mr. Churchill or the socialism of Mr. Attlee. It has only to do with what Britain was forced to do to finance its war effort. During and immediately after the war there was no dollar crisis because the United States sustained the British economy to the extent of one billion dollars worth of food a year, for nothing. After the war, when that aid was suddenly discontinued, the British Government was labouring under the impact of two crises that had nothing to do with the political complexion of tha government in office. The first crisis was that Britain was no longer receiving that American aid, which was cut off before Britain's industries could be reconverted to peace-time production in order to finance Britain's imports. The second crisis was that Britain suddenly had to assume great obligations in Europe. After all, it is costing Britain £S00,000,000 worth of dollars a year to occupy Germany. That means, in effect that food that Britain either earns with its exports or obtains on credit from this country has had to be diverted to the occupied territory. In fact, to a large degree, the British occupation policy in Germany is based on the provision of food to the Germans.

Mr Holt - I think that the honorable member has added a nought to his figure of British occupation costs.

Mr BEAZLEY - No, I have given the cost of the occupation at least in the first two years.

Mr Holt - I think that the figure should be £80,000,000, not £800,000,000.

Mr BEAZLEY - If I have been inaccurate in that respect I apologize to the House, but the point I am making is that at the time when direct aid to Britain from America ceased, Britain suddenly had increased obligations imposed on the British larder, because of the responsibility to contribute to the feeding of the German people and the British occupation forces in Germany. Criticism has. been directed at the policy of maintaining a sterling balance in London. Australia has a sterling balance of £451,000,000 in London, the accumulation of which arose from the fact that we have given Great Britain that amount of credit. I disagree with the statement of the Minister for Post-war Reconstruction that we ought to be grateful to Great Britain for taking that volume of our goods, because Great Britain is our best market. The point is that in a world where there is a seller's market, it has been essential, to British economy that Great Britain should be sustained by such credit. In the long run it is essential to Australia's economy that Great Britain should be so sustained. At the present time such sustenance on the part of Australia involves a sacrifice for us. The Leader of the Australian Country party (Mr. Fadden) may argue that we could gain dollars by selling zinc direct to the United States instead of exporting it to London, whence it may be re-exported to the United States. The honorable member for New England may argue that we could be getting a greater rake-off in dollars if we sold wool direct to the United States. He has not proved conclusively to me, and did not attempt to prove to the House, that the £20,000,000 gap between our dollar earnings and our annual withdrawals from the dollar pool could be gained in that way. We are getting £70,000,000 worth of dollars a year from Great Britain and our exports are earning £50,000,000 worth of dollars. The honorable member did not prove conclusively that the direct sale to the United States of wool now sent to Great Britain and manufactured into goods there would have itself bridged that £20,000,000 gap. Mr. Abbott. - I referred to the raw content of woollen goods manufactured in Great Britain and exported to the United States. The honorable member should not twist what I said.

Mr BEAZLEY - I am not twisting what the honorable member said. He argued that if these re-exports from Great Britain had been sold by us direct to the United States they could have earned for us £20)000,000 worth of dollars to bridge our dollar gap, but he advanced nothing to prove his statement. He left his assertion to stand on its own. In any event the particular category of goods is not important. It is purely the matter of the gap of £20,000,000 worth of dollars that we are discussing. The point is that, even if we have to make dollar sacrifices to do so, there is a strong case for our sustaining the British economy at the present time, because the British economy is, in some respects, being distorted for reasons of high policy to sustain certain parts of Europe. It is deplorable to hear from honorable members opposite this perpetual pretence that the socialist Government in Great Britain has caused the present economic crisis in that country.

Mr. ACTING DEPUTY SPEAKER (Mr. Burke).- Order! The honorable member's time has expired.

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