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Tuesday, 20 September 1949

Mr HOWSE (Calare) .- The honorable member for Hume (Mr. Fuller) seemed to be whistling to keep up his courage when he spoke about the result of the next general election being a foregone conclusion. He also spoke of the socialist pledge, and tried to justify it. The Minister for Health (Senator McKenna) also has attempted to justify the socialist pledge by stating that the Government intended to socialize only activities or concerns that, while they were conducted privately, were socially undesirable and were exploiters of the people. Who is to define what is socially undesirable ?

Mr Pollard - Leave that to me.

Mr HOWSE - I shall not leave it to the Minister for Commerce and Agriculture (Mr. Pollard) or the Parliament. " Socially undesirable " is a very broad term, and I am quite sure that the people will not be satisfied to have everything socialized on such broad terms. They will want some guarantee that free enterprise shall not be killed and that control of the State shall not be exercised by a small pressure group. I advise the honorable member for Hume, before he again criticizes any other honorable member, to have a talk with the Minister for Information (Mr. Calwell), who could give him some very good advice and might be able to put him on the right . track. I always have the pleasure of following the honorable member for Hume in debates and I remember, on the last four occasions, his love and affection for the Leader of the Opposition (Mr. Menzies). I should like to draw his attention to what the Minister for Information has said about that right honorable gentleman. I refer to a very good article that appeared in the magazine section of the Melbourne Herald of the 13th August last. The article reads in part -

There were many different kinds of public speakers, Mr. Calwell said - Public life abounded with men of diverse talents who used different styles with which to appeal to their audiences.

Mr. Menziesis undoubtedly the finest active political speaker in Australia, he said.

He is always pleasant to listen to. Nature has endowed him with many gifts, both of intellect and expression.

Then follow a number of notveryflattering references to other members of the party. The article continues -

Pass Menzies and there are no really great figures in the Opposition.

There is a testimonial from the Minister for Information to the Leader of the Opposition. The Minister might be accused of being biased on occasions, but I consider that in that instance he made a very fair criticism and expressed an opinion that is shared by all honorable members. For the honorable member for Hume to rise in his place and make the ridiculous statements that he did about the Leader of the Opposition and his lack of ability-

Mr FULLER - I did not say that the Leader of the Opposition did not have ability.

Mr HOWSE - I understood the honorable member to say so. I advise him to have a word with the Minister for Information, who will put him right.

There has been much talk about the depression years. The honorable member for Hume brought that matter up again.

We should get one thing straight. In the depression years a socialist Labour government happened to be in power. It could not be blamed for being the entire cause of the depression, but the people felt that a change of government was necessary. The Lyons Government was elected to office and made such progress in coping with the depression that it was returned with increased majorities at subsequent elections. However, all this talk about blaming any one government or section of the people for the depression is quite unfounded.

I turn now to the budget. First, I desire to speak on a matter that I consider to be of national importance. I refer to the poor state of Australia's defences. What is the Government doing about the preparation of the country's defences? What is its defence policy? The Government's five-year defence plan has failed. Cabinet has allocated hundreds of millions of pounds for defence and then has said, " Look at what we have done. We have allocated £295,000,000 for defence." The Government has budgeted for an expenditure of £60,000,000 on defence this year. In 1939, the last year prior to the outbreak of World War II. the Lyons Government spent £35,000,000 on defence out of a total budget of just over £100,000,000, or about one-sixth of the current budget. The value of the £1 has dropped now to slightly more than half of its value in 1939. The defence expenditure in 1939 was a bona fide expenditure on our defence forces. At that time civilian staffs employed in connexion with defence were of reasonable proportions and the cost of maintenance was insignificant compared with present levels. But whereas pre-waT expenditure on defence was legitimately used for defence measures, to-day a huge amount is being spent on defence without any real value being obtained in return. That is the position now despite the fact that the world to-day faces the same trouble as it faced during the Munich crisis of 1938. It may be very comforting to imagine that war may not break out for another five or ten years. Some experts may think so, but in these uncertain and troublous times we have to be ready to meet an emergency to-morrow if necessary. The present situation in Europe is extremely explosive. Before tie last war Nazi Germany confronted the world with the same set of circumstances as those with which Russia confronts it to-day. Stalin is Hitler's heir. He is the apostle of power politics. There is a distressing similarity in the attitude of Russia towards Yugoslavia and the German attitude to Czechoslovakia in the spring of 1938. It is the habit of European political circumstances to be repeated, and that is a fact that the Australian Government should keep well in mind. What is happening in Europe at the moment? What is the latest critical situation there ? Russia is very anxious to secure a naval base in Yugoslavia to enable the Russian fleet to be based in the Mediterranean. At the moment the straits of the Dardanelles are open to warships only in peace-time. If Russia had a naval base in Yugoslavia it would be able to move its Baltic fleet to the Mediterranean, base it on Yugoslavia and so threaten the lifeline between Europe and Australia.

In the Ear East we are no longer an isolated country. Only a few days ago the press announced that Britain's latest jet plane would be able to leave Australia at 10 o'clock one morning and arrive in London at 10 o'clock the same morning. That sounds paradoxical, but it is another way of saying that the plane would fly at the speed at which the earth revolves. So distances by air have been reduced to nothing. We are surrounded by countries in which communism is now playing a more vital part than ever before. In the last two wars Australia was able to take plenty of time, or, at least, did take plenty of time, after the declaration of war, to train its armed forces. There was no immediate threat to our country. But even during the last war, men were sent into action without adequate training because we employed the same training and mobilization methods as we used in World War I. During the last war we trained our service personnel on the principles applying in 1939. We shall have no warning of the next war. The full fury of it will be upon us without any declaration of war by the enemy, because the atomic bomb has opened up a new and more terrifying kind of warfare. What .are our defence responsibilities not only as a Pacific power, but also as a nation which seeks to play its part among the nations of the world? First, our defence forces must be sufficient to defend our long coast line. We cannot expect Great Britain, or other allied- countries, to support us directly because they will be busily occupied in their own spheres. We must be able to shoulder our full share of Empire defence. Clearly, Australia is not at present meeting its defence responsibilities even in the Pacific. The Government claims that we do not require a large defence force and it is acting on the idea that this country should primarily become the arsenal of the Empire. That involves the provision of factories, shipyards and stores to meet defence requirements. We are told that our second defence role will be to co-operate with Great Britain in developing atomic and guided weapons. How can we embark upon the rapid expansion of our industries without adequate supplies of coal? Indeed, we have not even the prospects of obtaining sufficient supplies of coal to meet our peace-time needs, let alone our needs in war-time. We are told that the substitute for coal is to be hydro-electric power to be generated under the Snowy Mountains scheme. But that scheme will be further delayed because of our inability during the present dollar crisis to obtain machinery from the United States of America. Therefore, the completion of that scheme must be a long way off. Australia cannot hope to become the arsenal of the Empire unless we have adequate trained defence forces to guard our own shores. Admittedly, our population is too small to provide a large defence force, but each of the services must be compact and well equipped. At present, the Navy possesses only a handful of ships, whilst the army is far below strength, the regular army being 4,000 short of its modest target of enlistments and the militia forces 19,000 short. The Royal Australian Air Force has practically ceased to exist, because it possesses only two fighter squadrons, two bomber squadrons and three transport squadrons on an operational basis. Our defence reserves are a mere gesture. The Government claims that it has made the fighting forces attractive to recruits. It has glamorized the uniforms and raised the pay of members of the forces. However, the fact remains that each arm of the forces is lacking in. numbers and it is impossible to build up units with inadequate numbers. Ex-servicemen's organizations and responsible bodies in the community have urged the Government to introduce compulsory training. We must face our responsibilities alongside Great Britain, New Zealand and other democratic countries which have introduced compulsory military training.

Honorable members opposite speak with great pride of the Government's preparations to meet a possible recession. Let us examine the implications of their statements. The Prime Minister (Mr. Chifley) has continually forecast a recession, and every one who studies present financial trends will agree with that view. However, the Government has failed to practice even elementary economy. This is evidenced by the rapid expansion of departments and rising administrative costs. The Government is guilty of wasting the taxpayers' money through sheer bungling. I shall mention one example. The budget discloses that the disastrous agreement to sell wheat to New Zealand has cost the taxpayers, including the wheat-growers, £7,500,000 during the last five years. The Prime Minister had been at pains to produce abundant evidence of the possibility of a depression which he is continually forecasting. A few weeks ago he announced a public works programme estimated to cost £700,000,000, which will be undertaken to counteract a depression. I believe that most people who heard that announcement were, unhappily, under the impression that the Government had a cut-and-dried scheme and that it had evolved definite measures to correct increasing unemployment and rising prices. However, the fact is that the Government has only devised new ways by which it can expend the revenues it will receive in future years. It has not set aside one penny with a view to providing the £700,000,000 to meet the cost of the public works programmes it has announced. It has not planned to set aside any sum whatever for that purpose, and it has no more idea than has the man in the moon where it will find even £100,000,000 let alone £700,000,000 which the Prime Minister boasts can be found to meet the recession he advertises so widely. The Government's approach to the possibility of a recession, which it is surely creating, is negative. AH that the Prime Minister is planning is to spend money without giving the slightest thought to where the money will come from or whether real money will be available. The distressing fact which will face Australia if the Government's extensive works programme is to be paid for is that the Government will, have to rely upon a policy of inflation. In other words, instead of adopting a commonsense policy of laying aside money at a time when large reserves could, with prudence, be provided to meet an emergency, the Government will resort to the printing of notes in order to finance its works programme.

The Government claims that it has made a series of major reductions of taxes since the end of the recent war. An examination of the figures shows that such a claim is sheer nonsense. Since the end of the recent war our invariable experience has been that collections of tax each year have exceeded collections in any previous year. That fact explodes the myth that the Treasurer is reducing taxes. The ordinary taxpayer is affected directly by three classes of tax, namely, income tax, company tax and social services contribution. Collections under those three heads alone during 1948-49 exceeded £272,000,000. Despite the Treasurer's claim that he is reducing taxes, the tax burden this year under those headings will be £276,000,000. Thus, the Government is really increasing the income tax burden this financial year by about £3,500,000. But that is not the whole of the story. In the history of the Commonwealth no Treasurer has been more conservative than is the present Treasurer. I say that in a complimentary sense. On the basis of previous budgets the Treasurer should collect from £10,000,000 to £25,000,000 more in taxes than he has allowed for in the Estimates. Therefore, the Australian community will have to bear additional income tax from which collections this financial year will be from three to five times greater than the increase which the Treasurer himself sets out in the budget.

We have heard a great deal of talk about television. Let us clear our minds on this subject. The Government proposes to establish a Government monopoly of television. This new development is of great importance and pays a vital part in modern warfare, whilst it has been developed to a great degree for commercial purposes in Great Britain and the United States of America. Apparently, the fact has not penetrated the mind of this Socialist Government that the cost of conducting a television service even on a limited scale will be much greater than that of providing sound broadcasting. No doubt, in this matter the Prime Minister has been egged on by the Minister for Information (Mr. Calwell) who desires to make television a government monopoly. Therefore, the Government has decided to bear the whole of the cost of establishing this extremely expensive service without having any prospect of a reasonable financial return from licensing fees or any other source for at least two or three years. Consider the staggering losses incurred on the Postal Department's entertainment services according to budget figures. These services will have to be increased four or five fold when the Prime Minister and his colleagues present themselves for the admiration of the Australian public on the television screen. The only possible reason for a government monopoly of television is that members of the Government themselves wish to monopolize the television screen. Television, under a government monopoly, will become a new deficit earner. Private industry is willing to share the cost of establishing television in this country. It should be permitted to do so on terms that will provide a reasonable return. The entry of private enterprise into the television field would be of great benefit to the public because the commercial stations would carry out experimental work at their own expense, and would give a very good service to the public.

I should like to say a few words now about the effect of the sterling devaluation on primary producers. Here is something that requires an answer from the Government. The drastic devalua tion of sterling area currencies shows the seriousness of Great Britain's financial position, but Australia is entitled to know - and I hope that the Prime Minister will provide this information - how the devaluation will affect the primary producer. Some primary producers may expect higher local prices for their products. In fact, the price of wool has already shown a slight upward move, but poultry-farmers, dried fruit-growers and, to some degree, wheat-farmers, have to accept pegged prices for their products. On the other hand, they if ace sharply rising prices for many of the things that they require to maintain their properties in production. Those requirements are well known. They include wire netting, which has to be imported because of the inability of local manufacturers to meet local requirements, petrol, motor cars, certain types of farm machinery, particularly heavy tractors, and pest exterminators. The prices of all those commodities will be increased, thus inevitably forcing up production costs. Any increased return that the wheat-farmer may enjoy as the result of devaluation will be more than offset by the inevitable heavily increased cost of the materials that he requires from the dollar area. It is the responsibility of the Government to provide some form of compensation for those increased costs, particularly where they have to be carried by the primary producer. I ask the Government for a clear statement of its intentions in this connexion.

Government administration costs are still increasing. The Treasurer estimates that this year the cost to the Australian taxpayer of the expanded administration will be approximately £28,000,000. Stated in plain terms, that is the current cost of bureaucracy. Only two years ago, the figure was slightly in excess of £15,000,000, so that administration costs have nearly doubled since 1945-46. Administration expenditure during the current year will be approximately six times the pre-war figure, and that, I consider, is one of the severest indictments of the Chifley Government's whole budget. The Government is showing a continued incapacity to bring ordinary principles of business management into departmental administration. The present cost of. living cannot readily be determined in relation to the pre-war level, but I suggest, as an approximate estimate, that the increased cost of living since 1939 is 60 per cent. On some items, of course, it is much greater, and on others it is less. In justifying this rise, the Government claims that the biggest increase has taken place in the price of clothing which is more than 100 per cent, dearer than it was in the June quarter of 1939. However, in the same period, the cost of government administration has increased by more than 600 per cent., so the Government has little cause for pride on that score.

T come now to Australian trade with the United Kingdom. Much has been said by honorable members opposite about Australia's assistance to Great Britain. We are told continuously that Australia is pouring foodstuffs 'into the United Kingdom in ever-increasing quantities; but I remind the committee that Australia's prosperity in recent years is attributable not to the Government but to the remarkably high prices received for our export commodities, mainly wool and wheat. The substantial payments that Australia is receiving to-day for its exports are due, with a few exceptions, to greatly increased prices and not to an increased volume of goods. The United Kingdom not only pays high prices for the few commodities that we are able to export, but also is the main market for our1 primary products. Britain has contracted to take the entire Australian exportable surplus of many primary products including meat, dairy products, and eggs. It is,, also, I understand, the largest importer of Australian wool. Increased quantities of Australian, wheat have been going to the Homeland. However, ai comparison with 1939 figures shows, that, considering the overall picture, Australia has failed miserably in. its drive to provide the United Kingdom with essential foodstuffs. Admittedly, the value of our exports to the United Kingdom has increased but that, as I have said, is due to the high prices. For instance, the average value of Australia's exports to Great Britain in 1938 was £6,000,000 sterling a month. The average for the first nine months of 1948-49. was £12,800,000 sterling, an increase of. 113 per cent. But. let us look at the other side of the picture.. Figures relating to the imports of food by the United Kingdom show conclusively that whilst the volume of goods received from other countries had increased, the quantity received from Australia has decreased alarmingly. I shall mention just a few figures to illustrate that point. In. 1938 Australia sent 1,550,000 tons of wheat, to the United Kingdom. In 1948, the quantity was only 772,000 tons, a drop of 778,000 tons in this one item alone. Butter exports tell the same dismal story. They declined from 90,000 tons in 1938 to 73,000 tons in 1948, a drop of. 17,000 tons. Exports of meat fell from 198,000 tons in 1938 to 133,000 tons in 1948, a reduction of 65,000 tons. Therefore, all this proud boasting about .helping, the Motherland is so- much eyewash, particularly when we remember that both New Zealand and Argentina have actually increased their exports to Great Britain over the pre-war figures. These figures reveal two disturbing trends. The first is that as the prices of wool and wheat fall, we shall be less able, out of export income, to maintain a high rate of consumer imports, or to pay for the essential import requirements of our expanding secondary indus.tries. The second is that because,, for a long period under Labour administration, Australian industry has operated far below maximum capacity, pent-up demand in Australia has had to be satisfied, at high cost, with imported goods that would normally have been available from domestic sources. In other words, the man on the land has to import a great many of his requirements at a very high price because they are not manufactured in Australia. Let us consider what has happened, in respect of wire netting, which is- a commodity urgently required by the Australian farmers.. Because of the inadequacy of Australian supplies', wire netting has to be imported at approximately four times the. cost of the Australian product. Under the Labour administration Australia is not producing the requirements of its people and consequently they must be imported at high cost. Consequently, the percentage of our national income which is expended on imports is increasing steeply. In 1938^39 we expended 14.3 per cent, of our national income on imported goods, but by 1948-49 the figure had jumped to 22.6 per cent. The present budget makes no attempt to arrest this drift in Australian overseas trade. It is true that in his budget speech the Treasurer (Mr. Chifley) made a passing reference to the possibility of a dollar loan, but he made nothing more than a passing reference. Under the socialist Government Australia finds itself in the unfortunate situation in which it can no longer attract investments from sterling or dollar sources. British and American investors have explored the possibility of investment in Australia. How can they look with confidence to Australia when we aTe not able to obtain the basic requirement of coal or power with which to exploit additional capital and man-power? In these circumstances what hope is there of being able to attract British and American investors to Australia ? The Labour Government has not shown at any time that it can -cope with these problems. In the present budget it makes no attempt to do 30. The Government's ambitious scheme to bring to Australia an increasing flow of migrants, good as it may be, will break down unless the attitude of the Communistcontrolled key unions to restrict immigration is reversed. Unfortunately, by the weight of the number of Government supporters this budget will be approved by the Parliament. That is unfortunate because next year the new government - the Liberal-Country partygovernment - will have no chance to do anything about it. [Quorum formed.]

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