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Thursday, 22 September 1949

Mr RYAN (FLINDERS, VICTORIA) - That is another alibi advanced by honorable members opposite in defence of the Scullin Government. Could it not have sought a double dissolution? When the Opposition parties are returned to power at the next general election they will not have a majority in the Senate. What will happen then should the Menzies Government insist upon the passage of legislation which it considers to be vitally necessary? Will it simply fold its arms and do nothing? No. It will do what the Scullin Government should have done when it was in office but failed to govern. The people are rather tired of the present Government because it has failed to take positive action to deal with our main economic problems; and I do not think that it ever will. The three main problems confronting the Government are: first, the decreasing productivity of industry; secondly, the increasing inflationary trend in this country, and, thirdly, the dollar shortage. The Government is not doing anything to meet those problems. One would have to be a super-optimist to believe that any government under the leadership of the present Prime Minister (Mr. Chifley) would ever take positive action to deal with any problem. He is a super-exponent of the policy of wait and see. He believes that any difficulty will eventually solve itself, that if one waits long enough something will turn up in the end. That is a dangerous policy. Experience in life shows that if one must do something, the sooner it is done the better. All of us are aware of the severity of droughts, but we know that even the worst drought will break. However, any farmer who failed to cart water for his stock, but simply waited for rain, would be considered a fool. The same observation applies to the Government's attitude to our present problems. I am sure that all of them will eventually be solved, because the world always finds a solution of its problems. But if our present problems are to be allowed to solve themselves the results for Australia will be disastrous. The Prime Minister, however, believes in the policy of waiting on events. I do not need to cite examples to illustrate that fact. In the recent past, the Parliament discussed the ban that was placed by the waterside workers' federation on Dutch shipping shortly after the conclusion of the recent war. That ban is still in operation. However, the Prime Minister, no doubt, supposes that if he waits long enough the waterside workers will get tired of the ban and will remove it. They have not yet done so, and I do not believe they will remove it until they are forced to do so. As another example of the Prime Minister's policy of wait and see, I cite the present shortage of petrol. Years ago the Government should have foreseen the present dollar shortage and how it would affect supplies of petrol to Australia. However, the Government did nothing to meet that problem in advance, but allowed our present difficulties to come upon us. The same observation applies to coal production. For years past we have been practically living from hand to mouth so far as coal supplies are concerned. Because of hold-ups in the coal mines, many industries are languishing. Many of our citizens have endured great inconvenience for long periods because they could not use electricity for cooking or obtain coal for fires. The coal-mining industry is still under the influence of the Communists, who simply do as they please. The Prime Minister did nothing to meet that problem .except to appease the Communists until he was forced into a corner when, to some degree, he fought back.

I should like to deal further with the problem of decreasing production. At the conclusion of the recent war Australia had a golden opportunity to expand its markets overseas. We completely failed to take advantage of that chance. A comparison of the figures relating to our present export trade with those for 1939 is most depressing. Whilst production has increased in some industries, the overall picture is one of decreasing production. This is in spite of the fact that the number of persons in employment, mainly in secondary industries, has increased by over 700,000 whilst we have increased our industrial potential as the result of our war-time activities and have imported considerable quantities of industrial plant. Nevertheless, we are not able to supply our own needs, let alone increase our exports. The Government has an alibi for its failure in that respect. What does the Prime Minister say on the subject? He claims, first, that the Communists are preventing industries from working to their full capacity; and, secondly, that production is interrupted by strikes. Those are facts. But do not strikes occur in other countries which are now increasing their production? The Prime Minister says that the decline in production is due to the lethargy that overcomes a people just after they have come through a war. That is true ; hut we find that in young countries like the United States of America, South Africa and Canada production, is increasing by leaps and bounds. The honorable member for Warringah (Mr. Spender) cited figures to illustrate that point, and it is well that I should repeat them. In the United States of America, the production of coal has increased by 50 per cent, since pre-war years. In Canada, the increase has been 35 per cent., and in South Africa 48 per cent.. Steel production in Canada has increased by 160 per cent, in the same period, and in the United .States of America by 180 per cent. Australian figures show a measly increase of 9.45 per cent, for all coal-mines, including, of course, the new open cut mines. Actually production in underground mines has decreased by 6.1 per cent. What does that mean? It means that whereas before the war, we produced coal at the rate of 49.3 tons per man-hour per month, the production figure is now 48.2 tons per man-hour per month. That reduction may sound small, but it is significant. Steel production has fallen from 10 tons per man per month to 9.9 tons per man per month. Cement production - another most important industry - has decreased from 18.5 tons per. man per month to 13.1 tons per man per month.

Mr Duthie - Where did the honorable member get those figures ?

Mr RYAN - From the Commonwealth Statistician.

Mr Duthie - I shall disprove them.

Mr RYAN - They are correct.

Mr Thompson - What about the 40- hour week?

Mr RYAN - That has contributed to the decline, but not to a great degree. Production has fallen mainly because the people are not putting their heart and soul into their work as they did years ago. Government supporters are continually saying " What wonderful men we are. Look at the wonders we have done for this country. How rich and prosperous we are ! " The figures that I have cited should make every honorable member opposite hang his head in shame.

Mr Fuller - The honorable member is being dirty now.

Mr RYAN - If honorable members opposite could see these things as I do, they would realize that it is not a matter of being dirty. If they loved this country as I do, they would do their best to get the best out of it; but they are going the wrong way about that now.

I come now to the second principle, namely the inflationary trend in this country. Here again we have government alibis. We are told that there is inflation in every war period. Any student of history knows that for hundreds of years inflationary trends have become evident in time of war. Sometimes they have been serious, and sometimes they have not. Inflation in wartime may be inevitable, but it is noi inevitable that inflation should continue after a war has ended as it has done in this country. Here again we have alibis from the Prime Minister. The right honorable gentleman says, in effect, that owing to the unfortunate decision of the High Court on prices control, and the resultant reversion of that control to the States, enormous price increases have accentuated inflationary trends. That is not quite correct. I have before me figures showing quarterly cost-of-living increases both before and after the prices referendum. The increases for the three quarterly periods immediately prior to the change from Commonwealth to State control were as follows: -


Then came the referendum and the reversion of prices control to the States. Subsequent price increases were as follows : -


All those figures are comparable with increases that occurred in the immediate pre-referendum period. The curve is continuing just as before. The increase for the March quarter, 1949, was only 1.71 per cent. It must be remembered too, that subsidy payments amounting to £20,000,000 annually were withdrawn by the Government after the referendum, for reasons best known to itself. One would have expected price increases to be much steeper for that reason. That disposes of the Government's alibi that the defeat of its prices referendum proposals has caused inflation. High prices are not the cause of inflation. They are the result of inflation. They are a sign that the economy of the country is out of balance. The reason for that lack of balance is that the Government's approach to our economic problems is wrong. I see that my friend the honorable member for Hindmarsh (Mr. Thompson) is listening attentively. He made one very good remark in the course of his speech earlier this week. He said that in prosperous times, a government should live within its means; but what is the position to-day? The prices for our primary products overseas are extremely buoyant. The local demand is still far from satisfied. We have full employment. These are all elements that make for financial economy. I am sure that the honorable member for Hindmarsh will agree with that. The Government should not be expending all its revenue each year, but should be placing reserves aside for bad times; but this budget provides for the expenditure not only of all the revenues that are expected from taxes, but also of approximately £35,000,000 of loan money. Virtually that makes this budget a deficit budget. That is a wrong" financial policy to adopt at present. Government members are entirely fascinated by glittering statistics. The national income of this country is now more than £1,900,000,000, an increase of 140 per cent, since 1939. The cost of living increase of 50 per cent, has been a mere bagatelle in the Government's estimation. National income and cost of living are highly illusory when they appear in their present setting. What is forgotten by the Government - and the honorable member for Reid has referred to this - is the catastrophic fall in the value of the £1. Statisticians tell us that the £1 to-day is worth only 12s., but, as I am sure housewives will agree, 10s. is nearer the mark. My second point is that to-day's prosperity and greatly increased national income are being chalked up in large letters by the Government to its own credit. Honorable members opposite apparently believe that, by prayer or by some other means, they have brought this prosperity to Australia ; but even accepting the national income of £1,900,000,000 at its face value, what is its composition ? Is it made up of a vast increase of production and higher wages paid inside this country, or is it made up - and this, I suggest, is the answer - of the greatly increased prices now being received from the sale of out primary products overseas? The latest figures indicate that our annual overseas income is now £540,000,000 compared with £119,000,000 in 1939. If, however, our present overseas income were at a rate comparable with that of 1939, our national income would be reduced by approximately £400,000,000. Our national income has increased by approximately the same percentage as has the cost of living. Compared with 1939 the cost of living has increased by from 60 per cent, to 70 per cent. This budget does nothing to correct the rising cost of living which hears so heavily on the people of this country. The Treasurer has granted us a paltry concession in sales tax which will amount to not more than about 5d. a head of the population a week.

I shall now deal briefly with the devaluation of our currency, which is a new element in our economy. The Leader of the Opposition (Mr. Menzies) said last night that devaluation may or may not have a long term effect on the United Kingdom and therefore upon ourselves and, what is perhaps more important, that, as the result of devaluation, the cost of living in Australia is certain to be forced up still further. The inflation which must follow the devaluation of our currency makes it imperative for the Government to do something really positive in the matter. Honorable members opposite should be aware of the facts. Our present prosperity, about which Government members have so much to say both inside and outside the Parliament, is based entirely on shifting sands and is completely illusory. It is not prosperity as the business man who has built up a sound business understands the term. It is much more in the nature of that of a punter - such as the one in Melbourne about whom we recently read - who, having a lucky day, goes home with a large sum of money in his pocket. He may lose it again as easily as he won it. That is the position that may confront us unless we take steps to guard against it. It is wrong for honorable, members opposite to boast about our prosperity lest one of these days the people are brought down to earth with a great bump. Indeed, some people can be taught to think' sensibly only in that way; others are prepared to listen to reason.

I propose now to deal briefly with the dollar shortage which has arisen because we are not selling as much of our products to the United States of America as we desire. That applies also, but to a greater degree, to the United Kingdom. T do not know whether the Treasurer will agree that our position to-day in this respect is broadly the same as it was in 1929 when, as the result of American action, there was practically 'a cessation of trade between the United Kingdom and the United States of America.

Mr Chifley - We lost both in quantity and price in those days.

Mr RYAN - The situation to-day is, broadly speaking, somewhat the same, although the factors that have given rise to it are quite different. The problem that confronts not only Australia but also, and more vitally, the United Kingdom, is how to correct the dollar shortage. Expansion of the sale of our goods in the United States of America offers the most practical means by which we can earn more dollars. I trust that the Government is taking every opportunity to achieve that objective and that it is doing everything possible to assist private traders to develop markets in the dollar area. Australians are apt to forget that they must offer goods of the right quality and type that are packed in the right kind of packages to suit American tastes. They must remember that a potential buyer will use his discretion as to whether or not he buys them. Whether the United States will accept more of our goods, I do not know. All that we can do in this direction is to endeavour to increase the sales of our products in America. Devaluation may help us to attain that objective. The selling of larger quantities of our products to the United States constitutes the most direct method by which the dollar shortage may be overcome. Another method is to raise a dollar loan, through either the Import and Export Bank or some other channel. I do not know how far negotiations for such a loan have progressed. We must at all costs make clear to the Americans the purposes for which we require that loan. We do not want them to think that we want dollars to pay for nylon stockings, newsprint and the like. We should tell them that we need them for the purchase of capital plant and equipment.

Mr Beazley - The Premier of Victoria suggested that the proceeds of a dollar loan might be used for the purpose of obtaining petrol.

Mr RYAN - I should be the last person in the world to expend loan moneys on the purchase of petrol. Another means by which we may obtain dollars is by the encouragement of American investment in Australia. At one time we obtained all our investment capital from the United Kingdom. We all agree that the possibility of doing so to-day is somewhat remote for a number of reasons, but chiefly because British businessmen have not sufficient capital to cover investments in this country. Obviously, then, we must look to the United States of America. Capital should come to us from America in the form of plant, farm machinery and technical assistance. American businessmen are known to be pretty tough. They will not invest capital in Australia if there is any possibility that they may lose it. As honorable members know, the experience of American businessmen in relation to foreign investments in pre-war years was not a happy one. They have not had much trouble of that kind since the war because most of the money that has gone out of America in post-war years has been in the form of Marshall aid.

Mr Beazley - American businessmen have invested an enormous amount of money-in foreign countries since the war.

Mr RYAN - They had their fingers badly bitten in pre-war years and they are not now as optimistic as they were. Devaluation may help to attract American capital to this country. As honorable members know, under the provisions of the American Economic Reconstruction Act, for the payment of a small premium a company can obtain a guarantee of the return of its European earnings in dollars. I do not know whether the Government has explored the possibility of having the provisions of that act extended to cover investments in Australia. If the Government has not done so, I suggest that it should endeavour to negotiate an agreement of that kind because it would be very helpful in obtaining a loan. At the same time we must realize that there are certain factors which deter American investors from investing money in Australia. The first is the conditions surrounding the repatriation of any dollar loan. Any one who makes a loan requires to be assured not only that he will have his money returned in due course, but also that he will receive a reasonable return on his loan. The second factor that is deterring Americans from investing capital in this country is that they are highly suspicious of socialist governments.

Mr Beazley - Has the honorable member any evidence that investors in the United States of America have discriminated against socialist countries?

Mr RYAN - Yes. American investors

Mr Beazley - American investors have treated Great Britain very generously.

Mr RYAN - The fact is that American investors are chary of investing money in Great Britain. They have observed the effect upon the economy of Great Britain of the political developments that have taken place in that country. For instance, they have observed the mounting burden of the cost of social services. I shall not at the moment enter into any discussion of the soundness or otherwise of increasing such services, but it is obvious that increased social services must increase costs of production; and no one wants to invest his money in countries where the costs of production are unduly high. American investors have also observed the result of nationalizing industries in Great Britain, in the course of which that country has already lost £78,000,000. Those factors have seriously impaired the confidence of American investors in Britain's economy. When they examine Australian conditions they see evidence of similar tendencies here to those which have manifested themselves in Great Britain. The position would be different if the Australian Government were to say to American potential investors: "As a matter of government policy we are determined to socialize all the industries that we can, but if we nationalize the industries in which you invest your money we shall make adequate compensation to you".

Another deterrent factor, the importance of which seems to have escaped the attention of both the Government and the people, is the state of the relations between Americans and Australians to-day. Whilst it is perfectly true to say that any Australian who visits the United States of America is received with great friendliness, and perhaps with more outward show of welcome than is an Englishman, and that any American who visits this country is well received, the fact is that the relations between the Government of this country and that of the United States of America are quite different. I trust that the Prime Minister (Mr. Chifley) already, appreciates this, and if he does not, I hope that he will take notice of what I am saying. Information which I receive from various sources indicates that a marked coolness is developing between the two governments.

Mr Chifley - That is not correct.

Mr RYAN - I am afraid that the Prime Minister's information is not quite correct.

Mr Chifley - Yes, it is. I know the source from which the honorable member receives some of his information.

Mr RYAN - The Prime Minister ha3 not the vaguest notion of the source of my information. In fact, he could not guess it even if I gave him a thousand guesses. I happen to have a number of correspondents in both Great Britain and the United States of America, and they let me know exactly what is going on. Why has this coolness developed in the relations between the two governments? One reason is to be found in the difficult manner in which the Australian Government has conducted negotiations with the American authorities on a number of matters. Only the other day I mentioned the failure of our Government to take action to enable Australians to avail themselves of the benefits conferred on us by the Fulbright Act, which provides that American funds left in overseas countries after the termination of lend-lease could be utilized for cultural purposes. What has happened in Australia ? Speaking subject to correction, we are the only people who have not yet availed themselves ' of the funds provided by the Fulbright Act. The Government has permitted certain minor technicalities to prevent the implementation of that generous scheme. Consider the negotiations for the elimination of double taxes on American investments and salaries. Although negotiations have gone on for months and months no satisfactory result has yet been achieved. Why has that matter never been settled? The Treasurer has indicated plainly that he wants his pound of flesh. Surely it is worth while, in such circumstances, to concede something for the sake of friendship between our two countries. What about the Navigation Act? Consider the story of Manus Island since the war. Did our Government make any kindly gesture to welcome the establishment of the Americans in Manus Island ? Finally, the antics of the Minister for Immigration (Mr. Calwell) have obviously not conduced to more friendly relations between the two governments. I need only recall the unpleasant publicity that arose out of the case of the " Manila girls " and the Gamboa incident. In themselves, those were only minor matters, but the cumulative effect upon American opinion of our Government's action must have been most damaging, more so because the Americans are a tolerant people. They must have said to themselves, "What sort of people are the Australians? What sort of government have they?" In conclusion, I repeat that it is high time that the present Government got out and made way for a decent administration.

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