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Wednesday, 25 February 1959

Mr IAN ALLAN (Gwydir) .- In his address on the occasion of the opening of this Parliament, His Excellency the Governor-General expressed the view that Australia's prospects for expansion appeared to be good. That is a confident view that will be shared by all people who have faith in Australia. But it is important that we should not allow that confidence to blind us to the real problems that beset Australia at the present time. If we consider our economic position at this time properly, we must see it against the background of the change in the structure of our population, the growth in our population, and the tremendous developments that are taking place in western countries and in the Communist countries. If we study Australia's problems against that background we must appreciate more fully the magnitude of those problems than we normally would.

This country has done remarkably well in the last ten years or so. We have invested a higher proportion of our savings than has any other country in the free world. Twenty-five per cent, of our gross national product goes back into capital works each year. That is a higher percentage than any other country can boast about. But despite that record, Australia is still desperately short of the capital that it needs for development at a rate sufficient to guarantee our long-term security and the maintenance of our standard of living. How much capital do we need to ensure the security and welfare of this country? We cannot say precisely, even if we had adequate data with which to make the calculation. All that we can say at this stage is that our need is very great and grave. We have, as is well known, and as will be made even better known at the Premiers conference to be held in Canberra next week, a grave shortage of capital for public works. We need more capital for the construction of roads and the improvement of our transport and communications systems. We need more capital for irrigation works and all the other things that will increase the productivity of our country. We need more capital for the raising of skills in the community. At first glance it may not strike one that the raising of skills does require a heavy expenditure of capital. It costs money to train people from the status of apprenticeship right through to the status of doctorate of philosophy, and in recent times we have been falling behind in the training of our people. We have not been spending enough in that direction. I can cite some figures which will indicate the extent to which we have been slipping back. In terms of percentage of total population, Australia produces only one-half as many scientists and engineers as the United Kingdom produces, one-third as many as the United States of America, and onequarter as many as the Soviet Union. If we draw a comparison between Australia and Canada, which are very similar countries, we find that Canada produces twice as many scientists and engineers, in proportion to its population, as does Australia. But worse than that, at the doctor of philosophy level the discrepancy is even more dramatic. Canada produces over eighteen doctor of philosophy graduates per 1,000,000 of its population to Australia's four. We need large amounts of capital to train our people.

We also need capital to raise the productivity of our industries, both primary and secondary. A celebrated Swedish economist, Professor Lundberg, who visited Australia a couple of years ago, estimated that Australia's productivity had slipped back in relation to that of other countries at a very striking rate. The results show up in the increase in real wages since the war. He calculated that in Sweden since the war real wages had risen by 55 per cent, as against 25 per cent, in Australia. That discrepancy is due very largely, of course, to our migration policy. We have admitted very many more people to these shores, and we have had to provide houses and other facilities for them. That has lowered our rate of productivity as a nation. However, we cannot be satisfied with that proportion. We must devote more money and more attention to the raising of levels of productivity in Australia during the next few years. When we attempt to raise productivity by introducing mechanization, by installing better machines and better equipment in factories and so on, obviously we will displace a great number of workers, as has happened and is happening now in the coalfields of New South Wales, and perhaps in the rest of Australia. So we must find capital to absorb those displaced workers and also the growing number of youngsters who will be leaving school and looking for employment in the next ten years.

Professor Sir Douglas Copland has calculated that the increase in our work force over the next ten years, as a result of the change in the structure of our population, that is, as a result of the increased birth rate after the last war, will be some 35 per cent. Other experts have put the position in another way, saying that in place of the 500,000 jobs that we had to find in the last ten years we shall have to find upwards of 1,000,000 jobs in the next ten years. That will require a great deal of capital.

We need to increase our productivity on the land, of course. We also need to increase our levels of production on the land very substantially if we are to continue exporting primary goods. I remind the House again that it is on primary goods that Australia depends for its overseas earnings, and on very little else. The percentage of truly manufactured goods in our exports is still round about 5 per cent, or 6 per cent. The great bulk of our exports comes from the primary sector of the economy. We must step up that production very sharply, if we are to cater for the needs of the rapidly rising population of Australia and to have large and growing surpluses for export.

The Bureau of Agricultural Economics has calculated, as shown by a paper published last year, that we have to increase our primary production by some 66 per cent, over the next few years if we are to maintain the proportion of primary products to our exports as it is at present. That is, if we are to satisfy the needs of our people and have a growing surplus for export, we must have a growth of 66 per cent, in our primary production. We have not made very much progress towards that goal of increased production on the land.

The Treasurer (Mr. Harold Holt) in a bulletin published in October, 1958, which is the most recent report I have, pointed out that the gross output of farm products in 1957-58 was 7.6 per cent, lower than it was in the previous year. We are remaining stationary or going back in production on the land, instead of having this tremendous increase that we should have if we are to maintain Australia as a growing country with an expanding economy.

Of course, it is very easy to say that we need these vast amounts of capital. We must have them if we are to maintain Australia as a free country with a high standard of living. Where are we to obtain these large amounts that we need? We can obtain them, as we have been doing, from overseas borrowing, overseas earnings, and foreign investments, but anything that comes in that way comes more or less as a windfall. It cannot be planned in advance. It cannot be ordered. It just arrives, and if it does not arrive, there is very little that we can do about it. We must continue to depend for our progress on the money that we can raise from ourselves, on our own savings, and on the increase of our productivity.

I urge the Government to investigate our taxation systems thoroughly. The GovernorGeneral has forecast a review of our taxation system. I suggest that it be a very comprehensive review, which takes into account all the innovations which have been suggested in recent years, such as the expenditure tax which has been canvassed by some notable economists and which at least would have the effect, I believe, of diverting money from the public sector to the private sector of the economy, and that might well be of great advantage.

I urge the Government to draw up plans for the future, to set up the machinery for eliciting the facts that it needs, to ascertain the facts, and to set about drawing up comprehensive plans for the future economic progress of Australia. Those plans would have to cover a long period. We would have to plan for at least the next ten years if the plans are to be worthwhile at all. In this connexion it is an interesting and rather odd commentary on our interest in the future and the welfare of other countries of the British Commonwealth, that the thorough-going report produced last year by the royal commission which Canada appointed a few years ago to ascertain her prospects for the next 25 years has evidently not been studied by this Government. Certainly it has not been studied to the extent one would wish, because when I set out to obtain from the National Library a copy of the report of the commission set up in 1955 to investigate Canada's economic prospects, I was told that a copy was not available here. Since

Canada's problems are very similar to Australia's, and since we both have a desperate need for more capital and an urgent need to discover where we are going if we are to maintain our high standards and free way of life, surely it is incumbent on some one to take note of what is happening in Canada and adopt the lessons that could be applied to Australian conditions.

A great responsibility devolves on the government of a country like Australia in these days because of the controlled economy we have. The general public is unaware of the economic relationship between one country and another. We do not know how our standards compare with the standards of people who live in other countries, as a general rule, but the Government does or should know what is the relationship. The general public are sheltered by various forms of controls and restrictions imposed by the Government and its agencies which give us an air-cushion ride. In the past few years, we have been able to ride over the shocks of the basic wage judgments, the Korean War and sharp increases in the price of wool in 1951 with scarcely a ripple on the surface of the economy. That is all because of this pneumatic-controlled economy. That being so, it is very easy for us as a nation to slide back in our standards without the public being aware of what is going on.

Those who know - and that means the Government, which should know - have an obligation to see that action is taken in time to prevent the country from slipping back. Therefore, I urge the Government to obtain the facts now, to set up the machinery to find out "what our needs are, what our standards are in Australia and our levels of productivity, and to draw up sensible longterm policies on .the basis of those facts.

It is not by accident that the countries of Europe have come together in an economic union. They are aware of the tremendous rate of development that is going on in the Communist countries. They are aware of the danger that will confront the free world in the next generation. The United States of America is also most conscious of this danger and its Secretary of State, Mr. John Foster Dulles, warned the United States only a month ago that it must be prepared to accept policies of government which would entail sacrifice and austerity. The mighty, wealthy America feels the need for austerity, for accumulating capital aud building up its country. Canada obviously is also aware of the need although it shelters under the umbrella of the United States. Canada has gone to the trouble of setting up a royal commission, and we in Australia at least should set up a fact-finding committee.

We are far more vulnerable than any other free country. We are isolated in the Asian sector of the globe. We are a long way distant from the sources of capital such as are freely available to Canada. We have to pull ourselves up very largely by our own boot straps and we are proud of the fact that we have been able to succeed in doing that so far. Let us go on and develop Australia in its strength by adopting wise policies now - policies that might be unpopular with the people who are not aware of the need for them, but policies which we believe we must obtain in the best long-term interests of Australia.

A mighty explosion is impending in Asia. The population of China is increasing at a tremendous rate. The Chinese are developing the wealth and the power of that country rapidly. If we do not build up Australia .at a rate at least comparable with that of the Chinese rate of increase and expansion, we will create a vacuum in this part of the world which will inevitably lead to war. It is weakness and not strength that produces wars. If we want to preserve this country for future generations, we must see .to it now that the right action is taken to safeguard Australia and keep it as a free country.

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