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Thursday, 12 May 1960

Mr PETERS (Scullin) .- Mr. Speaker,the present Government claims to have been conducting a ceaseless struggle against inflation since 1949. Sir Arthur

Fadden, the former Treasurer, in his Budget speech in 1950, said - . . during the war and post-war years, prices and costs in most countries rose much further and faster than here.

Prices have continued to rise much faster and much further in Australia than other countries since 1950. In his Budget speech in that year, the Treasurer of the day made it clear that the Government was making an all-out attack on inflation and that the main weapon which it intended to use was the encouragement of imports. In that Budget speech, Sir Arthur Fadden said that the Prime Minister (Mr. Menzies) was himself negotiating a loan in New York in order to obtain dollars for the importation into Australia of necessary goods. In his next Budget speech, in 1951, Sir Arthur Fadden pointed out that imports into Australia had not increased sufficiently, and he said that the Government therefore found it necessary to take further and drastic action in order to encourage imports. He said - it has to be recognized that the time has come to impose effective restraints on money for goods and on the indiscriminate production of less essential goods.

He said that the measures that would be taken included control of the volume of bank credit through the special account procedures, the advance policy instructions issued to the trading banks and control of capital issues. The Government's policy was effective. Floods of imports came into this country, and, in November, 1951, in a question, I directed the attention of the House to the diminution of our overseas funds, and I asked what the Government was going to do about it. Later, under the procedure that prevailed at the time, I moved the adjournment of the House in order to permit the discussion of that subject as a matter of urgent public importance. The gentleman who was at the time Leader of the House, speaking on behalf of the Government, said that everything in the garden was lovely, our overseas balances were all right and the imports coming to this country were not adversely affecting either Australian industries or employment in this country.

Mr Anderson - When was this?

Mr PETERS - I moved the adjournment of the House in March, 1952. Two weeks afterwards, when Parliament had gone into recess, the Prime Minister made a radio broadcast in which he stated that Australia's overseas funds had diminished to such an extent as to bring us face to face with overseas insolvency, and he said that we must apply savage import restrictions in order to save our overseas balances. He did not say that those restrictions were applied in order to save from unemployment the people of this country, 100,000 of whom were at that time unemployed. The Government applied savage import restrictions on that occasion, and it has since continued a process of first encouraging and then restricting imports. After the restrictions of 1952 had taken effect, the Government encouraged imports, and it again restricted them in 1956. Indeed, the honorable member for Mackellar (Mr. Wentworth) described the Government's policy as kangaroo economics.

The point that I want to make is that the Government, having first applied restrictions and then lifted them, had not cured inflation or reduced prices. Prices continued to rise, and the Government now comes forward with what appears to be a brand-new solution to the problem of inflation and says, "We shall lift import restrictions again. We shall remove them altogether." What will happen when import restrictions are lifted altogether? There will be a flood of imports. If there is not a flood of imports, or even a considerable increase in imports, the object of lifting restrictions will not have been attained, and the Government will have failed. It lifts the restrictions in order that imports may increase. As I have pointed out, imports were encouraged in the financial year 1951-52, and, as a result of that encouragement, they rose to the unprecedented level of £1,050,000,000.

Mr Roberton - We needed them.

Mr PETERS - It is all very well for the Minister to say that. The result was that, in that year, Australia had an unfavorable balance of payments of £575,000,000. In 1953-54. we had an adverse balance of payments of £17,000,000. The adverse balances in the following years were £259,000,000 in 1954-55, £238,000,000. in 1955-56. £177,000,000 in 1957-58, and £187,000,000 in 1958-59. Those are immense trade deficits, and they have to be met out of the industry and toil of the workers of Australia. What happens temporarily, of course, is that the Government raises loans overseas, and with every loan that it raises overseas a little more of Australia's wealth is put into pawn with overseas moneylenders. We also bring private capital to this country from overseas, and every £1 of private capital from overseas which is invested in Australia increases the measure of control and dominance over Australia exercised by overseas investors. As the volume of loans raised overseas and of overseas investments in this country increases, the self-government of the people of Australia is endangered. Let overseas interests control the economy of this country and own its industries and the Government will be impotent. That, of course, is why the Premier of South Australia - who apparently is a better Australian than are some members of the Liberal Party - is alarmed at the extent of our overseas obligations. That is why the Governor of New South Wales, Sir Eric Woodward, is alarmed at the extent of the control that overseas investors have over the industries of Australia.

What will be the effect of the Government's policy? It has lifted import restrictions, and that action will mean an immense increase in the flow of imports. That can be seen already. Imports into Australia last February were valued at £78,000,000 compared with £58,000,000 in the corresponding month last year. That was an increase of £20,000,000 in one month and the trend is continuing. In 1951-52, imports into Australia totalled £1,050,000,000 and the adverse balance of payments was £575,000,000. With the lifting of import restrictions and the decline in exports, we can expect that in the next five years our adverse trade balance will be more than it has been in the past ten years. Does the Government believe that is sound economic policy, and that it will be beneficial to the people of Australia?

I want to emphasize that the adverse balance of payments over the past ten years has totalled about £1,050,000,000. During that period, we had a favorable balance of payments with only one country, and that was Japan. The Acting Prime Minister (Mr. McEwen), who is sitting at the table, apparently was so horrified to discover that we had a favorable balance of payments with Japan and an adverse balance of payments with every other country that he negotiated a treaty with Japan. The object of the treaty was to destroy that favorable balance of payments. He said in effect: " Japan is a good customer of ours. We must enable Japan to send more goods to Australia, but it cannot do so under existing tariffs." The Government thereupon reduced tariffs to enable goods to come into Australia from Japan so that we would have an adverse balance of payments with every country in the world. That is how the Government seeks to safeguard the interests of Australia and pretends to fight inflation.

In reality, the Government is destroying Australian industry. Its policy is to import textiles, shoes and cheap machinery from Japan and other countries; to import confectionery and watches from Switzerland and artificial jewellery and all sorts of luxury goods from every country in the world. Its policy is to put our people out of employment, destroy Australian industries and build up a burden of debt.

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