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Tuesday, 23 August 1960

Mr WARD (East Sydney) . - It is a pity that the Minister for Territories (Mr. Hasluck) has engaged in the usual practice of speakers on the Government side of manipulating figures so as to make a dishonest presentation of the economic situation in this country to-day and of the attitude of the Opposition. He twits us and asks, " What would the Opposition do? What is the Opposition's alternative budget? " The half-hour allotted to each speaker in this debate does not permit any member of the Opposition to put forward, in any detail, an alternative budget.

Let us examine and expose the dishonest way in which the Minister for Territories presented his argument. I have time to give only one or two instances. The Minister compared the increase in company profits with increases in wages, trying to suggest that the workers, even in this inflationary period, were doing much better than the great monopolies and great companies of this country. Nothing could be further from the truth, because the company profits of which the Minister spoke are based on what is termed capital invested. That includes undistributed profits, eventually made available in the form of bonus shares. If these profits were determined on the basis of the actual capital invested, it would be seen that they are much greater than the White Paper to which the Minister referred indicates.

The Minister talked about increases in prices. Strangely enough, the two years for which he gave figures were 1948 and 1949. It is rather significant that the prices referendum was held in 1948. When the Chifley and Curtin Labour Governments had their great war-time powers, they kept this country's economy in a stable condition. It was only after the defeat of the prices referendum, with the aid of members and supporters of the present Government parties, and after the majority of the people of this country had foolishly accepted the arguments put to them by the people opposite, that prices got out of control. The parties now in office said to the electors, " If prices control is removed from the federal sphere, the States can handle the situation, and prices will not rise". The result proves conclusively that the people responsible for setting inflation afoot in this country are the people opposite, who induced the majority of the voters in Australia to defeat the referendum on the granting of power to this Parliament to control prices.

Now let us turn to the present situation. The Minister for Territories said that members of the Opposition had not endeavoured to examine the true economic condition of the country to-day. I say quite frankly that an incoming Labour government will have a most difficult task. This Government has bungled the affairs of the nation to such an extent that any government that takes over from it will have a most difficult task to put things right. The Government's own Minister for Trade (Mr. McEwen) does not regard the present situation as being satisfactory, because he said, " Australia's economy is balanced on a razor's edge ". Does that indicate a satisfactory state of affairs? A few night's ago I tuned to a television feature which was described as " The Great Debate ". On that programme the Treasurer (Mr. Harold Holt) said, "The real test of a budget is what it does for thi nation ". That is exactly how I intend to approach this Budget.

Nobody can deny that in this country to-day the great problem and the great worry of every thinking and sensible citizen is that we have unchecked inflation. The Minister for Territories said that last year the cost of living had increased by only 3.2 per cent. That is creeping inflation. Any type of inflation is dishonest, but evidently, according to the Government, if you have creeping inflation, so that you can rob the people scientifically and only in small amounts at a time, it does not matter. lt is quite in order.

Why are the Government's loans not being filled to-day? The last three Commonwealth loans were under-subscribed. 1 will tell you why they are not filling. It is because the average Australian citizen is aware of what this Government is doing. Honorable members can work the figures out for themselves. A person who puts his money into a long-term loan raised by the Government receives, when the loan matures at the end of, say, fourteen years, approximately 52 per cent, of the value of his investment. The other 48 per cent, has eroded in the fourteen years. Does anybody think that the Australian public will continue to fall for that kind of dishonesty?

In its presentation of statistics, the Government is dishonest. The Minister for Territories compared expenditure in the Northern Territory during the Labour Government's term of office with present expenditure. He engaged in the kind of argument in which Government speakers continually engage. There is only one honest way in which to make such com parisons, if Government speakers want to make them, and that is to make the calculations with due regard to the deterioration in the value of money. Measured according to that rule, it will be found that although the Government appears to be spending more than was spent during the time of the Labour Government, it is actually spending less. The way in which the Minister presented his argument is the dishonest way.

Let us look at the Government's method of calculating the decline in the value df the Australian ti. As the base year on which to assess the value of the £1, the Government takes a fairly recent year. It does not take a year when the £1 could be exchanged for a golden sovereign, and measure the currency's deterioration in value against the value of money in that year. The Government brings the base year forward a number of years and says that the calculation shows that the £1 has not deteriorated in value to the extent claimed by members of the Opposition.

I heard the Treasurer talk about the national income. Honorable members opposite talk about the progress that has been made in this country. Let me give them the benefit of a little calculation that I made. I based it on the years that were used as an example by the Treasurer on a former occasion. If you compare prices in 1958-59 - that is the latest year for which I can get figures - with prices in 1949-50, you will find that, based on 1958-59 prices, our national income in 1949-50 was £4,130,000,000. In 1958-59 the national income amounted to £5,021,000,000. But if you allow for a population increase in the same period of 121 per cent, you will find that, whereas in 1949-50 the production per head of population was £505, in 1958-59 it was £499, a reduction of £6.

Let us turn to the question of wages to which the Minister for Territories referred. What has happened? The Government says that it wants to curtail expenditure. This is one of its ways of arresting inflation. But in endeavouring to curtail expenditure the Government does not propose to cut down profits or impose a capital gains tax. Instead, it proposes to reduce the workers' wages. Except in two States the basic wage in this country is no longer subject to quarterly adjustments in accordance with changes in the C series index. The Government has decided, in co-operation with the arbitration authorities, that no longer should these quarterly adjustments apply. Consequently, in Victoria every worker is being robbed of 27s. per week. In other States, they are being robbed to a lesser extent and therefore cannot enjoy the same standard of living as they previously had. f order to show honorable members how the workers are being robbed and fooled into the belief that they are much better off because they get more in terms of money, I shall quote from the " Financial Review " which is not a Labour journal but is published by the " Sydney Morning Herald". On 8th August, 1957, it was stated in the " Financial Review " -

The cost of living rose in 1955-57 by twice the margin indicated by the official " C " series index. Basic wage adjustments in N.S.W. would luv.e been almost twice as great had they been based on the more accurate interim index rather than on the older " C " series index.

The " interim index " referred to is not the one the adoption of which is now being advocated. When the anti-Labour press of this country began to see great merit in what it now terms the " interim index " I immediately knew that it would be only another means of forcing down living standards. The Minister for Territories said how prosperous we were to-day. I think that the easiest way to judge whether this country is better off now than it was eleven years ago when this Government took office, is to consider the level of food consumption. According to the Commonwealth. Statistician the Australian community is now consuming less of the basic foodstuffs per head than in the pre- war period. I questioned the Prime Minister (Mr. Menzies) in this Parliament on this subject some time ago. When I suggested that people were not purchasing the same quantity of foodstuffs because they lacked the necessary purchasing power to obtain adequate requirements, the Prime Minister said that it was not because the people lacked purchasing power that the consumption of foodstuffs had fallen off but because their eating habits had changed. That is on record in " Hansard ".

Let us turn to the problem of the balance of payments. We are told that this is the great trouble to-day and that unless it is corrected we could be in serious economic difficulties. Even the Government admits that. The Government has created an illusion of prosperity. There are more washing machines, more refrigerators and more television sets, but the people have not bought them. They have borrowed them because they still owe approximately £420,000,000 upon them. As soon as we enter into a period of slack employment the hire purchase companies will be foreclosing wholesale on these appliances which the workers have in their homes.

Mr Peters - They are doing it now.

Mr WARD - Of course they are. How do people manage to keep up their payments on this equipment? There are many workers' homes which could not carry on with only one breadwinner. Wives have had to go to work. This enables these families to continue their hire-purchase payments and creates the illusion that they are better off than they were a few years ago.

During the 10½ years in which this Government has been in control what has been our situation in regard to the balance of payments? I have discovered that if we take the amount that we have received for our exports and balance it against the amount that we have paid for our imports, we are £1,343,000,000 on the wrong side of the ledger. That is a very bad trading situation. How has it been possible for the Government to meet this situation? Merely by borrowing overseas. The amount borrowed last year, £42,500,000, was a record. It was the greatest sum borrowed overseas by any government in any year since the Australian Loan Council was established in 1928.

According to the Treasurer (Mr. Harold: Holt) the Government intends to induce as much foreign capital to come into Australia as it can. Like an individual, if the Government is able to continue to borrow money it can live beyond its means, but there comes a day of reckoning. The Government has put this nation into pawnand has jeopardized the future of Australia and the economic security of our people. Last year, invisible items such as freights, dividends paid overseas, payments of" interest on loans, and overseas remittances- totalled £233,000,000. That means that in that year, because of the policy of this Government, the Australian producer had to find £233,000,000 of export income before he started to pay for any imports. Last year's figure represented an increase of £12,000,000, and these payments will go on increasing every year.

The Treasurer said that since the end of the war over £1,000,000,000 of private capital had been invested in Australia. What the Government has been doing is borrowing overseas and obtaining foreign capital to balance the deficit in the trading operations of this country. In this period even our internal indebtedness has risen remarkably. In 1950 our national debt was £2,909,000,000. By 30th June, 1960, it had risen to £4,098,000,000 an increase of £1,189,000,000 in the national debt which is borne by every member of the community. I have heard Government supporters say that it does not matter if the Government owes money in Australia because the public loans are held by the Australian community. I have discovered that in the year 1958-59 our internal loans amounted to £187,000,000 of which the trading banks provided £77,000,000. They could not do that under a Labour government because we did not permit it, but they were able to do it under an anti-Labour government. Savings banks contributed £21,000,000 towards the sum of £187,000,000. Last year, the savings banks' contribution to Government loans was £41,000,000.

In the year 1958-59 the Government, because it is a big businessman's Government, released to the private banks large sums of money from what were known as the " special accounts " but which are now called the " reserve deposits " under our existing banking legislation. The Government said that it wanted to increase the liquidity of the private banks, but the money was not used for the purpose of home construction or development. Immediately these millions of pounds were released by an anti-Labour government from the reserve deposits in which they had been earning interest at the rate of i per cent., the private banks invested the money in Government loans at 5 per cent. That was a completely dishonest act on the part of the Government.

Let us turn to this overseas capital for which we are told we should be eternally thankful. The Labour Party has an entirely different view from the Government on overseas borrowing. We believe that it should be kept to a minimum. There may be some special occasions on which it is needed for the purchase overseas of equipment which cannot be secured in Australia. But we do not believe that it is necessary on every occasion to take every pound that is offered overseas either in the form of private investment or in the form of Government loans. The firm of General Motors-Holden's Limited has often been mentioned in this Parliament. I propose to refer briefly to certain figures because, as I have said, we have been told that we obtain great benefits from this invested capital. I want the House to remember that it was a Labour government which paved the way for the establishment of this industry in Australia. We were not opposed to the manufacture of an Australian car in an Australian factory by Australian workmen. We encouraged it. But we never intended, when we embarked upon that policy, to place this great wealthy overseas company in the favorable position that it occupies to-day. Last year, General Motors-Holden's Limited made a profit of £15,000,000, which represented 875 per cent, on its ordinary capital and a dividend of 425 per cent, which it paid overseas. In the few years during which this company has been operating in Australia, it has ploughed back £50,000,000 from profits. And all this has been achieved from the investment of a capital of only £1,700,000!

That capital was not brought in from overseas. This company did not bring one American dollar into Australia. It started off with a Commonwealth Bank loan which was guaranteed by the government of the day, and, with that loan, established this great industry. There was only a handful of preference shareholders in Australia, and the return to those shareholders every year, regardless of what profit this great concern might earn, was only £34,000. Now, in order that it might hide from public gaze in the future the extent to which it is exploiting the Australian community, this company has decided to buy up the preference shares. Nobody can blame those shareholders because this company offered them much more for their shares than they were able to obtain for them on the open market.

It paid General Motors-Holden's Limited to do that. Although the Liberal Party Premier of Victoria has talked about amending the company law of that State to compel this company to present public accounts in the future in the same way as it has done in the past, no action has been taken up to this stage.

Let us examine the present position. There are no new industries of any great consequence being established by foreign capital in Australia to-day. The reason for that is that Australian secondary industry to-day has not only reached the stage where it can meet local requirements but it has also a surplus for export if export markets could be found for that surplus. Whatever foreign capital is coming into Australia to-day is not being used to establish new industries; it is being expended on taking over existing Australian industries. That is the type of activity in which foreign capital is being engaged.

Let me turn now to the question of the monopoly move. The Leader of the Opposition (Mr. Calwell) correctly said that the present Government represents the great monopolies of this country. I clearly remember the Treasurer (Mr. Harold Holt) saying in this Parliament that company take-overs and mergers in recent years had caused unwarranted fears of the development of monopolies in Australia. Then he went on to say that it would not lead to the development of monopolies because 97 per cent, of the factories in Australia individually employed fewer than 100 people. I say that is a dishonest presentation of the case to the average person who, I suggest, would be inclined to believe, after hearing that statement by the Treasurer, that there was no monopoly move in Australia. Anybody who knows the factory laws of New South Wales knows full well that if a new Australian, or an old Australian for that matter, had what was termed a backyard industry in which he employed two or three members of his own family, he was required to register that industry as a factory. By the use of this type of manipulation, the Government can make it appear that there has been a tremendous increase in factory growth in this country among the people with a small amount of capital.

Let us turn to what happened last year. In that year, 47 ordinary stocks disappeared from the Melbourne Stock Exchange.

They disappeared because they had been the subject of take-over moves by other companies. And so we find the growth of monopolies. In the year 1956-57, which is the latest year for which I have been able to obtain figures, 78 companies in Australia made taxable incomes of over £1,000,000 each. Many of them earned much more than that. One of them, General Motors-Holden's Limited, made a profit of over £15,000,000. There is no doubt in the world that the Government is allowing these people to control the affairs of Australia. It is allowing them to exploit th; Australian community and the nation without any hindrance from it because this Government is the direct political representative of the great monopolies.

What proposals has the Government put forward to arrest inflation? Everybody knows that inflation is the one great fear in the Australian community to-day. The Government has said, " We have got to have wage stability ". But how does it propose to achieve wage stability? It proposes to achieve it by intruding into the affairs of the Arbitration Court. It proposes to achieve wage stability by giving the Arbitration Court what is, in effect, a direction that it is not to adjust wages in this country. If that sort of thing is to continue in Australia, is it any wonder that the great body of Australian workers is beginning to lose any confidence it ever had in the arbitration machinery of this country? The Government itself is helping to destroy this system. Then the Government decided to remove import restrictions. Further, it proposed imposing credit restrictions. On whom did it propose imposing those credit restrictions? There is any amount of money available outside the banking system to-day because this Government evidently cannot control those organizations which are operating outside the recognized banking structure. The position simply is that whilst the banks are restricted in one direction the hire purchase companies, with which the banks are closely linked, can go on lending money at any rate of interest, and to any extent, without any interference at all from this Government.

Then, the Government made a pious appeal to the business community to exercise restraint. Honorable members will recollect that the Prime Minister (Mr. Menzies) made the appeal to the companies, saying to them that they must not regard profits as being sacrosanct He was asking them to exercise restraint themselves. Now, the Treasurer says that the economic policy of the Government is to prevent large increases in the factors which affect costs generally and that that was why the Government intervened in the basic wage proceedings. I say quite frankly that it was absolute impudence on the part of this Government, through the Treasurer and the Prime Minister, to intervene in the proceedings before the Arbitration Court, a tribunal before which the workers were asking not for an increase but for an adjustment in wages because of the increased cost of living. And this, from a Government which, not so very long before, had handsomely increased the incomes of its members, a Government which had handsomely rewarded itself without recourse to the ordinary form of tribunal before which its members might have been subjected to questioning and cross-examination.

Now, let me turn to one or two other matters. If one were to judge the position on the interjections emanating from honorable members on the Government side, it would seem that they believe it is a practicable proposition to appeal to the business community to exercise voluntary restraint and not to regard profits as sacrosanct The Victorian Institute of Public Affairs publishes a journal called " Review ". In the January-March issue of that journal, this institute was much more honest in its approach to this question than any honorable member on the Government side has been, for, amongst other things, it published this statement -

It is all very well to appeal for restraint - indeed, it is right to appeal for it - but the truth is that few of us can resist the temptation to try to increase our money incomes whenever the opportunity offers. It is in this natural human propensity that inflation has its seed.

This journal, which represents big business interests in this country, frankly admits that any appeal for voluntary restraint of the activities of big business must be doomed to failure.

If honorable members are interested in what the Government is aiming to do, let me tell them what the Prime Minister said when the Treasurer introduced what was known as the little horror Budget in 1956.

That was exactly the same type of Budget as the one we have to-day. The Government frankly admits that this Budget is a deflationary Budget, and so was the little horror Budget of 1956, when the Prime Minister said -

What we are trying to do is to prevent some elements in our prosperity from aggravating an inflation which could, if left alone, undermine our prosperity.

Now you know what it is all about. You know what the Government is hoping to do.

In the few minutes left to me, let me deal with the existing balance of payments position, which is critical. I do not know that I have ever previously agreed with the Minister for Trade in all the years I have been in this Parliament, but I agree with him that the economy is balanced on a razor's edge. Last year, we were £10,000,000 on the wrong side in our trading operations. Taking the Government's own figures, with invisibles totalling £233,000,000, we finished up £243,000,000 on the wrong side. Overseas loans amounted to £42,000,000 and we were able to induce foreign investments in Australia totalling £197,000,000. That did not mean that we got £197,000,000 of new money, because that amount included undistributed profits that had been retained in Australia.

Our reserves overseas to-day, controlled by the Reserve Bank and in the open financial field as well, amount to £700,000,000. This Government could go on risking the future of this country for a few more years, without taking effective and appropriate action. It could go on gambling with Australia's future. To show how critical the position is, I remind honorable members that in the past thirteen weeks our reserves have been reduced by £60,000,000. If that trend continues for the rest of the year, we will finish this year £240,000,000 on the wrong side of the ledger. In the month of June, there was a trading deficit of £12,500,000. If that continues without acceleration we will be £145,000,000 on the wrong side at the end of twelve months. The export flow to-day is £900,000,000 and the import flow is £1,080,000,000, showing that our adverse balance may be nearer £180,000,000 than the figure I have quoted.

The price of wool has fallen by H per cent. Every time the price of wool is reduced by Id. per lb., lt means a loss of £6,250,000 to this community. We are told by those who are able to make an estimate that this year the production of wool will drop by 5 per cent. It is evident, therefore, that we are facing a critical situation. The Treasurer has said that we will get no new British loans this year because other loans will mature. He has said that there will be a falling off in loan investment. Even taking the most generous view, we can expect a fall in our overseas reserves this year of £200,000,000. Time will not permit me to develop the rest of my case.

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