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Wednesday, 24 August 1960

Mr SWARTZ (Darling Downs) . - -First, I should like to offer my congratulations to the honorable member for Hunter (Mr. James) on his maiden speech, which he made in this debate last night. I also wish to refer to the speech of the Leader of the Opposition (Mr. Calwell) in which the honorable gentleman pursued what is now becoming the normal annual policy of his party, based on one foundation - gloom. His whole prophecy and forecast throughout his speech were of inflation and a tendency towards depression. Year after year the speech of the Leader of the Opposition in this House - in this case that of the present Leader of the Opposition - has followed the same pattern. I think it is about time that the Opposition obtained, and played, a new. record, because the present one is becoming a little scratchy. From the speech of the Leader of the Opposition one would gather that it is the policy of the Opposition to oppose anything put forward by the Government whether it be good, bad or indifferent. As an illustration of my point I draw attention to the fact that in the Budget debate last year the then Leader of the Opposition and, indeed, the Opposition as a whole, criticized the 5 per cent, rebate on income tax which was allowed in the 1959-60 Budget. They said that it was a bad thing because it would help big business but not the small man. Yet, this week, the Leader of the Opposition has criticized the removal of the 5 per cent, rebate under the 1960-6.1. Budget! Again, he has said that this action will help the big man more than, the small man. This is an illustration of my thesis that the Opposition is prepared to oppose anything put forward by the Government, whether good, bad or indifferent. In relation to economics the Labour Party is as completely out of date as it is in relation to many other things, including international affairs. It is time that members of the Opposition brought their policy into line with modern thinking and conditions.

The Leader of the Opposition went on to quote what he claimed the Government had promised in 1949 and perhaps at some subsequent date. I challenge the Leader of the Opposition to prove that the statement to which he referred was actually a promise. At the time to which he referred references were made to putting value into the £1 but there was no specific promise. Let us look at the situation. I invite the Leader of the Opposition to examine the Commonwealth Statistician's index of wages and prices for the last financial year. There he will find that based on 100 units for 1945-46, whereas the C series index figure had risen to 249 average weekly earnings had risen to 339. The figures show that over the last twelve months there has been an increase in the value of real wages of approximately 9 per cent. I think that that indicates the real state of economic circumstances in this country.

The Leader of the Opposition also quoted figures showing that prices had risen by 98 per cent, in ten years and he condemned the Government for it. I will not go back ten years although I think that the honorable member's figure is quite incorrect. I shall quote from the latest publication of the National Bank in which reference is made to prices. The publication states -

The general inflation of incomes and prices which we have suffered since the war has contributed substantially to our high cost structure, and this has been largely beyond the control of industry itself. As an example of the cost difficulties, over the last five years our prices have risen by approximately 19 per cent., those of the United Kingdom by 13 per cent., and in the U.S.A. and Canada the increase has been approximately 10 per cent.

There is certainly a very big difference between those figures and the figures quoted by the Leader of the Opposition. We must remember, in relation to costs and prices, that circumstances in Australia are quite different from those in the United States of America and the United Kingdom. We are in a stage of great development, and pressures on costs and prices are far greater here than in the economies of those two countries. The Leader of the Opposition went on to say that inflation is worse in Australia than in any other country. That is an equally absurd statement. I want to quote one short extract from the " National Institute Economic Review " of the United Kingdom for July which has just come to Australia. It refers to the economic conditions in the United States of America and the United Kingdom and says -

World trade may now rise more slowly. The United Slates economy is not expanding, and her imports are not rising; Britain's own imports may possibly fall a little; primary producing countries' export prices have not risen since the beginning of the year; the sterling area's exports appear to be levelling off, and sooner or later their imports are likely to follow suit. The area where expansion - both in demand and trade - is more probable is on the Continent of Europe, and in particular among the six E.E.C. countries.

I merely quote that to show that a somewhat similar set of economic conditions is facing our great friendly countries, the United States of America and the United Kingdom and that our economic situation in Australia is certainly no worse although, in some respects, perhaps, no better than that which is being experienced in those two countries. Let us be fair. Let us not decry what we have done in Australia and so mislead our own people and give a wrong impression overseas.

The Leader of the Opposition referred - rather hopefully I thought - to the fall in wool prices at the initial sales. Whilst we do not know at this stage what the future of the season will be, at least it is no cause for jubilation to know that there has been a fall in wool prices. If anything is likely to upset our economy both the Government and the Opposition should do their utmost to correct the trend. The Leader of the Opposition was also critical of the hirepurchase situation. He knows very well that this matter is under the control of the State governments which are taking some action at the present time. I am sure that he does not really overlook the advantages of the hire-purchase system in maintaining living standards and employment in Australia.

The next Opposition speaker was the honorable member for East Sydney (Mr. Ward), who quoted figures which gave an entirely misleading outlook. He said that production per head in Australia had been reduced over a period of years. That statement is quite incorrect. The figures bear out that Australian primary industries still have the highest output per man of any Western country. I think we should be duly proud of that. Certainly it is not a matter for criticism. Let us look quickly at an extract from the " Survey of Manufacturing

Activity in Australia " which is put out by the Department of Trade and will be in circulation during the next few days. Referring to manufacturing industries it says -

.   . output was running at a level more than 10 per cent, higher than a year earlier. In the same period, employment increased by just over 6 per cent. . . .

I think that that is sufficient indication that the movement of productivity per head of population is upward, not downward as the honorable member for East Sydney claimed. He said also that Australia was purchasing less food per head than in the pre-war years. I have not the exact figures for 1939 from which he may have quoted but looking back to 1953-54 we see a definite upward movement. The total monetary expenditure on food increased from £750,000,000 in 1953-54 to £1,055,000,000 last year, which is an increase of approximately 1 per cent, per capita during that period. These figures are taken from the Treasury's " Statement of National Income and Expenditure " which has just been released. So, again, I say that the figures quoted by the honorable member for East Sydney are an incorrect indication of the situation. The honorable member also said that overseas investment was not good for Australia. In order to answer that allegation I shall quote briefly from a publication called " Overseas Investment in Australia " put out by the Manufacturing Industries Advisory Council, of which honorable members have probably read. In its opening remarks it states -

Overseas capital has played a vital part in Australian development and the Council is firmly of the opinion that, despite the problems associated with it ... a continued inflow of capital from .abroad is necessary to the attainment of our national objectives of full employment, rapid population growth and rising standards of living.

I am sure that every member on the Government side of the chamber will agree completely, as I do, with the findings of that very important council.

The honorable member for East Sydney was also critical of the advice given by the Commonwealth Government to the Commonwealth Conciliation and Arbitration Commission when it was represented before the commission recently He classified this representation as a direction by the

Government to the commission. The only thing 1 can say is that that statement is a shameful reflection on the members of the court who are in a position to consider all the evidence before them, and I am sure the criticism will not be accepted at its face value in this country.

The honorable member went on to quote figures relating to our trade balances and the present position of our reserves. Again, some of his figures were not entirely correct. Perhaps they were a little slanted to give the impression he desired so much to convey, lt is a fact that we finished the financial year with a favourable trade balance of £13,300,000 and there was some movement between our invisibles and the investment moneys coming into the country. This did ultimately cause a slight deficit of £4,000,000 in our reserves for the year, but I think, when we look back on the conditions which we expected at the beginning of the financial year, that was a very favorable result indeed.

Let us examine the actual items mentioned by the honorable member. He quoted invisibles amounting to £233,000,000; but when we look at the figure for undistributed income, which is money which could have gone out of the country but which has stayed here and add that amount to the private net capital which has come into the country, we arrive at a total of £239,000,000. So, in fact, there has not been such a great strain on our resources as a result of the difference between capital inflow and invisibles during the particular year. In fact, the situation throughout the year has been most satisfactory when we appreciate the problems that were arising and could have arisen during that time.

If figures are to be quoted, I should like to cite one or two more to indicate that what I have said is correct. The statement on the general economic situation in June and July of this year, issued by the Department of Trade - and it is available for perusal by anybody - indicates that in one industry alone there has been a very substantial improvement which is related to our living standards. I refer to new motor vehicle registrations. It is a fact that in June, 1959, there were 920 motor vehicles registered each working day and that in June, 1960, that figure had risen to 1,115. During the same time, unemployment de creased. The number of applicants waiting for placement dropped from 66,000 to 47,000 in the respective months. The increase in unfilled vacancies was also substantial. Between June, 1959, and June, 1960, there was an upward movement from just over 20,000 to approximately 32,000. 1 think that is sufficient indication that the Australian economy is buoyant and stable at the present time. And this is happening in a rapidly expanding economy with all the inherent pressures and difficulties that accompany rapid development!

This Budget is designed to guide the trend of the economy, to maintain stability and promote continuous development together with high living standards. Over recent years, Australia has been achieving the supposed economic impossibility of reaching and maintaining the second highest living standard in the world while passing through a pioneering stage of development. In fact, we can say that the modern pioneer of Australia drives a motor vehicle, uses a refrigerator, washing machine and television set, and has time for sport and relaxation. This achievement in Australia is all the more remarkable when we realize that it has happened in such a brief period of history and with a relatively small population.

The Government has clearly referred in this Budget to the problem of prices and costs, and the measures it proposes to introduce will assist in steadying those pressures. But the problem, if it is to be solved, still demands the closest cooperation between all sections of the community. As I have said, these conditions are symptomatic of rapid development, of development at a faster rate than has taken place even in the United Kingdom and the United States of America. But we should also realize, in our investigation of the economic situation generally, that cost factors in some industries such as the steel and certain primary industries have, in the main, remained competitive with world costs, although the problem to which I have referred applies in a general sense. At the same time, the condition of buoyancy is indicated by this further extract from the report of the National Bank to which I have referred -

The opening month of the new financial year was marked by buoyant trading on the stock exchange with investors showing greater confidence in current share values and spreading their interests over a wider range of issues.

But Australia's condition cannot be examined in isolation in the world of today. The comments which I am about to quote give some idea of the interesting situation in the world economic scene and they are pertinent to a consideration of Australia's position. I quote an extract from the "London National Institute of Economic Review for July, 1960 ", as follows: -

I960 is seeing very little economic expansion in North America, but a good deal in Western Europe. Among the primary producing countries, it is still only the sterling area countries and the oil producers whose exports are running significantly higher than in 1957, before the recession - elsewhere there has been little recovery; the sterling area's exports may now be levelling off. Primary producing countries' export prices, after recovering some 7 per cent, in the course of last year, have not moved, on balance, this year.

World trade will probably now go up more slowly: there may not be much further upward tendency in the imports of either the United States or Britain - between them they account for a quarter of the world's imports - and sterling area imports may rise more slowly. The main area of expansion seems likely to be among the countries of the European Economic Community; output and trade within the Community are rising rapidly and the member countries' reserves are now so strong that they can afford any likely increase in imports from the outside world.

So, this Budget, because of the guidance it gives to the Australian economy, and the consideration which it gives to world conditions, can be termed in every respect a stability Budget.

Some indication of Australia's growth during the past twelve months is provided by the total revenue figure of £1,572,600,000 for this financial year, which is £140,800,000 greater than the figure for last year. Let us look quickly at some of the Budget proposals again. The increase of 6d. in the £1 in company tax, and the removal of the 5 per cent, rebate from income tax, have been accepted by the majority of honorable members and the majority of people in Australia as necessary measures to deal with existing conditions. At the same time, it has been found possible to increase social services. Age, invalid and widows' pensions are to be increased by 5s. a week, and the adjustments to the means test proposed on this occasion are most acceptable indeed. The importance of social service benefits to the community can be gauged from the fact that the total figure in the Budget this year is £330,698,000, or £31,335,000 more than the provision for last year.

It is interesting to see the allocation for defence expenditure this year. Because of the re-organization that is taking place in the services, particularly in the Army, the amount provided will allow Australia to undertake security commitments in conjunction with her great allies. Again, there is to be a reasonable increase in repatriation benefits this year, the total allocation being £96,243,000. The special rate pension is to be increased by 10s. a week, the war widows' pension will be increased by 5s. a week, and there is to be an increase in domestic allowances. The service pension is to be improved by 5s. a week and1 there will be a further benefit in this direction from the adjustment of the means test. We are all very pleased with the decision to provide free medical treatment for disabilities of war pensioners which are not due to war service. I am sure that all these improvements are completely warranted and fully acceptable to the community.

I want to deal briefly with some aspects of Australian industrial development. In referring to industrial development, I am not overlooking the tremendous importance of our great primary industries, which account for more than 80 per cent, of our export income. These industries are maintaining a high volume of production, and individual industries such as the cattle industry, particularly in north Australia, have a great potential for development. It is a fact that generally, in the light of what has been accomplished already in Australia since World War II., an even quicker rate of development than at present is possible in the next decade.

A continuing growth in population is one feature of the developmental picture, and this seems reasonably certain to continue in the future. Our population was officially recorded on 10th March, 1959, as having reached 10,000,000, an increase in twenty years of nearly 43 per cent. By 1970, it is likely that our population will have increased to 12,500,000. With the prospect of having, within ten years, one-quarter more people to be provided with useful occupation, food, shelter and other amenities of living, the developmental activity of the country is bound to increase. Every sector of our economy must be expanded to support that prospective growth in population; otherwise, the immigration programme cannot be maintained at the present level.

In considering future opportunities in Australia in the next ten years, it is well to look at what has happened in the mineral industry in recent years. Until the development of the Mount Isa ore body in Queensland began in 1922, no major mineral discovery had been made in Australia since the discovery at Kalgoorlie in 1893. For years later, mining in Australia seemed to be more or less in the doldrums, and the prospects of making new discoveries were considered to be rather poor. This view applied particularly to the tropical north, which takes in almost 40 per cent, of the Australian mainland. It was thought that, even if discoveries were made in this region, transport and labour difficulties, and especially the prospect of getting white people to live there, would be against putting them to commercial use. But events over the past decade have brought about a remarkable change in outlook.

Among the more important mineral discoveries made in Australia in recent years were these: Uranium, copper, cobalt and lead at Rum Jungle, in the Northern Territory; uranium at South Alligator River, in the Northern Territory; uranium at Mary Kathleen, in Queensland; copper at Mount Isa; lead-zinc at Mount Isa and nearby Handlebar Hill; lead at McArthur River, in the Northern Territory; bauxite at Gove, in the Northern Territory, and at Weipa, in the Cape York Peninsular; iron ore at Roper Bar, in the Northern Territory; and iron ore at Constance Range, Queensland. All these discoveries have taken place north of the Tropic of Capricorn, and progressive settlement is taking place.

Australia is fortunate in having great resources of the base metals - lead, zinc and copper. It is the largest producer of lead and the fourth largest producer of zinc. Before the Second World War, Australia had to import copper to make up the deficiency in domestic requirements. Now, thanks to the development of new reserves at Mount

Isa, as well as in the Northern Territory, the position has changed rather dramatically. Within the next decade, depending on prices, copper exported from Australian mines could be earning us £15,000,000 a year. The production of iron ore is increasing to meet the demands of the expanding steel industry. Although our high-grade ore reserves are not large by world standards, current exploration activities as well as investigations into the possibilities of using low-grade ores should, in the course of time, considerably improve the situation. Australia's iron and steel industry is going ahead, and the result is a tribute to our industries and the workmen engaged in them.

In manufacturing, the story of the Australian motor industry - another industry based' on steel - is a remarkable chapter in our recent development. This industry will make an even greater contribution in the future. Already vehicles made in Australia are being exported, and within the next ten years we can expect to see this industry greatly expanded and adding very much more to our export income.

Side by side with the development of the Australian motor industry, we have witnessed some astonishing advances in the establishment of a modern industry for refining oil from imported crude oil. Australia now has seven refineries handling petroleum products. From a capacity of only 800,000 tons a year in 1953, the industry has expanded so that to-day it is capable of refining more than 11,000,000 tons of crude oil annually. At the same time, Australia's current activity in trying to locate payable oil is a national enterprise which concerns all Australians. The Commonwealth Government gives practical assistance to the search.

The presence of substantial refinery capacity in Australia has meant that we now have available raw materials necessary for the petro-chemical industries. As a result, large projects have been commenced or are at present in the planning stage for the largescale production of chemical by-products from oil refining, including synthetic rubber and plastics, which are vitally important to our economy.

The technological efficiency of Australian industries is increasing. One interesting example is the techniques that accrue from the use of isotopes. Already radio-active isotopes are saving time and money and enlarging our knowledge in the fields of industry, agriculture and medicine. Isotopes are bringing great and growing benefits in other countries, and they will undoubtedly make an increasingly valuable contribution to Australian development in the coming decade.

Further examples of our industrialization are the numbers of locally produced radio and television sets and refrigerators being used in Australian homes. New cities based on heavy industries are being established and new factories and office buildings are rising in our State capitals. Despite what has been achieved in such a brief space of time, there is a lot to be done to keep up the rate of development. With the prospect of doubling our population in thirty years or so, we have to expand our industries to provide work opportunities. We have to increase the number and range of our industries and increase organization and efficiency all round so that there will be less dependence upon imports for basic plant and materials. We have to increase power capacity and water storage and provide improved transport facilities by road, rail, sea and air.

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