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Wednesday, 31 August 1960

Mr JONES (Newcastle) .- I feel a little awkward in replying to any of the criticisms or comments made by the honorable member for Mackellar (Mr. Wentworth) on the Budget because, while listening to him, I agreed with almost everything he said. However, I suggest to him that, while he is thinking about social services, instead of hammering continually for a complete relaxation of the means test, he should do some real hammering on behalf of those people who are on base rate pensions, so that those who have not a reasonable income will at least have pensions which will enable them to live decently. I believe that if the honorable member adopted that stand, he would be seeking to help a lot more people to a greater degree than he is doing with his advocacy of the complete relaxation of the means test. When I make that statement I am not disagreeing with the case for the relaxation of the means test. T consider that first things come first and I feel that an increase in the base rate - not only of age and invalid pensions but also of other social services - would be really doing something for a lot more people.

In the Budget we have yet another example of this Government's boom and bust economy. The Government lets things run until they almost burst. And during the Government's ten years in office, things have burst on a couple of occasions! We heard a great blare of trumpets earlier this year when the Prime Minister (Mr. Menzies) and the Treasurer (Mr. Harold Holt) said that, at that stage, we were on the verge of a dangerous period of inflation.

There was similar talk from those gentlemen back in 1948 and 1949; and yet, after they have been in office for ten years, we still hear talk from them about dangerous inflation. After ten years in office the Government has not been able to keep the economy of this nation on an even keel and avoid the boom and bust economy.

When talking about inflation this year the Government has its usual solution - a balanced Budget, unlimited imports and pegged wages. Nothing is heard about pegged profits. Ministers always concentrate on the necessity for pegged wages. In my opinion, the dangers of inflation were used most effectively by the present Government earlier this year when it talked the Conciliation and Arbitration Commission into rejecting the claim by the Australian Council of Trade Unions for a review of the basic wage and an increase in income for the millions of workers in this country. How is the Budget to be balanced? That is to be achieved, not by balancing the Government's income and expenditure this year, but by borrowings. Facts and figures in this Budget make it quite clear how the Budget is to be balanced, and, indeed, a surplus of £15,000,000 obtained. The result it to be achieved by the borrowing of £150,000,000. That is the only way in which the Government could balance the Budget.

The part of the Government policy which needs closest examination is that relating to import restrictions. In closely examining the imports and exports of last year, I refer to the White Paper which was prepared and distributed by the Treasurer. At page 28 I find that in our last trading year we were able to get within £4,000,000 of a balance. I feel that the method of arriving at that position is worthy of some examination. Our exports and imports were within £10,000,000 of each other, and we finished on the wrong side of the ledger by an amount of some £10,000,000. The invisibles came to a total of £233,000,000. so the total balance on the wrong side of the ledger was £243,000,000. The only way that that was offset was by a number of overseas loans, by undistributed income and also by the profits that were made by the investments of overseas moneys in this country.

How long can our economy continue to balance on the razor's edge? That term has been used by the Deputy Prime Minister (Mr. McEwen) and the Treasurer on a number of occasions. The point is that we have built up overseas credits by a fortunate succession of good seasons. We have been able to build up a good overseas balance also because we have been able to borrow on the world market money - some day it will have to be paid back - and also because of overseas investments in this country. I like to see this country with a large and healthy overseas balance, but what is to happen to us when he have a couple of bad seasons? According to the cycle of time they are sure to occur sooner or later. What will happen to us when we have those bad seasons, and what will happen to the economy of this country when the investors really start to take the profits out of Australia?

Let us take, for example, our old friend General Motors-Holden's Limited. Earlier this year that company went on to the Australian money market to raise an additional £2,000,000. I notice it has decided to proceed with another £15,000,000 worth of development. Where will the company get that money? It is pretty obvious that it proposes to raise the money on the Australian loan market. But what will happen to the profits from that increased investment in Australia, which is not an investment of American money but an investment purely and simply of Australian money in Australia? The result of the increased profits derived from the use of that money will be that Australia will have additional commitments overseas. I feel that a paragraph written by the financial editor of the " Sydney Morning Herald " in that newspaper when this company made application earlier in the year to raise £2,000,000 on the Australian money market is worthy of comment. The item to which I refer said -

General Motors Acceptance is treading hopefully in the steps of G.M.-H. It is keeping up the grand tradition that General Motors of U.S.A. does not invest in Australia. If the capital needs cannot be met out of huge retained profits, as in the one case, then borrow from the natives. But don't send a dollar out from Detroit.

That, I feel, concerns this country. As was suggested by the honorable member for Mackellar, we are slowly and surely building up to the day, a few years hence, when these investments in Australia, which at the moment are assisting us to balance our overseas accounts, will start to flow the other way - as will also happen in regard to our overseas loans, when the principal has to be repaid, and this country is really going to find1 itself in a position similar to that in which the people of Cuba have found themselves. The people of Cuba have got sick and tired of seeing their money exported to the United States. I feel that in the years to come the people of Australia are likewise going to get sick and tired of seeing their money exported to the United States. The same problem is occurring in Canada to-day, and also in a number of areas in Asia. Sooner or later the people in those countries, whether they be black, brown, white or brindle, finally rebel against world capitalism. They rebel against working to keep the capitalist system going, whether it be the capitalist system in the United1 States, the United Kingdom or any other country which has money invested abroad.

I think that the members on the other side who are continually raising in this Parliament the issue of communism bear the responsibility - which they must accept, because they support the present policy of the Government and the Treasurer - of having provided the fertile soil for communism to breed in this country at some future date when the state of affairs I have mentioned arrives. Therefore, I give them due and timely warning to take note of what is going on around them, especially in regard to this investment in Australia of overseas capital, particularly that section of it which is invested, not in new machinery and new ideas brought to the country, but in taking over existing industries - because that is what is happening.

All that the overseas capitalists are doing here is moving in and taking over going concerns. I feel that counteracting this is one immediate step that the Government should take. If the Government wants overseas capital brought into Australia, then Australia should do several things in regard to it. First, we should see that the money brought in will be used for the establishment of new industries and not for taking over existing industries. If we pursue that policy we will really be doing something to ensure the future of this nation, and the honorable member for Mackellar will not have to worry about the teenage or bachelor tax that he talked about this afternoon.

On the subject of imports, if this Government is greatly concerned with building up our export trade it is appropriate to raise at this stage of the debate an important matter appertaining to my electorate, and to the port of Newcastle in particular. I have been in correspondence with the Minister for National Development (Senator Spooner) on this matter, I might say without much avail. I have not had much success with him, because when one talks to that Minister one is certainly talking to somebody who could be classified1 quite easily as being in the frigid zone. I am referring to the export of coal to Japan. Over the last two or three years Australia has been doing all it can to develop coal markets in Japan and other countries, so as to provide employment for the men at present displaced from the coal industry as the result of mechanization.

Honorable members know as well as I do that the number of men displaced from the industry amounts to approximately one-third of the total work force previously engaged in the industry. Their displacement has had a great effect on the employment position in the steel, textile and other industries in the Newcastle and Hunter Valley areas. What affects the mining industry also affects the remainder of the people in that district. I give this Government the credit for being very active, in conjunction with the New South Wales Minister for Mines, in trying over recent years to develop an export coal trade. Apparently negotiations reached the stage where Japan last year bought from Australia 1,000,000 tons of coal at a cost of approximately £4,000,000. It has been announced that this year Japan will purchase from us approximately 500,000 tons between now and the end of the year. The point is, that if we are to retain the export market for coal - and it is a highly competitive market, as has been said again and again by Mr. Sam Cochran, the president of the Joint Coal Board, by the New South Wales Minister for Mines, by everybody else in the New South Wales Parliament and by Sir Edward Warren - we have to step up our organization. We have to have improved methods of production. These improved methods are possible as the result of machinery recently installed, but the industry runs into bottleneck after bottleneck when it comes to shipping the coal overseas. The Americans, as the result of the use of bulk-carrying ships of from 25,000 tons to 40,000 tons capacity, have been able to reduce the cost of carrying coal by from one dollar to one and a half dollars a ton. If we are to gain a foothold in the markets now supplied by the United States we must reduce our cartage costs to Japan or any other country by an equivalent amount. However, at the moment, although Port Kembla is fast developing to the stage where it will be able to cater for ships of that tonnage, Newcastle, because of the existence of a harbour bar, is not able to handle ships of over 17,000 tons or 18,000 tons. To overcome this disadvantage would be costly. It would require the expenditure of several million pounds. At the moment the port is large enough to handle the normal trade which uses it - that is, in the export trade in wheat, wool and so on - because the ships used are of a size which can use the port. Removal of the harbour bar would benefit the export of those commodities, but the really important benefit would be in relation to the export of coal.

Early this year, and again in June, I wrote to the Minister for National Development and asked him to do something about this problem. Again and again in this chamber I have asked the Commonwealth to do something about it. Every time, the Minister rejects my request and is quite emphatic that this Government is not prepared to make any money available for that purpose. If the members of the Government are so eager to build up a coal export trade for this country, which will return £4,000,000 or £5,000,000 a year, there is one way in which they can do it. That is to assist New South Wales to export coal to Japan by helping with the necessary work on the harbour bar at Newcastle. Another way is to do something about developing Port Kembla as a coal port. The benefits from taking these actions would flow back to the Australian people as a whole, because coal sales overseas would increase our trade earnings. This would be breaking new ground so far as the Government is concerned, because it has been giving its help in other directions.

For example, at present the Government is subsidizing the transport of coal from Leigh Creek to Adelaide in South Australia, at a cost of about £600,000 annually. It does so by allowing that coal to be carried by the Commonwealth railways at favorable rates. By so doing it is helping to defeat the sale of coal to South Australia from the Newcastle or south coast fields. In comparison with Maitland coal, or any of the coal produced in the Newcastle area Leigh Creek coal is just black mud. Yet the Government is helping the production of this so-called coal to compete with the production of coal on the northern coal-fields.

All we are asking the Government to do now is to make the necessary money available to enable Newcastle coal to be exported at prices competitive with overseas coal. The Government made a direct contribution to the development of the harbour at Gladstone in Queensland. Through the Joint Coal Board it has also made a direct contribution to the provision of loading plant at White Bay in Sydney. It is not much of a plant, but at least the Government made the money available for that work to be carried out. Besides that, this Government, again through the Joint Coal Board, has made available more than £20,000,000 to private coal owners in this country to enable them to bring their industry up to date. Yet it will not make money available to the New South Wales Government to bring a harbour up to date.

Sitting suspended from 6 to 8 p.m.

Mr JONES - -Before the suspension of the sitting, I was dealing with the necessity for this Government to make funds available for the development of the port of Newcastle. I point out that the Joint Coal Board has sufficient power to make funds available for this purpose. This clearly emerges from a reading of the Coal Industry Act 1946-1956, section 14(1.) of which states -

The powers and functions of the Board are to include the taking of such action as, in the opinion of the Board, is necessary or desirable . . .

Sub-section (2.) states -

In particular, without limiting the generality of the foregoing, the Board is to have power to make provision for or with respect to -

(e)   the effective and economical distribution of coal, including its purchase, sale, marketing, acquisition, disposal, supply, storage, reservation, pooling, transport, carriage, conveyance, delivery, handling, loading, discharge and reception;

The Joint Coal Board clearly has power under the Coal Industry Act to provide the funds necessary to overcome the bottleneck at Newcastle, so that new methods of transporting coal may be used. If we are to compete with the United States of America, we must use vessels of 25,000, 30,000 or 40,000 tons instead of the vessels we at present use of 10,000 or 12,000 tons.

The remaining point that I should like to deal with in the time at my disposal is the Government's attitude towards wages generally and the basic wage in particular. On previous occasions, I have condemned the action of the Government in intervening in the case before the Commonwealth Conciliation and Arbitration Commission and opposing the application for an adjustment of the basic wage. I shall give some figures to show how much the Government's action is costing the workers. The Government brought pressure to bear on the commission to force it not to increase the basic wage. The workers in New South Wales are much better off than are workers in other States because the New South Wales Government permits the basic wage to be adjusted quarterly in line with variations in the cost of living. The decision to freeze the basic wage is costing workers under State awards in Victoria 27s. a week. That is the additional amount they would be receiving if cost of living adjustments were made. Workers in South Australia are losing 18s. a week; in Western Australia, 8s. 9d. a week; and in Tasmania, 19s. a week.

We continually hear the cry from the Government that wages are causing the inflationary spiral; but not once have we heard any honorable member on the Government side give the real reason for the inflationary spiral. The real reason can be found in the financial pages of the " Sydney Morning Herald " and honorable members opposite would do well to read these pages while they sit in an aeroplane on Friday morning on their way home. I shall read some of the headlines that appeared in the " Sydney Morning Herald " on Friday, 26th August.

There we see advertisements by Lend Lease Corporation Limited offering 8 per cent, and by Cambridge Credit Corporation Limited offering 9 per cent, on money invested with them. Other companies offer 8 per cent., 9 per cent, and 10 per cent, and some go even as high as 15 per cent. I cannot believe that that does not create inflation. The money invested with these companies is lent by them to others at far greater rates of interest.

In the financial section we find such headlines as " Australian Controls Profit Recovery "; " Swan Cement Bonus Issue "; "Marrickville Holdings Growth Hint" - the company had just completed a very satisfactory financial year; and " James Stedman First Group Profit" - this is the first result of the new holding company and it showed a profit of 18.3 per cent, on ordinary capital. Other headlines are " R. E. Cunningham Dividend Up. Profit Trebled"; "McPherson's Issue. Profit Jumps "; " Humes Group Profit Up Again "; " Winchcombe Dividend Steady "; "Chapman's Profit Up"; "Fire Fighting Profit. Further Big Rise "; " Molloy Holdings Profit Rises 19 p.c"; and "J. Mcllwraith Profit Jumps 36.3 p.c".

Mr Chaney - What does it say about turnover?

Mr JONES - These are the increases of profit; never mind about the turnover. All the headlines I have just read are on one page, and there are a number of others. We find that the profit of Clark Rubber Stores Limited showed an increase of 26 per cent, and that Control Systems (Australasia) Holdings Limited had an increased profit of 10 per cent. Those are typical of the figures to be found on that page. On page 12 of the same issue, we find headings such as " Farmers Rise of 15s. in Five Days; "; " Preston Motors Profit Up "; " Cox Finance Earns 1 6 p.c"; and " Coal Companies raise Dividends ". But at the bottom of that page we find a really interesting item. It reads -


Lemons, grapefruit and large oranges sold slowly at the Municipal Markets yesterday.

Demand for peas and beans was moderate to poor, and stocks had not cleared at a late hour.

Is it any wonder that we find large profits being declared! Now let us look at that grand1 old octopus in Newcastle, the Broken Hill Proprietary Company Limited. For the financial year ended 31st May, this company declared a profit of £13,716,000, which was an increase of £3,533,000 or 34.7 per cent.

These figures tell the real story about inflation. These are the companies that the Government is concerned about when it frames its financial policy and decides to intervene before the Arbitration Commission - these fellows that are dead from the ears down. The commission was not prepared to grant to the workers the increase to which they were justly entitled because of the increased productivity of the country. The Government speaks constantly of productivity and claims credit for increased productivity, new methods of production, automation and so on. But when the workers want their share of this prosperity, the Government stands over the judges and commissioners of the Arbitration Commission and prevents them from granting any increase. The Broken Hill Proprietary Company Limited could have granted its 37,000 employees an increase of £1 a week and still have shown a profit exceeding that for the previous year. It did not do so, and the Government stood by it and assisted it by intervening before the Arbitration Commission.

Government supporters continually ask Opposition members what they would do about present conditions if they were in office. We believe that until this Government, or any government, is prepared to tax capital gains and really tax the profits of these companies, the companies will continue to be in the happy position that they are in to-day. They can declare their dividends and increase their capital gains with complete immunity, because this Government will do no more than talk about a capital gains tax. The Government says that it has no constitutional power to impose such a tax. But recently, it received the report of the Constitutional Review Committee. The Government has been told time and time again that it would receive the support of the Opposition if it were to hold a referendum seeking power to impose a capital gains tax.

Such a tax would not be something new. This Government's counterpart in the

United States of America imposes a capital gains tax. It is not afraid to use that kind of tax against these companies which make exorbitant capital gains. We ask the Australian Government to adopt a similar policy and practice in this country in order that the people of Australia may get their hands on the money that is tied up in some of the unnecessary profits that are being made by industrialists and commercial enterprises as a whole. We feel that this is the only sensible and logical thing to do.

I should like to give the committee a little information about some of the companies that I know are making enormous capital gains. Between February, 1952, and 1959, the H. G. Palmer company made capital gains totalling 1,181 per cent. Ampol Petroleum Limited has made capital gains of 720 per cent. Then we come to Mount Isa Mines Limited. Government supporters are always boasting about the fact that over 51 per cent, of the interest in that company is under American ownership. Mount Isa Mines Limited has made capital gains of 701 per cent.

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