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Thursday, 28 September 1972
Page: 2180


Mr CREAN (Melbourne Ports) - The statement that the Prime Minister (Mr McMahon) introduced the other evening was headed 'Overseas Investment in Australia'. I suggest with all respect that it is not a statement about long term overseas investment in Australia at all. It involves a number of short term remedies to a problem that can best be described as a problem of excessive liquidity.


Mr Bury - More than that.


Mr CREAN - Well, more than that. As I hope to illustrate, it is a lot more in that direction than in prescribing or spelling out future intent with respect to overseas investment. The Prime Minister began by referring to 3 matters which he said had been revealed in the Treasury document which was .published in May 1972, some 4 or 5 months ago. He said that the 3 principal problems were the high level of capital inflow and the potential problem . that creates for managing the domestic economy; the suggestions of exchange rate speculation to which such inflows give rise and the possible consequences of that; and the sheer growth of foreign ownership and control of important elements of our economy. I want to put those 3 aspects into some sort of perspective.

The honourable member for Wentworth (Mr Bury) made a lot of capital out of reading the Australian Labor Party's proposals as to what it intends to do in this matter. One thing that strikes me as very interesting is the changed attitude evident in the document just presented by the Minister for National Development (Sir Reginald Swartz) entitled 'Australia's Natural Resources' about what is called infrastructure. I contrast it with the Treasury document of May 1972 in relation to this question of infrastructure, which states that letting the mining company pay for the development is one way of garnering the economic rent from the exploitation of mineral deposits by foreign investors and is, from the national point of view, generally desirable. At least a little more realistic approach is shown in the more recent document as to what should be done in the future about infrastructure. I do not have time to talk about that today. 1 want to amplify this statement made by the Prime Minister:

In brief, in the past 2 years, capital inflow has resulted chiefly in a build-up of international reserves rather than an addition to resources actually being used in the economy. The greater part of this recently increased inflow has been in respect of company borrowings.

I submit with all respect that that statement begs a number of essential questions. The fact that the reserves have built up may be due to a number of influences. I want to have a look at these. 1 am afraid that on most of them the information is not available. The terrible thing in Australia at the moment is the deficiency of adequate information about the extent of overseas ownership of industry and of mineral activity. Has this money come in speculating against an upward move in the exchange rates? The honourable member for Wentworth suggested that our currency was undervalued, but he would not suggest altering the rate at the moment. I think: that is a fair rendition of what he said. But we do not seem to know the extent to which speculative money is flowing into Australia. The build-up could be due to the fact that firms in Australia, whether foreign or locally controlled, borrowed abroad rather than borrowed at home.

I must confess to being astonished by the figures that were given in the same speech about the exchange control approvals of gross borrowings abroad. The figure for 1969-70 was $568m; for 1970-71, $l,222m; and for 1971.-72, $l,681m. I think we should ask what the Reserve Bank has been doing. Why has it been giving such large approvals when it drew attention as far back as 1971 to the threat to our ability to control our economy internally by reason of the large amount of capital inflow? If it has given these approvals, why has it given them? After all, the Reserve Bank and what it does are the responsibility of the Government.

At the moment we have a surfeit of capital in Australia because the economy has been running down. I suggest that that is the real crux of the situation at the moment. I have spoken to the Minister for the Army (Mr Katter) who is at the table and he has agreed to my incorporating in Hansard of a table from the White Paper on National Income and Expenditure 1971-72. (The document read as follows) -

 


Mr CREAN - The table helps to illustrate a point that I want to make in the short time remaining to me. It shows over a S-year period the total capital funds accruing in Australia and the use to which those funds have been put. In the 5-year period from 1967-68 to 1971-72, the capital funds used in Australia aggregated $4 1,442m. Of that sum $7,000m has gone into dwellings. I make a point here that very little of foreign investment goes into dwellings. Nearly $6,000m of that $41, 442m has gone into what is described as other building and construction. It seems in some respects that in recent years foreign money has been going there. I have said

 

before that if there are to be capital gains made out of property development in Martin Place or Collins Street, they certainly should not go to foreigners. Yet in some respects that is what has been allowed to be done. Of that vast sum of $4 1,442m, $13,000m has gone into what is described as all other fixed capital investment. In the long run this is the sort of thing that makes the Australian economy tick.

In the same period in which we have spent $4 1,442m the amount of capital inflow from overseas has been $6,300m. To start with I simply make the point that out of every 7 capital dollars that have

 

been employed in Australia in recent years, 6 have been found from within Australia and the other one has come from overseas. At the same time as the amount of $6,300m found its way from overseas into Australian capital sources during the 5-year period to which I have referred, overseas reserves rose by $2,000m which would seem to imply that we really needed only two-thirds of the $1 in $7 that we borrowed from overseas anyway. I think the great danger in Australia is that although it seems we hardly need that money, we have allowed $1 in $7 to dictate the pace and direction of the development of the Australian economy. I submit that this is the critical problem that faces us in regard to overseas investment.

The very document that was tabled by the Minister for National Development in Parliament today reiterates figures that all of us know. For instance, the document states that 44 per cent of the total mineral industry in Australia is owned overseas and something like 60 per cent of the mineral activity in Australia is controlled by companies from overseas. Where does that put the credibility of this sort of document? We have yet another document which has been prepared in the last couple of months of this Government's existence which tries to explain what the Government intends to do in the next 3 years. However, the Government had no resistance whatever during the last 3 years to prevent it doing what it now says it will do. We have had document after document of this kind. They are belated acknowledgements that problems exist - death bed repentances of a Government that feels that it no longer commands the support of 50 per cent of the Australian people and which is trying desperately in this last couple of months to say that it now recognises it should protect our natural resources.

The honourable member for Wentworth (Mr Bury) sneered about the Labor Party's description of the national interest. The Government says in its own document that takeovers in the future will be guided by the national interest. Why is it any harder for us than it is for honourable members opposite to define the national interest? The Deputy Prime Minister (Mr Anthony), in an earlier debate today, suggested that commercial interests should decide whether a public utility should use a product made by another monopoly, as though that is a nice decision that can be made in closed quarters by those 2 groups. What we on this side of the House say is that in future, whatever the difficulties about unravelling what has happened in the past, Australia's natural resources should be developed for Australia's national interest. This does not mean extreme nationalism - that we will use these resources only for ourselves. We have some obligations to other parts of the world as well. But we are not just going to become a kind of quarry for the rest of the world which, after all, is what has happened in the last several years. As much overseas capital has come into Australia in the last 5 years as came in during the previous 15 years.

Australia, like any other country, basically lifts itself up by its own bootstraps. The preponderant part of capital development comes from within ourselves. We should tell the other dollar what is best for Australia. We should not let the other dollar dictate where the other $6 shall go. This is what national development is about in the long run. When we talk, as honourable members opposite are talking, of doubling energy supplies every 12 years and spending aggregates of thousands of millions of dollars, decisions no longer can be left entirely to what honourable gentlemen opposite describe as private enterprise. The only enterprise it has shown is in getting the best conditions for itself and fleecing the Australian public in the process. One-third of all the dividends paid annually in Australia now go overseas. There is no Australian ownership at all in basic strategic sections of the economy. That is what has happened under 23 years of Liberal-Country Party government. Now we are presented with documents a week or two before the elections saying that the Government can now do what it should have done before.







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