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Thursday, 15 November 1934

Mr McEWEN (Echuca) .- As a new member I have been impressed by the time that has been devoted to the problem of unemployment, not only during this debate, but in every one to which I have listened. That is as it should be. But I have been impressed also by the fact that most of the suggestions have been only towards the temporary relief ofunemployment and not towards a solution of this our most serious trouble. It has been said by the honorable member for Fremantle (Mr. Curtin), that the Commonwealth Government in the past has not properly taken up its duty in connexion with this humanitarian problem, but has left it almost entirely to the States to deal with. The honorable member suggested that the Commonwealth Parliament should make available to the States money to enable them to continue the work they have already undertaken. A good deal may be said in support of that view. After all, the State governments are continually dealing with the domestic affairs ofthe people which most closely touch employment. But we must recollect that the establishment of the Commonwealth resulted in the States losing their principal source of income, the customs revenue. Later, the Commonwealth Government invaded almost every field of taxation that the States had occupied, and still later, consequent upon the adoption of the Financial Agreement and the establishment of the Loan Council, the States were even deprived of the right to borrow money. In these circumstances it is only right that the Commonwealth Government should concern itself with the grave problem of unemployment. But it would be proper for this Parliament to leave the implementation of unemployment relief works to the State parliaments. It should, of course, make money available to the State governments for this purpose. I do not say that there are no avenues open to the Common wealth Government for providing employment. Some works of an urgent developmental nature could, and should be undertaken by this Government to alleviate unemployment. I refer to projects of a national character. A report was tabled in this House yesterday on the hydrogenation process of obtaining oil from coal. It would be appropriate for the Commonwealth Government to sponsor a project of thatkind, with the threefold object of relieving unemployment, correcting an adverse trade balance, and strengthening the capacity of the country to defend itself. Our adverse trade balance with the United States of America is largely in consequence of our importation of oil from that country. If we could discover flow oil, or produce oil from coal or shale, it would be of tremendous advantage to us. Unfortunately the report to which I have referred does not give much encouragement to those who have advocated that the Government should immediately make money available for the exploitation in Australia of this newly discovered system of producing oil from coal; but I do not believe that we should accept the report as the final word.We should continue to make further investigations, utilizing for that purpose the services . of various scientific bodies that are competent tohelp. Further inquiries should be made, also, into the possibility of obtaining oil from our extensive deposits of oil-bearing shale. I have said sufficient to indicate that certain avenues are open to the Commonwealth Government to exploit with the object, among other things, of assisting in the relief of unemployment. The point I make is that even in the view of those who consider that it is the proper function of the Government toorder our means of livelihood and not to provide them, and of those who believe that we should look to private enterprise to provide a permanent and satisfactory solution of the unemployment problem, there is a field of action open to the Commonwealth Government. We should try to discover the basic facts upon which our national economy is founded, and search there for the root causes of this very serious problem of unemployment. Those who examine the economic structure of our nation discover the basic economic fact that we are a debtor nation. I refer in this connexion, not to our internal debts, but to our heavy overseas commitments. Not only have >we to face the heavy obligations overseas consequent upon our past borrowings, but we have also to bear in mind that as a community desirous of living under modern conditions, we must continue to import large quantities of such commodities as rubber, oil and cotton, which we cannot produce in sufficient quantities in Australia to supply all our needs. We must have these goods if we are to live under reasonable conditions, and so we must import them; but such importations bring their own problems, and we must devise means of establishing credit overseas so that we may meet our commitments as they become due. Whatever may bc said in support of the view that we could expand our national credit through the Commonwealth Bank, we must realize that we cannot meet our overseas obligations with Australian paper currency. The only way to meet these commitments is to export goods which we can sell in the markets of the world. We certainly can never expect to export large quantities of manufactured goods from Australia, because our costs of production, are too high to allow us to enter into competition with overseas manufacturers. We must, therefore? rely upon our primary producing industries. A few years ago, when the 'credit of this country was drifting to a serious extent, it was generally recognized by all classes of the community that .something would have to be done to improve our overseas credit, and we turned for help to one of our great primary producing industries. An appeal was made, primarily by the Prime Minister of the day (Mr. Scullin), but with the endorsement of the State Premiers, for the production of more wheat. In our extremity resort was had to this great industry.

Mr Brennan - The cry now might well be "Eat more bread".

Mr McEWEN - I shall come to that subject a little later. The point I make at the moment is that in order to establish credits overseas we must continue to produce and export goods that we can sell in face of world competition. It is general knowledge to-day that those engaged in our great exporting industries are operating at a loss. It may be possible to carry on any business for some time at a loss, but that cannot be done indefinitely. It is, therefore, essential that something shall be done at once to enable those engaged in our great exporting industries to continue their operations. In other words these people -must be afforded security of tenure. Steps must also be taken to ensure that, these industries may be continued on a profitable basis. If Parliament is to provide a permanent and satisfactory solution, not only of unemployment, but also of all other major problems, it must tackle immediately that of rural rehabilitation. That must be done first by giving immediate security of tenure to those engaged in our export industries, and secondly by placing them in a position to show a reasonable return on the capital invested. In other words, they have to regain the overseas markets which they have lost largely as a result of the national policy of protection which has been adopted by this country. The costs of production must be reduced. I admit that the people of Australia have always supported a protective policy, and that, while wc are entitled to disagree with that policy to a certain extent, we must submit to a decision reached by an overwhelming majority of the people. It is quite logical for persons engaged in our export industries to say that, if they cannot have their costs reduced by means of lower customs duties, the same measure of protection as is enjoyed by other industries should also be enjoyed by them. Honorable members in opposition have said over and over again that the home market is the best market for our primary producers, and it seems generally accepted that that is so. But there is no justification for that statement, because the local consumers do not pay to the producers of wheat any more than is paid by a man in China. What do local sellers receive for wheat? How is the price assessed? The price of wheat in London is ascertained, the freight is deducted, and the producer receives the difference. Local consumers pay no more than the price paid by purchasers in lowwage countries, less the freight. The policy of protection has been applied to the butter industry, by means of a stabilization, scheme, and while high protection is the national policy of this country, it should be applied to every other primary industry. In pursuance of a policy of securing better conditions for the workers, wages are raised ; -in the case of railway workers, this moans an increase of railway freights, and under such a system an increase in freights means a lower price for wheat. In the light of these facts how can honorable members opposite justify the statement that the local market is the best market?

Mr Holloway - That is a new theory.

Mr McEWEN - If it is new to the honorable member he has been a long time in realizing the facts. He should know that the price of wheat in Australia is world's parity.

Mr Beasley - What would be the result if the railway men worked for nothing?

Mr McEWEN - I do not mind replying to a reasonable question; but I regard that interjection as frivolous.

Mr Beasley - It is logical.

Mr MCEWEN - The honorable member should know that the price of wheat in Australia is that ruling in Liverpool or Chicago, less the cost of transport. A portion of the cost of transport includes railway freight to the seaboard, and increased freights mean a lower price to the wheat producer. We have a properly constituted tribunal which wage-earners can approach in order that they may receive reasonable wages for their labour. The arbitration system is one of which I approve. The manufacturers engaged in. secondary production can also approach the Tariff Board for higher protective duties, b\it unfortunately those engaged in essential primary industries have no tribunal to which they can appeal in order to secure a reasonable return for their labour. Protection to the wheat-growers in this respect is long overdue. I trust that the Government's proposals for the relief of those engaged in the wheat-growing industry will be in the nature of permanent assistance and not a mere palliative. The policy of protection should be applied to those engaged in wheat-growing, particularly as appeals have been made to them from time to time to produce to the utmost of their ability in order to improve our national credit overseas. I presume that any rural rehabilitation proposals submitted to this Parliament will be based upon the continuance of present price-levels, or price-levels that may reasonably be expected to obtain, otherwise we cannot expect permanently satisfactory results. However, as the price of our export commodities is inextricably involved in the exchange rate in relation to sterling, any rehabilitation proposals should not be finalized until there is some definite understanding as to the rate at which exchange is likely to remain for some time to come. We have the spectacle of this Parliament proposing to deal with the problem of rural rehabilitation, while power to manipulate the exchange rate remains with - an institution over which Parliament has no control. While I am not one of those who believe that the Commonwealth Bank should be brought under political control, I do believe that there should be some liaison between Parliament and the bank. We have here an instance in which any step taken by this Parliament to bring about rural rehabilitation maybe nullified by the action of the Commonwealth Bank in reducing the exchange rate to bring Australian currency to a parity with sterling. Fortunately, we have passed the stage when it is possible for the private banks to fix the rate of exchange, and keep it at an artificially low level. The Commonwealth Bank has taken upon itself the obligation of fixing the exchange rate, but does Parliament know the factors which influence the bank in determining the relation which Australian currency shall bear to sterling? E doubt whether the Government itself is aware of these factors. I hope that, before any finality is reached by the Government in its rural rehabilitation proposal, it will confer with the Commonwealth. Bank Board regarding the future level of the exchange rate. We must not overlook the basic fact that, while we can provide by grants of money for the relief of unemployment, there can be no permanent solution of this problem until the essential exporting industries have been established once more on a satisfactory footing.

Progress reported.

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