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Thursday, 9 March 1961

Mr PETERS (Scullin) .- The honorable member for Wentworth (Mr. Bury) referred to a remark made by the Leader of the Opposition (Mr. Calwell) when he commenced his speech. The Leader of the Opposition said that the Menzies-Fadden Government inherited a sound economy from the Chifley Administration. This statement was ridiculed by the Treasurer (Mr. Harold Holt), who laughed when it was made. The honorable member for Wentworth has declared definitely that this statement is a myth which the Australian Labour Party endeavours to perpetuate. I have before me the Budget speech delivered in October, 1950, by the Right Honorable A. W. Fadden, M.P., Treasurer of the Commonwealth. Tn that Budget speech, he said -

Australia at the present time is in the midst of a vast and many-sided movement of expansion . . .

He added that the faith is held almost universally in Australia and by many people abroad, that this country is capable of immense progress in the coming years. The speech continued -

Under the stimulus of these ideas, governments and all their connected authorities are pushing on with large programmes of works to provide power, fuel, water, transport, housing, hospitals and schools for a larger population and a more highly developed economy. Private firms, in all branches of production, are increasing their present capacity or launching new projects to meet the wider demands of the future they foresee. Immigrants are pouring in from overseas, eager to try their fortunes and build new lives in this country. Immense amounts of capital are coming here, a great part of it for permanent investment.

In times like these, real and substantial progress is always made. Population grows, industries are built, new resources are opened up; and these are permanent gains.

He continued -

At 30th June this year, the total international currency reserves of Australia stood at £650,000.000 ... the total cannot be regarded as excessive for our requirements.

The amount of £650,000,000 bequeathed by the Labour Government to the MenziesFadden Government in overseas funds could not be regarded as excessive for our requirements. He went on -

If we are to obtain the still greater quantity of imports we need, it is important that we should have adequate international reserves against the contingency of a fall in our export earnings or a reduction of the inflow of capital.

Within a year, those overseas funds had increased to £803,000,000. That is the picture, given by a former Treasurer of the economic position of Australia when the Labour Party left office.

What is the position to-day? We have unemployment, a growing shortage of houses, insufficient hospitals and inadequate educational facilities. The only major development work in progress is the Snowy Mountains scheme, which was commenced by the Labour Government. Investors show a lack of confidence in the future of Australia, and in order to secure funds we have to increase the ra*e nf interest offered to investors. Even increased interest rates are not sufficient to obtain the amounts (hat were obtained in the days of Mr. Chifley. In order to obtain funds overseas, we must offer a higher rate of interest and better terms on the stock exchanges of New York and other centres than were ever offered by this country before. That is the position to-day and, to use the words of the Prime Minister (Mr. Menzies), we are facing international insolvency. If in March. 1952, when our overseas funds exceeded £360,000,000, the Prime Minister was entitled to say that this country was facing international insolvency, then with the figure at about £300,000,000 now and with a prospect of it decreasing considerably in the future, international insolvency again stares this nation in the face.

What is the position with our overseas funds? In 1948-49, we imported £415,000,000 worth of goods. Invisibles amounted to £145,000,000. We exported £531,000,000 worth of goods and received payments from overseas in other ways of £61,000,000. We had a profit on our overseas operations of £32,000,000. In 1959-60, our imports were worth £923.000,000. our invisibles £423,000,000, our exports £926,000,000 and other receipts £173,000,000. Our adverse trade balance for this period was £243,000,000. For the first eight months of 1960-61, we imported £755,000,000 worth of goods, while our exports totalled £573,000,000. For the corresponding period last year, our imports totalled £582,000,000, and our exports £618,000,000. It will be seen, therefore, that the position this year has deteriorated by £218,000,000, as compared with the corresponding period for last year, and I emphasize that this figure does not take into account the invisibles, which must be immensely greater this year than they were last year, because the increased volume of imports must mean higher freight payments, and freight charges have increased greatly during this year. I venture the opinion that whereas, without invisibles, our balance is down by £461,000,000 this year, as compared with £243,000,000 last year, our total adverse balance of payments for this year will be nearer £700,000,000 when invisibles are taken into consideration. It cannot be denied that we are in a state of international insolvency. Despite this, the Minister for Trade (Mr. McEwen) says, " But we can draw money from the International Monetary Fund ". Certainly, we can. but what does that mean? When he was speaking, the Minister sought to have us believe that Australia had a considerable sum of money tucked away in a fund somewhere overseas, and that we should be merely drawing out money that we had already saved. The fact is that we have contributed only a certain percentage, sufficient to give us the right to draw on the international fund, and that any money we draw from that fund will be borrowings upon which interest will have to be paid. Unless we can induce private people overseas to pour money into Australia in the form of investment in our industries, we shall not be able to pay our debts. We can get out of our difficulty only by obtaining loans or encouraging a heavy inflow of private capital. If we have heavy investment of private capital in our land and industries, it simply means that our assets are being sold bit by bit to overseas investors who will levy their toll upon the work and industries of the Australian people. The dividends will have to be paid in the form of produce or exports, and the amount that we are able to export just cannot cover the demands.

I remind honorable members that hitherto we have exported huge amounts of goods for which we have received record prices. We warned the Government repeatedly that record prices, and freedom from droughts, famine and other disasters could not continue, and that inevitably we would have leaner seasons, that inevitably we would obtain lower prices for our commodities overseas, and that the amount of money coming from overseas and expendable within this country would be about one-half, or perhaps only one-third, annually of what we have been spending during the eleven years for which this Government has been in office. We warned the Government that when that day arrived, then, in place of inflation and a spending spree, there would be restriction of activity, deflation and its attendant unemployment. Already unemployment is growing. In my electorate alone, the bricks are piling up in the brickyards and men are being dismissed from the brickworks. The rope and cordage factory has already dismissed employees, and the building trade is putting off hands. Because they have dismissed their employees through lack of funds, the productivity of these industries will be further restricted, which will mean that they will have to dismiss still more of their workers. The final result can only be the destruction of what confidence the people may have in the ability of the Australian economy to withstand the stresses to which it is being subjected.

The troubles with which we are faced are not those caused by such national disasters as famine, flood, bush fire, the destruction of our national assets or the destruction of crops by pests. Every difficulty confronting us to-day is manmade. Every difficulty with which we have to contend has resulted from the operations of the Government now in office. As I said before, never in the history of this country has our productivity been so great, never before have we seen such high prices; yet in this period of our greatest prosperity this Government has created and allowed to accumulate difficulties and circumstances which will place upon future generations an intolerable burden of overseas loans and indebtedness. What could the Government have done? Right throughout its period of office it has bungled every issue. We have what is called the Japanese Trade Agreement, in respect of which, of course, members of the Country Party say, "What a glorious achievement by the Minister for Trade ". But what happened? Australia had adverse trade balances with nearly every country in the world, with the exception of Japan, and the Minister for Trade (Mr. McEwen) came to this Parliament and said, " I am fixing a trade treaty with Japan so that I can reduce the favorable trade balance that Australia has with Japan ". He said, " That is fair to Japan. Why should Japan buy vast quantities of goods from us if we do not buy vast quantities of goods from Japan? " That is all right, tout before exacerbating our position in relation to that country should he not first have said, " There are countries in the world such as the United Kingdom and the United States of America that sell vast quantities of goods to Australia - vaster quantities of goods than Australia sells to them - so let us equalize that first and say to these people, ' Either you buy more from us, or we buy less from you ' "? Obviously, any intelligent community would first regulate its trade with countries that were buying very little from us, but from which we were buying considerable quantities, before starting to buy much more from countries like Japan, which already was buying more from us than we were buying from it.

The result is that to-day we are in difficulties and in ten years we have spent over £1,000,000,000 more than we have earned. Of course that creates prosperity, but ultimately, when we have to pay back that £1,000,000,000, plus interest, we will find ourselves in very grave difficulties.

The people of Australia see themselves faced with a terrible balance-of-trade disability. They see goods flowing into this country in vast quantities, and members on the Government side of the House say, " Yes, we have to have these goods. They are necessary to our development." I went into a major retail clothing store in Melbourne recently and saw racks of suits of clothes extending as far as from where I stand to the other side of this chamber. Those suits were manufactured in Italy and were priced at from £40 to £50 each.

Mr Killen - Did you buy one?

Mr PETERS - No. Is that necessary for the development of this country? In effect, the Government permits unemployed tailors in Italy to come to this country and then allows the importation of suits of clothes which they previously made in Italy and so ensures that such persons coming from Italy shall remain unemployed in Australia! Clothing is not the only thing which is coming into this country in vast quantities. Boots and shoes, worth hundreds of thousands of pounds, made in Italy and Czechoslovakia are flooding into this country, as well as all kinds of exotic foodstuffs from other parts of the world. Tobler's chocolates are seen in great quantities at every major aerodrome in Australia. They are probably very good chocolates. We should not import vast quantities of goods, such as suits made in Italy or in the United States of America and vast quantities of ties made in America, which are now to be found on store counters in every capital city of Australia.

The importation of such goods would be bad enough if our overseas balances were in a flourishing condition, but they are not. Yet the Government allows these importations; and we have the absurd statement by the honorable member for Wentworth (Mr. Bury) that controls can be applied to prevent such importations. What does he call the credit squeeze? Is that a control or a restriction of the quantities and kinds of goods that can be imported? In reality the banking institutions say, " We are going to issue credit and determine not merely how much credit operates in this country but also the channels into which it flows. We are not going to determine how much currency is expended throughout Australia, but we will determine, to a great extent, the things upon which it is spent." That is private control of the operation of industry in this country. It is control by bankers in the interests of the banks in order that higher rates of usury can be maintained - 10 per cent, and upwards - with the sky the limit so far as rates of interest are concerned. It was Sir Francis Bacon who said, " The tooth of usury biteth too much; it must be grinded ". If this Government continues to permit investment corporations to guarantee 20 per cent, interest - some have been unable to honour such a guarantee - and others to guarantee 12, 15 or 19 per cent, interest, and if it continues to permit industries and retail stores in this country to pay dividends of 18i per cent, or 20 per cent, to money lenders who invest their money in their undertakings!-

Mr DEPUTY SPEAKER (Mr Lucock - Order! The honorable member's time has expired.

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