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Thursday, 16 September 1971
Page: 1465


Mr FOX (Henty) - During the course of his Budget speech the Treasurer (Mr Snedden) said that Australia is in the grip of inflationary pressures and, if allowed to develop unchecked, this will cause increasing economic hardship. (Quorum formed.) 1 thank the honourable member for Leichhardt (Mr Fulton) for obtaining an audience for me. As he has done that, I think it is worth while beginning again. I said that during the course of his Budget Speech the Treasurer said that Australia is in the grip of inflationary pressures and, if allowed to develop unchecked, this will cause increasing economic hardship. I find myself in agreement with these sentiments. I believe that if we can do anything at all to reduce costs it is worth examining the proposal. I would like to make what I believe to be a constructive suggestion to the Government.

It is my belief that interest is a considerable factor in costs. If a manufacturer borrows money the interest which he pays forms part of his production costs. Obviously the selling price of his product is correspondingly higher. If a consumer borrows money to enable him to finance a purchase for which he cannot pay cash, obviously he has to pay more for the article than if he were able to pay cash. If he has to pay 10 per cent or 12 per cent interest then the ultimate price which he has to pay will be higher than if the interest charged were in the vicinity of 8 per cent. There are 2 main traditional sources of lending in Australia. 1 refer to the banks and to the finance companies, or fringe banking institutions. The current rate charged for a bank overdraft is in the vicinity of 81 per cent although the rate of interest charged by finance companies varies from 7 per cent to 8 per cent on new motor vehicles to as much as 11 per cent or 12 per cent on other consumer durables.

Over the past 7 years the trend of lending has been moving away from the banks and towards the fringe banking institutions. The reason that I have taken a period of 7 years is that it is only since 30th rune 1964 that the Commonwealth Statistician has compiled detailed statistics on the finance companies. But let me prove what I have said about the trend of lending moving from the banks to the finance companies. Between 30th June 1964 and 30th June 1971 the amounts which were owed to trading banks at the end of the financial year has increased over that period by 103.7 per cent. During the same period the amount of loans outstanding to finance companies has increased by 159.8 per cent. Let me express this in another way: The amount of money owed to trading banks represented about 60 per cent of the total which was owed to banks and finance companies combined at 30th June 1964; 7 years later, at 30th June this year, the amount owed to banks bad fallen to only about 54 per cent of the total.

I would like to remind the House that the amounts I am talking about do not exactly represent chicken feed. At 30th June 1964, the Australian people owed a total of $4,3 13m to banks and to finance companies. Of this amount the banks were owed S2,609.9m and the finance companies were owed $l,703.1m. At 30th June this year the total indebtedness had increased from $4,3 13m to $9,741. 6m, of which the banks were owed $5,3 1 6.8m and the finance companies were owed $4,424.8m. Honourable members can see that the movement of lending has definitely been from the banks towards the fringe banking institutions. This means that people are paying considerably more for goods for which they cannot afford to pay cash. It also means that many of the smaller manufacturers and the smaller builders who cannot be accommodated by banks have to borrow elsewhere at higher rates of interest. This also reacts to the detriment of the consumer. 1 would like to point out to the House that the trading banks are the major shareholders in many of the fringe banking institutions. My research has shown me that in the case of three of the major such institutions Australian banks own 100 per cent of the shares. In 3 other cases they own respectively 60 percent, 43 per cent and 42 per cent of the shares. In addition to this, overseas banks have substantial holdings in a number of finance organisations. This means, in effect, that in many cases where a person seeks to borrow money from his bank he cannot be accommodated at normal overdraft rates but he can be assisted if he is prepared to pay from 30 per cent to 50 per cent more for his money. The rate of interest which he is called upon to pay is, in many cases, dependent on the drawer from which the bank manager takes his loan application form.

The reason I have raised this matter is that bank lending is largely controlled by the Government through the Reserve Bank of Australia and it exercises this power in a manner designed to assist the Australian economy. With this I am in complete agreement. But I understand that the Government has no control whatsoever over other than bank lending. I am suggesting that it ought to be seeking this power. If the Government believes that it has a duty to control the economy in the interests of the Australian people and, in the words of the Treasurer, to combat inflation, to slow it down and to halt it, again I am in complete agreement with that. I believe that the Government ought to seek powers which will enable it to control all of the lending which is made both by banks and by other financial institutions - not only a reducing percentage of it which at the present time is not much above 50 per cent. I believe that high interest rates operate mainly against the ordinary people of the community and these are the people whom we as a Government claim to represent.

I now wish to turn to another matter which has been referred to during this Budget debate. I refer to immigration. I wish to join issue with my friend and colleague the honourable member for Moreton (Mr Killen) who said earlier this week: 1 think it is about high time that the Government . . . put the axe into the immigration programme.

He went on to say:

Growth for growth's sake is a spurious national goal.

He stated that we should be seeking quality rather than quantity. With these statements I am in complete agreement but I do not agree with the arguments which he developed. Today it is fashionable to knock immigration, and the critics of our immigration policy point to the demands which the immigration programme makes on the economy and the additional amount of money which has to be spent on roads, schools, hospitals and sewerage systems because of the number of migrants which we as a government have brought to Australia. The critics conveniently either overlook or seek to minimise the importance of the contribution which migrants have made and are continuing to make to Australia's development.

The latest information that I have been able to obtain indicates that whilst migrants represent only 18 per cent of the total population they provide more than 23 per cent of the work force. As to the demand for more schools - and 1 do not deny that many more are required - migrant children represent only a little more than 9 per cent of the school children population. If Australia has an education crisis I believe that it is a crisis created by prosperity and not by migrants. There is a demand for higher educational standards and it is a fact that children today stay at school much longer than did children of earlier generations. 1 believe that we in Australia might find it worth our while to examine the policies of some overseas countries which make much greater use of their school buildings by having 2 shifts per day instead of only one as we do. In this way they not only save a considerable amount of capital expenditure but also they get much greater value for the money which they spend on classrooms.

The critics of Australia's immigration policy base most of their criticism on the demand for capital which they claim is aggravated by our intake of migrants. They claim that much of our capital resources are diverted from productive fields to nonproductive fields such as the building of roads, schools, hospitals and power installations, the provision of water supplies and so on. The critics ignore the fact that migrants themselves contribute a great deal to our supply of capital. Migrants are not paupers. Many of them bring capital with them into this country. They are also good savers and experience has shown that per head of population they invest more of their savings in home ownership than does the average Australian. They also contribute substantially to Australian revenue, both federal and State, because they pay both direct and indirect taxes. They also pay their local government rates as, of course, do all Australians. To the extent that migrants through their work contribute to the profits made by the companies which employ them they also contribute to the capital which is not paid out in dividends but which is ploughed back into the businesses, and the industries which they help to develop also attract overseas capital.

Statistics show that migrant demands on social services are less than the Australian average. I would also point out that at a time when the primary producer is finding it extremely difficult to sell his products on overseas markets the migrant population contributes very substantially to the home market consumption. I have obtained some figures which were produced towards the end of last year. They show that migrants in Australia consume annually 70 million gallons of milk, 20 million lb of cheese, 55 million lb of butter, 525 million lb of meat, and 55 million eggs. In addition they consume a tremendous amount of fruit and vegetables. They must also be very big users of wool. I believe that those figures ought to be of interest to those who represent the primary producer. Without this contribution to local consumption 1 believe that primary producers would be in a much worse position than they are today.

Whilst on the subject of migration I would like to say that 1 favour the portability of pensions with respect to migrants who wish to return to their native land, provided of course that proper safeguards could be worked out so that elderly people would not come to Australia merely to qualify for an age pension and then return to their own country after qualifying. Al the present time 10 years residence in Australia is necessary to qualify for the payment of the age pension and this is probably an adequate safeguard. However, if at some time in the future the residential qualifying period were reduced this safeguard would not be as effective as it is at present.

I want to be fair to migrants but at the same time 1 do not want to recommend anything which could be unfair to Australian taxpayers. Migrants have pointed out to me that there could be a saving to revenue if we adopted this policy. If migrants who qualify for the payment of an age pension remained in Australia they would receive in addition to the pension all the fringe benefits which go with the pension. These fringe benefits have been estimated to be worth in the vicinity of $2 to $3 a week to each pensioner. To the extent that these fringe benefits could not be used by a person residing overseas this would be a saving to revenue. I understand that Canada permits the portability of pensions but there are very severe residential qualifications with respect to migrants who choose to return to their homelands. I understand this residential qualification varies from 25 years residence to 40 years residence. The United States also permits pensions to be paid to people in overseas countries. But comparisons with the practices in overseas countries are not valid because Australia's age pension scheme is non-contributory whereas in most if not all overseas countries the worker himself makes a contribution towards his retirement allowances or age pension. It is not possible to estimate how many people may seek to take advantage of legislation such as this, nor is it easy to estimate how much it would affect our balance of pay ments problem but 1 believe it is worthy of investigation and 1 support the idea in principle.

In the few minutes remaining to me in this debate 1 would like to refer to a conference which I was privileged to attend as a representative of this Parliament. This conference was referred to earlier in this debate by the honourable member for Reid (Mr Uren), lt was a conference arranged by the Working Centre of the 11 provincial parliaments of the Federal Republic of Germany and the theme of the conference was 'The Environment'. The conference was attended by 70 to 80 delegates representing 23 countries including countries in Europe, Asia, North America, South America, the Middle East and Australia. The resolutions which were passed at this conference will be sent to a much larger conference which is to be held in Stockholm next year and is being organised by the United Nations. It is hoped that most of the member countries of the UN will bs in attendance at the conference. lt was made very clear at that conference that no country can live entirely to itself and that action taken in one country or on one continent can react on people who live in another country or on another continent, lt was pointed out that the world's population will double during the next 35 to 37 years and that if the present rate of population increase continues there will be one person to every square metre on the face of the earth in 150 years time. Perhaps this is not quite as bad as it sounds because we will, of course, have available multi-storey buildings. This increase in population to the extent I have mentioned will not affect us and it may not affect our children but 1 believe that the actions which our generation takes today will have a tremendous effect on the lives of future generations.

The delegates at the conference were left in no doubt that the problem of pollution and the destruction of the environment is one which cannot be dealt with by one country in isolation and that laws relating to pollution, whether it be of the air, or of water, and to the destruction of the environment, have to be dealt with at international level.

For example, what happens in international trade when one nation requires an industry to bear the cost of combating pollution and another does not? Where the products of both countries are sold on the international market obviously the advantage must lie with the polluter. One of the problems discussed at the conference was that of non-degradable containers such as bottles, aluminium cans and plastic containers. People who travel extensively around Australia are appalled to see the extent to which the country is littered with these containers. Sooner or later, and the sooner the better, Australia will have to face up to this problem. Some countries and cities have already done so. I understand that the suburb of Bowie in Maryland introduced a law, effective from 1st April this year, which provides a fine of $100 for any store convicted of selling non-returnable containers. A bank in Pittsfield offered lc for non-degradable containers brought in by Boy Scouts. I believe it cost the bank about $1.2m.







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