Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Tuesday, 6 March 1973
Page: 227

Mr EDWARDS (Berowra) - Mr Deputy Speaker,I congratulate you on your appointment to your office, and I ask you to convey to Mr Speaker my congratulations on his appointment to the high office of Speaker. Also, 1 express my thanks to the people of the Berowra electorate for electing me as their member in this House. I assure them that 1 will do all in my power to represent them effectively. I should also like to take this opportunity to pay tribute to my predecessor, Hon. Tom Hughes, Q.C., who voluntarily retired from this House. His service to the Parliament included a period as AttorneyGeneral. He commanded the respect of members of all political persuasions, not least for his capacity to listen to and to accept an argument from either side of the House.

In rising to speak about the GovernorGeneral's Speech I refer to and applaud the intention of the Government, expressed in that Speech, to play an energetic part in the forthcoming round of international trade negotiations due to open later this year. This round will come to be known as the Nixon Round. Nothing is clearer than that in the past few years the international economic and financial system has been in disarray. There are problems of trade and problems of the exchanges. The man in the street knows these as 'currency crises'. Of course, the two are intimately bound up together. There is and there has been for some years a substantial imbalance in international trade. This results from a multitude of causes.

The flow of trade is hampered by tariff barriers and, even more importantly, with the substantial success of the 'Kennedy Round' of trade negotiations, by a bewildering array of non-tariff barriers. The General Agreement on Trades and Tariff Secretariat a little time back identified some 800 forms of non-tariff obstacles to international trade, such as quotas, import controls, export subsidies, restrictions in the name of health standards and so on. No country has clean hands in this respect. But I venture to refer to the rigid apparatus of agricultural protectionism associated with the Common Agricultural Policy of the European Economic Community as an outstanding instance, to the widespread judgment - it is extremely difficult to document - that the controls of this sort on imports into Japan are particularly severe, and to the quotas and especially the voluntary restraints on imports of traditional manufactures of the United States. These are major factors contributing to the present imbalance of trade both within the developed world and as between the developed and developing countries.

Looking at the causes of the world trade imbalance on a broader canvas and a longer perspective, the resurgence of Europe, particularly West Germany, after World War II, and the spectacular economic progress of Japan, have decisively eroded - relatively speaking, mark you, not absolutely - the dominance of the United States in the supply of goods and services to the world which prevailed at the end of World War II and resulted at that time as its natural concomitant in the era of the 'almighty dollar', as most honourable members of this House will recall. It is worth emphasising that there is nothing mysterious, chauvinistic or reprehensible in that. It was just the fact of life that in the post-war circumstances the American industrial machine was intact and massive and could supply the goods the world wanted, while America for its part wanted relatively little from the rest of the world. Therefore US dollars - the means to buy from America - were scarce, valuable and coveted. And entirely naturally therefore, the US dollar became the medium for international buying and selling. In plain terms it was international money - as good as gold.

In this House last week, the Prime Minister (Mr Whitlam) spoke warmly in his tribute to former United States President Harry Truman of the monumental generosity of the United States in contributing vast sums, and thus essential goods and services, to the restoration of war-devastated Europe. But now, as 1 said, there has been some inevitable evening up. The relative position of the United States has changed. The United States trade surpluses of the 1950s and early 1960s have given way to massive deficit while yet the US dollar, in plentiful supply but no longer convertible into gold, continues, for practical and understandable but hardly rational reasons, as the major form of international money. It is important in this situation to maintain a proper perspective and in particular a balanced view of the role of the United States.

For my own part I find the attitude of honourable members opposite to the United States disturbing, to say the least. I referred a moment ago to the generosity of the Prime Minister's statement in relation to President Truman. It contrasts oddly with the almost pathological anti-Americanism of other members of the Government. The views of the Minister for Labor (Mr Clyde Cameron) and the Minister for Overseas Trade and Minister for Secondary Industry (Dr J. F. Cairns) as expressed on the occasion of the maritime ban earlier this year when these Ministers referred to the leadership of the United States in the most deprecating terms - indeed as maniacs - are clear. The position of the Prime Minister is more difficult to spell out. As honourable members will recall, he did not have a great deal to say at that time. But at this point, so far as I can judge, I would say that he sees the United States as immensely powerful and well-meaning but rather myopic and blundering in its conduct of international affairs and in need of some guidance in its actions from smaller and more sophisticated friends - like Labor-governed Australia.

Be that as it may, one can certainly go along with the Prime Minister to the extent of agreeing that the United States is immensely powerful. Its sheer economic dominance is indicated by its gross national product of approximately$US1,100 billion - using 'billion' in the American sense. I will focus on the approximate figure of $US1,100 billion and compare it with the second most economically powerful country in the nonCommunist world, Japan, with a gross national product of upwards of $US200 billion. West Germany has a gross national product just nudging that figure. Britain's gross national product is about$US150 billion. Australia, taking note of the recent revaluations, has a gross national product of the order of$US50 billion. To give honourable members a perspective of this figure, it would be absorbed in the margin of error allowance in the projection of the United States gross national product by American economists.

Now it is true that as a result of the inevitable historical development to which I have referred and the relative incidence of barriers to international trade we now have a world trade pattern the outstanding feature of which is the very large United States trade deficit with its major counterpart, an almost equally large surplus in Japanese trade. These conditions indeed spell a weak US dollar in the foreign exchange markets. But make no mistake about it, it does not - I repeat, it does not - spell an economically weak America. The statement by the honourable member for Blaxland (Mr Keating) that we should have no truck with the United States dollar because it is on its way down to being 'worth nothing' is indicative of his own bias, but it is pitifully off beam as an appreciation of economic reality. Similarly, the view expressed by the Minister for Minerals and Energy (Mr Connor) that there will be further devaluations of the United States dollar may prove to be correct, though undoubtedly death and higher taxes to finance this Government's inflationary program are a much higher probability!)

My point is that if there are any such further devaluations they will be deliberate ones, ploys in the tough bargaining by the world's No. 1 economic power for a re-alignment of trade barriers and international currencies, bargaining by a United States Administration which is skilled in the art of the big league power play and not in any need of the advice of self-professed sophisticates from other countries, small or large. 1 cannot underline too strongly the point that, as things stand, while the United States dollar is weak in the exchange markets of the world, the dominant economic strength of the United States stands unimpaired. Cheap tills at the currency position are in poor and uninformed taste.

The central point is that the United States, in the face of a Europe and Japan reluctant to come to terms with a clear need for trade and currency negotiations with a view to farreaching and, in the monetary sphere, fundamental reform, has served notice that it is time - to use a phrase familiar to all honourable members - to get down to business. The United States can exert some muscle in these matters. The United States devaluation of 12th or 13th February - depending on which side of the Pacific one is on - was a major contribution in itself, as the Treasurer (Mr Crean) stated in a recent interview with Mr Peter Long, the 'Sun-Herald' financial editor. But it was not the only measure announced by the United States Government. There were other measures affecting - I say affecting, but to speak plainly, encouraging a restriction of - American investment abroad and there was a clear indication of the possibility of further action to come in the trade field. Honourable members will recall the 10 per cent surcharge on imports imposed at the time of the United States initiative in August 1971 - a restrictive measure of no mean order. This time Representative Wilbur Mills, the influential chairman of the House Ways and Means Committee, has suggested a 15 per cent import surcharge.

Far from being a weak element in the international community, the United States has presented the world with a choice. The world can pursue constructive international trade and monetary reform with some urgency, or the imbalance can be resolved the American way - in the latter event with unpredictable damage to world economic growth - and, be warned, with the rest of the world and, in particular the developing world, risking heavier economic losses than would be faced by the United States. In that sense the world trade and financial system stands at a crossroads.

So I commend the Government's intention to take an energetic part in world trade negotiations. lt bad better get cracking on the necessary industrial and rural reconstruction programs which inevitably will be required under reciprocal GATT concessions. Hand in hand with these negotiations must go a beginning to the task of reforming the world currency system - a move, perhaps, towards something in the nature of an 'SDR standard" or special drawing rights standard - if some measure of stability in exchange rates, albeit with a greater flexibility than now, is to be achieved. The SDR standard would include as a key element the demonetising of the 'swags' of excess United States dollars now sloshing around - to use the colourful phraseology of the financial Press - in the foreign exchange markets of the world, and poised per medium of the sophisticated development of the Eurodollar market and the operations of the multi-national companies, to flood in this direction or that direction whenever the betting is good for up-valuation of a currency.

However, in this context also we should approach the exercise with a right perspective on the matter. To hear some people talk it would be thought that when the Japanese, for example, buy up an avalanche of United States dollars it is in some way embarrassing to the United States. That is not so. The Japanese would be doing it not to support the US dollar, as it was misleadingly put, but to prevent an appreciation or up-valuation of the yen against the. dollar and, by preventing that, to maintain the Japanese competitive edge in world markets.

Against this background the national interest of Australia is to guard its options carefully and to mesh our actions into the big league'. I am somewhat loath to criticise the recent actions by this country in the currency field because perhaps it can be said that the matter is in the very best of hands'. 1 refer to Dr H. C. Coombs, a gentleman whom I hold in the highest esteem and, indeed, revere. I gather from the Press that the Prime Minister, if not the Treasurer, consulted Dr Coombs, but the process is a little confused, lt seems pretty clear that neither of them consulted the Cabinet.

As loath as I am to do so, 1 feel bound to say that with the United States deficit in 1972 and the Japanese surplus being the size they were, a blind man could see in the latter months of last year that a major realignment of world currencies was inevitable and imminent. When in addition it is recognised that we had already effectively revalued our currency to some extent, what was the purpose of drastically curtailing our options in the imminent major international readjustment by the unilateral 7.05 per cent revaluation at Christmas eve weekend? Two reasons spring to mind and neither is very sound. Firstly was the capital inflow which was said to be building up troubles for monetary control. Those difficulties will be compounded by the mounting Government deficit which at this very moment is heading towards an inflationary record. The capital inflow could have been contained by more direct measures. The second argument was, in effect, to keep election faith.

As the Leader of the Australian Country Party (Mr Anthony) said recently, the noel had been given to the international speculators and the payoff had to come.

Be that as it may, given the decision of 23rd December, it was certainly difficult for the Government, in the light of our obligation to contribute to the stability of the present rather fragile monetary system, to do other than stand pat when the United States devalued on 12th February. But that does not alter the fact that the combination of the decisions of 23rd December and February add up to a very big change. I ask the House: Would the Government, that is, the Cabinet, have acquiesced in that if there had been no revaluation in December? Would the Cabinet have acquiesced in an up-valuation as against the United States dollar of the almost unprecedented order of nearly 20 per cent? That is what has taken place since December last. In all there has been a revaluation of almost 28 per cent since 1971 and an up-valuation overall of the Australian dollar at least of the order of 10 per cent since December last.

I believe that it would not have done so. But if the answer from the honourable members opposite is an unrepentant yes, I would say, that is the answer of men who have not had to make a sale overseas of meat or other rural products, of iron ore or any other mineral product but, most importantly, of an Australian manufactured window frame, a radio microwave link, a motor car or a desk calculator - in a word, any one of the great range of items which today make up our increasing export trade in manufactured goods. That trade is of the utmost importance for Australia's long term prosperity and growth and therefore - and I ask the honourable member for Casey (Mr Mathews), who led in this debate, to mark this especially - this trade is important for the chances of this Government making a reality of the programme of social and economic development outlined in the Governor-General's Speech and so eloquently supported by the honourable member for Casey. I might add that the domestic program - its objectives, as distinct from its ways of obtaining them - is widely supported on this side of the House. Honourable members opposite do not have a monopoly of a concern for social justice, as they often like to imply.

If Europe revalues upwards this week it will help a bit. But, by and large, I would suggest that it is time, past time, that we called it a day in upvaluing the dollar. I strongly urge the Government to do this because with the current high wool prices being, unhappily, unlikely to last forever, with imports likely to increase notably with the resurgence of strong economic growth, and with an acceleration of inflation being the inevitable outcome of the policies of this Government, the Government will need all the leeway in foreign exchanges it can get-

I commend the intention of the Government to take an energetic part in the great matters affecting the welfare of the whole world and of this country in particular. Of them to whom much is given much will be expected.

Mr DEPUTY SPEAKER (Dr Jenkins)Beforecalling the honourable member for La Trobe I would remind the House that this is the honourable member's maiden speech and I trust the House will extend to him the usual courtesies.

Suggest corrections