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Tuesday, 9 May 1972
Page: 1447

Senator RAE (Tasmania) - I have listened to my friend Senator Mulvihill speaking with, I thought, some justifiable emotion about what sometimes happens to Senate committee reports. 1 felt that when he was speaking he had in mind the reports relating to the environment. I was somewhat disappointed that he did not spend more time talking about that matter, upon which I acknowledge he is an expert, rather than a matter upon which I have the greatest doubt as to his expertise. But with no further comment T pass on to talk about the matter which we are debating and thai is foreign investment and the sudden radical action proposed by the Australian Democratic Labor Party and supported by the Australian Labor Party. Mr President, I suggest that for a start we cut out the emotion in dealing with this matter on which it is easy to become emotional. I accept that people can, with considerable justification, become emotional on this matter.

Senator Byrne - It is the motion that we are interested in. not the emotion.

Senator RAE - That precisely sums up the situation. Although I say 'Let us cut out the emotion' let us not cut out in any way an expression of economic nationalism. I believe that Australia has reached the stage where it is entitled to indulge in a little economic nationalism - and not only entitled to indulge. I believe that any Australian government with the interests of the Australian people at heart is bound to indulge in a little economic nationalism even if it ls defensive rather than offensive. At a later stage I shall refer to a little offensive economic nationalism which I think we could usefully undertake. But let us be rational and weigh the considerations. Everybody accepts that we need growth. Everybody accepts our need for investment for development. Do we still need foreign capital to enable us to have that growth, that capital for investment and that development which we seek? Are the present circumstances still such as to warrant an unrestricted inflow of capital into this country for the purposes of encouraging development and investment.

I shall diverge for a moment. Because of our striking a particular rate in relation to our currency, have we created a situation which, temporarily at least, cuts out any necessity for a consideration of the encouragement of investment funds flowing into this country? Are we almost at the stage where we can say that we no longer need to worry about that, temporarily, because obviously the exchange rate is such as to introduce capita] whether we want it pr not. Whether people wish to invest in particular projects or not, it will flow into this country while we maintain an unreal exchange rate. Also 1 suggest that we should bear in mind the need to retain the opportunity to share in the growth of this country. Australians should have an opportunity to participate in the major growth points of the economy and in what might be described as the 'goodies' which are available to capital, particularly risk capital, in a rapidly developing nation such as this.

Like everyone else's resources, our resources are limited. If these resources are fully and rapidly exploited at this stage and if further exploration and development fails to find greater quantities then we may find ourselves in a very difficult situation. To this extent I quite agree with the sentiments which have been expressed in this chamber today in relation to this matter. It is a matter for concern. It is a matter about which I believe we are all concerned. Certainly the Government has indicated in varying degrees through various persons its concern about the matters which have been raised here today. But the first and foremost matter which I urge upon the Senate is that balance in the approach is required. The problem is: Where does the balance lie? At the present time that is very hard to determine. If I could criticise - mildly of course - the information available to us I would say that there is a lack in Australia at the moment of adequate information to enable us to say with certainty what is the situation. What is the balance which we should strike? Perhaps before Australia moves in any other direction it would be most advantageous to move in the direction of really finding out what is the inflow, where is it going, why is it coming in and the way in which it is affecting the situation in Australia. To what extent are the matters about which people have been speaking this afternoon and this evening being affected?

Senator Gair - That is why the Democratic Labor Party proposed to refer the matter to a committee.

Senator RAE - Senator Gair, with that I have concurred and I do not take issue, but 1 point out that the Committee has undertaken, as the Select Committee on Securities and Exchange has undertaken, because of the terms of reference, a complex, long and necessarily involved examination. I think the matter is a little more urgent than that and I hope not only that we can benefit from the results of the deliberations of the Committee to which you refer but also that we can obtain results more quickly, enabling the Government to act even tentatively by requiring and ensuring that we obtain a greater degree of information available to us now as well as a thorough Senate committee type examination, which can be and is usefully being conducted.

Senator Gair - This is an urgency motion.

Senator RAE - This is where you and 1 part company, Senator Gair. I do not think we know enough at this stage to support the motion, though, as you will gather, I am not differing with you on a lot of major points. I am saying there is a lack of information but the indications are clear. 1 believe the prima facie indications at this stage are that we have a continuing capital inflow. We have a situation in which we need not be as concerned as we were in the days when the Current Affairs Bulletins on overseas investment in Australia published in August 1961 said that the basic attitudes to foreign investment in Australia were largely the product of the universally felt desire for rapid national development. I think we are past that stage. Perhaps it is the result of the particular adjustments that were made lo the exchange rate, but I think we were passing that stage anyway, notwithstanding that. I think we can say, as set out in that very interesting article in that Current Affairs Bulletin in 1961, that no longer do we have to approach it in that way. Whilst we are considering this matter let us have another look at the motion itself that has been proposed by Senator Kane and supported not only by his colleagues in the Democratic Labor Party but also by members of the Australian Labor Party. It says:

The need lo initiate immediately such legislative and administrative measures either alone or in cooperation with the States- and, one may say, wonder of wonders if that could be achieved at this stage - in this particular field, I hasten to add - as will impede, delay or prevent the transfer of the beneficial ownership of shares in Australian public companies lo non-Australian ownership until the report ... or until something else has happened. What is the effect of it? The effect of it is to put a complete ban immediately upon the transfer of shares by any person, be he an overseas investor in Australia or an Australian investor, to any person who is resident overseas. The problems of definition are difficult to go into when one has only a quarter of an hour in which to speak, but 1 wish to raise briefly, for the benefit of those who are to speak later in the debate, the problem of definition of Australian companies. What does that mean? I do not know. It has a number of possible meanings. It could mean Australian registered public companies. It could mean Australian public companies which at the moment are 50 per cent or more owned by Australian shareholders. It could mean Australian companies which are owned other than through nominee holdings in some of the States in which it is possible to hold in nominee names by Australian shareholders, or it could mean a great number of other things which at the moment are impossible for us to determine. I suggest with the greatest of respect to Senator Gair and the members of his Party that there are problems in trying to implement a motion such as this. Even if one could overcome the definition problems and understand precisely what is meant, one then comes to the problem of what will happen. With the greatest of respect, I have not heard from those who have preceded me in this debate an examination of the possible effects of this particular action which is sought, andI hasten to add again that I am not in any way at all debating or disputing the general sympathy for the matter which has given rise to this particular motion.

Senator Gair - Where there's a will there's a way.

Senator RAE - That is so, and I trust that we will see from the Government not only a will but also a way.

Senator Gair - We want to see some evidence of the will.

Senator RAE - As a member of the Government parties, I am expressing a will so fur as I am concerned. I think there is a will amongst a great number of the members of the Government parties that something should happen in relation to these areas and there is a confidence that our Government will act in relation to them. Earlier speakers have referred to the measures that have already been undertaken and the measures that are expected to be undertaken. Let us not have any difference about the general sympathy. Let us get down to a consideration of some of the matters involved. One question that 1 ask, and I was asking when Senator Gair interjected - an interjection whichI did not mind as it was a perfectly reasonable observation - was whether any speaker this afternoon had considered what might happen as a result of the implementation of measures such as these that are suggested. For instance - and I raise this only as a possibility - has anybody ascertained or commented upon the extent to which British and Japanese investment in particular, plus other foreign investment through our stock exchanges and our capital markets in Australia can be taken as a basic element of the support of the depth of those markets. Can anyone say that if Australia withdraws summarily and arbitrarily by legislation the possibility of those people continuing to invest in some of those markets, that such markets will not collapse, particularly when one bears in mind the present much publicised loss of confidence in the Australian economy. I hasten to add that I am not suggesting that 1 believe this to be likely, butI believe it is prudent to consider it before voting in favour of a motion such as this. 1 certainly have not heard an economic argument and a detailed and reasoned argument supplied to us in support of this motion which would make me go even so far as to say that upon the balance of probabilities that would not happen. I have my own view, and I hasten to add that it is that the inflow of portfolio investments into Australia from overseas in recent times has been relatively small and that the amount of money that is available in Australia through the various institutional investors is more than sufficient to take up the lag, and I do not believe that the matter I have raised is a reality. However, I suggest to the mover of the motion and his supporters that it is one of the important things that should be considered and confirmed or rejected before the vote is cast in favour of a motion such as this.

I have my view, but J did not have time when the matter came to my notice this afternoon to research adequately and confirm what is a general feeling as far as I am concerned. I certainly was disappointed to find that apparently nobody who supports this motion was concerned enough to find out this information. If we go on to look at some of the other possibilities, I wonder whether those who support the motion can say with satisfaction that these things which may happen are less dangerous than the thing we all know is happening at the moment. I repeat that I am not suggesting that some action is not necessary. However, I ask why it is necessary to do it in this particular way - this particular and extreme way that has been suggested here today. Let us look for the moment at the capital inflow question. Is Australia really receiving capital inflow only because, as we have heard so often, andI think already heard referred to in this debate, of our relatively high interest rates.I think the Euro bond or the Euro dollar interest rates are higher. I consider that interest rates are no longer the cause, and that there is no cause stronger than that of the exchange rate. I notice that, unfortunately, I have exhausted the time allowed to me in which to speak. However, although my time is completed, I hope that Australia's time in relation to investment is not.

The DEPUTY PRESIDENT (Senator Laucke) - Order! The honourable senator's time has expired.

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