BUDGET, 1961
Speech in the House of Representatives by the Prime
Minister, the Rt. Hon. R. G. Menzies. 24th August, 1961
Sir I must be careful not to laugh. This debate has
been quite interesting. It has been very reminiscent of budget
debates that I have listened to for a long, long time. I have
heard some of it directly, and some of through the medium of the
wireless. I have learnt more things about myself than I ever
knew before. Not for the first time, but for about the twelfth
time, I have listened to honorable gentlemen on the Opposition
side explaining with some vehemence how my Goverrunont is busy
ruining the country, creating disaster, and bringing despair into
the hearts of people. This may be, of course, merely
repetition for the sake of emphasis, but I know, and all those
who have been here for a similar time know, that this is the
customary diet. The odd thing is that, in spite of this ruinous
process of administration that we have adopted, not only in 1949
when, I gather from one honorable member who spoke earlier, we
won the election by fraudulent practices, but in 1951, 1955 and
195Z at five consecutive gene ral elections the people of
Australia, who are not fools, have been told of this kind of
thing.
Mr. Costa You said this afternoon that people are gullible.
MR. MENZIES Gullible are they? Is that the Labour Party's viev?
All I can say is that in this series of five elections they. have
voted for us although there has never been an election campaign
yet which was not preceded by prophesies from honorable
gentlemen opposite of mass unemployment and grave disaster. At
the end of nine years of our incompetent administration, the
people of Australia gave us the biggest majority that a
government has over had. Gullible are they?
So I speak tonight on behalf of the people of
Australia who have voted for us, who have maintained us, who
have supported us, and who are now under attack for their own
folly, so the Opposition says. That is the issue. Are the people
stupid? Do they not understand these things? Or has the
Opposition suddenly, in the still watches of the night,
discovered the answers for the first time? It has never had them
before. I do not propose to waste my tine on this or that. I
want to say something about the spcech of the prospective Prime
Minister the Leader of the Opposition. It is quite proper to
refer to him in that way, as you will at once be disposed to
agree. One must fight in one's own division. Therefore, I deal
with the speech of the Leader of the Opposition, who was
described this afternoon in a somewhat intemperate speech as
am I permitted to use his name? the great Arthur Augustus
Calwell. I know him very well and we are, I am happy to say on
the best of terms. I have no objection to being Prime Minister
and he thoroughly enjoys being Leader of the Opposition. The
other night ho favoured us with a speech on the Budget and I will
with proper respect, confine my remarks within a limited period
of tirie to what ho had to say.
Mr. Peters Get on with it.
MR. I, 4ENZIES Yes, I will got on with it. So far I have been
doing rather well, don't you think? The theme song of the
Leader of the Opposition I quote his words was: All the
troubles in the economy have been Govornment-caused. I would like
to say to my distinguished friend, if he wore in the chamber,
that, as a matter of advocacy, it is a very great mistake to
overstate your case. He said: All the troubles in the economy
have been Govrnment-caused. That remarkable proposition
ignores the rest of the world and the great tides of events that
sweep around the world. Having established that proposition to
his own satisfaction, he says what? He cannot say, and he did
not say, that we created the boon of 1959-60, because he denies
that such a boom over existed. I want all honorable members and
all the people of Australia who may learn of the honorable
gentleman's statement, to got that firmly fixed in their minds.
He denies that there was a boom in 1959-60. I think I have a
note here of what he said. I must quote his precise words. He
referred to
The myth
I am not lisping
of the 1960 boom which the Government has been trying to
create in recent months.
That is how the Leader of the Opposition disposed of the boom.
He said that there , as no boom. It never existed; it was an
invention, an act of imagination on our part.
Mr. Haylen Hallolujah, I'm a boom!
MR. MENZIES I know that the honorable member who interjocts
agrees that there was a boom, but his Leader, or whatever he is,
says that there was no boom. If the Leader of the Opposition
means anything, he means that everything was going nicely, I am
delighted to see that the honorable gentlemn is here now. For
his benefit, I must repeat what I said. I was saying that the
Leader of the Opposition denied that there was a boom. He
described it as a myth created by the Government in recent months
Mr. Fox He will " myth" out, too.
MR. MENZIES I am sorry that honorable members should see fit to
laugh, because laughter is prohibited by the Sydney " Mirror". I
never read it without laughing. But what does the honorable
gentleman mean, if he moans anything, by his statement that there
was never a boom? Uhat he must moan is that, there being no boom
and everything, presumably, going nicely, wo, within a year of an
election, being minded to cormit suicide politically, took
unnecessary measures and caused a depression and dangerous
unemployment all of which my honorable friend will cure by the
time-tLaoured Evatt-Calwell recipe of increased inflation. If he
does not mean that, I ask everybody: What does he Tean? If
there was not a boom if everything was completely normal-why
in the name of fortune did the Government that I have the honour
of leading suddenly make up its mind to take unnecessary measures
to cause a depression and to go out to create unemployment? I
put this to the common sense, if not of honorable gentlemen
opposite, at least of the groat Australian people: Why should
they suppose that we would commit such folly, unless they imagine
that in a single stroke we had all gone mad?
Now the Leader of the Opposition, having committed
himself to these propositions, says, ' When I come in" he moans
after the next elections " I am going to have a February Budget"
I suppose January will be devoted to reconstruction and all
that " for a œ 100,000,000 deficit". That sounds magnificent,
does it not? It is the master-stroke of statesmanship. I think
the honorable gentleman does well to be optimistic. Every
leader should be optimistic. He says, " He have an election. I
come in. HJe form a Cabinet. We get to work and in February I
bring in a new Budget for a œ 100,000,000 deficit." A Budget in
February, let me remind honorable members, would relate to the
rust of the financial year. Itwould not become effective until
March. There would be March, April, May and June. So in four
months of the current financial year the honorable gentleman
would run into a deficit of œ 100,000,000. Subtracting the
deficit of œ 16,000,000 for which we budget, he would have an
œ 84,000,000 deficit for four months of the financial year. I am
sure that, as an honest man, he means that; but I am equally
sure that, as an intelligent man, he does not think it will
happen. But if his statement means anything, it means that he
would, in his Budget in February, introduce taxation reductions
and increase Government expenditure at the rate of 000 000
for four months and, therefore, at the rate of œ 250,006 006 a
year. This is the thoughtful contribution made by the Leader of
the Opposition. The arithmetic is simple. The deficit would
run at the rate of œ 250,000,000 for a full year.
Let me go on from that point, because I am perfectly
certain that my honorable friend does not design himself to be
the Prime Minister just for the balance of the financial year.
This is always a salutary reminder. There will be another year,
the financial year 1962-63. WIhat would he do in his Budget for
1962-63? The honorable member for Shortland ( Mr. Griffiths) is
interjecting. I am not asking him, because he will have nothing
to do with it. What would the Leader of the Opposition do with
the Budget for 1962-63? Would he go flat out for another deficit
of œ 250,000,000? Is that what we are being promised by this
party that wants development and hates unemployment? Is that
what the game is? Because if it is not, then presumably, having
got through an election on this rather lush promise he will, in
1962-63, bring in a Budget in which he rjstores taxes, or cuts
expenditure in order to achieve a balance, or continues the
inflationary process and budgets for a deficit of over
œ 200,000,000. Now, Sir, I do not ask the honorable gentleman to
come clean onthis matter in this debate, because he has already
spoken; but I do hope that he will cone clean on it with the
people of Australia before piling day.
We want him to come clean on this: Are we being
promised a vast inflationary system of finance because I will
say something about the consequences of that a little later or
is he just saying something at this stage in order to get over
the problem of the moment, and will then come along six months
after polling day saying, " I an sorry. Those taxes I reduced I
must now increase. That expenditure I let out I must now pull
back"? Because, Sir, he has made glowing promises of easier
borrowing. I wonder if he would mind my repeating it? Easier
borrowing! Easier borrowing for the Government? For the people?
How do you make borrowing easier if you are running into an
inflationary boon? How do you make borrowing cheaper if the
value of money is running away through inflation, as it
undoubtedly would on the programme he has put before us a
programme which, I may say, was so admirably exposed by the
honorable member for Wide Bay ( Mr. Bardidt) this afternoon.
Mr. Curtin Awl
MR. MiHZIES Yes, aidirably exposed. It is a pity you were not
here listening at the time.
Mro Reynolds You are easily pleased.
MR. MENZIES The hon: rable member says that I am easily pleased.
If he would make only one bright remark I would be delighted.
Easier borrowing. If I may use the famed Macaulayan phrase,
every schoolboy knows that in a period of inflation borrowing is
harder because interest rates must rise. But he is going to have
easier borrowing. He is going to do something about the pay-roll
tax. I must say to him, as an old friend, that I rather admired
the way in which he phrased it. He did not really say, " We will
abolish the pay-roll tax." That would have been well received
by some of those business interests that we are supposed to
serve, would it not? Ho did not actually say, " We will abolish
it." He said, " We will look into this to see whether we can
replace it in some other way." That is as broad as it is long,
and I do not attach much significance to it. He is going to do
something about the petrol tax. He is going to have vastly
increased expenditure in " Jestern Australia and Queensland, in
which States the expenditure by this Goveornnent leaves for dead
whatever was done by the Labour Party in its own time. He drags
out the good old thing about an ovrseas shipping line the
deficit on which no doubt he will carry on Treasury account. He
is going to have some sort of government ihsurance company that
is going to be unlike any other insurance company and be able to
carry on profitably at a loss.
This is the kind of thing he says, and because he has
put it in that way, because he or whoever has advised him has
looked up all the points of criticism, particularly in one or two
places that we know of, and they have added them together, he
produces this astonishing prograrmme so astonishing that I hope
Australia will never have to suffer from it.
Mr. Reynolds It has suffered from the Menzies Governmeiont a lot
MR. MBJZIES Australia has suffered from the Menzies Government
for twelve years, and if you can find anywhere in the world a
happier and more prosperous country than Australia, I should like
you to drop no a postcard.
Now I pass on from that in order, if I May with
profound respect, to point out a few uaps in the reasoning of the
honorable gentleman who made this policy speech. I admit it is
a little subject to correction, because the federal executive of
his party had not finished meeting at the time the policy speech
was made, and we all know that the policy of the Labour Party is
fixed by twelve people, or whatever it may be, outside. But I
say nothing more about that, because I an sure he has had a
difficult time. However, first of all, let me take the gaps in
his reasoning. He denies the boom. I just repeat that, because
he went to some pains to say that there was not a boom. I wonder
Sir, if the honorable gentleman believes that, and whether he is
unaware of the tremendous rise in 1959-60 of what has been
called " fringe banking" but which I much prefer myself to call
money dealing by people dealing in money, many of them making
Qnor. lous profits in consequence.
Mr. L. R. Johnqson You could have stopped that.
MR. NENZIES You say so, but I had other legal advice. Then
there is hire-purchase finance. Is he unaware of the tremendous
development in this field, of the development of fancy rates of
interest, or does he deny that those things existed? To me,
there were many indications of a boom, and to my delighted
colleagues they conveyed the some idea.
Does the Leader of the Opposition deny that we have
had a tremendous speculative boom in land sales?
Mr. Peters Promoted by the Governmento
MR. MENZIES Wait a moment! You do not get away from it by
saying " promoted by the Government". I am asking a simple
question: Was there a boom in land selling? Was there a
speculative land boom?
Mro Haylon Ring up Artie. He will toll you.
MR. 1ENZIES All right. Run away as fast as you like. Having
a sense of relativity I am saying this to the Leader of the
Opposition, who says that there was no such thing as a boon. You
do not explain this by saying that somebody was to blame for it,
because immediately you say that you adnit it existed. But the
Leader of the Opposition denies it existed. Does he? I wonder
what people would say who found themselves having to pay a most
fantastic sun of money for a bit of land on which to put up a
hone. But the Leader of the Labour Party denies that there was
any such thing. Does he deny that there was a speculative boon
on the stock exchange? Not a bitU He says there was no boom. I
do not like speculative boons on the stock exchange becauso,
quite frankly, stock exchange speculation very seldon, if ever,
puts new noney into industry. Does he deny that there was
enornous increase in purchasing power and that in consequence
there was an inr: ense denrand for inports? Does he deny that? I
put this, because he never thought fit to refer directly or
indirectly, to the fact that there was a grave threat to our
overseas reserves, which were falling rapidly aid, but for strong
action, would have fallen to the point of danger. The
prospective Prine Minister of Australia is unaware of the fact.
It is so trifling in his mind that never, from first to last in
a carefully prepared speech, did he mention it. This is the
leader of the alternative government. Does he deny that there
was an acute competition for labour and materials? I wonder
whether it crossed his eye, looking ovvor the records in the
course of his studies, that because of this boon and this
tremendous donand for basic materials, Australia, with all its
remarkable increase in local production, had become a net importer
of steel. There was no mention of it.
These are all the m. rks of -a bo.) n, and a government
that is confronted by a boor and is afraid to do something about
it is not fit to be a governreont. A Government that inherits a
quelled boom, or an abolished boon, and sets out to create a new
one by its policy is not fit to be the Government of Australia
either. Being confronted by all these obvious questions the
honorable gentleman took refuge in saying that the boon was an
imaginary thing created by our imagination and having no existence
in fact. So, Sir, as I repeat, he paid no attention to the
problem of the balance of payments. May I remind him and remind
Australia, if it needs to be done, that this wonderful country of
ours lives on international trade more than does any other
country of its population. We are one of the great trading
nations of the world. I am not boasting about this. It is a
fact that if you put down the first ten trading nations in the
world in absolute terms, not in comparative terms, we are one of
then. Of course we live on it, because our exports enable us to
pay for the things that we bring in from overseas, the bulk of
which are in aid of production in Australia itself. We are a
groat trading nation and therefore we have a vital interest in
what our balance of payments may be.
Do honorable members realize that all the economic
troubles that have arisen in Great Britain of late are troubles
of balance of payments America had a few of the same kind not
so long ago all problems of how you can keep your exports up to
the world so that you may buy what you want from the world and
not go bankrupt in the process? This is the simplest possible
way of stating the problem of the balance of payments. But the
honorable gentleman opposite says nothing about it. It does not
count in his world. Whoever advised him did not think of it.
Governments have had to think about it very greatly in ny time.
I wonder lam now speculating on what would have gone on in my
friend's mind if he had thought about this matter lad r. it this
is a dangerous and almost an impertinent exercise on my part
whether he would have said that there would not have been a
problem of that kind if import licensing had not been abandoned.
It is a very udd thing that in his speech, so much adn irod in the
Sydney afternoon press
Mr. Haylen The dailies were not bad cither.
MR. MENZIES I was referring only to the juvenile section; you
know what I nean.
Mr. Haylen I understand. You would read the conics first,
MR. MENZIES I always do except that I road the loading
articles; they are the sane thing. Of course, my friend reads
the comics, provided they are guaranteed written or drawn by an
Australian. Anyhow, we will not quarrel about that. The Leader
of the Opposition said not a word about import licensing. I
thought he was going to say, " Of course, there was a boon and you
caused it. You did not invent it; you caused it. And you would
not have caused it if you had not got rid of import licensing."
Now, Sir, this leaves us free to speculateo Does not
the Loader of the Opposition know that in a period of domestic
inflation with full and, fron tine to tine, over-full
employment a reduction in the supply of goods will increase the
inflationary pressure unless corresponding with the reduction in
the supply of goods by impor. t licensing, you stiffen up the credit
restrictions at hone? You cannot have it both ways. There are
two weapons you can use on this matter. One is to let nore goods
in, and the other is to restrict credit at hone by various
processes. But if you let all the goods in, then quite palpably
you will have to restrict credit twice as much; otherwise the
inflationary boon will So right out through the roof. This is
elementary. You do not need to be a professional economist to
know that. But the honorable gentleman has thought fit to ignore
it. I wonder, Sir, whether my friend, who is a good Australian
and believes in Australian industry, regards import licensing,
with its inevitably arbitrary and bureaucratic character, as a
sound permanent means of encouraging Australian industry because
quite frankly I do not. I am a great believer in Australian
industry. I am a life-long protectionist. I will not accept the
proposition that the right way to protect Australian industry is
to put it at the mercy of the government of the day and of the
officialdom of the day under a licensing system. Import licensing
lasted long enough, and I hope that it will never cone back.
There is one other question that I ought to put. I
wonder whether my honorable friend, when he wins the next
election and puts this new Budget of his into operation, is going
to restore import licensing. He did not toll us. I am sure that
as a member of the govornm cnt which made Australia a party to the
General Agreement on Tariffs and Trade, known as Gatt, he will
realize that with the present state of our overseas reserves
because our measures have restored then to a position of
abounding health in the last few months he could not
re-introduce import licensing because, as he well knows and as
his Government explained to us at the time, you cannot impose
quantitative restrictions except to protect your balance of
payments, and the balance today thanks to these measures that
we have taken is so healthy that nobody would have believed it
possible five months ago. That of course, explains why the
Leader of the Opposition has not promised that he will restore
import licensing. He has not even referred to import licensing
and in fact, of course, he would not dream of making a promise
because he knows that until his policy has been operating for six
months there will be no justification at all for import licensing,
Then, Sir I am bound to say that I heard this with
great reluctance and with some sorrow I am accustomed to some
of the extravagances elsewhere, but the honorable gentleman
seemed to me to set out to destroy confidence, to preach gloom,
to prophesy mass unemployment and to prophesy a depression deeper
than anything we have ever known. Of course and listening in
this afternoon, I have learnt that there are quite a few
expressions that are now parliamentary it is utter drivel to
talk about a mass depression of that kind. There is not the
faintest reason for any such prophecy.
The fact is that every one in this chamber I say
this emphatically on behalf of all of us hates to have out of
work people who like to be in wo?: k and who are competent to be in
work. Of course we do. No gover. nument in our history has done
nore over a period of twelve years to maintain the highest
possible level of employment than has this Government. We do not
need to be told by bellowing fellows you know, Sir, whom I
mean about unemployment and its hardships. Unemployment
presents the nost tremendous human hardship that one can possibly
imagine. But when people make speeches which, unless those
people are utterly stupid, are intended to increase unemployment
and human hardship, I express my utter contempt for them,
One of the greatest tasks we have is to get rid of the
relatively small amount, bur too big for our comfort of
unemployment that exists au present. The right way to do this is
not to destroy confidence in the cormunity but to encourage it.
Let me put it into simple tcrms. Today, the numbers of registered
unemployed are a little more than twice what they were in the
period of the boom. Do not let us forget that we have always had
a number of people registered as unemployed, even in a boom when
we have had full employment. Let us agree that the nunmer today
is twice as great as it was that is 50,000, 60,000 or whatever
you nay care to call it. These people are tremendously important.
How do we get them back to work? I put it in the simplest terms:
We get them back by improving business turnover in this country
by 2 per cent that is all.
Mr. Griffiths What sort of business?
MR. MENZIES The business of buying at the ultimate end, if you
want it explained to you. If people are threatened with
unemployment and are constantly told by their supposed leaders,
" You never know, you may be out of a job tomorrow; this is going
on and it will get worse and worse until it reaches the Lang
percent.", then, of course, they will button up. But if they go
about their affairs in the normal way, believing, as I think they
should, that this country is in a resurgent movement which will
make everybody before long forget these troubles, business
activities will return to normal. I put it in this way: 2 per
cent. more buying at the ultimate end
Mr. James With what?
, iR. MENZIES There is a good deal of purchasing power in the
cormunity. The honorable gentleman forgets that there has been a
substantial increase in the basic wage, a substantial increase in
social service payments in this Budget and a very large amount of
tax refunds this year, running, I think, to about œ 90,000,000. An
increase of 2 per cent. and the trade position will begin to
clear, the stocks will begin to move out and the manufacturers'
wheels will begin to turn. Sir, I am trying to put this in
proper proportion. It is all right to stand up and moan about
people. I know it is the fashion for a few honorable members
opposite to think of me as a thoroughly inhuman fellow. I am not.
Mr. Jones Aren't you?
MR. 4ME4ZIES You are the last nan who ought to say so. I an not.
I an a responsible political leader and as such it is my duty to
point out to this country that whatever reduces the confidence of
the people will destroy their employment and whatever makes then
see the position clearly with all the elements that make for
employment will restore the jobs of those who today are without
them.
8.
Opposition Members Oh!
MR. MENZIES I have heard that " Oh" many times. I have been
here a long time. I know Opposition members say I have been here
too long.
Mr. Curtin Too long!
MR. MENZIES Yes, too long for I th-t b. c. orable
members opposite live year by yearelecti. ro by eluction. on
prophesies of gloom. They say . o will DO more and more
unemployment. That is the most sh. ockingly barren policy I have
ever heard. It is quite discreditable. When they find 97 people
out of 100 employed in a factory or whatever it may be, they say
to the 97 as vdciferously as they can, " Be careful, you may be
the next to go". I know it is not very well regarded by people
of a delicate nature to say this kind of thing, but I perfectly
well believe that there ure honorable members opposite who would
regard another 100,000 the list of unemployed between now and
December as the greatest r-' O. itical triumph in their lives.
Mr. Reynolds Who is being inhuman now?
MR. I-ENZIES I am being human, but I am taking leave to question
your humanity. You might think about that occasionally.
To me, the existence of unemployment is a terrible
thing. It imposes human hardship. It is quite true that every
government, whatever its political colour may be must deal with
these groat problems in the broad an. occasionally m'ay have to
accept some of these consequences. But it is a monstrosity to
think that the Govcrnment does not know that there is tremendous
tragedy in homes in which the breadwinner is willing to work but
cannot work. The whole of our policy is designed to remove this
tragedy. The whole of our policy has been to get rid of
inflation, which is a threat both to development and to investmont,
to produce a sensible stability in the community, to prevent
the value of wages, s'Alaries and pensions from being run out by
an inflationary movement, and thereby before long in total to
restore a complete prosperity not a boom prosperity but a sound
prosperity to the country.
Our position today is that our overseas balances are
good; that the seasonal prospects appear to be good, except, I
regret to say, in parts of Queensland; that we have good
prospects for wool production; and that we will have, I hope,
good wool prices. Sales tax has been reduced on many cormmodities
that afect the householder and we have the virtual ending of the
credit squeeze, because all banking: restrictions today, under
Reserve Bank directions, are concentrated in substance of
speculative operations, as the Treasurer ( Mr. Harold Holt) pcirted
out in his Budget speech. We have good bank liquidity and a
vastly accelerated works and housing programme which has not
received the study in this place that it deserves, though the
Treasurer might, if he had had time, have said a good deal about
it. We have increased purchasing power along the lines that I
have mentioned. The last thing I wish to say is this: The Leader of the
Opposition said, being put to it by himself, that he prefers expansion
to stability. I want to say, if it is a permissible form
of words, that we prefer both. We attach enormous importance to
stability not for stability's own sake, but because we believe in
expansion and because we believe that unless we can have a stable
base in this country we can never attract the investments, the
hopes, and the willingness to take risks that the country needs
if it is to expand as it should. I could elaborate on that, but I
will not, because my time has almost expired. Perhaps, before I
resume my seat, I ouht to say that I hope I have made it clear
that we do not accept the proposition advanced by the Leader of
no Opposition.