SPEECH IN THE HOUSE OF REPRESENTATIVES BY
THE PRIME MINISTER, THE RT. HON. RoG. MENZIES
ON NO-CONFIDENCE MOTION TOTH MARCH. ~ 3960
MR. MENZIES: I am indebted to the House for 0. lowing me to speak
for a period of 30 minutes. It really is not long enough.
MR. CURTIN: It is too long,
MR. MENZIES: No, it is not. I felt that a period of 30 minutes
was not long enough for the Lead3r of the Opposition ( Mr. Calwell)
and I myself would have liked a little more time. I want to
say first, Mr. Speaker, that the Goverrnment, oddly enough, will
vote against what is in effect the no confidence motion. That,
ofcourse, will surprise honourable members opposite!
Secondly I wish to say something, quite briefly and I
suppose not comprehensively about the points that were taken by
the new Leader of the Opposition in attack on the Government.
I should like to chide him a little gently, if I may, about one
or two statements he made in the course of his speech. He said,
for example, that there was not one. wo. d in any Governmrent
statement about the impact of inflation on ordinary people wage
earners or those on fixed incomes. Having said that, the honourable
gentleman went on to pay me an ill deserved compliment of a
theoretical kind about the speech I delivered to the Institute
of Management conference in Helbourne to which, as I did not
realise, he had listened, Irarnjng from it but not, I regret to
say, acquiring wisdom from it. If he hod . li'ened to that
speech as closcly as I should have hoped he wrould, he would have
known that we have made a feature of this matter bec-use in that
very statement of mine in the Mielbourne Twcn Hall I said, if I
may quote my om -rords I knc it is n ill bus ness
' But the fact is that one of the great obstacles to counter
inflationary action is that there are . iany pr-ople who think
a bit of inflation is a very good thing. Such a view pays
little heed to the position of those on fi' Ad incomes and no
heed whatever to the continuing and growing need to finance
by public borrowings at fir. d r: ates of interest a great programme
of public works the completion of which is absolutely
vital to transporc and wat.: r. and power and housing and
schools and universities, to the ex-pansion of inCustry and
commerce, ana the maintenance of employment.
Theh, Sir, the honourable gentleman, when making his maiden
speech as Leader of the Opposition which we all appreci. ated,
said-de believe that the country is prosperous'
Indeed it is, It is prosperous for the overwhelming
majority of the people of Australia. If one had time one could
demonstrate that by showing how the ordinary standard of living
has risen. But I was glad to near the honourabl. e member admit
that the country was prcoerous a rather unpleasant admission
for an Opposition Leader to have to make. But he made it like a
man. Ho: wever, it was a notable reversal of form for one who has
been busy prophesying disaster and mass unemployment for the
last ten years and urging people not to save, Even he must know
that saving is one of the prime means of defeating inflation.
He has been saying, " Do not save your money; spend it, There
is disaster coming and there will be mass unemployment."
One of the iany things I like about distinguished
friend is that he is devoted to prophecy but over a period of
ten years his prophecies have never turned out to be right, So
this time he got away from prophecy and unertoolk to analyse the
present state of affairs in which there is a distinct upward rise
of costs and prices He said that this was a profit not
prophet inflation. In order to osta bish that there was a
profit inflation he quoted another authority as saying that the
total profits of Australian companies other than mining companies
last year was œ 130,900,000. Because of that œ 130,000,000 in
the total national income of Australia he said that all these
things were explained.
The honourable member spoke about wages, too. Has he
realised that under the last two decisions of the Commonwealth
Conciliation and Arbitration Commission I do not discuss them
the annual addition to the wages bill has been œ 165,000,000.
That is an addition over and above what has existed before. Even
that annual addition exceeds the total company profit by
œ 35,000,000. That may give a lot of intelligent and toughtful
people something to think about, My honourable friend seems to
think that that portion of company profit which he regards as
being excessive I do not know whether it is 10 per cent.,
per cent., or 30 percent has brought about the present inflation
while all the other obvious factors in the situation have
not affected it at all. That is a very remarkable state of
affairs. I shall accept the honourable member's view purely for
the sake of argument even though, between ourselves, I think it
is nonsense. Let us suppose for the sake of argument that there
is a profit inflation and that profits are being made by companies
every one of which employs thousands of good Australian
people. 4Jhat does the honourable gentleman propose to do about
it? Our supposition lends itself to a supplementary question,
and it is this: Does the honourable member regard inflation as
a theoretical or future problem or an immediate problem? As I
suppose he would agree that it is an immediate problem, I ask:
What does the honourable member irho, thank heaven, has made this
the issue propose to do about it? First of all indeed, I
thought at one stage it was last of all he proposes an amendment
of the Constitution and then to decide how to use any new
powers that the people may vote for. Sir, I have had a long
experience of attempts to amend the Constitution. I would not
dream of speaking of them in that confident way, particularly if
I were saying to the people, " You give me charge and I will
settle inflation. I will change the Constitution.
Mr. Bryaht: Put value back into the œ 1.
MR. MENZIES: Dear me! If you would put a bit more value into
the that you get the would be worth more. That is all
I have to say to you.
Mr. Bryant: That is a pretty bright remark.
MR. MENZIES: It is. Brighter than any remark I have ever heard
you make in this House. But I am not to be led off by these
matters. The time ticks on.
The Loader of the Opposition is going to amend the
Constitution. Really! The honourable member has enough experience
of politics to know that you do not just say today: " We
will amend the Constitution", and get it amended tomorrow. I
can remember sweating my way around this country many years ago
23 years ago asking the people of Australia to vote to give
power over civil aviation to the Commonwealth of Australia. They
voted, Therefore, if the honourable gentleman is saying
to people who are properly pressed by the weight of inflation,
" You leave it to me. I will alter the Constitution", they may
have a somewhat sceptical mind about it. But that is his first
step: . Ie rill amend the Constitution! As a solution for n
immediate problem of inflation I have never heard anything more
futile. In the second place, the honourable gentleman does not
say on behalf of his party that he would not intervene before
the Arbitration Commission, because it has been made clear for
years by his predecessor :. nd himself that it would. To do what?
To support further immediate wage. increases so as to increase
the volume of demand and, if I may add it, turnover, and, if I
may add it, profit. That is the one short run remedy that he
presents. The long run one quite theoretical at this stage is
to amend the Constitution. That takes an a;. ful lot of doing.
I am not saying that it might not be done in due course, but it
takes an eaful lot of doing and involves a lot of time. In the
meantime, the short run proposal is to increase the volume of
money in circulation in order to ristrain inflation!
Mr. Courtenay: You should get Sir Frank Richardson.
iMRl. M ENZIES: Did you refuse your increase? Stand up and be
counted! Did you refuse your increase? Of course not! There
is nothing I despise more than a fellow who wants to cash in on
a popular clamour, but takes the money ' ile the money is going.
So re need not pay any attention to you.
The third proposal of the Opposition is to increase
government expenditure both in respect of private citizens and
of State governments. Ie are not paying the State governments
enough! Last year when a new arrangement had been made with
the State governments and a bill was brought in to give effect
to it, every member of the Opposition voted for it. But there
is a by-election coming and so they say now, " Oh, this is
wiicked. The State governments are not getting enough." So, as
a counter to inflation, the Opposition proposes that more money
should be provided for the State governments and for private
citizens! Of course, all that means, once again, is that Opposition
members and I should like to have heard their views on
this matter either accept deficit finance in the middle of
inflation, when clearly there could be nothing more damaging, or
thuy propose, . ithout saying so, to raise taxes in order to
avoid a d-ficit. It would be very interusting to know whether
the Leader of the Opposition was proposing the outlines of a
counter-inflationary budget in which he rould substantially increase
expenditure and jack up revenue by further taxes on the
citizen. oell, -he has not told us. But the alternative to all
this greatly increased expendituro as a counter-inflationary
measure, mark you! the alternative to increasing taxes to raise
the wind is to leon heavily on central bank credit; to make what
the Opposition would call a more vigorous use of central bank
credit, thereby increasing the supply of money, but not, of
course, the supply of goods and services.
Sir, for a Labour Opposition much enriched by the
presence of a new Loader, and a nie deputy . ader whom I complimont
on his appointment to be seriously making an issue of inflation,
and at the , ame time producing a body of ideas which
would only pour ptrol on the fire of inflation, is one of the
most pathetic things in political history.
So far, I h.: ve stated what I believe to be the Opposition's
counter-inflationary policy if it is to be called onein
positive terms. But there are negative terms which we all
ought to remember. The first of them is that there is to be no
borrowing of capital from overseas. I hope that will not be dernd.
Mr. Pollard: It was never said.
Mji. MENZIES: No, Reggie I am sorry, Mr. Speaker I should
refer to the honourable member for Lalor.
MR. Pollard: It was not said by the Leader of the Opposition.
4.
MR. MENZIES: I am very interested to hear you say that because
I made a few notes on what the honourable member for Melbourne
the Leader of the Opposition whom you loyally serve today, said
in 1955 in this very House. He said
As a party-
I suppose that means, " As a party"
we do not believe in overseas borrowing. oJe have a very
strong objection to borrowing at all from overseas.
Mr. Pollard: Hear, hoar!
MiiR. MENZIES: My old friend, the honourable member for Lalor,
can make the best that he can of that. That is the view unless
it has been changed in the last fortnight. Labour would not
borrow from overseas! That might be a little awkward because this
country is chronically short of capital in its present amazing
state of d: velopment, lo cannot, at present, generate all the
capital we require for public w. rorks, for the needs of private
enterprise, and for the employment of all our people.
So, the first thing that the Opposition says unless
the policy is now to be cancelled is " WJe do not believe in
overseas borrowing. / e are entirely opposed to it." All right!
That means that that avenue is closed. Do honourable members
opposite believe that we can get sufficient capital for development,
capital for employment, capital to reduce the excessive
demands inside Australia which so easily produce inflation, unless
we enrich ourselves by an inflow of capital from other
countries? What is their view on that? So far as I ha: ve been
able to understand the Leader of the Opposition said nothing
about it, but I heard his predecessor speak about it a great
deal the Opposition is severely critical of foreign investment
in Australia. Foreign investors are bad people. They squeeze
out Australians. They have regard only to their own interest.
They make profits. Is this the policy of the Labour Party? If
so, it is a policy that ought to be expressed quite plainly in
Dandenong, in Goolong, and in Broadmeadows, to refer only to my
own State. Suppose Labour did succeed in deterring foreign investment,
would it have made a contribution to defeating inflation
or would it have poured petrol on the fire of inflation?
These things are worth remembering. I wonder whether honourable
gentlemen opposite, when they find themselves addressing people
who, by the thousands, are employed in Australia as a result of
developmental industrial capital, will say to them, " You ought
not to be employed by these peoples; you ought to be out of a
job. It is much better that you should be out of a job than that
we should allow money from overseas to come into Australia."
Time marches on, and I pass to the next point I want to
make. My honourable friend, talking about the increased costs
produced by recent events, has said that the Government is not
asking business interests to absorb some of these costs, but if
big business is so prosperous, it should be able to debit some of
the wage increases against its profits. I was sorry when I heard
the honourable member say that, because he had done me the groat
honour of going to the Melbourne Town Hall to hear me make a long
and considered statement on these very matters. I merely recall
to his mind what I said. I shall quote it to honourable members:
' The employer who simply passes on wago increases into higher
prices is contributing to the inflationary spiral, rendering
inevitable the next wage increase, and cost increase, and
r ice increase. Vast numbers of ordinary citizens will suffer
in the process, the export industries will be penalised,
U and the national finances will be disorganized, The task of
the employer, rho is for this purpose the manager, is thorofore
to meet each upward movement of labour costs first, by
absorbing it as far as possible, not regarding the current
rate of profit as sacrosanct, rnd second ( or should it be
first) so improving the efficiency of his operations as to
reduce, or at least stabilise, his unit cost of production.;
I quote those words in order to demonstrate that this has been
by no means overlooked.
As I an now left with ei. ght and a half minutes Ithink
I should perhaps say something about our own policy in case it
becomes overlooked. I will pass over all the proposals that have
been made by Labour leaders or by a Labour leader ovie the last
seven or eight years. In overy political campaign and in every
policy speech we have heard of more millions, more hundreds of
millions and more promises, all adding to purchasing power, and
not one of them having any relation to production. I pass over
that. As counter-inflationary measures they were, of course,
quite pathetic. But, Sir, we the Government have done something
that the Opposition has not done. , Jo have had a gcod deal of
experionce about this matteo. In 1951 in the Budaet of that year,
when the wool boom following on the Korean war had led to the
most tremendous inflationary pressure, we introduced a Budget
which was violently assailed by the Opposition. This Budget was
designed to draw down the total purchasing power so that the demand
in the country would not outstrip the supply. Honourable
members opposite had a wonderful time. They took us to pieces and
they had great supporters. The gallup poll showed us right down
at carpet level. But in--th 1954 ulection we won, and we won in
1954 because the action we had tak-en against inflation had produced
results. We may have won because the honourable sentleman
who is incerjccting was one of the candidates. Of cours., we won
in 1954 because the people saw that stability was being achiuved
by this Government. The people are not such fools as members of
the Opposition appear to them.
I shall tho:: efore rehearse quite briefly what action we
are taking. We have had to deal with booms by budgeting for a
surplus and have been hated in the process. JWe have had to deal
with minor recessions by budgeting for a deficit and whatever we
have done on these matters has been rong, but in the net result
as the Leader of the Opposition himself admits, this country is
in a state of prosperity that it has never boen in before. Our
inflationary measures I mention them very briefly devoting about
seconds to each are these: Je are going to avoid deficit
finance because deficit finance adds to the supply of money ahead
of the supply of goods or services. Deficit finance is proper in
a period of recession. Budgeting for a surplus, as in 1951, is a
propr counter-inflation action. Doesthe honourable Leader of the
Opposition agree with not budgeting for a deficit? He has not
said so. He does not believe it. Being an honest man he could
not honestly say so because the promises that will pour out from
the Opposition in the next few woees would make balanced budget
impossible. Therefore au are for avoiding deficit finance. The
Opposition is for h-ving it.
In the second plac. we support a central bank policy of
restraining the growth of excessive liquidity at a time of inflation.
The Leader of the Opposition said on behalf of his party
though I should doubt that he slid it on be'ialf of himself that
that is not right. His motto is more and more and more liquidity
and more nd more central bank credit. That is crazy and I say
that on behalf of the ordinary people of this country who suffer
from inflation. In the third place we have said plainly that we are
going to do what we can to resist, not paying increases as such,
6.
but to resist increases in the pay cheque of the country which
are not matched by increased productivity. This is the whole
basis of truth in this matter. If you pay more than there is
production then you hAv.:, of cours2, inflation and rising prices.
If you pay less than you have production, then you have a period
of depression and recession. The honourable gentleman says,
" Forget about productivity." Indeed, he did not say a word about
it not a word. Nor did his great predecessor over nine or ten
years say a word about productivity. He said, " Support the increases
whatever the result may be."
Finally we say le us move as quickly as possible towards
the removal of import licensing and thus towards in increase
in the total supply of goods. . Jhatever nonsense may be
talked about profit inflation, the truth is that by and large,
over a period a month, a year or five years-inflation reprosunts
an over-supply of money as compared with the supply of
goods and services. Ther. fore, Sir, wre have stepped towards the
removal of import licensing. Before I finish, having said that
the Labour Party is opposed to this, let me remind those of the
other side who have some memory that when, in 1952 we introduced
the modern edition of import licensing quiLe soverely
S owe were assailed from the Opposition for doing so. Dr. Evatt,
who was then Leader of the Opposition and who is now happ. ly
placed in another jurisdiction, said, " 1ec look forward to the
time when this system can be removed and when there will be substituted
for it a proper system of tariff duties so that the
trade of the country may run free". 3ut, today, the Opposition
is scratching about for a new look. However, it is ve:. y hard to
de -elop a new look in three or four days. So it has now discovered
that the removal of import licensing is a wicked thing,
although it thought, only a few years ago, that the imposition
of this kind of licensing was a piece of villainy.
I sum up, Sir, by saying that the Australian Labour
Party, having decided, as it has done, o make inflation the
issue, has absolutely no remedies to off. r, except, first, an
attempt, some day, somewhere, in respect of some matter, to induce
the people to alter the Australian Constitution, and,
secondly, further taxes I think they were vaguely hinted at
on che profits of companies.
Mr. Speaker: Ordoi T'he Rt. Hon. gent?:.**:: ans time has expired.
SiMR. MENZIES: Thank you, Sir. That was exactly where I wanted
to end.