SPEECH BY THE PRIME MINISTER THE RT. HON. R. G.
MENZIES IN THE HOUSE OF REPRESENTATIVES ON TIHURSDAY
24th MARCH, 1960
Mr. Speaker, I had the great advantage this afternoon
of listining to the speech of the Attorney-Goneoal ( Sir Garfield
Barwick) in reply to the attack made on the Government in relation
to the subject of wool pies. I am bound to say that his
speech though brief, was so devastating that nothing remains to
be said on that matter. He exposed the Opposition's move as a
piece of arrant political humbug. So, my colleague having
successfully destroyed this attack, there is no reason why I
should trample on the graves of the attackers.
But, Sir, the motion put forward by my friend the
honorable member for Lalor ( Mr. Pollard) -ont beyond wool pies.
It extended into the area of restrictive practices. About that
also my colleague had something to say. Restrictive practices
are, I imagino, attacked in the case of wool because it is said
that they tend to rduce prices. In every other respect that I
can think of, however, they are attacked because it is said that
they increase prices and therefore increase profits, and therefore
produce what the distinguished Loader of the Opposition
( ir. Calwell) was good enough to describe, a few times at
least, as a " profit inflation".
Mr. Calwoll That is right.
MR. iENZIES: That is right! I am very ' lad that ho is here,
because I regard his words with great interest. Several times
he has made it clear that this is a profit inflation. Therefore,
I imagine that my distinguished friend will agree that
this is just one phase of the attack, which the Opposition is
going through the motions of making, on the subject of alleged
excess profits and how to deal with them. Pies, coupled with
the honorable name of General Motors-Holden's Limited, represent
the two ends of the scalu-. Now Sir
Mr. Pollard ihat about Sir WJilliam MacGregor?
MR. MENZIES: I have never heard of Sir ! William MacGrueor.
Mr. Whitlam You have heard of Sir * illiam Angliss, though.
MR. MENZIES Yes, I have, and how green with envy you have been
ever since. I hate to use the word " green" beacuse it may wake
up troubles on the Opposition side and that, if I may so to
tho Deputy Leade of the Opposition ( Mr. Whitlam), is the last
thing I would ~ want to do. Now, Sir, the Attorney-General has
already said something about the difficulties that are involved
in an attack on the problems of improper harmful price agreements.
I do not desire to add anything to what he said on that
matter, but there are those, of course, who after a period of 59
years of this Parliament's existence, profess to find that the
problem is quite simple. No Government from this side of politics
or from the other has ever found it simple; but I am happy
to say that, reinforced as we are in this Government by the
services, as Attorney-General, of the most distinguished constitutional
lawyer at the Australian Bar, we are, in all earnestness,
concentrating our minds on what can be done either in the
general or in the particular.
The general treatment of this matter is not, of course,
very easy because, as everybody knows, and as the Joint Committee
on Constitutional Review recognized, the powers of the Common-
, r~ alth are sketchy; but the powers of the States within their
own domain are clear, and the committee d,;, ioted a good deal of
thought to producing its own solution of this matter. Now, I am
not at all disposed to brush all th-' t to one side, I think that
the report on that matter is of great interest. I have read it
two or three times. It is of great interest, but it does not
solve the problem because, first of all, you have to determine
whether you are going to seek to deal with these matters by
clear Commonwealth law ofcontrol or whether you are going to
seek to deal with them by co-operation between the Common. wealth
acting within its powers the States acting within theirs.
And obviously this is not a matter about which at this stage we
can do very much.
The Opposition professes to say and I understand its
attitude of mind "! ell here is the recommendation. All you
have to do is put it forward. The people will approve of it
and then the . whrole constituional structure will be changed." I
do not want to be unduly melancholy about this matter; but I
should like to remind 11 honorable membe:. s of the House that
for a long time it was thought that the answer to this kind of
problem was to give the Commonwealth Parliament power to legislate
with respect to monopolies a nice, round, mouth-filling
phrase. But that phrase is understood by the Opposition in a
quite different sense from that in ., which we would understand it.
The Opposition is entirely in favour of monopolies so long as
they are government monopolies. We, on the contrary, have always
been disturbed about any monopolistic tendencies in the
ordinary, and what ought to be competitive, business world.
I hope I will not be told that if I only had the right
attitude of mind the Constitution could be altered tomorrow. I
remind the honorable gentlemen opposite as they have reminded
us ond others that the Constitutional Review Committee's report
points out that five times in the history of the Commonwealth
attempts have been made to secure power over monopolies
for the P. rliament of the Commonwealth, and five times the proposals
have been rejected. I quite agree that on the last occasion,
in 1944, the proposal found itself one of fourteen points
which the then Attorney-General was optimistic enough to think
would be adopted in toto and which the people were pessimistic
enough to reject in toto.
But, Sir, the constitutional problem is not a very
easy one, and among the things that we 0ll h. ave to consider is
whether we will travel faster: and fare better by having co-operative
action rith the State gov-rnments and the State parlaiments
than by trusting all to the chances of a constitutional amendment
one of 22 comparatively major constitutional amendments
to which the attention of the Parliament is directed by the
report that has been referred to so frequently in this debate.
There are, ofcourse, some heads of power belonging to
the Commonwealth under which, subject to the wind and weather of
section 92 and those other prohibitive sections of the Constitution,
we :: ight be able to do something. I can assure the House
that we have been concentrating our minds on this very matter.
Jhen it was said in the Governor-General's Speech that we wore
closely investigating these matters, that is exactly what we
meant. Jhat is more, we mean to achieve as much result as we
can within the limits of our poweo in refieonce to this matter at
the earliest possible moment.
The whole House need have no exaggerated fears on
those matters. 3ut, Sir, as I said when I stood up and I notice
that the inexorable hand of the clock goes round and I
have used up half of my time this is one facet of the campaign
which the new Leader of the Opposition ( Mr. Calwell) has
launched w: ith customary spirit and gaiety profitoering
profit inflation. Therefore, I would like to say just a few
words about this alleged case; because there is no better answer
to a rhetorical case than a few simple, well-vouched facts. The
honorable gantleman said in the general, and his colleaguo, the
member for Lalor ( Mr. Pollard), said :-oday in the particular in
another connexion, that all these things are part of a profit
inflation. In other words, these things represent that the
present state of affairs in Austr,. lia, the inflation that is
going on the inflation which they used to describe a few years
ago as a bogy is due to extravagant profit making, whether it
is made by rings or whether it is made in the ordinary course
of business. Therefore, I would like to say, if I can be heard
over the unkindly interruptions of my distinguished and very old
friend, the honorable member for Lalor, that this talk about
profit inflation is the greatest rubbish in the world. And, of
course, if that falls to the ground all this becomes a mere
skirmish directed to the non-wool-growing constituencds of Australia,
which I gathered was the case this afternoon.
Now Sir, a few facts. The last concluddd financial
year is 1958-9, and I hope I will not be contradicted on that.
The national income in 1958-59 was œ 5 000,000,000. It was
œ 5,021,000,000; but call it œ 5,000,060,000. lagos and salaries
in Australia represented, out of that œ 3,046,000,000. In other
words, something well over 60 per cent, of the national income.
Remember that; wages and salaries represented œ 3,046,000,000.
Company income, meaning by that the gross profit before taxation
was œ 630,000,000, and bank profits œ 28,000,000. So that the
total profits ofcompanies of all sorts, public and private and
banks was œ 658,000,000. Out of that income, tax on companies
and the banks amounted to œ 220,000,000, and that left
œ 438,000,000, net dividends and profits sent abroad and I
emphasize that because the greatest friend that they have over
there is General Motors-Holden's Limited, and they generalize
from General Motors-Holden's Limited which, if I remember
correctly, they had the great honour of establishing in this
country -were œ 43,000,000i See how the figures are coming down.
Dividends paid to Australian residents were œ 160,000,000.
So out of that œ 658,000,000, taxation accounted for
œ 220,000,000, and dividends, both sent overseas and left in
Australia, amounted to œ 203,000,000, perceptibly less than the
tax on these companies. Then, as we go down the line, that
leaves us with undistribated profits of œ 235,000,000. Je
started with œ 658,000,000. Those undistributed profits of
œ 235,000,000, going into the reserves of companies have provided
for their devulopment. They have been ploughed back into
the business. And when one of these enterprises, which we can
abuse much too lightly in this country, ploughs back so high a
percentage of its profits into its business, it means a new
factory and extnnsions : nd more employment, more stability of
employment and more security. I wonder how my distinguished
friends opposite would like to go and tell the employees of one
of these companies that they do not believe the company should
have any capacity for financing its future development and future
employment
Mr. Haylon Why don't you go back to your muttons?
MR. MENZIES: If I did go back to my muttons, I would go directly
to the honorable member. Of this remaining total of œ 235,000,00
residents accounted for œ 201,000,000. In other words, residents
had the equity in this undistributed profit to the extent of
œ 201,000,000; and these sinister monsters which are getting
command of Australia had œ 43,000,000 œ 201,000,000 here and
œ 43,000,000 ove: seas.
Now, Sir, I will just put that in summary. Of the
total company profits and this is all behind this motion, the
object of the exercise this is the case that the Australian
Labour Party under new and garnished leadership thinks it has
of the total company profits earned in Australia, ' on-third comes
to the Government as income tax for expenditure on the general
social and other services of the country, 35 per cent. soes back
into enterprises for development, for capital investment, future
employment and for expansion of our industrial capacity, and
near enough to 31 per cent. is paid out in terms of dividends.
Now, Sir, those, I think, are very interesting figures, and I
refer to them because I believe that the Opposition has put this
4.
sorry little motion for'/ ard today as part and parcel of its
general campaign on profits.
The only other thing I iant to say is this and I
have three minutes in which to say it: Je have occasionally been
told from the other side of the House tihat if we did our duty
we w ould impose an excess profits tax. And even the honorable
member for East Sydney ( Mr. ia-rd), who dies hard, as we all know
in the last fortnight, keeps referring to this. May I remind
him and may I remind the House that there have been quite a few
attempts made to devise an equitable and just system of excess
profits tax on companies wrhich rould not grievously handicap
the new company established by some enterprising Australian
starting from scratch. The late John Curtin had to abandon it.
The late Mr. Chifloy had to abandon it and, indeed, he was very
frank about the matter because in 1947, in this voey place, he
said In ordinary peace-time circumstances this tax operates
inequitably.
This is the excess profits tax
It penalizes new industries by preventing the building up
of reserves -nd consequently favours old established industries
which have had the opportunity of building resorves
in the past.
* Sir, I quote that, and I would like to have said more
about it; but I quote it for the purpose of showing that if the
Labour Party in this place wants to put itself forward as the
party ihich will protect the old established business and as the
enemy of new enterprises, which must attract a lot of profit in
order to develop a now industry, it ought to say so.
Mr. Pollard It is not a matter of profit inflation but of
price manipulation.
MR. MENZIES I do not need to tell the honorable member any-
Sthing about rool pies. The Attorney-General left him, this
afternoon, without even the crust of a pie to bite on.