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Transcript 1157

SPEECH BY THE RT. HON. SIR ROBERT MENZIES, K.T., C.H., Q.C., M.P., ON AUSTRALIAN ECONOMY - MINISTERIAL STATEMENT

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Menzies, Robert

Period of Service: 19/12/1949 to 26/01/1966

More information about Menzies, Robert on The National Archive website.

Release Date: 21/09/1965

Release Type: Statement in Parliament

Transcript ID: 1157

COMMONWEALTH OF AUSTRALIA
SPEECH BY
The Rt. Hon. SIR ROBERT MENZIES,
M. P.,
ON
DAUSTRALIAN ECONOMY
Ministerial Statement
[ From the " Parliamentary Debates," 21st September 1965]
Sir ROBERT MENZ[ ES ( Kooyong-
Prime Minister).-I present the following
paper-Economic Inquiry-Report of Committee
( Volumes I and 11 and Index).
I am not proposing to move that the paper
be printed because, as honorable members
will understand from a glance at the bulk
of the report-a bulk that is not at all out
of place-a number of minor corrections
and alterations of form have come up on
" vision for incorporation. These, of course,
being dealt with. None of them involve
substance. They will not affect the reading of
the report by honorable members. But it
does seem to me that when the paper comes
-~ form part of the Parliamentary Paper
ies it is desirable that it should be in
cs final corrected form. Therefore, I intend,
if the House will agree, to present the report
later in its final form in substitution for
what I present today. Ont that occasion I
will move that the paper be printed. Even
then, I would value some discussion at that
time with the Chairman of the Printing
Committee because some arrangements are
in hand for publishing this in book form,
as he will understand. I have arranged for
the report in the form in which I have presented
it to be circulated to honorable members.
Now I ask for leave to make a
statement in connection with the report.
Mr. SPEAKER.-There being no objection,
leave is granted.
Sir ROBERT MENZIE! 3.-On 1 3th February
1963, 1 announced the appointment
of a Committee of Economic Inquiry, consisting
of Dr. J. Vernon--now Sir James
11886/ 65 Vernon-Professor Sir John Crawford, Professor
P. H. Karmel of Adelaide, Mr. D. G.
Molesworth * and Mr. K. B. Myer. These
are all men of distinction in economic and
business affairs; they have devoted immense
effort and much time to their labours, and
have produced a report of great significance.
Some suggestions made by the Committee
are not acceptable to us, but this does not
qualify our deep appreciation of the Committee's
work.
In reading the report, honorable members
will have in mind the terms of reference.
They are set out on page 1 of the report,
and I therefore do not need to refer to
them in extenso. They sought an inquiry into
and a report upon many questions of fact
and of tendencies having in mind that the
objectives of the Government's economic
policy are a high rate of economic and
population growth with full employment,
increasing productivity, rising standards of
living, external viability, and stability of
costs and prices".
We were asked by the Chairman, before
the terms of reference were finally settled,
to add a clause that would enable the Committee
to suggest steps which appear to
be necessary or desirable to conform with
and further the objectives of the Government's
economic policy This, for reasons
which will appear later in this statement,
the Government refused to do. But it did
add to the terms of reference the final
clause-The Committee will report the conclusions
reached by it as to the bearing which all or any
of the matters so ascertained have upon the
achievement of the economic policy objectives
above stated.

I mention these matters at the outset, because
it is necessary to have them in mind
when considering some aspects of the report.
For the truth is that, in addition to an
exhaustive and most valuable examination
of the facts involved in the terms of
reference, the Committee has in fact, in
many instances, offered its opinions or suggestions
on matters of policy. We have no
feeling of resentment about this. Indeed,
we should perhaps have realised from the
beginning that a group of -talented men
charged with this task would wish, having
made their statistical and other investigations,
to examine the bearing of the results
upon the general economy and thus to offer
opinions or suggestions. But it will at once
be seen, Sir, that the report, because of
the facts concerning the terms of reference
which I have just related, must be read
and evaluated subject to two reservations.
The first is that, in a free and self
governing country, policies will be political.
Under the party system, opposing political
parties will, not infrequently, have opposing
policies. In no case is a political policy
the product of purely expert opinion on
technical matters. It must cover a wide area
of localities and circumstances. It must
be flexible enough to meet the problems of
international and domestic change. It is
commonly pursued and applied in the light
of much accumulated experience and
political judgment.
Secondly, it follows that, when it deals
with statistical or technical or objectively
economic matters, this report is entitled to
and will be studied with profound respect.
My own Government will derive great
value and assistance from it. But where
the report makes what will doubtless be
regarded as advices on political policies,
such advices must be regarded, in the wellknown
legal phrase, as obiter dicta, and
not as possessing Iome binding authority.
No government, from whatever side of the
House it may come, and indeed no parliament,
can abdicate its own authority and
responsibility for national policy. It will
welcome the assistance of experts, but its
tasks will take it far beyond the limits of
economic expertise. Political policy in a
democratic community does not depend
upon purely economic considerations. I will
come back to this when I have something to
say about the various proposals made by
the Committee for the establishment of advisory bodies in various fields. But at this
stage it might perhaps be useful to offer a
general view. That general view may be
illustrated by a particular example in
relatively recently Commonwealth history.
In the early 1940' s, proposals were submitted
to the Australian Agricultural
Council which, as honorable members
know is a ministerial body, for the establishment
of an institute of agricultural
economics, with wider functions and powerthan
the present Bureau of Agricultmu
Economics, and with complete freedom
independently to carry out and publish the
results of research into a whole range of
matters affecting primary industries. These
proposals were rejected, as my friend ti
honorable member for Lalor ( Mr. Pollar
will recall, for reasons which were admirably
summed up by the present permanent
head of the Department of Primary Industry
when he made his presidential address
to the annual conference of the Australian
Agricultural Economics Society in Sydney
in February 1963. I quote his words-
Governments were asked to finance an organisation
removed from political control which could
report on the matters of policy but let the chips
fall where they may. It is not hard to imagine
Governments shying away from the concept of a
body which was committed to publish all its reports
and advice on policy but whose findin
could be used in evidence against Governmen,
which did not adopt them. On matters of fact
there could be little argument, political or otherwise,
against immediate publication; on matters of
policy it could quite often happen that the published
report of the independent authority pre--
sented only half the story. To be realist;
Governments----We are speaking about Governments from
both sides of the Househave
political convictions which might not
always be in line with the philosophy espoused by
the Institute. What the protagonists of this scheme
were really supporting was a system where policy
should be guided only by expert advice when
policy is often a compound of a number of
factors, only one of which can necessarily be
expert advice.
Dr. J. F. Cairns.-Now the Prime
Minister is getting ready to throw out the
report. Sir ROBERT MENZIES.-So far I have
proceeded, I venture to say from the ocular
demonstration, with the great approval of
those on the other side of the chamber who
have had experience in these matters.
Dr. J. F. Cairns.-We will see whether
we agree with it.

Sir ROBERT MENZIES.-The honorable
member never agree; with his leaders.
I do not care a hoot whether he disagrees
with me. He is looking forward to a govern
ment of economists, and will profess to be
one. It will, of course, at once appear to
honorable members that, if the only problems
in dealing with economic policy in a
nation were purely technical, Parliament,
,' T1( ich is not technical, and a Cabinet which
-:) not technical might as well hand over to
a group of technicians. In such a case
democracy would have cceased and a technocracy
would have begun. In this matter,
of course, my views are in common with
,2%, ose of the real leaders on the other side
, c the chamber. We hope and believe that
these observations, which it is necessary to
make, will not be misunderstood or resented
by the Committee which has served us all so
well. When honorable members look at the
magnitude of the volumes which I place
before them, they will at once realise that
to invite Parliament to discuss the report
too soon would be to ignore the importance
and complexity of the re: port and to ask
Parliament to summarise and absorb in a
days matters of such moment as to
-pquire prolonged examination. Since the
Government received this report, members
of the Cabinet have devoted to it weeks of
study and Cabinet itself days of discussion,
and even now I would say that we are not
a position on many of the matters
ii. tamined by the Committee to offer definitive
views or, in some cases, useful comments.
At one stage we thought we might try to
produce a precis or sumrrary of the report
in order to help not only honorable members
but the public generally to appreciate
the matters involved.
Mr. Webb.-When is the Prime Minister
going to put on the black cap?
Sir ROBERT MENZIES.-Does the
honorable gentleman not want to hear about
this? A precis for him would need to be
childishly simple. This is notorious. Every
time he opens his mouth he proves it.
Mr. Bryant.-Where is the report, anyhow?
Sir ROBERT MENZIE;.-It is here, Sir. Mr. SPEAKER.-The honorable member
for Wills will restrain himself.
Sir ROBERT MENZIES.-Let the honorable
member have a copy of the report. He
says: Where is the report? I have tabled
it. Mr. Hayden.-The Prime Minister does
not understand the report.
Sir ROBERT MENZIES.-I could never
aspire to the honorable member's profound
intelligence. I admit myself his humble
inferior, but at least I have devoted weeks
to studying this report. He has devoted
weeks to thinking only of silly interjections.
We have decided that to try to produce a
precis of the report would not be practicable.
Any summary which was brief enough
to be read would be open to the criticism
that some matters dealt with by the Committee
had not been included. Any summary
which strove to avoid this criticism would
tend to become so long that it would become
too long and not adequately readable.
What we must, I think, face up to is that
this report, the result of most valuable and
painstaking and conscientious examination,
has a magnitude both in scope and detail
never approached by. any former inquiry.
It would not achieve its purpose if any of
us yielded to the temptation to take individual
observations out of context. It is
therefore, we think, important that, the report
having been tabled-I am sure that
the Leader of the Opposition will agree with
this-Parliament should have a full opportunity
of reading it and considering it before
any debate on its contents occurs. It
would be doing less than justice to the Committee
and its report if we were precipitately
to engage in argumenfs which did not
arise from a full opportunity for consideration
and judgment.
However, in tabling the report after a
period of time in which the Government
has had a chance of examining and considering
it, I will make some observations
which may be helpful. I do not, of course,
propose on behalf of the Government to
make any dogmatic remarks. But I will take
two examples which will serve to illustrate
the differences which exist between a purely
economic approach and the necessarily
wider and more complicated approach of
the political policy maker. One is migration.
On this, the Committee has suggested that

the net immigration target should not be
raised above 100,000 a year, at least until
the late 1960' s.
We, while respecting the reasons submitted
by the Committee, are bound to take
into account a variety of factors. The contribution
made by migrants to the development
of Australian resources depends upon
more than overall numbers. The higher the
percentage of wage-earners-and particularly
of the types or skills that we need
-the less important will it be to restrict
overall numbers. Migrants of the type we
want are not equally available from year
to year. Circumstances in what I will call
the " supplying" nations will vary from
year to year, and so will the emigration
attitudes of the Governments of those
nations. Add to this that the building up of
our population by migration has enormous
significance for the growth and security of
Australia and for that business confidence
which promotes investment and expansion,
and it will be clear tl. at the Government
cannot accept an artificial ceiling on migration
for a term of year3. We will therefore
continue our present policy of securing as
large a flow of migrarts as Australia can
usefully absorb, and of deciding the target
number each year.
My second example has to do with the
problem of economic growth. I had something
to say on this in my policy speech
before our last election. I said-
We will press on with growth in no timid or fainthearted
way. We believe, and confidently expect
that over the next five years, given good government,
growth should at lea: e; quta l a total increase
of 25 per cent. in the gross national product, in
terms of constant prices.
What I stated there was a belief that,
given certain fundamental conditions our
economy, drawing upon its known resources,
energies and capabilities and obeying
its ordinary initiatives, was equal to adding
a full quarter to the " real" national
product over a five year period.
The Committee, however, goes a good
deal further than this. Its approach in fact
is basically different. It appears to set up
a certain rate of growth, measured statistically,
as something very like a ruling purpose
for economic policy-although, to be
sure, it recognises that the achievement of
this growth rate should not be pursued to
the detriment of all other objectives. It
suggests that a growth rate of 5 per cent. per year is possible but difficult; a good part
of the report thereafter is devoted to the
question of how the difficulties might be
overcome. In the process, a thesis appears
to be developed that this 5 per cent. growth
rate will be achieved only if there is a conscious
diversion of resources from some areas
of activity to others. Amongst these preferred
areas of activity, manufacturing
industry is given high place.
But this view of things leads on to
considerations of the very first consequenc'
By what means is this diversion of resources
to be accomplished? Indeed, as a matter of
basic policy and interest, are we disposed
to engage in a large scale diversion of
resources-in defiance, as it were, of tl
distribution that would occur if the norm.
demands of the community and the corresponding
initiatives of producers were to
be given free play? After all, we are a
private enterprise economy. In such an
economy, the demands set up by the people
who are the buyers are the normal stimulant
for increased industrial investment and
activity. What the Committee appears to
have had in mind is that those demands
should, where necessary, be re-directed.
Now, in individual cases we would not care
to deny this. We have ourselves, in pur
suance of our own economic policies, take
action now and then to reduce the demand
for some particular commodities in order
to meet some inflationary position; and no
doubt any government would continue to do
so. But to essay a widespread re-directio'"(
of'resources within the economy to achieJ)
some pre-ordained statistical result is a very
different matter.
It seems to us that the Committee has,
particularly in the light of its so-called projections
in Appendix N-to which I will
later make some reference-predicated
a degree of planning and direction of the
economy which in our opinion would not be
either appropriate or acceptable in Australia.
I can illustrate this by saying something
about its proposals on the use of taxation
for the purpose of diverting resources to
selected purposes. The Government is a
protectionist" government and has a firm
belief, well justified in the light of events,
in the significance and future of manufacturing
industry. I do not need to elaborate that.
But when the Committee develops its
theories we must sound a note of warning.

For example, it proposes that toencourage
manufacturing industry, there should be programmes
involving various incentives and
more generous depreciation allowances.
Now all of these, no doubt, have merits
which deserve proper consideration. We
have, in fact, had some of them under
scrutiny. But, setting aside the possible-or, some
might say, the probable-long term benefits,
lheir immediate result would be to diminish
revenues. And particularlynow when
e burden of defence expenditure is not
only large but growing anC. at a time when
employment is not only full but in some
occupations over-full, this would confront
11he Government with a choice between
, f1icit budgeting-at a time when inflationary
pressures are high-and increasing other
taxes. The Committee, though no doubt it
realised these matters, alo proposes that
the Government should increase its taxation
anyhow more than its expenditure in order
that by this means-that is. surplus budgeting-
saving for public authority expenditure
should increase.
Along with this it suggests that there
should be various tax concessions for business.
This leads to the clear inference that,
there must in its view be increased taxes
r a variety of purposes, these should fall
tlargely upon personal incomes or upon consumer
goods. It seems to us, however, that
if there were to be a series of increases in
personal taxation, this could very well reduce
,.-Ivings and thereby reduc'e investible capital,
well as demand. Quite conceivably, therefore,
it could defeat the purpose which the
Committee appears to have in mind, which
is to increase investment in industrial
enterprise. I emphasise that we are not offering dogmatic
views. On the contrary, we will continue
to give the deepest consideration to
what has been put before us by so powerful
a Committee. But we dowant to take this
early opportunity of saying to the House
that taxation policies are affected by many
considerations. Some of them are economic;
some of them, particularly at the present
time, are international; some of them are
domestic. No government can, in pursuit of
a general theory, abdicate its responsibility
for a taxation policy which may well vary
from year to year according to circumstances
of inflation or stability or recession
or, as we now know, f~ om a large and growing diversion of resources to the defence
of the country, the preservation of its
future, and the giving of appropriate aid
to other countries, particularly those which
are facing the acute problems of new independence
and a search for economic
autonomy. I now turn to the views expressed by the
Committee on investment from overseas.
The general approach of the Government
to such investment was stated by me, on
behalf of the Cabinet, in the policy speech
of 1963, as follows-
Investment from overseas countries has taken
an important place in our economy. Over the last
fifteen years it has amounted to over œ 1,500 million.
This investment has produced great advantages,
but under some circumstances produces problems
which need to be handled with care and understanding.
As, from a national Australian point of
view, we would wish to see new capital from
overseas employed for the great purpose of developing
new industries or extending existing ones with
all the benefit of overseas skills and experience,
we will always have a particularly warm welcome
for new capital designed to these ends.
We also believe that fears and misunderstandings
are least where there is an Australian participation
in shareholding and management, and most
when there is no more than a mere change of
ownership without more. There is, we believe, a
growing recognition of this in the minds of intending
investors.
I quoted that because it is sometimes forgotten
that that was the view of the Cabinet,
as expressed by me in 1963. Nobody would
quarrel with it today.
The terms of reference to the Committee
invited a factual assessment of the significance
of overseas investment in the Australian
economy. The Committee has gone
beyond this. It has offered a view that it
would be in the best interests of Australia if,
for some years ahead, new capital from
overseas could be limited to the level of
recent years, that is. about œ 150 million
per annum. It has proposed selective
controls on overseas investment and suggests
a consultative body to advise the Reserve
Bank on the administration of such controls.
We express no opinion on these suggestions
at present. We have been making
the necessary preparations for a full
Cabinet review of the problem, the practical
difficulties of which, I hope, we all
recognise. We will, when all Ministers
have been able to participate in it, make a
considered statement of policy on these
matters. But, so that no prejudgments one

way or the other may arise from the
Committee's report, I should issue a warning
note. The Committee itself says that
overseas investment has been " a powerful
force assisting the growth of the economy
That is right. It acknowledges that increases
in population, productivity and employment
in the postwar period would have been hard
to sustain without it.
Mr. Jones.-What does the Minister for
Trade and Industry say about it?
Sir ROBERT MEN ZIES.-He agrees
with every word I am & aying, if that is of
any interest to the honorable member.
Mr. Jones.-He mentioned selling a bit
of the farm every year.
Sir ROBERT MENZIES.-The honorable
member will never read the report. He
will live on a few slogans. So I continue
with this considered statement about the
report. So far, I would think we were all
on common ground.
Dr. J. F. Cairns.-Hear, hear!
Sir ROBERT MENZIES.-Oh, the boy
is at it again. The report goes on to raise
two major questions, the answers to which
are of great importanca to all of us on
both sides of the House. The first is: Will
the cost of servicing overseas investments
become unduly onerous in our balance of
payments? Dr. J. F. Cairns.-That is the end of the
common ground, is it not?
Sir ROBERT MENZIES.-How does the
honorable member know? Listen to him. He
is the only fellow who understands these
things. The second major question is: Is
there a danger of having too great a proportion
of the ownership of enterprises in
Australia in foreign hands? We need not
worry about this. These are two decidedly
important questions. That is why I said,
although the honorable member was so busy
talking that he did not hear, that the
answers to these are of great importance to
all of us on both sides of the House. It is
not my purpose, in this statement, to give
definitive answers to these questions. The
Government will certainly continue to face them, and will seek to arrive at balanced
judgments. As to the first question, the
Committee says that the costs cannot so far
be said to have represented a serious
balance of payments problem. But it is
apprehensive about the future.
Mr. Reynolds.-I bet it is.
Sir ROBERT MENZIES.-May I repeat,
for the benefit of one or two honorable
members opposite, that the Committee sa
that the costs so far cannot be said to ha" v.
represented a serious balance of payments
problem, but it is apprehensive about the
future. It has made a statistical projection,
commencing with the year 1959-60-because
most of -these projections begin
that year-which leads it to the conclusion
that, by 1974-75, the servicing of overseas
investment will become a severe burden on
the balance of payments. We do not brush
this problem aside. It will be considered and
dealt with. But in the meantime one comment
must be made, so that a proper perspective
may be achieved. It can be calculated
that had the assumptions used by the
Committee, as from 1959-60, the beginning
year, been borne out-their assumptions,
that is, in respect of earnings on capital
invested here and profits retained in AiV>*
tralia-and given the actual capital inflort/
that has taken place, the amount of income
payable abroad, on their projection, in the
past five years would have been of the order
of œ 860 million. But, in fact, we know from
statistics already published that -the amour
of income actually payable has been abou,
œ 250 million less than this. As honorable
members will see, the point of this comment
is, not that we ignore -the problem or its
possible magnitude, but that, as the Committee
in its report said, very wisely,
" attempts to forecast in quantitative terms
the behaviour of the economy 10 or
years ahead are extremely hazardous, can
prove positively misleading, and are almost
certain to be inaccurate"'. There is one, so
far, in which the inaccuracy is œ 250 million.
The answer to the second question, that
relating to the foreign ownership of Australian
enterprises, is also one not to be
hastily arrived at. As I indicated on behalf
of the Government in the policy speech of
1963, we much prefer what might be called
developmental investment to takeovers of
existing enterprises involving a mere change

of ownership. But again, the Committee's
report, based upon its statistical projections,
must be read with some reserve. Thus, the
Committee, starting its calculations with
1959-60, with a figure of 25 per cent. of
foreign ownership of Australian companies,
calculated that by 1964-65 the percentage
would have risen to 34 per cent. But in
fact, because the circumstiinces do change,
an estimate for 1964-65 based on the
Committee's own assumpticon makes the pro-
-' jtion less than 24 per cent. In other words,
/ has fallen since 1959-60. None of this is,
of course, to say that projections ought not
to be attempted as aids to thought and
exposition. What I have said is by way of
warning-for the reasons stated by the
) mmittee itself-against regarding statis-
,, cal prophecies as having some binding or
even highly persuasive authority. The circumstances
change from time to time, both
internationally and domestically, and it is
the task of statesmanship to deal with them
as they arise, and, of course, to anticipate
them if possible.
Nothing I have said subtracts from the
central truth, on which the Committee and
the Government are at one, that capital
inflow, in the long term, is not to be
-regarded as. the solvent of balance of pay-
' Knts difficulties. As a Government, we
pay constant and positive attention to
increasing our exports and to the trend and
nature of our imports, so that, while we
welcome the arrival of that really productive
-\ apital which a developing country needs,
should not become so dependent upon
it for our overseas balances as to threaten
our own national control over our national
development and resources. I said earlier
that I would make some reference to some
of the Committee's particular recommendations
for the appointment of special
independent commissions or councils. It
will be sufficient for my purpose to mention
two of the most significant, because one
cannot cover the whole of this ground. The
Committee has suggested the setting up of a
Special Projects Commission with the power
to investigate proposals for major developmental
projects, to advise -governments on
them, and to publish its findings. True, the
Committee perceived that there were, and
are, difficulties in arranging for projects
involving the agencies of more than
one government. This fact has substantially
affected our own method!; of dealing with such problems over many years. But the
Committee believes that these difficultiesmight
be largely overcome if an independent
Special Projects Commission were created
with power to investigate proposals for major
development projects. The Commission would
need a skilled staff to carry out cost-benefit
analyses, which we consider a necessary basic
step in project planning. The Commission should
investigate projects at the request of the Commonwealth
or State Governments, or on its own
initiative. Finally, and most important, the Commission
should be required to report to the Commonwealth
Parliament on its activities each year,
giving detailq of investigations requested, those
completed, and the stage reached with those
uncompleted. Now I point out that the Commonwealth
Government has available to it some
extremely expert advisers already, such as
the Bureau of Agricultural Economics, the
Commonwealth Scientific and Industrial
Research Organization, the Bureau of
Mineral Resources, the Snowy Mountains
Authority, and other bodies forming part
of or serviced by the Department of
National Development. The point of distinction
is that these agencies, in relation
to any special project, advise the Government
and enable it to conduct informed
discussions with the relevant State or States,
which also have experts of great ability and
experience. The Special Projects Commission suggested
by the Committee is an entirely
different thing. It is to investigate projects
at the request of the Commonwealth or
State Governments or on its own initiative.
It is to report to the Commonwealth Parliament
so that its views will be publicly
known and may come to achieve a degree
of authority. To the extent that this result
came about, both Commonwealth and State
Governments, whatever their party complexions,
would find themselves subject to
pressure, and even coercion into the adoption
of policies or projects which, between
them, they might not select at all. Add to
this that all projects involve the expenditure
of public funds, some of them on the
grand scale. I do not believe that any
government, responsible for its own budget
and conscious of the impact of its own
budget upon economic policy generally,
would be content to transfer authority in
these fields to an independent body acting
on its own initiative and with no responsibilities
to the government of the day.

I may tell the House, if it needs to be
informed, that my own Government, at an
earlier time, gave the closest thought to
suggestions that have been made for some
kind of development commission and rejected
the idea, substantially for the reasons
that I have just menticoned. I find it difficult
to imagine that another government
drawn from the present Opposition would
take any different view.
The Committee has also suggested the
formation of an " Advisory Council on
Economic Growth", with a wide charter
and powers, which " would be of material
assistance to the government and to the
community in general in the making of
economic decisions These words clearly
contemplate-as indeed does the nature of
the suggested Advisory Council-that the
views of the Council would be published
from time to time and that those views
would be designed to advise the Government
in relation to the making of what must
be, though of course related to economics,
high decisions of political policy. We
unhesitatingly reject this idea.
Mr. Reynolds.-Is tue Prime Minister
accepting any of this report?
Sir ROBERT MENZIES.-When the
honorable member has read the report he
will be able to answer that question. He is
all right. He is a great education authority.
He should get busy reacing the report.
Mr. L. R. Johnson.--The Prime Minister
is politely rubbishing this report.
Sir ROBERT MENZIES.-My politeness
might well be imitated by the honorable
member. In the Australian democratic
system of government based upon the consent
of a free community, no government
can hand over to bodies outside the government
the choice of objeczives and the means
of attaining them in important fields of
policy, particularly when such bodies
would, through the power of publication,
come to exercise what have described, I
hope not extravagantly, as a coercive influence
upon governments. There is a very
great difference between the appointment of
a special committee, like the one whose report
is now before us, and the giving of
publicity to its views, because such an
appointment is purely ad hoc; it is set up,
as was the Brigden Committee many years ago, to give us all the benefit of a close
and primarily factual review of the
economy as a whole. To have such a body
continued in one form or another as a standing
body of what would come to be regarded
as authoritative advice would have the
dangers I have described. Political policies
cannot be based upon pure economics and,
for the sake of the adequate handling of
international problems, of defence, and of
social and industrial justice and progress,
we hope they never will.
The Committee's terms of reference included
an inquiry into the availability of
credit. Its chapter on this subject concludes
with a paragraph proposing a full-scale
study of the credit system. I should say
word about this. As honorable membe. j
will understand, inquiries into the monetary
and banking system of a country are major
matters. They involve investigations of a
long and closely detailed kind, not only
within the main elements of the banking
system and other financial institutions, but
also among those interested in, or affected
by, money and banking, which means, of
course, virtually the whole community.
Such inquiries, fascinating though they are
to many, should be initiated only when there
are very strong reasons for doing so.
Dr. J. F. Cairns.-Are they not?
Sir ROBERT MENZIES.-No. A glance
back at history here and elsewhere would
show that they have arisen only in particular--
situations calling for far-reaching investigL
tions. We are not in any such situation now.
Indeed, if there is one broad conclusion to
be drawn from the review which the Committee
has made, it is that on the whole
our monetary system has functioned pretty
well. Furthermore, we would have the greatest
reluctance in proposing an inquiry which
could or might be taken to portend further
major changes in the banking structure. For
a period of 15 years beginning with the
banking legislation of 1945, there was great
turmoil and contention and much parliamentary
debate in that area. Our 1959
legislation, which separated the Corporation
banks from the Reserve Bank, appears to
have proved its own merit, not least by
achieving a settlement of large issues. We
would not wish to raise doubts as to the

continuity of the existing legislative arrangements.
The Committee has raade various proposals
which affect tariff policy. So far as the
Tariff Board is concerned, it is clear that
certain of the proposals are far-reaching and
probably contentious, going beyond an
evaluation of actual protection and bearing
on protection policy. Perhaps I might, with
advantage, because I do not want to answer
all those questions, state again what I said
here in the House when I announced our
decision to institute the inquiry. I said
then-The Government wishes to make it clear that it
has the firmest intention of preserving the full
independence of the Tariff Board as an advisory
body established by Parliament, its system of open
. and public inquiry and it. h; ig h public standing
and prestige. These things are of the very essence
of the Tariff Board system which has, over many
years, served Australia well and has won admiration
and respect overseas.
The Tariff Board is, to repeat, an advisory
body. It is not a policy-making body-although
its recommendations necessarily have a considerable
influence on policy-and it is not an executive
body. Its principal and best-known function
is to consider, on reference from the Government,
applications for protection by way of tariffs
or bounties or, alternatively, proposals for the
reduction of such protection. It also has power on
its own initiative to review existing duties, to con-
': C2l-duct inquiries on certain matters and to report
su to Parliament.
But tariff policy as such is the responsibility of
the Government. Only Parliament can enact
tariffs; only the Government proposes tariff legislation
to Parliament.
The Committee's observations on protection
S and the Tariff Board should and will be
if/ examined against the principles which I
have just stated.
I conclude by expressing the hope that
it will not be thought that, because we
have found it necessary to single out some
important matters for special commentand
in some cases for Government decision-
we are intending to qualify the value of this report as a whole. On the
contrary, and to take only a few examples,
the report will prove, and is proving, of
great value to us in the consideration of
such matters as research and development,
decentralisation, the application of research
to primary production, rural credit, the
form of the tariff, and the role and functioning
of the Tariff Board. In all of these
a great deal of work is being done, and
will be all -the better done in the light
of the Committee's report. We acknowledge
the value of the Committee's observations
on export promotion, in which field
we have been and are greatly assisted by
the confidential and therefore frank advice
given to us for some years by the Export
Development Council.
There are many other matters covered
by the report. They are all being put in
study by the relevant Ministers and, where
necessary, by the Cabinet, and can be dealt
with as they arise in debate. I will not
overload an already long statement by trying
to mention them all. The whole report
is such that we would not wish honorable
members, or the the public generally, to
pay attention to special parts of current
interest, while neglecting the whole.
I therefore conclude by repeating that
although, as it seemed to us to be necessary,
I have indicated some queries and perhaps
some criticisms, we are convinced that
every part of the report will deserve the
closest study. It will provide all interested
persons, whether technical or not, with a
compilation of economic information
unequalled in my time in this Parliament.
It is a fortunate country which can enlist
in its voluntary service men of such experience
and distinction as those who constituted
this Committee.
I present the following paper-
Economic Inquiry-Report of Committe-
Ministerial Statement, 21st September 1965.
BY AUTHORITY: A. J. ARTHUR, COMMONWEALTH GOVERNMENT PRINTER, CANBERRA.
11886/ 65.-2

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