SOCIALISM WITHIN THE AUSTRALIAN CONSTITUTION
JOHN CURTIN MEMORIAL LECTURE - 1961
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SOCIALISM WITHIN THE AUSTRALIAN CONSTITUTIONJOHN CURTIN MEMORIAL LECTURE - 1961 |
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I was proud to receive the invitation from
the University of Western Australia branch of the ALP to deliver this second
Curtin Memorial Lecture. I propose to deal with the opportunities a Labor
Government would have to carry out its policies under the federal system
as it stands at present.
My interest in constitutional matters stems from the time when John Curtin
was Prime Minister. The Commonwealth Parliament's powers were then at their
most ample and it was constitutionally, if not always politically, more
open to a Labor Government to carry out its policies than it is in peace
time. John Curtin, however, saw that he was presiding over a passing phase.
He was not content with the paradox that the Labor Party was free to enact
its policies in times of war alone. Accordingly, in 1944 he sponsored a
referendum to give the Federal Parliament postwar powers. His motives for
holding the referendum were based on patriotism and experience. He argued
the case with his full logic and eloquence. The opposition to the referendum
was spurious and selfish. The arguments were false. My hopes were dashed
by the outcome and from that moment I determined to do all I could to modernise
the Australian Constitution.
MODERNISATION
OF THE CONSTITUTION
Having a federal system, Australia operates under the transitional form
of government which has been devised for former colonial territories or
conquered nations. The Australian Constitution is the most archaic and the
least amended in the world. It was framed by members of State Parliaments
in the 1890s on the United States model of the 1780s. The American model
has been altered more often and more extensively and more recently than
the Australian. A record time has now elapsed since the people were last
given the opportunity to amend the Constitution. They can only amend it
if the Federal Parliament passes a bill and the Federal Government presents
the bill to them at a referendum. This has been one of the Menzies Government's
grossest derelictions.
The Australian Parliament has fewer functions than any other national parliament
in the world, including those in such federal systems as the United States,
Canada and West Germany. In what other industrial country has the national
parliament so restricted a right to pass laws on industrial matters, restrictive
practices and interest rates, companies, marketing and transport? Ours is
the only federal system where some matters are beyond the legislative competence
of the Federal Parliament and all the State Parliaments acting in concert.
The Constitution's archaism and anomalies and inadequacies become more burdensome
and frustrating as Australia becomes a greater trading and industrial country.
In most countries socialist parties merely have the task of persuading the
electorate of the virtues of their policies. The Australian Labor Party
has to devise policies which will secure not only the approval of electors
but also the approval of judges. In Australia, socialists are often demoralised
because no parliamentary means have been found to nationalise private industries
and services while inadequate means exist to plan them. At the same time
they have devoted too little initiative and imagination to applying the
Commonwealth's constitutional opportunities of competing with private interests
and internationalising them. These are two aspects which I shall stress
tonight.
Many persons still assert that the Chifley Government could have attempted
and the High Court would have permitted other methods to nationalise banks
and interstate airlines and to establish a national health service. Nostalgia
should beset conservatives, not socialists. My comments will be made on
the basis that the text of the Constitution has not changed since that time
and the interpretation of the Constitution is not likely to change as a
result of the appointments and promotion on the High Court by the Menzies
Government. This is not to say that different decisions could not have been
given by judges of equal competence and integrity. While Australians, like
Americans and Canadians, tolerate a federal system, they must, like them,
continue to endure surveillance by lawyers on any parliamentary or administrative
action which is challenged. Therefore this lecture will not be devoted to
distinguishing past judgements or by-passing the Constitution as it stands
but to enunciating methods which the Constitution appears to permit. Reform
of the Constitution must always remain in the forefront of the Labor Party's
objectives in Australia because many of the party's important policies cannot
be achieved and many of its preferred methods cannot be pursued without
such reform. The advocacy of policies and methods which we know the Constitution
does not permit is a fraud on our supporters and a boon to our opponents.
It will still secure cheers but it will still not produce results.
STERILITY
OF THE STATES
It is no solace to say that the States could pass laws on many economic
and social matters on which the Commonwealth cannot pass laws. The States
have never agreed on common economic policies and probably never will. By
way of illustration, the Commonwealth can and does regulate the provision
of credit through the banking system while the States can but will not regulate
the provision of credit through the hire purchase system. Commonwealth price
control was effective but State price control was not. The States have been
too timid to maintain land sales control, which would have done more than
any other measure to keep down the cost of housing.
LIBERAL
REGULATION BY TAXATION
Taxation and bank credit and import variations since 1951 would not have
been so sudden and severe if the Commonwealth had had a greater variety
of economic powers at its disposal. It is necessary to alter the Constitution
if Australia is to improve her economic performance. The limitations of
the Constitution are well realised by the present Government. For instance,
in March 1956 when the Government applied, for the second time, the technique
of the horror budget and credit squeeze which it had applied four
years before, Mr Menzies himself said:
There may be a good deal to be said for introducing selectivity into the demand for capital by some form of capital issues control like the one which existed during the war and was thereafter for a time continued under the defence powers The sample applies to the vexed problem of hire purchase finance. Various suggestions have been put forward for dealing with this matter, but each of them involves action of doubtful constitutional validity and could therefore hardly be relied upon to produce immediate results.
Two months later Mr Menzies introduced
the resolution which set up the Constitutional Review Committee.
The Treasurer, Mr Holt, in introducing his Government's third horror
budget and credit squeeze in November 1960, said:
There is a great problem of how to regulate the activities of [hire purchase] bodies and it is not made any easier for us by the limitations upon our constitutional powers in these fields Within the province of the Commonwealth the restraint of the growth in demand must be sought chiefly through monetary and budgetary action.
The measures of November 1960 were all
designed to achieve in a blanket or indiscriminate manner the things which
could in fact be better achieved if the Australian Parliament had the hire
purchase and capital issues powers which every other national parliament
already possesses and which, in October 1958 and again in November 1959,
the Constitutional Review Committee had recommended that the Australian
Parliament should seek at a referendum.
We may gather from this that there is no real difference between the political
parties in acknowledging that something has to be done, at least from time
to time, about capital issues or hire purchase. Something has to be done
about investment in general and credit in general. Under our present Constitution
such matters can be most readily regulated through bank credit and taxation.
In November 1960 the Liberal Government illustrated how taxation can be
used to achieve social and economic objectives. (A half-hearted attempt
is sometimes still made to say that the Labor Party believes in controls
and the Liberal Party in liberty; Liberal supporters have had cause to complain
with Madame Roland about the crimes committed in the name of liberty.) The
Liberal measures in November 1960 were designed first to limit hire purchase
and capital issues; they did this by making interest on debentures non-deductible.
Secondly, they were designed to direct funds into public loans; this was
done by giving concessions to life assurance companies which invested up
to 30% of their new premiums in government bonds. Thirdly, they were designed
to promote exports; this was done by reducing payroll tax for taxpayers
who increased their exports to a certain extent. A fourth example of the
use of taxation for economic purposes was the depreciation allowances which
used to be granted to encourage investment in new industrial equipment.
A fifth example is the concessions to encourage investment in northern Australia.
All these policies have been instituted for economic or social purposes
and not for normal revenue purposes. They show that the Constitution permits
some economic supervision and that Commonwealth governments of all shades
of politics will attempt it; they also show that the powers are deficient
and the policies therefore crude.
PUBLIC
PLANNING
The general lines of national policy should be clearly laid down and pursued
by governments in trade, transport, education, housing, health, social welfare,
industrial expansion and national development. These objective can only
be achieved through national planning, both economic and physical. Such
planning has become much more necessary as the century has progressed. Society
is becoming more urban and technological. Many resources and skills are
being more wastefully directed. There are more and more corporate and individual
needs which can only be met by public bodies and public finance. Settlement
and development in Australia are getting more and more out of balance.
Private enterprise must conform to the general guide lines laid down by
government planning. In many instances this can be achieved by regulation--by
inducements and penalties in taxation and credit. Government's activities
themselves must also be coordinated. In some instances achievement of planned
targets will require nationalisation where an industry is extremely inefficient
and where efficiency requires a monopoly in the industry. In other instances
abuses and inefficiency can best be cured by public competition setting
the standard and the pace.
PLANNING
FOR CORPORATE ACTIVITIES
Through
Taxation
I have already demonstrated how the Commonwealth's varied and virtually
unlimited taxation powers can be used to encourage and discourage various
social and economic activities. Governments could also curb disproportionate
expenditures in some fields by allowing manufacturers and vendors to deduct
a part instead of the whole of the cost of advertising from their taxable
income. Again, taxation inducements and penalties could be employed to ensure
that overseas companies allow a certain percentage of local investment in
their Australian subsidiaries. Thirdly, finance companies could be refused
reductions for interest on debentures unless they registered under the Banking
Act and complied with Reserve Bank policy. Fourthly, special taxation concessions
could be given to firms which undertake research and development.
Through
Exports and Imports
The Commonwealth's other great power over corporate activities relates to
external trade, for it has unlimited power to control the volume and nature
of imports and exports of goods and funds and services. The present Liberal
Government abandoned direct import controls at the beginning of 1960. By
the end of the year it applied fiscal controls to limit imports. Many may
still think that imports should not be limited except to balance our payments
and save foreign exchange. Import controls, however, can be used to guide
investment into certain fields or to regulate certain developments. A company's
imports and exports of goods and capital can be prohibited or limited or
promoted. Many processes and even whole industries can only be carried on
with import materials. The present Government has controlled the air transport
industry and imposed its concept of a dual interstate airline system by
allowing the importation of the necessary aircraft on condition that the
chosen operators take certain types and numbers of aircraft.
A government could impose its policy wherever an industry is using wholly
or substantially imported materials. While governments have few powers to
direct capital which is already in the country, they can do something to
dire ct it as it enters or leaves. First, governments can make it a term
of entry that funds should be invested in certain industries or regions.
This is of particular interest in Queensland and Western Australia which
are the largest and least industrialised States but the States where employment
and investment have been most deficient. Secondly, governments can make
it a term of the repatriation of dividends that after a certain establishment
period those dividends shall have been earned by exports achieved or imports
saved. A flagrant example is given by the British motor companies. Although
Britain, Japan and Australia are the only countries which still manufacture
cars with right-hand drive and the emerging countries around the Indian
Ocean are the only countries which still import such vehicles, the Australian
subsidiaries are not allowed by their British principals to supply and service
these few remaining external markets. Thirdly, governments can make the
extraction and export of minerals conditional on the licensees establishing
processing plants within a certain time.
Through
Supervisory Agents
The Arbitration Commission, the Tariff Board and the Reserve Bank Board
are highly significant federal agencies. The Constitution provides specifically
for another such agency in the Inter-State Commission. The Constitution
would permit a Monopolies and Restrictive Practices Commission, at least
in respect to interstate and overseas trade. Under the Constitution the
Commonwealth could not direct the Arbitration Commission or the Inter-State
Commission to make any particular award but in its legislation it could
prevent any of the agencies dealing with certain matters or dealing with
them in certain ways. The Commonwealth could require all such bodies to
consult with each other. By its appointments and submissions to them it
could greatly influence them in following a national plan.
Through
International Treaties
The Commonwealth could greatly enlarge its economic and social authority
by exercising its constitutional right to make laws with respect to external
affairs. The nations of the world now realise that an increasing percentage
of their transport, commercial, industrial, scientific, cultural, health
and social responsibilities cannot be discharged without making appropriate
international arrangements. Australia has attended meetings of the General
Assembly and the various agencies of the United Nations and other international
conferences where scores of conventions have been concluded. Except in the
civil aviation field, Australia has ignored or shelved most of them. The
more she becomes a party to international arrangements the easier it will
be for the Commonwealth Government to plan her internal as well as her international
affairs.
It is becoming urgent for Australia to share in regulating the activities
of international corporations because Australia's manufactures are coming
increasingly under their control and because her exports still so largely
comprise vulnerable primary and mineral products. Underdeveloped countries
rely almost entirely upon their exports of primary products, and often a
very few varieties or primary products, to earn them the foreign exchange
which is so necessary for their development. Any fall, therefore, in the
price of primary products on world markets poses serious problems for underdeveloped
countries.
Efforts must be made to eradicate instability in the prices or primary products
through some form of commodity stabilisation. Australia's economic problems
are surprisingly similar to those of the Afro-Asian bloc and Latin America.
Whilst our internal economy, like that of North America and Europe, is primarily
and increasingly industrial, our external economy is still overwhelmingly
dependent on mineral and primary products. In shipping and postwar industrial
investment we conform to the colonial pattern. Australia has long ceased
to be a colony but she is as much a tributary as ever. We should help to
iron out international fluctuations as we have ironed out internal fluctuations
through stabilisation and pooling arrangements. We should help to convert
the United Nations financial institutions into an authentic world central
bank. We should work towards these ends with the countries of the Indian
Ocean, nearly all of which have socialist governments. Socialism is the
only thing about Australians which is not exclusively western. It is, we
believe, the best way for the developing nations to become industrial democracies.
PLANNING
FOR GOVERNMENT ACTIVITIES
The Commonwealth has a monopoly of direct taxation and most forms of indirect
taxation--customs and excise duties and sales tax. It floats all government
loans. The States depend on the Commonwealth for most of the funds for their
current expenses and all the funds for their public works. The Commonwealth
has the dominant role in deciding the size and nature of the borrowings
by semi-government and local government bodies. There is thus ample power
for the Commonwealth to plan government expenditure and investment in Australia.
Transport
The Commonwealth could, however, take a more effective and responsible part
in planning expenditure by State Governments. Nowhere is this more relevant
and practicable than in the transport field, where there is singularly little
coordination on a national basis and where the Menzies Government has shown
a consistent--and often sinister--interest in civil aviation alone. Our
railways are all in the hands of governments, both in the provision of facilities
and the operation of those facilities. All road facilities are provided
by governments, the Commonwealth providing an increasing amount of the funds
but the States still carrying out all the construction. On the other hand,
all road services, except city buses, are in private hands. In sea transport
the port facilities are all provided by the States, although the Commonwealth
is providing more and more of the ancillary services in ports. Shipbuilding
is wholly subsidised and regulated by the Commonwealth. Of coastal shipping
operations, half are in the hands of a Commonwealth instrumentality and
half in the hands of private companies. In civil aviation, all the aerodrome,
weather and navigation facilities are constructed, financed and operated
by the Commonwealth. Half the interstate services are provided by a Commonwealth
instrumentality and half by the Commonwealth's chosen private operator.
Nearly all the intrastate services are in the hands of that chosen operator.
The most urgent requirement for modern coordinated transport services in
Australia is in connection with wharves. The stevedoring industry cries
out for rationalisation and nationalisation. Ports are of greater importance
to Australia than they are to practically any other country. We have 90
of them. They are administered by over 30 different authorities. The criticisms
of our ports made by Mr Basten in 1952 and by the Tait Committee in 1957
are still valid. Labor relations have improved very little indeed. Employers
owe loyalty not to the industry as such but to the shipping companies. The
costs can always be passed on to the customers. It is clearly time that
the States referred to the Commonwealth jurisdiction over ports, or, alternatively
that the Commonwealth made an offer to the States. (It need not be made
to all the States because the arrangement I suggest could operate in any
State which accepted the offer.)
The Commonwealth could offer to provide the money and management for these
port properties, which are all owned by the States, to be operated by a
joint stevedoring board, which would have permanent employees and modern
equipment. The Commonwealth already provides the ancillary services in ports
throughout Australia in immigration, customs, taxation, quarantine, explosives
and navigation. When it ratifies some more maritime conventions the Commonwealth
itself will have as much right to pass laws with respect to sea transport
as it already has with respect to civil aviation. The Commonwealth alone
has the financial resources and a sufficient preoccupation with trade to
raise the terminal facilities in our ports to international standards.
The Inter-State Commission, intended by the Constitution to stand with the
Parliament, Executive Council and High Court as the fourth organ of the
federal system, was allowed to expire in 1920. The Commission could put
an end to the centralisation which is fostered by all State Governments
through their railway systems. It is unconscionable that it costs so much
less to transport goods between Coffs Harbour and Sydney than between Coffs
Harbour and Brisbane, between Mildura and Melbourne than between Mildura
and Adelaide, between Mount Gambier and Adelaide than between Mount Gambier
and Melbourne. In each case the journeys are of equal distance, but the
State in which the provincial centre is situated has seen that freight rates
are very much lower to the capital of that State than to the capital of
the neighbouring State. The Commission could provide for the transition
to the time when railways are in fact run by the Commonwealth. The Commonwealth
has provided all the money for over 40 years to standardise railways on
the mainland. The Commonwealth has also provided the money to modernise
equipment in South Australia and to rebuild railways in Queensland. The
Constitution permits and contemplates the acquisition with the consent of
the State of any railways of the State on terms arranged between the Commonwealth
and the State. National control of railways is inevitable and it should
be easily accomplished in the five mainland States and the two mainland
Territories. The best railways in the worlds are in Western Europe, where
the six members of the European Economic Community together with Switzerland
and Austria virtually operate an integrated service. Such a system should
be capable of establishment in Australia even if the Government boggles
at Commonwealth ownership and operation of railways.
Then I come to the matter of roads. The great difficulty in respect of roads
is that there is no coordination between road systems, even where the Commonwealth
provides most of the money for them. Western Australia has decided to improve
the Eyre Highway and bring it to a good standard, while South Australia
is doing nothing about this road. The Commonwealth maintains the Barkly
Highway to a good standard, while Queensland does little in respect of the
continuation of that highway to Camooweal. Queensland has shown great resistance
to road links between the Channel country and South Australia and New South
Wales. Other States have too often used their road systems to centralise
trade in their own capitals. A State Government cannot make a neighbouring
State Government coordinate their two road systems. Similarly, local government
authorities cannot compel each other to coordinate their road systems.
You can usually detect the shire boundary by the difference in the road
surface. The Commonwealth itself could build roads which would help interstate
or overseas trade. It could make its petrol tax or other grants to the States
on condition that they build roads on specific routes or to specific standards
or for specific purposes. Since the 1955 High Court and Privy Council decisions
on the State ton-mile taxes, it is clear that the only tax which can be
imposed evenly on all road users is the petrol tax, which is a Commonwealth
monopoly. Only the Commonwealth can now raise revenue proportionate to the
use made of the roads, while the States and their subordinate bodies have
the greatest experience in constructing roads. The States cannot expect
the Commonwealth to accept the proposition that they can spend the Commonwealth's
revenue better than the Commonwealth can spend this revenue itself; the
States have never accepted local government's propositions that councils
can spend State moneys better than the States can. Accordingly, the Commonwealth
and the States must confer much more fully and frankly on how much money
is required for roads and how and where it can be best spent; and this involves
more revenue from the Commonwealth and more coordination by it. A Bureau
of Roads on the United States model should plan and largely finance the
roads while the States construct them.
Again, there is no coordination between road and rail. What form of communication
is there to be between Port Augusta and Alice Springs? Are we to have a
first-class road or are we to have a standard gauge railway from Marree
to Alice Springs or will we re-route the railway through Kingoonya? There
are different Commonwealth departments and there are different State instrumentalities
and nobody coordinates their activities.
What was regarded as a very bold proposal in some quarters, and by some
an impertinent proposition, has been made by the Premiers of Victoria and
New South Wales. They have asked for Commonwealth aid to build the Melbourne
underground railway and the Sydney eastern suburbs railway. Ideas of this
kind are far too revolutionary for members of the Menzies Government although
they appeal to the political parties of different complexions which have
formed the governments in the two States. In the United States it is frankly
admitted that the great transport problems arise in the cities and compel
federal grants.
Housing
and Education
The time has come to make a fresh assessment of the Commonwealth's grants
to the States in the social field. The quality of life is coming to depend
less on the things which individuals obtain for themselves from their personal
incomes and more on the things which the community provides for all its
members from their combined resources. Already the wealthiest man cannot
achieve high education, good health and pleasant surroundings without society's
help.
No Australian Government spent money on housing before the Curtin Government
initiated the Commonwealth and State Housing Agreement and the Commonwealth
did not spend money on universities and health services before the Chifley
Government made grants for them.
Now the Commonwealth provides all the money which the States spend on housing
and it provides more money for universities and health services than the
States. Future improvements in housing, education and health, in all of
which the Commonwealth has too few direct powers and the States too few
resources, will depend on conditional grants by the Commonwealth to the
States. Such grants in aid have been used much more in the United States
than in Australia although the federal financial predominance is greater
in Australia than in the United States.
In housing the Commonwealth should make grants to provide not merely housing
units but complete housing and community environments. Under its banking
and insurance powers it should require the funds for private housing to
be used in the same way. In education the Commonwealth should ensure that
facilities preparatory and parallel to university education are sufficient
to give every person an equal opportunity to secure training for life. In
health services the Commonwealth should ensure that there are sufficient
skilled persons and well-equipped facilities to carry out medical research,
preventive medicine and curative medicine at no direct cost to individuals
and at the smallest cost, within reason, to the community.
Senator McKenna's Tuberculosis Act shows the way. Equal opportunities in
education, health and housing are more easily given through governments
ensuring free or cheap facilities than through governments granting tax
concessions and personal subsidies. The objectives in housing and education
can be achieved by extending the arrangements which the Commonwealth has
now made with the States over many years. The objectives in health services
can only be achieved by a radically new approach.
Health
Services
The least defensible decisions of the High Court have been in the two pharmaceutical
benefits cases. In the second case in 1949 such a fantastic interpretation
was given to the ban in the Constitution on civil conscription in the provision
of medical and dental services that a national health service on the New
Zealand or British models is ruled out. A referendum "to authorise
any form of civil conscription" would be the least meritorious and
profitable to be imagined.
The Menzies Government's scheme to underwrite doctors' fees by subsidising
medical and hospital benefits funds have not reduced health costs for patients.
The reserves of the funds are unnecessarily large. The duplication of fund
buildings, equipment and staff is wasteful. The administrative costs exceed
those of the Social Services Department and amount to half those of the
Taxation Department. Liberal or Labor proposals to increase the Commonwealth's
contribution tackle the problem from the wrong direction. An increase in
benefits would be quickly swallowed by an increase in fees.
While the constitutional positions precludes the socialisation of doctors,
it permits the socialisation of hospitals. The Commonwealth could itself
provide hospitals and clinics but would usually be duplicating existing
facilities by doing so. It is clear that the proper approach in the Australian
contex t is for the Commonwealth to make additional grants to the States
on condition that they regionalise their hospital services and establish
salaried and sessional medical and ancillary staffs in hospitals. Such measures
would attack costs where they are greatest both for the individual and for
the community. The greatest hardship to a breadwinner is brought about when
he or a dependent is admitted to hospital. It is in hospitals that medical
care is most expensive for the community.
The best way to achieve a proper National health Service is to establish
a National Hospital System. Quite apart from the economic advantages there
is the great social advantage of providing both patients and doctors with
an alternative to the present system. Patients would be free to consult
the salaried staffs; doctors would be free to join them. Doctors and patients
and communities are alike unable to provide an alternative. Only the Commonwealth
can give them a choice. There is no sphere in which government initiative
can be such a liberating force.
NATIONALISATION
The Australian Labor Party's attitude to more equitable and efficient regulation
of the economy is often thought or alleged to centre chiefly or solely on
nationalisation. The party's objective is "the democratic socialisation
of industry, production, distribution and exchange to the extent necessary
to eliminate exploitation and other anti-social aspects in those fields."
This is a limited, negative and apologetic definition which makes little
allowance for the creative scope of socialist measures. Socialists should
not be content with nationalising where necessary; they should be intent
on competing where possible and initiating where desirable. It is as important
for them to protect the consumer as the employee. The sins of capitalism
in Australia today are ones of omission rather than commission and of not
being sufficiently enterprising and independent. Even if governments took
over every significant company, there would still be huge gaps in our development
and our trade.
Section 92 of the Constitution lays down that "trade, commerce and
intercourse among the States shall be absolutely free". In a series
of remarkable Court decisions this section has been interpreted to mean
that interstate trade and commerce should be conducted on the principle
of free enterprise. Any company, therefore, which conducts an industry
or is engaged in production, distribution or exchange in more than one State
is immune from nationalisation by legislation even if every member of every
parliament were to agree that only in this way could the company's exploitation
and anti-social practices be eliminated. No public monopoly can be established
in any of these fields were a company already functions unless the Federal
Parliament passes an act to establish it and the people approve that act
as a referendum. It seems that the stevedoring industry is the only significant
industry which could be nationalised without a referendum. The wharves are
owned and can therefore be controlled by the States, and stevedoring usually
falls within the Commonwealth's power to regulate trade "with other
countries and among the States".
PUBLIC
ENTERPRISE
Nationalisation is now the most difficult and least important aspect of
socialism for an Australian government to achieve. It is often neither essential
nor sufficient. It would be less relevant and effective than a generation
or more ago when there were fewer large companies in Australia and those
companies were Australian-owned. Australian industry now depends much more
on access to international patents and markets. What would it profit Australians
to vote at referenda in favour of nationalising the oil, drug and aluminium
companies and be cut off from oil supplies, drug formulas and aluminium
markets? A more fruitful and complete use can be made of Australia's human
and material resources through the initiation of public enterprise than
the regulation of priva te enterprise. The Australian Government is as constitutionally
free as any other national government to initiate public enterprise internally
or internationally. Public enterprise is not only the best but probably
the only means of now staving off or counteracting private monopoly in Australia
and providing continued competition where there is still competition.
One still hears the argument that public enterprise is not successful. The
Commonwealth Shipping Line of the 1920s is the favourite example; it should
not be necessary to recall that the Commonwealth line was as profitably
and honourably conducted as its private competitors. In the last two decades
public enterprises in which the Commonwealth has been interested have been
invariably successful. Qantas is one of the few international airlines to
operate without a subsidy. TAA consistently gets ahead of the chosen private
instrument which the Government has indulged with licences, guarantees,
contracts, depreciation allowances and fare increases. The Australian National
Line is the largest, most modern and most successful fleet on the coast.
The Commonwealth Bank is already the second largest trading bank. The present
Government has been persuaded to sell its successful pioneering enterprises
when new fields of profit open up--the Bell Bay aluminium plant when Australia's
vast bauxite deposits were revealed, the Commonwealth Oil Refineries when
local refining was undertaken on a large scale, Amalgamated Wireless (Australasia)
Ltd when television was about to be introduced, Commonwealth Engineering
when the State railways were being re-equipped. Not only is public enterprise
financially successful; it is economically basic and productive. Electricity
output and steel output are equally basic; the former comes from public
plants and the latter from private plants; since prewar the former has increased
almost sixfold and the latter threefold. There can never be any justification
for a shortage of steel in and from Australia.
Enterprises
by the Commonwealth under its designated powers
I shall propose enterprises which the Commonwealth should set up and which
under its existing powers it can set up. A general insurance office would
curb the present exorbitant premiums for fire and marine insurance and would
save some of the present excessive remittances to overseas companies. A
Fisheries Commission would enable Australians to compete with other countries
which are more and more availing themselves of our pelagic resources. The
Commonwealth Serum Laboratories (CSL) should be expanded to compete with
the existing exploiting drug companies. It is the only wholly Australian
body producing drugs, serums and venenes. In the last ten years almost every
large drug company in Australia has either been set up by or tied to British
or American or European drug companies. Governments themselves pay for most
of the products of the drug companies, the Commonwealth Government--through
the pharmaceutical benefits scheme, Repatriation Department and armed servicesbeing
the best customer, the State hospitals next. The CSL is the best instrument
for ascertaining the costs and techniques of drug production.
Above all, the Commonwealth should have an overseas shipping line. Australia
is one of the ten largest trading countries in the world but it is the only
country of any significance which brings all its imports and sends all its
exports in foreign ships. Even completely land-locked countries such as
Switzerland and Czechoslovakia--Shakespeare's coast of Bohemia--have their
own shipping lines. Australia has the skills and facilities to build ships
of any type and size which trade with her. She has the largest navigable
coastline in the world. All her trade must go by sea. Her wage and manning
scales are the same as New Zealand's, lower than Europe's and one-third
of America's. Our trade is handled by our competitors and our customers.
Freight charges are a serious burden on our balance of payments. If Australia
can capitalise Qantas, she could capitalise an overseas shipping line. Australia
should not aim to carry the whole of the trade but half of it, her customers
and suppliers carrying the other half. The Commonwealth itself could buy
or sell any or all of Australia's imports or exports, usually through boards
or commissions for particular products.
Enterprises
by the Commonwealth based on the Territories
The Commonwealth's powers in a Territory are as ample as the combined powers
of the Commonwealth and the States in a State. Accordingly, there are none
of the constitutional factors which might prevent the Commonwealth establishing
an enterprise within a State and there are none of the financial factors
which usually prevent a State setting up an enterprise within its borders.
In the Northern Territory the Commonwealth could establish industries based
on the mineral and pastoral wealth of the territory. In the Australian Capital
Territory the Commonwealth could establish national newspapers and journals
which would share the news and cultural services of the Australian Broadcasting
Commission and which would give Australians the same choice of news and
views in their newspapers as they expect in their radio and television.
Enterprises
by the Commonwealth based on the States
I now suggest enterprises which the Commonwealth could set up by grants
to the States. In our obsession with Section 92, which is held up as the
bulwark of private enterprise, we forget Section 96, which is the charter
of public enterprise. Section 96 enables the Commonwealth Parliament to
grant financial assistance to any State on such terms and conditions as
the Parliament thinks fit. Under that section there is no question that
the Commonwealth could enable a State to carry on any enterprise in competition
with an existing enterprise or to set up a new enterprise. The States have
the power but not in general the finance to set up public corporations.
The Commonwealth has the finance but not in general the power. Between them
they can set up any new industry or compete with any eixsting one. The model
for such enterprises is the aluminium industry set up in Tasmania by cooperation
between the Labor Federal Government and State Governments. It was set up
at a time when bauxite had to be imported. It was set up in a region where
there was no industry. If the two Governments had joined in a consortium
with an international aluminium company the national ownership and participation
would be greater today. Now we have found that Australia has the largest
bauxite deposits in the world and we are letting foreign companies themselves
decide how much of those deposits will be exploited, how far they will be
processed in Australia and for what price the product will be marketed.
The countries which depend on the export of primary products or mineral
products are inevitably subjected to fluctuations in their overseas income.
The only countries which have a rising or stable income are those which
export primary or mineral products, not in their original form, but in some
processed form. The countries which are most prosperous are those which
do not just charge for their raw materials but also charge for the human
skills which they put into processing those raw materials. Australia has
more industrial skill than any country for thousands of miles around. It
is in an area where all the new nations are importing manufactures. Our
iron ore and our coal are eminently suitable for the production of steel.
We allow them, however, to be taken overseas to be turned into steel and
then sold to our neighbours. We can produce steel here more cheaply than
any other country. We have thousands of people who know how to make steel.
We have hundreds who know how to smelt aluminium. Providentially the raw
materials are found in Queensland and Western Australia, the States which
are the least industrialised and the closest to the new markets. Why, then,
should we wait until BHP establishes steel works after a standard gauge
railway has been built to Kwinana or, until when, ten years after those
works are fully operational, it sets up a steel works in Queensland? Why
should we wait to produce aluminium until one of the three international
companies which produce aluminium in the free world is prepared to
set up in Australia?
I refer to States in this connection not because the boundaries between
States were established by Australians or have some economic significance
but because the two States concerned have conservative governments and have
not asked for assistance from the Commonwealth, while the Commonwealth Government,
also being conservative, will not offer assistance. In many new fields of
production and trade and development Australians are confronted, particularly
in Queensland and Western Australia, not with a choice between public and
private industry, but a choice between public industry and no industry at
all. It is unpatriotic and uneconomic for us to wait until North Atlantic
countries and Japan choose to set up industries in our country and promote
our exports and develop our north. The North Atlantic countries and Japan
need our raw materials and prosper from processing and selling them themselves.
The failure of the conservative Governments of the Commonwealth, Queensland
and Western Australia to safeguard Australia's new mineral resources has
resulted in the resources being largely controlled by foreign companies.
It was always possible for the Commonwealth to undertake, as the Chifley
Government was undertaking, the search for oil in the Northern Territory,
or, with the consent of the State, in any State. The present oil search
policy is subsidising the takeover of Australia's oil resources. The Commonwealth
Government could and should itself or in cooperation with the States and
where necessary with the aid of private enterprise, undertake the search
for oil in this country. This is how France and Italy discovered and safeguarded
their oil resources. The Commonwealth should make an agreement with the
British Government to buy back its shareholding in Commonwealth Oil Refineries
and thus obtain the direct information on the cost of discovering, extracting,
transporting, refining and retailing oil which has baffled the Tariff Board
and so many Commonwealth departments. There has been a conspicuous absence
of that Commonwealth and State cooperation which alone can achieve a national
fuel policy in the welter of conflicting interests between State and Territory
and foreign and local discovery, research and ownership in Australia's resources
of water, coal, oil, gas and uranium. Much of the agitation for nationalising
the remaining privately-owned coal mines would be better directed to preserving
and coordinating the development of all fuels in Australian hands. It is
better to fabricate the future than unravel the past.
Joint
Enterprises by the Commonwealth and Other Countries
Section 92 relates to trade and commerce among the States; it does not relate
to trade and commerce with other countries. There are constitutional impediments
to Australian governments carrying out a policy of nationalisation; there
are no constitutional impediments to the Australian Government joining with
foreign governments in carrying out a policy of internationalisation. Socialists
are coming to see that internationalisation is more crucial than nationalisation.
There are many fields in which Australia's requirements and resources cannot
be fully realised by the actions of Australian governments alone.
International mining and oil companies are frequently more powerful than
the governments of those countries whose commodities they develop, transport,
process and market. The place and pace of development of Africa's copper-belt
and Australia's bauxite deposits are not determined in Africa or Australia.
The Commonwealth Government could and should have entered into a consortium
with the New Zealand Government and the foreign companies concerned for
the further processing of some Australian alumina in New Zealand rather
than have allowed the foreign companies to make separate arrangements with
the New Zealan d, Queensland and Commonwealth Governments.
A few companies control the world's oil supplies, through some subsidiaries
securing concessions to drill for oil and extract it, through other subsidiaries
transporting the crude oil to refineries at home or abroad, through a third
set of subsidiaries operating those refineries and through a fourth set
of subsidiaries controlling the retail outlets for petrol and lubricants.
Very few governments can supervise the whole process from drilling to setting.
Indonesia's oil resources and Australia's refining and shipbuilding skills
could in combination have made a major impact.
The Commonwealth could join with the governments of all or any other countries
in joint enterprises to sell or buy or handle the products in which it and
they are interested. Such joint enterprises could be used to oust the international
companies or compete with them or cooperate with them. Most governments
are only strong enough in combination to regulate the operations of the
corporations which deal with the commodities on which most countries depend
for their external incomes and their hope of industrialisation.
Since the war the international drug companies have perfected the profiteering
process. They spend more on advertising and lobbying than on research. Nevertheless
their resources for research are greater than those of most governments,
and few governments could adequately or promptly make themselves independent
of these resources. The developed countries should combine to internationalise
the drug industry through the World Health Organisation. The developing
countries could be freed of disease with the money saved.
Commonwealth
Pioneering Enterprises
Australians will not fulfil their heritage as a nation and discharge their
obligations to mankind until they develop and use the whole of their continent.
Australia rules a larger are of the tropics than any country except Brazil.
Private enterprise has never given full and balanced development to any
tropical country. If private investors do not meet the challenge, the Commonwealth,
by itself, can establish in the Norther n Territory and, through State Governments,
can establish in the Gulf and Kimberley areas appropriate industries to
process the agricultural, pastoral and mineral products of the tropics.
Australia can thereby not only increase her export earnings but can also
give a lead to all her neighbours in the development of similar regions.
Canberra is the prototype of the growth points or poles of attraction which
can be set up by concentrating government activities and coordinating private
activities not only in the north but at economically strategic sites anywhere
else in the continent. There is no greater obligation and opportunity to
show socialism in action.
National conservation can be carried out by an agency such as the Snowy
Mountains Authority, which can now do for Australia's underdeveloped north
what the United States Federal Bureau of Reclamation has achieved for America's
west. New South Wales and Victoria did not have the financial means, and
the Commonwealth would have had a very dubious legal right, to carry out
the Snowy Mountains Scheme if all governments concerned had not cooperated.
Still less have Queensland and Western Australia the means to carry out
such schemes without Commonwealth initiative. The experts who investigated
and instituted the Snowy Mountains Scheme are now being dispersed. Their
services are still required and should be retained.
Western Australian ministers admit that the development of the north and
the emancipation of the Aborigines are beyond the State's financial resources.
The State should surrender the North-West to the Commonwealth. The Constitution
provides for this course and contemplates it. South Australia surrendered
the Northern Territory 50 years ago. The United States Congress administered
all the western and overseas territories until they were properly developed
and the Canadian Parliament still administers the Arctic territories. It
is a second best method for the Commonwealth to grant money to the States
to develop the north. First, such a policy would admit that the State can
spend Commonwealth money more effectively than the Commonwealth itself;
secondly, such a policy would subsidise disparities and differences with
the adjacent Northern Territory.
These, then, are the lines which I suggest that socialists should follow
in planning Australia's future. Physical planning of the private sector
will remain difficult as long as our constitutional framework lags so far
behind that of other countries. Members of the Federal Parliament should
not shirk their responsibility to propose improvements in the Constitution
and they should be able to persuade the people to accept them. Meantime
they should more consistently carry out the planning functions which they
can exercise through taxation, exports and imports and international arrangements.
Members of Parliament must accept the permanent necessity of seeking the
people's consent before they can nationalise an industry. This should not
be regarded as too stifling an inhibition in these times. Socialists are
now more concerned with the creation of opportunities than the imposition
of restraints. Within our own nation we do not have to ration scarcity but
plan abundance. There is now a greater obligation to ensure a fair distribution
of goods between all nations than there ever was to ensure a fair distribution
of goods within our own nation.
The Australian Government has as much constitutional freedom as any other
national government to plan the public sector in Australia and to make arrangements
with other countries. Through its financial hegemony it can create better
conditions in transport, housing, education and health; it can create new
industries; it can create new communities. Through international arrangements
it can share in the more orderly and equitable production, distribution
and exchange of goods and skills. Socialists have to play the most dynamic
role in the relatively skilled and affluent community inhabiting our remote,
dependent and unevenly developed continent.
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