on the World Today

THE downward drift of Australia’s overseas balances has been causing concern for more than a year. In the fall of 1955, attempts were made to reduce overall demand: credit was tightened, additional import restrictions were imposed, and the Prime Minister appealed to everyone for the exercise of “voluntary restraint.”

The overseas balances, however, continued to fall. The position was complicated by a lag in exports caused by two serious industrial disputes. Nevertheless, imports were still coming in at an annual rate of $1791 million instead of $1433 million at which the Prime Minister had aimed in September.

In a “supplementary budget” introduced on March 14, 1956, additional taxation designed to reduce public spending by about $257.5 million per year was imposed, and at the same time approval was given to increases in bank deposit and lending rates. However, there had already been some decline in business activity, and the restrictive measures aroused a storm of criticism. The government was berated for failing to reduce its own expenditures, and complaints were made that some taxation increases—additional company taxation, and steep rises in the sales tax on motor vehicles and parts and on gasoline — were actually inflationary in that they would increase costs and prices and lead to further demands for wage rises.

The new’ fiscal measures relieved an immediate minor crisis in government finance which had been largely brought about by a shortfall in public loan raisings and heavy seasonal deficit financing by treasury bills. However, critics contended that the government was taking advantage of the situation by attempting to assure its own survival. The Prime Minister had forecast the possibility of some “substantially higher” government spending next year and had also mentioned the need for provision against heavy loan conversions due in 1956-57.

The government has gambled on more than its own survival. It hopes that the imposed restraints will curb demand and expansion without seriously retarding production at present capacity. At the same time, contraction of the Australian market could force increasing numbers of manufacturers to explore overseas trade possibilities, and a general tightening of conditions could induce better labor performance. Both are prerequisite to a solution of Australia’s problem.

Expanding oppurtunities

For most of the post-war years Australia has enjoyed full employment and expanding business opportunities and profits. Enlarged industrial capacity and tighter trading conditions, however, have intensified competition, and genuine efforts are now being made to raise efficiency and absorb increased costs.

A campaign to extend over the whole field of industry awareness of the need for greater output from existing resources has recently been launched by the Ministry of Labor Advisory Council, a group of employers’ representatives and trade-union leaders, which acts in a confidential advisory capacity to the Federal Ministry of Labor. The Council plans to co-opt other employers and union leaders and to assign “field groups” to work in allotted sectors of industry. The scope is wide. Annual loss resulting from industrial accidents alone is between $168 million and $224 million.

Factory production index figures show that by 1954-55 factory output in Australia had increased by 39 per cent since 1948-49. In the same period production of basic materials — iron and steel, nonferrous metals, timber and building materials — rose by 43 per cent, the output of metalworking industries by 54 per cent, and clothing and textiles by 17 per cent.

About $448 million was invested in Australian secondary industry in 1955. Investment since 1950 has been more than $2250 million. Total annual depreciation provisions for 1954—55 of more than $672 million indicate a widespread desire to replace obsolescent machinery. However, some plans for re-equipment may now have to be deferred.

In the last five years the iron and steel industry alone has spent $112 million on new plant and equipment, and a further expenditure of $150 million in the next five years is planned. Before World War II the Australian steel industry was able to meet most of the local demand. Although production has more than doubled in the post-war years, the industry now supplies only about, three quarters of the Australian annual requirement of approximately 2.4 million tons. Per head of population Australia is the world’s sixth largest consumer of steel. The recent discovery, by aerial survey, of vast deposits of iron ore in East Gippsland, Victoria, not far from unlimited brown coal and substantial limestone deposits, may herald the foundation of an iron and steel industry in that State.

Essential imports

An analysis of Australian imports as governed by the present restrictions shows that materials essential for production represent 51 per cent, capital goods 22 per cent, and “ irreducibles”—chiefly petroleum and tea — 15 per cent. Only 12 per cent are more or less nonessential consumer goods. Any further import cuts would, therefore, almost inevitably slice into the actual requirements of industry. The government feels justified in insisting that Australian manufacturers should extend their sales beyond the protected home market.

A wide variety of manufactures is now being exported but, excluding mineral products and processed foodstuffs, their value is less than 3 per cent of the total value of factory production.

Trade difficulties

Despite the high cost structure, Australia’s trade difficulties are not all of its own creation. The country’s traditional exports are wool and skins, foodstuffs, metals and metal products. Wool production has increased enormously, but lower prices have meant reduced income. World-wide overproduction of wheat has meant greatly diminished returns and reduced acreages for Australian wheat, which receives no subsidy and is produced more cheaply than any other in the world. Australia’s dairy and other agricultural products have also tended to be excluded from former markets as a result of the domestic subsidy and disposal policies of the United States and other countries.

A small but encouraging increase in mineral production has occurred, and exports, at $160 million, were $30 million higher in 1955 than in 1954. Australia’s east coast beaches contain the major proportion of the world’s known supply of rutile. With the jetage emphasis on titanium, rutile could become a considerable dollar earner. Valuable beach deposits of zircon are also being exploited.

Britain takes about 40 per cent of Australia’s exports and supplies a slightly greater proportion of its imports. Australia has notified Britain of its wish to negotiate a new trade pact to replace the Ottawa Agreement, which has been in force since 1932. The protection afforded to British goods entering Australia is on a percentage basis, but the fixed monetary preferences granted to Australian exports to Britain have been considerably reduced in value by inflation.

Meanwhile, Australia’s sales publicity drive in Britain is already helping to increase Australian exports. Australian traders in all markets could do much to help themselves and their country by paying more attention to both careful and attractive packaging and by making a closer study of modern marketing techniques.

Labor’s restlessness

The cost of living in Australia has risen by about 5 per cent in the last twelve months. A further rise may occur as the result of a recent judgment of the Federal Arbitration Court which increased by 112 cents per week the basic wage for workers employed under Federal awards. About one million workers are affected. The court rejected the unions’ claim for (he restoration of automatic wage adjustments based on quarterly costof-living figures but suggested the possibility of period examinations to assess what the national economy could afford to pay. Union leaders claim that the increase is insufficient, and some have declared that in the future their unions would by-pass the Arbitration Court and would concentrate on obtaining wage agreements by means of collective bargaining.

Over the last twelve months industrial restlessness has provoked widespread criticism of Australia’s whole framework of conciliation and arbitration. Union resentment at the growing number of penalties imposed on unions by the Federal Arbitration Court culminated in an appeal to the High Court. In March of this year, the High Court ruled that the Arbitration Court could not exercise both arbitral and judicial functions.

As the result of subsequent legislation in the Federal Parliament, the present Federal Arbitration Court will shortly be replaced by a Federal Industrial Court in which penal powers will be vested, and by a Federal Arbitration and Conciliation Commission with associated Conciliators appointed to individual industries. It is hoped that separation of the powers previously exercised by the present court, and greater emphasis on conciliation, will lead to more amicable relations and quicker settlement of disputes.

Both employers and unions are now watching more intently industrial relations and procedures in other countries, particularly America, and there has been some promising experimentation with collective bargaining, incentive schemes, and on-the-job industrial committees.

Attracting new workers

The Australian labor force, excluding domestic and rural workers, now numbers 2.8 million. Immigrants have supplied about 75 per cent of the 500,000 increase in the last nine years. Furthermore, emphasis has been placed on obtaining tradesmen, and at present the proportion of skilled to unskilled workers among immigrants is 108.5 to 100. Among Australian workers the proportion is 68.6 to 100.

Earlier trade-union fears that a large influx of immigrants would lead to unemployment and a lowering of living standards are now quiescent and are unlikely to revive unless a period of general recession occurs. Immigrants, both skilled and unskilled, have been freely admitted to their appropriate trade unions.

Since 1947 more than a million migrants, about half of them British, have entered Australia. Under a scheme of selected migration, Australia has paid 85 per cent of the fares of about half of the British migrants and an average of 21 per cent of the fares for a slightly greater proportion of the foreign migrants. A free education scheme helps non-English-speaking immigrants to acquire a knowledge of the language and of the Australian way of life. Naturalization after five years’ residence is encouraged but not enforced.

Various services of the Immigration Department — an officially supported “Good Neighbor” movement links the activities of nearly 300 organizations — and employment alongside Australian workers hasten the absorption of all migrants into the general community. The dispersal of immigrants throughout the country, together with the Australians’ anxious awareness of the political instability of Asia and memories of imminent enemy invasion in 1942, has helped to break down the former intensely insular attitude of the Australian-born population.

Better living

Living standards throughout the community are still rising. Retail sales in 1955 were at a record $6169 million, of which $2624 million was spent on food and clothing. Demand for major domestic appliances such as refrigerators—now installed in 70 per cent of Australian homes—and washing machines (40 per cent) is high.

Australians now have one motor vehicle (excluding motorcycles) for every 4.5 persons. Of the 240,000 new motor vehicles registered in 1955, only 30,000 were imported fully assembled. Projected expenditure on expansion which is currently being undertaken by the major automobile companies in Australia is about $67 million.

Regular transmission of television, initially in Sydney and Melbourne, will begin in November. It is estimated that about 500,000 television receivers will be sold during the next five years, and that sales will rise to about 2 million by 1966 as television is extended to other capitals and large cities.

In November the Olympic Games will be held in Melbourne. They will be well staged, and Australians are hoping that tourists who come to see the Games will stay to see something of Australia — a great nation in the making.