COMMONWEALTH OF AUSTRALIA

SPEECH

BY

The Rt. Hon. HAROLD HOLT, M.P.ON

GOVERNMENT POLICYMinisterial Statement

[From the "Parliamentary Debates," 8th March 1966]

Mr. HAROLD HOLT (Higgins-PrimeMinister).-by leave-I am taking this firstopportunity after meeting the House tospeak on some of the more significantmatters with which we have been dealingsince the Government took office. The newGovernment was sworn in on 26th January-Australia Day. We have been in office,therefore, just short of six weeks. They havebeen weeks of unusually intense activity. AsI give an account of the highlights of eventsover that period, I shall also be mentioningsome important policy decisions not pre-viously announced. Ministers who will bespeaking later in the debate on this state-ment, or introducing statements of theirown, will provide more detail on severalmatters which I shall only be able to touchbriefly.

It is to be expected that a new Govern-ment will have a busy time in its early weeksas it takes up the reins of government. But,in addition to the tasks normally to beexpected in these circumstances, we havefound ourselves engaged in discussions-some of a profound and far-reachingcharacter-in the fields of defence andforeign policy. On the domestic front, wehave concluded a review of the current stateof the economy. This followed discussionswith official economic advisory bodies

2874/66

assisting the Government and with repre-sentatives. of industry. We have devoted agood deal of attention to the drought situa-tion' persisting over large areas of theCommonwealth and the .problems arisingfrom the ramifications of the drought.

Before commenting on .these matters, Iwould like the House to know that theGovernment will be. inviting it-on twooccasions I shall mention-to give recog-nition to the distinguished -public and par-liamentary services of my predecessor, SirRobert Menzies. Sir Robert established aremarkable record of more than 18 years ofleadership as Prime Minister,. more thandouble the previous record -length of servicein this office. Tomorrow, I: shall present aresolution to the House enabling us to placeon Parliamentary record our appreciation ofhis many years of service. On 17thMarch, the Government will be holding aParliamentary dinner in honour of SirRobert and Dame Pattie.

DEFERMENT OF THE REFERENDUMPROPOSALS.

I also mention the Government's decisionto defer, until the next Parliament, thereferendum on the two proposals to amendthe Constitution which were passed by both

Houses of Parliament towards the end oflast year. We would have preferred to letthe question of deferment stand until such'time as we could have benefit of parlia-mentary discussion and decision concerningit. But this course was not open to usbecause, as matters stood, the Chief Elec-toral Officer would have been requiredunder the provisions of the Act to post thearguments for and against the proposals tosome 6,000,000 voters before the end ofFebruary. Therefore, in practical terms, itwas necessary for us to make and announcethe decision before we met the Parliament.In pursuance of this decision, we willrecommend to the Governor-General inCouncil that he should not issue the writprovided for in section 5 of the Referendum(Constitution Alteration) Act. We remainstrongly in support of both proposals. Butwe are a new Government and, inevitably,much occupied not only with the very manyimportant and pressing matters arising athome and abroad, but with other matterswhich beset a new Government. A ref er-endum campaign would be an extra andlengthy commitment. in these circumstances,and because there is no -urgency abouteither of the proposals becoming law thisyear, we believe that it would be better todefer the holding of the referendum.

However, we intend, 'early in the life ofthe next Parliament, to introduce the neces-sary legislation to enable a referendum tobe held on the proposal to break the nexusbetween the two Houses of Parliament. Wewill also -then give a general indication ofour intentions in relation to the distributionproposals which would be made should thereferendum prove successful.

We intend, at the same time, to presentalso the proposal relating to Aborigines.This proposal has been supported by allpolitical parties, and there was indeed nonegative case prepared for circulation tothe electors. Any delay in passing the refer-endum in relation to the counting ofAborigines will have no adverse practicalresult because, in fact, the CommonwealthStatistician does count the Aboriginalnatives in the community and makes thefigure public. The provision in the Consti-tution does not amount to an impedimentagainst this counting. Nor does it preventAborigines voting; many of them do. We,nevertheless, believe that the provision

should be taken out of the Constitution. Itis outmoded and misleading, and givesunwarranted cause for criticism both insideand outside Australia by people unawareof the actual situation.

As I said when announcing our decisionto recommend a deferment, we are sensi-tive to the fact that the Parliament hassupported in both Houses the referendumlegislation which the Menzies Governmentpresented. We believe, however, that mem-bers in both Houses will recognise thereasons which have influenced us, and willapprove our decision to defer the proposalsfor the time being. The deferment is beingmade with a view to strengthening, ratherthan weakening, the prospect of success forthe two proposals.

I turn now to aspects of foreign affairsand defence with which we have been deal-ing over recent weeks. In our first monthof office, we had visits from Mr. DenisHealey, the British Minister for Defence,Mr. Hubert Humphrey, Vice-President ofthe United States, and His Excellency FieldMarshal Thanomn Kittikachorn, PrimeMinister of Thailand. Each of these discus-sions was of importance for Australia. Eachof them required considerable preparationand close consultation with our civilian andmilitary advisers.

VISIT BY, MR. HEALEY.Mr. Den is' Healey, the British Minister

of Defence, visited us for four days fromMonday, 31st January. The talks, althoughoccurring within the first week of our tak-ing office, were most timely. They wereheld at a -time when the United KingdomGovernment was coming to major longterm decisions, subsequently incorporated inthe White Paper on defence recently pre-sented to the United Kingdom Parliament.Mr. Healey had been set the task of fram-ing a defence programme which would con-tain British expenditure on defence in 1970within the equivalent in that year of£E2,000 million sterling today. This taskcalled for some drastic adjustments. One ofthe possibilities coming under publicdiscussion in Britain was a withdrawal ofBritish forces east of Suez. Mr. Healeymade it clear to us that his Governmentdid not hold any views on these lines. Butthe general proposition had found supportamongst -highly placed parliamentarians on

both sides of politics. The United KingdomGovernment decided-in our view, verywisely-that it would continue to maintaina global role in world affairs and that aspart of this role it would continue to main-tain substantial forces in South East Asia.The Canberra talks were of tremendousvalue in enabling us -to make a frankexchange of views. Mr. Healey made itclear to us, in direct but friendly fashion,that if British troops had to leave Singapore,then either they would have to be accom-modated in base facilities on the.Australianmainland or they would have to go home.For our part, we were willing ,to planagainst the contingency that Singaporemight become untenable at some futurepoint of time and have now put in hand astudy, at the Service level, of various possi-bilities and their feasibility. However, weemphasised strongly the need for a con-tinued British presence in South East Asia,and we affirmed that the bases in Singaporeand Malaysia, in which we share and towhich we have made substantial contribu-tion, should be retained for as long aspossible. The British presence on the main-land of Asia provides an essential stabilisingand moderating influence, and aid to morale.British departure from the scene could havedisastrous consequences. We are gratifiedthat the United Kingdom Government hasconfirmed, in the White Paper, its firmintention to continue to maintain the basesin Singapore and Malaysia so long as theGovernments of Singapore and Malaysiamake this possible on "acceptable condi-tions". For Australia this is a most signi-ficant and welcome decision.

Mr. Dean Eyre, the New Zealand Minis-ter for Defence, participated in all thediscussions with Mr. Healey. This Govern-ment wishes to increase its co-operationwith New Zealand in defence matters and,indeed, in all other matters of mutual in-terest. The Anzac tradition was forged be-tween us in another great struggle fought bythe forces of freedom to resist aggression.The grim events in Vietnam and Indonesia'sill-conceived confrontation of Malaysia havebrought us closely in association again. Ourdiscussions revealed complete identity ofview between our two Governments.

It is worth recording that the BritishGovernment carried out its recent defencereview in a way which was, we believe,

unique in British history. It was probablythe first time the British Government hasever tried to look so far ahead in planningits foreign and defence policy-Mr. Healey'stalks with us ranged over the period fromthe 1970's to the 1990's-and it is also thefirst occasion on which the United Kingdomhas consulted so closely with its allies beforefinal recommendations were adopted by theCabinet.

Arising from the Canberra talks, it wasagreed with the representatives of Britainand New Zealand that consultations willcontinue at ministerial level. We felt thatthere should be discussions between our-selves-that is, the three Governments-andUnited States representatives on ourrespective activities in South East Asia.These should not be confined to politicaland defence matters. We all are involvedin military action in one area or anotherbut we all are also participating 'n pro-grammes of economic and social aid in thearea. It would 'be of great advantage todevelop the widest possible agreement onpolicy aspects and to see how far ouractivities can be co-ordinated.

VISIT BY VICE-PRESIDENTHUMPHREY.

It was of great advantage to us to receivea visit from Vice-President Humphrey andGovernor Harriman so soon after thedefence discussions with Mr. Healey. TheVice-President was with us on 18th and19th February. This is only the second occa-sion on which a Vice-President of the UnitedStates has visited Australia. Mr. Humphreycame to us after a rapid tour embracinga number of the key countries of SouthEast Asia. He was able to bring us a com-plete account of the talks between PresidentJohnson and Prime Minister Ky of SouthVietnam. We found our own assessmentof the situation there, based on informationreaching us from our own sources, to bevery much in line with that conveyed byVice-President Humphrey to us. In his pub-lic statements in Australia he brought outcompellingly the critical and fundamentalcharacter of the struggle in South Vietnam.We had earlier told him we applauded theinitiatives advanced by Prime Minister Kyand President Johnson for a vigorous pro-gramme of economic and social reform.We all recognise that there is far more tochecking of the Communists by military

means. There is a need of reconstructionand rehabilitation. There is a need for aneffective national administration pressing onwith desired reforms and the improvementof standards.

Most of the people of South Vietnamlive in villages and hamlets. Many of thesehave suffered the ravages of terrorist acti-vities for years. First, -the affected areasmust be cleared of the enemy and madesecure against Vietcong reinfiltration. Thenext phase is the establishment of effectiveadministration so that the benefits of modernthe problem of South Vietnam than theservices can be brought to scattered ruralcommunities. So many leaders have beenmurdered that the Government of SouthVietnam has launched an extensive, butconcentrated, programme of training. Itaims to produce as quickly as possible suc-cessive teams of people who will return tothe ravaged areas as leaders in variousactivities of significance to the local com-munities. They include people trained in thebusiness of administration and government,and in health and rural development;' theyinclude also teachers -and personnel trainedto undertake such rehabilitation tasks as thebuilding of homes, schools, roads and hos-pitals. Already hundreds of these teams areoperating and the South VietnameseGovernment plans to have many moreavailable by the end 'of 1966. TheGovernment is planning in this way forthe progressive rebuilding of the socialfabric of the community. Australiansare assisting in this valuable work. I speak,in particular, of our surgical teams, whichare providing medical help in a countrywhich has far too few trained doctors serv-ing the community of 14 million people.Australians -are also helping as advisers inagriculture and road building.

I pay tribute, also,.Mr. Speaker, to thecontributions made by. Australian forces inthe'area. Since 1962, we have had militaryadvisers with the South Vietnamese forces.These are highly trained and dedicated men,who at'great risk, and .in some cases casu-alty, to themselves, have stood beside theirSouth Vietnamese counterparts in the field.Since 1964, a flight of Royal AustralianAir Force Caribou aircraft 'has been usedin a great variety of ways for general trans-port purposes, and to bring supplies quicklyto meet emergency needs. Last year Aus-

tralia committed the First Battalion of theRoyal Australian Regiment to Vietnam,which was subsequently expanded to abattalion -group. The Battalion has to greateffect and purpose been conducting opera-tions from its base at Bien Hoa, and hasearned praise and respect from our SouthVietnamese and American allies. Vice-President Humphrey made particular re-ference during his visit here to the highvalue placed on the Australian contingent,both in their role as fighting men and theirconduct generally amongst the Vietnamesepeople.

The Vice-President spoke of the overallprospects in terms of what he described as"restrained optimism". The informationwe and the Americans have is that the tideof war is turning in our favour. Progress isbeing made in rescuing new areas, in clear-ing them of Vietcong and in preparingthem for orderly civil government. Thecritical nature of the conflict in South Viet-nam has not been fully recognised by all,and this certainly includes many membersof the Opposition. We are told that weover-simplify the issue there. It is moreaccurate to say that our critics over-complicate it. We still hear from some re-presentatives of the Opposition that this isa civil war and that we have no good causefor participation. This view runs against allthe information and advice reaching us.The discovery by our own forces of ex-tensive headquarters and military facilitiesin close vicinity to Saigon illustrates thelorng-term planning and the years of pre--paration with outside assistance which liebehind the*activities of. the Vietcong. Thisis no civil war. It is the principal presentmanifestation of the expansionist activitiesof Communist China. These activities arechannelled through, and "directed from,Hanoi. All the countries in South East Asiaare facing the threat of Communist China'sexpansion in one form or another. In Laos,for example, there is fighting betweenChinese-supplied Pathet Lao-or Commun-ist forces-:--and the forces of the Govern-ment. The Prime Minister of Thailand andthe senior Ministerial colleagues whoaccompanied him gave us a graphic accountof increasing Communist subversion, infil-tration, and terrorist activities threateningthat country. In India there, have beendirect attacks by troops of the CommunistChinese Army across the Indian border.

Honorable members will see in these andother countries the manifestation, in oneform or another, of externally-directedCommunist aggression.

VISIT BY FIELD MARSHAL THANOMWe were able to discuss all these matters

fully and frankly with the Prime Ministerof Thailand and his distinguished Ministersin Canberra recently. We shared a commonview of the situation in Vietnam and agreedabout the incessant and widespread natureof Communist pressures in South East Asia.The Thai Government, let it be said, has aproud record of domestic achievement. Itis a responsible Government which has com-mitted the services and facilities of govern-ment and administration to the goals of eco-nomic and social progress in the spread'ofeducation, health and medical facilities andsocial services generally. Its record of eco-nomic advance is impressive. National in-come has been increasing at an annual rateof seven per cent. for the past decade. Agri-cultural production is currently increasingannually at about 6.3 per cent. This is acountry under Communist pressure. It is acountry that we are glad to have as an allyand we look forward to the multiplicationof our interests and associations.

STRUGGLE AGAINST COMMUNISMIN SOUTH VIETNAM

The war in South Vietnam has manybrutal aspects. What has been far too littleperceived is the systematic destruction ofleaders in the villages and hamlets in whichmost of the population of South Vietnamlives. The Communists deliberately eliminateany elements in village communities whomight hold out some hope of effectively re-building their community. In the last twoyears, more than 3,000 local officials andcivilians have been murdered. The leadersinclude teachers, medical workers, leadersin politics and administration, and technicalexperts of one kind and another. We can allpicture the mental anguish and physicaldistress caused by this systematic butcheryand the dislocation it brings to the life ofthe community where it occurs.

All this is what Communism in Asiameans. It does not stand for peaceful politi-cal and economic change. In the words ofa leading Communist military theoretician-General Giap of North Vietnam--" armed

struggle and political struggle are very closelyco-ordinated Of South Vietnam he says,

armed struggle has budded forth frompolitical struggle." Communism in Asia isthe politics of brutality, the politics of dis-ruption, the politics of the exploitation ofbackwardness. Its highest form is the

people's war "-that is to say, the brutalityand ,viciousness of guerrilla warfare practisedagainst an entire population-men, womenand children alike. A study of North Viet-nam's pronouncements in respect of SouthVietnam reveals the complete rejection ofpeaceful coexistence. Its language is the lan-guage of power, of protracted struggle, ofrepression, and it shows no disposition totolerate the existence of neighbouring socialand political systems other than its own.

Neither we, nor our allies, are in SouthVietnam for territorial gain or colonialpower. We are there to establish conditions,n which ordinary men and women-andthere are 14 million of them in South Viet-nam alone-can pursue their lives in free-dom. We are there because while Communistaggression persists, the whole of South EastAsia is threatened; while the Chinese Com-irunist -philosophy of world domination per-sists, the whole free world is threatened.

During the suspension of bombing inDecember and January, every conceivableeffort was made to bring the North Viet-namese authorities to the conference table.The)' rebuffed every approach. The searchfor peace will go on, but a long period offighting is the prospect which we have toface. The critical fighting in the area in-creasingly involves units and personneltrained in North Vietnam and directed andequipped from Hanoi and Peking. As pres-sure on the Viet Cong has increased, NorthVietnam has sent in reinforcements ofregular North Vietnamese troops on a verysubstantial scale, there now being nine andpossibly more regiments of the North Viet-namese Army in South Vietnam. Thesereinforcements continued during the bomb-ing pause, as did work on repairs andimprovement to the infiltration system. Onlywhen it is convinced that South Vietnam,the United States and other allies have thewill and the cohesion to see the strugglethrough is the other side likely to desist. Atthe present time the evidence is that it wantsto continue the fighting and to test our willand cohesion.

ADDITIONAL AUSTRALIAN FORCESFOR SOUTH VIETNAM.

The Government has for some time beenmade aware of the desire of the Govern-ment of South Vietnam that we increasethe size of the Australian force there. Therehas been a very large build-up in strengthof the United States forces. It is evidentthat the allies must put forward an increasedeffort if military successes are to be achievedand then followed effectively by the tasksof reconstruction.

Honorable members will be aware thatthere are at present serving in Vietnam morethan 1,500 Australian Service personnelcomprising the Army training team, thebattalion group, and associated headquartersand Royal Australian Air Force personnel.Of these forces, the main element, namely,the infantry battalion-the First Royal Aus-tralian Regiment-is due to be, and will be,relieved on the conclusion of its tour of oneyear in the theatre. Its personnel, otherthan those who will have served a consider-ably shorter period, will return by air totheir home station in Australia during thefirst two weeks in June.

Measuring the availability of Australiantroops in the light of our other commitmentsand in consultation with our allies, and atthe request of the Government of SouthVietnam, the Government has decided thatthe battalion will be replaced by a self-contained Australian task force under Aus-tralian command embracing all personnelserving there and enlarging our contributionto a total of some 4,500 men-in effect, atrebling of the current strength of our -mili-tary forces there. The task force will con-tain, in addition to its headquarters, twoinfan-try battalions, a Special Air ServicesSquadron, and a substantial force of com-bat and logistic support units. The taskforce will need close helicopter support and,for this purpose, we are incorporating withit a flight of eight Royal Australian AirForce Iroquois helicopters. Provision of theflight of Caribou aircraft and of the teamof 100 Army advisers will be continued.

This force will make a greatly enlargedAustralian contribution to the maintenanceof security throughout South East Asia. Itis, of course, in addition to our other forcecontributions in the region for the defenceof Malaysia, Singapore *and Thailand. It isour judgement that this is the most militarily

effective way in which we can assist theoverall allied effort in South East Asia atthis time.

Honorable members are aware fromprevious statements by the Government thatthe obligation to discharge national servicewith the Army includes an obligation toserve overseas if necessary. The Australiantask force which we will be sending toVietnam in the middle of the year willcontain two Army battalions, the 5th and6th Battalions, Royal Australian Regiment,each of which will contain a proportionof fully trained and integrated nationalservicemen as will all future substantialAustralian Army units deployed overseas inany theatre. That proportion may vary tosome extent from unit to unit, but it willbe a continuing feature. The normal tourof duty in Vietnam of personnel in the taskforce will be 12 months. The Govern-ment has also decided that the nationalservice intake will be continued at 8,400each year.

I am sure that honorable members wiN,in the light of what I have already said,appreciate the necessity for the Govern-ment's decisions. They are decisions greatresponsibility and we have not taken themlightly. Australia cannot stand aside fromthe struggle to resist the aggressive thrustof Communism in Asia and to ensure con-ditions in which stability can be achieved.Our own national security demands thiscourse. Do honorable members vpposite,wvho are interjecting, deny that?

Mr. Calwell.-Yes. I deny it flatly.Mr. HAROLD HOLT.-If they do, let

them stand and be counted when the timecomes. We cannot be isolationist or neut-ralist, placed as we are geographically andoccupying, as we do, with limited nationalstrength, this vast continent. We cannotleave it solely to our allies-and theirnational servicemen-to defend in theregion -the rights of countries to theirindependence and the peaceful pursuit oftheir national way of life.

I am confident that a majority of thisParliament and of this country will warmlysupport this increase in the Australian con-tribution. It has been heartening to theGovernment to have had, from the outset,the unanimous support of members of -theGovernment parties for Australian parti-cipation in resisting Communism in South

Vietnam. The overwhelming support givenby the Congress of 'the United States ofAmerica in recent days to -the amountssought by the President for the conduct ofmilitary and aid operations is encouragingtestimony of the strength of purpose of theAmerican people. The free world has causeto be grateful for -the clear sighted viewPresident Johnson has held at all times ofthe menace and fundamental character ofthe challenge to freedom in South Vietnam,and we have admired the resolution withwhich he has met that challenge.

DEFENCE SUPPLIESOne matter which has had and is still

having our attention at ministerial level isthe matter of supply of goods and materialof various kinds by Australian industry tothe American forces in South Vietnam.Late last year, the present Minister forDefence (Mr. Fairhall), when Minister forSupply, outlined personally, to the UnitedStates Secretary of Defense Australia'scapacity to provide a wide range of militarysupplies. The Minister's talk has beenfollowed up actively at the official leveland, as one result, agreement has now beenreached on the sale of a substantial quantityof Australian small arms ammunition to theAmerican forces. We have also been askedto quote for a number of other importantitems most of which are needed in largequantities. We are now working on theserequests. I might add that we took theopportunity to put this whole matter in themind of Mr. Humphrey on his recent visit.We believe that Australia can, withadvantage to the allied effort, to thestrengthening of our own capacity and tothe advantage of our own nation play anincreasing part in this matter of supply.

VIETNAM MEDAL.From our recognition of the funda-

mental significance of the struggle againstCommunist aggression in South Vietnam,and the special nature of the service whichour armed forces are giving there, the Go-vernment has felt it appropriate that aspecial award should be made to Australian.and, if the New Zealand Governmentagreed, to New Zealand servicemen postedto South Vietnam. I conveyed our view onthis to the Prime Minister of New Zealand,the Right Honorable Keith Holyoake. As

I have already mentioned, New Zealandtakes precisely the same view of the issuein South Vietnam as we do. I am glad tosay that Mr. Holyoake fully and immedi-ately welcomed the proposal, and we arejointly recommending to Her Majesty thata special medal for service in Vietnam bestruck. Her Majesty has told us that shewill be pleased to make this award. Thedetailed conditions of eligibility are beingworked out, and will be announced follow-ing Her Majesty's approval of them.

This new special* medal for service inVietnam will replace the General ServiceMedal 1962 with clasp "South Vietnam",which has hitherto been available for Aus-tralian servicemen in the area. The newmedal will apply to Australian servicemenwho have been in South Vietnam at anytime since 29th May 1964, which is thedate when the role of the Australian Armytraining team in Vietnam was extended topermit its employment in the field withSouth Vietnamese Army units in contactwith the Vietcong.

The Prime Minister of New Zealand andI have seen the issuance of a special medalas another welcome link in the chain of theAnzac tradition. I am sure the medal willbe worn with pride by all who participatein the South Vietnam campaign and it willcarry with it to the wearer an expressionof the gratitude of our two countries forservice in the highest order of duty.

VISIT TO VIETNAM.I am hopeful it will prove possible for me

to make a visit within the next few monthsto South Vietnam and some of the othercentres in South East Asia where Australiantroops are on active service. My colleague,the Minister for External Affairs (Mr.Hasluck), was in the area as recently as lastDecember, and I propose to arrange forother visits by appropriate Ministers so asto keep the Government in close andfrequent contact with developments in thisand other centres where our servicemen areengaged.

Mr. Reynolds.-What about opportunitiesfor Opposition members as well?

Mr. HAROLD HOLT.-I would be gladto consider that proposition if it were put tome seriously by the Leader of the Opposi-tion (Mr. Calwell).

OVERSEAS AID.Australia has an expanding role to play in

South East Asia and, indeed, in the worldat large consistent with its -growth ineconomic strength and the development ofits natural *resources. The growing influx ofimmigration, investment capital and officialvisitors, the substantial increase intourism, all signify *an increasing worldinterest in Australia and its growing stature.

Growing responsibilities carry with themenlarged obligations. Our three-year defenceprogramme now in its first year of durationis one measure of our -response to ourobligations. In the four years between 1962and 1966, the defence vote has doubled,from approximately $400 million to $800million. Large forward commitments havebeen undertaken for new and improvedequipment, for which substantial paymentsmust be made as the Services arm them-selves to meet the defence requirements of-the future. But even a rapidly growing billfor defence expenditure is not the only wayin which Australia's general external policyshould -find material expression.

*Aid appropriations from our Budgettotalled $114 milion this year. This is morethan nine times the amount given in theyear before we took office. This is practicalrecognition of the needs of other countriesfor our assistance. T'he Territory of Papuaand New Guinea, for which we havespecial responsibilities, remains -the majorrecipient of our aid. Indeed, this is a com-mitment which Australia has been carry-ing alone. Australia played a pioneering role-in the evolution of 'the Colombo Plan.Through this instrument we channel thelargest component of Australian aid toCommonwealth and foreign countries, theamount this year being $12 million.Although we are a capital importingcountry our programmes of aid for over-seas compare well in scale with those ofother major donors of aid. We are currentlyspending about 0.6 per cent, of our grossnational product on external aid. There arefew donor countries which can match thisrecord. We have joined .the Asian Develop-ment Bank, on the basis of an Australiansubscription of $US85 million. This is asubstantial contribution quite dispro-portionate to our population and nationalwealth, even when compared with the sub-scrip tions of major donors such as the

United States and Japan. Our contributionreflects our willingness to play a significantpart in promoting greater prosperity andsecurity throughout the South East Asianarea and our hope that this new instrumentwill play an increasingly significant partin that process.

We recently offered a'id to India to avalue of $8 million, principally in the formof food, as a contribution :towards meet-ing the critical shortages occurring there.We believe that much remains to be doneby -the international community to alleviatehunger problems of this kind, and we aredoing what we can -to stimulate a willing-ness on the part of industrialised as well-as other food producing countries to joinin 'helping the less 'favoured and lessdeveloped countries of the world. Ourcapacity to increase expenditure on defenceand foreign aid will depened on -the successof our efforts to ensure 'that our owneconomy is soundly based and continues todevelop rapidly in stable conditions.

ECONOMIC AFFAIRS.I now turn to our latest survey of the

economy. This Government retains thesame broad economic objectives which,successfully pursued by Governments led bySir Robert Menzies, resulted in the greatestera of economic development in Australia'shistory. Our slogan of "growth wvithstability will continue to guide us. We shallaim at the highest practicable level ofnational development and growth of in-dustry. A policy of full employment hasbeen successfully conducted with remark-ably little -fluctuation throughout our yearsof office. It remains in the forefront ofeconomic policy. Our national growth hasbeen associated with a programme of im-migration on the large scale. This will becontinued at the highest level we find itpracticable to sustain. The inflow of peoplehas been accompanied by an inflow ofcapital responding to a climate favorableto enterprise, skill and initiative.

Mr. Pollard.-Put a bit of ginger into it.

Mr. HAROLD HOLT.-That was thehonorable member's urging to me after thelast Budget. He had better get anotherslogan to break the monotony.

Mr. Pollard.-Give Holt a jolt.

Mr. HAROLD HOLT.-Well, a jolt isbetter than a removal job. Judged on thelatest statistics of the volume of capital andthe stream of official visitors coming herefrom various parts of the world to studyinvestment prospects, Australia can lookforward confidently to this inflow continuingstrongly. Its extent is the more remarkablebecause the Governments in the twoprincipal source countries from which thisinvestment comes-the United Kingdomand the United States of America-haveboth imposed some restraints on externalinvestment. The combination of favorablegrowth prospects and stable economic andpolitical conditions are proving stronglyattractive. Australia finds 90 per cent. ofits capital investment from its own savings,but our rate of growth has been greatlyassisted by the savings of others who bringnew industry, new techniques, new equip-ment and new skills to us.

Within the past fortnight, we have haddiscussions with representatives of industryand commerce and finance. These have beenfollowed by discussions in the Cabinet. Itis clear that the measures adopted in lastyear's Budget succeeded in bringing abouta better balance between supply and demandin the economy. There are, I know,apprehensions about some weaknesses in theeconomy which, if they were to spread andcombine, could create an undue slackeningof demand and unemployment. The Govern-ment certainly does not want this to happenand will take any steps necessary to preventit happening. The general trend of demandmust be kept rising sufficiently to preservefull employment and provide jobs for theadditional labour coming forward locallyand from the rising migrant inflow. Fromthe preliminary information available to usthere was a sharp fall in registrants foremployment during February.

A substantial additional amount offinance, estimated at $24 million, is beingprovided by the savings banks for housingin the second half of 1965-66. The effectof this has yet to show up fully. We haveunder consideration other measures to givefurther support to housing. The sameapproach applies to other sectors-subjectalways 'to the consideration that we mustbe guided first and foremost by the trendin the general level of demand and activityand the need to ensure that resources are

available for the priority requirements ofdefence and for developments of a kind thatwill increase exports: It is for this latterreason that we have been especially con-cerned with the problems created by thedrought and the still wider problem offinance for rural industries.

The drought in New South Wales andQueensland has been a great misfortune inmany ways. Most of all, it has been a mis-fortune for -the producers in the droughtareas. They have suffered heavy losses anda great deal of personal hardship. Oursympathy goes to them as we join our hopeto theirs for early relief. The drought hasbeen a misfortune- for the industries whichserve the rural producers, such as themakers of agricultural machinery. It hasbeen a misfortune for the economy becauseit has brought a heavy cut in rural output.We have felt the effects in exports for thisfinancial year and we will possibly feel itstill more heavily in exports for 1966-67.

The Commonwealth Government and itsagencies have, from the start, viewed thedrought as a nationalproblem. The firstrequirement is that of assistance while thedrought is still on. The provision of financefor this purpose rests largely with the trad-ing banks and, from all the information Ihave, they have done an excellent job. Theyhave been assisted in this by the ReserveBank which has seen to it that there wasno policy restraint on their ability to lendfor the purpose and that they had the liquidresources to support their customers allthrough the drought areas. The Common-wealth Government has backed the StateGovernments with finance in all the reliefmeasures they have found necessary. It hasdone this by grants and advances to enablethe State Budgets to carry the costs ofdrought relief and to make loans to droughtaffected producers on easy terms. In factit has assisted the States on a quite unpre-cedented scale to carry out drought reliefmeasures.

Unfortunately, the drought has notpassed even in Queensland, where therehave been rains, and in New South Walesit is worsening. The Commonwealth willcontinue to assist the States to finance theirdrought relief measures as far as necessaryand for as long as necessary. Where rainshave fallen, and the restocking of propertieshas become possible, a need for restocking

finance has arisen and is expected to growas and when the drought is relieved. Hereagain, 'the provision of finance will largelybe a matter for the trading banks. TheReserve Bank will support them in this tothe full extent. The CommonwealthDevelopment Bank has also been lendingfor the purpose and the Government willensure that it has the resources to continuedoing so.

There will, however, be producers who,for one reason or another, cannot getadequate bank finance for restocking. ThePremier of New South Wales has writtento me about this. He has proposed thatthe system of loans the State is making toproducers for relief purposes should beextended, with necessary adaptation, for re-stocking purposes. Under this system, loansare made up to certain limits at low ratesof interest and with provision for a deferredrepayment period. I have advised thePremier of New South Wales and also thePremier of Queensland that the Common-wealth is prepared, for this purpose, toextend the support it has been giving to theState for other drought measures. Obviously,it is only sensible and very much in thenational interest that, so far as finance isnecessary and can help to keep downdrought losses and get farms and stationsback into full production as the droughtlifts, it should be made available. The needto sustain and increase rural production fordomestic requirements and for exports isas important -today as it has ever been inour history.

The drought itself has demonstrated aneed for more investment in rural indus-tries to strengthen them in various waysagainst a recurrence of drought from whichwe have had the good fortune to be rela-tively free over a long period. This needfor drought mitigation work merges into awider need for increased capital investmentin the rural industries. On the one hand, wewill need more and more rural output toprovide exports. On the other hand, thescope exists for progressively increasingrural output in a variety of ways, all ofwhich require increased capital expenditureon farms.

We have had a great many opinions asto where the main need lies and, while theyvary in detail and emphasis, they all con-verge in a requirement for improved

facilities to provide longer term ruraldevelopment finance on a term loan basis.We are convinced, however, that the needis not so much for any radical innovationsor new machinery as for improvement andextension of facilities which have alreadyproved their worth.

The Commonwealth Development Bank,established in 1960, has already made avaluable contribution towards meeting theneeds for development finance by rural andother industries. However, we believe thatthe special problems of the farmer wouldbe better served if there were facilitiesexclusively devoted to his credit needs.Accordingly, the Government has underconsideration -the establishment of aseparate Rural Division within the Com-monwealth Development Bank. Legislationwill be required for this.

The Government believes it is desirableto provide the farmer with greater accessto medium and long term capital fordevelopment purposes -through his ownprivate bank. The term loan funds, intro-duced in 1962, already go some waytowards meeting this purpose. The Govern-ment now proposes to consult with thetrading banks with a view to establishingfarm loan funds separate from the existingterm loan arrangement. The funds wouldprovide finance for medium and longterm development purposes including thepurchase of land and measures 'for droughtrecovery and mitigation of future droughts.

Subject to suitable arrangements beingmade with the banks, it is envisaged thata sum of $50 million will be available forthese farm loan funds. This will be inaddition to the arrangements now beingmade by the Reserve Bank to increaseexisting term loan funds by $20 million.So, from -those two 6ources a total of$70 million, most of which will be for ruralpurposes, will be available.

Mr. Calwell.-At what rate of interest?Mr. HAROLD HOLT.-As the honor-

able gentleman knows, there has alwaysbeen a preferred rate of interest for ruralborrowers. It is contemplated that overdraftlending to farmers will continue as before.In addition, the trading banks will, we hope,be lending from the new funds on a longterm basis on reasonable terms and con-ditions. I hope to be able to make arrange-ments for the Treasurer (Mr. McMahon)

and myself to discuss these matters with theReserve Bank and the trading banks in thenear future.

The Government is exploring an in-surance scheme to cover loans made fromthe farm loan funds of the banks. This willbe done in order to ensure that this kindof lending is not unduly restricted bysecurity considerations where projects other-wise offer excellent prospects of success.From the national standpoint, action in thisarea is directed initially to the building upof our export capabilities, which are oneof the great key requisites for ensuringcontinued growth. As such, it is to be seenas part of a many sided programmeembracing not only assistance, direct andindirect, to exporting industries, but all thatgoes to the discovery and development ofresources, such as mineral exploration, oilsearch, water conservation, road, ail andport improvements, scientific research andextension services, in fact, most of the mainbranches of developmental work.

One of the most encouraging facts aboutexports in recent years has been their in-creasing deversification. Rural exports stillpredominate, and will do so for many aday to come. But they are being increasinglyand most opportunely supplemented byexports of minerals and of manufactures.One of the main topics discussed withindustry representatives last week was thatof export incentives for manufactures. Itwas the unanimous view that the schemeintroduced in 1962 had yielded excellentresults. The Export Development Counciltold us that it was making a general reviewof the subject, on which it would be report-ing to us. It asked that certain features ofthe existing scheme which had come tobe regarded as anomalous should be re-moved, and we have undertaken to con-sider this. It strongly recommended thatthe Government should give an assurancethat export incentives will be continued afterthe present legislation expires next year. Itis certainly the general intention of theGovernment that this should be done.Industry representatives also urged upon usmost strongly the need for encouraging thepursuit of research and development inmanufacturing industry. The Governmenthas been impressed by these views and isconsidering various proposals for assistanceto industry in this field.

NATIONAL DEVELOPMENT.Our approach to development generally,

and northern development in particular, willcontinue to be- both vigorous and com-prehensive. Achievements to'.date have beenvery much more impressive than publishedcriticisms would suggest.. When account istaken -of current and proposed work, thetotal of public and private investmcnt fornorthern Australia is in the vicinity of$2,000 million. The Government will main-tain close co-operation with State Govern-ments for development purposes. Theplanning and construction of public develop-mental projects are primarily matters foiState Governments. The CommonwealthGovernment has assisted the States to under-take a variety of projects by means otspecial grants and loans. We recognise, how-everl,'that while our activities can sometimestrigger off worthwhile developments, or actin aid of the development undertakings ofothers, the major contribution will be madeby private enterprise and the initiative ofprivate investors.

A recent example of co-operation betweenthe Commonwealth and the States towardsdevelopment was the announcement by theMinister for National Development (Mr.Fairbairn) on 24th February that the Com-monwealth and Sta te Governments haveagreed that Australia should increase its rateof softwood planting from the present40,000 acres a year to 75,000 acres for thenext 35 years. The programme recom-mended will meet Australia's most urgentneeds in the foreseeable future. Imports of'timber and other forestry products now costAustralia more than $200 million a year.This cost could treble by the end of thecentury if we fail to increase our plantingrate. The Commonwealth Government hasoffered the States about $20 million in long-term loans over the next five years to helplift the planting rate in the Governmentsoftwood plantations. These loans will beinterest -free for the first 10 years.

Commonwealth-State co-operation led tothe formation some four years ago of theAustralian Water Resources Council. Thanksprincipally to the provision of Common-wealth funds of about $5.5 million, expendi-ture on the investigation of water resourceswill increase by 60 per cent. in the three

years to 1966-67. A further expansion ofthis work in the succeeding three years isbeing discussed .by .Commonwealth andState officers in Canberra this week.

Examples of -this' co-operation are toonumerous for. me to list them all here, butI mention the agreement entered intobetween the Commonwealth and Queens-land Governments in 1962 to develop4+ million acres of land for beef productionin the brigalow belt of central Queensland,with the Commonwealth providing $14.5million to finance -the scheme. Despitesevere drought conditions in 1964 and 1965,go Iod progress has *been made in develop-ment of the area and, :as recently as lastFriday, I talked' in 'Canberra with thePremier of Queensland about a similarscheme for a further area of nearly six mil-lion acres in central Queensland.

Expansion in the mining industry hasbeen the most spectacular development inthe north in the post-war period. New in-dustries -have been established at a numberof places-bauxite development at Weipaand Gove, manganese at -Groote Eylandt,iron ore on the northwest of Western Aus-tralia, and at two centres in the No rthernTerritory, and coal at two centres incentral Queensland. In addition, consider-able expansion has taken place at MountIsa, involving private investment of some$130 million. In this case, the Governmenthas made this development feasible by pro-viding $34.5 million towards the cost ofreconstruction of the railway to Towns-ville. In the case of the bauxite depositsat Gove in the Northern Territory, the Go-vernment has negotiated arrangements fordevelopment of the field by a companywith 50 per cent. Australian equity andwith conditions requiring establishment ofa plant on the site to process bauxite intoalumina.

The -Commonwealth Governmentthrough its financial assistance in connec-tion with the beef cattle roads has made anenormous contribution to the developmentof better road transport facilities through-out Northern Australia leading to a largerturn-off of cattle. Drought effects were alle-viated by movement over these roads tobetter pastures. Since 1961-62, approval hasbeen given for assistance totalling $41.5million towards the construction and up-

grading of roads for cattle transport inQueensland, Western Australia and theNorthern Territory.

.The sugar i *ndustry which supports thebulk of the -population in the north ofQueensland has gone through a phase ofexpansion since 1950 with acreage andoutput both .increasing by approximately100 per cent. This expansion has been madepossible by the successful negotiations ofthe Government which have enabled it toestablish markets at home and abroad toabsorb the increased output. Developmentof the industry over the past 15 years hasled to substantial growth of cities andtowns on the north Queensland coast andto developm *ent and modernisation of har-bour and transport facilities.

DECIMAL CURRENCY.The changeover to the new decimal cur-

rency system for which work and planninghave proceeded over several years wentremarkably smoothly. The fact that it did soreflects great credit on the many peoplein all walks of life who played an activepart in one aspect or another of the plan-ning for this highly complex operation.Naturally, there were some uncertainties,and even an element of confusion, as wasto be expected, in a few areas during theearly stages, but, by and large, the generalpublic has 'rapidly become familiar withthe new coins and notes.

The United Kingdom bad a team ofoffici ,al observers in Australia at the timeof the changeover. Presumably these musthave reported favorably, because shortlyafterwards the United Kingdom Govern-ment announced its own firm decision tochange to a decimal system in 1971. NewZealand will be moving into decimals inJuly of next year, and several other smallercountries will also be following suit overthe next year or two. There will be veryfew, if any, countries remaining outside thedecimal family by the time of the Britishchangeover. Australia thus will have becomepart of a world-wide decimal currencycommunity.

IMMIGRATION.The Government has been making a

review of the restrictive aspects of our immi-gration policy. Australia's increasing in-volvement in Asian developments, the rapid

growth of our trade with Asian countries,our participation on a larger scale in anincreasing number of aid projects in thearea, the considerable number of Asianstudents-now well over 12,000-receivingeducation in Australia, the expansion ofour military effort, and the scale of diplo-matic contact, the growth of tourism toand from the countries of Asia, combine tomake such a review desirable in our eyes.

It is, at the same time, important thatthere should be a clearer understanding inAsia of our policy, and the reasons for it.It is certainly not based on any false notionof superiority. We are fully aware that manyof the peoples of Asia can point to culturesdating back centuries before those ofWestern Europe. But, in these modern times,every country reserves to itself the right todecide what the composition of its popula-tion shall be; it has regard to the preserva-tion of standards and of national characteris-tics and to the maintenance of the essentialhomogeneity of its people. Australia derivesstrength from its unity and a communitylife free from serious minority and racialproblems. All countries in South East Asiamaintain restrictions against immigration toserve their own national policies. Our basicpolicy has been firmly established since thebeginning of our Federation. It is widelysupported. But it has been the wish of theGovernment, as it would be of the com-munity at large, that the policy should beadministered with a spirit of humanity andwith good sense.

Following our most recent review, theGovernment has decided on some modifica-tion and a degree of liberalisation. Undercurrent policy, a non-European admitted ona long-term entry permit, must complete 15years in Australia before applying for resi-dent status and Australian citizenship. Wehave decided that, in future, application canbe made in these cases after five years, thesame period as applies for naturalisationapplication by settlers from Europe. Thereare other changes which, while maintainingthe basic principles of our policy, can bemade with advantage to enable moreflexibility in administration. The Minister forImmigration (Mr. Opperman) will shortlyindicate to the House the Government'sconclusions in more detail.

LEGISLATION PROGRAMME.

Honorable members will realise, fromwhat I have been saying, that the Govern-ment has been, and will be, active on manyfronts. Legislation will be needed to putinto effect some of the matters I have men-tioned to-night, and, of course, there willbe numerous other items not covered inthis statement, encompassing as it does thebroad field rather than the detail.

The legislation being prepared will covera wide and important range of subjects.Some of them are complex measures whichwill require much drafting and consultation,such as the shipping provisions for the tradepractices legislation, and measures relatingto copyright and off-shore petroleum. Inrelation to off-shore petroleum we have hada remarkable instance of effective Com-monwealth and State co-operation in thearrangements reached after the discussionswhich have occurred. There is also the com-prehensive review of the defence legislation.Other subjects will reflect our immediatepreoccupations at home and abroad, suchas the legislation seeking approval of ourdecision to join the Asian DevelopmentBank, and legislation in regard to droughtrelief. I am sure that all honorable mem-bers will welcome our proposal to give fullvoting rights to the member for the Aus-tralian Capital Territory. This is a matterwhich I shall leave until tomorrow, whenmy colleague, the Minister for the Interior(Mr. Anthony), will be making a statementon it.

CONCLUSION.

My fellow Australians will find reflectedin what I have said tonight the change oforientation which marks Australia's situa-tion in this second half of the 20th century.We find ourselves playing an active and notuninfluential part, in the world community,but we have become increasingly involvedin the affairs of Asia. We have found ourexternal responsibilities increasing as wehave increased our population and economicstrength. Others expect us to play an increas-ing part in military assistance, in inter-national aid and in diplomatic discussion.We are all conscious of a heightenedinfluence on our community life from aquickening spirit of nationalism. We seedangers ahead, but they seem to occupy farless of the horizon than happier vistas ofnational growth. We have the good fortune

to live together in a true democracy. Webreathe the air of freedom. We do notalways succeed in doing so, but we havelearned to co-operate effectively at all levelsof Government, and in the relations betweenGovernment and industry. We are confidentthat our greatest years have yet to be.

Mr. Whitlam.-Hal

Mr. HAROLD HOLT.-I appreciate thechagrin of the honorable gentleman oppo-site. I hope that he and his colleagues willbe able to eradicate the repression underwhich they suffer.

It is a privilege for all members of thisGovernment to have the opportunity,through their Ministries, to make a con-tribution towards Australia's progress. Wecommit ourselves to the tasks ahead withenthusiasm, with our hard work and ourdevotion.

I present the following paper-Statement of Policy by New Government-

Ministerial Statement 8th March 1966--

and move-SThat the House take note of the paper.

BY AUTHORITY: A. J. ARTHUR, COMMONWEALTH GOVERNMENT PRINTER, CANBERRA