Australia

on the World Today

EARLY in December, it was officially announced that at Rough Range near Exmouth Gulf in Western Australia oil, flowing at the rate of 23 barrels per hour, had been struck at a depth of 3605 to 3620 feet; that it had a very high grade paraffin base and was similar to Pennsylvania oil, one of the best automotive oils in the world. The strike was the most encouraging event so far in the search for oil in Australia.

This search has proceeded intermittently and with negligible results for sixty-one years. It now seems certain that large areas will be systematically surveyed and tested. However, the AustralianAmerican company which made the strike holds almost exclusive oil-search rights over some 325,000 square miles of the Western Australian coastal region, the most probable oil-bearing country.

Overseas capital will certainly be attracted by the hope of oil discoveries. A substantial strike of oil would not only profoundly affect the country’s economy but, because of Australia’s unique geographical position, would be of immense strategic importance to the free world. By what may turn out to be extraordinarily fortunate timing, a refinery which will handle 3 million tons of crude oil annually is being built by the Anglo-Iranian Oil Company at Kwinana, Western Australia, on the shores of a big natural harbor a few miles south of the capital, Perth. This development, which involves the creation of a new deepwater port, has, in itself, assisted the flow of capital from overseas.

Primarily in order to overcome difficulties caused by the nonconvertibility of sterling, American oil companies also are building a number of refineries in the eastern states. As a result of all this activity 83 per cent of Australia’s petroleum requirements will be locally produced by 1956.

Atomic power?

The acceleration of interest in Australia, even prior to the discovery of oil, can be attributed to her apparently rich uranium deposits. Defense needs are being given first priority, and uranium oxide for delivery to America and Britain is expected to be in full production this year.

Because of the real need for atomic power in Australia, where water is scarce and the great reserves of good coal are concentrated on the eastern seaboard, sufficient uranium will be conserved to provide for Australia’s future industrial development. The consensus among scientists is that Australia cannot hope for atomic power for industry in less than ten years. However, Mr. T. Playford, the Premier of South Australia, a state which has considerable uranium deposits, has said that an atomic power station will be built there by 1960.

Labor’s uphill fight

Elections for the Federal Parliament will be held in June or July. During the two months’ visit to Australia of Queen Elizabeth II and her husband a political truce has been tacitly observed, but soon after their departure this month the election campaign will open in earnest.

Some months ago Labor seemed justifiably confident of victory. The country, however, has largely recovered from the 1952 recession, and the LiberalCountry Party Government has regained some of the support which it alienated through its drastic measures to stabilize the economy. Financial and economic controls have been progressively relaxed; unemployment has been reduced to negligible proportions; and substantial taxation relief was given by the budget of last September. Consequently the Government is now prepared to rely on its record, and Labor is no longer in the happy position of being able to ride to power on the Government’s unpopularity.

The Labor Party is also beset by internal troubles. The party machine has been captured by the right wing, with the result that Labor’s socialistic objective has receded into the background. This has disgruntled some of the party’s left-wing members and small breakaway movements have sprung up in three of the six states. However, control by the right wing will enable Labor to make a strong bid for middle-class support.

To the Prime Minister, Mr. Robert G. Menzies, or to the Leader of the Opposition, Dr. H. V. Evatt, loss of the elections may easily bring loss of party leadership. Both men are now approaching sixty and each has the dubious advantage of towering intellectually above his followers. Mr. Menzies lost the Prime Ministership in 1941 and spent eight years in opposition before regaining office. The chances are against a second political recovery.

Dr. Evatt, who stepped down from the High Court bench in 1941 to enter Federal politics, became Leader of the Opposition on the death of Joseph B. Chifley in 1951. He has never been Prime Minister. Australian Labor is prone to distrust intellectuals and to prefer leaders who have come from the trade-union movement. This feeling may come to the surface if Labor should lose.

Production and wages

If economic recovery is to bo permanent, Australia must reduce production costs, now inflated to a degree which threatens the structure of her secondary industry. Manufacturers have protested vigorously at each successive relaxation of the restrictions on imports, and the machinery for regulating import tariffs has been streamlined in order to meet their demands.

But neither a larger flow of imports to keep inflation in cheek nor higher tariffs to prevent unemployment in industry is a solution to the problem of costs. A considerable measure of taxation relief was provided for companies and individuals in the last budget, but since this merely removed the crushing burden which had been imposed two years previously, it will provide incentive only to a limited degree.

Basic wages for each of the states have been set by the Federal Arbitration Court and have been adjusted quarterly according to changes in the cost of living. After a twelve months’ hearing, the Arbitration Court last September rejected the employers’ application for a reduction in wages and an extension of the 40-hour working week. However, the Court decided to suspend the quarterly costof-living wage adjustments, which had had the effect of doubling the basic wage in five years. It was hoped that this would lead to speedy stabilization of wages, as the majority of Australian workers come under Federal Arbitration Court regulations.

Shortly after the Court’s decision was announced, however, the costof-living index showed a slight rise. There followed considerable legislative and legal activity both on the part of some state governments which declined to apply the wage freeze to workers employed under awards of their states, and on the part of the Australian Council of Trade Unions, which challenged in the High Court the Arbitration Court’s constitutional authority. The High Court, however, upheld the judgment of the Arbitration Court.

Meanwhile the Arbitration Court decided not to issue cost-of-living figures for the December or subsequent quarters. Following the High Court decision and this latest move by the Arbitration Court, there has been a marked reluctance on the part of state governments to take any further action. The Arbit rut ion Court’s attempt at stabilization may therefore succeed.

Management-labor relations

If the solution to the problem of production costs is not found through enlightened coöperation between management and labor, it will be forced by the inexorable dictation of economic pressure. The decision by the governing body of Australian trade unionism, the Australian Council of Trade Unions, at its last annual congress in September, to countenance incentive schemes in industry may lead to an improvement in management-labor relations and to higher production.

Australian unions have hitherto bitterly opposed all incentive schemes; and all hough their new policy by no means denotes unqualified approval of incentives, it does at least accept the fact that they are already in operation and are spreading.

Another new departure in Australian industry in recent months has been the negotiation of agreements on a plant basis by collective bargaining between the management and the several unions involved. It would be incorrect to say that labor is fully prepared to cooperate with management, but the tendency is certainly in that direction.

Scientific research

Australia is not solely preoccupied with internal problems. For the past six years she has maintained meteorological and scientific stations on Heard and Macquarie Islands, situated far to the south. An expedition to Antarctica is now being undertaken by the Federal Government in order to establish on the Antarctic mainland a permanent station which, it is hoped, will not only justify Australia’s claim to an area almost as large as Australia itself, but will also provide valuable scientific and meteorological information.

An increasing proportion of the industrial work connected with the guided missile tests at the Woomera Rocket Range is now being carried out in Australia. This has led to the negotiation of a new agreement with Britain covering the share of the rapidly rising costs to be borne by each country.

The main item on the program at Woomera, which is also being used as a proving ground for Britain’s atomic weapons, is the testing of Britain’s latest “homing" rocket, which, it is claimed, can hunt down its quarry at a speed of 2000 miles per hour. The Australian “Jindivik” pilotless jet plane is to be used for testing purposes. The guided rocket program is essentially a combined British-Australian operation. The missiles are first tried out in England, and are then sent to Woomera, where largescale tests can be carried out under realistic conditions. Modifications which may prove necessary can now be effected in Australia.

The with America

Although the Anzus Pact is frequently discussed and criticized, Australia is well aware of its value. America agreed to the pact in 1951 as the price of Australia’s signature to the Japanese Peace Treaty, and the wording itself makes it clear that it was intended only as a temporary arrangement pending the development of a more comprehensive system of security in the Pacific.

Critics take the view that the time is now ripe for a complete revision of Pacific security arrangements. If a broad agreement on the lines of the North Atlantic Treaty Organization is impossible of achievement, it is contended, at least the defense of the Southeast Asian area should include America, Australia, New Zealand, Britain, France, and possibly Thailand. This view arises from the fact that Australia has a direct interest in the security of Southeast Asia, including Indonesia.

Fear of Japan

Despite the insurance afforded by the Anzus Pact, Australia is still extremely sensitive to even the longterm possibility of renewed Japanese aggression. It is generally recognized that some form of Japanese rearmament is inevitable, and in present world conditions even desirable, but Dr. Evatt was expressing popular opinion when he said that Australia must keep the closest watch on the form and content of Japanese rearmament.

Fear of Japan is further apparent in the dispute which has arisen over Japanese pearl-fishing rights in North Australian waters. Failure to agree on suitable fishing grounds led to the proclamation of Australian sovereignty over the continental shelf and the institution of a system of licensing and control of pearl fishing in those waters. Japan rejected Australia’s claim to sovereignty, and the dispute has been referred to the International Court at The Hague.

Australian preoccupation with the possibility of future Japanese aggression may seem farfetched when considered against current Southeast Asian problems. The Republic of Indonesia, with a population of nearly 80 millions, lies immediately to Australia’s north. Relations between the two countries are excellent and trade between them is complementary, although heavily in Indonesia’s favor. Furthermore Australia, through the Colombo Plan, is helping Indonesia’s development.

Indonesia, however, lays claim to Dutch New Guinea — a claim which, if conceded, would give Indonesia a common frontier with Australia in New Guinea. The Second World War showed New Guinea to be the key to Australia’s defense in any attack from the north. For her own security, therefore, Australia strongly supports Dutch resistance to Indonesia’s claim. In any realistic assessment of possibilities in that area, Australia cannot ignore the activities of Chinese Communists in Indonesia and the growing strength of the Indonesian Communist Party, which already claims a membership of 100,000.