Bob Santamaria - the Battler's Friend. Peter Myers, September 5, 2002; update April 9, 2004. My comments are shown {thus}; write to me at contact.html.

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(1) Dedication (2) Santamaria and the Split (3) What Santamaria Stood For (4) Opportunity Knocked (5) Grim face of self-interest (6) Who rules Australia anyway? (7) Saving Our Sovereignty (8) OBITUARY B. A. SANTAMARIA 1915-1998 (9) TRUE BELIEVER - by Clyde Cameron

(1) Dedication

This website is dedicated to Bob Santamaria (1915-1998).

Socialist, Anti-Communist, patron of small farmers and rural resettlement, opponent of Megapolis, a non-Anglo who became "the first Australian". Throughout the Cold War, and then the period of Thatcherism, he was the most influential person of non-English-speaking background in Australian politics.

Santamaria remained a traditional Catholic (whereas I have become a Taoist). He stood for a planned economy - the sort Australia had in the 1950s, which was set up by Ben Chifley (Labor Party) and maintained by Jack McEwen (Country Party) - and fought both Licentiousness and Totalitarianism. He was not a Green, but advocated simple living, family life, and spiritual values; even so, he was no prude. Santamaria tried to prevent the Australian Labor Party's takeover firstly by Communists and later by Capitalists.

Santamaria's Socialism is not racially-based. It has some features in common with Communism, the differences being that it provides for a mixed economy (yet publicly managed, and largely publicly owned), it respects the heritage of the past (whereas Communism tries to destroy it), and it conceives of a universal moral order to which man is subject. The ancient Egyptians called it Maat; Santamaria saw it in Christian terms; and I call it Tao.

I had the honour of meeting Mr Santamaria at his office in Melbourne a few months before his death. As we parted, I thanked him for his life's work for the Australian people; I pledge to continue it.

(2) Santamaria and the Split

It was Dr Evatt, not Santamaria, who split the Australian Labor Party, because Evatt refused to prevent its infiltration by communists.

The communist coal strike helped bring Chifley's Labor Government down in 1949.

In 1954, Soviet agents kidnapped Mrs Petrov. Later, Dr Evatt appeared at the Petrov Royal Commission, appearing to support Communism. On October 5, 1954, he attacked the pro-Santamaria anti-Communist faction of the ALP, precipitating the Split.

Fred Daley described the ALP meeting of October 20, 1954 at which Evatt defeated the Santamaria faction by 52 votes to 28:

'To everyone's amazement Evatt leaped onto the table, pencil and paper in hand, red-faced and excited, and triumphantly called out, "Get their names, get their names!" It was Evatt and Ward at their hating best. ... Evatt and some of his supporters enjoyed their moment of triumph despite the tragedy of the occasion for the Australian Labor Party.' (From Curtin to Kerr, Sun Books, Melbourne, 1978, p. 128).

Daley voted against the Santamaria faction, but was so incensed at Evatt's vindictiveness that he and two other members then crossed over in rebellion.

Daley was later Speaker in the Whitlam Government.

(3) What Santamaria Stood For

"The family, he preached, had been designed by God or nature for the primary care of the young, the sick and the old. To replace this simple unit with teachers, socialworkers, hospitals and creches was, therefore, both expensive and inefficient."

- from the Obituary, The Political Zealot, in the Sydney Morning Herald of February 26, 1998 (see below).

"The man blamed for the ALP split in the 1950s was the only national figure to stand by Labor's core values" - Clyde Cameron, Labor MHR & Minister in the Whitlam Government.

More from Cameron: "No other person had such an influence on the political scene as Santamaria during the last 50 years of his life; and no other political figure engendered the same devotion from his followers, or fear from his opponents. In fact, it is also true to say that no other figure commanded the same lasting respect from both friend and foe."

Cameron's tribute is reproduced below.

It's the more striking, because Santamaria himself was never in Parliament.

(4) Opportunity Knocked

B. A. Santamaria

The Australian, March 3, 1995

IN 19O6, Prime Minister Paul Keating, then Treasurer, described Australia as being in danger of becoming a banana republic. The phrase signifies that what is camouflaged as an independent government is, in fact, ruled by a foreign power. There is no army of occupation, no imperial link, no foreign flag: but there is an equally effective transfer of sovereignty through control of the subject nation's major corporations and, above all, its credit structure. The flag of independence flutters from every flagpole, but the reality is economic domination and political servitude.

The United Fruit Company was notorious for exercising this role in several Central American republics. The Anglo-American oil companies play the same part in the Middle East.

The essence of a banana republic is, thus, that while nominally independent, it is, in fact, a copy, but its colonial status is camouflaged. That, presumably is what Keating meant in 1986. All that has to be done to prove that this is Australia's present position is for a handful of foreign bond traders to dump Australian bonds for a sufficient period to show who is boss.

Since a banana republic only goes through the charade of governing itself, the struggle for power between the parties loses all sense of reality. Of Australia's parliamentarians of both parties a substantial proportion are there simply for the limousines, long past caring about problems which are too difffcult to understand. The public switches off - but the show must go on. Hence what passes for parliamentary "debate".

For instance:

During the past 12 months, Australian interest rates have risen 3 percentage points. For the home buyer borrowing $100,000, this has meant an extra $3000 a year, or $60 a week, in added interest alone. If the Federal Government raised income tax by $60 a week, there would be a political crisis. A similar interest rise, justified by phony arguments, is passed off as an expression of ironclad economic laws.

Overseas interest rates having risen, Australia's foreign debt is now $162 billion. It is bound to rise further, since it is obvious that a further rise in interest rates is in the making. Service charges on the debt are already about $16 billion a year.

The balance of payments gives a worse result with every passing month. Ministers profess excitement over the constant rise in the volume and value of Australia's manufactures, proof that micro-economic reform is working. As Professor Helen Hughes recently showed, "this success story is a scam, based on the reclassification of mechandise efforts from trade-based to industry-based statistics". The Government's attempt to introduce a system of compulsory savings through superannuation is obviously breaking down. Thirty per cent of Australia's sorely needed capital in these funds is invested overseas.

One might have thought that these issues would have provoked fierce parliamentary voked fierce parliamentary debate. But no. Nor have they been seriously discussed for months, if not years.


Ever since John Howard was elected as Leader of the Opposition, apart from adopting the role of world statesman, Keating's only thought has been how to "rubbish" Howard. The nonsensical debate over the allegedly sacred documents to be read only by Aboriginal women continues, although the Federal Court strongly criticised the Minister for Aboriginal Affairs, Robert Tickner, for making administrative decisions highly unfavourable to white residents of Hindmarsh Island without even having read the letters. Presumably the law expects a minister to read them.

EVEN more peculiar is the Coalition's concept of how to fight this nonsense. When it emerged that Tickner had effectively suppressed the Viner report on the massive financial irregularities in Victorian Aboriginal expenditures, the Coalition had the Government "cold". It should long ago have moved for the dismissal of the minister. Instead the Viner report was not even tabled by a member of the Coalition, but by one of the Greens. Despite being put under the hammer by Keating and his media mates on the matter of the Aboriginal letters the Coalition did not seem even to have heard of the Viner report.

Such is the political rubbish with which this particular banana republic is daily regaled.

The Canberra press gallery has now obviously decided to move on to Act II in its familiar drama: "How to assassinate a Liberal leader". Like Downer, and Dr Hewson before him, Howard was given the "benefit" of a short honeymoon period as Liberal leader. Now they are about to turn on him.

Perhaps I am mistaken but, as I saw it, his best chance was to confront his enemies by imposing his own agenda, by attaching his name to a major cause; in this way to attempt to change the terms of the political debate, and to compel the Prime Minister to fight on his ground. The family was a natural since 80 per cent of the people are still wedded to the concept. To adopt the cause, however, he had to say exactly what he proposed to do, in strictly financial terms, and then to fight it out. Disappointingly, nothing of the kind has happened or is likely to happen.

As a result, Keating, who, to use a good Marxist phrase, should long since have been swept into the dustbin of history, is, instead, on the offensive.

(5) Grim face of self-interest

B. A. Santamaria

The Australian, October 21, 1995

DURING last week's controversies, Rupert Murdoch, who understands how the world works, put the employment equation simply: "In Britain, Europe and America, there is a political class which believes in slow steady growth, no inflation and high interest rates. But if we're going to have a society that gives hope to young people, then we've got to have one that's got many more incentives to work and more opportunities." (The Australian, October 16.)

The financial interests of the international "political class" depend on its control of capital, and the high interest rates which it is thus in a position to enforce. For those at the other end of the pile (including 20 million unemployed in the Western world), a permanent regime of high-interest rates is a sentence of economic death.

What Murdoch described as the "political class" has been variously defined. Andrew Marr, formerly of The Economist magazine whose book Rule Britannia (1995) is one of the most perspicacious analyses of Britain's financial economy writes: "This is a world now run by a new global class of stateless entrepreneurs and workers, including the overseas Chinese, the senior employees of the big American, Japanese and European banks and corporations, and a few genuine tycoons and gurus. Is the power of our parliaments threatened? You bet it is."

A similar description was given by New York Times financial correspondent Louis Uchitelle: "In sum, the American economy is governed by the bond market: a loose confederation of wealthy Americans, bankers, financiers, money managers, rich foreigners, executives of life insurance companies, presidents of universities and non-profit foundations, retirees and people who once kept their money in passbook savings accounts or under the bed and now buy shares in mutual funds." (International Herald Tribune, June 13, 1994)

The "political class" is thus, essentially, a financial oligarchy whose members have no particular reason to be loyal to the country of their birth, whose ultimate interests lie in the value of shares and dividends, and control of major corporations wherever they happen to be situated. The problem is that their financial interests are no longer necessarily identified with their own country's or with the employment or unemployment of its nationals.

The "political class" lost billions in the collapse of the United States bond market that began in April 1994. Simultaneously, many of the celebrated hedge funds were also going broke. The "political class" looked like losing billions in Mexico, but under the guise of "rescuing Mexico", President Bill Clinton - whose hand was undoubtedly guided by his Treasury Secretary, Robert Rubin, former co-chairman of Goldman Sachs - effectively rescued the bankers rather than the Mexicans.

Suddenly, out of the blue sky, it was discovered that the US was threatened by inflation. Professor J. K. Galbraith gave a horse laugh. There was no sign of any inflation, in the US or anywhere else. But a 1 percentage point rise in the US bond rate was worth $US75 billion ($99.7 billion) to the bondholders. The US Federal Reserve obliged with a series of small rises, which ultimately totalled 3 percentage points. Work out the sums!

The Australian Financial Review's New York correspondent, David Hale, commented drily: "The bottom line is that the big speculators want US interest rates up ... The central bank can either pay them their profits to shut them up, or find better ways of coping with the volume of hot money now free to move around the globe in a millisecond."

AUSTRALIA'S economy is so much in hock to the US and its subordinate economies - both in terms of Australian companies owned and of debt owed - that it had no alternative but to follow suit. So a hypothetical danger of inflation was conveniently discovered in Australia as well. It never eventuated, any more than it did in the US. Nevertheless, interest rates went up approximately 3 percentage points.

This has led to, among other things, a rapid rise in mortgage rates and an equally rapid rise in home-loan repayments; to subsequent falls in house values, trapping thousands of borrowers in homes now worth less than they owe the banks on them; and, with the depletion of household savings that has followed the rise in home-loan rates, to a rise in household debt to more than $200 billion, a rise of 50 per cent in three years. It represents the beginning not of inflation but of deflation.

Now all of this is usually dismissed as scaremongering by conspiracy theorists. There is no conspiracy, but only the pursuit of ruthless self-interest by the "political class", which provides the funds and thus controls the interest rates that are the breath of life of modern economies - dictating the level of economic activity, of employment and unemployment, of sectoral and or general bankruptcies.

So, in a few months, the electorate will roll out to elect either Paul Keating or John Howard. So long as these fundamental problems of power are not recognised, let alone challenged, what does it really matter who wins elections? They decide nothing.

(6) Who rules Australia anyway?

B. A. Santamaria

The Australian, December 30, 1995

If the media are to be believed, one major thought is firmly embedded in the minds of the majority of Australians. It concerns the forthcoming federal election. When will it take place? Who will win?

My own small sample taken from among friends and acquaintances does not lead me to that conclusion. I doubt whether one in 20 gives the matter any thought at all. This is not merely due to the notorious apathy of Australians towards political affairs. It is also largely due to the wldespread convictlon that it doesn't matter. rightly or wrongly, I detect a growing anxiety: that the general direction in which Australia is set is wrong but that you can do nothing about it.

This article is based on two considered assumptions. The first is that if the basic principles of Australia's economic policy are continued, the effective decision-taking power as to its future will be taken out of Australian hands. That is to say, whether Australia is formally a monarchy or a republic, it will have forfeited its sovereignty, if that has not happened already.

The second is that as the neglect is so deeply entrenched, the only measures that may still avail will appear draconian. Therefore, neither political party will attempt them. This will be justified on one of two arguments: that the measures themselves are wrong; or, alternatively, they may be wholly or partly right, but nevertheless impossible. Notwithstanding that, they should at least be examined.

First, the problem; in a second article, a suggested solution.

The essential problem lies in the determination of both sides of politics that Australia shall see its future as entirely subject to the demands of a globalised economy and will reduce the role of government as close as is possible to none at all, paying whatever price is necessary to "free up" the economy. That view of the role of the State is essentially Anglo-American. It is not accepted by countries such as Germany, Japan and others in East and South-East Asia.

What are the results of this approach?

Throughout the Western world there are now more than 20 million unemployed, few of whom will ever again hold real jobs. The recent disorders in France; the popular hostility to migration, legal and illegal; the consequent xenophobia are directly related to the impact of unemployment.

In Australia the real unemployment figure is more than 1 million. More than 25 per cent of young people looking for work cannot find employment. The familiar political solution of "retraining" is phoney. There are few, if any, jobs at the end of it. Full-time jobs are being transformed into part-time jobs, an increasing proportion of which are held by women who are increasingly conscripted into the workforce, while thousands of former male breadwinners can no longer find full-time jobs. The consequent social problems are enormous. Nevertheless, we are told that social services must be cut and budgets balanced if we are to retain the "confidence" of foreign lenders.

Australia's net foreign liabilities, whlch include both the foreign debt and the value of foreign equity in Australian companies, are now the third highest in the in the world. The net foreign debt exceeds $180 billion. Net foreign liabilities - debt plus foreign ownership of Australian companies and assorted equity - now amount to $269 billion. Last year we had the highest annual peacetime deficit on the balance of current account, at $24 billion. This year, we were promised by the federal Treasurer in his 1995 Budget speech, the current account deficit would rise to $27 billion, although because of the economic downturn it now appears that it will be considerably less. About three-quarters of this deficit goes in interest and dividends to foreign owners and creditors. The result is inevitably an increasing volume of foreign indebtedness as a result of the operation of compound interest.

Since we apparently cannot escape from this situation, we have forfeited the ability to fix the domestic interest rate which now follows the rates charged by foreign creditors. As a result, we have the highest real interest rate in the developed world.

The Australian dollar has now lost 60 per cent of the value it had in relation to the Japanese yen when the Government came to office in March 1983. It has lost 17 per cent of its value in relation to the United States dollar, which itself has gone through a process of precipitate decline.

One result is that Australian companies are being sold cheaply to foreign interests. Qantas is now controlled by British Airways; National Mutual by the French company Axa; the food division of Pacific Dunlop has gone to US and Swiss interests; Arnotts to US-based Campbells; Western Australia's BankWest has been bought by the Bank of Scotland; the Commonweath Bank, the airports and Telstra are scheduled to go. The process of privatisation has spread to electricity supplies and will soon spread to roads and water supplies, at least in some States.

Accompanying all these developments, there is a rapid increase in the division between the economic classes - slower perhaps than in the US, where during the past decade the top 1 per cent of society has increased its control of the nation's assets from 29 to 40 per cent - but still going in the same direction. The difference between the salaries of executives and directors' fees, on the one hand, and average wages on the other has become a scandal and is breeding deep resentment that will inevitably take political shape.

The major interests that benefit from globalisation are the transnationals; the Wall Street investment banks and the Funds, both of which finance them; the members of the interlocking directorates that hold them together; the top echelons of university economics faculties; the bureaucracy, the union leadership which, in different ways, is increasingly integrated with big business; and the political leadership. This political/economic establishment is where the power really lies. John Dawkins's statement that the interests of the Business Council of Australia were better represented by the present Labor Government than by its Liberal opponents inevitably reminds us of the theme of Gerorge Orwell's Animal Farm.

The thinking public is mystified by the economic theories on which these developments are based. But they do have a logic of their own.

Globalisation may be defined as the economic theory which holds that, in an essentially internationalised world, economic efficiency will be most powerfully advanced if capital and technology are permitted to move freely from country to country, so as to take advantage of the cheapest labour costs. These will be found in China, India and Indonesia, in particular, where the awakening millions struggle for bare subsistence and are prepared to accept what Australians would regard as starvation wages.

In Australia, the average hourly wage rate is more than $US13 ($17.50). In Indonesia it is less than 40c, which is roughly equal to the going rate over the greater part of the industrialised sectors of the Chinese and Indian economies. That is to say wage rates in these countries are roughly one 30th of what they are in Australia. Scarce Australian capital is being increasingly exported to these countries. There are, admittedly, other major factors that help to determine where industries are located, including efficient legal and financial systems, and functioning infrastructure. But how can Australians ever hope to make up the disparity in relative wage levels? The result is that foreign capital takes over Australian firms with depreciated dollars, while Australian capital increasingly seeks cheaper labour costs by investment abroad.

Deregulation is required to ensure the complete mobility of capital. All restraints must be lifted from the operations of the the system, which provide the transit routes for both capital and technology. If it is objected that the removal of financial controls will lead inevitably to a revival of the speculative excesses of the 1980s, the answer is that bank policy and the exchange rate must, according to the theory, be given complete freedom, since billions of dollars can now be transferred across the oceans in a millisecond. The speed of modern communications has overcome the capacity of governments to provide a counter. National competition regulator Professor Allan Fels recently called for jail penalties for those who violate the Trade Practices Act. There are, however, economic crimes even more heinous than rigging prices.

Tariffs, quotas and similar devices must go if the internationalisation of capital and of technology is to be accompanied by the internationalisation of markets. Faithful adherence to the General Agreement on Tariffs and Trade and to its progeny, the new World Trade Organisation, is part of the new dispensation. Very few countries, other than Australia, put this principle into practice. Japan, China, Taiwan, Korea, Thailand, Indonesia and Malaysia do not. Like that great apostle of free trade, the US, they will not cease to protect either their domestic agricultural markets or large areas of manufacturing. As a small example, since Toyota faces a 25 per cent tariff on the T100 truck model in the US, it has had no alternative but to establish a manufacturing plant in that country, involving an investment of $US700 million with prospective employment for 1300 American workers. China imposes a 10 per cent tariff on wool imports.

The effective level of tariffs in South-East Asian countries also remains extraordinarily high. Nevertheless, Australia almost has eliminated its entire tariff structure. The result is that a great part of manufacturing industry, and the associated employment that was dependent on tariffs, has disappeared. The theory that this would be replaced by manufactured exports is pure myth. As Malcolm Fraser recently pointed out: "The lack of investment in Australia is highlighted by the massive change in Australia's manufacturing trade deficit. It used to run at about $2 billion a year back in the 1970s. Now it is running at more than $40 billion a year. That turnaround of itself is adequate explanation for our overseas debt.

"This has occurred because the totality of the Govemment's policies has resulted in a decimation of Australian manufacturing. Certainly, the Government talks with pride about increased manufacturing exports. It is soured by a much greater increase in manufacturing imports."

If one asks how, under these circumstances, Australians are going to find employment, the answer is that both our industries and our agriculture must become more competitive. This depends largely on reducing costs and raising productivity. We do this by "downsizing"; by removing legal protection for wage minimums; by substituting enterprise bargaining for arbitration; by weakening the power of the unions (as if they were not already achieving this themselves by loss of confidence in their leadership).

Downsizing is nothing more than an Orwellian description for the sacking of millions of workers in Western countries who no longer have any hope of re-employment. The once-respected class of middle managers has been decimated by the advance of computerisation. The attack on the unions, which Victorian Premier Jeff Kennett and West Australian Premier Richard Court both attempted - and in which they both failed - is now being undertaken by firms such as CRA. It will be amusing if all that this policy achieves is to scuttle John Howard's prospects just as Kennett's industrial policies helped to scuttle John Hewson's in 1993.

Globalisation thus has a tidy logic of its own. The logic, however, begs the question of whether the upshot is good or bad, or whether it is even a "goer". ...

(7) Saving Our Sovereignty

B.A. Santamaria

In the second of two articles on the threat posed to Australian autonomy by present economic policy, some suggested solutions

The Australian, January 6, 1996

THE critical question is: "What is to be done?" The advocates of economic rationalism will answer: "Nothing. Everything is going well."

A not inconsiderable part of the community is doing very well indeed. Others, however, would not agree, since their record during the past 12 years is one of progressive impoverishment. To remedy the situation requires a number of specific economic measures, all of which are, admittedly, difficult to take, but whose end would be the restoration of Australia's national sovereignty.

So what are the necessary minimum measures that should be adopted?

First, we should endeavour to reduce the capital flows that move in and out of Austraiia for purely speculative purposes without regard to their consequences for the Australian economy.

The prevailing orthodoxy is that direct foreign exchange controls are impossible to implement. This proposition, however, is not accepted by, for example, Japan or Taiwan.

Taiwan, which a little more than 25 years ago might have been dismissed as of no economic consequences, now has the second largest volume of foreign reserves in the world - about $US100 billion ($135 billion) compared with Japan's SUS140 billion. Taiwan has a rigid system of foreign exchange controls and recently strengthened them by adding criminal penalties for money-laundering of all types. For its part, the Singapore Monetary Authority possesses - and exercises - the power to direct bank-lending policies. These are merely regional examples. In other words, the movement of speculative funds can be controlled. The obstacle is not technical impossibility but lack of political will.

The measure suggested by Nobel Prize laureate Professor James Tobin - who, a decade ago, proposed a transaction tax of 0.5 per cent on each international financial transaction - might be an alternative. Whether 0.5 per cent would be sufficient to effect the change is another matter. In any case, it would represent a start.

These proposals would be resisted by the most powerful forces in the finance industry. It was tailure to control these flows which led to the 1994-5 collapse of Mexico's economy, which was no accident, but the result of reckless speculation by United States financiai institutions.

Second, we must restore the balance of trade. The adoption of specific proposals to cut imports would be opposed on the grounds that they would violate the provisions of the World Trade Organisation, the successor to the General Agreement on Tariffs and Trade. We are apparently one of the few nations that take GATT rules seriously. Its great proponent, the US does not.

It is amusing to note how the strongest world powers, particularly the US, which enjoin on others the necessity of practising the virtues of the free international market, rarely think of applying the principle themselves. Witness the most recent US policy in relating to Japan, and that pursued in its so-called "rescue" of Mexico, when those it "rescued" turned out to be not the unfortunate Mexicans - who are now facing interest rates of 50 to 100 per cent and 2 million new unemployed - but the US bankers who had lent billions to the Mexican government by investing in short-term Mexican bonds paying more than 30 per cent. They got their money back, so "confidence" was restored.

Article 12 of GATT nevertheless sanctions a general tax on imports "for the purpose of safeguarding the balance of payments". In conformity with this provision, former federal Liberal minister W. C. Wentworth has urged the adoption of a general primage duty of 20 per cent. A former deputy secretary of the Department of Trade and a representative to GATT, Colin Teese, has recommended a revenue tax which as distinct from primage, aims simply to raise revenue. Either measure would add substantial Customs revenue to the federal Budget , thus helping to reduce the Budget deficit and offer a degree of protection to Australian industries, as is done by many, if not most of those whom we diplomatically call our trading "partners".

THE anti-tariff cult will not find any support in a recent statement of Stanford University's distinguished economist, Professor Paul Krugman: "There is a dirty little aspect in international trade theory - The measurable costs of protectionist policies - the reductions in real income that can be attributed to tariffs and import quotas - are not all that large."

Thirdly, we should directly attack the the present level of foreign debt. Of our $180 billion net foreign debt, roughly 40 per cent is owed by federal and State governments and instrumentalities, and 60 per cent by private corporations. (The percentage varies from time to time.)

As to the public share of the debt, we might use a measure applied by the West German Government for a different purpose: namely meeting the costs imposed by the takeover of East Germany. These costs were assumed, among other reasons, to prevent such a massive flow of refugees from East to West - after the collapse of the Berlin Wall - as would have destabilised not only the West German economy, but its entire social structure. To meet this challenge, the German Government has to spend approximately DM200 billion ($187 billion) a year to subsidise industry and employment in the broken-down economy of the former communist East. To face up to the problem of providing the necessary DM200 billion a year, the German Government - in what is effectively a bipartisan policy - imposes a super-tax on all German taxpayers. It is, in effect, a capital levy.

There is a recent precedent for a capital levy in this country. Victorian Premier Jeff Kennett imposed a levy of $100 a year on each residential block in Victoria in order to help meet the state's debt. Rich and poor alike faced a levy of identical amount. The German levy taxes strictly according to wealth. If a similar super-tax were imposed for a limited period in Australia, the returns should be devoted to paying off the foreign debt owed by governments and statuory bodies.

The remaining 60 per cent is owed by the major banks and trading corportions. It is said that several of these corporations have recently been reducing their foreign indebtedness. If so, they should be strongly encouraged to continue this policy. Should they prove recalcitrant. the Commonwealth has the power to end the tax deductibility of interest payable foreign debt. For foreign borrowings the companies concerned would have to substitute equity, or borrowings from domestic sources.

Fourth, to substitute for borrowings abroad, there must be the capacity to borrow at home through the accumulation of adequate domestic savings.

A mechanism that increases household savings and ties them into what is effectively a capital accumulation fund is the substitute for overseas borrowings. The best contemporary example of such a fund is Singapore's compulsory Central Provident Eund (CPF) which Australia's newly applied and unsatisfactory administered superannuation fund would fit neatly. This system soon will collect compulsorily 15 per cent of wages and salaries. The administration of these funds is, however, effectively in the hands of insurance companies and trade unions, whose interests are not necessarily those of the contributors, who already have invested a considerable portion of their funds overseas, and whose investment record is undistinguished.

The first necessity is to mobilise the contributions of the present compulsory superannuation schemes into a single national superannuation fund which is controlled neither by the federal government nor by the banks, insurance companies nor trade unions. The most satisfactory controlling body would be a boards constituted like that of the Bundesbank which represents each of the German states as well as the German federal authorities. Its annual audited reports should be directed to federal and state Parliaments, not to governments, and debated in the respective Parliaments.

The capital adequacy of such a fund is evident from the somewhat uncertain figures supplied. One estimate is that five years from now, the assets of superannuationfunds (voluntary as well as compulsory) will amount to something like $450 billion. By 2010, they will amount approximately to $1000 billion and will there upon keep on rising rapidly. Paul Keating has said that by the year 2020 those assets will amount to $2 trillion. That is obviously far too large and critical a sum to be left in the hands of insurance companies, trade unions, or fund managers. The Singapore model should be seriously studied and applied.

Singapore's CPF ultimately finances pensions and retirement allowances. The funds are invested primarily in housing which, in some respects, provides even better security than government bonds. Each depositor receives 4.5 per cent on his or her individual personal deposit and pays 4 6 per cent on a loan, secured on his or her house or unit. That is half of Australias housing interest rate. An Ausralian home owner who has a 10 per cent mortgage of $100,000 would thus save nearly $5000 a year in interest.

The resources of a national superannuation fund would in time greatly exceed housing loan requirements. The overflow would be available for investment in government-guaranteed tax-free infrastruture bonds.

Fifth, we should create a specialised banking sector to meet the requirements of public works, with gradual extension into the field of rural credit; the latter was recommended 60 years ago to the League of Nations by Louis Tardy, director-general of the French Agricultural bank.

If it cannot be prevented, the sale of the Commonwealth Bank creates the necessity of establishing an alternative system to finance public works, and (within carefully defined limits) the rural sector.

In 1937, a royal commission on the monetary and banking system in Australia (of which Ben Chifley was a member) brought down its report. Section 504 ran as follows: "Because of this power, the Commonwealth Bank [now the Reserve Bank] is able to increase the cash of the trading banks in the ways we have pointed out above. Because of this power, too, the Commonwealth can increase the cash reserves of the trading banks; for example, it can buy securities or other property, it can lend to the governments or to others in a variety of ways, and it can even make money available to governments or others free of charge [emphasis added]."

The Commonwealth Bank was established in 1912. From 1913 to 1917 it financed the building of what was then known as the intercontinental railway at approximately 1 per cent by means of direct loans. So long as there are reserves of unemployed workers, plus locally available materials, the payment of interest on loans to finance public works is unnecessary.

The industrial expansion of Japan has been built on the basis of a financial system, that encourages a high ratio of personal savings and which permits Japanese industry to be financed at 2 to 3 per cent, now reduced to less than 1 per cent. Under a plan called the Founder Finance Quota, the Japanese Government is reported to have gone even further and offered interest-free loans for the establishment of new small and medium-size businesses. The purpose of this policy is to return to small businesses the role they have exercised as the driving force of the modern Japanese economy.

Italy achieves the same purpose in a different way, which partly explains why despite monumental political instability, Italy enjoys one of the most flourishing export sectors in the world and a great measure of social stability.

Not one of these proposals advanced is hypothetical. They have been put into operation by a respectable foreign governments, or, as in the case of the proposed tax on international financial transactions, have been proposed by an international authority of the standing of Professor James Tobin.

However, it is one thing to say that such measures have been found possible by other respectable countries with respectable political parties and governments. It is perhaps a totally different thing to say that they are possible in Australia.

There is, admittedly, no evidence in recent history that Australia is politically capable of putting these entirely feasible plans into practice. The problem, however, does not lie in the nature of the economic measures. It lies in the absence of political will. But perhaps something can be done about that - although recent political history would suggest that it would be unwise to hold one's breath.

This is an edited version of an article appearing in the summer issue of Australia and World Affairs.


Sydney Morning Herald February 26, 1998

The Political Zealot

HE NEVER held elective political office. Yet the political activities of B. A. (Bob) Santa maria, who died yesterday in Melbourne at the age of 82, bitterly divided the Australian Labor Party, preserved a Federal Coalition government in power and changed Australan history.

They did not, however, change Australian society in the way that Santamaria would have wished. I this respect, therefore, his extraordinary crusade must, ultimately be judged to have failed.

Nevertheless, he sprang almost overnight, from comparative obscurity to become a national figure and Australia's most celebrated Catholic layman. He enjoyed periods of dazzling success and, even in his later years, was never without influence.

Older Labor supporters will remember that they gauged Santamaria's triumphs in the years when he exercised most power by their catastrophic effect on the fortunes of the ALP.

To achieve his aims Santamaria was prepared to incur probrium as well as adulation. He was given both in full measure.

Certainly it was Santamaria's strategy in the 1940s, in establishing Industrial Groups to counter a communist thrust for leadership in Australian trade unions, that led, eventually, to the disastrous ALP split in 1955.

Although he once proudly claimed that he had never voted Liberal, Santamaria's espousal of the Democratic Labor Party, which was born following the split, kept the Federal Liberal-Country Party coalition firmly in power for nearly 18 years - until December 1972. Even as a very young man it was Santamaria's unshakable intention to change the face of politics and industrial organisation in Australia. And, while he made enemies, he also acquired powerful friends, the most notble of these being the formidable and turbulent Archbishop Daniel Mannix, Catholic Archishop of Melbourne.

Mannix, an Irish-born prelate vith a finely tuned political instinct, backed Santamaria in his formation of a national Catholic organisation, the Movement, designed to combat comnunist power on the industrial front.

It succeeded, not least because Santamaria paid the communists the tribute of copying their organisation. In the unions the Movement's Industrial Groups pitted trained activists against communist cells and cadres.

In the 1951 election for the control of the Ironworkers' Union they won a dramatic and famous victory. What had been he most comprehensively communist leadership of any major Australian union was totally defeated.

That was probably the high point of Santamaria's great anti-communist crusade. Now he was propagating his views through the Melbourne News Weekly which looked at union affairs from a Catholic Action viewpoint. ...

In early 1953, opposition to some of Santamaria's initiatives began taking shape from Sydney's Cardinal Gilroy and his coadjutor, Dr Eris O'Brien, and a year later the Federal Labor leader, Dr H. V. Evatt, denounced the Movement in a sensational attack on what he called disloyal Labor men in the right wing of the Victorian ALP.

Santamaria was front-page news.

Then came the dramatic 1955 Hobart Labor Party conference and the cataclysmic split in the ALP ranks. The DLP was formed. As president of the National Civic Council, Santamaria became its most potent driving force. When Evatt deserted the political stage, the enmity towards Santamaria from the new ALP leader, Arthur Calwell, merely intensified.

In the years that followed, Santamaria's range of activities continued to extend. As an editor, columnist, author, television pundit and pamphleteer he seemed dedicated to making anti-communism and, indeed anti-leftism, articles of faith for Australians. In the process he became one of the best-known public figures in the nation.

Santamaria's support for US foreign policy and Australian involvement in the Vietnam War was total. He condemned Labor policies as "dictated by Marxists of various stripes, militant feminists, environmentalists, unilateralists".

{Yet by the Gulf War, Santamaria had turned quite against US foreign policy; he said that the US had lured Saddam into Kuwait in order to get its airforce into bases in Saudi Arabia, in effect as an occupying army}

Some commentators, ironically, pointed out that perhaps Santamaria had a sneaking admiration for the communists who alone could match his uncompromising zeal and ruthless determination to prevail.

The Liberal Party, too, did not escape criticism. It stood accused of abandoning the lofty ideals of its founder, Menzies, and by being "unwilling to make a clear and decisive commitment to the social values of the family", unworthy of Santamaria's support.

The family, indeed, was to be the indispensable basis for Santamaria's hoped-for reforms. The family, he preached, had been designed by God or nature for the primary care of the young, the sick and the old. To replace this simple unit with teachers, socialworkers, hospitals and creches was, therefore, both expensive and inefficient. ...

Santamaria was labelled a fascist and a fanatic, a would-be dictator and a devious schemer. In fact, the image he mostly presented to the world was that of a scholarly man ...

Bartholomew Augustine (but Bob to nearly everybody) Santamaria was born in Brunswick, the eldest of a family of six children. His parents, who had emigrated from Italy, had a greengrocer's shop. ...

(9) TRUE BELIEVER - by Clyde Cameron

The man blamed for the ALP split in the 1950s was the only national figure to stand by Labor's core values, argues Clyde Cameron

The Australian, February 28, 1998

IT was with deepest sadness that I learned of the death of Bartholomew (Bob) Santamaria, who was the most significant flgure in Australian politics during the second half of the 20th century.

No other person had such an influence on the political scene as Santamaria during the last 50 years of his life; and no other political figure engendered the same devotion from his followers, or fear from his opponents. In fact, it is also true to say that no other figure commanded the same lasting respect from both friend and foe.

In 1936, when he was only 21, he started publishing the Catholic Worker. In its first editorial, he said: "The worst enemy is not communism, but capitalism." He explained later that in the Great Depression he believed that to be true.

But through the 1950s, 60s and 70s, he devoted his major efforts to fighting communist influence in the unions. He was the one whose inspiration led to the formation of the Australian Labor Party (Anti-Communist) later named the Democratic Labor Party, which kept the federal Coalition parties in power for 17 years. I believed him when he told me in a letter that he had always voted for the ALP until 1955, and thereafter, for the DLP; but had never voted for the Liberal Party. In another letter (dated May 4, 1990) he told me that from the 70s, the internal divisions in the communist movement had led many to turn "King's evidence", and as a consequence "the inequities of the banking/credit system during the last decade gained a new lease of life, I have returned to my original position [that capitalism and not communism is the worst enemy]".

While I haven't always shared his views, I have always admired Santamaria for his sincerity, dedication and outstanding intellect. During the years that followed the Labor Split of 1955, I felt he was wrong in sponsoring the DLP; but I always knew he was honestly wrong. I have always preferred that kind of person to one who is dishonestly right because he felt it would favour his advancement.

He was the only writer in the country whose regular articles in the The Weekend Australian gave vent to the thoughts and hopes of Labor's true believers. I shared his opposition to the privatisation of our publicly owned assets. In an article in The Weekend Australian (February 11, 1995), he referred to the then part-sale of the Commonwealth Bank as being bad enough. Even worse, he said, was the proposal to hand over basic utilities such as power, water, Telstra, harbours, railways, roads, airlines and even airports to the pirates of private enterprise.

In another article, he summed up the first Howard Government as "a marriage between identical principles and opposite political interests" and went on to say that it represented a situation of prime ministers paying attention to only those interests that can inflict retribution if their demands are unheeded.

He reminded leaders that Howard's proposal to sell Telstra first fell from Labor lips and that it was Labor who sold the Commonwealth Bank, Qantas and other publicly-owned assets to greedy profiteers.

I shared Bob's sadness over the way politics has deteriorated to a position where it is now a contest between the rich and poor; the exploiters and the exploited; the tax avoiders and the taxpayers; the greedy and the needy; the buyers of labour and the sellers of labour with the odds always stacked up in favour of the former.

In another article (November 25, 1995), he warned that unless union leaders became closer to their rank and file, they would see workers voting with their feet and walking away from their unions. He reminded readers that only 28 per cent of workers in the private sector belonged to a union and that the drift was continuing.

Santamaria won widespread support for repeatedly urging the Federal Government to require the Reserve Bank to make credit available for development projects such as the completion of the North-South rail link so that work could be found for the increasing number of unemployed.

He also warned that some of Australia's multitudinous superannuation schemes would see their funds disappear by the time their contributors were eligible to receive benefits. He argued that it would be possible for their funds to be squandered in huge executive salaries and/or shady business deals. For the past 18 years, he has been warning that the western financial system would face a major crash. He made the point that international banks were not concerned with whether the governments they helped were communist or anti-communist. Their only concern was with profit, not ideology.

My regret is that the death of this quite extraordinary man has prevented me from ever meeting him in this world.

Clyde Cameron was a Labor MHR from 1949-1980 and a minister in the Whitlam government.


Here's a scan of two of Santamaria's articles, showing his face: santamaria.jpg

Santamaria was really on the "Left"; only Trotskyists and the One World Government crowd would brand him "Right".

He was "Left" in advocating substantial public ownership and management of the economy; creation of money (for public works and utilities, and rural projects) by the Reserve Bank, bypassing the private banks; national sovereignty and self-reliance; and a full-employment policy.

The Trotskyists and Feminists have simply changed the meaning of the word "Left". The working class has been devastated by the destruction of marriage, which they have promoted along with their sex-war.

Here's a Trotskyist statement of 1979 which shows how they promoted Free Trade, to bring down the socialist Australia of the 1950s & 60s: xTrots.html

I can't accept Santamaria's conservative religion. Yet he didn't force it down others' throats; his columns were surprisingly free of it. One can respect his general spiritual orientation, while fitting a different philosophy to it.

Thanks, Bob. You worked for us right up to the end. Be with us, as we continue the struggle.

Homphrey McQueen calls Henry Lawson a Nazi: mcqueen.html.

How the Trotskyists led the Australian Labor Party up the Free Trade path: xTrots.html.

The League of Rights laissez-faire policies have contributed to Privatization and Deregulation: xLeague.html.

Back to the Australiana index: australiana.html.

Write to me at contact.html.