House of Representatives
11 December 1914

6th Parliament · 1st Session



The Clerk having informed the House that Mr. Speaker -was unavoidably absent,

Mr. Deputy Speaker took the chair at 11.1 a.m., and read prayers.

page 1604

QUESTION

BEER AND SPIRIT DUTIES

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Is the AttorneyGeneral aware that the gentleman with whom he has had correspondence regarding the new beer and spirit duties was intimately associated with the brewing trade of New South Wales?

Mr HUGHES:
Attorney-General · WEST SYDNEY, NEW SOUTH WALES · ALP

– That has not come to my knowledge. I have had a further communication from the gentleman referred to in reference to the date at which withdrawals from bond took place. To the best of my knowledge and belief, my correspondent has no interest at all in a distillery, brewery, or any branch of the brewing business, wholesale or retail.

page 1604

QUESTION

HEALTH OF MEMBERS

Mr FLEMING:
ROBERTSON, NEW SOUTH WALES

– In view of the effect upon the health of members caused by the great strain imposed by their duties here, will the Prime Minister take steps to appoint a Sports Committee, drawn from both Bides of the House, to provide some out-door exercise ?

Mr FISHER:
Prime Minister · WIDE BAY, QUEENSLAND · ALP

– However much honorable members may joke about it, the effect of the heavy strain of parliamentary work on the health of honorable members is a serious matter. Perhaps we might follow a better method in the transaction of our business. It might be that longer adjournments for meals would be helpful. That would give more time for out-door exercise.

page 1604

QUESTION

AUSTRALIAN METAL TRADE

Mr FENTON:
MARIBYRNONG, VICTORIA

– Has the AttorneyGeneral read the statement that the Americans have designs on the Australian metal trade ? The news has been cabled that if certain negotiations are favorable the Americans will be as successful as the Germans in controlling the metal trade. I ask the honorable gentleman cannot strong measures be taken to secure this trade for Australia?

Mr HUGHES:
ALP

– I have seen the newspaper paragraph referred to, and cables have been sent to Great Britain to ascertain whether there is any truth in it. The various local companies have also been communicated with. Our information received from these sources is to the effect that no such project is known of, but it is assumed by those who advise us that German interests are seeking once more to cloak themselves under another name.

Mr WEST:
EAST SYDNEY, NEW SOUTH WALES

– Would any benefit accrue to the people of Australia in this connexion if the Commonwealth had larger powers under the Constitution for dealing with trusts ?

Mr HUGHES:

– Undoubtedly the Commonwealth sphere of action in this and other matters is very restricted, our province being that of suggestion rather than of action.

page 1604

QUESTION

NAVAL ENGAGEMENT OFF FALKLAND ISLANDS

Mr LIVINGSTON:
BARKER, SOUTH AUSTRALIA

– I ask the Prime Minister if it has been officially reported to the Government that four German battleships were sunk by the British fleet in the action off the Falkland Islands. Is the statement which has been published to-day that a fourth vessel was destroyed correct?

Mr FISHER:
ALP

– We have not received official news on the subject, but we have subsidiary information which leads us to think that the report is quite correct.

page 1604

QUESTION

SOLDIERS’ DEPENDENTS

Mr BRENNAN:
BATMAN, VICTORIA

– I ask the Assistant Minister representing the Minister of Defence whether it is correct that men volunteering for service abroad are paid 5s. a day while in Australia, and 6s. a day while abroad, and that while they are in Australia a separation allowance of1s. 3d. a day for their wives, and 71/2d. a day for each child under fourteen years of age is paid, but that this allowance ceases when they leave Australia? If that be the position, is not a soldier worse off financially when serving abroad than when in camp? Will the Minister be good enough to ascertain whether it is not possible to continue a separation allowance while the men are abroad ?

Mr JENSEN:
Assistant Minister · BASS, TASMANIA · ALP

– It was stated last night by the honorable member for Fawkner that the allowance paid to soldiers’ wives and children had been stopped, but that is not so. The allowance is stilt being paid. When a soldier goes to the front, leaving a wife in Australia dependent on him, two-fifths of His pay is drawn by her in Australia, and if a wife and children have been left, three-fifths of his pay is so drawn.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Do the wives and families receive a proportion of their husband’s pay whether he has made arrangements with the Defence Department for them to do so, or nott

Mr JENSEN:

– Every soldier signs a paper, handed to him by his commanding officer, which sanctions the making of provision for his dependents.

Mr P P ABBOTT:
NEW ENGLAND, NEW SOUTH WALES

– Is the Minister aware that several thousand Imperial reservists residing iu Australia have rejoined the colours? What provision is being made for the payment to their wives and children in Australia of any portion of their pay ?

Mr JENSEN:

– I shall obtain the information asked for.

Mr BRENNAN:

– Will the Minister be good enough to ascertain also whether the separation allowance to which I have referred is paid to the dependents of soldiers who have left Australia, and not only to the dependents of those who are in camp here? If it is not so paid, will the honorable gentleman see if it can be paid?

Mr JENSEN:

– I shall inquire into the matter.

page 1605

QUESTION

DEPARTURE OF HOSPITAL SHIP

Mr KELLY:
WENTWORTH, NEW SOUTH WALES

– Is it a fact, as rumoured, that the departure of a Red Cross ship carrying nurses and doctors was seriously delayed by a blunder of the Defence Department, which allowed contraband goods to be loaded, these goods having to be unloaded before the vessel could start?

Mr JENSEN:
ALP

– I do not know anything about the matter, but I shall obtain the information for which the honorable member asks.

page 1605

QUESTION

FEDERAL CAPITAL

Designs - Railway

Mr RILEY:
SOUTH SYDNEY, NEW SOUTH WALES

– What stage has the Department reached in regard to the calling for designs for buildings in the Federal Capital ? Will finality in the matter be reached before the House adjourns for the Christmas vacation ?

Mr ARCHIBALD:
Minister for Home Affairs · HINDMARSH, SOUTH AUSTRALIA · ALP

– I do not thinkthat anything can be done before theHouse adjourns.

Mr AUSTIN CHAPMAN:
EDEN-MONARO, NEW SOUTH WALES

– Will the Minister of Home Affairs bring under the notice of the Cabinet the desirability of referring to the Public Works Committee the project for the early construction of a railway from Canberra to Yass and Jervis Bay ?

Mr ARCHIBALD:

– I shall bring the matter under the notice of the Government.

page 1605

QUESTION

PUBLIC WORKS COMMITTEE

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES

– Has the Minister of Home Affairs in contemplation the submission of public works proposals for their consideration by the Public Works Committee? Is the Committee to be given any work during the recess?

Mr ARCHIBALD:
ALP

– The matter is under the consideration of the Government.

page 1605

QUESTION

LAND TAX APPEALS

Mr GROOM:
DARLING DOWNS, QUEENSLAND

– Is there any likelihood of an amendment of the Land Tax Act on the lines that I suggested to the Prime Minister last night, providing for au easier method of dealing with appeals affecting comparatively small amounts ?

Mr FISHER:
ALP

– I am not now in a position to give the honorable member an answer, but his suggestion will have sympathetic investigation to-day and tomorrow.

Mr P P ABBOTT:

– Is the Treasurer aware that a great many land tax appeals have been awaiting a hearing for a period of eighteen months, and that a great number of these have not yet come before any Court, no special Court having been appointed to hear them ? In introducing an amending Bill, will the right honorable gentleman provide that, where the amount of the taxes does not exceed a certain sura, any appeal, instead of having to be referred to a Supreme Court, where the procedure is costly and tedious, may be referred to arbitrators, appointed! by the Crown and the land-owner respectively, with power to call in an umpire to settle the difference?

Mr FISHER:

– It is not for me to say whether or not arbitrators should be called in, without resort to any judicial authority, to decide such matters. I promise to look into the question of what amendment, if any, should be made in regard to the Land Tax Appeal Court. If we can cheapen the system without affecting the main principle of the Act we shall be glad to do so.

Mr PIGOTT:
CALARE, NEW SOUTH WALES

– Will the Prime Minister take into consideration in connexion with his revised land-tax proposals the advisability of providing that all taxpayers, whose taxation amounts to less chan £20, shall have the right of appeal to an ordinary Petty Debts Court?

Mr FISHER:

– There will be no restriction to the examination that we shall make before bringing down legislation to give effect to our proposals; but I certainly would not support a proposal to allow the right of appeal to a magistrate.

page 1606

QUESTION

DEFENCE BUILDINGS AT CRIB POINT

Mr McGRATH:
BALLAARAT, VICTORIA

– I desire to ask the Assistant Minister of Defence what arrangement has been made in regard to the erection of certain buildings in connexion with the Naval base at Crib Point?

Mr JENSEN:
ALP

– The whole work of erecting buildings there will be under the sole control of the Department of Home Affairs.

Mr McGRATH:

– Will the Minister of Home Affairs state what has been done by his Department with regard to the buildings to be erected at Crib Point?

Mr ARCHIBALD:
ALP

– The work is under the consideration of the Department and will be started, I believe, early in the New Year.

page 1606

QUESTION

OODNADATTA TO PINE CREEK RAILWAY

Mr POYNTON:
GREY, SOUTH AUSTRALIA

– Will the Prime Minister state whether the Government have arrived at any policy with regard tq the fulfilment of the agreement made, iii connexion with the transfer of the Northern Territory, to build a railway line from Oodnadatta to Pine Creek?

Mr FISHER:
ALP

– We have a policy relative to the construction of the line in question. We cannot commence the work this year, but the policy of the Government is to open up Australia from East to West and from North to South.

Mr POYNTON:

– I wish to ask the Prime Minister whether the policy of his Government is so far developed as to permit him to say whether the building of the East to West railway is to be completed before the construction of the North to South line is entered upon?

Mr FISHER:

– It has not been determined that no other railways shall be constructed pending the completion of the East to West line. It has been determined, however, that we cannot this year enter upon the construction of any more railways than now proposed.

Mr KELLY:

– Will the Prime Minister state whether it is not a fact that the Cook Administration commenced the construction of the North to South railway by authorizing the extension of the Pine Creek line to the Katherine, and whether that extension is not now being made ?

Mr FISHER:

– A Labour Administration in office prior to the Cook Government coming into power started that work.

Mr GROOM:

– Following up the answer just given by the Prime Minister, I wish to ask him whether it is not a fact that the Loan Bill, authorizing, for the construction of a railway in the Northern Territory from Pine Creek to the Katherine River and southwards, an appropriation of £400,000, was assented to on 19th December, 1913.

Mr FISHER:

– It is a fact; but it is also a fact that the permanent survey was completed before we left office, so that our successors only took up a project that we had under way.

page 1606

QUESTION

LAND TAXATION AND THE DROUGHT

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– In view of the distressful conditions prevailing in the country as the result of the drought, will the Prime Minister consider the desirableness of withholding the proposed duplication of the Federal land tax until at least the period of drought has passed?

Mr FISHER:
ALP

– If I were to be guided only by my sympathies, I might set aside all taxation, and so meet the wish of the honorable member. But having regard to the existence of the drought, and to other conditions now operating, as well as to the absolute necessity for raising taxation, I think the proposal made by us in this respect is the most equitable that could be put forward.

page 1606

QUESTION

PICTURE FILM RING AND INCREASED DUTIES

Mr RILEY:
for Mr. Charlton

asked the Minister of Trade and Customs, upon notice -

Whether he is aware that a ring controls picture films, rand that all picture-show proprietors have to obtain supplies through this ring; and that in consequence of the increased duty of 50 per cent, on films the ring is charging each proprietor 50 per cent, increase, notwithstanding that the same film is used by many picture snows. Has he power to compel the ling to spread the duty equitably amongst the users?

Mr TUDOR:
Minister for Trade and Customs · YARRA, VICTORIA · ALP

– I believe a large percentage - probably 80 per cent. - of the Australian business is under one control. “While the increased cost of films, owing to the duty, is doubtless being passed on by an increase of price, I do not know that any m07-e than this is being done. There is no power to take action in respect of the relations between the importers and the users.

page 1607

QUESTION

OXFORD-STREET POST OFFICE

Mr WEST:

asked the PostmasterGeneral, upon notice -

  1. Is he aware of the unsafe condition, and also the unsuitability, of the Post Office in Oxford-street, Sydney ? t
  2. If so, will he take steps to insure the long-promised removal of the disability which the public suffer in this respect?
Mr MAHON:
Assistant Minister · KALGOORLIE, WESTERN AUSTRALIA · ALP

– On behalf of my colleague the Postmaster-General, I beg to inform the honorable member -

  1. I am aware that the present premises do not accord with the importance of the Oxfordstreet Post Office, and provision is being made for the purchase of a site for a new office during the current financial year.
  2. See answer to No. 1.

page 1607

NAVIGATION BILL

Bill received from the Senate.

Motion (by Mr. Tudor) proposed -

That this Bill be now read a first time.

Mr JOSEPH COOK:
Parramatta

– I should like to know if it is proposed to proceed with this measure during the few days remaining to us before the Christmas adjournment. It seems to -me that if we are to load the business-paper, as the Government are doing, there is not the slightest hope of our getting away .within the time proposed.

Mr DEPUTY SPEAKER:

– Order ! This question cannot be debated.

Question resolved in the affirmative.

Bill read a first time.

Mr TUDOR:
Minister of Trade and Customs · Yarra · ALP

.- In moving

That the second reading be made an order of the day for to-morrow.

I desire to explain that shortly after the

Titanic disaster fin International Convention was called by the Imperial authorities, and that at that conference every country, including Australia, New Zealand, and Canada, was represented. The Convention agreed that certain, lines should be followed to insure the greater safety of life at sea, and in the British Parliament, which is not noted for the celerity with which it deals with such legislation, a Bill to give effect to the decision arrived at was introduced last May, and received the Royal assent about six weeks later. All the powers that were signatories to that Convention have passed the same legislation. Without this Bill, in order to bring our Navigation laws into line with the rest of the world in this respect, we should have to ask each of the six States to pass a separate measure covering our object. We think it better that the Commonwealth Parliament should take action, and pass this Bill so that it may come into operation simultaneously with the proclamation of the principal Act. With all due respect to the Leader of the Opposition, I should like him to appeal to the honorable member for Angas and the honorable member for Darling Downs, to state whether this Bill is not necessary, and whether it is not advisable to pass it at once. It is a n on -contentious measure, and is similar to legislation passed by the Parliaments of the principal countries in the world for the greater safety of life at sea.

Mr JOSEPH COOK:
Parramatta

– I am not objecting in any sense of the word to the merits of the Bill. Indeed, I am not acquainted with its merits, although I remember the proposition coming before me before I left office. The point that I wish to make is that, if the Bill is urgent, it is strange that it should not have been introduced before.

Mr Tudor:

– It has been passed by the Senate.

Mr JOSEPH COOK:

– And the Senate has only been sitting half time. One wonders why these measures, which are so urgent, have been allowed to linger so long in another place.

Mr Tudor:

– I gave notice of my intention to introduce this Bill early this session, but had the notice of motion discharged from the business-paper, so that the measure might first be dealt with by the Senate. It has come from the Senate as soon as possible.

Mr JOSEPH COOK:

– Then “ as soon as possible “ in the case of the Senate means taking a whole session to pass a non-contentious measure.

Mr Tudor:

– It was passed by the Senate in about two days.

Mr JOSEPH COOK:

– The right honorable gentleman merely shows by that statement that this urgent measure could not have been introduced in the Senate until the last days of the session. If the business-paper is to be loaded, how can we get away next week as arranged ? A definite understanding has been arrived at with the Prime Minister as to the measures to be passed; but the Government are beginning to fill the businesspaper in a way that renders its observance impossible.

Mr GROOM:
Darling Downs

– The Minister of Trade and Customs is correct as to the origin of this Bill. When the last Government were in power they received an invitation to attend the Conference, and a delegate was appointed. A report was received at the end of March this year, and was examined by the Department with a view to ascertaining the extent to which the Act needed amendment. A Bill was then being prepared; and I take it that that is the Bill now referred to.

Mr Tudor:

– Speaking from memory, I think it is.

Mr GROOM:

– It was announced by the ex-Prime Minister, that if his Government came back to power the legislation then contemplated would be submitted. So far as the Bill relates to safety at sea, we ought to endeavour to get it passed before the end of the year, but I understand that there are other provisions which put a difficulty in the way of this. Were the Bill confined to providing for safety at sea, it might almost be allowed to go through formally.

Mr Tudor:

– I understand that the Bill contains technical amendments of the Act that have been found necessary.

Question resolved in the affirmative.

page 1608

ESTATE DUTY ASSESSMENT BILL

Motion (by Mr. Fisher) agreed to -

That leave be given to bring in a Bill for an Act relating to the imposition, assessment, and collection of duties upon the estates of deceased persons.

Bill presented by Mr. Fisher,and read a first time.

page 1608

SPIRITS BILL

Motion (by Mr. Tudor) agreed to -

That leave be given to bring in a Bill for an Act to amend section 3 of the Spirits Act 1906.

Bill presented by Mr. Tudor, and read a first time.

page 1608

BUDGET

Land Tax and Death Duties

In Committee of Ways and Means (Consideration resumed from 10th De- . cember, vide page 1552, of Mr. Fisher’s motions for the imposition of a Land Tax and Death Duties, vide pages 1519-1520) :

Sir WILLIAM IRVINE:
Flinders

– There are many aspects of this, perhaps, the most important Budget statement made since the Commonwealth was initiated, which one would like to discuss at some length; but I do not propose to do so. The obvious intention of all sides of the House is that we shall, as soon as possible, get into temporary adjournment, and, therefore, I refrain from dealing with some features that are interesting to all of us. The proposals in regard to taxation are of momentous consequence, but they are insignificant, in my opinion, compared with the appalling magnitude of the issues raised by the Government proposals concerning the note issue. Before dealing with the latter, however, I should like to say a few words about some of the proposals for meeting the great deficit that now stares us in the face. One hoped that the Government in this time of national peril would have risen to the occasion. Recently returned from the country with a large majority, and intrusted with all the responsibilities of office at the greatest national crisis Australia or the Empire has ever had to face, they might have been expected to meet the position as representing the whole of the people - to present a Budget in which all sections were asked to contribute fairly according to their means and ability to the huge burden cast upon us by the war. This is a crisis Budget, and it is also, I regret to say, a class Budget. I suppose that if there is any general principle which we all admit, it is that taxation for war purposes ‘shall, as far as possible, attach to all sections of the people whose interests are involved, and that it shall be of the nature which, being temporary, and for a particular purpose, is capable of easy removal when, the immediate necessity is over. We have two main taxes proposed to meet this emergency; and one I shall dismiss in very few words. The proposed probate and succession duties seem to me the most ridiculous form of impost that the Government could adopt for such a purpose. I have no objection, I may say, to succession duties. I stand responsible myself for having initiated what was at the time the heaviest probate and succession duty in any part of the British Dominions, namely, the 10 per cent, rate imposed in Victoria ten years ago. The transmission of wealth is one of the sources of permanent taxation, from which the States ought to derive some, and, perhaps, a considerable portion, of the revenue required. When, however, we have proposed additional taxation amounting, as a maximum, to the enormous proportion of 25 per cent., and when we find that this tax, instead of being a permanent imposition which shall ultimately fall on all wealthy people and all wealthy estates, is a war tax nominally imposed for a short period, and which, when the war is over, will presumably be removed - at least that, I take- it, is the intention of the Government-

Mr Groom:

– They have not said so.

Mr Joseph Cook:

– The Prime Minister has told us the exact contrary.

Sir WILLIAM IRVINE:

– I think the House ought to know; and if the Prime Minister were not so absorbed in reading a document, I should ask him whether this is intended by the Government to be a war tax or a permanent tax. Perhaps the Attorney-General, who is in charge of the business of the House, will answer the question.

Mr Hughes:

– I do not know.

Sir WILLIAM IRVINE:

– It is either one thing or the other. It is either a war tax imposed for an immediate emergency, or the Government are using our national peril to further their own particular political propaganda. In the one case it is imprudent, while, in the other, it is dishonest and unpatriotic.

Mr Hughes:

– I think it may be said that in its present form it will not be permanent.

Sir WILLIAM IRVINE:

– That is some concession. If we treat it as a war tax imposed to meet a huge liability suddenly pressed - a huge burden with which the people and the country are suddenly faced - we cannot conceive a tax more ill-fitted to meet the case or more unjust and inconvenient. It will render necessary completely new machinery; and the tax will fall on an extremely minute portion of an extremely small class of the community.

Mr Pigott:

– It will affect the estates of only those who die during the war.

Sir WILLIAM IRVINE:

– That is so. I now turn to the other proposal, namely, the imposition, at this time, of a great addition to the existing land tax. When the former land tax proposals were before the House I pointed out that, with a rate of 6d. instead of 4d., they would mean a very much heavier tax than the Government had at that time received sanction from either their own party or the country to impose. The main objection did not arise from the nature of the tax, or even from the magnitude of the tax, but from the fact that it was coupled with a number of provisions that worked inherent, and, in some cases, disastrous injustice to individuals who were worthy citizens of the community. I pointed out at the time that mortgagors who, for the most part, are people beginning to push their way against great difficulties, and who had obtained their necessary capital by borrowing, were called upon to bear, not a tax or a contribution, fair or unfair, to the revenue of the country, but a crushing and destructive burthen on their interests. We know that the tax in many cases has so operated as to bring ruin to people; and now it is proposed to still further increase their difficulties. We ought to have an opportunity to discuss this Bill, even if it takes up much of the time still left to us, because there is no doubt that it means a great increase in this particular form of taxation. That form of taxation, even at its best, instead of being an endeavour to distribute this burden over the whole of the people, actually imposes a burden upon a small number of people, not exceeding 16,000, in a community of nearly 5,000,000. Yet this taxation is put forward as a legitimate and proper method of making the people bear fairly, according to their means, the sudden burden that has been placed upon us. And it is imposed at a period when there is a crushing drought such as perhaps we have never known in Australia. I assure the Government that they will not get the £1,000,000 which they expect from the tax. That estimate is calculated upon the operation of the tax under normal conditions. Under existing conditions the tax cannot be raised, it cannot be paid. The Government are taxing people who are already half ruined, who have no financial ability to pay a further imposition. Some people, of course, will be able to pay the tax, but the Government will not get anything like the amount, which they would get under normal conditions.

Mr Watt:

– The original Act made provision for these abnormal conditions.

Sir WILLIAM IRVINE:

– As my honorable friend reminds me, the original Act included a section, 6.2 I think, which enables the Commissioner to exercise a merciful discretion in connexion with people whose unfortunate condition makes it impossible for them to pay.

Mr Watt:

– That, section contemplated drought.

Sir WILLIAM IRVINE:

– Yes. A period of drought was put before the House as an occasion on which this section would be put into operation, and in view of the condition of Australia to-day, the Commissioner will be exercising that provision in a very large number of cases.

Mr Hughes:

– It is proposed to widen the Commissioner’s power in that respect, and I think it is proper to widen them at this juncture.

Sir WILLIAM IRVINE:

– But the more you widen his powers of discretion the less revenue the Government will get.

Mr Hughes:

– I admit that.

Sir WILLIAM IRVINE:

– I venture to say that the estimate of a million of revenue from this source is not calculated on the supposition that that section will be exercised by the Commissioner to a very great degree. I now pass to a matter which I consider more momentous than any other financial provision which the Government are making at the present time. I refer to the contemplated great extension of the note issue. I am not going to take up much of the time of honorable members by narrating the history of similar issues in other countries. Honorable members are familiar with those facts. I think the present Minister of Home Affairs has, more than once, shown to us that he has made a particular study of this matter, and he has more than oncepointed out that if an inflated paper currency should bring about a depreciation of that currency, the perils of waritself are hardly equal to the disasters that will befall the community, and those disasters will fall first and worst upon the wage-earners.

Mr Archibald:

– Hear, hear !

Sir WILLIAM IRVINE:

– The difficulty I have felt about approaching this subject at the present time arises from, two causes. First of all, I think we all agree that in an extraordinary financial period extraordinary financial methodsmust be adopted. Moreover, when all parts of the Empire are taking risks we, tpo, must take risks in bearing our shareof the burden.

Mr Poynton:

– Do you wish us to infer that the note issue, as it stands to-day, bears any comparison with note issueswhich have brought about disaster?

Sir WILLIAM IRVINE:

– If the honorable gentleman will give me his patient hearing for a few moments, I think I shall be able to answer his question. T have felt doubtful whether, at this stage, I should be justified in voicing the apprehension which I feel with regard to this; matter, because Ave all realize that every alarmist utterance may tend to increase the cause of alarm. I am conscious of that, and I have hesitated for some time as towhether I should in any way add to the possible apprehensions the people mayhave with regard to the note issue.

Mr J H Catts:

– But honorable members ought to have some means of consultation on the matter.

Sir WILLIAM IRVINE:

– Just so. The argument that has induced me to say what I am about to say is that so far we have not gone to the full extent that the Government propose to go, and if we allowed their proposals to pass without pointing out what appear to us to be the dangers attending them, we should afterwards be accused of not having uttered aword of warning. Therefore, I feel justified in putting before honorable members in all moderation the dangers of the situation with which we are faced. The Leader of the Opposition dealt with oneaspect of this case, and he was under the impression that the proposals with regard to assistance from the private banks were what I understood to be the original arrangement with the banks.

Mr Joseph Cook:

– No.

Sir WILLIAM IRVINE:

– Perhaps I may be permitted to explain. Whatever confidence attached to the original negotiations with the banks and . with State Treasurers, I have no hesitation in saying that those arrangements having been completed or abandoned, and, if completed, being the basis on which this Committee is asked to grant Supply, honorable members ought to be placed in full possession of the facts. There is nothing to. prevent that being done. If an agreement has been arrived at we ought to have it before the Committee, and if the negotiations have been abandoned we ought also to be 101d

Mr Fisher:

– Do you refer to the agreement drawn up by your Government?

Sir WILLIAM IRVINE:

– I refer to any agreement. The Prime Minister has said that an agreement with the banks has “been arrived at, but is not yet signed, and I say that members ought to know its clements. I understand the form the proposition originally took was that £10,000,000 was to be advanced out of the gold, reserve of the banks to the Government, the Government were to give the banks notes which were to be held in the coffers of the banks, and with that £10,000,000 worth of gold the Government were to open a credit with the Bank of England in order to enable our international financial obligations to be carried through. Am I not right?

Mr Fisher:

– I think not, so far as Hie present Government are concerned.

Sir WILLIAM IRVINE:

– I think that was the first and only object in view when the proposal to the banks was first made.

Mr. (Fisher. - The honorable member might tell the Committee that he has had facilities for seeing the whole transaction.

Sir WILLIAM IRVINE:

– That is quite true. But I am not aware of how “far I am at liberty to make a statement.

Mr Fisher:

– If the transaction is to “be made public, the whole of the papers ought to be here.

Sir WILLIAM IRVINE:

– Hear, hear.

Mr Fisher:

– But I warn honorable members that such publicity will not be in the public interest.

Sir WILLIAM IRVINE:

– The Prime Minister must take the responsibility; if an action is not in the public interests it should not be taken, but I think we ought to have some statement.

Mr Fisher:

– I have said five times deliberately to the honorable member for Balaclava that, in my opinion, it is not in the public interest that these papers should.be tabled.

Sir WILLIAM IRVINE:

– Negotiations that lead to any agreement ought to be regarded as confidential so long as it is in the public interest to do so. But supposing the original agreement and the negotiations have been superseded,- and that there is now a definite agreement arrived at, Parliament ought to have it.

Mr Fisher:

– I have no objection, but the agreement. is not yet signed.

Sir WILLIAM IRVINE:

– We ought to know what the agreement consists of. Without any breach of confidence, I can relate what I believe to be the facts, without having been taken into the con.fidence of the Government, with regard to the recent negotiations. As 1 have already said, the whole idea of the original proposed arrangement with the banks with regard to the £10,000,000 loan was that it should enable the Government to meet what was then a very critical position, namely, the provision in London of gold to meet the demands on us which would be made in London. The purpose of that proposal was the establishment with the Bank of England of a credit by lodging gold with the Treasurer, who was to hold it in trust for the Bank of England, which would establish a credit for us wherever it was needed abroad.

Mr Fisher:

– That was a different proposition, and has no relation to the present agreement. That was only like a passing feather in the air compared with the other arrangement.

Sir WILLIAM IRVINE:

– I accept that statement, of course. The position under the original arrangement would have been that that gold which the banks would advance, and which would be held in trust by the Treasurer, would be available to meet our obligations abroad through the Bank of England. That consideration, whether it entered into the later negotiations or not, becomes very important in an aspect of the case which I shall bring before honorable members. We are told now that that proposal has passed away, and that the present arrangement with the banks has nothing to do with it, but is an agreement whereby the Government receive £10,000,000 worth of gold, and the banks receive £10,000,000 worth of notes, and undertake hot to present those notes at the Treasury for payment, or to circulate them.

Mr Fisher:

– There is no restriction of the banks’ use of the notes, subject to the condition that they do not present them at the Treasury during the currency of the war.

Mr Watt:

– The banks may not present them, but the third party may.

Mr Fisher:

– No, the third party may not. The banks may make any use of the notes, but they may not present them at the Treasury for gold.

Sir WILLIAM IRVINE:

– I desire to follow this arrangement out step by step, because there was never a more important matter brought before the House, and it is essential that we should know all the facts. It is alleged by persons connected with some of the banks that the agreement which the institutions entered into was not to present that particular £10,000,000 worth of notes, but the banks were left entirely free to circulate £10,000,000 worth of notes, and to present at the Treasury any number of notes above that £10,000,000 which should in the natural course of business come into their hands.

Mr Fisher:

– That is not so.

Sir WILLIAM IRVINE:

– Then I am afraid there is a distinct misapprehension as to what the agreement between the parties is. That is the conclusion to which I have come, and it is of immense importance that the matter should be definitely settled.

Mr Carr:

– Has not your leader seen the agreement?

Sir WILLIAM IRVINE:

– No.

Mr Fisher:

– He can see it at any time he wishes to do so. I have said so publicly and in the House.

Sir WILLIAM IRVINE:

– I shall revert to that matter in a moment. If honorable members will follow my argument they will see the immense importance of the exact character of the agreement into which the banks have entered. Let us, first of all, look at the amount of the note issue. In round figures the note issue at the present moment is, £17,000,000.

Mr Joseph Cook:

– All that the Treasurer has told me about the whole trans action is that the notes were not to be circulated by the banks.

Mr Fisher:

– I have been saying so all the time.

Sir WILLIAM IRVINE:

– I am afraid that I cannot follow the Treasurer.

Mr Fisher:

– I shall stand by the Hansard record of my speech last night. Let me send for the proof.

Sir WILLIAM IRVINE:

– While that matter is being settled, I shall deal with another aspect of the note issue. I assume for the moment that the £10.000,000 worth of notes issued to the banks is to be tied up in parcels and kept in the coffers of the banks.

Mr Fisher:

– No, do not assume that. Why should not a bank be allowed to use the notes in its own way, subject to their not being presented at the Treasury ? I have explained that twenty times.

Sir WILLIAM IRVINE:

– But the point is, that once the banks part with these notes in the ordinary course of business, how can they fulfil the obligation that they will not be presented at the Treasury?

Mr Fisher:

– That is their business not ours.

Sir WILLIAM IRVINE:

– I can assure the Treasurer that it is our business. These notes are not ear-marked, and the banks cannot say that they will hot be presented.

Mr Fisher:

– The banks are in honour responsible for seeing that they are not presented.

Sir WILLIAM IRVINE:

– If the banks are in honour responsible for seeing that none of these notes which have gone out of their hands shall be presented, of course, it will be absolutely binding on them to keep the notes in their coffers, seeing that once the notes get out of the coffers of the banks the holderscan present them to the Treasury at any time. Therefore, though the banks may claim that it is not a condition of their agreement, I must proceed on the assumption that the notes cannot get out of their coffers. The banks must keep them in their coffers. On that assumption, which is in favour of the Government, and to which I shall refer in a moment, let me deal with another aspect of the question. As I have already said, the amount of the note issue is now £17,000,000. During the present financial year we are advancing to the States £10,500,000, which will bring up the note issue to £27,500,000. Further, we are advancing another £1,605,000 by means of the note issue; that is to say, we ate issuing notes to the public to this amount, in order to buy certain Treasury bonds that are to be issued - they have not already been issued - for the purpose of meeting the deficit and certain public works obligations.

Mr W Elliot Johnson:

– That makes the note issue £29,500,000.

Sir WILLIAM IRVINE:

– The note issue in these circumstances will be about £30,000,000, but, in addition, under the agreement with the banks there may be notes advanced to any bank from time to time as they may be required. I do not think that we have very much to fear from any great expansion of the note issue in that direction - at any rate, I sincerely hope that we have not - but in addition there will be the further £7,750,000 to be issued at this time next year to the States, which will bring up the total amount to £37,000,000, assuming that the Government do not use the note issue for any additional purpose. If we increase the whole currency of a country, including the note issue, to any considerable extent beyond the amount which the community can absorb for its ordinary purposes of circulation, it is as thoroughly recognised a rule or proposition in international and national finance as any proposition can be that two things take place - first of all, gold leaves the country. That is Gresham’s law, and, though many laws and political economies have from time to time been found fault with since this law has been established, no one has ventured to dispute it, and experience invariably supports it- gold leaves the country.

Mr Hughes:

– That law applies only to currency that circulates, and not to currency that is held.

Sir WILLIAM IRVINE:

– I am dealing with currency that circulates. We generally hear used, as to depreciated or inflated currency, expressions which in many cases do not convey more than a vague idea of the true position. Whether currency is to be inflated or not depends altogether upon the conditions prevailing in a country at a particular time. In some circumstances there can be a considerable currency without bringing about those conditions that tend towards its depreciation or inflation.

Mr Anstey:

– You said that two results follow an excessive currency. What is the second? .

Sir WILLIAM IRVINE:

– The second result is inflation or appreciation of prices locally. But I wish to deal now with the first result, the drain of gold from a country. Australia, perhaps more than any other country sharing in the present disaster, has conditions which tend towards that particular kind of inflation to which I have referred. The balance of trade is always against Australia. It has always been against us. Even in the days when our gold output was very much greater than it is to-day the balance of trade was against us, but in later years “it has always been strongly against us. Our gold production last year was in the neighbourhood of £10,000,000 for Australia, while our annual current payments that have to be made abroad for interest, public, municipal, and private, have been very roughly estimated at £.15,000,000 by Mr. Coghlan, whose estimates are generally accepted. Therefore the gold output does not pay more than 60 per cent, of our interest obligations ns a community.

Mr Fisher:

– Gold is no more valuable than any other commodity.

Sir WILLIAM IRVINE:

– Gold is only more valuable in a time of crisis when it becomes necessary to hold it, but I am simply regarding it as one commodity, and, considering it as such, seeing that it is less than our obligations, we cannot rely on the fact of Australia being a gold-producing country to set the balance right.

Mr Fisher:

– Not unless we produce more.

Sir WILLIAM IRVINE:

– That is so. In these circumstances we have to treat gold, as the Treasurer says, as being one of the products of Australia which have to be taken into account in our balance of trade, and that balance of trade, including gold, has always been, more particularly in recent years, heavily against us. How has that balance been squared ? By the fact that Australia has been a borrowing nation, and that its borrowings year by year are continuous and extended.

Not wrongly. I have never said so; I have always maintained that, on the whole, Australia’s borrowings have been good, useful and developmental; but the fact remains that the great gap that exists between our exports, including gold, and our imports, and always turns the balance of trade against us, has in past years been filled by the accretions which have taken place in regard to our borrowings. For instance, last year the addition to our borrowing was about £14,000,000, not including loans for redemption purposes.

Mr West:

– A big sum.

Sir WILLIAM IRVINE:

– It is a big sum, bigger than the borrowing in any preceding year, but each year has shown a large increase of money borrowed over the amount prevailing before, and the result has been that the balance of trade account between us and the world has “been squared by that borrowing. If that borrowing ceased or diminished, the balance of trade would turn strongly against us, and we should have to find gold to send away in order to meet our international obligations. This is a point to which I wish to direct the attention of honorable members: Once our borrowing ceases, other things remaining the same, we have to find from some source vast sums of gold to send to the Old Country, or have to become trustees of vast sums of gold here, in order to open up credit in the Old Country - in other words, put that gold out of our possession.

Mr Fisher:

– You could only do that once.

Sir WILLIAM IRVINE:

– Let me follow up the argument for a moment. This year, owing to the war, our ordinary borrowing has practically come to an end ; the States are not able to borrow and, with the exception of the £18,000,000 to which I shall refer presently, we are unable to borrow. Therefore, we have to provide in Australia not out of borrowed money, but out of this credit, or this supposed credit, that we are creating by means of the note issue, in order to furnish the means of carrying out work which we have hitherto paid for out of money actually borrowed from the other end of the world. I shall be immediately asked whether the £.18,000,000 is not practically substituted for the borrowings of the States and the Commonwealth in the past. My answer is “ No.” It is not a substitute for the reason that the £18,000,000 which we borrow from the

Old Country is lent to us for war expenditure.

Mr Riley:

– Nevertheless, it is a loan.

Sir WILLIAM IRVINE:

– Of course it is, but it is ear-marked for Avar expenditure, and a great deal of it will be spent at the other end of the world, while that which is not spent at the other end of the world Will be spent in Australia in paying for obligations which are quite separate and distinct from the ordinary obligations connected Avith our development work. Therefore, Ave may put that loan entirely aside.

Mr Watt:

– The greater part of the proceeds of the loans is not sent out here.

Sir WILLIAM IRVINE:

– It does not mean that the money is sent out here.

Mr Watt:

– Nor goods.

Sir WILLIAM IRVINE:

– Nor goods.

Mr Fisher:

– What is the difference?

Sir WILLIAM IRVINE:

– It makes no difference. I thought that it would be unnecessary to go into this purely elementary aspect of the case. Most of the money borrowed is used in paying debts that we owe in the Old World, our annual obligations, public and private, in interest alone amounting to something like £15,000,000. It is perfectly right that we as a community should borrow £18,000,000 to enable us to bear our share of the burden of the war. But in addition to that, we are, by means of a note issue, going to create a kind of credit that will enable us to continue the full expenditure on public works and departmental undertakings which has hitherto been paid for

Avith borrowed money. We are not going to borrow money for this expenditure. Therefore, Ave reay leave practically the whole, if not the whole, of that £1S,000.000, out of the national exchange account.

Mr Watt:

– Whatever use Ave make of the Imperial loan will not affect the accounts between England and Australia.

Sir WILLIAM IRVINE:

– No. ,But the loan was accompanied Avith the obligation that we should spend it for purposes on which we do not usually spend our borrowed money ; that Ave should spend it on the equipment and despatch of the Expeditionary Forces, and on other war services. Having accepted the money on those terms, we must put the sum on one side in considering the balance of trade, and our exchanges generally.

Mr Carr:

– We should still have to borrow for public works.

Sir WILLIAM IRVINE:

– Our obligations on the other side of the world must be met without having recourse to this £18,000,000. ‘ The ordinary method is now closed to us, and we are meeting the position by the issue of notes, thus creating a fictitious credit.

Mr Watt:

– If the British Government had lent this money to the Commonwealth for the financing of the public works of the States, what difference would it have made in the balance of trade between England and Australia?

Sir WILLIAM IRVINE:

– Every difference.

Mr Watt:

– Suppose, further, that we had then financed our war expenditure as tlie Prime Minister proposes to finance the public works expenditure of the States.

Sir WILLIAM IRVINE:

– We have to get, somehow or another, £.1S.000,000 for war expenditure in addition to our ordinary expenditure, and that sum may be put into a separate account so far as our ordinary financial obligations in London are concerned. We still have to meet them. The way in which we are trying to meet them is, I think, fraught with serious danger. What is going to happen ?

Mr Fisher:

– Nothing.

Sir WILLIAM IRVINE:

– I believe that the assurance is given in full confidence and security, but it does not relieve me of the duty of pointing out what may happen. Let us assume that the ordinary circulating capital of Australia is about £10,000,000.

Mr FISHER:
WIDE BAY, QUEENSLAND · ALP

– It ought to be a. little more.

Sir WILLIAM IRVINE:

– It is difficult to ascertain the amount with precision, but I should think that from £10,000,000 to £12,000,000 is the amount of circulation that we require.

Mr Fisher:

– Our circulation should be from £12,000,000 to £16,000,000.

Mr Watt:

– It depends, of course, on the amount of trade that is being done.

Sir WILLIAM IRVINE:

– That is always fluctuating from month to month, from, season to season, and from year to year. Supposing our normal circulation to be from £10,000,000 to £12,000,000, I would point out that we have in circulation a currency largely in excess of that.

We have £17,000,000 of notes in circulation, as well as gold and other coin. As a matter of fact, the banks are now holding a large sum in notes.

Mr Fisher:

– A part of that excess is made up of loans to the banks.

Sir WILLIAM IRVINE:

– The banks are merely agents of the public for the management of the financial operations of the community.

Mr Fisher:

– That is quite another mutter. The banks have been accommodated with Australian notes, and that accommodation has added to the excess.

Sir WILLIAM IRVINE:

– I do not say that the whole of the amount that I have named is in actual circulation. A large sum is held in notes by the banks.

Mr Fisher:

– We have given loans to the banks.

Mr Poynton:

– Apart from the loans, the banks have to hold a certain quantity of notes.

Sir WILLIAM IRVINE:

– There are so many elementary propositions with which I am confronted that I find it difficult to state my main point. The notes that are paid by the State for work done in the carrying out of public works will ultimately find their way back to the banks, and if the balance of trade continues against Australia, or the balance against Australia increases, so that gold has to be sent Home, or credits have to be opened at, Home with gold deposited here, our gold will be steadily drained away. I do not see how that can be avoided when the enormous note issue that is proposed is put into circulation.

Mr Fisher:

– The gold will go as a commodity then.

Sir WILLIAM IRVINE:

– At any rate, it will go. What talisman have we in Australia to avoid the result that has always accompanied such a state of things elsewhere? Is there any magic wand by which we can avert the consequences that have accompanied a drain of gold and an inflated paper currency in other parts of the world?

Mr Hughes:

– Countries which produce the raw material of metallic currency never find themselves in exactly the same position in respect to this matter as do other countries.

Sir WILLIAM IRVINE:

– The production of the metallic basis of currency does not matter at all, so long as the balance of trade is against us. Where you have a country whose gold production is not more than two-thirds of the permanent amount of current liabilities that have to be met outside annually, that production ceases to be of any more importance, for purposes of international exchange, than wheat or wool, or any other commodity. Therefore we may leave out of consideration the Australian production of gold. The banks must meet the obligations of their customers in London, public and private. They must find the means of paying in gold all our obligations outside Australia. They can do that only by using the gold in their coffers, which, fortunately, at the present time, possibly in anticipation of the dangers that might arise from an adverse condition of the balance of trade, is very large, amounting to £33,000,000. It is extremely fortunate for us that the banks have had the prudence to amass such a large gold reserve. If they had not done so, we should now be in a very peculiar position. But if the balance of trade is not re-established in some way, either by our borrowing money abroad in the ordinary way, or by increased production, or by decreased imports, there must be a continuous and heavy drain upon our gold.

Mr Watt:

– We shall have a decreased importation.

Sir WILLIAM IRVINE:

– I shall deal with that in a moment or two. The first way in which an inflated note issue is likely to bring about disastrous conditions is by causing a drain upon gold. Hand in hand with that another disadvantage arises, not so much from foreign exchange as from a local redundancy of money, paper or other currency. The banks are only conduit-pipes between lenders and borrowers. They take the money of the man who has more than he can use for current expenditure, pay him interest for it, and lend it out at a higher interest to other persons. They cannot increase the amount of their lending simply because an enormous number of persons wish to lend to them. They can find an outlet for the money only when business is increasing rapidly, and a host of new enterprises are being started for which money is needed. Under normal business conditions, only a certain amount can be lent out by the banks. The result is that when the currency of the community is vastly in excess of the amount required for the ordinary transactions of business, large and small, a number of persons wish to make deposits in the bank. But the banks are obliged very soon to say, “ We cannot lend out any more money. Therefore, although we will keep your money for you, we cannot pay any interest upon it.”

Mr LAIRD SMITH:
DENISON, TASMANIA · ALP; NAT from 1917

– But would the Commonwealth Bank say that?

Sir WILLIAM IRVINE:

– If it did not, it would be better that it had never been created. The honorable member’s interjection shows the sort of thing with which we have to deal. If the Commonwealth Bank is to be a deified institution, conducting banking business on entirely new lines, and if it is going to help every one by adopting rotten lines of business, then it would be infinitely better that it had never been established. If we have an inflated currency - if we have a much larger amount of money than is necessary for the purposes of the community, apart altogether from foreign exchanges, then it will be impossible to deposit a large proportion of it at interest with the banks and other financial institutions. Such institutions cannot pay interest where they cannot make interest. They will have to stop receiving deposits at interest, or lower the rate of interest.

Mr Fisher:

– What is the first stage at which the honorable member expects that state of affairs to exist in the Commonwealth ?

Sir WILLIAM IRVINE:

– I should say that it will occur very soon. It is, I think, a matter of mathematical calculation. If we have £30,000,000 of notes, in’ addition to whatever gold there is in circulation, floating about in a country where the whole transactions of the community can be carried on with £10,000,000 or £12,000,000, then that situation must soon arise. In short, my answer to the right honorable member is that it will occur as soon as ever he raises the note-issue.

Mr Fisher:

– This is the first time the honorable member has made that statement.

Sir WILLIAM IRVINE:

– I make it now. I say that we have already prevailing the conditions under which prices might be artificially inflated, with these £17,000,000 of notes-

Mr Watt:

– Not if partly locked up.

Sir WILLIAM IRVINE:

– No; that is, assuming that the banks cannot put these notes into circulation.

Mr Watt:

– Or -will not.

Sir WILLIAM IRVINE:

– There must be, of course, a certain amount of conjecture in regard to all these things. No one can state them with mathematical accuracy, and I do not pretend to do so. But if we have a note issue of £30,000,000, or, as we may have, before this time next year, a note issue nearer £40,000,000, then I, for one, cannot see the direction from which relief can be given from that position. I cannot see how we are to get out of it.

Mr Joseph Cook:

– And that would be a highly dangerous position.

Sir WILLIAM IRVINE:

– A highly dangerous position. 1 am endeavouring to show how it might come about - that people cannot get interest on their money if the banks and other institutions which lend it for them cannot earn interest for themselves. And not getting interest from it, we should then have the condition which has always arisen preliminary to the depreciation of a paper currency - the condition of a very large amount of money in excess of that which can be used in the transactions of the community. The inflation of prices, coupled with a tendency for gold to go away, has always, in every country, led to the depreciation of everything else, which we dread. The argument I have hitherto put to honorable members is entirely apart from the question of the £10,000,000 of notes issued to the banks. If the Prime Minister is now able to refer to the Hansard report of Eis speech, I should be very glad to see it before I sit down.

Mr Fisher:

– Here it is.

Sir WILLIAM IRVINE:

– I find that the right honorable gentleman was asked by the Leader of the Opposition -

Is that what you propose to do - to make this gold the basis of a further note issue?

He replied -

Apparently the Leader of the Opposition does not see how restrictive is the pinning of one down to one kind of action, and how it does not convey to the public the actual state of affairs. The gold is for all purposes, but particularly for the purpose of a further note issue, should such be necessary.

Mr BRUCE SMITH:
PARKES, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Do the banks undertake to keep that £10,000,000 worth of notes out of circulation ?

Then the Prime Minister, according to the corrected report of his speech, said -

Beyond question, the banks may use the notes, but may not demand gold for them till the end of the war.

Mr Watt:

– Does it appear in the agreement ?

Mr FISHER:
ALP

– Yes.

Mr Atkinson:

– Is that for 12 months?

Mr FISHER:

– I have said that it is to be during the term of the war.

That is all that I need quote. Let me take the Prime Minister’s statement, “ Beyond question, the banks may use the notes, but may not demand gold for them till the end of the war.” That being so, the banks can, of course, put these notes into circulation.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– And the transaction becomes a note payable on demand.

Sir WILLIAM IRVINE:

– No. As soon as ever the notes are put into circulation

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I mean on demand from the public.

Sir WILLIAM IRVINE:

– Yes ; it means that as soon as these notes get into the hands of the public they immediately become presentable at the Treasury.

Mr Fisher:

– May not the banks use them for their exchanges?

Sir WILLIAM IRVINE:

– Not for their international exchanges.

Mr Fisher:

– For their interAustralian exchange.

Sir WILLIAM IRVINE:

– If they do they will go into circulation, and will then become presentable at the Treasury.

Mr Fisher:

– We have to remember that this is an agreement, not with a bank, but with the banks.

Mr Groom:

– The banks may circulate these notes amongst themselves.

Sir WILLIAM IRVINE:

– But the actual payments made by the banks ia settling their current exchanges would not require anything like £10,000,000 of notes.

Sir Robert Best:

– Does not the agreement mean that the banks bind themselves to have this £10,000,000 of note3 quite irrespective-

Sir WILLIAM IRVINE:

– I think that we ought to see the agreement, so that we may really know what we are discussing.

Mr Fisher:

– Here it is.

Sir WILLIAM IRVINE:

– I shall read the notes of the agreement.

Mr Fisher:

– It is not yet officially signed ; but if the honorable member thinks it necessary to read it, he may do so. I have not the authority of the others to make it public, but rather than have a disturbing situation introduced, I think it well to let the honorable member see the agreement.

Mr Finlayson:

– It is most unreasonable to ask for the agreement at this stage.

Sir WILLIAM IRVINE:

– I can assure the honorable member that if the Treasurer does not desire me to read the agreement I shall not do so.

Mr Fisher:

– In view of the speech “which the honorable member has made, I think that in the public safety it should be read.

Sir Robert Best:

– Has it been agreed to?

Sir WILLIAM IRVINE:

– The terms “ Yes,” the agreement “ No.” -

Mr Fisher:

– I have certainly given the honorable member very direct answers to his questions, but he will not take them.

Sir WILLIAM IRVINE:

– Let it be clearly understood that while I ask for this agreement, because I think it is the right of the House to have it when it has to discuss these matters, the Treasurer himself must take the whole responsibility.

Mr Fisher:

– I will take all the responsibility.

Sir WILLIAM IRVINE:

– The agreement reads -

Agreement entered intobetween the Commonwealth Treasurer and the Associated Banks of Victoria. (Final.)

Agreed to finally by Treasurer,9thNovember, 1914.

The Commonwealth Treasury to issue Australian notes to cover expenditure for Expeditionary Forces and for other requirements.

If the Commonwealth Treasurer desires money in London, the banks, if required, to provide cover by telegraphic transfer at par, or to lodge gold at any capital city in the Commonwealth, not exceeding in all £10,000,000, as required from time to time in exchange for Australian notes.

The banks may make such use of the Australian notes for banking purposes as they desire, but shall not present notes at the Treasury for gold.

The issue of Australian notes to be considered an emergency war issue, to be redeemed in gold at the close of the war.

The State Governments to borrow in London with the security of the Commonwealth for all their requirements. (/) The Commonwealth Treasury to make advances to the banks, if required, in Australian notes, the banks to deposit in gold onethird of the amount of notes advanced, and to give a deposit receipt at 4 per cent, per annum for the balance; deposit receipts to be payable twelve months after the end of the war, and banks to have the option of paying same at any time before maturity.

I read paragraph b as rather bearing out the view I first expressed. If the Commonwealth Treasurer desires money in London, the banks, if required, must provide cover by telegraphic transfer at par or lodge gold at any capital city in the Commonwealth not exceeding £10,000,000, as required from time to time, in exchange for Australian notes.

Mr Fisher:

– We have an option.

Sir WILLIAM IRVINE:

– The main purpose of the agreement was to establish a credit in London.

Mr Fisher:

– The honorable member can have that opinion if he likes, but it is not the fact.

Sir WILLIAM IRVINE:

– A reference to the agreement shows that I was right in saying that the basis and purpose of the arrangement with the banks was to enable a credit to be established in London. But that practically becomes immaterial. The material point is what is to happen to these notes. As the Prime Minister has said, the banks are to be at liberty to make use of them in their banking business, provided that they do not present them at the Treasury for payment. If that be so, then there will be - not now, but capable of coming into general circulation at any time until this time next year - an amount of notes equal to £47,000,000. There is the £30,000,000 just obtained, the £7,500,000 further advance next year to the States, and the £10.000,000 in notes which the banks hold, and which may come into circulation. This is appalling to me.

Mr Fisher:

– I do not agree with the honorable gentleman at all.

Sir WILLIAM IRVINE:

– Let me put it again. I point out that the agreement is not that the notes shall not be presented, but that the banks will not present them.

Mr J H Catts:

– Suppose that new banking agencies are created to collect and present notes?

Sir WILLIAM IRVINE:

– Quite so. Of course, there is a physical difficulty in presenting these notes from all parts of Australia, but if a condition of things were to arise under which gold were at a considerable premium, all kinds of agencies would be brought into existence for picking them up and presenting them.

Mr Anstey:

– How does the honorable member explain the fact that the banks have entered into this arrangement if it is unsound and unfavorable to them ?

Sir WILLIAM IRVINE:

– I am afraid that that is quite beyond me. I have heard reasons given; but it is for the banks to say, and not for me. All I can say is that I am afraid there is a distinct misapprehension as to the meaning of the agreement and this ought to be cleared up. But before I close, I wish to refer to a matter mentioned very pertinently by the honorable member for Balaclava in connexion with my argument, namely, that in dealing with the balance of trade, we must take account of the fact that our imports are going down. That is quite true, but it is also a fact that our exports are going down, and partly owing to the same circumstances. The Minister of Trade and Customs said last night, I think, that there was reason to suppose our imports had decreased, or were decreasing, at the rate of £7,000,000 in five months. I was not able to follow the figures, but, at any rate, it was said there was a very considerable decrease. I do not know where the Minister derives his figures, but, in any case, I am afraid our exports are decreasing at present at a still greater ratio.

Mr Joseph Cook:

– As a matter of fact for the four months our Customs duties are quite equal to those received in the corresponding four months of last year.

Sir WILLIAM IRVINE:

– I believe there is a slight excess. I do not think we can hope for any relief during the next year from this particular source. Of course, we all hope and believe that ultimately our exports will increase very largely indeed. I may be asked, if that is the case - if those are the dangers attending this particular mode of finance - what else can we do ? I have no hesitation in saying that, for the immediate purpose, the only thing we can do is to borrow more money in the ordinary way, on any terms we can get.

Mr Riley:

– Prom where?

Sir WILLIAM IRVINE:

– Other places are doing the same. New York, the credit of which stands as high as that of any of the States of Australia, was obliged, at the beginning of this crisis, to borrow at 6 per cent, and 1 per cent, commission, or 7 per cent in all.

Mr Riley:

– That is unhealthy is it not?

Sir WILLIAM IRVINE:

– Of course, but we are in an unhealthy condition, and have to take steps to meet it.

Mr Mahon:

– Does not Tammany still control New York municipal life ?

Sir WILLIAM IRVINE:

– Not anything like to the same extent as before; but at present I have nothing to do with that.

Mr Mahon:

– But surely the credit of a Tammany city does not stand as high as that of any State of Australia?

Sir WILLIAM IRVINE:

– I understand that the credit of New York as a borrowing centre has been very high indeed, and yet it had to borrow on abnormal terms. There is the position ; and ultimately our relief must come from other sources. We must learn to increase our exports, and we must learn to do with less imports. This is not a thing that can be done at once, but must be the result of extended policy. We have continued to live in this community, almost, if not quite, at the same rat6 of extravagant expenditure as in normal times, though we are in the midst of the severest drought in our experience, and of the greatest war in history. Amongst all classes and ranks our mode of life and rate of expenditure has equalled those of the last ten or twelve years of the greatest prosperity the country has ever known.

Mr LAIRD SMITH:
DENISON, TASMANIA · ALP; NAT from 1917

– That may be the experience of the honorable member, but it is not the experience of some people.

Sir WILLIAM IRVINE:

– I am speaking of the people as a whole, and I am saying what every honorable member knows to be true. In all ranks of life our expenditure, as a people, is on the basis that has prevailed everywhere, amongst rich and poor, during a long period of unexampled prosperity. If we are ultimately to get right as a community, we shall have to do with less and adopt a somewhat simpler mode of life. The other way in which we can ultimately, and permanently, and firmly establish our balance of trade and our relations with the rest of the world, is by determinedly adopting a policy which will increase our exports, or our products for export. That must not be confined merely to increasing the production of wool, wheat, butter, and so forth, but must be extended to increase the production of those manufactured articles which must, to a large extent, take the place of those we now import from abroad.

Sir Robert Best:

– We cannot get them sent abroad just now.

Sir WILLIAM IRVINE:

– Not now, owing to the difficulties of a critical time ; but we, as a people and Parliament, have to face these questions.

Mr Riley:

– Will the honorable member suggest some course to be taken’?

Sir WILLIAM IRVINE:

-I have already suggested that instead of so largely inflating-

An Honorable Member. - Good old borrowing !

Sir WILLIAM IRVINE:

-“ Good old borrowing!” Is issuing £30,000,000 of paper money not borrowing ? It is an attempt to borrow without paying interestto set up a fictitious credit- and the attempt is supported by every catch phrase used by exploiters of fictitious credit at every period of history. Such exploiters always say, “ Have you no faith in your own country ? Is not the credit of the Commonwealth good enough?” These are the sort of * catch phrases that were used in support of the issues of assignats in France, the green-backs in America, and similar devices elsewhere. If we have to borrow, let us borrow as little as we cau, but borrow in the only legitimate way by which we can establish permanent relations with other parts of the world. Let, us borrow and pay interest, and not, by clap-trap artificial methods, borrow just as much, but under conditions of danger and mischief from which we in this part of the world have no more security than have people elsewhere.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– I regret the tone of the speech of the honorable member for Flinders, for it is pessimistic - an ad misericordiam appeal all through.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– It is well-timed !

Mr FISHER:

– It is ill-timed, and not at all befitting the situation. The honorable member spoke of the borrowings of Australia. But I submit, sir, that we have no debt here ! Working expenses and interest are being earned on all our borrowings, with the exception, perhaps, of 20 per cent. If those latter enterprises were conducted by private companies, these would extort quite as much as the shortage in the interest - simply drag tribute from people living here for the benefit of people in other parts of the world.

Sir William Irvine:

– What is “ dragging tribute” from the people here?

Mr FISHER:

– Instead of the States and the’ Commonwealth borrowing for public works and enterprises, the honorable member would hand those enterprises over to private companies.

Sir William Irvine:

– Who has suggested that ? The Prime Minister is distorting my words, and making a travesty of what I said.

Mr FISHER:

– The whole trend of the speech of the honorable gentleman

Sir William Irvine:

– And you are doing it intentionally, sir. I said nothing of the kind, and the honorable gentleman knows it. I said nothing bearing the complexion of what the right honorable gentleman suggests; and he knows it.

Mr FISHER:

– The impression left on my mind was that, in the honorable member’s opinion, we are in a helpless^ hopeless, decadent state.

Sir William Irvine:

– No, no!

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– You are, in connexion with the note issue.

Mr FISHER:

– There is nothing the matter with the note issue. There ought to be £15,000,000 of paper currency in Australia for ordinary requirements. Under the circumstances in which the agreement was drawn up, that agreement is as good and convenient for the banks as it is for the Commonwealth. It means that the banks, without disturbing their reserves in any serious way, are handing over to the Commonwealth £10,000,000 in gold in exchange for £10,000,000 in Commonwealth notes, which to the banks are equal to cash. The notes are worth their face value, and, as a reserve, are just as good as gold for all practical purposes, except for exporting abroad. That is how the matter stands. This arrangement is, in fact, a loan by the banks to the Commonwealth during the war period. It has to be redeemed at the end of the war.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– But redeemable by the banks’ clientele if the notes get into their hands.

Mr FISHER:

– The Commonwealth has engaged to repay the banks this £10,000,000 at the end of the war-“ at the close of the war “ the words are. It is an arrangement and an agreement which I hope will, in the near future, be given effect to, as would any other agreement or arrangement entered into under like circumstances.

Mr Glynn:

– The Treasurer evidently intended these notes to be in the position of gold certificates, and, therefore, not to be put into circulation, but the agreement does not say that, and, therefore, I think it requires modification.

Mr FISHER:

– I think the agreement is clear as to that. The representatives of the banks never had any doubt whatever - because the question was put to them in the discussion - that the agreement would be useless if these notes, which had been exchanged for gold, were to - come back to the Treasury. That is the difference between the arrangement made by the present Government and the arrangement made by the previous Government.

Sir Robert Best:

– Are not the words “ for banking purposes “ a doubtful expression ?

Mr FISHER:

– There is not a man of sense in the community who would enter into an agreement of this kind, and, at the same time, go away with the impression that the notes would not be held and controlled by the banks. That is the position.

Sitting suspended from 1 to 2. SO p.m.

Mr WATT:
Balaclava

.- I think the Committee is very much indebted to the honorable member for Flinders for the extremely lucid and powerful analysis which he conducted, prior to the luncheon hour, of some of the important phases of the note issue in relation to Australian finance at the present time. That remark might be made from either side of the Chamber, even if honorable members opposite do not agree with the conclusions of the honorable member in their entirety. It must be admitted in connexion with the questions of taxation and borrowing that the most important feature of our outlook under the present conditions will be found by experience to surround the question of note issue and holding. In consequence of the amount of time which the honorable member for Flinders devoted to this question, I do not propose to tax the patience of the Committee in any elaborate analysis of the matter, but I hope, in due course, to come to some phases which he did not deal with fully, before I conclude the observations I desire to make. Speaking generally, it has always occurred to me that it is a comparatively easy thing to criticise the finance of Labour Governments. Judging by our Australian experience, in the Commonwealth and also in States administered by Labour authority, the fallacies of Labour finance are very transparent, and I think the injustices of it are sometimes glaring and unmistakable. But I realize to-day that we live in unusual and very tragic conditions and times, and that a fair consideration of one’s political opponents, particularly when those opponents are in office, is perhaps more important than mere excess of party criticism. It is in that restrained, and I hope chastened, spirit that I propose to approach the Budget to-day. My own experience teaches me to be very sympathetic towards a Treasurer. Even in normal times the lot of a Treasurer, like that of the policeman in Gilbert’s famous song, “ is not a happy one,” and amongst his own colleagues in the Cabinet and in the party the grave responsibilities which the Treasurer frequently carries are not too keenly appreciated. If that is so in. normal times, it is doubly so to-day. The responsibilities which the Treasurer bears towards his own people and towards those who are lending him money from oversea are enormously intensified and increased. Therefore, any comments I shall have to offer on this Budget will, I hope, keep in view the unparalleled circumstances in which it was produced, and they will lack some of the severity which otherwise might have been directed to-wards some of the Government’s proposals. The first question which I desire to discuss is that of the form of the Budget. There are really two Budgets in the financial statement delivered by the Treasurer, and they are clearly divisible. A very ordinary analysis will subdivide the peace Budget from the war Budget, and I propose to ask for the attention of the Committee for a few brief minutes to the peace division of this statement as if no war existed and no emergency expenditure were in it. The outstanding feature of that peace Budget is the alarming rate, when we look hack over the last few years, at which the expenditure of the Commonwealth is increasing. I am not one of those who believe that this nation can stand still either in population or in enterprises, but I do believe that it is the imperative duty of the man in charge of the Treasury, and of his supporting colleagues in the Cabinet and in the party, to see that for every pound we spend we get one pound’s worth of value. In other words, economy is a duty which they ought to face, and which is made obligatory on the Treasurer and his colleagues to carry out to the fullest extent. I am not one of those who. hold the view that Australia has reached .the limits of taxation in times of peace, or that it is a heavily taxed country, because, in dealing with the taxation which the people of a nation pay, we have to keep in view, to be just in our comparisons, the functions which a particular Government discharges. We in Australia, rightly or wrongly, and most of us think quite rightly, have undertaken the custodianship and direction of many interests which in other countries are left to private enterprise. We do that for the fuller protection and development of the highest interests of the community, but it costs us money. If we did not .run the Postal Department at an enormous loss, as the remarks of honorable members opposite have shown it is run, we could do with less taxation. If we were content with government performing only the antique functions of soldier and policeman to the community, we could live on much smaller taxation than we are subject to to-day. So that, having in view the wide range of duties which Australian Parliaments, with the concurrence of their people, have given to the Governments to discharge, the Australians are a comparatively lightly taxed people. In the past we have been fortunate in that we have had no wars, and a number of the tribulations and trials which have confronted the pioneers of other settlements in the world have not been experienced by us. That meant that we could live .cheaply, and without that fear and trepidation which other countries in their early stages have felt. But the point in which I am very interested, and it has. already figured in more than a passing way in this debate, is this: the Governments of the Commonwealth and States, interdependent as they are, and. serving the same people as they do, must keep in view one another’s requirements and systems of taxation. If we of the Commonwealth decide to disregard altogether the laudable and natural wishesof the component parts of Australia forthe development of their interests, and push on with our system of taxation, it is just as apparent as the sun at noonday that there will be a collision, and, perhaps, an irreconcilable difference betweenthese two forces of government which will lead to an immediate, and probably permanent, injury to the highest interests we wish to preserve. That is why, in my opinion, the Commonwealth and the States should deal economically with the money they raise, whether from the lenders or from the taxpayers. There’ are some features of this Budget, and, nO’ doubt, of Budgets that will follow while honorable members opposite remain inpower, that seem to disregard these important considerations. I notice, for instance, that in the Budget the tall poppies of the Public Service have been carefully sheltered by the Treasurer. I make thisremark, not with the object of castingodium upon the higher paid and trusted! officers of Parliament and the Public Service, but because I do believe that in atime like this the men who can best afford’ to forfeit their increments and promotions are those who are enjoying salaries above £500 or £600 a year. I have been informed privately, with what truth I cannot say, -that these increments, which appear for the first time in the Estimates, of this year, are really the commitments, of former years. In other words, some of the officers who are mentioned in theEstimates have, by what means I know not already received the statutory increments which Parliament is now asked to vote. If that is so, we are only sanctioning the> transactions of last year, and I do not grumble at that being done.

Mr Fisher:

– Which officers are those?

Mr Joseph Cook:

– That relates to the officers of Parliament.

Mr Fisher:

– Those increments were not paid by the present Government.

Mr WATT:

– I am not interested in locating the blame with either Government or either party. It so happens that some of the blame which I shall place this afternoon must fall on the party now in power, because we are considering their Budget.

Mr Fisher:

– We have avoided paying those increments.

Mr WATT:

– I am glad to hear that, because they can be paid when we have plenty of money, and when the tide and breeze are with us. I believe that never yet in Australiahave we paid too heavily for the brains which the public requirements of the country necessitate, but the smaller-paid men are those who should receive first consideration, and if any one should wait for his increments it is the higher-paid officer. It is quite plain from the somewhat cryptic, if I may so term them without offence, remarks of the Treasurer that some of the taxation proposals which are to be brought forward to-day are not necessarily purely temporary expedients. The right honorable gentleman and his colleague, the Attorney-General, have declined to promise that this taxation is to be regarded as war taxation, and will be taken off when the war ceases. That seems to indicate an acknowledgment on their part that they know, not only that the permanent expenditure of the country is rising rapidly, but that it will inevitably mean additional “taxation by the Commonwealth to sustain on an ordinary peace footing the government of Australia. If that is so, I hope the right honorable gentleman will not mind my suggesting that that other question, which figured so largely in the -policy speech of the Prime Minister when he was Leader of the Opposition, in regard to further pensions and payments, will be postponed until this period of flux has passed, and we have arrived at a stabler and surer recognition of the resources and powers of taxation of the Commonwealth and State Governments respectively. We have already established old-age pensions, invalid pensions, and the maternity allowance, and I understand that it is proposed to pay an additional pension to widows and orphans as : soon. as the finances of the country will, in the judgment of the Government, justifythat course. I say that if the Go vernment do that sort of thing they must clearly announce to the States that they must at once go out of business in some of the most important lines they are holding and guarding to-day, or else Australia, unlike any other country or State I have known and read of, will have a duplicate or triplicate system of taxation, which must in the end lead to public revolt.

Mr J H Catts:

– It is too late to discuss the merits of the question now. We have promised these pensions.

Mr WATT:

– I have heard it said from the other side that second thoughts are best.

Mr J H Catts:

– But not to repudiate pledges.

Mr WATT:

– That is no repudiation of pledges, because if I read aright the Bundabergprogramme, the Prime Minister promised that when the finances of the State permitted these further payments would be made. I beg of the Treasurer to think cautiously of the rights and powers of the States, as well as of the taxpayers, before he embarks on the taxation which will be involved in the payment of these extra, and, from some points of view, unnecessary, items of relief. Taxation is to be avoided except when the absolute requirements of the nation or State demand it. It is almost truistic to say that money is best left in the pockets of the people. As an exPremier and State Treasurer who has had the responsibility of presenting six Budgets, and has had the purview of many important spending Departments, I have found that for every pound spent by the individual in his own interests the State gets far better value than for a similar amount spent by a Department of Government. In other words, the money is of more use to the people than to the public custodian of the people’s finances, and, therefore, we should leave as much of a man’s income in his own pocket as we can consistent with the highest economy.

Mr West:

– In spite of its taxation, Australia has prospered.

Mr WATT:

– I believe that if we could run a country without taxation it would be the best country in the world; but no one acquainted with a community such as ours will suggest that there is any likelihood that we will ever attain to that, although there are men in the community, known as Single Taxers, a body not yet extinct, who hold that economic rent will sustain a community without taxation. If I were to charge the honorable member with the logical conclusion of his remarks, he would blush to own them - the higher the taxation, the happier the community. We know that to be a fallacy. Common-sense men believe that we must keep taxation as light as possible, having due regard to the functions and ambitions of the community. I leave that branch of the subject, because I feel that to labour it would be of no use. It is a point that every member of this Committee must keep in view if he be true to his pledges, and when the Government know that this is the settled view of most honorable members, I trust that, in the preparation of any subsequent financial statement, they will be less prodigal. One of the outstanding features of the Budget is the Tariff, and yet one would not have known it from the utterance of the Treasurer. The Tariff was given to the Committee as a kind of afterthought. I listened attentively to every word the Treasurer uttered in making his statement, but until the form of the Tariff was placed before the Committee, and the Minister of Trade and Customs was asked to explain what it meant, I did not appreciate the fact than an alteration to the Tariff was part of the Budget. The fact was not made plain. The proposals came before us in a casual kind of way, and an examination of the schedule shows that it must have been as casually framed in the Department by the Minister as it was introduced. It is not a Protectionist effort, although it has the mask of Protection upon it. I have always been a Protectionist in what I may call the Victorian sense of the word. I am a high-duty man, although the constituency which I have the honour to represent is probably not a high-duty constituency. I believe that, in the interest of industrial development, manufacturing and otherwise, we should make our duties sufficiently high, not only to protect, but also to encourage and invite the promotion of, important industries that hitherto we have lacked. If the Minister of Trade and Customs asks some of us to vote for his Tariff on the ground that we are Protectionists, we cannot do so conscientiously, as the Tariff is not a Protectionist “one; but if he asks us to vote for it because this country needs, now and later, particularly during the present emergency period, extra revenue through the Customs House, I am prepared to vote for it. However, the Minister must not pretend for a moment that his Tariff is a temporary or final Protectionist effort. In that respect, it is a delusion and a sham. Let me illustrate, what I mean by a story of a lunatic post- impressionist artist. It is asserted, by some schools of artistic thought, that all post-impressionists are lunatics; but this one was legally a lunatic, and was confined in an asylum, and provided with a small room, a large canvas, and some brushes and paint, in order to give him a chance of cure as well as a peaceful and contented mind. He laboured long and lovingly on his canvas; and when some friends went to see his work, he said, “ I wish to show you the greatest thing I have ever produced. It is one of the masterpieces of all the ages.” His friends could see nothing on the canvas, and so one of them said, “ What does it represent?” The lunatic said, “It represents the children of Israel crossing the Red Sea.” The visitor said, “Where is the Red Sea?” “Oh,” said the lunatic, “that has been rolled back.” Then he was asked, “Where are the children of Israel ?” He replied, “They have crossed over.” “Well, where are the Egyptians ?” he was asked; and he replied “ Oh, they have not yet arrived.” That is how this Tariff strikes me. Protection is rolled back ; the revenue has crossed over, heading for the promised land; and the In- ter-State Commission has not yet arrived. It is a post-impressionist attempt at a Tariff, and is a blank in the truest and highest industrial sense of the word. I hope that the Minister of Trade and Customs will not take my remarks as personally offensive, but to me, as a Protectionist, the man who produces such a Tariff and calls it Protective is nothing but a Fiscal Fakir. If we wish to learn what the people think of the Tariff, we must not go to individuals engaged in the industries supposed to be affected by it. I am always disposed to take with a grain of salt many of the arguments of men who are engaged in the industries which ask for Protection. One must use his own judgment, in regard to representations made about the Tariff, by sifting the truth from the false. Let us take the attitude of the great advocates of Protection in this country, the journalists who have prescribed the minimum duties that can be considered Protective in any particular industry. What do they say about this Tariff ? Some of them have not yet vented their spleen, or poured out their vials of wrath, to show their disappointment with the proposals of the Ministry, whom they have so recently supported, but by the time we come to discuss this Tariff in March or April next, we shall discover that the true Protectionist forces in Victoria will describe the present Tariff as one of the greatest shams ever introduced. It is probably the best Tariff that we could expect from a party containing so many Free Traders.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– Look at your own side in that respect.

Mr WATT:

– On this side there are Free Traders, but on the other side Free Traders are as thick as autumn leaves in Vallombrosa

Mr West:

– Every man is a Protectionist, but he will not give Protection to any one else.

Mr WATT:

– I understand the meaning of the honorable member, although he did not do himself justice in the expression. For instance, in Victoria we have known of many who were Free Traders in regard to every industry but the one in which they had either a personal or a constituency interest, and in respect of which they became violently Protectionist. However, I trust that we have emerged from the chrysalis stage in fiscal matters, and can acknowledge the difference between Free Trade, a revenue Tariff, and Protection. I understand that Protection is the policy of this Government. Protection has for the first time been promised to the people of Australia by the Labour party. The fiscal agnosticism, which was the glory and boast of the early Federal Labour party when it was up for sale to the highest bidder, has passed away, and the party has come out now in defiance, I presume, of the vigorous resistance of the Attorney-General with a declaration of the policy of Protection. But the Tariff before us is not protective. To suggest that it is protective is idle.

Mr West:

– All true Federalists are Protectionists.

Mr WATT:

– The remark of the honorable member is a bitter reproach upon the Attorney-General. I have heard brilliant utterances from the Attorney-Gene- ral in the pre-Federal days, dealing with! tlie advantages of Free Trade to an infantile community such as the Colony of New South Wales, and subsequently to the people of Australia.

Mr J H Catts:

– That was before his conversion.

Mr WATT:

– I do not pretend to be omniscient, and I am glad that the AttorneyGeneral has surrendered his views, or been overborne by the common sense of his party and accepted the policy of Protection, but I urge that the Tariff should give real Protection. If we are to make a second attempt at a Tariff which will be really protective, let us have the advantage of the evidence collected by the Inter- State Commission, so that we may know how many of the problems of the industrial community presented to them for consideration have been considered by the Minister and dealt with in this Tariff. I understand from press reports that there have been 600 applications for relief.

Mr Sampson:

– Perhaps it would be better not to have the report of the InterState Commission.

Mr WATT:

– To those who desire short sessions, the shorter the Tariff debate the better, but as the Government have promised to make the incidence of the Tariff more truly protective, they should make a much better attempt to justify and .fulfil their pledges than they are making on this occasion.

Mr Richard Foster:

– Surely we can have the report of the Inter-State Commission.

Mr Tudor:

– If the report is available it will be supplied to honorable members.

Mr WATT:

– Last night the Government flagellator - I mean the Government Whip - in one of those wild impromptus that so often distinguish him, swung loose and lacerated his senior colleagues for the idiotic nature of the Tariff, and he went so far as to say that the Minister was actually amending the Tariff now. He protested that any amendment of the Tariff should take place except in Committee.

Mr Fenton:

– Worse than that, he said that the Minister was tinkering with the Tariff.

Mr WATT:

– I was using a more polite parliamentary phrase. The honorable member for Maranoa went further. He implied, if language implies anything, want of fiscal confidence in the

Government, whose officer he is, and he even suggested that as the anomalies in the present proposals were so evident, an amending schedule should he submitted to the Committee before Christmas. He wished to know whether that could be done. Remarks such as these from an intimate associate of the Government seem to imply that all is not happy on the other side of the chamber. Before we get to the consideration of the Tariff in detail we should have before us the evidence and findings of the Inter-State Commission in order to guide us with respect to industries with which we are not familiar. The sworn evidence before a judicial inquiry should enable us to separate from others the representations that are made by interested parties in applications for relief.

Mr West:

– Are you not advocating delaying the Tariff?

Mr WATT:

– No. It is better to do a thing well than to do it hurriedly and badly, as I said when I heard the Prime Minister suggest, with regard to the uniformity of the railway gauge, that the Government must act at once, although the desire for haste might in future mean the ripping up of some of the work of construction hurriedly done. The proper duty of a statesman is to get the evidence outside, and decide whether the recommendations of the Commission are right. In flinging out a Tariff of this kind, when, out of the 600 distinct suggestions made to the Inter-State Commission, not more than 100 have been considered, to say nothing of their being dealt with, by the Minister, the present Ministry are acting hurriedly.

Mr Tudor:

– I do not think that there is one suggestion made by the Inter-State Commission which has not been dealt with. On the contrary, a number have been dealt with without representations.

Mr WATT:

– If the Minister has dealt with 600 applications, I commend him for his marvellous celerity and industry. Apart from the question of Protection, the question of whether some of these admittedly revenue duties will yield the revenue expected of them is an important matter. In pre-Federation days in Victoria, when the State handled the Tariff, we imposed an extra duty on spirits of 3s., and we gained less revenue than was received under the old Tariff.

Mr Manifold:

– What about champagne ?

Mr WATT:

– I am not a judge of champagne. My honorable friend and his associates will give information on that point. I cannot afford to use champagne, except when some one hands it to me, and wishes me good luck with the gift. I am not an expert in regard to the quality of whisky, but at the same time I know something of the habits of the community in regard to whisky, and I know that Scotchmen will experience disappointment at the charge of 9d. for a whisky and soda. I know one honorable member of this House who has registered a vow that he will not drink anymore whisky until the extra Tariff is taken off. I cannot particularize the honorable member, but it is a solemn vow equal in solemnity and endurance to the party pledge taken by honorable members opposite. These remarks illustrate the theory that there is a point beyond which duties will not yield revenue, because they tend to destroy consumption, and therefore abbreviate the revenue.

Mr King O’Malley:

– But it is good for the families.

Mr WATT:

– I remember the saying that in drinking other people’s health we injure our own, and I believe that if we attempt to introduce temperance by Tariff restrictions the country as a whole will join us. There is too much liquor consumed in this country for the good of the health of the people, but the checking of the consumption is not a task that has been imposed on the Commonwealth Government or Parliament. We are told that the receipts from a duty of 16s. on a certain quality of spirit will be equivalently higher than the receipts from a duty of 3s. less.

Mr Tudor:

– Not equivalently. We have not estimated that the same quantity will be drunk. The figures show that.

Mr WATT:

– Then the Minister has allowed for a shrinkage in consumption. Is that shrinkage to be attributed to the war, to the drought, or to the Tariff? There will be a distinct diminution in importation, manufacture, and consumption, and this will cause loss of revenue; but, as the Minister says that he has allowed for that, I make no further comment on the matter. I now leave the Tariff; because we shall have other opportunities for discussing its influence on industry. I am not sure that it is not a good thing- I do not mean from a party point of view - that the discussion is to be deferred. After two or three months’ experience of the new Ordinances, the Legislature will be better qualified to judge of their effect.

Mr Palmer:

– The delay means a long dislocation of trade.

Mr WATT:

– Yes; but all Tariff alterations mean that. For that reason, I think that few Tariff alterations should be made, and that the work when done should be done thoroughly, so that the mercantile community may be free from interference for as long as possible.

Mr Fisher:

– In my opinion, that is impossible. Tariffs vary every year.

Mr WATT:

– The vicissitudes of trade and commerce become more apparent every year, bub the less we interfere with our manufacturers and importers the better, if we wish to induce men to put money confidently into manufacturing enterprises, to develop the industries of Australia.

Speaking now on the subject of direct taxation, let me say that I was bitterly disappointed by the reluctance of the Prime Minister and the AttorneyGeneral to say whether it was to be enduring. However else we may fight about party matters, we should have an understanding that this financial arrangement is for the present year only. The honorable member for West Sydney said ‘ Sufficient unto the day is the evil thereof.” I do not take that view in discussing finance, though I admit that none of us can see ahead to the 30th June next. We may have to alter our taxation for the year 1915-16 in a way that no one can foresee. The Government are entitled at this time to ask the House to tide them over the present emergency and the difficulties which they have inherited from their predecessors, who were in power when war was declared. It is clear that there must be taxation for war purposes in war time, but it should subsequently be taken off, and whatever readjustments may be needed to maintain the country on a peace footing should be made. I hope the Minister will remember that. I agree with the honorable member for Flinders that if any taxation should fall as equitably as the law-givers can devise upon every man, woman, and child in the community, it is war taxation. What measures we are taking now to defend the Commonwealth, and to show our interest in the great world struggle, are as much for the benefit of the poor wage-earner as of the rich property-owner. You cannot measure by possession the safety of the nation. The rule of Great Britain over this country has meant to every one of us the right to pursue, with success, according to his ability and his luck, his individual ambitions. But the proposed taxation is to be put on a few shoulders, whereas it should, so far as that can be devised, be put on all shoulders.

Mr Webster:

– Are not the poor doing their share in sending their sons to the war ?

Mr WATT:

– Yes, and the rich are doing their share in that, too. Perhaps the most pleasing feature of the great uprising of the British people has been the disappearance of class, rank, and race. Scotchmen, Irishmen, Englishmen, poor men, rich men, dukes, and wharf labourers have gone to the front from all parts of the earth. That is the glory of the struggle.

Mr Poynton:

– Do not the poor contribute their share by paying Tariff duties 1

Mr WATT:

– The Tariff increase is estimated at £800/000 for the half-year, or £1,600,000 for the year, but the new taxation is to yield altogether £4,600,000, so that £3,000,000 is to be obtained by direct class taxation.

Mr Poynton:

– The honorable member’s friends say that direct taxation is passed on to the people.

Mr WATT:

– The tendency of taxation, direct or indirect, is to settle down on the bedrock value, that is, on the value of human labour. Those of us who have watched the incidence of income taxation and land taxation, or rent taxation, know that eventually the consumer pays. Some things are difficult to locate, and others are easy to locate. Part of the land tax will be passed on, and part of it will not. I say that, although I am an ardent advocate of land taxation. Tha part that will be passed on is what is known as site value taxation. In Georgestreet, Sydney; in King William-street, Adelaide; and in other thoroughfares in the capital cities of Australia the taxation imposed on site values will inevitably be passed on by increasing rent or prices so that, eventually, the public must pay it. But is the measure as equitable as the Minister could have devised ? Let us consider the probate duties. I do not think that the Prime Minister realizes how heavily they will hit certain interests. It looks like a 25 per cent. tas. between the Commonwealth and the States, but it is really a 35 per cent, tax in some cases. Let me state a case beyond the possibility of quibble or doubt, one that has been decided in tlie Courts of Australia, and by the taxation commissioners. If a man living in Victoria lends money amounting to £70,000 or upwards on a mortgage on a New South Wales property and dies, duty at the rate of 10 per cent, must be paid to the New South Wales Government, because the property mortgaged is in New South Wales, and the same taxation must be paid in Victoria because the mortgagee was domiciled in Victoria. On the top of these payments comes the Commonwealth tax of 15 per cent. Therefore, in certain cases, chiefly where mortgages over large city properties or pastoral lands are concerned, the death rates will be raised to 35 per cent.

Mr West:

– People will have to conline their property to one State.

Mr WATT:

– In the case I bring under notice, a person living in one State advances money on mortgage on property in another State. These advances have facilitated settlement immensely. Many of the wealthy men of New South Wales have thus assisted the development of Queensland, just as Victorians have assisted the development of Riverina.

Mr West:

– Unification is the only way to get over the difficulty.

Mr WATT:

– That is like burning down the house to roast the pig. Obviously the Government intend to make the assessment permanent, because they propose to appoint a Commissioner whose tenure of office will be seven years. The honorable member for Flinders has dealt powerfully with the -land question. Honorable members opposite are responsible for a promise made to the land-owners of Australia that when hit with a bad season they would get relief from taxation. Section 66, which was framed largely on the New Zealand and Victorian legislation, holds out not only the hope, but the promise, that in times of drought and disaster the Commissioner, with his Board, may forego part or the whole of the tax. It would be bad enough then if at this juncture the Government were to say, “ We are not going to allow the section to operate this year,” because this is the first year in which it could generally operate. It is surely worse if, instead of foregoing part of the tax, a higher tax is imposed. Unless the honorable member in charge of the measure will give the Committee the assurance that within the drought-stricken area, which I believe to be very large, there will be indulgence shown, there must be considerable reluctance on this side, notwithstanding our desire to furnish the Treasurer with a .proper supply of money, to allow the measure to pass.

Mr Hughes:

– That can be considered by the Commissioner under the powers that we propose to confer upon him.

Mr WATT:

– I hope that I may have the assurance of the Attorney-General that in framing the Estimates consideration was given to these matters, and that remissions of taxation in regard to considerable areas of pastoral property have been estimated for.

Mr Joseph Cook:

– If so, the figures are pretty high.

Mr WATT:

– I have not been able to check them, but it is clear that a large allowance should be made for the droughtstricken land-owner who is fighting conditions sent by God, for which he is not responsible. If the spirit of leniency is not in the Treasurer and in the Government, their taxation proposals must be looked upon as confiscatory. Even in a time of emergency, to take 25 per cent. - and, in some cases, 35 per cent. - of the value of an estate is confiscation, and vindictive. I have not ascertained the number of persons in Australia on whose estates in a normal year death duties are paid, but .it is comparatively small. There are about 15,200 persons who pay land tax, and you may add 10,000 or 20,000 more as the number that pay probate. Out of the £4,600,000 that is to be raised by the new taxation, £3,000,000 is to be taken from that number. I hope I may be wrong in suggesting a motive, but it looks to me as if honorable members opposite have said, “ Let us tax the people who do not vote for us.”

Mr West:

– No.

Mr WATT:

– I do not wish to wrong honorable members opposite, and if I have their assurance that I am in error I shall withdraw the statement. But when I hear them say, “ Let us give preferment to those in the industrial walks of life who vote for us,” and when. I see them inflicting taxation on those who do not vote for them, the same motive seems to me to be apparent in each case.

Mr Jensen:

– There are 25 per cent, death duties in operation in Great Britain at the present time.

Mr WATT:

– And distinctly for this year only, as the Chancellor of the Exchequer, according to the newspaper cable messages, assured the Imperial Parliament. We should have the same assurance. I think we ought to be prepared to pour out our wealth and our humanity to sustain our Empire in every way possible while the war is on; but T do not think we should impose crippling, vindictive, confiscatory taxation, whatever may be the motive for putting it on, and keeping it on, in a country like this. It is bound to damage us. If the Government are animated by such a desire as I have indicated, then they are sowing dragons’ teeth with the expectation of reaping a rich harvest of blushing grapes or golden corn. But they are wrong, because in this country people are not so class conscious as to permit a gross outstanding injustice of this kind to grow and flourish.

Mr West:

– Taxation cannot be drawn from those who have nothing.

Mr WATT:

– There is no man who labours with his hands or his brain, or, like the honorable member, with his jaw, but has something. I do not care whether you tax our salaries or the salaries of the Public Service, or whether you levy a poll tax upon us, but I say that the most reasonable way of finding the revenue necessary to carry us over this period of great and tragic emergency is to appeal to the whole people, and to gather it for them under some equitable system. Honorable members opposite may say that expediency dictates the course they are following. If they do, then I shall reply in the language of John Stuart Mill, that “ there is an important branch of expediency called justice.” The Treasurer did not give the slightest justification for these proposals. Let us look back for a moment at the way in which he submitted them to us. He gave us no warrant for them. He did not give us any indication that they had been deliberated upon, or that the merits of the proposed taxation had been discussed. The right honorable gentleman simply said, “ It is proposed to levy this taxation,” and so far we have had no justification of it from his lips. The Minister of Trade and Customs did give the Committee an explanation of the reasons prompting the Government in making the Tariff changes, and sst out in some instances the probable effects, according to his judgment, of their proposals. But the Treasurer has not given us the slightest indication that this taxation will sit fairly upon the people on whom it is imposed. He, has not shown us that there is any substratum of justice in the proposals.

Mr FENTON:
MARIBYRNONG, VICTORIA · ALP; UAP from 1931

– These taxation proposals will come before us in the shape of Bills.

Mr WATT:

– Certainly. But surely, when it is proposed to increase the taxation of tho country by £1 per head, as this £4,600,000 proposition clearly means, some explanation should be given in the Budget statement.

Mr Richard Foster:

– Especially in the Budget statement.

Mr WATT:

– It is in the Budget statement that we should have an explanation of such proposals. When, in the region of State activities, we found it necessary to impose taxation amounting to 2s. per head, we had, so to speak, to fight for our very lives with the interests that were opposed to it in order to get it carried into law. After our failure to pass a graduated land tax I proposed a flat tax2 amounting to 2s. per head, by way of extra taxation iD Victoria, and it took us three months to pass that proposal through the Legislative Assembly. Every part of it was put under the microscope. If the Treasurer imagines that, by the mere assertion that the Cabinet proposes to do this or that, we are to be deluded into the belief that we have had an explanation of the reasons for, and the justice of, their proposals, then he deludes only himself. The effect of both these taxation proposals, direct in character, will be immediate and pronounced upon our brothers in Government in the State Parliaments of Australia. If this levy of £2,000,000, in respect of probate, is to be kept on, it means that the probate duties of the States must come off, or that a sense of deep injustice must grow up in the bosoms of the classes affected.

Mr Hughes:

– Did the honorable member say £2,000,000?

Mr WATT:

– Yes, for the year.

Mr Hughes:

– It is £1,000,000.

Mr WATT:

– The estimate is £1,000,000 for the half-year. Let me make that point very clear. I followed carefully the Treasurer’s calculation. The probate and succession duties will operate from the date on which they are agreed to - say. as from 24th December to 30th June next - and the Treasurer said it wa3 hoped to realize from them a revenue of £1,000,000 in the six months period.

Mr Hughes:

– The calculation is £1,000,000 per annum.

Mr.- WATT. - Then the calculation given lis is wrong.

Mr Fisher:

– It was submitted to me in error.

Mr WATT:

– Let us see what is right. Does this later statement mean that between now and 30th June next year the Government expect to obtain from this source only £500,000?

Mr Fisher:

– A little more.

Mr WATT:

– With what wisdom are we governed ? Surely the right honorable gentleman will not confess without a blush that this proposal has been bundled up in haphazard fashion and laid before the Committee of Ways and Means, with the result that his estimate is £1,000,000 out?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Which we learn on a mere interjection,

Mr WATT:

– On a mere interjection.

Mr Hughes:

– The tax will take effect as from the date of the passing of the Act.

Mr WATT:

– Let us assume that the resolution will be carried just before Christmas.

Mr Fisher:

– It is a mere speculative matter what the duties will yield.

Mr WATT:

– No one knows better than do those with Treasury experience that such matters are highly conjectural. This latest step on the part of the Government will tend to make the position even more so. The Treasurer is so frightening the very soul-cases of the rich people of the country-

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– Oh!

Mr WATT:

– That they will seek the advice of the honorable member for Melbourne, and incontinently die.

Mr Brennan:

– Would the honorable member blame the tax or the doctor?

Mr WATT:

– It would be a little bit of both - a case of the war and the drought again.

Mr Joseph Cook:

– It is stated that a similar rate in the States produced over £1,000,000.

Mr WATT:

– I confess that I have not had time to compare the Victorian rates with those here proposed. The Victorian probate duties yield, roughly, £500,000 a year. As the result of an experience extending over a score of years, we can calculate within £100,000 what we are likely to receive. We are sometimes, it is true, very much deceived; but that does not justify the statement of the Treasurer, who told us, in the first place, “We shall get £1,000,000 out of this source of revenue,” and from whom we now drag in some mysterious way - by tha interjection of a colleague - the admission that he is out in his calculation! to the extent of half-a-million.

Mr Hughes:

– The tax has been calculated hy the Commissioner, upon the basis of a normal year, as yielding £1.000.000 revenue.

Mr WATT:

– I believe that the AttorneyGeneral knows all about the Government of the Commonwealth - that he does as much in all the Departments of the Commonwealth as his great abilities will allow - and that he is the ruling spirit of the Government. Will he tell us who is responsible for the estimate with which we have been supplied ? Is it the Treasurer or the Under-Treasurer ? I do not believe in hitting heads that are blameless, but this Committee .should have the most expert advice, and all the figures produced to us should be beyond doubt.

Mr Hughes:

– The officers of the Commonwealth Treasury, and of Commonwealth Departments generally, will compare very favorably with officers in any State Department.

Mr WATT:

– That is a characteristically evasive answer on the part of the honorable gentleman. I was not questioning the ability of the Treasury officials. I have been acquainted with some of them for many years, and have the highest possible esteem for their public services; but surely the Committee is not to be misled in this way without expressing its indignation, and, possibly, inflicting punishment. This admission shows that the Public Accounts Committee just created has a lot of work ahead of it. I hope that it will make this particular mistake the subject of investigation.

Mr Groom:

– The probate duties of the States in 1912-13 amounted to £1,012,000.

Mr WATT:

– In 1912-13 £443,000 was raised in Victoria from this source, and this year I think it is estimated that a sum nearer £500,000 will be received. In New South Wales, strange to say, the receipts were less.

Mr Hughes:

– But the Commonwealth tax is upon a different basis, so that the comparison will not help the honorable member.

Mr WATT:

– I appreciate the difficulty of getting two formulae to agree, and that is why I wish an opportunity to compare the State schedules with the estimate placed before this Committee. In South Australia £58,000 was obtained in 1912-13, and in New South Wales £365,000. In Victoria, under the selfdenying and severe Ordinances passed by the honorable member for Flinders when he was Premier of this State, the returns in 1912-13 amounted to £443,000.

Mr Glynn:

– We cannot compare the two, because in some of the States the tax is based upon divisions.

Mr WATT:

– We can in certain ways, but we cannot make a microscopic comparison. The Treasury officials ought to furnish us with comparative tables.

Mr Fisher:

– This is a very speculative item.

Mr WATT:

– That statement does not dismiss the matter. Let us assume that the right honorable gentleman and his colleagues have made the best endeavours to insure the accuracy of the facts put before us. But we want something more to satisfy us as to the wisdom of this proposed taxation. If we had additional material we might hope to reduce certain phases of the schedule so as to make it more just.

Mr Joseph Cook:

– Why should the honorable member have all this information, seeing that we have never had it during all these years?

Mr WATT:

– It is perhaps because I am somewhat impertinent, coming, as I do, fresh from other fields. I cannot refrain from dilating upon the relation of these measures to State interests. Wc do not want to blight the careers of the six united States of Australia. We can best build up our nation by making its component parts strong and healthy. We do not wish to play the part of the rapacious thief who goes into their domain and takes from them their means of livelihood. We ought to work in a spirit of harmony with them. I am sure that the States would not utter one word of protest regarding these probate and succession duties if they were told that they were to remain in force only while the war lasts. They could then get back to scratch, and subsequent developments from either side could be met in a spirit of harmony and accord. I ask the Treasurer to take this view of the finances, because it is of the utmost importance to the people. Leaving the question of general taxation, I come to another phase of the Budget - that of borrowing. The general attitude of the party opposite has been ons of opposition to borrowing. If we take the platform of the Australian Labour party and of its six State cousins, we find on the part of all of them, at least so far as their utterances and professions are concerned, a desire to restrict public borrowing.

Mr Fleming:

– That is the platform utterance.

Mr WATT:

– It is what the men sign up. Some of them are like men who have taken the pledge, and who, after a long droughty time, break away and become violently inebriate, just as our friends in New South Wales are apparently doing, with the approval of the New South Wales people.

Mr J H Catts:

– I wish the honorable member would quote from some of the platforms of the Labour party in support of his assertion.

Mr WATT:

– I have them all in my room, and should have brought them into the Chamber had I thought my statement would be challenged. The plank in the Victoria State Labour party’s platform reads, “ The restriction of borrowing except for conversion.”

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– Except for reproductive works.

Mr WATT:

– When was that added? I carry this book around with me, because I find it a most useful tonic in times of depression. It was meant to be a. serious document, but I read into it its comic aspect.

Mr Sharpe:

– It was no good at the last election.

Mr WATT:

– It was no good to the people of Victoria; they would not have this red-bound book of revelations, but preferred to rely on their old and trusted friends of the Liberal Party.

Mr Sharpe:

– It was no good at Essendon.

Mr WATT:

– No, it was not; the electors accepted the candidate there, despite tlie fact that he carried this revolutionary volume in his pocket.

Mr J H Catts:

– In New South Wales it has for many years been a plank of the Labour party’s platform that there shall be a restriction of public borrowing, except for reproductive works which will pay interest and sinking fund.

Mr WATT:

– It is fair to say that the Australian Labour party, aud the Labour parties of Australia generally, advocate restriction of public borrowing; and if time permitted, I could quote utterances from almost every man on the front Ministerial bench showing the disadvantages of borrowing in the way many of the States have done. But a change has come over the scene. I see from the book handed to me that restriction of public borrowing is on the fighting platform of the Australian Labour party; and I think the statement I have made will be accepted by honorable members opposite as representing their general attitude, though in New South Wales the Labour party may have been a little less rigid than their confreres in other States. The Prime Minister and the other Labour leaders in the Australian party have accepted the same view as to the restriction of public borrowing until now; and I do not blame them for saying that this is the time to borrow - that we must depart from our old accepted policy of prudence, because we are at war and cannot get revenue as we could under the old conditions of flourishing industries with ample employment. It is a sound doctrine; but what astonishes us is the ease with which the Prime Minister passed from the position of critic of the borrowing practice to the position of a strong advocate of it. The right honorable gentleman is Saul an 011Rst the prophets, as I told him. I have re-read his utterances on the advantages of borrowing - on how we could build up great commercial enter prises without building up a national debt - a thing I have been trying to show the people of Victoria year after year. I note his conversion, and congratulate him.

An Honorable Member. - You are jealous !

Mr WATT:

– No; I desire no monopoly of the good thoughts of life. I am glad to see other men come into the kingdom in which I have been privileged to browse for some considerable time. But the right honorable gentleman comes in with an air of affectation peculiarly his own. He says that if we had sufficient revenue this year the Government would not borrow. No; nor would any one else. We only borrow because we feel, as our forefathers felt when they built up our railways and roads, that if we carry out such works by means of revenue we shall go at too slow a pace for the country’s needs. It is because the revenue is not sufficient that we borrow and apply the money to reproductive enterprises which will pay interest and sinking fund, and are, therefore, good business. The Treasurer has joined hands with gentlemen who sit on this side; and I hope we have heard the last of the nonsense that borrowing is a bad tiling for a young country like this. The main thing is to get the money at a fair price, and put it into enterprises which we are sure, after careful testing, will return; interest and sinking fund. The British Government are to be congratulated on the spirit of patriotism which has enabled them to meet the requests of the Dominion as well as their own needs. I notice with some regret - though, probably, it was an oversight - that a due measure of praise was not given by the Prime Minister to the British authorities for the valuable assistance they are rendering to Australia.

Mr Fisher:

– Yes, I did so.

Mr WATT:

– I must have overlooked it; at any rate, it is worthy of emphasis. This large Imperial spirit, which notes the troubles of the daughter States across the seas, and enables the Imperial Govern ment, with all the great commitments pressing on them day after day, to meet the requirements of Canada, South Africa, and Australia, ought to be acknowledged. As to the local loan, about which there has been so much trouble, it cannot be said that the Prime Minister was luminous, or even clear, in his first utterances.

On the contrary, it may be said that he made darkness visible. Yesterday, however, he made what he regarded as a clear statement about the loan from the Mother Country and its relation to the Australian loan. Let us look at the right honorable gentleman’s original statement. He bad dealt with the Imperial loan, which is to come to us from the 15th December this year at the rate of £1,500,000 per month, reaching a total of £18,000,000 by December next year, and he went on to say -

Associated with that transaction was an agreement made with the Associated Banks whereby they should give to the Commonwealth £10,000,000 in gold for Australian notes. In undertaking this financial transaction, I impressed upon the banks’ representatives that, us Treasurer, I should require their assistance, und they, recognising the national emergency, cheerfully agreed to render the Government every possible aid in their power. It should be clearly understood that the £10,000,000 advanced by the banks will be redeemed at the close of the war.

These arrangements made it possible for the Commonwealth to make available to the States, -at a low rate of interest, having regard to the state of the money market, a sum equal to thu amount the Commonwealth itself had borrowed from the British Government.

Mr Fisher:

– I think that is very clear.

Mr WATT:

– It is not so clear as what the right honorable gentleman has said yesterday. He dealt with the £18,000,000 proposition, and then with the £10,000,000 to be lent locally, and said that, because the Government- had raised the £10,000,000 they would be able to give the States £18,000,000.

Mr Fisher:

– Yes.

Mr WATT:

– The right honorable gentleman says “ Yes,” and he evidently has in his mind some internal conclusion that he has not made clear to the Committee. I have no desire to be querulous or quarrelsome in regard to this matter. I think that Australia is extremely lucky to get so large an Imperial loan, and, whatever Government may be in power, to have bankers with so much public spirit as to meet the Treasurer in the way they have. But while acknowledging that, why cannot we be clear to one another as to how all these transactions are to be carried out 1 I am convinced that nothing is lost by frankness. .

Mr Fisher:

– There is no lack of frankness.

Mr WATT:

– Then let me assume what is taking place, and see if I am right. Already this question has been discussed -almost ad nauseam, though in a very illuminating way, by many of the speakers. A sum of £10,000,000 is not equivalent to £18,000,000, and the Prime Minister has to find the difference of £8,000,000. We are borrowing £18,000,000 from the Imperial Government for war purposes, and we have exchanged £10,000,000 in Commonwealth notes for £10,000,000 in gold from the banks, and the Government have promised the States £18,000,000. How is this going to be done? If the loan to the States is paid with the £10,000,000 in gold, then that is all that can be done as the result of the transaction with the banks. If it is paid altogether in paper it will be £18,000,000 in paper against £10,000,000 of gold reserve stored.

Mr Fisher:

– Yes.

Mr WATT:

– If it is paid partly in gold and partly in paper, that will mean a substantial, although a less increase, in the note issue.

Mr Fisher:

– That is so.

Mr WATT:

– Which is it to be?

Mr Fisher:

– The latter.

Mr WATT:

– Part gold and part paper.

Mr Fisher:

– Yes.

Mr WATT:

– I hope the right honorable gentleman will not mind the suggestion, but I take it that he desires liberty to conduct this transaction to the final stage without being bound down to pay in gold or paper. No doubt the Treasurer should have a flexible arrangement; but why not tell us what it is?

Sir Fisher:

– I thought I had told you.

Mr WATT:

– The Prime Minister has complained about one writer in a journal saying that the issue of paper money was to reach £45,000,000; but it is because he himself has been reticent, or cryptic, on occasions of this kind that we are compelled to resort to such calculations. I believe the note issue is going to be much larger than was expected when war broke out, and I do not think any of us can name the final maximum to be issued or circulated - and they are two different features - by the time the war is over. I am prepared to give the Treasurer the fullest trust, assuming that his judgment And honour are equal to the great responsibilities that confront him. But he ought to tell us quite plainly, or tell some of us - a Finance Committee, if he chooses - exactly what is in his mind; so that what he proposes may be known to responsible authority on both sides of the House. I hope the right honorable gentleman will do that.

Mr Fisher:

– I will do anything in that regard.

Mr WATT:

– There are, I know, transactions in regard to notes and loans, and matters of that sort, which, perhaps, a Treasurer does not care to deal with fully in the presence of Hansard, the press, or the public; and I think it is sometimes good state-craft to keep a little “ up one’s sleeve “ until the business is completed. If that be so, let the secret be intrusted to a Finance Committee, or leading members of the Opposition, so that they may know exactly what is being done. I participate in the fear of the honorable member for Flinders that the note issue, wrongly used, may be a source of great injury, amounting, it may be, to ruin, in this country. Its potency on this occasion is the measure of its power for harm if improperly used. I do not quite know what the Treasurer thinks is the maximum absorbing power of the community.

Mr Fisher:

– The Leader of the Opposition and the honorable member for Flinders were both at a Conference, where the agreement was entered into with the States, and they got a good deal of information.

Sir William Irvine:

– We took up the same position at that Conference as the right honorable gentleman did in our Conference.

Mr Fisher:

– I think my reply answers the honorable member for Balaclava.

Mr WATT:

– It does, in a way. I do not say that the Prime Minister is hiding anything, but he possesses much Caledonian caution, and it ought not to be exercised on all possible occasions.

Mr Fisher:

– I am not to be blamed for that caution.

Mr WATT:

– I have seen the right honorable gentleman most disagreeably reticent where frankness, in my opinion, would have been the best policy, though that, of course, may be a matter of a difference in judgment. I hope the note issue will be carefully guarded; that the agreement with the banks, which may be read in two or three different ways, will be carefully drawn, so as to be beyond dispute; and that, if the banks have undertaken to keep this £10,000,000 in notes out of the public’s hands, and not present it at the Treasury, the condition will be unmistakably set forth in a legal document. If the banks say they cannot, or will not, use the £10,000,000 in notes, they have two alternatives; they may let out their present holding of £8,000,000 or £9,000,000 in notes. Have the banks given any guarantee in regard to that?

Mr Fisher:

– Yes, they have promised to meet us in that way.

Mr WATT:

– They “may not be able to do so, and, instead of the £10,000,000 in notes handed over by the Commonwealth, they may let out a corresponding number of their own, while technically keeping the agreement.

Mr J H Catts:

– The banks are interested in protecting themselves.

Mr WATT:

– We all are; we do not wish to see the edifice fall down.

Mr J H Catts:

– But I mean interested in protecting the banks.

Mr WATT:

– They are the guardians of certain interests, it is true; but we all. desire to see the Commonwealth staple and private interests protected. The Prime Minister, with wonderful rigidity, if I read the agreement aright, has said we will give £10,000,000 of notes for £10,000,000 in sovereigns, and that the banks must not use the notes at all while the war is on. If that be so, he has rendered it impossible to use £10,000,000; and he ought to pay the banks interest on that amount. He has robbed the banks of the money - I use that term, not as one of abuse or complaint, but of description - because he will receive interest from the States, and, as the financier or broker, will collar the whole of that interest for himself. Surely that is not fair to the States or banks. If he gets £10,000,000 for nothing, and lends it to the States, he should charge the States nothing.

Mr Burns:

– The banks are agreeable to what is proposed.

Mr WATT:

– I do not know the circumstances of the interview, but I can. well imagine the Prime Minister, backed by his strong following fresh from the country, saying to the bankers, “Well, gentlemen, if that is not done, something else must be done,” and he might shake his head in the way he has shaken it at members in this House, and made them feel frightened. I have seen men in this- corner tremble when the Prime Minister has shaken his head.

Mr Sharpe:

– You are speaking from experience.

Mr WATT:

– I am speaking from observation. I have seen the honorable member wilt when the Prime Minister has turned round and cast a look on his henchman. Turning away from jokes, the honorable member amongst them, to serious matters, I would ask the Prime Minister to, at some later stage, reconsider the phase I have put before him . If we get this money without interest, we have no right to collect interest when we pass it on to the States, other than a charge for doing the business. Even if, as the broker, the Prime Minister took 1 per cent. , he would be getting more than any other broker gets in a transaction of the kind, but if he takes the whole of the 4 per cent., I say he is charging a very high commission indeed for his services.

Mr Fisher:

– I, personally, will get nothing.

Mr WATT:

– I am not one to charge the right honorable gentleman with malfeasance in connexion with money he may handle in the public interest. I have nob suggested that, and never will. If the time comes when a man in power is guilty of such an action, the people of Australia will seek him out, and remove him from office. But I am speaking of transactions as between Government and Government, and as between Commonwealth and State, and I say that the Commonwealth should not charge the States interest if we have not to pay interest. The private banks, which have arranged this matter, deserve that strong praise which the right honorable gentleman gave them. They have met the situation in a public-spirited and far-seeing way, which will bid fair to strengthen the financial resource^ of all parts of Australia. But I ask the Prime Minister what part was played in this transaction by the Commonwealth Bank. How much money is that institution putting up ? We have been told that the Commonwealth Bank is the financial saviour of the country; how much of that Bank’s money, I ask, is included in this £10,000,000? I do not believe that the Bank has put up a solitary penny. If the Bank is all that it has been claimed to be - if it is the central pole in the tent of Australian finance, and the chief supporker of our credit-why did. it not or:ganize the movement? I venture to say that the men who have saved the situation are those who handle the private means of the country, the directors and managers of the big private financial concerns, and it speaks of the ineffable weakness and impotence of the Commonwealth institution that, at the first call made by the Commonwealth for aid in a time of difficulty, the weakest of all the financialinstitutions which have responded is the one of the Commonwealth’s1 own creation. That fact speaks its own condemnation of the men who launched the Bank, as well as of those who are in charge of it. An honorable member asks how long it is since the Bank was launched. It started operations in this State in June, 1912, and it has control of £18,000,000. But there were men on the platforms during the recent election contest/ - and I introduce this phase of my argument with some reluctance, because I do not desire to give a party colour to my criticism - who said that this Bank saved the country. I did not mind them talking to the poor, deluded electors in the country in that way, but when they openly « and blatantly blurt out such fallacies in this House, I can hardly believe my own hearing. Here is the actual test of what the Commonwealth Bank has done: the private banks have put their money up to the extent of £10,000,000 worth of gold ; how much has the Commonwealth Bank put up? Whatever fault or weakness there be in the Bank, lies in the wrong conception of the institution which was in the minds of its creators, a wrong conception, which has been corrected only in one respect, as the Banking Bill shows, viz., that the Government would enlarge the institution in some ways, but would not enlarge it to the extent of taking away that spirit of open hostility which exists towards it amongst most of the governmental forces of Australia. I ask the Prime Minister to consider that as an additional reason why this Bank should not take its place at the heel of the private corporations, but, in any future emergency, should be the bell-wether of the whole flock, and lead them on to wherever the governing forces of the country think they should go. This fact must also be borne in mind - that the men who have contributed this money as the custodians of. private means in this country, are those who are generally described as vampires and bloodsuckers by the more heated members of the party now in power. I have heard honorable members with red eyes and red adjectives speaking on this subject - some of them not far from your own constituency, Dr. Maloney - and to hear those orators one would think - and I must exonerate you, sir, in the position yon now occupy from the accusation I am now making - that these bank directors were worse than Germans and Turks, and that they had built their nests amongst us in order to rob us. I do not pretend for a moment that they are in the banking business for the sake of their health. They are in the business for profits, and they are wise to “ sock “ as much of them as they can, but they have shown that, in a time of great peril and crisis, they can serve the national interest in a truly national way.

Mr Burns:

– Is that the Opposition’s platform which you are about to read 1

Mr WATT:

– The Leader of the Opposition has just handed, to me an article written by the Hon. W. M. Hughes, Attorney-General of the Commonwealth, and published in the Daily Chronicle, and subsequently reprinted. In that article the writer described the progress of Australia under the reign of King O’Malley and himself, and various other gentlemen who did not count much. Amongst other things the writer says that the four great financial issues before the electors in 1910 were - (1) the allocation of Customs and Excise between the Commonwealth and States; (2) the Australian Note Issue; (3) the Commonwealth Bank; and (4) the non-borrowing policy. On those issues they won.

Mr Hughes:

– Quite so; are you annoyed ?

Mr WATT:

– Not at all; but I am glad to welcome a penitent into the fold, and I think that, henceforth, we can be brothers on financial questions.

Mr Hughes:

– Some day you may be penitent, too.

Mr WATT:

– I hope so ; but in another way. I did propose to emphasize some of the remarks made by the honorable member for Gwydir, as to the necessity of making the Postal Department pay, but time will not permit me to more than say, as one interested in postal administration in the days before it passed to the Commonwealth control-

Mr Mahon:

– That was when the lady called on you.

Mr WATT:

– Yes; and a lady called on the honorable member also, whilst another was introduced by one of the honorable member’s colleagues, the honorable member for Darwin, at the same eventful period of history. However, I wish the honorable member would not introduce these sexual questions. I will join with the honorable member for Gwydir in trying to reach a true balancesheet for the Postal Department. I do not know whether the last balance-sheet is as accurate as it should be.

Mr Webster:

– It is the best we have had.

Mr WATT:

– That represents some advance, but it is not in commercial form, as the balance-sheets of our railways are, and as it should also be, so that we may know exactly where the Department is; losing money and where it is paying. Weshould then join, irrespective of party, in making the Postal Department a paying concern, and in making its individual part* pay. If the larger cities, in which I have lived the greater part of my life, are getting undue concessions at the expense of the general taxpayer, let the Government, be quite open about it, and let us be courageous enough to say that we will notuse the Post Office as a taxing machine, but, at the same time, it must not be a losing machine, but must be made to pay its way. Telegraphs, telephones, postage, money orders - each branch of theDepartment should stand on its own footing and pay for itself. I hopethe honorable member will pursue resolutely his endeavour to place theDepartment on a better footing, and I hope next week to see him installed’ on the Treasury benches, perhaps in the office of Postmaster-General, wherehe may have some power to do what he thinks should be done. In conclusion, I desire to say that one welcome feature of the Budget is the changed attitude of the Government towards the States in respect of two very vital concerns. In 1909, the Prime Minister, as he then was and now is, with his colleague, the present Attorney-General, met a Conference of State Ministers. They did not treat the State representatives discourteously; in fact, they treated them very courteously. The Prime Ministerpractically said to the State Premiers, “ You are gathered together to discuss matters in which you are interested, and’ if you desire to make representations to us, we, as representatives of the Commonwealth, will be pleased to listen to you, just as we would listen to any other body of men who had representations to make to us as Commonwealth Ministers.” Mark what a change has come over the scene with wider experience. The Government now say, “ In regard to the two great problems - the utilization of the Murray River waters and the uniform railway gauge - we not only believe that these are our problems as well as yours, but we are prepared to help you on all occasions, and to give you financial aid in these and in all other matters. We adopt the Murray River agreement, which we had no hand in framing, and will cheerfully pay our £1,000,000, and will pass the necessary legislation through the Commonwealth Parliament when the State Statutes are passed. In regard to the uniform gauge question, we feel that we have a fatherly interest in the matter, and we will help the States. to get a settlement of the problem.” 1 say that I welcome that change of attitude, but, in connexion with the question of uniform gauge, I have a word or two of warning to offer. Alongside that question is that of strategic railways. It is difficult enough to settle the gauge question, as some of us know who m positions of State responsibility struggled with it for years, but it will be ten times more difficult to deal with if the Government associate with it the question of strategic railways. If you talk to State men of a uniform gauge, whether at a cost of £31,000,000 or £57,000,000, whether the States are acting in conjunction with the Commonwealth or by themselves, that is the biggest financial problem that they have ever had to face, and it is quite sufficient in itself. So keep apart the question of strategic railways, and if there are to be questions of that kind considered, let us have them before this House; let them be sent to the Public Works Committee, and let all the data and matter upon which we can judge be given to this Parliament, as well as to the State Parliaments. Lately there have been whispers in the different capitals of the Commonwealth that it is the intention of the present Government to build 3,000 or 4,000 miles of strategic railways. If anything like that is true, it is a wild-cat scheme. I hope we will not become mad in our desire to hasten the unification of gauge or the construction of strategic railways from Sydney to Broken Hill, or other outlying parts of the country. When the Emden and the Scharnhorst were abroad, and we did not know what might happen to the sea-ports and’ coast-line of Australia, the question of the mobility of our Defence Forces was of great importance; but that time is now past, and unless the Dreadnoughts of the North Sea are sunk where they ride, it is not conceivable that we are going to have any immediate necessity for a uniform gauge and strategic railways at great expense to the country. I firmly believe that for every pound returned on the expenditure on strategic railways, we would get £10 returned on expenditure on developmental railways. I hope that the Government will take that view, and not persist in the desire to link these twin issues, and thus prevent a settlement that may be arrived at between the Commonwealth and the States, for the gradual unification of the gauge of our railways.

Mr HUGHES:
AttorneyGeneral · West Sydney · ALP

– I can hardly be expected to follow in detail the remarks of the honorable member for Balaclava, or to traverse the ground covered by the honorable member for Flinders. I shall content myself with dealing very shortly with the general principles that have been the subject of criticism. I think it may be fairly said of those critics who have thus far favoured the Committee with their observations, that there has not fallen from their lips one helpful suggestion, None has attempted to deny that the’ country is faced at the present time with’ a position quite unique, that we are not to look for precedents for guidance nor authorities to help us, that we are to cleave a way to national and financial salvation, which perforce we must attain. There is no alternative that we dare contemplate, and there are no beacon lights by which we may steer. When we look to the Opposition for help we get an avalanche of criticism, but, aa I have said, not one helpful suggestion. The honorable member for Balaclava has run the gamut from strategic railways, through post-offices, through the sins of the Government now existing, through its past career in the days prior to the interregnumas I term the pleasant interlude in which the sun shone on gentlemen on the other side - through its every act, criticising all with meticulous detail. But he gave us no hint of a better way of meeting the present admittedly most difficult situation. He spoke about the Tariff, and while I listened I realized that he was the long-lost apostle and high-priest of the cause of Protection in Victoria, and, contrasting his professions with his actions, it is easy to understand why Protection has been in such a sorry way in this State. The honorable member said that the Tariff is insufficient; he requires a high Tariff. He said that the Tariff now before the Committee is the effusion of a Tariff-faker. No doubt he can speak with some authority upon the art of faking. He has had very many opportunities to do something for Protection. How has he used these? He had one opportunity during the last elections, but he deliberately harnessed himself to the chariot wheels of a party who wished to side-track the Tariff, who submitted the Tariff to the cumbrous machine of an inquiry which promised no immediate result, yet it is to this he now declares he looks forward with joyous anticipation. The honorable member says that we ought to have awaited the evidence taken before the Inter-State Commission. Let us see what he will do when he is confronted by this evidence. What doe3 lie hope from it? What does he expect from it? Has he read any reports of the inquiry of the Commission? Does he really think that from this Commission he will get that high Tariff of which he declares himself to be such an ardent supporter? The honorable member’s pose as the apostle of high Protection will avail him nothing when he attaches himself to a party - a veritable aiia podrida of fiscalism - led by a gentleman with whom I had the honour to be associated for some years in the great cause of Free Trade. We shall see what we shall see when the Tariff comes on; but, in the meantime, I adjure the honorable member to look back upon his own piebald fiscal history. His interest in Protection is academic at best. It never finds expression in deeds. It could not even withstand the pressure of the foreign locomotive builders. While there was opportunity at their very feet to encourage an industry in this city, the honorable member’s Ministry deliberately sent to a’ foreign country for locomotives that could have been manufactured in Australia.

Mr Watt:

– We have built more locomotives in Victoria than any other State has done.

Mr HUGHES:

– Whatever happened, the fact remains that the honorable member patronized foreign industry. Beyond expressing his unswerving faith in a policy of high Protection, he has done nothing for the cause. Now for another matter.

The honorable member, and also the honorable and learned member for Flinders, dealt with the land tax. They were very severe on the proposals now before the Committee. Neither honorable member attempted to deal with the merits of land values taxation as such; they were unable to do so, for the best of all reasons, for in their varied careers they have been ardent advocates of that very form of taxation.

Mr Watt:

– I am still.

Mr HUGHES:

– No doubt they both still are. They are in that happy position of advocates that look for the fruition of their advocacy in the dim future or in the still dimmer past. It is only the present time that is unsuited for the imposition of such taxation. Time was when the honorable member for Balaclava reviewed the results of fifty years of land legislation in Victoria, and condemned it unsparingly; time was when he held up the various schemes of closer settlement that had been taken up by the State Government and condemned them. He still is a believer in land value taxation. But he condemns our proposals. The honorable and learned member for Flinders, too, as he says, and as Ave know, has been an advocate of land values taxation in some shape or form; but it appears that there is about this particular tax something abhorrent to the very principle of land values taxation, whether it be the exemption, the severity of its incidence, we are not told; it is enough that these honorable members condemn it. But they did not advance a solitary, reason why the tax should not fall upon these great estates, nor were they able to give one reason why the new taxation should not be imposed. That there is a drought is true, and that there must be some cases where land-holders have been hit very severely may be readily admitted, but increased taxation is absolutely essential at the present time to meet the expenses of government for our purposes. The country has time and again endorsed the’ principle of land values taxation as at present applied; even the party to which these honorable members belong did not muster up enough courage at the last election to pledge themselves to repeal it, and, therefore, as with us, they are committed to the principle.

Mr Watt:

– Do you mean that because they did not promise to repeal the land tax they are committed to it?

Mr HUGHES:

– Obviously, a party seeking the suffrages of the electors which, declares definitely that it would not interfere with the general principles of the measure, and even declines any suggestions to amend it in details, must be held to support that system of taxation. As to cases of hardship, it is proposed to amend the law so that the Commissioner may deal with such cases, whether arising from the existing drought, or any other cause, and thus the only argument that can be directed against the proposals of the Government, so far as the land tax is concerned, are met. The honorable member described this as a class tax. In a sense, no doubt, the land tax is a class tax, but it is true only because a very few people have a monopoly of the best lands of Australia, a condition of affairs neither to be supported upon grounds of expediency nor of justice. That a few should possess the means whereby all must live is neither expedient nor right. It is true, as the honorable and learned member for Flinders said, that 16,000 would be paying all this taxation. It is equally true that about 600 people will pay half of it. What more scathing condemnation of the present system of land ownership could be advanced than the fact that there is such a distribution of the valuable land of Australia that 600 persons own half of it? This is in itself amply sufficient to justify a system of taxation that aims at a better and wider distribution of the lands of the Commonwealth.

The honorable member for Balaclava was agreeably vague in dealing with the probate duties. Beyond seizing upon the point that the Treasurer’s statement declared that “the expectations from this source of revenue would be £2,000,000 instead of £1,000,000, the honorable member’s criticism was irrelevant. He pretended to find confirmation of the charge that this tax is intended to be permanent in a clause of the Assessment Bill. But his attempt to do so must fail.

The explanation of. the language of the clause is simple. His contention, which he supported by a reference to this clause, is not supported by the facta. The Commissioner who will administer the tax is the Land Tax Commissioner, and the verbiage has been taken holus-bolus from the Land Tax Assessment Act. We are not committed to the appointment of a separate Commissioner, nor is the verbiage of the provision to be taken as indicating the length of time for which the tax will be imposed. Time alone will determine whether the tax will be permanent or not. By way of interjection I stated that, in my opinion, in its present form the duty would not be permanent. It is an expedient for raising revenue, and I venture to say that it is a form of taxation to which every Government has the right to resort, and which is amply justified in our present circumstances. The honorable gentleman spoke of the taxation proposals of the Government generally as class taxation. He said that we had given preference of employment? to those who voted for us, and now proposed to repay their patriotic services still further by exempting them from taxation. There is no truth in such a charge. In my opinion, the basis of true civic government rests upon taxation levied in proportion to the ability to pay. How has that canon of fair taxation been violated in the present proposals ? Upon whom does the present war press most hardly ? While the rich may be affected the poor feel it much more severely. Thousands of persons are unemployed because of the war, and, in the nature of things,’ unable to contribute to the fiscal needs of . the country. Thousands more are employed for only part of their time. In framing a scheme of taxation facts like these must be borne in mind. This scheme of taxation distributes the burdens fairly over the community. It does not press upon the rich with undue severity. If we compare our Budget) with that of the Chancellor of the Exchequer, it will be seen that the burden imposed on our wealthy classes is light compared with that on wealth in Great Britain. Our rich men are the most lightly taxed in the world. In Great Britain there is now an income tax of 2s. 4d. in the pound. We propose to tax the rich in two ways only - by increasing the land tax on estates valued at £5,000 and upwards, and by imposing duties on the estates of deceased persons. We tax the poor by revenue duties, and duties upon stimulants and narcotics. The direct taxation levied in Great Britain for the year 1913-14 was £87,359,000, or £1 19s. 8d. per head of population. The indirect taxation amounted to £75,000,000, or £1 14s. Id. per head of population. The direct taxation of the Commonwealth for the same year was £1,609,000, or, assuming for the sake of convenience, that our population is 5,000,000, 6s. 5d. per head, and the amount which it is estimated that we shall receive in direct taxation in the year 1914-15 is £3,700,000, or 14s. 9d. per head. The State indirect taxation for the year 1912-13 - the latest figures obtainable - was £1 0s. 3d., and the Commonwealth indirect taxation for the year 1913- 14, £2 19s. 9d., and the estimate for 1914-15 is £2 17s. 5d. per head of population. The direct taxation of Great Britain for 1913-14 was £1 14s. Id. per head, while the direct taxation of the Commonwealth for 1913-14 was less than £1 10s. per capita. The total British taxation per head of population for 1913-14 was thus £4 13s. 9d., as against the total Australian taxation for the present year, 1914- 15, £4 12s. 5d. So we see that the taxation to be levied during the present year in Australia is less per head of population than was levied in Great Britain in 1913-14. Since that time the British income tax has been doubled, and it is expected that £8,200,000 will be received “from the duty on tea, and £17,000,000 from the duty on beer. Thus it is plain that both rich and poor in this country are much more lightly taxed than are the people of Great Britain.

The honorable member for Balaclava pointed out that the war has done much to remove class and race distinctions. That is a matter for which to be devoutly thankful. It is also to be noted that the rich in Great Britain are paying their fair share of the cost of this dreadful war without grumbling or even protest. Are the wealthy classes of Australia less patriotic? I am as ready as any one to make allowance for the hardships land-owners have suffered through the drought. If the additional land taxation were to be imposed without making provision for the consideration of cases of individual hardship that would be ground for fair criticism ; but it is proposed to extend the powers of the Commissioner very considerably, so that he may be able to soften the harshness of taxation where sufficient cause exists. At present the restrictions imposed on him have made it impossible to usefully exercise his discretion.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Why have you not roped in the Shipping Trust?

Mr HUGHES:

– My experience with the Shipping Trust has been disastrous. [ spent a great deal of time and public money in trying to “ rope in “ the Shipping Trust, as the honorable gentleman calls it. But I failed completely.

A word or two now about the note issue. If I may say so without offence, the argument of the honorable member for Flinders went round about the subject and led nowhere. It gave us no help at all. It was academic in its tone. It warned us of the dangers of a paper currency. But it did emphatically not attempt a solution of our present financial difficulty. Obviously there are limitations to a paper currency; but what they are he did not tell us, nor did he say how they might be discovered. He led us to infer that some immutable law exists - some fixed mathematical ratio between the amount of gold and paper currency. But that is not so. There is no such fixed ratio. Further, the circumstances of one country are not those of another, nor are the circumstances of one century those of the next. The laws that regulated currency 100 years ago are the laws that regulate it to-day; but the circumstances are entirely different. A century ago metallic currency bore to the whole currency a ratio of one to two or three. To-day, especially in the great commercial countries of the world, the ratio is not one to a hundred. The honorable member spoke as if notes were the only form of paper currency, and that special danger attended their use. But any danger that attends the use of notes attends the use of all paper currency. It is a settled law that bills of exchange, Exchequer bonds and many other negotiable instruments are currency, and the commerce of the world to-day is based on a paper currency, of which notes form an insignificant part. Whatever danger may attend a note circulation attends also the circulation of other forms of paper currency.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– There must be a good backing.

Mr HUGHES:

– I do not deny that; hut in practice the backing is so insignificant in comparison with the totality of the currency, to say nothing of other forms of credit, that it is impotent to serve as a basis except in normal times. All modern finance rests upon the foundation of mutual confidence, without which it could not continue for twentyfour hours. The honorable gentleman spoke of American green-backs during the Civil War and other instances of a depreciated paper currency. But how do these apply to our circumstances? One might imagine from the remarks of the honorable member for Flinders that we had reached the danger point in our note issue; but nothing is further from the truth. Our note issue rests upon an absolutely secure foundation. The extent to which metallic backing is necessary may easily be exaggerated. Scotland is a country as little given to financial experimenting as any country on earth; but there, according to McLeod in his Theory of Credit, page 737, the banks are able to maintain about £95,000,000 of banking credit on a reserve of about £4,500,000 of gold, the ratio of credit to gold being about twentythree to one.

Mr Watt:

– That is not currency.

Mr HUGHES:

– It is credit.

Mr Watt:

– But they are not synonymous terms there.

Mr HUGHES:

– The honorable member is quite in error. While it is impossible to determine what is a safe ratio of gold to notes, yet it may be fairly said that the point of safety is not passed when the paper currency does not exceed the amount of the metallic currency which it displaces. Where paper merely takes the place of gold, and the gold is retired, then you are in a perfectly safe position. You may, and probably will be, in a country like this, safe far beyond that point, but how far, experience alone will teach us. Some honorable members speak of our position as if we were spinning on the tight-rope of fate, and were in imminent danger of disaster - as if we had no control of it and should have no opportunity to deal with it whenever occasion arose. As a matter of fact, the Treasurer and the Parliament have at their command means to deal with the situation if at any time it should become necessary. The present position is admittedly normal - I speak of it being normal in an abnormal time - and no trouble can arise except as the result of alarmist, grossly inaccurate, and misleading statements such as were published over the name of Mr. Brookes in a magazine this month. The statements in the article in question are grossly opposed to the facts, and are calculated to damage our credit abroad. They were written, as is very evident, by one who is totally unfamiliar, not only with the actual circumstances of our present position, but with the theory upon which currency rests, and from the stand-point of one more anxious to score points against the Labour Government than to conserve the interests of his country. I shall leave the position in regard to the note issue with the remark that at the present time there can be no danger of depreciation - since it is not an inconvertible issue. As to the notes held by the banks, the understanding is that the banks will not present these to the Treasury ; but that is the only obligation; the issue, therefore, is wholly convertible. As to the future prospects, the £8,000,000 now in circulation and the ,£10,000,000 to ba circulated, will result probably in £15,000,000 of notes being held by the banks, and £15,000,000 of notes being held by the public, that, I am assured, being about the distribution of the whole note issue. We therefore have a state of affairs where, £15,000,000 being in circulation and the whole issue legally convertible, there clearly can be no depreciation. It is an axiom of paper currency that depreciation cannot occur where the currency is convertible, for the holders of notes can convert them into gold whenever they please. No one denies that note holders will be able to obtain gold for notes presented, and there is thus a safeguard, complete and satisfactory, for cur paper currency.

I come now to another point to which I desire to refer briefly. The honorable member for Flinders and the honorable member for Balaclava both dropped some hints as to what we ought to do at the present time. The honorable member for Balaclava was even more vague than the honorable member for Flinders, who, after depicting a state of affairs little short of chaotic, said that the way out was to borrow money openly and honestly in the open market, and to pay interest upon it. According to the honorable member, all -would be well. Any one would imagine that the mere payment of interest created an impregnable financial position. But there is no virtue in interest per se. Although it is, unfortunately, axiomatic in this commercial world of ours that money cannot be obtained without interest being paid on it.

Mr Watt:

– The Government have destroyed that axiom by this £10,000,000 transaction.

Mr HUGHES:

– The point I was making was that it is not by paying interest that one insures financial stability. The honorable member says that we should borrow money in the open market and pay interest - any interest, no matter how high - for it. The true remedy for these troublous times, however, according to the honorable member, is to reduce our standard of living. Both rich and poor, he declares, are indulging in extravagance. We must, he says, readjust our outlook. We must live within our means. It is easy at this time to make a statement of that sort, which involves a gospel of destruction and ruin. I do not for one moment preach the gospel of extravagance, but it is very easy to see that a policy of retrenchment at the present time would spell absolute disaster to Australia. If there is one thing more than another that the country wants at the present time it is a vigorous public works policy. It requires the expenditure of public and private money, the one postulate only being that both public and private expenditure shall be for remunerative and proper purposes. Subject to that, the more we spend at this juncture the better for Australia. We must, of course, have the money to’ spend, but the doctrine preached by the honorable member for Flinders is that we ought to “ draw in our horns,” and retrench.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– That is the honorable member’s deduction.

Mr HUGHES:

– What I say is that we have here a Scylla and Charybdis. You may dash your ship against the rock of extravagance, but you may also rush it into the quicksands of a cheese-paring policy which would be absolutely fatal to Australia at the present time. This Government is faced with great problems. It has to provide employment in Aus tralia for as many people as possible. It has endeavoured, and is endeavouring, to meet its great obligations. It is generally admitted that the Government has carried out its duties so far satisfactorily. It has provided the States with £18,000,000, which they could not have obtained at this juncture in any other way. By this action alone it lias enabled the public works policy of Australia to be carried on. It has kept hundreds of thousands of men - I say this deliberately - in employment. The great army of public servants would have all been affected but for our policy in this vitally important matter. But this by no means discharges all our obligations. We have now to carry out a public works policy of our own. This necessarily involves very large commitments. But the question must be faced. The necessary money must be obtained. We must not, at our peril, listen to suggestions of retrenchment, for this would but add to our difficulties. It may be, it is, if you like, almost impossible to borrow money in the London market at the present time. The honorable member for Flinders said something about borrowing at 6 per cent, or 7 per cent. If we have to do so, well and good, but until we are driven to it, I venture to say that the policy the Government are pursuing in regard to the note issue at the present time is a sound one, and we should pursue it until it is proved to be unsound.

Mr Watt:

– It is all a question of how far you have to go.

Mr HUGHES:

– I quite agree with the honorable member, but mere academic dissertations upon the point are useless. There certainly are dangers in an excessive paper currency. There are dangers from over-eating and over-drinking. We observe them daily, yet for the most part no one ceases altogether to eat or to drink. A few do; and the result may be seen in any convenient necropolis. The virtues of a note issue, like everything else, have their limitations. Those are being carefully noted by the Government and by the experts at our disposal. If this policy which we are pursuing is not satisfactory, what remains? What is the alternative, for clearly some definite and vigorous policy is urgently called for? If we are not to spend money on public works we must pursue a policy of retrenchment. But if we are to pursue such a policy, let us be told so plainly. Do not let us be treated to academic dissertations upon the dangers of a note issue. Do not let us be told that we ought “ to draw in our horns “ and spend money less freely - that we should re-adjust our life to our new environment. We have a right to expect something more from our opponents than mere destructive criticism varied with academic dissertations upon the dangers of a note issue. If the honorable member for Flinders means anything he means that the Government should retrench the Public Service, reduce their salaries, and, in short, inaugurate one of those dark and melancholy eras which are indelibly associated with some honorable members sitting opposite. Our idea of what is proper at thi3 juncture is quite different. We hope to weather this storm, carrying on to the best of our ability, retrenching nowhere, and using what money we are able to obtain for the purpose of developing the resources of Australia. The provision of a uniform railway gauge, the Murray River scheme, and every other means by which employment can be profitably found for the people will have the support of the Government. It is to that policy we are committed, and until it can be shown that there is any rational statesmanlike alternative, the criticism directed against the Government must fail. We have imposed taxation only because there are no other means whereby we could finance the requirements of the Government. The proposals are in themselves equitable; they bear as fairly as possible upon all sections of the community, and, I venture to say, will stand the test of time.

Mr GLYNN:
Angas

.- This being confessedly a war Budget, and the occasion being very exceptional and critical, one needs no excuse for trespassing upon this subject, which is rightly regarded as being at the basis of Government, even after such excellent discourses from those who have addressed the Committee up to the present time. I think I ought to touch on some matters such as the note issue; and I shall endeavour, as much as possible, to approach the questions from a point of view that has not been directly, at all events, taken by previous speakers. We ought all, I think, whatever may be our differences as regards method, to be deeply conscious of the fact that we are absolutely capable of fulfilling the fullest obligations that the war may impose on us. At the same time, we ought to consider matters in the additional sense that this is a time for careful, temperate, and, within the limits of our abilities, wise finance. Within the last two or three years I have once or twice urged a word of caution on Treasurers, altogether irrespective of their parties ; and I may, therefore, be permitted to say a few words regarding what I call the somewhat wasteful management of the magnificent resources with which both States and Commonwealth are endowed. I say that we have magnificent resources, because, tested by any means you like - by production, by savings, by the volume of wages, and the average wages paid - there are indications of a prosperity that should deepen our sense of our capacity to meet, as I say, to the full, any obligations that the exceptional times may impose. But I very much doubt if we have practised that economy and wise management of our household which ought to be the highest aim of statesmen in public affairs. Let us look at our position, and review a decade. In 1903 the exports of Australian produce were £45,658,883, and in 1914 they rose to £75,090,147. The total trade in the earlier period was £86,061,583, and, in 1913, £158,273,422. This indicates, as I say, very admirable resources. During that period the aggregate revenues of the States increased by £13,892,944, or 48 per cent., the increase being per head as well as absolute. The percentage from public works and ser. vices during that period fell from 63 per cent, to 59.09 per cent. ; and it is a matter for the States principally, and to some extent for the Commonwealth, to consider to what extent the lavish expenditure of the last five or six years, both actual and projected, is likely to maintain the good results from our public works”, which up to recent years was perceptible in the state of our finances. No matter how good may be our resources, no matter how prolific the revenue, the expenditure nearly always keeps pace with, if it does not outstrip, the increase. I find that taxation was increased per head and absolutely during the period I have mentioned, the absolute increase being 56 per cent. Let us take an index to the prosperity of the Commonwealth. Between 1901-2 and 1913-14 there was an increase in the total revenue from £11,296,985 to £21,740,473, while the Customs and Excise revenue during that period rose from £8,189,529 to £14,978,069, or an increase per head from £2 3s. 4£d. to £3 ls. 52d. Between June, 1910-11, and the present time the Treasurers of the Commonwealth have been in a fairly good position. From 1910-11, when the revenue was £1,837,175 more than the estimate tip to the present, there has been a substantial surplus every year. The fact is that we try to live up to the exceptional bounty of nature, though this season nature has, to some extent, failed us, and we are landed in a position that requires the expedients which have been the subject of keen criticism this afternoon, and to which I shall refer later on. The finances of the States and the Commonwealth for the last eight or ten years - and particularly the finances of the Commonwealth - show, I think, that there has not been displayed to the full the two essentials of sound finance - correctness of estimates and providence for the future. On this point, speaking in August, 1912, I urged on the Treasurer, when he again had anticipation of a surplus of about £2,200,000 - not the last big surplus - that the course of international politics might develop events that would cause a severe strain on our acknowledged resources. The object was to impress the Treasurer for the time being with the necessity for creating a capital fund out of those exceptional and unexpected surpluses; first, for public works expenditure, and, secondly, to provide for such a crisis as has now come upon us. Honorable members may remember that the present Prime Minister has declared, in every one of his Budget-speeches for three years, that he intended to bring his expenditure, approximately, up to the level of his revenue. The expenditure has proved less, and the revenue much more, than his Estimates; and it was, therefore, by circumstances rather than what I may call foresight and prudence that he was enabled to hand over to his successor the surplus of about £2,640,000, of which we have heard so much. I may be excused making the following quotation from my remarks on 21st August, 1912 -

But we must remember that if, through any disturbance arising between nations, this prosperity receives n, sudden or sustained check, it will be found very difficult to withstand the strain. I again say that the Imperial prosperity is exceptional, and the same may be said about our own. Should war arise, then the test of our capacity to meet our responsibilities will be applied. War, we know, is always wasteful; and, on one side at least, is generally wanton. At the same time, we are proud to feel that the Empire makes for peace; but the maintenance of peace depends, on conditions and circumstances which we ourselves cannot prescribe or control. Even if the issue of peace or war did lie with the Imperial choice, we must recognise the fact that, at any time, the incapacity, haste, blundering, or petulance of a Foreign Minister may precipitate a crisis big with the fate of nations.

Under the circumstances, it is, perhaps, excusable in me to draw attention to the question whether we have made the best use of the bounty of nature, and of the wonderful resources we have in Australia. I do not wish for a moment to contribute anything towards a spirit of despondency or pessimism. We ought to be optimists here; and the Treasurer has very properly taken that view, altogether apart from the question whether particular financial arrangements are justified, in the Budget he presented a few nights ago. But it is a source of confidence and inspiration to find, as the Budget-papers disclose, that while the State public debts are £302,000,000, the investments of the States in public works are £293,741,000. The point, however, that I should like to emphasize is that we have a very large expenditure, both Commonwealth and State, even in normal times of peace. The ordinary expenditure of the Commonwealth for 1913-14, as shown in the Budgetpapers, was £23,161,327; and if we deduct the amounts paid to the States, including the grant to Tasmania, there is shown a net expenditure of £16,S78,32S. The expenditure of the States is about £45,000,000, which gives a total expenditure, States and Commonwealth, of £61,878,328. If we deduct from this about £15,000,000 expended on railways and other public works - because from these there are a revenue and service as a set-off - we have, for a population of a little under 5,000,000, a total expenditure of £46,664,136, Commonwealth and States. I pledge my faith, at all events, to the desirableness of making the very best of the resources with which we are gifted. If in the past surpluses, instead of being made the measure of increased expenditure, had been put into a Trust Fund, as they could have been by law, during the last four or five years, it is probable that we would now have had, perhaps, £10,000,000 or £12,000,000 to our credit to enable us to do some of the financing that is engaging our attention to-day. Before dealing with some of the new proposals, there are a few matters connected with exports and imports to which I should like to draw attention. Much has been said in regard to Free Trade and Protection, and this is not the time to discuss the merits of the question, either in the abstract or in relation to particular Tariffs; but, as to exports and imports, I should like to quote a summary of the opinion of Sir Robert Gillen, as expressed after very careful examination of the trend of British trade, and the change in the comparative proportions of British exports - that is, the proportions in relation to commodities. Sir Robert Giffen says - lt is not true that imports of any kind displace home production, because what competition may displace in one direction is compensated by a demand in another direction, and by the greater profit ot the community from buying in the best market as compared with the purchase of the dearer article from the weaker home competitors, and it is not true that investments at home, other things equal, arc better than investments abroad.

I only desire to point out that very great statistical authorities take, perhaps, an extreme view opposite to that which seems to be the prevailing one; at all events, with honorable members on both sides at the present time. While stating these generalities, I do not for one moment wish it to be understood that there is not an opening here, in connexion with the finances, for compromise in relation to principle, because our position is not exactly that of Great Britain in regard to external trade. However, it is just as well that we should not altogether overlook some of those economic generalizations which may have to be dealt with later on. As to exports, I very much doubt whether, even with the provision now being made, we shall be able to finance to the extent that is expedient, during the next year. The Treasurer last night gave us some figures which I have not had an opportunity to examine, but I made an estimate myself - and it is based on some figures considered by a competent financial authority - which shows that it is probable that there will be a shrinkage in our exports during the present financial year of at least £30,000,000 sterling.

Mr Tudor:

– I do not think it is so much.

Mr GLYNN:

– I will give the honorable member the leading lines, and I have taken off a considerable discount, to be on the safe side. The production of wool is about £26,000,000, but it is said that we shall not be able to sell at least £10,000,000 worth of that. Our wool is of the fine class, which at present is not in demand to the same extent as the coarser fibres for army clothing. ‘ For that reason, I am advised that within the next ten months it is almost certain that at least £10,000,000 worth of the wool production will not be got rid of. Other items are concentrates, £5,000,000; silver, £2,000,000; hides, £4,500,000; lead, £1,500,000; meat, £4,000,000; copper, £3,500,000; tallow, £1,500,000; pearls, £500,000 ; and grain and flour, at a comparatively low estimate, £8,000,000, making the total shrinkage in our exports £40,500,000. Assuming that that total is to some extent wrong, the shrinkage in exports during the year may be safely estimated at approximately £30,000,000. It is true that in Australia, as everywhere else, exports and imports approximately balance on the average of years, and they did fairly well balance last year. That does not mean that the products of a particular year balance the imports, because specie has sometimes to be sent to complete the balance. Generally, it may be said also that the banks finance the imports ; they make purchases or advances upon which payments for imports are subsequently rendered possible, especially in the United Kingdom. The position of the banks is that they will only have had during this year, assuming their coin is not diminished, about £24,000,000 upon which to operate their credit and to finance any exchanges that may be necessary outside the limits of Australia, because the Commonwealth is to take £10,000,000 out of the £34,000,000, which is the balance at the credit of the banks, and which was ample for all purposes of solvency. I believe the idea is that £10,000,000 worth of gold is to be exchanged for notes of a similar amount which are to be held by the banks in the same way as the gold certificates are held in America, and to some extent in Canada; but I do say that there is nothing in the agreement which was read to the Committee to-day to prevent those notes going into circulation, and, if they do get into circulation, there is nothing to prevent their being exchanged by the public at the Treasury for gold, as long as we preserve the principle of convertibility. We cannot have two kinds of notes in circulation, some convertible and some inconvertible. In my opinion, the persons who drew up that agreement have not yet got a clear mind, as to, or, if they have a clear mind, they have not a lucid way of expressing, what is the arrangement between the Treasurer and the banks. I understood the Prime Minister to say that he did not intend these notes to be presented; but if they are not held by the banks he will find himself in difficulties. Australia, unlike Great Britain, is not a credit country, and we must finance our imports in order to keep them on a basis necessary for the carrying on of our industries. I understand that the position as it was stated to us to-day is that the total of the Imperial loan is £18,000,000, of which £10,500,000 is to be received by the Commonwealth during the next ten or twelve months. Therefore, adding Treasury-bills to the amount of £2,588,314, and assuming that the Government were not paying the £10,000,000 over to the States, we would get about £13,000,000, or, approximately, the amount of the deficit on the year. But as the States are to receive this £10,000,000 from month to month, the banks are going to provide £10,000,000 for some purpose that may be directly associated with the deficit, or with an increase in the volume of the note issue. One cannot be definite, because we do not yet know exactly what is the position in regard to the £10,000,000 that is to be received from the banks - whether it is to meet the deficit or is to be made the basis of an increased volume of note «issue. Turning now to the note issue, I do not desire to deal with the aspects of the question which have been so well touched on by other honorable members. I do say, however, that we would have been just as well off, if not better off, at this period if the Commonwealth had not taken over the note issue. I am bound to say that, because it is assumed by the AttorneyGeneral that of the issue of £30,000,000, which he says will exist during this year, only about half will be in circulation.

Mr MASSY-GREENE:
RICHMOND, NEW SOUTH WALES · LP; NAT from 1917

– Will the issue in the hands of the public be appreciably greater ?

Mr GLYNN:

– The Government assume that it will. Perhaps the best thing I can do is to state the figures as I apprehend them. On the 1st November, 1910, the note issue came into force. The bank circulation was then about £4,291,000, in addition to which there was the circulation of Queensland, which was a State issue. The total circulation at that date may be estimated at about £5,000,000. But the circulation of the banks varies from month to month, so that the actual circulation would be about £4,300,000, and honorable members know that there was a tax of 2 per cent, on that circulation. Adding the profits of the Queensland State issue, the States were then getting about £93,000 a year from the note issue. The average issue of Australian notes, during the financial year ended 30th June, 1914, was £9,500,000. On that amount the interest earned was £210,285; the cost was £27,754, so that the net profit was £182,531. A tax of 3 per cent, would not have stopped the issue before the Commonwealth took the issue upon itself; indeed, I believe that, at the present time, the banks could stand a tax of 4 per cent, without any appreciable shrinkage in their issue. What the States were then able to do if they wanted more revenue from the note issue was simply to increase the tax. The Commonwealth Treasurer has gone to the full limit that he can go, but the States had in reserve a power of taxation which would not have been excessive at 3 per cent., and which would have cost them nothing, because there was practically no machinery required to collect the tax. In times of crisis like this, basing my opinion on what has been done in Germany, America, and the United Kingdom, we could, without any shrinkage below the needs of commerce and general business finance, have put on a tax of 4 per cent’, on the volume of note currency if in the hands of the banks. What taxation paper currency will stand will depend always on the circumstances df the moment. At one time there was, in one of the States, a tax of 3 per cent., and it did not affect the proportion of notes in circulation’ to the rest of the currency. Let us suppose, therefore, that a tax of 3 per cent, had been im- posed on a circulation of £5,000,000. The result would have been £150,000 on the banks’ circulation, in addition to which there would have been the profit on the Queensland issue, which may be reckoned at the comparatively small sum of £40,000. We thus get a .total profit of £190,000, as against the profit of £182,000 made by the Commonwealth note issue during the last twelve months. We would have had this great advantage also, that the automatic adjustment of the volume of the note issue, which is always determined by the general demand and exchange, would have gone on, and the banks would have been able to finance more easily in these difficult times than they can to-day. They could have placed notes in all their branches, and only when they were issued would the tax apply, so that they would not have lost any interest on them. While getting as good a profit, the actual accommodation for the needs of commerce would, on the whole, have been better than under the somewhat artificial method which is now being arranged.

Mr Poynton:

– Would the people have had the same confidence in those notes as in the Commonwealth issue 1

Mr GLYNN:

– I think so. I would remind the honorable member that the note issue is a first charge on the assets of the bank, and even if the banks sold their landed assets alone, they would have realized more than double the value of the issue. As a matter of fact, the banks, about two months ago, had current liabilities - that is, deposits on demand and current account - amounting to £76,000,000, which were covered by £36,000,000 in gold, besides a fairly large amount lying at demand in the United Kingdom. Besides, there were their general assets. So that there was no shadow of doubt about the ultimate solvency of the banks’ note issue, and I would say solvency for every other purpose of the banks at the time the note issue was taken over. Everything depends upon convertibility, no matter what we do, no matter how we try to increase our issue. Here I come to the point touched on by the honorable member for Richmond by interjection, that, as long as the note is convertible, the volume of circulation depends on the general needs of commerce, and not upon any idea of forcing the note issue. We find that, with a limited emergency but convertible issue, the financial credit of Great Britain is to-day as great as it was before the war, whereas we have only to look at the New York exchanges to see that Austrian and German notes or securities, during this war, have been at a large discount, while, for purposes of exchange, Bank of England notes were actually at a premium. As the Economist said on 25th July, before the question of the war might have effected people’s judgment -

All our international currency to-day is a cheque drawn against bank deposits, and it is the only form of currency which entails no strain at all upon the money market.

The mere that we depart from that position in Australia, the worse tilings will gradually become. We must guard against creating a state of affairs in which a weak Treasurer may make the note issue inconvertible. If, under convertible conditions, we increase the volume of the note issue even temporarily beyond a certain figure, and private persons who hold notes come to the Treasury for gold, and the gold retained in reserve is but little, the time must come when the reserve will fall below 25 per cent., or conversion must cease. While the circulation among the public for the last financial year was only £5,000,000 the note issue was about £10,000,000^ indicating at once the great difference between a note issue of £30,000,000, of which half would be in the banks, and a normal circulation of £5,000,000. With the circulation that the Treasurer thinks he will get, when people come to the exchequer to exchange their notes for gold, as they will come, because we cannot prevent them, if we do not have the cover which is necessary against the issue, we must reach the point at which the Treasurer must say that he cannot pay out gold.

Mr Fleming:

– And then the note issue will depreciate.

Mr GLYNN:

– The question is not what the Treasurer now intends, but what is likely to occur, and what we should do to meet such a contingency. The note issue for December is given at something just below £17,000,000. I think that the banks hold about £8,000,000, leaving a circulation of about £8,888,637. A tax of 2 per cent, on that circulation, assuming it to be the normal circulation, would yield £177,780; a tax of 3 per cent, would yield £266,670; and a tax of 4 per cent, would yield £355,560, indicating that there is no profit in connexion with the Australian notes issue that we could not realize from the notes by another means. The gold reserve is now 42 per cent., which was about the proportion of gold and bullion held by the banks against liabilities on demand at the time the Commonwealth took over the note issue, and, as the notes were a first claim on the assets of the banks, the latter might also be said to represent coin and bullion. The regular reserve of the Bank of England is 40 per cent., and in America this year a new system of note issue has been introduced. A number of banks have established gold reserve banks. These are bankers’ banks, into which they deposit some of their coin and securities, and which issue notes on certain terms, and one of the provisions of the new law in America is that when the issue of a reserve bank gets beyond 40 per cent. a tax is imposed to bring it back to the level of 40 per cent., thus having a tendency to create contraction of the issue. Therefore, taking the position as reflected by English finance, and by our present figure of 42 per cent., and by the law passed by America in the last twelve months, and assuming that as no general banking is carried on, no other assets are directly applicable against notes that may be returned for exchange, a fair reserve in gold is 40 to 42 per cent., and if we go beyond that figure we may be getting into a region where danger commences. The Treasurer expects to make £420,000 this year from the note issue, as against the figures for the financial year 1913-14, but he cannot do that without doubling the volume of his issue, making it at least £20,000,000. The Attorney-General says it will be £30,000,000. But, at any rate, with a volume of £20,000,000 here for a population of about 5,000,000, the United States of America, with twenty times our population, would need a circulation of £400,000,000, while _ a volume of £30,000,000 would mean a circulation of between £600,000,000 and £700,000,000. The 7,400 odd national banks of the United States of America in 1913 had an issue of £145,000,000. These comparative figures go to show to what excess it will be necessary to proceed before the expectation of the Treasurer as regards revenue in this direction will be realized. The present position is exceptional. We must be prepared for, and must willingly submit to, increased taxation; but the Treasurer and the Minister of Trade and Customs could not have submitted proposals for altering the Customs duties at a worse time. Half the human race is engaged in war. At least, if we add to the combatants the people who, owing to their close proximity to the centres of danger, have had to mobilize, I suppose about 900,000,000 are involved. Germany, before the war, had an export trade of something like £240,000,000 with the countries at war. Its trade with the British Empire was about £200,000,000, and every bit of that trade has been stopped by the British Fleet or by our laws. Germany exported to the United States of America, North America, and South America, about £90,000,000 worth of goods. Our Fleet has practically destroyed the whole of that trade. How can any Minister, no matter how far-seeing he may be, or how wide the compass of his grasp, say that he has the data upon which to settle a Tariff that can last for even two or three years, or a Tariff that may not result in the most glaring anomalies under this tremendous dislocation of trade 1 We do not know what ultimately will be the sources of our raw material. That will depend upon the issue of this war. We do not know yet what annexations are to be permanent, and, therefore, we cannot tell what the volume of trade in the “Pacific - the closest trade to us - will be. The Board of Trade publications from week to week show what possibilities of the shifting of trade on permanent lines are open to the enterprise of the United Kingdom .

Mr Fleming:

– No one can form the slightest idea what the total volume of trade will be when the war is over.

Mr GLYNN:

– It is impossible to tell. The bringing down of the Tariff under the pressure of some occult necessity, which so far I have not been able to fathom, seems to be almost fatuous in face of these international facts. Let us take the proposals. I think we may push the principle of progression to the most absurd limits. This issue was raised in 1889 in the South Australian Parliament on a proposal for succession duties that were excessive and did not encourage subdivision. We temporarily beat the proposals of the then Government, and an Act was subsequently passed which is the present Succession Duty Act of South Australia.

Mr Poynton:

– It goes up to 12J per cent.

Mr GLYNN:

– I think it is only un to 10 per cent., but it is on a different principle from this proposal. This clearly is a tax irrespective of subdivision. It ought, therefore, to be regarded as a war tax, and ought to have had a provision for automatic expiration in a definite time, unless renewed by Parliament. Any other way is the wrong way to do it. All these war taxes ought to be temporary taxes, and expire with the financial year, subject to their being renewed. A great many of the British taxes expire every year, and operate again under the Finance Act; but Parliament does not lose its vigilance, its power of observing what goes on, so long as it has to sanction the exceptional expenditure. That is the provision which ought to be made here. McCulloch, dealing with progressive taxation, says -

The moment you abandon, in framing such taxes, the cardinal principle of exacting from all individuals the same proportion of their incomes or their property, you are at sea without rudder or compass, and there is no amount of injustice or folly you may not commit.

Referring to some extreme proposals in relation to taxation, he says -

The savages described by Montesquieu who, to got at the fruit, cut down the tree, are about iis good financiers as the advocates of thi3 kind of tax.

Of course that is put with a certain amount of excess, but it is very difficult even amongst philosophers to strike the golden mean. There is no doubt that it is true of personal property, although it is not true of land, that if you push the progressive principle beyond certain limits there will be a most marked tendency for the property to shift from the area of the tax’s operation. Let us see what the land tax proposals amount to. I believe that we could obtain the revenue required by land taxation of much less harshness in its incidence than the present, and which would be quite as true to the economic theories of some of those who favour the land tax - and professedly there are a good many on both sides of the House who believe in a fair land tax. The Commonwealth tax produces at present about £1,386,000, and I think the State taxes bring in about £586,000, so that it may be said that nearly £2,000,000 is produced annually, on the latest available figures, by thismeans. Our tax is pretty differential. According to the report of the Commissioner which was presented about twelve months ago, about 14,000 persons now pay land tax, and 16,500 -persons who do not possess estates liable to taxation have to make returns, making in all about 30,500 persons possessing property of a value above £3,000, of whom less than half are taxed. The total unimproved valuation of alienated land is about £600,000,000. When the matter was last under discussion it was stated that the amount paid to the Crown for the fee-simple of the land was about £123,000,000. You might impose a progressive land tax, with the same economic end in view, but apply it in a much milder w*ay. Deducting the £123,000,000 paid to the Crown for the fee-simple of the land from the £600,000,000 at which the land is valued, you get an assessment of £477,000,000, on which a tax of Id. would return nearly £2,000,000 per annum, or about the amount which is returned by the progressive land tax of the Commonwealth and the taxation of the States.

Mr Poynton:

– That would be wiping out all exemptions.

Mr GLYNN:

– Whatever our political opinions, we must endeavour to find some solid ground of compromise, and no man can be considered inconsistent who modifies his views to obtain the nearest approach to what is possible and reasonable. This involves an exemption per acre. A tax of 2d. in the £1 on £477,000,000 would return £3,974,000. Such a tax would be fairer, and, perhaps, more consistent with the principles of the Labour party than the present tax, while it would be far less unjust in its progressive incidence, attaining the end of subdivision by more reasonable and moderate means. We should not attempt to force subdivision too quickly, or we may cause ruin to many people. There is, therefore, a method of land taxation, with which, modified, it may be, to strike that healthy mean to which I have referred, a good many Liberals would sympathize to a great extent, which is capable of realizing all the revenue required, and of giving the same economic results that are now aimed at, while being less harsh in its effects. As regards income taxation,

I am not a great lover of it, but I think that you should have an income tax in the States together with the land tax, because otherwise direct taxation might press too heavily on a particular class, and the most out-and-out advocates of the principles so ably urged by Henry George would not support anything approaching confiscation, except where political exigencies may occasionally blind the judgment.

Mr Poynton:

– Would the honorable member’s party support a tax of 2d. in the £1 ?

Mr GLYNN:

– I cannot speak for my party on this matter; I am merely showing that between two extremes there is a healthy mean. I do not think that there could be a much fairer means of providing for war expenditure than by the imposition of an income tax; but we should face the obligations which may, perhaps, be incurred within a year by providing for repayment over ten or fifteen years. The people cannot be asked to provide the whole of the money in one year. If the revenue were to continue as expansive as it has been, a good deal of the expenditure might be provided for in that way, but reasonable financing of the obligation would apportion its incidence over a number of years.

Mr Carr:

– We cannot borrow now.

Mr GLYNN:

– We must make provision in taxation or we cannot borrow. We may borrow to cover the immediate obligation, whether it be £10,000,000 or £30,000,000, but we must spread the repayment over a number of years, and the taxation should be so adjusted as to do that. I believe that that is the principle which has been, in the main, followed in Great Britain. The United States of America imposed an income tax for war purposes, which was abolished in 1872, having then achieved its end. They imposed another income tax, which was held to be unconstitutional, but about twelve months ago they commenced to tax incomes running up from £2,000 to £30,000 a year, and also imposed a special corporation tax, from which a revenue of £14,000,000 was anticipated. I do not know that we might not, without increasing the burden on the people, re-adjust some of our revenue duties. Personally, I do not think that the abolition of the duty on tea has given the public the benefit that was hoped for, because, in the main, it is low- priced teas that are imported into Australia. I do not think that the public would grumble much at having to pay £400,000 or £500,000 in a tea tax. in conjunction with an income tax. We might re-adjust other Tariff items in a way which would not burden the masses, who are now paying pretty heavily per head in Customs taxation, and would give a good return to the Treasurer. This is a war Budget, and we ought to be prepared to cheerfully submit to the obligations that it may impose. Although war is a grim affair, productive of more suffering and distress than can be realized with our imperfect sympathies, it has its moral compensations. I do not refer to its effect in tightening the moral fibre, and in preventing that softness of mind which too often occurs during prolonged periods of peace and prosperity. But with regard to its effect on our international reputation and our Imperial solidarity there are moral compensations involved which ought to make us submit with comparative cheerfulness to the exceptional imposts that are being levied. I do not think that Great Britain ever stood in a better light before the nations of the world than she does at the present time. Whatever doubts may have been entertained by those who knew her little, or saw her only, perhaps, in the false perspective of German historians like Treitschke, were, I think, removed by her diplomacy before the war broke out, by her recognition and acceptance of the obligations of honour and all that they entailed when diplomacy failed, and by the valour and effectiveness of her armies in the field. There are times when a nation must risk everything in a cause that appeals to its finer sense, and’ I do not believe there is a citizen in the Empire with the blood of the Motherland in his veins but recognises that this is one of them. As for the future, it is not merely a matter of material profit and loss, although I believe that the war will compensate materially, as well as morally, for the losses and sufferings that our participation in it entails, that the development of production and commerce will be again resumed with peace; that good times as certainly as good seasons will come again; that the United Kingdom, and the Empire itself, will stand higher in the counsels and respect of nations than ever before; and that, above all, there will result an improvement in those inter-Imperial relations, arising from the sense of the organic unity of the United Kingdom and the other parts of the Empire, which will facilitate the realization of their common mission throughout the many climes and places where, with all that it signifies, the Pax Britannica prevails.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– “What has struck me most in this debate is the attitude that a number of members have taken up towards the Commonwealth Bank, an attitude which I very much regret. They have asked what it has done. They previously predicted its failure, and now say the other banks could have carried on. without it. I indorse every word the Prime Minister has said as to the cordial action of the various banks in assisting to ward off the terrible times that may occur here. I recognise their splendid courtesy in co-operating with the Commonwealth Government; and I thus repeat to-night what I said in the Banking Institute in Melbourne, at a lecture by Mr. Williams, the managing director of the London Bank, upon the various national banks in the United States of America, with particular reference to the efforts which they have made to bring about a sound system of American finance. Let us examine the balance-sheet of the Commonwealth Bank. I challenge any honorable member to deny the figures I purpose to quote. The Commonwealth Bank was founded on the 16th July, 1912, with not a penny-piece in the safe, and nothing behind it but the splendid security of the Commonwealth, and the knowledge that every hill, valley, river, and dale of our magnificent territory guaranteed its security. Without credit, of course, no banking system in the world can be established, exist, or survive. On 30th June last, after it had been in existence for less than two years, the Commonwealth Bank had, in coin, bullion, and cash balances, £2,670,000. Can any bank point to such an achievement within the same short space of time? I think not. Unlike the honorable member for Flinders, I do not propose to invade the realms of fancy. In order to place before honorable members some interesting figures bearing on this question, I have collected the balance-sheets of the leading banks in the world as put before the Banking Commission of the United States of America. That Commission consisted of the most important business men in the United States of America, who were purposely selected to obtain for the guidance of Congress the fullest information in regard to banking matters. It took, not hearsay evidence, but the direct evidence of the governor or other leading officer of every great bank in the world. The Governor of the Bank of England, the Chief Director of the Bani? of France, and the principal officers of the Reichsbank of Germany, the Bank of Italy, and the Bank of Russia were among, those examined. According to these balance-sheets - and the report of the Commission from which I quote was published in 1909-10 - the Union of London and Smith’s Bank Limited, one of the soundest in London at the present time, had cash in hand amounting to £3,009,000 on 30th June, 1908. That bank has a history extending over a century. The London Joint Stock, which is famous throughout the world, and has also a history extending over a century, at that time had a turnover of £109,114,511, and its cash in hand and at the Bank of England amounted to only £2,998,000. After a century of business, it scarcely had as much money in its vaults as the Commonwealth Bank has after being in existence for barely two years. The well-known Union Discount Company of London Limited had cash at bankers amounting to £882,000, and the London and Westminster Bank had cash in hand and at the Bank of England amounting to £4,336,000.

Mr Webster:

– What was its turnover at the time?

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– It amounted to £33,411.000. One of the strongest private banking companies in England today is that of Hobarts, Lubbock and Company, and its cash in hand and at the Bank of England at the time of which I speak was £776,000. The Commonwealth Bank has a record which, so far as I have been able to ascertain, has never been equalled in this respect.

Mr Pigott:

– How does it compare with these other banks in the matter of advances to the public?

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– I shall have pleasure in handing this report to the honorable member, so that he may obtain the information for himself. The Bank of

Prance is a private institution assisted by the Government, and by a general consensus of the advanced opinion of the country has been made the guardian of the gold currency of the nation. It has a capital of £7,044,500, whereas the Commonwealth Bank, when the amending Bill now before Parliament is passed, will have a capital of £10,000,000. So far as I know, the Bank of England is the only institution whose capital will exceed that of the Commonwealth Bank when this Bill is passed. The capital of the Bank of France is £7,044,500. In this respect it is surpassed by the Credit Lyonnais, which has a capital of £9,650,000, and by the Credit Foncier, which has a capital of £7.720,000. The gold and bullion held by the Bank of France at the time of the issue of this report stood at £139,552,499. The Reichsbank of Germany is also a private institution, and it has a capital of £S,56S,000. Its gold and bullion, plus silver representing something* like £2,500,000, amounted, according to this report, to £33,526,160, and its balancesheet totals £246,000,000.

Mr Glynn:

– The Reichsbank now shows a much bigger reserve.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– No doubt there were many changes leading up to the war. This report was published in 1909-10, and the balance-sheet of the Bank of England published in it is dated 12th August, 1908. The Bank of England has the largest paid-up capital in the world, and on the date named had gold and bullion amounting to £36,000,000, and its balance-sheet totalled £121,000,000. The Bank of Italy has a capital of £9,600,000. Its total gold currency is £37,000,000; silver, £4,000,000; and cash and coin of other nations, £400,000 ; or a total of £42,400,000. Its balance-sheet totals £88,000,000. I did not fully complete my reading in connexion with the Imperial Bank of Russia; but I found that it has £102,000,000 in gold. I have made the note that not one bank about which I can obtain any information has more capital than the Commonwealth Bank will have, with the exception of the Bank of England. In Germany there are two banks, one of which has an equal amount, and one of which has something more than the Reichsbank capital of £8,568,000. There is the Dredner Bank, which has a capital of £8,56S,000. It has a gold reserve of only £2,353,194, or less than the Commonwealth Bank has at present in its safe. The Deutsche Bank has a capital of £9,520,000. Its cash and foreign money totals £4,104,456. It may interest honorable members to learn the number of banks operating in the United States of America. There are 23,937 banks in that country. That may appear, at first sight, to be a large number; but it is not really so. We have a population of only 5,000,000 in the Commonwealth, and yet we have a total of seventy banks of issue. A bank in a different State is counted as a separate bank, even though the head office might be established in one State. New South Wales has seventeen banks, which may be called cheque banks, to distinguish them; Victoria, sixteen; Queensland, twelve; South Australia, nine; Western Australia, seven; Tasmania, seven; and the Northern Territory, two; or a total of seventy. There are really twenty-four banks which are known as cheque-paying banks. The number of the branches of these banks are - In New South Wales, 654; Victoria, 676; Queensland, 309; South Australia, 257 ; Western Australia, 180; Tasmania, 60; the Northern Territory, 2; or a total of 2,138. When we remember that the United States of America has nearly twenty times our population, it will be seen that 23,937 banks is not an excessive number for that country. Mr. Williams, the general manager of the London Bank, whose lecture I had the privilege of hearing, and a copy of which he courteously gave me, that I might give it to my friend, the Prime Minister, stated that in America the system of banking is very different from ours. Speaking by-and-large, though there are some exceptions, the American banks, as a rule, have no branches. Honorable members will recognise that if a bank was established in one of the drought-stricken districts of Western Australia, and operated in that district alone, it might easily be ruined as the result of the present adverse conditions ; whilst in the case of a large bank like the Bank of New South Wales, with many branches in different parts of the Commonwealth, it may easily be saved by the operations of branches in more favoured districts. In America banks frequently fail because of adverse con- ditions in the very limited area of their operation. Under the United States of America legislation, country banks were obliged to keep 15 per cent, of their deposits in gold; but they were at liberty to send three-fifths of that reserve to a city bank. These city banks, in their turn, were compelled by the law to hold 25 per cent, in gold; but they were at liberty to lodge in the three large central banks at St. Louis, Chicago, and New York 50 per cent, of their gold reserves. When, as the result of adverse conditions in a particular district, people were forced to draw their money from the local bank, the bank proceeded to draw from the State bank, and the State bank to draw from the central bank, m and so a crisis was brought about. To remedy that state of affairs, the Commission to which I have referred, after a splendid inquiry, recommended the present banking system of the United States of America, which proposes the establishment of from eight to twelve district banks throughout the States. These banks will have the power of accepting national banks if they choose, but they cannot compel any bank at present carrying on operations under the law to come in. They can arrange to keep a smaller amount as a reserve, because the central reserve banks will be guaranteed and supported under certain rules and regulations by the United States Government. To use the words of Mr. Williams, this means that we, in Australia, have really arrived in this matter of banking at almost the same stage as the United States at the present time. Honorable members will agree that a large bank, with many branches, has a better chance of keeping afloat during a time of stress and trouble, like the present, than a small bank operating on its own in a district that might be visited with a drought or other adverse conditions. One thing that struck me forcibly in looking through the reports and documents was the amount of money that is advanced upon agricultural lands by the Bank of Russia. On the question of the confidence of the community in banking institutions I am sorry that the honorable member for Balaclava, whose speech greatly interested me, took up the position he did. He appeared to me to support too fully those who are, as a rule, much better able to tide over a time of stress than are those who live by the work of their hands, or b)’ their brains, ‘if they have to drive a pen for a living. The income tax in Great Britain, in 1913-14, which was collected before war was declared, gave a return of £43,000,000. There was a supertax upon that of £3,320,000. The honorable member for Angas will remember that I asked him on one occasion whether he could assist me in trying to ascertain the total amount which would be derived from the duties, taxes, and rates chargeable upon the estate of a man named Morrison who died worth £10,000,000. I tried, with the honorable gentleman’s assistance, and with the assistance also of the honorable member for Darling Downs, and of the present Attorney-General, to ascertain the amount which would; be derived by the Government from such an estate. The difficulties were very great, judging by the number of books which had to be looked up. I found that, from an estate worth £10,000,000, the Government would obtain £3,000,000, which is about 30 per cent, of the value of the estate. I know that Lloyd George - when he came into office there was a 15 per cent, probate duty - brought the amount payable on an estate of £10,000,000 down to £1,000,000. Let us see what a super tax on an income tax means. Any income over £5,000 would be subject to the super tax. In addition the taxpayer would pay an income tax of ls. 2d. in the pound, that is over 5 per cent. He would pay 6d. for every pound over £3,000, so that a man with an income of £10,000 would pay ls. 2d. in the pound on that amount; and, in addition to that, he would pay 6d. in the pound on £7,000, or a total sum of £758. We find that in that year an income tax of Id. in the pound gave a revenue of £3,130,000. According to a statement in the Argus, on 19th November, 1914’, they doubled the income tax. If we multiply the £3,130,000 by 28, representing the 2s. 4d., we shall get a total of £87,640,000. Now, the population of Australia is about 5,000,000, or, speaking roughly, one-ninth of. the population of Great Britain and Ireland. That amount divided by nine would give £9,737,000. If in Australia in this time of stress the people had to contribute an amount equal to that which is paid in England they would pay £9,737,000 in one tax alone. That does not mean that England is content with that position. What does Lloyd George, the Chancellor of the Exchequer, say ? His £200,000,000 Budget will he nothing compared to the Budget which will have to be submitted in 1915. He said that the income from wealth in 1913 was £2,300,000,000, whereas in the time of Napoleon it was only ( £250,000,000. He pointed out that if they were to take from the possessors of wealth an amount equal to what was taken in Napoleonic times, they would take £700,000,000 in one year. “Was there one honorable member on the other side who would dare to suggest that, if it were pub to the vote by initiative and referendum, the people would not say that those who had most should be taxed most heavily ? Certainly not. The suggestion, to my mind, is the most pathetic thing that can be said in reference to England. Now, England is not, and never was, a Free Trade country. At one time it was a Protectionist country. It is like the middle man on a see-saw. It is a revenue Tariff country purely and simply; otherwise why should the duty of 5d. per pound on tea be increased to 8d. ? On tea, which will be invoiced into England at 2½d. or 3d. per pound, people will pay 8d. per pound. That will affect every little home in England. Let me quote here the balance-sheet of an ordinary agricultural labourer in Essex, who has to maintain a wife and five children on the sum of 15s. per week. For bread and flour he pays 5s. 6d. ; tea, 6-Jd. ; sugar, ls. ; bacon and meat, lOd. ; half pint of milk every second morning, 3½d. On his consumption of tea he has to pay taxation at the rate of 8d. in the pound. On half a pint of beer the tax is a half-penny. I think that there must be an error in this statement from the newspaper, because, if I know the Londoner and his love of beer, such a tax would almost start a revolution there. A revenue of £17,000,000 they are to get from the tax on beer, and it is regarded as only a start. Any honorable member who realizes that the war may last for perhaps a year will understand readily that there will be far more taxes to follow the taxes I have referred to. Will the money be raised by means of an income tax as being one of the most fluid taxes which can be levied ? The amount once settled, a penny is added to the tax, and so on. It is asked in England, “Are we going to have a super tax?” Following up what the Imperial Government have done, I certainly think that the larger incomes ought to pay far more than they have done. Surely no one will say for a moment that it is not more unjust to attack a man in receipt of a salary of £150 and with a wife and family to support, even to the extent of £2, than to attack a man in receipt of £5,000 a year with a tax of 20 per cent. It is too ridiculous to consider for one moment. In war credit is nothing, and gold is the only thing that counts. I do not think that any honorable member will deny that next to a gold currency a silver currency is best. If that be so, why should we not take advantage of the fact that we are one of the great silverproducing countries of the world to coin more silver ? I propose to speak on that subject later,, and I hope to prove that we are neglecting a great opportunity. By the courtesy of the Prime Minister, I hold in my hand a statement which I value very much. I have converted the dollars into gold currency so that the information will appeal to honorable members better than it would if I were to speak in. dollars. In the “United States of America there are two varieties of paper issued. There are “greenbacks” of the nominal value of £67,000,000, against which there must be held a gold reserve of £30,000,000. A gold certificate is issued by the Federal Government, and gold must be held pound for pound. The sum of £188,000,000 is represented by gold certificates with a similar amount in gold, held in reserve. There is £93,000,000 worth of silver certificates, and the reserve of silver is valued at 45 per cent. With silver at 2s. per ounce, we. produce silver coins of the value of 5s. 6d. If our shillings, sixpences, and half-crowns were converted into solid metal it would only bring about 30 per cent, of the face value of the coins. Then there are Treasury notes guaranteed by a silver currency. Greenbacks and gold certificates are redeemable in gold coin, and silver certificates and Treasury notes in silver dollars. National Bank notes are redeemable in lawful money on demand at the counter of the bank; and “lawful money,” I take it, is silver money. They are also redeemable in United States notes on presentation at the Treasury. Every national bank is required to take and receive at par, for any debt of liability to it, the notes of other national banks. I may say that the national banks in America are private concerns, though the designation might lead one to suppose that they are Government institutions. They are called “ national “ banks because they are constituted under an Act passed by the Federal or National Legislature. In Everybody’s Magazine, in an article on “ The New Banking,” under the new Federal Banking Act, there is the following : - :

At the end of last year the National Banks of the United States among, them had cash on hand (in round figures) of only …. $890,000,000. Their aggregate deposits (in round figures) were …. $8,300,000,000. That is to say, the depositors were entitled to demand from the bank nine times mom money than the banks had to pay out. This expresses the lending power of a dollar.

The cash reserve requirements arc changed. Where a country bank was required to keep 15 per cent, before, it will keep only 12* per cent.; where a city bank was required to keep 25, it will keep only 15; and where banks in St. Louis, Chicago, and New York were required to keep 25 per cent., they will keep only 18.

We all hope, I am sure, that the Commonwealth Bank will ultimately take the place of the national bank system of America in assisting the Australian banks. I propose to show that the note issue of the Commonwealth is, -perhaps, the safest in the whole world, so far as security and liquid assets are concerned. First of all, I desire to speak of its pliability and mobility. Time was when there were forty-eight different notes issued by as many banks in the various States; and it will be remembered that on a note sent from one State to another, in those days, exchange was charged as in the case of cheques. Later on, the banks were good enough to make the notes current, to the great convenience of the public. There is one advantage I find in the 10s. note. My son, for instance, is 35 miles from a post-office, and if I send him a post-office order he has to travel that distance in order to get it cashed, whereas, if I send him 10s. notes in a registered letter, he is in possession of money immediately he receives it. That is an advantage never before enjoyed in the history of Australia. Then again, the security of the notes has been secured in a way never before attained, so far as my reading of the subject goes, in any country in the world. I do not know any bank in which a fund is laid aside, and cannot be touched except by an Act of Parliament.

On the 30th September last I received a letter from the Under-Treasurer. Mr. G. T. Allen, who may be complimented on the fact that his name will ultimately appear on more bank notes than that of any man in the world. This recalls a story of the celebrated Mr. May, Governor of the Bank of England, who, when touring Scotland, offered a cheque to the hostess of an hotel. The good lady was dubious about the cheque, and asked him, “How do I know it is your signature?” He got her to produce an English £5 note, and pointed out that his signature also appeared on that. This, however, only convinced the hostess that her guest was a forger, and Mr. May had to explain to the police, who were promptly sent for. The letter from Mr. Allen was as follows: -

In answer to your telephonic request, the following figures are furnished, viz. -

None of the greatest banks in England, France, Germany, Italy, Austria, or any other country have a gold deposit equal to that mentioned in the letter of Mr. Allen. I have already pointed out that in the case of the national banks of the United States £9 may be advanced for every £1 in gold, and that now the amount of gold held as security has been decreased.

Mr Fleming:

– In the United States they had the biggest money crisis in the world, owing to their short reserve.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– I think that was owing to the faulty banking system, which is now being amended in the direction of giving it stability and security of tenure. Against this gold reserve what are the claims? Only the notes that are in circulation. The assets comprise £6,500,000 in gold, balances amounting to £563,000, and an amount of £6,900,000 lent out on gilt-edged securities to the States. Let honorable members look at the assets and liabilities of the London Joint Stock Bank, one of the strongest banks in the world. It has cash in hand, £2,988,000; by money at call and short notice, £3,556,000. Against those amounts are - money due by the bank on current accounts, deposit receipts, circular notes, &c, £17,850,000; acceptances on account of Customs, £1,458,000. This statement I am reading from does not give the bank’s deposits. The first claim on a bank’s resources is its note issue. The next claim is by the owners of current accounts, and after them, the owners of deposits at callThen every man who has a deposit at the stated period has a claim, provided he can get an advance. In the time of the big crash following the boom, even the Bank of New South Wales would not give assistance to men who had large amounts on deposit. One man who had a deposit of £800 to his credit asked for £50 and was refused. I went next day to the manager, and he kindly arranged to allow the depositor to draw £30 on that day and £20 on the following day; he explained that he could not do more. What bank has a security equal to that which is comprised by these Australian notes? Let honorable- members compare our Bank with the Bank of England, which has such huge amounts at call, and at seven days’ notice, and they will see that it is wonderful how the institution is able to carry on.

Sitting suspended from G.SO to S p.m.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– When the sitting was suspended, I was endeavouring to show that the Commonwealth Bank, during the two years of its existence, has acquired a larger sum in gold than have many of the most powerful banks in the world, and that when it has obtained the proposed increased capital of £10,000,000. which it will presently secure by the issue of debentures or otherwise, it will possess a larger capital than will any national bank in the world, with the exception of the Bank of England, which has a capital of £14,553,000. In other words, the Bank of Prance, the Bank of Russia, the Bank of Germany, and the Bank of Italy do not possess the same amount of capital as will our Commonwealth Bank. As a matter of fact, many of the larger financial institutions of the world have not as much gold in their coffers to-day as has the Commonwealth Bank, after only two years of existence. What I propose to show is that this Parliament, if it chooses, can make our Commonwealth notes safer in war time than are the notes of any country, not excepting those of England. There is no gainsaying the fact that there is no such thing as credit when an invading army enters a country. If Germany were, unfortunately, to conquer England to-morrow, of what use would be the notes of the Bank of England ? But. by making use of the silver which we produce, we can make our Commonwealth notes absolutely safe. Even if an enemy’s fleet were to land an army of occupation here, our Commonwealth Bank would be able to offer our citizens a greater chance of having money to plant in their backyards than they would otherwise have. On the 30th June of this year, silver was sold in the open market in London for 2s. ner ounce. Now, an ounce of silver will make 5s. 6d. worth of currency. I wrote a letter to the Age pointing this out, and stressing the fact that 175 per cent, profit could be immediately made by minting our own silver. Honorable members know that, during the past few years, the Commonwealth, which has been minting gold at a slight loss, has been given the privilege of minting its own silver, but that for purposes of expediency our silver has been minted in England at a cost of 5 per cent., including insurance and freight. In view of the large expense involved in the purchase of land, buildings, arid machinery in connexion with every mint, it will be seen that the cost of labour must be very small indeed. If we allow 4 per cent, for the minting of silver in Australia, it is obvious that the extra 25 per cent, would more than pay the wages of the men who would be thus employed. If the Commonwealth would purchase all the silver produced by the Barrier mines, it would have a large fund of current coin of its own. In consideration of our embarking upon this enterprise, the Broken Hill mines should be kept working full time. If they refused to do that, the State of New South Wales, by virtue of the law of eminent domain, should seize those mines, work them, and hand over all profits made to the companies concerned. On the other hand, if the mines were worked at a loss, the companies should suffer. But it is obvious that there would be very little chance of any loss being incurred. The letter which I wrote to the Agc attracted the attention of the Broken Hill Proprietary Company, whose directorate requested me to grant its members an interview. I did so, and I had the pleasure of meeting Mr. E. L. Baillieu, who assured me that his company would be only too pleased to accept the terms which. I had outlined. He further declared that it would be willing to accept even 30 per cent, less than the selling price of silver in London before the declaration of war. In other words, it was prepared to accept ls. 4 4-5d. per ounce for its silver. Honorable members will see that that would allow the Commonwealth to make a profit of 292 per cent, upon the minting of silver. In other words, for every £ 1,000.000 worth of notes issued for the purchase of silver won by Australian workers from Australian mines, we should get in silver coin £3,928,571, less 4 per cent, for minting.

Mr Poynton:

– What is the total tonnage of silver in circulation?

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– I cannot say offhand. The value of a ton of silver is £8,983. It may interest the honorable member to know that at the back of our Commonwealth note issue there are 51 tons of minted gold, and that the £10,000,000 loan granted to the Commonwealth by the banks is equivalent to another 70 tons; so that we have 121 tons in gold alone. What I propose is that every note of the Commonwealth should be redeemable, 25 per cent, in gold, and 75 per cent, in silver. If an army of occupation came to Australia, every citizen knows that by a regulation it could make all our Commonwealth notes nothing but pieces of tissue paper. In such circumstances, nobody will deny that every citizen would like to have’ his savings in hard cash so that he might plant them wherever he deemed them to be safe. Men who have experienced the terrors of war have assured me that at such times they prefer to have small money rather than gold, because it enables them to purchase commodities more easily. Under my scheme, our citizens would be able to get 25 per cent, of the value of their notes in gold, and 75 per cent, in silver. It is significant that many persons entertain a doubt as to the value of notes. In this connexion, I may mention one incident which happened during the boom time here. A shareholder in one of the banks, angry that he had lost a lot of money in them, endeavoured to make use of the un- . employed by offering so many men a £1 note each, and requesting them to rush round to a certain bank and demand gold for it, his idea being that the institution would not honour its notes. I prevented effect being given to his suggestion, and for my action received the thanks of the bank. Men have doubted whether notes are of any use; and if we go into some banks and ask for 10s. notes, some of the superfine darlings, which many bank clerks are - I was a bank clerk many years ago, and know - will curl up their lips at the mention of a 10s. note. Not taking into consideration the £10,000,000 which the splendid partnership of the States and the Commonwealth has placed at the disposal of the community, the £6,500,000 in the coffers of the Treasury on the 30th September last ou a 25 per cent, basis would give us £26,000,000. Of this, of course, £6,500,000 would be ear-marked for the gold and £5,200,000 would be ear-marked for silver. We have already invested £6,992,500, which earns £227,085 a year, leaving £7,307,500 for investment, which should bring in a further income of £292,300 a year at 4 per cent., giving a total of £519,385, which would be available for a fund which could be ear-marked and placed beyond the- reach of any Treasurer except by the passage of a Bill through both Houses. Thus we would have a currency of notes, not necessarily going up to £26,000,000 ; but how different from any other notes in the world. I believe that the Commonwealth should purchase every ton of copper produced in Australia, and thus enable the mines to be kept going. Owing to the superlative richness of our copper lodes, we can produce copper more cheaply than any other part of the world. We also produce zinc. Why should not a sufficient amount be advanced by the Commonwealth for the purchase of zinc concentrates, so that our silver mines may be kept going ? Mr. Baillieu , in sneaking of the Broken Hill mines, expressed the hope that the companies would be able to keen on working; and where a city with 40,000 people is dependent on these mines, it is a scandal and a shame that they cannot be kept on, I am willing to accept Mr. Baillieu ‘s assurance that, thanks to arrangements made with the banks, the mines can give the workmen employment at half time, which will average £6 a week for those who work, or £3 week in and week out. If that is so, I must compliment the mines; but at the same time, if the Commonwealth Government would purchase the product of the mines at cost price, even sufficient to keep them going, we have the assurance of Mr. Baillieu that the companies would be glad to resume full operations. I see no reason why this should not be done. No one can say what are the potentialities in regard to the market for lead so long as the nations are so foolish as to wage war as they are now doing, and in regard to its commercial utility the demand is unlimited. Again, with electricity coming into use more and more - because we are only on the fringe of discovery in that direction - no one can place a limit on the demand for copper. I hope that during the recess the wisdom of the Government will be directed towards finding a means of overcoming the terrible unemployment that is sure to come about. I am not content with the Tariff from a protective point of view. Of course, in this terrible period, the Government must not be too ready to stop the supply of revenue, but while recognising that fact, I hope that they will understand my action in exercising, as I intend to do, my free right as a member of this House to vote in every instance for an increase of duty.

Mr Webster:

– Revenue duties?

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– I shall vote at every opportunity for an increase of duties.I want protective duties. England is held up to us as a great Free Trade country, but she has never been a Free Trade country. England was such a highlyprotected country at one time that there were, in a single year, no less than seventy-five death penalties for breaches of the Excise and Customs Act. I doubt now whether the death penalties in a year exceed the fingers on one hand.

Mr Page:

– How is it that we go to that rotten Free Trade country for the money that we require ?

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– If necessary, people will go to Hades for money lenders. I say nothing against the Home Land. My mother came from Great Britain, and the love of my heart goes out to the British nation, though, at the same time, I detest some of the laws which press too heavily on the poor of the United Kingdom. I suppose that some honorable members would be perfectly willing to base the

Tariff upon the duty we would impose upon goods coming in from the United Kingdom, while preserving a sufficient margin to balance our higher state of living, our better wages, and our better working conditions. Starting from that basis, I would be inclined to give the Home Land 5 per cent, preference over our Allies, and then I think our Allies should have the same preference against neutral countries, while I would give them 50 per cent, preference against our enemies.

Mr Fenton:

– How would you treat Japan ?

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– Japan is an allied nation. I have never said a word deprecatory of the Japanese. What I fear about the Japanese is their splendid qualities. I look upon Japan as one of the greatest nations. Possibly it will be the first co-operative Commonwealth, for Japan has had the wisdom to nationalize more industries than any other nation. I have no objection to the great German race, especially those in the middle and southern parts of Germany. My opinion is the same as that of Heine, the great German who spent his life in Paris. He spoke of the horror and terror of the Prussian race. That is the race I dislike. I have still a great veneration for the teachings of my old German friends in the past, men who had to leave their country in 1848, and even after the lapse of forty years, when the amnesty was proclaimed, were not allowed to land in Germany through the brutality of that dead tyrant, Bismarck. I should welcome any members of the German race who wanted to settle in Australia with their families; but I do not want to support any of their products, at any rate, until we have punished them. No nation has ever yet risen to greatness under Free Trade. The only really Free Trade place I was ever in was Hong Kong. In the year I was there, 1,100 dead bodies were thrown out into the streets, 200 of the deaths having occurred from cholera, plague, and small-pox, and because I published in the daily press the records kept by what they call a Government, they forbade my books to be sold there. I told them that I considered this was an honour, as I had only told the truth. We being 12,000 miles from the centre of the trouble, do not feel the full effects of the war ; but we can do our share: It is however a fact that many men who have given donations of from £50 to £200 to the Patriotic fund have immediately reduced the wages of the men working for them, or lessened the number of hands employed, while, in some cases they are trying to do more. There was one man who adopted an English alias, and after taking the oath of fealty, and a further oath as an officer in the Automobile Corps, was found to have been writing treasonable letters; yet the Army and Navy Club - the frills and feathers club in Swanston-street, who expelled a straight man for criticising another - allowed this traitor to resign. There are too many frills and feathers about that twopenny-halfpenny, tin-pot club. The three colonels who demanded Major McInerney’s resignation were only mosquito colonels. Not one of them had volunteered, but I am glad to say that two of them have now done so. If they are accepted, they will be luckier than I have been, because the authorities would not take me. In regard to the question of unemployment, I accuse the Home Affairs Department of not doing as much as it could and should do. I accuse Colonel Owen, and particularly Colonel Miller, that dictator and would-be emperor of the Federal Capital, and Mr. Hill, in this regard. I do not want to say a harsh word of Mr. Murdoch, who is a good and capable architect in every sense of the word; but he is too much under the thumb of Colonel Miller. Colonel Miller and others had the gross insolence to alter a work of art sent in by a gentleman who won a competition in which they themselves did not have the courage to compete. I have never known a Labour man or unionist to be treated decently by Colonel Miller. He tries to crucify men, and I, as a member, will not stand by and see a man crucified on the cross of departmental jealousy and incapacity. Let these men come out in the open and compete. The man who wins the prize ought to have the full honour of building the Capital ; but not one of those men is able to do it. A man who graduated from the Trades Hall, and had something to do with the Trades Hall Art School, is not class enough for these gentlemen.

Mr Webster:

– What does the Minister say to this?

Mr Archibald:

– He is talking rubbish.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– About as much rubbish as the Minister. There was- one Minister of Home Affairs who was the first man to have the pluck to introduce preference to unionists, and his name is known throughout Australia, because the previous election was fought on that question. I refer to the honorable member for Darwin. He required the officers of the Department to sign their names on arriving at the office in the morning; hut he was also man enough to sign his own name. Now, however, the present Minister has not the pluck to require Colonel Miller to sign his name. Look at the type of man who says that I am talking rubbish. Why, his very hair stands on end I He is not fit to loose the boots of the honorable member for Darwin, who was the first man to put Colonel Miller in his place. The Department should not be ruled by these heads, and I am sick and tired of it. I am credibly informed, and believe, that 3,000 nien can be put on the roads at the Federal Capital; but when I asked a question on the subject I was told that the Departmental Board had charge of. the business. Not one of the members of that Board had the pluck or ability to compete in the competition for designs for the Capital ; but they got together, and stole a bit of an idea from one plan, another bit from a second plan, and so on, and produced a plan which they called their own. When I asked the Minister a question about the cost of visits to the Federal Capital, I was given a lying answer. There were five separate picnics up there, and I was told that the cost was only £50. I suppose that was rubbish also. At any rate, the answer was a lie.

Mr Webster:

– Has not Mr. Griffin an action at law against them for pirating?

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– I do not know; but I hope I am not the only member here who will refuse to stand by and see a man crucified by departmental jealousy. I want to see the Federal Capital built. Why should it not be ?

Mr Archibald:

– It is cowardly of you to attack in that way officers who are not here.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– And the Minister is a cowardly cur to allow this to go on.

Mr Archibald:

– The honorable member ought to be kept within bounds.

T.he TEMPORARY CHAIRMAN (Mr. Atkinson). - I ask the honorable member to withdraw his remark.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– I withdraw it; but I would ask the Minister to behave himself, if possible. I do not want to quarrel ; but my life is too well known for me tq be called cowardly. I do not go behind a man and try to stab him in the back like these men are doing. I compliment the late Government on bringing out Mr. Griffin to see his own plan carried out, instead of allowing the departmental heads to run the show. What has happened now is just as if we brought out a splendid work by Rubens, and commissioned a little amateur artist to alter it, or handed over the plans of a great architect like Wren to be “improved “ by these departmental officers. None of us would have objected to their competing for the prize; but they did not have the pluck to enter. There is a man named Tompkins, head of the architects here, who told the Minister a deliberate untruth, as I can prove. He said that no architect had commenced to work on the designs; but I can produce two in the city of Melbourne who had done so.

Mr Archibald:

– He never told me anything of the sort, and you know it.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– The Minister said so in this chamber.

Mr Archibald:

– I did not.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– I can turn it up in Hansard.

Mr Archibald:

– Turn it up where you like. You cannot behave with anything like decency. I have never slandered a body of men who have no chance to speak for themselves.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– The trouble is that the departmental officers are bossing the Home Affairs Department. They are blocking the Federal Capital works, and are trying to stab a man in the back, and to crucify him.

Mr Webster:

– The honorable member does not blame them for stopping the Federal Capital?

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– I do blame them. I know the history of Washington, which to-day is the picture city of the wide world. L’enfant, the architect of that city, was a man of genius. He conceived the idea of the city which people see today. But his heart was cut out of him by departmental officers and other per sons. It was years before America gave him any credit, when a sum of money was voted for him. I do not wish the same thing to happen again in Australia. There are architects here whose good opinion can be taken. Are we going to break a contract with the whole world because there ha3 been a change of Government? I am ashamed of what has happened. If something is not done, these officers will be to blame. I ask the honorable member for Ballarat if he ever knew a unionist or a Labour man to be properly treated by Colonel Miller?

Mr McGrath:

– I do not know him.

Mr Archibald:

– The honorable member is not so fond of slandering as is the honorable member for Melbourne.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– Slander yourself. I am perfectly willing to compete with the honorable member in any branch of learning.

Mr Archibald:

– You are a bully and a cad now.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– And you are a puppy.

The TEMPORARY CHAIRMAN.The Minister must withdraw what he has said.

Dr MALONEY:
MELBOURNE, VICTORIA · ALP; FLP from 1931; ALP from 1936

– As I am on my feet, let me withdraw first what I said. Perhaps I have irritated the Minister too much. I ask him if he will excuse me, because in a moment of temper I called him a name which I did not mean to use.

Mr Archibald:

– I shall not excuse the honorable member.

Mr GROOM:
Darling Downs

– Every one must sympathize with Ministers because of the heavy burden that has been placed upon them. It is necessary for them to obtain financial means to enable the country to pass through the present crisis. They have, therefore, submitted various financial proposals which naturally invite our criticism. I wish, first, to make some remarks concerning the Tariff proposals. I think that these have been unduly rushed before Parliament. That has been done, I take it, not in view of the necessities of any industry, but because of the necessities of the Treasury. The revenue of £1,500,000 which it is hoped to raise by Customs and Excise duties is needed by the Treasury, and, in my opinion, the duties have been framed primarily to give revenue. The schedule has not been carefully arranged in accordance with Pro- tectionist ideas. I do not think that the Minister of Trade and Customs has had in view so much the framing of a scientific Protective Tariff as the imposition of duties which would give revenue.

Mr Tudor:

– I think that this Tariff will give more protection than any we have yet had.

Mr GROOM:

– The Commonwealth, having the right to impose duties of Customs and Excise, naturally makes them its main source of revenue, but in shaping a Protective Tariff four general principles should be kept in view. In the first place, it is considered by Protectionists that the development of primary and secondary industries may be legitimately encouraged by the imposition of Customs duties. In furtherance of this end, adequate duties are placed on imported goods likely to come into competition with goods made by the industries which it is desired to protect and foster, and also on substitutes which might be used instead of locally made articles. In the second place, the raw material of manufactures which cannot reasonably be produced locally is admitted free. In the third place, machinery, machine tools, and tools of trade which cannot be reasonably manufactured in the protected country are admitted free. In the fourth place, a number of articles are legitimately taxed purely for revenue purposes, but so that the taxation may fall as far as possible upon those who possess the greatest ability to pay, the rates are made higher on luxuries, stimulants, and narcotics than on articles of general consumption. This Tariff violates all those principles. Honorable members have not been supplied with information to guide them as to the need for any of the duties that have been proposed. We do not know the value of the industries which it is proposed to protect, what capital has been invested in them, what their plant is, or what number of hands they employ.

Mr Page:

– That information can easily be obtained.

Mr GROOM:

– No, it cannot. The Minister, when last in office, acting on the advice of his responsible officials, issued a schedule.

Mr Tudor:

– I did not act on the advice of any one; it was my own idea.

Mr GROOM:

– The Minister was responsible for it, but I think that his officials held the same view as he did regarding it. At any rate, he was equipped with some information thus obtained on the various matters affected by his proposals, which he supplied to honorable members. . But to-day that is not the case. Some weeks ago I asked if he was having schedules filled in by those who desired protection, and his reply was that he had advised the manufacturers who desired protection to make their applications to the Inter-State Commission. We know from an answer which he gave yesterday that in framing these duties he did not ask those interested in the industries which are being protected for any information at all regarding their needs. During the last two months the Minister has been guided, I presume, by the statistical information collected by the Department, without any inquiries from the persons concerned in these Tariff proposals. There has obviously been no careful inquiry from the consumer’s point of view.

Mr Tudor:

– This is a different tale from that which the honorable gentleman told before the elections, when he said that he was going to amend the Tariff as soon as he could.

Mr GROOM:

– I said nothing of the sort. What I said was that, as regards Tariff anomalies, the late Government were prepared to deal with them, and, as regards the general items of the Tariff, immediately we received a progress report from the Inter-State Commission upon them we should be prepared to take action with respect to the Tariff. Every member of the Committee is aware that the principal difficulty experienced by this House in dealing with Tariff matters has been due to the fact that we have not, in respect of any specific item, been able to get carefully sifted evidence and collated facts to guide us in endeavouring to do justice between all parties concerned. The absence of such information has operated injuriously to manufacturers, producers, consumers, and workers alike. The Minister of Trade and Customs knows well that mistakes have been made in this House in dealing with the Tariff from time to time entirely because we have lacked sifted information as to the effect of the proposals made. On the item of photographic films alone we have had evidence that the Minister did not obtain carefully sifted evidence which would satisfy him that the duty proposed would operate according to his intention.

Mr Tudor:

– I would sooner admit that I made a mistake than lean up against some one else.

Mr GROOM:

– No one is asking the honorable gentleman to lean up against any one, but when we are asked to legislate, the House should have positive and definite information, in order that we may do justice to all the parties concerned and avoid such mistakes. Here is a statement of his views on this subject, given by the present AttorneyGeneral when speaking, in 1912, at the manufacturers’ dinner in Sydney. The honorable gentleman said -

He hoped to see some comprehensive review and revision of the Tariff on a scientific and business basis. The Tariff was not a question to be treated as if it were one of party politics. True, Protection and Free Trade were party questions; but once they established a fiscal policy for Australia, then the giving effect to that policy should not be a party matter at all. The adjustment of the Tariff was a matter for investigation and adjustment on the merits of each particular item. He admitted t1 at Parliament was not the best instrument to arrive at that information. Whether the Inter-State Commission or some other body should do so was a matter for consideration. But the question should bc settled on those lines, having regard to the requirements of the manufacturers, workmen, and consumers, and the public generally.

The Minister of Trade and Customs cannot dispute that statement. We know from past experience in the framing of Tariffs in this House that Parliament is not the best body to make Tariff investigations. Supremacy must be retained by Parliament. It must decide the policy, but, in order to apply effectively the principles of which it approves, it must know the whole of the facts connected with the industries concerned. Unless we follow upon those lines we shall continue to make mistakes, and, instead of having a true Protective policy, worked out on clear and continuous lines, we shall find ourselves frequently amending the Tariff because of the anomalies which are bound to arise. This is a matter of importance to us all. We in Australia owe our existence as a nation to the fact that we are great primary producers. It is not desirable that we should be primary producers only. We can, and ought, to become a manufacturing nation. Our object is to make Australia a selfcontained nation, supplying all its needs and requirements, so far as that can reasonably be done. I have here some figures which will serve to indicate the extent to which we are dependent upon primary productions in this country. In 1912, our agricultural output was valued at £45,754,000. The output of our pastoral industries was valued at £51,615,000; dairying, £20,280,000; forestry, £6,432,000; or a total of £124,081,000. That sum represents the output of the primary industries referred to for one year. The output of those industries has gone on increasing, and the value has mounted up. It is because of the splendid returns we are able to get in the markets of the world for the products of our primary industries that we have been able to pay the high rates of wages which we have paid in all the cities of Australia. It is therefore incumbent upon us, if we wish to maintain, and even to increase, the standard of living in our cities, to do all that is possible to encourage and increase the primary productions of Australia, and make it easier and cheaper for those engaged in our primary industries to increase their output. The mining industry is another of our primary industries, and its output in 1912 is valued at £25,629,000. The value added to materials used in the factories of Australia in 1912 amounted to £57,022,000. So that the value of the output of our primary and secondary industries in 1912 amounted to no less than £206,732,000. Whilst it is important that we should preserve and encourage our primary industries, we must at the same time do what we can to safeguard the manufacturing industries which are reasonably suited to our requirements. We had in Australia last year 15,550 factories, employing 337,162 hands. Salaries and wages paid amounted to £35,585,248; the value of lands and buildings was £36,869,908; and the value of plant and machinery was £37,217,274. The value added to the material used in our factories in 1907 amounted to £38,063,153, and last year - 1913- that added value had grown to £65,197,247. That is to say that our Protective Tariff, originally introduced by the Right Honorable C C. Kingston, gradually took root in Australia; manufactories grew up under it; the Tariff was modified in 1908, and, as a result, we find the returns I have just given. I say that Australia can well be proud of the primary productions of their country, and also of the work done in the factories. Dealing with Australia as a whole, we want to be a nation with all a nation’s various activities; and when we propose to put into effect a comprehensive policy we must give due consideration to all the interests concerned. Above all, we must realize the fact that any injury done to the primary industries of Australia must re-act upon our great secondary industries. Our primary industrie’s must therefore be safeguarded to the greatest possible extent. The residents of our cities especially must realize that the greater our rural production, and the more extensive the settlement of our land, the greater will be our home markets. We cannot look at the present time to a great extent to the Continental markets for the disposal of the products of our secondary industries. We have only a limited market for them. Our labour conditions, the cost of transit, and other things make the cost of production in Australia relatively high. In years to come, and may they come soon, we may expect to be exporters of manufactures. For many years to come, however, we must have regard mainly to the primary industries, at the same time building up our secondary industries so that we may become a self-contained nation. My own ideal is that, if in time of war we are put in a position of isolation, we may be able to supply all our own requirements. Let us now look at the way in which the Tariff has been framed. Some 663 applications for Tariff alterations have been submitted to the InterState Commission. Of course, a private member has not at his command all the officers of a Department to assist him, but in the brief time at my disposal, I have examined, as far as possible, the nature of the duties proposed and the applications made to the Commission, in order to ascertain exactly what has happened. A tabulated list has appeared in the Age, representing, roughly, I suppose, about 200 items. Of these, about 25 per cent., have been referred to the Inter-State Commission to be dealt with in some way - to modify duties, to give preference, to grant bonuses, and so forth. This list, of course, must have been roughly made out, because, to accurately go through all the items, would be a comprehensive work requiring the knowledge of an expert. This means that we are called upon to deal with the remaining 75 per cent, of items without any careful investigation, and in the absence of reliable information relating to the industries concerned. We are asked to deal with the Tariff in the old haphazard way, with nothing to guide us but representations by the parties immediately interested - the way in which we have been forced to deal with the Tariff year after year, and which has, in many instances, proved fatal to industries.

Mr Richard Foster:

– We have still to get the report of the Inter-State Commission .

Mr GROOM:

– I only hope that that report will be available before the proposed duties are finally dealt with.

Mr Poynton:

– And we should have a return showing the growth of the various manufactures.

Mr GROOM:

– I speak feelingly on that point, because, when in office, I had to organize the Department of Census and Statistics. We in Parliament realized that we did not know everything, and that what was required was a sort of Intelligence Department to make specific investigations, and enable us to legislate in accordance with facts. We can, I believe, be proud of that Department, for there is not a T ear-Book in the world that can compare with the one issued by Mr. Knibbs. That is an opinion I heard expressed ‘ only to-day by a distinguished visitor from abroad.

Mr Fenton:

– All the same, the Customs statistics are not up to date.

Mr GROOM:

– That may be; but I am speaking of the principle. When dealing with the Tariff, we ought to have accurate information before us, so as to be able to lay down a sound basis, and prevent constant tinkering with the duties. The present Tariff proposals have been simply thrown at us; and, unless the deficiency I have indicated is made up, we shall be in a worse position than ever before. This mode of introducing a Tariff is not treating Parliament fairly; and it is so contrary to all common sense, that it leads one to believe that the hurry is only because revenue exigencies demand it.

Mr Joseph Cook:

– Is that the only reason 1

Mr GROOM:

– I say . that appears to be the primary reason.

Mr Joseph Cook:

– No; there “ is another reason.

Mr GROOM:

– I believe there is also a desire to keep faith with the promises made in regard to the Tariff. A reference to one or two of the items will show the way in which the Tariff has been prepared. The principle of a Tariff is to encourage the establishment of industries, and to interfere as little as possible with the importation of the necessary raw materials. According to the Tariff proposals before us, the duty on umbrellas and parasols is left exactly as it was, namely, 25 per cent. ; but the duty on the raw material has been raised from 10 and 15 per cent, to 15 and 20 per cent. It will be seen that the effect really is to take away 5 per cent, of the protection previously afforded. We can quite see that the Ministry in framing the Tariff have regarded silk as a luxury, quite forgetting that it is the raw material of an industry. Then, in regard to woollen-piece goods, the duty has been raised from 25 and 30 per cent, to 30 and 35 per cent. The woollen industry is one natural to the country, and a perfectly legitimate one for protection; and, in seeking to establish an industry, the principle is observed of not taxing the necessary machinery which cannot be manufactured here, because to do so is only to increase the cost of production. We find, however - and the Minister of Trade and Customs specially referred to this - that the duty on all machinery used in woollen mills, hat factories, tanneries, and so forth, has been raised from 15 per cent, to 25 per cent. in the case of the United Kingdom, and 30 per cent, in the general Tariff. I have here a list of forty or fifty machinery items that are absolutely essential to the development of the woollen industry, none of which can be reasonably produced here, and yet the duty has been increased in the way I have shown. Then, in the boot industry, the raw material has been taxed ; and so on in regard to a number of other items to which I need not refer. I only desire to point out that there are those violations of the principles that have been laid down . This House, on the spur of the moment some time ago, decided to impose a protective duty of £1 or 25 per cent, in the case of the United Kingdom, and £1 5s. and 30 per cent, in the general Tariff, on. oil or water-colour paintings, n.e.i., other than by Australian students or Australian artists abroad. That, to my mind, was one of the most absurd anomalies in the Tariff, and the Minister’s attention has evidently been drawn to it, because he has rectified it in parts. Here is a case that came before me: A man living in Australia had a relative in England, and she went to a little country town and made a small painting, which was worth not more than a couple of shillings. She sent it out here to her relatives and they had to pay fi duty, because it was classified as a work of art.

Mr Richard Foster:

– I submitted a similar case to you from South Australia.

Mr GROOM:

– Yes; several cases were brought under my notice.

Mr Poynton:

– Do you not think she ought to have been satisfied to pay £1 for the compliment of having her work called a work of art ?

Mr GROOM:

– But the picture had no inherent merit. It was sent to a person who was unable to visit the Old Land, to recall a visit to that person’s old home; but it was held up at the Post-office, and the addressee could not get it until fi duty was paid. I mention that as just one instance of the absurdity of that duty. The sugar duties have been left untouched, although a Royal Commission recommended that they should be dealt with. The farmers have been complaining about the maize duty not being sufficient, on account of the competition of coloured labour, but no further protection is given on that commodity. On looking through the Tariff, and comparing it with the applications to the Interstate Commission, I find that there are in many instances increases for which no application was ever made to the Commission by any manufacturer. In one case an application was made to the Commission for the removal of a duty, and the Government have replied to that request by giving the Mother Country preference, as against other countries. There are other cases of applications to the Inter-State Commission for increases of duties, and of the reply being in the form of preference to the United Kingdom. Here are a number of things upon which preference has been given, or iu- creased protection granted, and in regard to which no application was made before the Commission : - Agricultural machinery, cream separators, chaff cutters, churns, strippers, machine tools, tools of trade, cement, woollen piece goods- –with a modified exception - and sacks. On all those goods there have been increases of duty, many of them merely preferential duties, and some of them protective duties. But in no cases have the items been investigated as they should have been by the Minister. Honorable members opposite have boasted of the fair manner in which they are treating the Old Country, and the Tariff on its face does look as if that cry was well founded. There are preferences of 5 and 10 per cent, all through, and I am not surprised that one or two leading men outside Parliament, after a superficial glance at the Tariff, have remarked on what a fine thing it is to see Australia giving such & substantial preference to the Mother Country. I admit that that is the general sentiment of the Australian people. We do desire to give some preference to the United Kingdom, but we wish it to be a substantial preference. We find, however, that in this Tariff the preference, instead of being a real preference to the United Kingdom, is only a preference against other countries, in order to raise extra revenue. In many instances that extra revenue is raised from those who are engaged in primary production, and on the tools of workmen, who, in consequence, will find it more difficult to earn their livelihood. If these preferences led to an expansion of the industries in the Old Country, one could justify them, but in many instances they are preference duties which the Old Country can never take advantage of, and for that reason they are obviously nothing else but revenue duties.

Mr Patten:

– In two instances preference has been granted to the United Kingdom on machines that are not made there.

Mr GROOM:

– I desire to give some details in illustration of what I am saying, but my figures are subject to correction by the Department, because an individual member making his own investigations is naturally liable to err when there are hundreds of items affected, and he has only time to deal with them in a hurried manner. For instance, how nice the preference on pickles looks. The old duty was 6d. and Hd. The Government have said, “We had better give the Old Country a preference,” with the result that the new duties are 6d. and 9d. At the present time the total importation of quarter-pints and smaller is 47,950 dozen, of which 46,127 dozen are already coming from the United Kingdom; so that practically the whole lot, with the exception of about 1,800 dozen, comes from the United Kingdom at the present time. Obviously the preference cannot operate there. Of half - pints, the total importation is 300,717 dozen, valued at £91,101, and of that total, 291,377 dozen, valued at £88,234, comes from the United Kingdom. Therefore there is only left about 9,000 dozen for the United Kingdom to capture.

Mr Austin Chapman:

– It is a sham preference.

Mr GROOM:

– It looks well ana it sounds well to say that we raised this item from 7½d. tq 9d., but actually the preference does not mean much. Of pints, the total importation was 96,933 dozen, valued at £37,922, of which 85,388 dozen, valued at £34,202, came from the United Kingdom. Another striking instance is provided by jams and jellies, which hav.i been raised from ltd. and 2d. to 2d. and 3d. The total importation from all countries last year was 453,951 lbs., of a value of £12,213, and of that quantity, 437,463 lbs., worth £11,651, comes from the United Kingdom. Again, preference has been given to the United Kingdom on malt. The importation in 1913 was 34,001 centals from all sources, valued at £31,071, and no less than 30,138 centals, valued at £27,347, came from the United Kingdom. Mustard also is interesting. To make it hot for the foreign country, a preferential duty has been put on that item. The total importation of mustard at present is 886,067 lbs., of which 846,035 lbs. comes from the United Kingdom. In the case of canvas and duck, the value of the present importations is £344,333, of which £304,356 worth comes from the Mother Country. The same anomaly is to be discovered right through a number of these items. We find thai the Government are giving preference upon goods in which the Old Country has almost the whole trade at the present time. I admit that there are other items to which this criticism does not apply.

Mr Tudor:

– Do not admit that.

Mr GROOM:

– I must admit that, in justice to the Government, but I have mentioned these other items to show the haphazard way in which the Tariff has been framed. Take, again, bags and sacks for bran, chaff, and compressed fodder. The total importation at present is 1,223,922 dozen, valued at £351,546, of which the United Kingdom sends us 350 dozen, valued at £100; the Straits Settlements, 750 dozen, valued at £247 ; and India, 1,222,822 dozen, valued at £351,199. Gould the preference which has been given in the Tariff operation be anything like a substantial preference to the Old Country?

Mr Tudor:

– Yes.

Mr GROOM:

– How can it be done? How is the Minister going to do it? Will the duty of 10 per cent, cause a transfer of the trade from India to the United Kingdom? There is not the slightest doubt that the item is nothing but a revenue duty put on the primary producers of this country, and that it cannot operate to give a preference at all. If it could operate, and give a preference to Great Britain, it could be justified. Of. corn and flour bags the total importation is 3,483,322 dozens, of which we import from India 3,483,073 dozens, valued at £1,153,908. No corn and flour bags are imported from the United Kingdom, yet the Government are giving a preference to the United Kingdom - a preference which cannot operate in any way. Take again the item of mowers, reapers, and binders. The Minister has taken this item out of the free list, and made the articles free and 5 per cent. The total importation is valued at £160,281, namely, from United Kingdom, £16,341; from Canada, £84,642; from the United States of America, £61,248; and from other countries, £50. I am sure that the Minister will not contend that in this case he is imposing a, protective duty. It can only operate as a revenue duty, and it is a revenue duty levied on the manufactures of a sister’ Dominion, which exports over £84,000 worth to Australia. Again, take the case of strippers and harvesters. From England we import absolutely nothing, from Canada, £65,459 worth; and from the United States of America, £11,816 worth. The Government have raised the duty on this item from £12 to £14, giving a preference of £2. It can operate as a protective duty, but it certainly is not likely to give a preference to Great Britain. Of the metal of these, we import £226,146 worth from Canada, and £60,381 worth from the United States. The Minister has given a preference to the Old Country, but nothing is imported from there. If it operated it would transfer trade from one part of the Empire to the United Kingdom. The same remark applies to churns and many other items. If honorable members examine the Tariff and apply the principles I laid down at the beginning, it will be seen that the Tariff violates every principle which is applied in the formation of a scientific protective system. In the first place, it does not pretend to pick out the leading industries in Australia, and try to put them on a satisfactory protective basis. In the second place, it deliberately imposes revenue duties on machinery which is required in our manufacturing industries. It deliberately puts ever so many revenue duties on various items I have mentioned, such as cream separators, chaff-cutters, churns, strippers, machine tools and tools of trade which are. required in the secondary industries. If the secondary industries do not flourish, the primary industries will languish. Even raw material which is required by various industries is taxed. In every possible way the Minister seems to have violated the principles of proper taxation. Revenue duties should be so imposed that they fall upon people according to their ability to pay. So far as the Minister taxes luxuries, no one can find fault with him, but when one looks through the Tariff he sees that the revenue duties are falling even on the tools of trade required by the workmen in their ordinary avocations, that is in cases where “ their manufacture cannot be successful. If it can be established clearly that these tools of trade can be manufactured in the Commonwealth, they ought, I think, to be made dutiable. It shows how absurdly the whole of the Tariff has been drawn up. It proves the absurdity of attempting to legislate without having a proper investigation before a scientific body, capable of supplying accurate information. I think that before the consideration of the Tariff has pro- ceeded far the Minister will be glad to revise the duties on a good many items, and probably he will be only too pleased to accept the leading and guide he will be able to get from the Inter-State Commission. I do not wish to say anything more on the Tariff. It has been brought forward in a most haphazard manner.

I arn sorry that, in deciding upon the taxation to meet the requirements of the present situation, the Ministry did not pay due regard to the necessities of the States. Both the Commonwealth and the States can be indirectly affected by the war, and will feel the results of it. The Commonwealth has a legitimate sphere of taxation, on which it should live. We have a supreme power. We can range over the whole compass if we like, but obviously it was intended that Customs and Excise should be our main sources of revenue. The States can never carry on effectually if the Commonwealth disregards what are legitimate State sources of taxation. That was clearly recognised when Federation was being established. Mr. R. R. Garran wrote a little book called “ The Coming Commonwealth.” Dealing with the question of land taxation, he said -

Whatever the Federal fiscal policy should be, it is likely that there would at least be a revenue Tariff sufficient and, perhaps, far more than sufficient, for ordinary Federal requirements. It is, therefore, unlikely that, except in great emergencies, the Federal Government need resort to other modes of taxation; but since emergencies may happen, its powers of direct and indirect taxation ought to be unlimited.

Mr Page:

– What was the date of that book ?

Mr GROOM:

– The book was published prior to Federation; but it shows what was in the minds of those who were instrumental in bringing about the Federation, and laying the foundation of our scheme of government. It shows the lines on which they thought that the instrument would work.

Mr Watt:

– It was one of the most valuable publications in pre-Federal days.

Mr GROOM:

– It was. On the 17th January, 1901, in the first policy speech he delivered, Sir Edmund Barton dealt with this question -

Now as to taxation by the Commonwealth, I may tell you that I feel, quite as fully as any Treasurer could, that such a power is not to be harshly or rashly exercised. In this case any rash exercise of the power might be disastrous to every State. We have taken over great obligations from the States; but we have taken over the Customs with them, and you must recollect that if, after the Commonwealth imposes its Tariff, the States require more revenue, they can only obtain it by direct taxation within the States. The exercise of the power by the Commonwealth imposes on us an enormous responsibility; but in carrying out that responsibility they would interfere as little as possible with the States of the Commonwealth, as it was absolutely necessary to leave the field of direct taxation to those States. The States should be studied in every way, and the early difficulties of so great a change made as little trying as possible. There must be no direct taxation by the Commonwealth unless under the pressure of some great national emergency, and noteven then if it can bo avoided.

Then Sir George Reid, speaking on the 21st January, 1901, is reported in the Sydney Morning Herald to have said -

Mr. Barton says he is against direct taxation in the Commonwealth, except in the case of emergency. As I pronounced this policy two or three weeks before, I am very glad Mr. Barton has in this respect adopted my views.

When the Labour party framed its Federal platform, at the Inter-State Labour Conference which was held in January, 1900, it made no provision in it for a Federal land tax. It provided only for electoral reform, the total exclusion of coloured aliens, and old-age pensions.

Mr Page:

– From what is the honorable member quoting?

Mr GROOM:

– From a volume by a very reliable authority in the person of the Hon. W. G. Spence. The graduated tax upon unimproved land values appeared in the Federal Labour platform for the first time in the year 1908.

Mr Tudor:

– It was adopted at the Brisbane Conference?

Mr GROOM:

– Yes. I have made these quotations for the purpose of showing that, when Federation was established, every political party realized that the Commonwealth would take over large revenues from the States - revenues which would be derived from Customs and Excise. They recognised that if the Commonwealth endeavoured to exercise powers of direct taxation it might very easily embarrass the finances of the States. That being so, we ought not to exercise our powers of direct taxation except in case of national emergency. But, as a matter of fact, what are we doing ? We have already invaded the State domain of taxation by imposing a Federal land tax. This year it is estimated that £2,700,000 will be collected from that source. It is rather interesting to note how the proposed increased land tax will operate. Will it fall only on the “fat man”? In 1912 the sum of £525,455 was collected from town lands, and £919,805 from country lands. Preserving approximately the same proportion during the current financial year, £1,000,000 will be derived from city lands, and £1,700,000 from rural lands. Now, the £1,000,000 which will be derived from the cities will not lead to the bursting up of any estates, and the men who own large properties there will pass on the tax as part of the cost of running their businesses. In other words, the tax will be felt by their tenants. Consequently it will operate in a way that my honorable friends opposite do not desire.

Mr Patten:

– Will it affect private leaseholds ?

Mr GROOM:

– Yes. But we have not yet before us the amending Bill dealing with leaseholds which the Treasurer has promised to submit for our consideration. Then the probate duties, which it is proposed to levy, will press very heavily indeed. If honorable members wish to institute a comparison between the probate duties operating in the various States, they have merely to turn to the sixth volume of Knibbs, page 814. There they will find that the highest duty operative in New South Wales, Victoria, and Tasmania, upon estates valued at more than £100,000, is 10 per cent. But, in Queensland, South Australia, and Western Australia, a tax of 10 per cent, is levied upon all estates in excess of £20,000 value. I need scarcely point out that the proposed duties will be in addition to those which are imposed by the States. Thus, in Queensland, a 10 per cent, duty will be collected upon an estate of about £20,000 value, in addition to a Federal duty of approximately £4 12s. per cent. But the chief trouble about this taxation is that it will render it more difficult for the States to adjust their revenues. It is to be regretted that the Government have not observed the principles which were obviously in the minds of the framers of our Constitution. What is still more disconcerting is the fact that these taxes are apparently contemplated as permanent sources of revenue. Our expenditure will be founded upon them. This will make it more difficult for any future Government to re store these powers to the States. Under these circumstances, although the Ministry have made an heroic attempt to meet the necessities of the times, I cannot help thinking that, in many respects, their proposals will work unsatisfactorily, in addition to which they will inflict hardship in a way that is not contemplated.

Mr CARR:
Macquarie

.- The utterance of the honorable member for Darling Downs at least had the merit of being direct and definite. During the whole of the afternoon we have been favoured with a more or less academic discussion by members of the Opposition. The honorable member for Flinders successfully wove cobwebs around the question of finance, and the honorable member for Balaclava was certainly interesting as a word-spinner. But a great deal has been said without anything of a conclusive nature having been arrived’ at. We have been assured by the honorable member for Flinders that the transactions with the banks have established a very dangerous precedent. We have been told that these institutions now hold the Commonwealth and its currency in the hollow of their hands, and that they are ;n a position, at any time, by conniving with their clients, to raid the Treasury. I say that the men who control our private banks have been constantly held up to our gaze as models of integrity. They have come to an honorable understanding with the Prime Minister that the money received by them in the form of Commonwealth notes will not be presented to the Treasury for redemption during the currency of the war. Of course, there may be occasions when it will be impossible not to put some of those notes into circulation. But, even if a large quantity of them were obtained’ by a number of conspirators who exchanged them for gold, what would happen? If they attempted to ship that, gold from the Commonwealth, this Parliament would step in and prevent it. It seems to me, therefore, that the honorable member for Flinders has conjured up a bogy, and that there is not the slightest probability of what he pictured actually happening. So far as his statement contained an imputation against the bankers, I am quite prepared to repudiate it. But I do not think that honorable members opposite intended to cast a doubt upon the integrity of the bankers. That is the inference, however, because, when taxed in regard to the matter, they say, “ The banks will not present them,” as if there existed at the back of the minds of the bankers the intention to let some one else present them, and obtain gold. Such an idea cannot be entertained. The question of the currency, being an uncertain quantity, does not lend itself readily to analysis, and the honorable and learned member for Flinders had every excuse for weaving cobwebs about that also. I have no intention of attempting to analyze the matter, but it seems to me quite plain that we cannot force more notes into circulation than the people require. Certainly, in order to get out more notes and get in more gold, an arrangement had to be made with the banks, or else it would have been necessary to legislate in order to compel the banks to hold our notes as reserve in lieu of gold. This could have been done, but it was not done probably because the bankers knew this, and, therefore, recognised the - necessities of the situation, and agreed to meet the Commonwealth Government. Their action was wise, not to say generous, for, because of it, so much more paper money lias been placed in the market and made irredeemable for a fixed time. An attempt to force the circulation of the note currency by legislation, and make it irredeemable for a considerable time, would, if there was any hostility on the part of the banks, result in the notes now in circulation coming back to the Treasury, and render necessary the issue of irredeemable notes to the extent of many millions for the purpose of making up for the redeemable notes now out. However, that scheme is not proposed. The only other way, and a simple way, of forcing a currency in notes would be for the Commonwealth to pay all its wages in notes. I do not say that this should be done, but it could be done, and if it were done the tendency would be for the notes to accumulate as bank balances instead of gold, and in this way they would be as good as gold, because, after the war, with our industries stimulated, the redemption of these notes by the Commonwealth would be quite a simple matter. These are contingencies that might have occurred, and might have had to be met in the ways I have outlined, but it seems to me that, before it would be necessary to do anything further, our credit could be turned to good account, and that the inevitable consequences of the war upon Australia, concerning which the honorable member for Flinders drew such dismal pictures, could be counteracted to a great extent, if the Government would do the necessary thing for many of our manufacturing industries. Owing to the purchasing power of the people having diminished, and our export trade having fallen off, many of our factories have had to shorten hands. There is no warranty for keeping the wheels of industry going at the pace at which they were running. In order that these factories may have sufficient incentive to continue operations, it seems to me feasible that the Government should guarantee the banks in the matter of advances against manufactured goods, because, immediately the war is over, and normal conditions again prevail, there will be a ready market for many common commodities, such as furniture. I suggest that a bond should be established where the output of these factories could be taken care of, and that advances made by the banks against these products should be guaranteed by the Commonwealth. In this way we could utilize our credit. To realize what may. happen to Australia if the war is long drawn out is impossible, but matters are getting fairly bad now, and there is every prospect of their becoming a great deal worse, in regard not only to manufactures, but also our mineral industries. Much may be done in regard to our minerals. I cannot see any reason why our copper, silver, lead, and other mineral mines should be closed down straight away. There are copper mines in my electorate which should be working, but they are not working because there is no market for their output. There will be a market at some time. I do not think that copper will ever be higher in value than it will be when the war is over; so that it is only the ABC of commerce and finance for a powerful Government like that of the Commonwealth to undertake to see that the output of our copper mines is absorbed at once, and if necessary bonded. The value would be there. The same thing applies more particularly to silver. Silver in coin is worth twice its bullion value. How, then, can the Government go wrong in taking all that can be produced at current market rates, or even at nominal market rates? They will have absolute security, and, at the same time, the industry will be kept moving. The first duty of a Government is to see that the people are employed. That country is best governed that nourishes the most human beings, and extraordinary, though sane, methods must be adopted in order to see that the majority of all persons employable are employed. That is what I wish to see; and the steps I have indicated seem to be the proper steps to take. I am pleased at the announcement made by the Attorney-General that something is being done with regard to the output of the Broken Hill mines. I understand that the by-products of Broken Hill are, by contract, treated in Germany, and that the contract covers the next seven years, and covers practically all the concentrates turned out from the mines in that locality. However, the work of treating these concentrates cannot be done at present, and I am pleased to notice that the Government are behind a movement for keeping the industry alive. If Germans can treat these concentrates profitably, and to a great extent, they have been living on the raw products of Australia. - the treatment of them by British people should also be profitable; and I trust that one of the beneficial effects of the war will be the establishment of industries we have not previously had. However, it is time to get a move on, if not by direct action, at “least by indirect action through the Tariff. The honorable member for Darling Downs was severe on the Government for what he termed the haphazard way in which the Tariff has been brought down; but surely getting a Tariff introduced in a haphazard way is better than none at all. We could not wait for the report of the InterState Commission, and the Government have only done their duty in bringing in the Tariff, such as it is, now. I take it that there will be opportunity later to review it when we are more fully armed with the details that can be supplied by the Inter-State Commission. The honorable member for Darling Downs claims that the Minister of Trade and Customs should have brought down ‘a schedule showing how many employes there are in each industry affected, the output of the industries, and their possibilities; but the honorable member’s contention was absurd. The honorable mem- ber knows that the Minister cannot get more details than the honorable member can, being, like ourselves, dependent for guidance on the report of the Inter-State Commission. We shall all have the benefit of that guidance when the Commission’s report comes to hand. I welcome what has been done, because I realize that it is only by doing things like this we shall survive the effects of the present war.

Mr Austin Chapman:

– Like what?

Mr CARR:

– Like bringing in a Tariff to encourage the industries that we have, and, if possible, to start others. The honorable member, I presume, wants the Tariff to be effective, and would rather have none than what he has at the present .juncture. This incidentally produces needed revenue also. I said last night that I was prepared to come back sooner, and see the thing through. The Leader of the Opposition took exception to my unusual anxiety to do some work, but I can tell him that, whenever there is anything really waiting to be done, I am there to do it. If it is merely a matter of listening to the honorable member’s quip3 and jokes, and bandying of words, it has very little attraction for me, but if there is anything to be done, especially in a time of crisis like the present, I shall be here, as I always have been when there has been a demand for my services. I have been absent only for very good reasons. The sooner the Tariff is “ licked “ into shape the better. I am anxious to get at it, because I realize that we are going to have a bad time in the coming year. All that we can do will not entirely nullify the effects of the war, and the shortage that the world is feeling in production and wealth. We can avert the shortage in wealth if we do the things it is possible for us to do, such as extending our credit, and encouraging our industries to supply the markets that are now being starved, because there are markets abroad that are only waiting for us. The honorable member for Angas told us that Germany’s foreign trade of something like £230,000,000 per annum had been destroyed, but the people who made that trade have not been destroyed, and there will be a tremendous demand for not only our raw, but our finished, products. With the destruction of the enemy’s ships that I am pleased to say is going on, our oversea trade is bound to recuperate shortly; and if that is accompanied by an increased manufacture here, there is no telling the extent to which Australian development may go on. The war of 1870 practically developed the American nation, and there is no reason why this great war should not have the incidental effect of developing Australia. I believe it will if the opportunity is properly handled, and the way to handle it is the way I am now indicating. As for borrowing for war purposes, we ought to borrow if we can. I agree with the right honorable member for Swan that wartime is the time to borrow; but, unfortunately, the effects of the war are so far-reaching that we find it difficult to borrow, and, whether we will or not, are forced back on our own resources. If we cannot borrow, surely we are entitled to utilize our own credit to the fullest extent necessary. We have done so to an extent which has met with criticism, but to which I contend that we are justified in going. We shall be justified in going even to the lengths that I have already indicated should conditions become as bad as they promise to become before they start to mend. If, during the bad times, we lay the foundations which will enable us to grasp our opportunities, we shall indeed have cause to congratulate ourselves when the trouble is over. It is a matter for congratulation that we have in power men who have not stood upon ceremony in these matters, as the Opposition would indubitably have done. They have simply taken definite steps without attempting to reconcile all the conflicting views. I only hope that the move they have made will be persisted in to an even greater extent, and trust that many of the industries I have in my mind’s eye will benefit when the time comes, in common with others with which the Minister of Trade and Customs has already dealt.

Mr SAMPSON:
Wimmera

– The tone of the debate so far as it has gone is an evidence that the House is unanimous in the desire to help the Treasurer to tide over the great crisis through which we are passing, and I hardly think he can take exception to the character of the criticism that has been launched regarding the Budget. I have studied it carefully myself, and think that, generally speaking, notwithstanding the large increase in expenditure, most of it will commend itself to the general good sense of the country. The Treasurer has wisely separated the war expenditure from the ordinary expenditure, thus giving us an opportunity of judging how far our ordinary expenditure is mounting up, and how far we are carrying on our affairs in a business-like way. The Treasurer might have made the taxation proposals much easier by debiting more of the new revenue-earning reproductive works to loan account. This is the time when every legitimate means should be taken by the Treasurer to ease the burden of taxation, and that could have been done by including in the loan proposals practically all new works. Large sums of money debited to loan account by the previous Administration are now brought back into the revenue account in the most trying time in our history. We have a war expenditure of £11,742,000, and every one of us will agree that not only is that large sum justifiable, but that it might have been substantially increased. I quite appreciate the Prime Minister’s statement that we in Australia, having a Navy which has done very effective work, redounding to its credit and to the credit of the Empire, hardly stand in the same relationship to the Empire and its allies on the field as do places like Canada. The last information we have is that Canada is prepared to train and to place in the field at the earliest possible moment no fewer than 300,000 men, should that number be needed. I do nots say that she will be called upon to make good her offer. The moral effect on the enemy of a declaration in definite form from all parts of the Empire of what they are prepared to do in its defence must be very great. In the circumstances, I am sorry that we are not going to spend more than the sum of £11,742,000 which it is proposed to spend, because I think that a larger expenditure and more men would bring about a more speedy termination of the war.

Returning to the Budget, I find that the amount spent in 1913-14 was £23,161,327, and that in 1914-15 the expenditure will reach £37,583,000, or £14,42i2,000 more. Deducting the war expenditure of £11,742,000, the difference is £2,680,000, of which £1,622,000 representing in- creases, among them being for works and buildings £1,000,000; grant to Belgium, £100,000; interest on sinking fund, £141,000; railways, £185,000; increased payment to the States, £138,000; and increased payments on old-age pensions, maternity allowances, and ordinary defence expenditure,. £500,000. Regarding the proposed increases in public servants’ salaries, the honorable member for Balaclava was right in saying that increments and promotions might well be postponed for twelve months, without prejudice to the right to advancement. Such a postponement might be made without doing any injustice, especially where the more highly paid officials are concerned. I consider that the public servants should be well paid. The Public Service of the Commonwealth is one of which we have a right to be proud. As the Departments increase in importance, their permanent heads come to preside over expenditure amounting to millions per annum, we can hope for efficient service only by paying such salaries as will attract the best brains in the community. I wish now to call attention to the increases of taxation, which have been dealt with this afternoon so ably, trenchantly, and effectively by the honorable members for Flinders and Balaclava. The probate duties are estimated to yield £1,000,000 per annum; but the honorable member for Balaclava showed that they might probably yield £2,000,000.

Mr Fisher:

– The actual yield of such duties is always doubtful. The estimate in this case is a little over £1,000,000 ; but it would be quite possible for us’ to get that sum within half a year. Everything depends upon the deaths that occur.

Mr SAMPSON:

– The rate of taxation proposed on estates valued at more than £70,000 is 15 per cent. In Victoria, the taxation does not amount to 10 per cent., except on estates worth £100,000 or more, and the duties yield about £400,000 a year. The proposed land tax is expected to give £1,200,000. Thus we are to get altogether £2,300,000 in direct taxation. From Customs and Excise duties there is to be an increase in revenue of £1,500,000. That money is needed to make up a deficiency that will occur through the shrinkage of imports. The objection that I have to the land tax proposals of the Government is that they mark a new era in Australian taxation. For the first time in the history of the Commonwealth we have the confiscation of values proposed. The land tax proposals of the Government outrage all hitherto accepted views of constitutional ethics and legislative equity. I do not wish to be misunderstood. The nation is at war, and I think that we should submit to all the sacrifices which may be necessary to carry us through an unprecedented crisis. Individually, we should be prepared to do our part at home as our soldiers are doing theirs abroad. But to impose a tax on between 14,000 and 15,000 persons only is class taxation. In some instances the whole income of the land that is taxed will be required to pay the tax; thus the whole value of the land will be taken away, because when you take the revenue from the land you take from the owner its value. Shylock says -

You take my house, when you do take the prop

That doth sustain my house.

This crushing taxation amounts to confiscation. The class which the Government is taxing has little political influence. A body of 14,000 or 15,000 voters counts for little in an election. The large land-owners have not many friends. There is no large body of members to defend them against this crushing onslaught. We are, in this predatory tax, introducing an immoral principle, which may be used later, when the occasion demands, to tax away other values. Mr. Lloyd George, in a celebrated speech made some time ago. said that treaties are the currency of international statesmanship. The currency of statesmanship within a nation is the just and equitable laws which are imposed on the community. Parliament, instead of establishing the immoral principle of the confiscation of the values of property by taxation, should set an example to the community of moral ethics by defending the rights of every section. A Parliament that will consent to the imposition of a confiscatory tax upon the property of any section in the community is a very dangerous and destructive, instead of, as it should be, the bulwark of defence in its guardianship of the rights and property of the people as a whole. Itmust be agreed that the present is the worst time at which such taxation could have been introduced. Parliament cannot consent to taxation of this kind at any time without suffering in its character. Parliament is the public body which above all others should give the lead to the community by the equity of its legislation. Mr. Lloyd George has stated that “ the scraps of paper,” in defence of one of which we are at present engaged in the greatest war known to history, are the valuable documents upon which is carried on the commerce of the nations. It is the confidence reposed in those documents which enables thousands of tons of commerce to be carried overseas, and which give their value to bills of exchange, bank notes, and other commercial instruments. Do not our titles to land stand in exactly the same category ? Is it not the honour of the community which is understood to be behind these securities that gives them their value? If this Parliament is going to disregard its moral obligation to protect the people’s rights and maintain public confidence in the security of landed titles, we must seriously consider the road we are travelling, and the danger which must accrue to the community in the future if we decide to take that road. I thoroughly agree with the statement made this afternoon, that in the circumstances at present existing the taxation proposed should have been imposed upon the whole community in proportion to the means of individuals. This is a critical period, when we should have been prepared for mutual sacrifices.

Mr McGrath:

– The honorable member would impose the burden upon the smaller men.

Mr SAMPSON:

– No , I would have proposed that the increased taxation necessary should be met as far as possible by the whole community. I say that that might very well have been done through the Tariff. It would be quite possible through the Tariff at the present time to raise more revenue, and at the same time preserve its protective incidence. At the. present time New Zealand raises a revenue of £3 4s. 6d. per head from Customs duties In the Commonwealth we receive from Customs duties something like £2 7s. 6d. per head.

Mr Tudor:

– What does New Zealand receive from Excise duties?

Mr SAMPSON:

– I am not dealing with revenue from Excise. New Zealand’s Excise duties are very nearly equal to ours, but New Zealand raises from Customs duties 17s. per head more than we do in the Commonwealth. I remind honorable members that if we proposed to raise the same revenue per head from Customs duties that New Zealand does it would probably provide us with an additional revenue of £4,000,000. Although the New Zealand Tariff yields a revenue of 17s. per head more than does the Commonwealth Tariff, the protective incidence of the New Zealand Tariff is higher than that of the Commonwealth. This shows that it is possible to raise large sums of money through the Customs, and at the same time have a Protective Tariff. If the Minister of Trade and Customs will look up the information given in Mr. Knibbs’ Y ear-Book, he will find that on dutiable goods alone, apart altogether from spirits and narcotics, the protective incidence of the New Zealand Tariff is higher than that of the Commonwealth Tariff.

Mr Tudor:

– I think the honorable member is wrong.

Mr SAMPSON:

– I am sure that I am not wrong. I wish before I close to give honorable members some idea of what the proposed new land taxation will mean in the case of holdings of different values. I exempt, of course, the first £5,000 of value; and on the first £5,000 of taxable value, the present Federal land tax amounts to £24 6s.1d. The new tax will amount to £27 15s. 7d. On estates of £10,000 taxable value, the present tax is £5511s.1d., and the new tax will amount to £69 8s.11d. On estates of £30,000 taxable value, the present tax amounts to £250, and the new tax will amount to £375. On estates of £50,000 taxable value; the present tax is £550 11s., and the new tax will amount to £902. On estates up to £75,000 taxable value, the tax averages about 6d. in the £1. On estates over £75,000 of taxable value, the tax becomes 9d. in the £1.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– The honorable member’s figures are wrong.

Mr SAMPSON:

– My figures have been carefully worked out, and I am satisfied that they are correct. On estates of the taxable value of £75,000, the present tax amounts to £1,192 14s. 10d., and the new tax will amount to £1,875.

Mr McGrath:

– The present tax amounts to £1,593.

Mr SAMPSON:

– I am giving the Committee certain figures, and if the honorable member desires to challenge them, he can get up later and do so. I am satisfied that the figures I am giving are accurate. It must be remembered that these increases in the taxation upon land are proposed at a time when stock are dying in different parts of Australia, when crops have failed in the drier areas of the Commonwealth, and, in fact, at the least opportune time for the imposition of increased taxation. I do not wish to hold any brief for the large land-owner. This taxation will not affect residents of my constituency to a serious extent. There are not more than 700 or 800 who will be affected by the Federal land tax. I am viewing the question from a higher altitude than that of mere party advantage. I say again, that to impose taxation which has the effect of confiscating the whole value of the property of any class in the community, is to adopt a principle which must bring Parliament down from the high position which it has hitherto occupied in the opinion of the community as the defender of the people’s rights, and a body whose practice it has been to legislate justly and fairly on behalf of all sections in the community. I do not propose to discuss the Tariff at length. I believe that it is capable of considerable improvement. As a representative of a country district, and a Protectionist, I am not satisfied with some of the duties proposed, on the ground that they afford insufficient Protection. In my view, the Government have picked out some of the worst items they could have selected, in order to increase the revenue of the Commonwealth. I instance, again, the item cornsacks. It is assumed that the increased duties on this item will bring in a revenue of something like £140,000. This is an item which the Minister of Trade and Customs has not attempted in any way to explain. We cannot discover that the proposed increase in the dub will have any protective incidence at all It represents merely a revenue impost upon persons in the community who are suffering more than any other persons at the present time. Every one is aware that, during the last two or three years, the increase in the price of cornsacks has been greater than that upon any other commodity which agriculturists use. It may be said that that is due to the operations of a combine in India; but, if so, that is a matter with which we cannot deal. It is a necessary raw material for an im- portant section of the community, and the Government propose to raise an additional £140,000 a year from it, without any explanation, and without any justification whatever. It seems to me that, in their new taxation proposals, the Government have set themselves out to strike another blow - and in some instances a death-blow - at the agricultural industries of Australia. I hope that, as members of a National Parliament, we shall have regard for every interest in the community. As a representative of an agricultural district, I am prepared to vote for substantial Protection, in order that our secondary industries may be built up. I believe that Australia should be the most self-contained country in the world. I am not prepared to contend that, because it may be said that all wealth in the first instance comes from the land, land only is to be considered, or that the cultivator of the land is the only producer of wealth. The man who takes a piece of wood from the forest and fashions it into an article of furniture is equally a producer with the cultivator of the soil. There is a false impression abroad that wealth springs from the land without the application of man’s industry and intelligence. Land is a commodity which will produce abundantly in accordance with the amount of intelligence and industry applied to it by man; and in just the same way, raw materials are manufactured into finished articles necessary for the human race. If we are to impose undue taxation upon the agricultural community, we shall destroy the primary element, without which our secondary interests cannot be built up. The position taken up seems to be that the large owners of land are to bear the greatest bulk of the taxation - that imposts are to be placed on agricultural interests without any protective incidence - thus increasing the burden of the people, who, in the first instance, produce our wealth, but are unable to pass on any increased prices. It is said that some part of the land tax may be passed on. but there is certainly twothirds of it that cannot. Surely it is very important that there should be wool growing in Australia, for we are proud of our wool-clips, which are so sought after, that, in my opinion, Australia will become more and more the woolproducing area for the whole world. Of course

I am willing to admit that large landowners, as well as possessors of wealth in other forms, should pay in proportion to their capacity, in order to assist the revenue in our supreme crisis; but there never was a time when taxation could be more justly spread over the whole community I have very little complaint to make about the revenue and expenditure aspect of the Budget; my objection is that the incidence of taxation is unjust. The taxation is to be imposed on one particular class, and, as the honorable member for Balaclava pointed out this afternoon, it is a method of taxation that should cause any fair-minded elector to have most serious misgivings. Here we find the Government prepared to give special preference in the way of employment to members of their own party who are unionists ; and when it is necessary to impose direct taxation they select a class which, numerically and politically, are not powerful, and are thus unable to defend themselves.

Mr Watt:

– It is a new theory of rewards and punishment.

Mr Hannan:

– In proportion to their earnings, the humblest worker is more heavily taxed than the richest land-owner, seeing that four-fifths of the revenue comes through the Custom House.

Mr Watt:

– The duties are not all paid by the worker.

Mr Hannan:

– In proportion to his earnings, the worker pays more than any man in the community.

Mr SAMPSON:

– We have a very large free fist, with duties imposed for the purpose of encouraging manufactures, not of the very highest quality of goods, and if the workers are paying the bulk of the duties, it only shows that there is not sufficient Protection. Otherwise, we should ourselves be making more of the goods which are chiefly purchased by the wage-earners, and it would not then be necessary to pay duty. The Prime Minister, in a war period, has produced a Budget of great dimensions, and there is, on the part of the Opposition, and the House generally, a genuine desire to assist him in the present crisis; and I regret that, under the circumstances, a method of taxation should be proposed that means a reliance on a few members of the community to make up the deficiency in the revenue.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– I would not have had anything to say at this stage were it not for some of the remarks which have fallen from the lips of the honorable member for Wimmera.

Mr Kelly:

– I suppose that is why you rise with a bundle of notes.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– The honorable member may look at the notes if he cares to do so. The honorable member for Wimmera made use of a statement, which also came from other honorable gentlemen on the opposite side of the House, in regard to one particular question, and I do not wish to see the remarks of honorable members appear in Hansard uncontradicted, and so give them an opportunity to use that material during the recess to mislead innocent people in the country as to the incidence of this proposed taxation on unimproved land values.

Mr Watt:

– You would not suggest that we would do that.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– Prom what I know of the honorable member for Balaclava personally, one would be inclined to think that he is incapable of saying those things which he has been accustomed to say very often against members on this side of the House, particularly when he was on the public platform. The honorable member referred to-day to the red adjectives, and red in the eyes of some members, of the party now in power; but the honorable gentleman, too, has some very red adjectives, glowingly red adjectives, which he has used in the past on the platforms of this country, and some of which he attempted to use to-day for the first time since he has been in the House. When it comes to a matter of making extravagant statements, the honorable member cannot be excelled by any one on this side, particularly if he is desirous of making political capital at our expense. I recollect the honorable member, when he took a hand in State elections, speaking about the free breakfast, and tearing from the context a portion of the platform to which this party is pledged.

Mr McGrath:

– And he had been an advocate of a free breakfast.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– That is so ; but I did not rise to go into these matters. I wish to take this opportunity to reply to some of the criticism uttered by the honorable member for Balaclava and other members of the Opposition. The honorable member for Balaclava referred to the land taxation as robbery and confiscation; and the honorable member for Wimmera adopted the same line of argument. I can quite imagine innocent pro.pertyowners in the country, who do not investigate the facts, being led to the belief that they are being robbed by the party now occupying the Treasury benches. The honorable member for Wimmera represents a constituency which is in every particular similar to the one I have the honour of representing, and I tell him that, in my constituency, there are only 124 land-owners who are paying land taxation under the proposals of the present Government. The honorable member for Echuca, when speaking last night, would have had every landowner in his constituency believe that he was being robbed by the Government’s proposal in regard to increased land tax. I tell the honorable member that, judged on the basis of the Indi electorate, there are probably not more than 124 landowners in the whole of the Echuca electorate who ever paid land tax to Hie Federal Government. The honorable member for Wimmera would make it appear that every land -owner is being taxed.

Mr Sampson:

– I said the opposite.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– The honorable member did not say how many land-owners were interested.

Mr. -Sampson. - I said that between 700 and 800 were affected in my elec-

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– It is surprising to see that in the electorate of Wimmera only about 200 men are interested.

Mr Sampson:

– I have received official figures from the Land Tax Department, and they show that between 700 and 800 persons pay land tax in that electorate.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– Federal land tax?

Mr Sampson:

– Yes.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– I think the honorable member has read the figures upside down. He must have added another nought on to the figures which were given him . I know that there are only 124 land-owners in the whole of the electorate of Indi who are paying land taxation, and I do not think there can be many more in the honorable member’s electorate.

Mr Sampson:

– I do not care what you think. I gave you the figures supplied by the Land Tax Department. You arenot fair enough to accept a direct statement.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– I will go so far as to accept the honorable member’s statement in that respect, but I will not accept the statement he made in regard to the increased taxation under the new proposal. The honorable member when speaking was proceeding to exaggerate when he was reminded of his inaccuracy, and then he dropped that line of argument. I took the trouble to-day to find o.ut what this increase would amount to on estates valued at from £5,000 up to £10,000. I ask the attention of the Committee to these figures, which I wish to put in Hansard in answer to the statements made by previous speakers. Do honorable members opposite think that it is fair to ask the land-owners in the country to believe that they are being in any way seriously inconvenienced by the proposed increased taxation ? Take the case of a landlord with land of an unimproved value of £6,000, which would represent a total capital value of £8,500.

Mr Sharpe:

– A man may own £20,000” worth of property and not pay the tax.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– Yes. 1 take it that it is a fair estimate that if the unimproved value of a man’s property is £6,000, its capital value would be about £8,500.

Mr LAIRD SMITH:
DENISON, TASMANIA · ALP; NAT from 1917

– It would be at least £10,000.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– Perhaps £10,000 would be nearer the mark. Let us, then, take the position of a man owning land of a total value of £10,000, and let us see how he is going to be robbed under the incidence of this tax as honorable members would have usbelieve. That man would be previously paying £4 6s. Id., and under the proposed tax he would pay £4 8s. lid. So that a man with land of a capital value of £10,000 - and there are very few of them in my electorate, and not many of them in the electorate of Wimmera - will be called upon to pay only an additional 2s. 10d., and he is going to pay that 2s. lOd. on the £10,000 worth of property. That is another instance of the “ poor widow “ bogy. Going a little further, I will take the case of a man with an estate of £10,000 unimproved value. which, I suppose, is equivalent to £16,000 capital value.

Mr.Watt. - No; not £10,000 unimproved value in the country.

Mr LAIRD SMITH:
DENISON, TASMANIA · ALP; NAT from 1917

– In New Zealand they double it.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– I do not wish to be unfair. Let us take the case of a man with £16,000 worth of property, and see how much extra he will have to pay under these proposals which are going to crucify unfortunate people in this, their hour of trial. Previously he had to pay £24 6s.1d., but he will now have to pay £27 15s. 7d., being an increase of £3 9s. 6d. There are men who, out of their weekly wages, have contributed more to the patriotic funds which are being raised, not only in my electorate, but in many other divisions. There is any number of men in the workshops who have contributed more to these funds than will large owners of property under this alteration. A man with £16,000 worth of property is called upon to pay a paltry £3 3s. more than he did before. No doubt at the little shows which will be held in their electorates during the next few months, honorable members on the other side will produce their speeches and show how the agriculturists are being taxed off the land.

Mr Watt:

– Is this a Committee speech ?

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– I think it is time that an honorable member on this side made a few remarks in refutation of the extravagant statements which have been put into Hansard for electioneering purposes. Let me take, now, a poor property-holder with £20,000 worth of land, unimproved value, which would mean about £35,000 of capital value.

Mr Richard Foster:

– Nonsense.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– How much does the honorable member say it would represent?

Mr Richard Foster:

– It would depend upon the land and where it was situated.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– Would it represent £30,000 of capital value?

Mr Watt:

– It would probably represent £27,000 or £28,000 worth, on an average.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– I will let my honorable friend have his own way. Previously a man with £28,000 worth of land, capital value, paid £93 15s, but now he is to be called upon to pay £125, being an increase of £31 5s.

Mr Watt:

– It is a rise of about 33 per cent.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– The poor property-holder with about £10,000 worth of land has to pay 2s.10d. more, while the gentleman with £15,000 worth of capital value has to pay £3 9s. 6d. more.

Mr Kelly:

– Without seeking to interfere with the honorable member’s argument, will he tell us the unimproved value of the properties, instead of the capital value? Will he put them on a 5 per cent, basis?

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– These are the poor men whom our honorable friends opposite would have us place in the same category as the “ poor widow.” When the land tax was proposed in 1911, the honorable member for Swan told us that it would produce £3,500,000, and his speeches are ringing in my ears yet..

Sir John Forrest:

– When did I say that?

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– It is reported in Hansard.

Sir John Forrest:

– Let me see the report.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– The right honorable gentleman estimated that the land tax would produce £3,500,000.

Sir John Forrest:

– I must have been quoting somebody. I could not know myself what it would produce.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– I believe that nine-tenths of the members sitting on the other side said that the land tax would yield a similar amount, and I suppose that their estimates of the yield of the present proposals will be equally wide of the mark.

Mr Joseph Cook:

– Your own estimate this time is £2,700,000.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– What is my right honorable friend’s estimate? I suppose that he will make the yield double that amount by the time he has finished. If I followed the reasoning of the honorable member for Balaclava today, it was that at the present time the cost of the war and the taxation for war purposes should be equally divided.

Mr Watt:

– Equitably.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– I think that the honorable member conveyed a wider impression than that - that each and all should pay in proportion.

Mr Watt:

– “ Every man, woman, and child,” I said.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– As honorable members have pointed out from this side, the people without property in this country are paying far more to the cost of the war than are men with the estates I have mentioned.

Mr Fenton:

– And filling the ranks, too.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– That is so. According to the reasoning of the honorable member for Balaclava to-day, a man with £50,000 worth of property should pay no more than a man without property.

Mr Watt:

– I did not suggest that.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– That was the inference to be drawn from the statement. I believe that the honorable member will not deny that a man with £50,000 worth of property who is called upon to pay an increase of £31 5s. is not paying proportionately his fair share compared with a working man who has no property.

Mr Watt:

– May I say, in reply, that the ability to pay, which was the canon of taxation relied on by the AttorneyGeneral to-day, is dependent upon the annual value of a particular estate at a particular time, and not on the capital value ?

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– My honorable friend knows perfectly well that one man on an estate worth £50,000 will make double as much as will another man. Consequently it is not a fair way of computing to take the ability of the man. There is only one reasonable method, and that is to take the value of the property. I have no intention to further discuss the Budget. I rose because I thought it was time to refute some of the exaggerated, misleading statements which have been made as to what is to be paid by the propertyowners of this country.

Mr. RODGERS (Wannon) [10.381.- I am very pleased that I was in the chamber to listen to the best case which can be put from the farmers’ point of view by a Labour representative, but I cannot congratulate the honorable member on his defence of the interests of the producers of this country.

Mr PARKER MOLONEY:
INDI, VICTORIA · ALP

– There are many farmers with over £20,000 worth of land, are there not?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– In this debate I am chiefly concerned with the incidence of taxation as outlined in the Budget proposals, in connexion with which the Treasurer submitted scant information. I can remember well when the land tax was proposed by the Labour party in fulfilment of the pledges which returned them on the 13th April, 1910. I can also remember well the reasons given by practically every accredited member of the party, both inside and outside of this House. These proposals, they informed us, were intended to achieve two objects, one of which was to provide money for the defence of Australia, thus giving effect to that plank in their platform which reads, “Naval and military expenses to be allotted from proceeds of direct taxation.” That plank to-day represents the creed and the test of membership of the party. Every person who joins it has to subscribe to the doctrine that all naval and military expenditure should be derived from the proceeds of direct taxation. The second reason advanced for the Federal land tax was that its effect would be to burst up large estates.

Sir John Forrest:

– That was the first reason, I think.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– If the Prime Minister had favoured us with anything like a reasonable explanation of the amending Land Tax Bill, I had intended to ask him if the reasons which prompted him to submit the original measure were those which still actuate members of his party. One has only to jump into a train in which the adherents of that party are to be found, in order to discover the reason why the increased land tax is proposed. It is intended that it shall hit the large land-holder.

Mr West:

– The city lands will pay more than all the farmers put together.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– But how much of the burden can be kept on the shoulders of the city man who owns property? I admit that to-day Australia occupies an unparalleled position from the standpoint of the supreme responsibility which rests upon her. In these circumstances, when we were told that proposals to levy direct taxation would be submitted, I felt that at least they would be just and equitable in their incidence. But we now learn that the amending Land Tax Bill is intended to increase the revenue derived from that source by more than £1,000,000 annually. Let us see how this proposal will operate. Practically it will call upon less than 14,000 persons to contribute the absent portion of the money that is required for the government of Australia. Both in this House and outside of it we have never ceased to hear of the manner in which combines have crawled all over the Commonwealth, and of the way in which they have sucked the lifeblood of the people. To-day we are assured that they are more rapacious than ever. But do the Government propose to levy any direct taxation upon them? I do not, refer to the merchants, traders, or shippers of the community with any feeling of scorn, because I believe that they are all anxious to do their duty to the Commonwealth. But my honorable friends opposite have brushed them aside, and in effect have said to them, “ Not one penny of direct taxation shall fall upon you except in respect of city property, in which case the tax can be passed on.” Now the fiscal policy to which I subscribe is that of Protection for reasons which I shall have an opportunity of explaining later. But if I required any further reason why I should support a Protective policy, that put forward by the honorable member for Wimmera would be sufficient. He pointed out that when a trust exists outside of Australia we can exercise no control whatever over it, and the truth of his remark is well illustrated by the condition of the jute industry. The trust which controls that industry is punishing the farmer, and we are helpless to repress it. I have heard honorable members of my own party describe this tax as a class tax. That is not my view of it. I regard it as a tax on a section of a class. - If there be wealth on the side of those whom we represent in politics, why should we not spread the tax over the whole of that class and of Australia? At a time when the country is at war, when the men upon the land are not only earning no income, but are suffering immense losses as the result of their stock perishing from drought, when many of them are unable to provide their families with even the requisites of life, the Government bring down a proposal to further tax land, but to exempt all holders of estates of less than £5,000 unimproved value. I ask honorable members, Is it humanly possible, even under a pretence, to exempt farmers from the payment of the tax - to exempt them from its effect? Upon one side of a road, for example, is to be found a large land-holder, whilst on the other side, perhaps, all the small sections are owned by men whose estates are worth less than £5,000 unimproved value. The moment the Federal land tax is imposed, down comes the value of the big man’s holding, together with the value of every small man’s holding. Under the law of the survival of the fittest, the last to go out will be the big man. This is a country in which contractual obligations used to be honoured, but in some States, I regret to say, the law of contracts has been swept aside. To-day the world revolves on public credit. The men on the land, above all others, are those who take advantage of the stored-up cash reserves of other people. To-day, at least 50 per cent, of the capital value of all alienated land in Australia has been placed there by those who have built up cash reserves from other industries. That is to say, the ordinary land-holder has borrowed at least 50 per cent, of the capital value of his land. Sometimes by hard work and by the enslavement of his family, he has gradually been able to subscribe the balance. Now he is to be hit with the second instalment of a confiscatory land tax which is designed to reduce the value of the big man’s land, but which cannot help decreasing the value of the holding of the small man - -in other words, of the man who is least able to call upon other reserves. If he is unable to secure fresh money, what will happen to him? Will his little neighbour alongside, be able to buy him out? The possibility is that the biggest man will be able to step over and get the property at a sacrificial’ price. If I can gauge public opinion, and if I know the minds of the land-holders of Australia, the time is ripe-in the language of the honorable member for West Sydney, “ rotten ripe “ - for the formation of a Land League, and then what we are now unable to achieve in the House, on account of numbers, will be forced by conviction upon this country in a manner that will probably awaken my friends opposite. The honorable member for Wimmera says that he holds no special brief for the large landholder, except it be a brief of equity, and I am not able to discriminte between money put into land and money put into a bank or into some other industry. I want to know why, when the plank providing for the defence of Australia from money raised by direct taxation was framed by the political Labour party, two gentlemen, the present Prim© Minister and the Minister of Defence, forgot that it was the nation that had placed them in the highest positions in the gift of the community. And why should they not, out of the emoluments of their offices, pay their little bit towards the defence of the country that has placed them in their positions? Every honorable member in the House should contribute his quota according to his means. Why should we discriminate, in a time of war, as to those who should put in their money ? I have many friends among the land-holders who are not contributing to the Federal land tax, and none of them wish to skulk behind the 14,000 persons who pay land tax and provide the money for the defence of the country. I regard this second instalment of a confiscatory land tax as an attempt designed to hit men towards whom our opponents have particular enmity, and as a first step in the direction of the leasehold system, or, in other words, the nationalization of land, designed with the object of shrinking land values. The honorable member for Indi, who interjects, has asked me no question that I am not prepared to answer. Has the honorable member told his electors that, though he said he was going to do wonderful things in connexion with trusts and combines, neither he nor his leader has lifted one finger to place an impost upon these trusts and combines, which, if they existed at the time of the last election - and every honorable member on the Government bench vouched that they did, and the Prime Minister, in his Bundaberg speech, said it also - must still be in existence to-day. Several months have since elapsed in which they must have increased in virility and further extended their tentacles over Australia, yet the honorable member, who had so much to say before his electors in regard to the imposts on farmers, has not been able to show that his party has done anything towards relieving the community of the vile operations, if we are to believe the honorable member, of these trusts and combines. The proposed land tax is another attempt on the part of the Federal Labour party to do indirectly what they are constitutionally not entitled to do directly - that is, to lay down the land policy of Australia. When was the power given to the Federal Parliament to determine the land policy of Australia? By sovereign right this power was reserved to the States. Every State is busy, at Home and abroad, by every agency possible, endeavouring to induce people to settle on the lands of Australia; but the irony .of (he situation is that all the time every State in the Union is imposing taxation on land-holders, while, on top of the State imposts, we have a supertax and a super supertax imposed by the Federal Parliament. All these imposts are not likely to assist those anxious to spread out on the lands of Australia, whether they come from inside the Commonwealth or abroad. In Victoria the land-holder pays three taxes - the State tax, the existing Federal tax, and the new Federal tax.

Mr SHARPE:

– Where would you get the money for defence ?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I believe that every person in Australia should contribute to the cost of the defence of his country in the proportion and to the extent to which he enjoys the privileges bestowed by the community. In other words, I am a convinced believer in the principle of an income tax and if there were sufficient honorable members with the same conviction as myself in this matter, I should be prepared to bargain with the States so that the Commonwealth would surrender to the States the proper avenue of State taxation - that is, taxing the land - and, in exchange, the States would surrender to the Commonwealth the sole right to impose an income tax. Then the Commonwealth could levy, for defence and other purposes, sufficient taxation upon incomes. I am ‘ unable te discriminate between the man who puts his money into land and the man who puts his money into a bank or factory. It is everybody’s duty to contribute to the defence and economical administration of the country. By the way, it is intended simultaneously with the imposition of an increased land tax, to present at least another 5 per cent, protection to our manufacturers. I have no objection to that assistance being given; but, at the same time, it is hard that there should be discrimination of this sort. While we are supposed to be able to set up those who are starting in secondary industries, with a certain knowledge as to the conditions under which they will carry on, and with a fairly accurate knowledge as to the profits they can make; on the other hand, why should we put fresh imposts on the land-holders of Australia, who, this year, as has been vividly demonstrated, are up against the elements, and can gain no profit upon their holdings? To my way of thinking, the public of Australia, and the manufacturers, in common with others, do not desire this segregation of the land-holders of Australia as the special subject of taxation. I asked the Treasurer to-day whether, in regard to his taxation proposals, particularly the land tax, he proposed to relieve the landholders of the burden of paying this new impost during the present drought, and his reply was, of course, indefinite. The right honorable gentleman smiled, and said that he would be very pleased to be able to do it. There is in the Land Tax Assessment Act, section 66, which provides that the Commissioner, in association with a Board, may take into consideration adverse circumstances, and may practically waive the payment of the tax in case of bankruptcy and insolvency, or for other unfortunate circumstances; and I do not know whether the Treasurer has changed his mind in this regard, but, at a later stage, the Attorney-General assured the Committee that provision would be made in the Bill to meet the case of those land-holders who failed in the present year owing to adverse circumstances. I should be glad if the Prime Minister would confirm the assurance given by his Attorney-General to-day that the machinery of the existing Act would be enlarged sympathetically to deal with the distressing circumstances of the present drought.

Mr Fisher:

– I think it is fairly broad. It enables the Commissioner to relieve any or all who are in difficulties.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Section 66 is not wide enough. It leaves the matter to discrimination.

Mr West:

– What would the honorable member have?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I think that the AttorneyGeneral is more enlightened in this matter than even the honorable member for East Sydney, who claims to know all things. I take it that the Committee can accept the assurance of the AttorneyGeneral that the machinery of the Act will be sympathetically enlarged to meet the conditions of the existing drought. If that be so, we may take it as fairly certain that from 75 to SO per cent., at least, of the large landholders of Australia no Federal land tax will be collected during the first term of the operation of the new Act.

Mr Brennan:

– Surely that is not right. The drought does not apply to Queensland at all.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I invite honorable members to look at the production returns. The Prime Minister said that it was unwise for honorable members to decry the position of the country, and that we were drawing the long bow. Those people abroad who are concerned in the welfare of this country, however, have a more accurate knowledge of its conditions than the right honorable member seems to think. Knowing as they do that we are importing wheat to feed our people, and in many cases to provide seed - knowing, also, that we are importing fodder for our stock - it is fairly certain that the people of New Zealand, Canada, and the Mother Country, from whom these imports come, are fully aware that a condition of drought alone could be responsible for such a state of affairs. They know that Australia is essentially an exporting country in the matter of wool, wheat, butter, fruit, &c.

Mr Fisher:

– But that does not justify the honorable member making the position appear worse than it really is.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I do not think that I have done so. Mere casual statements to the effect that we are decrying the country by putting the plain position before the Committee must go for nothing.

Mr Fisher:

– Compare the sheep and cattle returns for 1902-3 with those of today.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I think the present drought is more widespread than was that of 1902.

Mr Fisher:

– Great Heavens! The honorable member gets into a back-yard and calls it Australia !

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Notwithstanding the demonstration on the part of honorable members opposite, the effects of this drought, in my opinion, will be far greater than were those of 1902.

Mr Sharpe:

– What is the honorable member talking about?

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I am not talking to the honorable member.

Mr Sharpe:

– I do not want the honorable member to do so.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– I do not usually address my remarks to one so woodenheaded as is the honorable member. I do not as a rule indulge in personalities; but if honorable members court such retorts, then in the heat of debate they must expect them. It is not my usual custom.

Mr Mahon:

– The honorable member is too good-natured.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– My nature is different from that of the honorable gentleman. I have witnessed an outburst or two on his part in this House that do not make me think that he is the embodiment of good temper. I wish to deal very briefly with the financial position as outlined today. I shall not discuss it at length, for we have already had to-day two very admirable addresses from the Opposition benches and an answering speech by the Attorney-General. It seems to me that we do not arrive at a true analysis by comparing the conditions of the Old Country in the matter of currency with those prevailing in Australia. Australia is a debtor nation, whereas the Mother Country is a creditor nation. We may make, internally, arrangements in respect of our currency and exchange which will suit us; but whilst these temporary arrangements may tide us over for the time being within Australia they cannot permanently make up the leeway or the loss or balance of trade that this nation will suffer during the present year. I compliment the Treasurer on what I think are the admirable arrangements he has been able to make in very difficult circumstances - the arrangement by which he has secured from abroad a loan to provide for war expenditure and the arrangement he has been able to make with the Associated Banks, which, in my judgment, reflects a great deal of credit, more particularly upon the banks themselves.

Mr Fisher:

– Hear, hear !

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– It also gives evidence of a good deal of sagacity on the part of the Treasurer, who has been able to make such an arrangement. I regret to say, however, that the arrangements made by the right honorable gentleman are alto gether in conflict with the statement that he put before the people in the manifesto of the Labour party, issued–

Mr Archibald:

– Before the war.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Issued before the last general election but after the declaration of the war. In the Labour manifesto, issued on 24th August last, we have this statement -

The Conference at which representatives of the Opposition sat with those of the Government and the States has made such arrangements, and it was enabled to do so because the Commonwealth Bank and the Australian note issue had created the very instruments by which credit could be supported, and the wheels of industry kept moving, even in this great crisis. Thanks, then, to the Australian note issue, enough money is to be loaned to the States by the Commonwealth to enable them to maintain their public works policy, and thus prevent a huge army of unemployed being thrown upon the streets. Similarly with private employment. Had it not been for the Commonwealth Bank and the note issue, the private banks would have been compelled, in sheer defence, to restrict credit.

Mr LAIRD SMITH:
DENISON, TASMANIA · ALP; NAT from 1917

– Hear, hear!

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– The statement continues -

Overdrafts would have had to be reduced, so that enterprises affected by the war would have shrunk almost to nothing.

The honorable member for Denison says “ Hear, hear,” although he has heard only to-day an emphatic declaration by the Treasurer that these very banks have been the buttress of the credit of the country - that they have been the means by which the Commonwealth and every State of the Union, except Queensland, has been financed in the most difficult period ever experienced. The manifesto proceeds -

Money would have been very dear; unemployment and trade crises wouldhave come upon us like a flood submerging everything. Instead of which, money is very cheap, employment is encouraged, traders should not be called upon to reduce overdrafts or harassed by dread of complete ruin. The wheels of industry move, and trade becomes possible.

It is hardly necessary to point out that this is a pre-election manifesto - that it was issued on the eve of the last general election -

The Commonwealth Bank and the Australian note issue, without which at this juncture we should be faced with a general collapse of industry, trade, and finance, are due to the Labour party alone. By their fruits shall ye know them.

By the absence of its fruit at the present time do we know this institution

I Iia ve no desire to decry it, but I wish to point out the glaring inconsistency between this statement and what actually took place later on. I have here an emphatic declaration by the Prime Minister that his party was pledged to, and would, during the first session of this Parliament, introduce, a policy that would give absolutely effective Protection to Australian industries. I am content to accept, for the time being, the public estimation of that Tariff, and the opinion of honorable members who sit behind the Government, and of others sitting in Opposition, who are pledged to a policy of Protection.

Mr Spence:

– Such as your Leader.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– That means neither my Leader nor the Attorney-General, who, in a great measure, leads the Labour party. I include neither of them among those pledged to a Protective policy. It has been clearly demonstrated by recent happenings, fortunately for those who have undertaken manufacturing industries in Australia, that the grave state of international complications now existing has changed the opinions of many with regard to fiscal matters, but there are one or two items in connexion with the Tariff presumed to have a protective incidence which, personally, I am not prepared to support.

Mr Mahon:

– This is the good Protectionist !

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Not from the honorable member’s point of view. I hope I am able to look all round this question, because I am not leg-roped and tied up, as my honorable friend is, to the policy of the new Protection. The Assistant Minister may rank in the minds of some outsiders as a good Protectionist, but he is not so to the members of this House. Like every other member of the Political Labour party, he is pledged and tied up to the policy of the new Protection. Before the elections the party took the risk of promising effective Protection through the Customs House, although, at the time they were speaking, and the same thing is true to-day, the real plank in their policy was the new Protection, to which every one of them was pledged. That plank cannot be altered by the Government, or by any member of it. It can be altered only by the Labour movement itself. Take, for instance, the tax on cornsacks and woolpacks, which I regard as nothing more than a direct impost on one class. On the face of it, it might appear to the public unacquainted with the facts as intended to encourage the industry of cornsack and woolpack making, both in Great Britain and Australia, but will any Minister tell me that one pack or cornsack is made, or can be made, in Australia 1

Mr Richard Foster:

– They could not make them for ls. apiece.

Mr RODGERS:
WANNON, VICTORIA · LP; NAT from 1917

– Then that puts that item out of court. How many are made in the United Kingdom ? Is not the item a mere humbug and pretence, introduced ostensibly to protect the interests of Australia, or the Empire, when, as a matter of fact, it simply imposes a direct revenue duty on one of the staple industries of this country ? One honorable member behind me asks if I am a good Protectionist. I say, unhesitatingly, that if all the items were levied in that direction I should vote for none of them, but if I am shown items which will genuinely and honestly encourage Australian industries, I shall vote for every one of them.

Mr PATTEN:
Hume

.- At this late hour I do not propose to say more than this: I am not prepared to vote a single halfpenny more of taxation, direct or otherwise, that is going to be borne wholly and solely by the men on the land. I say that definitely and deliberately. In the submitted Tariff proposals it seems to be absolutely misleading to say that, under the heading of stripper harvesters, the United Kingdom is going to get a £2 preference over foreign countries. The United Kingdom has never built a single harvester that has come to Australia. The item, therefore, is absolutely misleading, and a species of fraud to place before the public.

Mr Joseph Cook:

– Still it looks well there.

Mr PATTEN:

– It may ; but it is not the kind of thing to put seriously before the people. We are also offering to the United Kingdom a preference of a farthing per pound on metal parts for stripper harvesters, and the United Kingdom has not made a single part for a stripper harvester. Those are two items that are supposed to show preference to the United Kingdom, but are perilously close to untruths. The Government are not justified in placing proposals of that sort before the public.

Mr Bamford:

– Be fair. You ought to give them a show.

Mr PATTEN:

– I want to be fair, but I want the truth to prevail, although the heavens fall. Until we have some evidence of the United Kingdom being able to take advantage of the preference we are by these items simply throwing dust in the eyes of the people there. If any British manufacturer sees them, the Budget of the Australian Parliament will become a laughing stock for the whole business community of the Old Land. Some time ago, when the distributing agents in Buenos Ayres had a difference with a firm here, they approached certain English manufacturers, asking if they would make stripper harvesters; but the reply given was that it would not pay to do so, unless an order were placed for some thousands of machines. I believe that one machine was sent to the Argentine from Great Britain, but that it proved quite inefficient. The proposed preference is altogether misleading. As to the duty of 10 per cent, on corn-sacks and bags, it seems to be an attempt to bolster up the speculator, who alone can send forward orders, and take advantage of cheap prices. The ordinary farmer usually buys at high prices ; and if he purchases towards the end of a season, he will find himself in a position very different from that of a speculator. Our great primary producers should not be penalized in this way.

The TEMPORARY CHAIRMAN (Mr Atkinson:
WILMOT, TASMANIA

-If no other member proposes to address himself to the general debate on the Budget, I shall put the motion that a land tax be imposed.

Mr Joseph Cook:

– I strongly suggest that the matter be left over till to-morrow, so that our members may be here to vote on the question.

Mr Fisher:

– You will take the vote then?

Mr Joseph Cook:

– Yes. The debate is finished.

Mr Fisher:

– If the Leader of the Opposition says that the debate is finished, the request for an adjournment to. permit of a division is a reasonable one.

Progress reported.

page 1684

TRADING WITH THE ENEMY BILL (No. 2)

Assent reported.

page 1684

APPROPRIATION (WORKS AND BUILDINGS) BILL 1914-15

Bill returned from the Senate without amendment.

page 1684

SUPPLY BILL (No. 4)

Bill returned from the Senate without request.

page 1684

APPROPRIATION MESSAGES

Mr. DEPUTY SPEAKER reported the receipt of messages from the GovernorGeneral recommending appropriations for the purposes of the following Bills:-

Treasury Bills Bill

Invalid and Old-age Pensions Appropriation Bill.

War Loan Bill

Loan Bill (No. 2)

Referred to the Committee of the whole.

page 1684

SPECIAL ADJOURNMENT

Motion (by Mr. Fisher) agreed to -

That the House, at its rising, adjourn till tomorrow, at 11 o’clock a.m., and that Government business have precedence on that day.

page 1684

ADJOURNMENT

Taxation or Soldiers : Seat of Colonel Ryrie

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– In moving -

That the House do now adjourn,

I ask honorable members to put themselves to a little inconvenience by sitting to-morrow afternoon and evening. There are special circumstances that make this necessary.

Sir John Forrest:

– We shall not get on any faster by working too much.

Mr FISHER:

– I am not anxious to sit late; but we must make progress.

Mr KELLY:
Wentworth

.- I wish to ask the Prime Minister whether, in connexion with the taxation proposals, an opportunity will be given to honorable members to see the provisions of the Imperial Act exempting from special taxation members of His Majesty’s Forces serving at the front? If we could see those provisions, I believe it would help us in considering the matter.

Mr FISHER:
Prime Minister and Treasurer · Wide Bay · ALP

– In reply to the honorable member for Wentworth, I shall be very glad to do what he suggests. He has reminded me of a matter which I have had in mind for some time, and that is the position of at least one of the members of this Parliament who is going to the front. I am inclined to think that it will be necessary to pass a Bill to secure his position as a member of this Parliament.

Mr Glynn:

– That question was discussed at length in the South Australian Parliament when the late Mr. E. A. Roberts went to South Africa, and very elaborate speeches on the subject will be found in the debates of the South Australian Parliament.

Mr FISHER:

– I shall be glad to have the co-operation of honorable members in this matter, as the position of the honorable member to whom I refer should be placed beyond all doubt.

Question resolved in the affirmative.

House adjourned at 11.32 p.m.

Cite as: Australia, House of Representatives, Debates, 11 December 1914, viewed 22 October 2017, <http://historichansard.net/hofreps/1914/19141211_reps_6_75/>.