6th Parliament · 1st Session
Mr. Speaker took the chair at 2.30 p.m., and read prayers.
Report (No. 3) presented by Mr. McWilliams, read by the Clerk, and adopted.
– Has the Minister for the Navy read a report of the question asked by Mr. Fitzpatrick last night in the New South Wales Legislative Assembly, from which it appears that a’ wounded soldier, travelling from Melbourne to Sydney, was provided by the Department with only one meal, although ho left Melbourne at 4 o’clock one afternoon and did not arrive in Sydney until half -past 12 the next day? Will the Minister ascertain if this has happened, and, if so, will he take action to prevent similar occurrences in the future?
– I shall be pleased to comply with the honorable member’s request.
– I wish to know if I correctly understood the Minister for the Navy to state the other day that the Commonwealth transports have already earned £760,000 in freight?
– They have earned £1,000,000 in freight.
– I ask the ‘ Minister how he reconciles that statement with the statement of the Minister of Defence that the earnings are something over £200,000? I should also like to know whether the money is paid into the Consolidated Revenue, or is held as a setoff against war expenditure generally ?
– The information that £1,000,000 has been received in freights for work done by the transports in carrying cargo between Australia and England comes from the Director of Transports, and is reliable.
– The gross earnings are £1,000,000?
– Yes. As a set-off there must be put perhaps £180,000 for agency costs, and demurrage and other expenses. I shall ascertain whether the money earned is paid into the Consolidated Revenue Fund.
– In order to put the matter on a business-like footing, will the Minister have a statement prepared showing the gross earnings of the transport vessels, the charter money, cost of maintenance, insurance, demurrage, and all outgoings, so that we may know what the net earnings have been ?
– There is no objection to doing that, but I should like notice of the question.
– Is the PostmasterGeneral aware that a week or two ago, when casual letter carriers were needed byhis Department, men over the age of twenty-one years were appointed at 8s. a day, but that recently the instruction has been issued to country and otherpostmasters that they must engage lads under twentyone years of age, and pay them 5s. 4d. aday.
– There has been no change of practice. When youths under twenty-one years of age are employed, they are paid in accordance with the award.
– I ask the Minister Tor the Navy if he is satisfied with the lack of expedition shown in informing relatives of casualties to men fighting on Gallipoli?Cases have frequently come under my notice in which relatives have received cables from men, announcing that they had been wounded, three or four weeks before any official information has been received. I ask the Minister if he will see that, if possible, casualties are notified to relatives within a reasonable period ? The trouble seems to occur in Egypt.
– The Department is desirous of giving, and is doing everything possible to give, to all concerned the most reliable news from the seat of war as quickly as possible.
– Has the Attorney-
General received a reply to his cable to the Imperial Government re the 50,000 tons of zinc concentrates to which he has referred ?
– No reply has yet been received.
– Is it the intention of the Attorney-General to give to Tasmania the same conditions in respect to the supply of sugar as have been granted to the other States?
– As I said the other day, the intention of the Government is that, so far as possible, sugar shall be retailed throughout the Commonwealth at 3d. per lb.
– In giving a commission of 5 per cent, to brokers who persuade their clients to invest in Che war loan, will the Prime Minister give preference to unionists? Does he intend to decline to give any commission to non-unionist stockbrokers ?
– In consulting them, I did not inquire whether they were members of a union or not. I know, however, that there is a union of sharebrokers. Those in the union are probably the “ recognised brokers “ to whom reference is made in the prospectus.
– Will the Minister for the Navy cause to be prepared for the early information of the House a statement as to the nature and extent of the dental units in the military organizations of the armies of the Mother Country, the Commonwealth, and the “United States of America ?
– Is the Treasurer prepared to state what form the new taxation to provide for war expenditure will take?
– One form will be an income tax.
– One form?
– That will be the first tax to be imposed.
– Has the attention of the Minister of Trade and Customs been directed to the fact that America is taking from this country 20 per cent, more sheep skins than she took prior to the war, with the result that the local market is being depleted, and men are being thrown out of employment?
– The honorable member recently drew my attention to the fact that the export of sheep skins to America had considerably increased. I think he stated that the export to America at present is not 20 per cent., but twentyfour times greater than the export at the same time for twelve months ago. The honorable member presented me with a statement on the matter, and I am causing inquiries to be made into it. * Unfortunately, owing to the depletion of our flocks, the export of mutton is less than it was before the war, and consequently we have fewer skins to export.
Elimination of High Profits
– According to the London Times, the war expenditure of the Imperial Government is materially increased by the high profits made in connexion with the supply of certain war commodities, and the Home Government are considering the desirableness of eliminating all high profits. Will the Prime Minister take similar action here to insure that the Defence Department is not overcharged in respect of any supplies?
– I have grave doubts as to whether this Parliament has any such power as that which is proposed to boused by the Government of the United Kingdom. The power is certainly onethat ought to be exercised by those Governments which possess it. I think I. can speak for all parties in this Parliament when I say that, so far as we havepower to prevent it, no exploitation of” any kind should be permitted at the present time, whatever maybe done after the war is over. That I am convinced is the policy of all parties and of the people; generally.
– Will the AttorneyGeneral state when the arrangement with the Colonial Sugar Refining Company will be completed, and whether he is aware that the supply of sugar to householders is in the meantime being held up ? I am told that the deprivation of sugar in households is becoming very acute. It is so in our own. When may we expect some from Grocer Hughes ?
– In reply to Orchardist and Jam-maker Cook, I am inclined to regard his question asa personal reflection upon myself. As an honest, though budding, tradesman, I shall endeavour to see that he gets thesugar he needs. Speaking quite seriously, there ought to be, and there will be, no difficulty in obtaining sugar. There was a difficulty yesterday and the day before, owing to the fact that the sugar now beingplaced on the market is for the most part imported, and that a misunderstandingarose regarding the payment of duty upon it: That duty, however, was paid yesterday by the Government, and, consequently, there will be no further shortage.
– Will the Minister for the Navy state whether it is intended next season to use transports for the carriage of wheat oversea?
– I have gone into this matter with the Director of Transports, and we believe that we can see our way clear next year, provided that the war is still going on, and that we have charge of” these transports-
– And provided that thesea routes are free.
– Quite so. I hope that the war will be over before then ; but, if it is not, then, in the circumstances I have mentioned, “we believe we can see our way clear to ship by our transports to England 250,000 tons of wheat.
Adjournment of Parliament
– Will the Prime Minister take into consideration the advisableness of adjourning this House from tomorrow until Tuesday week, so that honorable members may be able to attend the Australia Day celebrations in the different States, and also take part in the recruiting meetings to be held next week?
– I have already expressed in this House the opinion of the Government, and my own strong personal conviction, that this Parliament ought not to adjourn because of a recruiting week in any State. We did not do so in connexion with the recruiting campaign in Victoria, although the Seat of Government is in this State, and I do not think we should be called upon to adjourn because of a recruiting campaign in any of the other States. At the same time, we shall be pleased to continue the arrangement made on a previous occasion to allow honorable members representing the States concerned to . attend recruiting meetings.
– I understand that the recruiting campaign inNew South Wales does not begin until the end of next week. May we not complete the work of the Parliament before then?
– I am very pleased to receive so favorable a suggestion, and can only say that we shall assiduously attend to our duties, and endeavour to free hon able members within the time named.
Offer by Commonwealth Government.
– With regard to the Prime Minister’s very generous offer to supply England with coal from Newcastle, New South Wales, is the right honorable gentleman aware that, according to recent statistics published in the Times, the whole output of coal from Newcastle for one year would provide only two and a half days’ supply of coal for the Old Country? Even then it -would not be smokeless coal.
– I am well acquainted with that fact. In my younger days I earned my living as a coal-miner, and know all the circumstances connected with the industry; but in making this offer my ambition and desire was to do a service to the Mother Country, and at the same time afford an opportunity to our own coal-miners to be fully employed.
The following papers were presented : -
Arbitration (Public Service) Act -
Copy of an Order dated 24th June, 1915, made by the Commonwealth Court of Conciliation and Arbitration, varying the Award given on a plaint submitted by the Small Arms Factory Employees Association.
Statement of the Laws and Regulations . of the Commonwealth which, in the opinion of the Deputy-President of the Court, may be affected by the Order.
Copy of the “ Reasons for the variation of Award “ by the Deputy-President.
Memorandum by the Attorney-General in connexion with the variation of the Award.
Australian Institute of Tropical Medicine, Townsville, Queensland - Half- Yearly Reports from 1st July tb 31st December, 1914; and from 1st January to 30th June, 1915.
Rnbaul - Alleged Misuse of Red Cross Gifts, and Looting by Military Officers and Privates - Report on, By Hon. W. M. Hughes, Attorney-General.
Ordered to be printed.
– I wish to ask the Minister for the Navy a question relating to that great organ, the Argus. Has his at-‘ tention been drawn to the fact that in some cases where employees of the Argus have volunteered for the front no provision is made for keeping their positions open for them? Considering that the Argus is asking other private employers to do this, should not the wealthy proprietors of this great organ, like the proprietors of other Melbourne newspapers, make good the difference between civilian and military pay in the case of their employees who volunteer?
– I have not seen any reference to the matter in the Argus, but no doubt the position is as the honorable member suggests. I take it that the Argus will, at least, endeavour to do what it tells other people to do.
– In the statement the Attorney-General made yesterday regarding the base metal industry, he said that a . certain copper mine was selling its output through Merton and Sons. Later he said that two directors of that same company had applied to him for permission to act as sole agents for Merton and Company.
– Not quite that.
– The honorable gentleman said that an Australian firm had made application.
-. - That is right.
– And he also said, “ I shall add nothing to this except to say that the two directors in this firm are also directors of the mining company above referred to.” Seeing that there are several copper concerns in Australia, and that an imputation now rests on them all, will the Attorney-General, in order to free those who are not included in this imputation, announce the name of the mining company and the names of the directors referred to in his statement?
– I will do that if it is necessary. I do not know that it is necessary, but if it is I can have no possible reason for refusing to disclose the information. The responsibility for the disclosure, however, must rest upon the honorable member who asks the question. The companies involved are the Mount Morgan Company - both directly and through the refining company the Electrolytic Company - and Goldsbrough, Mort and Company.
– In addition to theinformation he has just given to the House, will the Attorney-General . also give the names of the two directors?
– Yes. The names are Casey and Niall.
– May I ask the Attorney-General whether I understand correctly that he is. either not prepared, or has some objection, to accept the suggestion I put to him yesterday, to the effect that he should ask the Government Statistician to report upon the two schedules in the War Census Bill as to what part of the information required could be obtained from the Land Tax and Statistical Departments of both Commonwealth and States, and as to what information is not so obtainable; also, as to the manner in which the Government Statistician himself thinks that all the information required in the two schedules could be most easily and quickly obtained ?
– The questions how this information is to be obtained, and to what extent it should go, are for the Government and Parliament to determine, and for nobody else. The Government takes the advice of, and seeks assistance from, its expert officers in carrying out its policy, but what that policy is to be is for the Government itself to determine.
– I should like to ask the Postmaster-General whether his attention has yet been directed to the statement that a regulation has been issued by the Postal Department to the effect that telegrams conveying information regarding casualties to people living in the country, upon which porterage has to be paid, must wait for delivery by the mail carriers ?
– The Postal Department co-operates with the Defence Department in the matter, and I think that where a porterage charge was incurred in the delivery of a telegram, the direction from the Defence Department was that the telegram should be sent out by letter-carrier, that being the only way to avoid porterage charges.
– Will the Minister for the Navy bring that answer under the notice of the Minister of Defence, and ascertain whether it is his wish that such a course should be followed ?
– I will bring the matter under the notice of the Minister of Defence, but my own view is that the relatives of the wounded should get theinformation as quickly as possible.
– Has the attention of the Minister for the Navy been drawn to the cost of the badges that nurses have to wear. The manufacturing cost of each badge is 6d. Then the middleman comes along, and charges1s. 6d., but the people to whom the Defence Department has referred the nurses charge the handsome sum of 6s. 6d. for each badge. Will the Department endeavour to get these badges direct from the manufacturers, and themselves sell them to the nurses at cost price ?
– If the position is as stated by the honorable member, I think the Department will do quite right in agreeing to comply with the honorable member’s request.
– As many of the men who have offered their services to the Defence Department have been rejected on medical grounds, and owing to other disabilities, I should like to ask the Minister for the Navy if the Government will make some arrangement whereby men who have been rejected on these grounds may receive medallions, or cards, or certificates, so that they may not have the white feather sent to them by people who do not know the circumstances?
– That provision has already been made.
– Has the Minister of Trade and Customs taken action yet to have fully qualified veterinary surgeons placed in charge of the inspection and certification of meat for export?
– I think I sent to the honorable member a letter setting forth the facts in regard to theveterinary gentlemen he referred to. Qualified veterinary inspectors are not available at the present time; the Defence Department has engaged them all.
Transports : Returning Soldiers
asked the Minister for the Navy, upon notice -
– The answers to the honorable member’s questions are- 1 and 3. Twelve. Average cost, £6,099 17s. 6d. 2 and 4. Fifteen. Average cost,£ 6,359 6s. 11d.
The State Dockyard, Williamstown, fitted out seven: average cost, £11,061 12s.
Thirty-two transports were also fitted partly by Government yards and partly by private yards.
With regard to 3 and 4, it should be noted that the quantity of work to be done and the conditions differ in the various ships.
asked the Minister for the Navy, upon notice -
– The answers to the honorable member’s questions are -
asked the Minister for the
Navy, upon notice -
Whether the Minister of Defence has any objection to furnishing a copy of the last annual confidential report on Major J. W. M. Carroll, if any such report exists?
– The report asked for by the honorable member may be seen by him or any other honorable memberwho desires to do so.
asked the Minister of
External Affairs, upon notice -
– The answers to the honorable member’s questions are -
asked the Minister for the Navy, upon notice -
– The answers to the honorable member’s questions are -
asked the Minister of Trade and Customs, upon notice -
– The answers to the honorable member’s questions are -
Employment in Central Office.
asked the Minister for the Navy, upon notice -
Whether he will inform the House as to -
– Such information will involve much labour, and will take some time to prepare. It will be furnished when available.
Enlistment of Officers
asked the PostmasterGeneral, upon notice -
What number of telephone mechanics from the various States have enlisted -
– Inquiries are being made, and replies will be furnished as early as possible.
Debate resumed from 21st July (vide page 5171), on motion by Mr. Fisher -
That this Bill be now read a second time.
– All parties are in accord as to the necessity for this loan and for sinking all political controversy at the present time. We all recognise that this is a time of difficulty and danger, and that it is the duty of every honorable member in the House to assist the Government to carry on the business of the country in the easiest and most satisfactory way. The proposed loan is an absolute necessity, and I hope and believe that, so far as the resources of Australia are concerned, there will be a great effort on the part of everybody to make the issue a success. I should like to point out, however, more especially in view of some statements that were made yesterday, that, a proposal to raise an immense sum of money by loan must be viewed to a large extent as a business matter. The subscriptions to the loan must appeal to those who have money largely from a business point of view. It is all very well to be philanthropic, but it is not quite reasonable to expect those who possess wealth - acquired for the most part by long and arduous toil - to invest it except on some reasonable business foundation. The loan has been proposed by the Government as a business proposition, and it is based upon principles that seem to me to be fair as well as expedient. In due course we shall receive from the Treasurer, I am sure, a full statement in regard to the ways ‘and means, the mode which it is intended to adopt in regard to finding the revenue with which to pay interest and the sinking fund provided by Statute in regard to the raising of inscribed stock. Therefore, it is not necessary to discuss that side of the question now. When parliamentary authority to raise a loan is being sought, it is not unusual to have a statement from the Treasurer as to the ways and means and the mode proposed to be adopted to raise the money necessary for the paying of interest and sinking fund, but on this occasion I take no exception to the course followed by the Treasurer in postponing such a statement until the Bill has received parliamentary sanction. When the Treasurer deals with the Budget - which he, no doubt, will do at the earliest opportunity - a full statement from him as to ways and means will be convenient, both for himself and for honorable members.
My desire now is to urge economy in regard to the administration of public affairs, but not economy that will interfere with efficiency. We must have efficiency at all times, but we need it more particularly at the present time, when we are engaged in an arduous and dangerous war. To urge economy at this time might be construed to mean that economy is to be obtained by lessening efficiency - a result which is far from my mind, because efficiency should be our main object at the present time. It is, nevertheless, necessary that we « should have economy in all Departments. It is not usually expected that the soldiers who fight our battles should be financiers - the two functions do not usually combine; and my desire in urging the need for economy is not dictated by what has happened in the past, though I believe that there has been a good deal of extravagance. I simply wish to urge the need for economy in all Departments of the Public Service, especially in the Defence Department, with its enormous expenditure. There are financial Departments which may be expected to scrutinize expenditure more carefully than others, but is there any officer whose special duty it is to keep a special watch on the expenditure of the Defence Department ?
– Mr. McCheyne Anderson has just been through the Defence Department making an investigation of the accounts.
– I should like to see his services continued, if not permanently, at any rate during the period of the war. In fact, there should be an Inspector-General of Accounts, whose whole duty should be the supervision of expenditure of all Departments.
– The Auditor General supervises the expenditure very carefully.
– The AuditorGeneral merely supervises expenditure after it has been made.
– He can compel a refund.
– I am aware of that, but the Auditor-General has a great deal to do, and his main business is to see that the people entitled to payment receive their money, and that the vouchers retained by the Departments are correct. I believe that if we had an officer such as I have indicated he would save his salary a dozen times. We need some one of considerable standing in authority who will deal with economy in the Public Service generally. If it has been found necessary to depute an experienced gentleman to look into the accounts of the Departments - and he has found a good deal to complain of- how much more powerful would he be, and how much more would he be able to bring about efficiency and economy, if he was permanently “appointed ? I hope that even if the gentleman to whom the Minister has just referred is not permanently appointed he will remain at his task during the continuance of the war. There should be some one to exercise this supervision, and I am sure that if an officer were appointed he would earn his salary a dozen times over. My object in making these remarks is to see that in these times of great difficulty and heavy expenditure we have economy practised consistently with the maintenance of efficiency.
– Do you think that one officer would be able to exercise supervision right through the Commonwealth?
– Not necessarily; he would need assistance.
– That would mean the creation of another Department.
– In any case it would be doing good work.
– The right honorable gentleman is merely proposing this in regard to war expenditure?
– Generally for war expenditure, but we need more control over the expenditure of Departments. Ministers do their best, but they fire only in office for a time.
– We have a Committee of Public Accounts appointed for the purpose.
– Their supervision is spasmodic, and not continuous. J suggest that we should appoint an expert financier to hold the position of Inspector- General of Accounts. Such an appointment would insure careful management and proper economy.
I wish now to say a few words in regard to the financial position of Australia. We are about to borrow an immense sum of money. We are absolutely forced to do so; but I wish to point out the position into which we are being driven in regard to the finances, not so much of the Commonwealth, but more especially of the States.
– Would the right honorable gentleman call the war loan a patriotic loan?
– What does the honorable member mean?
Mr.Hampson. - That the patriots should accept½ per cent, interest less than the rate that the Government offer.
– Let the honorable member set an example. He would not suggest that others should do what he would not do himself.
– I have nothing to invest in the loan.
– There are too many who talk about others doing what they cannot do themselves. Let the honorable member, when he gives advice, follow it himself. If he has not a great deal to invest, let him give something.
– I was speaking of the 4½ per cent, patriots.
– I hope that the honorable member is not one of those patriots who will give nothing and risk nothing. He seems to think that others should give what little wealth they have gathered by long years of toil and care, while he has nothing to give away. The honorable member had better remain silent. I have a more serious matter with which to deal. There is a great danger to our Federation ahead of us - if it is not already upon us. I refer to the double’ taxation which now exists, and is likely to continue to a somewhat larger extent in the future - double taxation of the same people by two Legislatures. One great defect in our Federal Constitution which is becomng more and more apparent every day is the equal power of the States and the Commonwealth to impose taxation upon the same people and in the same manner. It was thought by the framers of that instrument that the Commonwealth would not levy taxation on land, incomes, and estates submitted for probate, except in times of great stress and difficulty. Of course, at the present juncture, my remarks on this subject have not the force that they would otherwise have, because our necessities are now so great, but the defect to which I draw attention has caused a great deal of friction, and, if it continues, will be worse than a blunder; it will be a crime. The present situation is unjust and intolerable, and, in my opinion, cannot continue. We have now two Legislatures engaged in taxing the one set of people, each almost regardless of what the other is doing. When the framers of the Constitution gave the Commonwealth authority an unlimited power to tax, they thought, in their unwisdom - I was one of them - that taxation of the kind to which I have just mentioned, would not be resorted to except in times of great difficulty. We have been rudely awakened from that belief. Let us consider the financial state of Australia. The exact figures are not obtainable, but the public debts of the States now amount to probably £350,000,000, and the public debt of the Commonwealth, if the £9,000,000 owed to the States for transferred properties is taken into account, about £40,000,000. Therefore, at the end of the year, the public indebtedness of Australia will be about £400,000,000, or about £80 for every man, woman, and child in the Commonwealth. In some States the public indebtedness per head of population is now more than that, and in others, of course, it is less. How are the States to continue to pay their way if the Commonwealth continues to deplete their taxable resources? I approve of the present war loan, because it is absolutely necessary in this time of danger, but it accentuates the position.
To honorable members opposite I give the odium - because they alone deserve it - for having invaded the taxable resources of the States, a thing that was never done by any Government holding power during the first ten years of Federation. The result has been to impoverish the States in a way that was not anticipated by the framers of the Constitution. There is now a Federal land tax, which is anticipated to produce this year £2,500,000, and Federal probate duties, which are anticipated to produce £1,000,000, making together £3,500,000. The Prime Minister has told us to-day that a Federal income tax is also to be imposed. All these imposts are in addition to similar State taxation. The interest on the public debts of the States is now about £11,000,000 a year, and I regret very much that the net return from the public works for which the money was borrowed is only about £9,000,000, or about £2,000,000 less than the interest paid in respect of them. The States have to make good this deficit; and we may well ask, Where will they get the money to do this? The position is a very serious one for them, especially since the Federal authority has begun to deplete their sources of revenue. The people of Australia have to pay municipal and shire taxation, Federal and State land taxation, and Federal and State probate duties - amounting in respect of large estates to about one-quarter of the value of the estate charged. They have also to pay a State income tax, and a Federal income tax is in prospect. This matter must engage the attention . of all who take a live interest in Australian finance. If the States cannot pay their way, means must be provided to enable them to do so. They and the Common wealth are so closely knitted together that what is good for one must be of advantage to the other, and what is bad for one must be injurious to the other.
– The State Governments must practise economy.
– I agree with the honorable member.
– The people of the States say that the Federal Government should practise economy.
– There is plenty of room for economy in Federal administration also. The position to whichI have drawn attention must, if it continues, result in the taking over of the State debts by the Commonwealth, and, unless some fairer and better scheme is devised, must eventually mean the Unification of Australia. So far as I can judge, the States, within a very short time, will be unable to pay their way, because of the invasion by the Commonwealth of the taxable area which was thought to be reserved to them.
– How does the right honorable member propose to finance the Commonwealth if he limits its sphere of taxation ?
– I do not think that I need go into that matter now; I am concerned at the present time merely with making it clear that if the Labour party continues as it is doing, the States must get poorer and poorer, and the result must be, first, that the Commonwealth will be compelled to take over the debts of the States, and, secondly, that Unification will become a necessity. I mention these things because it is my duty to draw attention to them, as they should be the subject of serious reflection. In my opinion, we cannot continue to deplete the State sources of revenue, without destroying the Federation. We cannot make a change while we are at war. But when the war is over the Federal compact will h ave to be reconsidered. I assure the Government that so far as I am concerned I shall do my best to help them in these troublous times. I shall support the second reading of the Bill, because I consider the measure absolutely necessary by reason of the war.
– I agree very cordially with the last words that fell from the right honorable member for Swan. After the war is over - possibly even before - the Federal compact will have to be reviewed. As to the measure before us, the first point to be noticed is that, notwithstanding its vast financial importance, we are asked to discuss it before we have had a general statement of the financial position which, under ordinary circumstances, would be a necessary preliminary to intelligent discussion. I do not suggest that the Treasurer could make such a statement at this time, but none the less, the fact that the necessities of Government have required the Bill to be brought forward at this juncture throws upon the House, in the absence of such a financial statement, the obligation of considering, as far as our lights will permit, the very serious financial position in which we find ourselves. This is a war measure, and, as such, it will receive my cordial support, but the very fact of ite being a war measure raises in one’s mind considerations regarding the urgency of the national struggle in which we are now engaged, which cannot fail to appeal to honorable members on both sides. In this connexion I should like to put before honorable members a view which may not have occurred to some of them, and that is that our enemies in this struggle, whatever we may say of their conduct of the war, have at least already shown a capacity for national and wholehearted sacrifice such as we have not yet even begun to display. I take this opportunity of saying that not only is this war not yet near its conclusion, but that it will not and cannot conclude in the way in which we should wish it to conclude until every part of the Empire to which we belong, as well as every citizen of it, is prepared to undergo sacrifices similar to those which at the present moment every man, woman, and child in Germany is undergoing. That is the first fact that we have to recognise. There is no expenditure that is deemed necessary for prosecuting this war to the end which ought not at this time to be undertaken by this Parliament. There is, however, another side to the question, and it is that all the expenditure and all the sacrifices that we are now making may be futile unless we are prepared henceforth to make them effective by engaging in a course of both public and private economy throughout the length and breadth of Australia. Not merely economy in public expenditure, but in- dividual domestic economy must be practised by every citizen in the community unless the necessary- expenditure which, we are now called upon to make in the prosecution of the war is to be rendered absolutely ineffective. While I recognise the desire of the Prime Minister to pass.this measure as quickly as possible, and, therefore, do not propose to take up more time than is absolutely necessary in discussing it, I would remind honorablemembers that since this is the first great war financial proposal that we have had put before us, it raises matters of immense moment to the whole of the people of Australia, which it is not right for us to pass by without calling attention to those which appear to be of fundamental importance. We talk about, organization, and the Prime Minister and the Government have already taken thelead in putting forward a scheme for the organization of the resources of Australia.in connexion with the war. But in the very forefront of any organization of that, kind there must be an organization of thefinances, and of the whole of the expenditure of the Commonwealth in all its Departments. The real position into which, we are drifting is to a large extent, masked from us by the necessities of the war, but whether it be masked or not we must face the facts sooner or later, and the sooner we do the less likely are we to have that financial catastrophewhich must inevitably come unless we* are prepared to face them as they should’ lie faced. I should like very briefly to draw attention to the fact that therehas never been since the inception of theCommonwealth what has always appeared to me to be one of the first essentials, and that is a truly national balancesheet for Australia. This has been duepartly to the extraordinary financial provisions of the Constitution under which we live, and partly to that mutual independence of the States and the Commonwealth in relation to finance and othermatters, which, rightly or wrongly, has been regarded as the guiding thought of the framers of our Constitution. A simple statement - intelligible to thewhole of the people of Australia, whoare interested in finding the money, and in the expenditure of that money - showing the whole of the resources of Australia for taxation purposes, and thewhole of the expenditure of that taxation , has never been brought forward, and? never can be, it seems to me, unless a drastic change be made. Many of the people of Australia were induced to vote for Federation because of the argument that it would reduce the public expenditure. We were told that the co-operation between the States which was to be brought about by Federation would have the effect, not only of not increasing the expenditure, but of reducing it, and that all that we should have to set off as against that reduction would be the slight amount of additional expenditure due to the establishment of the Federation itself.
– But consider what has happened since then - something of a financial orgy.
– The right honorable member for Swan is not far wrong in saying that what has happened since then has been something like a financial orgy. I realize that it would not be permissible to deal in detail with this phase of the question, and, therefore, shall give only the figures showing what has actually happened - figures which show that not only have these fond anticipations not been realized, but that the exact contrary has been the result. These figures are to be found in Mr. Knibbs’ book, and carry their lesson on their own face. The total Commonwealth and State expenditure for 1902-3 - and I take the figures for that year because the Commonwealth could hardly be said to have got on its feet in 1901-2 - was £33,132,000. I am referring now to annual expenditure, and not to loan expenditure, which stands on a different footing.
– But that was nearly all State expenditure.
– We are dealing now with the cost of the Government of Australia and the question of whether that Government is divided between several agencies does not touch my argument. The Commonwealth and State expenditure in 1902-3 was £33,132,000, whereas in 1913-14 it was £62,019,000, so that in eleven years the cost of maintaining the government of Australia had practically been doubled. Allowance, of course, must be made for the fact that during this time the population of Australia had increased. The population, taking the nearest figures available for these two periods, increased from 3,083,000 to 4,600,000 in 1913. A very simple arithmetical calculation will show that, taking into account this increase in population, the expenditure per head in that extremely short period in the life of our nation - a period of eleven years - increased to the enormous extent of over 60 per cent. I shall be told, of course, that included in that increase is the cost of building up the great defence scheme that we now have. I am not going into details; I am dealing merely with the general financial position; but I would point out that this increase of expenditure is generally attributed by the man in the street to the necessity for the defence of Australia. In 1902-3. Australia’s defence expenditure was £766,000 ; in 1913-14 it was £2,950,000, or an increase of £2,184,000. If we subtract the whole of that difference, we find that the expenditure of Australia in respect of the ordinary purposes of government, leaving the cost of defence out of the question altogether, increased in round numbers from £33,000,000 to £60,000,000. Every one knows that the whole of this money has not been wasted, but, undoubtedly, a great deal of it has been thrown away. I have not the slightest doubt that a careful, systematic investigation by responsible officers, such as the right honorable member for Swan has just insisted upon, would disclose that there are a thousand leaks, both in State and Federal Departments, through which our money has flowed. Not only is that so, but a large proportion of this increased expenditure has been devoted to purposes which the people have demanded.
– We have employed an accountant for the very purpose of making a systematic investigation.
– I am not criticising that appointment.
– Keep him going.
– We are.
– No party or Government should have the blame or praise for this enormous increase in the public expenditure of Australia.
– There, is no question of disability.
– I am not dealing with that point at all. I do not claim that this or that Government has been more economical.
– I am not denying the honorable member’s suggestion by any means, but I say I am taking action.
– I am glad to hear it. I do not deny that a large portion of this expenditure has gone in directions which the people required, and in directions which, of course, conferred benefits on all sections of the people; and if we had unlimited moneys to expend I have no doubt that we could go on increasing our expenditure indefinitely. But what I am concerned with now is to show that that expenditure has gone on, apart altogether from defence, and has increased in a very short period from £33,000,000 to £60,000,000.
– The pity is we did not spend enough on defence.
– I agree with the honorable member, but for the reason I have stated it is desirable to leave defence out of this comparison, and to deal only with the increase of expenditure that has occurred in the ordinary Departments of Government quite apart from defence expenditure. If you ask me the reason for this, I have no hesitation in giving it. Apart altogether from the undoubted period of prosperity through which we have passed, as the result of which every one would expect some increase of expenditure, because we were growing richer - apart altogether from that, you have not far to look to see what it is that has removed every kind of political or economical safeguard from the finances of this country. What’ has done that - and I do not hesitate for one moment to say it ; the point was lightly touched upon by the right honorable member for Swan ; I have stated it in public before, and I desire to restate it here - has been the uncontrolled, mutually independent, and mutually irresponsible power of taxation given both to the States and to the Commonwealth. The management of finance is at all times difficult in a Democracy. Every one recognises that. In every kind of representative institution finance is the great difficulty, for reasons that I need not go into. You have the people seeking, through their representatives, to have their wants supplied, and expenditure tends to go up until it is brought to a check by nothing short of necessity. Under ordinary circumstances, in the unitary form of government, the check, and the only check, on expenditure is the fact that the Parliament which authorizes the’ spend ing of the money is also the Parliament endowed with the direct duty of finding the money to spend, and, in order to do that, of depriving the people of some benefit by the imposition of more taxation. In theory that applies both to the Federal Parliament and to the State Parliaments, just as it does to any single Parliament. In practice it does nothing of the kind. Honorable members will recollect that during the first ten years of our history the Federal Parliament had complete control of the Customs and Excise revenue, with the constitutional obligation to give back three-fourths of the total collected to the States. When the Surplus Revenue Act was passed, in 1910, under which 25s. per head was given ‘to the States for ten years, there was a sudden and enormous increase in the spending power of the Federal Parliament. The available Customs revenue went up to a very large amount. The mere fact of passing the Surplus Revenue Act endowed this Parliament with a sudden access of revenue of between £4,000,000 and £5,000,000 a year for a number of years. And this Parliament, instead of conserving that increase or making any reserve to meet any great national obligation that sooner or later must arrive, has, from the outset, expended the money as soon as it came in. That is just one of the facts which shows the absolute want of ordinary check upon our Parliament as a spending body. The same thing may be said with perhaps equal force, or with nearly equal force, of the State Parliaments, for, -notwithstanding that their revenues from Federal sources were fixed at only 25s. per head, and that it was supposed the States would take that fact as a warning not to permit their expenditure to .go on increasing in the way it had done before, but that they would at once set about putting their houses in order, we find, from an examination of the figures, that their expenditure has increased, just as the Commonwealth expenditure has increased. There is the position. Neither in the Federal nor in the State Parliament has there been any real attempt to set the financial house in order from the beginning of Federation to this time.
– They have borrowed and borrowed and borrowed.
– Yes, until we at last find that one of the greatest
States of the Commonwealth has actually been reduced to the extraordinary device and contrivance of farming out its public works to a private syndicate. If such a thing as that had been suggested to a party such as that my right honorable friend now leads, at the initiation of Federation, or even five years ago, they would have declared that it was not only impossible in any representative Parliament, but that it would be doubly impossible in a Parliament . led by a Government which holds the opinions they do. Our States have acquired a momentum of expenditure that it is almost impossible to stop now. We in the Federation have also gone on. We have absorbed all the enormous increases of revenue as rapidly as they came in, and I have shown you by the figures already quoted that the defence of Australia up to the commencement of the war - because I desire to entirely separate the enormous advance that has taken place since that time - accounts for only a little over £2,000,000 a year of the total amount. That is one side of the question. Another side of the question is that of borrowing. The two matters cannot be separated. We cannot discuss any proposal like this for pledging the credit of Australia to the extent of £20,000,000 without discussing also the whole financial position. I do not know whether it has struck honorable members - the Prime Minister himself did not refer to it - but it strikes me as a matter that cannot for a moment be left out of account in this connexion. The Prime Minister said that he welcomed this first opportunity upon which we were called upon to rely upon our own resources. In one sense I agree with him. I think the time had to come sooner or later, and I think, also, that a time when the people of this country are becoming alive to the very serious position which confronts them in many respects is perhaps the best time for it to have come. But what I want to remind the Prime Minister of is this : that, apart from the necessity of shouldering the burthen of finding our own money as far as we can, our having to find our own money is, economically speaking, an absolute disadvantage. Honorable members will see that hitherto we have been able to draw enormous sums of money, both for the States and the Commonwealth, from a perennial source of lending power in Great Britain, at low rates of interest, whereby we have been immensely aided in the development of this country. Now we are called upon, not for purposes of development, but for purposes of war, to borrow, not from outside sources, but from our own people. What will be the result? I should say that nine-tenths of the money which we borrow in Australia will be “money necessarily withdrawn from the active working capital of Australia. Do not forget that. The bulk of this money will come from the people who have placed their deposits in the banks. These moneys were deposited in the banks so that they might be invested in business affairs. They have “gone to finance all kinds of businesses, as all small sums of this sort, which the depositors are necessarily unable to themselves invest as capital, do go, through the medium of the Savings Banks and the other banks. These small deposits are practically the only source enabling a variety of industries to find employment and wages for the - people. Whoever loses sight of that fact loses sight of the whole position, which is that the mere fact of borrowing within Australia, as compared with borrowing outside Australia. . is in itself an evil. It is an evil that we cannot help. Sooner or later it had to come.
– Is that the honest conviction of the honorable member ?
– Yes; I do not see how we can possibly get out of it. To borrow large sums of money in Australia, especially for unproductive purposes, is to draw away largely from the funds which now pass through the ordinary financial channels, ultimately intothe pockets of the workers as wages. That is the main thing that has to be looked at. I may, in this connexion, make another general observation. Exactly the same thing that applies to such a loan applies - though with a limitation - to heavy taxation. Undoubtedly it does not apply to such a great extent. It is perfectly true that if you can, by any human device, impose such forms of taxation as would compel rich men, or comparatively well-to-do men to sparesomething from the luxuries which they are enjoying, that possibly would be one of the best modes of taxation. The difficulty is that almost any form of” wealth or property tax, and to some extent of income tax, is also a direct tax upon the reproductive energies of the- community. It must to some extent take away from that fount of productive energy which supports the industrial life, of the people. The borrowing of money must result in the withdrawing of a large amount of money from the deposits in the banks. One may take a bucket of water from a current, and yet the stream so long as it continues to flow will make the country fructify and support industry; if the stream is baled dry, industry ceases. ‘So, too, if you carry taxation beyond a certain point, you get exactly the same result. I am perfectly aware that there is a section of people in this community - rather a large section, I am afraid - who think that in the realized wealth of the country there is an almost inexhaustible source from which we can draw to feed the poor of the country and find work for them. I am not going to address arguments to those for whom history has no lessons. I am speaking to honorable members who, I presume, have studied the mere fundamental elements of our social life, and I will not attempt to argue with those people who think that we have an unlimited fund from which we can draw by taxation in order to give work and wages to the people. A more false, mischievous, and ruinous idea never entered the mind of a community, and I say to those honorable members who may have influence with the people who hold that idea that the best service they can render to the country is to use on the platform all the eloquence they possess in order to disabuse the minds of their followers of such a notion.
– I do not think that that idea is held by the representatives of the people in this House.
– I do not think it is, but that it is held by many of those who support honorable members in this chamber I know, for I have encountered the idea many times. There is no country in the world where wealth is so evenly divided as it is in Australia, and where such a large proportion of the wealth is the actual productive, energising capital of the community. One of the results of the war census, which, I hope, will be speedily taken, will be to show to the whole world what has been to me, and to many others who have studied the question, a patent fact for many years, viz., thatin Australia the vast bulk of the realized wealth of the people consists in those things which constitute either the fixed or circulating capital which supports, and is the working machinery of, all the industries of the country. Therefore, neither is it a good thing in itself to borrow in Australia, although it may be, and is, necessary, nor is it a good thing to tax the people more than can be avoided; and in both cases if you exceed the limit which ordinary common sense ought to teach you to impose upon the exercise of these powers, those who will feel the evil first and most are those on the lowest rung of the ladder.
– They always do.
– They always do. That is so with regard to any abuse of the power of issuing notes. If you make mistakes in the fundamental principles of public economy in connexion with either taxation, borrowing, or the issue of notes, you do so, not so much at the risk of those who are at the top of the social tree, as at the risk of the people whose bread and butter depend on their daily employment. I have pointed out what I think has inevitably led from the constitution of our Parliaments to this enormous and overwhelming increase in public expenditure. We have seven Parliaments all independent of one another, each, under our Constitution - which in this respect is ridiculous - possessing uncoordinated and exhaustless powers of borrowing, all without relation to one another or mutual dependence, and all without obligations to jointly or separately place before the taxpayers of the community a knowledge of the full resources of the country, of the subjects of taxation, or of the purposes of public expenditure. When you have such a position, and have no general national balancesheet placed before the people who must find the money, you have all the circumstances which not only destroy the , ordinary safeguards for public economy, weak as they are in the best of circumstances, but bring about conditions which must lead to continued and swelling extravagance in every Department. The result of that state of affairs has been that though for twelve months we have been engaged in this most terrible war, and threatened by the most dreadful peril that ever threatened us collectively or individually, we are all individually spending nearly as much as we ever spent. We are in every section of society, from the wage-earner to the millionaire, if there be such a person in this community, recklessly spending money. That huge swollen stream of public expenditure - money bleeding from every pore, leaking from a thousand holes in every channel, State and Federal - has been increasing since the war at quite as great a rate as during the period preceding the war.
– A good deal of that expenditure is caused bv the drought.
– The drought, so far as it operated at all, must have acted as a check on expenditure. But even the drought, which, . so far as it affected Victoria, has been certainly the worst this State has experienced, and one of the worst the whole Commonwealth has experienced, has not acted as a real check upon the enormous growth of public expenditure. My views with regard to the necessary alteration which, sooner or later, must be made in the Constitution, are already published. I shall have an opportunity elsewhere to fully, and without any of the restrictions imposed by parliamentary procedure, place before the public my views on the necessary changes in the .structure of the Constitution. But there is one thing which, without any change of the Constitution, can be, and must be, done now. This Parliament cannot, even if it would, shirk the responsibility attaching to the National Parliament of the people of Australia. It can not shirk the responsibility which arises from the fact that it is, and must remain, the guardian of the finances of Australia, of the States as well as of the Commonwealth.
– Have we shown ourselves more economical than the State Parliaments ?
– It is not a question of which Parliament has shown itself to be most economical; neither State nor Commonwealth has shown any economy.
– A change of machinery will not necessarily give us economy.
– Neither the State Parliaments nor the Federal Parliament has, since the initiation of Federation, been placed in a position in which there was any inducement towards economy. All the Parliaments were placed in the position in which there was every inducement towards extravagance, and that arises, in my opinion, from the constitutional mutual independence, the attempt at creating mutual independence in two authorities that cannot be mutually independent. Even since the outbreak of the war, mainly in order to give the States accommodation and to permit them to continue their expenditure, we have advanced to them a sum of £12,611,000. Before the end of this year, that sum will have increased to £21,000,000, including the £18,000,000 and other advances made by the Commonwealth to them. For that purpose, the Commonwealth has engaged in a course of economical conduct which, from, the beginning, I have viewed with apprehension and anxiety. I refer to the issue of paper money to an extent, which, I ventured to predict a year ago, would reach probably not less than £40,000,000. Before this year of grace is finished, and without any further commitments than those shown on paper, but with the completion of the advances to the States and. with the necessary issue of additional paper money in order to obtain from the banks the balance of the £10,000,000’ worth of gold advanced by them to the* Commonwealth, the notes circulation will be between £45,000,000 and £46,000,000i. I view that prospect with very grave* apprehension. I am not going to debatethat question now, beyond saying that wehave walked on that path which all history teaches us is beset with dangers, mainly for the purpose of financing theStates, and, to a comparatively- small extent, for the purpose of” financing our own> obligations.
– Our note issue is notworse than that of the British Government.
– I do notdesire to be drawn into a discussion of” the note issue at this stage. We haveengaged in this comparatively enormous note issue mainly for the purpose of financing the States. In addition, weprovide the States under the Surplus Revenue Act with a sum of, approximately,. £6,000,000 annually.
– A little more than that.
– I suggest to the Treasurer that there may be som& means whereby, without the creation of a tremendous amount of new machineryfor income taxation or any other mode of ‘ taxation under the Commonwealth, some arrangement might be made with the–
Stares by which they could use the machinery that they now have for the purpose of raising this taxation, and the Commonwealth should take the necessary amount out of the 25s. per head payable to the States. One thing above all others ought to be avoided, and that is duplication and reduplication of the services required for collecting taxation equally with the enormous additional labour and annoyance and trouble it will give to the people of Australia.
– We have been at that matter for three months.
– I felt sure that the Treasurer would not have overlooked it, and no doubt when introducing the promised taxing Bill he will give us the necessary information.
– I almost despair of what will happen.
– To revert to the main point of my argument, we possess the power, and with it we are under a responsibility to the States. We finance the States; we have a constitutional obligation to do so. I remember that, though I declined to accede to the Financial Agreement which my party proloosed to embody as part of the Constitution, I afterwards acceded to the proposition brought in by the Fisher Government immediately they came into office. I refer to the Surplus Revenue Bill, which gave the States 25s. per head. Mr. Deakin at that time put the position that the Bill was a sacred guarantee to the States that this payment of 25s. per head would be continued, but I ventured to take up the attitude that this Parliament could not give any such guarantee, that the matter could not be allowed to go into the Constitution, and that whatever payment was made to the States might be modified or taken away by this Parliament if the national necessities required it.
– I am afraid that the States will not get the payments very much longer.
– I do not wish to be misunderstood. I hope that the honorable member does not take me for one moment as suggesting that we would be doing our duty if we set our own finances right by depriving the States of that payment without having any regard to their finances. Nothing is further from my thoughts. If any State should become insolvent, Australia would become insolvent.
– No State can be allowed to become insolvent.
– We cannot allow it. We are the guardians of the State finances, and that guardianship throws an obligation on us. During the debate on the Surplus Revenue Bill I said that I would never accede to the principle that this Parliament might not, in the extreme necessity of the State, or indeed’, in- any necessity, be obliged to repeal, modify, or alter the Act.
– The States are our partners; we cannot bring them down without bringing down ourselves.
– They are partners, and not only is their solvency our solvency, but, moreover, every loan borrowed by a State is borrowed, not on the security of the State, but on the security of Australia. We must support every State loan.
– The Constitution provides for that.
– The Constitution provides that we may give the States financial assistance, but I am not dealing Avith the constitutional aspect of the question now. I wish to put that question on one side, and deal with the great practical difficulty that confronts us. Constitution or no Constitution, I say that the National Parliament of Australia cannot allow the solvency of any State of Australia to be affected seriously, and, therefore, it must support, as far as it can, the solvency of the States. But that fact does not free the Commonwealth from an obligation as guardian of the finances of Australia to see that both in the State and Federal Governments the necessary provisions for economy and sound finance are employed.
– Should the Federal Government have prevented the New South Wales Government from farming out its public works?
– The honorable member has given a concrete case which it is very difficult to answer. I do not intend to deal with the past, but I make a suggestion to the Treasurer, feeling that the matter is really of urgent necessity. Our finances are getting into such a condition that we shall soon not be able to go on ; sooner or later we must come up against the wall unless the position is taken in hand, and the sooner that is done the better. Let us not allow this financial storm which looms in the distance to be masked from our eyes by the immediate necessities of the war.
– Does the honorable member refer to the States or the Commonwealth ?
– I speak of Australia. I cannot free my mind from the fact that never in the history of this country were we more one people than we are now; we have one interest before us, and this Parliament is primarily and essentially charged with the maintenance of the financial interest of the whole of Australia in all its channels. When I went to the Treasury the other day - it is not the fault of the Treasury officials, it is the fault of the system - and asked for the figures showing the amount of borrowings by the States since their last financial statements were made, I was told that they had no such records in the Treasury, and that they did not possess the information I required. I was ultimately, by the courtesy of the Treasurer, permitted to get at the only source from which the Commonwealth can know what the States are doing in the way of borrowing, namely, press cuttings collected from time to time. It seems to me absolutely absurd and mischievous that the Commonwealth Treasury, charged, as it indubitably is, with the responsibility for the State finances as well as its own - because the States are now deeply in the Commonwealth Treasury books for moneys lent to them, and for them mainly we have embarked upon an issue of paper money which will soon amount to a little under £50,000,000 sterling-
– It is only £33,000,000 at present.
– The Treasurer was not in the chamber when I pointed out that, even with existing obligations, the notes issued and to be issued before the end of the year, in order to get the gold of the banks, will amount to nearly £46,000,000.
– That will be the case, but I interjected because I think that will be the limit.
– I sincerely hope that it will be the limit. I do not wish to press the argument further than it will go. Seeing that there is this direct financial link between us and the
States for which we are engaging ourselves so deeply in what must always be a highly dangerous enterprise, and that we are under an obligation to feed them with moneys out of the Customs and Excise, revenue as far as our resources will permit, no National Government can wash its hands of a certain responsibility for the State finances. It cannot say, “Am I my brother’s keeper?” We in this Parliament are responsible, especially at the present time, for the whole of the finances of Australia. The suggestion that I make to the Prime Minister is this - it will have to be done sooner or later, and if it is not done in the way I suggest it may ultimately have to be done under a sudden cataclysm which we all desire to avoid; we should approach the matter in a business way - I maintain that the Prime Minister and his Government are under an obligation to take up a perfectly definite attitude towards the State Governments. We took it up partly at the . Conference which was held about eight or nine months ago, when it was agreed that there was to be a distinct limitation on State borrowings; the States were not to borrow except for conversions, except with the consent of the Commonwealth Treasurer. I know that there have been departures from that agreement, and we shall probably hear the reasons for those departures when the Treasurer’s financial statement is made. The Commonwealth is not only under an obligation to come to a definite understanding with the States in regard to borrowings, but also to see that firm and direct steps are taken to bring about economy in every Department, Commonwealth and State. We are under an obligation to see that early and immediate steps are taken in connexion with economy in the Federal Departments.
– I have no power. in the case of the States, except the persuasive power which the honorable member also has.
– The Treasurer has a great deal more power than that. He is now the creditor of the States. He is practically financing the States. It is for the sake of the States themselves that I am making this suggestion. Moreover, the Constitution only gives ‘to the States portion of the Customs revenue for so long as, in its wisdom, in the interests of the whole of Australia, this Parliament should think it necessary to hand it to them.
Mr.Fisher. - I go further, and say the Commonwealth Parliament has no power to enforce a claim against a sovereign State Government.
– This Parliament has complete, unlimited control over the whole of the Customs revenue, and in that way holds complete control over the finances of the States.
– That would he in the nature of a threat.
– Of course it would be. We cannot avoid our responsibility for the State finances. We have gone too far already. If we allow the matter to go further, we shall come to a point at which there will be a distinct clashing.
– What about our agreement with the States?
– I think it is far better to appeal to the common sense of the people.
– Hear, hear! Through the referenda proposals.
– Let us put them aside for the moment. Of course, we must appeal to the common sense of the people to practise economy ; but there is a more direct duty for the Commonwealth Government, and that is to enter into direct relations with the States, and to put this to them: “ There must be a definite effort in both the Commonwealth and -the States for economy in every branch of the Public Service. We are going to make it: what are you going to do? Let us know how you can reduce your expenditure. It may be that we cannot afford to give you so much of the Customs revenue as we have been giving, though we wish to give you as much as before. It is a simple business proposition. What are you going to do; how are you going, in your spheres, to take your part in the duty we all must perform of stopping the thousand leaks that occur in every detail of the Public Service?” That is our duty, and it is duty of prime necessity and also of urgent necessity.
– Can we interfere with the per capita payment until the ten years have expired?
– I have already pointed out the position. If the promise made was one from which the
Commonwealth Parliament could not recede the per capita payment for ten years might just as well have been put into the Constitution. When Mr. Deakin said that he understood that the Commonwealth Parliament could not alter the Bill, I took up the position that if national necessity arose, the Bill could not he considered by the States as any promise binding the Commonwealth Parliament not to be at liberty at any time during the ten years to modify the measure.
– The strong point was that one Parliament cannot bind another.
– Not only that one Parliament cannot bind another, but that no understanding in one Parliament can be deemed to bind another Parliament.
– We made a definite promise, to which we gave effect by legislation.
– I differ absolutely from the right honorable member on that point. I took up the position - and I think that the then Leader of the Opposition agreed with me - in part at any rate - that Parliament would not do its duty if it bound itself for ten years by any promise, since honorable members could not know what might happen in the future.
– What was the attitude of the Prime Minister at the time?
– He gave a definite and distinct promise for ten years.
– The statement of the Prime Minister made at the time is the ruling statement, compared with which that of a private member is of small importance; I merely cite what I said then to show that I am justified in stating the view that I now hold. Mr. Deakin is reported, at page 423 of vol. LV. of Hansard, to have said on this occasion - referring to the Prime Minister -
He has given a deliberate pledge, not only for this, but for future Parliaments, during the period for which the measure will operate. Although that assurance was unnecessary, so far as honorable members are concerned, it is valuable and effective so far as the public is concerned, because without it they might be misled. The Prime Minister laid a proper emphasis on this understanding.
– I do not think that his words went so far as the honorable member suggests. This, like any other measure, may be altered if the necessities of the Commonwealth require it.
– Nothing short of a cataclysm, such as cannot be foreseen or provided against, would justify any party in proposing an alteration of the measure.
– We pledged ourselves to the people to continue the arrangement for ten years.
– I do not agree with that view. I think that the pledge was made subject to any overriding necessity of the Commonwealth.
– Ask the Prime Minister.
– No doubt he will state his view when the time comes. Had it been otherwise, this Parliament would have deliberately surrendered an essential function. It might have to face an emergency at any moment. The attitude I took up was this. I said -
I agree with the Leader of the Opposition when he says that we ought to give the assurance - and we do by passing this Bill give the assurance - to the States that we contemplate nothing within the horizon of practical politics, to usethe language of the Leader of the Opposition, which will be likely to induce us to alter the terms of this measure. That is the strongest declaration of intention that we can make. But I decline to go further than that, and to consider that there can be anything in the nature of a pledge binding the conscience of any member of this House with regard to what may be the case should the ultimate necessities of the Commonwealth require a change.
I understand that that view was generally assented to at the time, but I may be wrong.
– Here is the measure itself.
– I do not dispute the statement that the measure provides for a period of ten years, but I. hold that it, like every other Act, may be repealed or altered.
– Not a measure like that.
– It is a mere scrap of paper.
– An Act of Parliament is not a treaty. Is it suggested that Acts under which municipalities are subsidized cannot be repealed or amended without breach of faith by State Legislatures? The view that I now put forward is that which I expressed when the matter was originally under discussion. To take any other attitude is to assert that this Parliament then sur rendered its freedom of action at a time of most serious responsibility, such as a crisis of the kind with which we are now faced.
– When a Parliament says that an agreement shall continue for ten years, I think that that constitutes a binding promise.
– I disagree with the right honorable member, though he is entitled to his opinion. I now hold by the view that I expressed at the time.
– The honorable member’s time has expired.
Leave to continue granted.
– Our efforts to finance the huge obligations that this war imposes on us may, after a time, be rendered, if not futile, to some degree ineffective, unless we couple with them a rigid economy, both State and Federal. The primary obligation of leading in, and insisting upon, that economy lies upon the Prime Minister of Australia.
– We should begin by setting an example to the States.
– Yes; but we must not wait. The finances of Australia are one concern; those of the States cannot be divorced from those of the Commonwealth. To attemptsuch a divorce means ruin. In finance divided responsibility means no responsibility. That is what has led to all the trouble, and it may lead to infinitely more trouble. Not only is a determined effort, led by this Parliament, necessary to effect drastic and complete reforms in the finances of both the States and the Commonwealth for the purposes of the war, it is necessary also to secure our position after the war. When peace is concluded we shall be invested with new rights and new responsibilities, such as no community of our size has ever yet enjoyed. At the end of a successful war, not only shall we be intrusted with the development of the whole of Australia, but we shall also be charged with the policing and the care of huge interests, outside Australia, in the Southern Ocean. If we are to be in a position not merely to do what is necessary to win the war, but also to take upon ourselves, and support worthily, the burden of a noble heritage, such as has never yet fallen to a people of our size - the development of the great country that we now hold and the care of many surrounding islands and archipelagoes, together with the obligations resulting from the international relations which will necessarily be included in these arrangements - the first and most necessary step that we must take is to proceed at once to set our house in order.
– It is well, in this time of stress and storm, to take stock of things, especially things financial. Whether it means a longer session of this Parliament or not, the time will be well occupied which is spent in reviewing our financial situation. The last speaker laid considerable emphasis upon the fact that in recent years our expenditure has been considerable. I think that every member will agree with him, though we may not agree with his deductions. Ours is a young community, and if there is any place in the world where there should be a liberal expenditure for developmental purposes it is Australia. Between 1901, when Federation was consummated, and the present time, the population of the Commonwealth has increased by 1,108,000 persons.
– I took that into account.
– We must also take into account the increase in the necessities of the population.
– I took that into account in arriving at the conclusion that our expenditure had increased by 60 per cent.
– And our production by 100 per cent.
– To my mind, the honorable member for Flinders did not place enough value upon the fact that it is largely in regard to defence that our expenditure has increased so rapidly of late years. While no one would claim that every penny spent on defence has been wisely spent, there is a general agreement that for the most part our defence expenditure is the best that we have made. In the year 1910-11 our defence expenditure was about £3,000,000 - a great increase on the expenditure of previous years-, in 1911-12 it was £4,081,000; in 1912-13, £4,346,000; and in 1913-14, £4,750,000, or £16,183,000 in four years. That expenditure has given very good results during the present trying times. Without it, it is more than likely that at least two of our chief ports would have been blocked for a considerable period after the commencement of the war. Our defence expenditure for the financial year just closed - 1914-15 - amounted to £18,250,000, which, of course, includes the outgoings in respect of the war; We must scrutinize every item of expenditure, but it must be remembered that there is economy which may bring disaster. It would, I think, be criminal to curtail expenditure on public works, especially on reproductive works, even in time of war. Our people must be fed, clothed, and housed.
– Does not the honorable memberthink that something could be saved in connexion with the Federal Capital scheme?
– If we closed down at Canberra within, say, a month, the men now at work there would be out of employment.
– There is a difference between doing a reasonable amount of work at Canberra and shutting down altogether.
– What would the honorable member call a reasonable amount of work?
– What would the honorable member do when we had no more money ?
– I am afraid that the honorable member is taking an exceptionally doleful view of the situation.
– I am not expressing any view; I am merely seeking information.
– I do not think such a time will ever arrive. Reproductive works, or works that are likely to prove reproductive in the near future, should be prosecuted with the utmost vigour. Unless this be done, we shall have within the Commonwealth a condition of affairs almost as bad as the state of war outside. If by any mistaken policy on our part thousands of men are thrown out of employment, very serious trouble will be createdwithin our own borders. Neither the Commonwealth nor the State Governments have done all they might have done in this direction. Whilst it is necessary that we should preserve the financial equilibrium of the Commonwealth, we must at the same time see that our people are. fed, clothed, and housed, and it is better to employ them on reproductive works at reasonable rates of wages in these tunes of high prices than to close down our whole public works policy. It is because of these considerations that I pay special attention to the use of the word “ economy “ by honorable members opposite. Both the Leader of the Opposition and the honorable member for Flinders have urged that economy must be exercised. ‘ We are all agreed that economy is desirable, and that the man who lives in a frugal way, even in time of plenty, is a better citizen than is a spendthrift. A certain expenditure, however, is necessary for the upkeep of every community. There is, no doubt, a certain amount of waste going on.
I was very much impressed by some figures given recently by Mr. Chiozza Money, a member of the British House of Commons, who is also a member of the Finance Committee appointed by the British Government to carry out the work of financial organization in the United Kingdom. Discussing the habits of the British people, Mr. Chiozza Money, in the March number of the Fortnightly Review, mentions the fact that in respect of a few luxuries - he does not include all luxuries - the people of the United Kingdom spend at the rate of £350,000,000 per annum, and he makes the comment that a nation that can spend. £350,000,000 per annum, on luxuries should not find it very difficult to find £500,000,000 to carry on a big war. When we are speaking of the necessity of every member of the community contributing his or her quota to the upkeep of the country, I hope we shall always remember that out of £15,000,000 raised by Customs and Excise duties, no less than £12,500,000 comes out of the pockets of the poorer people of the community. It is well for us, when dealing, at a time like the present, with the finances of the country, to consider how these people have been contributing to the maintenance of government in the years gone by. In proportion to the wealth they possess, the poorer sections of the community are already contributing, and have been contributing year after year, very handsomely indeed to the revenue of the Commonwealth. Surely the proportion I have mentioned is more than a fair contribution on their part to the governmental expenses of the coun try. Another point which must not be overlooked is that the working classes have to buy in small quantities, and, therefore, as a rule, have to contribute to the profits of all engaged in industry. . It is they who deal chiefly with the retail man. I think I may safely say that the richest men in the community live at wholesale rates. It is the poorest, and not the richest, section of the community that pays the biggest price for the goods it consumes. The wealthy section of the community is prepared to pay big prices for luxuries, but in respect of their general living requirements they purchase at wholesale rates.
– That is not so.
– All goods consumed in the household of the squatter or the big farmer, as well as the food required for their employees, are purchased at wholesale rates.
– I thought that the honorable member was referring to the wealthy people living in our cities.
– The same remark will apply to them. Thousands of wealthy city people deal directly with the wholesale houses. As one who has conducted a business in the country, I know that many large farmers and others are supplied by the wholesale houses.
– But will a wholesale house supply a suburban resident?
– The honorable member, I am afraid, is professing an innocence which he does not possess.- I make the statement, with ample proof at the back of it, that the rich people in every community in Australia are living at a cheaper rate than are the poorest members of the community. Excluding luxuries, such as motor cars, they are able to buy what they want for less than it costs the poor man who has to make his purchases in small quantities. Thus the poorer classes are not only paying more than two-thirds of the Customs and Excise taxation, but they have to pay more than the rich for the goods they require. Yet another consideration is the fact that, as a rule, the workers have the largest families. As every one knows, the man with a large family to feed and clothe contributes more to the cost of the upkeep of government than does the man with a small family; and I hope that, in connexion with any new taxation that may be imposed, there will be not only a liberal exemption but special regard for the number of the taxpayer’s family. Already in some of the States the number of a man’s family is taken into account in the imposition of taxation, and I think that such a principle might well be introduced into the Commonwealth scheme of taxation. The consideration is one that cannot be ignored when taxation is being imposed. If we are going to place additional taxation on the man who already finds it difficult to provide for his wife and family, we shall do a very serious injury to the most deserving members of the community, and I, for one, shall not be prepared to tolerate such a thing for any length of time. A great economic question is involved in the consideration of this measure. It has always been said that the heaviest burden should be placed on the strongest shoulders. The weaker portions of our community must be protected by the stronger, and in respect of taxation the biggest burden should be borne by those best able financially to bear it.
On the outbreak of this war there was much confusion in all countries. Thousands of men were thrown out of employment in the United Kingdom, and there was something in the nature of a general panic; but, owing to the strong measures taken by the British Government, confidence was quickly restored. In August, 1914, the month in which the war broke out, there were 71 per 1,000 out of employment in Great Britain ; but in December that percentage was reduced to 25 per 1,000, the proportion of unemployed then being less than in December, 1913.
– A great many had gone to the war in December, 1914.
– That, no doubt, was one of the contributing factors. In a young community like ours there should not be such a lack of employment as prevails in the older countries of the world. We often boast of our railway systems, our water supply schemes, and many other revenue-producing public utilities; but, having regard to our vast potentialities, we are as yet only at the beginning of our developmental work. Where there is so much to do and so little actually done there should hot be so many out of employment as there are. So far we have already sent, or are sending, to the front about 105,000 men, and if enlistments continue at the present rate
I believe that by the end of the calendar year about 150,000 men will either have gone to the front or be in preparation for active service. At the same time there will be nearly 100,000 engaged in work that has to do with the provision of clothing and equipment for our troops, or, in other words, somethinglike a quarter of a million will be exclusively engaged either at the front or at home in war operations. I believe that, with 250,000 people employed either in the theatre of war or in preparing themselves or others for the war, even with our limited finances and the trouble the States may have in obtaining loan money, we ought to be able to keep our own people in employment. Particular attention has been paid to this matter in Great Britain. That is why, in December last, the percentage of unemployed was so small, and we ought tobe able to do something of the same sort here.
I am prepared to admit there is room for economy in many of our big spending Departments, just as we know there is need to abstain from wastefulness in the community generally. I believe that in the Post Office just as in the Defence Department - both on the naval, side as well as the military branches - a good deal of money could be saved. I have no objection to our finances being subjected to a very severe scrutiny. Many honorable members of this House have suggested on previous occasions that this scrutiny should be made. They have realized that it is necessary to have a stocktaking, and that if we desired to conduct our business in a way that would lead to the very best work being done, it was necessary that we should keep a close handon public expenditure. I have not the complete figures for 1914-15 by me. but they approximate the figures for the previous year, during which I find that State expenditure amounted to £46,000,000 and loan expenditure £20,700,000, making a total expenditure of £66,000,000.
An Honorable Member. - What do they pay in interest?
– I think the interest, charges amount to between £11,000,000 and £12,000,000 a year. The honorable member for Flinders hinted at the possibility of certain things being done if the situation demanded it. He admitted that lie himself would not be afraid, if the necessity arose, to go so far as to repeal the Surplus Revenue Bill - I hope I do not misrepresent the honorable member; I think that is what I understood him to say - and to deduct a certain amount from the revenue which the States are now receiving from Commonwealth sources. The sum now amounts to about £6,500,000 per annum, and it seems to me that we might, instead of paying that money to the States as we are doing now, take over a certain proportion of the State debts and ourselves pay the interest charges. I said just now that the State Governments have to provide between £11,000,000 and £12,000,000 interest each year. If something were deducted from the amount paid to the States by the repeal of the Surplus Revenue Act and the sum devoted to the payment of interest upon State loans transferred, I think it would lead to a curtailment of some of the extravagance that now exists iii connexion with the State Governments. The possible creation of one borrowing authority was one of the reasons that led to the Federation. It is quite likely that this war will do some good if it only forces upon us the amalgamation of the State debts into one stock with one borrowing authority for the whole of Australia. At any rate, I believe strongly that this question of State debts should be examined. I do not suggest that we should do it at the present time, but the question is one that might receive attention when the war clouds have blown away; and if any new financial arrangement can be come to by which the whole of our State debts can be consolidated and one borrowing authority created, it will be for the benefit of Australia. We might not save money on interest charged at the start, but I think that, later, considerable sums would be saved. A £ or ^ per cent, would mean a great amount on so large a sum.
There is one aspect of this Bill that may be referred to : A big sum of money will have to be paid in interest on the loan of £20,000,000, most of which will come back to our own people. I do not know that there is anything in the proposal before the House to exclude outsiders from investing in this loan, but the big proportion of the money will be subscribed within- the Commonwealth, and the interest will be paid in Australia, and will, no doubt, be re-invested, and this will give employment to our people. I cordially support the Bill under the emergency circumstances in which we find ourselves. I do not think that in either this or the other House it will receive anything but approval and sanction. I believe also that the loan itself will he a success. If ever there was an opportunity given to the Australian people to display their patriotism it is now. I believe many people, even if they can spare only a £10- note, will be prepared to purchase a loan bond, and so help to make the success that we are hoping to see. I believe the loan will be a good advertisement for Australia. If we can finance ourselves right through these troublesome times - if we can not only send 150,000 or 200,000 men away, equipping and transporting them to the other side of the world, paying them handsomely in comparison to the doles that are meted out to soldiers in other parts of the world. - if we can do this and finance ourselves to the end of the war, Australia will have achieved for herself a higher place than she ever previously occupied. I do not wish to make any pessimistic prophecy, but I do not think that we have yet reached the worst times we may expect. In my view, the most trying time for this country, as well as for other countries, will be when the war drums have ceased to beat. The task of dealing with the thousands of men now fighting the country’s battles when they come back to us, as we hope the great majority of them will, will tax statesmanship of the highest kind at a time when the world will be more or less disarranged as a result of the war. It is for us to so legislate and act now that when that most serious time does come along, we shall be able to meet it as it should be met. That period will require that we should show the mettle of which we are made, but our legislation now should tend towards helping us to meet such difficulties as will arise then. I take an optimistic view of the general war situation. I know the position does not look bright now; but I think we shall come through triumphantly in the end, and when we do, I hope we shall be in a position to meet the most acute stage that is certain then to arise.
.- I only desire to refer to this Bill in order to qualify, I will not say the pessimistic utterances of honorable members, because there is scarcely pessimism in Australia after the action of our men at Gallipoli, and the splendid response of new recruits, but to qualify anything in the nature of despondency that may arise on our entering upon the first stage of what may be an extended loan policy. Before doing so, may I be permitted to refer to one or two remarks by the honorable member for Flinders. Many of the problems to which he gave expression in the course of his speech this afternoon were not being stated for the first time. With my right honorable friend the member for Swan, I had the honour of being a member of the Federal Convention, and it may not be amiss, as we have to some extent dealt with history which, though not ancient, is perhaps somewhat remote in retrospect, if I point out that many of the questions that naturally arise during a discussion of the limits of the Federal idea - the unification or coordination of finances and of Federal control - were dealt with by the Convention. But what is most germane to the subject under discussion is the fact that more than one motion was tabled at the Convention for the immediate consolidation of the debts of Australia. I brought the matter to an issue by moving in this very House, where the Melbourne Convention was sitting, on the 25th February, 1898, for an immediate transfer of the debts of the States to the Commonwealth. I took that action for some of the reasons urged by the honorable member for Flinders, namely, that we could not possibly allow six States and one Commonwealth to independently deal with the same assets, to perhaps heap responsibilities in future upon the same source from which these financial obligations would have to be discharged. It may serve my purpose for a moment if I briefly refer to, without quoting, some of the appeals I have made to this House on previous occasions to deal with the debts question, and when I not merely offered more or less destructive criticism in regard to the position we were placed in by the separate borrowing powers of the various Governments, but put forward two or three alternative solutions by which the end we had in view might be accomplished.’ On the question of double pressure of taxation, I said in this House on the 21st August, 1912 -
We must remember that the States use the same sources of taxation, excepting Customs and Excise, that we do, and the State taxation, which falls on the same people, has risen from 14s. Id. per head in 1901-2 to 19s. per head in 1910-11.
Reverting to the Convention, I suggested that we might at once better what had been done in Canada, where it was decided to take over all the debts at once, by consolidating our debts in this way. We have, in final analysis, one security and one responsibility. There were differences in the -per capita liability of the States. Speaking from memory, Victoria owed in 1898 about £42 per head, and South Australia about £69, and there was an average per capita indebtedness for all the States of approximately £52. It seemed to me that all we had to do, knowing the absolute power of payment which the States and the Commonwealth had, was to transfer those debts to the Commonwealth, debiting those States which had an indebtedness per head over the average, and crediting those whose indebtedness was under the average. I investigated the matter very carefully, and found that, although something of that character was attempted in Canada, the scheme there adopted waa not from an actuarial point of view perfect. Transfer of the debts of Canada took place at once, but was brought into force, subject to arrangements to equate differences, that lasted for some years. On more than one occasion I have suggested various methods of dealing with the debts problem.
– The provinces of Canada can borrow.
– That is so, and I have just said that their method is not as perfect as that which it is within our power to adopt. In order to show that the Convention was not asleep in regard to this matter, and as many of the younger generation of politicians do not know what took place at the Convention, I may be permitted to give the text of an amendment I moved. On clause 98 I moved an amendment which, if carried, would have added to the clause these words -
Existing public debts of the States shall be taken over by the Commonwealth at the date of its establishment, and the interest thereon shall be a charge on the Consolidated Fund. Each State shall indemnify the Commonwealth in respect of the amount by which its debts exceed the average amount of the debts of all the States, after such debts have, for the purpose of ascertaining their relative values, been reduced to and expressed in a debt of the average currency and rate of interest of the debts of all the States. The Commonwealth shall be deemed to be indebted to a State in the amount so ascertained by which the reduced debt of the State is less than the average amount of the reduced debts of all the States.
The debts of the States being extended over different terms, and carrying different rates of interest, it was necessary to express in terms of one common stock the relative indebtedness of the States and having equated all the stocks under one denomination, we were to take the average and fix the credits and debits accordingly. I have more than once suggested in this House that that method be adopted and a limitation placed on the borrowing powers of the States. There are various logical ways of prescribing how that limitation could be imposed, but this is not the time for debating that matter. I agree with the honorable member for Flinders that there are times when there must be a national stocktaking, and it is better not to wart until the emergency has arrived to arouse us from our slumbers and lethargy and to awaken, when the best of the opportunity has passed, to the necessity for prescience and economy. Speaking on the Budget, on the 21st August, 19.12, I said-
Nations, like men, occasionally take stock. They must endeavour to ascertain the proportion between their effective resources and their responsibilities - to what extent they can meet without any undue disturbance of their normal social and industrial conditions the calls that an emergency may at any time make, which must, of course, with becoming fortitude, be faced. Were it not for the continued change we are undergoing in international relations, I personally should not be much disquieted by the perceptible fastness of the financial pace. But we must remember that we are part of an Empire, the stability of which directly touches at least one- fifth of the human race - an Empire so colossal in its proportions, and so vast in its extent, that there is, perhaps, scarcely a moment of our lives when it does not touch or affect the enterprises or ambitions of some other country or people.
I proceeded to show that there were clouds on the horizon, the significance of which we should take some notice of. Referring to the delusions that arose, both at Home and in Australia, from the fact that at the moment our . prosperity was exceptional, I said -
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. “We have to justify our position sometimes in order to avoid any possible idea that we were insensible of the financial problems and possibilities that were before us. May I refer with the greatest possible respect to one or two opinions expressed by the honorable member for Flinders? I do not agree with the honorable member that it is bad for a State to borrow internally.
– It is largely a question of degree.
– No doubt. The United Kingdom is the great lending country of the world. I shall show the pace at which it does lend money to other nations, and, commercially speaking, it is perhaps the most prosperous country in the world. That circumstance may not be conclusive. It is a fact, also, that Australia’s prosperity and progress have been greatest since we began to borrow internally. Turning to the figures issued by the Board of Trade for the last decade, we find that the proportion of our indebtedness which is local has been substantially increased during the last ten years. It is somewhat significant that when that canon of financial prudence which the honorable member for Flinders has laid down was not applied, our prosperity seemed to be most on the increase.If we look at the apparent aggregated wealth, in the form of bank deposits, we find that there is a large surplus always awaiting an outlet, far more than the banks can apply profitably, and I cannot see that the applying of our own capital to the development of our own resources, and preventing the expansion of that drain by way of interest to the outside world, which has been in progress for the last forty years, does not give abalance of advantage in our favour.
SirWilliam Irvine. - I should be inclined to agree with the honorable member if he treated this question as one of degree - that is to say, if we only take from the wealth of the country by that means what it can easily spare at the time.
– That is the point. So long as we have common premises there is no difference of opinion between the honorable member for Minders and myself; but I am afraid that,, as his argument struck the Blouse, his opinion may have seemed more pronounced against local borrowing than on closer investigation it proves to be. Whether we should borrow from abroad depends on whether we reproduce the interest and make a profit, directly or indirectly, . on the amount borrowed. If we only reproduce the interest . and . the cost of -the loan, we are just as we werebefore ; we have a postponed obligation. But if we do prouce more than that, then, on the balance, we . gain by borrowing from . abroad. And, of course, young countries, not hawing capitalized ‘their . resourcesto any extent in the beginning, and not at all in proportion to their possibilities of development, must borrow for a time from abroad. But if it he asked which is better for a country, which is in a position to adopt either form of finance, I say that local borrowing is better, as it tends to foster that independence of spirit and that financial standing and self-reliance which we all desire to see established. The honorable member for Flinders has touched on many matters which are not quite directly related to the Bill, and are of too great importance to be discussed in connexion with this loan proposal. I think it would be a dangerous expedient, unless we were driven to it by a sense of overpowering necessity, to interfere with a grant that the States had received by an Act of Parliament, though that Act be capable of alteration, modification, or repeal. We should therefore assume that the payment was to be continued for a period of ten years. A man should never tell a lie, but I suppose that sometimes he is not obliged- to tell the truth. Silence is, at times, in the case of. politicians, a necessity as well as a virtue I confess that I have felt a great deal of sympathy with the views expressed by the honorable member for Flinders as to not fixing the payments to the States. I was a member of the Ministry that advocated placing the per capita payment of 25 per cent, per annum in the Constitution. I do not know what stand I would have taken up had I not been bound at the time by a sort of corporate conscience to believe that the Bill brought down for the purpose of altering the Constitution in that regard was the last word in political wisdom. Personally, I am not altogether sorry that the power to meet a great emergency by keeping back, or not extending, the 25s. per head, which is given to us by the Constitution, was conferred upon us by the better judgment of the electors of Australia.
– They made a mistake.
– We should not make a bigger mistake now by going back on the other alternative on which the electors acted, which was that there was to be an assurance that for a further experimental period of ten years the States were to receive from ‘the Commonwealth a per capita payment of 25s. per annum - the very payment which the electors did not wish to see embodied in the Constitution. Though it may be necessary in a great national crisis to call up every available revenue that we have, I say that unless there is an overpowering sense of necessity we should not do so.
– The honorable member would not be a party to repudiating a solemn compact with the States?
– I hope that there will be no misunderstanding. I say that we should not break what the States have regarded as a kind of contractual obligation. Though we have the power to repeal it, the understanding was that, though the Constitution was not to be amended in order to insert in it a per capita payment of 25s. as a fixed provision, at least the payment of the same amount per head to the States should continue for an experimental period of ten years.
– The whole point is whether it was a contract.
– I know that it. was not a contract; but we should not settle questions of general policy by the mere text or test of an ordinary agreement. It was not technically a contract, but it was an understanding that affected the trend of political opinion at the time the referendum was taken. We are now faced with the greatest war in history and the necessity for excep tional expedients. To realize the extant of the obligations “we may have to face is almost impossible. When we think of the territorial extent of the war - from Switzerland to the Atlantic at Ostend, from Ostend to the Baltic, from the Baltic across half of Europe to Boumania, and from the eastern frontier of Austria across to the Italia Irredenta; when we consider also - what appeals to us more directly - the conflict in the Dardanelles, stretching from theAEgean Sea to the Bosphorus, in regions of immortal memories, which our own brave boys have crowned - we must realize that the war is one of the most colossal in history. When tested by the number of nations engaged, by the wastage in life and energy, by its effect on commerical relationships, and by its far-reaching moral and racial possibilities,’ we realize that there’ has never been so vast a struggle since the world experienced the meddlesomeness, the passions, and the heroic ardour of mankind. But while recognising the tremendous responsibilities before us, there, are one or two matters to which one can draw attention as showing what, as time goes on, will be our capacity to bear these obligations. I may begin’ by mentioning the change in the burden of a nation’s debt as its population and prosperity increase. I am speaking as one who has never been an advocate of a borrowing policy. In 1902, when Sir George Turner brought in his first extraordinary Bill for borrowing £571,000, of which about £220,000 was. to go to works in New South Wales - all States receiving their shares of the expenditure - that State received through the Customs, after the Commonwealth had taken its one-fourth, . as provided under the Braddon section, - about £1,200,000 more than it had received in the previous year. So obsessed were the people of Australia with the idea of borrowing that it became as a sort of reflex action on the part of the Treasurer of the Commonwealth to ask for a loan whether he needed it or not. I do not think that Sir George Turner was enthusiastic over his loan proposal, but as he was a Minister, he was driven to it in that corporate sense that, sometimes drives people in a direction contrary to that in which their own personal wishes Would guide them. However, I am glad to say that we threw out that Bill or resolution, my vote helping that decision. Let us take the position of the “United Kingdom during the last fifty years. There has been a marked development, which we can compare with the position of a young community like ours with the potentialities and powers of development which we possess. Until 1846, unfortunately, there was not much change in the conditions of the United Kingdom. Factory legislation was blocked on all hands. There were extraordinary ideas about trade, and as to what prosperity consisted of. Thanks to Sir Robert Peel, and others, a new era began about 1850, brought about by the relaxation of the grip that existed in regard to external commerce, and by paying more attention to the condition of the masses bymeans of beneficent factory and social legislation. The results were, perhaps, greater than were hoped for’ by those who had given attention to political matters in the preceding generation. The national debt of the United Kingdom fifty years agowas £821,000,000, or £28 per head. To show that increased population and increased prosperity gradually diminish the burden of a . national debt, that of the United Kingdom on the 23rd April, 1913, was £661,000,000,, or only £14 per head. During the fifty years the decline in the indebtedness per head was from £28 to £14. On the 31st March the national debt of the United Kingdom, owing to the war, had increased by £458,000,000. The Budget statement of Mr. Lloyd George showed that the total indebtedness was £1,165,802,000, but it is encouraging to know that the British Chancellor had been reducing it at the rate of about £12,000,000 per year. The Liberal Government in Great Britain, during their term of office, struck off by redemption £107,000,000 of the national debt. I am not speaking as an advocate of borrowing, but because I think the people ought tobe shown that there is a light in which borrowing in a great national crisis such as this should be viewed, enabling them to look with the brighter outlook which I am sure is in store for Australia at the obligations which are now so willingly recognised by those who have the means at their disposal to pay; because these obligations, if the development of Australia is equal to the magnificence of. its resources, should be more lightly borne in the future, always assuming that we do not abuse our powers of borrowing of taxation by extravagance. Let me take the position of the United Kingdom. The property value in 1812 was £2,700,000,000, and the national debt was £900,000,000, or equal to a mortgage pressure of 33 per cent. That was at a period when the Napoleonic wars were concluding, and some people, according to their means, were paying up to twothirds of their incomes in order to meet the obligations imposed by those wars. The value of property in the United Kingdom in 1909 was £14,000,000,000, and the national debt at that time was £754,000,000, or a mortgage pressure of only 5 per cent. If the figures of 1913 are taken, when the national debt was £707,000,000, and the accumulations are assumed to have increased at the rate they have been doing during the last ten years, the pressure would be only 4 per cent, on the capital resources of the United Kingdom. A comparison of the indebtedness of the United Kingdom with that of the other belligerent nations shows that Great Britain stands in the strongest position. I do not propose to give all the figures. On the 31st December, 1915, the national debt of Prance will probably be £2,253,000,000, while that of Great Britain is set down at £1,587,000,000. Passing on, let us look at the resources of the United Kingdom. The British investments during the six years from 1906 to 1011 were £829,000,000. I refer to foreign investments and ship earnings, which are always taken into account as external investments. These had been proceeding at the rate of £2,500,000 a day up to the beginning of the war, when this form of investment was practically stopped. It is in these tremendous resources that are now entirely devoted to the purpose of enabling the people of Great Britain to meet their loan necessities, and the call for revenue to meet annual expenditure, that we see the source of the fortitude and ease with which, happily, the Imperial Government have met their obligations.
– I think that the total investments of British capital amount to £4,000,000,000.
-The private and semi-public ‘ investments abroad of the people of . Great Britain earn £200,000,000 a year in interest. In his Budget speech Lloyd George men tions that the well-to-do, as he calls them, have £4,000,000,000 invested in. foreign and Colonial securities. The investments of the Imperial Government are not very large. They were summed up in the Budget, and consist of Suez Canal shares, among other things; but the State property of Great Britain is insignificant compared with the property of individuals. Then there are annual savings amounting to £300,000,000 or £400,000,000.
– Does the honorable member know what sums have been lent to Austria and to Germany?
– I have not that information here. As much as 95 per cent, of the £200,000,000 earned by external investments come from countries not affected by the operations of the war. Germany’s foreign investments, however, are ‘ mostly in countries affected by the war. Many other facts of that kind, when summed up, show the tremendous financial strength, and consequently great borrowing power, of the Imperial Government of Great Britain. Since the war, the trade of Great Britain has diminished by £170,000,000; but her foreign trade still amounts to £1,223,269,000. I am glad that our proposed loan is to be made the subject of an appeal to the general public. In the first instance, the Imperial Government was niggardly in its recognition of the small investor. There were 100,000 applications for the loan floated in November, £700,000,000 being tendered to cover a loan of £350,000,000. In the case of the first German loan, which was for £2a3;036,445, 75 per cent, of the applications were for less than £100 worth of stock. The ‘loan was mentioned at the time as a magnificent .expression of the grit of Germany, and of the German capacity to meet internal obligations. In connexion with the German loan, which was issued in, I think, February last, there were 2,691,060 applications, and of these 1,694,359 .were for sums of £50 and under, and over 911,000 for sums of between £50 and £500. That was another splendid example of the spirit of the people of Germany with which we have to contend. The last Imperial loan showed that when a similar appeal was made to the people of Great Britain the response was- commensurate, and I believe that the same thing will happen here. In regard to the note issue, I think that no harm can be done by dwelling on the necessity for caution. The States which are at war seem to have reached the limits of that borrowing which is done under the guise of a note issue. Let us consider the position of the six great national banks. In March last, the Bank of England had increased . its note issue, including the Treasury notes, by £43,500,000, as compared with the issue of March, 1914 ; the Bank of France had increased its issue by £212,000,000; the issue of the Imperial Bank of Germany had been increased by £157,000,000; that of the Bank of Russia by £150,000,000 ; and that of the Austro-Hungary Bank by £89,000,000, the total increase being about £262,000,000, or from £601,500,000 to £1,253,000,000. If we consider the gold reserves of these banks, we shall see how cautious they have’ all been. The Bank of England had a gold reserve against Bank and Treasury notes of 117 per cent. ; the Bank of France, a gold reserve of 38 per cent. ; the Imperial Bank of Germany, a gold reserve of 46 per cent. ; the Bank of Russia, a gold reserve of 50 per cent.; and the AustroHungary Bank, a gold reserve of 45 per cent., the gold reserve in every case being greater than ours, which is about 33 per cent. . The gold reserves of these banks have increased by £149,000,000, and their note currency by about £652,000,000. Let us see what they say about these matters at Home. Lloyd George, in that part of bis Budget speech which was headed” The Paper Bridge,” refers to the note borrowing of Germany, and says -
There is, first of all, a paper bridge - what is known as dilution of the currency. Disguise it as they will, there are many girders in the’ German financial bridge which are made of paper, and no amount of paint and varnish will hide the fact. It is an easy and very tempting method. You appear to get over your difficulties in the simplest way, and it is very difficult for any one to point out the way you are going wrong for some time. Looking at it most carefully, it is simply an indirect method of levying taxes upon the income of the people. You water the currency, and the prices go up. . A country that has no foreign trade, which is the case in Germany, can do it. A’ country which has still got a great international trade cannot do it. Gold would Vanish, and there would be a. rise in the price of provisions which would be fatal to any Chancellor of the Exchequer. Therefore, that is a course which would be fatal for a Chancellor of the Exchequer to pursue in order to get over his difficulties in ‘meeting the deficiency.
It’ is as Well that we should bear in mind in regard to our financing the trend of. Imperial opinion.
– Can the honorable member say why there has been such an increase of the note issues of Germany and France compared with that of England? Is it due to the greater use of cheques in England?
– Yes. Ninety-eight per cent, of the financial currency of the city of London consists of cheques and bills of exchange, less than 1 per cent, consists of gold, and about 1 per cent, consists of notes. The Scotch’ note currency is about 10 or 12 per cent. In connexion with the Bank of France, until’ recently practically everything was done by means of notes, the cheque system not being in vogue, and in Germany they have been dealing not so much in cheques as in notes; but about three years ago they passed a law under which the development of the cheque system is marked. As regards the imposition of income tax, I would urge caution upon the Treasurer in fixing the scale. The income’ taxation of the State Governments brings in £2,881,055 a year, my figures being for the year ended 30th June, 1914’.
– Since then Mr. Hol man has increased the income taxation of New South Wales by about £1,000,000, and the State direct taxation is now about £4,000,000.
– The figures whichI have are not absolutely reliable for the purposes of comparison. If you take Mr. Lloyd George’s speech of the 5th March, you will see that the yield of the British income tax, the rate of which has been doubled, is now £59,279,000, but the yield of the previous year, which I take from other sources,’ was £47,249,000, so that the doubling of the rate has not greatly increased the return. There has been very heavy pressure on some classes, without corresponding benefit to the Treasury. The war supertax brings in about £10,000,000. It is paid by 26,000 persons, about 15,000 of whom were new taxpayers after the war budget was framed. The increased pressure upon individuals has been great, but the increased return to the Treasury has been comparatively small. In this morning’s newspaper there is published a telegram in which it is stated that thewar taxation for the year 1914-15 was £18,000,000, and that it was estimated that for 1915-16 it would be £68,000,000, and for 1916-17 £72,000,000. They must therefore find some better means than a blind increasing of rates, without care and discrimination. I agree with the honorable members for Parramatta, Flinders, and Swan that we should have had a comprehensive survey of the whole position before being asked to decide as to the taxation to be imposed, and the manner of imposition. We should have the opinion of financiers, or Treasury officials, as to the comparative effect of various expedients
– There is no taxation proposal now before the House.
– I think I may with some truth say that, unfortunately, once a proposal is brought before the House it cannot be altered. The only opportunity an honorable member has of compassing his desire is by speaking before those private meetings are held of which we hear so much, and which make the House the mere register of unalterable opinions.
– In Great Britain economy is being, made a leading plank of the platform.
– Mr. Lloyd George has appealed to the people to economize, but I am afraid that very often if you do not spend you embarrass other persons. It is extravagance that we ought to avoid; parsimony and meanness, restriction in the wrong direction, . would strike at those whom we wish to assist. The subject is one in regard to which many opinions are held to which expression is not always given. Another matter to which I should like to make reference is the spirit with which the German people are meeting appeals made to them. In sneaking on the last German Loan Bill, Dr. Delbruck, the Vice-President of the Prussian State Department, mentioned that this was not only a war of nations and of armies, but of people against people; and the sooner we recognise that the better. He said -
The war upon which we are now engaged is altogether different from those of former centuries. Then the Army went forth ; the people at home sent their good wishes after them, and. rejoiced in their victories. To-day England’s attempt to starve us out has made* this war a war of people against people - nay, of man against man -so that every one, no matter whether he be in the field or at home, under arms or at work, without distinction of age or sex, must devote his whole being to the simple service of war. Every one of us must from morn till night direct every activity by the one question - now to injure the enemy and serve our country.
– Nothing could be stronger than that.
– Nothing Let us profit by the words of our enemy. Immense sacrifices are being made in Germany. I read the other day that the people there are actually obsessed with the idea that the world is against them, and wrongly against them; that there is a sort of religions opinion abroad that has welded the nation into one united whole.
– Their self-sacrificing spirit is the only thing we have to fear.
– In view of our experiences, if we keep abreast of the occasion, I think we have very little to fear. Let us not listen to the voice of Belial, the spirit -
To vice industrious, but to nobler deeds
Timorous and slothful, who with words cloth’d in reason’s garb
Counsel’d ignoble ease, and peaceful sloth,.
Not peace : nor, with Mammon, “live to ourselves only “ ; but rather, purging our minds of every sordid desire and unmanly apprehension; hearken to the imperative accents of conscience and of country ; to the silent eloquence of our surroundings and. the still, small voice withinus which speaks of personal honour and patriotic duty, and tells us that most of the prestige and blessings we enjoy are derived from our fellow citizens or from our forbears - a moral and material heritage that we must hand down untarnished and undiminished to the long line of generations who, in surroundings so precious and endearing, are -to succeed us upon the boards.
.- The discussion of this measure naturally opens up a vista of the financial relationship of the Commonwealth and StateGovernments, and of the whole financial position. The Commonwealth and State Governments, having joint powers in regard to the taxation of the same sources of wealth, are certainly acting in a most irregular manner. The honorable member for Flinders dealt very effectively with this aspect of the situation, and one cannot but indorse his fear as to what the consequences may be. The honorable member has expressed the opinion that the Common wealth, is the guardian of the State finances. That is a new doctrine to be laid down in this House. Nominally we may be the guardian of the State finances, but in fact we have absolutely no control over them. The State Governments are sovereign within their own sphere, and instead of approaching them with the air of dictators, as has been done, I am sorry to say, in some cases, by Ministers,we should meet them as equals with propositions to be discussed. By ; thus reasoning together we might arrive at a satisfactory solution of the problem of how the joint finances of the whole country should be conducted. It is the height of absurdity that Governments that are in no way acting in concert should he levying upon the same people, and drawing in the same way upon the same sources of wealth. This system has continued too long. We have not yet even been able to bring about the consolidation of the State debts. A proposal for their consolidation was carried, but I understand that, owing to limitations which the State Governments insisted upon maintaining, in respect of their right to borrow independently of the Commonwealth, the proposition fell through, and the motion has never been put into effect. If it is necessary that the Constitution should be amended, in order that a better financial arrangement may be arrived at, then such an amendment should have been included in the other proposals which have teen submitted by this Government, and which it is proposed to place before the people. Finance is admittedly one of the most difficult questions with which we have to deal, but, apparently, the more immediate troubles under which we labour - the questions of the determination of industrial conditions, the control of monopolies, and like subjects - have obscured every other consideration. I take the view that behind all these there still remains the great financial problem which threatens to, and undoubtedly will, swamp us if the several separate Governments of the Commonwealth and the States are to continue, each in their own way, heedless of all other considerations. We have to recognise that the States, within their respective spheres, are sovereign powers, and that the Commonwealth Parliament cannot do as it pleases with them. It is open to us, of course, to act independently of them, and to go to the extent of discontinuing the present payment to the States of 25s. per head of the population; but I do not say that that should be done. Any such action would still further estrange the States, and the estrangement between the State and Commonwealth Governments is already too marked. There appears to be, on the part of the Government of the Commonwealth, a tendency to emphasize its supremacy, although, in fact, it has no real supremacy. The sovereign States, in their respective spheres, are just as dominant as we are in our sphere of government. As a matter of fact, their sphere is wider than our own, since all that is not specifically conveyed toils by the Commonwealth Constitution remains within their control. In these circumstances, therefore, there should be on the part of our leaders a sense of the fitness of things in approaching the State Governments. There has been displayed too much bitterness, and this bitterness is being fanned even now. The State Governments should have been approached before this loan proposal was brought forward. There should have been consultations between the Commonwealth and State Governments, and a decision, as far as possible unanimous, arrived at in regard to it. If we are going to exercise our presumed authority, and, as the Prime Minister suggested this afternoon, to look to the people to give us the power to do that which we cannot do now, then we should at once submit, with our other referenda proposals, a Bill to give us the power that we seek.
– The Government called in the bankers of the States, but not the State Governments.
– That in itself was a slap in the face to the responsible State Governments exercising sovereign power within their own jurisdiction. We cannot afford to do anything of the kind. We cannot afford to permit ill-feeling to be engendered and fostered by the continuous ignoring of the State Governments. I take the view that some form of unification in respect of finance must be brought about very shortly, but we are not likely to secure it by acting as we have been doing, unless we succeed in winning the people to our side on an appeal to them by way of referendum, and to do that in the face of the opposition of the State Governments would be no easy task. It is for the Commonwealth to give a lead in this matter. If the Commonwealth Government, by virtue of its position, claims to be supreme, it should justify its claim by displaying that strength to concede, which, to my mind, is the hall-mark of superiority. The Commonwealth Government is giving no evidence of such strength. Although I support the Government, I say, unhesitatingly, that one of its weak spots is that it has not sufficiently considered the importance of the States. It has not treated with the State Governments with the object of bringing about, by common consent, a better system of finance, and of doing away with the present system under which each helps itself at will to this and that source of the wealth of the country. The responsibility of guardianship of the States, as suggested by the honorable member for Flinders, seems to me to be a responsibility without power. The Commonwealth is not in a position to act as the guardian of the States, and, that being so, I object to the assumption of that responsibility. The obligation, apparently, is all on our side. To put on the screw, as has been hinted at, by actually foreclosing as a mortgagee would do, because, to some extent, we have them in our power as debtors, would simply be to make confusion worse confounded, and to add insult to injury. Such a thing could not be tolerated for one moment. If one Stale became bankrupt, it would be to the discredit of the whole Commonwealth, and to talk of putting on the screw in that way is to suggest that which could not be given a moment’s consideration. On the other hand, an advance with a view to a compromise, such as that to which a sovereign State is entitled, should at once be made. The longer we delay the more Australia will suffer. Coming to the war expenditure, I would point out that, whilst it is easy te vote supplies, and whilst war supplies must be voted, their expenditure has not been as carefully guarded as it should have been. Contracts have been let here, there, and everywhere under .1 system th.it has resulted in the Government being called upon to pay for many of its requirements far more than it has any need to do. If attention had been given to cer.tain information that has been placed at the disposal of the Government at different times - and by myself amongst others - large sums could have been saved. I make this statement here because it is useless to mention it elsewhere. In respect of certain contracts which have been let, 100 per cent, more has been paid for goods than need have been paid for them. That I am in a position to prove.
– That, perhaps, is because of the union label condition in the contracts.
– The increase has nothing whatever to do with any such consideration. When mentioning this matter I had in mind certain imported lines, with the facts relating to which I am familiar. One line indented by a keen business man ac a cost of 22s. 6d. per gross was bought by the Defence Department at prices running up to 46s. per gross. The expenditure in respect of this one item ran into thousands of pounds. In another case - and there are quite a number of them - the Department m’ere paying 15s. per dozen for a certain article which I advised them could be landed here by the Government and supplied to the troops at a cost of 7s. per dozen. This advice was not acted upon. If the responsible authorities would only make inquiries from some of our keen commercial men, they would be put in the way of obtaining goods at first cost, instead of having to purchase them, even by tender, from rings of commercial men who will not cut against each other, but who will command their own price whatever it may be. This sort of thing is still going on. I am in a position to show that, in respect of some of the requirements of the Department a saving of 100 per cent, could be effected. Officialdom, however, is such that it cannot be overcome. One appeals to the Minister, who, in turn, appeals to his officers, and is informed by them that what is suggested cannot be done. No intelligent, thoughtful interest is displayed in the business affairs of the country. No keen desire is shown to avoid unnecessary expenditure of the kind I have just indicated. I recognise that Ministers are more or less at the behest of their officials under the present system of government, which, on the one hand, secures an evanescent responsibility to the Minister, and, on the other, permanence of control to the officers. Under such a system the preponderance of power must, and does, rest with the officers. If the Department could only be remodelled by the infusion now and then of new blood from outside, the position would be improved. I give the Prime Minister credit for the appointment of Mr. R. McC. Anderson, but one man is not sufficient. There are keen and patriotic men in this country who are prepared to place the whole of their special knowledge and qualities at the disposal of the Government. I leave the matter there.
.- Whilst a good deal has been said upon the subject of general finance during this debate, which I have listened to very carefully, I have heard very little that relates to this particular Bill, though no time that Ave can spend in discussing itwill be in anyway wasted. I feel very strongly that as our young fellows at the front have shown the material of which they are made - they have alarmed and astonished theworld by theirvigour - sowe here ought to perform our duty just as thoroughly and support in every possible way the young fellows we have sent to the front. It should he rather a proud moment for Australia to think that she is now called upon, not only to do her share in the fighting, but also in the financing of the greatest Avar that theworld has ever seen. This Bill appeals not only to our loyalty and patriotism, but also to our self-reliance, and if all our energies are focussed on this one point Ave shall make the proposed loan, not only a success, but an absolute triumph. I do not desire to say much about the Commomwealth Bank in connexionwith the Loan Bill. To my mind, the Bank has been a failure. It could not verywell have been otherwise, because it had neither cash nor credit. The Bank cannot help us in this crisis, for, though we are told that it has the credit of the Commonwealth behind it, that is all idle talk. So long as the Treasurer has control of the note issue the Com monwealth Bank cannot have the credit of the Commonwealth behind it. So that we can put the Commonwealth Bank absolutely on one side so far as the present crisis is concerned. With the private banks, however, the position is quite different. If these banks are treated in a proper spirit they can do a great deal more than they have yet done. Although they have advanced£10,000.000 to the
Governmentwithout interest, that does not by any means exhaust their resources, and if they are approached in a friendly way I have no doubt that they will be able to do much to assure the success of this loan. I have gone to some trouble to get figures relating to the operations of the private banks, and I find that their assets on the 30th June, 1914,were £176,000,000. At the same time, their liabilities were £168,000,000. A very important matter in connexionwith the liabilities and assets of these private banks is that the banks have been gradually, but continuously, reducing the sums they had invested in land. Their interest in the ownership of land was reduced from £6,000,000 in 1900 to £4,500,000 in 1914. That seems to indicate a very serious position. Surely our production is worth fostering. Surely our production ought to be a field of financial enterprise sound enough to encourage the banks to increase their advances rather than decrease them, and the position is one which I think needs attention. If the Government showed sympathytowards the producing interests, I have not much doubt that Ave should largely increase production, and so restore the confidence of the banks in this type of investment. Deposits not bearing interest - the ordinary trading accounts - in the private banks increased from £37,000,000 in 1905 to £70,000,000 in 1914. The deposits bearing interest - and these depositswill undoubtedly provide a proportion of this war loan - have increased from £61,000,000 in 1905 to £93,500,000 in1914. During the same period the deposits in the Savings Banks increased from £35,500,000 to £83,500,000; and the total of interest-bearing deposits in all banks increased to no less , than £177,000,000 last year. That, is a very serious position for a young country like this to be in. With all the possibilities we have for the investment of money, the fact that we have £177,000,000 - probably £180,000,000- locked up at 3 to 3½ per cent, interest shows that there is something wrong somewhere. To my mind, this is due to an absence of confidence; and the principal thing that we. can do at the present moment to make this loan a success, not only so far as concerns the present issue, but all- its issues, and to establish a feeling of confidence in Australian finance, is to do all that can be done to show that we in this House are in sympathy with production. The bank notes in circulation to-day represent nearly nine times greater value than ever before - and this is just at the beginning of the war. Such a position is serious, and needs close supervision. The previous highest issue was £3,750,000,in 1910. As the honorable member for Flinders pointed out, before the end of the year we shall have notes issued representing £40,000,000 to £45,000,000. It seems to me that if the Prime Minister and the Government will show more sympathy towards the private banks they will get a great deal of the money on interest-bearing deposit, whether rightly or wrongly, for investment in the loan. Some people think that this money ought not to be withdrawn from the banks. With that view I differ. In my opinion, the present is the time for those people who have deposits in the banks, and for the banks themselves, to come forward and do what they can to make this loan the tremendous success we all hope it is going to be. Insurance companies provide another source from which we may hope toget a great deal cf money, and I want to say a word or two to the Prime Minister on the subject of those companies. In 1914 the assets of the Australian-owned insurance companies represented an amount of between £60,000,000 and £70,000,000, nearly the whole of which is invested at an average of 4½ per cent. - exactly the amount the Government propose to pay for this loan. It seems to me that it is hardly likely that we shall be able to induce insurance companies to withdraw any great amount of the money they have already invested in order to reinvest it at the same rate of interest; but these insurance companies, which hitherto have been trusted and trustworthy, and which have done and are doing a great deal for the financial stability of the Commonwealth, have surplus funds amounting approximately to £2,000,000 a year. Recently the Government brought forward an Insurance Amendment Bill. I can assure the Government, and I wish to assure the Prime Minister particularly, that this Insurance Amendment Bill is creating a great deal of fear - I might almost say consternation - amongst the big insurance companies. I have it from one of the greatest authorities connected with insurance in Australia that if that Bill becomes law it will do more harm to insurance and to the big: insurance companies than anything that, could reasonably be allowed, and I would urge upon the Prime Minister to recognise that at a time like the present, when financial stability is more important to this country than almost anything else - when it is more desirable than it has ever been that there should be a feeling of financial security in the country - that he should not do anything to injure the big insurance companies that have so much to lose, and stand for so much thati s good in the community by permitting this Bill to go through in anything like its present shape.
– You might certainly ask the Government to postpone its coming into operation until quieter times.
– If the Government would give an undertaking that the Insurance Amendment Bill will not be taken any further until after the war, I am quite convinced that they will get a great, deal more assistance from the financial institutions and the insurance companies of Australia than they can possibly hope for otherwise.
– I will give consideration, to that matter.
– I am glad of that.. One thing in the Prime Minister’s speech that pleased me very much was the statement that he expected a good deal of money for the later issues of this loan to come out of the productiveness of Australia. This is the best note that has been struck in this Parliament for a long time. Without being in any way partisan, it seems tome that this Parliament has not recognised the producing interests of the community as they should have been recognised, and when the Prime Minister states that, at a time of crisis like this, he will be dependent for the later issues of the loan upon the productions of the country - upon the wheat and upon the wool - then I say he is striking the note that will induce a great many of the producers to come forward and give this loan the assistance that, in the present crisis, it shouldreceive from one and all.
Question resolved in the. affirmative.
Bill read a second time.
Clause 1 (Short Title).
.- I should like to move an amendment, but I am not sure where it should be inserted. The prospectus of the loan shows that interest for the full six months will be payable on an instalment of the loan, of which the Treasurer will have had only six weeks’ use when the interest becomes payable. I should like to move an amendment to provide that interest shall be payable only for the period during which the Treasurer has possession of the. principal. I am also desirous of making provision against the remission of income tax in regard to investments in this loan.
– We shall be paying to the investors in the loan only what would be paid to the underwriters if the loan were to be underwritten. By this arrangement in regard to accrued interest we shall be getting the money at practically £98 net. and underwriting charges as a rule do not give such a good result as that. The question of remission -of income tax may be discussed when that tax is under consideration.
Mr. McGRATH (Ballarat [6.36].- The Prime Minister has shown that there is no necessity to have the loan underwritten. Why, then, is it necessary to pay six months’ interest for six weeks’ use of the money ?
– Such an amendment as the honorable member has indicated could not be moved on this clause.
– In regard to the payment of income tax, a statement was made that the Attorney-General had advised that the loan investments would be exempt from State income taxes. I do not desire to question the validity of that opinion, but I urge the Prime Minister to endeavour to come to some arrangements with the States to expressly exempt the war loan investments.
– The Attorney-General is not at all in doubt.
– I have some doubt.
– Some of the States have agreed to the exemption.
-If that can be arranged so much the better.
Clause agreed to.
Clauses 2 and 3 agreed to.
Title agreed to.
Bill reported without amendment; report adopted.
Standing Orders suspended, and Bill read a third time.
Sitting suspended from 6.38 to 8 p.m.
In Committee (Consideration of GovernorGeneral’s Message) .
– I move -
That it is expedient that an appropriation of revenue be made for the purposes of a Bill for an Act to authorize the borrowing of money from the Government of the United Kingdom.
The reason for this Bill is that, soon after we had borrowed £18,000,000, it was realized by the Commonwealth Government that that would be inadequate for the purpose in view, namely, the continuation of the war as we found it immediately after we came into office. Discovering that the British Government were ready to lend a further sum to us, we approached them, and got £6,500,000 for war purposes, in addition to the £18,000,000, on the same terms as we had got the latter - and very good terms, indeed. It was subsequent to that period that the market hardened in favour of the investor, and new conditions arose. I am sorry to say that the Commonwealth Government raised this £6,500,000, as it had raised the £18,000,000, without parliamentary authority ; but I hope that what I might, perhaps, call our precipitate act will be condoned under the circumstances. The only regret I have is that it was not a larger sum; but, at the same time, we did what we considered to be the right thing. We asked for a little more than the British Government thought was a fair thing at the time.
– How much of this loan have you received?
– About £3,000,000, I think.
– Is it for war expenditure only, or for works as well?
– For war expenditure. As I say, we asked for a little more, namely, £10,000,000, of which £3,500,000 was for railway works; but the British Government did not meet us to that extent, though they handsomely came forward with £6,500,000. We must make no complaint; indeed, we ought to be very grateful to the Home Government.
It was subsequent to this loan that the statement came, of which I have before informed the House, that is, on the 6th July of this year. However, under all the circumstances, we ought to express our gratitude to the British Government for the manner in which they have met our applications up to date.
– I presume that this loan stands by itself - that, so far as we are concerned, it has no; relation whatever to the State Governments?
– None whatever.
– We may well ask, also, at the present time, ‘ whether the Prime Minister has in view any further borrowing proposals for public works purposes. Last year we financed about £4,000,000 odd for public works, and we may expect to have to finance a considerable amount of that expenditure again this year, though not all of it. Perhaps the right honorable gentleman can tell us how he is going to finance this £3,000,000 or £4,000,000 for public works this year. What T mean is that it seems somewhat unsatisfactory to be votingloan proposals piece-meal in this way.
– This is only an authorizing Bill.
– I know; but we have heard much lately about the necessity for organizing our finances and putting them on a war basis. We have had many homilies - I have delivered one myself - on the necessity for retrenchment and economy - for drawing in sail, and utilizing every pound we can lay our hands on for war purposes, and war purposes alone, while minimizing our expenditure in many other directions. I confess I was surprised at the range that the ‘ debate took this afternoon. It seemed to me that we were not merely debating our own loan proposals, but actually the whole range and scale of our constitutional powers, particularly as they affect finance. There is no use disguising the fact that the whole crux of the Constitution centres on the question of financial control. In my judgment, before we can point the finger at the States, either warningly or in any minatory way, we ought to resolutely set our own house in order. The best thing we can do for the States, and to the States, is to set them an excellent example. If we are responsible, as has been alleged - and there is no doubt that in the eyes of the world Australia is held to its responsibility as associated with the Federal Parliament, and that in that high sense the statement is true - if we are responsible for the whole financial credit of Australia, then the best thing we can do is to set an example in economy and rigidly review our own position. I do not think we can say anything to the States until we have begun to do that.
But are we getting the- best out of the Federal .compact at the present time? Why should the Commonwealth stand over the States and tell them what they must do perforce ; or why should the States, on the other hand, criticise the Federal Government and tell them what they must almost not do? I have always held the opinion that we have scarcely begun to work our Constitution constructively. As I understand Federation, it means that there should be amicable relations between the two entities.
– We have made a number of attempts, only to find out that we were wrong.
– The honorable member has made a lot of attempts, but I never, to my knowledge, heard him utter one conciliatory word towards the great State he represents. He stands in this House and talks to the people of that State as if they were inferior and had inferior functions. I do not understand my Federal “ book “ in that way. The essence of Federation to me means amicability of relationship between the two governing entities of Australia. T believe that in this as in every other walk of life we can get the best results when we avoid friction and waste of effort.
– I am a Federalist first.
– The honorable member is talking about the Bathurst burr!
– The honorable member is talking about something that he is entitled to talk about. I do not forget that he was one of the greatest supporters of our Federal Constitution - that he was one of the men who did as much as anybody else in the House, because he was closely related to the Trades and Labour Council of New South Wales, and was on the Federal Executive with my honorable friend the member for Parkes.
– Was that honorable member associated with the Trades Hall, too?
– The honorable member for Parramatta must be a Rip Van Winkle, or T am, because I cannot remember that.
– The honorable member surely remembers that he was on the original Federal Council, and worked his very best.
– Which Federal Council ?
– The Federal Council of which Mr. Dowling was secretary.
– I regret to interrupt the honorable member for Parramatta, but he is going outside the motion.
-I propose to connect my remarks in a moment. I say that the honorable member for East Sydney, in the early days, was one of the greatest champions of the Constitution.
– I was not; but I was one who accepted the best article we could get at the time.
– The honorable member was on the Federal Council, and supported the Bill, when many of his present confreres were opposed to it. However, since he has been in this House he seems, somehow or other, to have adopted an anti-State note - to have gone back on his Federal attitude of that day.
– I must remind the . honorable member that he is again transgressing.
– I merely desire to point out that, instead of criticising the States as such, we had better try to work with them, and make the best of the Federal compact.
– The motion before the Committee deals with the War Loan Bill, and not with the relationship between the States and the Commonwealth. That matter the right honorable gentleman will have the opportunity of discussing on a Supply Bill. If I permit him to debate it now it will open up a general debate.
– I do not see how a general debate can be avoided. I do not see the difference between this motion and a similar motion concerning an Appropriation Bill.
– The motion deals entirely with the War Loan Bill, with which the States are not in any wa.y connected.
– I take it that, as the motion will grant supplies for our public services, the discussion upon it should take in the whole of the financial relations of the Commonwealth, particularly as the war affects not only State relations to the Commonwealth, bub also the whole of the Commonwealth as an entity.
A great deal has been said to-day as to whether there should be financial unification. We have been arguing the question of whether there should be one or two Governments controlling finances, and that is the only point on which I am speaking at the present moment. My contention is that we do not need to recast and reconstruct the financial relations between the States and the Commonwealth if we treat the matter of the finances in a Federal spirit, and consult the States, and act harmoniously with them. The Treasurer has consulted the bankers, and they have advised him. Has he consulted the States with regard to his and their further borrowing?
– No; that was done three months ago.
– We had a definite arrangement with the States that they were not to borrow, except for conversion purposes, without the consent of the Commonwealth Government.
– But since then all borrowing from London has been interdicted; we are told that we must not borrow at all. That decision profoundly affects the States as much as the Commonwealth. We shall have no trouble in raising this £20,000,000 for war purposes, but what the States are going to do to raise money, as they will have to do immediately, I do not pretend to know. I think that we shall not need to stand by and tell them that they will have to draw in their horns. The very nature of things will compel them to do it to an extent they perhaps will not. appreciate. But since the whole of the London market has been closed to them and to us, and we have been thrown on to our own resources, the proper thing to have been done was to pall a financial conference and discuss the whole matter in the light of the state of the London money market. The statement that has come out from London affects the States as much as it affects us. Our relations are affected in the same way, because we both have to appeal to the one financial source in Australia. It is to our interests, as well as to the interests of the States, that there should be a complete and cordial consultation with regard to the whole of our borrowing requirements and the steps to be taken to suit the needs of each. If ever there was a time when amicability and complete and cordial consultation should exist between the States and the Commonwealth, it is the present, when we are both meeting an unprecedented set of circumstances. I do not know what has been the experience of other Administrations. I know that whenever I have been in consultation with the States I have not found it impossible to get on with them.
– But the right honorable gentleman has not been taking anything away from them.
– I do not think that we should take from the States more than we can help taking. We have our functions to perform, and they have theirs. I am merely suggesting now that our attitude should not be an arm’slength attitude. It should, rather, be one of complete and close co-operation, which is the very spirit and essence of the Federal bond.
I do not care how we re-arrange our machinery, we can never make the Commonwealth absolutely in dependent of the States, or make the States absolutely independent, of the Commonwealth. It is the very essence of Federation that each should subscribe to its own limitations. Federation begins with the recognition of the limitations of the Commonwealth; therefore there is in a Federal system of government, perhaps more than in any other system, a greater call for the display of the Federal spirit, altogether apart from the mere cold machinery of it. I admit freely and frankly that there has been extravagance, wild extravagance; but can any honorable member say that we are to change all this by a mere alteration of machinery! Extravagance is a personal matter; it is not an impersonal matter, to be affected by machinery, as such. By machinery we may make extravagance easier or a little more difficult, but whatever the machinery may be, there will always be extravagance if the machinery is operated by extravagant people with extravagant notions, who seek to spend money for political and other purposes merely to put it round and make themselves popular in doing so. No machinery that I know of can stop Governments from doing this, and that is precisely what has been done in Australia in late years.
– Surely the check on extravagance will not be as great in a business where there is a bad system that lends itself to extravagance as in business where there is a good system.
– We can have no check which will stop extravagance if people are disposed to be extravagant.
– Some systems lend themselves to extravagance.
– The honorable member has been interjecting “ Hear, hear,” to every proposal which has been made to-day for seeking further power for the Commonwealth as against the States. I ask him a simple question: Does he believe that there is extravagance and costly control in his own State of New South Wales ?
– I believe that there is costly control in all the States.
– Order! The debate is getting beyond the question before the Chair, which has no connexion with the administration of the States.
– I come back to my point. The mere alteration or readjustment of our machinery of government will not necessarily give economy. Everything will depend on how we operate the machinery that is in existence. If that machinery is operated by Socialistic Governments, who believe in extending the functions of the State and in the State doing things which themselves are not economical, we cannot have economical government; we must spend the people’s money unnecessarily. Everything depends, not on the machinery we operate, so much as on the man behind who is operating the machine - in other words, the various Governments of Australia, who find it popular to spend money and to raise money so long as the people will give it.
– This Loan Bill is for war purposes only.
– I know that it is for war purposes, and because the war has cut off the financial supplies of the
Stateswe in this Federal Parliament are entitled to consider the financial relationship of the States to ourselves and to the war, which is the only point that I am putting before the Committee. What We need above all thingsnow is financial consultation and co-operation. Let us all get together under this burden, and try to sheer down thewhole cost of it by cutting off every trapping and every form of political frippery onwhich Ave can put our hands. That is the attitude that we should adopt all through these proposals. I regret very much to hear that the Prime Minister has not been in consultation with the States since he received the intimation from London that we need not look to the London money market for further loans. In not doing so he is paying the States scant courtesy. I suggest that he should do it even now. It is not too late. He knows the difficulties of the States, and because he has the supreme power, the control of the purse, and all those other matters that are to be held in reserve, he, being strong, should consult with those who are financially weaker, and find themselves confronting a sudden condition of affairswhich threatens to make a tremendous call on their resources and statesmanship. That is the first thing that, I think, it should have occurred to the Prime Minister, as Treasurer of the Commonwealth, to do.
This loan is imperative. We have already spent a good deal of the money. No one can cavil at it. But I suggest to my right honorable friend that he should, as soon as possible, give us a rough-and-ready review of the whole position as it affects Australia as a whole, as well as the Commonwealth in particular. I am not asking for a scientific Budget, but I think we are entitled to have that rough-and-ready re- view that I speak of, and if we can get that we shall be on much stronger ground in voting these supplies from time to time. I cordially and willingly support the proposal before the Committee, and I only regret that it is of such a piecemeal character.
.- I am pleased, Mr. Chairman, that you have allowed a little latitude, for it enables me to reply to the remarks of the Leader of the Opposition. Frequently during. the last few sittings that right honorable gentleman has taken occasion to refer to the lack of a financial statement from me. We arenow in July, the first month of the Commonwealth financial year, and the right honorable gentleman knows, or ought to know, that the books cannot be balanced until about the 21st of the month; yet, on the 1st day of July, I made a frank and full statement, as detailed as it possibly could be made, of the receipts and expenditure of the year ending the 30th June last, a thing unheard of until then in any Parliament. I handed to the Leader of the Opposition a brief memorandum showing everything that could be shown, and it is to be found in our Hansard record. What is the meaning, then, of these constant appeals for another financial statement? What is the meaning of these requests to be told exactlywhat is being done? There is nothing being done that the right honorable member does not know of.
– The Leader of the Opposition asked, not for a complete financial statement, but for an outline of what the right honorable gentleman proposes to do.
– I regret that the Prime Minister seems not to understand what I say. The fault may be mine.
– I am sorry if I have misunderstood. What further information I can give at this moment, without making a financial statement for the year that has just begun, I hardly know.
– Will the right honorable gentleman tell me one thing? Is the £20,000,000 urgent?
– What makes it urgent ?
– The payments that we have to make for war purposes. The prospectus of the loan ought to be issued on Monday next at latest, to give the public an opportunity to apply for stock, and to enable us to obtain the instalments in time to provide for war expenditure already incurred, and being incurred from day to day. We cannot raise money in a moment. No one can say exactly what we shall need; I could give only an estimate. Ten per cent, of the loan is to be subscribed on application, 15” per cent, more on the 15th September, 20 per cent, more on the 15th October, 25 per cent, more /on the 15th November, and the final 30 per cent, on the 30th November.
– Those dates do not represent the dates on which the money will be needed. They are fixed as the best in the interests of the money market.
– Nevertheless, the Bill is urgent. We could not go on the money market to-morrow. Another £6,500,000, of course, will be available, and there are still resources from the note issue. Before the House rises, I shall make as complete a financial statement of our past operations, and as accurate a forecast of the future, as it is possible to put before honorable mem.bars
As to our not consulting the States, the honorable member for Flinders has put his finger upon the very spot. Never, to my recollection, have the States consulted the Commonwealth about a loan, except when they have wished to borrow money from us. I do not complain of that; but it is a fact that in my official capacity I have not been able to obtain information as to the prices at which their loans have been floated, or any particulars of these transactions, which were of any guidance or assistance to me. In saying that, I do not reflect on the States. Their powers are sovereign in the matter of borrowing, and they can do as they please.
– I do not think that the New South Wales Ministry gives such information to the State Parliament.
– I am inclined to think that the honorable member is right.
– That information is given to Parliament.
– Can the honorable member for Robertson tell me, from an official document, what these loans have cost?
– I cannot say now what they have cost, but during the nine years that I was a member of the Legislative Assembly of New South Wales I knew what they cost.
– I believe that you can ascertain from official papers what almost every loan raised by Australia has cost.
– The honorable member for Hunter knows that this information was given to the New South Wales Parliament, of which both he and I were members.
– The fullest information was given.
– In my early parliamentary experience the Government of the day considered it most impertinent for a mere representative of the people to inquire what a loan cost,, and what manoeuvring had taken place to float it. We had to seek information from the Auditor-General. I am happy that this question has been raised. We are not working with the States, and no amount of conciliation will enable us to work together. The States are not working in unison for the benefit of Australia. They are working individually, each seeking the best opportunities for borrowing money for its own purposes, and they will not let each other know what their necessities are. They have declined to cooperate with the Commonwealth in regard to the raising of loans.
– Has the right honorable gentleman tried them since the war began ?
– Yes. I can say now publicly what has not been said before, that, when the £18,000,000 was borrowed by the Commonwealth recently, the British Government would under no circumstances advance money except for war purposes.
– That was announced at the time. I saw it in the press.
– I think I read it there, too.
– It was not announced. The Leader of the Opposition and the honorable member for Flinders were present at the Conference at which the Premiers demanded to know whence the money was coming, and why I would not say how it would be obtained. I replied that I could not tell them, and I did not tell them. Money could not be borrowed then except for war purposes; but we were able to advance the States £18,000,000 by using our own resources, and obtaining £18,000,000 from the British Government for war purposes.
– I think the right honorable member has said that before in this chamber.
– I have made it known since; but I did not say why the fact could not be declared at the time.
– It was announced in the House of Commons at the time.
– His Majesty’s Government informed us that the facts were not to be revealed under any circumstances.
If everybody knew them, why did the Premiers make their request for information, and why did they say that the money was borrowed to meet their liabilities?
– It is only a question of dates. The facts were announced in the press subsequent to the Conference.
– It is entirely a question of dates. Yesterday I made statements that at the beginning of the war 1 would not have made under any circumstances.
– After the press announcement, I asked the right honorable gentleman in the House whether the Imperial Government had been made acquainted with what took place at the Conference between him and the Premiers, and he said that he had told it everything.
– We told it everything. Now that we are dealing with national rather than political matters, may I say that it was the greatest regret of my life that the Commonwealth Government had to do this. It was my ambition, as Treasurer, to finance our war expenditure without asking the Imperial Government for a penny. We could have obtained from £20,000,000 to £25,000,000 for the equipment of our Expeditionary Forces without going outside of Australia, and without disturbing the local money market. I say this in defence of the Commonwealth Government, not to attack the States. We had to put our own wishes on one side in order to assist and protect the States. As the honorable and learned member for Flinders has said, the credit of the States is intimately connected with that of the Commonwealth, and we put our national Australian feeling on one side to secure and sustain that credit. That was done without any waving of flags or demonstration of any kind. It is now said that we have failed to communicate with the States. As a matter of fact, I have communicated with them three or four times since the agreement was arrived at with them.
– The Caucus can be called together. There are Labour Governments in some of the States. Does the right honorable member suggest that they will not meet him 1
– I have spoken, I think, “ with all the State Premiers, including the Premier of Victoria, of whom I am glad to speak in the highest terms so far as these negotiations are concerned. The point made by the right honorable member will be sufficiently answered by the statement that, since the States entered into an agreement not to borrow money until November of this year, there has been no great necessity to consult them during the interval. They have pledged themselves not to raise any money by way of loan, either inside or outside Australia, except in accordance with the agreement signed by their representatives. That being so, we are not called upon at the present time to consult the States, seeing that they have been provided for until November next.
– Have they complained of any discourtesy on- the part of the Commonwealth ?
– That is nob the point. The argument raised this afternoon was that the Commonwealth Government should stand over the States and tell them what to do.
– That came from the Opposition side of’ the House.
– No; from the Government side of the House.
– These are times when no party, no Government, and, indeed, no patriotic citizen, can take up a standanddeliver attitude of £hat kind, and this Government has no intention of doing so. There was no time for a Conference with the States after the arrival of the confidential communication from Great Britain. The whole thing would have broken down if we had waited to arrange for a Conference other than that which we held. There were only a few people in Australia who could be called together to give us the information that we required. A Commonwealth necessity, and an urgent one - a question concerning ‘the defence of the whole Commonwealth - was at stake, and, in my opinion”, we took the only proper step that could be taken to bring the matter to a success- ful issue. We are now in a freer position. We have obtained the information we require, and are now on the way to launch this loan. After it has been successfully launched, we shall have time to look round, and I can say, on behalf of the Government, that we shall be prepared to do everything we can to assist the States. What I have had occasion to suggest to the States - and I take occasion now to warn them of it - is that their difficulties in regard to the raising of money, either here or elsewhere, are not limited in number. Their difficulties will be great, but whatever they may be, the Commonwealth will be associated with the States in trying to minimize their troubles in that respect. I have publicly appealed to the representatives of the States again and again to arrive at an agreement in regard to common borrowing, or, in other words, as to the desirableness of having only one borrower.
– Does not the Treasurer think that the farming out of public works in New South Wales is tantamount to a breaking of the spirit of the agreement with the Commonwealth ? How is he going to get over that sort of thing?
– I am not now discussing what the States are doing. If I were, my statement would be of no avail. I am dealing now with the financial position of the States and the Commonwealth as it affects the people of Australia. Whatever has been done cannot be undone; but the future lies with ourselves. If the people of Australia demand that a new course shall be taken, there is no one who can say them nay. The only practical, safe, intelligent, and economic path that we can take, in my opinion, during the present crisis is that of securing at an early date a round-table Conference of all the authorized representatives of the people in the State and Federal Parlia- ments to discuss financial and other matters of mutual interest. The invitation to such a Conference must come, not from the Commonwealth Government again, but from the sovereign States.
– Because we have appealed to tl: em again and again. They know that the Commonwealth is ready to act, and that it has acted for them in the time of their greatest difficulty. They’ came to us when they were in trouble, and we were able to help them. If they were not in trouble, they might tell us, if we approached them, to mind our own business. They have a right to come on the market individually when and how they please. One or more have exercised that right to the full even during the currency of the present agreement, but of that I am not complaining. If they express any desire to meet us, we shall meet them; but we were not in a position to afford them any relief in connexion with this . loan, nor can we see any reasonable prospect of helping them in the near future. We are ready, however, to confer and deliberate with them on this important question, and to give them all the assistance we can, as a Government, and, I believe, as a Parliament, in meeting their present and pending difficulties. In conclusion, I have only to repeat the statement I made at the outset of my remarks, . that if the right honorable gentleman wishes it, I shall hold over all the other matters pending the bringing down of a. financial statement in relation to thefuture. That is the best we can do in the meantime, and upon that statement a full discussion may take place. I donot think it is possible to submit such a statement before the week after next. Asthe right honorable member for Swanknows, it would be impossible to make a. complete and accurate Budget statement so soon after the close of the financialyear.
– -Especially at a timelike this.
– Quite apart from that there is the fact that the accounts from the Northern Territory and Papua do not reach us for six weeks or more after the close of the financial year. It is impossible to make an accurate Budget statement in these circumstances, since all the facts essential to it are not available to the Treasurer. It is true that we could obtain information by telegraph, and the information will be made available at the earliest moment. I ask honorable members on both sides not to discuss the financial situation as if there was something mysterious relating to it. There is not. As I said on a former occasion in regard to the note issue, every member of Parliament is at liberty at any time to go to the Treasurer, or to the Auditor-General, and to obtain from them information regarding the finances. The Treasury officials have been notified that members of Parliament are to be given all the information they possess “other than confidential information as between the Department and myself. Honorable members, therefore, may, in that way, learn of every financial transaction that takes place. I have also to thank the Finance Committee for assisting me in protecting the credit of the Commonwealth by making available to me information in their personal possession. Let every honorable member go to the permanent heads of the Departments and discover how matters are being conducted. If this be done, there will be no difficulty in regard to the affairs of the Commonwealth.
– Why, we could not obtain information in regard to the gold reserve !
– The information is published every month.
– I am referring to the gold reserves in Australia.
– That is another matter.
.- However anxious we may be to arrive at some system of borrowing that will be mutually satisfactory to the States and the Commonwealth, the fact should not be overlooked that this is a specific motion to authorize the raising .of money to carry on the war. It is, in fact, a motion to validate that which has already been done. The Prime Minister has informed the Committee that, acting in the interests of the Commonwealth, he borrowed this £6,500,000 on the best terms possible, taking into consideration the circumstances of the time as occasioned by the war itself. I do not think it is wise, therefore, for us to discuss in connexion with this motion the question of whether or not the States have been consulted, more especially as the States were actually consulted by both parties in this Parliament some ten months ago, and that an agreement was then entered into with respect to future borrowing. The Commonwealth, at that time, was solicitous for the welfare of the States during the war crisis, and, consequently, took steps to provide for them. A sum of £18,000,000 was made available, and under the agreement then arrived at, there was a definite arrangement with respect to all borrowing up to the end of the present year. In view of that fact, and the fact that this Parliament is charged with the conduct of the war - and this, to my mind, is a most important point - the States surely will take no exception to this proposal. This Parliament, and not the Parliament of the States, has to find the funds necessary for defence purposes, and surely, in view of the agreement that has been arrived at, the States would not insist upon being consulted with respect to this particular transaction. To try to make it appear that they should have been consulted, and that they have been overlooked in some way, is hardly to meet the position fairly. The Commonwealth Government is charged with the great responsibility of finding the money necessary to enable us to carry on the war, and I think every honorable member will agree that, having regard to all the circumstances, the action taken by the Treasurer was the correct one. That being so, why should there be any complaint, some months later, in regard to the question of consulting the States? There is certainly some room for an endeavour to arrive at an agreement with the States in respect to future borrowing in the interests of both the States and the Commonwealth, and in such a way as to protect the taxpayers as a whole. I rose only to point out that it would be regrettable if it should go forth that there is any difference of opinion as to whether or not the States have received fair treatment. Any fairminded man, I think, will admit that the States have received reasonable consideration at the hands of both parties in this Parliament. Our defence expenditure is very heavy. If it were necessary to consult the States regarding this £6,500,000 it would be equally necessary to ask them whether they were agreeable to our floating the proposed loan of £20,000,000 to enable us to prosecute the war.
– No one has suggested that.
– But this £’6,500,000 is for war purposes. The Prime Minister made it clear that he asked for £10,000,000, and that the British Government stated that, as £3,500,000 of that sum was for public works, we should ask only for £6,500,000.
– We are not’ suggesting that there should be a conference with the States in regard to this £6,500,000.
– Just so. But what is the inference to be drawn from the honorable member’s remarks regarding that sum? This is a specific motion dealing with £6,500,000 required for war purposes, and if the House agrees that it is necessary to obtain this money we ought not to allow the suggestion to go forth that there ought to have been a consultation with the States. The inference the public will draw from honorable members’ remarks in Hansard and from the press is that there ought to have been some conference between the head of this Government and the heads of the different State Governments so that they might have come to some common understanding.
– Not with regard to this matter at all.
– The honorable gentleman’s remarks were very pointed. He was dealing with this particular motion.
– He was doing nothing of the kind.
– If the honorable member’s remarks did not apply to this particular motion, what did they apply to? What does the public expect from members of this House but that they shall deal with particular questions as they come forward?
– They are very often disappointed.
– That may be, but anybody reading the discussion on this particular matter, then before the Chair, could only come to the conclusion that the remarks made by the right honorable member did apply to it.
– If they read what I said they will not.
– The Chairman complained all the time that the honorable member was not dealing with the Bill.
– I begin to think that the Chairman was perfectly right, because now the honorable gentleman admits that he was not dealing with that matter.
– Then your argument must be wrong.
– My argument is’ not wrong. It is essential for the benefit of the readers of newspapers and of Hansard that remarks made by honorable members should relate to the subject before the Chair. The honorable member, however, now states that his remarks were not relevant. I only rose for the purpose of laying stress upon the point that I thought the Prime Minister had omitted, that during this time of war, when this Parliament is charged with the duty of finding money to carry on the war, it is not necessary for the States to be consulted at all. In a time of emergency such a course would not even be possible.
So that, in the circumstances, the Government were justified in getting the money it required without consulting the States at all, though Ihope that in the future some arrangement will be possible under which the States and the Commonwealth can co-operate in the matter of borrowing.
.- I agree largely with the remarks of the honorable member who preceded me as to there being no necessity for consultation with the States in matters connected with the war. The Commonwealth Government is necessarily in possession of information that they cannot communicate to the States, and they have therefore to take the full responsibility of dealing with the finances.
– The Prime Minister stated that there was nothing to hide about the finances.
– The honorable member is a genius in finance, but I do not propose to bandy words with him.
– What I say is the fact, all the same.
– The honorable member said a lot of things last night that were not facts, so that I propose to leave him to stew in his own fat. What I was about to say in regard to the loans that have already been raised was this : Whilst we have been raising money, ostensibly for war purposes, we should not have found it necessary to raise that money at all if we had kept the £18,000,000 that was lent to the States. We find ourselves, therefore, up against this position : that owing to the fact that the war will probably last a good deal longer than some of us anticipated, we shall not be in the position regarding the raising of loans that we thought we should be. We have already borrowed £18,000,000 from the British Government. We lent that £18,000,000 to the States to carry on their public works, and the fact is now being brought home to us that we shall shortly have placed before this House Bills for the purpose of raising taxation in order to pay for the war loans that we have given to the States, in many cases, to squander on public works.
– Do not say squander.
– I should be prepared to substantiate the statement if time would permit, and if discussion on the subject were allowed. I do not want to allude to the honorable member’s State, but it was about the grossest Government in the matter of extravagant expenditure in the Commonwealth. At the present time, as I think honorable members will agree, all the indications are that we are in for a prolonged and strenuous war period, and we can only regard the future with a certain amount of trepidation. We know we shall have to borrow this year, next year, and possibly the year after that. And I would urge that the States should get into their minds, clearly and definitely, the impossibility of borrowing money from the Commonwealth for the purpose of carrying on their public works at the same rate that they have been borrowing in the past. The Commonwealth is not in a position to lend the money, and we have not illimitable sources of taxation. We may raise a certain amount of loan money, but if we go beyond that we may do a good deal more damage than many people imagine. I would like to say, in regard to the Loan Bill that we have just passed, that if the money comes in when the Treasurer is not absolutely in need of it, the wisest course will be for him, instead of withdrawing the money from the commercial community, to leave it in the hands of the institutions in which it is deposited, so that it may be available for commercial use. If- we draw indefinitely large sums of money out of the ordinary channels of commerce, the result will be that men will be unable to extend their businesses, and that there will be a large number of men out of work. That situation stares us in the face as clearly as daylight. Unless we are particularly careful in the expenditure of the huge sums of money that are now being raised, we shall bring financial disaster upon this country. We are a rich country - probably there is none richer on the face of the earth - but there is a limit to the amount of money that can be raised by loan for the benefit of the States if we are to allow commercial development to go along its natural lines.
– How can you prevent the States from coming on to the Australian market?
– The States will be prevented from borrowing when they know that they cannot get their loans floated; but as long as the States know that they can come to the Commonwealth and arrange for loans you will never stop them. The only thing that will stop a State from borrowing is the same thing’ that stops the individual from borrowing - the fact that nobody will lend to him.
– Some wise people stop before that time.
– Suppose the States” offer a higher rate of interest than the Commonwealth ?
– I am not going to predict what would happen if they offered exorbitant rates of interest, but- no Government would be allowed to maintain its position on the Treasury benches if it persisted in borrowing money at exorbitant rates of interest. The wisest policy would be for the States to curtail their expenditure. We cannot possibly curtail our war expenditure. We may prevent extravagances in particular directions, and I hope we shall do that; but we are now creating a national debt exactly on the same lines as the national debts of the older countries in the world; we are blowing the money away in powder and shot. We shall have no asset to show for it. The money that has been borrowed in the past by the States has been mostly spent upon public works. The Commonwealth is not doing that.
– What about the territory we shall acquire in the Pacific?
– I do not know how much that will be worth to us, but I . would like to urge upon the Government the necessity of making provision for sinking funds. I take it that no provision has been made in connexion with the repayment of this money to the British Government for a sinking fund.
– Yes, there is - J per cent.
– In the Audit Act there, is a clause dealing with trust funds provided by the Commonwealth, which reads as follows : -
A separate account shall be kept in the Treasury, to be called the Trust Fund Account, of all moneys that shall bc placed to the credit of that fund, under such separate heads as may be directed by the Treasurer.
Another clause in that Act states that nomoney shall be paid out of that fund except by the authority of Parliament. I think it was the honorable member for Bourke who said last night that trust funds were piled up by an economical Treasurer for the benefit of the first Treasurer who came along short of cash and made an appeal to Parliament. I have had some experience in connexion with trust funds in the State of Victoria. I was one of Trust Fund Trustees, and opposed bitterly the attitude of my own Government in taking money out of that fund, which was made up of revenues from certain Mallee lands. The first time that the Treasurer struck bad times he brought in a Bill to take a portion of these funds. He apologized profusely for his action, and said it would not create a precedent, but next year he brought down another Bill and scooped -the lot. There is no protection in the trust funds provisions of the Audit Act for the sinking funds that are being provided in connexion with these loans.
– I am afraid all the States have done the same thing, excepting Western Australia.
– And when the Commonwealth is placed in a similar position it will do the same thing. The sinking fund provisions of the Act should be amended to give power to the Auditor-General to buy up bonds in the market as the Trust Fund accumulates. That is the only safe way in which the sinking funds can be utilized, because by that means they are placed beyond the reach of an impecunious Treasurer. I urge the Treasurer to consider whether it would not be wise to adopt that method, thus reducing the debt practically without any one being aware of the fact. That is the method adopted by the British Government for the redemption of consols, and a very good method it has proved.
– I rise to stress a point made by way of interjection by the honorable member for Bendigo, who seems to have placed his finger right on the vital spot. The debate has been proceeding this evening upon the wrong assumption that we may treat the States as we like. Let honorable members get that notion out of their heads. The States have rights and resources, just as the Commonwealth has, and there is nothing to prevent them exercising to the full their resources, which are as great as those of the Commonwealth. What could be more reprehensible in this time of war than to have the States, which are being treated in an off-hand way by the Federal Parliament, competing with the Commonwealth on the money markets? They have only to offer a high enough rate in order to receive the money in preference to the Commonwealth.
– And then we shall have to go one better.
– Exactly, and I am asking whether that is a wise thing to do. I am suggesting that when two competitors are operating in a restricted market, they should make arrangements to get the best out of the market for their mutual advantage. That can be done, not by keeping the States at arm’s length, but only by consulting with them. It is to avoid unnecessary competition that I am pleading for a consultation with the States. Both the States and the Commonwealth are in trouble, owing to the cessation of the supply of money from London, and we may not brush the difficulty aside in the light and airy way in which honorable members on both sides of the House have attempted to deal with it this evening. The States have resources which they can exercise if they choose; and I should bitterly regret any attitude on the part of this Parliament which would force them to resort to a ruinous competition in rates in the restricted money market. The States must have money. I understand that the Government of New South Wales has 20,000 men in its employ; and I have yet to learn that any honorable member representing that State is prepared to tell the New South Wales Government to discharge those men willynilly, and that we of the Federal Parliament will not even consult with the State Government in regard to methods of keeping those men employed. We must get down, to bed-rock in regard to this matter; and every consideration of prudence and statesmanship at this particular time suggests that we should combine together to exploit this restricted market on the best terms and conditions for all concerned.
.- I am glad that the aspect of the matter dealt with by the Leader of the Opposition is now being considered. When I referred to the matter yesterday, there did not appear to be any desire on the part of honorable members to enter into this phase of the question. But Opposition leaders are now taking the matter up, which seems to make all the difference. To-day it appears to have developed into one of the serious issues which challenge our attention.
There has been no complaint on the part of the State Governments in regard to the financial position that they have not been consulted; but the situation is developing in such a way that, if something is not done, both the Commonwealth and the States will suffer, and there will be resultant distress throughout the country. This is almost wholly due to the changed aspect that has come over the financial situation during the last few months.
When the war broke out, the States were the only borrowers on the market. The Commonwealth did not publicly borrow: there was no necessity for it to do so. The States had access to the London market.
Almost immediately after the outbreak of war, the London market was closed to the States, and an arrangement had to be made by the Commonwealth Government to raise the necessary loans in London, so that the Commonwealth could arrange such accommodation to the States as would enable them to carry on their loan works for the current year.
When the Commonwealth went on the London market, the States had then access to the local market for loans beyond those which had been arranged for from the Commonwealth, and they had agreed not to raise loans in London while the Commonwealth was acting in England in their behalf. But. that agreement was abrogated by an arrangement between the Commonwealth Treasurer and the Treasurers of the States.
– The arrangement was eased, but not abrogated.
– In some cases the Commonwealth Treasurer released the States from the arrangements which they had made.
– As far as I could do so, I agreed that I would not take serious exception to the States taking advantage of the market.
– If you make an agreement with a party, and he asks to be released from it, and you then say, “ I do not raise any serious objection to your taking advantage of the conditions that now prevail,” surely that reply means releasing that party from the agreement.
– No, because to release him from the agreement would mean that the other man’s rights were at an end.
– If a person has rights and does not insist upon them, he surrenders those rights.
– The States were released to some extent.
– That is so.
– The Treasurer allowed a little latitude, and a departure from the arrangement.
– I did not take exception to the States departing from the arrangement.
– Therefore, the States assumed, as I would have assumed, that they were free to make this departure.
– I do not agree with that view.
– Very well. The manner in which the relaxation occurred is now apparent. The States then had access to the local market.
The next development has been that the London market is closed to the Commonwealth. No definite pronouncement on the matter has been made, but it is more than probable that the market has been closed to the States also.
– It is not absolutely closed; but an appeal was made to us to . raise our own funds in Australia.
– The Imperial Government is itself appealing to the London market for many hundred’s of millions of pounds, and it sends out a communication to the Commonwealth that Australian loans ought to be raised in Australia. Again I say that such a desire, expressed by the British Government at a time like this, is tantamount to closing the London market against Australia, because Australia would never except as the very last extremity approach the London market in the face of such an appeal.
For all practical purposes, the London market in the way described is closed to Australia. The Commonwealth, with its huge commitments, both immediate and in prospect, is’ compelled to raise large sums of loan money or credits. The London market being closed, an appeal is being made to the Australian market. The Commonwealth now comes into direct competition with the States. The latter have been appealing to the local market, and now the Commonwealth and the Stales will go together upon the local market as competitors to raise money for public purposes - the States for their developmental services and the Commonwealth for prosecuting this war.
These, then, are the steps as the situation has developed : -
There are two kinds of credit in Australia - there is public credit, and the credit of private corporations and individuals. The public credit of Australia is disorganized, and in a state of almost chaos. Private credit is organized, and a great advantage is to be reaped by the organizations of private credit, the financial institutions, which are very closely associated and linked together so that every financial operation of any kind in Australia is carried out by them in consultation and co-operation. So far as the public authorities are concerned, there is competition, but in the case of private authorities there is co-operation. There is necessity for co-operation on the part of the public authorities - co-operation that we have not to-day. This cooperation can be brought about only by consultation and arrangement between the Commonwealth and the States; and the advantages to both would be such that there ought to be no questionas to the dignity of one Parliament contrasted with the dignity of another. The Commonwealth, as the national authority, ought to lead in the matter. I agree entirely with the honorable member for Flinders that, although the Commonwealth has no constitutional obligation directly caston it to safeguard the finances of the States, it cannot allow the States to become bank rupt or their credit to depreciate. Our national necessities, regardless of State divisions, imperatively demand united action. The circumstances in which we find ourselves are coercive and as mandatory as any written constitution could make it. It is the undeniable law of national necessity.
– There is another motive for consultation - our own interests.
– That is what I have been hammering at for days; I have said that co-operation is essential to both.
– I am not sure that the States could not injure us as much as we could injure them, provided we tried.
– If there is competition for credit both authorities will be damaged, and the public will suffer greatly.
The honorable member for Henty said that the States should be allowed to go on in their own way until they were pulled up with a round turn, when there was no more credit for them to borrow. It would be a sorry day for us if the States could not get the necessary accommodation to keep their services going as at present. There would be wholesale unemployment and distress, and if it is in our power, by suggestion, by proposals, by conference - by anything we can do - to save the situation, the responsibility is upon us to act.
It requires no stretch of the imagination to foresee wholesale unemployment; and should it take place, the responsibility will be on us equally with the States if we have not done everything in our power to avert it. Those who would suffer are our constituents, as well as the constituents of the State Parliaments; and they will require from us, as from the representatives of the States, an account of our stewardship - they will want to know what has been our contribution to safeguarding them from calamity.
I therefore hope that the leader of Australia, the Prime Minister, will not be concerned about the failure of any efforts in the past, but that he will make a direct communicacation to the States. It is not a question of an appeal; the Prime Minister ought to make a direct, business-like com- munication, pointing out that their interests, as well as our own are affected, and that the interests of the great general public will be prejudiced unless the authorities come together and arrange their financial undertakings in co-operation. If the Prime Minister of Australia takes that course, and the States absolutely refuse to meet him, then the responsibility, which will be a very heavy one, will be on their shoulders. We shall have done our best, and the situation demands that we should do nothing less.
.- A great deal of the trouble to which the honorable member for Cook has just referred - the continued loan expenditure of the various States and of ourselves - is due to a cardinal misapprehension as to the future loan position. Immediately after the war broke out, some of the Premiers showed very considerable apprehension; and I think the Premier of New South Wales showed a keener apprehension than any of the others. In that State it seemed to be recognised that they were right up against the beginning of the end of their loan policy; indeed, it was actually discussed whether even the arbitration awards should not go. The seriousness of the position was such at that time that the Premier of New South Wales was prepared for almost any method of handling the sudden emergency. Since then the British Government has shown itself a ready assister; and the whole scene has changed, apparently, in the minds of the State Premiers. When I use the words “ State Premiers,” I make no particular attack upon the States, because we have been all more or less sinners in this regard. After all, despite the fact that the world is struggling for the existence, of the social fabric - in spite of the absolute dislocation of a vast number of the industries of the civilized world - it was thought that, after all, the British Government would come to our help, and after the war “everything in the garden” would, as usual, be “ lovely.” The feeling I have is that after the war the tightness will be much greater for some time than it has been during the war. After the war, half of Europe will have to be rebuilt. Belgium will have to be rebuilt, industries will have to be restarted, machinery recreated, and the torn fragments of some of the greatest industrial nations of the world, so to speak, knit together by the little remaining capital. When all is said and done, capital is only a sort of stored industry; and that stored industry, instead of being used to-day for the continuance of human activities of a reproductive nature, is going up in the smoke of shell - going to heaven in the flames of burning factories.
– All waste !
– All waste; and not only will that actual immediate waste of war, munitions and human lives, have to be remedied after the war, but destroyed properties will have to be recreated, and cities rebuilt. From where is to come the stored industry to do this work? In the past London has been the great money market of the world, and let us hope it will again have that position, but for some years after the war is over the people of England will be hard put to it to make up for the waste that has occurred in defending their country’s liberties. Money will be required, as I say, to rebuild Belgium, to rebuild the factories which formerly used Australian wool in Northern France, and that money must come from wherever it can be. got - largely, I believe, from America. But there will not be much capital available, except at an exorbitant rate of interest, for the Australian States to play with. For this reason I believe that the warning we have received from the Mother Country represents one of the friendliest actions on her part since the war started.
– It is very disagreeable !
– It is; but, all the same, it is one of the friendliest things that has been done to us. The idea of going on until we are pulled up with a round turn means wholesale unemployment and absolute chaos in wages conditions; it means the very worst thing for the working people of the community. It is about up to us all, Commonwealth as well as States, to begin, in no hysterical way, but sanely, to pull in our horns in loan expenditure, and to look forward to that time when there will be no loan money from abroad, %when local loans will not have behind them the spur of patriotism, and when we shall have to compete in the local market for the comparatively little money there is on absolute terms of business equality with all other competitors. I am not in any way charging the Prime Minister with having failed to approach the Premiers of the States in the past - this is not the time for recrimination. But the sooner he speaks out straightly and plainly to them the better for us all.
– I have seen every one of them within the last three months.
– I am sure the Prime Minister has, and I am not saying otherwise. But there is a point at which I think we may have failed a little in the past. It has always been assumed that the Commonwealth is a- sort of good, kind big brother, who will do nothing if his views are not accepted. Well, we have very considerable power. There is enormous power inherent in the Commonwealth, and I think the time has come to show the States, in the interests of the Australian workingmen and Australian industries - in the interests of the Australian social fabric - that we are prepared to use the power we have to compel economy, if the States will not take those steps which sanity demands for the common weal.
.- I should not have risen at this late hour had I not felt that some honorable members have shown themselves rather pessimistic; and I think that, even after the remarks of the honorable member .for Parramatta, there is some room for optimism. I realized, as soon as the Commonwealth Government had to raise loans for the purposes of the war, that trouble would commence here. I think that the remarks of the honorable member for Parramatta, derogatory to the States, and certainly to the Premier of New South Wales, were rather uncalled for; and I also noted an interjection by the honorable member for Robertson in regard to the Norton-Griffiths proposal.
– I made that interjection honestly.
– I made no derogatory remark of the Premier of New South Wales.
– Perhaps the honorable* member will allow me to make my own speech. When the Norton-Griffiths proposal was first made I took the same objection to it. that has been raised to-night, because I thought it was a bad and expensive policy, which gave ground for a certain amount of dread. The proposal was withdrawn, but was renewed in November of last year. When the Commonwealth Government accepted the loan of the British Government we were informed that we were not the only people who were worrying the British Government for money. The municipalities and county councils of England also required assistance. Mr. Lloyd George said that it would be hopeless for the municipalities of Great Britain to borrow, but he was prepared to give them £10,000,000, and Mr. Holman and those who were watching events came to the conclusion that next year there would possibly be a shortage of money from any other source. I am not in the confidence of the Premier of New South Wales, and I am not inquisitive enough to wish to know his business; but I understand that he realized the importance of renewing the Norton-Griffiths proposal in view of the fact that the Commonwealth would be compelled, owing to the closing of the London money market, to raise a large sum of money for war purposes within Australia, where the market is so limited. One benefit to be derived from this loan will be the fact that most of the money will be spent in Australia, and that the interest will be paid in Australia. A great factor which has tended towards making London the financial centre of the world has been the payment of the interest on the British lean indebtedness within Great Britain itself. Another factor has been the expenditure of much of the money raised by Great Britain in the British Isles. Even in the case of the heavy borrowing for the Boer war, most of the money was spent in Great Britain, and the portion which was spent in Africa returned to Great Britain, because the manufacture of the appliances for carrying on the war was carried out there. The payment of interest on the British indebtedness is not such a drain on Great Britain as would be the case if the money had been raised abroad and the interest had to be sent out of the country, which, unfortunately, has been the position of Australia in the past. The Commonwealth election of 1910 was fought on the question of the wisdom of borrowing £3,500,000, which the Liberals proposed to do; and the party which came into power as the result of that election was a non-borrowing party, which stated that it would only borrow when the country was in peril, or facing some unforeseen disaster. I think honorable members opposite ought to give credit to the people of Australia for the wisdom and foresight displayed on that occasion, by putting into power a party which would not allow the National Government to enter on a borrowing policy. Borrowing is proposed now only under circumstances which compel it, and when the people of Australia are prepared to make extraordinary sacrifices in order to carry on the war. The people have placed the present party in power to carry on the war, and when for that purpose a Commonwealth loan has to be placed on the local money market, we are in a fortunate position in that we have not had to appeal to that market before, seeing that so far we have been able to obtain money from the Imperial Government. I am afraid that the loan that we propose to raise will not cover the expenditure, and we have also to see whether the State Governments will go on the Australian money market and offer higher rates of interest. However, I do not think that they will do so. I think that they will see the wisdom of acting conjointly with the Federal Government. “When they arc driven to extremes they will find no better godfathers than the Federal Government. All the prognostications of our friends opposite - especially of the Leader of the Opposition - will be found to be wrong. I am quite satisfied that the States will appeal to the Labour Government which is in power in the Commonwealth, and that conjointly we shall be able to tide over difficulties such as have never occurred before in the history of Australia, and which I hope will not arise again. I hope that honorable members will take an optimistic view. In proportion to her population, Australia is the greatest producing country in the world. In 1913, her production’ was £288,000,000, according to figures furnished to me by Mr. Knibbs about four months ago.
– A few hours ago Mr. Knibbs informed me that our production was £230,000,000.
– The right honorable gentleman’s figures’ are correct. I hope that all those in authority in Australia, even those managing public utilities and companies, will take a broad optimistic view of the situation, for I am certain that Australia will tide over her difficulties, and emerge from this time of trouble triumphantly and with every credit to the Empire of which it forms a portion.
Question resolved in the affirmative.
Standing Orders suspended, and report adopted.
That Mr. Fisher and Mr. Archibald do prepare and bring in a Bill to carry out the foregoing resolution.
Bill presented by Mr. Archibald, and passed through all its stages.
In Committee (Consideration of the’ Governor-General’s message) :
– I move -
That it is expedient that an appropriation of revenue be made for the purposes of a Bill for an Act to authorize the raising and expending of the sum of £1,500,000 for the construction of a railway from Kalgoorlie to Port Augusta.
I propose merely to introduce this Bill now, and to leave the discussion of it until to-morrow. We hope to be able to finance the construction of this railway out of our own resources. I am sure the Committee will not be disappointed when I mention that it is believed that the sum mentioned in the motion will be sufficient to complete the railway, and that we hope to have trains running right through from Port Augusta to Kalgoorlie by the end of 1916. I have been in communicationwith the Government of Western Australia, with a view to getting the Western Australian line finished at the sametime as our line is finished, so that theremay be no delay in running trains right through.
– Is it not rather late to do this ?
– They cannot get that work done now in time. What is the length of the Western Australian line?
– About 375 miles.
– I had an interview with the Minister of Lands for Western Australia this week, and I think that we shall be able to come to an arrangement which will be mutually satisfactory. My chief desire now is to put an end to the statements that have been made to the effect that this line is. a desert railway which it will take many years to construct. It is expected that the line will be open to traffic by the date I have mentioned, and that passengers will then be carried across it. the trains running at a maximum rate of 30 miles an hour.
– But the line is being designed for a running speed of 40 miles an’ hour.
– The ballasting will not be finished by the opening date.
– Thirty miles an hour is not to be the ultimate speed limit, but it will be the rate at which trains can be run over the line when it is first opened for traffic. It is a good average rate, taking most of our lines into consideration.
– The line will not be completely ballasted when it is opened for traffic ?
– There will be portions requiring a little more attention. The main thing to remember now is that the money for which we are asking will complete the railway, which is not a work that ought to be hung up at the present juncture.
– Is it the intention of the Government to assist the Government of Western Australia in regard to the line from Kalgoorlie to Fremantle?
– It will be our duty to assist the Government of Western Australia in the financing of that line, because the matter is one of mutual interest.
– The right honorable gentleman does not mean that he intends to make himself responsible for the cost of it?
– No. The whole financial responsibility will rest on the Western Australian Government, but the Commonwealth will heartily co-operate, in the relation of lender to borrower, to provide for its completion. There will be a business-like arrangement between the two Governments concerned, so that there may be no delay in the completion of the line.
– Has the question of fares and freights been considered ?
– We have a working arrangement, on the basis of the local rates.
– I have come to an understanding with the Government of Western Australia, which has not yet been embodied in an agreement, under which the Commonwealth will have running rights over the Western Australian line, and Western Australia will have running rights over our line, and if we require a spur line from the Western Australian line, the Government of Western Australia is to have the same right in regard to our line.
– To what extent will the Government of Western Australia be able to use the transcontinental line?
– To any extent it may think fit within its own territory, and the Commonwealth will have the same rights in regard to the Western Australian line. It is obviously an arrangement of mutual benefit.
Question resolved in the affirmative.
Resolution reported, and adopted.
That Mr. Fisher and Mr. Archibald do prepare and bring in a Bill to carry out the foregoing resolutions.
Bill presented by Mr. Fisher, and read a first time.
” Argus “ Volunteers - Defence Administration - Price of Foodstuffs.
Motion (by Mr. Fisher) proposed -
That the House do now adjourn.
.- Today I asked why the proprietors of the Argus are not treating their employees who have gone to the war in the same way as they are asking other employers to treat their employees, and I have since been furnished by a member of the Argus literary staff with the following statement on the subject: -
Case No. 1. - The Argus is actually paying £200 a year difference between salary and military pay, giving absolute guarantee of same position when the man returns.
Case No. 2. - Allowance subject to present consideration. Increased insurance on account of war guaranteed and absolute guarantee of position when he returns.
Case No. 3. - Short service in office. Man not guaranteed position vacated, on account of unsuitability, but guaranteed some position of about equal salary.
Case No. 4. - Now on active service and reported missing. The mother is being paid the difference between military pay and pay previously paid by Argus. Was guaranteed position.
Case No. S. - Payment of balance between military pay and office pay promised to mother of employee, but withdrawn when it was ascertained that the employee had allotted military pay to some one not a relative.
A guarantee has been given in each case of employment on the return nf the employee. The balance between ordinary pay and military pay is being made up by the office, but with concurrence of employee is being held in trust until return in most cases, and is in some cases paid to dependants in Melbourne.
.- On the 1st July I offered some friendly suggestions to the Minister for the Navy, who was then Assistant Minister of Defence, as to the advisability of increasing the staff of the Central Administration to cope with the work of the Defence Department, or of re-allotting the work of the officers of the Department, so that delays such as those to which I drew attention might not recur. I instanced a case in which the money for a motor ambulance was sent from Sydney on the 8th or 9th February, and was not used by the Defence Department until the 30th March - that is, not until seven weeks had elapsed - and that information had come from the front that this ambulance was badly needed. In the Age of the 5th July, tho Minister is reported to have said -
The facts are that we had a communication from New South Wales to the effect that the money necessary for an ambulance would be donated. There are two ways in which we have been making use of money for ambu lances. First, by cabling money to England for an ambulance to be made there, and to be attached either to an Australian unit or to the British Army; secondly, to place the order in Australia, and attach the ambulance to a unit here. In the case mentioned by Mr. Kelly communications passed in order to find out the views of the donor, and also with regard to the class of ambulance required. There was no undue delay.
By the courtesy of the Minister for .the Navy, I have obtained the papers in this case. The first of them, which is dated the 8th February, 1915, is a letter from Colonel Wallace, Commandant, to the Secretary of the Defence Department, and shows that the statement of the Minister was wholly incorrect, Us concluding words being -
The donors have been suitably thanked, and they desire that this ambulance bc made in England.
From the file I find that, on the 12th March, some five weeks after the draft was received in the central office, it was discovered that it was made payable to the New South Wales Commandant, and was returned to him foi his indorsement, and to be paid into a Sydney account. On the 24th March, the Department was notified that the money had been paid in as instructed. I was given to understand by a letter which I received from the Department that, on the 30th March, the money was put into use, but I find from the file that on that date the Department of External Affairs was asked to send a cable to the High Commissioner stating that donations had been received for motor ambulances, of which a list was given, and the words “ letter following “ (vere added. There was no order given for ambulances ; the communication contained merely the statement that certain moneys had been received. The next paper on the file is a decode of a telegram from the High Commissioner, dated 8th April, asking -
With reference to your telegram 7th April, motor ambulances, shall I order at once?
So far, the order had not been given. Apparently it took the Department of External Affairs from the 30th March to 7th April to send the cablegram it was asked to despatch.
– It is only fair to mention that that happened to be Easter week.
– In any case, the suggestion I make is that an arrangement should be made between the two Departments that the Department of Defence shall be free to send direct to the High Commissioner any cable that it wishes to transmit to him, merely notifying the Department of External Affairs of what is being done. In that way all this redtape could be short-circuited, and a great saving of time effected. Two days later, namely, on 10th April, the Department of Defence asked the Department of External Affairs to send to the High Commissioner a cablegram requesting that the order for the motor ambulance mentioned in his cable message of 8th April, should be placed at once. It was then that the order for this ambulance was placed. The money left Sydney on the 8th February; it was put to use on the 10th April. I think honorable members will ‘realize that there must be something wrong with the Central Administration when this is possible. No sooner had the Minister’s statement appeared in the newspapers than I received a letter from another man who, with his wife, had forwarded to the Department a like donation of £500 for the purchase of a motor ambulance. Heinformed me that for a time he did not receive even an acknowledgment, and that he had to write again to ascertain whether his cheque had been received. There are many other instances of delays in the Central Defence Office. I trespass on the patience of honorable members to-night solely because I believe it is the duty of all of us to endeavour to have these matters put right. I believe that the Central Office has been glutted with work, but that a step has been taken quite recently to assist it with new abilities. One of the best officers in the Department over which I formerly presided has gone there, and a number of other officers of the same type, I believe, have also been sent to assist the Department. I hope that the utmost care will be taken to see that these delays do not again occur. If we allow them to continue, we shall utterly kill all enthusiasm on the part of our people. I am grateful to the Minister for the opportunity he has given me to see the papers. The statement I have made to-night will prove that the Minister of Defence was completely misin formed by some one in his Department when ‘ he gave the interview to which I have referred.
– The prices of foodstuffs, particularly in the State of New South Wales, are becoming increasingly urgent. It will be remembered that on the 3rd. June last I submitted to this House a motion proposing that there should be a national stock-taking in respect of foodstuffs, and that the Government should formulate somepolicy of dealing with this question. Following upon that action on my part, I received this letter from the secretary of the Trades Hall Council, Sydney -
Trades Hall, Goulburn-street, Sydney, 1st July, 1915.
Dear Sir, - I have been directed by the above council to draw your attention to the very high prices of foodstuffs at present prevailing in New South Wales, and to request you and your colleagues in the Federal Parliament to use your best endeavours to have the import duty on foodstuffs removed until such time as the production of foodstuffs again reaches the normal level, particularly in those cases where the removal of duties will not cause unemployment of the workers.
At the present time butter and sugar are almost unobtainable, and my Council believes that this shortage might be remedied by the removal of duties on such articles.
Trusting this request will meet with your approval, I am, yours faithfully,
That appeal is made on behalf of something like 150,000 members of unions, representing, in the aggregate, at the very least, 250,000 consumers. Following upon the receipt of this letter, I asked the Prime Minister, on 7th inst., whether the suggested action could be taken, and his answer, as reported in Hansard, page 4635, was -
I know of no method by which revenue can be taken off, and, at the same time, debts paid. I also know of no way of pleasing everybody.
Later on, in the ordinary way of business, I had a conversation with the AttorneyGeneral of New South Wales, who represents in the State Parliament portion of the electorate which I represent in the Federal Parliament, so that we often come into touch with each other. He mentioned that the shortage of butter in New South Wales was becoming a matter of some moment, and that the State Government had decided to import to meet the ascertained shortage. He expressed the desire to know whether the Commonwealth would be prepared to remit the duty of 3d. per lb. on the quantity of butter required to meet this shortage. On the 8th instant I asked the Prime Minister in this House, as reported in Hansard, page 4.715, the following question -
In the event of the Government of New South Wales finding it necessary to import butter to meet an ascertained shortage in the State, will the Commonwealth Government remit the duty on the butter so imported, so that the price of this article may not be unduly increased to the people of New South Wales?
The reply made by the Prime Minister was as follows -
Only one answer can be given to questions like this. As they refer to Tariff matters, our action in regard to them cannot be anticipated.
Unfortunately, the statement has been made that the Tariff is not to be considered at the present time. It seems to be generally agreed on both sides of the House that there shall be no consideration of the Tariff schedule for some considerable time.
– Nor do I; but it seems to be the general feeling on both sides, and I am afraid that my honorable friend and I are in the minority. On the 8th instant - the same day as that on which the question was answered - the Prime Minister, as reported in Hansard, page 4717, made the following statement in this House: -
There is, however, a feeling in the country that, while the Tariff may not be a party matter on either side, the discussion of it may create an atmosphere that would have as bad an effect as bitter party strife. Furthermore, there are circumstances which would make a postponement of the discussion of the Tariff a must valuable consideration.
It would appear from a close examination of this statement that the valuable con- sideration referred to is that the Commonwealth Government desire to take advantage of the revenue coming from the Tariff as it stands. Discussions-in the House show that the feelings of the representatives of the people here are such that the revenue duties would be knocked off and the people would get their foodstuffs cheaper than they are likely to obtain them while the Tariff remains as it is. In that respect I regret that the Parliament has not an opportunity to deal with it. In the Melbourne Age of 21st inst., under the heading of “ Price of Butter,” there appeared the following statement: -
Because the Commonwealth Government have refused to remove the Customs duty on butter, the New South Wales State Government, which is about to become an importer, decided in Cabinet to increase the price of butter by 3d., the amount of the duty. A subsequent Executive meeting was held, fixing the price of butter at1s.10d. per lb.
I wish it to be known that, having received the letter I have quoted from the Labour Council of New South Wales, I brought it forward and asked that the request preferred should be complied with.
I do not agree, and never have agreed, that revenue should be raised by duties on the necessaries of life. I am in favour of the imposition of duties that will keep out foreign manufactures and encourage their production in Australia; but where there is an ascertained shortage of production in Australia - where it is necessary to import sugar, butter, or any other foodstuff which cannot at the time be produced in Australia - then I most emphatically protest against revenue duties being collected on such commodities.
We have placed fodder on the free list during this war because there is a shortage in Australia, and also for the reason that we do not desire to collect revenue from the farmers and the business men of this country who are using fodder.
I hold that in regard to the working classes - the great consumers of butter, sugar, and other necessary commodities - there is no justification for the collection of revenue from them by resorting to a kind of side wind. We do not know exactly what the state of the public finances are; but if their condition is so urgent that it is considered expedient by the Government to impose revenue duties’ upon the necessaries of life for the working classes of this country, then such a course should be taken directly, openly, and clearly, by the express decision of the Commonwealth Parliament. If that were done, although it would not take from the objections of honorable members like myself, it would at least enable the people of Australia to fix the responsibility, and understand the necessity for it.
If the postponement of the Tariff means that there is to be collected a large amount of Customs revenue from the masses of the people in regard to foodstuffs, because of a temporary shortage on account of the war or seasonable conditions, I can only say that I regret very much that sanction is be ing given to the postponement of the consideration of the Tariff.
I have objected to this Parliament being closed until the great issues upon which we were elected are dealt with. In making that protest, and in putting forward this plea, I am sorry to say I have not received any support. But I have played my part, and if this Parliament adjourns without dealing with these matters, then I shall have no responsibility for it. I can only express the hope - and it is almost hoping against hope - that we shall have an early opportunity of considering the position of the people of Australia in regard to their supply of foodstuffs generally.
It has been decided since the date on which I submitted my motion for a national stocktaking that such a stocktaking shall be made. The result has not yet been communicated to the House, and what policy is to follow upon it we cannot say. I trust, however, that these matters will be speedily dealt with, and that we shall be given an opportunity to deal with the issues raised with the best information that we have at our disposal, so that we shall be able to say that, having regard to the powers and opportunities we possess, the very best possible has been done for the people.
.- May I refer to one particular aspect of the question raised by the honorable member for Cook? In regard to butter, Victoria has undoubtedly experienced a worse season than New South Wales; yet there is not the same shortage in Victoria that there is in the other State. Why? Because the Government of New South Wales, in its wisdom, thought fit to fix the price of butter at -a level which did not permit producers to put it upon the market. They could only produce and sell at a loss, and no persons are mad enough to do that. So that the condition of things complained of by the honorable member for Cook has been brought about by the foolish policy of Government inter ference. Practically the same thing has happened in Victoria regarding wheat.
– God only knows what the people would have done had there not been Government interference 1
– Without possessing any knowledge at all, the Government foolishly interfered with the price of wheat, with the result that the persons who otherwise would have imported wheat to meet the Australian demand were afraid to import, lest Government action might land them in a large loss. The consequence was that there did appear to be a shortage of wheat in Australia; yet not till the price of wheat had advanced in all” parts of the world did the Government import supplies, so that the community has had to pay considerably more for its bread . than would have been necessary had there been no Government interference.
– Is that the Liberal Government in Victoria?
– Yes, I am now referring to the Liberal Government of Victoria, which in this regard has been just as mad as the Labour Government of New South Wales.
– They paid more to the farmer of imported wheat than to the local farmer.
– All this goes to show how foolish it is for a Government, which has neither body to be kicked nor soul to be damned, to act in matters it does not understand.Action taken with the object of reducing the cost of living has actually had the effect of increasing it. The price of bags also is important, if only in its bearing upon the price of wheat. A majority of the members of this House are opposed to the retention of the Tariff duty on bags; yet, in spite of that, we cannot get the duty removed. What is to be done? I certainly am of opinion that where a majority of members are in favour of the removal of a certain item in the Tariff, its removal ought to be assured; and in this respect, just as my honorable friend has put forward a plea for the consumer, I submit a plea on behalf of the producer, who must be handled tenderly if maximum production is to be secured and the best interests of the consumer served.
Question resolved in the affirmative.
House adjourned at 10.35 p.m.
Cite as: Australia, House of Representatives, Debates, 22 July 1915, viewed 22 October 2017, <http://historichansard.net/hofreps/1915/19150722_reps_6_78/>.