6th Parliament · 1st Session
Mr. Speaker took the chair at 2.30 p.m., and read prayers.
– Has the PostmasterGeneral come to any decision regarding the employment of girls in the several post-offices in Sydney, on night work ? If not, will he let us know before there is any long adjournment what decision will be come to?
– No decision has yet been arrived at.
Nurses’ Uniforms : Non-paymentof Recruits: Postal Business, Liverpool Camp : Chaplains : Postage of Newspapers: Stoker W. Oakley: Soldiers Missing in Turkey: Payment of Soldiers’ Wivesin England.
– Some days ago Messrs. David Jones and Company wrote to the press a letter in which they stated that theyhad a definite contract with the DefenceDepartment for the supply of nurses’costumes, and that an officer had waited on them in regard to it. Will the Minister for the Navy have all the papers relating to this contract laid on the table?
– If such a contract exists, I shall be pleased to have the papers relating to it laid on the table; but I think thefirm’s statement was that it had a Government contract, not a contract with the Defence Department, and my opinion is that the contract referred to isone with the Government of New South Wales, and relates to the supply of uniforms for State hospitals and other institutions.
– Is the Minister aware that recruits in New South Wales, after they have been passed by the doctor, are vaccinated, and then ordered to return to their homes for fourteen days ?As payment does not commence until a man has been sworn in, many young men who have left their employment in order to enlist are without income during the period of waiting. Will the honorable gentleman, therefore, take into consideration the advisability of paying men from the date on which they are passed by the doctor?
– I have brought the matter under the notice of the Minister of Defence. Personally, I think it is hard that a man who has been accepted and vaccinated should be sent back home and be compelled to lose money while he is waiting to be sworn in. The Minister is considering the matter.
-Is the Postmaster-General aware that at the Liverpool Camp all telegraph business is controlled by an officer of his Department, and postal business by officers of the Defence- Department, and that this arrangement has led to much confusion? Will the honorable gentleman consider the advisability of allowing the officer who now controls the telegraph business to take charge of the postal business also ?
– I shall consult with the Defence authorities, and see what is the best arrangement to make.
– I ask the Prime Minister if there is any Act of Parliament, or any regulation under which the Government is compelled to refer the appointment of chaplains to serve in the ExpeditionaryForces to outside bodies such as the Presbyterian Assembly ?
– I do not know of any such requirement, but I think that the union rule should prevail in regard to churches as well as in regard to other bodies.
– Can the right honorable gentleman say whether the Rev. J. B. Ronald is, or is not, a member of the Presbyterian Church Union ? If so, does the right honorable gentleman believe in. the members of the union persecuting other members?
– I do not believe in persecution. The gentleman referred to is a member of the church to which I belong. He has been a member of this House, and I have a very high opinion of him, notwithstanding all his faults.
– Has the PostmasterGeneral yet arrived at any decision regarding the postage charges on country newspapers sent to the front?
– Australia is a member of the International Convention which governs external postal arrangements, and is the only country allowing bulk postage on newspapers. In respect of newspapers sent out of this country, we have obtained from Great Britain permission to lower the rate of postage from1d. for 8oz. to1d. for 16 oz., but that is the furthest concession that we can get. We are not allowed to send newspapers in bulk through the post to other countries.
– Does that mean that three or four light country newspapers, weighing in all less than 16 oz., may be posted in one wrapper for1d. ?
– No . Separate postage must be paid for each newspaper, but a newspaper not exceeding 16 oz. in weight may be sent for Id.
– On H.M. ship India, which was recently torpedoed and sunk in the North Sea, there was an Australian stoker named W. Oakley. . Will the Defence Department endeavour to ascertain, for the information of the mother, whether this man was drowned or saved?
– I shall endeavour to obtain that information,
– Very little information is received regarding Australians reported as missing at Gallipoli, or in other parts of Turkey, though such persons are believed to have been taken prisoners by the Turks. Will the Minister of Defence endeavour to obtain, through the American Ambassador and the High Commissioner, regular information regarding these persons, so that the fears of parents and others may be allayed ?
– The High Commissioner is in constant correspondence with the Ambassador of the United States of America regarding missing soldiers who may be prisoners of war in Turkey, and forwards the fullest information available concerning them. Directly he obtains information regarding any man, he sends it on, and the names given to him by the United States Ambassador are immediately sent to Australia and published. Everything possible is being done, because we realize the importance of such information to people whose soldier relatives are reported as missing.
– The wife of an Englishman who enlisted in Australia, and is now at the front, finds it necessary to return to her relatives in England. Will the Minister for the Navy state whether she will be able to draw her husband’s pay in England, and, if he dies, receive a pension?
– If the PostmasterGeneral should decide to increase the telephone rates, will he take into consideration those cases in which’ by monetary contributions or otherwise . country subscribers have already placed their lines on a paying basis, and in no such case raise the rate ?
– The matter will receive consideration.
– Does the AttorneyGeneral propose to allow representatives of any of the existing metal companies to become members of the proposed Metal Exchange ?
– It is contemplated that metal brokers, rather than members of metal producing companies, will be members of this Exchange. I should nob like to commit myself to a definite expression of opinion on the point. I do not say that it would be a bad policy to exclude representatives of the metal companies, but there is to be a meeting on Monday of those who have made application for membership, and they may discuss this matter amongst other things. I shall bring the matter before the House so that members may be able to express an opinion upon it.
– Will representatives of the companies be able to attend that meeting ?
– Certainly; if they have made applications, and these have been provisionally accepted.
– By way of personal explanation, I desire to refer to the Hansard report of Friday’s proceedings. When I was addressing the House, on the motion for adjournment, I referred to the disgraceful treatment received by certain recruits who had left Orange, and I asked the Government to establish a recruiting camp in that centre. The Minister for the Navy was present, but the Attorney-General was acting as Prime Minister, and, according to. Hansard, the following discussion took place: -
– Does the honorable member want the thing settled, or does he want to go. on speaking for evert
– I want the thing settled.
– I will settle it if the honorable member will sit down.
– Will the honorable member - guarantee to me that a recruiting camp will bi> established in the township of Orange t
– I will have the matter in”, quired into.
Aa a matter of fact the AttorneyGeneral’s reply was, “Yes, yes.” I desire the answer which he is credited with in ilansard struck out, and the reply which the honorable member actually gave substituted.
– I rise to make a personal explanation. I have already explained to the honorable member, and he knows perfectly well the circumstances under which my reply was given.
– I do not.
– The honorable member does, because I explained them to him yesterday.
– The honorable member’s reply to me was “ Yes, yes.”
– On the motion for adjournment on Friday, the honorable member put to me a question which I did not hear, but I assumed that he asked me if I. would bring the matter under discussion before my colleague the Minister of Defence. What have I to do with district camps in New South Wales? I took the earliest opportunity of correcting the reply I gave owing to a misapprehension, and the honorable member must rest satisfied with that explanation.
– I am quite prepared to accept the explanation given by the AttorneyGeneral ; but I should like to know whether he or anybody else is entitled to alter Hansard?
– No one is entitled to alter Hansard in any way, unless tho matter comes under my notice. If any member has attempted to alter the sense of anything which he may have said, and which is printed in Hansard without my consent, then somebody is to blame.
– Then I ask you, Mr. Speaker, to investigate this particular case, and see if Hansard has been altered.
– I shall inquire into the matter.
– Will the Minister of Trade and Customs communicate with the Government of Queensland with a view to making some arrangement by which the Federal Government will have absolute control of the meat trade of Australia, thus enabling all the States to obtain a sufficient supply of meat at a reasonable price?
– So far as the export trade is concerned, the Imperial Government might with advantage have placed the whole business under the control of one Government instead of dealing with the separate States, but as regards InterState trade, 1 do not admit that the Government of Queensland, or any other State, can hold up meat or any other commodity that is required for consumption or use in other States of the Commonwealth.
– In the absence of the Prime Minister I ask the AttorneyGeneral whether he will furnish the House with a list of Germans and Austrians, including contractors, employed under the Federal Government, such list to show the positions held, and the salaries and emoluments paid ?
– I must ask the honorable member to put that question to the Prime Minister when he is in the Chamber.
– Has the Minister of Trade and Customs taken into consideration the petition presented to Parliament a little while ago from the dairy farmers of Richmond River, in reference to the restraint placed on their trade by the action of the New South Wales Government in preventing exportation to other States? If so, does the Minister propose to take any action against the New South Wales Government in order to settle the question whether that Government has the power to prohibit trade from one State to another ?
– It would be much better if notice were given of questions : of this character, seeing that no Minister can possibly keep fresh in his mind all the documents in his Department. Speaking from memory, however, I believe I referred this matter to the AttorneyGeneral, it being purely a legal one. I suggest that the honorable member for Richmond give notice of his question for Wednesday next.
– On Thursday last the Prime Minister, in reply to the honorable member for Swan, said that a Bill would be introduced in reference to the distribution of the sugar crop. Can the Attorney-General inform the House when such legislation is likely to be introduced ?
– I must not be regarded as committing myself, but I am not sure that this matter requires any Bill - any statutory authority - if no money is to be expended. If, for example, receipts come in and expenditure goes out, and the contra account is such that there is practically no expenditure, I can conceive of no authority being necessary. I must ask the honorable gentleman to allow me to consider this matter from a Constitutional stand-point before I give any definite answer.
– Is the PostmasterGeneral making any arrangements for direct communication between Parliament House and the Defence Department, in order to prevent the delays and annoyance to honorable members, who have really to hustle all day in order to get a connexion ?
– Any one desiring such communication will have to make application.
– During the last few months it has been almost a matter of impossibility to get into telephonic communication with the Defence Department, which, I understand, has only six lines. I ask the Minister to see what he can do in this matter.
– Probably I may be able to settle this question. The matter was brought under my notice by the honorable member for Darling Downs; and, after consultation with the President, arrangements have been made for another line to be established as soon as possible.
– In the absence of the Prime Minister, I desire to ask the At torney-General whether the Government have in contemplation any comprehensive scheme for reducing the cost of carrying on the government of the country in view of the enormous expenditure caused by the war ?
– I should be glad if the honorable member would direct that question to the Treasurer.
Motion (by Mr. Hughes) agreed to -
That leave be given to bring in aBill for an Act to amend the Commonwealth Conciliation and Arbitration Act 1904-1914.
Motion (by Mr. Hughes, for Mr. Fisher) agreed to -
That leave be given to bring in a Bill for an Act to amend the Commonwealth Public Service Act 1902-1913.
Bill presented by Mr. Hughes, and read a first time.
The following papers were presented : -
Public Service Act -
Promotion of V. E. Butler, as Manager, 1st Class, Electrical Engineer’s Branch (Telephones), New South Wales.
Australian Contingents - Correspondence re Undertaking by Commonwealth Government to bear the whole Cost.
War Census Act - Regulation (Provisional) -Statutory Rules 1915, No. 138.
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 -
– The Minister is of opinion that the information could more readily be obtained from the Rev. J. B. Ronald.
asked the Minister for the Navy, upon notice -
– The answers to the honorable member’s questions are -
asked the Attorney-General, upon notice -
– The answers to the honorable member’s questions are -
asked the Minister of Trade and Customs, upon notice -
Has his attention been called to a cable appearing in last Monday’s newspapers to the effect that the American Beef Trust has completed arrangements with the other meat works in the Argentine for the purpose of forming a meat combine of all the works in that country, and is he of opinion that the same thing may be taking place in Australia; and, if so, has he any power of preventing the Beef Trust now operating in Australia from obtaining absolute control of the whole of our meat supplies ?
– Yes; the operations of American meat companies are being watched, but, so far, there is no evidence of such a combination in Australia as that reported to have been effected in South America.
In Committee of Supply: Debate resumed from 12th August (vide page 5718), on motion by Mr. Fisher -
That a sum not exceeding £16,195,469 be granted to His Majesty for or towards defraying the services of the year ending 30th June, 1916.
– I desire for the benefit of honorable members, and in order that there shall be no misunderstanding, to inform the Committee that in the Income Tax Bill, paragraph a of the second schedule should read -
I desire also, to supply a table whichI had promised to have prepared showing the income tax payable by a resident of the United Kingdom as compared with that payable by a resident of New South Wales under both the proposed Commonwealth income tax and the income tax as existing in the State of New South Wales to-day. A similar comparison is shown in regard to a taxpayer of the
State of Victoria. I wish to make a further correction. In the table which I quoted yesterday setting forth the amount payable and the rates at the different points, my staff, including the Statistician, made some slight errors, which, however, were not material, and did not vitiate the calculations arrived at. I am having the necessary corrections made, and as soon as the amended table is available it will be distributed among honorable members. The tables which I have with me show clearly the position of the taxpayer under the Income Tax Bill, and I shall read them for the benefit of honorable members in order that they may realize what that position is compared with the position of the taxpayer in Great Britain. They are as follow : -
On a taxable amount of income of £300, the resident of the United Kingdom pays £22 10s., and the resident of New South Wales, under the proposed Commonwealth tax and under the existing State tax, will pay £15 3s. Id. On £500 the resident of the United Kingdom will pay £37 10s. ; the resident of New South Wales, £26 16s. 5d. On £1,000 the resident of the United Kingdom will pay £75, and the resident of New South Wales, £62 14s. 2d. On £1,500 the resident of the United Kingdom will pay £131 5s., and the resident of New South Wales £107 4s. 7d. On £2,000 the resident of the United Kingdom will pay £200, and the resident of New South Wales £160 16s. 8d. On £2,500 the resident of the United Kingdom will pay £291 3s. 4d., and the resident of New South Wales £2231s. 5d. On £3,000 the resident of the United Kingdom will pay £375, and the resident of New South Wales £294 7s. 6d. And so the table goes on. It is not until the £8,000 margin has been reached that the double tax, which will be imposed on the taxpayer of New South Wales, will be as heavy as the tax that is now imposed in Great Britain.
– Does your table include the double tax in Great Britain; that is, the income tax with the super tax ?
– Yes, but I think that the super tax does not operate in Great Britain until the £3,000 margin has been reached, and then goes back to £2,500. The effect in regard to the earlier part of the table which I have quoted is that the proposed Commonwealth tax with the heaviest State income tax in Australia ranges to 33 per cent. lighter than the tax which is paid in England.
– Has the Minister a comparative statement showing where income is derived from land in Great Britain and here, and, including the land tax paid here with the income tax, giving a comparative statement of the taxation here and in Great Britain ?
– No; from general statements made in the British Parliament it is not possible to say how the distinction between revenue derived from agricultural land and revenue derived from any other form of land is made. It is impossible for us to differentiate in such a way as to give the return for which the honorable member asks. It is with great difficulty that we have been able to say what the effect upon taxation of Lloyd George’s last Budget was. I put the table before honorable members because it gives them a clearer idea than anything I can say as to the position of the taxpayer of the Commonwealth as compared with that of the taxpayer of Great Britain at the time of this war.
– One or two members of the Committee having spoken to me in regard to my interpretation of one of the Standing Orders for the guidance of proceedings in Committee, I wish to say that we are now dealing with the question of Supply, and, strictly interpreting the rules of procedure, the statement made by the Treasurer the other day concerning the finances was not a Financial Statement. However, I have no desire to restrict honorable members as to the length of their speeches to the ordinary rule governing speeches on Supply. I recognise the magnitude of the question now before the Committee, and believing that the fullest liberty should be allowed to honorable members, I propose, with the consent of the Committee, to treat the statement of the Treasurer as a Financial Statement, and to allow every honorable member who desires to address the Chair the full measure of time - that is, 1 hour 35 minutes.
.- There will, I think, be very general agreement with your ruling, sir, for assuredly the statement made by the Prime Minister last week is in scale and proportion high above every other financial statement ever made in any Parliament in Australia. We are making history in many ways. Our soldiers have written their names imperishably upon the scroll of fame, and we have entered into a place in the councils of the nations of the world which is very different from our position of the past. Not only have we taken a higher, larger, and more important place in our military setting in the world, but we have succeeded by the same token to a larger place in its financial and governing institutions. One has only to reflect that our expenditure this year - Federal and State - amounts to over £150,000,000 sterling, collected from 5,000,000 people, to realize how enormously important the question of finance has already become to us. In addition, we shall have at the end of the year £460,000,000 of public debts. I include in those towering figures all our outgoings. I include services in them, and even the figures for services need close and earnest criticism and investigation, because they represent the cost of the functions of government.
– How do you make up the sum of £150,000,000 ?
– Our total outgoings for the year are estimated by the Prime Minister at £77,000,000. Mr. Knibbs’ book for 1913-14 shows that the total outgoings of the States were £46,500,000 for ordinary purposes of government. I put upon that amount a pro rata increase, and add £24,000,000 of loans which the States expended last year. I arrive in that way at a total of £151,000,000 or £152,000,000, and was, therefore, quite within the mark in saying what I did. An added obligation is laid upon us to investigate the accounts, and while we pay with the greatest possible pleasure the cost of our war obligations, and, indeed, of our ordinary obligations, we are under an added duty to see that no money that can be saved is wasted.
I rise to criticise the Estimates submitted by the Prime Minister in that spirit, and in no other. We have no right to offer any carping criticism at a time like this, but we are under a special obligation to examine the Estimates to see that no money is being wasted, in view of our large obligations on account of the war. Whatever we have to say in that respect will, I hope, be taken in the spirit in which it is intended, and not as uttered for any party purposes. We must not only criticise destructively - that is only incidental to the main ‘ objective - but we should criticise with a view to help the Prime Minister to finance his fearful obligations, and to see that money does not run to waste. I hope to point out several ways in which large savings can be made. It is of no use to indulge in general criticism unless wo are able to put our finger on the weak spot and say whether there has been extravagance or not. Now, the Prime Minister estimates the income for the year from Customs and Excise at £15,000,000, an average of, roughly, £3 per head of the population, I suppose the largest revenue obtained from Customs and Excise in the world
– New Zealand is about as high, and generally a shade higher.
– I know of no other country that comes anywhere near the totality of our collections from Customs and Excise alone. So far as direct taxation is concerned, £1,766,000. is set down for land tax. That, I think, is a very great under-estimate, or there is something wrong with the last increase of the tax. I cannot believe that one and three-quarter millions is all that the revised tax will yield. From probate £687,000 is expected, and from the income tax, £4,000,000; so that we antici pate receiving £15,000,000 from Customs and Excise, and £6,453,000 from direct taxation. That, I think, is an underestimate. I believe the income tax and the land tax will yield more, and I certainly think the probate and succession duties will yield more. Whoever has submitted these Estimates has, in my opinion, greatly under-estimated them. Our total income, according to the Prime Minister, is to be £77,000,000, and the expenditure is to be a like amount, made up as follows: - Ordinary services, £18,266,000; payments to States, £6,200,000- which will be £73,000 less than last year, and none of us will like that reduction, for it indicates a less population, which means a serious outlook for Australia; - new works, £3,827,000; ordinary loans, £3,000,000; and special war expenditure, £45,750,000.
There is an increase in the ordinary services of government of a very large amount, irrespective of the war. Altogether, we are budgeting this year, to be paid for out of ordinary revenues, no less than £28,293,000- a tremendous increase. To meet this we estimate a revenue of £23,540,000, showing a difference between ordinary income and ordinary outgoings of £4,753,000.
– That includes works 1
– Yes, all outgoings from revenue. My point is that the £4,000,000 extra income tax proposed to be collected is more than needed, not for war purposes, but to meet the deficit between ordinary income and ordinary expenditure, although the Attorney-General last night emphasized the fact that the Income Tax Bill was essentially a war measure. If it be such, the money ought to be specially allocated to war purposes, but there is no special allocation of the kind made or contemplated, so far as we know. The whole of the proceeds are lumped with the ordinary revenue. Notwithstanding the extra land and probate taxation of last year, over £4,000,000 additional revenue is needed this year to meet ordinary expenditure. One marvels that more care has not been taken in the preparation of the Estimates to keep separate and distinct war and ordinary expenditure ; but I have taken the trouble to separate for myself the items coming under these two headings, and propose to give the result to the Committee. The expenditure for the current financial year is estimated to be £28,293,629, and the revenue will be £23,540,000, the difference between the two amounts being about £4,750,000. The Prime Minister has explained that special appropriations will have to be made to provide interest and sinking fund iu connexion with the war loan, and that another special appropriation of £500,000 will be needed to provide war pensions. Those are obligations which arise out of the war, and, therefore, must fairly be deducted from this difference of £4,750,000; bub there still remains, roughly, £3,000,000. Therefore, our first duty should be to ascertain what the excess expenditure is, and to see whether some of it cannot be prevented.
There is an increase for ordinary services of, roughly, £2,750,000. Comparing the estimate for this year with the estimate for last year, there is an increase of £34,000,000 in war expenditure, and of £821,000 in loan expenditure. But if we compare the actual outgoings of last year with the estimated expenditure this year, we will find that, whereas last year we spent on the ordinary services of government £20,585,000, it is proposed to spend on them this year £24,466,000; that whereas last year we spent upon new works £2,670,000 out of revenue, it is proposed this year to spend £3,827,000 out of revenue. In other words, our outgoings from ordinary revenue last year were £23,255,000, and are to be this year £28,293,000. As to ordinary loan expenditure, last year it was £2,178,000, and this year it is to lie £3,000,000. Thus, leaving out of account the war expenditure, our outgoings last year were £25,434,000, and this year are to be £31,293,000. This is a state of things which should make one pause. For war purposes, honorable members are prepared to vote anything that the Government like to ask for. That, T believe, is the position of every member of the Committee. There can be, and ought to be, no stint in war expenditure. The only care should be that the money is spent reasonably, with a view to insuring efficiency. The increases of which I complain do not relate to war expenditure, but are connected’ with the ordinary expenditure of government, and we should ascertain the cause of them. The estimated increase in ordinary expenditure is £3,881,000; in new works expenditure, £1,157,000; and in loan expenditure, £821,000; or altogether an increase in respect of the ordinary services of the Government of £5,859,000.
The great need of the moment, in my judgment, is economy. “ The accumulations of peace,” it has been said, “ are the sinews of war,” but, unfortunately, this war has come upon us after many years of spendthrift finance in both the Federal and State arenas. That makes the need and obligations of the moment all the greater. We might, in the first instance, look in the direction of the Post Office for a chance to save money. We might, also, look at some of the proposed expenditure on Naval Bases to see if something cannot be postponed. We should have regard, likewise, to the expenditure on the Federal Capital, as well as to that on the Small Arms Factory, the proposals for expenditure in the Northern Territory, the referendum, and the war census. I find that the increased expenditure on the Post Office this year is to be £482,000. In addition, it is proposed to spend £201,000 more on new postal works than we spent last year, making the total increase of expenditure on the Post Office £683,000 out of revenue. The total increase of revenue from the Post Office is set down at £108,000, which means that an addition of £575,000 to the chronic deficit is to be incurred by the Post Office this year, to be added to those of previous years. Then there is to be an increase of £300,000 in ordinary loan expenditure for the building of conduits, the purchase of sites, and so on. Thus the Post Office is going, tq cost us in all £875,000 more this year than it cost last, and is going to return us only £108,000 more this year than it returned last year. If that is the only result of Mr. Anderson’s investigation, and of the. attempt to put things on a business basis, it. is. a very poor one, and there is need for special and particular investigation into the matter.
– Expenditure on works may be capital expenditure, though made out of revenue.
– I have always stated that capital expenditure should be made with capital funds, and not be. taken out of revenue.
– Even admitting that, it must be acknowledged that money spent on capital improvements is not an increase of the annual expenditure.
– The capital expenditure on the Post Office, which is being made from revenue, is increasing each year. I am not discussing now whether that expenditure is right or wrong per se. Surely, if we increase our expenditure we ought to get a return in increased revenue, but this Department goes on accumulating losses year after year, and there seems to be no end to them. If we allow this to continue it will be the ruin of our finance.
– We have the cheapest postal, telegraphic and telephonic services in the world.
– The interjection is quite irrelevant. When the right honorable gentleman appointed Mr. Anderson to make an investigation of the affairs of the Department, he anticipated some improvement of its financial condition, but I now point out that this year he proposes to increase the ordinary expenditure of the Department by nearly £500,000 to obtain an increase in revenue of only £108,000. That is not business, whatever else it may be.
In regard to special appropriations, there is an increase of £1,294,000, which, as the Treasurer has explained, is to provide interest and sinking fund in connexion with the war loan. Other increases are: Invalid and old-age pensions, £145,682; maternity allowances, £55,725 ; Parliament, £3.709; Treasury, £8,000; war pensions, £500,000’; Attorney-General, £7,278; Navy. £49,155; military. £1,136,664- this has nothing to do with the war; it is for the ordinary administrative services of the Department - and Customs, £108,821.
– We get an increased income greater than that amount.
– The income is not shown in these figures.
– Yes; £120,000 is shown for light dues.
– The right honorable gentleman has not looked at the statement.
– I have looked at the statement at least as much as the right honorable gentleman. That is the only claim I will lodge in connexion with it. The Home Affairs Department shows an increase of £117,614, and the PostmasterGeneral’s Department, £482,683. There are a few savings, but they leave the increases as I have indicated. There are also increases in new works, which, of course, are paid for out of revenue. In the Defence Lands Purchase vote there is an increase of £31,769; Home Affairs, £26,620; Postmaster-General. £201,020; Defence works, £814,209; Navy, £18,916; and lighthouses, £71,976. Adding that last item to the other increase of £108,000 in the Customs Department, we arrive at a total increase of £179,000 in the expenditure of that Department to off-set the anticipated increased income of £120,000 on account of light dues. All I am pleading for is that these services shall be placed on a reasonable business footing. In the ordinary loan expenditure there are these increases: - Purchase of land in the Federal Terri. tory, £13,000; Commonwealth building in London, £11,500; redemption of Northern Territory loans, £383,000; Pine Creek railway, £200,000; construction of conduits, £260,000.
– That expenditure is badly needed.
– The Government cannot spend that money this year if they try. Were we not told last year by the Minister of Home Affairs that we did not know what we were talking about when we said that the votes would not be spent? And yet the year closed with about £800.000 of the votes unexpended. Why do the Government inflate the Estimates ‘in this way when they should know that they cannot expend the money? It is an insult to the House, and a wrong to the country, to inflate the Estimates, and make them the basis of increased taxation.” For post-office sites £50,000 has been set down. In enumerating all these items I enumerate also possible oppor- tunities for saving. Will anybody tell me that there is any overpowering necessity for spending £50,000 on post-office sites during this year of war? Surely these things could wait awhile. What we must consider is not whether it would be advisable to spend this money, but whether we can spare it, having regard to our immense outgoings in connexion with the war. The one item in regard to which there is to be decreased expenditure is the Kalgoorlie-Port Augusta railway. The honorable member for Capricornia will take some comfort from the fact that the vote for that work shows a decrease of £50,000 as compared with last year. I find that on the vote for ordinary services last year we saved no less a sum than £1,109,279. and on new works, £1,533,631.
– What do you mean when you say that we saved that money?
– We did not spend, it. But the Government told us time and again that they were going to spend all of the money voted, and more. Nobody will blame the Government for not trying to do their best. They spent as fast as they could, but no Government can undertake to spend all’ the money that is voted year after year in this House. It is not possible to do so, having regard to the ramifications of this wide and extended continent. The Government may spend, as hard as they are able to do, and yet they will not spend within many hundreds of thousands of pounds the whole of the amount Parliament may vote; and last year, in spite of the fact that the Treasurer was doing his best to push on with the expenditure of money, he expended less than the votes for works by £1,500,000. That is to say, that the Government expended on ordinary services and new works last year £2,742,910 less than Parliament voted. My deduction from that fact is this: If the Government saved two and three-quarter millions last year out of the ordinary votes, they could save a like amount this year if they tried. I know of no disturbing factors which intrude themselves into this consideration this year, and if last year, with all the disturbance caused by the war, the Government were still able to save two and three-quarter millions out of the ordinary vote, they are not justified in inflating the Estimates before us to the extent they have done, particularly when they are asking Parliament to vote increased heavy taxation.
When I look at the Estimates, it seems clear th&u the Government can save at least £1,000,000 on ordinary services, having regard to the fact that they saved £1,109,279 last year, and another £1,000,000 out of new works, on which they javed £1,533,P31 last year. Another £1,000,000 could easily be saved out of the Estimates in one or two ways. First of all, there is the expenditure on the Federal Capital. A Bill was prepared long ago, and is to be found in the Department, for the creation of a Trust to independently administer the Federal Territory.
– Do you think that will result in a saving ?
– Not only will it effect a saving, but until such a Trust is created we shall have no real responsibility there. We ought not to be building the Federal Capital out of ordinary revenue. Until the Government create that Trust, with independent borrowing powers and responsibility, so that it may aim at reaching a stage when it will recoup itself for the outlay, they cannot be said to be doing their duty. This reform is long overdue, and the Government should relieve the ordinary revenues of an expenditure of more than £200,000 a year in connexion with t’he Federal Capital alone. The same reasoning applies to the Northtern Territory. This year, the Government propose to spend there over £600,000 from revenue, and an additional £200,000 upon the Pine Creek railway. That makes a proposed total expenditure of £800,000 in the Northern Territory for the current year, and the Government anticipate a return of about £40,000.
– You will admit that the railway will open up the country.
– I hope it will. Something must be done to open it up ; we cannot continue spending £600,000 annually in that Territory unless there is a prospect of getting some return.
– Your party entered into the bargain.
– Has the Primo Minister carried it out?
– Your party made the agreement.
– As the right honorable member said he would have done. We have a common responsibility in regard to the Territory.
– I was never in favour of the terms of that agreement.
– Does the right honorable gentleman intend to repudiate that agreement with South Australia ? We are now told by the Prime Minister that he was never ‘in favour of the agreement.
– It was submitted to the House by his own Minister.
– I ask the right honorable gentleman if his view is that of his party? If so, he has managed to conceal it for many years.
– It was a clumsy political agreement.
– It was submitted to the House by a Labour Ministry.
– We always carry out any agreements made by any Government.
– I tell the Prime Minister that I, too, always thought that the agreement was liberal to South Australia.
– South Australia carried the burden of Australia for thirty years.
– And then handed every penny of the burden over to the Commonwealth.
Mr. ARCHIBALD. But for the action of South Australia the Territory would have been handed to a Trust sanctioned by the Imperial Government, and that is what .your party wanted to do.
– South Australia sold the Territory to a man when he was drunk and not looking.
– In answer to the Minister of Home Affairs, I say that whatever the Liberal party did or wanted to do, we were more liberal to South Australia than the honorable gentleman’s own Leader says he would have been. The honorable member may deliver a tirade at the Prime Minister, but not at us.
– South Australia kept the Territory free from coloured labour.
– Our total taxation is extremely high, and is becoming higher the whole time. That is a feature of our Australian Government, as, perhaps, it is a feature of all Governments throughout the world in these modern days. But I fancy we hold an easy first place in every country so far as the increased cost of government is concerned; and by this I mean the increased cost pur capita and not in the bulk. Our Customs revenue, for instance, is £15,000,000, or £3 per head, while the direct taxation budgeted is £7,000,000, or £22,000,000 altogether, meaning £4 10s. per head. Then we have to add to this 30s. per head “for State direct taxation, giving a total taxation of about £6 per head.
– The State direct taxation does not average 30s. per head over the whole.
– I think it does. The figures I saw in Knibbs two years ago indicated £6,300,000, and since then over £1,000)000 has been added by Mr. Holman.
– But some of that is represented by railway rates.
– None of it.
– Some of the extra taxation is by railway rates.
– I am talking of income tax, stamp tax, and that kind of thing, which mean an increase of over £1,000,000, besides the increase in railway rates and so forth. I think I am within the mark, and very much within the mark, in saying that to-day the total direct taxation is very little short of £15,000,000, or, with Customs, as nearly £6 per head as is possible. The AttorneyGeneral last night was very interesting when he made it appear that we were more lightly taxed than the British people at Home. But the honorable gentleman took in all local and municipal taxing, which, I venture to say. vitiated the comparison entirely. Local and municipal taxation is imposed for services rendered, and we are supposed to get in return every fraction of benefit. We must, therefore, leave all that taxation out if we are to make the comparison fair.
– We must put in both if we are to make the comparison fair. Municipalities in England do certain work that the State Governments do here. For instance, the educational votes are very Targe in the Old Country.
– I do not think that the local rates are debited very highly now for educational purposes.
– In certain cases they are.
– I know £hat the outgoings of the Imperial Exchequer for education have more than doubled during the last few years. I am taking the outgoings of the Imperial Exchequer and comparing them with the outgoings of the States and Commonwealth here. If we take in all the local services we shall have to exclude a lot* of our services from the State arena, and class them with local services. We here do infinitely more directly for the people than do the Imperial Government; and so I come back to the only fair comparison.
This year at Home they are budgeting for a total taxation of £270,000,000.
– Last year’s Budget “was £200,000,000.
– Yes; £60,000,000 or £70,000,000 has been added; and that taxation gives as nearly as possible £6 per head over a population of 46,000,000 or 47,000,000. The taxation of £6 per head is just about the same as our own ; but we must remember the difference between their condition and ours. At Home they have an old war debt which costs them nearly £30,000,000 per annum for interest and charges, and there are all the other Imperial outgoings, considerable in amount, which we do not have to budget for here. Then, again, I find that the total expenditure on the war at Home is estimated this year at £1,173,000:000 as against our £77,000,000 ; in other words, their revenue is not a fourth of their total outgoings, while our revenue is nearly a third of our outgoings, showing that at Home they have greater obligations than we have to meet with their limited revenue. Either, therefore, we are raising a generous and large amount over and above what we need from revenue, or they are not raising sufficient at the other side of the world. My own opinion is that we are raising at least a sufficient amount here, and I think they are doing all they can at Home. But they have their war expenditure this year, to say nothing of the debt with which they set out - a debt incurred on account of these territories .as much as for themselves, and carried from time immemorial without asking us for 6d. - and in spite of that debt they are spending, say, twenty or thirty times as much in connexion with the war as we are. Therefore, the parallel sought to be set up last night by the Attorney-General fails at every point. Our outgoings are not nearly what theirs are, and our taxation is equal to theirs.
M-r. Sampson. - As a matter of fact, their war debt will be more than twice as much per head as oura will be.
– And yet our taxation at the moment is at least equal to theirs per head.
– Is this comparison between the cost per unit?
– Yes; but it should be in our favour if anything, because they have all the other Imperial obligations to finance, to say nothing of the wax debt. If all were included the comparison ought to be easily against Australia as far as high taxation is concerned.
– Query !
– I am giving my own opinion.
– They are spending £3,000,000 a day, whereas we are spending £1,000,000 a week, or £21,000,000 as against our £1,000,000, and the comparison is against us, of course.
– Much against us.
But, after all, it is not so much a question of the amount we are levying as the way it is laid on the people of the country, and of what the expenditure is for. That is the crucial inquiry that we ought to, and must, make into all these outgoings. At Home there is a huge war debt, whereas we have none ; and, moreover, I point out the difference that the last increment of taxation there is, I understand, for purely war purposes - in liquidation of their war obligations - while ours, as I have shown, will more than all be needed for the liquidation of our ordinary outgoings and ordinary services. Taxation is a necessity in these days, and so is borrowing. The war has to be paid for, both in money and, unfortunately, in life. The phrase, “The last man and the last shilling “ is no mere rhetoric; and all of us agree that we must provide the whole amount requisite, always taking care that the taxation is fair all round, and bears equitably on the people of the country. I remember reading the other day of a gentleman in a responsible position in labour circles in Ballarat who gave utterance to the statement that, inasmuch as men are sacrificing their lives for their country, the wealthy should resign all their wealth freely for the conduct of the war. That seems to me to be an attack on capital, and not to indicate a legitimate use of it. I agree that capital and vested interests must be wrought upon severely, if necessary, for the purpose of financing this great war.
– Who would carry on the industries to produce the wealth to carry on the war if that were done?
– Perhaps it is just as well to say that this war of all wars is not a capitalists’ war. Is it not absurd to speak of any war as a capitalists’ war? Capitalists do not like wars. Of all others it does not suit them. War wastes capital; and if there be one man in this community, or any other, who is shy of war, and the dislocation and penalties it imposes, it is the capitalist, who is seeking wise and safe investment for his money.
– Do you not think that the German capitalist has something to do with this war?
– I do not. I do not believe that the great body of people in Germany would continue a world-wide war, with everything at stake, for the sake of all the capitalists in Germany. The German people to-day are cordially in favour of this war - that is, according to all my reading. In these modern days a great war cannot be conducted that is engineered by a few people. We must realize that the people of Germany are behind this war, or it would not be waged for two days.
The interesting question arises as to what are fair principles of taxation as applied to war; this is the pertinent inquiry in connexion with these outgoings. I have tried to put together in a very brief space some of the principles which I think ought to be applied in war taxation. First of all, standing out above and beyond all others, is the principle that this taxation should be spread over the future as well as the present. We are fighting for the integrity of this country, not to possess it in our life-time alone, but to hand it on intact and secure to those who come after us. It is to the interests of posterity that we should spend this money, as well as it is to our own interest; and posterity, therefore, should bear some of the burden, while we take our own rightful share in our day and generation.
Then, again, this taxation should fall on all alike equitably as far as is possible, and there should be few exemptions, and no excessive graduations. It should be laid equitably over as wide an area as possible, so as to make all alike share the expense and sacrifice. I have only one word to say about the proposed exemp tion of £156. While this may be reasonable enough in the case of a married man, it is grossly unfair and unjust to exempt from taxation a single man with £156 a year. Such a single man is better able to pay the taxation than are many married men with four times the income; and the exemption, to my mind, in the case of single men, is unfair to the other taxpayers of the community.
– The trouble is the collection of the tax.
– There will be no trouble in collecting it.
– I am inclined to think that the honorable member for Oxley and I are getting to common ground at last. His idea of a tax on bachelors appears to have something in it as applied to this war taxation and the exemptions under it.
Our taxation should not deplete our national resources any more than is unavoidable. I was glad to hear the economics enunciated last night by the Attorney-General. I rubbed my eyes when 1 heard him quoting all the good old Conservative economic tenets which he has repudiated on almost every platform in the country, but on which he now finds himself in the stress of war compelled to fall back, as on a Rock of Ages. Listen to some of them : “Productivity, depends on the amount of capital available for investment.” The capitalist is not the enemy of labour after all, as we have all been imagining so long, because the Attorney-General says that the whole productivity of the country depends upon the same capitalist and the amount and quality of his investments in the industrial life of the community. Another excellent sentiment that I was glad to hear from the Attorney-General was: “ If you tax wealth in industry you diminish the production of the country.” I have heard it often said that labour was the basis of all successful industry and the real wealth of the country, but now the Attorney-General says that that idea is all wrong, that we cannot do without wealth, that we must have it pressed into the industrial enterprises of the country, and that if we diminish the one we diminish the total product of the other, increase the cost, and, therefore, make the worker very much poorer. Then the Attorney-General went on to tell us what was the proportion of capital in industry. He told us that 50 per cent, of it was in companies, and that the taxation of companies retards production. What are these companies? Sugar companies, shipping companies, coal companies, tobacco companies, flour companies, timber companies. Taxing these companies, says the AttorneyGeneral, retards production, and does an injustice to the shareholders who have their money invested in them.
– Does the right honorable gentleman believe in that principle?
– I am commending the Attorney-General for his sensible economics. I am glad to see that in this time of war he is taking his old principles out of the shop window for the time being. I suppose that when he goes on the platform he will bring them all back again, but in the meantime he has put them all away, and at the table of the House he has enunciated tenets that honorable members of the Opposition, for years upon years, have been advocating and defending and explaining to the people of this country.
– What taxation would you impose in lieu of this “ dreadful “ income tax?
– I have not said that I would substitute anything, nor have I called it a “ dreadful “ income tax. I am nob arguing against an income tax. I hope that nothing I have said to-day can be taken to express any dissent from the principle of direct taxation for war purposes. Indeed, I know of no other tax so appropriate for the expenditures on war as that drawn from the invested wealth and incomes of the community. I am merely trying to lay down the principle that in imposing this taxation and collecting it we should take care not to deplete unduly the national resources, the capital stock of the country ; for this reason : The nation lives from hand to mouth as a rule. We have no great stores of wealth. We consume them as we proceed, and in the literal sense of the words we live from hand to mouth. Therefore, our sources of reproduction should not be jeopardized by taxation or in any other way. In other words, we should not kill the “ goose that lays the golden egg.” Here I point out that we are trenching upon ground that is very delicate, and we need to walk very warily upon it. For instance, the loan that we propose to extract from the community will be taken largely from the industries of the community.
In spite of what the AttorneyGeneral tried to make out last night, the war loan will be taken from the working capital of Australia. We have in Australia no huge reservoirs of national invested wealth. Most of our wealth is our working capital. Our working capital and our savings are the main sources from which we may extract all this taxation and all this borrowing. Clearly, therefore, the £20,000,000 of borrowing in which we are about to indulge withdraws so much working capital from the industries of Australia, and we should not tax away more than we can help our resources in this respect, nor to such an extent as to drive capital away to countries where it is not taxed so heavily.
– I should like the right honorable gentleman to name one.
– Canada and the United States of America are examples, but there are scores of countries. My honorable friend had better peruse his recent taxation history. He will find that Australia is no longer the lightest taxed country in the world ; it is one of the heaviest taxed countries today.
Another principle of taxation as applied to the war should be that we should not tax to such an extent as to compel unduly the passing on of the tax to other sections of the community. This taxation can, and will, be passed on.
– Is there any form of taxation that cannot be passed on ?
– I confess that I do not know of any, except those that fall on the primary producers in the interior. The primary producer cannot regulate his prices. The industrial manufacturer can, and does, pass on the taxation. The primary producer cannot. Upon this point let me quote a sound economist and an able man. A little while ago, Mr. Asquith, discussing this question, said, in regard to the increase of the income tax, which he was defending at the time -
I do not hesitate to associate myself with the declaration of more than one of my predecessors that an income tax at the uniform rate of ls. in the £1 at a time of peace is impossible to justify. It is a burden on the trade of the country, which, in the long run, affects not only profits but wages.
This tax must be passed on if it becomes too heavy and too sectionalized in its imposition. That it is passed on can be demonstrated very readily. If we put the tax on the banks, it goes on to their debit side of the ledger, and is one of the costs of the banking establishment. If we put it on the capitalist it goes on to the price. All increases in the cost of production express themselves ultimately in the price of the commodity, which is the final product of the industry. The only other alternative is unemployment. Either the tax must be passed on or there must be less employment. These things must shape themselves to equation in the industrial ramifications of the country. That, I think, is a fundamental law which cannot -be controverted. The same thing applies on the other side. If we tax the working man unduly, he requires more wages to bear the weight of the tax. What is the plaint now being made to the Arbitration Court constantly? It is that the cost of living is towering up. The cost of living is affected very sensibly by the taxation of the people of the country.
– Not at the present time.
– It is a very big factor.
– Does the right honorable gentleman say that the drought lias not made its effect felt?
– It has. I do not suggest that the cost of living is due to the taxation of the people of the country. I say that this is one of the factors which enters into the increased cost of living. Every increase obtained from the Arbitration Court is immediately passed on to the prices of commodities. If we increase the cost of a man’s living, we reduce the value of his wages. That is an old doctrine, which was emphasized ages ago. Adam Smith pointed out that the price of labour was regulated in two ways - firstly, by the demand for the labour - over and above a minimum wage, if we are to modernize that precept today; and, secondly, by the cost of provisions - or, in our modern language, by the cost of living. If we tax labour so that the worker must get higher wages, and if we tax the capitalist so that he’ must get more for his produce, we set up a vicious cycle; and the only people whocannot pass on the tax are the primary producers.
– Do you think that the whole of the revenue to be raised by thistax will be passed on ?
– Not the whole of it, but a great portion of it will be.
– The right honorable gentleman will not be able to pass on the £10 that he will pay.
– Honorable members belong to the category of those who cannot pass on the tax. I hope I have made my point sufficiently clear that, in these days of Arbitration Courts and such like things, and the higgling of the market by means of corporations and companies, it is impossible for one, over a given amount of time, to get very much advantage over the other. They consider the matter between them, after they have done all their higgling and passing on and manipulation, so that it all comes back to this : Where there is any national obligation to be met, both sides had better agree together to get fairly under the burden in proportion as each can bear it.
– The argument of the right honorable gentleman amounts to this - that the poor man must pay, because he cannot get out of it, and, therefor©, he may as well pay graciously.
– I thought that I had made my own deduction in my own way. The honorable member may make his in his own. way if he chooses. Does he think that this tax cannot be passed on?
– Unfortunately, I feel that it can and will be passed on, as the right honorable gentleman says.
– Then should not we all try to suggest some way which will make the passing on unnecessary, and under which each will get under the burden in proportion to his ability to bear it? First of all, we should tax moderately, widely, and wisely, spreading the tax over as wide an area as possible, and thus getting a better chance of collecting it all without any manipulation. We should tax all that we can tax for war purposes, and make the burden as light as possible for all.
– Do you believe in the £156 exemption?
-I do not believe in the exemption of the single men. A man with £156 a year and no obligation but to keep himself, is better able to pay taxation than men who axe married, and who have £300 or £400 a year. Are there anywhere taxes of this kind which fall lightly, wisely, and equitably over the whole range? I think some have just been imposed in Canada. The stamp taxes in that country are admirable for the purpose. Any one posting a letter there puts on it the ordinary1d. stamp andaspecial war stamp. Who objects to that?
– I do.
– Then the right honorable member would object to anything.
– It is a tinkering way of trying to raise war funds.
– I suppose the right honorable gentleman objects to taxation of that kind because he cannot humbug the people on the platforms with it. They know what they pay, and the extent of the tax. One advantage, which I am sorry does not appeal to the right honorable gentleman, is that it costs nothing additional to collect. For all these reasons I suppose it does not appeal to my right honorable friend.
– Canada put a tax on tea; do you suggest doing that here?
– A tax on tea in war time is to be defended. I cannot understand any man objecting to pay an extra tax of 2d. or 3d. per pound on his tea in war time. These are exceptional days of burdens.
– Do not forget the present high cost of living.
– I know the present high cost of living and my argument this afternoon has failed if it has not suggested a better way of lightening the cost of living, and preventing it from going higher than it is now. If the Government impose sectional taxes, grading them so that they become burdensome upon the capital of the community, which is nearly all in companies, as the Attorney-General told us last night, they will achieve the very results which that gentleman said might, in certain circumstances, accrue; that is, they will lessen the total product of the community and increase its price.
– Did you say you were in favour of 2d. postage?
– I said I was in favour of a special war stamp, such as they have in Canada, by which they are raising a huge amount and hurting nobody. It graduates itself, and the business people bear the bulk of the burden because they transact the bulk of the business.
– That is contrary to your argument just now that business people pass all taxation on. They would pass that tax on, too.
– I am sorry to be so misunderstood. I was discussing the income tax, and saying that it could be passed on. The extra postal taxation could not be so treated, it is easily collected, and there is no motive for passing it on. The revenue that could be derived over a big country like Australia if the taxation were placed fairly and lightly over the whole community is surprising. In this connexion I saw some figures in a letter written to the Age the other day. The writer showed that by taxing incomes fairly up to a maximum of 2s., in the shape of an income tax;, the sum of £4,147,000 could be raised. The Government are going to tax up to 5s. in the £, and estimate to get £4,000,000, or less than the writer would raise by his method.
This war is unexampled in its destructiveness. Capital is being destroyed every day. Nearly all the world is engaged in this destructive warfare, and we are getting the Biggest economic shock that the world’ has ever experienced. This must express itself finally in a shortage of labour, dear money, and high taxation, and therefore in more difficult and costly production on the whole. One must look with some reasonable apprehension, although I hope with no undue pessimism, to the future. The excessive war expenditure is bound to make money dearer, because of the huge destruction of capital that is taking place. People are writing to the papers pointing out the advantages of this and the other loan, and of keeping the money in the country. We are destroying it here by applying it to war purposes just the same as it would be destroyed by application to war purposes in Gallipoli. The absolute destruction of capital is taking place, and the whole business has few redeeming features from a financial point of view.
It is all a dead loss and waste. As one writer says, it goes up in a’ puff of smoke, there is a loud report, a hole in the ground, men slain, and that is all you see for your capital. It is costing us 25s. per head per day according to the Prime Minister to maintain our soldiers, and we must add to that another capital loss in the shape of the soldiers’ possible earnings, as well as the actual destruction of property in the war itself. Unlike many older countries, we have no huge stores of vested wealth. The cost in our case has to come out of our working capital or savings, for we have very little surplus outside those two headings. The question, therefore, arises once more as to how much we are going to extract from each of those sources, how much out of capital account, how much out of luxuries, and how much out of our communal surplus. Those are the only three sources from which we can extract money to prosecute the war. There is no proposal that I know of to tax luxuries in this country, but I am not at all sure that we could not tax a few, and perhaps be the better for it. At the time of the last bursting of the b6om in America, the doctors complained that their living was gone. The people had less to spend on luxuries, and their health was better in the same ratio. It may therefore be that we could make an inroad Up04 the luxuries of this country in war time, and be the better for it, because enforced abstinence of that kind ministers to the efficiency of the people. Our first and paramount duty, as I see it, is to cut out all unnecessary expenditure. If we do that, our financing should be easy, having regard to the total amount we are spending in connexion with the war.
– How would you draw the line between necessities and luxuries ‘!
– I am not in an economic catechumen class at present. Our credit, happily for us, is very good just now. A war loan at i per cent, seems to strike the high water mark of credit. The other day in America the Austrians wanted to renew a loan, and offered 1 per cent., yet could not renew it at the price. We may, therefore, regard ourselves as fortunate in the rate at which we propose to raise our own money. Another pleasing feature is that, although the war is a terrible thing for the Empire as a whole, the Empire was never in its existence so well able to stand the strain and stress as it is to-day.
I am a little apprehensive as to whether the £20,000,000 loan may not affect the State credit, for it seems to me that if we are not very careful we shall smash the credit of the States. The war and its consequences in the higher cost of borrowing here and elsewhere have considerably lowered the price of all their investments, and I have been wondering whether we could not do something on perhaps a larger scale than Mr. McKenna has already done in the way of converting some of the State stocks to a common denomination. It would be a very good thing to do, but we have not even begun to deal with tlie rudiments of the question yet. To do it would require probably the larger operation of taking over the whole of the State debts, and I am not at all sure that this is not the psychological moment to tackle a preliminary phase of that very big question, and put the State indebtedness once and for all upon a proper basis. They have a motive now to come and consider the matter with the Federal authorities, and there is open a way for them to get some relief for themselves^ putting the whole question upon a footing that it could not occupy in ordinary peace times. I certainly suggest, as I have already done many times, that the Treasurer should be in all these matters in close and constant consultation with the Sta.te Governments, because if he does not take that attitude, and they do not reciprocate, a costly and ruinous competition which will injure both Commonwealth and States will, 1 am afraid, ensue. The States have rights and powers of their own, and if there is to be a fight in this matter of the financial market, they can do us perhaps as much injury as we would be likely to do them. We are all the one people shouldering a great obligation and functioning in both financial spheres, and it is our duty in a time of great financial stress like the present to get together, consider each other’s outlook and obligations, and see if we cannot do something in common to try to save each other’s credit and minister to each other’s governing difficulties.
– Do not you think we should have Unification ?
– That is an easy way out, and always seems to me to be a cowardly one. It means that you will not take the trouble to make a safe and reasonable way. The easy cut in this case is the suicidal and destructive cut, which would go far towards the undoing of Aus- tralia so far as its Federal and State institutions are concerned. “We do not desire Unification, but we need more than ever the exemplification of the Federal principle in the conduct of our governments.
– We need simplification.
– The honorable member is not far wrong. There should be more sympathy between us, and a better display of Federal feeling. There are scores of avenues the exploitation of which would redound to the infinite good* of the community if we consulted together as to the best means to be adopted. Now, when everything outside is threatening, and our obligations are towering up to titanic proportions, the time has arrived for common counsel, so that we may arrange the burden to suit the shoulders of the bearers,: remembering that the one people constitute the population of the States and the population of the Commonwealth.
I congratulate the Treasurer on the prospects of the coming season. It is well for us that the rains have descended and the floods have come, so that our parched ground is beginning to smile in wholesome harvest. This will do, perhaps, more than anything else to help us over our troubles. We should be profoundly thankful for the rain that has fallen, and must wish that the great State of Queensland may shortly get a plentiful supply. But, whatever our obligations may be, we have to see the war through to a finish, no matter what it may cost.
– I shall not, on this occasion, make a- reply to the Leader of the Opposition in the ordinary sense of the term. I rise to thank him for the manner in which he concluded his speech, and to say that the Government are entirely in accord with his opinions as to what should be the relations of the Governments of the States and the Commonmonwealth. It is not easy, at the present moment to find a viti media, or any means of obtaining a common credit. Indeed, it is difficult to know what the Commonwealth credit is, though, happily, it seems to be- good. But there are prospects of an early conference, initiated by the States, to consider financial matters. While I shall not approach that conference with great enthusiasm or optimism, we have this ground for satisfaction, that the Commonwealth is providing the States, up to the end of November next, with more money at a cheaper rate than they have ever borrowed before. They will have that money for a year from the end of November, its repayment falling due, not in one year, but in two. The real position of the Commonwealth’s finances, so far as expenditure is concerned, is not so serious as the Leader of the Opposition seems to think. I disagree with him, and with those publicists who have expressed the opinion so freely that this is a time to stop all public works - except, of course, those at their own doors. I do not think that we should reduce expenditure intended for the opening up of the country, and which will make it more productive. It has been suggested, that the construction of the transcontinental railway, on which some £4,000,000 has been spent already, should be proceeded with more slowly, and that the pioneers who have left the comforts of the capitals, where more than a fair share of public expenditure has always taken place, to open up and increase the productivity of the country, should be deprived of means of communication, and of some of the blessings of civilization, because we propose an impost which will cut off the top of incomes running into tens of thousands and twenties of thousands of pounds per annum.
– The money for the railway came from the note issue.
– Then it has cost us nothing. Why are they grumbling
– I do not know.
– Nor do I. They are blind leaders of the blind, and are complaining merely because they think it is popular. This has the same momentary effect of riveting public attention as has a tin-can tied to a dog’s tail. The Leader of the Opposition suggested that we might economize in our loan expenditure where that can be done without retarding the development of the Commonwealth. I say that we should economize in regard to departmental expenditure where that is possible without injury to the Commonwealth services. But I differ from him as to ‘the increase in the ordinary expenditure of the Defence Department. It is our duty to separate the ordinary expenditure of the Defence Department from war expenditure The mobilization of our troops,which was designed to assist the conduct of the war, added greatly to the ordinary expenditure of the Department. Let us consider the expenditure under special appropriations. That of 1914-15, excluding old age pensions and maternity allowances, was £653,246; and (the estimated expenditure from special appropriations for this year is £1,947,620, an increase of £1,294,374. The principal items of increase are these: -
Let me turn now to the Commonwealth debt, about which we have heard so much. The public debt of the Commonwealth on the 30th June, 1915, was £37,394,148, consisting of -
I ask honorable members to listen to the details of how the £6,500,000 on account of inscribed stock and Treasury-bills was expended, in order to see howthe Commonwealth has been managing the finances of the people -
In regard to the Australian Notes Fund, the gross earnings during 1914-15 were £364,457. Deducting the expenses, £48,638, the net earnings were £315,819. The interest payable in 1915-16 on the loan of £6,500,000 from the British Government is £163,184, and the annual interest £239,473. It will be seen that, so far as the Commonwealth is concerned, nobody is being taxed for the developments we have been carrying on, and I think I am entitled to say that all of these financial arrangements were inaugurated by Governments of which I have had the honour to be head. Instead of having a debit in respect of interest, the Commonwealth has really a credit at the present time. I have said over and over again that it is impossible for us to continue to do that, but up till now no burden has fallen on either the rich or the poor in regard to Commonwealth expenditure on public works, and it is time that commonsense people had something to say to those critics who speak to the contrary.
– Can you explain the increase in the ordinary expenditure in the Postal Department?
– I have not the particulars available at this moment, but I shall deal with that matter later. In my opinion, this is a time when postal work should be proceeded with, if possible. As Treasurer, I have expended a good deal of money in and around Melbourne in order to utilize labour that had been made available by the disturbing effects of the war, and especially the drought. I think that was the right policy to adopt. We even went to the extent of decorating the interior of this parliamentary building, in allowing us the use of which the .Government, of Victoria has treated us so handsomely. There was available a class of labour peculiarly qualified to do that work, and I think we did the right thing in putting the work in hand. We also did other work about the city in connexion with the various Departments, but there is a limit to what we can do. I ask honorable members not to think that because the war is in progress, and Australia has just experienced a great drought, our difficulties are greater Gan they really are. I do not agree with the honorable member for Darwin that taxation can always be passed on. If I held that opinion I should like to invite the House to make an experiment by taxing the incomes of all’ people, and observe what would happen. That is one of the nice little absurdities that arise out of a complicated system of government. If we had a governmental system that enabled the people to deal directly with every phase of trade and industry, we should soon see whether the trader was passing on taxation to an extent that returned to him more than a legitimate profit. As I understand wealth and possessions!, no individual of any State, and certainly no individual of a democratic State, is anything but a trustee of his own wealth in time of war. It is the State that counts, and not the individual. The freedom of the individual is guaranteed, but he must offer to give his life and his all for the maintenance of the State, or cease to be a citizen of it. That is the reason why those who have large possessions should give freely, and those who have less should, give’ their proportion. Many people are complaining before they are hurt. I hope they will not be hurt as muchas they seem to fear. But having said that much, I should like to pay a tribute to all classes in Australia for the manner in which they have risen to the necessities of the country in this great war crisis. All ranks and conditions of men are to be found in the trenches, and all ranks and conditions of women are to be found endeavouring to ameliorate the sufferings and add to the comfort and pleasure of those men who are fighting or proceeding .to fight for their country. They all deserve our thanks. All others, too, should bend their energies to the successful prosecution of this war, and be prepared to make the necessary sacrifices. Those who are required to give money give very little; those who are offering their lives are giving their all. But we are partners with the Mother Country in this contest, and we all recognise the necessity for sacrifice. In conclusion, I am very glad to say that, with the exception of the State of Queensland, the drought has completely broken up, and it will be discovered soon that the disastrous effects contemplated six or seven months ago will not be nearly so severe as many people seemed to expect.
– The pastoralists canna”! re-stock.
– I know the difficulty., I knew it in 1902-3, when the drought was considerably worse than that which has just terminated.
– The drought of 1902 was only a circumstance compared with the last one.
– Members who have a limited vision can be made to believe any thing.
– The figures show there has been double the loss of stock.
– The argument is purely one of figures. There are bigger States! than Victoria. It is a notorious fact, not remembered by many honorable members, -that in 1902-3 there was a very good season in Victoria, when New South Wales and Queensland were practically a desert.
– More than half the State of Victoria was suffering from drought at that time.
– I ask the honorable member to recollect what a little area the State of Victoria, important as it is, really comprises. When talking of stock we should deal with Australia as a whole. However, with the exception of Queensland, all is well in the Commonwealth -to-day. I hope that in that State also good rains will fall, and that a great number of the stock which seem likely to be lost will be saved. Having spoken in that optimistic way, I hope honorable members will believe me when I say that I have just as much sympathy as they have with those who have suffered. However, the facts regarding Australia should be made known to the outside world. I have seen many countries in my travels, but I think Australia gives a larger production per head of population than any other, and it gives a better return for the labour of the individual who has only his health and his hands with which to produce.
– Except New Zealand.
– In New Zealand a man without capital would have some difficulty in getting a beginning. Sir Robert Best. - I was referring to the production per head.
– The production there is the highest, and the conditions are about the best in the world. I am no pessimist, like the Leader of the Opposition, and I do not think that, so far as Australia is concerned, disaster will follow this war. I do not fear dear money, It is a contingency concurrent with favorable opportunity for investment.
– Is there no chance of international bankruptcy?
– When we have disaster, we have cheap money. Let there he a collapse here, and money will become cheap, because it cannot be employed; but if we make our lands available, and enable men to get land, plus tools, money will become dear immediately, because, whenever it can be profitably used, there is a demand for it.
There are, of course, cases like the present, when money is required for war purposes, and it becomes dear because we have to purchase from other countries what we cannot produce. We need arms and equipment of every kind, and we have to get them elsewhere. I do not say that the money markets of the world are closed to us altogether, but, at any rate, it is a good thing that Australians, for the first time, have been thrown on their own resources. The raising of £20,000,000 will not disturb us seriously if we mean to raise it.
– The people will acquit themselves well!
– I believe they will. I believe that the people here could subscribe double that amount, especially when we remember that at least twothirds of it will be expended in Australia, mostly on goods produced here by our own labour. In this way, in a period of, say, twelve months, we could turn over £20,000,000 two or three times.
– I challenge that.
– I do not object to any challenge, because I regard it as a good thing to have statements questioned. I do not pretend to have any special knowledge on this master, but I do say that Australians have been modest in their attempts to help themselves; they have been too eager, when they had the opportunity at Home, to go elsewhere for credit. I am sorry that the war broke out at a time when nearly every Australian Government was seeking in a small way for monetary assistance abroad. That is all to our disadvantage at the present moment; but it will do us no harm if we have to turn to and economize in those things that are not essential and necessary for our own welfare or that of the nation - if we have to turn, not only our thoughts, but our efforts, to the production of more wealth, and especially to the equipping of large forces for despatch to wherever the enemy can best be fought.
.- I regret that at this time I should have to criticise adversely the financial statement presented to us by the Treasurer. I do not intend, if I can avoid it, to import any heated controversy into the debate, but to deal with the subject merely as it appears to me, giving data for the opinions which I hold so far as I am able to judge. It is impossible, however, on an occasion like this to remain silent, and
I do not suppose that the Treasurer would desire us to do so, in the face of the very drastic borrowings, and, I think I may say, the reckless expenditure, on the part of the Commonwealth and the States at this time of difficulty, when we are engaged in a terrible war. It seems to me that “a full-speed ahead” policy is being continued in both the Commonwealth and the States, and that all that caution of which the right honorable gentleman is very wont to speak, is completely absent in these Estimates. This is a time of great difficulty and stress when even the future is not absolutely assured, although we are most hopeful; and one would think that the Government would desire, above everything, to put their house in order and institute that care and economy in the public expenditure that the Prime Minister so often assures us is his desire. If we look through the Financial Statement, however, it is difficult to find any real evidence of an effort at economy. I propose, therefore, to criticise that Statement, though not in any very polemical way. I can assure the Prime Minister that at the present time I would have much preferred to say the opposite to what I am going to say. We have to remember that this Government is a very strong one, the strongest that has ever been in power in the Commonwealth. They have a majority, not only in this House, but in another place; and, therefore, by arrangement with honorable members, can do what they think best without any fear of any real effective attack from the Opposition. The Prime Minister in his speech told us, in words that I am sure meet the approval of all, “ that we are faced with great difficulties, if not dangers, and that the whole-hearted co-operation of all the public men of Australia is necessary.” The right honorable gentleman also urged on us in the strongest and most earnest manner - and we know how earnest he can appear to be - “that the necessities of the Commonwealth demanded economy on the part of the people in every walk of life.” Yet, after the expression of those sentiments, with which I am altogether in accord, the right honorable gentleman submitted Estimates in which there is no evidence of any attempt to economize, or even of a desire to do so. It is somewhat unpleasant to me to have to criticise the right honorable gentleman in this way, because, when addressing the House, he seems so earnest and fairspoken that one is unwilling to attack a man who appears so eager to do his duty - to do everything that is best and right. But I have sat with the right honorable gentleman for many years in this House, and, although I ‘have the greatest personal regard for him, I fear that he is very often influenced by party considerations - that, although he is very fair-spoken, he does that which astonishes one, and probably he does not like himself. At any rate, it seems to me that the financial policy of the Labour Government has not changed in any respect - that from the beginning it has been a spendthrift policy, having for its object the party gains of the organization of which the Prime Minister is the head. “ Tax and despoil our opponents “ might well be their political motto.
Ever since the Labour party gained power in this House, in 1909-10, to the present time, that has been the policy they have pursued. Land taxes have’ been levied when the revenue was not even required, and was not spent when obtained, and probate duties, amounting to a quarter of the income of the people who were supposed to be rich - and who are their opponents - have been imposed; and now we are confronted with a drastic income tax levied against the same people. In the face of these facts, how can I otherwise describe the policy of honorable members opposite? When the Labour party took office in 1909-10, the whole revenue available for Commonwealh expenditure, after allowing for contributions to the States, was £7,500,000, whereas now it is £20,000,000. In the interval between 1910 and the present time - omitting the year when the Labour party were not in office - they have imposed immense land taxes and probate duties and have received, in addition to the £20,000,000, several millions from the Note Fund. The career of the Labour party during their four years of office might well be likened to that of a spend-thrift heir who had come into possession after a long reign of careful ancestors. There is no comparison, I submit, between the economy and care practised by those who preceded the present Administration and that of honorable members opposite, except to the disadvantage of the present Administration.
Now, coming to the present year, and comparing it with the past year in regard to expenditure - exclusive of the war, with which I shall deal separately - there is no evidence of economy. Last year, 1914-15, the expenditure was £23,218,513. One would have thought that in this year of stress and difficulty, as well as of danger, with the immense obligations that have come upon us, and which we are fulfilling, we would have endeavoured to live upon the same amount as we had last year when the war was not so heavily upon us; at any rate one would have thought that a moderate, reasonable, economical administrator would not wish to spend more than it was found necessary to spend on current account last year for the ordinary affairs of the country, but we find that it is proposed to spend £26,488,388.
– What was the estimate of the right honorable gentleman last year?
– I am dealing with the actual expenditure of last year. We spent £23,218,513, and this year the proposal is to expend £3,269,875 more than was spent last year. There is an increase of expenditure in every Department except that controlled by the Prime Minister, in which there is a reduction of £3,000. Does it not strike honorable members opposite, as well as those on the Opposition side of the House, as significant that every other Department of the Public Service intends to spend more this year than was spent last year ? It is not in keeping with the circumstances of the country. Does it show any attempt at economy when every Department has an excessive expenditure over that which sufficed it in the y’ear which has gone by ? It is no wonder that we require a revenue of £4,000,000 from an income tax. That revenue is not required for the war. Onehalf of it will be required for other purposes; only one-half of it will be required during this year for interest and sinking fund on the naval and military expenditure, and for war pensions, in connexion with the war. The war is talked about as justification for this drastic income tax, when. only one-half of the proceeds of the tax is to be applied to it.
– The calculation of the right honorable gentleman is wrong.
– The total, amount required this year for interest and. sinking fund on war loans, and including, the £500,000 for war pensions, is £1,805,266. Those are the figures in thefinancial statement laid before us. By curtailing expenditure, and by livingwithin the means we had at our disposal last year, no extra taxation would havebeen found necessary this year. Honorable members may hardly believe such a strong statement, and after hearing somuch talk about the war having occasioned the necessity for levying an incometax in order to produce £4,000,000, they probably have the idea that this amount is to be spent on. the war in the shape of interest and sinking fund and war pensions during this year, but that is not tliecase. I contend that there should be no extra taxation during the current year, and I propose to show how it would be very easy to carry on without it. I would limit the expenditure to that of last year. It is not an unreasonable proposition. What was good enough for us in the highest year of expenditure since the establishment of the Commonwealth, surely should be sufficient: for us in this time of stress and difficulty. In this way we would save £3,269,875.. Then if the new works are to be all carried out I should pay for them out of loan moneys, and not from revenue. It is proposed to spend £3,827,629 on new. works, but building them out of loan moneys, and saving the £3,269,875, which represents the increase over last year’s expenditure, would mean a total reduction, of £7,097,504.
– You would not build all new works from loan moneys.
– Certainly. These are new works, not repairs. Allnew works could be fairly charged against loans. What would be the result? Intrest and sinking fund on £3, 827, ‘629- would mean an annual expenditure from revenue of about £191,000, instead of the £3,827,629 it is proposed to expend on new works this year. This is not an unreasonable proposition, and if a proposal’ of this sort had been brought down, there would have been some evidence of careand economy in the administration of the financial affairs of the country, and of a desire to relieve the burden on the people. On the contrary, however, we find no attempt to reduce expenditure. We pro- pose to spend £3,827,629 on new works this year as against £2,670j236 last year, an increase of £1,157,393. What justification is there for this reckless expenditure when we are in the throes of financial difficulties and when every pound we can save should be saved? However, I shall return to this subject directly. The AttorneyGeneral yesterday said that there were no data available in Australia in regard to the number of persons possessed of incomes, or the amount of their incomes; but I find that there are some details in Mr. Knibbs’s Pocket Compendium of Commonwealth Official Statistics 1914, of which all honorable members have received, copies. The figures may not be very accurate to-day; but, at any rate, they are an indication of what Mr. Knibbs thought when he published the book. I find that there are 114,195 persons whose incomes are above £200 a year, and that the aggregate amount of income of these persons is £64,637,896. The number of persons with incomes under £200 a year is not given. The number of persons whose incomes are between £200 and £300 is 56,678, the aggregate amount of income being £12,511,131. The number of persons whose incomes are between £300 and £500 is 32,032, the aggregate amount of income being £10,671,018. The number of persons whose incomes are between £500 and £750 is 9,892, the aggregate amount of income being £6,046,817. The number of persons whose incomes are between £750 and £1,000 is 6,336, the aggregate amount of income being £4,744,257. The number of persons whose incomes are between £1,000 and £1,500 is 4,256, the aggregate amount of income being £5,267,579. The number of persons whose incomes are between £1,500 and £2,000 is 1,465, the aggregate amount of income being £2,443,220. The stages beyond £2,000 are not tabulated, but the number of persons whose incomes exceed £2,000 is 3,536, the aggregate amount of income being £22,953,874. Those 3,536 persons, who receive something like £6,000 a year each, must consist of companies, corporations, and banks, and other persons. The amount they receive represents about one-third of the whole of the income. If these tables are anything like accurate, it appears that of the population of Australia one out of forty will be taxed for income tax, and thirty-nine will go free. The public indebtedness of the six States amounted, on 30th June, 1914, to about £317,000,000, and has increased enormously during the past three years. It almost staggers one to read of the change that has come over the Governments and Parliaments of the States during the last three years as compared with the twelve years that went before. From 1901 to 1912 the public debt of the States increased by £71,000,000, or an average of £6,000,000 a year for all of them, but during the years 1913, 1914, and 1915, the debt increased by £66,000,000, or almost as much’ as in the previous twelve years, representing an average increase of £22,000,000 a year, instead of £6,000,000, while in the year 1914-15 the increase was actually £23,569,141.
– Many of those items are renewals.
– The figures I have given comprise increases only. Renewals would be taken off. In the £23,569.141 added last year there are no conversions. This increase of public indebtedness has been incurred to a large extent by Governments belonging to the Labour party, one of the planks in whose programme is the restriction of public borrowing. The down-hill retrograde movement in regard to living beyond their means, which has been made by the States during the last three years, is simply appalling. It indicates a spendthrift policy, and clearly shows that no reasonable economy has been practised. There has been no desire to balance the ledger, or to live within their means in a reasonable wayAs the States are interwoven with the Commonwealth, and look to the Commonwealth to help them, and the Commonwealth is anxious to do so, as far as possible, these are facts which should be made known to everybody. In the four years from 1910 to 1914 the following increases per head of the population took place in our public indebtedness: - New South Wales, from £56 12s. to £62 17s. per head, or an increase of £6 5s.; Victoria, from £43 9s. to £46 10s., an increase of £3 ls. ; Queensland, from £74 7s. to £80 6s., an increase of £5 19s. ; Western Australia, £85 17s. to £106 5s., increase, £20 8s. ; Tasmania, £55 13s. to £62 73., increase, £6 14s. In the case of South Australia, the amount fell from £78 14s. to £76 lis., a decrease of £2 3s. It will be noted that although Victoria spent a good deal of money last year, her indebtedness per head is very small compared with that of the other States, and it is worth nothing that at no time in her history has the spendthrift Labour party had charge of her public affairs.
– I suppose you will give us the assets per contra?
– I am dealing with the expenditure.
– The right honorable gentleman will give only what suits him.
– The figures I have quoted are appalling, and show that the desire to borrow to an enormous extent has taken hold of the States, especially during the last few years. Last year, 1914-15, they borrowed from the Commonwealth £10,625,000, and borrowed elsewhere £12,944,141, making a total of £23,569,141. New South Wales, of that amount, accounted for £8,000,000 odd, Victoria £6,000,000 odd, Queensland £1,500,000 odd, South Australia £2,000,000 odd, Western Australia £4,426,000 odd, and Tasmania £850,000 odd. There was no crisis in the States, nor did they pay anything towards the war during that financial year.
– Your own State is the worst of the lot’ per capita
– That is so.
– It has been the worst for about ten years, and the right honorable member was the boss of it.
– I never imposed any additional taxation in my day, and I was there for about ten years as Premier and Treasurer.
– Your per capita debt was the highest.
– It must be remembered that the population was then very small. The honorable member for Balaclava is quite right. The indebtedness per head in Western Australia last year was £106 5s., whereas in the State he represents it was only £46 10s. There is a striking contrast.
– They do not include municipal debts in Victoria.
– Nor are they included in -Western Australia. We have never borrowed for them in Western Australia.
– Is it a fact that the right honorable member borrowed £1,000,000 to build a dock, and the bottom fell out of it?
– The honorable member, in his desire to say something disadvantageous to myself, has made a mistake. I spent nothing on the dock. It was done after I left. I hope the honorable member will make no further assertions which are not based on fact. I return to the defence1 expenditure for this year, which is altogether a Commonwealth matter. It will hardly be believed by honorable members that we are spending this year on defence and the war - exclusive of defence works under the control of the Department of Home Affairs- £53,515,985, of which £45,749,450 is required in connexion with the war, to be derived from loan; while the local expenditure on account of defence, including £1,305,266 for interest and sinking fund on war loan and £500,000 for war pensions, is to be £7,766,535. We all know the war expenditure is a necessity; but I am sure that no great economy is being practised in that direction even in this country.
– It never is.
– But there might be some attempt to do it, and we might have competent and experienced persons trying to economize ; but we have not got them in power. No curtailment is proposed in regard to the local expenditure of £5,000,000 odd. Everything is going on, not even on the plane of last year, but on an increased scale; yet we are told by the Prime Minister “ that the necessities of the Commonwealth demand economies from its people in every walk of life.” What has the right honorable! gentleman done to carry out that economy in the administration of the public affairs of the Commonwealth? The estimated expenditure of £53,515,985 for this year is made up of £45,749,450 war expenditure, £1,305,266 interest and sinking fund on loans, £500,000 war pensions, new defence works chargeable to revenue £1,353,610, being £814,209 more this year than it was last year. Why should this be?
– How can the right honorable member say that that expenditure is chargeable to revenue this year, when, as a matter of fact, the revenue of the year will not amount to one-third of the expenditure ?
– The honorable member is including war expenditure, whereas I am dealing with expenditure chargeable to the local revenue. If the revenue of the year is not sufficient to meet the expenditure, it is because the Government is expending at too high a rate. It would be sufficient if ordinary economy were practised. The Defence Department should have been told that a larger expenditure this year than last year would not be sanctioned. The amount set down for the construction of the Fleet is £600,000, the increase on the expenditure of last year being £18,916. For land purchase there is set down £98,069, an increase of £31,769 on the expenditure of last year. This year the total increase in the expenditure out of current account on defence will be £2,050,713. Let me enumerate the items which make up this total increase -
The Government, not being content to limit its expenditure this year to the amount expended last year, cannot be said to desire economy. The expenditure on new works amounting to £3,827,629, to which I have referred, could be provided for by borrowing, in which case, at 5 per cent., the annual charge on the revenue account would be only £191,000. I see no justification for spending this money out of revenue when it could be borrowed, in which case extra taxation would be unnecessary.
– Borrowing would merely put off the evil day.
– That is sometimes a good thing to do. The right honorable gentleman has done many things lately which he said he would never do under ordinary circumstances, but I do not twit him with that, because necessity knows no law, and one may be compelled to do what otherwise he would not do.
I hope that the public will realize that in this year of war it is proposed to spend £1,157,393 more on new works than was spent last year. Therefore, when Ministers prate of a desire for economy in financial administration, their remarks may be regarded as mere idle talk. The AttorneyGeneral said yesterday, when speaking on his income-tax proposals, “ that it was in the last degree important at this juncture that enterprise should not be discouraged.” That was a splendid sentiment, but, coming from the honorable gentleman, and examined in the light of these Estimates that had already been laid before Parliament, it means nothing. To take £4,000,000 out of the pockets of the people at the present time must discourage enterprise to a considerable extent. The honorable gentleman sneered at those whom he proposes to tax, and called them “Conservatives.” He soon showed his party feeling and bias, and seemed to be glad that he was able to tax these persons. He said that the “ Conservatives ‘ ‘ expressed a hysterical desire to tax the “ other fellow and not themselves,” and he gloatingly referred to the fact that “this income tax would, he hoped, come as a useful antidote” to them. What reason had he for making that ungenerous, unfair, and unjustifiable remark? The honorable gentleman also said that “ the necessity for the imposition of an income tax arises out of the great and growing demands made by the war.” That is an opinion that prevails throughout the country. The public believe that an income tax is to be imposed to meet the war expenditure, and the Attorney-General proclaims that opinion. He went on to say that His proposals “ touched the high-water mark of income taxation,” and that “economy was essential at this juncture.” Have we the least indication that economy has been practised by this Government? As a matter of fact, it is proposed to spend out of revenue this year on ordinary services £3,269,875 more than we spent out of revenue last year.
– With all the economy that the right honorable member could suggest income taxation would still be necessary,.
– I deny any necessity for increased taxation if economy and care is practised this year.
– There will still be a deficit of £19.000,000.
– There will be nothing of the kind. I have taken that £16,000,000 to £19,000,000 into account, to be obtained by loan. What we have to ask ourselves is whether extra taxation, amounting to £4,000,000, is imperatively necessary at the present time in order to carry on the business of the country efficiently and economically ? To that question my reply is emphatically “ No.”
– The right honorable member would borrow.
– The Treasurer is borrowing from the Note Funds and in other directions, but he objects to limit his expenditure to what he expended last year, and objects to charge new works to loan funds. The war expenditure for last year was £14,792,960, and the estimated war expenditure for this year £45,749,450, so that by the 30th June, 1916, the war will have cost us £60,542,410, exclusive of interest, sinking fund, and war pensions in both years.
-Even with the income tax there will be a big deficit this year.
– The honorable member means by “ deficit “ that a further war loan will be required. The income tax is only required for the purpose of paying interest and sinking fund, and this I have provided for much more than is necessary. The interest and sinking fund charges upon the total loan required for this year, viz, £60,542,410, at, say, 5 per cent., will amount to about £3,000,000 a year when the whole sum is raised and interest bearing. The total amount required this year for interest and sinking fund on the war loan and for war pensions is £1,805,266, and not £3,000,000.
– The interest and sinking fund charges are more than £1,805,266.
– That is the amount mentioned in the right honorable gentleman’s Statement. The whole of the money will not be borrowed at one time, and, therefore, some time must elapse before the whole sum will be bearing interest.
– How much has the right honorable gentleman estimated for pensions ?
– £500,000, as in your Statement.
– That amount is too small.
– That amount appears in the statement. Despite the fact that interest and sinking charges and war pensions will amount to £1,805,266, the Treasurer proposes to impose taxation to the extent of £4,000,000. I say the taxation is not required now. We can carry on very well by curtailing expenditure to the limit of the actual expenditure last year, and by charging to loan account all the principal works which are being constructed. Honorable members must know that there is a consensus of opinion in both Federal and State spheres that buildings and works of a permanent character should be paid for from loan, but the right honorable gentleman, in pursuing a fetish, will persist in constructing all works and buildings throughout the Commonwealth, including those in the Federal Capital, the Northern Territory, and elsewhere from revenue. As an honorable member interjects, the Kalgoorlie-Port Augusta railway also is being constructed from revenue, but the Treasurer receives the money for that work from the Note Fund, and does not pay any interest for it.
– We do pay interest and sinking fund on that amount.
– Yes, but the Treasurer pays it to himself. I do not believe in that policy. It is only robbing Peter to pay Paul.
– It is sound business.
– I do not think so. The money does not cost the Government anything, and, therefore, I do not see why the work should be debited with any charges.
– Your contention is that any taxation which may be necessary should be deferred until next year?
– My contention is that by limiting the expenditure this year to what was actually expended last year, and by charging some of the principal works to loan, there is no necessity for any increased taxation at present. After we have passed through the war, have balanced our ledger, and know what our position is, we can take whatever steps may then be found necessary. I regret that the war receipts from loan and the expenditure are treated as if they represented ordinary revenue, and as a -result there is confusion. I admit that the Treasurer will have means by-and-by of separating the loan expenditure from revenue expenditure, but the treatment of this loan expenditure in this way is, I think, inadvisable. The Treasurer was of opinion at one time that the two kinds of revenue and expenditure should be kept distinct, and he promised that that course would be followed. I know the influences which are at work in the Treasury, and that it is more convenient to the Treasury officials to have the two classes of revenue and expenditure grouped in this way; but this course is not so convenient for honorable members. I regret that the practice established in all the States of keeping loan expenditure separate from ordinary revenue expenditure has not been followed by the Commonwealth. In my own experience as Treasurer of a State, loan money was treated as trust money and revenue was current account. I know there are difficulties in the way, but if this course can be followed, it will make the, public accounts simpler.
Another point which I wish to mention is that there is not proper control over the public expenditure, especially that in connexion with the war. The volume of expenditure has increased so much that the control and supervision which have been sufficient hitherto are not sufficient to-day. Who manages the immense Defence expenditure of about £50,000,000 this year? I fear there are not many departmental officers who have been accustomed and who possess the business capacity to manage economically and efficiently this tremendous sum of money.
– We have those officers whom you appointed.
– But the circumstances are so changed, seeing that we are now dealing with an immense expenditure in a very short space of time. Those public officers with whom I have come in contact are very conscientious and efficient men, but they have their own departmental business to attend to. I desire somebody appointed who is capable of managing this tremendous expenditure, some man or men of exceptional ability. The expenditure of a few thousand pounds in securing efficient management of these heavy disbursements would prove very profitable to the Commonwealth. We cannot expect the Minister to control this expenditure entirely; that is something he cannot do. He must have the assistance of somebody in whom he has complete confidence.
– We have the services of an exceptional man in Mr. McC. Anderson, and he says that the present arrangement is good.
– We require the services of an exceptional man or exceptional men, like Mr. McC. Anderson, is said, to be to control the Defence expenditure. Take the Naval Board, for instance. I question whether there is one real business man on that Board.
– There is one there now.
– I am not referring to the Minister for the Navy. He cannot let -contracts and ascertain where things are to be obtained cheapest, and so forth. I am not prepared to say that any Minister has the technical knowledge necessary for the management of this business. I desire the control of our expenditure put on a proper permanent basis; not on an ephemeral basis. We require the services of a Board of expert business men, the very best obtainable.
– Not Defence officers.
– No, business men. Let us pay them well, and the money will be well spent. The thought of £50,000,000 of Defence expenditure in one year is enough to make one shudder. I am certain that it will not be attended to as it should be. In saying that I am making no reflection on the officers, because, at present, we have not the machinery for the proper control of expenditure.
– If we had a number of sharp business men attending to the expenditure, a number of “ patriots “ would be in gaol.
– And a good thing too, if they deserved it. I do not think any private company would embark on the expenditure of £50,000,000 in a year without assuring itself of efficient supervision. I ask honorable members to realize the enormous business that the Commonwealth is carrying on, and the necessity for the strictest business supervision and control-.
– Speaking seriously, has the right honorable gentleman any doubt about the expenditure being properly conducted ?
– Yes. I regret to say I have. I do not think that it can be properly conducted under present conditions. The departmental officers have not had the necessary business training. If Mr. McC. Anderson is a proper man to advise on this expenditure why not secure his services, or the services of two or three men of that stamp? I am very much surprised that the Treasurer has allowed, at the present time, these Estimates to be placed on the table in the inflated form in which they are before us.
– They are not Estimates; they are a mere statement.
– But they will form the basis of the Estimates, and are practically the Estimates.
– Honorable members asked for a financial statement, and I have given one.
– And the Treasurer says that this is the best statement that he could give. It is now the 19th August, and there ought to have been time to have prepared the Estimates for submission to Parliament. They have been on the table of the House in years past by the end of July.
– I managed to do that once.
– What the right honorable member did once he could do again.
– In war time? Nonsense !
– Did not the Treasurer yield to the request of honorable members to give us a pre-Budget statement?
– The only reason I can assign for the statement appearing in its present form is that the Treasurer has not been able to give full attention to it, because I am certain that if he and the Treasury officials had had an adequate opportunity of dealing with the Estimates, they would never have appeared in this form, and the officials would have insisted on the pruning knife being drastically applied.
– I used the meat-axe on them.
– The right honorable member did not use it sufficiently. I know that Departments endeavour to get as much as possible from the Treasurer, but if the right honorable member had said that they must not spend more this year than they spent last year, his Estimates would have been reduced by over £3,000,000. It seems to me as if every Department has been allowed to frame its Estimates as if no crisis existed. I know how unpleasant and difficult it is to cut down Estimates, but if ever there was a time when that course should be followed, it is this period of war.
– Do you not want lighthouses on the Western Australian coast?
– If that is the best argument the honorable member can use, it is of no use mytalking to him. I am dealing with the financial interests of Australia. Each Department appears to have been allowed to prepare its estimate as if no crisis or war existed ; and, in every case but one, has increased the expenditure over that of last year. Speaking of the Ministry as a whole, and of the Treasurer in particular, a course has been followed as unwise as it is discreditable. The Government’ and the Treasury have on this occasion shown themselves unequal to their responsibilities.
Personally, I very much regret to conclude with what may be thought harsh words, but I am compelled to do so in the public interest, when I see such a disregard for reasonable economy. I think I have shown that there has been no attempt to economize. I think I have made it clear that, with care and economy, there would have been no need whatever at the present time for imposing a drastic income tax on the people. Finally, I desire to express a hope that this ruinous and unnecessary method of finance may soon be changed for a saner and more just system.
Sitting suspended from 6.25 to 7.£5
.- The financial statement just delivered is by no means cheerful and encouraging. It is, however, satisfactory in that it permits of an understanding of the financial position of the last twelve months. For this small mercy we should be profoundly thankful.
For the year ended 30th June, 1915, the total expenditure of the Commonwealth was £36,823,615, which included special war expenditure of £14,790,000. For the current financial year namely, 1st July, 1915, to 30th June, 1916, the position is as follows: -
The means available and proposed for making good this stupendous deficit may be tabulated as under: -
– The honorable member appears to be reading his speech.
– The honorable member is quoting some figures.
– It is impossible to carry masses of figures and quotations in one’s head. It is proposed that the item £16,103,104 “to be otherwise provided “ will be raised by loan either in Australia or in Great Britain when the money is required. For the present and proximate war needs of the Treasury it is assumed that the balance of the British Government’s war loan, and the proceeds of the Commonwealth war loan, will suffice. It is hoped that there will be no occasion for the Government to raise a further war loan until the proceeds of the projected income tax have been received and expended. The estimated war expenditure for 1915-16 is to be applied as under: -
In addition to the £16,103,104 yet to be provided for, there is £10,000,000 of gold to be returned to the banks after the war. making £26,000,000 unprovided for.
State Borrowing. The States have borrowed £17,000,000 to redeem loans falling due, £18,000,000 from the Commonwealth, and £12,000,000 additional, increasing their total debt by £30,000,000. during the current calendar year. With the Commonwealth a large borrower, and’ the States so large consumers of loans, ruinous conflict and competition must soon evidence itself unless co-operation is arranged for. This has been pointed out time after time to the Prime Minister. He now appears to realize the position.
A Critical Time. In the words of the Melbourne Age, we ‘are passing through an unexampled crisis. We want something more than general principles to guide us through these stormy times. We want principles translated into practical measures, and the measures vigorously enforced. It will be the purpose of these remarks to re-assert the principles of the Labour movement, and to demonstrate their practicability.
History in the Making. During the history of the world great events have occurred which have created new eras in the thoughts and actions and experiences of men. Thus we date our modern civilization from the birth of Christ.
In the industrial world, the introduction of machinery and the joint stock company marked the commencement of: an epoch, a new period, which divides! commercial activity in much the same way as the Bible is divided, into old and new dispensations.
In like manner, the greatest of all wars now in progress, is so revolutionizing our economic, industrial, financial, and social relationships, that a new and distinct era of human activity promises to arise from the smouldering ashes of this world-wide conflagration. This period will probably witness organization on scientific lines of the relationships of men under the direction of the national power.
Organization. Organization is in the management of human affairs what machinery is in manufacture. The creation of either requires resource “and, ingenuity. It is the science of securing the maximum of result with the minimum of effort. On its negative side it means the adoption of method’s to prevent overlapping and waste. On its positive side it means the adoption of methods to promote efficiency. It is the adoption of method as a science, as an economy of government, of business, and of individual experience. Its study, development, and application is an important governmental function in Germany, and a primary commercial activity in the United States. In both countries master minds nave been induced to devote themselves to it especially. The inventive faculty is necessary to discover mechanical device and novelty. The faculty of method and order and the analytical mind are essential to produce and apply organization. Necessity creates the demand for both. Knowledge and experience perfect them. But organizers and inventors are a type. They are born, not made.
The Absence of Organization. Unfortunately organization is not a strong point with us. To the observer and student, one of the most amazing, and one of the most depressing; phenomena in Australia is the most appalling apathy, the appalling disorganization, the appalling overlapping of effort, and the appalling waste. It must exist in the nation, for it exists in its National Parliament, and what is Parliament but the reflex of the mind and purpose of the community?
We do not know our national wealth. We do not know our national income, expenditure, convertible resources, total debt, total interest bill, stock of gold, quantity of foodstuffs, extents and limits of taxation, the extent to which we may borrow safely, our currency requirements. We do not know how we are to meet our necessities, nor how we are to discharge our debts. We are without essential knowledge regarding our vital interests at home and abroad. We have a Trade and Customs Department that knows much about Customs, but little about trade. We have a Home Affairs Department that knows little about home affairs - it does not know even what State loans are raised and the cost of raising them. We have a Commonwealth Treasury that cannot tell us what gold is in the country. We have an External Affairs Department that has little external information - that cannot, for instance, inform us of the proposed almost revolutionary alteration of international power in the adjacent East by the military unification of Japan and China. This development is probably fraught with grave forebodings for us.
The goddess of carelessness is our reigning deity. We exhibit the valour of ignorance. We act without information. It as impossible to even estimate conse- quences. We merely blunder along, leaving the morrow to take care of itself. This is hot quite as applicable to our party as to the other. But the party whose aim is to leave things as they are has no necessity for information to compare with the party whose aim and object is the reconstruction of society. Furthermore, times of prosperity are giving place to a period of adversity. To follow the same course in days of peril as in the smiling and piping days of peace is ridiculous. What may be done with impunity at one season, may be to court and precipitate disaster at another. To direct attention to our national needs and short-comings is like the bleating of the lost lamb in the wilderness. It is ascribed to a disordered liver, to a fanatical turn of mind. The parliamentary chariot rumbles along as of old. The broad sweep of the hand, and “ It’s all right, brother,” “You’re a little nervy,” seem to symbolize as it were the national consciousness. Nevertheless, if we weather the approaching storm - particularly financial - it will be more by good luck than good management.- And although good luck may continue to -preside over us, good management is called for to-day as never before.
National Necessity. If there is one thing more than another, which emerges as a social ‘salient from the horrors and experience of this war, it is that scientific organization of production and industry is essential to national existence. We are having a new lesson on “ the survival of the fittest,” showing that no nation can -be expected to live as an important factor in our civilization whose arrangements of its affairs do not provide for efficiency in all its activities. Principles of political economy which have hitherto been regarded by many as mere academic platitudes, are now being demonstrated to have irresistible recommendations in actual practice.
The nations best prepared for this titanic conflict are those who have entered on the collective oversight and ownership of the means of production, distribution, and exchange. This system of political economy has been propagated by what is known as the Socialist school.
That the Socialist scheme may be misapplied is evident. Germany has prostituted the organization and efficiency of the Socialist scheme of collective effort, to the aggrandizement of a powerful co- operating combination of the bureaucracy of military rulers and capitalist caste, whose world-dominating ambitions are corelated and co-extensive, if not identical. These numerically insignificant groups have been able to monopolize the brains of scientific Germany through the financial power, and to coerce the industrial mass of Germany through the military power. In a word, the scheme evolved for the emancipation of the proletariat the ruling classes of Germany have appropriated to their own selfish use. The desirability, efficiency, and the necessity for the adoption of this scheme in the economy of government is proven. But it must be utilized for its rightful purpose, for universal betterment, not for sectional advancement - for the mass, not for a class.
A Great Opportunity. For those who believe in this system, and have the privilege and power of giving effect to it, the present is a unique occasion. National necessities demand it, and the public mind is ready for its application by competent authorities -
There is a tide in the affairs of men,
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows, and in miseries.
Nationalization of Exchange. The nationalization of exchange is one of the great pillars of the Socialist arch. A Commonwealth bank of issue, deposit, exchange, and reserve has been a plank of the fighting platform of the Federal Labour party since 1908.
Upon the promise of comprehensive action in this regard, Labour was returned to power, in both Houses of the National Parliament in 1910. At the close of 1909 the Leader of the Labour party, now Prime Minister, stated -
Unemployment is to-day caused primarily by a capitalist system; the remedy is for the community to take charge of production and exchange. - Argus, 7th September, 1909.
The Labour manifesto, 1910, stated -
Banking is one of the frauds by which capitalism bleeds the people. The labour proposal is not to nationalize the existing banks, but to establish a Commonwealth Bank with unlimited powers, which will have a branch in every considerable centre in Australia, and will enter into competition with the company-owned banks. The gradual extinction without compensation of the present banks would follow as a matter of course.
Commenting on this, the Brisbane Worker said -
The establishment of a bank of issue, deposit, exchange, and reserve, would be a big step towards making the Australian nation master of its own currency, and liberate its citizens from the talons of the money powers.
Extent of Commonwealth Power. The Commonwealth has power over banking - the means of exchange. It is the dominant financial power in Australia. For all practical purposes it isunlimited. These powers, as set forth briefly in the Constitution, are as follows: - Section 51, subsections mentioned - (ii.) Taxation; but so as not to discriminate between States or parts of States. (xiii.) Banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money. (xvi.) Bills of exchange and promissory notes. (xxxix.) Matters incidental to the execution of any power vested by this Constitution in the Parliament, or in either House thereof, or in. the Government of the Commonwealth, or in the Federal Judicature, or in any Department or office of the Commonwealth.
It is now accepted as a settled principle, declared by the High Court, that where a State law comes into conflict with a Commonwealth law upon a subjectmatter of Commonwealth power, the Commonwealth law, to the extent of any inconsistency, prevails. Under these circumstances, it will scarcely be disputed that a great Commonwealth banking institution of issue, deposit, exchange, and reserve, which would by law hold the reserves of all private banks, and upon those reserves issue currency and credit, would be such a powerful corporation that private banks would be able to exist only as feeders to an effectual Commonwealth monopoly. Our present Commonwealth Bank is shorn of its activities or. functions as a bank of reserve and abank of issue - the really great engines of financial power.
The Note Issue. We have a working illustration of the utility of the power of reserve and issue. Upon the outbreak of war the Commonwealth obtained £10,000,000 of gold from the private banks, to be lodged in the vaults of the Treasury as demanded. Upon this gold £40,000,000 of legal tender- Commonwealth notes - are being issued. The banks are being supplied with notes for use in place of the gold. Upon these notes as reserves the banks are issuing credit equal to at least £4 for every £1 held as reserves.
– I again rise to order. It is perfectly obvious that the honorable member is reading his speech, and I ask your ruling, sir, as to -whether he is entitled to do so.
– I ask the honorable member to quote less.
– I have gone to some pains to prepare this statement, and it is very ungenerous of the honorable member to seek to break up a prepared speech by continually taking points of order. The Prime Minister read his speech from beginning to end for over an hour.
– You are not the Prime Minister yet.
– I only claim equal facilities and consideration such as is extended to others. I presume nothing more and ask nothing more. The right honorable member for Swan read his speech. There should be no specially privileged persons on the floor of Parliament.
The gold in question is upholding a total superstructure of credit of at least £7 for every £1 in gold. Probably this applies to our whole note-issue. This is the creation of a reserve and issue department, a financial expediency department of the Treasury - not endowing the National Bank with them, and it is utilizing these powers in a temporary way - as a make-shift, as a kind of emergency “ lean to “ - with the maximum possibilities of danger and the minimum of advantage.
Utilize Public Credit.- If the Commonwealth Bank were fully created - endowed with the full, powers prescribed in the Labour platform, and controlled by a great administrative Board representative of the Commonwealth and States, the vast volume of public credit, of which our note-issue is but a small proportion, could be organized, mobilized, and applied to those purposes - Commonwealth, State, municipal, and general - as would best serve the interests of the whole nation. We must not overlook the fact that the States have the power to act should we refuse. This would vastly complicate the efforts to create one grand financial institution for the benefit, of Commonwealth and State alike-
Systems should he Investigated. Financial systems and banking systems have functions to perform which’ may profitably differ under varying conditions and circumstances. Great Britain is the gold bug of Europe - the world’s banker.
The Bank of England is the great international clearing house. The , system which has been created largely through the dominant influence of the British school of economists - the financial system of a great creditor nation - may for the very reasons for which it was propagated, be advantageously departed from or varied by a debtor country. It requires to be independently investigated, not slavishly copied and followed. There are two great systems of public currency - (a) Convertible paper currency based upon standardized gold - for both home and foreign trade.
The first is the dominant system with which the British school of economists have influenced the general banking system of the world.
The second is in evidence, for instance, in Greece - see Economist, 17th April, 1915. It is true the population of Greece is small, a little more than half that of Australia. But Greece has to maintain its position as a national entity in the very storm centre of the world. It has an efficient army of 400,000 men, and the anxiety of the Allies to induce Greece to array this fighting machine against the Germanic hosts is a testimony to its worth and capacity. Greece has produced some of the greatest thinkers of all ages - Aristotle, the political adviser of Alexander the Great, Demosthenes the orator, Pericles the statesman, Aristophanes, Plato, and Socrates - names that will live, and minds that will leave their impress upon humanity while time lasts. Let it not be assumed that a financial system adopted by this Mediterranean power is unworthy of serious inquiry . and consideration. In view, especially “of the farreaching financial disturbances now taking place, the whole matter should be approached and thoroughly investigated with an open mind.
Australian Banking. The banking system in Australia provides the connecting channel for the circulation of commercial credits. It is the local clearing house or exchange depot. The lending of credits or advances is a kind of byproduct, profitable and important though, it he, based upon the security of the bank’s customers. A multitude of depositors’ balances creates a kind of unearned increment which bankers operate. This increment should no more be appropriated to the use of private corporations than the unearned increment in land. It is par*, of the public estate, and should be operated by the public authority in the public interest. The nation has almost’ universally to rescue financial institutions from their own failures in controlling, and administering public credit. The nation, being really responsible for defects in management, should appropriate the profits and benefits.
First Step in Social Reform. The creation. . and regulation of all forms of a nation’s currency are not at present governmental functions, for almost every trader has recourse to some form or other of paper currency. Thus a complete socialization of currency would be impossible, except upon the accomplishment of a complete socialization of all forms of wealth and wealth production - at present not even advocated by the most imaginative propagandist. But the public currency, the clearing-house machinery, the banking function, should be nationalized or socialized. It is really the first step in social reform.
Railways are the arteries of material commerce. Banks are the transport facilities of the representation of commerce - credit. To operate one as a public utility, and allow private persons to operate the other as a private function, is an inexcusable paradox.
Progressive Confusion. High finance, or national finance, comprehends all forms and media of private finance. All must be taken into account. The financial operations of our largest institutions, as well as individual transactions, have peculiarities of their own, and are as variable as human faces. It is upon this aggregate of security that national finance is based. No wonder the subject is complex and perplexing. It is not the problem the lover of ease, the follower of the line of least resistance, would tackle. Many glittering and elusive butterflies bedeck the financial field. The casual observer, the superficial inquirer, the taker of things for granted, may easily be led astray. These bright gems have not as much substance as colour when run to earth. Indeed, some of them are mere optical illusions. Things are not always what they seem. Here are a few of the misconceptions - admixtures of truth and error -
Gold. Gold is a convenient form or representation of stored wealth for redressing international trade balances, because in all countries it has, by consent, design, and practice, a specific recognised relation to goods and services. It is the international medium of liquidation. It is a standard of values, not a security or basis for currency, except as a common commodity. The investment of gold with an economic halo, the long-sustained effort of a school of economists to deify gold into an infallible basis for currency, are fast disappearing into the limbo of the past. The gold basis for currency theory deserves to be described as a prehistoric curio for the commercial museum, a superstition of the economic dialectician, a magician’s wand, one of the mysteries of capitalistic witchcraft. The public must be weaned of their infatuosity. They must be taught the lessons of current banking history. Here are some authorities: -
Professor Meredith Atkinson (Oxford), Professor of Economics, Sydney University - Sydney Morning Herald, 11th August, 1914-
It is a fallacy, as common as it is vicious, to assume that the world’s credit system is based entirely upon gold. The English Bank Act of 1844 was founded on the idea that the prevention of crises could only be effected by safeguarding the gold reserve. The history of the nineteenth century is chequered with financial crises, whose disastrous effects were mitigated only by suspending the very Act designed to avert them.
Professor Irvine, Professor of Economics, Sydney University - Sydney Daily Telegraph, 11th August, 1914 -
Modern money is not gold….. the greater part of our buying and selling is done without the intervention of gold. The greater part of the values of these exchanges, though expressed in terms of gold, are not represented anywhere by gold.
The London Economist, 22nd May, 1915, page 996-
Bankers’ ideas regarding the so-called quick assets have undergone some modification during the past year. The warning which all students of banking matters have been uttering for several years regarding the fallacy of “ cash at call “ as an element of strength proved to be justified, for such cash became uncallable last July.
The Chancellor of the Exchequer and the Hon. Austin Chamberlain, both recognised as financial authorities of the first water, in the House of Commons, 23rd February, 1915, agreed upon the following : -
Unless gold is used to correct the balance of the exchanges, it is pure waste to hold it in exchange.
The Basis of Modern Currency. Security and confidence are the bases of modern currency. The universal medium is paper. Upon this foundation is reared a superstructure of cheques, notes, bonds, drafts, bills, letters of credit, and like instruments. This is the real exchange medium of the world. These parchments are promises to pay - acknowledgments of debt - liquid, floating, portable, transferable credits. They are credits to the receiver, and debts to the issuer. The currency of modern commerce is therefore manuscript based upon wealth in all forms, and confidence in the ability of the issuer to liquidate his liabilities. It is “ the substance of things hoped for, the evidence of things not seen.”
Security is visible and realizable, exchangeable wealth of all descriptions.
Confidence is potential wealth - the discount value of a pre-dated bill. It is as. though sight, hearing, and feeling had; been reduced to yard-stick measurements. It is the expression of the sensesof the corporate body of commerce in mathematical terms. Dealers in debts or credits - lenders, make advances not only upon the visible security of the borrower, but upon confidence, upon his commercial character, ability and business acumen - his capacity to create additional means of payment or liquidation. This is a matter of daily experience and common knowledge. Credit is therefore a volume of trust or confidence upon which trading may be conducted. Every sensible business man knows that he can only carry on a certain amount of trading on his capital. In the same way, a bank must keep in mind a certain relation of credit expansion to securities. For practical public purposes it is an ascertainable, definable quantity, and may be safely operated within these limits. These limits will be referred to subsequently.
The Utilization of Credit. The proposal recently submitted by the honor-, able member for Bourke, which came like “ a bolt from the blue,” was insufficient and impracticable. This was. no doubt, due to an oversight in drafting, for my honorable friend is too well versed in the subject to have fallen unto error through lack of knowledge. The proposal was as follows : -
That bonds to the extent of £20,000,000 be deposited in the Commonwealth Bank, and that the Governor of the said Bank be instructed to credit the Commonwealth Government to a like amount, less such charges as are necessary to pay the expenses of the Bank in operating the account of the Government. - Hansard, 21st July, 1915, page 5165.
Mr. Anstey went much further than this during the debate, as is shown by the following : -
– If the honorable member’s argument was any good, we might just as easily raise £1.000,000,000 as £5,000,000.
– That is quite true.
The honorable- gentleman qualified thislater by saying that the larger amount could be raised if there was security behind it. But this exposes the fundamental difference between a loan or credit for reproductive purposes - a credit by which an asset will be created - and a loan or credit to obtain goods and wealth for waste, for war. In one case, assets are created; in the other, assets are destroyed. There is, therefore, a very severe limit to credit expending on war services. It must not be forgotten that a loan utilised on war creates a vacuum, a black space, leaves nothing behind. A loan or credit in this case is not the means of effecting an exchange of assets, goods or services. Unless some arrangement is made to liquidate the debt, to actually -replace the wealth destroyed, such a proposal as that referred to is unsound. Utilize credit to create assets and the volume of credit expands; utilize credit for obtaining perishable products, and the volume of credit diminishes. The one adds to and enhances existing securities; the other not only adds nothing to existing securities, but destroys securities actually existing.
Nationalize the means of exchange and mobilize, under the control of the National Government, the basis of security upon which the superstructure of public credit is reared, and our full extent of available credit could be utilized for public purposes in the following manner: -
Mr. Knibbs, Commonwealth Statistician, writing under date 6th August, 1915, although unable to guarantee the figures, names £300,000,000 as the amount which Australia has already paid in interest - in produce of some sort - on its borrowings. This is a perpetual burden on the workers, on the production of the country - the penalty we pay for allowing the financial middleman to operate a great public utility - the public credit.
– I rise to order. I desire to call attention to standing order 256, which says that an honorable member shall not read his speech. I ask you, Mr. Chairman, to rule in regard to the speech now being read.
– I did call the honorable member to order previously, but it will be admitted that a good deal of latitude is usually allowed in a debate of this nature. I must say that the honorable member for Cook is quoting rather extensively, but the honorable member is exceptionally eloquent to-night, and it is difficult for me to divide the quotation from the onginal matter.
– There are a great many figures in my speech, and in the endeavour to compress a good deal of matter into a limited space of time I find it necessary to refer rather frequently to my notes. We have already taken away from the private financiers the right to issue bank notes - public currency. There is no real reason why we should allow these same institutions to control and manipulate the other greater branch of public .finance - the public credit created by the people of the country and the stability of the Government.
Instances of the utilization of public credit by Governments. Instances could be multiplied, but a few are ‘as good as many : -
The Economist for April stated that the gold reserve in the countries named, including Austria, whose expansion of note issue amounted to £89,000,000, was £149,000,000. This shows an expansion of public credit on notes to the extent’ of £708,000,000, or about £4 of credit for every £1 of security in gold. The general securities of these countries have sensibly diminished, so that there can be no additional assets excepting the gold. The Round Table asserts that these issues have not been pushed to a point involving depreciation. In parenthesis, it may be stated that the alleged increase in the gold reserve appears very doubtful, in view of the fact that the Allies have had to transfer large amounts of gold to neutral countries for war munitions. For instance, to the end of June of this year, £50,000,000 in gold had been sent to America. How then could their reserves increase? It is probably “ a white lie.”
The Expansion of Credit. The following facts are illuminating : -
American National Banks alone have excess - that is surplus - reserves of 730,000,000 dollars, permitting of new credit expansion of more than 3,000,000,000 dollars, while the surplus of the other 15,000 banking concerns is probably equally as large.
This indicates an expansion of credit upon the value of securities - not coin - in the ratio of four to one.
The facts stated above cannot be disputed. If .private financial institutions may lend credit on security, the Commonwealth may do the same. Its security is greater than that of any one or number of internal institutions, for it embraces and comprehends them all. We need only to create the machinery - to complete the equipment of the Commonwealth Bank by making it a bank of reserve and a bank of issue. The reserves would provide the necessary coin upon which to. issue the instruments of credit - notes. The security would be the whole of Australia, and all that it contains.
Limits of Credit Expansion. It would be possible to approximately estimate the limits of credit used without creating actual assets or tangible security. For no assets are left behind war expenditure, the only security being the promise - the good faith of the Government - the general taxation resources of the country. The limits to the Government’s borrowing - credit raising - is measured by its’ ability to pay the lender of credit for the convenience or accommodation. If, for the sake of example, borrowing under this system were carried far enough, continuously eating up wealth and wealth production for war, leaving no asset behind, progressively widening the’ gap between credit and security, and paying interest (by taxation of pre-existing wealth) to a small class who would themselves be exempt from taxation, the time would come when the whole of the wealth un- ‘ usable for war would become the property of this select few. At that point the Government would be compelled to repudiate its guarantee of exemption of taxation given to the lender of credit, and tax his interest to restore the proportion of credit to security, or to obtain further credit. Likewise, at this point, the circle of folly is completed, and the illogical and untrue basis of the whole transaction is exposed.
The Will and the Way. Inquiry, analysis, and consideration of the mass of facts and experiences of modern banking will amply repay the student. As applied to Australia it shows conclusively that our Commonwealth Bank is not at present in a position to carry on the great work intended. It is a mere infant struggling for existence against powerful and long- established rivals. It has no sufficient balances, reserves, or securities to materially benefit the Government’ in supplying the credit that our war finances render necessary. But the weakness can be cured. The defects can be remedied. There is the way if we have the will. The principles and pledges of the Labour movement demand action. Our professions are in the testing crucible. The circumstances are propitious. The advantages are obvious. The public interest is insistent. National necessities imperatively call for courageous enterprise. Our powers and opportunities are ample. The clay is in our hands to mould. There is no excuse for further delay. The task is not nearly so formidable as it appears at the distance. To get to grips with it will be to dissolve doubts and fears. Incompetence and timidity alone can explain our inability to effectuate our acknowledged purpose. Let us transform preaching into practice. Let us replace platform by achievement. Let us accomplish our ambition. We shall add fresh laurels to our party honours. We shall immeasurably increase our record of great performances. We shall add yet another trophy to the invincible genius of universal emancipation.
– I rise to a point of order. Standing order 256 provides that a member shall not read his speech; but it has become obvious that the speech of the honorable member for Cook is being read from the beginning to the end.
– This is a contemptible point of order.
– I must ask the honorable member to withdraw that remark.
– I withdraw it.
– I am sure, Mr. Chairman, that you have had sufficient experience to know that, especially in debates on financial questions, honorable members - particularly on the Treasury bench - have read their speeches from fully-prepared documents. I have listened to the honorable member for Cook, and I submit that he has not read all his speech. He has certainly referred to very copious notes, and has found occasion to read extensive quotations from authorities. I am of opinion that the honorable member for Echuca has not been paying sufficient attention to the debate; but that his time has been taken up in the endeavour to discover some method of suppressing the honorable member for Cook. I submit that the honorable member for Cook is quite in order in delivering his speech in the way he is doing. The same concession should be given to the honorable member that is given to other honorable members, like lie Prime Minister, the right honorable member for Swan, and others. The right honorable member for Swan interrupted me some little time ago, and said he never read his speeches; but I submit that he, when Treasurer, read his financial statement.
– I was speaking of my speech to-day.
– We are talking about the practice of the House, and not merely about to-day’s work.
– Would the honorable member depart from the Standing Orders?
Mi-. Higgs. - The Standing Orders-
– Are meant to be broken. Mr. Higgs. - They are frequently broken by the honorable member - the high admiral! The Standing Orders are the basis for the guidance of the House; and I apprehend, Mr. Chairman, that you will be guided by the practice of this Chamber.
– My ruling has been sought on standing order 256, which is mandatory, and states that a member shall not read his speech. I understand that the same point of order was taken before the Temporary Chairman earlier in the evening, and that he gave a ruling that a certain amount of latitude should be allowed at all times in financial debates, particularly when a number of figures is involved, rendering it almost impossible for a member to carry them in his mind. It is, however, distinctly out of order for a member to read his speech from beginning to end. This concession, I am aware, has been allowed to the Treasurer in making his statement; but, so far as I know, it has not been conceded to any other member of the Committee, although I am quite prepared to admit’ that the privileges of all are equal. Personally, I desire to interpret the Standing Orders as liberally as I possibly can. I shall allow a certain amount of latitude, particularly where figures are concerned; but if I find any honorable member absolutely breaking the rule by continuously reading his speech, and not merely making quotations, I shall feel compelled to intervene. I therefore ask the honorable member for Cook to comply with the Standing Orders.
– I am happy to say that the remarks I desired to deliver have been completed. I have to thank all the honorable members present except one, for their attentive hearing and sympathetic consideration during an effort obviously not easy - when dealing with a difficult subject. At the same time I wish to point out that if an honorable member comes into this House with a book from the Library, he can read it paragraph by paragraph, so long as he makes a few comments in between - that is, he can read what somebody else has prepared, during the whole of the time allotted to him. Every honorable member knows that that is perfectly true; and it is therefore absurd to nag at and interrupt a member who goes to the trouble of preparing a statement, as I have done for the last month, from reading it.
.- I followed the remarks of the honorable member for Cook with deep and growing interest, especially up to the ruling just given. I cannot now, looking back on the speech, conceal from myself that it was largely, if not wholly, read. The honorable member himself admitted, somewhat naively, that the subject had given him considerable trouble, and had involved him in vast preparation. I have had a somewhat protracted and variegated political career, and it has never been my lot to hear a speech that smelt so suffocatingly of the midnight oil. It took me back, with loving and lingering touch, to the forgotten vale of childhood, when I, like a great number of other honorable members, took a deep interest in debating society essays - essays which’ generally succeeded in eliciting a vast amount of discussion, but ended nowhere, just where, I am afraid, the honorable member, with his recondite deliverance, has landed himself and the Committee.
– You cannot refute my conclusions!
– I do not know what they were. Notwithstanding this criticism, which I think the honorable member will permit rae to say is justified, there was much in the speech that was new and beautiful; but, unfortunately, as one celebrated critic said on a former occasion, that which was new was not beautiful, and that which was beautiful was notnew. As to banking, we had vast slabs from standard works which honorable’ members have read.
– That is not true!
– These were duly acknowledged and revised by the maturer thought of the honorable member, but much of them were platitudinarian and old.
– Everything I quoted I quoted exactly, and gave the authority.
– I am not accusing the honorable member of literary plagiarism or piracy; he only showed how faithfully he has read, and how closely the index of his memory has registered his reading. My acquaintance with the works almost lead me to the very chapters from which the honorable member drew his ideas. I am not suggesting that it is not advisable on , important occasions for honorable members to come to the House with minds well stored with standard authorities, for it is excellent teaching for those who have not time to pay attention to all branches of a subject. There is great doubt, however, whether that part of his speech, which to some extent I concur in, would be found practicable in actual experience. I take it that the honorable member believes that there is ample authority under the Constitution and laws of this nation to so enlarge the Commonwealth Bank, and to give such a powerful incentive to organized public credit, that all the evils to which we are heir will be met and cured.
– Let the States in!
– The honorable member for Darwin, in the course of the speech we have just heard, now and again gave a word of approval or emphasis, and I could see how large was the concurrencebetween the two honorable members. When this speech is published - as I trust it will be, because it is a carefully .prepared document - I hope that as marginal notes the remarks of the honorable member for Darwin will also appear. May I say that the honorable member for Cook is probably much more studied in this subject than most honorable members of his party, or even honorable members on this side. I can see in the design of his speech, and in its motive, a recognition by himself of the early departure of the Treasurer for some field of service elsewhere; and the honorable member wishes to place on the Committee, as on a vast transparent hoarding, the advertisement that he is not only a candidate, but is qualified for the office. I commend hia judgment and sense of prevision.
– You think you ought to be Leader of the Opposition, do you not?
– No, I do not- yet. When I do I shall tell the honorable member; but I am sure he is good-natured enough to know that when we have listened to hia mysteriously prepared speech for an hour and a quarter, we are due for a little joke.
– You had afew jokes yourself at the expense of your colleague, the right honorable member for Swan.
Mr.WATT.- That honorable member can stand jokes. He fired back like a revolving fort, while the honorable member for Cook did not, but, when he was hit, said he did not wish to be interfered with in the execution of his duty. The quarrel I have with the honorable member for Cook is the quarrel I have with all who have spoken on the question from either side. I refer now to my respected leader and the right honorable member for Swan, who, it seems to me, have treated this as a Budget occasion. They have attacked the financial statement of the Treasurer as if it were a fully-prepared and, as it is now fashionable to say, “finalized” Budget. I cannot hide from myself the knowledge that from both sides of the House during the past two months there has come the solicitous request that the Treasurer should, as early as possible, take a glance at the finances for the year closing on the 30th June last, and also give us the advantage of a forecast for the forthcoming year. I do not take the statement under discussion to be a Budget, but merely a kind of impressionist attempt at a Budget, leaving the definite figures for a later time, when all the factors can be taken into consideration, and we know what our commitments are at home and abroad. Honorable members on either side cannot come to a consideration of the facts and figures presented to us without a feeling of deep sympathy for the Treasurer who has to handle this, the greatest problem that any Treasurer has had to handle since Australia or any parts of it had responsible government. The Leader of the Opposition expressed his desire that in this debate that fact should be kept in view; and I hope I shall say nothing to lead honorable members to think that I am unmindful of the’ heavy and unique responsibility that to-day lies on the Leader of the Government. If we require any proof other than the denial of the Treasurer that this is a Budget, we find it in the utterance itself, on which we are now called upon to comment. Everywhere we find in it signs of hasty preparation. In some instances, sums are not added, and matters that were promised to be attended to were forgotten before the speech closed. I do not blame the right honorable gentleman for this, but I pause to comment on these omissions as indicative of the fact that this was but a thumbnail sketch of the Budget that has yet to come. The first sign to which I have alluded has led to confusion in some directions. Some honorable members have treated the figures given as the Estimates for 1915-16. The Treasurer himself declared them to be Draft Estimates. What are Draft Estimates? If they be truly described, they mean the requisitions that first come from the Departments to the Treasury for addition, reconciliation, and approval, and if they be primary drafts they are always swollen far above what eventually get through the sweating chamber of the Treasury. There is no honorable member who has had any experience as an administrator of the affairs of the nation but does not know the unpleasant but inevitable task that the Treasurer and his staff have each year in going through these Draft Estimates, and reducing them and getting the measure of them in order to get them within the State’s means. On this occasion, our Treasurer has brought down unrevised Estimates, and said, “ These are the total requisitions of the Departments.”
– He had no business to do any such thing.
– It was so declared by the Treasurer in his speech, and again in an interjection to the right honorable member for Swan.
– The Treasurer said that he had cut them down considerably.
– I did not hear him say that. In that case, they are not the original Draft Estimates. As to whether it was a wise procedure is an altogether different matter. I doubt the wisdom of saying, “ Here are the figures upon which the Government have been asked to frame their Budget. We give them to the House and the country in the raw and rough state. We do not say where we are going to pare or subtract.” Such a statement undoubtedly invites the misapprenhension that has arisen in the minds of some honorable members.
– I do not think that such was the case.
– Experience alone will prove whether it is a wise procedure; but I venture to think that when, after an adjournment of the House, the Treasurer presents his definite and final figures, it will be found that some of the items which we have criticised, involving increases on ordinary expenditure, will be reduced within the compass of our means. . T take leave to hope, in addition to thinking, that such will be the case. Another phase of the utterance of the Treasurer, which indicated hasty preparation was the fact that no indication was given by him then, nor in his speech today, as to how the deficit of £19,000,000 is to be bridged. I use the term “ deficit” advisedly, because, including provision for new works, and after imposing taxation amounting to £4,000,000, there is a sum of £19,000,000 “to be otherwise provided for,” according to the Treasurer’s statement. I hope that before this debate on Supply is concluded the Treasurer will be good enough to direct his attention to that omission, because we, who are in charge of the people’s purse, cannot be doing our duty properly if we do not know how that yawning gulf is to be bridged, whether it is to be done by extra taxation or loan, or by appropriation of any of the funds within the control of the Treasurer.
– All the military and naval expenditure is from loan funds.
– I am well aware of the source of that expenditure, but I am speaking of the deficit, for which there was no provision suggested either in the utterance or the tables of the Treasurer, and concerning which the right honorable gentleman has given us no explanation.
– Why should the Treasurer, so early in the year, anticipate what is proposed to be done by Parliament later?
– When the financial wants of the country are known, it is the invariable practice and duty of the Treasurer to inform the Committee as to where his ways and means are to come from, and I believe that it was but inadvertence on his part that he did not give information for which the Committee was entitled to ask. Another extraordinary feature of the figures as presented is the fact that for the first time in our history the expenditure for the year ended 30th June last balanced to a penny the receipts for the year.
– That happens every year in the Commonwealth.
– That is so when there is an appropriation to the Surplus Revenue Account, but on this occasion there was no such appropriation, and the Treasurer has been able to take his receipts, and spend just that much and no more. I take leave to say that this has been done improperly, and I am sure that this will be admitted in the Budget at a later stage.
– Section 94 compels it.
– I have no desire to appeal to the Chair against my right honorable friend, the revolving fort, whose voice is so much stronger than mine that I do not hope to enter into competition with him in that respect.
– The honorable member will find that I am correct.
– The Treasurer stated the total receipts as £38,047,962, this total being made up as follows : - Revenue, £22,411,700; British loans, £14,100,000; Treasury-bills, £311,905; surplus from preceding year, £1,224,347. That, also, made the exact total of what was spent, and we have, therefore, the right to inquire later on, probably, if necessary, by means of the Committee of Public Accounts, as to how this mysterious balance has been created without the absorption into the Surplus Revenue Account of any surplus as in previous years.
– It is done every year.
– It was not done before the creation of the Surplus Revenue Account.
– It is always put into a Trust Fund. *
– There is no Trust Fund this year. This peculiar circumstance would have been explained if there was any money from revenue or loan in excess of requirements that had been taken into Trust Fund, but no payment of that kind was made during the last financial year, so that we are driven to question how such an exact balance could be arrived at, every penny raised, no more and no less, having been spent during the year. Another feature of this preBudget statement is the awkward way in which the figures of revenue and loan have been used on both sides of the cashbook. I hope that when, the Budget is finally presented to the Committee there will be a clear red line on both sides of the statement separating the revenue receipts from loan and other receipts, so that, as they run, honorable members can know exactly the difference between the receipts from taxation and those that come to us as raisings, and which we have, in some form or other, eventually to repay.
– There would be no sense in not doing so.
– Yet in this pre-Budget statement it is not done. The right honorable member for Swan and I came into violent conflict as to whether a particular £800,000 was to be paid out of revenue this year. Judging from the figures supplied, we do not know where any particular item pf expenditure in whole or in part is met in whole or in part by revenue or by lo’an. Yet we should know, beyond the shadow of mistake how the money spent is raised. Allowing for all this evidence of raw haste, which is only natural, and to be expected, the outstanding feature of the Treasurer’s statement is that our expenditure is to be £74,000,000 this year, and our revenue is to be £27,000,000, leaving a sum of between £46,000,000 and £47,0’00,000 that has to be met by some other form of income. However we reason about the situation at which we have arrived to-day, whatever our political or financial creed, or objective may be, this is the most serious fact confronting the Legislature of Australia, apart from the great Avar. And it arises out of the war. The war figures amount to over £45,000,000, leaving out interest and sinking fund on the new war loan, but there is no man on either side of the Committee who would suggest the reduction of that expenditure by one penny. If that £45,000,000 is spent economically and wisely, there will be a chorus of approval and of complete acquiescence, but there is a thought suggested by some criticism from this side of the House, and the Committee has not yet been given an assurance - it is probably beyond the capacity of any individual Minister - as to the wise control of that expenditure. I do not pretend to believe that any nation, however wisely organized, can get 20s. in the £1 for its Avar expenditure at home or in the field, yet if one keeps one’s eyes and ears open in Australia, there is undoubtedly indication of loose expenditure through the Defence Department to-day. I do not say this in order to attach blame to Senator Pearce or the Minister for the Navy, but wherever we sit in this chamber, if we hear that this is going on, and believe it to be true, we have a perfect right to tell Ministers, as the only agents of the nation in executive authority, and to see by some machinery, business-like machinery, extra departmental machinery probably, that the money we are spending is giving* us as full value as the nation can expect in these extraordinary circumstances. It is not with the war expenditure that I wish to deal, but it is upon some of the items of what I call the peace budget that I wish to dwell for a few minutes, because if we take out the £45,000,000 of war expenditure, we leave as a residue the peace expenditure. We can examine the figures in two ways - we can either include the works which are in contemplation, or we can excise the works, and calculate without them, but if we include the works amounting, roughly, to £3,000,000, which is the wiser course, we arrive at an expenditure of £28,000,000. The revenue against that is £23,000,000. Thus £28,000,000 is’ our peace expenditure, as shown in the pre-Budget statement, and £23,000,000 is our peace revenue; but it should not be forgotten that it includes some ‘ special war taxation, because the super land tax, submitted and carried earlier in the session, is already yielding its fruit to the Treasury, and the extra Tariff collections, whatever they may be., are already in operation, so that the revenue estimated represents peace revenue plus some special war revenue; and even with that included, it fails to meet the peace expenditure by £4,750,000. I do not know how the Treasurer feels about that.
– In that amount is included provision for war pensions.
– To be microscopically correct it is necessary to deduct from the expenditure £1,300,000 for interest and sinking fund and £500,000 for war pensions, leaving in round figures £3,000,000 unprovided for if there were no war and we were actually at peace. This nation, fourteen years after 0its establishment, thus finds that it has lived so indulgently that although our taxation is yielding, roughly, at the rate of 60s. per head through the Customs House, we are this year expending about £3,000,000 over our receipts.
– Some of that has been caused through the war.
– I am not able to assume that from the figures given by the Treasurer.
– You are assuming that the whole of the estimated expenditure will be spent.
– I am assuming that the draft Estimate figures will be expended, and all my deductions made from those figures are based on that assumption. If the Treasurer is able, with the consent of his Ministers, to cut off £1,000,000 from the expenditure of the Departments, the £3,000,000 deficit will be reduced to £2,000,000. If he is able to cut off £2,000,000 it will be reduced to £1,000,000, but he will have to cut off £3,000,000 to obliterate it. I do not know how the Treasurer feels about this matter, but I cannot help thinking that he Eas many uncomfortable dreams about it. I believe him to be sincerely desirous ‘of doing his duty as Treasurer conscientiously and faithfully at this critical time, and that being so, he sees nothing before him, with the means at his disposal, but this great deficit, which, instead of getting smaller, is likely to become annually larger and larger. The increases shown in the Draft Estimates, and on which already comment has been made, are realities. They are no nightmare conjured up with which to frighten timid political neophytes. They are actualities which the right honorable gentleman will have to meet in soma way or other, and the Ministerial party must be just as desirous of safeguarding the credit and solvency of this their native or adopted country, as are honorable members on this side. I merely utter these thoughts, not by way of complaint about the figures as now submitted, but to show that if they be maintained in their final form this country is up against a proposition to provide still further revenue for peace purposes than we have ever yet thought of. I cannot take the view which the Attorney-General took in introducing the one taxation Bill of this session, that considerations of, and cries for. economy must be passed by as the hysterical wailings of unfortunate political lunatics.
– I did not say that.
– I admit that I am translating freely.
– You take a little of what I said and add to it a lot of what you say.
– I had to decorate the honorable member’s utterance, which was greyer than usual.
– I prefer that you should leave it as I uttered it.
– Will it meet the honorable member if 1 attribute to him the remark that requests for economy were hysterical at this stage? I do not think they are. There is not a journal or public teacher, or public representative, in this country who does not feel that requests for economy judiciously provided and made, must be the desire of every party and individual representative of the people.
– I was speaking of economy of taxation.
– I admit that there is an economy which starves and kills. We have seen it in all the States in those recurring periods of prosperity or depression, when we are seized with panic and do the wrong thing. Assuming that wisdom resides in the Government of the day, it is safe to say that they cannot refer to the demand for economy as an hysterical outcry.
– -What I did say was that persons with incomes between £104 and £156 could not economize and live.
– That is another issue; and I am ready to join very sympathetically in the consideration of the problem of the man with an income under £156 a year. The Government have, broadly speaking, struck, in that respect, the right figure, although I think the exemption might be dealt with in a more elastic way when the individual taxpayer even below £156 has no dependants. That is the only qualification I make at this stage. I would: remind honorable members opposite that if they desire to spread the drag-net of taxation more equitably, according to their view, and over wider waters, there are other means of doing it; but I would not go in this particular respect below £3 a week, which, at the present price of provisions, seems to me to be the fair compromise for the married man with dependants. The only conclusion I draw at this stage is that, in regard to our peace expenditure, which is increasing every year, the duty of economy will be thrust by the nation upon whoever is in power. I hope it will not be pursued, as some of the journalistic advisers of the Government would have it, in any hasty or panic-stricken way, but that the Government and their departmental heads will realize the necessity of getting ready for it. Whether it is done this year or next does not very much matter, so long as it is done, and we get back to the economic truth that a nation, like an individual, if it wants to keep creditable and solvent, must live within its means. When a nation talks of its means, it talks only of asking as much from the people as it actually needs to discharge the social or other purposes of the nation. The individual taxpayer will spend his own money better than the Treasurer will spend it for him; and if the Treasurer is wise, he will leave as much as he can in the pocket of the taxpayer, and take as little as practicable for his financial purposes. I take leave at thic stage to comment on the figures regarding State borrowings which the Treasurer gave the Committee. As quoted by the honorable member for Cook, they embrace the financial and calendar year, and thus overlap. The figures, as I read them in the Treasurer’s speech, are these: The States have borrowed, by arrangement with the Commonwealth in the financial year ended 30th June last, £12,125,000. They borrowed in London and Australia, including the £900,000 specially arranged for. by Victoria, the sum. of £13,800,000, making the. total spendings from loan sources £25,925,000. As one who believes that most of the State loan expenditure has been in years gone by, and is even at present, being wisely invested, I really feel alarmed at the magnitude of these operations, if they be correctly stated; but we have not the means at this stage of testing the sources from which the advisers of the Treasurer got their information. We were told by the Treasurer that the State Treasurers had supplied him with the figures; but I am inclined to believe that, notwithstanding the orgy of expenditure indulged in by some Governments in Australia in recent years, they include provision for converted loans. The Treasurer said they did not, but I think they do. It must be remembered that the £26,000,000 is in addition to what we know as “ over the counter “ business.
– Taking the balance of loan money to come from the Commonwealth up to November would make £30,000,000.
– Quite so. If the honorable member reaches forward to the 30th November of this year, which will include almost half of the present financial year, his figures are correct. But beginning at the 1st July, 1914, and ending at 30th June, 1915, the correct figures are those given by the Treasurer. The overthecounter business is fairly substantial in some States, and if it is not included it ought to be. Some of the States have offered an inducement to friendly societies to invest in specially created stocks their money as it falls in, and a lot of money comes into the Treasury in that way. A number of private trustees buy over the. counter, and Savings Bank managers sometimes make arrangements not to float loans, but to advance against Treasury bonds or debentures, and if we are not sure that all these items, probably amounting to many millions for the whole of the States in one year, are included in the figures submitted to us, the Treasurer should ascertain the facts, and inform the Committee as far as possible. Assuming that they are included, and that there is no conversion business in the total, the outstanding fact remains that during this period of war the States have in the aggregate added fo the capital debt by £5 per head. That is an appalling rate at which to speed with the market gradually closing against them at the other end of the world, and with the sure knowledge that when that market closes for them it closes also for the Commonwealth, and thus drives the Commonwealth on to our own market, as it has done for the £20,000,000 loan. I was glad to hear the Treasurer’s statement that there would be a conference of the financial authorities of the Commonwealth and States to endeavour to arrive at some understanding for the co-ordination of operations both here and in London. The States will recognise, as we all do, that war requirements must come absolutely first. Even if it does mean for the States a shrinkage for the time being of their forward public works policy, it is much more important that we should win the war than that a railway should go to a particular district, or that public works should proceed at the same rhythmic pace as in times of peace. Our requirements must be recognised as standing first, and therefore the Commonwealth demands should be first made on the financial resources of the people, and first met.
– Why say anything about State public borrowings when, as you say, the railway and other public works are probably paid for with this money!
– If the money is coming in at a reasonable rate, it is quite a sound policy that we should continue to borrow as States to promote those great industrial undertakings, especially if the interest rate is not going to rise unduly against us; but if the State borrowings are going to restrict the freedom and elasticity of the nation in coping with the great Imperial problem, they should be regarded as secondary to that paramount consideration. I do not want to shut the States out; I want to give them the greatest possible freedom. The States may have a labour problem if moneys are shut off at the main, whether that main is in London, Melbourne, or Sydney. Whatever happens, there should be a complete understanding between the States and the nation as to future borrowings, and that understanding must during a time of war lead to a restriction of the credit of the States.
– That is about the only time that we can get an understanding.
– We had it before, when the war broke out, and the States told the Commonwealth that they wanted it to help them with loan money.
– That was since the outbreak of war.
– It was when the war broke out. I am not a believer in haste in the consolidation of the public debts, but I have on many occasions, in other positions and here, asked the Commonwealth Government to pay early attention to this question. Whether financial advisers would say that this period of financial stress is the best time in which to operate, I do not know; but it is the best time for getting the States into reasonable order to consider the problem.
– Having been in both the Federal and State spheres of politics, the honorable member should be in. a position to offer a suggestion as to how the various parties can be brought together.
– I have offered suggestions in concrete form, and have put forward definite schemes. I have always been an advocate of the consolidation of the debts of Australia, and my visit to London confirmed me in the conviction that with seven borrowers, and even with six, the inevitable jostling and competition are bad for the credit of the nation. With proper organization nothing but benefit could accrue to the States by the consolidation of the debts. This consolidation will involve arrangements respecting future borrowing. Whether these arrangements will take the form of definite restrictions cannot be dealt with at this stage. You must regard the problem as a whole, and cannot deal with it in part only.
– Is there a solution, except under an understanding or condition that there will be control of future borrowing?
– I do not believe in such understandings. In all the Conferences in which the consideration of this problem has been attempted, the Federal attitude has been, “We will take over your debts if you will give an undertaking that future borrowings shall be limited.”
– Not limited exactly, but subject to Commonwealth approval.
– -That would be the same thing. I cannot help feeling that the wrong attitude has been adopted by the Commonwealth all through, and that the solution of the problem has, therefore, been hindered. There is going to be a natural settlement of the question once the debts are consolidated, even if not one written word passes between the contracting parties. Once, by reason of the conversions and consolidation, Commonwealth stock begins to take the place of the State stocks, London will not deal with anything else except at a fabulous rate. The example of Canada pretty well shows that. The Canadian provinces, like the Canadian cities, have not been told to go out of London, but on more than one occasion they have been “ warned off the course “ ; if they have not been refused business, they have been quoted such figures that they have felt that it would be better not to borrow. The opinion I gathered at the other end of the world was that, if we consolidated our debts, London, a few months after the consolidation, would wish to deal with one Australian stock only. That would give the Commonwealth a very large authority over the States, and is a thing that I somewhat fear. I have always thought that Commonwealth Treasurers, coming and going as they must, will take different views of the activities of the States, and unless we create some governing organization to measure out to the States a fair quantity of means for their public requirements, there will be eccentricity of development which will be harmful. That is why I have suggested the creation of a body of trustees to help the consolidation. Although the right honorable member for Swan, judging from his schemes and his utterances, does not believe in that, I think that if both parties- in this Parliament were to come together, and say, “This is not a party question, because finance is the bedrock of all government,” we should early have the recognition that some such organization should be created, and would be beneficial.
– Something on the lines of the British National Debt Commission.
– Yes; though the functions would be different, because of the difference in circumstances.
– Although the States might not be able to borrow in London, they would still be able to borrow in Australia.
– Precisely. The field of borrowing would not be exhausted. But there would be a natural limitation to borrowing in Australia. The opportunities for raising money on loan here are more limited than in London and in other big financial centres, and this natural limitation would compress and regulate local borrowing, while overseas borrowing would be affected in the way I have described. I hope that the Treasurer - not now, when he has greater problems to face, but as soon as possible - will have some sympathetic conference with the Governments of the States, and try to create an organization for the consolidation of the debts and the regulation of the borrowing of Australia.
– Could not the Commonwealth Bank, if it had State representatives on its Board, do that?
– The Bank might do something if it were truly representative of all interests, but that I regard as practically impossible, because of the adamant attitude of the Treasurer on the subject. We have held out the hand of friendship to him in schemes of the kind, but he has always said that, although the Brisbane Conference, speaking for his party, proposed such a thing, he did not believe in it. Thus we have in complete authority in Australia to-day a party, whose mandate has come from its duly appointed Conference, which has designed a scheme which most honorable members want, but its responsible leaders will not put. that scheme into operation. I do not wishto introduce party politics, but the honorable member for Darwin brings thismatter to my recollection. If the Treasurer could not see his way to appoint a. National Debts Commission to do the work of which I have spoken, he might take the middle step suggested by the honorable member for Darwin, and create within the Commonwealth Bank an organization representative of both the Federation and the States, which could either temporarily or finally discharge these important functions. If that were not done, the Federal Treasurer would be the absolute dictator of the financial policy, not only of his own Government, but also of all the entities comprising the nation, municipalities as well as States. His fiat would decide the public works and development policies of the States as well as of the nation. This would make a fiction of local government. If you deprived the local authorities of the right to finance, either by imposing taxation or raising money, or both] you would take from them the life blood which sustains them. Local government would then be a mere fiction, and Unification would come as a disease instead of as a remedy. I had intended to refer at some length to the note issue, but I shall’ not pause long on it, because there are other questions on which I wish to touch. According to the Treasurer, the note issue on the 9th August last was £34,635,000. Then we have commitments to the banks - part of the £10,000,000- of which” £5,000,000, in round figures, have not yet been lifted by us. There are issuable Treasurybonds, provided for last year and only issued to a portion of the authority, the sum not yet issued being about £2,250,000. This makes a sum total of £42,000,000. In addition- I take it to be. in addition, though the Treasurer was not clear on the point - the Transcontinental railway is to be financed by an issue of notes. It may be that this issue was contemplated under the Treasurybills Act, but it may be a separate issue. If it be a separate issue, it will add’ another £2,000,000 or £3,000,000, bringing the note issue for the present financial year to £44,000,000 or £45,000,000. There must be other issues. For example, the arrangement still holds that the banks, if money is needed, can bring gold to the Treasury, and get notes for it. In all probability, if things get tight, they will do that, and there may be an issue of £1,000,000 or £2,000,000 during the -financial year, under cover of that arrangement. Thus we shall come perilously near to a note-issue of £50,000,000. “When, at the beginning of the war, we reminded the Treasurer, on his assumption of office, of the dangers of a large or unlimited issue, he scorned the idea that the issue would ever reach anything like £30,000,000. I said that I could not see that it would be less than £35,000,000, but he discounted my statement.
– At first, it was thought that it would not reach £8,000,000.
– I am glad of that interjection. I am not, and never have been, opposed to a note-issue. I have always thought that the party with which I have the honour to be associated was foolish in not putting it into operation - in a different way, perhaps, than that provided for in the statute-book, and more on the Canadian principle. I am not against the note-issue as a note-issue.
– The right honorable member for Swan had a Bill prepared.
– Our Government was turned out before we could deal with the matter.
– Honorable members opposite have always fought against the note-issue.
– Members have a habit of fighting against proposals when they are in Opposition - honorable members of the Labour party as well as others. The noteissue is likely to approach £50,000,000. Although the gold reserve to-day is slightly over 34 per cent., it cannot continue at that proportion long, I hope that the Government, as I am sure the Treasury officials would like, will keep the closest possible eye on the noteissue. It is not so much during the period of progression that we shall have cause to fear. While our confidence and our credit in our resources last, there is not going to be trouble. But difficulties will arise later. We shall have to deal with deficits in regard to revenue. They must be met somehow. Then we shall have to repay the British Government loan, and the £10,000,000 Bank Joan. This must be done just at the time that the note-issue will begin to shrink. Assuming that at the end of the war the note-issue stands at £30,000,000, it will have to come back to at least £15,000,000. Before the war the note-issue was barely £9,000,0*00, but the community, Having got used to paper money, may be able to use £15,000,000. In that case there must he a shrinkage of £35,000,000, just at the time when the Treasurer and his officials will be at their wit’s end for money. I do not see how all these things ‘can synchronize with success, unless the greatest care is exercised to restrict the oversea borrowing, or further issue of this otherwise desirable form of currency.
– It is only deferred borrowing.
– I believe that to be so.
– At the end they will borrow more.
– That will be necessary, but will not be easy, because all the nations of the earth, whose public works are to-day tied up, and whose assets are being destroyed, will also be borrowing, and there will be only three or four markets in which to borrow. New York will probably handle more business than ever, because custom is coming to that city. Paris will rectify and adjust, and become a foreign lending city. Berlin will not. Thus there will be only London and these other cities to deal with the loans, which will be so large that they will bewilder those in charge of the underwriting and brokerage business. We must, therefore, make our requests much smaller.
– The rate of interest will check our borrowing.
– The rate of interest cannot check borrowing when money must be had. The Government cannot regulate this except by declaring their notes inconvertible, or suspending specie payments. If the notes come singly or in dozens to the Treasury counter, gold must be paid out, and in the hand of the individual holder rests the option of demand, and the Treasurer will require to have, in addition to the reserve, power to shrink the note-issue from £50,000,000 to £15,000,000. I believe that the Government would be wise to take the fullest counsel available at every stage, not on the question of taxation, because therein rests Executive responsibility, but on the question of further borrowing, or the further issue or redemption of notes - counsel with the best minds that are accessible anywhere in Australia, so as to insure that the Treasury, armed as it is with a good departmental staff, will receive the best expert financial assistance. That course seems to be necessary, and I understand the Treasurer is desirous of following it. In regard to the Australian loan, I see, according to the figures of the pre-Budget statement, that the proposition is to have the whole of these four instalments of the £20,000,000 loan floated and issued before the 30th June next. I do not know whether that is the intention, but the figures show the £20,000,000 of loan money as provided towards meeting the expenditure of the year. Already we are past the middle of August, and I do not suppose another instalment could be floated before Christmas. Until we know what the harvest results are, and some of the money changes hands, ‘and the balance of trade has floated in our direction, the Treasurer will be well advised not to offer any more loan money, that is, before January or February, and unless we get a large oversubscription of the first instalment, it will not be convenient to float the remaining £15,000,000 in the last two quarters of the financial year. We are hopeful, however, that there will be a substantial over-request for this loan, probably to the extent of £2,000,000 or £3,000,000 beyond the £5,000,000 for which the Government are asking, and if that happens it would seem to be an easier problem to carry the loan proposition through. But there is one. phase of the question upon which I desire to pause. The Treasurer has said that he does not believe that £20,000,000 is the maximum borrowing power of the Commonwealth within its own borders, or the limit of the lending power of its people. Neither do I, but there does seem to be a gathering opinion that that £20,000,000, when once spent, will be returned to its usual coffers, as water returns to a pool, and may be again drawn upon. If the Treasurer is calculating upon that assumption, he is certainly not reading the financial position as many of us regard it. While it is true that the bulk of this money will return to the use of the nation, it will not return to the same hands. It will very likely pass from ABC into the hands of XYZ, and although ABC may have acquired more money when the next request comes, XYZ. having in the meantime parted with their goods, may feel called upon to use that money in the creation of further employment in manufacture and production, and, therefore, there will not be any substantial proportion of the original £20,000,000 available for a second issue.
– But by and large only a small percentage of the people hold the money, and to that small percentage the money returns, no matter how it meanders on its way.
– In the long run it does so, but assume that £1,000,000 comes from the small savings, contributions which the Treasurer has arranged to receive. That £1,000,000 does not get back to the- owners of those small savings.
– Oh, no; that is the last rose of their summer.
– But they have the bond, and they draw the interest. I hope the Government is taking advice as to how far this borrowing is likely to disturb the holdings of the Savings Banks of the Commonwealth and the States, because I regard that consideration as vital. Honorable members know that the Saving Bank authorities of the States have as their first line of defence against a run, roughly, about 15 per cent, of their deposits. Part of that “15 per cent, may go. The second line of defence is generally in some semi-liquid form - deposits fixed and breakable in the commercial banks of the nation. In Victoria the Savings Bank always carries about £4,000,000 of constantly recurring fixed deposits, which they have power to break at the loss of interest for that month. It may be that some of that money will have to be disturbed by the Savings Bank authorities if the run on the 15 per cent, margin is severe, and in that event the drain will be felt by all banks that have to immediately cash. Therefore, the banks will be called upon to assist the loan in a secondary way when some of the fixed depositors require payment. I’ hope that all through this movement the Government will exercise the greatest care, and take the financial advice they have hitherto had and such other advice as they will be able to obtain before launching a second instalment of the loan. As to the British loans, the two loans which the Commonwealth has obtained from the British Government seem to be the first of their kind in this respect, that we do not know what we are going to pay for them, or how long they will last. As sketched by the Treasurer, the operation is this : The first loan of £18,000,000 was to come in instalments as the money was required for war purposes, over a period of eighteen months, and we were to be charged as we receive the money at a temporarily fixed rate. But we would not know whether the adjustment was against us or for us until the loan was wound up, because it was merged in the borrowings of the British Government, and the British Exchequer could not tell us immediately what the ‘ money would cost. It seems to me that that was not the wisest course to follow. Tt would have been better for the Commonwealth to say, through the High Commissioner, to the British Exchequer, “ What is the rate you think you will be able to obtain? If you think the money can be obtained at 4 per cent., we will pay 4 per cent., because we want to be able to write up our debit annually.” It may be,’if this war drags on for two or three years, and the adjustments are adjourned for a further two or three years, that the Treasurer will have falling in oh him at the end of five or six years a heavy debit, because of the disadvantage of having to make up arrears of interest on the British war loan. Therefore, I hope it is not too late even now for the Treasurer to endeavour to make definite arrangements, if not as to the period of the loan, at least as to the rate of interest we shall pay. There is a proposition in the pre-Budget statement in regard to the £1,000,000 of revenue earned by the naval transports which strikes me as being extraordinary and worthy of consideration. The Treasurer announced that the £7,500,000 expended on transport services was reduced by £1,000,000 in respect of money earned by transports, and he proposed not to pay that amount into the Treasury, but to use it again. I have not had time to ascer- tain whether the Audit Act of the Commonwealth will admit of that course being followed, but, whether it does so or not, the proposition is a mighty dangerous one. If the Act does allow such a procedure, it should be altered for this reason : The whole theory of government is that a Treasurer or Government cannot spend money unless it has been specially appropriated by Parliament for a certain specified purpose. Suppose, for example, we use these ships, by arrangement with the Imperial Government, for carrying our wheat harvest, and thereby earn another £10,000,000. The Treasurer could, by this arrangement, spend £10,000,000 more than this House has granted him authority to spend. Parliament would absolutely lose control of that expenditure. The argument may be made clearer by a further extension of it. Let us assume that honorable members opposite are eventually permitted by the people to alter the Constitution, and embark on great industrial undertakings. According to this theory of finance, Parliament would never vote any money in connexion with such undertakings, except the advance with which an enterprise was started, and, although the Commonwealth was involved in heavy responsibility, such disbursements would be entirely beyond the purview of Parliament. It would be a wiser course to follow if whatever revenue is raised in any undertaking were brought to account and paid into the Treasury. If it were necessary to re-vote the money that could be done.
– It is not correct to say that this transaction is, or can be, outside the purview of Parliament, because honorable members have the item before them now.
– But only by polite and courteous intimation from the Treasurer.
– Do you regard courtesy as a vice ?
– Wo; but as an unusual exhibition by honorable members opposite. The Treasurer stated -
It is also estimated that a sum of £1,000,000 will be collected as freight in respect of cargo carried on transports. This amount will not be credited to revenue, but will be treated as a set-off against transport expenditure. I think that is the better way to deal with it.
That may be the most convenient way to deal with the money, but it sets at defiance the whole theory of parliamentary control of the purse, and I hope that, viewing the matter in that light, the AttorneyGeneral will promise to have it reconsidered, so that whether the Audit Act compels the Treasurer to do so or not, the money will be brought to account and voted as the Department needs it. I pass on finally to the question of revenue. The Treasurer, in bringing down his probate taxation in December last, estimated a return of £1,000,000. “We were told later that the £1,000,000 was the estimate for the year, not for tho half year. But instead of producing £1,000,000 the tax earned only £39,000. “What an extraordinary default in calculation - probably the worst known in the history of financial forecasting.
– That shows the length to which our opponents will go ; they will not even die.
– The honorable gentleman will not have that complaint against them during this year, because the income tax will bring about that result. If ever a body of wealthy men were to be frightened by an oncoming spectre or Juggernaut, this 5s. in the £1 taxation will create sufficient paralysis or heart disease to bring a -big return to the Treasury.
– It will act as a stimulus or tonic to some of them.
– An antidote, the honorable member called the tax in his memorable speech. We have now been given a new estimate of £670,000 as the receipts from this taxation. I am afraid that the ‘ calculation was necessarily hurried by the Tax Commissioner, and that we are still, as it were, groping. I should like the Minister, or one of his colleagues, to show us what data there are for the estimates arrived at. Just as he has been good enough to supply us with comparative tables relating to the income tax, so we should have the basis of these calculations, and the data which the States could furnish, to show us what we are likely to receive in the coming financial year. . Last financial year the calculations were falsified in regard to the land tax by £746,000, although the system had been in full operation for about three years, and we had all the valuations.
– There were some additions.
– That might cause an increase, but would, not account for any shrinkage. The Treasurer must be groping in the . dark a great deal, and I nope he will show us how the Estimates have been arrived at this year. The Committee of Supply should be furnished with the fullest departmental data to enable it to judge whether the calculations of the Treasurer are correct. We are obliged, not only to vote Supply, but in Committee of Ways and Means to show how the money is to be obtained ; but whether we are arranging for raising or spending the money, we should know whether the calculations are right.
– May not the deficiency have arisen through appeals made to the Land Tax Commissioner for relief ?
– I am told that is not so - that the Commissioner regarded insolvency as the only basis of hardship. It is clear from a study of the areas of the big estates that the shrinkage, which was predicted as the result of the heavy graduated taxation, has not taken place. There is almost as large an area now as when the Act came into operation.
– We have no statistics to show how the most recent impost has affected holdings.
– That is so; but we ought to be able to get within £50,000, apart from remissions, of what the revenue will be.
– You must recollect that there is the question of leaseholds. We have had great difficulty in arriving at some basis for a calculation of values.
– I admit that; but surely the Treasurer was wise enough not to calculate on a great return from leaseholds.
-=-He calculated on some return.
– Not very much. I take leave to say that there is every appearance of a muddle or miscalculation in connexion with two sets of predictions made and so clearly falsified. The same remark applies to the income tax. The honorable gentleman in charge of the Bill complained about lack of data, and illustrated, through Chiozza Money’s book, how definite is the data obtained in England; but if the honorable gentleman will take the true statistics of England, and compare them with those of Australia, I venture to think he will find the comparison in our favour. During the last ten years we have done more here to reduce to definite classifiable forms the data in this regard, than has been done in any other part of the world. All the State figures are open to the Treasurer, and wo ought to be able to ascertain above £200 per annum what our people are earning. In England they have no further statistics; but whatChiozza Money has done is to speculate on hypotheses, some sound and some unsound, as to how the smaller incomes stand. Unless we compel everybody, even those having an income below £156, to put in a return for at least one year, we shall have the same complaint at the conclusion of the current financial year.
– We shall have data after the census.
– Yes, approximately. The honorable gentleman will find that the hardest calculation is in connexion with an income tax, as is shown by the fact that all Treasurers who have imposed such taxation have found their prophecies fail in the light of experience. He will also find, as in the States, that there is mighty little revenue raised from the taxation of lower incomes. It is safe to say that about 85 per cent. of the income tax raised in most of the States is from incomes of over £500. I am, of course, speaking broadly from memory, but I am sure the honorable gentleman will find that the greater part of the tax is paid on large incomes and by very few people. Although it may be advisable to say that those with incomes of between £200 and £156 should be taxed because we are at war, I think we would find that it would be more the educative value of the tax that would be appreciated by Parliament and the people, if not by the individuals taxed. Such taxation would not bring much grist to the Commonwealth mill. I hope that all the figures as to the expected revenue will be laid before us. In my opinion this heavy tax will yield more than £4,000,000. I have not been able to get all the data from the State offices, but I think that what I say is likely. When the Bill is before us, the Attorney-General will find a wide diversity of opinion as to whether the period should be from December to December, or from June to June. The former is the method of the States, and for many reasons. First of all, the State Parliaments generally pass their taxation measures towards the end of the calendar year, before rising for Christmas, and the people know that they have to get their accounts ready in January or February and pay in April or May. This has become the custom, though it has never been quite justifiable from any other point of view. We are now in August, and our Income Tax Bill cannot be passed before the 1st September. It is proposed to date back to a year that expired nine months ago, thus reaching into a period of prosperity, and asking people to pay on that period during another period of great depression.
– That is not quite accurate, because, from what we are told, the period covers six months of the ‘ ‘ worst drought the country ever knew.”
– That fact is admitted for the first time from the Treasury benches.
– I have heard it so many times that I know it by heart.
– But it was our song.
– Yes; but I have heard it so often that I have learned to sing it myself.
– The Leader of the Government said that it was only a “little drought,” and inhis recent statement he called it a “ dry spell.” In my opinion it was a big drought, comparable to, if not more intense than, the drought of 1902. But all through the year closing in Juno, we were feeling the effects of that drought, just as we felt them in the half year closing in December. I submit that the year ending on the 30th June should be selected, because then it would be easier for the people, seeing that the tax would have to be paid at a different time from the State tax; and, moreover, it would synchronise with the close of the financial year. Altogether I contend that to make the year close on the 30th June would be less irritating to the people as a whole. As to the family remission, I think it is wise, if the nation can afford it, to allow it to men with children or dependants. I have calculated that a man who is allowed £13 for a child will, at the 3d. rate, benefit to the extent of 3s. 3d., and a man, at the 6d. rate, to the extent of 6s. 6d.
– But look at the man on the 5s. rate; what a lot he gets!
– But we know that the man who pays at the 5s. rate is not concerned about a paltry remission of £13, and, generally, has not too many children. The man who has a numerous family is usually one whose strength has not been sapped by luxury, and to whom such a remission would be important. If tha remission were doubled it would, at any rats, mean the price of a pair of boots for a child.
– I explained yesterday why we fixed this amount. The reason is that we consider it enough for a widow whose husband is killed in action, and, therefore, it ought to be enough for the ordinary taxpayer. If it is not enough for the ordinary taxpayer, it is not enough for the widow.
– I believe the proposal to he logical, but the accidental agreement may not prove it to be the most just basis for the remission - one, in a way, is a gift, and the other is a tax. As to life insurance companies. I think that the AttorneyGeneral, if he inquires from the States Tax Commissioners will find that probably ls. 6d. is a high flat rate. It is true that the tax is imposed only on undistributed profits, but we have to remember that these companies are not like ordinary companies conducted for private profit. After many years’ experience of trying to deal with these companies in the States, a method of taxation was eventually arrived at by agreement, which I think has proved equitable. Reversionary bonuses, which accrue to policies, might, I think, be treated as undistributed profits, seeing that the great bulk of our best mutual societies put their money into that form. I believe that the people of this country will pay this income tax as cheerfully as they know how. I do not agree with the right honorable member for Swan that we could avoid a deficit and an income tax this year. I cannot see how we can get over the deficit without an income tax. Inevitably, I see an income tax and a deficit staring the Treasurer in the face at the close of the year.
– I worked it out. and you have not, it seems !
– I have spent some time on it, sir.
– What is the result?
– The result is disagreement with the right honorable gentleman.
– Where are the figures ?
– I do not believe in loading the Committee with figures - the honorable gentleman showed us what to avoid in that regard. I tried to follow his speech, in which I was deeply interested, and although I like figures - I sometimes eat them - I think that as between layman and layman figures are better understood when given in round numbers. When the Treasurer has of necessity to give us figures, it is the most awful task of the year. I do not agree with the right honorable member for Swan in his analysis.
– I think that I am right.
– The honorable member has a habit of thinking that he is right, but I do not think there is one member of the jury before which he appeared today who will agree with him. In a few minutes to-night, the Leader of the Opposition, in a dialectical way, saved £3,000,000.
– How did he do it?
– Wonderfully, in the AttorneyGeneral’s best style; but I do not propose to browse in that mead long. On top of that £3,000,000 the right honorable member for Swan cut off another £7,000,000; that makes £10,000,000. I give the right honorable gentleman all that in, but I say that even if these savings be real and be effected, we shall still need an income tax, and have a deficit. We know that it is hard to draw the teeth by direct taxation of the ordinary rich or middle-class man, and at the same time to avoid hig squealing. I hope honorable members opposite do not think that this tax will achieve the end in view without that squealing. I represent, perhaps more by accident than design, one of the wealthiest communities in Australia, but I say, as the representative of the people in that constituency, that it is up to them to pay whatever this Parliament deliberately decides they shall pay as fresh taxation. I take that responsibility now as I should take it on the platform.
– If fresh taxation is required.
– I do not believe that all the saving that my right honorable friend could “ make would obviate the necessity for fresh taxation. It appears to me to be inevitable, and I welcome an income tax as the best temporary war measure, but at the same time the operation of the higher rates is going to do what the Attorney-General warned this community from doing. These rates are going to injure employment. I agree with the subdivision of capital and wealth which the Attorney-General so wisely made in his best economic style. There is such a subdivision, and it is unwise to lay hands on wealth that is devoted to the production of further wealth. However we safeguard against passing on, there is nothing that so lends itself to passing on in the shape of rents and values as does ah income tax. Although competitive forces may not be fully operative during the period of war, yet in the long run these taxes get down to the bedrock of human effort, which is the wages of the manual or unskilled labourer.
– The people pay.
– In that sense I am not advocating any special tax on the ordinary man earning under £156. The Prime Minister denies that these taxes are passed on - we have heard his denial frequently. He said at the opening of this period of taxation that no one would escape. I believe that no one will escape, because taxes are passed on. If I did not know this, I could not believe that no one would escape. Through the varied strata of human activity there is a filtering process down to the bedrock and that is the unskilled worker. In some shape or other, although it will not be always tangible or provable, his rents and prices will rise or his wages will fall, and in that sense he will be an indirect contributor to the taxation, although otherwise he escapes.
– The greatest amount of wealth in this country is invested in primary production, and any tax on primary production cannot be passed on.
-I admit that an income tax, or a land tax, which rests directly on the back of the producer cannot be passed on with regard to his sales overseas, or even with regard to all sales in this country, and I was speaking with that limitation, which every one recognises; but the ordinary professional man, the manufacturer, the trader, and the distributer on whom an income tax is imposed will try to get some of the money he is paying to the State tax-gatherer from the man to whom he sells his goods or services.
– And even the primary producer must pinch somewhere.
– I believe that the Government have been unaccountably lax in not raising sums of money in other ways which would be spread broadcast over the community.. I do not intend to give any indication as to what those other ways are, although the Treasurer must have at his command every means of identifying them; but surely at this time no one would object to pay 2d. for postage upon a letter, whether he is a member of the mercantile community or an ordinary worker, knowing that the rate had been imposed because of the war ? It is a little tax, and it would be paid conveniently, because it would not fall in any lump sum. I believe that from this source we could derive a vast sum of money that would not only help to put the Post Office in a decent position, but also help the Treasury considerably. I do not know whether it would be within the terms of the Berne Convention, but I believe that the rate from here to England should be 3d. instead of1d., and that we should pay 2d. for postage within the Commonwealth.
– The Berne Convention rate is still 2½d.
– Then let us get back to the Berne Convention, and, if the people on both sides of the world understand that this small sacrifice, although yielding much in the aggregate to the Treasurer, is necessitated by the war, it would be cheerfully made, and I think there would be less comment upon it as a temporary war measure than would attend an alteration of the telephone rates. I have endeavoured to give these scattered thoughts, not in the style of the honorable member for Cook, finished, polished, and sandpapered, but just as they came to me, like desert sand, when listening to the remarks of the Prime Minister. I believe that we should consider this statement as a non-party production given at the earliest moment at the request of, and for the information of, honorable members. When we talk of economy from this side of the chamber, let Ministers understand that we are not urging it by way of a complaint, but as a course to which the nation inevitably must, individually and collectively, resort, if its credit is to be maintained at a reasonable level here and on the other side of the world.
In Committee of Ways and Means:
Debate resumed from 18th August (vide page 5854) of motion by Mr. Hughes -
That an income tax be imposed . …(vide page 5851).
.- I desire to amend the motion that I submitted yesterday by omitting from the Second Schedule paragraph a -
Motion, by leave, amended accordingly. Progress reported.
Hospital Management, Egypt and Malta: Food on Returning Transports.
– I move -
That the House do now adjourn.
The Government desire to clear the business-paper by to-morrow week, but it will be clearly impossible to do that unless honorable members curtail their remarks and make an effort to help us. The idea of the Prime Minister is that the debate on the financial question, including the income tax, shall conclude to-morrow. I do not know whether honorable members will agree to sit late with that object, but I hope that they will make an effort to conclude the business. I shall be glad if the Leader of the Opposition will give me some idea of what he thinks can be done in the matter.
– I hope sincerely that we shall be able to finish our business next week, but Ministers must curtail their loquacity if this object is to be attained. The Treasurer has delivered two speeches on the financial statement, and the AttorneyGeneral has delivered I do not know how many speeches.
– I have made but one speech.
– The Minister made a speech to-day.
– That was in correction of my former speech.
– I should like to know what business the Attorney- General has in his mind. For instance, while saying that the House is to rise to-morrow week, he threw on the table yesterday a very contentious measure. That Australian Workers Union Bill is contentious to the last degree.
– Is that what the right honorable gentleman calls it? That is not what it is called on the notice-paper.
– I think it is admitted that the Bill is to cure, or get round the judgment of the Justice in the Arbitration Court. Then there is the Compulsory Voting Bill. Is the AttorneyGeneral going on with that Bill?
– Yes; I had nearly forgotten that Bill.
– I should like to see the honorable gentleman take it back and stow it away-, and his referenda proposals with it. Let brotherly love continue until the war is over.
– Why are you so afraid of the referenda?
– I am not afraid of them, but the honorable member should be. He will find he has got. hold of some Dead Sea fruit when he comes to pluck that tree. What is the object of the Public Service Bill ?
– To a large extent, it consists of amendments arising out of the war, such as the postponing of the examinations.
– Does it contain anything contentious?
– I should not think so. There is nothing of a party nature in it.
– Is there to be any more Supply?
– Yes; and there is a Sugar Appropriation Bill to appropriate money for that purpose.
– When are we to get the memoranda that the honorable member promised weeks ago? How is his shopkeeping getting on ?
– We are short of string and paper; otherwise, we are all right.
– With a little effort, we ought to be able to finish next Friday, and I do not think there will be very much objection to sitting a day or two extra next week for the purpose. If other days are wanted, the Government might allow those who want to go home at this week-end to do so; and, if they are wanted back early next week, I am certain that all my friends on this side will make an effort to attend.
– As I can never get satisfaction by means of questions, 1 must take this opportunity to bring forward an important matter. I have had to complain to the Defence Department times out of number of the treatment of men in camp, and on more occasions than one I have been insulted by the Minister of Defence. The treatment of men in the hospitals in large camps in Victoria is discreditable to the medical fraternity. If it is rot their fault; it is the fault of the Minister of Defence in not supplying them with money and hospital necessaries. A young man at the Show Grounds informs me by letter that for twenty hours he was kept out there with his temperature at 102. He had to sleep in the dispensary; but he was lucky, because others had to sleep where they could, and were then brought into town on a lorry. We should have in such cases immediate supervision, and when the Defence Department finds out such defects it ought to remedy them at once, if only for the sake of the men who are going to the front to fight for us. We hear repeatedly that there is something wrong in ‘the hospitals in Egypt and elsewhere. It has come to my knowledge that an investigation has been held there, but we have heard nothing of it. I am told that Dr. Barrett, Dr. Ramsay Smith, and other leading doctors and leading nurses, are to be sent back to Australia for mismanagement, if not worse. If that is a fact, the people ought to know it. - I have brought forward here ‘cases of men who have been really maltreated, but no remedy has been offered. The only way to get an improvement is to ventilate the matter, and not allow it to be hidden under a sere an of officialdom. If an investigation has been held, and the doctors mentioned are being returned for some misdemeanour or neglect, the people ought to know it. I know they were at variance with others early in the campaign. A doctor, a personal friend of mine, told me about six weeks ago that Dr. Syme, one of Melbourne’s leading surgeons, while at the front was set to do measles cases. He said to Dr. Ramsay Smith, in front of others, that he had not attended a measles case for twenty-five years, and Dr. Smith said, “ Well, it is damned well time you did.” That was not the sort of work to which to put a man of Dr. Syme’s standing. It has been asserted previously that there has been mismanagement at Mena House and other hospitals, and, in view of these reports, it is the. duty of the Minister to give us exact information.
– The following interview appeared in one of our leading newspapers yesterday : - “ When we aic in the trenches we don’t bother much about tucker. We take what we can get, and are thankful for it,” remarked a wounded non-commissioned officer who returned by the Ballarat; “ but the tucker served to us on the Ballarat would have made any one shy.” Several of hia wounded companions nodded approval; and the patient proceeded: “ In camp you get stew and bread and jam, and in the trenches you get biscuit and tinned stuff, and sometimes other things. I heard from one of my mates that they get bacon and eggs for breakfast now, occasionally; but the stuff served to us on board the Ballarat - and you must remember we were all wounded or sick - was the limit. Meat and bread smelt of kerosene, and one lot was so bad that we just dumped it overboard, and went without our dinner; and the stew was worse than what we got at Kensington in camp - and goodness knows that was bad enough. “Things were a bit better when we reached Australian waters, but they were never at any time what you might call a diet for sick and wounded mcn. We don’t expect to be pampered, but we did expect clean, wholesome food, and plenty of it, on the way home.”
I bring this matter forward,, not by way of complaint against the Minister for the Navy, who has not been sufficiently long in office to have any personal responsibility in the matter, but in order to request him to take steps to ascertain the character of the food that is being supplied on the transports which are bringing wounded soldiers back to Australia, and to see if something can be done to provide for the proper victualling and comfort of the men. Ordinary ship’s diet is all very well for hale, strong sailormen, but even that needs to be clean, wholesome, and properly cooked; but invalided soldiers ought to have a different diet altogether. I hope steps will be taken to remedy the state of affairs which appears to have obtained on the Ballarat, seeing that other ships are about to leave Egypt. Some are already on their way, and the Minister might, if possible, get into wireless communication with them before they reach Colombo, so that if the food is unsatisfactory, an adequate supply of proper food may be obtained at Colombo. Knowing the Minister’s sympathetic nature, I am sure he will do his best to have the grievance remedied,
– If the state of affairs indicated by the honorable member for Melbourne Ports exists, it is only right that the House should be informed of it. I will convey to the Minister the facts as set out by the honorable member, and if they are correct. I am sure the matter will be looked into and remedied. The Chief Medical Officer of Australia, Dr. Fetherston, is proceeding to Egypt to inquire into the hospital treatment there of our soldiers, and to report to the Minister. I promise the honorable member that if there is any correspondence between the hospital authorities in Egypt and the Minister, I shall let him know about it at once’. If the doctors mentioned by the honorable member are returning, I shall endeavour to ascertain the reason. The transport Ballarat referred to by the honorable member for Lang arrived recently, and I believe there was a certain amount of justification for the complaints of the men with regard to the food on board. I am prepared to admit this from what I have heard.
– Who is responsible?
– The Ballarat was not commandeered by the Commonwealth. She is an Imperial transport, and we had nothing to do with the provisioning of her.
– I am not blaming the Government.
– We are responsible for seeing that good food is placed on our ships, and I take full responsibility for the provisioning of our. own transports. But the food on the Ballarat was placed on board that vessel by the Imperial authorities, who regarded it as sufficient, and we had no control of the matter. Tomorrow I shall make a full statement on the subject, because I regard the complaints of the soldiers as serious, and the blame should be borne by the proper shoulders. Were this Government to blame for such a state of things as has been complained of, Ministers would be deserving of censure. The food purchased and put on board our transports is the best that we can purchase, but I cannot take blame for something of which this Government had no control.
Question resolved in the affirmative.
House adjourned at 10.47 p.m.
Cite as: Australia, House of Representatives, Debates, 19 August 1915, viewed 22 October 2017, <http://historichansard.net/hofreps/1915/19150819_reps_6_78/>.