7th Parliament · 2nd Session
Mr. Speaker (the Hon. W. Elliot johnson) took the chair at 11 a.m., and read prayers.
– Has the Acting Minister of the Navy noticed a paragraph in to-day’s Argus to the effect that the Premier of Victoria has interviewed Admiral Clarkson regarding freight for the supply of 200,000 tons of coal for two years in connexion with the contract between the New South Wales and Victorian Governments, and, presumably, Messrs. J. and A. Brown? Is the honorable gentleman aware that if such a monopoly were granted, it must prove disastrous to the industrial peace of the community, and militate against the successful prosecution of the war? Will he ask Admiral Clarkson to allow the matter, to remain in abeyance pending the appointment of a transport board, and the apportionment between the various collieries of the limited orders for coal?
– I have seen the paragraph, and have been in consultation with Admiral Clarkson this morning. He assures me that nothing has been done, and I have given the instruction that nothing shall be done until the Acting Prime Minister has had an opportunity to go into the whole question of the distribution of coal and coal contracts generally.
– I ask the Minister representing the Shipping Board if he can lay on the table of the House a statement showing the Inter-State rates of freight prevailing prior to the war, and those ruling now?
– I shall see if that oan be done. I know of no reason why it should not te done.
– Has the PostmasterGeneral noticed in the press this morning a statement regarding the use of flying machines for the carrying of mails? Will the honorable gentleman obtain information concerning the effect that the use of aeroplanes would have in preventing the robbery of mail bags, and report it to the House?
– Has the PostmasterGeneral seen a paragraph which appeared in last night’s Melbourne Herald-
– Are not questions founded, on newspaper paragraphs out of order?
– Stating that the telephone cases are being treated with a coat of shellac, and then being re-issued, and that good furniture in the Department is being painted from the same pots as are used for the pillar-boxes, thus spoiling valuable timber? Are these things being done from motives of economy ?
– The honorable member has submitted the paragraph to me. It is one of those irresponsible paragraphs which constantly’ appear in a press that evidently publishes anything submitted to it, without verification, or any attempt to secure accuracy. Evidently it was supplied by an artist, out of work.
– I remind honorable members that it has been frequently laid down, both here and in the British House of Commons, that the asking of questions founded on newspaper paragraphs is irregular, unless the questioners are prepared to’ vouch for the accuracy of the reports on which the questions are founded.
– On Friday afternoon last I handed to the Acting Prime Minister a letter relating to the War Precautions Regulations which are objected to by the members of the party that I have the honour to lead.
– And by the Labour movement.
– Yes. The letter was written in consequence of what took place at the recent conference at Government House. I ask the honorable gentleman when I am likely to receive a reply, and if he has any abjection to the publication of the letter?
-I receivedthe letter when on the point of leaving for Sydney, and acknowledged it yesterday after my return. The honorable gentleman should get my reply this morning. I have no objection to the publication of the letter.
– Will the Acting Prime Minister take into consideration the advisability of repealing the Wartime Profits Tax Act?
– That is a fairly large order to come from the quarter where the honorable member sits. It would be easy to reply “Yes.”
– Then you had better do so.
– I do not intend to do so, but I repeat what I said on behalf of the Government a week or two ago, that when the assessments for the first year have been completed - and they are just about complete -and we know what is likely to be the yield of the tax and its incidence, the whole question will be carefully reviewed. I cannot say more.
– In view of the great increase inthe prices of Australian wines by their manufacturers, although there is no Excise duty on those wines, and of the large increase in the prices of Australian-ms.nufactured spirits by the wholesale trade, and in view of the huge profits thus made by the wholesale sellers, will the Acting Prime Minister kindly inform the House when a new Tariff will be introduced? Failing that, will the honorable gentleman consider the loss of revenue caused by the present system of Excise?
– On the subject of the Tariff generally, I cannot add anything to my replies to the three questions of the honorable member for Capricornia (Mr. Higgs), but as tha honorable member for Melbourne allege;; a loss of revenue in respect of Australian wines, I shall refer his question to the Minister for Trade and Customs.
Mr.FENTON. - Is the Assistant Minister for Trade and Customs aware that about . 14,000 boxes of butter were put in cool stores in Victoria about twelve months ago, and are still there? Seeing that butter has gone up in price recently, will the honorable gentleman inquire why the butter was put into store, and why it is kept there?
– I shall be pleased to make inquiries on the subject. I think that the butter to which the honorable member refers belongs to a private individual who refused to put it into the Imperial Pool because he was not allowed to export it. Butter that had been twelve months in store would hardly be fit for the Australian market at the present time.
– Before the House rises will the Acting Prime Minister give us anopportunity to discuss the regulations under the War Precautions Act creating the Shipping Board?
– I do notknow that it would be prudent or fair to promise honorable gentlemen a special occasion for discussing any of these matters, because if a concession were given to one it would be expected by others. I would point out that the Estimates will afford an opportunity to members to deal with all the matters that they wish to discuss, and I hope that they may be brought forward next week.
-I ask the PostmasterGeneral if he remembers that during the conscription referendum campaign the censor issued the instruction to the newspapers that no cartoon was to he published which would bring the policy of the Government into ridicule? If that instruction still has force, will the honorable gentleman see that it is applied to the disloyal cartoon of the Melbourne Punch bringing the honorable member into ridicule?
– Two questions have been addressed to Ministers to which they have not risen to reply, evidently regarding them as frivolous or not seriously asked. I therefore call the attention of the House to the fact that the asking of frivolous questions is distinctly disorderly.
– If a Minister declines to reply to a question, is it to be therefore deemed frivolous?
– Not necessarily. Questions asked without notice should relate to urgent public business, or to matters of which the Ministers to which they are addressed have charge. Ironical or frivolous questions are not in order. It does not require much discernment to see that the two questions to which no reply was given this morning were of an ironical or facetious character.
– As a personal explanation I desire to disclaim any intention of being frivolous in the question I submitted to the Postmaster-General. The Minister did not consider frivolous the. first question relating to the paragraph in the Melbourne Herald, and he acknowledged that I gave him the cutting, and suggested that it afforded him an opportunity to ‘deny such a ridiculous report as that good furniture was being painted from the same pot as the pillar-boxes. In regard to the second question asked by me, it is a fact well known to every honorable member that an instruction such as I mentioned was issued by the censor, and that it did prevent certain newspapers from publishing cartoons which contained” reflection or ridicule upon the Government and their policy. That instruction was applied particularly to cartoons concerning the Prime Minister, and it had a particular effect on Labour papers and anti-conscription publications. I am unable to understand that a rule can be of any value unless it cuts both ways’, but we find that the Melbourne Punch is publishing, in a most disloyal way, a cartoon reflecting on the Postmaster-General.
– Order ! The honorable member is exceeding the bounds of a personal explanation.
– I had no intention of being frivolous, but, in the kindness of my heart, I gave the Minister an opportunity to express his contempt- for the attack made upon him by Punch.
– I, too, had no intention of being frivolous or humorous in the question I asked the Postmaster-General. I made the inquiry in the public interest, and I am sorry that the Minister has been remiss in his duty.
– I again ask the Acting Prime Minister if he will make a statement giving the exact position in regard to shipbuilding, especially the building of wooden ships 1 There is a good deal of misconception in some States, and an explanation” of the position would be helpful to the industry.
– I am aware of the natural concern and anxiety respecting this matter in certain centres of the Commonwealth, and I shall ask the Assistant Minister in charge of shipping to make a statement next week for the information of the House.
– Is the Assistant Minister in charge of shipping aware that at Williamstown there is supposed to be a shipbuilding yard, but that, owing to the attitude of the Government, the progress being made is similar to that of a man who makes one step forward and two steps backward? Will the Government endeavour to make arrangements with the unionists so that construction may be expedited ? The unions are willing to go ahead, but the Government seem to retard them. *
– I assure the honorable member and the House that the Government are doing everything possible to expedite .shipbuilding at Williamstown. It is all very well for the honorable member to say that this thing and that thing can be done. As a matter of fact, though the first lot of material for steel ships ha? arrived from America, there is a considerable amount of work to be done before actual construction can be commenced. That preliminary work is progressing with all possible expedition. It must appeal to any common-sense man that expedition in connexion with shipbuilding is all-important at the present time, and the Government are doing everything in their power to have ships built as speedily as possible.
-Will the Acting Minister for the Navy say what arrangement, if any, has been made to utilize the ships lying idle in at least one harbor of Australia in the carriage overseas of some of the Australian produce which is so much needed by Great Britain and her Allies 1
– The position, as I understand it, is that a number of small boats arrived from America, and that, under an arrangement with the United States Board of Trade, all the vessels that are capable oi; carrying wheat from Australia are to be utilized for that purpose. Some of these vessels, however, have been declared unsuitable for the carriage of wheat, and they have been released for the carriage of copra. I may add that there is a distinct inclination on the part of shipowners to evade carrying wheat, because they get higher freights for carrying other commodities.
– In view of the disinclination of shipowners to carry wheat because they can :make a greater profit out of the carriage of other commodities, will the Minister consider the advisability of pooling all profit, and, after deducting expenses, distribute the profit amongst the shipowners according to tonnage?
– I ask the honorable member to give notice of that question, but I may state now that the majority of the owners to who:m I refer are Americans, and we have :10 control over owners of other nationality.
– In the financial column of to-day’s Age appears the following paragraph regarding the jute trade : - “The Government of India,” the circular adds, “also stipulated that this should constitute a monopoly for Australia. The result has been a complete cessation of business with Australia.”
Is it not a fact that tile Government monopoly is in regard to cornsacks only?
– That is so. The Government of India refused to interfere with any part of the jute trade except cornsacks.
-. - Yesterday the honorable member for Capricornia (Mr. Higgs) asked if I would supply “the House with, the instructions which I had issued regarding soldiers’ parcels. Those instructions are as follows : -
Parcels may be sent through the post to the following: - (.1) Soldiers and sailors (no address but that of uni, to be accepted ). (2; Munition workers. (3) War workers. (4) Y.M.C.A. representatives. (5) Red Cross workers. In regard to 2, 3, 4, and 5, the sender must sign a declaration at the Post Office that ‘the addressee is as stated therein.
– Last year a Bill was almost rushed through Parliament to provide for the management and construction cf silos throughout Australia, nominally for the preservation of wheat. As not one silo has been constructed, at any rate in Victoria, I desire to know from the Acting Prime Minister whether that Act was really a preservation measure, or whether the various States are now committed to a bulk-handling scheme?
– I do not know that I can give an authoritative answer. The primary intention of the Commonwealth and the States in co-operating in the quick construction of silos was to salvage wheat. I believe that in some cases the States concerned, notably New South Wales and Victoria, desired to have the silos dealt with in such a way that they would become the foundation of a bulkhandling system. One State clearly resisted that system, and I do not think that it can be said that all of the four wheat-growing States are in favour of the bulk-handling system. What we were chiefly- concerned about was to proceed quickly -with the erection of storage to preserve wheat against destruction by weevil and other pests. 1
– Is the Acting Prime Minister aware that a gentleman named Kirkpatrick is at present making inquiries in Chicago and New York regarding silo construction in Australia i If so, is that gentleman acting on behalf of the Commonwealth Government?
– I am not aware of any arrangement between the Commonwealth Government and Mr. Kirkpatrick in regard to silo construction.
– Having regard to the fact that bulk handling will affect every port and State of the Commonwealth, will the Acting Prime Minister promise that, before the adoption of such a scheme,* which will probably cost £15,000,000, the House and the country will be given an opportunity to consider the whole question of policy and every phase of the bulk-handling system?
– After studying the bulk handling, both in Australia and abroad, I have always held that the question of adopting that system is entirely one to be dealt with by the States. It is true that the war has conditioned many operations of the Commonwealth and the States, particularly in regard to wheat. In order to assist the creation of pools, and the organization of shipping, storage, and finance, the Commonwealth has come in as a sort ofbanker, but only as a banker. The State pools control the handling of the wheat, and the Commonwealth only co-ordinates the work.
– The Minister must know from his experience that it is impossible to operate the dual system.
– There will be difficulties during the transitional period, but notwithstanding the mobilization of credit and the organization for which theCommonwealth has been responsible in connexion with the wheat trade, the question of whether wheat can be handled in bulk by all or some of the States seems to me to be entirely a State matter.
– In view ofthe cable sent by the Secretary of State for the Colonies (Mr. Walter Long) in which he asked to be informed as to whether the Australian Government desired to export rabbits to America, and in view of the Imperial Government’s apparent willingness to allow such export, will the Government take immediate steps to communicate with the United States Government in order to arrange for the export of rabbits to that country ?
– I believe that we cannot do more than has been done already, namely, to notify the Imperial Authorities that we are prepared to sell rabbits to America, and ask them to arrange a contract for us. However, I shall look into the matter and give the honorable member a further answer.
– Has the Assistant Minister in charge of the Butter Pool heard of the dissatisfaction which has been expressed regarding inferior butter which has been sent from Queensland to Melbourne? Has such butter been classed by Commonwealth officers as first grade? Will the Minister make a statement concerning the butter trade generally?
– Complaints have been made in Melbourne regarding Queensland butter, but they were in regard to butter that had been graded by the Queensland inspectors before the Commonwealth took control of grading on the1 st May. I understand that since the Commonwealth graders have been working in Brisbane no complaints have been received in respect of the butter dealt with by them. I shall bepleased to make a statement some time next week covering the full position of the butter trade.
asked the Minister representing the Minister for theNavy, upon notice -
Ma-. POYNTON.- The answers to the honorable member’s questions are as follow : -
Bernard Jonas,chief officer, believed single.
William McHardy, 4th engineer, believed single.
John Tudor, chief steward, believed married.
James Flynn, seaman, married.
John McRae, seaman, single.
Peter Roche, seaman, single.
Walter Edward, seaman, single.
Douglas Rea, ordinary seaman, believed single.
George Kerries, mess-room steward, single.
Peter Joyce, greaser, single.
Henry Day, trimmer, single.
George McLeod, 3rd gunner, believed married.
Edward Foley, fireman, believed married.
John Cook, fireman, married.
Thomas Ferries, fireman, single.
John Dickinson, fireman, single.
Charles Flexin, fireman, believed married.
George Gilbert, fireman, married.
Arthur Paton, fireman, single.
As far as is known, all of the above were British nationality.
D. Lewis, A.B., single, British.
asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Acting Prime Minister, upon notice - .
– The Assistant Minister will answer this question.
– The answers bo the honorable member’s questions are as follow : -
Alleged Seizure of Petition
asked the Acting Prime Minister, upon notice -
– I know nothing of the matter, but have asked my colleague, the Minister for Defence, to furnish me with information regarding it.
Importation of Labour
asked the Minister for Home and Territories, upon notice -
– The answers to the honorable member’s questions are as follow : -
Deductions under War-time Profits Tax.
Mir. BOYD asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follow : -
In Committee (Consideration of GovernorGeneral’s Message) :
– I may, perhaps, best consult the convenience of honorable members if at this stage I put before them the facts I had intended to set out in moving the second reading of the Bill to be founded on thisresolution. I move -
That it is expedient that an appropriation of moneys be made for the purposes of a Bill for an Act to authorize the raising and expending of the sum of £80,000,000 for war purposes.
This motion is necessary to originate a Bill to enable us to conduct our war loan operations for the full calendar year from the date of moving. The provisions of the Bill will be the same as those of all former Bills authorizing war loans. These loans are issued under the Inscribed Stock Act or the Treasury Bills Act. No conditions are inserted in the Bill itself; they are governed by the parent measure. The result is that when a loan is floated we fix, by an orderof the Governor-General in Council, the conditions relating to the amount, the rate to be paid, the currency or duration of the stock, and other general matters. Already four Loan Bills, such as that to be founded on this resolution, havebeen passed since the outbreak of the war, and they give authority to raise a total of £168,000,000. The first of these gave authority to raise £20,000,000, the second gave authority to raise £18,000,000; the third, £50,000,000, and the fourth, £80,000,000. This will be the fifth Bill of the kind, and will give authority to the Treasurer to raise £80,000,000. Of the total of £168,000,000 thus authorized, a sum of £149,325,058 has been raised, leaving a balance of £18,674,942, which may he raised under the Bills already passed.
As to the raisings, as honorable members know, there have been six different operations. I propose, for the information of the Committee, to give the totals. The first war loan was in August, . 1915, when we raised£13,389,440; the second was in February, 1916, when we raised £21,655,680; the third was in August, 1916, when we raised £23,587,650; the fourth was in February, 1917, when we raised £21,584,020; the fifth was in November, 1917, and realized £21,213,780; while the sixth, which we concluded last month, realized £43,510,740. In addition to these amounts, war savings certificates have been issued totalling, up to the 4th inst., £4,383,748. The total sum raised by these six definite war loan operations, and by the selling of war saving certificates from the inauguration of that system until the 4th inst., is £149,325,058.
In addition to this the Commonwealth has borrowed £47,500,000, for war purposes, from the British Government. That amount, added to the raisings in Australia which I have just mentioned, gives a grand total of £196,825,058.
– Does the sum of £47,500,000 represent our total indebtedness to the Mother Country?
– No; I am speaking now not of our total indebtedness, but of loan raisings. In addition to that sum of £47,500,000, we have not lifted, as was originally expected, the payments which the British Exchequer has made on our behalf for military and naval expenditure in London. It is anticipated that, taking into account payments now current, those payments up to 30th June next will re- present a total of £39,750,000. In other words, it is expected that when we have paid all we can pay during this and next month, we shall AVe the British Government £39,750,000.
– Has any substantial portion of the loans, raised been set aside to meet that obligation?
– I think I ought to say to the honorable member, and to the Committee generally, that for the last month or so Ave have been exchanging cable correspondence with the British Government, through the proper channels, with the object of putting this matter on a better footing tb.£.n it has occupied. While we may not be able to take up, immediately, the full indebtedness to the British Exchequer under which we labour the- desire of the Government is that we should give them a definite promise - and I have ‘taken the responsibility of giving that promise - that in future our current indebtedness to them will be promptly met. The question as to how the £39,750,000 which, it is anticipated, will stand to our debit, in respect of current commitments not met, shall be dealt with is largely a matter of whether it is to be regarded as a set-off against purchases of our wool, and wheat, and things of that kind? It ia a complicated transaction which I hope to be able to settle later on. However, the Government need the assistance of the House and of the country in carrying out the promise made to Great Britain that our indebtedness to the Imperial Authorities for the maintenance of our units on land and sea will be promptly met. In view of the success of the last War Loan we felt that the country would stand behind a promise of that kind, and I accordingly made it on. behalf of the Government.
The estimated cost of the war in this financial year is £84,051,230. I am in aposition to say that it will be slightly less than that, possibly two or three millions less, but in any case it will be over £80,000,000.
– That is not much of a reduction.
– Tie honorable member who has been a Commonwealth Treasurer knows that it is impossible to calculate what this expenditure will actually be, because much of it is incurred in London, and until Ave are hi a position to get full information from London Ave cannot tell what the actual expenditure has been. If the war should continue during the whole of the next financial year, we see no reason to believe that the War Loan expenditure will be much less in the financial year 1918-19 than the actual expenditure for this year will be. The amount provided in this Bill together Avith the balance of £18,674,942, now available, will be sufficient to meet the probable requirements for 1918-19, and leave a balance of authority of about £14,000,000. It Wl be seen that I am asking the authority of the Committee to raise more than we actually require, but when one is making arrangements for loans he must make them well ahead. The trouble in the past has been that on many occasions we have come right up to our requirements and have had to raise money hurriedly. If we have our loan scheme properly organized, and preparations in hand, so that we can give four or five months’ notice of our intention to borrow, we are more likely to arouse people to their obligations in this respect and secure the money which the Treasurer finds necessary.
Prior to the sixth War Loan all issues were at 4£ per cent., free of Commonwealth and State income tax, but when this War Loan Avas issued we offered an alternative rate of interest. We provided a 4-j per cent, stock, free of Commonwealth and State income tax, and also a 5 per cent, stock, subject to Commonwealth income tax. We also announced that it would be the last tax-free loan to be issued. At this stage I need not discuss the matter, but later on, if honorable members desire it, I can point out the necessity for that announcement. How.ever, it is perfectly plain that whether Ave agreed with it or not, as most of ,us did, the original ordinance of the first Federal Government that met the Avar that these loans should be tax free had a farreaching effect.
– Do not associate me as being in concurrence Avith that policy.
– The honorable member Avas behind the Government that proposed it.
– I. opposed it.
– I do not know why the honorable member should ask me to pick him out as being in agreement with the policy.
– The Treasurer said that all members in the House approved of it.
– I said “whether we agreed with it or not, as most of us did,” I admit that I agreed with Mr. Fisher who stood here as Treasurer and announced the policy of the Government in that respect.
– I did not.
– Then the honorable member showed more foresight in that particular than he has proved that he has shown himself to have prudence in other respects. None of us foresaw the length of these loans or the extent to which they would go. If we had had in 1915 the opportunity of a more careful review of the situation, we would have seen what to-day appears as plain as the sun at noonday to be a wrong and dangerous policy. None of us can dogmatize on big subjects of this kind that have come to us for the first time in our lives. I have had a little to do with loan flotations. In the old State days to raise a loan of £2,000,000, £3,000,000, or £4,000,000 was regarded as a very large transaction. Five years ago, as Premier of the State of Victoria, I had the opportunity of raising a little over £4,000,000 in London, and it was regarded as a tremendous amount of money. But now we are talking of sums which altogether dwarf everyconception we may have formed in the days of our Commonwealth infancyor in the financial dealings of the States.
It is quite plain that one effect of the system of freeing war loan scrip from payment of Commonwealth or State income taxation was to gradually remove from the area of taxation for the duration of this stock, which is roughly ten years, a vast source of available wealth, and I, for one, felt, and the Government have confirmed my belief, as I am sure the House and the people will also confirm it, that it was time to make a departure from that policy. At the same time, the Government felt that it would not be quite fair to the community to say that we were going to chop it off at once; therefore we gave in regard to the last loan a plain intimation that for the future’ interest earned by war loan stock would be subjected to whatever taxation. Parliament might impose.
As a result of the alternative offer in regard to the last war loan issue, £36,987,295 was raised on 4½ per cent. stock free of Commonwealth and State income taxation, and £6,523,445 was raised at 5 per cent. subject toCommonwealth taxation, the total being £43,510,740.
– The people are not too anxious to pay taxation on their interest.
– It would be the small holders who would take up the 5 per cent. stock.
– It is perfectly clear to those who watch transactions of this sort that immediately an announcement of the sort was made people who valued the immunity of their stock from taxation would do their utmost to put as much money as possible into the last issue to which that condition attached.
– That fact would greatly help the loan.
– I am not able to say how many millions extra were received on that account, but the banking community who handle these matters have a good idea that the increase on this account amounted to many million pounds- People with smaller incomes who would not be frightened by the effect of a graduated income tax would undoubtedly put their money into the 5 per cent, stock. Whatever the Government do with regard to future loan issues, I feel confident that the Committee will confirm the proposal to chop off the old system and prepare for a new system in regard to our war loans.
– It is too late to do so.
– It is not too late to do so. The honorable member’s friends have boasted that very little of the available wealth of Australia has gone into our war loans. The fact has been used as a political argument, as the honorable member knows. It is estimated that of the inventoried wealth of Australia 10 per cent. has been put into our war loans.
– It is less than 10 per cent. It is not more than 8 per cent., according to the figures used by Mr Denison Miller when the last war loan was issued.
– It all depends on how one calculates the wealth of Australia. I am speaking of the inventoried wealth, which is the best system of calculating it. In my judgment, the percentage mentioned by the Leader of the Opposition as having been given by the Governor of the Commonwealth Bank referred to another system of calculating the wealth of the country.
Mr.Fenton. - What is the rate of interest which we are paying on money borrowed from Great Britain ?
– I cannot say. It has been raised in different ways by different Treasurers and at different times. Speaking from memory, some of the first issue was based on the average rate which the British Government had to pay at the time. I hope that the Committee will carry the motion and enable me to advance the Bill to-day to ite second-reading stage.
. -I was out of the chamber yesterday when the message from the Governor-General was received, and I had not the remotest idea that this business would come forward today.From hints that have been thrown out, and from comments that have appeared in the press, I gathered that it was the intention of the Government to have a brief adjournment of the sittings of the House. The Treasurer has intimated that we can still go on the market for £18,500,000, and seeing that we are not spending more than £1,500,000 per week out of war loan funds, and that we recently raised £43,000,000, I did not think it would be necessary to go on the market to raise another loan until October next. In any case, I did not think it would be necessary to pass another Loan Bill until we met again. It will certainly be necessary for the Government to meet the House early in the next financial year to get Supply. I am glad to hear the Treasurer say that he proposes to adopt the policy that was suggested and for which many of us fought so hard in September last. Before any banker mentioned it, the honorable member for Grey (Mr. Poynton) moved an amendment to the Loan Bill for £80,000,000 brought forward by the exTreasurer (Lord Forrest). The object of his amendment was to bring about the very system which the Treasurer now proposes to adopt.That proposal was opposed by honorable members opposite, with the exception of the honorable member for Indi (Mr. Leckie), the honorable member for Kalgoorlie (Mr. Heitmann), the honorable member for Illawarra (Mr. Hector Lamond), and another whose name I forget.
– Did the amendment go to a vote?
– Yes; I looked up the record yesterday.
– We all realize now that there was a mistake from the first.
– That is so. I have been taunted with being a member of the Government which made the mistake ; but I think very little of a man, in politics or any other walk of life,who is not ready, in the light of further experience, to admit an error. I am glad to hear the Treasurer to-day confirming the statement he made when the last loan Bill was before us, and I congratulate him on the full and complete statement he has given to the House. I suppose that the further we go in the matter of loan Bills the more complete the statements regarding them will be, as to how we stand, not only in Australia, but with regard to the Mother Country. The honorable gentleman has shown the amounts authorized by the various loan Bills, and the amounts raised; and I am quite in accord with him in his proposals as to income tax. The longer the war continues, the higher must be the rates of that tax; and it is well known that people have withdrawn wealth from other channels for investmentin war loans. I have heard of a case of a man disposing of his industrial business for £18,000 and investing the whole of the proceeds in loans, simply because the interest was free from income tax, though, of course, I cannot say whether, had he remained in business, he would not have more than made up the amount of the remission. I have no desire to forecast what the Treasurer is likely to do, but, in all probability, we shall have to follow the example of other countries, and increase our income taxation. The 6s. 3d. of the higher rate in Australia to-day is low as compared with the higher grades elsewhere. This remission of 6s. 3d. means nearly1½ per cent., or gives the investor, roughly, an additional1/3 per cent. ; and there is no doubt that the State will follow in imposing income tax on war loan interest, thus making the remission more valuable to the extent of at least 10s. in the £1 in the higher grades. However, as I say, it is now ourduty to repair the blunder made in August, 1915, when the first war loan Bill was introduced by Mr. Fisher.
– Australia is not the only country that has made the mistake, for Canada, I think, floated a 5 per cent. loan at £98.
– It is quite likely. What caused honorable members to vote against the amendment of the honorable member for Grey (Mr. Poynton) was that he stipulated for 5 per cent. interest, but honorable members failed to see that they were giving a remission to big investors equal to 6 per cent. or 7 per cent. It is quite possible that the Treasurer in his prospectus will have to allow for a higher rate of interest in order to attract investors. Money has to be raised to carry on the war, for according to the Treasurer our expenditure is a little over £1,500,000 per week, or only £2,000,000 or £3,000,000 short of £84,000,000 per annum. The honorable gentleman has not told us what will appear in the prospectus, or what will be the rate of interest.
– That I cannot say.
– I do not say it would be wise to give the information to-day, but it is certain there will have to be some alteration. If the loan is floated at par, with the same rate of interest as previously, the Treasurer will have to consider seriously whether it may not prove a failure. When the first loan Bill was introduced,Mr. Fisher distinctly stated what it was proposed to put in the prospectus, copies of which were, I think, handed to honorable members. At the present time, the Treasurer will, no doubt, have to consider carefully what must be done, so that any alteration in the interest rate may not depreciate the other stock or create any risk of failure, and whether it might not be advisable to issue at a rate lower than par, as in the case of Canada. We know that in the last alternative issue only £6,000,000 was invested at 5 per cent. with liability to income tax, while £37,000,000 were invested with no such liability. The latter form of investment is most likely to be favoured by people who pay the higher rates of income tax, because it is they, and not the small working-class investors, who have sufficient interest to make the necessary calculations and appreciate the advantages of one or the other system. I should say that the great bulk of those who contributed the £6,000,000 were either not taxpayers at all or taxpayers in the lowest possible grade. I congratulate the Treasurer on breaking away from a policy which a previous Government of his party refused to abandon last year. Had the policy now proposed been acted upon previously, we might not have raised so much, but we should have been on sounder ground.
– I congratulate the Treasurer on his clear and imformative statement of this morning, and on his definite announcement as to the Government’s intentions in regard to the all-important subject of the exemption of war stock from income tax.
– Is it very meritorious when hesays he “ will not do it again “ ?
-The honorable member is very atrabilious this morning !
– Evidently ! The honorable member for Batman (Mr. Brennan) is conspicuous for having originally opposed a proposal of the kind, and we are ready to give him credit to that extent. This House must not attempt to shirk its responsibility. We followed on the lines of British financial operations at the time, and felt ourselves justified in doing so. This is no occasion for recrimination of any description, but for realizing that we have made a mistake and rectifying it as quickly as possible, just as the British Government itself has done. The position seems to be in a nutshell; loans amounting to £168,000,000 have already been authorized, and we are now asked to authorize an additional £80,000,000, making a total of £248,000,000. The Treasurer ‘has told us that our war expenditure is at least £80,000,000 per annum; and that expenditure we must prepare to meet. We have actually borrowed £149,000,000 in Australia and £47,000,000 in England, or £196,000,000 altogether. Of the money borrowed in Australia, all but £6,500,000 has been borrowed on the condition that the interest shall be exempt from taxation, an exemption of considerable magnitude. The Bill which it is sought to introduce contains nothing regarding the rate of interest, nor the amounts of future borrowings; those are matters regulated by the Inscribed Stock Act. It is competent for the Governor-General in Council to fix any rate of interest, and to say that the interest on future loans shall be exempt from taxation. But the Treasurer has given us the assurance that we all expected from him, that the interest on future loans shall not be exempt from taxation.
– The States have borrowed large sums, the interest from which is free from taxation.
– By the decision in d’Emden v. Pedder, State borrowings are State instrumentalities, and, as such, are not subject to the taxation of the Commonwealth authorities.
– The Commonwealth has raised £7,500,000 in London for the States.
– And lent them £18,000,000 in addition.
– For which the States ask us to .accept property.
– At all events, the amount of Commonwealth borrowing, the interest on which is exempt from taxation, is about £14;i,000,000.
– Will the interest on that amount always be exempt from taxation ?
– The issues expire in 1925 and 1927.
– Then the loans cannot be redeemed before those times except on terms which’ the bond holders are prepared to accept.
– Would you consider the retrospective taxation of this interest?
– It would be direct repudiation to alter the terms on which the money was borrowed, except on terms agreed upon by the lender. That we should do so would be a most heinous suggestion to come from a responsible member of Parliament, and I am sure that my honorable friend would not venture upon it. We have the assurance of the Treasurer that no more interest will be exempted from taxation, which is exceedingly satisfactory.
.- I understand that, although the Bill is to be introduced as an urgent measure, the Treasurer will be satisfied with getting the first reading to-day and will set down the second reading for next week. I appreciate his consideration in taking that course, because with the majority that the Government possesses he could stifle criticism . No Minister enhances his reputation by doing that, nor does he advance the in terests of the country. I hope that between now and the second reading a copy of the official report of the Treasurer’s remarks to-day may be sent to each of us, and that when making the second-reading speech the Treasurer will tell us what are the obligations of Australia, and what they are likely to be in the near future.
– Does the honorable member mean all borrowings, all indebtedness, or only Commonwealth indebtedness ?
– We are not concerned so much about private and State obligations, except so far as we may be bound to consider the extent to which the Commonwealth may be called upon to assist any State. The other day Western Australia was sending out the S.O.S. signal, and the Acting Prime Minister pledged the Commonwealth to render her assistance.
– Perhaps I should have construed the Treasurer’s remarks to mean that any request would be treated sympathetically.
– Knowing something of the difficulties of the State, I assured its authorities that if those difficulties were presented, they would.be considered, and I think I am not wrong in saying that very many special difficulties loom in Western Australia.
– The Treasurer should tell us what are our present obligations, and what our future commitments are likely to be.
– Including the commitments of the States?
– I see no objection to that. I noticed a report the other day to the effect that the Treasurer proposes to call a conference of State Treasurers or Premiers, I think in July, to be held in Melbourne, at which he proposes to tell them privately what the financial obligations of Australia are. I do not know why he should impose on his auditors the obligation to treat his information on this subject as confidential. Ought not the public to know our obligations? There are many persons in Australia who in this time of fictitious prosperity have large incomes because of the immense profits that are being made in various industries. Many of these persons are incurring obligations which they would consider themselves unable to meet if they knew the taxation that they are likely te have to pay in the early future. The Government should ask Australians to refrain from investing their money abroad. I believe that a certain amount of Aus.tralian capital is going abroad, because of the huge profits that have been made on money invested elsewhere.
– The British Treasury has arcade a regulation on the subject, and we are considering the making of a similar regulation.
– I am glad to hear that. The Treasurer possibly intends to tell us, when the Estimates are brought on, more about our obligations, and he might then be good enough to inform us concerning the financial assistance that is to be given “to soldiers. A good deal of money will be required to assist returned soldiers in the purchase of businesses and of land.
– For the time being, the giving of assistance for the purchase of businesses has stopped, though I hope that it may be restored.
– I suppose it was found that the businesses which were being taken up were small businesses, against which there is plenty of competition.
– Every one with a dying ^business seemed to want to dump it on a soldier.
– And no doubt every one with an unsaleable block of land wishes to dump it on the Repatriation Department. W e should be told what money the “Commonwealth proposes to borrow to –settle soldiers on the land, and what our interest obligations will be in respect of ^repatriation. I think it was agreed, that when we lent money to the States to be advanced to soldiers, the soldiers should he allowed to get it at a low rate of interest, the Commonwealth and the States making up the difference between that irate and the rate at which the money was i borrowed from the public creditor. We .should know to what extent and for how many years we shall be committed to these payments. !
– We do not advance money for the purchase of land; our advances are in connexion with improvements. The Commonwealth advance i3 merely for improvements and equipment, not for the capital charges on the land.
– I do not think the Commonwealth has abandoned the responsibility of raising the money.
– The States raised the money to provide the land. The Commonwealth advances loans up to a maximum of £500 for improvements and equipment.
– The arrangement is tha the States provide the land and the Commonwealth provides up to £500 for stocking, equipment, and improvements. It is doubtful whether the scheme can stand the strain of the full repatriation effort.
– That means that the Commonwealth will be compelled to assume a greater share of the obligations.
– That is so.
– I am glad that the Treasurer realizes that, because we have raised Australian and British loans to the amount of £196,852,000, and we have commitments to the amount of £30,550,000, making a total of £227,000,000. We propose to raise a further £80,000,000, which will bring the total up to £307,000,000. I think the Treasurer stated also that there will be a surplus of authority of about £14,000,000 in June next. On that indebtedness the interest will be at least £14,500,000 per annum. The Treasurer mentioned that, in connexion with the loans raised in our behalf by the British Government, the original arrangement was that we should pay an average rate of interest. If there has been any fresh arrangement, perhaps the Treasurer will advise the Committee. I am inclined to think that that arrangement will continue until the war ends, and it will be satisfactory for us to pay the average rate which the Imperial Government ure paying now, because there is no doubt that at the end of the war there will be a stupendous funding operation, by which the Imperial authorities will pay much less in interest than they are paying now.
The Government announce their intention of taxing future war loans, and that will mean that the interest rate must be increased. The value of the immunity of past waa* loan3 from taxation is shown by the Treasurer’s statement that of the recent loan, £37,000,000 was raised at 4£ per cent, free of taxation, and only £6,523,000 was taken up at 5 per cent, subject to taxation.
– That was the most costly loan that the Commonwealth has raised.
-I do not see how the present Government can hope to get money at less than 5 per cent.
– I hope that they will not pay mere.
– Somebody has suggested that the Government might issue future loans at a discount. The bonus of accrued interestwhich is paid under the present instalment plan amounts to a discount, and I sincerely hope that the Government will not issue a loan at any further discount. The late Treasurer (Lord Forrest) declined to pledge himself not to raise loans at a discount. Indeed, he did issue a loan in London at a discount, but I think that is a wrong principle to adopt.
.- We are indebted to the Treasurer for his very clear statement of the loan obligations of the Commonwealth, and I sincerely hope that, as he has already forecast,the consideration of finance will he the outstanding feature of the next session of this Parliament. I hope we are about to enter upon a period of clear thinking and acting in financial matters. We have proceeded in the past in a haphazard, jerky style, raising money by loans and by other means, until the public and private finanses in Australia are in such a condition that we hardly know where we are.
– Our stability is all right so far.
– I am not afraid of our solvency, but for the benefit of al] the great financial institutions which have to conduct the urivate business of Australia, the Commonwealth Government should make a clear statement of the financial position.
– As long as we are able to send away our wheat and our wool we shall be all right.
– When we are piling up a war debt at the rate of £84,000,000 per annum,unless we accumulate assets at a greaterratethan at present we shall not be all right. There is in progress a process of exhaustion which no man car. contemplate with a calm mind. I hope that the clear statement which the Treasurer will give to Parliament next session will show the necessity for an altered policy in regard to the primary industries. I believe that the Acting
Prime Minister could do nothing better than provide an opportunity to give consideration to the future of wheat growing.. I noticed that the Premiers at their recent Conference agreed to guarantee wheat production for a further year, namely, 4s. 4d. per bushel for the season 1919-20. The future of wheat growing in this country is imperilled to a. great extent, because there are a number of new wheat-growing districts in which owing to the enormous increase in the cost of production farmers cannot continue their operations at a profit. Many share-farmers and contract growers are selling out, and wheat production is falling off. There is no honorable member who represents a wheat-growing district but knows that lands are going out of production. We cannot continue piling up an enormous national debt without establishing corresponding assets.
Some honorable members seem to think that as soon as we get rid of the obligation to give income from war loans immunity from taxation, all will be right so faras future war loans are concerned. That is not so. We have established a principle from which we shall have great difficulty in escaping. A total of £143,000,000 has been raised at 4½ per cent. with immunity from taxation. As a result there has been established a standard for war loan money in Australia, and I say to the Treasurer and to other honorable members who are advocating the abolition of the freedom of war loan income from taxation - we all recognise that that immunity should never have been established - that although we may escape from the principle we shall not get away from the effect of the past policy. We shall either create an appreciation of the old stock or we shall not have successful loans in future. We shall have to offer to the public a price equal to that which they obtained for their money in the past or they will buy the old loans. It is no longer the time for the Government to consider how they shall make one loan more attractive than another, or for competition between different Treasurers in offering attractive terms. The times are not ordinary, and all money required for the war must come down, as other things have, to a fixed price. We shall require to consider the standardization of all money required for war purposes.
– Can we fix a standard? The honorable member will desire a low standard.
– That is so. I recognise that when we depart from the sytem hitherto adopted, we shall have difficulty in deciding upon new conditions that will be equal to those formerly obtaining. We shall certainly have a dislocation of financial matters.
– Does the honorable member suggest compulsory regulation?
– There will have to be some measureof regulation - I shall not say compulsory - which will guarantee to Australia all the money it requires.
– How are we to regulate without compulsion?
– I do not propose to use the word “ compulsion,” since it would require me to go further than I desire at present. I should have been glad if the Treasurer had brought down a classification of the loans which have been floated to-day, showing first of all those who obtain some actual immunity from taxation by reason of their investment in war loans, and those who do not. In other words, we should have a classification showing the aggregate amount of the non-taxpayers’ contribution to the war loans of Australia, and the total contributions by actual taxpayers. The various gradations are readily obtainable, and such a classification would show us what it has cost us up to date to float these loans. The honorable member for Kooyong (Sir Robert Best) has said, in effect, “ We have raised by way of war loans £143,000,000, and the whole of that sum is immune from taxation.” That, however, is not actually the position. While the statement, generally speaking, is correct, we know that, in reality, a great part of the money so raised would not, in the ordinary way, be liable to taxation, since it has been subscribed in small amounts by persons whose income is such that they do not come under our taxation measures. We should have from the Treasurer a complete statement showing what has been the actual cost to us of all the loans so far raised. This would afford usa basis on which to deal with future loans. I sincerely hope that this suggestion will not be lost sight of by the Treasurer, since its adoption would put us in a better position to deal with the ques tion of the amount and value of future flotations.
– I am very pleased to find that, for the first time since the outbreak of war, the Government and honorable members generally are beginning to realize the importance of the financial situation. There can be no doubt that, in our initial war borrowings, we made a serious mistake in exempting the war loans from taxation. We are wise after the event, and the Acting Prime Minister is now taking a very proper course in determining that this mistake shall in future be obviated. I hope that the suggestion which has been made in certain quarters, that it will be necessary to largely increase the rate of interest offered for future loans, if such interest is to be liable to taxation, will not be entertained. So far, the wealth of Australia has scarcely been touched in connexion with our war raisings. I say deliberately that I am a conscriptionist, and that I would carry that principle further than some honorable members are prepared to do. If it is right to conscript men to defend the Empire and Australia, surely, wealth should not be exempt. If the wealthy people of Australia would not contribute to our war loans in return for a fair. and reasonable rate of interest, I should not hesitate to take the money necessary.
– The wealthy, so far, have done very well.
– No doubt; but it is not creditable to Australia - which, in proportion to its population, is the richest country in the world - that we should be living and sponging on Great Britain to the extent that we have been doing in respect of our financial obligations. Great Britain has had to bear the greater part of thefinancialstrain of this war. It has had to finance its Allies practically from start to finish, and no countryhas treated any of its dependencies as it has treated us in this respect. It is up to us, therefore, to face our obligations, and instead of permitting England to go on advancing money to pay for our troops, we should find the money for ourselves. We ought not to trespass further on the generosity of the Old Country.
I rose particularly, however, to urge that the Government should not very largely increase the rate of interest in respect of future wai: loans, the income from which is not to be exempt from taxation. I would not give more than 5 per cent. If the wealthy are not prepared to contribute to the next war loan on that basis, then I should not hesitate to adopt whatever methods are necessary to insure that the wealth of Australia should help to finance us throughout this war. There can be no doubt that this immunity from taxation has been a very great advantage to the wealthiest people in this community. The more wealthy the contributor to our war loan, the greater the advantage he. enjoys from this exemption.
The honorable member for Wannon (Mr. Rodgers) has «aid that this Parliament should immediately determine that Australia must do more to develop her resources. We must produce latent wealth. For instance, nothing has yet been done in Australia in regard to shipbuilding. We have been told to-day that, since the outbreak of war, Canada has built eightynine ships, which are now carrying her wheat to England. To our disgrace be it said, Australia has not built one. We should have had by this time at least 100 ships built in Australia, and engaged in the transport of our wheat to the Old Country.
– There are too many Free Traders in the Government to allow that to be done.
– If I understand anything of the principles of Free Trade, this is one direction in which the Government would have hai the full support of all Free Traders. Quite apart from fiscal considerations, however, the Government would have the support of every thinking man in any effort they made to develop the shipbuilding industry here. It is a’ disgrace to the Australian Parliament that our wheat should bie rotting, to the extent of thousands of tons, on our wharfs, and that w>3 have done nothing in the direction of building ships to transport it oversea. We are now availing ourselves of wooden sh: ps from America to carry our wheat, and there is not one State in <the Union which could not have built since the outbreak of war a number of four and Eve-muted schooners, each fitted with a Diesel, engine, and which would have been well suited for the conveyance of our wheat to Great Britain. The wheat-producing industry, which is one of the greatest we have, is threatened with destruction owing to our inaction. It would not be good policy for the Government to go on financing the farmers in the production of their wheat if we are to allow it to rot on the wharfs. A strong bold ‘and definite policy of shipbuilding must be adopted so that we may transport our wheat to starving England. Is it not surprising that with a freight of 5s. per bushel not one ship has been built in Australia to carry wheat to the Old Country?
I have brought this question forward again and again, until I have become almost weary of doing so. There are, I believe, in my electorate, a thousand mill hands out of work owing to the inability to secure shipping to carry timber from Tasmania to the mainland markets. We have no means of transit. I hope that before the House rises we shall have from the Government a definite promise that they will, without delay, take advantage of some of the offers that private Arms have made to push on with shipbuilding if the Government will assist them in financing their operations. I refuse to accept the statement that the unions are to blame for the delay in embarking upon the industry. I have a telegram from the leader of the Wood Workers Union in Tasmania, stating that his co-workers are prepared to give the Government every assistance. They are prepared to allow the dilution of labour and to guarantee that they will not strike during war time.
– And in New South Wales the workers are waiting on the Government.
– Quite so. There are more ships being built by private enterprise in Tasmania than in the rest of the Commonwealth. The people of Tasmania grew tired of waiting for action on the part of the Federal and State Governments, and private enterprise there has taken in hand the work of shipbuilding.
– What is the capacity of the ships that are being built in Tasmania ?
– Six hundred tons. No more useful type of vessel for the Inter-State trade gould be built. I hope the Government will give us an assurance that there will be no more delay in setting out upon the work of shipbuilding, which should have been commenced three years ago.
– The Prime Minister made enough speeches about the matter.
– It is time that we set to work, since, as the’ result of the delay that has taken place in developing the shipbuilding industry, the people are suffering to a degree that is scarcely appreciated.
Sitting suspended from 1 to 2.15 p.m.
.- As a general rule in the discussion of financial measures, an ex-Treasurer follows the Treasurer, who submits the motion to the Committee, and other honorable members seem to look upon the discussion as an opportunity for having a debate upon a great variety of matters. It would appear that honorable members are not considered sufficiently cognisant with financial matters to attempt to deal with the proposition before the Committee.
– It shows they are quite satisfied with the proposals put forward by the Government.
– lt is the duty of every honorable member to give the Treasurer the benefit of his advice, possibly for the purpose of enabling him to carry on the financial affairs of the country in a better way. The proposal that the Treasurer has put before us to-day will cause, a great deal- of surprise when the public become acquainted with it through the press tomorrow morning. It was beyond the expectation of most people that such a large loan would be raised so soon after the recent flotation. It is also surprising to learn that before December next we will need something like £40,000,000 to meet our war expenditure. I think that the Treasurer will act wisely in issuing this prospectus for the next loan if he will not ask for too large a sum until next year. After the month of December people generally know better how they stand financially. Balance-sheets are made up at the end of the year, and dividends come to hand early in the following year. The difficulty to which the honorable member for Wannon (Mr. Rodgers) has referred in regard to the different rates of interest on the various loan issues can hardly be avoided. A large proportion of the money subscribed to our loans issued at 4^ per cent, has come from insurance companies and large firms, who have quite properly recognised that our war loans have been good investments. But if the Treasurer proposes to issue a large loan at 5 per cent, almost immediately, I am afraid that he will not have those large contributions from these big firms which have been a feature of our previous loans.
– Does the honorable member consider that 5 per cent, is a fair rate ?
– It is a very fair rate for a loan issued by the National Government. It might not be considered a fair rate for a loan issued by a speculative concern, but no loan issued with the credit of the nation behind it should pay more than 5 per cent, interest, even in war time. Any person who would ask for a higher rate of interest would be exceedingly greedy, and certainly would not be in sympathy with the aspirations of the nation. If we cannot get money from those who have ‘it, because they will not accept 5 per cent, interest on the ground that the rate is too low, we will have to force them to give their money, and accept whatever rate of interest Parliament may decide to fix. We are told by those who have the information that not more than 10 per cent, of the money available for investment in loans has yet been raised in Australia. We were also told the other day that since the war commenced a sum of £126,000,000 has been saved and deposited in savings banks and other financial institutions. We have hardly touched those savings yet. In the face of these figures the Commonwealth Government are justified in asking the people to lend their money to the nation at 5 per cent. I do not mind taking my share of the blame for the mistake which …… made in issuing loans at 4£ per cent, free of income tax. However, it was an experiment. We had to offer some inducement to people to induce them to adopt the proposal put forward by Mr. Fisher to raise money in Australia for war expenditure. I have watched political events in this country for many years. The heaven-born muddlers who have controlled the financial destinies of the States were awfully alarmed when persons intimated the possibility of raising loans in Australia. Some inducement had to be given by Mr. Fisher in the inception of this new policy, and it was good business to do what was done. The English money market is already strained to meet the requirements of the British Government and our Allies. So that the duty devolves on us to raise whatever moneys we require within Australia itself. I hope that the Government will not offer more than 5 per cent, interest, and I hope that the Treasurer will not ask for the whole of the money at once. If he would float half Che loan in September next and leave the balance until next year, he would meet with more success. Any flotation that is not a success leaves a bad impression. The .,oan issued by the Fisher Government- - a Labour Government - in August, 1915, proved to be a phenomenal success. It exceeded all expectations, and the amount subscribed was several millions more than the amount asked for. The spirit of enthusiasm which was displayed by investors on that occasion is still in existence. People like to belong to something which is successful. Nothing pleases a man better than to be a supporter of a succesful parliamentary candidate. In ordinary business, loan issues, and other human activities, nothing succeeds like success ; and I am anxious that the excitement and enthusiasm displayed in regard to previous loans may find expression in all subsequent appeals. I hope that the Treasurer will bear in mind the suggestion I have made, and, above all, make up his mind that no more than 5 per cent, shall be offered, and that, if money cannot be obtained at such a rate, means shall be devised for obtaining the sinews of war from the people of Australia.
– - i hope and believe that those people who are well able to lend money will come forward, as’ in the case of previous loans. Some of the present issues will become due in 1925 and 1927, and the Government ought to be left with no anxiety as to the ability to arrange for their repayment on the due date. There is no doubt that money is very much needed at the present time, and it is hard to conceive that any person would refuse the present or any future appeal, though, of course, we all wish that there may be no necessity for the latter. As a natter of fact, where could people find a better investment for their money? Certainly not in Great Britain or America., and, therefore, the best policy is to keep the money in Australia, which at present is the bestgoverned country in the world, and the most safe, both for money and human beings. Anybody who sought to invest his money elsewhere under the present circumstances would, indeed, be- a madman. It was the Honorable Andrew Fisher who promised that Great Britain should have the aid of our last man and our last shilling; and should the war, unfortunately, continue, I hope Mr. Fisher may see his promise enthusiastically redeemed. If the war has proved anything, it has proved that Australia is one of the most loyal countries in- the British Empire, and, at the same time, one of the most wealthy, though up to the present we have only touched the fringe of our resources. The country is to be congratulated on the fact that the Prime Minister arranged in so statesmanlike a manner for the sale of our wool and wheat, and while, of course, it is impossible to make arrangements for such a deal in a few days, the Government are doing everything that is humanly possible to help win the war. In this time of war and difficulty it is the duty of every one of us to do all we can to help the Government to preserve our wheat and wool- to preserve the food of the people of Australia, our soldiers at the Front, and the people of the Empire generally. “When the other day a man drew my attention to a stack of wheat uncovered, I pointed out to him that it was the people’s wheat, which he ought to assist to protect from the wet, if -he could not protect it from mice and other plagues, and that the Government had done all that mortal men could do to surmount the difficulties in this connexion. I quite agree with the honorable member for Franklin (Mr. Mcwilliams) that we ought to have ships to carry our produce overseas ; but, at this time, the starting of new industries in Australia is hampered by conditions that are not found operating in other countries. However, the position is improving, and day by day the rights of men engaged in this particular industry are becoming more fully recognised and satisfactory arrangements are being made. I sincerely trust that the shipbuilding project in Tasmania will be brought to a successful issue.
I regretted to observe the resolution carried by the union of railway men in Victoria, suggesting the repudiation of our war indebtedness.
– That has been squared up; why re-open’ the question?
– I know that thehonorable member, as a fair-minded man, does not agree with any such resolution, and very properly this action of the Railway Union was not allowed to pass unnoticed. As I have already said, it is the duty of honorable members on both sides to give all possible assistance to the Government, and if the Government go wrong, to tell them of the fact. I have always believed that when a Parliament is elected the people ought to have a say in the government of the country, but hitherto we have had the spectacle of two great parties fighting for office, and at times I have been ashamed of what goes on’. Parliament ought to* elect Ministers, who should have the continued support of all ; but how often does the question arise as to how a given piece of legislation may affect the next elections ? I hope we shall rise to the occasion, and do everything to encourage ‘the wheat, wine, and other great industries of the country. In Australia is to be found every product useful to mankind, with, perhaps, the exception, of oil; and we have a prospect of getting that. “With such resources we cannot fail to have a great future.
.- Any one listening to the liquid language of the Treasurer this morning, and impressed by the almost poetic way in which he proposed the motion, might be led to think that a war, which has, even indirectly, produced such pleasant discourse, is not an unmixed disaster.- Unfortunately, it is our duty as politicians to go a little beneath the surface of things, with a view to discovering what are the hard and cruel facts in connexion with the financial obligations of the country, particularly in respect of the war. Although perhaps I should not confess it without due contrition, I have been reading the newspapers published during the currency of the notation of the last loan, and I noticed quite striking advertisements in the morning journals of Melbourne. I feel sure that these journals received no invidiously generous treatment in this regard;
I am struck’ by the fact ‘that the Acting Prime Minister, in all these advertisements, insists on the fact that, while our soldiers are suffering and dying, in the discharge of their duty in foreign countries, men in Australia might discharge the full measure of their duty by investing in these war loans. The Acting Prime Minister was good enough to say that he does not propose to import into any future issues a feature of the present flotation; that is to say, never again will he propose that the interest shall be outside the area of taxation. I am amazed that, in the light of facts before him, the best he is able to say to the country is that he will do this thing once more, and then reform.
– The “last drink”!
– Quite so. The Treasurer had the advantage of having before him not only illuminating criticism by members on this side - of which he may be inclined to take but little notice, since we are supposed to be outside the charmed circle which understands the mysteries of finance - but also some very useful observations by no less an authority than Sir John Grice, President of the Associated Banks, when submitting the annual report a few months ago. I propose to have some of the language employed by this gentleman, as a leading financial authority, republished ‘ in Hansard, because, although probably I do not think on even terms with him on most matters of politics, I recognise a great measure of truth in what he told us. He was reported at great length in the Argus, the Melbourne morning news-i papers recognising new truth in those words of Sir John Grice, which they had failed to appreciate when practically the same words came from the Leader of the Opposition (Mr. Tudor) and some of the rank and file of the Labour party.
– The Argus practically said it was a “ fool “ proposition when I made it.
– Unquestionably,, from the point of view of the newspaper, it would Be a “ fool’s “ proposition coming from such a source, but a proposition of sagacious warning when uttered by an. authority like Sir John Grice. That gentleman, speaking of the immunity of these loans from taxation, said -
It is, of course, known generally, though not perhaps in detail, that the immunity thusafforded benefits chiefly the wealthy class,. whose incomes, if derived from other investments, would be liable to be taxed on the higher scale, and that the wealthier the individual the greater the advantage gained by investments in the war loans, or in State Government loans. There is, therefore, this anomaly. The Commonwealth Government declares with one voice that graduated taxation (which means the wealthier the taxpayers the higher the tax) is equitable, and most people in these days of war and high prices, even those paying taxes on the higher rate, agree with these views, provided they are not carried to extremes, and that the lower incomes also pay a moderate amount of taxation. The other Government voice, speaking in regard to the war loan, virtually says: “There shall be no graduated taxation in regard to this form of investment.”
This second decision makes the war loan at 4½ per cent., with exemption from taxation, a splendid investment for the very rich Investor, for though he would be quite willing to be patriotic and to make sacrifices in such time as these, in order to help his country, no sacrifices are asked from him. On the other hand, the investment is not equally good for those with only a modest amount of capital. It will make my remarks clearer if I go into detail and give the varying returns of respective income.
As my words might be ineffective in this Committee, and those of the gentleman whose remarks I am quoting illuminate my point better than I could do, I shall quote his detailed examination of the position. He says -
A tabulated statement beside me shows that, to persons living in Victoria, investments in the war loan, with exemption from taxation, compare with an investment on mortgage mbject to both Federal and State taxation as follows: -
To an investor with £600 a year, the~4i per cent, war loan is equal to £4 14s. 6d., or nearly 4¾ per cent. received from interest on mortgage. To an investor with £1,000 a year the equivalent of £4 10s. 2d., or nearly 5 per cent. To an investor with £3,000 a year £5 10s. 5d., or just over5½ per cent. To an investor with £5,500 a year, £6 0s. 8d., just over 6 per cent. To an investor with £10.000 a year, £69s.9d., say. 6½ per cent. By the time we reach a man with £30,000 a year it is equivalent to £618s. 4d., or nearly 7 per cent. Assuming the graduated basis of taxation to be equitable, the taxpayer with £30,000 a year thus gains by investment inwar loan an advantage of nearly2¼ per cent. over the man with an income of £500 a year who similarly invests.
Lord Forrest. - That is the point. The graduated system brings about these results, but it does not treat every one alike.
– My right honorable friend would take every care that every one should not be treated alike. He has treated his rich friends with special generosity. That is the point I am making.
Lord Forrest. - You have omitted to mention the reason for the inequality about which you are speaking, namely, the graduated system of taxation.
– I made use of these very figures when the last war loan was about to be issued.
– To continue the quotation -
Looking at it from another aspect, and taking 6 per cent. as the ruling rate of mortgage at the present time, the small man whose investment in the war loan equals only 4¾ per cent. to him on mortgage, loses about 1¼ percent. by the investment in the war loan, and the very rich one with £30,000 a year, who receives what is equal to £6 18s. 4d. per cent. by investment in the war loan, benefits to the extent of nearly 1 per cent. over the mortgage rate. This high rate to the wealthy, with such a security as the Federal Government has to offer, must be too tempting for any wise capitalist to refuse.
Those statements have not been answered, and cannot be contradicted. When a new loan was to be floated, the present Treasurer, who recognises the unanswerable logic of what I have read, was able to promise merely that the exemption of war loan interest from taxation would occur once more only. Instead of expressing contrition for what has been done, and promising that, under his regime, it would not recur, the honorable gentleman repeated it, excusing it on the ground that it would not be fair to change the practice without notice.
Lord Forrest. - The honorable member, and the party to which he belongs, introduced the system.
– Yes; after a decision in Caucus.
– And not once, but several times.
– Many of those who were of this party have been - if I shall be in order in using the words of the Prime Minister - “ spewed “ out of it. I can only say that the arrangement has neverreceived my support; and months ago, when sitting where the honorable member for Henty (Mr. Boyd) now sits, I said that I was altogether opposed to it. I remember the pained surprise of the then member for Flinders (Sir William Irvine), who could scarcely credit that my reforming zeal extended so far.
– Does the honorable member recognise that we shall have these war loans with us for all time, though the condition about which he is speaking may “not be retained for more than another seven or nine years.
-‘ We shall have these loans with us so long as they can be made attractive to the investor. What pains me more is that we are likely to have wars with us so long as they can be made attractive to the investor.
– That o is an outrageous statement.
– It is meant only for an advertisement. The honorable member does not believe it himself.
– I have made the statement deliberately, and with a knowledge of the history of these matters. I do not accuse honorable members opposite, or any person responsible in any country for the “conduct of the present war, of having deliberately promoted it for what they could make out of it. But I say that while those who do not fight are permitted to make their non-combatancy comfortable and attractive, conditions exist in every country which help to make wars inevitable.
– The conditions in Great Britain and France are very attractive just now !
– This war loan, so the advertisements tell us, is the most attractive investment that is offering in Australia at present.
– I agree with the. honorable member that these loans ought to have been floated at the market rate of interest, and that the returns from them should not have been exempted from taxation. I have always held that view.
– A great deal has been published of late in the press about the repudiation of our war loan obligations, and much has been made of an alleged resolution- misquoted by the newspapers - of the Victorian Railways Union. I do not believe in the repudiation of any kind of contract or frond, or of one’s word, given either in writing or orally ; therefore, I do not, and the union does not, believe in repudiation of the obligations incurred by the people of Australia in respect of this war, whether in regard to the lending of cash or the giving of service in arms. The members of the union are to be complimented on having courageously called attention to the gross inequity, if not iniquity, of putting these loans on the market, and holding them up in prospectuses as gilt-edged securities, which upon their merits should attract those with money to invest in them far what their money so invested will earn, and setting up such investing as a discharge of their duty by the capitalists of the country.
– Does not the honorable member know that many of those capitalists have sent their sons to fight?
– One prospectus says -
A full six months’ interest is payable on the 15th June next, and as instalments are payable over an extended period up to 31st May, 1916, this represents a substantia] bonus to investors. Therefore, if looked at simply as a gilt-edged investment the issue .is a highly attractive one: but at this critical juncture in the history of the Empire of which we are proud to f orm a part, there are more vital considerations to be borne in mind than the mere question of the attractiveness of the loan as an investment.
When the next war loan is about to be floated - which will not be long, because, as the honorable member for Wannon says, we Shall always have these loans with us - I hope that my attitude may not be misunderstood. I shall then say, as I say now, that, not only am I opposed to the exemption from taxation of the interest on war loans, but, if the war is to continue, with its frightful sacrifice of priceless human lives, if ,we are determined that we may not negotiate to end it until we have satisfied the last object of our ambition, including the acquirement of new and useless territory, I am opposed to the flotation of war loans at a handsome rate of interest, until it has been ascertained by searching investigation to what extent the surplus capital of this country is available to foot the bill without rewardof any kind. It is the common jargon of those who profess to be, the know-alls-of finance that money cannot be borrowed without interest without hindering the wheels of commerce and industry; that for every pound put into a war loan without reward in the way of interest, unemployment, lack of production, and diminution of the public wealth is caused. I do not believe that those who say these things have failed to realize that there is an immense body of surplus wealth available to be put into this war by people who believe in. the war, and that it can be put in without any reward, yet without causing unemployment or the reduction of production if the men who control this wealth are really sincere. It is part of the policy of the Government, in this as in other matters, to stifle public discussion. The Acting Prime Minister (Mr. Watt), who has tried very hard to be amiable since hehas been leading the Government, and who, considering the uncongeniality of that rôle, has succeeded with a fair measure of success, has made it part of his policy to forbid discussion on this matter, and, in regard to it, has allowed himself to slip once or twice from the high plane of toleration which he had attained into that more congenial element in which he says hard things about those who disagree with him. Accordingly, we read in a recent issue of the Herald the following paragraph -
Action May be Taken.
Disapproving of public criticism of delicate financial matters in the sphere of the Commonwealth, Mr. W. A. Watt, Acting Prime Minister and Federal Treasurer, to-day uttered a warning that action might be taken to stop it. “ Two reports have recently appeared in the daily press having a bearing on important financial matters,” said Mr. Watt. “ The first was the report of the views of the Railway Union of Victoria concerning the repudiation of war-loan repayments or interest. The second is the opinion of Mr. Atkinson on the note issue.” “At such a time as this,” Mr. Watt went on to say, “ questions of this character should be dealt with carefully. I want to say plainly that the Government expresses disapprobation of these views and methods. If this expression is not sufficient, the Government will have to take such measures as it thinks prudent and necessary to protect the interests of Australia, to relieve the mind ofthe public creditor, and to assert the stability of our currency.”
I hope the stability of our currency will be maintained, but I hope, also, that this threat by the Acting Prime Minister will not be taken seriously to indicate that public men or private citizens cannot openly discuss this question of vital importance to our well-being, so that we may consider whether we are drifting into a dangerous position in regard to the financial obligations which are arising out of the war. To my mind, it is nothing less than repulsive that men should be reaching out with one hand for the bodies of others to throw into this fearful war, and with the other hand seeking to obtain for themselves an almost extravagant reward for their investments in connexion with it. The veil should be torn from the eyes of the people. I am convinced that it is this false perspective, amongst other things, these utterly old-fashioned and discredited financial shibboleths, that are responsible for that false condition of mind which has rendered possible a continuation of this long, bloody, and most costly of wars. I take this opportunity of voicing my protest against that policy.I am not favorable to the exemption from income tax of the fruits of these investments. I shall not be favorable to the continuation of these flotationsuntil we have ascertained how far those having large sums of money to invest are prepared to back up their patriotism by acts of real sacrifice. I maintain that there has been no sacrifice in connexion with this war comparable in even the remotest degree with the sacrifices of those who themselves have suffered in the war, or of others who have lost those who are nearest and dearest to them. While this frightful conflict continues in Europe - and many people seem to regard it as a permanent institution, which must not interfere with their pleasures, their prospects, and their prosperity - men are discussing these gilt-edged investments with the easy conscience of the period when war was not being waged. We find places of pleasure overflowing with people, and, so far from the community showing greater realization of the sacrifices of others, they are realizing them less from day to day. I wish to see the fearful effects of this war borne in some measure by those who are nonparticipants to-day, and I do not wish to see the ghastly spectacle described in the article by Sir John Grice repeated again and again, and the rich men made still richer, and the poor still poorer, under the conditions patronized by the Acting Prime Minister and the Government,
.- It is quite right that honorable membersshould regard this debate as affording an opportunity to air their opinions on financial matters, because it has been apparent for a long time that Commonwealth finances are getting into a serious condition. One point on which I desire to congratulate the Treasurer is the determination of the Government to issue no more loans with the inducement that the income therefrom shall be exempt from taxation.
– Why did not the honorable member vote in that way in September last?
– At that time I was favorable to the issue of loans without immunity from taxation, but I was given to understand by the then Treasurer (Lord Forrest) that if such a policy were adopted dislocation of the finances would be the result. I also understood that the loan authorized in September last would be the last to which the promise of immunity from taxation would be attached. I favoured the amendment moved by the honorable member for Grey (Mr. Poynton), but the House decided that the loan should be issued on the conditions proposed by the then Treasurer. I, however, took a later opportunity of rising in my place and urging the Government not to exempt from taxation the income from future loans. I was disappointed, therefore, to find that, at a time when Parliament was not sitting, the last loan was being issued with the alternative conditions of 4½ per cent. interest and immunity from taxation, or 5 per cent. subject to taxation. I hope that that policy will not be continued. Already the Commonwealth has plaoed about £148,000,000 outside the taxable area for a certain number of years. It has been said that we have only absorbed in this way about one-tenth of the wealth of Australia; but I regard that amount as a very fair slice to be taken out of the taxable area, because, even if it represents only one-tenthof the total wealth, much of the other wealth is in such a form that it cannot be easily transformed into a liquid state and subscribed for war loan purposes. The position is more serious than some honorable members seem to think. I am glad, therefore, that the Government have announced a discontinuance of the past policy.
It is probable that, by the end of next year, we shall have accumulated a war debt of at least £300,000,000, and that will involve an annual bill of £14,000,000 or £15,000,000 for interest and sinking fund.
That debt, together with the other amounts which the Commonwealth will require to find in order to carry on its services, will be a very heavy burden on 5,000,000 people. How shall we be able to pay off that money ? It seems to me that our chief hope of repayment must centre in the stimulation of primary production. The proceeds from the sale of our primary products are providing the greater portion of Australia’s wealth at the present time, and are enabling us to pay our interest bill and other obligations abroad. There rests upon the Government the necessity of not only getting additional money from the people, but also of giving the community a lead in the fostering of primary production. Can our 5,000,000 people do very much more with the soil and resources of Australia than is being clone to-day? That is a serious problem, which will call for the most careful and prudent statesmanship. The possibilities of wealth in Australia are so great that I have no doubt that, in time, this country will be able to establish financial stability; but a number ofyears must elapse before that is achieved, unless we are fortunate in getting a large influx of people who will aid in the rapid development of the country.
There are certain undeveloped industries, in respect of which the Government certainly can give assistance. One of the first considerations of the Government should be to encourage the discovery and development of oil deposits. Some time ago the Public Accounts Committee investigated the matter of oil production in Papua, and the evidence of the Government oil expert and other authorities showed that there is, in that island, a large area that can be considered oil-bearing. Already oil of a very high mercantile value has been struck. There are, oh the mainland, other deposits which the Government expert is very anxious to have developed, and we shall need to tap those resources if we are to provide locally the oil for the Commonwealth Navy, and for all those industries for which crude oil for fuel purposes is becoming more requisite. Therefore, I hope that the Government will not only see how they can get money from the people, that they will not only practise economy in all forms of expenditure, but that they will also give a lead and encouragement to the people in respect of certain lines of production. Such a policy will materially help to reduce the debts which the Commonwealth has accumulated during the. terrible period of conflict in Europe. I prefer to leave my further remarks concerning finances until we have heard the Budget statement which the Treasurer has promised to produce early in the financial year - probably about August. I read in the press that he intends to make his Budget Statementas early as possible in the next financial year. There is no reason why that should not be done. The question was investigated by a Committee of this Parliament, and officers who have to do with these matters gave evidence that it was quite practicable for the Budget to be presented to Parliament early in the financial year. I am glad that the Treasurer has arrived at this decision, and since he proposes, probably in August, to make his Budget Statement, and to outline the taxation and other proposals by which the Government hope to balance the national ledger, I shall reserve until then any further observations I have to make concerning the finances of the Commonwealth.
.- There can be no doubt that, as other honorable members have said during this debate, we have entered upon serious financial responsibilities. We have to consider, not only the borrowings of the Commonwealth, but onr responsibilities in respect of loans raised by the States, the municipalities, corporations, and private individuals, inasmuch as the interest bill has to be met by the whole community. Although our country is large, we have a population of less than 5,000,000, so that this question is of the utmost importance to us. Mr. Knibbs, in his latest statistics, shows the total borrowings of the States amount to £372,000,000. The ActingPrime Minister (Mr. Watt) has told us to-day that we have already incurred a war loan indebtedness of practically £227,000,000. In addition to that, we owe the States something like £10,700,000 for transferred properties, and we have loans outstanding in connexion with the Northern Territory and the Oodnadatta Railway. Allowing for these, as well as for the public debts of the States, and the £80,000,000 which is to be raised under the Bill now before us, we have a total indebtedness of £694,000,000. An additional £100,000,000 may be put down in respect of the borrowings of municipalities, corporations, and private persons ; so that less than twelve months’ hence our total borrowings will amount to not less than £800,000,000.
– That represents an amount equal to the capital of Australia.
– I am looking at the great burden which the masses of Australia have already to shoulder. Unfortunately, it is inevitable that our interest bill will increase. While the Commonwealth authorities are able to float loans at 4½ per cent. and 5 per cent., the States are in a different position. Within the next few years a number of State loans will mature, and although the States’ borrowings total £372,000,000, there is only some £10,000,000 to the credit of sinking funds throughout the Commonwealth. That £10,000,000 will go but a small way towards the redemption of loans in the near future.
– The honorable member need not worry; we shall have our loans for the term of our natural lives.
– The honorable member may adopt that comfortable attitude in these very uncomfortable times, but I am not prepared to do so.
– Tell me of one public loan that has ever been paid off?
– The point that I wish to make has reference to the position we shall occupy when these loans mature.
– The Victorian Railways Union is the only body that has suggested a way of getting rid of that liability.
– And I intend to point to what a certain gentleman had to say in time of peace in regard to repudiation. He was not brought to bookfor his utterances. When the States wish to redeem the loans maturing within the next few years, it is quite probable that they will have to raise money at 5½ per cent. to pay off 3 per cent. stocks. In that way alone our interest bill will be largely increased. Within the next few years, before we have a penny to devote to repatriation, to the payment of soldiers’ pensions, or to developmental works, we shall have to provide £50,000,000 per annum for the payment of interest.
– The honorable member will have to come over to our side, and advocate increased production.
– Honorable members generally are in favour of that policy. That, however, does not necessarily mean only increased production from the soil. We want increased production on the part of our factories, as well as from the land, and with a greatly increased output we shall find employment, not- only for the people at present here, but for the millions who will be attracted to our shores.
I was rather surprised to hear the honorable member for Barker (Mr. Livingston), who is not usually aggressive, attacking the Railways Union for its temerity in placing on record its opinion as to how our indebtedness should be dealt with. The honorable member waved his arms like flails, and spoke with much warmth. I would remind him that before the outbreak of this war a notable book was published from the pen of Norman Angel, and that it created in the minds of many people, myself included, the feeling that war would be impossible. The conclusion at which he arrived - and his arguments were most convincing - was that we had reached a stage when even the most aggressive country would not think of going to war. He pointed out that it had never paid any country to go to war. He said that nations, as the result of war, might secure new provinces or large indemnities, but that war did not pay, and he referred to the fact that eighteen months after the Franco-Prussian war of 1870, Germany, notwithstanding the provinces and indemnity she secured from France, was in far poorer circumstances than France herself. Norman Angel accepted an invitation to lecture before the Bankers’ Institute of London, and lectured before 1,000 bankers from London and the provinces, as well as from France. At the close of his address he answered a number of questions, and a prominent director of Lloyd’s Bank, in moving a vote of thanks to him, said that he agreed with every proposition that had been advanced by him. He added, “ I am going to say something to which, in all probability, some of my brother financiers will take exception. Judging by the way in which the nations are piling up their debts and increasing the burdens on the great masses of the people in preparing for war, a day will come when, quite likely, the people of those countries will ‘ cry ‘ Enough ! ‘ “ “ Looking at the future, I see,” he said, “ running right across the financial sky a very ugly word, ‘repudiation.’ The people’s burdens will become so great even in preparing for war that they will say to their rulers : ‘ We can stand no more’ of these burdens, and we therefore ask you to repudiate some, if not all, of the liabilities you have entered into.’ “ That was said by one of London’s leading bankers. The Victorian Railways Union never used words so drastic as those, yet they are held up to opprobrium. Its members simply gave legitimate expression to the opinion they held, and it is; rather unfair for any member of the House to try now to put them on the gridiron, seeing that the Premier, the Government, and the Railways Commissioners of Victoria have accepted the reading of the motion as put before them by the executive of the union. Those members of the House who are fortunate enough to be supported by the press of this country think .that every paragraph they read in their newspapers is gospel truth. The Lord deliver them from such a delusion ! Even though that section of the press favours them in their political careers and in their election campaigns,. I implore them not to accept newspaper statements as being absolutely true. If those honest workers in the community who belong, to the Railways Union are prepared to go tq the responsible authorities and point out exactly the meaning of the resolution they passed, and the Railways Commissioners are satisfied to withdraw any embargo against the union, surely it is not fair for the honorable member for Barker (Mr. Livingston) to drag the question up again here in the way he has done.
As regards compulsory monetary contributions to the needs of the Commonwealth, let me quote a short extract from the Budget speech delivered by the Honorable Sir J. G. Ward, Minister for Finance in the Dominion of New Zealand, in 1917. Speaking of the way in which wealthy men should contribute to the loans in New Zealand, he said -
In the event of the voluntary contributions falling short of the amount required, I will ask the House for authority to introduce a system of compulsory contribution, under which persons who have not done their part in helping to provide the necessary finance for carry- ing on the war, and fc r providing adequate payment for soldiers and their dependants, will be assessed with additional heavy taxation, which I will fully explain when dealing with taxation. I will ask the House to make the authority applicable to those who neglected to take up their part, not only of the last war loan, but of any future war loan.
The compulsory system will not be enforced against those whose incomes are under £700 per annum. Those whose earnings are below that amount .must be trusted to contribute voluntarily.
This may be regarded as a somewhat drastic measure, but I regret te say that it is necessary, as there are many persons of means, and also companies, who subscribed very little, and in some cases nothing an all, to the last loan. I would earnestly impress’ upon the- country the fact that our part in the war cannot be carried on without the necessary ways and means, and all who possess means and do not realize what is their clear duty must be compelled to make the same sacrifice as those who do recognise their duty.
There a very responsible Minister in a sister Dominion shown that he is prepared to take drastic steps in the case of wealthy men who will not contribute voluntarily. I am prepared to go further. The honorable member for Wannon (Mr. Rodgers), and even an honorable member on this side, have expressed the fear that when the next loan proposals are submitted by our Treasurer, with the interest taxable, the financial magnates of Australia will not bite at them as they have done at past loans, which were free from income taxation. Let me say in regard to that matter, as also with regard to the period when the contraction of the note issue will come about, that unless the banks and big financial people generally behave in a proper manner they will be compelled to do certain things. If we want a loan of up to £S0,000,000, the people will have to contribute the money, if not voluntarily, then compulsorily. It will have to be done in some way if the money is required. When the last Loan Bill- was before the House I moved an amendment that the interest should be taxable. The Labour party voted solidly for it, but almost all those under the leadership of the then Prime Minister (Mr. Hughes) refused to take the opportunity to remedy a defect that was created almost at the inception of our war borrowing. That was on the 7th September of last year. I am not sure that the whole of the Coalition or Fusion party voted to make the interest on that loan tax free, but at least some of us who had been offenders on this side of the House were prepared to repent of our former sins. I believe that the honorable member for Werriwa (Mr. Lynch) did vote with us, and it is suggested by interjection that the honorable member for Grey (Mr. Poynton) also did so. That was not so, but the honorable member for Grey moved that the interest should be 5 per cent, and subject to tax. I voted against that, because I did not believe in fixing any amount as interest.
Realizing the great responsibilities we are incurring from day to day in this awful conflict, I sincerely trust that the rich men of this country will display in a practical fashion some of that wonderful patriotism that they are always mouthing on the platform. I should like to see some practical effect given to all this patriotic talk, which reminds me of the caustic statement made by the Prime Minister (Mr. Hughes) when he was leader of our party, in submitting to the people the referenda for the amendment of the Constitution, that there were people who would give £50 to a patriotic fund but would fleece the public of £5,000 by means of increased prices. That system is still being persisted in. When the Prime Minister thought as we do, he generally used very drastic language in dealing with the capitalists, but he has been remarkably quiet on the subject in recent times. If these people will not contribute voluntarily they will be compelled to contribute cither by means of taxation or in some other way. It is the bulk of the poorer people who have to do the fighting for this and every other country, and then when it comes to footing the bill the same unfortunate people have to find the money. That is the unsatisfactory and deplorable condition of affaii’3 which has arisen through our miserable system of taxation, which is passed on to the masses of the people. If we are going to do justice to the whole community we must consider these things. If we do not give them serious consideration, the time will come in this and other countries when the people will rise up en masse and say. “ Enough of this : such rulers are no good to us ; We will banish those who still persist in. adhering to the old system, and will establish a new regime, which will give us a better deal.”
.- Most of the arguments we have heard have been as to whether our war loans in future should be issued with or without exemption of the interest from payment of income tax. The honorable member who has just sat down takes special credit for the leader of his party, and for the party generally, for having voted solidly on 7th September last against the principle of allowing this exemption; but if we go back a little we find that it was Mr. Fisher, a former leader of the party opposite, who initiated the system of exempting interest earned by investments in our war loans from payment of income tax, and the system then established was carried on by the Labour .party in regard to succeeding loans issued by the Commonwealth. I quite agree with the honorable member that we have reached a limit in this regard. We must consider the financial position a3 it is to-day. We have borrowed about £196,000,000 altogether, and of that amount we have raised £149,000,000 in Australia. It has been estimated that the capital of Australia amounts to £S00,000,000, as some authorities say, or £1,000,000,000, as others say. The amount taken from that wealth and put into our war loans is about 18 or 19 per cent, on the lower estimate, or about 15 per cent, on the higher estimate. Therefore, although in a matter of millions the amount of capital which is free from the payment of income tax may be deemed to be large, the percentage does not amount to very much more than the annual income of Australia. But the Government are perfectly right in looking to the future. I quite agree with the suggestion that the exemption should hot continue in regard to further war loans.
One of the biggest problems confronting the Treasurer is the matter of fixing the rate of interest to be paid. I was glad to hear the ‘ honorable member for East Sydney (Mr. West) say, in reply to an interjection from myself, that he considered that 5 per cent, was a very fair rate- of interest. I commend the honorable member for that statement ; but there are . thousands of the supporters of his party outside who consider that 4$ per cent, is far too high a rate to pay, and that, as a matter of fact, the payment of interest should be s wiped out altogether. In considering the rate of interest to be paid, it is just as well to compare our position with that of other countries. Great Britain paid 3 per cent, for her money during the Boer War, but she is now paying 5i per cent. During the first year of this war, she paid 3£ per cent., during the second year she pawl 4^ per cent., whale in the third year, and up to the present, she has been paying 5$ per cent. The average, strange to say, is 4£ per cent., the fixed rate which we have been paying.
– The honorable member is not taking the average on the amounts borrowed.
– That is true. I am merely averaging the rates in each year. The true average would probably be 4f per cent., showing that we are not. paying an extortionate rate of interest in Australia to those who have come forward so generously and lent their money in the cause of the Empire. ‘
The honorable member for Batman (Mr. Brennan) attacked the wealthy man who has put his savings into war loan scrip, and by reason of receiving exemption from income tax on the interest earned on that scrip, has transferred his wealth from a higher grade of taxation to one in which he receives entire exemption from the payment of income tax. The honorable member pointed put that, in such a case, the rate of interest paid by the Commonwealth was practically 5^ per cent., instead of 4^ per ‘cent. I would point out to the honorable member that a wealthy man is not gaining any great advantage by putting his money into war loan scrip. As every one knows, there is a -big demand for money at the present time, and a wealthy man can find plenty of first class ‘mortgages in which to invest his money at 7 per cent. As a matter of fact, the wealthy people of Australia are really making a sacrifice by contributing their money to our war loans.
I hope that the Government will not increase the rate of interest beyond 5 per cent., because, if they do, they will depreciate the value of State securities, and of all gilt-edged investments, such as consols, municipal debentures,’ and debentures for waterworks and other public undertakings. An honor able member has informed me that, as an executor of an estate, he invested moneys in City of Melbourne debentures, bearing 3^ per cent, interest, at £96, about nine years ago, and that those debentures are now on offer at £72. Gilt-edged securities bearing a low rate of interest, have already depreciated very much in the market, and they will continue to decrease in value the higher the rate of interest that is fixed for pur war loans.
The honorable member for Maribyrnong (Mr. Fenton) considers that we should emulate New Zealand in the matter of compulsory loans, which are synonomous with a levy on capital; but nothing would be mere calculated to disorganize trade and the money market than an attempt to bring about such a system. If the Treasurer attempted to do it, he would have 0De of the most difficult undertakings that the Government could ever take in hand. I find from the American Economic Review that in July, 19.15, Canada, for the first time in its history, sought the New York market. Two note issues- o:ae of $25,000,000 for one year, and the other of $20,000,000 for two years, bearing 5 per cent, interest and with the privilege of conversion into twenty-year debentures - were sold through the Bank of Montreal and J. P. Morgan and Company, at the very favorable price of 95-J. I notice, also, that the British Government, owing, no doubt, to the fact that credits: had been established in the United States of America, where munitions have been manufactured on a very large scale, have borrowed something like £600,000,000 or £700,000,000, if not move. In 1915, when I brought this matter under the notice of the then Prime Minister (Mr. Fisher), and told him I thought some efforts should be made by the Commonwealth Government to approach the United. States of America money market, in order to relieve the position in Australia as much as possible, Mr, Fisher said that the rate of interest was too high, and. that I was up against the impossible. Sir ce I made my ‘suggestion, however, Canada has practically absorbed all the surplus money in the United States of America, for I notice, from the same magazine, that in 1914
Canada had borrowed from the United States of America $272,935,000, in 1915 $335,000,000, and in 1916 $356,000,000. If Canada and Great Britain could obtain that amount of money by the issue of notes oil the American market, I think this young country, at a time when its resources are being overtaxed, should take into consideration the, advisability of following their example. I may add that at the time I mentioned this subject to Mr.’ Fisher I saw the United States of America Consul, who told me he thought Australia would be welcomed in the New York market, and that our loans would probably be successfully floated. In view of what Canada .and Great Britain have been able to do, I think it advisable that the Commonwealth Government should see what can be done in this direction.
Question resolved in the affirmative.
Standing. Orders suspended.
That Mr. Webster and Mr. Groom do prepare and bring in a Bill to carry out the foregoing resolution.
Bill presented by Mr. Webster and read a first time.
Bill committed pro forma
– In moving -
That the House do now adjourn,
I desire to say, in reply to a question raised by the Leader of the Opposition (Mr. Tudor) yesterday, concerning the remission of penalties in certain cases, that we have taken action, and I have a list available for his perusal at his convenience.
– Will the Minister in charge of the House state what will be the order of business on the next day of sitting ?
.- I wish to draw the attention of the Assistant Minister to the statement in regard to the coal contract of the Victorian Government with the Government of New South Wales. I want to say, at the outset, that I am quite satisfied with the answer given by the Minister in charge of shipping this morning, and I only rise now to bring under the notice of the Minister one or two facts bearing on. this important matter. It does seem strange that the question of this coal contract should be resurrected. We discussed this matter in the House something like six months ago, when there was a desire to enter into’ a contract with J. and A. Brown for 2,000,000 tons to supply the whole of the requirements of Victoria. That proposal has been in abeyance for some time, but during the Premiers’ Conference, for some reason or other, it was again raised. On this occasion, in place of 2,0,00,000 tons, freight to carry 200,000 tons of coal is asked for. in connexion with the contract between the Government of New South Wales and’ the Government of Victoria. I presume that contract is identical with the former one, and really means that the coal is to be supplied from the Pelaw Main and Richmond Main by Messrs. J. and A. Brown. We have created a Shipping Board to deal with, the whole of the shipping in Australian waters, in view of the fact that it is necessary to Utilize the tonnage to its utmost capacity in connexion with the war. The coal trade will suffer to a large extent, as the number of boats for carrying coal is gradually diminished, as they are required for war business in Australia or abroad. Large quantities of coal have been stored on the surface in New South Wales for the Government, but the storing has been discontinued, and, consequently, the coal trade is slack. Many mines are not. working more than three to five days a fortnight, though others are working every day. In connexion with the Shipping Board, a Transport Board is about to be appointed to deal with coal and other goods: and this at once involves the waterside workers and the coal miners. If at this juncture we permit any particular proprietor to enter into a contract and absorb a largo part of the coal trade of Australia, we shall place that proprietor in the happy position of seeing his mines working regularly, while other mines are in a state of idleness. If it is necessary in the national interests-* - and, as it is so, neither miners nor proprietors complain - to curtail shipping in the coal trade, the:i the interests of all concerned in the industry ought to be considered. Further, if, as in the past, it is necessary to form wheat and wool pools to insure that every farmer and grazier shall get the price fixed, it is equally necessary to see that the coal trade is fairly portioned out amongst the different proprietaries. It may be contended that the coal in question is superior to any other coal; but, so far as the broad seam is concerned, prior to the opening. of the Maitland seam, and, to a large extent, since, that coal has been considered one of the best on the market, and certainly the best known in Australia ; and it is quite as good to-day as before the opening of the Maitland seam. There would appear, therefore, to be no reason connected with the quality of the coal itself for the present position. I am sorry to have to say that the State Government of New South Wales, or some members of that Government, for reasons best known to themselves, are endeavouring to secure the contract for one particular individual against the interests of all the others concerned. Then, as one who knows something of the coal trade, I point out to the people of Victoria that the Government of their State, for some reason best known to themselves, intend to enter into a contract under which -they will, for two years, pay the biggest price ever paid for Newcastle coal in the history of the field. Are the people of Victoria sure that they are getting a fair deal? Why is it that the New South Wales Government, while keeping Messrs. J. and A. Brown in the background, are constantly pushing forward this question of the contract ? There is a ‘good deal of suspicion in the minds of everybody concerned, and it would seem there is reason for that suspicion. The coal miners are quite in accord with what I am now saying, and certainly they are being placed in an unfair position. If we are to conserve the national interests, and do our best in prosecuting the war, we must not permit any State Government or colliery proprietor to get the monopoly of any particular industry. We have to consider that there is hardly a ton of coal going abroad owing to lack of ships; and yet, for the same reason, we cannot even meet the demand in Australia. There is a dearth of coal in Victoria, South Australia, and Western Australia; and, in the circumstances, it is proposed to allow one individual to obtain a contract for the supply of 200,000 tons per year at 15s. per ton free on board in Newcastle. That, as everybody knows, is a war price; and if the war were to conclude, as we hope it may, inside twelve months, the price of coal would fall, with the people of Victoria tied to a contract to pay 15s. a ton. I doubt whether that aspect of the case has been realized by the people of this State.
– They will look into it after this.
– Perhaps when it is too late. There is something behind this business that should be probed to the very bottom. We are not justified in permitting any such contract at the present juncture. Whatever the demand may be, or whatever boats may be available, we ought, in the interests of recruiting, if for no other reason, to see that the men get a fair deal. I speak as I do because I see the iniquity of the whole business. If I viewed the position from a personal point of view, I should speak in a tone quite different. So far as my constituency is concerned, it means regular work, and the men there will benefit; but they do not regard it as right to secure an advantage at the expense of their fellow men in other constituencies, who also have sent their sons to the war. The great majority of the proprietors are, I believe, in accord with what I say ; and I hope the Government will look seriously into the matter, and not permit this contract to be entered into until the Transport Board is appointed. I hope “hat provision will be made for representation on that Board of not only employers and shipping people, but also the waterside workers and the mining employees - an arrangement which, I am sure, would give good results while the war is in progress. In Newcastle, boats are detained day after day owing to the want of a proper method of working in regard to despatch. If there were a representative committee such as I suggest, all concerned would work together, and labour would be provided to get the vessels under the cranes and away as quickly as possible. The men would realize the necessity of keeping vessels moving in order to get as much work as possible. It will be wise to consider every phase of the matter, and of some advantage, perhaps, to ask men of practical knowledge of coal mining to give us the benefit of their advice.
– I desire briefly to introduce again the matter of the persecution of Italians and their dependants in Australia to-day. It is one of those questions which one is not pleased to have to bring forward ; but the fact is that there is a system of terrorism in Australia at present which I had never thought to see. One particular section of the people is being persecuted in a manner which is a disgrace to us. The Government are not proud of their association in the matter, I am sure. I know that they may be to a degree forced into the stand they have adopted. Still it must be with reluctance that they find themselves parties to what is actually taking place. There are women and children in this country who are inno manner at fault. These mothers have found themselves married to men who can be claimed by the Italian authorities. I will admit that there are hundreds who are trying to evade the position. Meanwhile, however, their dependants are suffering acutely. Cannot the Government in some way hold off this persecution? I know of four cases of Australian women who are married to Italians. It may be said that these men should have become naturalized. They were, indeed, very foolish not to have taken the necessary steps to that end. Many of them understood, however, that by the fact of their being here for so long they were really Australians. I know of one individual, for example, who is twenty-nine years old, and who reached Australia at the age of two. The Government are pursuing him, but, so far, he has managed to evade the searchers. All I ask is that the Government should, if possible, point out to the Italian authorities that we are creating feeling which should not exist in Australia.
If the objective was going to have any great bearing on the war itself, I could quite understand it, butI am astounded at the Italian Government endeavouring to obtain men in this manner, seeing what a few they can get by the introduction of these proceedings.
There are children starving who can get no relief. The Italian population who have not been called up are not in sufficient numbers to maintain these dependants, or to materially assist them. Neither are the Italian authorities doing anything, so far as I know. These children, apparently, are regarded as criminals because their fathers have sought to evade the purpose of the Italian Government. The Commonwealth Government should take steps to minimize - to whatever degree they can - the horrors which are being witnessed in this country. If something effective is not brought about to -that end a bacl taste will be left in the mouths of the Australian people. After all, the desire is to get recruits for the Italian Army. It is. not the fault of the children that their fathers are Italians; and, that being so, the Government should consider whether in a great many cases they should not call off the searchers who are going about the country hunting for these men.
There are hundreds of children to-day in want through no fault of their own, and simply because their fathers are in hiding rather than return, to Italy. Those men came here because they had nothing to thank Italy for - a country where the conditions of the worker were such that they could not tolerate their situation, and emigrated. Many of these men were brought here as children, and never dreamed of finding themselves where they stand to-day. Now they are being forced by the Australian Government to go back to Italy, when they have nothing to gain by fighting for that country. I ask the Government to see that, in the interests of the starving children, something is clone towards drawing off the searchers - at any rate, so far as married men are concerned.
– T regret that the Minister representing the Minister for Trade and Customs is not present, since I desire to draw attention to a matter on which I based a question yesterday. It was as to whether it would be possible to establish what might be termed bran and pollard pools. The reason for this matter being brought under my notice was that dairymen are being compelled to dry off numbers of their milking herds simply because those very important elements in the winter ration of cattle are being denied them.. I recently met the owner of one of the finest Ayrshire herds in Australia, who told me he bad been compelled to dry off a number of his cattle because it was impossible to secure bran. He had been a big purchaser; but now, when he goes to the miller for 2 or 3 tons, he is told that if he likes to buy 1 ton of flour he may be supplied with a ton of bran. That is an impossible proposition to put to any single individual in the community. The effect is that large numbers of milking cows are going out of profit at present, which means, of course, a lower production of milk, butter, and cheese. Unfortunately, as the supplies of those very necessary commodities become scarcer, prices are rising higher, thus entailing still further burdens on the consuming public, and particularly upon the working classes. This situation exists, not only so far as this State is concerned, but in other parts of Australia.
Even if it should mean the establishment of a Flour Pool. as well as bran and pollard pools, it should be brought about on the ground that it would foster and maintain the production of certain elements of foodstuff, and at the same time prevent prices from mounting to such a height as to place them beyond the reach of the average consumer.
I urge upon the Postmaster-General (Mr. Webster) that he should endeavour to gain the sympathetic ear of the Assistant Minister, who has already told me that he will look into the matter; but that does not convey anything particularly encouraging. I hope that the Assistant Minister will look into the point very closely, and that he will, in the interests both of the public and of the dairy farmer, and the poultry-keeper also? bring about some measure of relief.
– Would it not be a good plan, for the Government to sell some of the wheat in the country to-day to help in making up the loss to the general taxpayer ?
– As to the matter of wheat, there is a great difficulty confronting the poultry-keeper in securing what is known as damaged wheat - feed wheat - at present. So, also, there is a difficulty with farmers in many parts in securing sufficient supplies of seed wheat owing to certain rules and regulations having been laid down by the Wheat Board.
Unfortunately, mice are again becoming plentiful. I was glad to hear from one authority this morning that the pest is not so wide-spread as during the recent plague.. Nevertheless, in some parts, the trouble is almost as prevalent as hitherto. I hope that the PostmasterGeneral will inform’ the Minister for Trade and Customs that I have again raised this question, and that the Ministry will give favorable consideration to the proper distribution of bran and pollard, either by the establishment of a pool or in some other way, and encouragement to the gristing of wheat. What is necessary can be done only, I think, with Government assistance.
– I shall bring under the notice of the Ministers concerned the remarks of the honorable member for Hunter(Mr. Charlton) and the honorable member for Maribyrnong (Mr. Fenton). In reply to the inquiry of the Leader of the Opposition (Mr. Tudor), I have to say thit the business for next week will he the consideration of the following Bills in the order in which I shall name them : The Supplementary Appropriation Bills, the Australian Soldiers’ Repatriation Bill, and the Defence Bill
Question resolved in the affirmative.
House adjourned at 4.17 p.m.
Cite as: Australia, House of Representatives, Debates, 17 May 1918, viewed 22 October 2017, <http://historichansard.net/hofreps/1918/19180517_reps_7_85/>.