House of Representatives
28 April 1931

12th Parliament · 1st Session



Mr. Speaker (Hon. Norman Makin) took the chair at 3 p.m., and offered prayers.

page 1309

QUESTION

COMMONWEALTH FINANCES

Co-operation of Political Leaders.

Mr LATHAM:
KOOYONG, VICTORIA

– Is the Prime Minister in a position to make an announcement regarding the conference of parliamentary party leaders which was suggested by the Loan Council at its meeting in Melbourne last week?

Mr SCULLIN:
Minister for External Affairs · YARRA, VICTORIA · ALP

– No immediate action is proposed by the Loan Council in regard to such a conference. The Loan Council has appointed a committee to investigate the budgetary positions of the various governments, and will re-assemble three weeks hence, when the proposal for a conference of party leaders will be further considered.

Mr MACKAY:
LILLEY, QUEENSLAND · NAT; UAP from 1931

– The Prime Minister is reported in this morning’s Canberra Times as having said -

Not a suggestionhas been offered as to how this serious position is to be met. This discourages the belief that there is to be any cordial co-operation with the Government in facing its difficult task. . . The only definite proposal put forward as an alternative to the Government’s practical policy is - defeat the Government.

I ask the right honorable gentleman if that report is correct and, if so, whether he has listened to or been informed of speeches delivered in this House by the Leader of the Opposition (Mr. Latham), the Leader of the Country party (Dr. Earle Page), and the honorable member for Wilmot (Mr. Lyons), in which they have repeatedly offered cordial co-operation with the Government on a sound national basis, and have suggested plans for restoring national prosperity?

Mr SCULLIN:

– The report is correct. I have listened to the speeches of the honorable gentlemen referred to, and have failed to discover in them one suggested alternative to the practical policy of this Government. The only plan that has been put forward is to got the Government out of office.

Mr KEANE:
BENDIGO, VICTORIA

– Did the Prime Minister read in the Canberra Times of the 14th April a statement by the honorable member for Wilmot (Mr. Lyons), in the course of which’ he is reported to have said that the first thing to be solved was the unemployment question, and that not one member of his audience would be foolish enough to invest in any loan floated by the present Federal Government? What steps does the Government propose to take to safeguard the interests of the nation?

Mr SCULLIN:

– I have not read the report, but if it is correct, such an utterance is not worthy of any person elected by the people to this Parliament.

page 1310

QUESTION

GOLD RESERVE

Mr MACKAY:
LILLEY, QUEENSLAND

– I ask the Prime Minister whether the Commonwealth Bank Board has informed the Government that it is advisable to ship the gold reserve to London to avoid default in respect of the Commonwealth’s financial . engagements there? That inference is to be drawn from a paragraph in a statement purporting to have been supplied to (he Canberra Times by the right honorable gentleman.

Mr SCULLIN:
ALP

– I have not seen the report referred to by the honorable member. The position is as I stated during the debate on the Commonwealth Bank Bill. I was definitely asked whether the Commonwealth Bank Board had written recommending that the gold reserves should be shipped to London, and I replied, “ No ; the Bank Board wrote advising the Government that it could give no assistance to meet obligations falling due in London on the 30th June.” The Government has been informed by its financial advisers that there is no chance of the bills maturing on that date being re-issued on the London market. The only alternative left to the Government is to ship gold to London to prevent default on the 30th June.

page 1310

QUESTION

AERIAL COMPETITION WITH RAILWAYS

Mr LACEY:
GREY, SOUTH AUSTRALIA

– Some time ago I asked the Assistant Minister in charge of Transport whether the’ Government would consider the advisability of taking action regarding the competition of Westralian Airways with the Trans-Australian railway? I now ask the honorable gentleman whether he will consider the imposition of a tax on passengers carried in aeroplanes that compete with Commonwealth railways, with a view to assisting the finances of the Trans-Australian railway, and possibly restoring the train that was recently cut out?

Mr CULLEY:
Assistant Minister assisting the Minister for Transport and War Service Homes · DENISON, TASMANIA · ALP

– I shall take note of the honorable member’s suggestion, and let him have a reply.

page 1310

QUESTION

PETROL AND MOTOR OILS

Mr M CAMERON:
BARKER, SOUTH AUSTRALIA · LP; NAT from 1925; UAP from 1931

– Does the Prime Minister intend to order a more complete investigation into the prices charged to Australian consumers of petrol and motor oils?

Mr SCULLIN:
ALP

– When the Government has had an opportunity to digest the report already submitted on this subject, it will consider the need for a further investigation.

Mr LACEY:

– There is on the noticepaper a motion dealing with the inquiry concerning the price of petrol. Will the Prime Minister state when the discussion on this motion is likely to take place? If it is not to take place in the near future, will he give consideration to its removal from the notice-paper, so that honorable members may take other steps to bring about a discussion on a subject which is receiving a good deal of consideration in the country districts of Australia?

Mr SCULLIN:

– The motion was put on the notice-paper really to give honorable members an opportunity to discuss that subject. For special reasons I made the request that the motion to print the paper should be agreed to forthwith, but bo as not to rob honorable members of an opportunity to discuss thiB subject on the motion for the printing of the paper, I substituted the other motion. My action was not taken to thwart honorable members. If they desire that other opportunity should be given to discuss the petrol question, I shall have no objection to the removal of the motion from the notice-paper; but I would prefer to act for the convenience of all honorable members rather than at the request of one or two.

Mr GREGORY:
SWAN, WESTERN AUSTRALIA

– Will the Prime Minister make available to honorable members the report of the committee of inquiry in respect of the operations of the Commonwealth OilRefineries Limited, so that we may be able to ascertain how effective the policy of that company has been in keeping down petrol prices by its competition with other companies ?

Mr SCULLIN:

– The results of all the investigations that have been made, or are likely to be made, will be placed at the disposal of honorable members.

page 1311

QUESTION

WAR SERVICE HOMES

Mr GULLETT:
HENTY, VICTORIA

– A few weeks ago, on the motion for the adjournment of the House, I called attention to the difficulty experienced by many occupants of War Service Homes in meeting their payments, owing to the general reduction in wages and the widespread rationing of work. I asked the Government to consider the possibility of extending the period of repayment, or easing in other ways the existing terms of purchase. The Minister promised to consider the matter. I now ask him whether he is yet in a position to furnish a reply?

Mr CULLEY:
ALP

– Various organizations have made representations to the Government on behalf of the occupants of War Service Homes, and I assure the House that the Government will give sympathetic consideration to the matter. The honorable member for Brisbane (Mr. D. Cameron) suggested an extension of the period of repayment. This proposal has received attention, and will be further dealt with at a meeting of representatives of returned ‘soldiers’ organizations at an early date.

page 1311

QUESTION

UNEMPLOYMENTRELIEF

Field Kitchens and Cooking Utensils

Mr CUNNINGHAM:
GWYDIR, NEW SOUTH WALES

– Has the Minister for Defence come to any decision regarding the request that his department should make available field kitchens and cooking utensils to unemployment relief committees during the winter months?

Mr.CHIFLEY. - I regret that it is not possible to make available field kitchens; the number in the possession of the department is limited, and they require special attention, without which they would be likely to become unserviceable. It has been possible, however, to lend cooking utensils to the unemployment relief committees.

page 1311

QUESTION

IRON AND STEEL PRICES

Mr GREGORY:

-Will the Minister for Trade and Customs lay on the table of the House the report of the Tariff Board in connexion with its investigations into charges respecting the restraint of trade and the giving of special rebates to certain sections of the trading community ?

Mr FORDE:
Minister for Trade and Customs · CAPRICORNIA, QUEENSLAND · ALP

– I shall look up the report this afternoon, and lay it upon the table of the House when it is printed.

page 1311

QUESTION

CONDUCT OF THE BANKS

Statement of Mr. Theodore

Mr M CAMERON:
BARKER, SOUTH AUSTRALIA · LP; NAT from 1925; UAP from 1931

– Has the attention of the Prime Minister been drawn to a paragraph in this morning’s issue of the Sydney Morning Herald, in which it is stated that at Adelaide last night the honorable the Treasurer made the following statement: - “It is time that the weakness of the banks was exposed, and their villainy laid bare.” Will the Prime Minister explain what is meant by the reference to the “ villainy of the banks “ ?

Mr SCULLIN:
ALP

– If I were to attempt to give the explanation for which the honorable member asks, I shouldbe ruled out of order by Mr. Speaker.

page 1312

QUESTION

BUFFALO FLY

Mr RIORDAN:
KENNEDY, QUEENSLAND

– Has the attention of the Minister for Home Affairs been drawn to newspaper reports regarding the spread of the buffalo fly in Queensland? This pest has become a menace in that State, and is now working its way to the coast. I should like to know what action the department has taken to prevent the terrible ravages of the buffalo fly. Has the Government rendered any assistance to the Queensland Government in respect of the maintenance of quarantine areas in the affected districts?

Mr BLAKELEY:
DARLING, NEW SOUTH WALES

– For some time past the Health Department, a section of the Prime Minister’s Department, and the Home Affairs Department have been dealing with this important matter. It was recently determined in conference between representatives of those departments and the Premier of Queensland that a survey should be made to determine the area in Queensland infested by the buffalo fly. Certain negotiations took place, but last week word was received from Queensland that the fly had been found some 60 miles south of where it was believed to be when the negotiations commenced. This pest is now said to be on the lower portion of the Leichhardt River, and also south-east of Burketown. If that is true we are faced with a serious difficulty. In order to determine definitely whether the buffalo fly has got so far south, Dr. McKerris and Mr. Campbell, officers of the Council for Scientific and Industrial Research, are now on their way to Queensland, and will commence their researches atCloncurry and Dalby next Monday. I hope to have the reports of those gentlemen in the near future, and to ascertain whether there is any truth in the report that the buffalo fly has travelled so far south.

Mr MARTENS:
HERBERT, QUEENSLAND

– I recently had a conversation with Dr. W. A. N. Robertson, the chief veterinary officer of the Commonwealth, who has been dealing with this pest, and he informed me that it is now practically impossible to stop its spread. Will the Prime Minister ascertain from this gentleman if what I have stated is true, and whether the expendi ture of a million pounds in trying to stop the ravages of this pest would be of no effect?

Mr BLAKELEY:

– When the conference to which I have referred took place, it was anticipated that by spending probably £100,000 we should be able to establish a buffer area somewhere near the rabbit proof fence, south-west of Burketown, which would protect both New South Wales and Queensland from the operations of the buffalo fly. If the report is true that the pest is at the Leichhardt River, it means that it is practically impossible to establish a buffer area, and_in that case the Commonwealth Government will probably have to depend on scientific research to discover a parasite that will successfully combat the buffalo fly.

page 1312

QUESTION

NOTE ISSUE

Mr MACKAY:

asked the Treasurer, upon notice -

  1. What was the amount of the Australian note issue in (a) June, 1929; (b) December, 1929; (c) June, 1930; (d) December, 1930; and (e) April, 3931?
  2. Will he explain in what respect the Commonwealth and the trading banks arc responsible for the alleged deflation of credit?
Mr THEODORE:
Treasurer · through Mr. Holloway · ALP

– The answers to the honorable member’s questions are as follows : - 1. (a) £42,408,220, at 1st July, 1929;

  1. £45,261,226, at 30th December, 1929;

    1. The Commonwealth Government’s views on this question arc set out in the letter of the 15th April, 1931, from the Treasurer to the Chairman of the Board of Directors of the Commonwealth Bank, a copy of which has been laid on the table of the House.
Mr HOLLOWAY:

– On the 24th April the honorable member for West Sydney (Mr. Beasley) asked the following questions, upon notice -

  1. Will he supply the details of the securities at present held by the Note Issue Department, showing when acquired, rates of interest, and dates of maturity?
  2. Is it a fact that securities bearing higher rates of interest were taken from the Note Issue Department and have now been replaced with securities bearing an interest rate of only 3 per cent.?

The following replies have been furnished by the Commonwealth Bank: -

  1. The securities held in the Note Issue Department at this date are as shown in the following statement: -
  1. With a view of providing finance in London for Australian Governments, funds of the Note Issue Department have been transferred to that point, and the funds have been lent to the Government upon debentures and treasury-bills bearing interest at the rate of 3and 3½ per cent., which is based upon current rates of interest in London.

page 1313

QUESTION

EXPORT OF PRIMARY PRODUCTS

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

asked the Minister for Markets, upon notice-

Referring to the answers given on the 21st instant to questions by the honorable member for Melbourne regarding export of primary products, will the Minister furnish a list of primary products showing -

Those upon which about 30 per cent, is charged to merchants in addition to the f.o.b. price in Australian ports ; and

Those exported on which such 30 per cent, additional is not charged?

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– The desired information is being obtained.

page 1313

QUESTION

ELCHO TRAINING FARM

Mr SCULLIN:
ALP

– On the 15th April the honorable member for Oxley (Mr. Bayley) asked me a question, without notice, in regard to the Elcho Training Farm, situated near Geelong, Victoria. I am advised that the Elcho Training Farm, which was originally purchased by the British, Commonwealth”, and Victorian Governments for migration purposes, has not been in use for such purposes during the last two or three years. About six months ago the question of the disposal of the property was taken up with the British Government representative in Australia and the Victorian State Government authorities, and it was agreed that tenders be invited from persons willing to purchase the property. Tenders were received by the State Government in November last, but as none of the offers received for the purchase of the property was considered satisfactory, the whole of the tenders were declined. Owing to the depressed property market, it is considered that the present would not be an opportune time to again invite tenders, and pending improved conditions the area is being utilized as a grazing and farming proposition under the control of the State Government.

page 1314

QUESTION

COMMONWEALTH DEBT

Mr SCULLIN:
ALP

– On the 22nd April, the right honorable member for Cowper (Dr. Earle Page) asked me the following question, upon notice : -

What was the amount of the short-term indebtedness in (a) Australia, and (6) London, 1st October, 1929, 1st January, 1930, and 1st April, 1931, for the Commonwealth and each of the States respectively?

I am now in a position to furnish the following reply : -

The short-term indebtedness of the Commonwealth and the States at 1st October, 1929, 1st January, 1930, and 1st April, 1931, was as follows: -

In the period of one and a half years from 1st October, 1929, to 1st April, 1931, no loan was raised overseas, and the loans raised in Australia were insufficient to meet the restricted loan programmes approved by the Loan Council. The increase in short-term debt was necessary to meet the loan programmes, and to cover the deficits. Since September, 1930, when the exchange pool commenced to operate, the short-term debt in London has remained stationary. Figures for the States prior to 1st April, 1931, are approximate only.

page 1314

QUESTION

CIVIL AVIATION

Mr CHIFLEY:
MACQUARIE, NEW SOUTH WALES · ALP

– On the 22nd April, the honorable member for Balaclava (Mr. White) asked me the following question, without notice: -

It is stated in this morning’s press that Flight-Lieutenant Owen, who has just returned to Sydney from Wellington, has said that civil aviation is in an infinitely bettor position in New Zealand than in Australia. Will the Minister for Defence, in view of that statement, have an inquiry made into the subject, especially in view of the recent loss of an air liner? Will he state if any alteration will be made in regard to the provision of wireless for aeroplanes?

I have now received the following report from the Controller of Civil Aviation: -

I have not seen the press report referred to. Mr. Owen is an employee of the Shell Company. I asked that company to inquire whether Owen made any such statement, and am informed that he categorically denies hav.iiia done so. The denial is credible as a statement that civil aviation in New Zealand is in an infinitely better position than in Australia could only be made or quoted in good faith by persons without any specific knowledge of the subject. Mr. Owen is not in that category. It might be mentioned that the document prepared by the British Air Ministry for the information of those attending the recent Imperial Conference, embodies much statistical matter in connexion with commercial aviation in the Dominions and Colonies. No mention is made of any routes in New Zealand in regular operation. Similarly, no mention of New Zealand is made in a recent survey made by the Department of Commerce of the United States of America covering civil air transportation throughout the world. In that document, aviation activities in various categories and in 38 countries are carefully dissected. In connexion with the last paragraph of Mr. White’s question, it might be stated that the necessity of providing wireless for aeroplanes on certain routes was foreseen many months ago, and work is proceeding actively in regard to the essential ground stations that must first be provided.

page 1315

QUESTION

WATERSIDE WORKERS FEDERATION

Unemployment

Mr SCULLIN:
ALP

– On the 10th December last the honorable member for Bendigo (Mr. Keane) asked the Acting Prime Minister whether certain information regarding unemployment amongst members of the Waterside Workers Federation could be supplied? No official information is available but a return was obtained through the courtesy of the General Secretary, Waterside Workers Federation, giving the following figures, which, according to a recent communication from the federation, indicate approximately the present position: -

The foregoing figures do not indicate the number of unemployed returned soldier members, as desired by the honorable member. In reply to a recent communication from the Prime Minister’s Department, inquiring whether this information could be furnished, the General Secretary, Waterside Workers Federation, intimated that such figures were not readily available, and that considerable difficulty would be experienced in obtaining them.

page 1315

COMMONWEALTH LOAN

Mr. THEODORE (through Mr.

Holloway). - On the 24th April, the honorable member for Lang (Mr. Long) asked the following questions, upon notice -

How much did it cost to float the loan of £28,000,000, when the honorable member for Wilmot was Acting Treasurer?

How much did the banks get for underwriting ?

What did it cost for advertising and brokerage ?

What amount did each newspaper receive for printing and advertising?

What was the total cost?

The answers to the honorable member’s questions are as follow: -

£92,249.

The loan was not under-written and no under-writing commission was paid. Banks (other than the Commonwealth Bank) and savings banks were, however, paid a sum of £38,555 as commission for receiving and handling applications for the loan.

Advertising, £16,019; brokerage, £23,045; total, £39,064.

The amount paid to all newspapers throughout the Commonwealth was £13,575.

£92,249.

page 1315

PAPERS

The following papers were presented: -

Public Works Committee Act - Sixteenth General Report of the Parliamentary Standing Committee on Public Works.

Seat of Government Acceptance Act and Seat of Government (Administration) Act - Ordinance of 1931 - No. 5 - Rates.

page 1315

COMMONWEALTH BANK BILL

(No. 2).

In committee: Consideration resumed from the 24th April (vide page 1309).

Clause 6 -

Section sixty k of the principal act is amended by omitting sub-section (1.) thereof and inserting in its stead the following subsection : - “ (1.) The Board shall not issue Australian notes to a greater amount than sixty million pounds “.

Mr LATHAM:
Kooyong

.- It is proposed by this clause to deprive the Australian note issue of any gold backing, or indeed, of any backing at all. If the clause is agreed to, our note issue will be made a fiduciary issue in the fullest and worst sense. A note issue is always fiduciary to some extent where there is not a backing of pound for pound in gold, or some other security of indubitable value amounting to pound for pound. Up to the present it has been regarded as a sound general principle of finance, that there .must be some objective standard to which a note issue is anchored. Otherwise there can be no real control of the note issue, other than the opinion or judgment of those in charge of it from time to time. Section 60k of the principal act provides that -

The Board shall hold in gold coin and bullion a reserve of an amount not less than one-fourth of the amount of Australian notes issued.

It is now proposed to omit that subsection, and to leave the Australian notes with no gold backing whatever. In that respect Australia will hold an unenviable position in the world of finance. Our present gold backing is equal to 32 per cent, of the notes issued. We have issued notes to the extent of about £48,000,000, and we have a gold reserve of about £15,500,000. But not only is it proposed to relieve the bank of the obligation to maintain a gold reserve; it is also proposed to give power to increase the note issue of £60,000,000.

Reference has been made to the fiduciary note issue of Great Britain. I have already said that to the extent to which a note issue is not backed in value by1 pound for pound, it is fiduciary. It has been urged in the course of this, or some recent, debate in this chamber, that there is a completely fiduciary note issue in Great Britain. But according to the last weekly return published by the Bank of England, the notes issued in Great Britain total £406,000,000 and the gold backing amounts to £146,000,000, which is about 36 per cent. Yet it is now proposed to take away the provision for even a 25 per cent, gold backing for the Australian notes.

Suggestions have been made in recent economic literature that on account of the scarcity of gold, or, if one may use the term, the growing scarcity of gold, it might be desirable for the countries of the world to agree, through their central banking institutions, to reduce the ratio of gold to notes in circulation. If that were done by international action, it might be wise. In the present circumstances of Australia, it might even be justifiable to review the provision which makes it necessary to hold 25 per cent, of gold against our notes; but this proposal goes far beyond that, for it suggests the entire abandonment of any gold reserve. At present the bank is under an obligation to limit its note issue to 25 per cent, of its gold reserves. It is now proposed to issue notes to the extent of £60,000,000 without any gold reserve. I should like to know why the amount of £60,000,000 was fixed instead of, say, £55,000,000, £70,000,000 or even £100,000,000. Presumably there was some reason for fixing this figure. We are aware that the Government would have issued Treasury notes to the extent of £18,000,000 if it could have obtained authority to do so. Had that measure been agreed to, the note issue could have been extended, with this provision, to £78,000,000 without any gold backing whatever. It seems to me that, in taking this course, the Government is acting in a spirit of despair. Its policy will make it more difficult, if not impossible, for. the Commonwealth to obtain from abroad, that assistance which it needs so badly at the present time. Not only do we need assistance from abroad, but we want also to reestablish the confidence of our people in the soundness of Commonwealth finance. This bill is a step in the wrong direction. The removal of our gold reserve will bring about a permanent condition of relative financial disability in Australia without making any real contribution towards the solution of present or future problems. What is urgently needed is a financial policy which looks beyond the end of the current year; beyond even the end of the next financial year. The Government’s proposals do not do that. Under this bill our gold reserve will be shipped to London and there utilized to reduce our overseas liabilities. Recently this House passed a bill to provide for the payment of £6,000,000 to our wheat-farmers and £1,000,000 a month for a period of twelve months to relieve unemployment. But assuming that that policy is adopted, what will happen at the expiration of the twelve months ? Obviously we shall have to repeat the operation, because it will be impossible to cease suddenly the expenditure of £1,000,000 a month to relieve unemployment. A continuance of the policy of inflation will become inevitable. Accordingly the Government’s policy, of which this clause represents an important element, is one of hopelessness and despair which will place Australia in a much worse position than it is in at the present time. It is argued, in support of the bill, that the gold will be utilized to pay a portion of our indebtedness overseas. But its principal effect, I submit, will be gradually to complicate the future position and it will make it more difficult for our finances to be placed on a sound basis.

Mr MAXWELL:
FAWKNER, VICTORIA

– This Government will not be required to face the consequence.

Mr LATHAM:

– The consequences of such a policy may, I fear, be” disastrous. What is needed is a much more radical reconsideration of the general financial and economic system. I had hoped that, in his reply to a question which I asked to-day about the proposed conference of political leaders in Australia, the Prime Minister would have indicated that something would be done; but as honorable members know, he merely stated that the Loan Council would be meeting again in three weeks’ time, when the subject would be considered. I do not think we can afford to wait even three weeks before taking definite action. Without desiring to appear in the role of a prophet of evil, I consider that the financial and economic position of the Commonwealth is so serious that every possible avenue should be explored in an endeavour to overcome our difficulties. I have indicated that, in my view, the Government’s financial policy cannot possibly succeed; that on the contrary it must lead the country into a morass of suffering, and distress, and of potential disaster. Accordingly I appeal to the Government, even nOw. to reconsider the provisions of this bill. The measure cannot be regarded as a permanent contribution to the solution of the tremendously difficult problems which confront us.

Mr SCULLIN:
Prime Minister · Yarra · ALP

.- The Leader of the Opposition (Mr. Latham) has asked why the bill provides for the issue of notes to the value of £60,000,000, instead of £50,000,000, or some other figure. The answer is that the Government is not empowering the Com monwealth Bank to issue notes in excess of the authority already given. Existing legislation provides that the bank may issue notes to the amount of four times the gold reserve. As the- reserve is, in round figures, £15,000,000, the bank could, under existing legislative authority, increase the note issue to £60,000,000. This bill provides for the removal of the gold reserve. If specific provision were not made in it, the Bank Board would be empowered to issue notes to an unlimited amount. We, therefore, seek to limit the issue to £60,000,000, and since this does not exceed existing authority I* suggest that objection to it cannot be sustained on the ground that it means inflation. Honorable members should bear in mind that while the gold remains in the bank’s vaults, it does not earn anything, whereas if it is shipped to London it will save us the interest upon the amount of overseas obligation which it will meet, and, in addition, it will avoid heavy payments in exchange, which, owing to the high rate ruling, is costing the various Governments of Australia over £10,000,000 a year. I also remind the House that treasury-bills to the amount of £5,000,000, which fall due on the 30th June, represent Commonwealth and State debts. Under the Financial Agreement between the Commonwealth and the States all indebtedness incurred by the Commonwealth and State Governments must be met by Commonwealth securities and the bills falling due on the 30th June were issued in the name of the Common-, wealth on behalf of a number of Governments. In March last treasury-bills to the amount of £5,000,000 were retired by the Commonwealth Bank in London. During the last twelve months the bank has shipped a large quantity of gold to London, but no more gold can be shipped unless this measure is passed. Last March, if we had not had gold in London, the Commonwealth would have been faced with default, because there was no credit in the Commonwealth Bank to meet the position. It was not possible, according to our financial advisers in London, including the Commonwealth Bank authorities, to re-issue the retired bills. Fortunately, we had anticipated the position. Gold had been shipped to London by tha Commonwealth Bank Board.

The only real menace that is hanging over us to-day in London, from the financial point of view, is from the £5,000,000 of treasury-bills that fall due on the 30th June, next. I put it to honorable members that we must make a choice between shipping £5,000,000 worth of gold, or defaulting on the 30th June. If honorable members opposite can suggest any alternative to that, l6t them tell us what it is. lt is of no use to charge the Government with being helpless, and with having a hopeless policy, when the Government is facing the facts and the Opposition is shutting its eyes to them.

Mr Mackay:

– Why ship £15,000,000 worth of gold in order to discharge a debt of £5,000,000?

Mr SCULLIN:

– We are merely asking for authority to ship up to £15,000,000 worth. We may not ship any of it; but authority to do so must be given. We may be forced to meet our short-term indebtedness. For instance, there is the overdraft of £5,000,000 with the Westminster Bank. None of that is Commonwealth debt; it is money owing by three State Governments, and the bank has been demanding payment. It is true that we have negotiated with the bank, and for the time being have arranged for it not to press for the money; but the bank can demand payment at any time, and the authority to send gold to London through the Commonwealth Bank is’ asked for to meet such a situation. It is quite reasonable that this chamber and another place, too, should make up its mind what is to be done in the emergent position that confronts us. During the whole of the debate on the bill, both in the House and in committee, it has been admitted that there is not sufficient gold in the Commonwealth Bank to enable gold to be given in exchange for notes, if it were demanded; Of course there never has been sufficient gold for the redemption of the notes issued by the Commonwealth Bank.

Mr Gullett:

– That was never intended.

Mr SCULLIN:

– Quite so. Yet we are told by honorable members opposite that the psychological effect of a gold reserve must not be overlooked.

Mr Gullett:

– There is a statutory limit to the value of notes that may be printed.

Mr SCULLIN:

– And the Government proposes a statutory limit under this bill. Mr. Gullett. - Is any statutory limit provided under the Fiduciary Note3 Bill?

Mr SCULLIN:

– I am now discussing the present measure. The sole argument of the Leader of the Opposition (Mr. Latham) in support of a gold reserve, apart from the theory, based on super.stitution, that it has a psychological advantage, is that it imposes a statutory limit. Precisely; and the limit at the present time is £60,000,000, because there is £15,000,000 worth of gold in the Commonwealth Bank. The Government .is providing, under this bil], for a statutory limit of £60,000,000 worth of notes, which is the issue permissible to-day. Therefore, I have disposed of the only serious argument advanced by the Leader of the Opposition. Admittedly, he also said that the measure to some extent covered general policy, but that is only partly true. He described the policy of the Government as one of despair, one that would lead the country into a morass; but. like all other honorable members opposite, he submitted no alternative.

He referred to a question asked earlier in the day regarding the calling of a conference, and I simply said that the Loan Council was meeting to finalize its proposals, and, I presume, to summon a conference. From that reply the honorable gentleman gathered that I had failed to give encouragement to the idea. I point out that four years ago I suggested that this Parliament ought to resolve itself into a round table conference, at which party differences should be forgotten, and that there should be a discussion on the drift that has led us into our present unhappy position; but that request was unheeded by the Government of the day. Any such proposal coming from the Leader of the Opposition to-day will not go unheeded by the present Government.

Mr PROWSE:
FORREST, WESTERN AUSTRALIA

– Proposals have already been made to the Government.

Mr SCULLIN:

– I invite honorable members opposite now to put forward suggestions for the improvement of the present proposals of the Government, or alternate proposals.

Mr PROWSE:

– Proposals in greater detail than those of the Government were submitted by the Opposition when the Prime Minister was in London.

Mr SCULLIN:

– Four years ago the drift that has led us to our present difficult position was noticeable. The adverse trade balance at that time was clearly a menace to this country, but not a finger was lifted by the party opposite to arrest the drift. That position was not dealt with, either in a general way or in detail, by the previous Government; but the present Ministry throws wide the door to suggestions for co-operation by all parties. Surely among the 76 members who have been elected to this chamber it is possible to form a council of State, by means of a conference representing all opinions in the House. There is surely not much need to go beyond Parliament and ask outside leaders or groups to confer. I invite honorable members of all parties to a conference in this chamber.

Mr Gullett:

– That was suggested some months ago, and the present Government repudiated the proposal.

Mr SCULLIN:

– I invite such a conference now, not to be held in private, but in this chamber. Let honorable members opposite submit their proposals, and the Government will put forward its own.

Mr Gullett:

– Has the Prime Minister in mind ordinary parliamentary debate? Surely we get enough of that.

Mr SCULLIN:

– If honorable members opposite desire a modification of the Standing Orders so that our deliberations may take the form of a conference, I am prepared to meet their wishes in that matter. The Government has gone seriously into all its proposals, and believes that they offer a remedy. They may not provide a permanent cure for the financial ills of the Commonwealth, but they are a remedy for the immediate position. The Government, however, has met the usual opposition that is received from party politicians. It invites honorable members opposite now to throw off the party cloak, and give up talking to the electorate.

Mr Gullett:

– Let the Prime Minister give up the policy of printing paper money, and then the Opposition will confer with him.

Mr SCULLIN:

– The Government will submit the whole of its proposals. It invites the party opposite to submit better and more practical proposals to meet the present situation, if it is able to do so. Let honorable members opposite avoid generalities, and the- mere assertion that confidence will be restored when a change of government has taken place. They ask us to drop party politics, but they themselves are not prepared to do so. When they say that confidence will be restored by a change of government, they ignore the well-known fact that the confidence of money lenders overseas in Australia had been lost long before the present Government assumed office. For twelve months prior to the defeat of the Bruce-Page Government it was impossible to float a loan in England. Indeed, three attempts to do so failed. A year or more before that Government went out of office less than 16 per cent, of a loan offered was subscribed by people overseas. Yet, with those facts staring him in the face, the Deputy Leader of the Opposition (Mr. Gullett) claims that a change of government would restore confidence.

Mr Gullett:

– Try it.

Mr SCULLIN:

– That interjection reveals the party spirit of the Deputy Leader of . the Opposition, a gentleman who says that we should scrap party politics and unite to serve the nation!

Mr Gullett:

– The Opposition will not co-operate with the Government to give effect to any policy which has inflation or repudiation as its basis.

Mr SCULLIN:

– I repeat that the Government will drop every plank of its policy if the honorable gentleman and those associated with him ‘are prepared to come down with a better, or even as good, a policy, and discuss it in this House.

Mr Gabb:

– The right honorable gentleman would not be allowed to do that.

Mr SCULLIN:

– I am prepared to take that chance. I invite the honorable gentleman-

The CHAIRMAN” (Mr. McGrath).I have allowed considerable latitude to the Prime Minister and other speakers; but I must now ask the right honorable gentleman to confine his ‘remarks to the subject before the Chair.

Mr SCULLIN:

– This clause is part of a measure designed to give authority to the Government to use the gold which now lies idle in the vaults of the Commonwealth Bank. It is well known that Australia is no longer on the gold standard. The promise to pay a sovereign on demand for . every £1 note no longer stands. It is as well for us to face that fact. That promise went when legislation, recommended by the Commonwealth Bank Board, and, I believe, agreed to unanimously in this House, was passed authorizing the mobilization of the gold reserves of the country. Had that legislation not been enacted, the gold reserves would, nevertheless, have gone; and we would not have met our obligations, lt is true that we may demand gold at the head office of the Commonwealth Bank; but so soon as it is handed over the counter, it has to be handed back again. In reality, the promise to pay gold on demand is not met; the gold is not there. We are off the gold standard. There is nothing lost but the psychological effect of the gold ; and that will not pay the £5,000,000 indebtedness which falls due on the 30th June next. The gold which we possess will, however, save us from default if it is released for that purpose. The psychological effect of the release of the gold would be better than that of the hoarding of the gold in the vaults of the Commonwealth Bank.

Mr GULLETT:
Henty

.-The Prime Minister (Mr. Scullin) has asked the Opposition for an alternative policy to that which the Government is adopting. He has asked us specifically for an alternative to the proposal to ship to the United Kingdom £5,000,000 of our very slender gold reserve in order to meet treasury-bills falling due on the 30th June. The alternative to the Government’s proposal is a very simple one; it is that the Government shall return to the principles of sound and conventional finance. I suggest that the Government should adopt the attitude which the Prime Minister (Mr. Scullin) took up in the cables which he sent from England to the then Acting Prime Minister (Mr. Fenton) a few months ago. Had the right honorable gentleman stood to that attitude he would not now be in charge of the disgraceful bill before us.

Mr Riordan:

– Will the honorable gentleman give us his alternative proposal ?

Mr GULLETT:

– There is a simple alternative to the Government’s proposal to ship gold to Britain. We have heard it so often in this House that we have become tired of hearing it; but that does not make it any the less a real alternative. That alternative is, as I have just stated, that the Government should return to sound principles of finance, and give sincere evidence of a disposition to live within its income, whatever that may be. I do not suggest that it is possible to balance the budget this year, or even next year; but that is not essential to the restoration of credit. If, however, the Government would abandon its attempts to increase the paper currency with Australian credit, and get back to the old path, the treasury-bills falling due in June would be met without difficulty, and not one sovereign need be shipped from this country.

Mr Scullin:

– Does the honorable gentleman mean that we should get back to the policy of the “ tragic Treasurer ?”

Mr GULLETT:

– There are tragic treasurers, and other kinds of treasurers. The right honorable gentleman asks for an alternative-

Mr Scullin:

– I am still awaiting it.

Mr GULLETT:

– Apparently, the Prime Minister is determined that the Government shall not subscribe to the policy to which every individual and business firm in this country subscribes if he would avoid bankruptcy, namely, a cutting down of expense. Instead of recognizing that elementary principle, the Government chooses to inflate the currency by issuing, for a start, paper money to the extent of £18,000,000. It will also ship overseas the remnant of the gold reserves that the country possesses. It will attempt to meet the situation in many ways; but it will not adopt the proper method.

Mr Lacey:

– What reductions in expenditure does the honorable gentleman suggest ?

Mr GULLETT:

– The Government has made little or no attempt at economy. Let us consider this hopeless sham - the saving of £1,000,000 in the cost of the public service.

Mr Scullin:

– Surely that remark is not in order?

Mr GULLETT:

– Then I withdraw it. The Government says that it proposes to save £1,000,000 in the salaries and wages paid to its employees. The Prime Minister had already told us that £750,000 of that amount represents an automatic reduction in their emoluments in conformity with a fall in the cost of living. I do not wonder that I was tempted to call the proposal a sham, seeing that threequarters of the reduction that has been so widely advertised would come about automatically in accordance with the law of the land.

Mr Scullin:

– No.

The CHAIRMAN:

– I remind the honorable gentleman that the discussion is entirely out of order. It has nothing to do with the clause before the committee.

Mr GULLETT:

– I am endeavouring to show how money could be found in London for meeting these treasury-bills. It could be obtained very easily if the Government would demonstrate” its intention to live within its income, instead of trying to supplement its means by printing worthless paper money. If the Government were really in earnest, and were sufficiently courageous, it should have no difficulty in reducing expenditure by £5,000,000 during the next financial year.

Mr Lacey:

– How does the honorable member suggest that it could be done?

Mr GULLETT:

– I would cut £1,000,000 from the Public Service vote to begin with. I make that declaration in order to show that I am not afraid to face the issue. That would be an unpopular course, but I do not hesitate to recommend it. What we need from the Government is courageous and determined action to institute, and carry through, unpopular measures of that kind. After all, if the money is not available the Government cannot pay it. It is only making a pretence to say that it will not reduce salaries, and then proceed to pay them in depreciated paper currency. In the long run, that will reduce effective salaries by much more than a straightout reduction in the ordinary way. The Prime Minister must know that if those who hold our treasury-bills really had confidence in the Government, and were iu no way afraid that the country might default, they would not hesitate to renew the bills at our request. If the Government would either restore credit by resolute action in this House, or make way for another government that would, there need be no more heard about shipping gold.

Mr Scullin:

– Sink party politics!

Mr GULLETT:

– I appeal to the right honorable gentleman to take the necessary action. We have heard his challenge; he has called for an alternative, and i have suggested one. Let him restore confidence, and the treasury-bills can be renewed.

Mr Scullin:

– That is only talk.

Mr GULLETT:

– The right honorable gentleman knows that treasury-bills have been renewed at the request of previous governments, as they always can be renewed by governments whose credit is good. Honorable members opposite have the distinction of supporting the first Government which has been unable to renew its bills. Has it not occurred to the Prime Minister and his followers that it is due to the policy of the Government that it is suspect on the other side of the world? The Prime Minister has asked for an alternative to be suggested, but he has not the slightest intention of accepting any alternative. If he really wanted some policy other than his present one, I suggest to him the policy indicated in the cablegrams which he despatched to his deputies in this country three or four months ago. That policy, if carried out, would indicate sufficient courage and determination to convince financial interests on the other side of the world of our honesty of purpose, and there would then be no need to ship this gold to London.

Coming to the larger issue of the gold itself, I say, first, that its shipment is unnecessary, and secondly, that I cannot conceive of a step more likely to shatter completely what little remains of this nation’s credit. The Prime Minister has called the gold standard a superstition. Well, it is a very tangible and helpful superstition to any country in time of trouble. To-day we have in Australia £15,000,000 in gold. If we had a superstition three or four times as great, our credit troubles overseas would not exist. Our gold reserve is a very definite check to currency intiation. It would seem as if the Government were determined, by shipping all the gold out of the country, to make our currency a fiduciary one, irrespective of whether the Fiduciary Notes Bill passes through Parliament. The Government proposes to remove all tangible backing to the notes, and all restrictions on the quantity issued. Under the rule of this Government Australia’s credit is already low enough. I appeal to the Prime Minister not to take a step which, by shattering what remains of our national credit, will go a long way towards bringing industry to a total standstill.

The CHAIRMAN:

– The honorable member’s time has expired.

Mr NAIRN:
Perth

.- This debate will have served a useful purpose if it does nothing else than elicit, from honorable members the expression of a general desire for a conference of members of both sides of the House to evolve a common policy. This is the first occasion on which I have observed evidence of any real readiness on the part of honorable members to consider the position of the country altogether apart from party politics, and with a view to doing what is best in the crisis which is very close upon us. It is late in the day for such action,, it is true, and the suggested compromise has. been forced1 upon us by circumstances - by the fact that we can all see the danger of almost immediate default. Honorable members would be wise iu their own interests if they seriously considered the suggestion of a non-party conference. All over the country movements have been inaugurated for the purpose of taking the business of the country out of the hands of Parliament, indicating quite clearly that Parliament does not possess the confidence of the people. The reason is; very plain. Parliament is not facing the. position squarely. The finances of the country are, being- allowed to drift at the rate of millions a year, and we are approaching the breaking point. I should like to see a non-party conference held, but it should not be an open conference as suggested by the Prime Minister. Such a conference would be quite ineffectual. Discussion in open conference would merely be a repetition of what is taking place in this chamber week after week. It is unfair of the Prime Minister to ask the Leader of the Opposition (Mr. Latham) to submit his policy in detail, because it is reasonable to. assume that any policy submitted by this side of the chamber would not be acceptable to honorable members opposite. Our financial position is so desperate and our deficits so, progressive that the drift can be arrested only by taking certain action which will be extremely unpopular. As the revenue is not likely to increase for some considerable time, it is obvious that the only way to square the ledger is by reducing expenditure, not to the extent of £1,000,000, £2,000,000. or even £3,000,000, but by a much larger amount. At the end of this financial year the Commonwealth will have, a deficit of something like £20,00,0000, and although expenditure cannot be reduced to, that extent,, a determined attempt must be made to balance the ledger by reducing our commitments to the lowest possible limit. There are five different sections in which expenditure can be reduced - I do not exclude interest - and if the Government is to place this country’s finances on a proper basis every avenue must be fully explored.. Obviously, that is the duty of Parliament, and if Parliament will not take the responsibility, the people will revolt against Parliament to such an extent that the present federal system may be destroyed.. As it would be hopeless to meet in open conference with the object of discussing the severe curtailment of public expenditure, I appeal to the Prime Minister to consider the holding of a conference behind closed doors, with even the official reporters excluded, so that the views expressed would not be heard by other than members, and so that no record of the speeches would be obtained. In such circumstances we would have an honest expression of opinion and, possibly, a majority of honorable members would be prepared to support proposals necessary to square the public ledger. Meeting as we are at present, with the possibility of a general election in the near future, many honorable members are merely making electioneering speeches, and it is difficult to get a clear and honest expression of opinion. The proposal of the Government, as embodied in this clause, is to obtain authority to ship gold at present held as a backing against our note issue, and is one which I cannot support. In a sense, it is feasible that this gold is not earning anything, and that if it is not shipped to meet payments falling due at the end of this financial year the Commonwealth may be compelled to default. But the payment of £5,000,000 will only mean postponing default, and if the present financial policy of the Government is continued, default with respect to a much larger sum may be inevitable.

Mr Riordan:

– The honorable member is a “Langite.”

Mr NAIRN:

– Surely I cannot be charged with being a “ Langite “ merely for stating the effects of the Government’s policy. I am anxious to avoid default. This proposal will not prevent ultimate default, but will merely provide the Government with a little spending silver. Should we ever reach the stage when, after expenditure has been reduced to a minimum, the Government cannot raise any additional revenue, the people may be prepared to give some consideration to a policy of inflation ; but we have not yet reached that point. If the shipment of gold is authorized, we shall have £60,000,000 worth of notes in circulation for which there ‘will be no gold backing. Under such a policy it would not be long before the Commonwealth Bank would be in a similar position to that of the Government Savings Bank of New South “Wales. One banking institution has already defaulted, and, if the Government continues as at present, there is every possibility of the Commonwealth Bank being unable to give further credit to the Government. This measure embodies the most palpable piece of kiteflying imaginable, and if the present policy is continued, it will not be long before Australia will be compelled to default. I am opposed to the Government’s proposal in this connexion, and intend to vote against the clause.

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

.- This clause is to amend section 60k of the Commonwealth Bank Act 1911-1927, which reads -

  1. The board shall hold in gold coin and bullion a reserve of an amount not less than one-fourth of the amount of Australian notes issued.
  2. In ascertaining the amount of Australian notes issued, the amount of notes which have been redeemed shall not be included. [Quorum formed.)

In the bill the suggested alteration reads -

Section sixty k of the Principal Act is amended by omitting sub-section (1) thereof and inserting in its stead the following subsection “ ( 1 ) The Board shall not issue Australian notes to a greater amount than sixty million pounds.”

If I understood the Prime Minister aright, there will not be issued a greater amount in notes than the act as it stands at present allows to be issued on the basis of a gold reserve of £15,000,000 ; but that, should the necessity arise - and in the case of necessity no law can withstand the needs of the people - the Government willbe empowered to ship to England the whole of the £15,000,000 worth of gold that is now held. I also understood the right honorable gentleman to say that it may be necessary to send only £5,000,000 worth of gold for a start.

I have studied, to a certain extent, the question of exporting gold that is held as a reserve, and am rather diffident concerning the practice. I hate the very idea of gold being compulsorily withdrawn from a country for the payment of loans, because the result may be to inflict hunger upon men, women and children. Let us see what the withdrawal of only £11,000,000 worth of gold did to the mighty British Empire. I have it on the authority of one of the financial experts of the present day, Mr. G. Marshall Hattersley, in his work, This Age of Plenty, that a few financiers - they must have been multi-millionaires, judging by the wealth that they controlled - went from the United States of America to London, bought largely in American gilt-edged securities, sold largely in English securities - a practice which, as honorable members are aware, has a tendency to depress the market - obtained £11,000,000 worth of gold from the Bank of England and sent it to America, with what result? Representative British securities numbering 325 depreciated to the extent of £115,500,000. I do not say that the shipping of our gold to England would have a similar result. But has the sending of gold from any country in the world increased the prosperity of that country ? I have been unable to find in any library evidence showing that a government or a country has benefited as a result of the export of its gold. I, therefore, am timid about this proposal. My only concern is for the starving men, women and children of this country. I know of men trying to live on 5s. 6d. a week, and married men with families trying to exist on less than 20s. a week. I should like all parties in this chamber to come together, and to declare that the present is a state of national emergency. In the opinion of probably the best health officer that the city of Melbourne has ever had, the physical development of our men, women and children is being injured at the present time. I have not addressed meetings of unemployed, because I am somewhat afraid to do so ; but were I 25 years of age I would go as far as any one in the direction of seeing that, so long as this country was teeming with food, and the raw material for the manufacture of clothing, not one man, woman or child suffered want. I have a suggestion to make to the Government, which I hope it will carry into effect at a later date.

It was questions that I asked in this Parliament that exposed, for the first time, the infamy of paying £1,500 of the people’s money annually to teach a boy of 13, 14, or 15 years of age to be a naval cadet, the staff of tutors averaging two and a half to each scholar in attendance.

The TEMPORARY CHAIRMAN (Mr Francis:
MORETON, QUEENSLAND

– Order! I have given the honorable member a reasonable amount of latitude. He must keep to the question, which is that the principal act shall be amended by providing that the board shall not issue Australian notes to a greater amount than £60,000,000.

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

– I am addressing my remarks to the question of economy. “We on this side did our best while we were in opposition to prevent wasteful expenditure.

The TEMPORARY CHAIRMANI remind the honorable member that at the moment the question of economy is not before the committee.

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

– I am replying to statements regarding economy that were made by the Deputy Leader of the Opposition (Mr. Gullett). It was a question that I asked of the Prime Minister at the time (Mr. Bruce) that led “to the publication of the number of men in the Public Service who were in receipt of a salary of £1,000 a year and over, in the year which marked the outbreak of the war and in 1928. The first figures furnished were incorrect. That was not the fault of Mr. Bruce, but of the officer who supplied him with an inaccurate statement. In the first place he stated that the numbers were six and 33, but later the error was corrected and the figures were shown to have increased from 33 in 1913 to 181 in 1919. During that period the additional expenditure involved amounted to the vast sum of over a quarter of a million pounds.

The Prime Minister (Mr. Scullin) has asked for alternative proposals to that advanced by the Government. I do not approve of the alternative suggested by the Opposition; but I should like all parties to meet together, perhaps without the presence of newspaper reporters, and have a heart to heart discussion.

Mr Gullett:

– Why not an open go?

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

– The friends of honorable members opposite control the mighty press of this country, and it supports them through thick and thin. I have a kindly recollection of the honorable member’s relinquishment of a very important position because it conflicted with the democratic opinions that he then held.

Reference has been made by the honorable member for Perth (Mr. Nairn) to the Government Savings Bank of New South Wales. It would have been a wise act had the Commonwealth Government placed at the disposal of that institution the £230,000 of silver currency that is lying idle in the vaults of the Commonwealth Bank. The handling of silver currency instead of notes, which have the false superscription, that their face value is payable in gold, when everyone knows that that is no.t so, would have given confidence to those who withdrew their savings from the State bank. That institution should never have been allowed to fail; action should have been taken, by both the Commonwealth and State Governments to prevent such an occurrence. Do honorable members forget how Sir George Dibbs saved the banks in the awful crash that succeeded the land boom in 1893? He said, “New South Wales will stand behind every note that has been issued “. Through this bill the Government really says to the bondholders, “ If you demand gold for your bonds, we shall pay you in gold, so long as we can “. In an endeavour to meet its obligations every ounce of gold that the Government possesses is to be exported. This Australia of ours grows wheat, meat and wool, and produces silver, zinc, iron and lead. Let the bondholders be asked how much of these commodities they want to satisfy their claims, and Australia will make the settlement. I sincerely hope that the great desire of the workers, and of the Labour movement generally, will be acceded to, that we shall borrow no more money overseas. Can any honorable member deny that our present terrible position is due to excessive borrowings abroad ? And now our creditors are calling for the gold that we have not. In my opinion, the whole trouble arises from a few men ruling the world through the power of gold. It is said that seven specific men in the United States of America, and five others in Europe could ruin any country if they combined in their operations.

The Deputy Leader of the Opposition (Mr. Gullett) spoke of worthless paper money. That brings to my min’d the fact that, if the paper money that I possess were worth its face value, I should be a multi-millionaire. It happened in this way: The widow of an old friend of my student days wrote me a letter from Germany detailing the sufferings of herself, and of the people of that nation. I sent a few pounds across to her, and later, actuated by curiosity, sent another pound, and asked that she should send me some German marks in return. As a result I am now the possessor of twenty million marks. I wish I could cash those notes at their face value, if only to enable me to help the unemployed a little more. So that I can speak with some authority of the worthless paper money to which the Deputy Leader of the Opposition referred.

The TEMPORARY CHAIRMAN:

– The honorable member’s time has expired.

Mr PROWSE:
Forrest

– I consider that this bill is liable to do the country even greater injury than would have been possible had the Fiduciary Notes Bill been approved. The clause with which we are dealing proposes to abolish our gold standard. In that respect Australia is to become financially isolated. We are too prone in this country to experiment with ideas without first submitting them to close examination. This measure proposes, as did the Fiduciary Notes Bill, to inflate our currency. Under the principal Commonwealth Bank Act it is necessary to have a gold reserve equal to 25 per cent, of our note issue. It is now proposed to issue a further £12,000,000 worth of notes without any gold backing.

I was pleased when the Prime Minister (Mr. Scullin), in his then capacity of Leader of the Opposition, stated his willingness to co-operate with the Government to bring about any result that would confer benefit upon the nation. During the right honorable gentleman’s absence in London, when it was apparent that Australia’s financial position was becoming worse and worse, I quoted his suggestion that party considerations should be discarded, and that the best brains of the respective political interests should co-operate for the welfare of Australia. On the 17th November, 1927, the right honorable gentleman stated -

When it is clear that we are either approaching or have reached the crisis, we should, as private members, irrespective of party considerations, do our best to face the situation, and if possible find a remedy for it. We ought to bring the facts under the notice of the Government in such a way that they cannot be overlooked. In my opinion, we could profitably devote a session, or at least the greater part of one, to the consideration of the economic and financial position of Australia. We should do well to confer round the table, forgetful of party distinctions, in order to find a way out of our difficulties. I have no desire to say a word that will weaken the credit of Australia. I know that our country is passing through a critical period. The Treasurer has to convert large loans, and I do not desire to do ot say anything that may have the effect of destroying our credit. I believe that Australia lias more than sufficient assets to offset every penny that she owes.

The then Government took certain action, not exactly along the lines suggested; but it did attempt to curtail expenditure on administration. Since then, during the absence of the present Prime Minister (Mr. Scullin) in London, the Leader of the Opposition (Mr. Latham) put forward a very definite proposition, which sought to rectify the present position, and which had the concurrence of all on this side of the chamber. In his remarks he said -

The continuance of seriously unbalanced budgets - Commonwealth and State - will mean ‘ ultimate disaster to Australia as a whole. Will our present method of government meet the situation ? I think not. The responsibility for unpopular action rests at present wholly on the party in power. 1 am not about to propose a coalition government. This Labour Government hass a large majority, and is bound to accept the responsibility of administering the affairs of the Commonwealth. But it ma)’ be necessary, in the interests of the people, to take unpopular action, which it is highly unlikely that any party in power is prepared to take-

The TEMPORARY CHAIRMAN:

– The honorable member is not in order in quoting at length from Hansard of the current session.

Mr PROWSE:

– The suggestion of the Leader of the Opposition was that a council consisting of representatives of the Commonwealth Government, the representatives of the States on the Loan Council, representatives of the Opposition parties in Parliament, and of the Commonwealth Bank and associated banks should confer, in an. effort to devise means to counteract the present drift. That suggestion was put forward in all seriousness, and when the Leader of the Opposition was speaking on the budget, he detailed means by which a saving of £4,000,000 could be effected in Commonwealth expenditure. The then Acting Prime Minister (Mr. Penton) secured the adjournment of the debate, doubtless with a view to consulting caucus, and next morning the House was virtually informed that the Government had the support of a majority of the electors, and was conferring with economists and others outside. In other words, it was equal to the job, and would stand up to it. No doubt, the Prime Minister, who was absent at the time, approved of the attitude taken up by has deputy. Legislation has been introduced which is expected by the Government to meet the position that has arisen, but is more likely to make the financial position worse. The advice tendered to the Government is still open for acceptance, the drift is still going on, but the Government prefers to deal with public interests on party lines instead of in a broad Australian spirit. [Quorum formed.] I fear the result of shipping our last sovereign overseas. What are we to do if similar circumstances arise next year? We have no right to deprive ourselves of every shred of backing we possess for our paper currency. Gold is the recognized backing for paper currency throughout the world. We cannot put ourselves in a position of isolation from the rest of the world. We cannot force the rest of the world to recognize our paper money as good credit unless it has a gold backing. Professor Shann and Professor Copland sum up the position as follows -

Their counsel oan only increase trouble We have reached a stage in the crisis when responsible Ministers urge Parliament to resort to the printing press, a phase in the deterioration of public finance out of which few countries have emerged without disaster.

I cannot understand the change that has come over the Prime Minister. It saddens me. In November last he incurred the expense of cabling the following opinion -

To create credit for £20,000,000 for loan work is unsound, and I expect the banks to refuse to do so.

At that time Australia had a gold reserve of £15,000,000. Now the right honorable gentleman proposes to , ship that £15,000,000 abroad, and to resort to the printing press for another £12,000,000. He tried to justify a step which will deprive Australia of the foundation upon which its international credit rests. No country with a population of only 6,500,000 people can afford to ignore a principle which is recognized throughout the world. We may think we can “ back “ ourselves; we may have every confidence in ourselves; but the question is- how is our credit recognized abroad? I hope that the bill will be withdrawn, and that, the case being so serious, the Prime Minister will accept the suggestion for a conference to see if the deportation of our little reserve of gold cannot be averted.

Mr MACKAY:
Lilley

.- The bill provides that the Government may require the Commonwealth Bank to hand over all the gold in its possession which is now held as backing for our note issue, and the Prime Minister says that the need for this serious step is to meet urgent liabilities in London. He also says that the only alternative is default, a humiliation which no good Australian cares to contemplate. We have gold valued at £15,000,000, and the Government seeks control over the whole of it, although the admitted urgent liability overseas is only a matter of £5,000,000.

Mr SCULLIN:

– In my speech I spoke of £5,000,000 to the Westminister Bank and £5,000,000 to meet treasury-bills falling due in London.

Mr MACKAY:

– That is a little further information, but why should the Government seek control over £15,000,000 to meet an urgent liability of £10,000,000? If a further £5,000,000 should be required later-, a fresh bill might well be introduced to enable the Government to secure control over the balance. But the point on which we have not had a satisfactory explanation is what the ‘Commonwealth Bank has had to say in regard to this proposal. Statements we have heard from time to time would indicate- that the directors of the bank have suggested the course the Government have taken, but we have heard nothing definite upon the point. I should like the Prime Minister to say definitely whether the Commonwealth Bank ap*proves or disapproves of the despatch of the last of our gold to London. The bill maintains the present statutory limit of the note issue at £60,000,000. No honorable member objects to that ; in fact, did we not know that the Government intends to issue fiduciary notes to an unlimited amount, this bill might be acceptable.

Mr Lewis:

– That is not true;

Mr MACKAY:

– It is true that the Fiduciary Notes Bill prescribed a limit of £18,000,000; but that was for present purposes only. There is no guarantee that that would be the limit of the issue. An announcement by the Prime Minister that the Government intended to abandon its proposals for the inflation of the currency would make for a better understanding in Parliament and the country. The right honorable, gentleman made to-day what seemed a very friendly gesture; but. he made a similar gesture when he met this Parliament early last year, and it was responded to enthusiastically by the members of the Opposition. During the absence of the Prime Minister in England the Leader of the Opposition renewed his offer of co-operation with the Government in a policy to overcome Australia’s financial difficulties. I hope all honorable members will realize the necessity for concerted action so that we may restore confidence in this Parliament.

Mr KEANE:
Bendigo

.- From whatever angle I view this clause itappears to me to be sound. It is undeniable that there is £15,000,000 worth of gold in the vaults of the Commonwealth Bank that is earning nothing. Overseas there is a maturing debt of £38,000,000, on which the Commonwealth has to pay high interest and bank charges. When £3,274,000 was remitted to London bank charges and exchange totalled £927,000. An obvious gain to the Commonwealth would result if the idle gold reserve in the Commonwealth Bank were shipped to England to liquidate a corresponding amount of early maturing debts. Although the gold standard is well established by custom, I have yet to learn that it has been of any practical value to us during the history of Australian currency. A very brief examination sho”ws the absurdity of pretending to maintain a standard that has ceased to exist. The notes in circulation amount to £45,000^000, and the gold backing does not exceed £15,000,000. Therefore, £30,000,000 of the note issue is uncovered. It is true that the Government has proposed a further extension by means of a fiduciary issue of £18,000,000. Au Australian note bears on its face a promise that it will be exchanged for gold. If, in accordance with that promise, I present a note at the head office of the Commonwealth Bank, I may be paid in gold in one room and be required to hand it back in the next room. Therefore, in practice, the gold standard no longer exists in Australia. The Prime Minister has assured the committee that certain liabilities maturing in London on the 30th June must be met, and that there is no possibility of borrowing any of those mysterious millions of money which members of the Opposition so frequently say are available. They declare that, if this Government is removed from office, money to an. unlimited amount will be available to us in London. I have heard that wild generality at least 20 times during the last fortnight, but no honorable member has been prepared to disclose how the money is to be obtained. For seven years the last Government borrowed money at the rate of £34,000,000 a year. The present Government has had no loan money. The market is closed, and we are in the unhappy position of having to reduce our loan programme from £43,000,000 to £14,000,000 in one year, thus throwing thousands of men out of work, and causing widespread distress. Yet honorable members of the Opposition suggest further retrenchment. The Deputy Leader of the Opposition (Mr. Gullett) said that the Government could save £5,000,000 a year, but the only specific saving he indicated was a further cut of £1,000,000 in public servants’ salaries, in addition to the £1,000,000 that they will lose from this month. He did indicate that certain action might be taken in respect of old-age and invalid pensions and war pensions.

Mr Gullett:

– Hear, hear!

Mr KEANE:

– Apparently he intends to get the balance of the £5,000,000 from the sick and aged poor and the mangled diggers. There is no other source that can be tapped at the present time. Members of the Opposition say that we should not export the gold reserve, but should allow it to continue to lie idle in the vaults, and that by some ungodly manipulation, a further £1,000,000 should be taken from the public servants. Reference was made also to an amount of £3,000,000, which, apparently, relates to the social services mentioned by the committee of experts, and referred to by the honorable member for Gippsland (Mr. Paterson), who urged a reduction of all controllable expenditure by 20 per cent., and possibly 30 per cent. I would like to see the best brains in the Parlia ment working in unison for the relief of the thousands of people who are looking to us for help, but the opposition offered to this bill is on a par with the opposition to the other financial proposals of the Government. This clause is a logical consequence of the non-use of the gold reserve. We have idle money. We have to meet debts due in London, and no further loans can be raised there or in Australia. Our first job is to endeavour to discharge our liabilities in a decent way. I am not satisfied that the mere shipment of gold will afford relief to our own people. That will require to be done by other legislation. But, as we make no use of the gold that is in the vaults, why keep it there, when it can be utilized to advantage? The gold standard is only a fetish. If we cash our notes for gold the coin is immediately commandeered from us.

Mr Latham:

– Everybody says that, but it is not so, because no proclamation relating to the surrender of gold has been issued.

Mr KEANE:

– I repeat that as the £30,000,000 of our total note issue of £45,000,000 is without gold backing, it is idle to say that the gold standard operates in Australia.

Mr BELL:
Darwin

.- If the committee agrees to this clause, and the bill is passed, our paper currency will be without gold backing, for the Government will have power to export the whole of the £15,000,000 worth of gold now held as a reserve against the note issue. The Prime Minister has told us that £5,000,000 of liabilities must be met in London in June, and that the alternative to the export of gold is default. He challenged the Opposition to suggest any other course.

Mr Scullin:

– It was an invitation, not a challenge.

Mr BELL:

– From time to time the Leader of the Opposition (Mr. Latham) has offered to co-operate with the Government. Those offers have been rejected almost contemptuously; we have been told that the Government has a majority, and will govern. The Treasurer (Mr. Theodore) said that the proposal to export the gold reserve is the only practicable step possible in the circumstances. But the Leader of the Opposition and other honorable members on this side have put forward another alternative, which is in accord with the necessity that is imposed on every individual who becomes financially embarrassed. A nation is merely an aggregation of individuals, and can finance itself only on the same lines as a business man or a group of men operating in any industry. The national income has dwindled, and we have tremendous commitments, which we shall not be able to meet unless we reduce our expenditure. The course open to us is obvious. We have to assure the people to whom we owe this money, who are pressing for a reduction of the debt, that we are determined to pay our way by living within our income. If that were done the pressure would be relieved and arrangements could be made which would render unnecessary a step so dangerous as one removing all gold backing from our note issue. That assurance has not been given by the Government. The overseas investors see clearly that if we continue the orgy of expenditure in which all Australian Governments have indulged for years past, and if we continue to adhere to a standard of living superior to that of any other country, we shall have no possible chance of meeting our liabilities. The Prime Minister (Mr. Scullin) places a definite obstacle in the way of any co-operation with the Opposition because he adheres to financial proposals which we consider must surely lead to default and national dishonour. Although he has said that the Government is willing to listen to any alternative suggested by the Opposition, he has also said that he will have nothing to do with any scheme that involves a reduction of the basic wage or a lowering of the standard of living. If, as a nation, we are not prepared to do without some of the luxuries we have enjoyed in the past, we cannot expect to meet our commitments and pay our way in the future.

Mr Scullin:

– What luxuries are allowed for under the basic wage?

Mr BELL:

– Many people on the basic wage are enjoying things that are denied to others who are working harder in providing the necessaries of life for the general community, but who are not protected by Arbitration Court awards.

The return for their labour does not equal the awards of the industrial tribunals which have been set up by act of Parliament. Are there not luxuries under this high standard of living which the Government says must not be reduced? Has not every tribunal in giving its awards taken into consideration the cost of many articles which, if not looked upon as luxuries in years gone by, must be considered to be luxuries to-day in view of the tremendous decline in our national income? We must be prepared to make every sacrifice to ensure that this country lives within its income. Our income has dwindled this year, and it will dwindle further next year. Unless confidence is restored in this country we shall not again have the assistance of the financiers overseas, who in the past lent us the money with which to meet our commitments. We must make any sacrifice necessary to reassure the world that we as a people are determined to meet every obligation as it falls due, and there is no other alternative. We have been assured from time to time that the financial assistance necessary to tide us over our present crisis will be forthcoming, provided that we make every effort to bala’nce the budgets, not only of governments, but also of individuals. If the Government continues to bring down measures, the object of which is to maintain the present high standard of living, or at least to keep up a pretence of high wages and standards, it will be impossible for this country to meet its obligations. I should welcome the invitation of the Prime Minister to co-operate with the other parties in this chamber were it not for the fact that he himself has been uncompromising in his attitude in respect of every measure that the Government has introduced. He has, in effect, said, “ This is the Government’s proposal, and the Government alone is responsible for it; we have the numbers, and we will put it through; if it is rejected in another place, the responsibility will be upon that chamber.” If the Prime Minister is anxious to cooperate with the other parties in this chamber, let him withdraw his fantastic financial proposals, and let us start off from scratch and consider the alternatives. The present proposal to inflate currency and to tax interest is really repudiation. When we borrowed money at a certain rate of interest we stated that it would not be taxable. The Government’s policy is causing a lack of confidence in Australia in this country and abroad.

Mr Scullin:

– Does the honorable member say that the Government is proposing to tax bonds which we promised would not be taxed ?

Mr BELL:

– When we invited the people to subscribe to the Commonwealth loan we said that it was a gilt-edged security, with the whole of the resources of the country at its back. We said that a certain rate of interest would be paid.

The CHAIRMAN (Mr. McGrath).There is in the clause no reference to bonds.

Mr BELL:

– If I were permitted I should be only too pleased to point out to the Prime Minister how the Government’s proposal to tax interest is a distinct form of repudiation.

Mr Scullin:

– I deny that.

Mr BELL:

– While proposals such as this are before this chamber, it is impossible for us to- co-operate with the Government.

Mr Scullin:

– What counter proposal does the honorable member suggest?

Mr BELL:

– The counter proposal is that definite action be taken to meet our commitments by reducing expenditure and bringing it within our income - an essential step towards restoration of confidence. The Prime Minister (Mr. Scullin) has made no effort to do that. As to the best, means, by which’ this might be brought about, and the fair method of spreading the burden and equalizing the sacrifice,, there is room for difference of opinion. It is upon this important matter that we should be willing to cooperate, and, if necessary, compromise. There is no need for1 me to elaborate my proposal, because it is simplicity itself. At this stage I am not permitted to repeat in detail the suggestions of the- Leader of the Opposition (Mr. Latham) as to the directions in which reductions in expenditure cam be made., Every member of this Parliament should co-operate in determining in what direction governmental expenditure could be reduced, at the same time making each section of the community bear its proper share of the sacri fice. There is no reason why we should not co-operate, throwing aside all party feeling and party politics. The adoption of the suggestion of the honorable member for Perth (Mr. Nairn) would enable that to be done. Let us confer within closed doors. At present honorable members, while suggesting that they are dealing with this measure in the best interests of the community, are really talking to their electors. They axe afraid to express in this chamber their real thoughts because by so doing they might offend their electors and render their positions in this Parliament insecure. The Prime Minister, while offering to co-operate with the other parties in this chamber, still refuses to compromise upon essential matters. Under this measure, it is proposed to take over the gold reserve that is the backing to the currency of this country, and to send it abroad to meet debts that are shortly maturing. That may suffice for’ the time being, but what of our obligations at the end of this year and of next year ? We can use this gold only once and it will pay but a small portion of our debt. The exporting of our gold to meet a liability of £5,000,000- is not an alternative to taking action to ensure the meeting of our future obligations. The export of the mere handful of gold remaining in this country will have little effect in restoring confidence in this country. It will be more likely to instil in the community the fear that we have exported our- last handfu>l of gold because we are in such a desperate financial position that we cannot get credit at home or abroad. Suggestions have been thrown out from time to time by leading financiers of Great Britain that under certain conditions, assistance would be given to Aus.tralia. The Prime Minister, while in London, was assured that this assistance would be forthcoming provided-

The CHAIRMAN:

– The honorable member’s time- has expired.

Mr LAZZARINI:
Werriwa

,.- The honorable member for Darwin (Mr. Bell) has suggested that we should go into committee behind closed’ doors in an effort to solve Australia’s financial problems.. Apparently he wishes to> say something in committee that he is not prepared to say on the floor of this House with the light of publicity upon it.

I intend to move that the clause be deleted; because this provision proposes to establish a principle and precedent which no Parliament should accept. The Treasurer (Mr. Theodore) in putting this clause into the bill apparently considers that he knows the amount of currency that is sufficient for the requirements of this nation. He is prepared to say that £60,000,000 will be sufficient for our requirements for all time. I am not prepared to accept his dictum. I have a very poor opinion of the Treasurer as a financier. In his secondreading speech there was not one word of a limit of £60,000,000 to our currency. The Treasurer is attempting to usurp a prerogative that no other man in the world has had the audacity to usurp.

Mr Prowse:

– Yet the honorable member keeps the honorable member for Dalley in his position as Treasurer.

Mr LAZZARINI:

– The honorable member does not seem to understand what I am contending. This is the first time in the history of the world that any man has attempted to take to himself the right to set a limit upon the amount that will satisfy the currency requirements of a country. The clause provides that the Commonwealth Bank shall not issue more than £60,000,000 worth of notes. I have no wish to speak in a pessimistic strain of the financial position of this country Olof .any of its financial institutions, but I contend that a run on the associated banks would bring about the gravest financial crash that this country has ever experienced unless perhaps £120,000,000 worth of notes were printed.

Mr Bernard Corser:

– Why set a limit of £120,000,000 worth?

Mr LAZZARINI:

– The amount can easily be arrived at. The associated banks owe £100,000,000 and against that they hold £47,000,000. The Government Savings Banks of this country have had deposited with them £280,000,000 and yet there is not £15,000,000 of currency in their vaults. If there were a run on the banks it would be necessary, to prevent a financial crash, to print at least £120,000,000 worth of notes, because if one-third of the demands of the depositors were met in that way confidence would be restored. But if gold were demanded, the position would be a hundred times worse; for there are not two sovereigns iu the country for every £100 demandable. This position has been caused, not by this Government, but by our adherence to the capitalistic system of finance, which has allowed huge expansions of credit ou the cheque pound system operated by the associated banks. I do not want any more financial repercussions in this country. I believe that it would be a mistake to limit the Commonwealth Bank Board to a note issue of £60,000,000. I desire to see our financial position stabilized; though the statements made by the Treasurer at a public meeting in Adelaide on Monday night will not tend to stabilize it. Whether we like it or not, there may be financial trouble of a more serious kind than we have yet experienced in Australia. The inescapable fact is that £380,000,000 might be demanded by bank depositors to-morrow. It would be ridiculous in this circumstance for us to limit the note issue to £60,000,000.

Mr Maxwell:

– Would the honorable member limit the notes only to the extent of the possible demand?

Mr LAZZARINI:

– Certainly. Unless sufficient notes are available to meet possible demands, a financial crash might occur. My statement that £380,000,000 could be demanded from the banks is based upon official figures. The returns of the savings banks and a mass of other banking information is available to honorable members.

Mr Maxwell:

– The printing of the notes would not stop with the present demand if the people knew that notes would be printed to satisfy every demand.

Mr LAZZARINI:

– I disagree with the honorable member. The people require notes only to buy the necessaries of life, and they will not demand notes in excess of their needs. Seeing that the Commonwealth note is legal tender, the butcher, the baker, and the candlestick maker will accept them in payment for goods or in discharge of debts.

Mr Gregory:

– But the issue of notes under those conditions would cause prices to rise.

Mr LAZZARINI:

– The honorable member does not know what he is talking about. The purchasing power to which I refer is already in the country, and prices have not risen. There is a difference between something created and something that might be created. The New South Wales Savings Bank could have operated with cheques, had not a certain gang caused a run to be made upon it for political purposes. If the people had been satisfied with cheques there would have been no trouble; but they demanded notes. The associated banks could not meet a run of £100,000,000 tomorrow if the people demanded bank notes, for they probably have no more than £37,000,000 in notes at their disposal. The whole situation is pregnant with the gravest possibilities. There may be a rush on the banks, though I sincerely trust that there will not be. But if there is a rush there should be a safety valve. In my opinion a limitation of the note issue to £60,000,000 is extremely dangerous. If a rush on the banks occurs, our whole financial fabric will be smashed to smithereens. If the slender thread of faith is broken disaster must follow.

Mr Gregory:

– What we need is confidence; and the honorable member is trying to destroy it.

Mr LAZZARINI:

– If the honorable member says that I am trying to destroy confidence, he is lying. I am trying to prevent the inclusion in the bill of a clause which may bring serious trouble upon the country. If times were normal, I should not object to the inclusion of this figure ; but in view of the present circumstances, I believe that it would be wise to give the Commonwealth Bank Board a wide discretion. If a limit is put to the note issue, and trouble occurs, it might not be possible to summon Parliament quickly enough to overcome the difficulty. In my opinion, this bill would be likely to be a much better instrument if no limit were put to the note issue.

Mr GREGORY:
Swan

.- The honorable member for Werriwa (Mr. Lazzarini) has made somewhat clearer the object which he and certain other honorable members are trying to achieve. The honorable member for Bendigo (Mr. Keane) let the cat out of the bag a little while ago when he pointed out that last year £43,000,000 of loan money was spent in Australia, and that this year only £14,000,000 obtained from loan had been spent. He said that the Government needed more money to provide employment. We all desire “to see our’ workless people given profitable employment; but, as the honorable member for Darwin (Mr. Bell) pointed out, it is impossible to restore good conditions in the country except by the creation of real wealth. Such wild, fanciful and absurd schemes as that developed by the honorable member for Werriwa (Mr. Lazzarini) will get us nowhere. He desires us to print notes, and then print more and more notes. This must, inevitably, destroy the confidence of the people, not only in themselves, but also in their country. It would be the essence of folly for us to adopt such a policy. If this scheme is sound one cannot but be deeply sympathetic with the older countries of the world, because such great financiers as the honorable member have not arisen to help them out of their trouble.

The continual printing of banknotes in Germany, France. Russia, Austria, Italy and other countries, created deplorable conditions. People who were in business were selling goods at certain prices, but did not know what prices they would have to pay to replenish their stocks owing to the continued sudden rises in prices. In every country where this policy was tried repudiation followed. In France the Government is paying the people the equivalent of 2d. for every lOd. that they invested in government loans.

Honorable members opposite assert that gold is of no consequence in the present situation. It this is so, why did the banks in 1925 import -£10,500,000 worth of gold merely to replace it in their vaults? The gold was brought here to create confidence. We must trade with other countries, and even if we may think that gold is of no value, we need it because other countries hold tha,* it is necessary to sound finance.

Mr Martens:

– Many banks have failed in America recently, yet there is plenty of gold there.

Mr GREGORY:

– The failures were probably due to over-speculation or to the lending of money which they did not possess. Our troubles have been caused by the extravagance of governments. If governments - and I refer to this Government particularly - want money, let them obtain it by taxation. They should certainly not be allowed to demand the savings of the people in order to finance their own extravagant schemes. The adoption of that policy must, inevitably, bring the country to insolvency and bankruptcy. We need economy in government, and there is still plenty of room for economy.

Just after the Prime Minister returned from his trip abroad, he informed the country that it would have been possible to fund £37,000,000 of floating debt in London but for the foolish resolutions of the Labour caucus. Because it has not been possible to fund that debt, we are now told that it is necessary for us to ship away the relatively small quantity of gold that we still have here.

Mr Eldridge:

– How much gold does the honorable member think we ought to have here?

Mr GREGORY:

– For many years there has been a provision on our statute-book that we should have 25 per cent, of gold as a backing for our notes. That is the lowest percentage in the world, and only Russia and Australia have such a low percentage. Surely it is significant that even the Central Bank of Russia is obliged by statute to retain a gold backing of 25 per cent, for its notes. I do not know whether that provision is operative - I doubt whether it is. It was pointed out in a recent report on banking, issued under the authority of the League of Nations, that the gold reserves of certain countries could possibly be somewhat reduced. Certain countries have a gold reserve of 50 per cent., the average holding being about 35 per cent. I do not think it would be wise to allow the reserve to fall below 25 per cent. This gold reserve is the foundation upon which the financial superstructure of the country is built. In my opinion, we would be wise to follow the example of the older countries, and retain a sound gold reserve.

The Treasurer (Mr. Theodore) has totally changed his financial policy recently, as this and other bills which he has brought down prove conclusively. Speaking in the Balmain Town Hall on the 31st January, 1930, the honorable gentleman said -

To issue more paper money would be an evil worse than the remedy-

Mr Eldridge:

– But what does he say to-day ?

Mr GREGORY:

– He said that on the 31st January, 1930, which is not long ago.

Mr Eldridge:

– But it is what he says to-day that matters.

Mr GREGORY:

– He went on to observe -

Every worker in the land would be robbed. We would be fools to reduce the purchasing power of our money, and that is what it would mean. Who would suggest that a Labour Ministry should descend to so calamitous a policy to drug the workers?

Apparently the Treasurer has since changed his mind. Now, so he tells us, he is prepared to go just a little way along the road to inflation to give the drug in small doses for a start. All that he asks is that the note issue shall be limited to £60,000,000, plus a fiduciary issue of £18,000,000 for this year. But what about the next?

What we need in Australia more than anything else is a definite movement to inspire confidence in the minds of the people overseas that we are united in our determination to pay our way. The Commonwealth and State Governments should have realized eighteen months ago, when every one could see’ the crisis coming, that the time had come to cut expenditure down to within reasonable limits of the income received. No one expects the Commonwealth Government and State Governments to balance their budgets this year, or possibly next year; but if they made a genuine effort they could get pretty close to a balance. Honorable members would be false to their responsibilities if they passed this bill.

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

.- For some considerable time I have commented upon the increasing cost of governmental services. During the regime of the Bruce-Page administration I directed attention to the high salaries paid to certain officers in the Public Service. Mr. Bruce, on one occasion, courteously gave me an inaccurate answer, for which, of course, responsibility rested upon departmental officials. Later he gave me an answer that was somewhat up to date, and more recently I have had information on this point from the present Prime Minister (Mr. Scullin).

Mr Eldridge:

– The reply to which the honorable member has referred was not the first inaccurate answer that has been given by Ministers in this House.

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

– I am afraid that if we are to expect absolute accuracy in answer to all questions more than one Ananias must disappear from the ranks of those who prepare them. One reply informed me that, prior to the wax, 33 officers in the Commonwealth Public Service were in receipt of salaries of £1,000 and upwards, and that, in 1929, the number had increased to 181.

The CHAIRMAN:

– The honorable member must confine his remarks to the subject matter of the clause.

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

– The Prime Minister has, asked for suggestions. I submit that, next to gold, silver is the best currency. Until recently, every country, with the exception of Great Britain, South Africa, Australia, and New Zealand, based its currency upon silver. In the United States of America, Canada, Newfoundland, and the South American States the currency was based on the silver dollar. France had the silver franc, which, by the way, never depreciated from lOd. to 2d. as in the case of the paper franc a few years ago, and Austria, Germany, Russia, China, Japan, all carried ;>n their commerce with silver. It was only when the gold standard was adopted” by the different nations that the real troubles of this world began. The people of practically every country which adopted the gold standard are now suffering misery and unemployment never before equalled in history. France is the one exception. But France, as we know, discarded orthodox methods of finance. For a time there was an unlimited issue of paper currency, and when Poincare stabilized the franc at 124.2 to the English pound, France found herself later in the possession of gold to the value of £330,000,000 - more than twice the gold reserve of Great Britain. This huge reserve has since been increased by approximately £100,000,000 received during the last year. It may be of interest to honorable members to know that such is the strength of the Bank of France that on three occasions it has been called upon to save the Bank of England, but the services of the latter institution have never been sought by the Bank of France. With remarkable perspicacity, Napoleon, in his direction to the regents of the Bank of France - corresponding to present-day directors - toM them they should write in letters of gold in their board rooms the following: - “ What is the Bank of France for ? To keep advances at 4 per cent. “.

When war was declared in 1914, I directed attention to the advisableness of departing from time-worn financial methods, for the purpose mainly of utilizing our immense silver resources and maintaining continuity in employment at the Broken Hill mines. The proposal which I made to the then Prime Minister (Mr. Andrew Fisher) was that the Government should purchase the total mineral output of the Broken Hill mines, which the directors were prepared to make available at the cost of production, and to engage in the minting of silver. I was especially anxious that the Broken Hill mines should not close, because of the widespread distress which would follow. I pointed out that, with silver at the then ruling rate of ls. 4d. per ounce, the Commonwealth Government could mint £1,000,000 worth of silver, pay for it with Australian notes, and obtain a return in silver coins of £4,125,000 sterling; less the cost of minting, or a profit of approximately £3,000,000. Recently I asked the Treasurer if it was not a fact that £1,000,000 worth of silver at the then ruling rate of ls. per ounce would produce £5,500,000 in silver currency, and give a net return to the Commonwealth of £5,335,000. The Treasurer admitted that the fact was as I had stated. Silver, as I have shown, ranks next to gold for currency purposes. Under existing conditions it is certainly better than notes, because, while the latter bear on their face the Treasurer’s promise to redeem in gold, we know, as a matter of fact, that they are inconvertible. I also directed the attention of the Treasurer to the fact that under the British Coinage Act of 1920 the pure silver content of silver coinage had been altered from 925 parts of silver in 1,000 parts to 500 pure silver in 1,000 parts. This reduction-^ of the silver content in the Mother Country has been exceeded only once in its history - during the 37th year of the reign of Henry VIII., when the pure silver content was reduced to one-third. I then asked the Treasurer what would be the return from the minting of £1,000,000 worth of silver containing 500 parts of pure silver to 1,000 parts of silver coinage? In reply I was informed that the return would be £10,175,000 sterling. In other words, this means that the investment of £1,000,000 in silver for currency purposes would show a profit to Great Britain of £9,000,000. I emphasize the importance of giving this proposal serious consideration. The mining industry in Broken Hill has declined seriously in recent years. Compared to 1914, only about two-thirds of the miners are employed, and it is estimated that 56 per cent, of the unionists living there to-day are out of work. New South “Wales produced £63,000,000 worth of silver out. of a total production in the Commonwealth of £69,000,000 up to 1928.

The CHAIRMAN:

– I shall be glad if the honorable member will connect his remarks with the clause under discussion.

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

– I was under the impression, Mr. Chairman, that my argument was quite relevant. The Prime Minister has invited suggestions with regard to currency problems, and I am putting forward one for consideration.

The honorable member for Swan (Mr; Gregory) referred to the results of currency inflation in several European countries, notably Germany, France, and Russia. He omitted to mention that much of the distress in those countries was due to shortage of foodstuffs. Australia is in an entirely different position. We produce all that people require to sustain them. ‘ If Germany or Russia had been, in a like condition, their people would not have suffered want. The great famine in China is more directly responsible for the privations in that country than any deficiency in its silver currency. The time has come to proclaim a national emergency. If Australians were not a law-abiding race, riots would have occurred and blood would have been shed in this country. The people of Latin countries such as Spain, France and Italy would not rest content under economic conditions such as those obtaining in Australia to-day. I recognize that many excellent laws have been passed in this country; but every man’ and woman in the community is entitled to at least £1 a week for the necessaries of life. I am not complaining of the action of this or any other Government. All parties should come together, and agree to the Government declaring that a state of national emergency has arisen, so that every man, woman and child in Australia may be given sufficient food. If the bondholders overseas-;-

The CHAIRMAN:

– The honorable member’s time has expired.

Mr LAZZARINI:
Werriwa

.- I cannot allow the honorable member for Swan (Mr. Gregory) to attribute to me words that I have not uttered. He asserted that I advocated the printing of notes on a wholesale scale to provide for the unemployed. I never spoke of the printing of notes for the purchase of anything, or for providing employment. What I advocated was that the Commonwealth Bank Board should have power to print sufficient notes to cover all bank deposits, in case there should be a run on the banks. If we are to avoid a panic, it will be necessary to give the Commonwealth Bank Board the right to print sufficient notes to enable the owners of the present deposits to recover their purchasing power. Honorable members who do not recognize the imminence of this danger resemble ostriches, which are said to put their heads into the sand in an endeavour to escape from their enemies.

Mr Bell:

– That is an alarmist statement.

Mr LAZZARINI:

– I am merely drawing attention to a plain fact. If Parliament is not prepared to take this course that I have indicated it will be acting like Nero, who fiddled while Rome was burning. The deposits in the various banks belong to the thrifty people, who placed them there for a rainy day, and in view of the present conditions in Australia they are likely now to want their money back. My suggestion is not that the potential purchasing power of the depositors should be extended, but that it should be restored. If Parliament had to be specially summoned to pass legislation to give the Commonwealth Bank Board power to issue further notes, a panic might ensue.

Mr ELDRIDGE:
Martin

.- I am opposed to limiting the powers of the board to issue notes beyond the sum stated in the bill. I happen to belong to a group in this chamber which holds certain views with regard to the note issue, and, because of those views, my colleagues and I have been branded throughout the country as advocates of inflation.

Mr Francis:

– And repudiation.

Mr ELDRIDGE:

– That is another charge, to which I shall reply at another time. I am now dealing with the allegation regarding inflation. Thi3 charge is too humorous to be taken seriously; but, unfortunately, some persons are not blessed with a sense of humour, and they regard my colleagues and me as dangerous men. To describe me as an inflationist may, after all, merely be a playful reference to some aspects of my athletic build; but I am inclined to think that something else is meant. I should like those , of our opponents who constantly bleat and bray concerning the dangers of inflation to furnish sound reason for persistently selecting instances of increased note issues which have proved unsuccessful, and remaining silent regarding those instances in which increased note issues have been entirely beneficial. There is no instance in history of an increased note issue proving disastrous, except at a time when the manufacturing and commercial activities and equipment of the country concerned had been utterly disorganized and destroyed, notorious examples being provided by the post-war experiences of Russia and Germany.

Not long ago the Sydney Morning Herald published an account of a lecture by a person, who, judging by the report in that newspaper, was no more than a half wit. The lecture, which was delivered before the Constitutional Club of Sydney, related to experiences and opinions formed on a visit to Germany at the time of the note inflation in that country following the armistice. The Sydney Morning Herald, in order thoroughly to scare the public over the alleged dangers of inflation, reproduced two illustrations of the German mark, and these provided the finishing touch to the report of the lecture. Unfortunately, however, that newspaper did not publish, side by side with the two representations of the paper mark, any reproduction of the paper franc of a neighbouring country - France - issued in 1930. No less than an increase of fourteen billion francs were printed by that country, which increased its note issue to that extent in the three years from 1927 to 1930. That was done regardless of any gold standard, and, far from any injury having been inflicted on the people of that country, considerable advantage resulted from the action taken. Honorable members opposite .harp on the importance of a gold reserve as though it were a guarantee against inflation or deflation ; but a gold standard is no guarantee against either. Financiers themselves are not agreed as to what is a proper gold reserve. Let me mention some of the standards adopted by financiers in other countries. In England, £100 worth of gold is held for every £100 of currency. In the United States of America, in Holland, and in Germany, £40 worth of gold is required for every £100 of currency. Not even in the British Empire is there uniformity. We find that in Australia £25, in New Zealand £33, and in South Africa £40 worth of gold must be held for every £100 of currency. Canada is not on the gold, standard at all. That country has entered into no obligation to pay out gold for notes, nor, for that matter, has New Zealand. Apparently, according to recent cables, the reactionaries of the Argentine, who are bent upon continuing their merciless, murderous traffic of personal gain at the expense of human beings, are attempting to introduce a reserve of £70 worth of gold against each £100. of currency. The whole position is ridiculous.

Australia, so far as its currency and credit resources are concerned, may be likened to a community in the throes of a drought, and because somebody suggests that provision should be immediately made for an increased water supply, a certain section declares this to be a dangerous procedure, which would result in a flood and cause many of the inhabitants to be drowned. A portion of my electorate comprises the finest residential area in the Commonwealth - I refer to the northern suburbs of Sydney extending from Lindfield to Hornsby - but although the dwellers in the palatial homes to be found there desire, and are able and willing to pay for, an extension of the sewerage system to serve that district, they are unable to get it. It is true that some time ago a commencement was made with sewerage constructional operations in that district: but on account of a shortage of funds the work had to be discontinued. Considerable expense was involved in sealing the shaftswhich had been sunk, and removing the plant to the storage yards belonging to the “Water and Sewerage Board, where it is now deteriorating. The completion of necessary works such as these is, I know, among the undertakings with which the New South Wales Government intends to proceed if it can secure the necessary credit. An increase of the note issue to enable works of this nature to be undertaken would not only give employment to our citizens who are in urgent need of it, but would also provide works of a reproductive public health insuring character. I see no harm in increasing the note issue, to enable works of this kind to be undertaken; on the contrary, I feel that there is much to commend it. Some consternation was caused when honorable members of our group proposed that the note issue should be increased by £20,000,000 to initiate such works to absorb the unemployed. I ask honorable members to compare that sum with the fourteen billions by which one country - France - increased its note issue in three years without bringing disaster on its people. That country had sufficient courage to increase its note issue, but apparently we have not.

A good deal has been said about the gold reserve. Ample evidence could be produced to prove that a gold reserve will not protect a country against either inflation or deflation. It is ridiculous that the development of a young country like Australia should be arrested, business paralysed, and our people impoverished and placed in the hands of foreign financiers, simply because we have not sufficient courage and wisdom to break with the past and place our house in order along lines, the soundness of which is demonstrated by what has taken place in other parts of the world. Although at the beginning of the Great War, in 1914, Australia possessed only £30,000,000 in gold we spent £744,000,000, or nearly 25 times as much as our gold reserve, during the war. Similarly, Great Britain, which possessed £60,000,000 in gold at the beginning of the war, spent, during the war, £10,000,000,000-166 times the amount of the gold reserve. The belligerent nations possessed £2,000,000,000 in gold when hostilities commenced. Their war activities resulted in an expenditure of £52,000,000,000. What, then, became of the gold standard ? The committee would be justified in deleting this clause from the bill. I intend to vote against it.

Mr SCULLIN:
Prime Minister · Yarra · ALP

– I point out to the honorable members for Werriwa (Mr. Lazzarini) and Martin (Mr. Eldridge) that if they vote against the clause they will voteto restore the gold basis for our notes.

Mr Beasley:

– Not at all.

Mr SCULLIN:

– Clause 6 seeks to amend section 60k of the principal act, which reads - (1.) The Board shall hold in gold coin and bullion a reserve of an amount not less than one fourth of the amount of Australian notes issued. and to insert in its stead the following sub-section : - (1.) The Board shall not issue Australian notes to a greater amount than £60,000,000.

Mr Eldridge:

– Would it not be possible to amend the clause?

Mr SCULLIN:

– I am pointing out that if honorable members vote to negative this clause, they will restore the gold

Mr HUNTER:
Maranoa

.- This bill has been introduced because a national emergency makes it necessary, in the opinion of the Government, to get gold from the bank into the hands of the Government, for shipment overseas. We hear a great deal about the gold basis being unnecessary for our currency, but it would appear that the Government can find some use for the gold which the country possesses. Although kept in the vaults of the banks, the gold reserve is being used ; it forms the basis of the note issue. The honorable member for Martin (Mr. Eldridge) said that during the war the belligerent nations expended sums considerably in excess of the gold in their possession. He compared Great Britain’s gold reserve of £60,000,000 at the beginning of the war with the £10,000,000,000 which that country spent during the period of the war. The comparison here is between the gold reserve and the note issue. The comparison di-awn by the honorable member would be all right had Great Britain issued notes to the extent of £10,000,000,000 against a gold reserve of £60,000,000. But she did not do so, and consequently the conclusions drawn by the honorable member cannot be sustained. I should like to know whether, if this gold is shipped from Australia, a further £15,000,000 in notes is to be issued. One would think that if we got rid of that amount of gold we should cancel notes to the same extent.

Mr Scullin:

– This bill does not say that the Government will issue a further £15,000,000 in notes.

Mr HUNTER:

– I am aware of that; but it gives the bank the power to do so. If the gold is shipped, the bank will be left with £45,000,000 in notes without any backing at all, other than the problematical securities which may be given to the bank by the Government. If it were not for the clause which provides that the gold is to be taken by the Government, we might imagine that the Government intended to get another £15,000,000 in sovereigns, and keep it in order to maintain the gold standard.

Mr Mackay:

– The bank already has power to issue £60,000,000 in notes.

Mr HUNTER:

– That is so, and consequently there is no necessity for this clause. If it is negatived, we shall remain on the gold standard ; .and consequently, if gold is shipped from Aus.tralia notes to a similar .amount will have to be cancelled.

Sitting suspended from 6.1-i- to 8 p.m.

Mr HUNTER:

– The Government has informed us that it has introduced this hill chiefly because we are passing through a time of national ‘emergency. I contend that it is at just such a time that the best brains of the country should be mobilized in the production of a scheme which would provide a solution of our difficulties. I ask members of the Government whether, seeing that this bill is merely part of the Government’s newfinancial policy, that policy is the product of the best financial brains of Australia. Has it received the endorsement of those persons who, by virtue of training, education, and experience, are alone qualified to speak authoritatively on monetary policy and finance generally? If the Government can honestly assert that its proposal for departing from the established practices of banking and finance has received the backing of the best financial authorities in this country, then it can claim to have a good case. We know that this policy has not been tried in any other country. On die face of it, it appears to be a good way ‘of evading one’s indebtedness. We hear a great deal at the present time about France, and what she has done. Honorable members opposite have claimed that, because France inflated her currency, it would not hurt us to do the same with ours. However, if it is good enough to follow France in one thing, it is good enough to follow her in others, and I remind honorable members opposite that the average wage in France is 19s. a week. If they wish .to follow France in regard to currency, let them tell their constituents that they wish to follow France to the extent of reducing the average wage in this country to 19s. a week. Let them “ go the whole bog “.

Some honorable members opposite have seized the opportunity presented by the introduction of this bill to attack the gold standard. There is nothing sacred about gold, which is only a form of goods. Instead of having notes backed by gold, it would be quite as effective to have them backed by any other form of goods, provided those goods were readily marketable, were recognized as standard, and did not fluctuate in price. Gold has been fixed upon by those countries which have adopted the gold standard because it is easily negotiated, is universally acceptable, and does not vary in price. For the settlement of international claims, gold is practically the only universally acceptable medium. For our internal currency we can use anything we lake. We can use I.O.U.’s, or shin plasters, as was done in the country districts in the early days; but for the purposes of restoring the balance of trade between two countries, only two things are acceptable: goods on the one hand,, or gold, which is a form of goods, on the other.

There is nothing wrong with this clause. It is right that the Commonwealth Bank Board should have entire control of the issue of notes, but it is also right that the Bank Board should be entirely free of political control. The whole object of the Government’s financial policy is to get the board under its control. We have heard a great deal from honorable members opposite about the people’s bank. In days gone by we were told that if the people controlled the national finances through a national bank everything would be right; yet no bank has been attacked more persistently or more strongly by members of the Government than has our own Common. wealth Bank. Only the other day the Treasurer renewed the attack in a statement issued in Adelaide. He said that the bank was not independent, but was taking its orders from the Bank of England. He knows that the charge is not true, but at any rate, when it comes to taking advice, the only sort of advice worth taking, I repeat, is that of men whose training and experience fit them to give it. The Commonwealth Bank would be quite right in accepting the advice of the financial leaders of the world, as represented, by the Bank of England authorities. The bank board would not be right in taking the advice of theoretical financiers who know nothing of their subject except what they have read in fanciful articles or treatises. Let us be guided by the opinions of experienced men, rather than those of theoretical faddists who have written the books so freely quoted by some honorable members opposite. This is a time of financial stringency, and we should not now seek to make changes in our monetary policy, but should rather stick to approved methods. The time to make changes is when every one is prosperous, and when, if a mistake be made, it can be remedied before great damage is done. When, as now, we are right up against it, the Government should not introduce drastic alterations of the kind contemplated in this measure.

Mr ELDRIDGE:
Martin

.- As an amendment to clause 6 I move -

That all the words after “ thereof “ be omitted.

The clause would then read as follows : -

Section 60 (k.) of the Principal Act is amended by omitting sub-section ( 1 ) thereof.

Earlier in the debate I offered the opinion that neither inflation nor deflation is prevented by the maintenance of the gold standard. I remind honorable members that the theory has been well tried out in Great Britain. The English Bank Act of 1844 provided that for every bank note, issued above £14,000,000 - a so-called fiduciary issue, by the way, for which the Bank of England held securities - an equivalent was to be held in gold coin or gold and silver bullion. This is known as the gold par method, a definition of which may be stated in the following terms : It is a system of regulating a paper currency on a basis designed to prevent the issue of inconvertible paper the moment there is the smallest premium on gold; that is, so soon as a paper note for £1 can buy only 19s. 11-Jd. worth of gold. If we consider this proposition, the first thing that presents itself as worthy of notice is that the theory begins by presenting two methods each different from the other. The first method makes the issue of currency dependent on the quantity of gold, while the second makes the issue dependent upon the price of gold. Statements have been made in this House to-day and at other times which, according to the suggestion of Une honorable member for Maranoa (Mr. Hunter), indicate that anything which attacks the gold standard is undoubtedly sacrilegious.

The speaker who preceded me was kind enough to hint that we of the group with which I am associated base our opinions on the theories of persons who, apparently, are not considered politically respectable. We make no pretence of enunciating or following the theories of financial experts of the type of Sir Otto Niemeyer or his like but since authorities have been challenged, I may be permitted to quote from a work of J. S. Hecht, a Fellow of the Royal Economic Society of Great Britain, and a man with a world-wide reputation as an economist. He has written a book called Unsolved Problems : National and International, from which I quote as follows: -

Assuming that a country’s production is stable and that the quantity of gold available is doubled (which might conceivably have happened before the industrial age), the issue of bank notes is doubled. The value of money has fallen by approximately 50 per cent. The currency has been inflated despite the Bank Act. Let us now assume that a country’s output of exchangeable commodities is doubled, while the quantity of gold available in that country remains the same, which might certainly happen in our day. The issue of bank notes cannot be augmented, so that unless an alternative currency is available, or unless the public reverts to barter, the purchasing power of money must rise. The convertibility of bank notes into gold has not prevented deflation.

But let us test these conclusions by what has actually happened. During the nineteenth century, with its development of machine production, the quantity of exchangeable commodities increased infinitely more rapidly than the supply of gold. In the 50 years, 1878-1028, “trade, as reflected by turnover through the London Bankers’ Clearing House, increased from £5,200,000,000, to £44,200,000,000, while our gold assets remained practically stationary.” Why, then, under these conditions, and particularly since they coincided with a fall in production costs, did deflation not occur? Simply because the bankers circumvented the Bank Act. It resorted to the use of cheques, bills of exchange, postal orders, stamps, and other currency, which “ made money more efficient,” even if they did not “ create credit,” and which, by replacing legal tender, increased in effect the issue of currency. For example, “ already in 1804, coin and notes were used in only 3.2 per cent, of the transactions on the London banks, against cheques and bills 96.8 per cent. In 1881, the respective proportions were 2.77 and 97.23,” while nowadays “ nearly 99 per cent, of our trade is transacted by means of bank credit.” Far from prices falling during the nineteenth century, we know that they tended to rise, and that this was inevitable under the regime of economic liberty. The latter, and not the increased use of cheques, &c. was the cause of this inflation. The growth of bank notes was merely an effect of a greater output of exchangeable commodities and of their higher price. A larger supply of currency became essential. Even had prices fallen considerably during the nineteenth century, more currency would have been required, and the fact that the quantity of currency increased immeasurably more rapidly than prices rose goes to prove that there is no connexion between the use of bank credit and inflation. Similarly, the issue of masses of currency notes during the war was not the cause of the rapid inflation. The Bank Act is ineffective, therefore.

While on the subject of authorities, I desire to state that, if I and my colleagues have been traduced in the press of this country as inflationists, repudiationists, and the like, this House, at any rate, might be interested to learn that we have also received testimonies of respect and commendation both from England and America.

Mr Archdale Parkhill:

– What about Russia?

Mr ELDRIDGE:

– No, we have not yet received any from Russia; but, no doubt, if the people of that country are even only a little bit more reasonable than the honorable member who has just interjected, commendation from that country is also probable. Only to-day my esteemed colleague, the honorable member for Werriwa (Mr. Lazzarini), received a letter and publication - which were opened only half an hour ago - from W. H. Wakinshaw, M.A., a noted English publicist, whose name is familiar to most persons who have studied financial problems. He is the author of that splendid book entitled. The Solution of Unemployment, as well as a more recent publication called The Golden Crucifixion of John Bull. The publications embody entire support to the views which I have offered, perhaps somewhat imperfectly, in my endeavours to place them before the committee. I do not propose to say any more about the publication, but I think I may be permitted to read the letter to which I have referred. It is from London, and - I say this for the benefit of those always hankering after respectability - from a man who is a Master of Arts of the Oxford University. Mr. W. H. Wakinshaw, writing from 6 St. Andrew’s Square, Surbiton, Surrey, on the 25th March, said -

  1. H. Wakinshaw, 6, St. Andrew’s Square,

Surbiton, Surrey,

England. 25th March, 1931.

Mr. H. P. Lazzarini, M.H.R.,

Canberra,

Australia.

Dear Sir. - I see you are reported in the English Daily Mail as proposing an amendment to make illegal the spurious currency of bankers’ bastard money.

I, of course, agree with your idea, and am sending you a pamphlet upon which I have had correspondence with one or two of your principal statesmen in Australia, not excluding Mr. Lang.

I am,

Your faithfully, (Signed) W. H. Wakinshaw.

I have specified my amendment, and in view of the fact that the Treasurer (Mr. Theodore) has himself boldly declared in favour of the abandonment of the gold standard, I sincerly trust that it will meet with the acceptance and approval of the right honorable the Prime Minister.

Mr SCULLIN:
Prime Minister · Yarra · ALP

– I cannot accept the amendment of the honorable member for Martin (Mr. Eldridge) as it would defeat one of the purposes of the clause. The clause consists of two paragraphs, one of which relates to the deletion of sub-section 1 of section 60k of the principal act, which provides for a gold reserve and the other limits the value of notes which the board may issue to £60,000,000. The effect of the amendment would bc to remove that limitation, which is not the intention of the Government. We believe that there should be a statutory limitation of the note issue. The statutory limitation to-day is that it shall not be greater than four times the value of the gold reserve. As about £15,000,000 worth of gold is held by the Commonwealth Bank the issue of notes is thus limited to £60,000,000. The bill gives the Government power to acquire the gold now held in reserve, but it also imposes a statutory limitation on the note issue of £60,000,000. It does not add to or take away from the authorization which the Commonwealth Bank Board holds to-day.

Mr Maxwell:

– On what principle is the amount of £60,000,000 fixed?

Mr SCULLIN:

– I would not say that a principle is involved, but there is a practice. The position that the Commonwealth Bank Board has taken up is that it has already shipped as much gold as it can consistent with its statutory obligation to maintain a gold reserve of onefourth of the note issue. That really fixes the amount that the board believes it ought to be authorized to issue at £60,000,000.

Mr Francis:

– Four times the value of the gold in reserve represents £60,000,000.

Mr SCULLIN:

– Yes, and that is what it can issue at the present time. The board has that statutory right. This bill does not increase the note issue to £60,000,000, but simply leaves the power of the Commonwealth Bank Board as it is to-day.

Mr Mackay:

– Will that limitation of £60,000,000 cover all issues?

Mr SCULLIN:

– It covers the issue provided for under this measure. It has nothing whatever to do with the Fiduciary Notes Bill, in which provision is made for the issue of £18,000,000 worth of notes. That would be a separate statutory provision. The Commonwealth Bank Act, which this bill amends, empowers the board to issue notes, butsubject to the gold reserve limitation.

Mr Gregory:

– If both bills were passed could £78,000,000 worth of notes be issued.

Mr SCULLIN:

– Yes, but the amount would not necessarily be £78,000,000.

Mr Bell:

– Why not obtain power under this bill to issue £78,000,000 worth of notes.

Mr SCULLIN:

– -If the honorable member will assist in that direction I shall give the matter consideration.

Mr Bell:

– I certainly will not.

Mr SCULLIN:

– Why does the honorable member make such a suggestion if he is not willing to assist. The honorable member is confusing two measures. This bill is merely to give the power to acquire gold to meet an emergency. It is not the intention or desire of the Government to use it as a subterfuge to deal with the note issue. The Government frankly and boldly provided for a fiduciary note issue in a separate measure.

Mr Eldridge:

– Why this limitation?

Mr SCULLIN:

– I have already indicated that there should be a statutory limitation as is provided in the principal act. If we remove the gold reserve we should limit the issue of notes. I do not think it desirable or wise to leave the way open for an unlimited issue.

Mr Eldridge:

– Will the right honorable gentleman accept an amendment for a higher figure ?

Mr SCULLIN:

– No ; the Government has gone carefully into this matter and the position is as I have stated. The honorable member for Werriwa (Mr. Lazzarini) raised the point that an emergency may arise and that if a run on the banks occurred the power to issue notes of greater value might be required. With that contention I entirely agree; but if such an emergency should arise it would be the duty of this Government, or of any other Government, to come to Parliament and ask for that emergency power, and, if necessary, I am sure it would be granted. At present it isnot necessary to give the board any greater power with respect to the issue of notes than it already posseses. I trust the amendment will not be carried.

Question - That the words proposed to be omitted (Mr. Eldridge’s amendment) stand part of the clause - put. The House divided. (Chairman - Mr. McGrath.)

AYES: 49

NOES: 3

Majority . . . . 46

AYES

NOES

Question so resolved in the affirmative.

Amendment negatived.

Question - That clause 6 be agreed to - put. The committee divided. (Chairman - Mr. McGrath.)

AYES: 29

NOES: 21

Majority . . . .8

AYES

NOES

Question so resolved in the affirmative.

Clause agreed to.

Clause 7 agreed to.

Title agreed to.

Bill reported with an amendment.

Motion (by Mr. Scullin) agreed to -

That the bill be recommitted for the reconsideration of clause 4.

In committee (Recommittal) :

Clause 4 -

After section sixtyh of the principal act the following section is inserted: - “60ha. - (1. ) Any sum payable, in the

Commonwealth or in any Territory under the control of the Commonwealth, under any contract or agreement, whether made before or after the commencement of this section, may be paid in Australian notes or Treasury Notes issued under any other act, notwithstanding any provision in the contract or agreement requiring payment in any other currency. (2.<) Any provision in any contract or agreement, under which any sum is payable in the Commonwealth or in any Territory under the control of the Commonwealth, which requires the payment of any further or additional amount by reason of the rate qf exchange existing with any other country shall, subject to this section, be void and of no effect. (3.) A further or additional amount of which payment is required shall be deemed to be required by reason of the rate of exchange existing with another country if in the opinion of any Court of competent jurisdiction it is in fact required for that reason, notwithstanding that in the contract or agreement that reason is not expressed or some other reason is expressed. (4.) The Governor-General may, by notice published in the Gazette, exempt from the operation of sub-section (2.) of this section contracts and agreements, of such class as is specified in the notice, whether made before or after the date of publication of the notice.”.

Mr SCULLIN:
Prime Minister · Yarra · ALP

.- I move-

That the words “ contracts and agreements, of such class as is specified in the notice “ sub-section (4), proposed new section 60ha be omitted with a view to insert in lieu thereof the words “ any contract or agreement specified in the notice, or a contract or agreement of any class so specified “.

Last week the Leader of the Opposition (Mr. Latham) drew attention to the wording of this provision, and suggested that it should he made clearer and more specific. I promised that I would look into the matter; and the new drafting is designed to make the provision more definite than it was in its original form.

Amendment agreed to.

Clause as amended agreed to.

Bill reported with a further amendment; reports - by leave - adopted.

Bill - by leave - read a third time.

page 1343

TARIFF

In Committee of Ways and Means: Consideration resumed from the 26th March (vide page 744), on motion hy Mr. Forde -

That the schedule to the Customs Tariff 1921-1930 be amended as hereunder set out (vide page G82).

That the schedule to the Excise Tariff 1021-1928 be amended as hereunder set out [vide page 740).

Item 1 (Ale and other beer, cider and perry, spirituous).

The CHAIRMAN” (Mr MoGrath:

Under the Standing Orders as amended last week the time allowed for this debate is, in the case of the Leader of the Opposition 60 minutes, and in the case of all. other honorable members 45 minutes.

Mr LATHAM:
Kooyong

.- There have been introduced, I believe, eight sets of tariff proposals. The first was brought down with a flourish of trumpets, and flamboyant promises of increased employment throughout Australia, in November of the year before last; and now, after many months of delay, this committee actually has an opportunity of discussing the different items in the form that they have ultimately assumed, after having been modified, amended, altered and, in some cases, abandoned.

In dealing with the tariff the committee has to discharge one of the mostimportant functions of this Parliament. A tariff discussion affords an opportunity to consider the general economic position of the country, particularly as that position is affected by the tariff. We are all only too painfully aware of the present economic position of Australia. We know that unemployment is more serious and severe than it has ever been, and that the promises of the Minister that employment would be largely increased as a result of the tariff have dwindled until they have become rather an unconvincing allegation that but for these proposals unemployment would undoubtedly have been worse than it is to-day. Evidence in support of that so stoutly made allegation has not yet been adduced before this chamber. The mere making of an allegation, even when a Minister or an Assistant-Minister says it three times, does not of itself prove that that allegation is true. We are all aware that the fall in world prices has a great deal to do with the present unfortunate economic position of the country. Whatever may be his views on the tariff, no honorable member with any sense of responsibility will credit the whole of any particular improvement or depression to the operation of the tariff. There is no doubt that a tariff has a profound influence upon the general prosperity of the community. It is one of the most important economic instruments within the control of any Parliament. It affects not only the industry of the country where its direct effect is felt, but also social conditions generally - using the word “social” in its widest significance - and the very character of the people of the country.

A tariff schedule consists of a long list of items. In the form in which it is placed before the committee this particular schedule extends to 62 pages. Doubtless there will be differences; of opinion on both sides of the chamber with regard to many items. Even those honorable members who agree upon general tariff principles will occasionally differ as to their application. On this occasion I do not propose to deal with any of the items of the tariff. There will be opportunities to do that during the course of the detailed discussion of the schedule, when it will be necessary to go into the effect of particular proposals. Some of them are very remarkable in their character. What may appear to be a more or less harmless and small specific duty sometimes turns out to be a duty of hundreds per cent. All of those details will have to be examined. I propose at this stage to limit myself to a consideration of certain general principles which, I submit, should be applied by the committee in the specific cases that are submitted in this schedule.

At first sight there appears to be a great deal to be said for the old orthodox freetrade doctrine. It is, prima facie, hardly to be expected that a national area, one which happens to be existing under a single government, should also be what I might term an economic area suited in its boundaries and character for the imposition of tariff barriers against other countries. Tariff questions are necessarily dealt with by the governing authorities of countries, on the basis of national areas. That fact gives the doctrinaire freetrader what appears to be a pretty good start in argument, and if the postulates assumed by him were accepted it would be difficult to avoid the conclusions that he draws from them. What are these postulates? Among them are at least four assumptions. First of all, there is that of the transferability of capital ; that is, the assumption that capital can readily be transferred from an area where it is used less economically, to one where it can be used more economically. We know in fact, that that assumption does not obtain; that all countries have a large amount of fixed capital assets which can be used only in the place where they exist. It is, therefore, useless to formulate an economic doctrine based upon such an assumption, which is not found to be true in the world of facts. Further, some economists appear to assume a complete mobility of labour. In their doctrines they regard human being3 merely as producing animals, as if they could be moved from place to place over the surface of the world to the particular spot where the application of their labour would produce the greatest economic results. That assumption is not in accordance with the facts of the economic world as we see them to-day.

Again, there are those who assume that free competition exists between industries and countries. We are all aware that the industries of many other countries receive assistance at the hands of governments in one form or another. It is accordingly useless for us to devise our economic policy as if there were free and unlimited competition, and as if our competitors in other parts of the world were receiving no assistance from their governments. We have to recognize the fact that there are in the world huge aggregations of capital which are tremendously powerful; that if we failed to grant protection to our industries it would be easy for these gigantic enterprises to overwhelm a relatively small industry in Australia by selling their goods very cheaply for a limited period, and then compelling the people of this country to pay any price that foreign enterprise chose to fix for the goods that they made and exported to Australia.

Finally, there is the frequently accepted assumption that the world must always be regarded from the economic point of view as a trading concern, in which all persons are actuated by the dominating motive of buying in the cheapest and selling in the dearest market. Unfortunately, we cannot assume that the world will always be at peace, and we know full well that there are other national impulses in addition to the economic one.

The tariff must, therefore, be regarded from the national point of view as well as from that which might be described as the economic point of view in the ordinary narrow sense of the term. What may originally appear to be an uneconomic point of view, may prove on a long view to be the one most conducive to the national well being, even economically. Accordingly, one of the objects of the tariff policy ought to be the protection of essential interests, and the establishment of essential industries in the country. In Australia there are not many such industries as to which questions arise. There is one which immediately springs to the mind, the vitally important iron and steel industry, which I am prepared to consider, from the point of view of national well being, on a long. view, and to pay something for having that basic industry established here.

Mr Gregory:

– All the people ought to pay for it through the medium of a bounty.

Mr LATHAM:

– That is a matter for consideration. The general principle, which I am stating at the moment, is that it is worth while for us to pay something for the establishment of such an industry. The questions to consider are the means and method, as suggested by the honorable member for Swan (Mr. Gregory), and also the amount that we are paying. The criterion ought to be that that degree of protection should be given the industry which will enable it to become established upon fair terms for those engaged in it, and for the community as a whole. The application of such a principle will necessarily lead to divergent opinions in particular cases, but, generally, I suggest, it is the principle which should be applied to what can fairly be described as an essential industry.

There are other industries which are suitable to the country which will provide varied employment, and which will assist to maintain a high standard of living for our people. It is under this heading that most dispute probably arises. There are some industries - as for example, those engaged on a large scale in the manufacture of goods from our own raw material - which we ought to be able to protect in such a way as to confer benefit, not only upon them, but also upon the community as a whole. In considering these industries, one of the most important matters to bear in mind is their magnitude. Small industries, however important they may be to the individuals engaged in them, cannot expect to receive the same consideration from Parliament as large industries, using a great amount of our own raw materials, giving a considerable amount of employment, and catering for a large local market.

In the case of the many articles for which there is a large consumption in Australia, if we were able by appropriate tariff provisions to securer-subject to some considerations which I shall mention later - the market for our own manufactures and our own people, it should then be possible to employ up-to-date plant, modern methods, to introduce large scale production, to give extensive employment, and actually to reduce costs for the benefit of the public, as against the imported article. It must not, however, be thought that every proposal for protecting an industry which is in existence in Australia, is a desirable one. Each must be considered on its merits. There are some who say that no one can be a protectionist unless he supports every duty that happens to be proposed on a particular occasion. I do not adopt that attitude. By unwise protection, we may do ourselves very great harm indeed…

All honorable members are acquainted with the inquiry that was _ made into the Australian tariff in 1929, ‘by five prominent economists. At page 6 of that report, in the summary of conclusions, there appear the following words: -

We consider that further and uneconomic increases in the tariff are probable, unless some action is taken to apply economic principles to the tariff. Our conclusions on effects indicate that the total burden of the tariff has probably reached the economic limits, and an increase in this burden might threaten the standard of living. It is important, therefore, that no further increases in, or extensions of, the tariff, should be made without the most rigorous scrutiny of the costs involved.

That pronouncement was made as the result of the most complete inquiry, from an economic point of view, that has ever been made in Australia. It was made before these tariff proposals were introduced, and I ask honorable members in considering them to make the rigorous scrutiny of the costs involved which is invited by these economists. It is important that an instrument in part devised to improve and maintain the standard of living should not be allowed to threaten the standard of living of the people generally or of any important section of the community. Some industries are capable of being made largescale industries for the production of goods for which there is a large market, and in respect of which the securing of that market to the local manufacturer ought actually to reduce costs. In recent years, I am glad to say, in quite a number of cases that has taken place. There are, however, a number of articles which can be made, and which ave imperatively required in Australia, but which can only be produced at a great increase of cost compared with the cost of the imported article. In the case of some of these articles, there is no real gain to the country in giving protection against importations. For instance, some heavy electrical machinery can be made with a great deal of effort in Australia, but only at a tremendous cost, and the payment of these high costs imposes a burden upon large groups of industries in Australia. Careful consideration, therefore, ought to be given to the placing of duties on machinery, and articles of this character, for which the local demand is relatively small, and when they can only be made locally at great cost, whereas they can be made overseas relatively cheaply, and particularly when the use of the Australian article which costs a great deal more than the imported article imposes overhead costs in the shape of interest and sinking fund for an indefinite term of years upon Australian industries generally. There are also many smaller articles which are really machines to be used in production. And here again we should be careful before imposing duties on articles for which the demand in Australia is relatively small, but which it is most important should be made cheaply available to producing industries.

I have said that we must consider costs in dealing with the tariff. I have felt that the attitude of mind of the Minister in charge of this tariff is such as almost to exclude questions of cost. It is, I suggest, quite wrong, in considering a tariff, to concentrate attention merely upon a , particular industry proposed to be benefited. . It is essential to consider the effect on the community as a whole; the effect on other industries, and the effect on costs in general. In 1929, in the report to which I have already referred it was said of the tariff as it then existed - that is to say, before these increases were made, that -

The final effect is to raise the general price level (excluding luxuries) by 10 per cent, above prices with a purely revenue tariff. Taking government assistance into account, costs of production in the export industries are raised 9 per cent, by protection. The effects of this cost are to increase the number of industries, and the volume of production which cannot subsist without the tariff or other assistance, lt leads to claims for compensating assistance and even to subsidies for exports. The cost of the tariff becomes u cause of its extension. Part of the tariff is required as a protection against its own costs.

When that stage is reached it is evident that the tariff is defeating its own object. Accordingly it is important to consider the effect upon costs of every item in the schedule, more particularly in relation to our great primary industries, which at the present time are, speaking generally, unable to produce at a profit. Wool, I am glad to say, has improved, but it is essential to the continuance of Australia as a producing country that we should be able to produce our leading primary products at a profit.

We cannot affect world prices. I suppose that the Minister for Markets (Mr. Parker Moloney) thinks that by holding a conference he is able to affect the world’s price of wheat. I do not know whether anybody else harbours such a delusion. We are unable to change world prices; we must accept them, although by co-operative marketing schemes we may possibly improve our chances of getting the best prices. The costs of production represent the other end of the problem, and they are to a considerable extent within our own control. Whether we like it or not, the cost of production of wool and wheat must bebrought down if we are to continue to live at anything like our present standard. It is ‘useless to think that by subsidies we are able to help all the primary exporting industries of Australia as a permanent measure of assistance. I agree that from time to time special help must be afforded to meet particular circumstances of distress, but if prices remain substantially where they are to-day there must be a reconsideration of our whole economic structure. It is equally useless to think that by imposing taxation of any character on other industries already heavily taxed we can obtain money from the rest of the community to subsidize our export industries upon a scale which would be required to make them profitable if present costs are maintained. We are unable to increase our wealth by taxing ourselves, and, therefore, in these primary industries it is essential that the costs of production must come down. That i3 a leading consideration which must be borne in mind in relation to some of the great increases which this tariff makes.

It is not unimportant to remember that this is the first substantial tariff which the Labour party has introduced. With the exception of one small schedule introduced by the late Mr. Frank Tudor, the whole of the tariff protection that lias been given to Australian industries since the establishment of the Commonwealth has been afforded by the party on this side of the House. This tariff, however, makes enormous increases in the duties already existing, and careful consideration must bc given to many of them in relation to costs.

Another element in this tariff which is of the utmost importance is its tendency to create monopolies. I am aware that in some cases monopolies are justifiable in the interests of the public. For example there is no sense in having competing water supply systems in the same city, and we need only one postal service. Other examples could be cited. I am also aware that modern methods rather tend towards the merger into one concern of several enterprises, and that considerable savings in overhead costs and the like may be effected by such mergers and by enlarging the scale of production. But monopolies must always be viewed with suspicion. The people are not able to protect themselves against a monopoly.

Apart altogether from the constitutional limitations upon the legislative powers of this Parliament, they cannot be protected against monopolies by price fixing schemes, speaking generally. Their best protection is the possibility of competition, and they must be protected not only in relation to prices, but also in relation to quality. In an examination of this schedule I propose to consider carefully any proposal which savours of monopoly.

The inter-imperial aspect of the tariff is yet another element to be borne in mind. I believe very strongly in using a tariff as an instrument for promoting Empire trade. That has been the policy of this Parliament for many years past. Sometimes complaints are made that there is not sufficient reciprocity, in particular from Great Britain; but we receive so many benefits from that country that I am not concerned to make a commercial balance-sheet of such a matter. I believe that we shall serve our own final interests in the best way by extending the fullest possible preference to Great Britain, having regard to the other considerations I have already mentioned. In some eases in this schedule increases have been made in the general tariff and in the intermediate tariff, which on the face of it, would seem to extend a preference to Great Britain ; but the effect of the preference is abolished because the British rates are so high that it is impossible to export many British goods to Australia. In this connexion it is important for us to remember that we must do everything we can to retain the goodwill of Great. Britain, which we have enjoyed for so many years. Some items in the tariff imperatively demand reconsideration from that angle.

This tariff has gone so far in some directions as to invite retaliation by other countries. Although there, may be no retaliation by a country as such it may still be exercised by the merchants and the public of that country. All honorable members are aware of instances in which that has already occurred. Having regard to the dependence of Australia upon export trade, and to the importance of finding, and not only finding and maintaining, but also extending, markets for our primary products, we should be careful indeed before we do anything to antagonize, without fully understanding the risks we are running, the customers for our wool, sheep skins, metals, hides, wheat, dairy produce and so forth. Unfortunately some proposals in this tariff have already produced definite antagonistic reactions in other parts of the world.

For the purpose of rectifying the adverse trade balance the Government has imposed many embargoes by proclamation - it is questionable whether the rate of exchange would not have operated sufficiently by itself - but Parliament has not had nor will it have an opportunity to discuss those embargoes. The imposition of a total prohibition of the import of a particular class of goods is more important than the placing of a duty upon them. This House cannot be prevented from discussing the imposition of any duty, but no such opportunity is given to us to arrive at a determination in regard to an embargo or the complete prohibition of the importation of any particular class of goods.

Finally I refer to the revenue aspect of the tariff. The Commonwealth depends very largely for its revenue upon the tariff, and it has always been necessary for this Parliament to compromise to some extent between protective and revenue duties. We have desired to give protection to our industries, and, at the same time to obtain revenue for the services of the Commonwealth. Necessarily, there is a certain inconsistency between these two aims and, accordingly, it is impossible to justify from a purely theoretical point of view many of the provisions in the tariff. We are unable to ignore the revenue aspect. The receipts from the tariff and excise duties have decreased very greatly in recent years, and that is one of the direct causes of the financial difficulties in which the Commonwealth finds itself at the present time. I am satisfied that a reduction of some of the duties would lead to an increase of revenue and it is important that that should be borne in mind by the Government during the discussion of the individual items. Some duties, which were imposed purely for revenue purposes, have been fixed so high as to bring about a marked reduction in the consumption of the articles to which they relate. The items should be reconsidered in the light of our revenue needs, and I hope that will be done by the Government.

I repeat that each item must be considered on its merits. It will be the duty of the committee to examine the effect of duties, not only upon the industry directly concerned with the manufacture of the articles affected, but also upon other industries, the general cost of living, and the revenue. In respect of a particular item, one of these considerations will carry more weight than the others, and, accordingly, there will be a division of opinion even amongst those who adhere to the same general tariff principles. I hope that the Government will not seek to have the tariff treated as a party measure. Generally speaking, a considerable amount of latitude has been allowed individual members in the consideration of past tariff schedules, and I ask the Government not to regard this schedule merely from the party point of view, but to allow its own supporters to vote as they think proper on each item. There may be some matters upon which the Government feels that it must take a stand, but, generally, the discussion of a tariff should be a series of separate debates on the merits of the various items, and the view of an honorable member on one item should not necessarily determine his attitude on another.

These are the general principles which I suggest should be applied in the consideration of this schedule. The application of them will lead to the approval of some proposals and to the rejection or modification of others. I ask honorable members to deal with each item, not only in the light of its probable effect upon the industries directly and particularly concerned, but also - and this is

Most important at the present time - from the point of view of the Australian people as a whole.

Mr GREGORY:
Swan

.- It is quite apparent that the people of the cities have not yet learned the lesson that experience should have taught them. In every past tariff discussion some honorable members have emphasized the need for making Australia self-contained. As if any country could be completely self- contained! We are told that we must build up our industries so that Australia may be fully prepared and independent in the event of war, and for this purpose we must penalize the country and compel its people to pay tribute to the manufacturers. How many honorable members read in the Argus of Saturday last an article headed “ The Tragedy of the Mallee “ ? It contains a moving description of the trials, hardships and destitution among the settlers in the Mallee district of Victoria. The writer tells of the farmer, gaunt, weary and heartbroken ; of years of hard labour and loss of capital; of vanished hopes and prospects; of a wife, tired and weary of life and never ending toil, with a heart scarred and broken; and of children ragged, unkempt, bootless, and often hungry. He said -

There are people in the Mallee who will not talk of their distress. A woman fainted in the street of Manangatang not long ago. It was not until she had been taken to the Coffee Palace and given a meal that she admitted that she had had nothing to eat for two days. When a visitor opens the Mallee gate, the housewife sends the half naked children away out of sight to play and makes a brave show of her own meagre attire. The mother of a family into which the special representative of the Argus was welcomed in this manner, and where there was no visible sign of the misery that was eating out her heart, had already confessed to the wife of a neighbour that she believed that her brain was giving away under the strain, for she feared that her eighth child, about to be born, would come unwelcome into a world of hunger and want. The settler himself, who has so far refused sustenance coupons, talked about his horses.

These are the people to whom the Government said “ Grow more wheat ; produce and export so that with your produce we may pay our debts abroad and live like princes”. The farmer in the Mallee, in the Riverina, in South Australia, and in Western Australia, responding with faith in this Parliament, produced a noble and record harvest. He produced the food that fed the people ; he produced the wealth to pay our debts and continue our extravagance; he produced the real gold of the nation ; and, as the Argus contributor wrote -

He watches with tearless eyes, utterly wretched, his wife, his boys, and girls staggering on to winter often without enough food, and always without enough clothes.

Thank God, conditions in Western Australia are not so bad; but the farmers from that State are still looking forward for some measure of fulfilment of the promises made to them by this Parliament. I know of men who have been on their holdings for 30 years, and have developed magnificent properties, yet today are in the Insolvency Court. Tragedy after tragedy of that character has occurred in the country districts. Recently a farmer in Western Australia, who has been 23 years on the land and. whose son, aged 21, had never visited the city, was so distracted with the thought of his hopeless prospects that he shot his wife and son and then himself. Minor tragedies are occurring day after day. Hundreds of men after years of labour and the expenditure of ample capital are to-day hopeless, weary, and dejected, facing insolvency and destitution with, a bitter curse against those primarily responsible. These settlers battle along, and of every £100 they spend at least £50 is more than they should spend under economic conditions ; of every £1,000 they spend in the development of their properties fully £500 is in excess of what would be necessary if we got rid of wretched socialistic conditions and permitted economic freedom. These people - the nation’s hope and pride - are sacrificed to make a Roman holiday for the dwellers in the cities.

What has this Parliament done to foster the primary industries? Except for the activities of the Bureau of Science and Industry, this Parliament has done nothing; in the main, they are left to the States, upon which the legislation of this Parliament has placed a stranglehold. What has this Parliament done to destroy the primary producer? We tax everything he uses; we build up costs upon costs. First we tax his land, then we place high duties on the tools required for clearing and on his wire and netting, in order that bounties may be paid here and there to secondary industries. For the same reason he is required to pay extra for fencing material and roofing iron. The Minister for Trade and Customs boasted of the high wages paid to those engaged in the manufacture of galvanized-iron, and gloried in the embargo placed on imports so that the people engaged in that industry might enjoy a monopoly. On ploughs, scoops, harvesters, and hinders, on every implement and every part thereof, duties of 100 per cent., and even 200 per cent., must be paid. Even on fertilizers there are special duties, as there are also on wheat bags, twine, and needles, and even on the farmer’s clothing, if he can afford to buy any. Even on phosphatic rock, sulphur, wheat and wool sacks, a primage duty of 4 per cent, is imposed. Yet special concessions are always being sought for the secondary industries. Having increased the cost of every requirement on the farm, having raised the cost of living and of material used in the construction of railways, we are then forced to increase the freight charges. The railway systems have not shown a profit since 1914. Since that year freights have increased 60 per cent., and yet the systems have lost over £50,000,000. This has been the result of one great socialistic experiment. In connexion with the administration of ports and harbours, the farmer is penalized. We do our best to prevent shipping from coming to our ports; we place an embargo on imports as if we were determined not to trade with any other country. Some time ago I asked that pyrites be admitted duty free. That would have reduced the cost of fertilizers, and the vessels bringing pyrites to our shores, rather than return empty, would have offered cheap freights on our exportable productsMy request was refused.

Although we have placed an embargo on the importation of machinery and galvanized iron, arid a primage duty on phosphatic rock and jute goods, the Government still says to the primary producer, “Produce, produce. Give us something that we can sell overseas so that we may pay our debts.” It has done nothing to help the farmer; but it has made his costs of production the highest in the world. What is the influence here that puts the interests of the manufacturer first ? Not only have the farmers to compete in the markets of the world, but they have to work without tha shelter that is given to workers in other industries. Rut the worker also must feel 1 severely the effects of huge imposts which rob him of the value of his wages. Why he has not rebelled must be because he fails to see that under this method of indirect taxation he often pays from 300 to 400 per cent, more than is paid by workers in most other countries.

The farmer, the ‘ miner and the woolgrower produce the wealth of Australia, but we have done nothing to help them. Instead, we have been doing our best to kill the goose that lays the golden egg. We have been living in a fool’s paradise. By juggling with finance, by the wasteful expenditure of loan moneys, by the granting of concessions to every type of lobbyist, by socialistic experiments that hundreds of years ago proved disastrous, and by placing staggering burdens upon the real producers of wealth we have almost caused the whole nation to become bankrupt. The city dweller has not yet realized the intensity and completeness of the folly of our policy. The sufferings of the farmers in the Mallee have been depicted in the Argus. But similar conditions prevail in the other States. The realization of this should act as a vital flame and a burning torch to the conscience of the people of the cities, who for many years have legally robbed and despoiled the country people.

Parliament is largely responsible for this, for it should take to itself the real control of the tariff. It is not proper])’ the duty of any Government to place taxation upon the people except with the consent of Parliament. In my opinion we have been treated abominably in regard to these customs schedules. The first schedule was tabled eighteen months ago, and since then twelve additional schedules further increasing duties have been tabled, but this is the/first opportunity we have had to deal with them. That is disgraceful. It is unjust and unfair that taxation should be imposed without our approval. The power to collect new customs duties should be taken away from the Government until they have been approved by Parliament. I advocate an immediate amendment of the Customs Act to provide for this change. Since 1920 altogether to much power has been given to the Minister. Ministers have imposed embargoes on agricultural machinery, galvanized iron and other commodities, and Parliament has been powerless to prevent it. Heavy primage duties have been imposed on phosphatic rock and jute goods, and even now no effort is made to secure parliamentary approval. It was never intended that the Minister should exercise such enormous power, and in my opinion it is wrong for him to do so. Power has even been given to the Minister to alter the customs classification, and some extraordinary decisions have been given in this connexion. When we had high grade fertilizers coming here from abroad, fears were expressed that certain Broken Hill interests and certain gas companies might be injuriously affected in regard to the disposal of their by-products, and the department, in consequence of representations made to the Minister, classified fertilizers as chemicals, which brought them under a much higher rate of duty. The by product of a smelter was deemed of greater importance than high grade fertilizers. One may well ask . where the influence comes from. Nitro phosphates, for instance, have to meet a duty of 33 per cent, at Fremantle, including primage, whereas in almost every country in the world fertilizers are admitted duty free. The variations in duties on goods classified under items 174, 404 and 415a have been astounding. Doll’s eyes have recently been allowed to come in free and certain ribbons required for the manufacture of dolls; but where remissions of duty have been absolutely necessary in the interests of the farmers, nothing has been done.

In 1925, a stupid alteration was made to the Customs Act,- which provided that Australian wool should he deemed to be British for the purpose of preference, but if there was a single unit of foreign material in the article the full duty became applicable. I have objected to this without satisfactory results.

In 1920, the Tariff Board was established. Previously an inquiry had been made into the methods of the Tariff Board in the United States of America. Although it was shown that the tariff duties in that country were conceived in an atmosphere of corruption, and that the proceedings of the board were inoculated with the venom and poison of fraud, cupidity, concessions, and the worst evils of political patronage, we slavishly followed the system in vogue there. Mr. Page, the Chairman of the United States of America Tariff Board for many years, has said in regard to the work of that body -

Lying campaign contributions, expensive and misleading propaganda, costly and expert lobbying, astute distortion of evidence and consideration enjoyed by men in big affairs are among the means at the disposal of big business for securing duties needlessly high.

Our Tariff Board was first created under star chamber methods. Evidence was heard in secret, and there was no requirement that it should be on oath. After a very great fight an alteration was made in that regard; but it is essential, if the board is to be free from political control, that the chairman should not be an officer of the Customs Department.

I should like all honorable members to read the peroration to the speech of Senator Massy Greene when he introduced his 1920 tariff. He spoke of the marvellous developments that would follow the operation of that tariff. He said there would be a big increase in business and we were told that there would be general prosperity after the imposition of the high duties then provided. The Minister said, “ The door of opportunity is open wide.” I do not think that even he realized how wide open he made it. But when we are discussing such items as the duties in this schedule on timber, glass, galvanized iron, and fencing wire, there will be some surprising revelations that will show how wide the door of opportunity was thrown open and the vicious influences that have entered into our political life. Where is the prosperity that we were promised?” The enthusiasm of the Minister of the day, which has been reflected in his successors, has built a staggering burden for the primary producers of every kind. In consequence of that tariff, and others which have followed it, we have practically destroyed the mining industry of Australia, and the farmers and woolgrowers are heading for bankruptcy. This means, of course, that the nation is also becoming bankrupt with consequent increase in poverty and unemployment. Over and above all this the effect of our legislation and its administration has been to destroy competition. When we destroy competition we destroy one of the finest assets of a nation.

We have wonderful deposits of copper, lead, zinc, iron, wolfram, tantalite, asbestos, mica, and other minerals in this country, but we can do nothing with them. We also have immense lodes of low grade goldbearing ore, but we can do nothing with them. Only this morning I noticed a report in the press to the effect that the Mr ‘Morgan Mine was1 closing town after having produced £16,000,000 worth of ore. There is still an abundance of fairly high grade ore in the mine. If the deposit were in any other country in the world - even if it were in America where wages are higher than in Australia - employment would be provided for between TOO and 800 men, and these would be carrying from 5,000 to 6,000 other men on their backs. It was to production of this description that we owed our past prosperity. If we could even now work some of these low grade mining propositions, Ave should be able to revive this languishing industry. God has endowed this country with marvellous mineral wealth, yet mine after mine is closing down and more men are being thrown out of employment.

About a fortnight ago I quoted a number of statements by an American mining engineer to the effect that in America they were mining, rat a profit, many minerals of a lower percentage than those which are deemed to be unprofitable in Australia. One of the reasons for this is that mining machinery costs 100 per cent, more here than in the United States of America. Surely this must indicate to us that there is something seriously wrong. Our people have energy and ability, but their initiative has been destroyed. Some of the finest assets of the nation have been rendered valueless by the tyranny of trade unions, by our foolish tariff policy and by the interference of Parliament in industrial matters.

Just as we owe our past prosperity to the primary producers so our only hope for future prosperity is in them. In spite of all the assistance that has been given to our secondary industries through the years not one of them can to-day stand the cold blast of competition. The

Leader of the Opposition referred to the iron and steel industry, which was started with great enthusiasm. We were told that those financially interested in it did not want a bounty, a duty, or any assistance of that kind. They said that if they could not compete with the world they would cease operations. They told us that they had wonderful deposits of iron ore - far richer than the deposits of Great Britain - and the finest machinery in the world. They had every hope that the industry would succeed, but because of the socialistic conditions imposed upon them and the interference in their business by governments, they have come to this Parliament time after time for relief; and Parliament has granted every concession asked for by their lobbyists. How is it that we cannot make a success of these industries seeing that they are so successful in countries like America?

Mr Killen:

– They have the policy of payment by results there.

Mr GREGORY:

– That is so. Every employee believes that it is in his own interests, as well as those of his employer, to do his best to make the industry a success. All the workers do their best to make their own jobs secure, and in that way prosperity is assured, but here we have the employer and the employee at each other’s throat. In Australia those who bear the risks of fire, flood and drought, are compelled to pay the bill all along the line. The iron and steel industry is national in every sense of the word, and we should do our best to establish it successfully in Australia; but we are not going about it in the right way. To establish a national industry all the people should pay, and this can only be done by a bounty on production.

In May, 1929, Mr. Bruce said -

Two alternatives face Australia to-day. Hither we can resolutely attack our problems of reducing our costs of production and by so doing reduce our costs of living, expand our avenues of employment, maintain and augment our standard of living and increase our national wealth, or we can refuse to recognize the needs of the position and allow our national wealth to diminish and unemployment to increase until, faced with a national crisis, we are forced to reduce our standards of living and so the whole of our national life. Between these two alternatives can there be any hesitation?

Mr. Bruce recognized at that time that the policy that was being pursued was unsound, and lie warned the people that a national crisis was approaching. The crisis is now here. Yet we are continuing to do everything imaginable to make impossible the lot of the man on the land who produces the real wealth of the country. Extra duties and taxes are put on him in every direction. We have made it impossible for him to market his products at competitive prices and we are to-day reaping the results of our folly.

Mr Riordan:

– What does the honorable member propose to do about it?

Mr GREGORY:

– I propose to ask Parliament to realize the futility of this policy and to recognize that the control of industry by arbitration courts and restrictive legislation of every kind is not in the interests of the general community. It is foolish also to allow monopolies and combinations of various interests to fix prices and stifle competition. I have advocated these things for years, and, as I have remarked on more than one occasion, I should have been prepared to help into power any party that promised us relief through the tariff. The remarks of Mr. Bruce, to which I have just referred, are especially applicable to the Commonwealth at the present time. The national crisis to which he alluded is upon us, and such is our position that it is difficult to see how, in view of the crushing tariff burden on the primary producers, we are going to meet our obligations. I assume, of course, that the great majority of honorable members are honest enough to wish that the Commonwealth shall pay its debts. But how are we going to do it? Are we going to pay them by means of our secondary industries? They will not help us. I do not wish to see them destroyed, but I submit that they should bear their fair share of the economic burden that rests upon the people of this country. In the past they have not done that. Let me repeat that there should be no hesitation about adopting the alternatives mentioned by Mr. Bruce.

One of the things which we must do to extricate Australia from its difficulties is to get our mines working again. If production costs could be reduced by 25 per cent, hundreds of thousands of pounds would be readily available for investment in a large number of abandoned mining properties in Western Australia, which, owing to the high cost of production, have been closed down in recent years. If, in that way, we could ensure the employment of 5,000 miners I know from my experience on the gold-fields of Western Australia a revival in the mining industry to the extent mentioned would mean the employment of an additional 30,000 to 35,000 people in woodcarting for the mines, on the railways, on water supply schemes, in factories, and in various other directions.

Mr Nelson:

– No other industry would respond so quickly as mining.

Mr GREGORY:

– I agree with the honorable member. I have a small interest in a copper mine at Barrow Creek, but although the lode is a rich one it cannot be worked economically, because of the high costs involved. The honorable member for the Northern Territory must be well aware of the wonderful deposits of base metals in his constituency.

Mr Nelson:

– And gold also.

Mr GREGORY:

– I have a personal knowledge of the marvellous mineral wealth in the north-west of Western Australia, and I wish to emphasize how important to the Commonwealth it is to work those deposits. What will happen to Australia if, besides destroying the mining industry, we also continue these crushing tariff imposts on the farming industry? If the cost of production is greater than the value of the product then production must cease. Then why close our eyes to the danger ahead?

In recent years we have gone tariff mad. In Victoria in 1892 when the agitation for high protection duties was gathering strength, the late Mr. Deakin said -

If we are to follow some of the arguments that have been used on the other side, we shall have to haul down the national standard of protection, and hoist, in its place, the yellow flag of prohibition. We shall put this colony into commercial quarantine.

That is what we have done with the Commonwealth. By the imposition of prohibitive tariffs on a large number of items we have antagonized those countries which are our best customers. Do not honorable members realize that if we are to develop this country satisfactorily we must, subject to a substantial preference to the Mother Country, trade with the rest of the world, arid must have a favorable trade balance to the extent of £35,000,000 yearly in order to pay interest on our overseas obligations? Yet, as I have said, we are antagonizing those countries with whom we should endeavour to extend our trade. For example, in 1929 France purchased Australian goods to the value of £15,141,000, and sent us, in return, goods valued at £3,700,000. Japan’s purchases totalled £11,518,000, and we bought from Japan goods to the value of £4,700,000. Germany took £9,7-30,000 worth of our commodities, and sent us goods valued at £4,545,000. Italy purChased £5,160,000 worth, and sent u3 goods to the value of £1,449,000. These countries provide us With our best “markets, and mil’ favorable trade balance with them helps to stabilize our exchange on London. When speaking on the Commonwealth Bank Bill I referred to the condition of our overseas trade, and said that I should not mind very much if our relations with the United States of America were somewhat altered because in 1929 that country purchased Australian hides* skins, wool, sausage casings, tin, and pearl-shell to the value of only £5,831,000, whereas our purchases from the United States of America totalled no less than £35,308,000. [Quorum formed.] An alteration of our trade .position with the United States of America Would not affect us sp seriously as will retaliatory action by France, Japan, Germany, and Italy. We really cannot afford to lose those markets. Some years ago we destroyed our trade with Fiji with a prohibitive duty on bananas. We have also -lost a considerable trade with New Zealand through the extra duty on butter, and we came near losing a large proportion of trade with Java by a proposed special imposition on coffee. Our folly in regard to tariff matters has antagonized France, Germany and Italy which, as I have shown, are heavy purchasers of our exportable products. We are continually heaving o’f the need for wider markets for our .primary products, and yet in our tariff legislation we do our best to destroy our most favorable overseas markets.

We hear a great deal from time to time of the value of protection to Aus’tralian industries. It was fashionable, prior to federation, to cite Victoria as an outstanding example of the wisdom of this policy. A perusal of Coghlan’s statistics of the time tell an entirely different story. They show that the development of Victoria received a wonderful impetus following the discovery of gold. The rapid increase in population provided a ready “market for the protected industries in that colony.

Df. Maloney. - We had an important export trade then.

Mr GREGORY:

– I wonder if the honorable member for Melbourne (Dr. Maloney) is proud of the condition of affairs that obtained in Victoria from 1887 to 1900, when sweating prevailed widely in some industries and conditions of employment generally were shocking? Let us examine the relative positions of freetrade New South Wales and protectionist Victoria during the ten years, from 1891 to 1900. In that period the population of New South Wales increased by 19.35 per cent., and in Victoria by 4.8 per cent. The public debt increased by 9.12 per cent, per capita in New South Wales compared with 10.12 per cent, in Victoria. The figures dealing with operatives in secondary industries are also illuminating. The total employed in New South Wales in 1900 was 51,833, comprising 42,936 males, 8,327 females, and 570 children. In Victoria the total number employed was 50,574, comprising 35,55S males, n© less than 14,008 females, and 1,008 ‘children. The figures relating to savings bank deposits are also -instructive. The amount to the credit of each depositor in New South Wales in 1900 was £38 12s. Id., compared with £24 5s. 10d. in Victoria. The consumption of foodstuffs, including beef, mutton, and sugar per head, was higher in New South Wales than Victoria, and it* was remarked that Victoria consumed rather more potatoes per head than New South Wales because they were much cheaper. So much for the alleged advantages of high protection in Victoria prior to Federation, which brought that State to the worst extremes of sweating, of poverty and distress.

It is possible that the people in the eastern States have derived advantages from this policy of high protecti’o’n. The people -in Weste’r-n Australia, on the other hand, have suffered grave disadvantages. Because of the high tariff duties plus high sea freights made possible by the coastal provisions of the Navigation Act, we have to pay much more for all our commodities. Mr. Ferguson, the representative of the Sunshine Harvester Company, estimated the additional cost on agricultural machinery in Western Australia at 12 per cent, over Victorian figures.

Mr Bernard Corser:

– The primary producers in Western Australia have the advantage of a wider home market in the eastern States.

Mr GREGORY:

– The higher sea freights more than offset any advantage which we may get in that way, and why should we continue to pay tribute to the people of the eastern States?

Mr Bernard Corser:

– We built the East- West railway for Western Australia.

Mr GREGORY:

– It was built by Mr. King O’Malley, the then Minister for Home Affairs, on the day-labour principle, and cost £8,500,000 instead of £4,500,000. The people of Western Australia now have to pay their share of the cost.

Mr Riordan:

– I suppose the honorable member advocated the construction of that line?

Mr GREGORY:

– Whether or not I advocated it is beside the question. Even up to 1920, no one anticipated that the Commonwealth Government and Parliament would become tariff mad.

Mr Culley:

– You were never better off in your life.

Mr GREGORY:

– The Assistant Minister probably holds that view because he is now drawing ministerial salary and allowances.

I am not exaggerating when I say that, because of the high tariff and other burdens laid upon Western Australia by Commonwealth legislation, we are paying at least 50 per cent, in excess of what, in other circumstances, it would cost us to clear and develop our farming lends. ‘ Unfortunately, our producers have to meet all these costs, and, as I have pointed out on many occasions, the history of the farming development contains many pages of stark tragedy. Wo feel that we cannot stand it any longer. The people of Western Australia will absolutely refuse to be tied to the Commonwealth if it continues to exploit them in the future as it has in the past. We have heard a good deal about the need for dispensing with State Parliaments. I do not share that view. I know that, on the contrary, there is a growing demand to get rid of the Federal Parliament, and restore State Parliaments to their former status. The history of the Commonwealth Parliament is one long record of extravagance, waste, and increasing taxation. We are rapidly approaching, if we have not already reached the time when the people of Western Australia will be forced to rebel against the impositions that are being placed upon them by the Federal Parliament.

I shall have an opportunity later to discuss the various tariff items. While this tariff should be discussed from a non-party view this party is pledged to low tariffism, and must, later, when we are free from the present crisis, use every means, at any cost, to secure its objective. I have written letter after letter to the newspapers and to various bodies and individuals, setting out my misgivings as to the future of Western Australia if its destiny is to be determined by this Parliament. The position of Western Australia is hopeless unless secession is insisted upon. I have pointed out that there is one way, and one way only, to keep that State within the union. That is by -an alteration of the Constitution by which Western Australia will be given control for 25 years of tariff matters within its own borders. That would give it an opportunity of making good. The trade of that State, important as it is to the people of Western Australia, is a small thing in comparison with the preservation of Australian unity. But the imposts which the people of the western State now have to bear are so great that they cannot longer stand the strain. The burden has been growing year by year, and the breaking point has now been reached. They desire the right for 25 years to impose duties, if they choose, against the rest of Australia, and against the world. Western Australia comprises one-third of this continent. It has remarkable potentialities, being rich in mineral, agricultural, pastoral and timber resources, but there -is no hope of their development under the laws passed by this Parliament. Unless substantial relief is granted- and this is entirely hopeless - the State must demand the right of self-determination.

Progress reported.

page 1356

ADJOURNMENT

New South Wales Interest Payments

Mr SCULLIN:
Prime Minister · Yarra · ALP

– I move -

That the House do now adjourn.

Yesterday I asked the Premier of New South Wales (Mr. Lang) whether his State would provide the moneys necessary to meet interest falling due in London and New York in the next few days. In reply, the Premier advised that his State was unable to meet the interest due to private bondholders in London and New York, but would provide £38,000 to meet interest duo by it on certain debentures owned by the Commonwealth Bank. In view of these advices from the Premier’, of New South Wales, and of the responsibility of the Commonwealth under the Financial Agreement, I have to announce that the Commonwealth will meet these interest payments promptly as they fall due. I have . had prepared a statement setting out details of all payments which the Commonwealth will have made up to and inclusive of the 1st May, and the sums duo by the Commonwealth to New South Wales, which are being offset. The balance due by New South Wales to the 1st May will be £1,590,083.

Question resolved in the affirmative.

House adjourned at 10.4 p.m.

Cite as: Australia, House of Representatives, Debates, 28 April 1931, viewed 6 July 2017, <http://historichansard.net/hofreps/1931/19310428_reps_12_129/>.