House of Representatives
18 June 1931

12th Parliament · 1st Session



Mr. Speaker (Hon. Norman Makin) took the chair at 2.30 p.m., and offered prayers.

page 2773

LEAVE OF ABSENCE

Motion (by Mr. Scullin) - by leave - agreed to -

That leave of absence for one month be given to the honorable memberfor MelbournePorts (Mr. Mathews) on the ground of ill health.

page 2773

QUESTION

BRITISH AND NEW ZEALAND PENSIONERS

Mr LATHAM:
KOOYONG, VICTORIA

-I ask the Treasurer whether it is true that under the arrangement made for the payment of British war pensioners resident in Australia, the Commonwealth is paid in London in English currency, and pays them in Australian currency, thereby making a profit out of the transaction? If that is so, does he propose to alter the arrangement ?

Mr THEODORE:
Treasurer · DALLEY, NEW SOUTH WALES · ALP

– It is a fact that the amount payable to Imperial pensioners in Australia is paid to the Commonwealth agent in London in British sterling. The pensioners have been paid here in Australian currency. No difficulty arose until the exchange became so adverse to Australia as to create a marked disparity. Correspondence then took place between the British authorities and the Commonwealth Treasury, aa a result of which a new arrangement has been made by which Imperial pensioners in Australia will be paid the Australian equivalent of the amount due to them in English sterling. An officer from the British Pensions Department has been in Australia for some weeks arranging the details with the Treasury officials. I understand that an agreement has been completed.

Mr Archdale Parkhill:

– Will the arrangement be retrospective?

Mr THEODORE:
Mr CROUCH:
CORANGAMITE, VICTORIA

– I understand that the exchange between New Zealand and the Commonwealth is 15 per cent, adverse to Australia. Will an arrangement similar to that made in regard to Imperial war pensioners be made in respect of old-age pensions paid by the Commonwealth on behalf of New Zealand ?

Mr THEODORE:

– This matter has not previously come under my notice, but if moneys are made available by New Zealand for the payment of pensions in Australia, I shall investigate the possibility of making an adjustment similar to that I have already indicated.

Melbourne Conference Agreement : Opposition or Labour Organizations.

Mr BEASLEY:
WEST SYDNEY, NEW SOUTH WALES

– An official statement by the Australian Workers Union regarding the decisions of the recent conference in Melbourne, includes this passage -

The measures which it formulates in the name of economy are completely out of line with the principles of the Labour movement. Nothing can justify such a deviation from the Labour platform as the Premiers’ plan involves. No situation can justify its submission to the ultimatum of the Commonwealth Bank, which, all through this crisis, has acted as the ally of the Nationalist party. No plea of economy can justify a Government repre-. senting a great humanitarian movement in scraping the butter off the bread of old-age pensioners and war veterans. The organizations of Labour, both industrial and political, view this plan with invincible repugnance.

I ask the Prime Minister whether, in view of that statement, the Government intends to deviate from the decisions reached at the Melbourne Conference?

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

– The attitude of the Government will be stated by me at a later hour this day.

Mr JAMES:
HUNTER, NEW SOUTH WALES

– As the federal executive of the Australian Labour Party is deliberating in Canberra upon the resolutions of the Melbourne Conference, will the Prime Minister say whether the decisions of that body will have any effect upon the vicious policy of pension and wage-slashing which the Government has accepted ?

Mr SCULLIN:

– It is not customary to announce Government policy in answer to questions.

page 2774

QUESTION

GOLD LOAN

Mr KILLEN:
RIVERINA, NEW SOUTH WALES

– I ask the Prime Minister if it is true that a gold loan of £15,000,000 was lately offered to the Government for 40 years at 4 per cent.? If so, why was the offer refused? If such a loan is still available will the Government consider the advisability of accepting it in order to obviate the need for shipping a portion of the gold reserve to London, and -also to permit of the expansion of the note issue, if necessary.

Mr SCULLIN:
ALP

– This is about the twenty-fifth time I have heard of this £15,000,000 gold loan.

Mr Archdale Parkhill:

– Let us have all the fact9.

Mr SCULLIN:

– I have no facts regarding it. I have heard many rumours, and representations have been made to me that there is available somewhere £15,000,000 of gold at 4 per cent, for a period of 40 years, the price of the bonds to be whatever the Government chooses to fix. Naturally the Government is very interested in such an attractive offer. It at once asked for definite information regarding the whereabouts of the gold and the names of the principals who are offering it. So far our curiosity has not been satisfied.

page 2774

QUESTION

PRESS TELEPHONE RATES

Mr BELL:
DARWIN, TASMANIA

– I have to-day received the following telegram from Burnie: -

Report from Canberra Postmaster -General proposes abolish press telephone rates and prohibit use dictaphone which latest and most effective method transmission. Such act would place impossible burden country press. Please advise whether it is seriously contemplated.

I ask the Postmaster-General whether his department proposes to abolish the facilities referred to in the telegram.

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

– Yes, but as a result of many representations the Director of Posts and Telegraphs will receive a deputation from representatives of newspapers in Melbourne next week.

Mr THOMPSON:
NEW ENGLAND, NEW SOUTH WALES

– Is the PostmasterGeneral aware that country newspapers which incurred the expense of installing dictaphones, and employing expert shorthand writers to use thom, did so on the advice of the honorable gentlemen’s department, which assured those newspapers that its policy was to encourage the use of telephonic rather than telegraphic service ? In the circumstances, will the honorable gentleman give consideration to the view of country newspaper proprietors that the contemplated change of policy represents a gross act of repudiation ?

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

– I have seen it stated that the introduction of dictaphones into provincial newspaper offices was the result of recommendations that emanated from, a Nationalist Postmaster-General. As I have already stated, .the whole of the circumstances will be examined by the Director of Posts and Telegraphs when he receives a deputation from representatives of the provincial press.

page 2774

QUESTION

AUSTRALIAN NOTES AND SILVER

Exchange Rate in New Zealand.

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

– Has the Treasurer been informed that only 16s. 3d. is paid in New Zealand for Australian £1 banknotes? Also, will the honorable gentleman make inquiries as to whether it is a fact that £1 is given in that dominion for twenty Australian silver shillings?

Mr THEODORE:
ALP

– I am not aware of the circumstances referred to by the honorable member. The exchange value of Australian currency depends entirely upon the willingness to accept it on the part of banks and other institutions in the countries concerned. I shall institute inquiries into the matter.

page 2775

QUESTION

VIOLENCE BY COMMUNISTS

Mr WHITE:
BALACLAVA, VICTORIA

– In view of recent acts of violence committed by communists in Australia, will the Government declare the supporters of that organization to be members of an unlawful association?

Mr BRENNAN:
Attorney-General · BATMAN, VICTORIA · ALP

– I have no cognizance of the acts of violence to which the honorable member for Balaclava directs my attention. I shall take the matter into consideration.

page 2775

QUESTION

WAR DEBTS MORATORIUM

Mr BEASLEY:

– Will the Prime Minister make a statement, perhaps on another occasion, as to the precise developments of the discussion that is taking place in Europe with regard to a war debts moratorium? The topic seems to be a very live one in Germany and the United States of America.

Mr SCULLIN:
ALP

– As soon as I have any definite information on the subject I shall be very pleased to make a statement to the House. Up to the present nothing definite has come to hand. .

page 2775

QUESTION

SUGAR AGREEMENT

Mr GREGORY:
SWAN, WESTERN AUSTRALIA

– Yesterday the Prime Minister informed honorable members that he would table the sugar agreement at the earliest possible opportunity. Is there any reason why it should not be tabled at once, for the information of honorable members ?

Mr SCULLIN:
ALP

– I shall issue instructions to expedite the presentation of the sugar agreement to the House, and hope to lay it on the table later in the day.

page 2775

QUESTION

TRADE TREATY WITH CANADA

Mr MORGAN:
DARLING DOWNS, QUEENSLAND

– Is the Minister for Markets aware that, owing to the delay in operating the trade treaty between Canada and Australia, our dairying interests are being prevented from quoting for business which, as a consequence, is drifting to other countries?

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– I am in close touch with the Dairy Export Control Board, and I have heard no complaint of the nature referred to by the honorable member. I am confident that if such a set of circumstances existed, I should have heard of them. As I have previously pointed out, a mutual arrangement exists that until the signed treaty reaches Australia it will not be given effect to by either party.

page 2775

QUESTION

DRIED FRUITS

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

asked the Minister for Markets, upon notice -

With reference to the question regarding dried fruits, asked by the honorable member for Melbourne on the 14th May last, is the Minister yet in a position to supply the information required; if not, can he state when a reply will be furnished?

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– The desired information is being obtained, and will be furnished as soon as available.

page 2775

QUESTION

CO-ORDINATION OF TRANSPORT SERVICES

Mr KEANE:
BENDIGO, VICTORIA

asked the Prime Minister, upon notice -

In view of the fact that of the amount of £8,524,000, the total State deficits for the year ended 30th June, 1930, £8,491,639 was caused by deficits on railways, will he consider, in conjunction with the State Governments, the creation of a national committee of inquiry into the problem of the unfinancial position of all Australian railways; the scope of such inquiry to include the following: - (o) Consolidation and control of all Australian railways; (6) capitalization; (c) obsolescence and depreciation; (d) separation of railways finance from general finance; (e) consideration of the various forms of transport; (/) non-paying lines; (g) standardization; (ft) freights and fares; and (i) uniform policy to facilitate the ultimate conversion of gauges?

Mr SCULLIN:
ALP

– The general question of the co-ordination of transport services throughout Australia was listed for discussion at the recent conference of Commonwealth and State Ministers (see page 60 of the Report of Proceedings) . It was not possible^ however, to allot sufficient time for a discussion on this subject, but it will be brought forward for consideration when opportunity offers.

page 2776

QUESTION

NOTE ISSUE

Mr LACEY:
GREY, SOUTH AUSTRALIA

asked the Treasurer, upon notice -

  1. What are the details of the Commonwealth notes account as at present, and as at 30th June, 1930?
  2. What values of notes, in the various denominations, are there at present, and what were the values at 30th June, 1930?
  3. What is the amount of the gold reserve at present, and what was it at 30th June, 1930?
Mr THEODORE:
ALP

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

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

asked the Treasurer, upon notice -

  1. Is it a fact, as stated in Australian statistics, that Australian notes issued in 1925 amounted in value to £55,140,226, and at 30th June, 1930, to £44,914,320 ?
  2. Do these figures show a gradual deflation from 1925 to 1930 of a sum of £10,225,900 of Australian notes?
  3. Has such deflation had a depressing effect upon trade?
  4. What are the accepted reasons for such deflation ?
  5. What is the approximate value of Australian notes issued to latest date?
Mr THEODORE:

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

  1. The Australian notes circulation at 30th June, 1925, was £53,890,220, and at the 30th June, 1930, £44,914,326.
  2. These figures show a decrease in the circulation of £8,975,900, which was distributed as follows : -N otes held by the banks, £8,683,641; notes in the hands of the public, £292,259.
  3. The fact that the notes in the hands of the public within the period mentioned remained practically stationary does not appear to afford evidence of deflation.
  4. The reduction in the total note issue in 1930 as compared with 1925 is almost wholly attributable to the change in banking practice. Prior to the end of 1924, settlements of balances between banks were made by the exchange of notes. Following an amendment of the Commonwealth Bank Act at the end of 1.024, these balances were settled by cheques drawn on the Commonwealth Bank, and as a result the notes held by the banks were reduced by £7,936,000. 5. The Australian notes circulation at 15th June, 1.931, totalled £50,653,426, of which £25,197,529 was held by the public as compared with £22,864,424 at 30th June, 1925.

page 2777

QUESTION

NEWSPAPER SUBSIDY

Mr KEANE:

asked the Prime Minister, upon notice -

Does the Commonwealth Government pay directly or indirectly any annual subsidy to the newspaper proprietors in Australia; if so, how much, and for what purpose is the subsidy paid?

Mr SCULLIN:
ALP

– I know of no payment of the nature mentioned by the honorable member being made by the Commonwealth Government.

page 2777

QUESTION

BUTTER PRICES

Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

– The honorable member for Barton (Mr. Tully) has asked a number of questions on notice regarding butter prices. The information is being obtained.

page 2777

QUESTION

EMPLOYMENT STATISTICS

Mr KEANE:

asked the Minister for Home Affairs, upon notice -

How many employees were there in Australia on the 30th June, 1921, and the 30th June, 1930, engaged in (a) primary industries, and (b) secondary industries?

Mr BLAKELEY:
DARLING, NEW SOUTH WALES

– The following information has been supplied by the Commonwealth Statistician : -

Primary industries - 4th April, 1921. (census), 598,095 persons. 30th June, 1930, not available, but it is estimated that approximately 501,000 persons were engaged in primary industries.

Manufacturing industries - 30th June, 1921, 386,639 persons. 30th June, 1930, 430,738 persons.

Mr KEANE:

asked the Minister for Home Affairs, upon notice -

How many junior employees, and how many female employees were engaged in the secondary industries in Australia, as at 30th June, 1921, and 30th June, 1930?

Mr BLAKELEY:

– The following information has been supplied by the Commonwealth Statistician : -

Number of employees under the age of sixteen years engaged in manufacturing industries - 1920-21, 18,737 persons. . 1928-29 (a.) 22,790 persons.

Number of females employed in manufac turing industries - 1920-21, 90,145 persons. 1928-29 (a) 117,372 persons.

Details for 1929-30 are not yet avail able.

page 2777

QUESTION

LIGHTING OP POST OFFICE CLOCKS

Mr CROUCH:

asked the PostmasterGeneral, upon notice -

  1. What expense is saved by his department ceasing to light at night the Maryborough post office clock?
  2. What post office clocks in Victoria are at present lighted at night; where are they situate and who pays the expense?
  3. Will the lighting of every post office clock in Australia be charged to other authority than the Postmaster-General’s Department; and, if not, why is the discrimination made?
Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

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

  1. £9 10s. per annum.
  2. The only turret clocks in Victoria hitherto illuminated at the cost of the department are those at Maryborough, Castlemaine, Kew, and Elizabeth-street, Melbourne, and in each instance steps are being taken with a view to the cost of illumination being borne by the municipal authorities, as is the case in connexion with the other turret clocks in Victoria, viz. - those at Benalla, Bendigo, Echuca, Geelqng, Horsham, Kyneton, Natimuk, Sale, and Stawell.
  3. Steps similar to those taken in Victoria are proceeding in the other States.

page 2777

QUESTION

BUTTER SUBSTITUTES

Mr CROUCH:

asked the Minister for Markets, upon notice -

  1. Is he aware that a large amount of coconut oil is being used in Australia as a partial substitute for butter?
  2. Will this have a serious effect on the dairying industry?
  3. Can the import of this coco-nut oil be prohibited, or how otherwise can he meet the position ?
  4. If coco-nut oil is necessary for soapmaking, can it be introduced for that purpose under regulation safeguards?
Mr PARKER MOLONEY:
HUME, NEW SOUTH WALES · ALP

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

  1. Yes.
  2. Any marked increase in the use of this substitute must have a serious effect on the dairying industry.
  3. Power exists under the Customs Act to prohibit the importation of coco-nut oil.
  4. It would be very difficult, if not impossible, to regulate the importation of coco-nut oil for the use of Soap-making only.

page 2778

QUESTION

RUSSIAN BUTTER

Mr SCULLIN:
ALP

– On the 15th May and the 4th June, questions, upon notice, were asked by the honorable member for Balaclava (Mr. White) and the honorable member for Wide Bay (Mr. Corser), respectively, relative to the importation of butter into Great Britain from Russia. Inquiries made by the Department of Markets into this matter have revealed that recent arrivals of Russian butter in Great Britain have not been abnormal. The recent improvement in the price of Australian butter on the London market indicates that the fear of large quantities of Russian butter being dumped on that market is unwarranted. In pre-war years, imports of butter into Great Britain from Russia reached 40,000 tons per annum. For the years 1926-1929, inclusive, the average annual importation of such butter was only 15,000 tons, and last year the imports from that source fell as low as 9,300 tons. Unless there is a very substantial increase in the imports of Russian butter during the remainder of the European season, the English market is not likely to be unduly affected. - Selling organizations in London are of the opinion that the total quantity imported from Russia this season will not very materially exceed last year’s figures. The position, however, in Great Britain will be carefully watched with a view to safeguarding the interests of Australian butter producers. Some time ago the London agencies of the Australian and New Zealand dairy export boards, together with the dairying interests in Great Britain, combined with the object of making representations to the British authorities for the application of the Merchandise Marks Act to all butter sold in the United Kingdom, It has been reported that the British Standing Committee has recommended that empire and foreign butter shall be marked in order to indicate its origin. This recommendation, if given effect to, should give Australian and other dominion butters a decided advantage over foreign butters, as it will indicate to the consumer the origin of the butter purchased by him.

page 2778

QUESTION

PETROL PRICES

Mr SCULLIN:
ALP

– On the 4th June, the honorable member for Corangamite (Mr. Crouch) asked the following questions, upon notice -

  1. Does the Commonwealth Oil Refineries Limited market its product through garages in the same manner as other oil companies?
  2. Do re-sellers of petrol marketing only the products of major oil companies, including those of Commonwealth. Oil Refineries, receive a discount of 2d. per gallon?
  3. If a trader markets a brand of petrol other than that of the Commonwealth Oil Refineries or that of any of the four major companies, is his discount then reduced from 2d. to1d. per gallon?
  4. Is the Commonwealth Oil Refineries Limited part of the oil combine ? .
  5. If not, why does it reduce the discount to traders by1d. per gallon if they deal with other than the five major petrol companies?
  6. What difference is there in the methods adopted by the Commonwealth Oil Refineries in marketing its products, and the methods adopted by the other four major companies?

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

  1. Yes.
  2. I am advised that retailers marketing only such brands receive a bonus at the rate of1d. per gallon from the major oil companies and Commonwealth Oil Refineries Limited.
  3. See answer to 2.
  4. No.
  5. The Commonwealth Oil Refineries Limited has advised that, although it had nothing whatever to do with the initiation of the payment of the bonus of1d. per gallon, it found it necessary, in order to continue in business in Victoria, to fall into line with the other companies in this respect.
  6. It is pointed out by the Commonwealth Oil Refineries Limited that, apart from the question of the expediency of supplying the information sought, considerable detail would be involved in furnishing a reply to this part of the honorable member’s questions.

page 2778

DEBT CONVERSION AGREEMENT BILL

Motion (by Mr. Scullin) agreed to -

That he have leave to bring in a bill for an act to approve an agreement between the

Commonwealth of Australia of the first part and the States of New South Wales, Victoria, Queensland. South Australia, Western Australia, and Tasmania, of the second, third, fourth, fifth, sixth and seventh parts respectively, relating to the conversion of the Internal Public Debts of the Commonwealth and the States.

Bill brought up by Mr. Scum-in, and read a first time.

Second Reading

Mr SCULLIN:
Prime Minister · Yarra · ALP

by leave - I move -

That the bill be now read a second time.

This is a very brief bill, the main features of which are contained in the schedule. It approves an agreement between’ the Commonwealth and State Governments for the proposed conversion of Commonwealth and State bonds. The agreement is made under section 105a of the Constitution, and must bc ratified by all the Parliaments of Australia. It covers the whole of the conversion plan, and authorizes the Commonwealth Government to act on behalf of the State Governments, as well as of the Commonwealth, to effect the conversion of Commonwealth and State securities.

I suggest that as this bill covers the conversion plan, and the general agreement between the Commonwealth and State Governments, the discussion on the whole plan might be taken on the motion for its second reading. Other bills will be brought up subsequently, and their details may be discussed when they are presented, but the’ present bill offers a favorable opportunity for discussing the whole plan.

Mr SPEAKER (Hon Norman Makin:
HINDMARSH, SOUTH AUSTRALIA

– I rule that the general discussion may be taken on this bill.

Mr Lazzarini:

– I presume that, when the other bills are presented, secondreading discussions will be permitted on them also.

Mr SCULLIN:

– They may be discussed, but the Speaker has just ruled that a general discussion may take place on this bill.

Mr Beasley:

– Discussion on the subsequent bills will not be circumscribed in any way?

Mr SCULLIN:

– No. I do not propose to go into this matter further than to make a general review of the situation, because many of the facts are familiar to honorable members if they have followed the proceedings of the Premiers Conference, which were published at considerable length.

Australia is confronted with the gravest crisis in its history; certainly the greatest financial and economic crisis in its history. For many years we enjoyed high prices for primary products exported overseas. “We borrowed very largely overseas, and, between receiving high prices for our exports, and maintaining a high average rate of borrowing, we were living under conditions that were somewhat artificial. Recently there came a very sudden drop in the price of exportable commodities, together with a complete cessation of borrowing overseas, and these two factors have greatly aggravated the financial and economic depression, i

The national income of Australia in 1928 was £650,000,000, but for the financial year of 1931-32 it is estimated that the national income will be not more than £450,000,000, a drop of £200,000,000, due to the fall in prices, and the cessation of overseas borrowing. This has reacted very seriously on all classes of the community, but particularly on the unemployed and the primary producers. Although the national income has fallen by £200,000,000, government expenditure - that is, expenditure by all the Australian governments - has gone from £187,000,000 to £198,000,000, an increase of £11,000,000 since 1927-28. Interest, sinking fund payments, exchange and unemployment relief having increased during that period by £27,000,000. For the year 1930-31, if expenditure and receipts remain at their present level the deficit of all the Australian governments will be £30,000,000, and it is estimated that by the end of the next financial year there will be further deficits amounting to £40,000,000, making the total deficits for the two years £70,000,000. At the end of June this year the Commonwealth deficit will amount to, £14,000,000, and it is estimated that by. June, 1932, if no action is taken to reduce expenditure and increase revenue, there will be a further deficit of £20,000,000, or a total for the two years of £34,000,000.

The short term debt of Australia in London is £38,000,000, and in Australia,, £25,000,000, a total of £63,000,000. A» honorable members know, the Commonwealth Bankis carrying the bulk of our short term indebtedness, and it has notified all the Australian governments that the credit limit for their Australian indebtedness will be £25,000,000. That limit will be reached by the end of this month. The overseas limit was reached nine months ago. We have had no credit in London since September last, and, as I have said, our indebtedness there stands at £38,000,000.

The increased expenditure of Australia has been caused mainly by the general change in world conditions. The adverse exchange rate is responsible for the expenditure of an additional £10,000,000 a year. A few years ago we had no exchange to meet. There are 360,000 men unemployed in Australia, and they are costing the Governments for sustenance and relief £9,000,000 a year. It is estimated that, unless something is done, the cost of unemployment relief will soon amount to £12,000,000 or £14,000,000 a year.

Mr Gregory:

– That is for the whole of Australia ?

Mr SCULLIN:

– Yes. Thus, in exchange, and for unemployment relief, Australia is paying annually £19,000,000, which she would not be called upon to pay except for altered world conditions.

Mr Morgan:

– And the maintenance of uneconomic conditions here.

Mr SCULLIN:

– The Government has endeavoured during the last year or two to arrest the deflation which has been going on. We have endeavoured to prevail upon the banks to extend credit in order that unemployment might be arrested, wholly or in part.Failing to obtain bank credit, part of the plan was to pass a fiduciary notes bill to assist the wheat-farmers and the unemployed, but that measure was rejected in another place.

Following on that, this Government, in common with the State Governments, received from the Commonwealth Bank notice that the limit of our overdraft had been reached. Every government in Australia is now faced with the position that its revenue is insufficient to meet its expenditure. It is obvious, therefore, that unless some such plan as is proposed is adopted, to say that default stares this country in the face is not an unduly alarming statement. The position is one of falling revenues and growing deficits.

Let us consider the financial position of the Commonwealth. At the end of June, 1929, there was a deficit amounting to £5,000,000, while in June, 1930, the deficit for the year amounted to £1,500,000. the accumulated deficit at that stage being £6,500,000. At the end of the present month the deficit for the year will be £14,000,000 making the accumulated deficit £20,500,000, and, if no. action such as is proposed is taken, the deficit for 1932 will be £20,000,000, making the accumulated deficit £40,500,000, largely due, as I have said, to falling revenue.

As an illustration of the way in. which the revenues of the Commonwealth have fallen, let me give the following figures showing the receipts from three main sources, namely, customs duties, excise duties, and income taxation: -

A comparison of the estimated receipts from customs for next year with the actual receipts for 1929-30 shows a reduction of £14,200,000. Similarly, there will be a reduction in excise revenue next year of £1,600,000, and in income taxation of £2,600,000. On those three items alone, the reduction in the estimated revenue for 1931-32, as compared with the receipts for 1929-30, amounts to £18,400,000. Those figures indicate the difficulty of government finance with constantly falling revenues.

To deal with this situation, a conference of State Premiers and Treasurers and the Commonwealth Prime Minister and Treasurer met in Melbourne recently, and faced this alarming position, which we realized called for emergency measures. Prior to the summoning of the conference, Under-Treasurers, economists, and others had been set to work to gather information, so that the whole position might be placed before the conference. The picture presented to us was anything but satisfactory. It showed an alarming growth of deficits and serious reductions of revenue, and that the position was not gradually, but rapidly, becoming worse. I must say, Mr. Speaker, that the atmosphere of that conference was one of very great gravity. Its members represented all shades of political opinion, and realized that they were facing a grave national emergency. In that spirit we approached every problem put before us, and all agreed that something had to be done. It was recognized that the responsibility of any member who broke away from the conference would be very great, indeed. The feeling was that if no plan emerged it would be a case of “ God help Australia “.

There were necessarily many different points of view at the conference. It was composed of men with divergent outlooks ; they represented different schools of political and economic thought. Yet we were faced with the necessity for coming to an agreement orv a common plan, or allowing Australia to meet disaster. An agreement was essential, and the men who attended the conference had to accept their individual responsibilities, realizing that national safety was involved. The facts of the position were clear. We sat for three very strenuous weeks, which caused every member of the conference great anxiety, and great distress in many cases; but a plan was eventually agreed to. There was not a member who cheerfully accepted it. Features acceptable to some of us were distasteful to others. It was generally recognized that we had to agree upon a plan, and, in order to do that, each had to give way on principles which had been cherished for many years.

I shall outline the main features of the plan. In the first place, there is to be a loan for the conversion of the whole of the Commonwealth and State securities, amounting to about £550,000,000, which it is proposed to convert into a new stock, returning, with one or two minor modifications, a rate of interest 22-J per cent, less than that now received. The banks have agreed to reduce their rates of interest on deposits and advances, and there is to be a reduction of the interest charged on private mortgages, and a reduction of adjustable expenditure by all governments. In addition to that, additional taxation is to be imposed to assist in making up the deficiency in revenue.

The object of the plan is to spread the burden- so that there shall be no privileged section, and so that budgets shall be balanced, in order that a feeling of security may be restored to the community. This, it is expected, will stimulate business activity and promote employment.

Some of the economies proposed in this plan are most distasteful to . every member of the Government, and, I believe, to every member of the Parliament and every person in the community. I do not think that any one could face with cheerfulness .the reductions which we are contemplating. I assure the House that I cannot do so. Were it not for the gravity of the position, nothing would have induced the Government to accept this plan. Except that there is no alternative but default, with consequent disaster to Australia, some of these proposals would not have received a moment’s consideration.

But what were we confronted with? The Commonwealth Bank had announced that the limit of our overdraft had been reached. When an announcement of that kind is made to private business men they realize that they must thereafter depend entirely upon their own resources. That is the position of the Government. We must depend upon our own resources, which are taxation and the reduction of expenditure

We have an immediate problem to face. Our estimated revenue for the coming twelve months is £60,000,000. That estimate may, or may not, be reached; but it has been honestly made. Other estimates have been made with equal honesty by the Government, and have not been reached. To meet our present expenditure we should need £80,000,000 next year, which is £20,000,000 more than our estimated revenue. In other words, for every £1 of expenditure we shall have only 15s. of revenue. If we rely upon our own resources entirely for the next twelve months, and maintain our expenditure at the present rate, we shall not have more than 15s. in the £1 to meet our liabilities in Australia and overseas for wages, material, interest, pensions, and all other expenditure.

The position which will confront us in the first month of the new financial year is even more serious. It is estimated that our revenue for July will be £4,400,000, and our expenditure £7,100,000, so that ‘there will be a shortage of £2,700,000. We shall, therefore, be faced Avith the need for the rationing of payments in July unless we can evolve “some plan to get us out of our difficulties. As I have said on a number of occasions, we shall be able to pay only 12s. in the £1 in July unless we ration all our payments in Australia and overseas, or cut all expenditure down. Under existing conditions, if we meet our overseas obligations fully we shall have only 9s. in the £1 to meet our combined obligations in Australia in July. There is nothing to show that the position will improve in the first six months of the financial year; but in the second six months there will be some improvement, for our income from taxation will be greater than in the first part of the year. The position which faces us immediately is undoubtedly very serious.

The Government is of the opinion that the sacrifices- involved in the plan which was adopted at the conference will fall on all sections of the community, and that the failure to accept these sacrifices will involve the country in default, force the rationing of our payments to meet our obligations, involve the whole community in intense hardship, and destroy the credit of Australia to such an extent that it will not recover for many years.

There are some who ask whether it is not possible to make the necessary savings without cutting into this, that, or the other avenue of expenditure. I have been inundated, and so, I suppose, have all other honorable members, with telegrams, letters and deputations, requesting that soldiers’ pensions shall not be touched, or that old-age or invalid pensions shall not be touched, or that public service salaries shall remain as they are. The Government does not want to touch one of these things. The members of the Government have fought hard, individually and collectively, to preserve and maintain our present standards, through all the years of their political existence. We would prefer anything, short of national dishonour and the imposition of far worse hardships upon the people, to the placing of our finger on one of these items; but we have to face stern facts.

Let us look at the position in detail. For the coming financial year overseas interest, sinking fund payments, exchange, and payments to the States will represent £25,000,000. That expenditure cannot be touched immediately. It cannot be adjusted in any way at the moment. Interest in Australia will cost us £14,000,000, less £2,000,000, which will be recoverable from the States, making £12,000,000 in all. Pensions and wages will involve an expenditure of £32,000,000 and other expenditure £9,000,000.

Towards meeting the position, internal interest will be reduced by 22£ per cent, under the conversion loan. The item represented by the £9,’000,000 I have mentioned has already been cut very severely, but it must be cut further. Leaving out of account, for the moment, the £25,000,000 needed for interest and other payments overseas, and £14,000,000 for interest payable in Australia, it will be seen that if we maintain the present rates of expenditure we shall have to find £41,000,000 to meet our requirements, and we cannot do it. We have to ask ourselves, then, how is it possible to effect the savings necessary to bring our expenditure within our income? We have examined every possible field of revenue, including taxation, and the only means we have been able to devise for meeting the position is the plan decided upon at the conference.

Some honorable members have objected to the plan almost in its entirety; others have said that it has been too long delayed. My reply to both sections is that this is the first complete plan that has yet been suggested for meeting the situation.

Mr Stewart:

– It is a most incomplete plan.

Mr SCULLIN:

– I do not say that this plan is 100 per cent, complete, but it is complete in the sense that it calls: upon all sections of the community tomake sacrifices.

Mr Stewart:

– It does not touch themanufacturers, who are enjoying high tariff protection.

Mr SCULLIN:

– It is the first definite plan that has been introduced for the reduction of interest payable to bondholders in Australia.

Mr Yates:

– Repudiation! Swallow that, you repudiators!

Mr SCULLIN:

– It is not repudiation.

Mr Yates:

– Only about sixmonths ago the Government promised to pay bondholders 6 per cent.

Mr SCULLIN:

– If the honorable member for Adelaide holds a brief for the bondholders he will be able to speak to it later.

Mr Archdale Parkhill:

– No honorable member has abused them more than the honorable member for Adelaide.

Mr DEPUTY SPEAKER (Mr McGrath:
BALLAARAT, VICTORIA

– I ask honorable members to preserve silence while the Prime Minister is making this very important statement.

Mr SCULLIN:

– I do not think it is necessary that I should speak at great length, but I make the point that this is the first definite attempt to bring the bondholders into any general scheme of contribution to meet the fall in our national income. We are putting forward a bold proposal. It may, in the minds of many, be a revolutionary proposal; but it is not a dishonorable one. It is not a proposal for repudiation. It is an honorable proposition, asking the bondholders of this country in a time of national crisis, to convert their bonds into new stock bearing a lower rate of interest.

Mr James:

– The bondholders are asked to make a sacrifice, while others are compelled to do so.

Mr SCULLIN:

– So long as we meet this crisis, it does not matter in what way we do it. It will facilitate the rehabilitation of Australia if we can declare to the world that the bondholders of this country have voluntarily converted their bonds at a lower rate of interest.

Mr Mackay:

– Under compulsion.

Mr Yates:

– With a bludgeon.

Mr SCULLIN:

– I deny the statements of both the honorable member for Adelaide (Mr. Yates), and the honorable member for Lilley (Mr. Mackay). However, they will be able to express their opinions fully at the proper time. This conversion proposal will be the boldest operation ever attempted in Australia.

Mr Yates:

– And the cheekiest.

Mr SCULLIN:

– It is one of the biggest operations ever mooted in this country, and I believe that, if successful, it will add tremendously to the prestige and credit of Australia. The plan is allembracing, and calls for sacrifice by nearly all the people. No plan is 100 per cent, perfect.

Mr Prowse:

– Does it call for sacrifice on the part of the manufacturers?

Mr SCULLIN:

– It calls for sacrifice on the part of the manufacturers, the producers, the wage-earners, the pensioners, and the bondholders. Sacrifices are never pleasant, and any plan which calls upon all sections of the community to make a sacrifice will never be warmly supported in any quarter. I believe, however, that the Australian people will regard this plan as at least an honest attempt to spread the burden imposed upon the community by the loss of national income. One of the most important problems with which we are faced is to provide work for our large army of unemployed.

Mr James:

– Will the plan provide work for them?

Mr SCULLIN:

– I am not saying that this plan will provide work for everybody, but I hope that it will give a sense of security to the people, and that it will enable business to be revived and moneys to be released for employment in this country. If the assurances that we have received, and the statements that have been made to us, bear fruit as a result of the operation of this plan, I believe that we shall turn the corner, and be able to employ many of our citizens who are now out of work.

The Loan Council is at present negotiating, with the banks to provide additional relief for necessitous farmers, and some £6,000,000 for unemployment, to be expended at the rate of approximately £1,000,000 a month, as a stimulus to employment while other industries are recovering. It is obvious that all of the 360,000 men who are now out of work cannot be given government employment. Industries must be revived to employ them all. We have the assurance that when our finances are straightened out, as proposed under this plan, the banks will carry the Governments of Australia over the period of three years which must elapse before budgets are likely to be balanced, and will, in addition, make further advances to industry. Sound propositions will receive the assistance necessary to enable them to be established.

The whole proposal is as complete as it has been possible to make it in the time at the disposal of those Who attended the conference in Melbourne. It means, of course, that we have to swallow nasty medicine, but it must be swallowed, because the alternative to it is a more serious condition of the body politic. The bondholders, who are to suffer reductions in interest, are reminded that, by the adoption of a plan like this their capital is being safeguarded; government employees who are making a sacrifice will have their positions made more secure; persons whose pensions are being reduced will have removed from them the danger of a greater reduction, and perhaps, with default, the loss of most of their pensions.

Mr Francis:

– “What are the details of the plan?

Mr SCULLIN:

– The Treasurer, who is speaking immediately after me, will give all the details of the plan. I am merely making a general statement to honorable members. All citizens are called upon to play their part in this rehabilitation scheme. I say to the critics, both inside and outside of this chamber, that it is of no use to criticize this plan unless they have some alternative to put forward.

Mr James:

– “Why not fix the maximum income at £500?

Mr SCULLIN:

– The honorable member for Hunter would solve this problem by reducing the maximum salary to £500. Such a scheme would not provide even a very small percentage of the money which it is necessary to find, and any one who puts it forward as a solution has not studied this problem. The responsibility rests upon every one, and particularly upon any honorable member, who advocates a plan different from that which is now being put forward, to show what the alternative is. It is easy to win cheers by standing up and saying that no reduction in any direction is necessary.

Mr A GREEN:
KALGOORLIE, WESTERN AUSTRALIA · ALP; FLP from 1931; ALP from 1936

– Those who oppose the scheme have a yellow streak.

Mr Yates:

– On the contrary, I submit that the Postmaster-General and his associates are showing a yellow streak.

Mr DEPUTY SPEAKER:

– Will the honorable member for Adelaide cease interjecting ?

Mr. Yates (continuing to speak despite calls to order). - The Postmaster-General has said by interjection that honorable members who oppose this plan have a yellow streak, “but it is he himself who has a yellow streak.

Mr DEPUTY SPEAKER:

– I name the honorable member for Adelaide because of his absolute disobedience to the Chair.

Mr Yates:

– I did not mean to offend you, Mr. Deputy Speaker.

Mr SCULLIN:

– The honorable member for Adelaide persisted in speaking while Mr. Deputy Speaker was on his feet. He definitely disobeyed the Chair, and I call upon him to apologize.

Mr Yates:

– I apologize. If I have offended Mr. Deputy Speaker, I deeply regret it, because I had no desire to do so. My only desire was to defend from insult those who oppose this scheme and intend to submit an alternative to it.

Mr SCULLIN:

– No one will welcome a practical alternative to this plan more readily than I shall, and I shall be exceedingly glad if any honorable member can submit a practical method of overcoming our immediate difficulties.

Mr Maxwell:

– It must be practical.

Mr SCULLIN:

– It must be practical and capable of being carried out. It must take into consideration the economic and political situation, and, in fact, every other situation. If a practical scheme can be given effect without rendering necessary the sacrifices that I have enumerated, I shall be only too glad to accept it in place of the plan that I have submitted to the House. Up to date I have not heard of any such alternative.

Mr James:

– The Prime Minister will hear it before the debate closes.

Mr SCULLIN:

– The responsibility rests upon every member who is elected to this Parliament, wherever he may sit, who has an alternative to this plan, to submit it to the House. It has been my life-long ambition to uplift the people, and improve the standards of living, and it is a crushing disappointment to me that as Prime Minister I have to introduce legislation which envisages the lowering of existing conditions. Honorable members will realize that the duty is not pleasant. It will be easy for honorable members to quote declarations by me that the Government would not agree to reduce pensions. I have said that again and again, and when I said it I meant it; I would repeat it now if it were possible to give effect to it, but I would sooner eat my words and do the right thing than follow the wrong course in order to be consistent. It will be easy for critics to utter cheap sneers at me and others, but while I am satisfied that I am adopting the right course, I can afford to ignore such gibes. It is the greatest disappointment of my life that, after two years as leader of the Government, I am unable to say that the conditions of the people are better than they were when- 1 assumed office ; but we have to face stern facts, and I say frankly to the old-age pensioner, the war pensioner, the public servant, and the bondholder, “ Although we are proposing to reduce what you are receiving, the cut is being made in a legal and orderly way in order to preserve to you more than you would get in the event of default “. Those who advocate the rejection of this policy must put forward a practical alternative, or declare to the world that Australia will go on as at present until July and then default, paying to its servants’, its pensioners, and its bondholders less than 12s. in the £1. Such a policy would not reflect much glory upon them. I know that they declare that the talk of default is nonsense, and that the banks will come to our rescue. They have a sublime, child-like faith in banking institutions; but bankers will not risk the solvency of the institutions they control to save any government or individual from default. And who can blame them for that? I believe, however, that more could have been done by them to release credit in this time of depression, but we have received notice that the limit of our credit has been reached, and that we must now rely on our own resources, choosing between some measure of sacrifice, such as the Government is proposing, and default in July. For two reasons the Govern ment will not allow the country to default: One is that that would bring greater hardships on all our people, and the second is that it would bring discredit and dishonour upon the nation which 1 have the honour to lead at the present time. The way of sacrifice is not a primrose path, but it is the only one open to us under existing conditions, and we are forced to tread it. My earnest hope is that all sections of the community will realize the gravity of the position, loyally support the conversion plan, and courageously, if not cheerfully, accept the. inevitable sacrifices. If we, as a people put our shoulders to the wheel, and resolutely face our difficulties, my hope and belief is that the nation will win through, to safety and greater prosperity.

Mr THEODORE:
Treasurer · Dalley · ALP

– It is my part to supplement the remarks of the Prime Minister (Mr. Scullin) by setting forth in detail the economies to which the Government is committed, and the financial consequences of the plan we have adopted. In considering the important measures that will be submitted for the implementing of the agreement reached at the Melbourne conference, honorable members must keep in mind that the circumstances of the nation are not ordinary. They must recognize the realities with which the nation, the Government and every individual is faced. We cannot afford to. ignore the dreadful consequences in which, the Great War involved the world. The armistice was signed in 1918, but the aftermath of the war is still affecting Australia and every other country that took part in the war. It is well to remember that in the war 8,000,000 men were killed, 20,000,000 were wounded, many millions of others were gassed, shellshocked and otherwise incapacitated, and that within a year or two following the war 10,000,000 people in various countries died from a mysterious influenza epidemic. So far as it can be calculated, the cost of the war to the various participating countries was £50,000,000,000, of which a relatively heavy proportion has to be borne by Australia. The signing of the Peace Treaty did not end the consequences of the war, nor discharge its costs. We are still bearing the burden of those costs,. and some of them are reflected in the troubles which are afflicting the nation to-day.

Mr Beasley:

– And shall we not continue to do that under the scheme that is proposed?

Mr THEODORE:

– Undoubtedly, if the present procedure is continued, we shall continue to be oppressed by these troubles. Let us consider some of the immediate effects of the war upon the finances of Australia. In the year before the war the services of the public debt of the Commonwealth and States combined cost £12,250,000; for the last complete financial year interest and sinking fund absorbed £62,000,000. Taxation, which is being levied upon nearly all classes in order to meet the requirements of the Commonwealth and States, amounted in the year before the war to £23,000,000; last year it was £92,000,000. Income tax has risen from a pre-war total of £2,800,000 to £26,000,000.

Mr GREGORY:

– Our big public debt is not wholly due to the war.

Mr THEODORE:

– The growth of taxation, and the charges upon the revenues of Australia, are not wholly attributable to the war, but they, and the higher cost of money, are mainly a result of it. These are stern realities, which the nation must face.

The Prime Minister referred to the economic position; we cannot afford to ignore it. The economic position brought about by the world-wide depression affects Australia as intensely as any other country. The value of our exportable products has declined by over £60,000,000 a year. The stoppage of the flow of loan moneys, which were cut off suddenly in 3 929, deprived the nation of £30,000,000 a year. In these two ways alone the national income has been reduced by more than £90,000,000 a year. Concurrently with the onset of the depression in other countries, the monetary policy pursued by the banks allowed the collapse of prices overseas to be reflected immediately in Australian prices. In my opinion, that policy was woefully mistaken. It brought about a too sudden diminution of values, and too great a disruption of the relationship between the creditor and debtor classes, and caused such chaos that the primary producers have been almost ruined; they probably are bearing a greater share of the loss occasioned by the depression than any other class, with the exception of those workers who have been entirely deprived of their employment.

I have called the attention of the House to some pregnant facts, and whatever we may think of this or that policy it is certain that some measures must be taken to cope with them. The Commonwealth Government has given earnest and constant consideration to the problem of meeting equitably the loss of national income. It propounded a financial policy, involving an alteration of monetary policy, to effect a liberation of credit and the utilization of the credit-creating resources in. order to counteract the effect upon local prices of the sudden collapse of the markets overseas. That policy was resisted as a form of inflation. It is true that it involved inflation, but inflation that could have been controlled, and, in my opinion, it would have enabled the nation to tide over the worst of the crisis, and to meet the inevitable clearing up of the exchange position when the monetary policy of the world had settled to a more stable basis than it is on at the present time. But the Government was unable to carry that policy into effect.

Mr Beasley:

– Who stopped it?

Mr THEODORE:

– It was rejected by the Senate.

Mr Beasley:

– By the banks.

Mr THEODORE:

– It was resisted by the banks, and the legislation which would have overcome a portion of that resistance was rejected by the Senate. Whoever was responsible, the simple fact is that the Government could not give effect to its policy. I say frankly that, had the necessary legislation been passed, and the Government been able fully to operate its financial proposals, there would have been no need to attack pensions or the basic wage. But, although I recognize that it is futile to pursue that line of argument this afternoon; I do not want anybody to run away with the idea that the Government is making the admission that the policy propounded and placed before the Premiers Conference in February was unsound. I acknowledge, however that that policy cannot now be carried into effect, and that unless the Government is to be recreant to its trust it must meet in some other way the problems that face the community. It is only on those grounds that the Government was prepared to modify its attitude with regard to the reduction of Public Service salaries and pensions.

There will be found in the scheme that the recent conference discussed for three weeks, which is embodied in the rehabilitation plan which is to come before Parliament shortly, a comprehensive . proposal that brings about a pooling of the national loss. No one section of the community is being asked to carry the whole burden of the depression, nor is any considerable portion of the community exempted from contributing to the counterbalancing of the reduction in national income.

Mr James:

– Does not the honorable gentleman consider that some portion of the community could be exempted from the proposals?

Mr THEODORE:

– When details are considered later, the House, in its generosity, may modify the suggested scheme.

Mr Yates:

– The House will not do so ; the honorable member has it nobbled.

Mr THEODORE:

– The honorable member is not justified in saying that. There are certain things to which the Government is committed under the plan recently adopted in Melbourne. One is the bringing about of a 20 per cent. economy reduction in government expenditure.

Mr Coleman:

– Twenty per cent, will be the gross reduction made ?

Mr THEODORE:

– The Government must effect a 20 per cent, reduction. As to how that is to be done will be left to the judgment of the House. I shall give details later showing how little latitude there is to let up on any considerable section of the community. While the Prime Minister was speaking, the honorable member for Hunter (Mr. James) suggested that pensions might be exempted by reducing to £500 per annum all Commonwealth public servants in receipt of high salaries. The total amount received by officers under the Commonwealth Public Service Act who are being paid more than £1,000 per annum is £78,000. If those officers gave their services free, the saving in salary thus effected would not enable the Government to add much more than1d. a week to each old-age pension.

Mr James:

– Then the figures that the honorable gentleman used in the Hunter electorate must lie. I shall put them back over him.

Mr THEODORE:

– The honorable member will probably find that it is not the figures that are wrong, but the honorable member’s examination of them.

Mr James:

– Could not a very severe cut be made in all large incomes?

Mr THEODORE:

– That is a different matter.

Mr James:

– I have been referring to incomes all along.

Mr THEODORE:

– The Premiers Conference that was held in this chamber last February, which was attended by the Prime Minister and myself, faced problems of a similar nature to those which now confront the nation. Admittedly they have become more acute as the months have passed. The Prime Minister and I propounded the idea of liberating credit, of utilizing the powers that are undoubtedly possessed by the banks of the country to create credit, and in that way of stimulating industry and business by giving additional employment and increased purchasing power. We found difficulty in getting that policy implemented. The alternative then submitted by Nationalist Premiers and Ministers contemplated only a reduction of Public Service salaries and the exercise of rigid economy on the part of Governments. At that time there was no proposal to bring in the bondholder or those who hold internal fixed money claims; who draw out of the national fund of wealth production a sum of between £70,000,000 and. £80,000,000 per annum. Not until recently, at the last Melbourne Conference, was that very important class brought within the scheme of economy.

Mr Gullett:

– Did not the bankers, when replying to the February scheme, specifically mention a reduction of interest ?

Mr THEODORE:

– No attempt was made, other than by the Prime Minister and myself, to include the internal fixed money claims on the community. It was indicated, in a. vague way, that interest would be reacted upon if the Government lived within their incomes. No doubt it would have been possible to effect a reduction in interest charges in future contracts made with regard to borrowed money, but that did not bring under the control of the economy measure the fixed money claims to which 1 have referred, which consist of outstanding Commonwealth and other Government securities amounting to £560^000,000, more than £100,000,000 of private mortgages, registered and unregistered, more than £100,000,000 of fixed bank deposits for over a year’s duration, and other large aggregations of capital of that description, which entitle the owners to draw the present high rate of interest until the expiration of existing contracts, some of which do not terminate for 30 years. Previous economy and retrenchment plans held those fixed money claims to be sacrosanct.

The present plan is, therefore, different in a fundamental particular from any heretofore considered. It is revolutionary in its nature as compared with those earlier plans. It can be considered to be all-embracing in its incidence. On that point, I think, that even the most radical member ought to be able to support it, provided that he recognizes the desperate need for financial rehabilitation in Australia.

Mr Yates:

– Why does not the honorable gentleman use the right language and say “ The desperate mess that the Government has got itself into “ ?

Mr THEODORE:

– Surely the honorable member does not suggest that the “” desperate mess “ is the fault of myself, as Commonwealth Treasurer ? It may be the fault of governments, past and present.

Mr Beasley:

– Or of the existing financial system.

Mr THEODORE:

– Exactly. However, we should not advance towards a solution by bandying accusations and recriminations on the subject. The debate will permit the frankest and fullest discussion.

Mr MARR:
PARKES, NEW SOUTH WALES · NAT; UAP from 1931

– Cannot the sugar industry be included in the general sacrifice?

Mr THEODORE:

– The honorable gentleman is at liberty to bring forward any practical suggestion for the consideration of the House. It is my duty this afternoon to give in outline the operation of these economies and reductions, and I shall proceed to do so. The Estimates for 1931-1932 provide for an expenditure of £80,600,000, and a revenue of £60,200,000, which will leave a deficit of £20,400,000. Compared with 1929-30 that expenditure shows an increase of £2,000,000, which is made up wholly of interest, sinking fund,, and exchange, amounting to. £1,600,000, invalid and oldage pensions, £1,800,000; war pensions, £200,000; and. payments to the States, £100,000. Savings in other directions, amount to £1,700,000, reducing the net increase to £2,000,000. Compared with 1929-30 the revenue, despite increased taxation, shows a decline of nearly £17,000,000. That tremendous decline is made up as follows : -

That is offset to some extent by the new sales tax of £4,500,000.

The Government proposes to meet the Commonwealth deficiency in part in the way that was outlined at the last Premiers Conference. Savings will be effected in consequence of the conversion loan reducing the interest bill, and reductions will be made in Public Service salaries and wages, old-age, invalid and war pensions, and maternity allowances. Additional revenue will be raised by an increase in the sales tax, from 2J per cent, to 5 per cent., an increase of primage duty, bringing it up to 10 per cent., and by a further increase in income tax. Particulars of the new taxation measures wild be placed before the House shortly. It is necessary to raise an additional £7,500,000 in that way, to get within balancing distance of the budget next year. By the various measures that I hope will be adopted, the Government will reduce a prospective deficit of £20,000,000 to one of about £4,500,000.

Regarding interest, the debt of the Commonwealth and the States maturing in Australia amounts to about £556,000,000 on which the annual interest liability is at present approximately £29,000,000. About £88,000,000 of that debt is free of all taxes. Approximately one-half of that £88,000,000 is held by the public, and the rest by governmental or semi-governmental institutions. The balance of the debt is subject to Commonwealth taxation but, except in a few isolated exceptions, is free from State taxation. The taxable interest is now subject to the special Commonwealth income tax on property of 7£ per cent., or ls. 6d. in the £1.

The under-treasurers and economists suggested in their report a further contribution from interest of approximately 15 per cent. This, with the 7& per cent, special tax levied last year on the taxable interest, represents a total contribution of 22-J per cent., and that is the figure that has been adopted by the Premiers and the Commonwealth as the contribution that should be made by the bondholders. Such a reduction will reduce the average rate of interest as follows. The present average rate on the Australian portion of our public debt is £5 4s. 3d. per cent. The reduction of 22^- per cent, will bring that average rate down to £4 0s. 9d. The total reduction in respect of the whole Australian debt, Commonwealth and States, will be about £6,500,000, which will represent the saving in the interest hill on the conversion of the internal public debt. This saving will not t>e’ wholly reflected in the Commonwealth and State budgets, because -some part of it will be passed on to borrowers from the Government, -such as local authorities, soldier settlers and other persons who were participants in the loans when they were (raised.

Mr Francis:

– By how much will the Government benefit?

Mr THEODORE:

– The Commonwealth Government will benefit by £2,470,000.

Mr Beasley:

– Are the bondholders to be exempt from future taxation?

Mr THEODORE:

– Bondholders will be subject to existing taxation, but will be exempt from increases to existing taxation. The 7 § per cent, special tax “imposed last year on property is merged into the 22£ per cent, reduction of -interest, and will therefore be cancelled. “Honorable members, when analysing these proposals in order to determine the taxation to which bondholders will be subject, should remember that the rates of Commonwealth tax on property incomes are already at a high level, but the bondholders will be immune from any increase to that tax.

Mr Beasley:

– Will the others who are affected be immune from future taxation ?

Mr THEODORE:

– Any tax-free loan which is converted” will retain its freedom from tax up to the present date of maturity of that loan. If the present tax-free securities mature, say in 1935, and are converted with a new maturing date 30 years from the present date, they will retain freedom from taxation until 1935, but after that will be subject, to the ordinary property rates.

Mr Hughes:

– What are these tax-free loans - State or Commonwealth?

Mr THEODORE:

– They are all State loans. Almost half of these loans carry low rates of interest such as 3 per cent., 3-£, 3J and 4 per cent. Some go even as high as 6i per cent., but those comprise only a very small portion of the whole.

Mr Beasley:

– The holders of those bonds are not likely to convert voluntarily, when such action will subject them to extra taxation.

Mr THEODORE:

– We expect that they will convert voluntarily; at any rate, the plan is based upon their doing so.

Mr Latham:

– In no case is the return to be reduced below 3 per cent.?

Mr THEODORE:

– I had intended that we should reserve discussion of details until a later stage, but as this point is covered in the bill I may as well explain it. The holders of 3, 3£, and 3f per cent, stocks, who acquired such securities prior to August, 1914, will be asked to convert without making any sacrifice which will bring the return below 3 per cent. When the stock is held by recent purchasers, however, no provision of that kind will apply and the 22-J per cent, reduction will be effected.

Mr Gabb:

– Even on the 3 per cent. stocks ^

Mr THEODORE:

– Yes. The honorable member must see the justice of that. Some of the present holders of the 3 per cent, and 3^ per cent, stocks may have bought them at as low as £55, and the effective return may be 6 per cent. Unless such holders are subject to the reduction they will constitute a specially favoured claps. In the general plan is included provision for dealing with the interest on private deeds and mortgages. Simultaneous legislation will be passed through all the State Parliaments to enable interest on such mortgages to be reduced by 22½ per cent., subject to a minimum of 5 per cent., and subject also to exceptions in special cases, to be decided by a court.

Mr Francis:

– On private mortgages too?

Mr THEODORE:

– Private mortgages will be included. A mortgage in this sense means any deed, memorandum of mortgage, instrument or agreement whereby security for payment of money is granted over real or personal property or any interest therein, and includes an agreement for sale and purchase over real or personal property where payment of the unpaid purchase money and interest thereon is secured on such property. That is one of the measures with which we, as a Commonwealth Parliament, are not directly concerned ; it is a matter for the State Parliaments. An agreement was reached in order that every class which ought to make a contribution at this time might be included.

Mr Hughes:

– Does it apply to first and second mortgages?

Mr THEODORE:

– I take it that it applies to second mortgages as well as to first. It applies to every deed and agreement. The interest on second mortgages is generally high, depending, of course, upon the nature of the security. In every case provision will be made enabling a mortgagor to apply to a tribunal for the reduction of the rate of interest by 4s. 6d. in the £1, and the mortgagee will be given the right to show cause why the reduction should not apply in his case. If he can show that the reduction should not apply - that he has already made the requisite sacrifice - the tribunal may grant him special consideration.

Mr Hughes:

– This matter will be dealt with by the States?

Mr THEODORE:

– Yes. A draft bill was given preliminary approval at “the Premiers Conference.

Mr Hughes:

– What will be done in regard to mortgages in the Federal Capital Territory?

Mr THEODORE:

– They will be covered by special legislation passed by this Parliament.

Mr Coleman:

– What is to be done in regard to loans on war service homes, and land held by soldier settlers?

Mr THEODORE:

– Concessions will be made in the existing rates charged to the borrowers. The details have not yet been worked out. As a feature of this plan the banks have agreed to reduce the rate of interest on bank deposits, bank advances, loans and overdrafts by 1 per cent. Where the rate at present stands at 7 per cent., it will be reduced to 6 per cent.

Mr Stewart:

– When?

Mr THEODORE:

– The reduction will be simultaneous with the operation of this plan. The banks have not yet made a final decision, but a conference will be held shortly to settle details. The savings banks have already conferred, and they will now confer with the trading banks.

For 1931-32 the Commonwealth budget liability in respect of salaries and wages is approximately £11,000,000, exclusive of child endowment, which approximates £300,000. In applying any scheme of reduction it is necessary to note the distribution of salaries as shown in the figures relating to officers under the Commonwealth Public Service Act. This distribution, as on the 1st July, 1930, was as follows: -

Mr Beasley:

– Will the Treasurer cover all the items in respect of what is described as adjustable expenditure governed by awards of the Arbitration Court and of wage tribunals?

Mr THEODORE:

– Without going fully into the figures I shall try to cover that aspect of the matter as it will be affected by the application of these economies. For some time past the salaries of officers and employees under the Commonwealth Public Service Act have been adjusted from the 1st July in each year, in accordance with the average of the cost of living figures for the six capital cities for the year ending 31st March. To meet present conditions the Service basic wage should be brought into line with the current cost of living figures. The Public Service basic wage at the 1st July, 1930, for adult male officers was £216, based on the cost of living index number 1805- for the year ended 31st March, 1930. For the March quarter, 1931, the cost of living index number was 1546. Calculated on this index number, the Service basic wage would be £182, so that the reduction warranted by the fall in the cost of living, inclusive of the reduction already made since the 1st July, 1930. is £34.

Mr Beasley:

– Has the Canberra allowance been taken into consideration in arriving at these conclusions ?

Mr THEODORE:

– No. The matter has been mentioned to me by one officer, but I have not had time to go into it. That detail will have to be dealt with separately. The plan aims at a reduction of 20 per cent, on salaries as at the 1st July, 1930, by a reduction in accordance with the fall in the cost of living, together with a percentage deduction on a sliding scale. For an adult male the plan will involve a flat rate reduction of £34, including any cost of living adjustments already effected since the 1st July, 1930. There will be a further reduction on the remaining salary, varying from approximately 3 per cent, to approximately 24 per cent. The actual reduction will be determined by a formula which is embodied in the bill. No adult male officer of the Commonwealth Public Service will be reduced below the basic wage of £182.

Mr Beasley:

– Was consideration given to the unemployment tax levied in some of the States,

Mr THEODORE:

– No. I remind the honorable member that the unemployment tax has to be paid by those inside the Service and those outside it.

Mr Beasley:

– In some cases the pay.ment of this tax, after the cut in wages has been made, may involve hardship to members of the Commonwealth Public Service.

Mr THEODORE:

– If that can be proved, consideration will, be given to proposals for easing the burden.

Mr Martens:

– In New South Wales the unemployment tax is ls. in the £1.

Mr THEODORE:

– But that applies to every one ; to those outside the Service as well as to those in it. The plan will also be applied to female workers and minors, with variations to suit varying conditions. In so far as the basic wage worker is concerned, the proposals of the Government involve nothing more than an adjustment of his salary to an amount justified by the actual purchasing power of money at the present time. The advancing scale of reduction beyond the basic wage worker is necessitated by the stern requirements of the present situation, and in the sacrifice that is being demanded from the remainder of !the officers to obtain the required reduction in expenditure, every effort has been made to equalize the burden to be borne by Commonwealth servants in common with the community in general. The following table shows the amounts which will be deducted from officers in the various salary grades: -

The Government gave earnest attention to the manner in which the deductions should apply to war pensions. We seriously considered changing the mode by which pensions are granted, and endeavouring to make the saving out of the war pensions of those ex-soldiers who are in employment and earning incomes over a certain amount; but, the more we considered the matter, the more we saw how impracticable it would be to do that. It is recognized throughout the world, apparently, that pensions shall be payable on the basis of disability, irrespective of the income or the means of the ex-soldier. In every belligerent country, allied or ex-enemy, so far as I have been able to ascertain, there are no exceptions to that rule. If the principle were altered, and pensions were granted on the basis of the income or private means of the disabled ex-soldier, there would be endless confusion through the necessity for varying the pensions each year in accordance with the varying income, and each ex-soldier would be required to submit each year a declaration showing his income and earnings. . If the principle were extended to dependants, the confusion would be still greater.

Mr Crouch:

– That principle is recognized in the case of invalid and old-age pensions.

Mr THEODORE:

– It is true that a declaration form is sent out to each invalid and old-age pensioner every year, and additional information is sought as to his circumstances, but the honorable member will recognize the fundamental fact that the war pensions were never granted upon a charity basis, but always on the basis of the disabilities suffered as a consequence of war service, the assessment of the degree of disability determining the amount of the pension. The cost and number of war pensions may be gathered from the following table:-

The proposed reductions of pensions are as follows: -

  1. The pensions payable to ex-soldiers are to be reduced by 20 per cent., but the pensioners are to be allowed a refund in cases where their income from all sources - pension, earnings and other income - is insufficient. These refunds will be determined having, regard to a minimum income to be called “ prescribed income “ thus - For an ex-soldier, £25s. per week; for his wife, 10s. per week; for each child, 5s. per week. If a soldier’s reduced family pension, plus other income, is less than the “ prescribed income “ for his particular family, the refund would be such an amount as would bring his total income up to the “ prescribed income “ : but, of course, the refund would not exceed the 20 per cent, reduction.
  2. The pensions of widows and widowed mothers, if they have no other income, are to be reduced by 10 per cent., and if they have other income, the pensions are to be reduced from 10 per cent, to 20 per cent., according to such other income.
  3. In the case of motherless orphans, that is, children of deceased ex-soldiers whose mothers also are dead, there is to be no reduction.
  4. In the case of all other dependants, there will be a general reduction of 20 per cent.

The idea is not to apply the reduction to the pensions of an ex-soldier who is unemployed, unless he has income that totals £2 5s. a week, if he is a single man, or a higher amount if he is married.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– Is an ex-soldier who receives a special pension to suffer a reduction of 20 per cent.?

Mr THEODORE:

– Yes.

Mr R GREEN:
RICHMOND, NEW SOUTH WALES · CP

– Then the worse his disability, the more he will have to lose.

Mr THEODORE:

– Every part of this plan is unpalatable to somebody. Let us consider, with all sympathy, and as much generosity as possible, each of the measures to be submitted by the Government, and, if the House can agree to modifications mitigating the hardship in individual cases, I do not imagine that the Government will offer any objection to following that course.[Leave to continue given.] Further savings will be made as follow:-

The practice of paying six months’ arrears of pensions is to be discontinued.

The practice of continuing pensions to war widows for two years after re-marriage is to be discontinued.

No further pensions’ are to be granted to “ new wives “ and “ new children “.

Future applications lor permanent pensions for tubercular ex-soldiers are to be assessed on the basis of disability. This will not apply to claims already lodged.

Mr Archdale Parkhill:

– If a person received an invalid pension of only 5s. a week, would that be reduced by 2s. 6d. ?

Mr THEODORE:

– Yes. All pensions will be reduced 2s. 6d. a week. The purchasing power of money is greater now than it was a few years ago, and therefore the pensioner will not be relatively worse off than he was two years ago. According to the cost of living figures, 17s. 6d. per week will purchase slightly more food and groceries than could be bought for £1 in 1925, when the pension was increased to £1.

I propose to submit a table showing the number of pensions operating in each year since the system was inaugurated; the expenditure on these pensions; the expenditure per head of the population; and the rates of pension, as well as information regarding pensions paid in other countries. The honorable member for Melbourne (Dr. Maloney) is interested in these particulars, and the publication of the figures will bring the information together in a handy form for reference purposes. Undoubtedly, Australia is much more generous than any other country in the matter of pensions. There is no other country that has a non-contributory invalid pension scheme, age pensions may be gathered from the The cost and number of invalid and old- following table : -

A comparison has been made between the pensions legislation of Australia and that of all other countries in the world concerning which information is available. In all, 29 systems have been investigated. Of these seven, nearly all of them in European countries, constitute a form of compulsory insurance, and are, therefore, not suitable for comparison with the Australian system. In any event, they are much less liberal. In Great Britain there are both contributory and noncontributory forms of pension legislation, but both are also much less liberal than the

Australian system. So far as Great Britain and the dominions are concernedj there is not a great deal of difference between the liberality of the Australian and New Zealand schemes. The Canadian and South African schemes are distinctly less liberal. It is worthy of note that Australia appears to be the only country with a non-contributory invalid pension scheme. The following table gives a comparison of the main points of the pensions schemes within the Empire : -

Of the European countries, Denmark and Norway possess the only non-contributory schemes. In both of these countries the provisions are less liberal than in Australia, as will be seen from the following table : -

In the United States of America pensions legislation appears to be of recent date only. In all only fifteen States of the Union provide for the payment of pensions. We have detailed particulars in respect of five of these States, but full information concerning the legislation in the other ten States has not yet come to hand. It would appear that the maximum rate of pension provided in the States is higher than in Australia, but this is discounted by the fact that the income limit is lower, and also by the fact that, generally speaking, the age qualification is 70 years. Moreover, in four of the five States concerning which we have details it is a condition of pension that the claimant must have no children or other person able to support him. Some of the States also provide that any pension paid shall be recovered, with interest, from the pensioner’s estate, and the pensioner may be required to assign his property to the State before the commencement of the pension. In view of the uniformity of legislation to hand, it is probable that similar provisions will appear in the legislation of the other States.

In addition to the saving in interest and thedrastic economies in salaries, pensions and maternity allowances, it is necessary to effect a further saving in the budget of approximately £1,000,000. The field available for the saving is limited to £8,650,000, and includes expenditure on the Defence Department, repatriation services, bounties, superannuation contributions by the Commonwealth, section 84 pensions, and other special appropriations, the ordinary votes for the post office, railways and territories, and miscellaneous expenditure.

Mr Archdale Parkhill:

– What about overlapping services?

Mr THEODORE:

– Any savings that can be made in that direction will come out of this field, and will be included in the £1,000,000. Any diminution of the economies proposed in regard to salaries, wages and pensions, will also have to be made up out of this limited field. The following statement summarizes the proposed measures for improving the budget for 1931-32 : -

No one can minimize the severity of the economies that have been forced upon the Commonwealth - not forced upon it by its political opponents, nor by outside institutions, but by the realities of the case. There is evidence, if one can judge by the interjections that are being made, that some honorable members are hostile to this plan. If such honorable members can bring forward any other plan as an alternative, which will be adequate and practicable, or, if they can show where this plan is defective, their representations will be carefully considered. The Government will be quite willing to give consideration to any criticism of the details of the plan which reveals possibilities of easing the hardship in certain directions, and of making more equitable adjustments in other directions.

Mr Lazzarini:

– We shall remind the Treasurer of some of his own wild talk when he was in Opposition.

Mr THEODORE:

– If the honorable member follows the sound lines that I followed when I was in Opposition, I shall not complain of his criticism. I commend this rehabilitation plan to the earnest consideration of honorable members as not only practicable, but inescapable, if we are to meet the present emergent position. Any additional details can be given honorable members when the specific measures dealing with different aspects of the subject are before us.

Perhaps I should say that immediately after these emergency measures have been dealt with, the Government proposes to introduce the budget, so that the full effect of the economies may be obtained for the greater part of the financial year. We do not intend to delay the introduction of the budget, for that would mean that the economies would apply to only a portion of the year. The necessities of the case are so great that it is desirable that the budget should be introduced without delay. The emergency measures contingent upon the acceptance of the rehabilitation scheme may occupy our attention for two or three weeks. Immediately afterwards the budget speech will be delivered and the budget papers presented.

It is the intention of the Government to concentrate attention upon these emergency measures until they have been passed. This may involve additional sitting days and longer hours; but the work must be done without delay.

Mr Lacey:

– Apply the guillotine.

Mr THEODORE:

– That may be a convenient arrangement for honorable members.

Mr LYONS:
Wilmot

.- I suppose that never before in the history of this Parliament have members been called upon to discuss more serious and farreaching proposals than those now before us. My observations will be of a general character, for the reason that we have already had a wealth of detailed information made available to us which will take honorable members some time to assimilate.

Mr Beasley:

– Why does not the honorable member ask for the adjournment of the debate?

Mr LYONS:

– There is no necessity to do so. The urgency of the position is such that I am anxious to help the Government in every possible way. It is for that reason that I am not asking for the adjournment of the debate.

Mr Beasley:

– The honorable member knows all about the plan.

Mr LYONS:
WILMOT, TASMANIA · ALP; UAP from 1931

– I know the general principles of it, but not the details. I understand that many of the details were completed just prior to the delivery of the speech of the Prime Minister (Mr. Scullin). A number of measures will need to be introduced to give effect to the plan, and we can discuss the details when those bills are under consideration.

The position which faces Australia is extremely serious. The universal admission of this fact has led to the readiness of all political parties to co-operate in endeavouring to arrive at a solution of our difficulties. We feel that, regardless of party considerations, we are all called upon to do our best to help Australia out of her troubles. The economic disorganization that has occurred has severely shocked the whole community, and it is essential that we shall attempt to restore order into our business and commercial operations. The measures necessary to do this are unpalatable, but we must not, for that reason, shirk the duty of taking them.

Until two years ago a combination of fortunate circumstances enabled us to occupy a very happy economic and financial position. We went on our way with great cheerfulness. We were collecting high revenues; but unfortunately we were not only spending all the money that came to us, but were also spending large sums of borrowed money. While we were receiving high prices for our products, particularly our wool, and while our production was increasing in volume year by year, everything appeared to be right. Substantial returns from wheat and wool led to a continuous expansion of production in these directions. The same thing might be said, though to a lesser extent, of most of our other exportable products. But our good times ended very suddenly. We not only suffered a heavy reduction in our national income, due to the drop in world’s prices of our exportable commodities, but, as the Treasurer has pointed out to-day, we also, at the same time, reached the end of our tether as an overseas borrower. Our national income, which was £650,000,000 in 1927-28, fell to £564,000,000 in 1929-30, and it is estimated that it will fall further to £450,000,000 in 1931-32. It will thus be seen that we shall suffer a diminution of national income of £200,000,000 in, three years. I think it was Mr. Davidson, of the Bank of New South Wales, who recently pointed out in Sydney, that everything that we pay for individually or as a community, must be paid for out of that national income. We must therefore, reconsider our expenditure.

It has been pointed out that the deficits of the seven Australian governments will be £31,000,000 this year. In spite of economies that have already been made all »the governments are still falling behind. According to the reports presented to the conference held in Melbourne recently, the Commonwealth and State Governments are still drifting behind at the rate of £40,000,000 per’ annum. Unless this drift can be stopped, we shall have to declare a state of national insolvency.

Up to the present the loss in national income has been borne mainly by the primary producers, particularly the exporters; the unemployed and rationed wage-earners; and the recipients of profits from businesses. But the time has come when we must face the task of dia- tributing the loss over the whole community, in such a way that every section of the people will bear its fair share. It is for the purpose of achieving that result that the rehabilitation plan has been submitted to us.

It has been apparent for some time that the drift in our finances must bring the country into a serious condition, and close observers have for several years been warning the governments of Aus1 tralia, and also the people generally, that disaster would inevitably overtake them unless they mended their ways. Among many recent warnings was that contained in a paragraph in the report of the Board of Directors of the Commonwealth Bank, dated 24th January, 1930, which read as follows : -

The feeling generally exists that no immediate improvement in the depressed condition of the internal trade of Australia can he anticipated, and whilst avoiding any comments which might savour of pessimism, the fact has to be faced and every effort must be put forth in the direction of increased production and reduced expenditure upon unproductive work. The effective putting into practice of these remedies is the solution, and evasion or procrastination will only tend to postpone the desired improvement, which, undoubtedly, can be achieved from the utilization of the great potentialities of this country.

A conference of Commonwealth and State Ministers was held in Melbourne, in July and August of last year, which has come to be known as the “ Melbourne Conference “. That conference had the privilege of hearing the views of Sir Otto Niemeyer on the financial position of Australia. In view of the criticism hurled at this gentleman and also o’f the fact -that his words have come true, it is well that his opinion should be placed on record, although it was comparatively unheeded at the time it was expressed. Sir Otto Niemeyer said on that occasion -

Australia must be treated as a whole, and the reactions of interstate finance and of State and Federal finance are essential to a complete view. In this matter the fortunes of the whole are the fortunes of the parts, and the failure of any of. the parts will be the failure of the whole.

Sir Otto Niemeyer then sketched the position which confronted Australia, and said -

The only minor alleviation of this gloomy picture is that, apart from the £30,000,000 of unfunded debt, Australia, by a great piece of luck, has no external maturities in 1930 and 1031. That means, in effect, that she has a maximum period of two years in which to put her house straight.

Later, when referring to the proposals which were ultimately adopted as resolutions by the conference, he said -

You will, I hope, allow me to express the opinion that these proposals are wise and necessary. If they were publicly adopted by all concerned, Australia would then be able to turn to the question of gradually liquidating her outstanding obligations in London, which, in itself, in any circumstances, is not likely to be an easy operation or one which could be carried through, except by stages.

The final words of Sir Otto Niemeyer to the conference were -

The situation is difficult and calls for a considered programme and united action. But I wish to make it quite clear that, given determined action, it is in no way beyond control. The difficulties of Australia are not comparable with those from which many other countries have successfully emerged, and have only to be squarely faced to be capable of solution.

The proposals to which Sir Otto Niemeyer referred were, of course, the resolutions ultimately adopted by the conference, which expressed a determination to balance the budgets of the Commonwealth and the States for the financial year, 1930-31, and to maintain similarly balanced budgets in future years. It was also agreed that, in the event of there being any indication of revenue falling short in any subsequent year, immediate action be taken during the year to ensure the balancing of the budget. Both Sir Otto Niemeyer and Sir Robert Gibson recognized the sacrifices that were involved in their proposals. The resolutions of the Melbourne conference concluded in the following terms : -

The voluntary acceptance of these sacrifices is, in the opinion of the members of the conference, the only possible way of avoiding the infinitely greater and more prolonged sacrifices that would be involved in any failure to meet our national obligations.

It was recognized by the representatives of the Commonwealth and of the States who attended that conference, that any delay in giving effect to those proposals would bring about an infinitely greater sacrifice on the part of the community at a later period. The views expressed by the conference were prophetic, because the proposals that are before us to-day will make the sacrifice infinitely more drastic than what was contemplated by Sir Otto Niemeyer, Sir Robert Gibson and the Melbourne conference.

Mr Beasley:

– Then the Governments proposals go further than the proposals which the honorable member submitted when he was Acting Treasurer ?

Mr LYONS:

– The sacrifice now proposed must be heavier because of the delay which has taken place since the economy proposals were first agreed to by the conference. Later, an exceedingly important warning was given by Sir Robert Gibson, as chairman of the conference, to me, as chairman of the Loan Council at that time. On the 13th December last he repeated the warning that he had given on other occasions. He said -

In all seriousness, the banks must press upon the Loan Council the facts that the total expenditure of Australia, whether indulged in by governments, or by people as a whole, must be in accord with the total income available for such purpose, and not until

Australia as a wholeis prepared to accept this fundamental principle can the hanks see any hope of extricating Australia from her difficulties and eventual disaster.

On the 5th March, of this year, the Board of Directors of the Commonwealth Bank repeated its warning. Finally, on the 2nd April last the present Government received from Sir Robert Gibson, as chairman of the Commonwealth Bank Board, a striking warning, which was read, in conjunction with the reply of the Treasurer, to honorable members.

Mr Beasley:

– The Commonwealth Bank Board must have foreseen this development. Why did it not warn the previous Government?

Mr LYONS:

– I am unaware of what took place previously, but we were warned practically from the day that we assumed office. I have not forgotten, nor has the honorable member for West Sydney (Mr. Beasley), that when we first sat in cabinet we were surrounded with an atmosphere of depression because of the doleful tale of the Prime Minister and the present Treasurer. We were informed of the difficulties confronting Australia, of the increasing unemployment, and of other problems which had arisen because of the lack of finance. We received repeated warnings, yet no substantial action was taken to meet the position. I impress upon honorable members the seriousness of the position. If any further delay takes place in giving effect to these economy proposals, we shall soon be face to face with national insolvency. When I was Acting Treasurer, at least some of the members of the Cabinet made every effort to cope with the situation. We recognized its seriousness much earlier than did the Cabinet as it is now constituted. The Prime Minister has said that it is a disappointment to him to have to declare in this chamber in f avour of a reduction of pensions, salaries and other services, reductions which he declared at one time he would never make. He objects to what are described as the cheap sneers that may be cast at him because he has been compelled to somersault and eat his words. I sympathize with the Prime Minister and those associated with him, because I know that noother course than that now proposed can be followed. I recognized the position long ago. I knew that sacrifices were inevitable, not because I had a special knowledge of the circumstances, but as the result of our investigations, and the advice that we obtained from those who are now advising the Government. I made proposals that brought nothing but condemnation upon my head. . I was charged with being recreant to the pledges that I had given to the people. Some of my closest and best friends condemned me, and, in contrast, hailed as heroes, some of the members of the present Government. I received little or no assistance, even from those who are to-day supporting proposals infinitely more drastic than those which I submitted to this House.

Mr Lazzarini:

– The victor can afford to be generous.

Mr LYONS:

– I am no victor, but I am generous. To-day I am doing my utmost to assist the Government to rehabilitate our finances, and to resuscitate industries in this country, so that employment may be found for many of those who are now out of work. The proposals which I, as Acting Treasurer, submitted to honorable members, would have involved a much lighter sacrifice on the part of the lower paid members of the Public Service. . There would have been a tax of roughly 11 per cent, on the salaries of public servants, inclusive of the loss of the cost of living allowance. To-day the public servants are being asked to accept a reduction in salary of 20 per cent. I did not submit my proposals with any pleasure. Because of the policy of the Government, which stood for the maintenance of the arbitration system, it was decided that we should consult the representatives of the Public Service. We did so, and put our proposition to them. The Acting Prime Minister and myself particularly appealed to them, and made it clear, as the Prime Minister is doing to-day, that we regretted the necessity, of asking for any sacrifice on their part, but that it was unavoidable in view of the state of the finances. Last year we warned the public servants that what the Prime Minister has said to-day may happen in July would be inevitable unless preventive measures were taken. . To-day that danger is nearer actual fulfilment, but substantially the position is the same as it was then. Upon those grounds we appealed to the public servants to accept a percentage reduction of salaries; but I have always been reluctant to cut public expenditure at the expense of individuals, and I would not resort to that expedient if it could possibly be avoided.

The proposals now submitted by the Government are in effect those adopted at the recent conference of Federal and State Ministers, and they cover the whole field of finance. So far as the economies in the Public Service are concerned, honorable members of the Opposition recognize the need, for proposals at least approximating those made by the Government. I shall not go into details now, but, so far as the general principle is concerned, the Opposition will take its share of responsibility and help the Government in its difficulties. That applies also to the other economies, particularly those relating to pensions and the maternity allowance. I recognize that approximately the amount estimated by the Government must be saved unless the country is to default, at least partially. Therefore, I am prepared to give to the Government the fullest assistance in respect of the general proposals, reserving the right to suggest alterations of details. The Treasurer stated that, if the Opposition could offer suggestions that would improve the Government’s scheme in details, and soften the sacrifices which the community is asked to make, he would listen to them sympathetically, provided, of course, that they did not reduce the amount of relief to be given to the budget. We do not know yet exactly what the Government proposes in regard to taxation, but when the details are before us we shall deal with the measures reasonably and fairly, and with a desire to help the country through the Government. In regard to war pensions, the Government knows the total amount that must be saved in this field, and I suggest that it would be more satisfactory if the Treasurer, before completing the details, consulted with representatives of the various soldiers’ organizations.

Mr Beasley:

– What about the representatives of the aged and infirm?

Mr LYONS:
WILMOT, TASMANIA · ALP; UAP from 1931

– It is utterly impracticable to consult the old-age and invalid pensioners, but there are organizations representing different sections of soldiers. I believe that, in the administration of the pensions department, further extensive economies are possible, apart from the proposed percentage reduction of the total expenditure. The Government has, I understand, already given special attention to this matter with a view to achieving all practicable economies, but in connexion with the actual pension payments there are anomalies, and,- possibly, abuses, in the rectification of which the soldiers’ organizations could assist the Government. This consultation could take place without any great loss of time. The soldiers are in a special class. They made, during the war years, sacrifices for which no monetary payments could compensate them.

Mr James:

– Do not forget the pioneers.

Mr LYONS:

– I recognize our obligation to the aged, but they are in a different category, I am not suggesting that the total amount to be saved in respect of pensions should be reduced, but I believe that consultation with the soldiers’ organizations would enable the Government to apply the cuts more equitably than would be possible by merely departmental action.

Mr Coleman:

– Would not a better alternative be an extensive inquiry into the repatriation system?

Mr- LYONS. - No. I recognize, the difficulties of the Government. In July, it must get certain budgetary relief, that must be continued throughout the financial year if the undertakings given to the representatives of the other Australian Governments are to be honoured, and I shall put no impediment in the way of completing that plan as early as possible. If more time were available the inquiry suggested by the honorable member for Reid (Mr. Coleman) . might be acceptable.

Mr E RILEY:
SOUTH SYDNEY, NEW SOUTH WALES · ALP

– Would the honorable member insist on the carrying out of the whole plan before even one State Parliament has accepted it ?

Mr LYONS:

– We must act immediately; we cannot wait until the State Governments have acted. Let us attend to our job; they must attend to theirs. I understand that they are legislating simultaneously with this Parliament, with the possible exception of one State Government, upon which the honorable member for South Sydney (Mr. Riley) may bring his influence to bear. I hope we shall proceed at once to complete the work that is before us, and that it will be acceptable to the whole Parliament and the country.

The Prime Minister (Mr. Scullin) stated that this is the first occasion on which a definite and complete proposal has been, made for every section of the community to contribute .towards the general sacrifice. That is not correct. It may be true of governments, but honorable members on this side, while advocating economies in government expenditure, stated repeatedly that that policy should be accompanied by a reduction in the rates of interest paid by both private and public borrowers.

Mr Lewis:

– The honorable member did nothing of the kind.

Mr LYONS:

– Long before the economists suggested to the conference of Ministers in Melbourne a large conversion loan, I said in this chamber, and on the public platform,, that the right policy to adopt was to effect the maximum possible economies necessary to bring the expenditure into a more healthy relationship to revenue, and that then the bondholders should contribute their share. I definitely advocated huge conversion loans in respect of both the internal and overseas debt. Naturally, I am gratified by the knowledge that every part of the policy I have advocated for the last twelve months is now being put into operation by the Government, and it follows that I am prepared to assist the Government to give effect to that policy. My only regret is that the Government did not realize earlier the necessity for doing on a smaller scale what it is compelled by circumstances to do move extensively now. As a result of the delay, the resuscitation of industry has been deferred, more men have been thrown out of employment, and destitution and want are greater than they would have been had this plan been adopted months ago when it was advocated by honorable members on this side of the House.

A sacrifice is to be asked of those who are deriving interest from government bonds, and I am glad that the Government is standing by the voluntary principle. Hp to the stage at which Senator Pearce, the Deputy Leader of the Opposition (Mr. Latham), and I were invited to confer, the Melbourne conference had decided that an appeal should be made to bondholders to convert on the basis of a 22^ per cent, reduction of interest, but the invitation was to be accompanied by a threat that those who refused to convert would be subjected to a penal tax of 25 per cent. The task of the conference was to devise mean’s of restoring public confidence, and any threat of compulsion would have had the very opposite effect. We believed that it would be better to have faith in the patriotism of our own people. The bondholders have been subject to a lot of condemnation, but it is well to remember that many of them have taken up bonds to a very limited value and will be embarrassed by the reduction of interest. There are poor men and women who have invested the whole of their small savings in government securities, and they will be hardly hit. Only during the last few hours I received a letter from a man who told me that when the appeal was made last December for the conversion of the £28,000,000 loan, he put all the money that he owned into it, with the exception of £5, knowing that the country needed it. To-day he is out of employment,’ and could well do with some of that money. And there are thousands of other people similarly situated. I and other honorable members on this side have definite instances of that. It is, therefore, wrong to condemn bondholders as a class. Surely honorable members recognize that the £30,000,000 which Australia borrowed annually for years, and which” resulted in a so-called prosperity, was passed on, in the main, to the workers of the “country. The Government appealed to those people, borrowed their money, and entered into a definite contract with them. To-day they are asked to contributesomething towards the sacrifice that hasto be made by the community generally. We know that the alternative to doing so will be a greater sacrifice on their part, as they will lose their investment. Those who attended the last Premiers Conference in Melbourne felt that they could freely make an appeal to these people to- come to the assistance of Australia. Never have our people failed to assist their country in its hour of need.

Mr Yates:

– Its soldiers certainly did not.

Mr LYONS:

– They assisted Australia in the greatest crisis through which it passed, entirely voluntarily.

Mr Beasley:

– Most of them were workers.

Mr LYONS:

– The Australian Imperial Force was representative of all sections of the community. I agree with the Prime Minister when he says that if we can successfully effect a voluntary conversion of our internal loan it will he one of the finest possible advertisements for Australia in the eyes of the world, and will restore confidence in this country. It has been asked “ What of those who will not convert?” The conference decided that it is better to deal with any situation that might arise in the future when the time comes; that it was inadvisable to hamper the conversion with threats of any kind. If the people of Australia are appealed to in the proper spirit I have no doubt as to the result. The appeal must come not from individuals, but from this Parliament, representative of the whole of the community. I am pleased that at last these proposals are placed before us.

Mr Yates:

– The honorable member’s halo is again becoming visible.

Mr LYONS:

– I am not conscious of any halo, and I see nothing to boast about in connexion with anything that I have’ done. I merely regret that the Commonwealth Parliament did not grapple with this problem earlier. I am confident that had it done so, the shipment oven-seas of £5,000,000 of Australia’s gold reserve to meet immediate commitments in London would have been unnecessary. The whole of our economic circumstances would have improved, and Australia’s credit abroad would be ob a higher standard than it is to-day. Honorable members of the Opposition appreciate the difficulties that confront the Government. They realize the magnitude of the task ahead, and on their behalf, I give the assurance that, irrespective of the political convictions of the Government in power, they will meet it in the cooperative spirit that is so essential if Australia is to escape from the economic morass into which it temporarily finds itself.

Mr LAZZARINI:
Werriwa

.- This will long be remembered as the day of Labour’s disgrace and degradation. In the first place, I take the Treasurer (Mr. Theodore) to task for having stated that no suitable policy was previously advanced to help Australia. Frequently, in the caucus room, the honorable member for Wilmot (Mr. Lyons), the honorable member for Maribyrnong (Mr. Fenton) and others, put forward proposals which the present Treasurer described as “ tripe “, as fanciful illusions, and which he strenuously opposed. For eight long, weary months the honorable gentleman resisted the introduction of a policy upon which, with amplifications, he bases his present plan. Surely nothing more is needed to prove his incompetence and political stupidity. To-day he will advocate a scheme. To-morrow, in order to gain political advantage, he will drop it. He takes everything, and gives nothing. All his ideas are reactionary. To-day, he has not a policy, nor will he ever have one that is worth a snap of the fingers to Labour, He will adopt any expedient to pull himself out of an awkward political corner. His position to-day is similar to that of a fox which has been cornered by dogs, and has to fight for its life. That is what the honorable gentleman is now doing. Instead of rehabilitating Australia, this policy of his will push it further into the mud. The sum total of the “ wonderful leadership “ of the Prime Minister, supplemented by the “ remarkable capacity “ of the Treasurer, is merely retrogression, so far as Australia is concerned. For over eight months they have delayed the rehabilitation of the country.

This is not a Labour policy that has been put before the House - it is merely something that will make the reactionary forces of the country laugh. It cuts right across the idealism, the principles, and the philosophy of Labour. If this can be described as Labour’s policy-

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

– It cannot..

Mr LAZZARINI:

– I agree with the honorable member. If it can be described as the policy of Labour, I say to the men and women who are members of our industrial organizations, who have made sacrifices and fought strenuously for the cause of Labour for 40 years, look after your gardens and your own affairs, let Labour alone; it is no longer of any use to you. I urge them not to support a policy that jettisons every ideal of Labour, that contemplates a reduction of 2s. 6d. a week in the pensions paid to the aged and invalid members of the community. The tragedy of the whole thing leaves one almost incapable of expression. If this is to be the result of the ceaseless striving of the industrialists for 40 years, the movement will go into oblivion, “ unwept, unhonoured and unsung.”

Mr Archdale Parkhill:

– That is what will happen to Lang.

Mr LAZZARINI:

– Politically and physically Lang will be alive long after the honorable member has faded into deserved obscurity. While I pledge my allegiance to no individual, I admit that the only man in Australia whose name is politically worth while is Jack Lang, who has the courage to fight for the people whom he represents.

On more than one occasion this Government has repudiated parts of Labour’s policy. I shall endeavour to make known the principles enunciated by the present Prime Minister to an industrial conference that was held in 1921.

Mr Archdale Parkhill:

– That is ten years ago. Surely conditions have changed since then.

Mr LAZZARINI:

– The Prime Minister was then a mature man. For years, when he was “ heeler “ to the Nationalists, the honorable member for Warringah (Mr. Parkhill) vented his political spleen against Mr. Scullin. Now he is trying to defend him. If the Prime Minister cannot find a better apologist than the honorable member for Warringah, he should hang his head in shame. Anyhow, I assure the honorable member that the Prime Minister does not thank him for his defence. The reactionary forces have achieved their heart’s desire. They have, forced a Labour Government into a position in which it has to reduce pensions and wages. Presently the Government will be taking the pennies from the blind. Even now they are taking money from the old and infirm. I recently received a booklet from the Returned Sailors and Soldiers Imperial League in which instances were given of maimed soldiers, men who have had both legs shot away, or have suffered other frightful injuries, and are now to have their pensions reduced, while the members of the Government continue to draw their £40 a week. The returned soldiers are to have their pensions reduced to £2 6s. a week, and yet members of the Government speak of the equality of sacrifice !

Mr Marr:

– The honorable member did not help the soldiers during the war.

Mr LAZZARINI:

– The honorable member had better be careful what he says. Some of those whose pensions are now being reduced did not come back from the war as fit as he did, nor was their economic position so good. When I see how the soldiers are now being treated, I thank God that I had sufficient sense to keep away from the war, which, it is generally admitted, was fought in the interest of capitalism, though the soldiers did not believe that at the time. As a matter of fact, the victorious participants in the war gave better terms to the defeated nations than Australia is receiving from her creditors at the present time. If these proposals are accepted, every vestige of the Labour policy will be destroyed.

Mr Marr:

– They never had one.

Mr LAZZARINI:

– They did have one, but now their policy is the same as that of the party opposite. That, no doubt, is why the honorable member does not like to see it attacked. The Government has betrayed Labour.

Mr Archdale Parkhill:

– ‘-Then why not put it out?

Mr LAZZARINI:

– If honorable members opposite will give us the opportunity on this bill we will put the Government out. If these proposals are accepted inside this House and outside it by Labour organizations, Labour will not live down the shame of it for 50 years*

Mr Beasley:

– They will not be accepted.

Mr LAZZARINI:

– I do not believe that they will. No one can justify the cutting of wages and pensions in this way. Those who have defended the interests of the workers in the past, and now agree to this proposal, must have been talking with their tongue in their cheek. The acid test will be applied when a vote is taken on this proposal. Evidently the only member of the Government who had the courage to oppose the plan was the honorable member for Flinders (Mr. Holloway), who resigned his portfolio. The whole thing was a betrayal, which had to be done in secrecy. A secret meeting of caucus was held, and a secret ballot taken. Members of the party did not dare to put up their hands to indicate how they stood.

Under the agreement the tax-free bonds are to remain tax free. The Treasurer spoke much of the cost of living. Evidently it has fallen a little, and so the old-age pensioners and the maimed soldiers are to lose half-a-crown a week and more. If this were not taken from them they might be able to buy another packet of cigarettes or another pint of beer, and that would never do ! This is the man who speaks of equality of sacrifice, while he draws his salary of £40 a week! Every 10 per cent, fall in the cost of living increases the value of the bondholders’ assets by 10 per cent. ; they lose much less in interest than they gain in the increased value of the principal. Nobody emphasized this more strongly than did the Treasurer himself when he was seeking the votes of the workers.

What is the policy of Labour at the present time? The platform is set out in the report of the All Australian Trade Union Conference, held in the Trades Hall, Melbourne, from 20th June to 25th June, 1921. One of the objects of the Conference was to bring about a reconciliation between the industrial and political wings of the Labour movement. A committee was set up to frame a platform, and the chairman of that committee was Mr. Scullin, now Prime Minister, who later moved for the adoption of its report. The platform drawn up at that time was as follows: -

That, in recognition of the fact that this is an era of social production, this conference declares that craft organization, as a workingclass weapon, is obsolete, and pledges itself, and all its future representatives, to organization of the workers along the lines of industry, as shall be decided by the organization committee of this conference.

The nationalization of banking and all principal industries, and the municipalization of such services and supplies as can best be operated in limited areas; adult franchise and extended powers to be granted municipalities for this purpose.

The government of nationalized industries by boards, upon which the workers in the industry and .the community shall have representation.

The establishment of an elective supreme economic council by all nationalized industries.

The setting up of labour research and information bureaux and of labour educational institutions, in which the workers shall be trained in the management of . nationalized industries.

That the foregoing be sent to the Australian and New Zealand Labour Parties, as a recommendation that it be the fighting plank of the platform, believing that only by the abolition of the capitalist system can working-class emancipation be achieved.

That all parliamentary representatives be required to function as active propagandists of the objective and methods of the movement.

Mr. Scullin made a speech during the conference, in the course of which he said -

The parliamentary machine has been used to give sanction to the schemes of the capitalistic system.

In the same speech he said that the Economic Council of Industry was to take the place of Parliament, and, eventually, must take its place. He continued -

They would be able to show those people who had a grip upon the whole of industry, and would be able to answer the question why money could not he-raised to feed the unemployed in this country.

From Melbourne the conference adjourned to ‘ Queensland, where consideration was given to the subject of the socialization of industry. At that time Mr. Scullin was fighting Mr. Theodore. Mr. Scullin was outside Parliament and was fighting for what was called the “ red objective”, while the present Treasurer was telling him that he was trying to Russianize Australia. Mr. Scullin then said that the capitalistic system was rapidly falling into decay, and that world events were accelerating that decay. Now he is trying to induce Parliament to accept a proposal to bolster up the falling capitalistic system.

The Treasurer says that we must reduce pensions; that there is no other way of saving money. What did he say in 1929 when he was trying to get into Parliament? He was then tickling the ears of the coal-miners in order to extract from their organization, which was putting up a most heroic fight to maintain their wage standard, a sum of £1,000 for his party funds, in order that he might become Treasurer and draw his present substantial salary. Afterwards, he was prepared to sell the miners. He has declared that there is no harm, in order to get votes, in making statements by which one is not prepared to stand. The other day he admitted that he was then engaged in a political campaign to catch votes, and that it did not matter if he failed to keep his promises, According to the Labour Daily of the 12th July, 1929, the Treasurer is reported as follows : -

Mr. Theodore demonstrated how the Federal Government, all the time it was squealing about the ruin which was overhanging Australia, was paying out tremendous and unnecessarily large sums of money as interest to investors in federal loans.

Statistics showed that a very small percentage of these loans was subscribed out of the savings of the ordinary people, and the actual implication was they were being subscribed by the coal barons, shipowners and big business men, from the profits of industry.

Now, of course, it is the savings of the people, of the widows and orphans, which we must safeguard ! At that time he was talking to the coal-miners. He continued -

It was characteristic that the Bruce-Page calamity-howlers were not proposing to make any of these people pay for the financial setbacks of Australia. The workers’ beer and tobacco and kiddies’ picture show entertainment were being made foot the bill.

Now the pennies of the poor are being taken to foot the bill. Now he is laying hands on the half-crowns of old-age pensioners, and of wounded soldiers. But he goes on -

Commonwealth loans were returning £5 7s. per cent, to investors, while banks, such as the Australian Banking Company, English, Scottish and Australian, the Bank of Australasia, Bank of Commerce, Union Bank, National Bank, and others, were paying only £4 15s. per cent. This boosting of interest was alone costing the Federal Government £250,000 a year. The Deputy Labour Leader referred scathingly to the *’ gilded roosters “, who were doing so well on these loans. One big business man, some years ago, he said, made a demonstration of putting £1,000,000 into Commonwealth loans in a lump sum. He was regarded as a true patriot. But he would have done better to put his money into productive enterprises rather than sit back and lazily gather in by the sweat and toil of the workers, £55,000 a year as interest on his loan.

The Treasurer went on to deplore the fact that during this period “ when times were so bad “ the workers’ wages had to be sacrificed. He continued -

There were 2,000 people on the income tax list whose incomes were over £5,000 a year.

Their aggregate income was £21,000,000 and their average income £10,000. Last year this class increased by 300, and the income by £3,000,000. Where were these people when wage cuts were being proposed? Why were not their wages cut first?

Then the Minister proceeded to prove how wealthy the banks were. Now, however, according to the Treasurer, the bankers are poor people who are endeavouring to do their best to help the country; he is submitting to their dictatorship. Let me further quote from the former remarks of the Treasurer -

We could face the world without a fear of the dreadful calamity that’ Air. Bruce predicted, said Mr. Theodore. Where were the banks failing? Where were the businesses closing? Were the capitalists suffering a diminution of revenue? Where was property declining? These were the real tests as to whether the country was economically sound. “ There arc tremendous funds yet from which to draw,” he proceeded earnestly. “Don’t ask women and children to go hungry until you have asked others at the other end of the social scale to do their bit.”

Now the Treasurer, and the Prime Minister, have become calamity howlers; they are both squealing about the unpleasant job that they have to do. Why do they not go out of office, and let others have an opportunity to govern Australia? I have shown the attitude of the Treasurer when among the coal-miners. Speaking in the Sydney Domain, when he tries to fool the workers, he has the red flag flying above him; but he is no longer a Labour man, so far as the Labour party in New South Wales is concerned.

I intend to refer to other members of this Government of surrender; this cabinet of “ white flaggers “. The AttorneyGeneral (Mr. Brennan) has subscribed to this wage and pension reduction policy. He has given his vote for a cut in the wages and salaries of public servants, and in the payments made -to invalid and old-age pensioners, and he is prepared to reduce the pensions of exsoldiers. When the Attorney-General was in opposition, the atmosphere of this chamber was almost turned blue by his fierce invectives against the capitalistic system and all for which it stands. He was one of Labour’s roaring lions, and was always ready to rend and tear; but now he is as harmless as a domestic cat. He is not game to put up a fight for years, thing; he was not prepared to stand to his guns in the fight over the Arbitration Bill. There has been betrayal all along the line. A few years ago the Minister for Home Affairs (Mr. Blakeley) was annually ejected from the chamber, because he worked himself into a frenzy on behalf of “ the boys “ at Broken Hill. At one time there was no better fighter than he in the Labour ranks, but now he has joined the other members of the Government. The Postmaster-General (Mr. A. Green) had the effrontery to say that those who did not vote for the policy decided on by the conference had “ a yellow streak’-‘. The Minister is now yellow from the top of his head to the soles of his feet, though he used to thrill “ the boys “, and stimulate the revolutionary spirit by singing the “ Red Flag “ and “ Solidarity “. Now he would no more sing the “ Red Flag “ than he would surrender his job. To-day he is prepared to take half a crown a week away from the old-age and invalid pensioner, and the ex-soldier, yet he sticks to his own £36 or £40 a week, and squeals about equality of sacrifice. The red flag is 30 besmirched now that one cannot recognize its color; the Ministry has hoisted in its stead the white flag of surrender.

One cannot worry about the Minister for Markets and Transport (Mr. Parker Moloney), who has never known whether he is a Labour man, a member of the Country party or a Nationalist, but the electors know now that he is a Tory and a reactionary. As for the Minister for Trade and Customs (Mr. Forde), he has always apologized at election times for the views held by him. He need not apologize any more; by casting his vote in favour of the Government’s policy he has shown that he is not a Labour man. The Minister for Defence (Mr. Chifley) was once a Labour advocate in the Arbitration Court, and, I may say, a very able one; but he has now repudiated his advocacy of higher wages for the workers, and he stands for cuts in wages. We had the sorry spectacle of the Minister, in replying to a question asked this afternoon by the honorable member for West Sydney (Mr. Beasley), repudiating the decision of his own organization. I hope that the decision of the Australian Workers Union will cause the rank and file of that organization to determine that it shall again become the powerful fighting force that it was for many years. The Minister for Health and Repatriation (Mr. McNeill) was one of the most militant members of the organization. He is familiar with the conditions of the workers who have to bear the heat and burden of the shearing sheds, and the dust of the country tracks. He knows that, for years, members of that organization and their families put their sixpences and shillings into the Labour funds. Yet, knowing all this, in his declining years he has repudiated the decision of the organization for a few more paltry months on the treasury bench. There could be no more tragic spectacle than that of a man with such a record drawn into a betrayal of this character.

Mr Cusack:

Mr. Cusack interjecting,

Mr LAZZARINI:

– The honorable member wa3 returned for Eden-Monaro by a turn of fortune as great as that of the winner in a Tattersalls sweep; but his electors now know him in his true colours, and they will not return him again. He cannot even depend upon the cemeteries in his electorate. Even the dead will refuse to vote for him this time. They must turn in their graves at his betrayal.

Members of the group with whom I am associated have had no opportunity of perusing the documents used by the Treasurer in speaking to the bill. The Leader of the Opposition, apparently, was supplied with some notes on the measure, but we could get nothing of that nature. Although the Treasurer has taunted us with the remark that we have no alternative proposal to offer, we have a better pi an than that submitted by the Government, and we are prepared to adhere to it. The Treasurer has favoured about five plans, every one of which he originally condemned as useless. Our plan was outlined in the caucus room. It was carried, on a certain occasion, when the Treasurer supported it, by 26 votes to

  1. On that occasion, however, the party was having a fight, not over a plan, but over the Treasurer himself, who now has the caucus hoodwinked. The majority in the caucus do not fight for principles. In saying that I exclude the honorable member for Adelaide (Mr. Yates), the honorable member for Melbourne (Dr. Maloney), and some other honorable members.

The Attorney-General (Mr. Brennan) would not touch the Government’s plan for reductions of wages and pensions until the Treasurer adopted it. Similarly he would not have anything to do with a fiduciary note issue until the Treasurer advocated it. The Attorney-General follows men, not principles. Proposals of a character such as are accepted by the Treasurer were submitted immediately the Government took office, and the Attorney-General raised his voice against them. On some occasions he said that he did not understand them. He does not understand them to-day; but, since the Treasurer supports them, the AttorneyGeneral accepts them.

Mr Brennan:

– I have never understood the honorable member forWerriwa.

Mr LAZZARINI:

– Nobody understood the Attorney-Generalwhen he moved the second reading of the Arbitration bill. A more glaring example of ineptitude and stupidity than that displayed by the Minister in introducing that measure would be hard to imagine. The members of the group with which I am associated have a plan which we shall put forward, and by which we shall stand until it reaches fruition. However those honorable members who may be termed “the heelers “ of this Government may betray the principles of Labour, itis abundantly clear that before very long they will have to adopt the plan which we are advocating. Its ultimate adoption is as certain as is the rising of the sun. Some honorable members may laugh and sneer at what I have to say, but they will see, within perhaps a few months, that the policy I am advocating is correct. The Leader of the Opposition (Mr. Lyons) has frequently referred to what he said could be foreseen, but will he deny that we told him and the Government of which he was once a member that the position which we now have to face was inevitable, and that what he was trying to do would be as ineffective as it was to try to take the dint out of the rubber ball. His present actions will’ result in making that dint even larger. It is inevitable that within another three or four months another “ cut “ will have to be made. It will be found that the reductions proposed in this instance are only an instalment of a more comprehensive scheme of reductions and retrenchment. That is as inevitable as the laws of nature. All that the Government is doing to-day is to take a little more from the national reservoir, while no attempt is being made to replenish the supply, so that it must eventually be exhausted. We are now reaching that point. The only way to regain financial stability is by releasing credits, as has been repeatedly proposed in this chamber and in caucus. I do not wish to dogmatize. It is very risky to prophesy, but I am prepared to assert that the policy now proposed by the Government will not provide work for thousands as is suggested, or assist in producing budgetary equilibrium, but will result in our deficit being even greater than it is to-day, and in thousands of additional men being thrown upon the labour market. This is a world problem, and every country that has adopted the same stupid formula is in a similar position to the Commonwealth. Whether the policy adopted is that enunciated by the Treasurer (Mr. Theodore), or the Leader of the Opposition (Mr. Lyons), it must fail. It will be found so nauseatiug that in three months’ time those who are now supporting it, will be avoiding it because of its odour. It is all a matter of bluff, but the bluff has now been called.

Mr Maxwell:

– Has the plan advocated by the honorable member ever been put into operation in any country?

Mr DEPUTY SPEAKER (Mr McGrath:

– The honorable member’s time has expired.

Mr PATERSON:
Gippsland

.- I listened with a great deal of interest to the speech of the right honorable the Prime Minister (Mr. Scullin), and also to the detailed statement of the Treasurer (Mr. Theodore). I am, of course, somewhat at a disadvantage in discussing the important proposals embodied in this measure without the customary opportunity of closely studying them that is provided when an adjournment of a debate is granted. However, I desire -to assist the Government as much as possible to get on with the business of the country, and do not offer any objection to the course adopted in this instance. The figures quoted by the Prime Minister, which were furnished by a committee of experts, to a conference of Commonwealth and State Ministers, recently held in Melbourne, show the appalling extent to which the Commonwealth has failed to live within its income. The Prime Minister informed us this afternoon that the aggregate deficit of all governments, Commonwealth and State, on the 30.th June would be £31,000,000, and that, if the present rate of governmental expenditure is continued, at the end of the next financial year it will be £40,000,000, or a total of £71,000,000 in two years Those figures disclose how great has been our dependence in the past upon the high prices which we formerly received for our wool, wheat and other exportable produce for meeting expenditure on a basis which has increased so enormously since the war period. It is interesting to compare the difference between expenditure to-day and in pre-war years, and to endeavour to determine the reason for the tremendous increase. During the present financial year the war has been responsible for additional Commonwealth expenditure alone of approximately £30,300,000, of which £22,000,000 is for interest and sinking fund payments on the war debt, and £8,000,000 for war pensions and medical services. Obviously, that expenditure is wholly additional to that which had to be met in pre-war years. If we refer to the cost of social services - the next biggest item of expenditure - we find that in 1913, the year before the war, the total expenditure on invalid and old-age pensions was £2,500,000. Two years ago that expenditure had increased to £10,000,000, and last year it was, in round figures, £10,750.000. This year it closely approaches £12,000,000. If we add to that expenditure the cost of the maternity allowance, the charge upon the Government for social services this year will be quite £12,500,000. On these items alone the Commonwealth has to face an additional expenditure of £40,000,000, as compared with pre-war years. The Prime Minister informed us this afternoon that the total Commonwealth expenditure for next year, if the present rate were maintained, would be £80,000,000. The figures I have quoted show that not les3 than one-half of that expenditure is accounted for by ‘the costs arising out of the war and by the postwar expansion of our social services.

Let us now consider the financial position of the States. I intend to select merely a few of the more important items, and not to go into detail. The States were not in any way burdened by finding money with respect to interest payments on war loans and so forth, although they incurred considerable expenditure in regard to soldier land settlement schemes. During the past decade the national debt of the States has increased by more than £200,000,000, and the interest on that increase necessitates £10,000,000 more being annually provided by the State authorities. In pre-war years every State railway system, almost without exception, was a revenue producer, but now they are all losing money very heavily. Indeed the extent to which the total railway deficits of the States coincide with the actual budgetary deficits of those States is remarkable.

Sitting suspended from 6.12 to 8 p.m. [Quorum formed.]

Mr PATERSON:

– The country did not feel this heavy load for a. number of years, mainly because the price of our wool, wheat, dairy, and other primary produce was high. But to-day, when the value of our exportable goods has dropped to about half what it was formerly - in some cases the fall has been considerably more than 50 per cent. - we cannot carry the load that we could carry a few years ago. We are very much poorer as a nation than we were.

About six months ago I said in this House that I considered that the financial position was such that nothing short of a reduction of 20 per cent, in adjustable government expenditure would save us from national default or bankruptcy. At that time I was attacked by several members on the Government side who painted me as a hard-hearted villain, who actually desired to bring about such a reduction. I think I can claim, with perfect justice, that the reductions which the Government is now proposing are just as unpalatable to me as they are to any honorable member opposite; but I . could see, even six months ago, that there was no escape from them, for the financial position into which we were drifting would force them upon us. Now seven governments - the Commonwealth Government and all the State Governments without exception, governments of every political complexion - realize that there is no escape from a reduction of governmental expenditure of at least 20 per cent. The plan adopted by the Melbourne conference after two or three weeks’ debate provides for the reduction of interest charges and pensions, a lowering of the cost of public and social services, and an increase in taxation, including an increase in the primage tax of from 4 per cent, to 10 per cent., and of the sales tax from 2£ to 5 per cent.

The party to which I belong was not consulted by the conference which agreed to these proposals, so we may be regarded as having a free hand to support or oppose the plan. On the -other hand, we have told the Government more than once that if it continued to spend money at the present rate it was simply rushing towards national bankruptcy; but that if in the face of the grave emergency which was facing the country, it courageously reduced its expenditure in all directions and removed burdens upon industry in a way that would be fair to all, we would be prepared to take our full share of whatever unpopularity might be incurred in the doing of these things.

Let us examine the plan which has been agreed to, with the object of seeing whether it meets all the requirements of the case. I believe that the Prime Minister was absolutely sincere this afternoon when he said that he considered that the plan was as complete as possible. I do not hold that view, however, nor do other members of the party to which I belong. We consider that there has been one very important omission from the plan. Provision has been made for the reduction, of interest rates, salaries, social services, and government expenditure generally ;- but no attempt has been made by the Government to bring about a lower cost of living by the reduction of the cost of the essential finished articles needed by the public whose incomes will be so greatly reduced. Such a reduction in the cost of living is necessary to compensate to some degree the people for their loss of income, and to enable them to meet the additional taxation that will be imposed upon them.

The Government has claimed credit for having evolved a plan which will bring about equality of sacrifice, but while wage-earners, and those who derive incomes from salaries, interest or pensions will be called upon to make a sacrifice, one section of the community will be left untouched, and will continue to enjoy all the economic privileges that it at present enjoys: I refer to the manufacturers of Australia, who have recently been given such great protection that they are able to disregard entirely any possibility of external competition. The protection which they now enjoy makes it quite unnecessary for them to reduce the price of their commodities to a level which would be fair to all, and within the payable capacity of those in primary industry, those who work for wages, and those who have only their pensions upon which to live.

Mr Stewart:

– The wages of the employees of these manufacturers have been reduced.

Mr PATERSON:

– That is so. There is an enormous disparity between the relative prices of our primary products and manufactured goods. I have no desire to introduce anything petty or sectional into this debate, but I regard this aspect of the subject as being extremely important to Australia - so important, in fact, that it should be ventilated. Professor Copland has prepared a most enlightening table in which the prices of primary products and manufactured goods in Australia are compared at various periods from January, 1926, onwards. The prices in 1911 were taken as the standard. and indicated by the index figure of 100. The table, which is as follows, speaks for itself : -

To-day, the average farmer has to part with 60 per cent, more of his products in exchange for the same quantity of manufactured goods than he did in 1911. It is absolutely hopeless for trade to revive and for Australia to overcome the present depression until something is done to decrease the tremendous gap which exists between the prices of primary and manufactured products.

The Prime Minister spoke feelingly this afternoon about the plight of the 360,000 unemployed people in Australia, and said that industry must be revived in order to provide them with work. We all echo that sentiment. The right honorable gentleman went on to say that the banks would assist to revive industry if this rehabilitation plan were put into operation. But I very earnestly submit that, while the proposals made this afternoon may be looked upon by some as a means of reviving industry, they must prove absolutely futile unless steps are taken to bring the price of manufactured goods within the purchasing power of the people. Our secondary products must be offered for sale at prices which those engaged in exporting industries, and those whose incomes have been so seriously reduced, can afford to pay. The people engaged in exporting industries cannot now buy anything like the same volume of goods that they could afford to buy a few years ago. The prices of primary and secondary products must be brought into a closer relation. While the present disparity is allowed to continue, the effects must be so serious to both our secondary and our primary industries, as to make impossible the reemployment of our people, or the marketing of their goods. Lt is impossible for people to carry on, let alone extend, their business operations under present conditions. Therefore, something more than the mere reduction of the interest bill and the lowering of wages is required if the needs of the situation are to be adequately met. I press that point as strongly as I can on the Prime Minister (Mr. Scullin). Not every business firm takes full advantage of the tariff wall that we have erected. In justice to them I say that. If the Prime Minister would agree to an all-round reduction of duties comparable with the reductions that are being made in interest and salaries, and his plan were put into operation, those industries which are not taking an extreme advantage of the tariff wall and the high exchange rate would not be effected in the matter of price. Unfortunately, there are some manufacturing industries which are taking the fullest possible advantage, not only of the high tariff wall and the natural protection in the shape of ocean freights, but also of the exchange rate.

Mr Keane:

– That matter is not contained in the plan.

Mr PATERSON:

– I am pointing out to the Prime Minister, at his invitation, what I regard as an important omission from the plan. The Prime Minister said that he welcomed suggestions. I make this suggestion, in all seriousness. If honorable members opposite had for the past twelve months been engaged in wheat-growing or in other primary industries, or were about to engage in such pursuits, they would realize the justice of my contention. As evidence in support of my statement that some firms are taking undue advantage of the tremendous height of the tariff wall, and the exceptional exchange rate, I point out that galvanized iron, which is used largely in the country, and for which the Tariff Board considered £24 10s. a ton was a fair price, actually costs £30 a ton. The galvanized iron manufacturing industry would be unable to charge for its product £5 10s. a ton in excess of what the Tariff Board regarded as a fair price were it not for the height of the tariff wall, the natural protection, and the exchange rate combined. I remind the House that galvanized iron, which costs £30 a ton in Australia, is sold for £15 a ton in Great Britain. I submit that the disparity between the prices is too great. There are many other things that I could mention, but I do not wish to multiply instances unnecessarily. I merely alluded to galvanized iron by way of illustration. The honorable member for “Wimmera (Mr. Stewart), who knows a great deal about the problems of the wheat-grower, gave us another instance the other day, when he pointed out that a farmer has to sell four times as many bags of wheat to-day to purchase a ton of wire as were necessary a few years ago. Australian manufacturers are unduly privileged in thatthey are not being called upon to contribute their fair share to the national sacrifice. They will reap the benefit of lower interest rates on their bank overdrafts, which both the Prime Minister and the Treasurer informed us would prevail as the result of this plan being put into operation. Manufacturers will enjoy reduced costs in the shape of lower wages to their employees, as the result of decisions of the Arbitration Court and wages boards. Yet, at a time when there is less necessity than ever there has been for high duties, on account of the causes which I have mentioned, and the abnormal exchange rate, the tariff wall is being raised to such a height that manufacturers whom it shelters from competition are able to exploit the public. We hear a great deal of the necessity _ for equality of sacrifice. I ask what sacrifice the manufacturers of this country are called upon to make? This afternoon, the Leader of the Opposition (Mr. Lyons) quoted a statement made by Sir Otto Niemeyer in connexion with finance. I wish to quote very briefly from a statement made by the same authority with regard to the effect upon the primary producer of the ever-increasing tariff rate. Speaking in Melbourne in August last, Sir Otto Niemeyer said -

Primary producers competing in the world’s markets with Australia have a competitive advantage over the Australian primary producer, so long as the Australian costs of production are not reduced.

Australian secondary industries must face a fierce international competition, growing in intensity as the price level falls, unless they in their turn are able to reduce their costs.

The secondary producer can attempt to meet this price situation by increased tariff protection, but this simply means that his protection is achieved at the cost of primary production.

I submit that the increased prices which Australian manufacturers are charging as a result of the excessive tariff protection afforded to them, are obtained at the expense of that section of the community which exports, and whose products have to compete in the markets of the world with the products of other countries.

The Prime Minister said this afternoon that the Government had made every possible effort during the last twelve months to arrest deflation. It certainly has been most successful in the direction of arresting the deflation of prices of secondary industry products, because of its determination to maintain and increase high protective duties. As the Commonwealth Parliament, because of constitutional limitations, has no power to fix prices, it cannot say to any manufacturer that, in consideration of an import duty on goods which compete with his product, it expects him to sell his goods at a certain price. Therefore, the only thing that this Parliament can do to ensure that prices shall be brought down to reasonable levels is to see that the tariff wall is not raised so high as to exclude all possibility of external competition. That competition has a wonderful effect on internal prices. To-day, the tariff wall is so high that in many instances there is practically no competition from overseas.

Mr Coleman:

– But there is considerable internal competition.

Mr PATERSON:

– I admit the partial truth of the honorable member’s contention, but frequently, that competition is insufficient. Although in some industries the competition is sufficient to keep prices at reasonable levels, there are some industries which are almost monopolistic in character. For instance, there is only one firm in Australia manufacturing galvanized iron. The only weapon by which the prices of galvanized iron can be kept within reasonable limits is the threat of external competition.

I desire to say a word or two regarding the Government’s proposals for increased taxation. The Treasurer told us that it was the intention of the Government to bring down a measure to increase the primage duty to 10 per cent. To that part of the plan I am opposed. I hope that it will not be accepted by this Parliament, for I believe that its effect would be to add to the cost of production at a time when it is essential that costs should be reduced. Iti that I agree with Messrs. Pitt and Strutt, members of the committee which reported to the Premiers Conference. If we must have additional revenue, and it comes to a choice between a higher primage duty and an increased sales tax, the latter course is preferable. The revenue collected by means of a sales tax is collected on a broader basis, and, therefore, a lower rate of tax would bring in as much revenue as would a higher rate collected on the narrower basis of the primage tax. A large proportion of the increased costs of commodities charged to consumers because of a sales tax goes into the general revenue, because a sales tax is imposed at a late stage in the marketing of the article on which it is collected. A sales tax is imposed just before the article gets into the hands of the retailers. One difference between a sales tax and a primage duty is that the former applies late in the marketing of the article, whereas a primage duty operates from the start and may be multiplied many times before the goods get into the hands of the consumers. In some instances a primage duty is imposed on goods which are the raw materials for certain manufacturers, thus adding to the cost of the manufactured article. If we must have taxation, I prefer the sales tax to the primage duty.

Mr Stewart:

– We are now called upon 10 pay both.

Mr PATERSON:

– I shall certainly oppose any increase in the primage duty. There is the further point that, whereas in the case of a sales tax a large percentage of the added cost goes into revenue, in the case of primage duty a large proportion of the added cost might go into the pockets of local manufacturers. I hope that the Prime Minister will regard seriously my contention that the plan is lop-sided and incomplete as well as unjust to consumers who are trying to make ends meet on reduced incomes. Unless some action, along the lines I have outlined, is taken to bring about fair price levels by the only direct means open to the Government, namely, a reduction in customs duties, there will be do other course open to me and those honorable members who belong to the Country party other than to oppose certain portions of the plan. These high duties are less necessary than at any previous time in our history. I say that with a full appreciation of the meaning of my words. The exchange rate is now so abnormally high that iD some instances it makes customs duties almost unnecessary. If the tariff wall were reduced in height by 50 per cent, to-morrow and if, as the result, any demand for imports set in, the demand for gold exchange would be correspondingly stimulated, and the fall in duties would be automatically offset by an increase in the exchange rate.

With reference to the effort that is to be made to bring about a voluntary conversion of loans, both Commonwealth and St’ate, I was pleased to hear the Prime Minister say this afternoon that it would be better for the credit of Australia if we could succeed in converting these loans voluntarily, because that would appeal wonderfully to the imagination of the world. Honorable members can imagine the effect upon overseas creditors of an announcement that Australian bondholders had voluntarily agreed to accept rates of interest lower than the Government had contracted to pay, and that a voluntary conversion from motives of patriotism had been successful, on a scale of unparalleled magnitude. On the other hand if investors overseas learned that the Australian bondholders were being compelled arbitrarily to convert their bonds at a lower rate of interest they would not be likely to assist us later when our overseas loans are maturing. I hope that this conversion loan will succeed, and if it does I can imagine the splendid effect it must have on our creditors overseas. Nothing will help our credit abroad so much as a successful voluntary conversion loan.

One section of the community should, I think, receive special consideration at the hands of the Government. Certain elderly people have saved and made sacrifices during their lifetime in order to gain a competence sufficient to make it unnecessary for them to apply for the old-age pension. In some instances these people have put their all into Commonwealth loans, and are receiving by way of interest, just enough to enable them to live in reasonable comfort without the necessity of applying for the old-age pension. Any considerable reduction in their already small incomes may drive them into the arms of the Pensions Department. I, therefore, suggest that, if possible, we should in this scheme make some provision under which elderly people of small means may, if they so desire, be paid the face value of their bonds, and thus be rewarded for the fine spirit of independence that they have shown.

I wish now to refer to the overlapping of Commonwealth and State departments. Very little attention has been paid by either the Prime Minister or the Treasurer to this source of possible saving.

Mr Theodore:

– An inquiry is taking place at the present time.

Mr PATERSON:

– I am glad to have that assurance from the Treasurer, because I believe that there’ is a fairly big field for economy in that direction. The previous Government did make some considerable saving - about £200,000 per annum - by arranging for tax collections by one authority.

Mr Theodore:

– The State Governments and the Commonwealth Government have each appointed a representative to investigate the over-lapping of Federal and State departments. The inquiry has been progressing for some weeks.

Mr PATERSON:

– I am glad to have that assurance. There is, I believe, a certain amount of over-lapping in connexion with the Health Department, the Inspection of Products, and the Navigation Department. In. the past possibly a certain amount of jealousy existed between Commonwealth and State departments, but to-day there is a general disposition for co-operation. The Commonwealth and State Governments are anxious to save the last penny, and I am pleased to learn that an inquiry is now taking place with a view to reducing as far as possible the over-lapping of Federal and State departments. “With regard to soldiers’ pensions, I had intended to make a suggestion similar to that made by the Leader of the Opposition (Mr. Lyons) this afternoon. He suggested that representatives of the returned soldiers’ organizations might be taken into the confidence of the Government and given an opportunity to suggest in what way the necessary savings could be made with the least hardship upon war pensioners. The returned soldier should be the last to be called upon to suffer under the Government’s economy proposals, but because of the extraordinary state of our finances, it is impossible for him to escape altogether from the sacrifices which must be borne by the community in general. In any case he should not be called upon to make a sacrifice unless and until every other avenue of economy has been explored. It was for that reason that I gave prominence to the possibility of making savings by the avoidance of over-lapping of Federal and State departments. We owe that consideration to our returned soldiers.

This afternoon the honorable member for Werriwa (Mr. Lazzarini), and indeed one or two other honorable members on the Government side, by interjection, tried to indulge in what might be called heroics when announcing their intention to resist reductions of all kinds. I remind them that it is easy to win popularity in that way, and that it takes much more courage to support a government which is taking an unpopular but right step in the direction of financial stability.

I hope that the Prime Minister will give due consideration to the case for a general reduction in tariff rates equal to the other reductions to be made under the general plan, with the object of bringing the prices of manufactured products into something like conformity with the prices of primary goods and within reach of the pockets of the people.

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

.- I regret that a bill such as this should have been brought before the House. I certainly did not expect it. For nearly 40 years I have been a member of the Labour party. I have followed it consistently, and have never broken a single pledge or violated one principle of its platform. I, therefore, cannot see my way to support the bill. Rather than vote to take one penny from the poor old-age pensioner I would cut my throat. I swear by the living God that I shall do my utmost to prevent any reduction in old-age and invalid pensions. I have represented the Melbourne electorate for 42 years. I remember in the old days the case of a poor woman, 80 years of age, who was trying to live on the 2s. 6d. a week paid to her by the Ladies’ Benevolent Society. I returned home one evening and found this woman lying on my doorstep. I thought that she was under the influence of drink, and I said, “ My dear, you should not drink “. I helped her into my house, and she thereupon said to me, “Doctor, I am suffering, not from drink, but from weakness; I have not eaten anything for 24 hours “. Fortunately, our social conditions have improved since then. I continued to fight the battle for labour. I spoke from boxes at street corners, and on the Yarra Bank, to which some people refer in derisive terms. Why did I join the Labour party? I won my seat when there was no Labour party in Australia, and my first action- in Parliament was to try to lift my mother and all her sex out of that awful category of criminals, lunatics, and women who, under the Victorian electoral laws, were not allowed to vote.. I moved in the House a motion that women be given a vote. The member who was to second the motion had an attack, of stage fright, and would not enter the chamber. I was speaking from the Opposition side, and at intervals sipped from a glass of water. I was told* that. I drank three glasses of water,, and I do not doubt it. I was prepared to stay on my feet until my seconder entered the chamber. I was subjected to jeers, sneers, and cat-calls from Liberals,. Conservatives, and a few radicals. No one would second my motion until Colonel Smith, of Ballarat, who has now joined the great majority,, came in and said, “ What is all. the row about?” He was informed that no member was prepared to second my motion. The position was explained to him, and he said, referring to me, “I like that youngster “. Of course^ I was a young man in those days. While I stood at the table sipping water, he’ came to> me and said,. “ Sit down, and I shall second the motion “. God only knows how glad I was to, sit down. When the Labour party was established in the next Parliament,, there was no need to ask its members to second a similar motion. They were only too glad to do anything to help the child, the woman, and the man. For that reason I joined the Labour party. It has always stood for the advancement of the people. After 42 years of parliamentary experience, I must congratulate the Opposition on the success of their efforts to force the Government to carry out the policy of the Nationalist party. I have no wish, at this stage to refer in. coarse language to that action. Honorable members opposite have for some considerable time been attacking the old-age and invalid pensions. They are acting according’ to their lights, and I have no doubt that they feel compelled to take such a step. But there is no need for them to talk about equality of sacrifice. That will never be brought about, and honorable members opposite are well aware of that fact.

The Treasurer informed us this afternoon that the salaries- paid in the Public Service amounted to £11,000,000 per annum. It is a large sum, but it must not be forgotten that Australia has more’ national undertakings that any other country, with two exceptions. The Treasurer also stated that 9,155 public servants draw salaries of less than £250’ per annum, 18,504 draw salaries of between £250 and £500, and 1,256 draw salaries exceeding £500. In answer to the honorable member’ for Bendigo (Mr.. Keane’)’, the Treasurer stated this afternoon that in 1925’ Public Service salaries! amounted to £9,17.0,000, and in 1930-31 to £9-,.470,000, an increase of ony £300j000: When Mr. Bruce was Prime Minister I was supplied with the statement that, in 1913, including the Governor-General 33 Commonwealth officials were paid, salaries of £1,000 a. year and upwards-.. By 1929 that number bad increased to- 181, drawing £296,995,. compared with £62,895- paid to the 33. To-day, in answer to an interjection by the honorable member for Hunter (Mr. James), the1 Prime Minister said that the reduction, of all incomes in the Public Servicete £500 a year would represent an additional saving of only £10@.000. The difference between the £62,000 paid in 1913i and the £296,000 paid in 1929 in high, salaries amounts to more than that. I.’ do not wish, it to be thought, however, that I am anxious to cut down the big poppies of the Public Service; many of our officers are well worth the salaries they are paid; but rather than take one penny piece from a pensioner, I would cut every public servant’s salary and every private income down to £250. During the war the people of Great Britain were obliged to submit to a rationing of food. Aristocrats with large rent rolls could not obtain more than the fixed allowance. In this great country of ours, blessed as it is by nature, and capable of producing more food than its people can consume, there is no need for scant food rationing as in England ; but I would throw every one’s income into the pool so that we could be in a position to assure our bondholders overseas that they would be paid in full. To those who say that compulsory reduction of interest is not repudiation, my answer is that of a Victorian barrister who said, “It is not only repudiation; it is absolute daylight robbery.” When I was a young man I had some sympathy with the Kellys, and, indeed, one can respect men who take their lives in their hands, when they take that which does not belong to them; but I regard with contempt and loathing this proposal to take money from bondholders. With what scorn and contumely would those who were asking the people to subscribe to the last £28,000,000 conversion loan at 6, o-J and per cent, interest, have treated the suggestion that the subscribers to that loan were likely to have their interest taken away from them? Yet now we are quietly doing that. I hope that the honorable members opposite are proud of their pyrrhic victory. I am afraid it will be their undoing. If the 22£ per cent, reduction of interest is also to apply to money lenders I shall welcome it. I am well aware that some money lenders are very decent-, they do not charge more than 10 per cent, interest; but others extract as much interest as they can get. They are a type that I loathe.

The honorable member who has just resumed his seat prefers an increased sales tax to a primage duty. Is he aware that not one of the 27 acts of this Parliament dealing with the sales tax contains a provision under which the thief who charges 60 per cent, when he is entitled to charge only 8$ per cent, may be punished? If the Government proposes to increase the sales tax, in justice it Should include a penal provision. When recently I asked to whom a citizen charged 60 per cent, instead of 2£ per cent, should look for justice, I was astounded at being told that he must seek redress from the vendor. Could anything be more absurd than to expect the man who has been robbed to seek redress from the man who has robbed him!

I have been privileged to see some figures in the possession of the honorable member for Flinders (Mr. Holloway), showing that throughout the world the low er prices have fallen the more unemployment exists. One of the planks of the Labour party is that it is the duty of the Government to find work for its people, but I find nothing in the bill before us to indicate that employment is to be found for a single individual. I regret having to speak in this way, but my conscience tells me that it is my duty to do so. In my study of the world’s happenings, I have been unable to find, and no university professor or economist has been able to tell me of any other country, although only barely capable of growing sufficient food for its people to eat, which allows 25 per cent, of its population to suffer want, privation and misery such as we have in Australia to-day. I have always looked upon our invalid, old-age, and war pensions as safety valves against insurrection, but we may be nearer to that to-day than we think. Already there are skirmishes in countries where the accursed gold standard exists. Only one country is seemingly mending its ways. France is leaving the old road of finance rutted by obstructions such as those which this House, by its majority to-day, would bring into existence.

The Socratic method of reasoning and instruction was by a series of questions. It is easy for a Minister to ask a private member to submit a scheme in substitution for that which has been put forward by the Government, and although I am not foolish enough to be caught in that trap, I nevertheless propose to show” how the United States of America has acted iti respect to the heavy . war indebtedness- due to it by other countries. What was done in the United States of America stands out as a guide to the world, just as a lighthouse stands out as a guide to shipping. The Foreign Debt Commission appointed a committee of experts to investigate the wealth of the debtor nations, not for the purpose of estimating how much interest could be screwed out of them, but rather to determine at what rate each country could repay its debt3. I quote from the combined reports of the commission : -

The commission has always felt, however, that it is essential that the principal of the amounts owed to us should be repaid. This is important, so that each debtor may be able to say that it has paid in full what it ow,,cs, and so that the United States may be in a position to state that the sums lent had been returned.

That was generosity. To enable that policy to be carried out the United States of America funded the whole of the debts owing to her by the other nations. In regard to the Italian debt, the commission stated -

It was apparent that Italy was u country practically without natural resources; that she had no productive colonies; that her balance of trade had been always adverse, and would continue to be adverse; that a large part of her territory was mountainous, and that she did not possess soil enough to raise food sufficient to feed her fast-growing population; that coal, iron, copper, cotton, and oil had to be imported; that water power, not yet fully developed was her chief asset; that the standard of living of the Italian people, and their taxable capacity wore extremely

The United States Government had borrowed by the issue of Liberty bonds, over $5,000,000,000 at 4^ and 5 per cent., but funded the debt of the United Kingdom, at 3 per cent, for the first ten years, and 3£ per cent, for the remainder of thecurrency of the loan. The commission’s report continued -

To meet Italy’s capacity to pay, interest rates during the period of the funding agreement, after the first five years, are. fixed for successive ton-year periods at one-eighth of I per cent., one-fourth of 1 per cent., one-half of 1 per cent., three-fourths of 1 per cent., 1 per cent., and 2 per cent, for the last seven years.

There was also a proviso that upon giving 60 days’ notice payments could be. deferred for as much as two years from the due date. At a meeting of the Parliamentary Labour Party, the honorable member for Bourke (Mr. Anstey) proposed that the bondholders should be required to wait one year for the repayment of the money due to them, but should not be asked to forego one penny of interest or capital, and that any lender who was in difficulties could have the whole of his bonds redeemed. That was carried unanimously.

Mr Crouch:

– No.-

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

– If I am in error I am glad to be corrected.

Mr Crouch:

– The honorable member should say nothing about what happened in caucus.

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

– Thank you for nothing. That resolution was published in the press throughout Australia, and as nothing that happens in the party rooms can be kept secret, the press learning of all we do - whether by a concealed wire or not, I cannot say - I do not think I have broken faith. What economies do I suggest to obviate the reduction of wages and pensions? Close down Australia House, the capital cost of which was £1,000,000, and the upkeep of which has cost another £1,000,000. In answer to a question I asked, I was told that 100 clerks and 25 typists were employed in the building. I understand that in this Parliament House, the legislative centre of the Commonwealth, only twelve typists are employed. Aided by the investigations by the honorable member for Reid (Mr. Coleman), the Government has done splendid work in reducing the expenditure of Australia House, but the whole establishment should be closed up. Nobody can justify the expense of maintaining it. At the inception of federation were we not told that State AgentsGeneral would be abolished ?

Mr Fenton:

– They could be wiped out, but Lang has just appointed a new Agent-General.

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

– Why do we not wipe them out? Why should we not abolish State Governors, by politely asking them to retire and return to their homeland ? Why not economize in respect of this running financial ulcer, Canberra? The silly fools who chose the site were equalled by the silly fools and greater knaves who built the city. Parliament House, which was estimated to cost £230,000, represents an expenditure of over £700,000, and the roof will not keep out the rain. While the BrucePage Government was in power I asked what steps were being taken to make the roof secure, and I was told that a large amount of money due to the contractor was withheld, until the roof was made waterproof. When I returned to Canberra after a brief recess, I found that 80 tons of gravel had been put on the roof to keep out the rain. The contractors had got off very lightly. The genius who planned the city, Walter Burley Griffin, bad reserved a square mile under the lee of Capitol Hill as the first residential portion of the city. Had that layout been adopted the housewives of Canberra would have enjoyed the blessing of a gas supply. But those who were in charge of the construction of the city piled absurdity upon absurdity. Never before in the history of the world was a town, city or hamlet built other than from the centre outwards. In the middle ages cities were usually built about castles or cathedrals. In Australia the tendency has been for settlement to start about a post office, store, or hotel, and develop outwards, but Canberra was built from the outside of the circle to the centre, and it is the silliest experiment ever made. All of the hotels cost thousands of pounds above the estimates. Instead of having one ten-story hotel under one management, the commission built five hotels at points miles apart, and so shoddy is some of the work that the shelves in the wardrobes have not even been planed. The cheapest of furniture is finished better. An honorable member has done credit to himself by giving notice of a motion that the people should be asked to close down Canberra and cut the loss. I believe if the people were consulted they would wipe this city out, and I would gladly take the platform in any State to advocate that course. We should wipe out the State Legislative Councils and that abomination of democracy, the Senate.

The platform of the Australian Labour Party - to my mind the Bible of democracy - includes planks as plain as the ten commandments, and I defy any one to say truthfully that the adoption of any one of those planks would not be for the benefit of every man, woman and child. These are only a few of the planks -

The new protection, embodying effective protection of Australian industries, prevention of profiteering, and the protection of the workers in such industries.

Import embargoes for the effective protection of Australian industries, subject to the control of prices and industrial conditions in the industry benefited.

Income tax. - All income from personal exertion of less than £300 to be exempt from income tax, with a further deduction from the taxable income of £100 for a taxpayer’s wife, and £60 for each child, and others wholly dependent on the taxpayer.

Civil equality of men and women.

Uniform laws of marriage and divorce.

Widows’ and childrens’ pensions.

Increased old-age and invalid pensions.

Motherhood and childhood endowment.

Abolition of capital punishment and flogging.

Bather than vote against any one of those three pensions, I would walk out of this building, even if I knew that I would be shot when I got outside. The bill before the House includes an agreement which provides that “ the Commonwealth will take the necessary action to submit to the Federal Parliament any legislation necessary to carry out or give effect to this agreement”. Knowing that such legislation will include provision for the reduction of wages and pensions, how can I support it? I shall have an opportunity, when other measures constituting part of the Government’s plan come before the House, to discuss its proposals with regard to invalid, old-age, and war pensions, which I consider should be sacrosanct. If Australia followed the example of the Motherland it should be possible to make satisfactory arrangements for the funding of our internal obligations. I have no doubt whatever that the people of this country would expect only a nominal rate of interest for a specified period, during which the Government could make its arrangements. I would also urge the people of Australia to make it a cardinal principle of their economic faith never to sanction the borrowing of money overseas. If Australian governments had not done so in the past, we should not now be considering such doubtful expedients as the discovering of more gold to buttress our system of national finance. If we confinedour activities to the production of foodstuffs, which, after all, are the only satisfactory basis for a nation’s prosperity, we should be in a much happier position.

Mr PROWSE:
Forrest

.- I listened patiently to the statement of the right honorable the Prime Minister (Mr. Scullin), when moving the secondreading of this bill. I am not surprised that Australia is now facing one of the most difficult periods of its history. Ever since I have been a member of this House, a period extending now over twelve years, I have not ceased to issue warnings that the day of reckoning would come to Australia. I am aware, of course, that I have been characterized as a modern Jeremiah, because I have consistently declined to view with cheap optimism the various fiscal and economic policies of succeeding governments. We now see the result of governmental folly in an increasing army of unemployed, already numbering well over 350,000 men and women in all the States. Those unfortunate citizens of the Commonwealth, I suggest, will not jibe at one who takes a serious view of the nation’s difficulties, and whose sole aim is to persuade governments to frame their fiscal and economic policies on sound, constructive lines. In 1923 I warned honorable members representing city constituencies that sooner or later they would be faced with a grave industrial problem, and would learn the facts from bitter experience. The right honorable member for North Sydney (Mr. Hughes), while occupying the position of Prime Minister, made a bold bid for popularity. At a time when Commonwealth revenues were buoyant, he was ever ready to grant all manner of requests. Among other things he appointed Judge Piddington to inquire into the basic wage rates for Australia. After inquiry, the Basic Wage Commission, presided over by Judge Piddington, reported that the basic wage, sufficient for a man to maintain a wife and three children, should be £5 16s. per week. When Mr. Hughes asked how that rate was to be paid, Judge Piddington replied that he had not been asked that question. The ex-Prime Minister then said, “ I now ask you, and will give you twenty-four hours within which to supply an answer.” The members of the commission immediately secured the assistance of the late

Mr. - later Sir George - Knibbs and others, who reported that if the Government paid £5 16s per week it would be paying 7s. per man per week more than each man earned, and that at the end of twelve months the basic wage would need to be approximately £8 per week. That proved conclusively that we were approaching a point at which there would be no margin for capital. The people and all the parliaments of Australia, not realizing the pitfalls ahead of the nation, believed that, as we were obtaining high prices for our wool and wheat, and could borrow in the overseas market without any difficulty, the manner in which the money was expended was of no moment. Political parties vied with one another in making promises to electors which were not capable of fulfilment. Now that the money has been expended, and the day of reckoning has come, the people are blaming past governments for lavish expenditure of loan money, which, as I have shown, was obtained all too easily. In the closing months of the war, when the outlook for the allies was exceedingly dark, the people of Australia’ thought that if only the allies could win, and so insure to us that liberty which all prize so much, they would be content to live even on bread and dripping. The war did end in victory for the allies. We retained our liberty, and instead of facing a bread and dripping period there was ushered in an era of high prices for primary commodities. Australia was receiving enormous dividends in the form of high returns for her exports of wool and wheat, and the establishment of Bawra brought an unexpected £21,000,000 of income into Australia. During this period of unexampled prosperity, the Government of the day decided to pay war gratuities on a generous scale. In this way it distributed £25,000,000 which has to be repaid to the lenders. It decided also to build war service homes at a cost of between £17,000,000 and £20,000,000. Those were the days when men who ought to have been statesmen should have advised the people to be cautious, and not regard the extraordinarily high income as the normal return from our primary and secondary industries. The people should have been told that the prosperity of Australia really depended upon the sale of her surplus primary exports. Unfortunately, on the strength of high prices for Australian export commodities, successive governments borrowed heavily for several years after the war. The Arbitration Court also was not inactive. During this time of prosperity and when money was plentiful, arbitration awards increased manufacturers’ costs, and manufacturers in their turn, levied toll upon the general community and demanded increased protection. Primary producers were among the sufferers. They had to pay high prices for all that they required, and had to sell the produce of their labour in the markets of the world. Pew people then gave heed to the warnings of economists and other students of the trend of world events. It only needed a sustained fall in the price of our export commodities to spell financial and economic ruin for Australia. That time has come.

It is said that the object of the Government’s proposals is to spread the burden equally. I have always contended that our primary producers have been compelled to bear more than their fair share. Eight years ago, in this House, I declared that it would be better for the people of Australia if all costs could be reduced by 33£ per cent., because then it would be possible for industry, primary and secondary, to absorb the unemployed and build up an export trade. I am prepared to support any plan that will spread the burden equally over all the people of Australia. This phase of the problem was carefully considered by Professors Copland, Giblin, and Shann, and. Messrs. L. G. Melville, H. A. Pitt, G. W. Simpson, J. H. Staney, P. H. Strutt, and R. R. Stuckey, who, in their report to the recent conference in Melbourne, stated -

The increased primage duty and the valuation of imports in Australian currency, if adopted, should be accompanied by the abolition of embargoes and rationing in respect of imports imposed during the last two years and by a reduction of some of the extreme protective duties. Such measures would be no longer necessary, and their removal would promote better feeling overseas, or at ‘east off-set any unfavorable reaction _i.o increased primage and the higher valuation i.f imports. On the whole about £8,000,000 should be obtained from s combination of primage, s:«les. tax, amd a revaluation of imports, accompanied by st reduction of embargoes and high customs duties, and a more liberal exemption of basic foods and instruments, of production. (The principles of these exemptions require careful detailed statements, which cannot lie attempted here. ) These proposals would yield £10,000,000 of new taxation, which reduces the gap between revenue and expenditure in 1931-1932 to £16,000,000.

Evidently the Premiers Conference regarded that subject as sacrosanct, almost as a sectarian issue, and left it severely alone. The economists found it necessary to bring it to light. This Government took the wrong turning after it assumed office by indiscriminately imposing embargoes, surcharges and additional customs duties. That merely tended to keep up the cost of living, make it more difficult for the unemployed to buy the necessaries of life, and for the primary producers to carry on their business. That policy also reduced Australia’s revenue from customs duties. In view of the staggering rate of exchange that is against us, the reduction in wages and other factors, the tariff should have been reduced instead of increased. Probably when some of our city representatives read the latest bulletin issued by the New South Wales Chamber of Manufactures, they will realize that the honorable member for Forrest (Mr. Prowse) has not been talking altogether “ through his neck.” Manufacturers are business men and are apt to form combines while there are any commercial oranges to squeeze. They have squeezed the primary producers to the utmost, but there is now no juice left in the orange. The export of our primary products establishes the credit of the country and has enabled the Government to bolster up and shelter secondary industries. In Bulletin No. 11, vol. 1, issued by the New South Wales Chamber of Manufactures and dated the 1st June, 1931, there appears the following : -

  1. Australia’s principal wealth is produced from her soil. Her secondary industries have reached a stage of development vhich makes them a vital factor to be considered in determining the future national policy.
  2. Fundamental policies of Australia must be the stabilization of the man on the land and the provision and maintenance of an effective tariff on industries efficiently equipped for local conditions to ensure the Australian market to Australian producers, both primary and secondary, thus providing employment for our own people and a local market for as much of our products as possible.
  3. Reductions in tariff in Australia without reductions in cost would mean the closing down of many primary and secondary industries, and would cause a corresponding increase in taxation in some form or another to maintain the additional unemployed.

I want the Government, honorable members generally, and the Treasurer (Mr. Theodore) in particular to take notice of what the manufacturers of Australia say. They do not thank those people who have foolishly given them just what they asked for. To-day the Prime Minister (Mr. Scullin) appealed to this Parliament to countenance reductions in many directions, including soldiers’, old-age, and invalid pensions, the maternity allowance, the salaries of civil servants and every other form of Government expenditure. The Government should reduce something else - the tariff. It should not regard the secondary industries as sacrosanct and allow them to form combines and charge whatever price they wish. “While that is done, where is the equality of sacrifice? It is but fair to reduce the tariff to at least the 1928 level. Our manufacturers now have the additional protection of the existing rate of exchange, and reduced rates of wages.

There was a great deal in what the honorable member for West Sydney (Mr. Beasley) said recently, that wages are being lowered simultaneously with an increase in the tariff. What part does that increased tariff play in the present depression? It has put a few people into sheltered positions and imposed a burden on the remainder of the community to the extent of £11,000,000, due to a shortage in customs revenue. That should concern the Treasurer (Mr. Theodore), as the shortage has to be made up by additional taxation. If there is to be universal sacrifice, there should be no hesitation in reducing the tariff, so that this sheltered section shall share the burden. The numerous privileges that have been granted to our secondary industries involve Australia in £120,000,000 per annum by way of additional cost of living

I am glad that the Government realizes that it is necessary to endeavour to balance the ledger. There is not enough money to go round on our old standard of living. The Treasurer pointed out that we are experiencing a shortage of between £50,000,000 and £80,000,000 from export sources that cannot be made up by any issue of paper money or by the waving of a magic wand over the Commonwealth. The situation should be regarded as a person’s domestic affairs are. When an individual’s income is reduced, he endeavours to readjust his mode of living. As with a family, so with the Commonwealth. It must adjust its expenditure to its reduced revenue, and all in the community must share the burden. That is why I want the Government to make this proposal all-embracing. If that is not done now it will have to be done later.

Mr Riordan:

– Was not the tariff adjusted with a view to correcting our adverse balance of trade?

Mr PROWSE:

– When the Government brought down proposals to impose certain embargoes and super duties the Prime Minister said that it was in an endeavour to adjust the balance of trade. The right honorable gentleman also contended that the financial condition of the country, coupled with the action of the banks, could effect the desired purpose. J submit that it could have been achieved without adopting the artificial method of sheltering a section of the community behind formidable tariff walls. The financial exigencies of the country would have regulated imports, but whatever was imported would have produced customs revenue.

The Prime Minister has invited suggestions. I hope that when these bills are brought down the good sense of the Government and of honorable members generally will induce them to take into consideration, the report of the economists that was recently submitted to the Melbourne Premiers Conference; also that they will have regard to the experience through which the country is passing, realize that our exorbitant tariff has caused much, if not all of our troubles, and take steps to cure the evil. The vicious tariff policy adopted by the Government has brought wealth to one section, but it has also left 300,000 in unemployment, and many others on halftime, and insufficiently fed. If the Government does not take the necessary action now the whole process will have to be repeated. I, therefore, urge that, while we are about it, the scheme should be placed on a more equitable basis than is at present proposed by the Government.

Mr JAMES:
Hunter

.- At one time I supported this Government, but I now regard my association with it very much as I should regard the experience of being dragged through a sewer. The proposals before the House represent one of the most cowardly actions that could be perpetrated by any administration. The Prime Minister stated that a reduction of all high salaried Commonwealth officials to a payment of £500 per annum would get us nowhere; that the resultant saving would be less than £100,000 yearly. The honorable member for. Melbourne (Dr. Maloney) cleared up that matter by reading a quotation, which is also in my possession, which proves that if that step were taken it would mean a saving of £290,000 per annum to the country. These proposals do not touch private incomes, which will be subjected only to income tax. Speaking at Wallsend, in my electorate, in July, 1929, the Treasurer said that there were in the vicinity of 50,000 persons in Australia who were in receipt of an income of over £10,000 per annum. I understand that he obtained those figures from the Taxation Department.

Mr Theodore:

– The number I gave was not 50,000.

Mr JAMES:

– That was approxi mately the number. I contend that these proposals of the Government are as low down as it would be possible for any proposals to be. It is intended that old-age pensioners shall have their pensions reduced from £1 to lis. 6d. a week. Yet these people were promised by many Labour candidates on the hustings that, if Labour were returned to power, their pension would be increased, because the cost of living had risen so greatly since the last increase was given in 1925. The following table that I have taken from the Sunday Sun, Sydney, of the 14th inst., will prove how unjustly they are being treated: -

This is one of the most callous proposals imaginable. Three-card tricksters and other spielers have nothing on the people who have suggested the reduction of the pension that these unfortunate people receive, and if my vote can shift the Government it will be shifted from the position that it has taken, up in this matter. It is not deserving of confidence, considering the promises that were made on the hustings. The present Prime Minister then said that in one fell swoop the Bruce-Page Government proposed to do away with the Arbitration Court, and to bring the workers down to a standard of living verging upon that of the coolie. I can also recall the Treasurer likening the Bruce-Page Government to a set of spielers, and fulminating against it on the ground that it desired to get rid of the Arbitration Court. He said that the round table conferences which were favoured by that Government would get us nowhere; that he personally believed there should be something in the background for fear of failure of the round table conference, and that that was arbitration. If arbitration were abolished, he said, the workers would be at the mercy of unscrupulous employers, and that their position then would remind him of the lines -

There was a young lady of Riga,

Who went for a ride on a tiger;

They returned from the ride,

With the lady inside,

And a smile’ on the face of the tiger!

These proposals are worse than those adopted by the Bruce Government. The workers are not even to be consulted at round table conferences. The Government has allowed itself to be forced into the position of standing by while humanity is being exploited, plundered, robbed and economically murdered.

Let us consider the case of the returned soldiers. They, in my opinion, have made the greatest sacrifice for their country that any one could be called upon to make. They went .to the war believing that they were safeguarding the people of this country, and helping to make the world safe for democracy. But they have had a rude awakening. They have since realized that they fought in the interests of the capitalist class, the members of which did not go to the war, but exploited the relatives of those who did, and invested in war loans the profits derived from their exploitation. Those war loans are to-day regarded as sacrosanct - as something that ought not to be touched because they are the property of a class which stands above the ordinary worker and the returned soldier. The returned soldier reminds me of a man who, having entered a ring to do battle with an opponent, finds that instead of being paid for his exhibition he is obliged to pay his audience. At the outset of the war the late Mr. Andrew Fisher said that the. last man and the last shilling would be sent overseas to help the financial bandits to preserve their domains and to keep the world safe for democracy. The last man may not be lying on the fields of Flanders or in Gallipoli, but he is lying in the Domain at night and is compelled to beg for food. In the case of the last sovereign, if it finds expression in our paper currency it is worth overseas only about 10s. Last night this House passed legislation providing for the export overseas of £5,000,000 of our gold. Before very long we shall send away a further £5,000,000 or £10,000,000, and then none will be left and we shall be on the currency that carried us and the whole world over the war period. When the Bradbury note was issued in England to the value of approximately half a billion pounds, there was no talk of inflation. When Lloyd George was questioned in regard to the backing of the Bradbury note he replied that it had the backing of the British Empire. Australia is a constituent part of the British Empire; thus the property of the people of this country was involved. If it is good enough to inflate currency to provide the means to kill people we should adopt the same means to feed people by the provision of funds for useful reproductive work.

I do not believe in criticizing the Government unless I am able to suggest alternative proposals. I say that we should have a currency based on similar guarantees. If another war broke out to-morrow there would be no difficulty in raising the necessary finance to prosecute it. There would be no talk of stealing a little from the returned soldier or the oldage pensioner, or of making it more difficult for expectant mothers to obtain the medical attention that is necessary during that critical period of their lives. Nothing more callous or dastardly has ever been perpetrated in any civilized country. To-day, 72,000 returned soldiers are drawing pensions, and of this number 29,000 are receiving treatment in repatriation hospitals. During the last year there were 2,400 deaths in their ranks. Since 1919 the deaths among members of the Australian Imperial Force have reached a total of 30^000; and they are dying off at the rate of approximately 2,500 a year. Nor must it be forgotten that 60,000 of them were left on the fields of Flanders and in Gallipoli. They made the supreme sacrifice; and now it is proposed that those who managed to escape such a fate shall be deprived of a portion of their pensions so that we may be enabled to balance our budget. I do not believe that such steps are necessary, even under the existing social system. We should utilize the credit resources of our country to overcome our difficulties. According to the Commonwealth Statistician, the estimated wealth of this country is £411,000,000,000. We should make it plain that our debt of £1,100,000,000 can be liquidated if our people are given an opportunity to produce that with which Nature has blessed us. During the war we promised that any soldier who came back crippled would be well cared for, and that the relatives of those who failed to return would never want. Today, unhappily, many are in want; yet even those who are crippled are to have their miserly pensions reduced. Honorable members know how hard it is to establish a soldier’s claim for a pension; he has to be “ dinkum “, or the Repatriation Boards will not give him a hearing.

But, like the proverbial pie-crust, the promises that were made to the soldiers are to be broken. When the “digger” loan was floated in 1920, a booklet issued by the Commonwealth Bank included a banner upon which were inscribed the words, “We cried for men; they answered. We cheered ; they sailed away. We slept in peace; they suffered. It is our turn ; we must pay “. Are we now going to pay, or are we going to lop something off the miserly pittance the soldiers are receiving? So far as I am concerned, I will not consent to a reduction, and I hope that the House will not carry these proposals. We have not done as much for our returned soldiers as have many European countries. France, for instance, has passed legislation compelling private employers to employ one returned soldier for every ten workers. In Germany, returned soldiers are given absolute preference in the Public Service. How different is the lot of our returned soldiers! If we treated our returned men as they ought to be treated in regard to employment, we would not have to pay so much away in soldiers’ pensions. Thousands of returned soldiers have been unable to follow their pre-war occupations owing to injuries and ill-health. This applies particularly to coal-miners. From my district branch s of the Coal Miners Federation alone two battalions of soldiers went to the war, and many of them came back crippled and ailing, so that they were no longer .able to do the work they had been accustomed to. Their earning capacity has been so greatly reduced that the pensions they receive are not adequate compensation for their injuries.

The present economic depression is being felt, not only in this country, but throughout the whole world. Industry the world over is in the same condition as it is here. Whether a country possesses gold or not, she is feeling the effect of the depression. Senator Wagner, of the United States of America Senate, stated last year the mechanization of industry had displaced human labour to an almost unbelievable extent. While there were 3,500,000 men unemployed in the United States, the output of her factories was 25 per cent, greater than when those men were employed on useful work.

The same thing applies to other countries. America possesses 42 per cent, of the world’s gold, yet she cannot prevent unemployment. We have been told that we ought to get back to the gold standard, but the gold standard is not doing much for the countries in which it obtains. Germany had practically all of her gold taken from her under the terms of the Versailles Treaty. She is carrying on with practically nothing but a note issue, and yet the percentage of unemployment in Germany is less than in any other European country, with the exception of France, which has found work for her citizens reconstructing the devastated areas.

Even if we reduce the Australian standard of living to that of countries in . which industry is carried on- with coolie labour, it will not provide employment to the extent which some honorable members seem to think. The standard of living in England is far below that in Australia, yet the percentage of unemployment in that country is greater than here. Nevertheless, some honorable members wish, apparently, to force our workers down to tho coolie standard, under which they will dress themselves in sack-cloth, and live on a handful of rice a day. Of course, if, by means of such a reduction, we were able to capture trade from a country in which coolie standards now prevail, the owners of industry in that country would not yield without a struggle. They would say to their coolies, “ Your standard of living is too high! That sack-cloth you wear is too flash; it must come off.” And then we should have a condition of affairs which we hope will never obtain in any civilized country.

Mr Stewart:

– What about the handful of rice?

Mr JAMES:

– Well, I suppose even coolies must have some nourishment. That illustrates the vicious principles we are now being asked to support. Naturally, when the coolie country won back its trade, Mr. Theodore and Mr. Scullin would want to reduce wages in Australia still more, in order that we might compete.

According to budget figures, the annual cost of repatriation in Australia is £32,000,000, of which pensions amount to £7,000,000. Where does the other £25,000,000 go to? It goes in interest and sinking fund payments. Why not takesomething off the £25,000,000? If the bondholders had had one-quarter of the patriotism of the soldiers who offered their lives, they would have said, “Here is our money; we do not want it back.” Instead of that, however, when the first war loan was floated they went on strike until the rate of interest was raised. The soldiers did not go on strike. They volunteered in their thousands, and carried on until the war was over. In 1921 the average rate of pension paid to soldiers and their dependants was £1 3s. l1d. a fortnight, while in 1930 it amounted to £11s. 41/2d. a fortnight. The Repatriation Commission pointed out that economic necessity had compelled many ex-soldiers to approach the commission for assistance, and among them were many who were obviously entitled to benefits, and had very properly received them. That statement clearly indicates that many ex-members of the Australian Imperial Force did not desire to involve their country in the expense of paying pensions to them if they could earn a living. Thousands of Australians returned from the late war with a slight cough, of which they took little notice, never realizing that in their systems were the germs of tuberculosis. These men were absorbed in industry, but, in the course of a few years, the disease developed, and they had to become inmates of institutions established for the treatment of tubercular soldiers. It is tragic to find that about 25 per cent, of those men are dying annually.

The spectre of depression stalks through every country. It is obvious that the present social system is quite inequitable, since there are millions of unemployed throughout the world who are on the verge of starvation, although the productivity of the earth has never been greater than at the present time. No fewer than 300,000 persons in Australia are unable to obtain sufficient food, and many of them are homeless, though our granaries are overflowing. If the Government is sincere in its policy, and seriously desires to balance the budget, let it reduce the salaries of Ministers to the same level as that to which it wishes to reduce the incomes of others. If it can be proved to my satisfaction that the proposals of the Government must be adopted, I am prepared to submit to a reduction of my Parliamentary salary, not to £500, but to £400 a year, if all other incomes are reduced to the same extent. When I receive £18 a week as a member of this House, although I give away approximately £8 a week, I can scarcely ask a man who is on the unemployment dole of 8s. a week,, or 14s. aweek, if he is a married man, to submit to a reduction, or tell the old-age pensioner that his £1 a week must be reduced to 17s. 6d. ? Nor can I request the ex-soldier to submit to a reduction of his pension, or the expectant mother to forgo proper medical attention. I hope that the proposals before the House will receive short shrift. If members of the Opposition desire to capture the treasury bench, I urge them to joinwith the group to which I belong, which intends to look after the “underdog” in preference to the bondholder.

Mr MARR:
Parkes

.- The Prime Minister, in introducing these proposals, and the Treasurer in supporting them, left no doubt as to the serious position in which the Commonwealth is placed. Almost two years ago the exPrime Minister, Mr. Bruce, pointed out both inside and outside this House, the course which Australia must pursue if it was to be placed on a proper financial and economic footing; but the people took no notice of his statements. Members of the present Government were then in opposition, and they made promises to the electors which they knew could not be fulfilled.

Mr Keane:

– Name one of them?

Mr MARR:

– The present Prime Minister, in his policy speech, promised to findwork for all. He has been in office for over eighteeen months, but he has not been in power, because his Government is dominated by outside organizations. Even to-day, when this Parliament is discussing problems of the gravest national importance, the Federal Executive of the Australian Labour Party is deciding what the Government is to be allowed to do. The Prime Minister made excellent speeches regarding the economic position when he was Leader of the Opposition, and when he attained office he repeated them both in Australia and on the other side of the world. At the Premiers Conference in Melbourne as late as August last, when he was a sick man, he attached his signature to a document which bound his Government to adopt certain measures; but, before the ink was dry, his own supporters in the Labour caucus went back on the word of their leader.

Mr BEASLEY:
WEST SYDNEY, NEW SOUTH WALES · ALP ; LANG LAB from 1931; ALP from 1936; ALP (N-C) from 1940; ALP from 1941

– Does the honorable member favour the proposals of this Government ?

Mr MARR:

– The honorable member who interjects supported the ex-Minister for Health (Mr. Anstey) when he declared “ Default and be damned “. That was a remarkable statement for a Minister of the Crown to make. When the Prime Minister was abroad he made some excellent speeches, and we on this side agreed with the principles enunciated by him. The then Leader of the Opposition (Mr. Latham) said on numerous occasions that if the Government would follow the course advocated by the Prime Minister the Opposition would give it all the support that lay in its power. But the Government failed to accept that offer. The Prime Minister stated in England that the British financial institutions were prepared to assist Australia, and to stand by the Labour Government, yet his own colleagues in Australia passed resolutions in caucuswhich closed the doors of those institutions against this country. The doors have remained closed.

Mr Lazzarini:

– And a good job too.

Mr MARR:

– I remind the honorable member for Werriwa that the prosperity of a country depends upon the extent to which it enjoys the confidence of other countries. The success of, any financial policy which we may adopt depends upon co-operation with other countries. As we cannot dispose of the whole of the commodities which we produce, we have to depend upon our trade with other nations. No nation can live unto itself. The present President of the United States of America said that even that great country, with its high tariff wall, cannot live unto itself, and that in order” to construct a locomotive in America, 47 or 48 commodities have to be imported from other countries. Honorable members and the people generally know that the vital economic problem with which we are now confronted has not arisen within the last 24 hours. The present situation commenced to develop when the present Prime Minister was Leader of the Opposition, and when Mr. Bruce, who led the late Government, directed attention to the seriousness of the economic outlook. The present Prime Minister made certain suggestions to which effect could have been given when he came into power. When the Prime Minister returned from Great Britain the representatives of all political parties were willing to give him their support in an endeavour to restore financial stability. The Prime Minister is the first citizen of the Commonwealth, irrespective of the political party to which he belongs, and when the present Prime Minister returned to Australia from the Imperial Conference he received a striking welcome from all sections of the community, which believed that he would give effect to the principles he had enunciated on numerous occasions in Great Britain. Unfortunately, however, as a result of other influences, he made many grievous errors, the most striking of which was to totally discard the policy which he had previously favoured and to advocate a policy of inflation. He appeared on the public platform at Ashfield in connexion with the Parkes by-election, when it was expected that he would deliver a great speech.

Mr Beasley:

– It was a rotten speech.

Mr MARR:

– On that occasion he was accompanied by the honorable member for West Sydney (Mr. Beasley), who was then a member of the Cabinet, and who said later that he did not agree with the policy which the Prime Minister had outlined. When the Government introduced the Fiduciary Notes Bill, the Prime Minister said that if it were rejected by another place it would be re-introduced in July, and if it were again rejected he would go to the country. Why has not the right honorable gentleman honoured the promise which he then gave to Parliament and to the people? The Prime Minister and the Treasurer have recently returned from a conference of Commonwealth and State Ministers with still another policy, which is diametrically opposed to that which they previously supported. A private individual can spend only what he receives plus what he can borrow, and governments are in the same position. What this country needs more than anything else is a policy of business in government rather than one of government meddling in business. This afternoon the Prime Minister and the Treasurer placed before the House the decisions reached at the Melbourne conference, and the seriousness of the situation as disclosed by them demands our closest possible attention. Every honorable member desires that a high standard of living and the present rates of wages and pensions 3hall be maintained so that the conditions of the workers will be easy and their remuneration satisfactory. But a high standard of living with remunerative wages is possible only when the finances of the country permit. When that is impossible reductions must be made in order to restore financial stability. The Prime Minister informed us this afternoon that during the last two years our national income has decreased from £650,000,000 to £450,000,000. We cannot ignore the fact that it is impossible for the Government to continue to pay away more than it receives. The first step in the direction of restoring confidence and financial stability is to endorse the proposals outlined by the Prime Minister, the details of which can be considered later. That there will be differences of opinion as to the way in which reductions should be made is only natural, but those who are criticizing the Government’s policy should offer constructive rather than destructive criticism.

Mr Yates:

– What is the honorable member’s alternative?

Mr MARR:

– I am not criticizing these proposals; I intend to support them. I invite the honorable member for Adelaide (Mr. Yates), and the honorable members in the corner opposite, ‘with whom he seems to have associated himself, to make some constructive proposal as an alternative to the rehabilitation scheme brought forward by the Government. The speech of the honorable member for Hunter (Mr. James) was not constructive in any sense whatever.

The Prime Minister (Mr. Scullin) told us this afternoon that the fall in tho national income had been very great, and that it was necessary that expenditure should be reduced. The agreement reached by the Melbourne Conference shows that a definite effort is being made to reduce expenditure. We have to face the fact that only a limited amount of money is available to meet our needs. If the various Governments spend more than their fair proportion of it, industry must go short, and unemployment must extend. Our Governments must cut their coats according to their cloth, and leave as much money as possible available for utilization in industry. Governments do not create, but only spend wealth, whereas industry creates wealth.

I regret that the Prime Minister allowed himself for a time to be misled into accepting a policy of inflation; although he denounced that policy not so very long ago. We shall never restore confidence in Australia by the adoption of any policy which savours of inflation. The printing presses can never provide us with money. The quickest way to destroy any country is to put a large amount of paper money in circulation without an adequate gold backing for it. An economic crash must follow the adoption of that policy and such a crash is always more severe on the workers than on any other section of the community. The financial experts of the League of Nations, who were charged with the duty of rehabilitating the finances of Austria, Czechoslovakia and some other European countries insisted upon the restoration of the gold standard. They fixed the minimum gold reserve at 15 per cent, and arranged for an increase in the percentage year by year until 33-J per cent, was reached. If those countries, which are non-gold producing, could find gold with which to back their notes, surely Australia, which is a gold-producing country, can find it.

The Prime Minister this afternoon regretted the decline in our customs and excise revenue; but the decline is consequential on the tariff policy of the Government. Customs duties serve two pur-, poses. They protect industry and provide revenue. While it is true that a customs tariff may be partly protective and partly revenue producing the adequate protection of industries always requires duties which are high enough to discourage imports. When such duties are imposed the revenue from the Customs House must necessarily decline. I am a protectionist and have always voted in favour of giving adequate protection to industry, hut we cannot have adequate protection and a substantial customs revenue at one and the same time.

The Melbourne Conference agreement was arrived at by representatives of Governments of all shades of political opinion. The members of the conference faced the issues fairly and squarely and decided that the scheme now before us was the only one that offered any prospect of success. Irrespective of our fiscal theories, we must ultimately get down to hard economic facts.

Although the Government has insisted that there shall be equality of sacrifice by all sections of the community, it has made an exception in favour of the sugargrowers. It is not long since the sugar agreement was signed. I believe that the sugar industry should be protected, but at a time when wages and the prices of commodities generally are falling, surely the consumers of sugar had a right to expect that the price of sugar would be reduced below 41/2d. per lb. In view of the fact that the Colonial Sugar Refinery Company has been able to pay a dividend of 121/2 per cent, for a considerable time, and that the cane-cutters receive a daily wage of 26s., there is some justification for the complaints that have made about the price of sugar.

Mr Culley:

– The cane-cutters earn their wages.

Mr MARR:

– Probably they do; but the Prime Minister says that there must be equality of sacrifice. The canecutters were entitled to 26s. a day in good times, but they should now be willing to accept a 20 per cent, reduction in their wages as their share of the sacrifice that all must make. Unfortunately the Government has tied the country for three years to the terms of the sugar agreement. It did so in order to placate honorable members representing Queensland constituencies. Even now, I urge the Government to make some effort to modify that agreement. The sugar interests should be approached with a view to obtaining their consent to a voluntary reduction, and should they fail to respond to such an appeal, some means should be found to compel them to accept their share of the common sacrifice.

I now come to the most important question involved in these proposals, namely, soldiers’ pensions.

Mr Beasley:

-Where does the honorable member stand in regard to that matter?

Mr MARR:

– When the soldiers were urged to enlist all sorts of promises were made to them. The honorable member for West Sydney (Mr. Beasley), and those associated with him profess concern for the soldiers; but I remind them that persons holding similar political views, when speaking in the Sydney domain, called our soldiers “ six-bob a day murderers “. I do not want honorable members sitting in the corner to remind me of my duty to the soldiers.

Mr Lazzarini:

– Was it not Tom Mutch who so described the soldiers?

Mr MARR:

– No, it was Donald Grant.

Honorable members interjecting -

Mr SPEAKER:

– Order ! Honorable members surely must realize that I cannot allow the debate to be carried on in a disorderly manner.

Mr MARR:

– I yield to no one in this chamber as to my concern for the returned soldiers and their dependants. When the subject of soldiers’ pensions comes before us honorable members will know where I stand. Representatives of certain organizations of soldiers are here in Canberra now. I suggest that the Prime Minister should invite them to meet him to discuss matters affecting soldiers generally.

Mr Crouch:

– They are meeting here to-morrow.

Mr MARR:

– I do not care whether they meet here to-morrow or next week. In my opinion, an inquiry should be instituted into the incidence of pensions. Even if the inquiry took several weeks, it would be justified if it prevented an injustice from being done to any deserving person.

Mr Beasley:

– The honorable member is letting the soldiers down.

Mr MARR:

– The honorable member who is interjecting, and those associated with him are making a bid for the votes of returned soldiers. I ask them what alternative they have to offer to the scheme before the House.

Mr Lewis:

– Will you vote for it?

Mr MARR:

– The honorable member asks me whether I will vote for the Lang plan - the plan of a man who has crippled New South Wales, and every industry in that State. At the Easter conference be first advocated the socialization of industry, but a few days later he said it would take three years to give effect to his plan. I feel that I owe a debt of gratitude to Mr. Lang, because he undoubtedly assisted me to win the recent Parkes by-election, although he himself was not game to visit the district during the campaign.

Mr Beasley:

– He spoke in the East Sydney electorate during the recent byelection there.

Mr MARR:

– There have been four byelections in New South Wales recently, but in only one of them did the group, of which the honorable member is the leader in this House, participate.

Mr Beasley:

– What four by-elections have taken place?

Mr MARR:

– Those in the Upper Hunter and Parkes districts, and also that in the district which was represented by Mr. Pollock. The advocates of the Lang plan took part in the elections only in the district in which they thought they had a chance. Why do they not advocate their policy throughout the whole State?

Mr Beasley:

– We intend to do so.

Mr MARR:

– I suggest that the honorable member and those associated with him should give the electors an opportunity to express their will.

Mr Beasley:

– They will get that opportunity in good time.

Mr James:

– The honorable member wishes to retain his seat.

Mr MARR:

– In my political career I have suffered some defeats, but I have never squealed. I do not want the advice of the honorable member and his colleagues as to what I should do in connexion with soldiers’ pensions. I have’ met the soldiers in my electorate in conference, and we have exchanged views. My views will be made known in this House at the proper time. The honorable member for Hunter (Mr. James) contends that invalid, old-age, and soldier pensions should not be interfered with. I remind him of the Prime Minister’s statement that unless proposals along the lines of those now before us are accepted the country will make default. In that case all those persons who look to the Government for payment of either salaries or pensions would receive not more than 10s. in the £1.

Mr Riordan:

– The Prime Minister said 12s. 6d.

Mr MARR:

– Only if we do not meet our overseas obligations. The Prime Minister admits that these proposals are distasteful to the Government, and has asked for alternatives. They are distasteful also to honorable members on this side. It would appear that in some respects they are distasteful also to the honorable member for Adelaide (Mr. Yates) and the honorable members who sit in the Ministerial corner. The first plank in their platform is repudiation. The honorable member for Hunter (Mr. James) to-night referred to the Government’s proposals as being the most cowardly that had ever been brought before any Parliament; but, although I listened attentively to him, I failed to hear him suggest any alternative. He reminded the Treasurer of certain promises that he had made to the people ; but I listened in vain to any reference to the promise that the Treasurer would, if the Labour party were returned to office, re-open the coal-mines within fourteen days. As the honorable member for Hunter does not seem to have any alternative to suggest to the Government, his criticism of its proposals is of little assistance. Most honorable members have now come to the conclusion that the problems of peace are greater than those of war. Australia, in common with other countries, is faced with serious difficulties, and that fact brings home to us, particularly those of us who served overseas, the awful curse of war. In the excitement of war people do things which in their sane moments they would not dream of doing. If they were always in a state of sanity there would be no wars. This country, like other countries, has suffered severely as the result of the last war, and we should do our utmost to bring about the prevention of war. We should give every assistance to the League of Nations, so as to bring about the peaceful settlement of disputes.

The Government in submitting its proposals is making a serious effort to rehabilitate this country. I have heard honorable members deplore the tremendous unemployment existing throughout Australia, and I contend that in giving a dole to our unemployed we are breaking the spirit of citizenship.

Mr Lewis:

– Why does not the honorable member provide work for the unemployed ?

Mr MARR:

– I am not a member of the Government. Every decent unemployed person in Australia wants, not the dole, but employment. I am prepared to assist the Government in any effort to solve our problems and to find employment for our people. In England thousands of young men are in receipt of the dole. They have never worked, having received the dole from the time that they left school. The dole is slowly but surely strangling the trade of Great Britain, and I pray to God that Australia will soon be rid of the necessity to pay it to our young and virile manhood. Honorable members in the ministerial corner are supporters of Mr. Lang, the Premier of New South Wales, whose policy is to maintain high salaries for a chosen few and to keep the rest of the community in unemployment. Our national income has decreased in two years by almost £200,000,000. How can we, therefore, continue to expend as lavishly and to live as fastidiously as we have in the past? One of the greatest handicaps of this country is the fact that members of all parties at election time appear on soapboxes at street corners and on the publicplatform cadging for votes. Promises are made that will never be carried out. I congratulate the Government and the Prime Minister on placing the position of Australia honestly before the people. He has informed them that his party cannot honour the promises that it made on the hustings. I commend for the consideration of the House the proposals of the Government, although I do not agree with all of them.

Mr Yates:

– We have been told that it is all or none.

Mr MARR:

– I trust that in the interests of Australia the proposals of the Government will meet with the wholehearted support of this House. If they are carried, they will go a long way towards bringing about the rehabilitation of our finances and the restoration of confidence in Australia overseas. Only the other day I read in the press that as a result of the decisions, of the Premiers Conference, Australian loans in London had appreciated in value by £30,000,000 in one day. . I sincerely regret that the Government did not take many months ago the action that it is now contemplating. I agree with the Leader of the Opposition (Mr. Lyons) that had the proposals that were submitted by him when Acting Treasurer to this House been accepted, the sacrifice that the community is now compelled to make would not be nearly so great. The Government proposes to make heavy and drastic reductions in expenditure; but that is inevitable if we are to face our financial position fairly and squarely. If necessary, we must break our allegiance to our parties for the sake of the country. Australia is the greatest nation on God’s earth, and its potentialities are great. During the war posters were displayed depicting Kitchener pointing to the youth of Australia, and saying : “ This is your country ; fight for it “. I say to the people of Australia, “ This is your country; work for it”. We have a glorious heritage, and I believe that if we face the present position in that spirit of greatness which the people expect of us, we shall be able to solve our problems and rehabilitate this country.

Debate (on motion by Mr. Brennan) adjourned.

page 2829

COMMONWEALTH BANK BILL

(No. 3).

Bill returned from the Senate without amendment.

page 2829

ADJOURNMENT

Case of Jacob Johnson - Transport Workers’ Licences

Motion (by Mr. Brennan) proposed -

That the House do now adjourn.

Mr BEASLEY:
West Sydney

– I take this opportunity of bringing once more under the notice of the AttorneyGeneral his failure to give any definite information in regard to the .missing documents in the Jacob Johnson case. The following letter has been addressed to the Prime Minister and myself : -

Dear Sir,

I have made application since the 24th March last to the Attorney-General’s Department for the return of all my documentary -evidence in connexion with my case.

Some papers, which are of little .material value, have been returned to me, and all the important documents, such as statutory declarations of the Crown witnesses, in which they confessed having committed perjury, and in which they implicate Dillon, the secretary of the Steamship Owners Association, police officer Longmore, and Thomas Walsh, &c, I am informed, are now supposed to be missing.

On the 18th May last I wrote to the Attorney-General’s Department, desiring to know from them, if they were unable, or refuse, to return my documents to me, what* they suggest as an alternative.

Not receiving a reply to my letter of the 18th May, I wrote again on the 9th June, stating that a reply to my letter of the 18th May would be greatly appreciated. The department, up to date, has not even extended me the courtesy of acknowledging receipt of either.

After just on two long years of weary negotiations with the Government, firstly for the purpose of getting the appointment of a public tribunal to investigate the whole matter of my prosecution, and the last three months to obtain the return of my documents, my patience has now become utterly exhauster!.

To be “ framed “, and as a result oi it serving a term of six months imprisonment is monstrous, and stamps the creatures responsible as a low and degenerate type of human animals. A government harbouring such selfconfessed criminals is possessed of equally bad qualities. But a government who, either direct or through its servants, later robs the injured person of his documentary evidence which establishes his innocence, and is not prepared to offer a recompense in the circumstances, deserve to bo looked upon and treated with greater contempt than the original conspirators, who were responsible for the sufferings of my family and myself, when they railroaded me to prison. What is your answer in the matter?

Yours faithfully,

Jacob Johnson

On half a dozen different occasions I have pressed on the Government and the Attorney-General the need for doing justice to Mr. Johnson. It is well known to the Ministry that during the absence of the Attorney-General the Acting Attorney-General recommended that compensation should be paid to Mr. Johnson.

Indeed, I was deputed by Cabinet to finalize arrangements with the Crown Law Office in Sydney, and to that end all who had any connexion with the case were called upon to discuss the matter with the Crown law authorities in Sydney. Finally, a report was submitted to the Attorney-General for the purpose of having the whole matter wound up and Cabinet finally agreed to compensate Mr. Johnson. But that decision, somehow or other, has evidently been altered, or, if not, the circumstances of the case are such that the matter has not been finalized. And to add insult to injury the documents which Mr. Johnson declares establishes his innocence are still missing. The matter is so serious that one would think no Government would hesitate for more than 24 hours to take action in connexion with it. Mr. Johnson says that his patience is exhausted. The patience of those who aTe advocating his cause is also exhausted. Because there is an obligation on members of this Parliament to see that justice is done to the humblest person in the land, those who are associated with me will join with me in pressing for justice for Mr. Johnson at every available opportunity, and if needs be, we shall discuss it in public places until public feeling is so aroused that the Government will be forced to take action in the matter.

I have received a telegram from the New South Wales representative of the Waterside Workers Federation asking me to bring under the notice of the Attorney-General, his desire for a change of policy in regard to the issue of licences. These licences are to be re-issued on Monday, under conditions which will mean the volunteers will have an advantage over unionists for the ensuing twelve months on account of the preference given by the shipowners, and the tele- « gram suggests that the Government should alter its policy and restrict the issue of licences to members of the Waterside Workers Federation only. The Government originally departed from its policy of giving preference to unionists because it deemed it necessary to give preference also to returned soldiers. But now because of the latest development in regard to the financial affairs of the country, when preference to soldiers in regard to pension cuts has been abolished, the Government’s policy of preference to soldiers should not be continued on the waterfront. The Waterside Workers Federation thinks that if the Government has sufficient courage to carry out a policy for financial rehabilitation of the country by attacking. soldiers’ pensions, it might exercise the same amount of courage in confining the issue of licences from Monday next to members qf the federation only, and it has asked me to place this view before the Attorney-General.

Mr LAZZARINI:
Werriwa

.- I support the remarks of the honorable member for West Sydney (Mr. Beasley) in connexion with the Johnson case. That the railroading to gaol of Mr. Johnson was a political frame-up in order to create an election cry has been conclusively proved in the course’ of the inquiry which has been held, but if the documents upon which Mr. Johnson relied to prove his evidence have been stolen while in the department of the Attorney-General, some one else should be put in gaol. Surely when Labour is in control of the Department of Justice it will see that justice is done, although one can never right the wrong that is done by sending an innocent man to gaol for six months. I hope that exhaustive inquiries will be made in order to ascertain who is responsible for the loss of Mr. Johnson’s documents, and that there will be no need to ask once more why the payment of compensation has been delayed. Mention of this matter to a Labour Attorney-General should be sufficient to ensure that justice will be done promptly. With the honorable member for West Sydney, I hope that the Attorney-General will see that immediate effect is given to the decision of the Government, and that every step is taken to recover the missing papers and .return them to their owner.

Mr JAMES:
Hunter

.- I, too, support the claim of Mr. Jacob Johnson, which I am sure is just. When Labour was in opposition we moved that an inquiry should be held into his case, and the Attorney-General (Mr. Brennan) particularly took to task his predecessor. So also did the present Treasurer (Mr. Theodore), and it is true that the sufferings of Mr. Johnson’s wife and child were used as political capital on the hustings during the general election campaign. Now our chickenshave come home to roost; we are in a position to give effect to the policy we urged upon the last Government, and we are in duty bound to do that. I do not know whether the Government is deliberately side-stepping the issue, but the fact is that a determination was reached by Senator Daly, when Acting Attorney-General, that compensation should be paid to Johnson. The Government is able to pay the compensation, and should do so without further delay.

Mr BRENNAN:
AttorneyGeneral · Batman · ALP

– In regard to employment on the waterfront, the honorable member for West Sydney (Mr. Beasley) referred to a change of policy. No such change has been decided upon by the Government. We are giving effect to our policy, which includes and involves a considerable measure of preference in terms which have been agreed to by the representatives of the waterside workers’ organization, and which, apart altogether from their wishes, are considered by the Government to be fair and equitable. That preference remains.

Mr Archdale Parkhill:

– Every second day.

Mr BRENNAN:

– No ; the preference is the subject of special regulations which were gazetted this afternoon within an hour of the disallowance by the Senate of other regulations. Until its policy is deliberately changed, the Government intends to give continuity and a measure of permanence and stability to its regulation plans. The change which the honorable member for West Sydney said is desired by the Waterside Workers Federation would involve very serious consideration of policy, and also law, in respect of which the honorable member is not yet fully informed. Although the Government must come to a decision in regard to the re-issue of licences at the end of the present month, that matter has not yet been, completed.

I invite those honorable members who have spoken regarding the case of Mr. Jacob Johnson to refer to what I have already said on that subject in this House.

I promised to make a considered statement, and, having gone through certain papers, have prepared matter for the consideration of the Prime Minister and the Cabinet when relief from more important matters affords them an opportunity to deal with it. That opportunity will, I hope, occur at an early date.

Mr Lazzarini:

– Surely this is important!

Mr BRENNAN:

– It is, but very much less important than the matters which have prevented the Prime Minister from presiding over a Cabinet to deal with it.

Mr Beasley:

– It has been, on hand for two years.

Mr BRENNAN:

– -Not this aspect of it, and the suggestion that the matter has been unduly delayed by the Government has no basis in fact. After my return from Europe, the Government took up the matter promptly, and came to a decision upon it. As I have already pointed out, when Johnson intimated that he would like me to consider certain other documents, I promised to do so. The statement I have already made on that aspect speaks for itself. In respect of two points which the honorable member for Werriwa attempted to make a reply is due. One was that there are documents somewhere known to the Government

Mr Lazzarini:

– I did not suggest that the Government knew where the documents were.

Mr BRENNAN:

– I understood the honorable member to say that there was documentary evidence which proved conclusively the innocence of Johnson.

Mr Lazzarini:

– That is stated in his letter.

Mr BRENNAN:

– That statement is entirely incorrect.

Mr Beasley:

– If the Attorney-General does not know where the documents are, how does he know that the statement is incorrect ?

Mr BRENNAN:

– I do not know the whereabouts of documents I have never seen.

Mr Beasley:

– How, then, can the honorable gentleman say that they do not prove Johnson’s innocence?

Mr BRENNAN:

– I content myself with saying that there are no documents in the possession of the Crown Law Department, or known to me, which prove conclusively or otherwise the innocence of Johnson in respect of the charge made against him.

Mr Beasley:

– Where are they?

Mr BRENNAN:

– We shall come to that in due course in accordance with the promise I have made. The other statement made by the honorable member for Werriwa (Mr. Lazzarini) is one which I, as Attorney-General, cannot allow to go unchallenged; it was that there was a deliberate political frame-up against J ohnson.

Mr Lazzarini:

– So there was. I do not refer to this Government.

Mr Beasley:

– So there was.

Mr BRENNAN:

– The statement may not be intended to refer to the present Government-

Mr Lazzarini:

– The Attorney-General knows that it does not.

Mr BRENNAN:

– Whether it is intended to refer to this Government or to any other government of the Commonwealth, it is a serious thing to say or suggest that for political reasons, a deliberate frame-up - which, I presume, means a deliberate conspiracy to which the Government of the time was a party - was entered into to secure the criminal conviction of any person. I take leave to say, in my position as Attorney-General, that there is not the slightest evidence or suggestion of such a thing on record.

Mr James:

– The honorable gentleman when in opposition, and when the honorable member for Kooyong (Mr. Latham) was Attorney-General, thought that an injustice had been done to Johnson.

Mr BRENNAN:

– That is a totally different matter. But I am not aware even that the honorable member will find, in any observations of mine on the subject when in opposition, an allegation that an injustice had been done to Mr. Johnson.

Mr Latham:

– I do not think there was. The honorable member merely pressed for a full inquiry.

Mr BRENNAN:

-If the honorable member for Hunter will refer to what I said on this matter from my place when in opposition, he will, I think, find that I urged strongly on the then AttorneyGeneral that a full inquiry should be made. I believe also that I asked for a public inquiry, because we had before us some evidence that a man named Andressen, who had given evidence in the case as a material witness, had since recanted and declared that his evidence was false. On that occasion I said, in support of the remarks of the honorable member for Dalley (Mr. Theodore) and the present Prime Minister (Mr. Scullin) that, in those circumstances, something less than justice would be done to Mr. Johnson if such an inquiry were not made. I made other observations by every one of which, because I have recently re-read my speech in the House, I stand to-day. I retract nothing of what I said then, although I may add that sometimes an honorable member, in opposition, will say things which perhaps he would modify if he were a member of a government. ButI am in the happy position of being able to say that I have nothing to withdraw in that regard. I ask the honorable member for Werriwa (Mr. Lazzarini), in fairness to his own country, to hesitate before asserting that any government would be guilty of entering into a criminal conspiracy of the character indicated by him.

Mr Lazzarini:

– The Minister knows that it has been done a thousand times.

Mr BRENNAN:

– That is all that I wish to say on that point. In conclusion I ask those honorable gentlemen who have addressed themselves to thissubject to exercise a little more patience. A statement willbe made in due course.

Question resolved in the affirmative.

House adjournedat 11.24 p.m.

Cite as: Australia, House of Representatives, Debates, 18 June 1931, viewed 6 July 2017, <http://historichansard.net/hofreps/1931/19310618_reps_12_130/>.