12th Parliament · 1st Session
Mr. Speaker (Hon. Norman Makin) took the chair at 2.30 p.m., and offered prayers.
– Has the Minister for Trade and Customs any information to the effect that the motor ship KingLud is likely to continue its voyage from Sydney to the Argentine without further unloading its cargo of Russian timber?
– I have received no information on the subject, but the King Lud’s cargo has not been overlooked by my department.
– I ask the Minister for Home Affairs if it is true that the honorable member for Northern Territory (Mr. Nelson) has been appointed administrator of the territory ; if so, when will he commence his duties ?
– The honorable member’s source of information is not very reliable.
-Will the Prime Minister consider the advisability of altering the procedure of answering questions upon notice, with a view to permitting written answers to behanded to the clerk, and duplicates to the members concerned, thus saving the time now occupied by Ministers in reading replies?
– The suggestion is an excellent one. The Standing Orders Committee agreed some time ago to propose an amendment to that effect as part of the general scheme for the revision of the Standing Orders, but if the House is agreeable I shall be pleased to move a specific motion forthe adoption of the honorable member’s suggestion.
Honorable Members. - Hear, hear!
-Was the question of the honorable member for Oxley inspired ?
– The honorable member for Oxley is a member of the Standing Orders Committee which drafted the proposed amendments, but, unfortunately, they have not yet been brought before the House.
– In the Public Accounts Committee’s report on the finances of South Australia a statement appears in regard to the subsidies paid in each State to protected production. The figure for New South “Wales is given as 5.5 per cent., and for Western Australia as 3.6 per cent. As these figures seem out of proportion to the actual facts, will the Treasurer ask the chairman of the committee to supply such further information as would enable the House to judge how the computation was made? I ask the Treasurer to make this request of the chairman, because it is not within my province to do so.
– If, on consideration of the report, further light on the subject to which the honorable member has drawn attention seems necessary, I shall interview the chairman of the Public Accounts Committee.
– Will the Prime Minis ter say whether the honorable member for Cook (Mr. C. Riley) has resigned the position of Government Whip ? If he has done so, will the right honorable gentleman, in view of the fact that the Government has not sufficient members of its Own party to fill the vacant position, offer the appointment to the honorable member for Warringah (Mr. Parkhill)?
– Because of the lawlessness that has occurred in various State capitals, particularly Sydney, on the part of persons who are supposed to be allied with the Russian communists, I ask the Minister for Defence whether his department has any recognized system of aiding the State police when necessary?
– By machine guns?
– Yes, if necessary. Has the Defence Department any recognized methods, similar to those adopted in other countries, for coping with civil lawlessness ?
– The Commonwealth Government does not intervene in civil disturbances except at the request of the State Governments concerned. If a request for assistance is made by any State government, it will receive consideration.
– Has the Defence Department any tear-gas bombs?
– The Chief Secretary stated in the New South Wales Parliament last week that the honorable member for Richmond (Mr. R. Green) had, at a convention in the north of the State, urged the lawless elements to take the law into their own hands. Will the Minister for Defence have that statement, as well as the honorable member’s activities, investigated ?
Question not answered.
– I ask the Prime Minister whether the Melbourne Financial Conference concluded its deliberations, or adjourned on the understanding that it would reassemble after the Federal and State Governments have submitted the proposed legislation to their respective Parliaments?
– The conference ad journed on the understanding that, if necessary, it would be called together again to go into further details of the plan it had adopted. I do not anticipate however, that there will be any need for the conference to reassemble.
asked the Minister for
Markets, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Minister for Works andRailways, upon notice -
In view of the cessation of the aerial mail service between the mainland and Tasmania, and the inability of the Government to subsidize the service in order that it may be continued, and also in view of the fact that Tasmania has to rely during the winter months on the equivalent of three mails per week, will he cause the work of linking up Tasmania by telephonic communication, as recommended by the Public Works Committee, to be put in hand with the least possible delay?
– Subject to Parliament approving of the recommendation of the Public Works Committee, the work will be proceeded with as early as the financial position permits. The department realizes the importance of the service, and is anxious that it should be established as early as practicable.
asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follow : - 1. (a) The amount due to Australia from Germany is an average yearly payment of approximately £830,000 up to the year1965;
The amount payable by other countries is negligible.
– The honorable member for Henty (Mr. Gullett) has asked, upon notice, a series of questions regarding the remission of duty on union yarn. The information is being obtained.
asked the Minister for Repatriation, upon notice -
Has the practice of paying arrears of soldiers’ pensions been discontinued since 1st June last; if so, on whose authority?
– The commission, under the authority vested in it under the Australian SoldiersRepatriation Act, has decided not to pay, in future, arrears for six months prior to date of application. Other arrears are not affected by this decision. This was done after notification to the Minister and also to the Treasury, in connexion with Estimates.
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Minister for Home Affairs, upon notice -
– The answers are contained in the following table: -
asked the Minister for
Trade and Customs, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow : -
– On the 23rd June the honorable member for Grey (Mr. Lacey) asked me the present position regarding the matter of the inquiry into the price of petrol. As I have already indicated in reply to questions asked by honorable members, this matter was raised at the recent conference of Commonwealth and State Ministers in Melbourne ; but, owing to the pressure of other matters, finality was not reached. A record of the discussions will be found in the report of the proceedings of the conference (page 58, &c). I have now communicated with the Premiers of the States suggesting that they join with the Commonwealth in a full and comprehensive inquiry into the matter. It is hoped that the State Governments will see their way to agree to the proposal.
– On the 19th June the honorable member for Hunter (Mr. James) asked the following questions, upon notice -
T am now in a position to furnish the following reply: -
– On the 19th May the honorable member for Swan (Mr. Gregory) asked the following questions, upon notice -
I am now able to furnish the honorable member with the following information : -
Proposal, by the United States of America.
– by leave - I desire to make a statement concerning the proposal that has been put forward by President Hoover for a temporary suspension of reparation payments. I shall read to honorable members a statement on the subject that has been made in the House of Commons by the Chancellor of the Exchequer. It is as follows: -
As my right honorable friend the Prime Minister informed the House on the 22nd instant His Majesty’s Government in the United Kingdom subscribe whole-heartedly to the principle of President Hoover’s proposal and are prepared to co-operate] in the elaboration of details, with a view to giving it practical effect without delay, and with the permission of the House, I should like to take this opportunity to explain the steps which we have decided to take for this purpose.
The more consideration we give to the President’s declaration, the more it seems to us that, having regard particularly to the history of the matter, the declaration constitutes a very great gesture on the part of the United States of America, and it will be a thousand pities if Europe does not respond to it in the same spirit. The beneficial effect of the proposal may be lost unless steps are taken by all the countries concerned to give it prompt and practical effect.
This is particularly the case asrregards Germany, which, after all, is the essential difficulty. We agree with the view expressed by the United States Government that there is no time for a conference. A more prompt method must be found for putting into operation the proposal of the United States Government for a complete and immediate suspension of German payments to the creditor Governments.
The procedure which we would favouris that the creditor Governments should forthwith notify the Bank for International Settlements that they agree to the proposal for the suspension for one year of all German payments due to them. . The decision, of course, does not rest with us alone, and we are awaiting the views of the other creditor Governvernments; but we hope it may be possible to secure agreement 011 these lines as soon as possible.
President Hoover’s proposal applies, however, to “ all inter-governmental debts, reparations and relief debts.” His Majesty’s Government, for their part, accept this proposal in the spirit as well as the letter. They will accordingly be ready to suspend for one year all such inter-governmental debts due to them as soon as President Hoover’s proposal has been generally accepted and, in the meantime, as from the 1st proximo they will refrain from claiming the instalments that may fall due. As regards relief debts, His Majesty’s Government are at once taking steps to inform the other European Governments which hold relief bonds of their action and to invite them to co-operate.
Finally, although His Majesty’s Government in the United Kingdom do not regard President Hoover’s proposal as directly affecting the war obligations of the dominions and of India to the United Kingdom, which are a matter for discussion and settlement between those of His Majesty’s Government concerned, we felt that we should interpret the wishes of the country in deciding freely to offer to the dominions and India the same concession as is proposed for foreign countries under the same conditions. Accordingly, when inviting the assent of the Dominion Governments and the Government of India to the suspension of German payments so far as regards the shares to which they arc entitled, we intimated that on the same principle we would readily give them the option of postponing the whole amount of their war debt payments to the United Kingdom for a period of twelve months from the 1st July, 1931, if they so desire.
These proposals will involve a loss to the current budget, which may reach approximately £11,000,000. This is a serious sacrifice for the taxpayers of this country, upon whom such heavy calls have already been made, but we hope the steps which we are taking in co-operation with the United States will be more than, justified by the help it will give in reviving confidence and prosperity. Canada, 73; Commonwealth of Australia. 89; New Zealand, 74; Union of South Africa, 40; Newfoundland, 41.
Communications have passed between the Commonwealth Government and the Government of the United Kingdom on this subject, and all I feel disposed to say at this stage is that the Commonwealth Government readily assents to the proposal to forgo reparations. We appreciate the interpretation placed upon the plan by the Government of Great Britain, and we also appreciate the action of that Government in so promptly and fully offering to extend relief to the dominions. The Hoover plan, if adopted by the allies in the same spirit as it has been adopted in the United States of America, and accepted by Great Britain, should go far towards restoring the general economic position of the world.
.- by leave - I endorse the remarks of the Prime Minister (Mr. Scullin) regarding the action of the Government of Great Britain. It is encouraging for us to see how promptly this matter has been taken up by the British Government, and how generously that Government is prepared to treat the various dominions. It is, of course, what all of us would have expected, but it is gratifying none the less. With the Prime Minister, I feel that real and substantial benefits must flow from this action, and it bears out what some of us have repeatedly declared, namely, that Australia has only to show its willingness to help itself, and we can depend upon the willing co-operation, and even generosity, of Great Britain. I regard this action as an indication that the British people will be with us in our struggle towards prosperity, provided we display some willingness to do our share.
Limitation or Debate.
Motion (by Mr. Scullin) proposed -
That the Standing Orders be suspended in order that the time for speeches on the second and third readings of the Debt Conversion Agreement Bill be limited to thirty minutes, with no extensions of time.
Mr. BEASLEY (West Sydney) [2.58 - I oppose the motion. This is a samp of what I expected would followup the recent amendment of the Standing Orders in regard to the limitationon debate. On that occasion we in this corner objected to the limitation of time, because we felt that the greatest freedom should be permitted to honorable members to express their views on subjects before the House.
– If it can be applied to this measure it can be applied to any other.
– So can the gag.
– It appears that members of the Opposition, in dealing with this measure, do not object to having their rights taken away from them, because it is their policy that is being given effect, and, no doubt, with their help, the Government will be able to get this motion carried. We should not forget, however, that the bill to which this motion applies is one of the most important which Parliament has ever been called upon to discuss, and the length of honorable members’ speeches should not be subject to restriction. The Standing Orders provide that honorable members may speak for 45 minutes, and the House may then extend the time if it so desires. Why should the House, during the discussion of this bill, be denied the right of granting moretime to a speaker if it pleases? Ido not know any organization, howeversmall, which does not reserve to itself the right of allowing a speaker addressing it to speak for longer than the specified time if the members of such an organization by a majority so desire. If this
Parliament is to be a mere machine for the purpose of turning out the measures submitted by the Government with, as in this case, the assistance of the Opposition, why not simply put the official seal on the measures, and refuse to have them discussed at all?
Motion (by Mr. Scullin) put -
That the question be now put.
The House divided. (Mr. Speaker - Hon. Norman Makin.)
Question so resolved in the affirmative.
Original question put. The House divided. (Mr. Speaker - Hon. Norman Makin.)
Majority . . . . 46
Question so resolved in the affirmative by an absolute majority of the members of the House.
The following papers were presented : -
Navigation Act - Regulations amended -
Statutory Rules 1931, No. 69.
Seat of Government Acceptance Act and Seat of Government (Administration) Act - Ordinance of 1931 - No. 11 - Liquor (No. 2).
Debate resumed from the 24th June (vide page 2984), on motion by Mr. Scullin -
That the bill be nowread a second time.
.- I preface my remarks by expressing personal gratification at the action of the British Government in making a generous gesture to relieve Australia, temporarily, in common with the other dominions, of the payment of the principal and interest due on her war debt. I hope that this action will lead to a general agreement under which there will be a mutual cancellation of reparation payments and war debts. The action which the British Government has taken is a step in that direction. The relief which this action will accord] to Australia will go a long way towards assisting us out of the pit of economic depression in which we find ourselves to-day.
In dealing with the financial proposals of the Government, my first observation is that while this is a time for plain speaking, no useful purpose is served by indulging in recriminations and vain regrets about what might have been, or what ought to be. The concrete realities that confront this country at the moment must be faced, and the Government’s financial proposals must be examined in relation to existing conditions. It is an unfortunate circumstance that, by the bludgeonings of chance, so to speak, this Government has been compelled to take upon its shoulders the responsibility for establishing order out of the economic chaos which surrounds Australia in common with most other countries. I share the feelings of many others who see the results of the strivings of many years for better social standards seriously affected by the projected economies. I yield to no one iu my solicitude for our old-age, invalid and war pensioners, or in my desire to maintain good conditions in our public service. I have played my part in this House in striving to uphold the rights of the oldage, invalid and war pensioners, but it is wrong, in my opinion, for any individual or any party to claim a monopoly of sympathy in this regard. We have to face facts and speak plainly at a time like this. I utter the obvious truth when I say that although this party has for years past striven to increase our pension payments and improve our living standards, the fact remains that the increased payments made to old-age and invalid pensioners and war pensioners in recent years, have been granted by previous governments. I can see no possible harm in conceding this fact.
It is the right of every honorable member to consider these financial proposals and act in relation to them as he thinks best; hut we have to face the fact that so far in this debate, no honorable member has offered any practicable alternative to the policy of the Government.
If there is a political Moses among us who can lead us out of the economic desert into the promised land by an easier and less irksome road than that we are taking, I shall be glad to follow him. It cannot be denied that these proposals have been forced upon the Government by the refusal of the State Governments and the banking institutions to accept other financial proposals previously submitted to them by this Government. In the light of these realities, doctrinaire diatribes and negative criticisms will not get us anywhere, and will not assist the Government nor the people generally. I sympathise with the Government because, Atlas-like, it has had placed upon its shoulders a world of responsibilities, and has been called upon to perform a most unpleasant and difficult task.
The plan presented to us was formulated by a representative committee of experts and, for my part, I do not think that any useful purpose can be served iu blindly abusing the committee for reaching the conclusions it did, and for adopting what some honorable members have been pleased to call a perverted and wrong policy. I accept the decisions of the experts as Having been made in all good faith, and as offering us what is in their opinion the best way out of our present difficulties. The suggestion has been made during this debate that some other course should be taken. But the alternative economies that have been proposed do not relate to anything that can be done immediately. The proposals for the a’bolition of State Parliaments, the sweeping away of State Governors, and the removal of overlapping in public utilities, could only be given effect either by an amendment of the Constitution, or by an agreement among all the States. We have to remember that we shall face default in a few weeks’ time unless something is done immediately. If the Prime Minister (Mr. Scullin) and the leaders of the State Governments, who conferred on this question in Melbourne for some weeks, are to be believed, we must, for the moment, disregard all proposals for economies which cannot- be given effect at once, and concentrate on a policy which will give the country immediate relief. “We are told that we will drift into default next month, and pay only 12s. or 9s. in the £1, unless we act without delay.
Some honorable members have suggested that the banks are playing a game of bluff. But is that true in view of the fact that the governments ‘ owe them’ £68,000,000 worth of short-term liabilities? It may be that the banks have been misguided, or that they have adopted a wrong attitude, but whether that is so or not, mere criticism of them will not get us out of the tangle in which we find ourselves. The banking companies, in their wisdom, and having regard to their general policy, have declared that they cannot carry the governments any longer. In the absence of a mandate from the people to alter our banking system, we must accept this position and conform to it. After all, the banks are justified, according to their viewpoint and outlook, in adopting the same policy towards governments as they invariably adopt towards individuals when the credit limit is reached.
An alternative to the acceptance of this policy is to appeal to the people for a mandate for the nationalization of banking in Australia. But so long as we allow private financial corporations to retain control of our banking system - I exclude the Commonwealth Bank from consideration for the moment - they are entitled to operate their own policy^ and conduct their business in their own way.
In any case, the suggested alternative of default in July can be disregarded, because it is certain that another place would not allow the Government to default. Furthermore, steps could be taken in the law courts to enforce the Government to meet its contractual obligations, and also to carry out the provisions of the financial agreement. The only way to get out of our obligations under the financial agreement is to obtain an amendment of the Constitution, or an amendment of the financial agreement which requires unanimity among the signatory governments. “We all know that at present the Government and the State Governments are bound to act in conjunction in regard to their financial policy. Even if we went to the country and won a campaign on the nationalization of banking, the obstacle of default would still have to be overcome, and we should still have to face the difficulty of either amending the financial agreement or the Constitution in order to take away the powers conferred under the Constitution by which such agreements are made. It is in the light of these facts that the Government, and honorable members supporting it, are called upon to examine the position.
Default is generally regarded by honorable members as undesirable. It would amount to an admission of insolvency, and lead to panic, economic reprisals, and widespread hardship. It has ‘been suggested as another alternative that rather than take the course that it is taking, the Government should hand over the control of the nation’s affairs to the Opposition; but if it took such a course it would be guilty of cowardice and treachery, and would condemn the Labour party for all time as being incapable of governing during a national crisis. The other alternative is an immediate single or double dissolution, and if that were adopted the only proposal which the Government could then submit to the people would be the fiduciary issue. An immediate election would not extricate this country from its difficulties ; but -I have no wish to traverse that ground further, as it has already been sufficiently covered. In any case, the federal executive of the party to which I owe allegiance has declared that it does not desire an election in the present circumstances. It does not wish this Government to imperil its occupancy of the treasury bench, and that fact is evident as a major element in the resolution which that body recently carried. I am not surprised at the action of the federal executive. I have no wish to indulge in recriminations, but the fact remains that if this Government were defeated, and the alternative of the former Government were resorted to - the abolition of arbitration followed by the destruction of unionism - the whole structure upon which unionism and labour standards have been established, would be permanently destroyed. I ask myself whether it is not better in the circum- stances to make an orderly retreat than to suffer a possible rout. Is it not better to consolidate our position as a movement, and to make our last stand on the principle that there shall be no more cuts in wages ? This is an emergency scheme, to be judged by the results achieved under it. As a party we should prepare for future action on the policy of national control of banking and credit. Nevertheless, we have to face actualities, and I am brutally candid enough to express doubt whether the people of Australia at this moment would welcome nationalization of banking in view of what happened recently in New South Wales. It would be a good line of action for all parties in this House to consider the question of introducing a national insurance scheme, with the object of establishing social legislation on a permanent basis.
Those who regard the Fiduciary Currency Bill as an economic elixir are prone to forget that it was introduced because the other financial proposals of the Government, including the release of credits by the banks, were rejected. The fiduciary currency proposals were brought forward because the banks and the other governments of Australia were not prepared to accept the Goverment’s monetary policy. A fiduciary currency alone would not be a remedy for all our ills. After all, £18,000,000 worth of fiduciary currency would be but a drop in the bucket compared with the decline in national income from £650,000,000 to £450,000,000 and compared with the gigantic volume of documentary currency in use throughout this country. If the present drift continues, the deficits for the ensuing year will amount to £20,000,000. I, therefore, cannot see how £18,000,000 of fiduciary currency would solve the problems that confront this nation. It certainly would not solve the problem of the conversion of our £250,000,000 of loans which mature between 1931 and 1935. In the absence of the economy plan, those loans under a fiduciary issue would have to be converted at a higher rate of interest or redeemed with an inflated currency which, if it exceeded reasonable limits, would undoubtedly precipitate a collapse. Unrestricted inflation has been condemned by the
Labour party, because it would not restore economic stability, would not prevent the collapse in world prices, would not prevent steep rise of price levels in Australia, but would increase the adverse exchange rate, would involve an extended system of assistance to primary industries, and would in all probability, ultimately force us to follow the example of France by devaluing the £1. Accordingly the Labourparty has rejected the theory of unrestricted inflation. The fiduciary proposals certainly would not overcome the difficulty of converting the huge volume of debt which is being tackled under the Government’s present plan.
Whilst every one recognizes that past governments wasted our substance iD riotous living and exhausted our credit resources, and that this Government has been compelled to act more or less as a charwoman in cleaning up the financial mess, and although this country has also been the victim of private extravagance which has been largely encouraged by our private banking system, the real problem with which we are faced is unquestionably the world depression, over which we, as one small unit of our civilization, have no control or any power of legislation. If international price levels were restored to what they were formerly, our troubles would disappear. Failing that, an empire economic union based on reciprocal preferences, with an empire currency, would go a long way towards solving our external trade difficulties of the moment. The solution of the world’s problems would mean our economic salvation. We cannot live in a world to ourselves. The discussion at the Geneva Conference, which I attended last year, ranged round economic world problems which are baffling the economists who have propounded solutions. A world inquiry has been initiated. Every country is suffering as a result of war debts, reparations, the hoarding of gold and the collapse in silver. Different solutions have been put forward, such as the rationalization of production, the remonetization of silver, &c, but in the absence of an agreed international change in monetary and economic policy, we must attempt to adapt ourselves to circumstances. Some people appear to ignore the seriousness of our position, Recently over 400,000 of our workers, under federal awards, suffered a reduction in wages of 23 per cent. This, the Government was powerless to prevent. Over 400,000 persons are on the dole, and countless bankruptcies are being recorded in the press. The farmers are in a desperate plight and the banks are carrying millions of unsecured liabilities, [n the light of these facts, surely we must strive to arrive at a nation-wide agreement in order to save this country from bankruptcy. The supreme responsibility if this Government is to get the wheels if industry moving and to find employment for our vast workless army. These things cannot be done until stability i.? established and confidence is restored. Ii is upon those two things’ that the structure of our credit rests. The alternative is to allow the whole financial system to collapse, which, in my opinion, is an unthinkable alternative. I believe in an ordered progress towards -socialism. We cannot bring that about by a drastic and sudden change such as is contemplated in the proposals that have been made for voluntary default as a deliberate act of policy.
A grave responsibility is vested in this Parliament iu deciding whether this agreement should be adopted. The unanimity with which it was arrived at by the various governments indicates that they recognize the seriousness of the position. The proposal to convert the whole of the accumulated debt of Australia by what may be described as a voluntary form of compulsion is undoubtedly the best way to restore our prestige overseas and to maintain our credit as a nation. I take this opportunity to protest against the manner in which the bondholders are being singled out for abuse. I hold no brief for them, but there are people who have refused to invest in Government, securities, have either invested their fund? abroad or locked up their money in mortgages and fixed deposits;, if comparisons are to be made between different classes of wealthy people, these persons are infinitely more odious than the holders of Government stocks. The obvious effect of the attacks upon bondholders is to damage our prospects of future borrowing. Who is going to lend
Mr. Coleman. money to governments if they are to be abused and threatened with repudiation for so doing. Time does not permit me to discuss these proposals in details, but I suggest to the Government that where there is no inducement to bondholders to convert because of the early maturity of their stocks, the Government should give consideration to the imposition of a penalty upon them so that they will carry their share of the burden of sacrifice equally with others who hold long-dated securities. I make that suggestion, because it is imperative that the conversion loan shall be successful. There are those who have attacked the reduction of interest on the ground that it is not enough, but judging by the market quotations, the conversion at 4 per cent, will represent a saving of 3 or 4 per cent. on the rates we would have to pay if we had to float loans under present conditions in the absence of a nation-wide plan. I assume that when the conversion of the internal debt has been completed, the Government ‘ will negotiate overseas for an abatement of the interest on the external . debt. ‘Concerning the old-age and invalid pensions, no doubt we shall have an opportunity to deal with details when the bill is in committee, but there is room for a mitigation of the reduction proposed by the Government in regard io hospital inmates. Some of the reductions that are now proposed will not operate equitably.
In regard to war pensions, I associate myself with the remarks by the honorable member for Brisbane (Mr. D. Cameron) last night. I am glad that the Government has adopted the suggestion made by me and other in asking a committee of soldiers, representing exsoldier organizations, to co-operate in suggesting alternative economies. As an ex-soldier I appeal to the returned soldiers to assist , the Government in this great national emergency as they did during the memorable years 1914-1S. I agree with the honorable member for Brisbane that an appeal should be made to the soldiers who are in a position to do so to voluntarily to abstain for the time being from collecting their pensions without prejudice to their rights. In making that suggestion, I claim no credit for the fact that since I became a member of this Parliament I have never drawn the war pension at a permanent rate, to which I am entitled, and have thereby sacrificed over £1,000. I am now merely asking those who are not dependent upon their pensions to follow the example set by the honorable member for Brisbane, myself, and others. Men with incomes of £5,000 to £10,000 a year are reputed to be receiving war pensions. If the Government appeals to them, and assures them that if they forgo their pensions now they will not prejudice their right to apply for them again should they ever be in necessitous circumstances. I feel sure the invitation will meet with a substantial response.
The time limit prevents me discussing the proposals further, but no doubt other opportunities will present themselves in the House and on the public platform for dealing with the plan which the Government has submitted to the House, but I content myself with saying that I shall follow the majority decision of the Labour party regardless of the consequences to myself for I regard the government policy as the alternative to something infinitely worse. After all, this is a testing time when men should examine their own consciences and determine not what is best for themselves and what will further their personal and political interests, but what is best, for the nation, remembering that “ The noblest motive is the public good “ It has been said that “ each petty hand can steer a ship becalmed “ but at the present time the ship of state is driving through storms. I have faith in the captain on the bridge, and I believe the people will ruefully accept the proposals he has submitted when they know that the alternative is to allow the nation to drift like a waterlogged derelict towards the rocks of default and disaster.
.- The honorable member for Reid (Mr. Coleman) has described clearly the dangerous position into which Australia has drifted. We have to decide how we can best lift the country out of that position, while ensuring that every section of the community shall be compelled to bear a fair shave of the sacrifice. I am not con vinced that that is being done. The bill before the House is merely toapprovean agreement for the conversion of the internal public debt, but the debate is covering the whole plan of reconstruction which emanated from the Melbourne Conference. I want a plan adopted that will rehabilitate Australia not only financially but also economically. I approve of the debt conversion proposals subject to sacrifice by other sections of the community; but many of the details that should accompany this plan have not been enumerated by the Government, and I have grave doubts of the intention of Ministers to enforce true equality of sacrifice. That. Australia has drifted almost on the rocks like a ship commanded by an incompetent captain is only too apparent. The Prime Minister (Mr. Scullin) has stated that “ We are confronted with the gravest economic and financial crisis in our history “. Why ? Few countries have greater resources. Nature has endowed Australia with rich and varied soils and a wonderful climate, and all things necessary for the building up of great industries, and we have an intelligent and welleducated people. Something must be wrong with our economic system when a nation with so many natural advantages is almost on the rocks of bankruptcy. The Prime Minister might truthfully have said that through political interference with industry, by absolute disregard of economic laws, by waste, extravagance, and incompetence, by neglect to take heed of the financial dangers that threatened us, by the Government’s refusal to honour the pledges given by the Prime Minister in August last, by procrastination and broken promises, causing a loss of confidence as shown in the prices of our stocks at home and abroad, the country has become bankrupt not only financially but also in statesmanship and national honour. I read in the Sydney Morning Herald on Monday last that Australian51/2percent. funded stock, tax free, and payable in 1934 was quoted at £74 10s., although on the same date New Zealand51/2per cent. bonds, maturing in 1937, were quoted at £118. To-day Australian 5 per cent. stock is selling on the New York market at £62, while equivalent Canadian stock is worth £107. Twelve months ago the Government was fully aware ofthe desperate financial position into which the country was drifting. The Prime Minister said in July last -
Parliament must recognize, however, that no further drift in Commonwealth finances can be permitted, and that the balancing of the budgets is an essential step for the restoration of the credit of Australia. The Government proposes to watch the financial position closely throughout the year, and, without waiting until the end of the financial year, will not hesitate to take immediate steps if such action appears to be necessary in order to prevent any serious disturbance in the budgetary position.
This need was recognized much earlier by others. In 1929, Mr. Bruce, addressing the Premiers Conference, said -
Two alternatives face Australia to-day. Either wo can” resolutely attack this problem of reducing our costs of production, and by so doing reduce bur costs of living, expand our avenues of employment, maintain and augment our standards of living, and increase our national wealth; or we can refuse to recognize the needs of the position, and allow our national wealth to diminish, and unemployment to increase until, faced with a national crisis, we are forced to lower our standards of living and reorientate the whole of our national life. Between these two alternatives can there be any hesitation?
asked, “ Can there he any hesitation.” Unfortunately, there has been hesitation ever since, and no attempt has been made to put our house in order. I am fully justified in saying that this is due solely to political tactics. Politicians have indulged in window dressing. They have gone hither and thither, promising this and that, in order to win popularity. This practice, of which all parties have been guilty, has brought Australia to its present pass, but the Government, with all the facts before it, and with a full appreciation of the financial chaos it was creating, refused to recognize the needs of the situation. As Mr. Bruce clearly pointed out, the only way to maintain our standard of living and increase our national wealth was to recognize the seriousness of the financial position, and endeavour to correct it by reducing the costs of living and production. (Quorum formed.’] The only effect of the policy of the Government has been to aggravate industrial animosity and place a greater stranglehold on our primary producers. “Were it possible in connexion with this debate, I should move that the reconstruction plan now before the House be not approved until Parliament had given full consideration to the difficulties of the wheat-growers and made provisions for their relief. It is necessary for us to recognize that if we do not produce wealth we cannot enjoy good conditions.
We are asked to force sacrifices upon those who lent money to the country, upon our incapacitated returned soldiers and old-age and invalid pensioners. At the same time; the Government grants concession after concession to certain sections of the community, and neglects the wheatgrowers, who loyally came to its aid last year. It does that, despite the fact that legislation was passed last year providing a means to assist the wheat industry. Can anybody understand that action, particularly when the Government has renewed the sugar agreement, and so continued the benefits enjoyed by people in that industry, who have done exceedingly well during the past ten years ? If sacrifices are to be made, they must apply to all sections. Failing the removal of the embargo, the Government should compel those in the sugar industry to bear their share of the burden by imposing an excise duty of at least 20 per cent, on the value of all sugar used in Australia.
By granting huge reductions of excise duties on cigars, the Government has made a specific present to our cigar manufacturers amounting to £40,000. There are many other instances of a similar nature. It seems to me that the Government has done nothing but foster a policy of high wages and preference to unionists, and, by the introduction of embargoes, has lined the pockets of our cigar-makers, the manufacturers of galvanized iron, and the iron and steel trade. It has also compelled the general public of Australia to “ pay the piper” to the tune of 1,450 per cent, in the form of increased duties on certain goods. From figures that were supplied to me yesterday by the Minister for Trade and Customs (Mr. Forde), I find that the percentage of the gross amount of customs duties collected on the value of all imported merchandize, including those on the free list, in 1920-21 amounted to 13.74 per cent.; in 1928-29, to 21.22 per cent., and in 1930-31, to 31.56, an increase of 50 per cent, for the last twelve months, or of 130 per cent, since 1921. lt is improper to give all these concessions to one section of the community and to ask the other sections to bear the burden. “We should realize that our wool, wheat and mining. industries are the real wealth producers of the country, aud that if we make it impossible for them to carry on it is out of the question to make a success of any reconstructive plan, no matter how we reduce rates of interest, or effect reductions in governmental expenditure. There can be no permanent advancement in the development of the country until those industries are placed upon a stable basis.
A few years ago we were borrowing at the rate of £40,000,000 a year, and our customs revenue was increasing by between £6,000,000 and £7,000,000 annually, because of the duties that were charged on goods for which we were paying with borrowed money. The revenue of the country was being surreptitiously increased, and we were living in a sort of fool’s paradise, the results of which are apparent in the staggering unemployment figures of the present day. As the honorable member for Reid (Mr. Coleman) pointed out, farmers, storekeepers, and others are becoming bankrupt in alarming numbers. How are we going to rehabilitate the country when the Government hands out largesse in a most objectionable fashion to certain sections? It is noticeable that the latest tariff schedule contains no increases on disinfectants. They were too much needed to deodorize the whole smellful business !
The honorable member for Fremantle (Mr. Curtin) claims that the present policy of the Government amounts to absolute surrender of all that the Labour Government fought for in bygone years. If that is so, why is it that its leader, who has countenanced such a surrender of principles, is to be permitted to lead the nation in this crisis? Who is going to trust him? Perhaps, behind the closed doors of the Labour conference, the honorable gentleman pointed out how he could manoeuvre affairs to the advantage of the Labour party, if he were granted his way. I find it difficult to believe that. I had great confidence in the Prime Minister. I listened to his speech the other evening. It sounded very well. I also listened to the right honorable gentleman’s speeches of July and August of last year. I followed closely his utterances when he was in Great Britain, and the text of the cables that he sent to his colleagues in Australia. All of those things gave me great confidence in him. Unfortunately, recent events have shattered that confidence. I am concerned not so much with his alleged failure to adhere to the principles of the Labour party, but with the way in which he has failed the country. In August of last year the right honorable gentleman said -
The members of the conference represent all the Governments of Australia. Their decisions have Keen arrived at apart from party or political considerations, and with the sole desire to avert the danger ‘which threatens Australia. Having heard Sir Otto Niemeyer and Sir Robert Gibson, they have no doubt that the present financial difficulties of Australia, and the financial and economic situation will be greatly relieved if the arrangements outlined above are faithfully carried out. A failure to do so is, of course, not to be contemplated.
The Government did nothing to give effect to those recommendations and decisions, and the result has been disastrous to Australia. There is a great representation in this chamber of the cities, the inhabitants of which have not yet learnt the lesson of the great economic collapse that has befallen the country. They must recognize that, while a moderate protective policy may be good for Australia, it must go hand in hand with the development of our primary industries. Otherwise, the rehabilitation of Australia is impossible. Unfortunately it is fatally true that once protection begins corruption follows in its wake. In past years, particularly between 1908 to 1914, we were apt to boast of the wonderful prosperity of our country. Since than we have borrowed huge sums of money, and notwithstanding the extraordinarily high prices that we have received for our products, we have been unable to build up in this magnificent country of ours the fair and reasonable conditions pre:viously enjoyed by our people, which, I hope, will return.
The Government is faced with the alternative of allowing the affairs of Australia to remain in a chaotic condition, or of legislating to reduce the cost of living, and with it the cost of production. I point out that it is also necessary to increase our national wealth. Whereas the statesman believes in providing commodities for the people at a cheap rate, so enabling them to live in comfort, the politician believes in making it difficult to secure them, by imposing heavy duties upon importation, thereby making the purchasing value of wages considerably less than it should be. That has been the policy of this Government. It has brought forward unparalleled tariff imposts, and by its interference with industry it has fostered animosity between employer and employee. I do not say that low wages are good for any country, but I claim that high wages and good conditions are possible of attainment. The average wage of the 1,600,000 men employed on the railways of the United States of America has increased from 34s. 6d. a day to 35s.1d. this year. This figure, of course, may include overtime. I have been unable to obtain our figures, but it is interesting to note that, with the exception of those on wheat, freights in the United States of America are between 25 per cent. and 30 per cent. less than those in Australia. In that country they pay licence-fees for their charters, and income tax to both State and Federal authorities. Notwithstanding that, their dividends average approximately 5 per cent. per annum. In Australia we have increased our freight charges since 1920 by 60 per cent., and since then £43,000,000 was lost on the operations of the combined railway systems of Australia. No doubt it now amounts to £50,000,000 if we add this year’s losses.
– We have not the same volume of trade.
– That is true, but it does not account for the extraordinary difference in result.
Mr.Fenton. - It would be fairer if the honorable member were to compare conditions in Canada with those in Australia.
– I have not the figures for Canada, but wages are high there, also. One Canadian practice, which might with advantage be introduced here, is that of paying locomotive drivers so much a mile. If that were done we should not have those interminable delays which occur when carrying live-stock on the railways of the States.
Generally speaking, Iapprove of the decisions arrived at by the Premiers Conference in Melbourne, but I do not approve of the action of the Government in asking the community to accept these sacrifices while allowing the burden of the tariff to press as heavily as ever on certain sections. The Government has granted concessions to one. section after another, while the great basic industries of the country are finding it extremely difficult to carry on. Apart from this, the plan is satisfactory enough, although, judging from some of the speeches of honorablemembers opposite, it is difficult to conceive that they will loyally adhere to it. We should never overlook the fundamental principle that production will not be carried on except at a profit. Men may continue to produce for a little while at a loss, but unless there is hope of eventual profit they will discontinue their efforts. If we were to reduce the cost of living and of production all round by a substantial amount, there would be a marvellous revival of industry. Far from taking any steps to achieve this, the Government has, through the tariff, been increasing costs all the time. The very tools of trade, the picks, shovels, and saws used by the workers, have become far more expensive as a result of the Government’s policy. Duties and embargoes have been imposed simply to provide employment for a few persons. Unless the cost of living and of production is reduced to within 10 per cent. or 15 per cent. of what it was in pre-war years, there is not the slightest chance of Australia making good.
– The criticism levelled against the Government’s plan up to date - and I have in mind particularly the criticism of the honorable member for Fremantle (Mr. Curtin) - has been based on the assumption that this Government is in full control of both Houses of Parliament. Only in that event would it be possible to sustain the charge that it has departed from Labour’s policy. The Labour party, like every other party, made promises to the people at the last election. I claim that the Labour party has been honest in its attempt to carry out its promises; but fair-minded people realize, and will admit, that a government can only honour its promises if it has a majority in both houses. Never since it assumed office has this Government been in that happy position. For the last twenty months we have endeavoured to give effect to Labour’s platform, but we have failed because we have not had a majority in both Houses of the Legislature.
As the Prime Minister (Mr. Scullin) pointed out in his speech, Australia to-day is confronted with the problem of falling revenues and growing deficits, and is on the verge of the greatest crisis in her history. If no action is taken along the lines of the Government’s plan, the accumulated Commonwealth deficit by the end of 1932 will be £40,500,000, while the accumulated deficits for the whole of Australia will be £70,000,000. Revenue is also falling rapidly. It is -estimated that custom’s revenue will decline during the coming financial year by £14,000,000, while the drop in excise revenue will be nearly £2,000,000. Besides this, there will be a decline in. income tax of £3,500,000. There are certain items of expenditure over which the Government can exercise no control. One of these is exchange, which, for the present financial year, has cost the Commonwealth £10,000,000. [Quorum formed.] In order to show the desperate position in which we find ourselves it is only necessary to point out that the national income has declined by £200,000,000 owing largely to the drop in prices of our primary products. Every government in Australia has received advice from the Commonwealth Bank that the limit of its overdraft has been reached. It is estimated that for the next twelve months the Commonwealth revenue will be £60,000,000, while the expenditure will be £80,000,000, leaving a deficit of £20,000,000. By the end of July, unless some action is taken, the Government will be able to pay only 12s. in the £1 on its commitments. That is a desperate position, but no one who has so far spoken, against the Government’s plan has suggested any alternative. The honorable member for Hunter (Mr. James) without offering a single useful suggestion, spoke loosely of the plight of old-age pensioners, who are to lose half a crown a week; but surely he must realize that if the Government’s plan is not put into operation, those oldage pensioners will receive only 12s. a week. . Since he did not prove these figures to be incorrect, the honest course would have been to accept them, and to support this plan so that the best possible could be done for the pensioners.
– In speaking of the plan, does the Minister include the reduction of pensions?
– I refer to every part of the plan. A member who advocates giving the old-age pensioner 17s. 6d. a week adheres more faithfully to Labour’s policy than those who oppose the plan, the rejection of which would inevitably result in the reduction of the pension to 12s. a week.
– Does the Minister favour a cut of 2s. 6d. a week in a pension amounting to only 5s.?
– That question hardly bears on my argument; if a person does not receive the full pension, he must have other income or property. A reduction in pensions and wages is hateful to me and to the Government, and we only agree to a small cut now in order to prevent a much larger one which the rejection of this plan would entail. A reduction, of 20 per cent, in the wages and salaries of public servants is proposed; but, if only 12s. in the £1 were paid, the reduction would be 40 per cent., instead of 20 per cent. We should tell the public servants that a reduction of 20 per cent, is necessary to avoid a reduction of 40 per cent. I stand for the principle of giving the old-age pensioners the maximum amount, that can be paid under the present circumstances, and, under this plan, it will be possible to pay them 17s. 6d. a week. Consequently, every member who votes against this measure is forced into the admission that, unless he offers an alternative, the old-age pension will be reduced to 12s.
Let us take the speech of the honorable member for Fremantle (Mr. Curtin) as a fair sample of the addresses that have been delivered against this bill up to this time. Stripped of its rhetoric what hope did that speech offer ? The honorable member said that the Government’s plan, in essence, was the same as that of the Opposition, and when he was asked why he had reached that conclusion, he remarked that a statement to that effect, had been made at the conference of the Nationalist party. I then interjected - “Do you believe everything said at a Nationalist conference ? “, and he replied indignantly in the negative. The Treasurer (Mr. Theodore) conclusively showed him his error by pointing out that in the Lyons plan no provision was made for the reduction of interest. Any member who contradicts that assertion will speak with his tongue in his cheek, and be an apologist for the Opposition. The honorable member for Fremantle immediately proceeded to apologize, and he was much more generous to the Opposition than to this side of the House. In effect, he said that the Lyons party claimed that, as a result of its plan, there would be a reduction of interest; but he had to recede quickly from his definite statement that the Government scheme was on all fours with the Lyons plan, because it was shown by interjection that he was entirely in the wrong. If any member is not prepared to be an apologist for the other side, he cannot contend that the Lyons plan was the same as that of the Government because of the allimportant fact that the Government plan aims at substantial reductions of interest not contemplated in the Lyons plan.
The plan provides for conversion of the internal debt of £560,000,000 at the reduced interest rate of 4 per cent., which will result in a saving of £7,000,000. The reduction of the bank rates on overdrafts and advances will effect a saving of between £3,000,000 and £4,000,000, and there is to be a cut of 22£ per cent, in the interest on private debts and mortgages, which total £200,000,000. I have mentioned the three main proposals. Any honorable member who opposes those provisions among business people and the suffering primary producers will have much to explain away when he meets his constituents, but I commend the plan to the support of the House, not on the ground of political expediency, but because of its justice. Can anybody deny that it provides for a reform that is long overdue, and that was not contained in the Lyons’ plan?
– What certainty is there that the proposed reduction of interest on private overdrafts and mortgages will be made?
– That is provided for in the plan. The necessary legislation will be introduced by the State Governments.
– My objection is to generalities.
– The reduction of interest is a specific part of the agreement. The necessary bills were drafted and agreed to at the recent conference.
– I have said that the honorable member for Fremantle offered no useful suggestion. When it was proved that the Government’s proposals were not identical with the Lyons’ plan, there was a chorus from members- of the Beasley group, who exclaimed, “ That was the Lang plan.” That shows the confusion on the part of those who are opposed to the Government. The fact is that the Government’s proposals are neither the Lyons plan nor the Lang plan, but they comprise a new scheme which provides something of the greatest importance to struggling farmers, business people, and others, . which the Lyons plan omitted, and avoids the objectionable features of the Lang plan. The honorable member for Fremantle said that there would be no sacrifice on the part of bondholders, because, owing to the reduced cost of living, they would be as well off as before, despite the reduction of interest. But shortly before that the honorable member sought to make political capital out of the inevitable cut in pensions by 2s. 6d. a week, although to-day 17s. 6d. a week will purchase more than ‘£1 in 1929 for the old-age pensioners, because their incomes were to be reduced 2s. 6d. a week. Those two arguments do not agree.
Let me refer to another striking speech in opposition to the plan. The honorable member for Kennedy (Mr. Riordan) denounced it lock, stock, and barrel, and when an honorable member asked him for his alternative, he replied, “ Labour’s own policy - the nationalization of banking.” As I pointed out at the beginning of my remarks, what is the good of talking of Labour’s policy, in view of the inescapable financial position of the Commonwealth? I stand four square to giving effect to Labour’s policy, but the fact must be faced that, without control of both Houses we cannot give effect to Labour’s policy. The other branch of the legislature has, so far, thwarted the Labour party. Every opponent of the Government’s proposals admits the facts of the situation, and, unless a definite alternative be offered, nobody will be convinced of the fairness of the attack on this plan. Probably the most necessitous section to-day are the hundreds of thousands of men who have done no work for about a year. When I was addressing a meeting of 300’ unemployed recently, they told me that they hoped that the Government would put its plan into operation, in order that some work might be provided. When I mentioned that the adoption of the plan might result in cutting down the old-age pensions to 17s. 6d. a week, the leader of the men replied, “I have not seen 17s. 6d. for seventeen weeks.”
It has been promised that if this plan is put into operation credits will be released for the revival of trade and industry. This would make possible the reemployment of thousands of our people who are to-day out of work. The plan therefore gives a gleam of hope to people who are to-day hopeless, and for that reason, and also for the reason that no practicable alternative to it has been proposed, I urge honorable members to adopt it. In my opinion, some of the criticism of this scheme has been most unfair - I do not use the word in an offensive sense. At a time like this, those who are opposed to a specific proposition for financial rehabilitation should be able to bring forward some practicable alternative to it. That has not been done in this instance. In all the circumstances, I feel that I would be dishonest if I refused to support the plan.
– It will be generally admitted, I think, that I have not hitherto shown undue regard or admiration for this Government. My speeches have not overflowed with adulation of it, as they might have done for other administrations. But I am glad to admit that at last the Government has summoned sufficient courage to do what it should have done last August.
Had the Government acted then, as it is acting now, a 10 per cent, cut in salaries would have met the position, and there need have been no reduction in pensions or interest payments to bondholders. I do not propose to spend any more time in discussing the statements that have been made that the Government has been forced to take this course because of the action of another place, other than to say that if it had had courage it could have forced the hands of the members of another place. It had the remedy in its own hands.
It is significant that so far no honorable member who has opposed this plan q has suggested any practicable alternative to it. We have been told, of course, that the policy of the Australian Labour Party for the nationalization of banking should be put into operation; but it is well known that the adoption of that policy could not give any immediate relief to the country, if it could ever confer any benefit upon it. The country is in a critical position, and immediate measures must be taken to meet the crisis. I am amazed that some honorable members opposite should even suggest that the nationalization of banking would be desirable, in view of the fact that the Hew South Wales Labour Government, by its interference with the State Savings Bank, has effectively smashed that institution. The workers of New South Wales, in common with many other sec- ‘ tions of the community, are suffering seriously because they have been deprived, by the actions of the Premier of the Mother State, of the use of their savings. Mr. Lang has refused to repay to the bank the money which he has borrowed from it, and the bank has been obliged to tell its depositors that it cannot meet the just demands that they have made upon it. This has brought grinding hardship upon many people, and this instance does not suggest that the nationalization of banking is likely to be beneficial to the country.
I do not believe that the opposition shown to this plan is really honest. Many honorable gentlemen opposite are opposing it in order to equip themselves with electioneering material. They are more concerned about the result of the next election than about the interests of Australia. They have so long traded upon the cupidity of the electors and inflamed their passions, that they fear that, some other party will secure the weapon and use it to their disadvantage. Consequently, they are endeavouring to maintain a position which will enable them to outbid or undercut their opponents, whichever course may seem to them to be expedient at the moment. They fear that some of their political opponents may use the questionable electioneering methods which they themselves have adopted in the past. In short, they arc opposing this plan from the sordid and mercenary motives of political campaigning. They are acting on the principle that he who fights and runs away may live to fight another day.
I regret that the honorable member for Fremantle (Mr. Curtin), who unfortunately is not in the chamber, has, so far. been the best exponent of this political cult. “We have been led to expect something better than this from that honorable gentleman. I am not at all surprised that, some of his colleagues in opposition to this plan are acting as they are doing, but I am amazed at his stand, as he claims to appeal to the intelligence of his audience, and regards himself as being among the intelligentsia of the Labour party. He made a sorry spectacle when delivering his speech last night. He did not produce a tittle of evidence to support any one of the three definite statements that he made. His speech consisted of a series of assertions. When he was asked to produce evidence in support of his contentions, he said that that could be done by experts and others. He charged the Government with adding to the burdens of the people, by imposing heavy sales taxation and primage duties upon the goods they required. Yet this is the honorable gentleman who, in season and out of season, has, on the one hand, protested against the imposition of heavy tariff duties, and. on the other hand, has almost invariably failed to support his protests with his vote. In the circumstances, how can we be expected ;r> give any weight to the unsupported opinions advanced by this honorable gentleman? He released a deluge of words last night, and indulged in a great deal of rhetoric, but did not make a single constructive statement. His utterances were like ships that pass in the night. He said nothing of any real value, and proposed no alternative method of helping the country out of its difficulties.
I am favorable to this financial rehabilitation plan, not because the Government is responsible for it, but because it has been formulated by the best economists and financiers of Australia, and because my own experience and information convince me that it is the best under existing circumstances. It cannot be denied that Australia will be forced to default next month unless this plan is put into operation. I have been surprised to learn that some responsible members of this chamber can view the prospect of default with something like equanimity. The honorable member for Wimmera (Mr. Stewart) is reported to have said that the present economy plan i’s repudiation, and that default is preferable to it. That statement fills me with amazement, coming as it does from a responsible member of this House.
– I do not think that the honorable member is doing justice to the honorable member for Wimmera.
– I am quoting the reported utterance of the honorable member for Wimmera. I have not yet read the Hansard report, but a fairly lengthy report is given in the Sydney Morning Herald. The statement of the honorable member for Wimmera fills me. I repeat, with absolute amazement, because nothing would do more harm to the workers, or inflict more deprivations and hardships upon the people of all classes than would default. Let me quote from the statement of the under-secretaries to the Loan Council in February last. They had no object but to state the facts as they saw them. [Quorum formed.’] The undersecretaries referred to default in these words -
The evils which would follow such default would be immeasurably greater than the nation need to have to face in order to restore Australia to a sound position. Panic conditions would prevail in financial circles, involving banks and savings banks; business would be paralysed; insolvencies would be the order of the day; unemployment would be general; and recovery would be indefinitely postponed.
That is in no sense an overdrawn picture of the dire consequences of default. Default is unthinkable, and it is essential, nay imperative, that this plan, or some practical alternative, should be put into operation so as to avoid the consequences depicted. Therefore, I accept the Government’s plan. I hate, as much as any other honorable member, the idea of reducing soldiers’ pensions. I have r.he same objection to a reduction in oldage and invalid pensions. The proposals in regard to the bondholders are in many respects unfair, but if we are not prepared to accept this scheme, our position will become worse. Therefore, I accept these proposals as the best means at present available of enabling us to overcome our financial difficulties. When the various bills are introduced, I intend to offer some further observations.
– Does the honorable member agree with the principle that half of the bondholders shall be exempt from making any sacrifice, while the other half are being called upon to make a substantial concession ?
– I should be prepared to answer the question if there were sufficient time. Our national income has decreased by £175,000,000. Next year, the money available for distribution and spending purposes in this country will be £200,000,000 less than it was last year. The money market oversea is closed to us and our national income has thus been considerably reduced. These two props to our social system have been removed, and the whole edifice is in danger of tumbling down, as many people have been prophesying for years past. At the end of this month the deficits of the governments of Australia will amount to £30,000,000, and at. the end of the next financial year they will amount to £40,000,000. Some honorable members contend that the banks should continue to carry this deficit, irrespective. I presume, of whether it is £50,000,000, £100,000,000, or £200,000,000. But where are the banks to get the money? Gustav Cassel, the celebrated economist, who . has been frequently quoted in this House, has said that the banks have no more money than what is put into them from the savings of the people. Therefore, when the banks lend all the money that has been deposited with them, the only alternative, if further money is required, is ‘to print paper money. If that is the alternative suggested by some honorable members opposite, they should be honest and say so, and then the peopleWill make it perfectly clear that the alternative is unacceptable to them. It was rejected by an overwhelming majority of the people at the Parkes by-election, and the people of that electorate are typical of the people of the Commonwealth. They decided clearly and definitely that they would have nothing to do with inflation. A similar decision was given by the people at the recent Tasmanian by-election. I can quite understand the humiliation of Labour mem bers and supporters, who for years have been extolling the merits of a Utopian scheme of high wages, and generous social services established out of loan money from overseas. But now that borrowed money is unobtainable, and our national income has considerably decreased, Labour supporters are faced with stern realities. They realize that the people have to pay for their requirements out of what they earn, and that the doctrine which they had been preaching for many years is utterly wrong. I sympathize with them in having to admit the position to their constituents and former dupes. I repeat that the bondholder is not getting a fair deal under this plan. Once it is given effect, there will be a political agitation for the restoration of pensions and salaries, but no one will advocate the restoration of interest to the bondholders. It is only reasonable that when conditions improve any benefit that is given to one section should apply to all sections directly affected by this plan. Then again, so as to prevent any hardship from being inflicted upon small bondholders, some arrangement might be made for the redemption of bonds in necessitous cases. I intended to refer to the speech of the honorable member for Wimmera, which, although it has been given considerable prominence, contains no alternative to the Government’s scheme. I am amazed that the honorable member should suggest that default is preferable to the Government’s proposals. He also said that the scheme would be incomplete unless it provided for a relative reduction in tariff duties. I should not be averse to that, but when I recollect that the people of this country are being compelled to pay abnormal prices for primary products so that they may be sold more cheaply overseas, I am inclined to suggest to the honorable member that such primary products, .as well as the tariff, should come under this scheme. The honorable member also suggested that the life of this Parliament should be extended. That is the most extraordinary suggestion that I have heard. In principle, I do not object to longer parliaments, but this is the most disreputable Parliament that has been in existence since federation, and I include the Government in this statement.
– I rise to a point of order. While you, Mr. Deputy Speaker, were temporarily engaged in conversation with the honorable member for Maribyrnong (Mr. Fenton) the honorable member for Warringah (Mr. Parkhill) was guilty of saying that this is a most disreputable Parliament. I ask that those words be withdrawn.
– I ask the honorable member for Warringah to withdraw the words objected to.
– I withdraw them, and say instead that the reputation of this Parliament, judged on public standards, is lower than that of any previous Parliament. The proposal to extend the life of this Parliament is, therefore, absurd. For what did the honorable member propose to extend it? To create a non-party executive which is to consider nothing immediately, but to arrange for the holding of a convention some months hence. Obviously another case of Nero fiddling while Rome burns ! During my time in this Parliament I have heard the honorable member make only one suggestion for the restoration of Australia’s finances, and that was to create wheat pools and to tax the general public in the interests of the farmers by compelling them to pay high prices for wheat and wheat products so- that the exportable surplus might be sold at lower prices abroad.
– The honorable member’s time has expired.
.- I intend to oppose the bill, not because I fail to see any good in the proposed loan conversion, but because it is part of a complete and indivisable whole, and, therefore, we cannot reject some parts and accept others. I must vote against this measure rather than prejudice my opposition to other phases of the general plan. The scheme which the Government has put forward does not seem to me to offer any hope for the future. It is not based on equality of sacrifice. It will not take us off the beaten track we have been following during the last two or three years, and it will increase, rather than minimize, the evils which beset us to-day. I do not feel called upon to suggest an alternative to this plan, because it is, in itself, an alternative to the financial policy of the Labour party. I am not surprised that the plan should be approved by the members of the Opposition; it is consistent with the policy they have always advocated, but I am disappointed that some members of my own party should so quickly change their front. Those members have no logical right to ask me to suggest an alternative, but I can logically ask them to explain why they accept this plan as an alternative to the policy to which they and I are pledged. The plan which has emanated from the Melbourne conference does not offer any prospect of relief from the economic destitution which Australia is suffering to-day. On the contrary, it is directly opposed to the reports issued by experts in various parts of the world during the last two or three years. Every reputable investigator in Europe and the United States of America has pointed out that no hope is offered by any scheme which does not immediately arrest deflation and cause price levels to ascend. This plan deliberately flies in the face of that dictum. Professor Cassel has repeatedly said that there is no prospect of economic improvement and increased industrial activity unless a further release of credit is made possible to check the deadly effect of deflation. The special committee of the League of Nations which is dealing with unemployment and economic depression, in its last report, issued in January of this year, stated that the only hope of salvation is a change of the monetary system in the direction of releasing more credits to stimulate industry. From the forecasts which have been published, I am convinced that the report of the McMillan Committee in Europe will recommend that a new issue of credit is necessary to revive moribund industry. The plan now before the House offers no such stimulus. If it is to be successful it must increase prices, and if it does that, it will inflict hardship upon those whose wages, salaries and pensions are to be mercilessly slashed. All the efforts of the Government during the last eighteen months to correct the financial position by unscientific and false economies have accentuated, rather than minimized, the depression, and I am convinced that this plan of reconstruction will have the same effect. We are told that the plan is based on equality of sacrifice. I respect the ability of the Treasurer (Mr. Theodore), and I recollect his saying that we should first turn our attention to those who are living on fixed interest. He said that, during the period of deflation - and this is supported by economists all over the world - the bondholders have been drawing hundreds of millions of pounds of excess profits from the community. I do not suggest that the reaping of this harvest is immoral; I am merely pointing out that economic laws have operated in such a way that immense profits in excess of the amounts contracted to be paid have been drawn from society generally by the section living on fixed interest as the result of falling prices caused by the deflation of values.
– Did not the contract with the bondholders involve this disability ?
– I admit that. But if deflation, unforseen or artificially rigged, has enabled bondholders to reap hundreds of millions of pounds’ worth of excess profit, and thereby to overburden society, surely a plan which would cause price-levels to rise would be sane and proper to prevent the continuance of this unfair advantage. Indeed, the Government proposed six months ago to make those living on interest disgorge some of their profits; it intended to impose on such incomes a retrospective special tax of 2s. 6d. in the £1; but that, with other features of the Government’s financial policy, has been abandoned. I have here a propaganda sheet issued by the Government only a few weeks ago, in which it asks the people to examine and support its financial proposals.
I am pledged to the financial policy of the Scullin Government. I have broadcast it in various parts of Australia; everywhere it has been acclaimed, and I believe that the great mass of the people in Victoria heartily endorse it. I accept no alternative to it for I believe in it is the genesis of national recovery. In the ability and honesty of the Treasury officials I have confidence, and I do not doubt the figures they have furnished to the Government, but I do not accept the declaration that, unless we do certain things the Commonwealth must default; that unless we adopt something which is contrary to the declared policy of the Government and the Labour party, no money will be available for public requirements. (Quorum formed.] Any member who does not recognize the financial position of Australia to-day does not know much of recent developments in his own country. But I do not accept the alternatives put before us by the banking institutions. I have more faith in the natural resources of Australia, and in the patriotism of Sir Robert Gibson and the other members of the Commonwealth Bank Board, than to believe for a moment that they- would allow the Commonwealth to default through failure on their part to make credits available to the Government, knowing that our wonderful natural resources in wool, wheat, coal, metals, &c. could back all such deficits a hundredfold. I believe that the whole thing is a political trick; that there is any amount of evidence to prove that the banking people were not honest when they put up that possibility to the representatives’ of the various governments of Australia.
Two or three months ago this Government was fighting hard to persuade the Opposition in this and another place to pass a certain financial measure. The Opposition made every financial hill that was proposed by the Treasurer a vital issue, and instructed those in another place that they were in no circumstances to give it favorable consideration. That was because the suggested legislation contemplated, for the first time for many years, encroaching upon the sacred preserves »f the banking institutions of the country.
– Why did not the Government bring about, a dissolution on such an issue?
– The honorable member is anticipating what is in my mind. After allowing the country to pass through eighteen months of travail-
– It was the Government which did that.
– I will agree to apportion the responsibility on a fiftyfifty basis. After our strugggling farmers were reduced practically to ruin, and our unemployment figures had jumped from 12 per cent, to 25 per cent, in eighteen months, when half of the total breadwinners of the country were either fully or semi-unemployed, conditions became so desperate that something had to be done. I suggest that this is what happened. The representatives of the Opposition, backed by the representatives of the financial institutions, definitely told this Government that if it was’ prepared to abandon its financial policy, and do certain other things, they were, in turn, ready to reduce interest rates and help the Government to effect a conversion of Australia’s internal indebtedness. While negotiations were taking place the honorable member for Henty (Mr. Gullett) and his colleagues, quite honestly from their point of view, were stating that Australia had reached the danger point, that the banks had almost exceeded the legal limit of advances and could not make another pound available, that Australia must default if the plan were not accepted. Yet the Commonwealth Bank Board disclosed that further credit could be released, even with Australia’s limited gold reserve, provided that legislation was passed making such a procedure possible without violating a law which was said to be in existence. The Government endeavoured to pass that legislation, but the
Opposition fought it tooth and nail, having before it at all times the fixed idea that it was an encroachment upon the preserves of private banking. After the Opposition made that proposal, pressure was brought to bear on the Government. It was told that the plan had to be accepted, or the inevitable result was that Australia would default; that no Supply would be passed for the ensuing year unless the Government acquiesced in the proposal. The Government wilted under the pressure, became panicky, and capitulated. It agreed to implement the plan. Immediately the Government submitted and dropped its financial plans a measure similar to one which had been strenuously opposed by honorable members opposite and in another place was cheerfully agreed to. Within 24 hours legislation was passed making it possible to export £5,000,000 worth of our gold reserve. That made credit available to the people of Australia, some £20,000,000 in excess of what they claimed was the safety limit only a few weeks before. In addition it was readily agreed to underwrite a loan of £8,500,000 for the purpose of relieving unemployment and of granting assistance to necessitous farmers.
– That was not agreed upon, and the £8,500,000 has not been underwritten.
– It must be obvious to every thinking person that if this conversion scheme is successfully effected there will be large gaps, which will have to be bridged by the creation of credit by the Commonwealth Bank.
– Is not the greatness of the plan indicated by the fact that money will be made available?
– Order ! In view of the serious curtailment of the time limit of speeches that has been agreed upon, I cannot permit honorable members to interrupt speeches by interjecting.
– It merely proves what a great boon the plan is from the point of view of the Nationalist party and private banking institutions. By conversion they have . prevailed upon the Labour party to abandon its financial policy and attack social services. lt may be claimed that this plan does not affect the wages of workers outside the Civil Service. There is not the slightest doubt that this 20 per cent, reduction will be enforced by private employers. Wages and salaries are to be attacked more brutally than has been the case since the inauguration of federation. With the assistance of Professor Giblin I collected statistics concerning cost of living and wage reductions over a period of years. In 1907 the basic wage was £2 2s., in 1920, £4 4s. 6d., and for the first quarter of 1931, it was £3 17s. Then the 10 per cent. reduction made by the Arbitration Court came into operation, and it was reduced to £3 9s. 4d. When the extra 10 per cent, that will result from the operation of this plan becomes effective the basic wage will fall to £3 2s. 4d. For the first quarter of the period 1929-31 the jost of living figures show a decline of 15 per cent. Wages, on the other hand, will have fallen by 31 per cent.
It is suggested that, under this plan, wage-earners and pensioners will obtain some recompense through the resultant decrease in the cost of living. Everybody knows that wages are automatically adjusted according to the rise and fall in the cost of living. The honorable member for Henty (Mr. Gullett) and others have repeatedly said that they had no desire to interfere with “ real wages. There will be a reduction of 20 per cent, in “ real “ wages, apart from the additional reductions effected by automatic adjustments.
– Where does the honorable member get his second 10 per cent.?
– A 10 per cent, reduction has already been made by the court, and under this plan there will be a second cut of 10 per cent. I deny that he sacrifice that is to be made by wageearners and pensioners will be on an equal basis with that made by investors. I contend that pensions should not be tampered with in trying to bring about economic equilibrium. The pensions given to injured returned soldiers are not fixed according to the needs of the family concerned, except in extreme cases where the incapacitated man or the widow is not receiving sufficient to support dependants in decent comfort. In such circumstances the pension is made up to what is considered to be a reasonable figure. Under this scheme all such pensions are to be reduced. And yet it is suggested that, to balance the budget and to bring about equality of sacrifice with the bondholders who have been raking in excess profits as a result of deflation, the miserable pittance received by the widows and mothers of soldiers should be still further reduced. On the face of it, the proposal for the reduction of old-age and invalid pensions is one of 2s. 6d. in the £1, but in actual effect it will mean cutting off 2s. 6d. from all pensions, even those as low as 5s. or 6s.
– Where does the honorable member get that from?
– It is part of the plan. It is also proposed that when a pensioner’s home is of more than a certain value, a proportionate reduction shall be made in his pension. Everybody knows that thousands of old-age pensioners in this country live in their own homes. Many of them have been able to save at least enough to buy their own cottages. Homes on which they paid £300, £400, or £500, 10, 20, or 30 years ago, may now carry a municipal valuation of £600, £700, or £800. The principle followed in paying old-age pensions up to the present has been that, if a person occupies his own home, he is entitled to receive the pension without reduction so long as he draws no interest or profit from the home. It does not matter what the value of the place is; he is still entitled to draw the full amount of the pension provided that it is used only as his own domicile. According to the plan, however, the old-age pensioner, in addition to losing 2s. 6d. a week, will lose £10 for every £100 at which his home is valued in excess of £500. This means that, in thousands of cases throughout Australia, persons at present in receipt of old-age or invalid pensions will lose the whole of their pensions.
– The honorable member’s time has expired.
– I desire only to round off my remarks. I wish to make it clear why I propose to vote against the bill. I can see some good in it, but the price we are asked to pay is too great.
– This is a long rounding off. We shall all try this on.
– I cannot support the plan, even though there be some virtue in the reduction of interest, consequent upon the conversion of Commonwealth loans. -This attack on wages and pensions by the present Government is the worst thing that has ever happened in the history of Australia.
– I hope that the fact that the honorable member for Flinders was permitted to continue his speech at some length after being notified that his time had expired will not be taken as a precedent. I do not intend that the same thing shall be permitted again. Honorable members must so order their speeches as to finish them in the prescribed time.
– I strongly support the proposals of the Government, not for any party or partisan reason, not because certain honorable members on this side of the House have been for some time past advocating similar proposals, but because I admire the courage of the Government, and because the plan represents the first indication of returning political sanity that Australia has seen for some years. It shows that the great Australian Labour Party is not obsessed with class consciousness or class hatred ; that it is first and last what it has always claimed to be - a great national party. Other political parties in this House have made the same claim, and by their political records they have proved that they are national in spirit - that they place the interests of the people of Australia before party considerations. The Labour party, or the majority section of it, has at last decided to follow the same course, and I feel sure that the gesture which has been made will strike a responsive chord throughout the length and breadth of Australia. fdo not deny that the sacrifices which are to be made by various sections of the community will arouse a” considerable amount of bitterness and hostility. Nobody likes to lose anything. Even a man in comfortable circumstances hates to have his salary or his income reduced. It is against human nature to accept, in a spirit of goodwill and complacency, personal sacrifice which involves the loss of benefits to which we have been accustomed. Therefore, it is not to be expected that the sacrifices involved in the plan produced most unexpectedly by the Government will be received gladly, or in a spirit of high patriotism. Nevertheless, I believe that the great majority of the people of Australia will accept the proposals of the Government, feeling thankful that they are no worse. I observe that the honorable member for South Sydney (Mr. E. Riley) is amused. He may yet sit in this House and see greater sacrifices imposed on the people by this Parliament. We shall be- fortunate, indeed, if the matter ends here, having regard to the economic position of the country. The wage-earners will be lucky if they have not yet to accept less than is proposed. The old-age pensioners will be fortunate if they continue to receive 17s. 6d. a week, and. I shall be glad if the military pensions are not still further reduced. I sincerely hope that no further sacrifices will be required. I had hoped a little while ago, as I indicated by my vote when I supported the Government on certain matters, that no sacrifice would be demanded from civil servants, and particularly from old-age and military pensioners. I believed that those social commitments should be the very last to be attacked. But what has happened since then? The Government has been rushing from one position to the other, and honorable members opposite, who began by denying the possibility of any sacrifices at all being required, have been compelled to support one proposal after another, all involving sacrifice of some kind. It is true that the Government sought desperately to evade the necessity for sacrifice. First, there was introduced the Fiduciary Notes Bill, which was a proposal for inflation. Other proposals of all sorts were introduced in an endeavour to avoid a general reduction in the costs of government. Now, in spite of the most desperate efforts to stave off the evil day, the Government has had to face the inevitable, and reductions in expenditure have to be brought about.
The statement of the Prime Minister, when these proposals were placed before the House, ought to be sufficient to satisfy every intelligent and patriotic person, either in this House or out of it. We know that he was almost heartbroken at having to make the statement he did. We know that the members of his Ministry, with one or two exceptions, reluctantly accepted the position when he placed the facts before them, and we know that a large number of the members of the Labour party accepted his assurance, and the evidence which he put before them, that no alternative to the Government’s plan was possible. When tine Prime Minister (Mr. Scullin) was being criticized from his own side of the House, he said, “ Show me an alternative, and if its practicable, I shall adopt it.” The debate has been in progress now for some time, but no alternative has been submitted. I asked the honorable member for Kennedy (Mr. Riordan) last night what alternative proposal he had to suggest, and he replied, “ The Labour party’s platform”. Presumably, he means the socialization of industry, and the nationalization of credit. We have heard those two phrases uttered at different times throughout the last 30 years, but it is only lately that they have come prominently into the political picture.
– The Government should be honest enough to carry out the Labour party’s platform.
– The honorable member says that the Government should carry out the party’s platform, but I have not yet seen the honorable member for Kennedy make any effort to carry out his party’s platform as it applies to the socialization of industry.
– Has the honorable member not seen us trying to do something in connexion with banking or wheat marketing ?
– The Labour party has never made any attempt in this House to put into effect its proposals for the nationalization of banking.
– The Government has been hamstrung by another place.
– The honorable member is wrong. Another place has not hamstrung the Government in connexion with any proposals for the nationalization of banking, because no such proposals have ever been submitted to it. The honorable member for Werriwa (Mr. Lazzarini) is always talking at the top of his voice about the nationalization of banking, but he is the only member of his party whom I have ever heard say straight out that he believes in it. Other members of the Labour party have had various things to say about finance, but none has come before this House with a definite proposal for the nationalization of credit. We have had before us a socalled credit extension scheme, but that is quite different from the nationalization of credit. The credit extension scheme was an experiment in inflation, and I admit that another place did check that. Another place did prevent the . Government from plunging into what might hare proved to be the world’s record inflationary experiment.
The Government has finally accepted the situation. It realizes that there is no use in butting its head against a brick wall. It realizes that it cannot get its inflationary proposals through the present Parliament. We now have, not weeks, but days, to come to a decision. Honorable members who have criticized the Government - and some of them, including the honorable member for Wimmera (Mr. Stewart), sit on this side of the House - have failed to suggest any means by which the Government can overcome the difficulty with which the country is faced, namely, that within a few days, unless some effort is made to stabilize the financial and economic position of Australia, this country must default.
– Surely it should not have been left to the last few days to make the attempt.
– I agree that it should not, but nothing was done, because the Government was exploring every other possibility. It was investigating all sorts of alternative wild-cat schemes.
– The Government’s previous proposals were not wild-cat schemes.
– The Government’s fiduciary notes proposal, which it submitted to this Parliament, was undoubtedly a wild-cat scheme.
– The honorable member would have voted for such a policy with respect to the Wheat Bill.
– When I supported that measure I said that I was not in favour of financing it by means of any policy of inflation.
– The honorable member’s party would accept money for the farmers under any scheme.
– Let me see the colour of any honest money for the farmers, and 1 will take it. The farmers have been led into a state of expectancy, and have been dreaming of millions, but their hopes have never been realized. It is useless for honorable members to kick the Government; it has taken the only possible course open to it. When honorable members opposite, who have more to lose politically than honorable members on this side, have the courage to say that, in order to save Australia’s good name, they are prepared to sacrifice principles which they now find cannot be put into operation at the present time, it does not mean that they have sacrificed them permanently. Probably no honorable member on the Labour side believes that it will never be possible to restore pensions and wage standards to their present level. We do not believe that we have to write “Finis” across the story of Australia. We consider this to be but .a temporary crisis, and our duty is to make provision for posterity.
– If the scheme is incomplete, we are justified in pointing out omissions.
– Quite so; but no honorable member has drawn attention to any particular in which the scheme is incomplete. Personally, I would tack on to it a proposal to reduce the duties imposed under the tariff by 25 per cent. But that matter has no direct relation to this plan, which is designed to convert the internal loans of the Commonwealth as quickly as possible.
Some time ago, the very suggestion that we should repudiate our liabilities to the people who have lent money to Australia was anathema to all parties; but how quickly events have moved. In a few short weeks we have had to realize that Australia cannot continue to carry the present tremendous interest burden. The day may come when we shall be able to borrow again, and it may be necessary, in order to float loans, for Parliament to give a definite undertaking that no alteration will be made in the conditions of issue. This country is now in a dreadful position, for we are compelled to say to our creditors, “ The only alternative to your accepting a reduction of interest is to receive no interest at all. We may not be able to safeguard even your principal; and, to save you from a worse disaster, we are asking you to agree to a breach of contract on our part.” I think that it is a courageous action on the part of the Government, and the Parliament, to ask our creditors to accept that position.
– I thought that that was repudiation.
– No doubt it is: but it is repudiation in the interests of Australia, and it is necessary, in order to save everything that we have. We have seen what default means in one State, but the people of that State have not felt the full consequences of it, because Australia, as a whole, has taken over the liabilities of New South Wales, which has not had to endure the shame and misery of actual default. But the situation would be vastly different if Australia defaulted; there would then be no other , authority to take over the Commonwealth’s liabilities. Before the nations of the world, we should simply be a country that had outstripped its resources, and was no longer able to hold up its head among stable and selfrespecting commercial nations. We cannot face that possibility without the gravest misgivings. The Prime Minister has assured us that there is no other way of escape from our predicament than accepting this plan. Therefore, we should not be indulging in argument on political and economic subjects, but should agree at once that the passing of this measure is the only gesture that the Parliament can make to preserve the good name of Australia.
I would not agree to the reduction of wages or pensions, unless there was also to be a reduction of interest. I was hoping that no reductions would have to be made ; but everybody is called upon to make sacrifices. Persons still in private employment have had their incomes reduced 20 per cent, or more, and the number of unemployed is growing every day. Many who thought they had safe jobs no longer retain them. Undoubtedly, pensioners, military and otherwise, and public servants form a sheltered class. I hope that the day will come when the present wages and pensions can. be restored; but, by comparison with those who are without incomes, and have no idea what the future holds in store for them, the members of the Public Service are in a fortunate position. Consider the plight of the ‘armies of unemployed to be seen on the Yarra Bank, or in the Sydney Domain. What of the starving men and women in the slums, and those who line up in queues at the dole depots? If the Government is prepared to stand up to all that this plan involves, I am willing to support it, not to gain political or party advantage, but simply because I realize that the Ministry has been forced into a most difficult position through economic necessity and political stress. It is the duty of every member not to let the Government down, or kick it to death, in order to gain political ends. Members on the Opposition side of the House will, find it just as unpleasant as will members’ supporting the Government to justify these proposals in the eyes of the people. Naturally, the electors will resent having to forgo anything. We have to find, not ways of saving our political skins, but ways of putting the facts before the people clearly and honestly, allowing them to judge for themselves. If, as the result of doing what we consider to be in their best interests in this terrible crisis, the electors give their votes to men - to political opportunists - who will promise them anything, we shall have to accept their verdict. The people generally do not know how desperate is the position in which Australia is placed.
It is useless to expect the Government to continue to pay the tremendous sums spent in the past in interest and pensions, at a time when the national income has been reduced to the extent of £200,000,000 a year, when taxation has increased 25 per cent., when every Government in this country is practically bankrupt, when private enterprise is paralysed, when credit is smothered, and when the banking institutions are on the verge of, perhaps, the greatest financial crisis in the history of Australia. We cannot blind our eyes to the position, and say, “ We will keep up the financial jamboree. So long as we are returned at the. next election, what else matters? After that, the deluge.”
– The present Government has had no financial jamboree.
– I admit that. It would be unfair to attribute all the financial sins of Australian Governments to the present Ministry. The situation is the outcome of the policy pursued by governments for the last 30 years, and the State Governments are infinitely more blameworthy in this matter than the Federal Ministry. But we cannot remedy the trouble in a day. If we do not start at the top by reducing Commonwealth expenditure, the States will not make the necessary savings, and the inevitable result will be a crash. Financial crises have occurred in the past in different States, but we have never been faced with a nation-wide crisis such as that now confronting us. We are threatened with a complete collapse, not only of all governmental activities, but also all private industrial and commercial enterprise. Although it may seem ludicrous to imagine that the consequences of such a disaster in Australia would be similar to those experienced in other countries, there is no logical reason why we should not be called upon to endure all the pains and penalties that have been suffered iu France, Germany, Austria, and other countries that have allowed their finances to drift into a hopeless condition.
I regard this plan not as the Government’s policy, . but as the Parliament’s policy, and, whatever faults we may find with it, it is an honest attempt to cope with a desperate situation. Everybody in Australia, even the trade unions, has been crying put for action of this kind for the last twelve months. The workers want the members of the Government to do something other than loll back in their cushioned seats. I have mixed a good deal recently with all classes of the community, and I have formed the opinion that Labour supporters and non-Labour supporters alike desire the Government to get down to real work, and do something to stop the rot. There is no enthusiasm among the workers for the “borrow, boom and burst” policy. The workers realize that our good times have come to an end. Although they do not like the prospect of reductions, they realize that the present standards cannot be maintained. . They will not object to a reduction provided that everybody - those who draw incomes from interest and those who occupy sheltered Public Service positions in particular - bear a fair share of the sacrifice.
This plan is only the beginning of a comprehensive policy of reconstruction. I congratulate the Government upon having had the courage to do what it knows to be the right thing. I believe that the people will realize that it has acted in the best interests of the country.
.- No one will be surprised to hear that I am opposed to this plan, lock, stock and barrel. The Government, in bringing these proposals forward, has made one of the most pitiable exhibitions of failure that a big party has ever made in this Parliament. I hope we shall never again be called on to witness such a debacle.
The honorable member for New England (Mr. Thompson) said that the alternative to this policy was default. But he knows very well that if defaut does occur, the Labour movement will not be responsible for it. In addressing myself to this bill, I speak as a pledged Labour man of the minority group, and find myself in opposition to the majority of honorable members of the House, who are supporting the Government.. Let me ask who will be responsible for the default if it occurs ? I reply to my own question by saying that the chamber which is dominated by the members of the party opposite, many of whom are quite out of touch with the electors, must accept the blame for what happens. Although some of those honorable gentlemen were elected four and a half years ago, they have seen fit to do their utmost to break the Government. Many of the present members of the opposition parties in this Parliament acquiesced in the policy of the previous Government, which borrowed vast sums of money and involved the country in its present heavy interest bill. These honorable gentlemen went “ both feet into the trough”, so to speak, without a care for the future. I cannot be accused of ever having supported a policy of public borrowing. The honorable gentleman who has just resumed his seat said that we must make some provision for posterity. But, as the honorable member for Fremantle (Mr. Curtin) pointed out last night, the monetary system of this country is such that it is possible for us to oblige posterity to pay 4 per cent, interest for 40 years on money borrowed years ago. We are told that if this policy is adopted, confidence will be restored. What will happen when confidence is restored? We know very well that the Government will then proceed to borrow more money, and so involve posterity in still further obligations. I have never supported this policy, which may have the result, if more new money is borrowed, of making the interest, burden on the people just as heavy as it is now. If Australia defaults in her payments, the parties opposite will be blameworthy, and not this party. We have tried to introduce a better, monetary system, bus so far have not succeeded in doing so.
Honorable members who support this plan have asked those who are opposed to it to suggest an alternative, and when one honorable member did so, he was accused of being drunk with rhetoric. 3 am sorry that the honorable gentleman who made that accusation is not in the chamber, for I wish to tell him that he is drunk with base deception.
– What is the honorable member’s alternative ?
– I shall indicate it before I conclude my speech. When the Prime Minister (Mr. Scullin)- was making his speech in support of this bill, he correctly anticipated the attitude that I would adopt in regard to it, for he knew well what has taken place in the caucusWhile the Prime Minister was speaking, one of the members of the Ministry interjected that those who opposed this plan had a yellow streak. That honorable gentleman knows full well who has the yellow streak, for he has been a member of the caucus for the last twenty months. If he, and certain other honorable gentlemen, will measure up the position, they will be forced to the conclusion that those who support this plan are yellow right through.
– Why does not the honorable member accept the apology of the Minister and his withdrawal of the statement ?
– Had the honorable gentleman apologized in the House where he made the statement I would have accepted it. But I do not want his apology. All I wish to say to him is that those of us who stand where we have stood in the caucus for the last twenty months, will be standing when some others who formerly stood with us have been trampled to the ground.
– I do not think that it is quite right to say that honorable members are yellow all through.
– The honorable member for Warringah (Mr. Parkhill) can find virtues in the Government because it is doing his dirty work. When an objection was taken to the interjection to which I have referred, it was said that the comment was not intended to have a general application, but was meant’ only for me. After remarks of that kind have been bandied about it is too late to talk about apologies. I defy any honorable member to prove that I have shown a yellow streak in connexion with my attitude on public finance.
Let me inform the honorable member for New England (Mr. Thompson) that throughout its history in the Federal Parliament the Labour party has endeavoured to lift the interest burden from the people. For 30 years we have endeavoured to give effect to the monetary policy that we have consistently enunciated.
– The policy of the Labour party is the cessation of borrowing.
– That means the lifting of the interest burden from posterity.
– All Labour Governments have disregarded that policy.
– What the honorable member for Reid (Mr. Coleman) has said is quite true. Unfortunately, good Labour men have failed to do the work that they were elected to do. If the honorable member wished to condemn them he should have done so in his speech, and not left it for me to do so for him. For decades we have told the people that when an opportunity was afforded us to reduce the interest burden we would reduce it. I had hopes that when the last double dissolution occurred and Labour was successful in securing a majority of members in both Houses of the Parliament, something would be done. But, unfortunately, the war came along, and certain circumstances that occurred in relation to it caused this party to be rent in twain.
We were in the political wilderness for many years, but nevertheless we did all we could to give expression to our ideals. I defy any honorable member to indicate a single speech of mine in this House on public finances in which I have not opposed public borrowing. I have no need to quote my speeches in this connexion. I remember that in 1916, when the Fisher Government proposed a considerable borrowing programme, the honorable member for Bourke (Mr. Anstey), the honorable member for Bendigo (Mr. Hampson), and the honorable member for Ballarat (Mr. McGrath) voted against it. Subsequently, I was the only speaker against a similar bill.
In 1929, when Labour was returned to power with a large majority in this House, I again had hopes that we would be able to give effect to our policy. We had a definite financial programme which was in direct contrast with the programme of the Bruce-Page Government. We told the people that if we were returned to power we would give effect to our policy. We had an alternative to the policy of the previous Government; but now, when we are on the edge of the precipice, nothing is to be done to give effect to it. The previous Government was swept ignominiously from the political life of this country because of its failure financially. Only two members of the Nationalist party survived in New South Wales. One of them, the honorable member for Warringah (Mr. Parkhill) only survived the maelstrom by a fluke. In South Australia, the Liberal element in federal politics was almost exterminated. When Labour assumed office it was estimated that 8 ner cent, of our people were unemployed, and Labour promised to enforce a policy which would find work for them.
– The people were sold a pun.
– The policy of the Labour party has been endorsed again since that time. It has been said that the Tasmanian election showed that there was a swing against Labour, but what about the New South Wales election? The opponents of Labour were practically annihilated in New South Wales. Yet nothing is being done by the Government to give effect to Labour’s financial policy. The Minister for Markets (Mr. Parker Moloney) said that this plan gave a gleam of hope to our unemployed people. But we promised them, not a ray of hope, but a whole rainbow. Tens of thousands of leaflets containing definite promises were distributed over the name of “E. G. Theodore, Campaign Dire;tor “.
– It is a “comedown” from a rainbow to a ray.
– There will be a further “ comedown “ when we get to the bottom of the slide. The people have not altered their mandate to us, and it is our duty to fulfil our promises to them. No honorable member can truthfully say that I have remained silent in regard to Labour’s monetary policy, nor shall I do so. I believe that in the final analysis we shall have to adopt that policy.
Sitting suspended from 6.15 to 8 p.m.
– If the Labour party platform had been given effect, Australia would not now be in financial difficulty. All honorable members are aware of the financial policy of the Labour party. It is not an idea of mine; it was formulated by the Fisher Government. It has been put into operation and has not failed. I challenge the honorable member for Fawkner (Mr. Maxwell) with all his forensic skill to disprove my statement. The principle of that policy has been fully proved, and cannot be misapplied. I have at various times advocated in this House its adoption by the Government. So impressed were the members of my own party with the scheme that, in conjunction with the Prime Minister, the Treasurer and others, I was appointed a member of a committee to consider it. Of course I was in a minority. I was told that I was not able to wave any magic wand. All the old Tory shibboleths were used against me and I was defeated, yet the Federal Conference at Canberra accepted the principle of the. scheme. In spite of this a member of the Government accused me of having a yellow streak. That to me is most offensive, although I know that the term was used politically. Had my proposal been carried into effect, Australia would not now be in a grave financial position. As I once told the Prime Minister and the Treasurer, we cannot take out of a body its sustaining power and expect it to thrive. Honorable members opposite have at last worked their will with the Government. It has now agreed to make reductions in wages and salaries and pensions. When the Deputy Leader of the Opposition (Mr. Latham) some time ago laid down the policy which this Government should pursue, we fought him vigorously. We know what has. happened since. When I think of our hopes and aspirations on gaining, office, and gaze on the wreckage of the Labour party after being in power for twenty months, I feel utterly ashamed of the position in which we find ourselves. We need not have been in that position, but we know what has happened in the interim. Certain members on this side of the House, including myself, have fought strenuously against various proposals introduced by this Government. We have been termed poltroons, traitors and cowards, because we will not accept what others are prepared to accept, and because, so it is said, we cannot offer an alternative.
– Who said that we were poltroons and cowards?
– Never mind who said that. I certainly object to those terms being applied to me, because it cannot be proved that I have not endeavoured to do that which I was elected to Parliament to do and paid to do. Now we are asked to suggest an alternative to the Government’s plan after every opportunity to give effect to any alternative proposal has been lost. I tell the Government to do its worst. I shall not cease to fight against this plan. I care not whether I lose my seat in the effort. If that happens I shall at least preserve my self-respect, knowing that I have fought for my principles. If I lost my seat because of consenting to a plan advocated by the honorable member for Warringah (Mr. Parkhill), I should feel that I had been treated as I deserved. There is something wrong when that honorable member sings iri unison’ with honorable members on this side. Evidently a wrong string is being, used in the political musical instrument. It is being twanged by the Opposition, and I for one refuse to dance to the tune.
The big businesses of Australia, the pastoral companies, the shipping companies and the banking institutions are controlling wealth, considerably in excess of what is necessary to provide food for our people. If we cannot find the means to bring that wealth to those who produce it, and to those who are given no opportunity to produce it, we are not doing our job. I am prepared to go to the people to-morrow, and to tell them of our alternative to the Government’s proposals, and how unsuccessful were our efforts to persuade the Government to accept it. If an election took place to-morrow, honorable members opposite would not escape scatheless. What has the Senate done for Australia during the last twelve months? It has not produced an original thought. Honorable members opposite talk about economy, and the cutting out of useless expenditure. Can any one of them honestly declare that the Senate is of any use to this Commonwealth? It is one of the greatest anachronisms that the world has ever known. It meets one day and disallows a regulation, and then its members return to their homes. When they are called together again they find it difficult to obtain a quorum. Yet honorable members opposite advocate a reduction in old-age and invalid pensions and soldier pensions. They know that other avenues of economy are being left unexplored, but it suits their book not to interfere with them. They are opposed to unification which is the commonsense corollary to any plan of reduced expenditure. I do not know how the Leader of the Opposi-« tion, when he faces his electors, will find an excuse for the position in which he is’ to-day.
– The honorable member’s speech is not very interesting.
– It is more interesting than was the speech of the honorable member. He reminds me of a soda water bottle being opened. There is- a lot of noise, but little substance. I have no wish to discuss the idiosyncrasies of the honorable member. I pity him, because of them, but he has the consolation of knowing that the first 40r years is the worst stage of his complaint.
The hill provides for a reduction of interest payments to bondholders. Honorable members opposite hail this proposal as a means of salvation. Why, I wanted to cut out interest payments altogether! It can be done; and it has been done to a great degree in Australia with advantage. At the proper time I shall place the facts on record. Had we dispensed with interest payments altogether, we should not now have hundreds of thousands of our citizens unemployed and starving. I want, not to make political capital out of that fact, but to provide work for them. When the unemployment position became accentuated in Adelaide, I placed myself at the head of a procession and demonstrated to the public the rapid development of unemployment. I took all the opprobrium which came from members of the Nationalist party, but I persuaded the Attorney-General of the day in South Australia to telegraph to every district council in that State asking them to provide some work for the unemployed. I did accomplish something. Will this economy plan provide employment? We are told that credits will be made available, but we know that on a previous occasion when we were told, that, the banks themselves stated that they had given no such undertaking. I do not desire the banks to make credits available, because, if necessary, credits can be made available by this Parliament.
– The honorable member has his cheque book.
– I ‘want to put something behind the cheque. There is no need to print more notes; all we need is the determination of honorable members in this House to appeal ‘to the people for wider powers to enable them to make credit available. How many people will be given employment as the result of this plan? The Minister for Trade arid Customs (Mr. Forde), has told us’ repeatedly that the tariffs which he has introduced would provide more and more employment. He said that thousands of men would be given, work in consequence, and every goose that he produced he declared to be a swan. The Treasurer (Mr. Theodore) has stated that his plan will lead to the employment of 100,000 men, but I have heard him say ‘ a lot of ‘ things which have not been true. He has been an absolute dud. “We were told that the 10 per cent, reduction awarded by the Arbitration Court would help, not only to cheapen the price of commodities, but also to provide employment. Instead of this being the case, unemployment has increased. In what way will the reduction of the purchasing power of the community and the reduction of pensions provide employment for our citizens ?
Let me repeat what I said in regard to soldier pensions. In one year soldiers’ pensions cost this country £7,897,292, and interest on bonds to the man who stayed at home and profiteered, cost us £17,175,893. Since the war the total paid to the soldiers in pensions has amounted to £92,938,663, and the total interest payments to bondholders to £228,606,000. Yet honorable members talk about the burden of sacrifice being spread equally among the community. If that is the way in which the promises and responsibilities of the nation are to be honoured, no man will be found willing to enlist for ‘ the next war.
– The plan that is outlined in the bill has been attacked from various angles - by some honorable members for sentimental reasons, by many because they sincerely believe that it is a retrograde step, and by some, unconsciously perhaps, for reasons of selfinterest. I regret to have to say that the hostility of some members is inspired by the belief that the plan will be unpopular. The sentimental objectors are those who are unwilling to defer the realization of the ideals for which they have striven in the Labour movement, and I appreciate their view. But, after all, what is the plan and from whom does it emanate? It is not the result of the thought of any one man or of any one political party.. In a great national crisis men holding the highest positions in the Commonwealth have come together from opposing political camps because of the desperate position into which the country’s finances have fallen, and the possibility of chaos in the near future. The last conference in Melbourne included representatives of conservative opinion and the various shades of political thought within the Labour movement.
There were Labour Premiers who might be termed moderates, and one Labour Premier whom the militants, no doubt, regard as the ideal leader. Those men, meeting in conference with their political opponents, were able to look deep into the economic and financial problems. They had the assistance of the most eminent financiers and economists in Australia, and from their study of the problem in the light of facts and advice, more complete than are available to the members of this House, this plan evolved. The sponsors of it do not pretend that it is entirely acceptable to them; some delegates, no doubt, regretted that it did not go so far as they thought it should, whilst others, possibly, feared that it went too far in certain directions. But they had to devise a method of restoring financial stability, and this represented a fair com promise to which all could subscribe. T do not pretend that the members of the conference believed that the plan, would bring immediate prosperity to Australia, but they were convinced that it would at least prevent Australia from degenerating into financial, economic and industrial chaos, which would bring ill to every section of the community. To the conference were revealed facts of the most appalling character. The national income has dropped by £200,000,000 ; the deficits of the seven governments of Australia for the current financial year will total approximately £30,000,000, and if the present rate of expenditure continues, will next year reach £40,000,000. There is no chance to-day of an economic revival, with a resultant rise in the prices of the goods upon which this, country depends to produce credits overseas. These unsavoury facts were reviewed dispassionately, but not callously, as some honorable members who have spoken against the plan have suggested: Do they really believe that the Prime Minister would be indifferent to the sufferings and necessities of hundreds of thousands of our people?
– The right honorable member for North Sydney (Mr. Hughes), after seeing the military experts in London, tried to introduce conscription in Australia.
– That may be so, but let us deal with the’ plan on its merits. and free of unworthy suspicions. The honorable member for Adelaide (Mr. Yates) regards his proposal as fool-proof, and is convinced that anybody who opposes it is wrong. I am not so egotistical. Possibly the scheme to which the Government is committed may not do all that is expected of it, but at any rate it embodies the considered opinion of men of -various parties, holding the highest offices in Australian public life. They believe that the general terms of this policy must he adopted if this country is to avoid economic chaos. It has been said that our present troubles have been caused by the financial institutions in this and other countries. Other causes mentioned are the Great War, and the tremendous load of debt which it placed upon the whole world, the gold standard, and the unequal distribution of gold, the fall in the price of silver, over-production, and the mechanisation of industry. All of these factors may have contributed to the economic crisis that confronts the world, but whatever the cause, we have to deal with effects that are apparent to all. The outstanding fact is that next month our expenditure will exceed our prospective income by £2,700,000. What alternative solution of that problem do the opponents of the conference plan offer? Does any honorable member seriously suggest that it is palatable to other honorable members, whether on the Government side or on the Opposition side, to advocate a scheme which imposes heavy sacrifices on the whole community. Some have said that we who are supporting the plan are callous and indifferent to the distress it will impose upon the community, but I believe that their real objection to the plan is that it will be politically unpopular. Is it agreeable to the honorable member for Brisbane (Mr. D. Cameron), a soldier, and a leader of the returned soldiers’ organizations, or to the honorable member for Reid (Mr. Coleman), who also has been a soldier, and an active defender of ex-service organizations, to advocate a plan which calls for further sacrifices from the comrades with whom they fought in the Great War? It is not. And those who suggest that the supporters of the scheme expect personal or political gain from it, are simply deluding themselves. Australia stands on the threshold of default, and an appeal is being made to the bondholders, who by some honorable members have been reviled as Shylocks. I am not without sympathy for the bondholders, who are affected by this plan, for despite the ranting and raving of some honorable members, I know that there are hundreds of persons who have invested their life’s savings in government securities, from which they* had expected to derive enough income to maintain them in comfort in their old age, after years of toil and stress.
– How many are there ?
– A considerable number, for we have had letters from many who will find themselves in difficult circumstances. Nevertheless, we have to face the facts. I do not wish to introduce personal passion into this debate; I would prefer to give to the opponents of this plan credit for sincerity, but I might easily contrast their attitude with that of men who are taking an unpopular stand which may lead to their political extinction. Opposed to them are those who are raising the popular cry that something is being taken from the people, and we know that when people are being deprived of a benefit they do not hold in high favour those who are responsible for the deprivation.
The honorable member for Flinders (Mr. Holloway) spoke of a 31 per cent, reduction of wages. The plan provides that, inclusive of the cost of living reductions, there ,is to be an average 20 per cent, reduction of the bill for wages and salaries as at the 30th June, 1930. The railway servants in Victoria have already suffered a 23 per cent, reduction. I believe that the honorable member for Bendigo (Mr. Keane) has been informed that to members of 100 unions in Australia have been applied, not only the 13 per cent, reduction in respect of the cost of living, but also a further cut of 10 per cent.
– This Government opposed the 10 per cent, reduction.
– I do not deny that; but I am emphasizing that this plan will not be superimposed on the reductions already effected.
– But it will be an incentive to owners of industry to cut wages.
– The -wages of the majority of the workers have been already reduced by the Arbitration Court. I regret that. For many years I appeared in the court, and I am not conscious of having ever failed in my duty to the workers, or of ever having claimed for them something to which I did not conscientiously believe they were entitled. I repeat that the plan, does npt provide for a 31 per cent, reduction or for super- t imposing even a 20 per cent, reduction on cuts already made.
The present Government has been accused of having failed to redeem its promises. That has been said of every government throughput political history. The New South Wales Government, in which some honorable members have great faith, was returned to office in October last with’ an overwhelming majority. During the election campaign I was frequently on .the Labour platform, and I heard the spokesmen of the party make certain promises to the people. The Bavin Government had reduced the pensions of widows - had, in the words of Labour speakers, mutilated both the Widows Pensions Act and the Endowment Act, and had rationed extensively work in the Railways Department. Labour candidates promised that what had been taken away would be restored, and I have no doubt they honestly believed that the promises could be redeemed. The Lang Government has now been in office for seven months, and the Widows Pensions Act and the Endowment Act are still in the mutilated condition in which they were left by the Bavin Government; the per cent, reduction of . Public Service salaries, which Ministers had promised to remove by the 1st of April, is still operative ; and an unemployment tax of ls. in the £1 on wages and salaries is now in force. Even servant girls in receipt of 22s. 6d. a week and their keep have to pay that tax.
– Those who pay the tax are at least receiving the union rates of wages.
– I have no time to enter into a debate on such points. I do hot say that those who took such action were dishonest or insincere, or that they deliberately evaded their promises. They were compelled to do something that must have been unpalatable, as it was im possible to raise revenue by other means. This Government wants to do the things for which it was elected to do, but it finds itself faced with the fact that next month or thereafter it will . lack the necessary income.
It has been claimed that, this plan will reduce the purchasing power of the community. It is perfectly true that usually when employees are paid more money their purchasing power is increased, but the certainty remains, tha’t, no matter how great the desire the money is not available ‘ to realize it. I accept the statistics that have been supplied. They are open to investigation, and the critics of the plan have not proved them to be fallacious. The honorable member for Flinders (Mr. Holloway) said that he accepted them. They indicate that, if the Government does not act now, the purchasing power of public servants and bondholders will be reduced to 12s. in the £1.
I admired the rhetoric of the .honorable member for Fremantle (Mr. Curtin) and the sentiments expressed by a number of other honorable ‘ members, but . they cannot escape the mathematical fact that the finances of Australia are in a desperate condition, and that if action, such as is contemplated, is not taken,’ not only will Australia have to default to its bondholders, the public servants and pensioners, but everything will be in such a state of chaos that no member of the community will have any sense of security or know what the next, day holds in store.
It has been claimed that the cause of all this trouble is the failure of the existing monetary system. I agree that while that system might have been suited to the industrial and economic conditions of last century, it has not kept step with modern needs. I do not deny that the banking institutions of this country have been conservative in their outlook. The honorable member for Flinders (Mr. Holloway) and others, believe that the Commonwealth Bank could do more to assist the nation, by providing the Government with additional money. That is merely a hope, with no” basis of fact. Labour members should he keenly jealous of the stability of the Commonwealth
Bank, the creation of a Labour Government’. Actually, the bank is -already covering Government debts, here and abroad, to the extent of approximately £50,000,000. “While I believe that the financial institutions of the world should be governed by a more advanced system of extending credit to meet the commercial needs of the community, I submit that it is unsound to expect them endlessly to advance money to governments in order to meet its commitments. Governments cannot solve the problem itself, of giving work to the unemployed. They can only provide the banks with a vehicle ‘ for the assistance of industry, and their actions must he based on a sound policy. I agree with the honorable member for Fremantle (Mr. Curtin) that within a decade there will be a revolutionary change in the world’s monetary policy. That, however, does not solve the pressing needs of next month, and the month to follow.
I certainly supported the Fiduciary Notes Bill, but I point out that it was not designed to meet the administrative expenses of the Government. Those who claim that that was its purpose could not have studied the measure. Its object was to provide reproductive work for the unemployed, and to assist our farmers.
This plan may fail in a number of respects, as some claim that it will. No plan can be complete. It is almost inevitable that other action will have to follow. Our primary producers must be given some direct assistance to enable them to carry on. If possible, provision must be made to stimulate industry by establishing reproductive works. All those things are incidental to the plan. While I do not claim that the scheme will .usher in all the elements of prosperity that some people hope will follow its introduction, I do believe ‘ that it was formulated in all sincerity by the Premiers of Australia, in an endeavour to save the country from chaos.
I heard the gibe thrown across the chamber to a Minister, .and to some honorable members, that when next they face their electors they will be shown exactly where they stand. That may be perfectly true. I do not know how the people that I represent will view my action. I know that it is popular to decry those who support the plan. Unpalatable and distasteful though it is, I am giving it ‘my support, because I believe that if the Government fails to do something in a general way to rectify the position, national ruin is inevitable. I hope that it will be possible to modify the proposals, and to soften their severity. But the members of this Parliament are charged with a national responsibility, and their personal concerns must be temporarily set aside. I am not like the honorable member for Adelaide (Mr. Yates), who airily says that he does not care what happens. I do care. I do not want to lose my seat in Parliament. I appreciate the trust placed in me by my constituents, and regard it as an honour to represent them here. I am endeavouring to do the right thing. As the honorable member for Fawkner (Mr. Maxwell) said on one occasion, the motive, that inspires the action taken by a man counts a great deal when his conduct is judged.
This plan is backed by men who have had experience in governing the country, who know the facts and who see the position clearly ; but those who oppose it have nothing but hope to’ support their attitude. They hope that something may happen that will pull Australia out of the mess. My action in this matter may mean my political extinction. Possibly it will not be justified by events to follow. However, the personal political welfare of the individual must be set aside. It is the nation that counts in a crisis such as this. If my constituents consider that I have failed, and that my action, however sincere, is wrong, I shall abide without complaint by their decision. While I am in this Parliament I must endeavour to help the country to emerge successfully from this, the greatest economic crisis in its history. My action is not the outcome of egotism, of the belief that everything that I do is right. It is taken in the belief that this plan embodies a general solution that will prevent the country from lapsing into chaos. If that happened, the people would be plunged into misery and suffering, into a state of insecurity, and none would know what the morrow would bring forth. If we, in this Parliament, can do something to prevent such a lamentable condition of affairs, we shall at least have served honestly the persons whom we are sent here to represent.
.- I agree with the honorable member for Macquarie (Mr. Chifley) when he says that honorable members of this Parliament are charged with a national duty, that they must tackle these problems in the light of knowledge gained. I believe that most of us know the magnitude of the economic crisis that faces Australia. That being so, this is the time to advance suggestions for rectifying theposition. I have heard many honorable members say, when they began their speeches, that there should be no recriminations on an issue such as this, but before they had finished many had offended in that respect. I shall not follow their example. I shall endeavour to speak to the measure as concisely as possible, as I know that a vote is to be taken early in the morning, and that many other honorable members desire to address themselves to it.
This bill emphasizes the grave economic position in which the Commonwealth finds itself. I am pleased that the Government has at last brought down a scheme that will help to rehabilitate Australia. It is one that has my approval and support. We have become accustomed to this Government sponsoring fantastic plans. In times of national emergency I believe in proceeding along sane, safe, and tried methods, and for this reason I would not support legislation which can be classed as experimental. This is no time for experiments. For instance, I never had any faith in the fiduciary notes scheme, and could not bring myself to believe that it would assist in the rehabilitation of the country.For that reason I spoke against it, and voted against it. I was pleased to hear from certain members of the Government that it is not proposed to go on with that scheme. The Labour party, I know, is divided on the matter, and some of its members say that the proposal will be resurrected. For my part, I hope that we have heard the last of it. In my opinion, the majority of honorable members opposite do not in their hearts believe that the fiduciary notes scheme could, if put into operation, help the country out of its difficulties.
I have been credibly informed that if the Government’s economy plan is not adopted by the 1st July, it will cost Australia £50,000 for every day’s delay. I regard this as a very serious matter, not one for joking, as do some honorable members opposite. It is my desire to protect the future welfare of civil servants, oldage, military, and invalid pensioners, and I believe that the best way of doing this is to support the bill now before the House. I believe that if this bill is passed, and the plan put into operation, the first step will be taken towards restoring the prosperity of Australia. I do not wish to do anything detrimental to the welfare of civil servants or pensioners.
– That is why the honorable member went across to the Opposition.
– The honorable member has no right to make that interjection. I have always sought to protect the interests of the civil servants and of the old-age, invalid, and soldier pensioners. Honorable members opposite will find that if this plan is not put into operation, the Government which they support will not be able to do for the civil servants and pensioners even as much as is proposed under the plan. It is no pleasure to me to vote for the reduction of salaries and pensions ; but even those who are to suffer as a result of the adoption of this plan must recognize that, were it not adopted, the Government would shortly be unable to pay them even the amounts provided in this bill. In voting for the Government’s present proposals, as I intend to do, I am convinced that I shall be acting in the interests of the civil servant, the pensioner, and the Commonwealth as a whole.
I am glad that the conversion of our internal debt of £550,000,000 is to be carried out voluntarily. When the last conversion proposal was before the public, money was put into the conversion loan by some people who to-day could ill afford to do so. They were actuated by patriotic motives, and some of them may now find themselves in financial difficulties. I am glad, therefore, that those persons, if they so desire, will have an opportunity of getting back some of the money of which they may stand sorely in need. It will be a good stroke of business on the part of those with large sums of money in Commonwealth loans to convert their holdings even at 4 per cent., because at least they will be protecting the capital they have invested. I trust that the conversion loan will be an outstanding success, and, if it is carried through, it will influence the overseas money market in our favour . It will go a long way towards restoring confidence in this country, and we shall then be able to appeal to the Mother Country to help us.’ It will mean that money will be available for public works, and we shall be able to provide employment for those now out of work. This country cannot get out of its difficulties until we restore confidence, and get the unfortunate army of unemployed back to useful employment. ‘
– The honorable member was himself once a disciple of the honorable member for Adelaide (Mr. Yates).
– I have never agreed with the financial proposals of the honorable member for Adelaide, nor did I ever agree with the repudiation schemes of the Lang party.
– The honorable member supported them not so long ago, and now he has gone over to the other side, holus bolus.
– I warn the honorable member for Hunter (Mr. James) that the next time he interjects I will name him-
– The honorable member for Hunter knows that I have consistently fought repudiation. If the Government’s, plan can be put successfully into operation, I believe that confidence in Australia will be restored, and before long we shall have turned the corner. With improved markets and better prices for our staple products, we can then look for brighter and happier times for the people of Australia.
.- Having followed this debate closely, I still take my original view of the . Government’s proposal. I intend to oppose any scheme that aims at the reduction of wages or pensions or the expenditure on social services, and in making that statement, I am fully conscious of the fact that we are threatened with a financial armageddon. When I face the electors who sent me into this House, I desire’ to be able to assure them that I have’ attended to every aspect- of their social life ; that I have done all I could to assist business men who have required tariff adjustments, industrialists who have looked to me to maintain their wages and conditions of employment, and agriculturists who have expected the Government to protect their interests. In my electorate are numbers of invalid and old-age and war pensioners, and I will not agree to a reduction of their pensions.
It seems to me that there are inherent weaknesses in this plan, and I propose briefly to enumerate them. The reduction of wages, salaries, and pensions is made mandatory, but the proposed reduction of interest On private mortgages and overdrafts . is optional and problematical, despite the repeated assurances given by members of the Government that the agreement reached at the recent conference in Melbourne covers private interest. If an agreement embodying the latter proposal is in existence, I suggest that it be produced in this chamber. I have read the agreement carefully ; it was prepared by able government officers, assisted by certain experts, the majority of whom I had never previously heard of. At a time of national crisis should we allow outside experts, who have been called in to advise the Government, to say to the Parliament, “.That is what you are to do ; carry it out? “ That will not satisfy me. I prefer a practical man, rather than an expert, at all times. The plan, as I have said, lacks a definite assurance that private interest will be reduced.
The conversion loan will save from £6,000,000’ to £8,000,000 in interest annually, and with that form of interest reduction I have not much quarrel; but there is no definite assurance that money will be provided for the relief of the unemployed, and the primary producers. The Government has been in communication with’ the banks, through the Chairman of the Commonwealth Bank Board, Sir Robert Gibson, and I cannot overlook the fact that, prior to the advent of the present Government to office, Sir Robert Gibson uttered no word of warning regarding the .financial rot that was setting in. All the bell ringing has occurred since the present Ministry assumed control at the Treasury. That fact supports my suspicion that those directing the affairs of the Commonwealth Bank have no time for the present Government. That is a serious allegation which, I hope, some member of the Government will answer at a later stage.
It has been stated many times that, owing to the reduction of interest rates, the position of the primary producers will be eased. Assuming that a farmer owes £2,000, which he has borrowed at 71/2 per cent., his interest bill amounts to £150 annually. If the interest rate were reduced by 221/2 per cent., he would have to pay 6 per. cent. or £120 annually, and that would mean a saving to him of £30 a year, which is not considerable. Take the position of the average worker who is employed in the Public Service, and assume that he is in receipt of £400 & year. Under the Government’s plan, which provides for a reduction of 20 per cent. in wages, he would lose £80. If he owed £400 on his house, there would be a saving in his interest bill ; but a loss of £80 in his wages would not make the proposition so attractive as has been represented. The proposed reduction of wages and pensions will decrease the spending power of the people. In June, last year, the Prime Minister said, in this chamber, that the wages of the workers had been reduced by £24,000,000. The present scheme provides for a further reduction of £1,700,000, which, as the honorable member for Flinders (Mr. Holloway) said this afternoon, would set an example which would be followed by private employers. Therefore, I maintain that the plan involves a decrease in the spending power of the community, and an increase in unemployment. “When the Arbitration Court made a cut of 10 per cent. in wages some time ago, it was declared that this would result in increased employment for the workers; but the unemployment figures have been steadily increasing ever since that cut was made. I predict a similar result of the reduction now proposed, and, no doubt, private employers will immediately approach the Arbitration Court and ask that, since the Commonwealth Government and the experts have advised a reduction of 20 per cent. in the wages of public servants, the court should double the cut that it has already made in the basic wage.
Under this plan, loan expenditure is to be further reduced by £14,000,000, which, together with the reduction already made of £29,000,000, means £43,000,000 less governmental expenditure in twenty months. It is madness to make such a drastic cut. There is no guarantee that the adoption of the plan would result in a release of credit. If a saving of £15,000,000 is made in Commonwealth expenditure, there will still be a deficit of £5,000,000 next June, apart from the further economies that will be introduced by the State Governments. In Victoria, for instance, there is a deficit on the railways of £1,900,000. Every economy has been practised there by hard-headed business men, who are to-day suggesting that the Victorian Government should balance its accounts. The only way to do that, in my opinion, would be to dismiss from 6,000 to 8,000 railway men. But every dismissal of a workman means an increased charge on the community, and an addition to the constantly growing army of unemployed. The Arbitration Court recently decided to reduce wages 10 per cent. in the trial case of the Australian Railways Union, and I remind the House that the present Government briefed counsel on that occasion, at high cost, in order to prevent the reduction of the wages of those unionists. The Government then showed that it had a proper outlook, and a lively recollection of the manner in which the Labour party swept the polls in October, 1929, because of its arbitration policy. It seems extraordinary that the Government should now be proposing a cut in wages 100 per cent. higher than was made by the Arbitration Court.
It has been said that the cost of living has decreased. As one who has had many years’ experience of industrial affairs in connexion with various tribunals, I have never admitted the accuracy of the cost of living figures on which the basic wage is adjusted. Those figures are not arrived at in an equitable manner. There has not been much reduction in rent, and no reduction whatever has taken place in interest, overdrafts and mortgages, contributions to friendly societies and lodges, medical fees, corporation rates, school fees, legal fees, electric light, gas, oil or coal. There has been a small reduction! in the price of meat, milk, bread and clothing, but it has been so slight that it is almost imperceptible, and certainly that reduction should not be used by a Labour Government as an argument to justify the reduction of the pension of the invalid and aged by 2s. 6d. a week. After much discussion of this matter, we are now given to understand that the actual reduction of the pension is to amount to 12£ per cent. The Treasurer was asked by the honorable member for Warringah (Mr. Parkhill) if a person receiving an allowance of 5s. a week would have that amount reduced by 2s.- 6d. The Treasurer replied, “ Yes, all pensions will be reduced 2s. 6d.” ‘ A reduction of 2s. 6d. in 5s. is a reduction, not of 12£ .per cent., but of 50 per cent. But I should object to a reduction of even 1 per cent, in pensions. I do not think that it will be denied that even the most careful member of this Parliament spends more than £1 per week on things that are not absolutely necessary; yet our old-age and invalid pensioners are expected to provide for all their needs with only 17s. 6d. per week. I protest strongly against the proposal to provide £3,500,000 less for pensions’ next year than was provided this year. It must be remembered that the imposition of additional sales taxation and primage duty will increase the cost of many articles which our pensioners require.
I refuse to be a party to the proposed reduction of Public Service salaries. Our public servants are working under awards, and if those awards are to be varied, it should be done in a proper way. It is actually proposed that in some cases wages shall be reduced below the basic wage.
Honorable members who have opposed this plan have been accused of not suggesting any alternative to it. I suggest as one alternative that something should be done to reduce our expenditure on interest on overseas loans. It is proposed to reduce the interest payable to local bondholders by 1$ per cent. If something like that could be done in respect to oversea interest it would be a fine thing. All the world is talking to-day about the proposal of President Hoover to suspend for one year the payments of interest and principal due to America by Germany. If a suspension of our overseas payments could be granted, it would be of tremendous help to us. No less than £36,000,000 is required this year to meet our overseas interest payments. It will cost us £9,000,000 in exchange to send that money abroad. This means that we must provide £45,000,000 for overseas payments. If an arrangement could be made by which overseas bondholders would agree to accept, say, 2 per cent, interest on this money for the next twelve months, a large sum would be saved to Australia, and it would not be necessary for us to consider this nauseating subject of the reduction of old-age, invalid, and soldiers’ pensions. The Prime Minister (Mr. Scullin) said this afternoon that if the Hoover plan for the suspension of interest payments is adopted, Australia might be saved £3,900,000 this year. If that saving is effected it should not be necessary to slice £3,900,000 off our pensions payments.
Another alternative to the economies proposed by the Government is the elimination of overlapping in the railway services of Australia. The report of the Commonwealth Railways Commissioner for the year ended 30th June last, revealed that the aggregate deficit of the Australian State Governments last year was £8,600,000, and the aggregate deficit on the State railway systems, £8,491,000. I suggest that an inquiry should be made immediately into the possibility of saving a great deal of money that is being needlessly spent to maintain the overlapping of railway services. It should be possible to save £3,000,000 or £4,000,000 in this way.
I am opposed to this plan; and I will not associate myself with any proposal for the reduction of wages, the increase of working hours, the rationing of employment, or the curtailment of our social services. I was elected to this Parliament to support a certain policy, and I intend to support it. I have a particular regard for the welfare of the hundreds of thousands of people who are out of work in Australia. I have no desire to criticize adversely the members of the Government. All I will say is that if this plan is the best that, could be evolved by certain experts, half of whom
I have never previously heard of, plus the directors of our banking institutions, plus the experts of the various Common- * wealth and State Governments, plus the Premiers of six States, including three Labour Premiers, and plus the members of this Government, it is a poor lookout for Australia. It should be remembered that the Government has reduced its expenditure by £29,000,000 on last year’s figures, and that it is proposed to reduce it by £15,000,000 this year.
As an alternative to the plan now under consideration, I suggest that we should review our overseas liabilities, and endeavour to effect a saving in overlapping services. But whether this is done or not, I am totally opposed to the reduction of pensions, wages and salaries. The Labour party was not consulted about this plan, and the supporters of the Government had no first hand knowledge of it until it had been adopted. I fail to see how the plan can possibly make money available for the relief of unemployment. In my opinion, unemployment is the most important problem that we have to consider. It is entirely problematical whether any money will be made available under this plan for the relief of those out of work.
.- I do not think there is much reason to labour this subject Doubtless every honorable member has already made up his mind how he will vote on this bill. All the talking in the world will not alter a single vote. Nevertheless it is necessary for us to record our views on the plan that is before us. The members of the Opposition have frequently advocated the adoption of some such plan, and now they are called upon to give reasons in support of it. The Minister for Defence (Mr. Chifley) got down to bedrock in his speech. He said that we must face facts and not play about with theories. It has been made quite clear to us that at our present rate of expenditure our revenue next year would be £20,000,000 short of our requirements. The Minister also said that unless something is done immediately, this Government will be able to pay only 12s. in the £1 next month. If our overseas liabilities are fully met, the Commonwealth Government will be able to pay only 9s. in the £1 on all its Australian commitments. That is the answer to all honorable members who are opposed to this plan. We must remember that in three years our national income has fallen from £650,000,000 to £450,000,000. It must be apparent to every one that we cannot live at the same rate as formerly on an income 30 per cent, less than we previously enjoyed. If the cost of living could be reduced by 30 per cent., a reduction of 30 per cent, in our . national income would not matter much, for an income of £70 would then buy as much as an income of £100 buys now. With proportionate reductions in income and in the cost of living there would be no sacrifice. We have heard a good deal lately about the gold standard; but there is another standard which must be borne in mind, namely, the goods standard. What we need is a reduction in production costs which will enable us to buy as much food and clothing with our reduced income as we can buy with our present income. I regret that during the period this Government has been in office it has not only taken no active steps to reduce the cost of living, but has done many things which have tended to maintain present costs. While it is true that the cost of living has fallen, on the average, by 15 per cent., it is true that the cost of manufactured ‘goods has remained as high as ever. The price of the farmers’ products has fallen heavily. If the price of manufactured goods had fallen in the same ratio we should not now be in such severe straits. In 1924, the index figure for products of the land was 194, and for manufactured articles, 178. What is the position to-day % In April last, the index figure for products of the land was only 119, and for manufactured articles, 193. In those seven years, the index figure for manufactured articles had increased from 178 to 193, while for products of the land the index figure had fallen from 194 to 119. If the index figures for those two classes of articles had varied uniformly there would have been no need for the general reduction of expenditure by 20 per cent., because the adjustment would have taken place automatically by the operation of the Arbitration Court, with the result that with less income we would have been in exactly the same position as we were when our income was considerably higher.
Some reference has been made to the monetary policy of Great Britain. It has been said that certain economists who inquired and made recommendations respecting the Bank of England stated in their report that the policy of the bank had been too conservative. Because of that, some honorable members contend that the conservative bank policy of Great “Britain and Australia has been responsible for the position in which this country now finds itself, and that, therefore, that policy was absolutely wrong.
– We do not know the full text of the report.
– We have the newspaper report, and I am accepting it as correct. The banking policy of Great Britain has no bearing upon the conditions existing in this country. Prices in England have fallen considerably. During the last three years, the index figure for foodstuffs has fallen from 115 to 85, and that for manufactured articles from 125 to 85. In that case, there was no great disparity between the figures and, consequently, there was room for a release of credits for the purpose of evening up prices. But there is no room for releasing credits in Australia while the disparity between the index figures is so great. Any release of credits would only still further increase the disparity between the prices, and, in consequence, our costs would be considerably higher. We cannot lose sight of the fact that the cost of government has increased proportionately much more in Australia than in other countries. In 1927-28, our governmental costs consumed 28 per cent, of the entire national income. Since then the cost has increased until this coming year it will consume 40 per cent, of our national income. The proportion is too great, and the outside community must strongly object to it. It has been said that any reduction of governmental expenditure would be unpopular, but I fail to see how that could be so. The people outside, when they realize that the cost of government is taking 8s. out of every £1 of our national income, will not view with any great objection a proposal to reduce governmental expenditure. There will, of course, be objections raised to the present economy proposals, but it is only human nature to object to anything in the nature ‘of reductions of income. Therefore, to that extent, many of these proposals will be unpopular.
I wish to pay a tribute to the Government. No honorable member will accuse me of having any political love for the members or supporters of this Government, but for the first time in my political life I take off my hat to the Treasurer (Mr. Theodore). He and the Prime Minister are up against things, and they are attempting to remedy our financial ills despite the opposition of the extreme wing and the moderate section of the Labour party. They have taken their courage in their hands in an attempt to do what they consider to be the right thing for Australia. We do not know their motives. We know only that they are taking a very .necessary action, and, therefore, due credit should be given to them. There is no need for honorable members to cast slurs upon them or to make recriminations against them.
I wish to refer to the only alternative to the Government’s proposals that has been mentioned iu this debate. The Treasurer has said -
I say frankly that had the necessary legislation been passed, and the Government been able to operate its financial proposals, there would have been no deed to attack pensions or the basic wage.
The honorable member for Flinders (Mr. Holloway) also referred in similar terms to the proposed fiduciary issue; but that contention is utterly wrong. Had the Government’s fiduciary proposals been given effect the £1 would no longer be worth 20s. It is estimated that next month it would have been worth only 9s. It would have been an easy matter to make a fiduciary issue, but in that event the price of goods within a short time would have increased, not by 20 per cent., but by 50 per cent, or 60 per cent., and the £1 would have been worth only 12s. or considerably less. The Minister for Defence (Mr. Chifley) has reminded us that the fiduciary issue would have been used for the purpose of assisting the wheat-growers to the extent of £6,000,000 and the unemployed to the extent of £12,000,000. But it would have been necessary to issue an additional £20,000,000 of notes to meet the deficit at the end of next month, and a further £89,000,000 to meet the deficit at the end of the next financial year. By that time the £1 would have been worth only 12s. The Government’s present proposal is an infinitely better proposition than a fiduciary issue, because it means only a reduction of 20 per cent., whereas the issue of notes would have meant a reduction of at least 40 per cent. There are many things in the plan with which I do not entirely agree; but this is the only plan submitted to us, and the Government is the only body that can give effect to it. It is not complete, because it does not provide for a decrease in the cost of living commensurate with the decrease in the national income. At the same time, it is a stepping stone to better conditions, and I believe that it will do some good.
There are two factors operating in the depression. One is the ordinary economic factor, and the other is the psychological factor. If a person is sick he cannot do his ordinary work as well as when he is in a fit state of health. That applies to the nation. The people to-day are sick. There is a cloud hanging over them, and its psychological effect, is depression. It is impossible to ascertain what is the percentage of the depression due to psychological effect compared . with the total depression, but I should think that it amounts to from 15 per cent, to 20 per cent. Throughout the length and breadth of this country the people look to this plan for their salvation. They are wrong; but, nevertheless, they have in their minds the idea that this plan will rehabilitate Australia, and the moment it is put into operation the psychological depression will disappear. The people will walk with a lighter step in the belief that this country has turned the corner to national solvency. In Queensland, from which I returned last week, I found that conditions had not become -worse during the last four months. The inference is that that State has reached bedrock. I believe that that is true of some of the other States also, and if this plan be accepted, Queensland, at any rate, will experience some visible benefits within the next three months. The other States of the Commonwealth also will quickly respond to the removal of the psychological fear from the minds of the people. Probably towards the end of -the year we shall get a definite cash benefit, and twelve months ahead there will be a noticeable improvement to place to the credit of this plan. I shall support it, not because it is complete, but because it is the best that has been offered. None of the suggested alternatives are at all feasible. The release of furth’er credits by means of the printing press would not relieve distress, but would merely disguise it. Instead of imposing, as this plan does, a direct and visible reduction of incomes, inflation would indirectly, but more dangerously, reduce the purchasing power of the people to a much greater extent than the Government is proposing.
.- It is necessary for honorable members to define their attitude to the momentous plan that has been placed before us by the Government. The bill is 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.” But, although the measure relates only to the conversion of the £556,000,000 of public debt within Australia, we are discussing the whole plan of financial re-adjustment of which it is part. I cannot vote for the bill, because pf the related measures which effect reductions of old-age and. invalid pensions, other social services and war pensions. Much has been made of the claim that the loan conversion is to be effected on a voluntary basis. We should be honest with ourselves; the conversion is to be compulsory, for the agreement in the bill provides that bondholders shall be invited to convert at rates of interest 22-^ per cent, below the rates at present payable. If they respond, well and good ; so far as they are concerned the conversion will be voluntary, if reluctant; but those who fail to convert will be subject to ‘a penalty tax of 4s. 6d. in the £1 on the interest they draw from their bonds. We have been told that the bondholders who convert will make a sacrifice; actually they will not. Even the rate of interest they will draw after the conversion will have a purchasing power at least equal to that of the original rates of interest when the loans were floated. The bondholders will actually lose nothing, but some of them, in comparison with the workers whose wages will be reduced, will be on an improved footing. Despite what honorable members may say to the contrary, this legislation is the first definite move towards a compulsory reduction of interest. Had the bondholders continued to receive the rate of interest originally promised to them, they would have profited by the depression, because the purchasing power of their income would have been increased by the reduction in the cost of living. For that reason, I approve of that portion of the agreement, but I am told that the two cannot be separated. Throughout the depression from which the country is now suffering our opponents have sought to make political capital out of the Government’s financial policy, and it is interesting to note that measures which they formerly condemned they are now ready to accept. Is the explanation that because they have induced the Government to agree to a reduction of social services, pensions, and wages; they are prepared to sacrifice some of the political principles they formerly cherished? Is the reduction of wages worth so much to them that they are ready to offer a quid wo quo? Or are we to assume that their past opposition to features of the Government’s policy was not sincere? To-night the honorable member for Boothby (Mr. Price) expressed pleasure that nothing further was being said of repudiation and a fiduciary note issue. I remind the honorable member that every person who votes for this loan conversion measure will be guilty of repudiation. Last year the honorable member for Bourke (Mr. Anstey) moved et a meeting of the Parliamentary Labour party -
That legislation be passed immediately compelling bondholders in the £27,000.000 loan maturing in December,, to hold their bonds for a further period of twelve months, interest to be paid as usual, with the proviso that persons in necessitous circumstances may receive immediate payment of small amounts by cashing their bonds at the Commonwealth Bank, the same to be held as non-interest bearing security, the onus of proving that the circumstances justify payment to fall on the bondholders.
Those who supported the motion were reviled throughout Australia as advocates of default. The then Acting Treasurer, now the Leader of the Opposition (Mr. Lyons), refused to accept the resolution of his party, and decided to -float a conversion loan of £28,000,000. He assured prospective investors that the whole of the principal and interest due to them would be paid. To-day the honorable member is supporting the Government in reducing by 22-J per cent, the rate of interest he, on behalf of the Commonwealth, contracted to pay. Surely that is repudiation. The honorable member for Bourke merely proposed that bondholders should hold their bonds for another year at the same rate of interest, and that those in necessitous circumstances should be able to cash their bonds. Under the plan now before us, investors who were told that they would receive the full rate of interest will be compelled to convert to a new issue and suffer a reduction of the interest they are now receiving by 22-J per cent. If we who sp snorted the honorable member for Bourke were advocates of repudiation, those who are proposing to break the contract with the bondholders are at least equally guilty. . Leaders and would-be leaders who were seeking the limelight gained much kudos for the success of the £28,000,000 conversion loan; they were then the stalwarts against repudiation, to-day they are the champions of repudiation. The honorable member for Boothby said .. that he was glad the Senate had rejected the Fiduciary Notes Bill, and that the Government was not persisting with that chimerical proposal. Does he not know that since the Fiduciary Notes Bill was rejected Parliament has agreed to a fiduciary issue greater than the Government had proposed? Only recently we enacted a measure to permit £5,000,000 of the gold reserve to be sent from Australia, and to reduce the minimum gold backing of the note issue from 25 per cent, to 15 per cent.
To make my contention clear I quote the following statistics : At the end of June, 1930, the note issue in Australia was £44,914,326, the gold reserve £19,931,102, which means that the amount of notes not covered by gold was £24,983,224. On the 8th June, 1931, the note issue was £50,623,426, and the gold reserve £15,226,529, the uncovered note issue being £35,426,897. The bill that was recently passed by this Parliament provides that our gold reserve need now be only 15 per cent, of the note issue. As our gold reserve is now £10,226,529, the Commonwealth Bank would be entitled to issue notes to the value of £68,176,860, or a fiduciary issue of £57,950,331, an increase over the issue that had no gold backing in June, 1930, of £43,193,636.
How well we remember the way in which the honorable member for Henty (Mr. Gullett) and his colleagues raved and ranted, and told: the people that the country needed real money, and not “ valueless “ notes. Yet they supported the Commonwealth Bank Bill that passed through this House last week. How radically they have changed their opinions! Why is it that those who maligned the supporters of the Government as repudiators who refused to meet honorable obligations, are now prepared to do something even more drastic than was contemplated by those whom they condemned? Why is it that those who voted against and made political capital of a suggested fiduciary note issue are now prepared to vote for a similar issue on a scale of much greater magnitude than was then suggested? Why was the All for Australia League, a new political party, born ? Was it not to oppose a fiduciary note issue, and to deal with repudiators? Today that party of mushroom growth is prepared to throw overboard its previous professions of faith, provided that it is permitted to participate in bringing about a drastic reduction in old-age and invalid pensions.
It is said that, under this proposal, more work will be found for the unemployed. I contend that we shall never rehabilitate Australia until we employ a large number of those who are now out of work. It is the greatest economic waste conceivable to have 400,000 of our people out of employment. This plan was submitted to the various State
Governments, and the Premier of South Australia, Mr. Hill, when introducing it to his Parliament, is reported in the South Australian press of the 17 tb instant as having said-
It is estimated that the deficit for 1931-32 would be reduced by £28,000,000, leaving it at £11,000,000. However, the probability of expenditure on unemployment relief increasing may cause it to rise to £13,000,000. Practically the whole of this comprised unemployment relief expenditure.
That speaks for itself. The necessity to spend ?that additional £2,000,000 on unemployment relief means, in the light of the dole paid, which varies from 4s. 6d. to about 10s. a week, that Mr Hill contemplates that the ranks of our unemployed will be increased by another 100,000. If his surmise is correct, Australia will not turn the corner that has been referred to so many times during this debate ; our ills will merely be added to.
It is to the disgrace of this country that any scheme adopted to rehabilitate it should necessitate those on the lowest rungs of the ladder being compelled to pay the ‘piper. And this is not the first time that that has been done. Many months ago this Government made available £1,000,000 for the relief of unemployment. A little later, the Premiers Conference ear-marked £850,000 of that sum for South Australia, to enable the State to balance its budget. The unemployed, unfortunates earning nothing, who are not even receiving the sustenance to which God’s people are entitled, were mulcted to the extent of £850,000. I am sincere when I urge that we should not interfere with old-age pensions, but I hold that, to take that amount from the unemployed, was almost criminal.
Throughout this debate honorable members have quoted the opinions of numerous economists. It is idle at such a juncture to do that. While one speaker may quote an authority who says one thing, it is quite easy for the next speaker to combat that opinion effectively by quoting another economist. The honorable member for Fremantle (Mr. Curtin) effectively referred to the remarks of Viscount D’Abernon, who stated that the main cause of the present trouble is of a monetary nature, and that the remedy can be found only in measures of monetary reform. That coincides with a statement made by the Commonwealth Statistician, Mr. Wickens, which has been referred to by the honorable member for Maribyrnong (Mr. Fenton), and others. Unfortunately, I have not time to -quote it now. Throughout this great depression the unemployed, and those on the bottom rung, -have been asked to contribute too much. The number of our unemployed must be at least 400,000, as many are not registered. Allow them an average wage of £3 per week, and add to the total the £44,000,000 that has been taken from the wage-earners, and it is found that the workers of Australia have already lost £106,400,000 during the depression.
This scheme will reduce the rate of interest; but, I submit, that that rate could be reduced by a further half per cent., and pensions left untouched. Many other avenues could have been explored before interfering with pensions. I have on a number of occasions referred to the extraordinary high cost of governing Australia. I believe that, if the economists had been asked to investigate the cost of maintaining a Governor-General, State Governors, and the numerous parliaments of Australia, with all their overlapping and cost, they would have recommended much more effective economies than those embodied in this plan.
With the honorable member for Flinders (Mr. Holloway), I believe that, had the Government made a genuine endeavour to abolish existing costly duplications, the banks would not have allowed the country to default. I refuse to subscribe to the reduction of old-age and invalid pensions, or the dishonouring of pledges that I have made to the people. I submit that the adoption of the means referred to and increased taxation will not solve* our problems.
.- The House has deliberately curtailed the time to be allotted to honorable members to speak to this bill. It is, therefore, impossible to deal with all the matters that lead up to the compelling of the Commonwealth Parliament to adopt this plan. There are many things in the scheme that I dislike. Yet I admit that to some extent I am in the same position as those honorable members opposite who have denounced the Government for proposing it, but have not suggested an alternative. The Prime Minister (Mr. Scullin) made it plain that the Government cannot meet its liabilities unless drastic economies are effected in administrative costs, and provision made to increase its income. In the latter direction its hopes must be slight, as it is evident that very little more can be taken from individuals or industry in the form of taxation.
The Minister for Defence (Mr. Chifley), in a simple and manly speech, clearly outlined the position, and indicated why the adoption of the plan is necessary. He said that there was no alternative, and there is not. If we have reached such a position - and obviously we have - that the Government next month will be able to pay only 12s. in the pound to bondholders, civil servants, pensioners and other persons to whom it is committed, surely it is better that we should adopt the plan now before us, which will reduce wages, salaries, pensions, &c, by the smaller amount for which the measure provides. A year ago the Government was warned from this side of the House that we should, if expenditure were not curtailed, inevitably reach the position in which we are now. Nevertheless, the Government persisted in its declaration that oldage, soldier and invalid pensions must not be. touched, that wages should not be reduced, and that the standard of living should be maintained. At the time, we expressed the opinion that such declarations were foolish, and the Government has apparently now come to the same conclusion. However, I do not propose to waste time telling the Government that it is to blame for what has happened. In my opinion, this plan, necessary as it may be in many particulars, possesses weaknesses which even now could be eliminated. I agree with the opinion expressed by the honorable member for Wimmera (Mr. Stewart) that it would have been fairer and more honorable to have said to the bondholders that we could .no longer pay the high rates of interest which we had undertaken to pay ; that we were in the position of a private person whose income had declined to such an extent that he could no longer pay his way. We should have said to our creditors “ We mean to pay every penny we owe, but our circumstances are such that unless we are given time we may not be able to pay this year or even next. It will be better in your interest and in ours if! the terms of the contract are modified. It will be better in both our interests to grant this concession rather than force us into absolute default and bankruptcy”. That would be the more honorable course, and the better one for all concerned. I am certain that the Prime Minister (Mr. Scullin) and the other representatives at the Premiers Conference in Melbourne were not in a position to foresee what rate of interest may be considered reasonable, or may have to be paid, in the years to come. This voluntary conversion, as it is called, is to be for varying periods up to 30 years. That is one of the great mistakes in the plan, because, even in ten years’ time, the rate of interest which is being paid by other countries, and which we may be paying for loans then raised, may be considerably higher or lower than the 4 per cent, stipulated in the plan. The economic and financial position of the world at the present time is such that no one can see far into the future. Therefore, it were better to arrange with the bondholders to suspend part of the interest payments until it was possible to determine what would be a fair rate of interest to pay. I am afraid that in ten or twenty years’ time the legislators and economists, and the public generally, may be blaming this Parliament, and the other Australian Parliaments of to-day, for enforcing a plan for conversion of loans at a rate of interest either unfair to present bondholders or to the community. They will say that the sponsors of this so-called complete and orderly plan had so little vision that they agreed to the conversion of Australia’s internal debt at 4 per cent, for 30 years, when they ought to have foreseen that the proper rate of interest was only 3 per cent. Moreover, I believe that this bill should contain a definite provision to the effect that the Loan Council or other borrowing authority should not pay a higher rate of interest for future loans than is to be paid on the loans now to be converted. Otherwise this or some other Government may go on the market in twelve months’ time for money to help the wheat-growers or other deserving people, and pay more than 4 per cent, for it. Obviously, that would be unfair to those bondholders who now patriotically convert their holdings, or are bludgeoned into it by threats of taxation. It is possible that in the future we may have to pay more than 4 per cent, for money, although, personally, I believe that the interest will be lower. Everything points in that direction, but an undertaking should be given that a higher rate of interest will not be offered, or, if it is, the bondholders who now convert should then receive the higher rate. Some such provision is necessary if the voluntary conversion scheme is to be a success.
Another; objection to the conversion scheme is that it will interfere with many private contracts. The Prime Minister has described the Government’s proposal as an orderly plan. It is better, he says, to do what he proposes, than drift into such a position that Australia must default, thus bringing about chaos in our financial affairs, and causing the public to suffer even more than will be necessary under the plan. I believe, however, that the plan itself may, in its operation, bring about grave disorder to the detriment of those who have been, up to date, conducting their business affairs in an orderly way. Many people are committed to the making of definite payments in the future. Bondholders; in some instances, in selecting their stocks, have had in view the date of maturity, rather than the amount of interest they would receive. They have done this because they wished to obtain possession of their funds at a particular date in order that they might honour their obligations. If, however, they are compelled now to convert their holdings to a date far ahead, of that which they originally intended, they will not be able to meet their commitments.
I am certain that those who took part in’ the Premiers Conference in Melbourne did not visualize what the effect of this plan would be. If we interfere with private contracts, it is impossible to foresee what will be the ultimate outcome. As I have said, the more straightforward and sensible method would have been a temporary suspension of payments. Some honorable members have described such a proposal as straightout repudiation; it is nothing of the kind. I would not put forward such a proposal were it not evident that we are threatened with immediate default, and there is a great difference between default and repudiation. There is a difference between not being able to meet one’s obligations and, therefore, being compelled to ask for time, and saying deliberately that one will not pay. In this instance we should do the honest thing, and if the honest thing is not the best one, it will be for the first time in the history of the world. We cannot afford to default, nor to repudiate our obligations. We as legislators ought to feel ashamed that we are forced into the position of having to say to those people to whom we pleaded, in some cases, to lend us money, that we cannot fulfil our contract. I am afraid that those who evolved this plan were more concerned with government finance than with its effect on the community. If the plan is a success - and we all hope that it will be- 1it will make it possible for the Government to meet its obligations next year. That is very necessary, of course, but it is not everything, and I believe that amendments can be made to the measure which may make it less dangerous. While I agree with the honorable member for Wimmera (Mr. Stewart) regarding his proposed alternative to the Government’s conversion scheme, I cannot agree with him that it would be desirable to set up a non-party executive, drawn from all sides of the House, to carry out the Government’s proposals. It is true that the plan is not complete, and that much more must be <lone if we are to rehabilitate industry, and provide employment for all those who are willing to work. The idea of. a nonparty executive, however, does not appeal to me. Imagine the Prime Minister (Mr. Scullin), the Treasurer (Mr. Theodore), the Minister for Customs (Mr. Forde), the honorable member for “West Sydney (Mr. Beasley), the honorable member for Werriwa (Mr. Lazzarini), the Leader of the Country party (Dr. Earle Page), and the honorable :member for Wimmera (Mr. Stewart), as members of an executive charged with carrying out this plan, or any plan! Their views are so divergent upon all questions that they could not carry out any plan.
The honorable member for- Wimmera (Mr. Stewart) said that this was not a complete scheme, because it did not provide for a reduction of the tariff. With some of his views on the tariff I agree. He declared that a reduction of duties was imperative if those engaged in our export industries were to he enabled to make a decent’ living; but how does the honorable member propose to secure a revision of the tariff by a Ministry which includes such extreme protectionists as the Minister for Trade and Customs (Mr. Forde), and the honorable member for Werriwa (Mr. Lazzarini) ? Every honest man, whether he be a worker or engaged in a business enterprise, should have a fair opportunity to earn a living. One of the chief reasons why Australia cannot meet its liabilities is that we have given special benefits to sections of the workers, and to persons engaged in certain industries. It will be impossible to rehabilitate industry unless those engaged in primary production for export are given reduced costs of production, which cannot be brought about by means of this plan. I do not agree to the formation of a Cabinet representing all sections of the House. The people should be given an opportunity of returning to this Parliament men who recognize the cause of the economic drift that has occurred. The electors should send men here who will not grant high wages in one industry at the expense of another, and provide favorable conditions for a privileged few at the expense of those who are providing the real income of Australia.
The only alternative of those who are opposed to this plan is a fiduciary note issue. The Government had intended going to the country on the latter policy; but it has somersaulted. It was said that by increasing price levels, industry could be encouraged, and high wages and pensions paid, as in the past. But that idea was exploded, I thought, months ago. It is childish folly to suggest that the national income would be increased by providing some new forms of currency, and, as some have said, by maintaining the standard of living, and the purchasing power of the community with a debased currency. Of course, the maintenance of high wages for public servants and pensioners would increase the purchasing power of those particular members of the community, but it would not increase the national income by one farthing. The printing of paper money to maintain price levels is advocated by those who fail to understand the relation between prices and values. What is the use of paying high wages, if the value of those wages is reduced, and what is the advantage of maintaining high price levels, if we make impossible conditions for the producers ? The honorable member for Fremantle (Mr. Curtin) said that, in order to stabilize prices at the levels of 1929, it would be necessary to introduce a fiduciary note issue; but I know of nothing that would more surely make prices unstable than rendering the national currency unstable.
The Treasurer and the Prime Minister undoubtedly realize the hopelessness of a policy of inflation; otherwise the present plan would not have been brought down. When the Treasurer visited Tasmania recently, I heard him speak at one of his meetings, and I am convinced that the shrug of the shoulders, the knitting of the brow, and the contemptuous curl of the lips at the reception given to his fiduciary notes scheme for the rehabilitation of industry and the provision of money for the wheat-farmers, caused him to realize that the proposal was too thin to be accepted by sensible people. I do not think that any member of the House believes in it; but the Government now says that, as the Senate threw out its proposal for a fiduciary note issue, it was forced into the position of adopting the present plan. Certain honorable members, instead of facing the facts of the situation, still adhere to their old shibboleths. We cannot provide high rates of interest to bondholders and maintain wages and pensions at the present rates, by conjuring tricks ; economic laws will operate, irrespective of any legislation we may pass. We cannot provide money for the people by acts of Parliament, but we may, by our legislation, cripple industry. If we are to provide all the worthy people in the community with an opportunity to work in fair competition, we must remove hampering legislation; to encourage rather than discourage thrift.
– The honorable member’s time has expired.
– The honorable member who has just resumed his seat declared that the bill was loosely drawn, and would do more harm than good. He contended that it would hamper private capital, and to that extent I agree with him ; but, unlike the honorable member, I am not prepared to support the measure. It gives the Government power to enter into an arrangement to consolidate the debts of the Commonwealth, amounting to £550,000,000, by means of a conversion loan. That, in itself, is a commendable proposal; but, after hearing the speech of the Deputy Leader of the Opposition (Mr. Latham), last week, when he pointed out the weaknesses of this plan, I have doubt as to its soundness. The honorable member drew attention to the fact that the £550,000,000. due to bondholders had been largely spent on public works in the various States, and that the Commonwealth Government would be responsible for all future interest payments on debts incurred by the States. He showed that the scheme was certainly loaded against the Commonwealth ; yet we are told that it is a perfect plan. The Deputy Leader of the Opposition contended that the bill had been submitted too hurriedly, and should be reviewed by the legal officers. I claim that something should be done to secure the interests of the Commonwealth as opposed to those of the States. If I held Government bonds which were to fall due at the end of this year, and if. I had made arrangements to use the money to pay off certain indebtedness, under this bill I would be unable to cash my bonds for seven years.
– Sell them on the market.
– That could not be done. If a man expected to regain possession of his capital on the date when a particular loan matured, and was prevented from doing so by the provisions of a bill of the kind we are now discussing, he might be very seriously inconvenienced. It appears to me that our acceptance of this bill would prevent money from becoming available for private industrial purposes and the development of the resources of the country. So far as I can see, there is nothing in this bill which will make possible the relief of unemployment.
The passage of this bill will undoubtedly tend to prevent people from investing their money in future government loans, for once a bill of this kind is passed there is no guarantee that other similar bills will not be passed in the future. It is argued that this bill should bo supported because it will bring about a reduction of interest rates. I am not influenced by that contention, for the history of the centuries teaches me that every effort to regulate interest has failed. Money is a commodity, and, like other commodities, it will always fetch its value. If money is scarce, interest rates are high. “We may fix the interest rate at 4 per cent. -by this means, but the financiers will adopt other measures for obtaining the full value of the money they make available. A system of bonus payments may be introduced. When a man is in a desperate need of financial accommodation he is willing to pay almost any rate of interest.
The pious hope has been expressed that the adoption of the plan we are now considering will lead to the release of credits and so make money available to provide work for the unemployed. I can see nothing in the measure which justifies such an assumption. Money, after all, is merely a tool of trade. It is desirable that we should have as many tools of trade as possible. If currency is restricted - and, undoubtedly, the banks are restricting it to-day - trade is hampered. I do not deny the right of the banks to protect the interests of their depositors; but we have to look to the welfare of the country. We need additional currency in Australia, and I can see no reason why it should not be made available. This country is wealthy. We have an abundant supply of wool, wheat, meat, butter, and other commodities. All we need is a medium of exchange. I cannot believe that the banks have really reached the end of their resources. If a war were to occur, money would be made available for war purposes. I can see no reason, therefore, why money should not be made available to provide work for our army of unemployed. An emergency currency should be circulated. Emergency currencies are not unusual.
I regret that the representatives of the Commonwealth at the recent Melbourne conference were outnumbered. I have no doubt that they did what they thought was best in the interests of the country; but our great need at present is additional currency.
– I suppose the honorable member realizes where we have been landed by the issuing of an emergency currency during the war?
– I was a member of this Parliament when the war broke out. For the first eighteen months we financed our war operations’ by means of the note issue. We are facing a national emergency at present, and we ought to meet it by increasing our currency. If I had been at the Melbourne conference, I would have flatly refused to consider the reduction of pensions and wages as a means of overcoming our troubles. I believe that if our representatives had refused to consider that policy, and had threatened to withdraw from the conference, another plan would have been propounded.
– And the Commonwealth would have defaulted in July.
– We were told ten months ago that the nation was on the point of defaulting. I object to the reduction of wages by an act of Parliament. We have set up industrial tribunals for the fixation of wages, and we should leave the matter to those authorities. If the whole Commonwealth Public Service were to work without any pay at all, it would be impossible to balance our budget. There was a time when this Parliament did everything possible to improve the Public Service; but now some honorable members seem to take a pride in reducing it.
– That is not so.
– There was a time when we did everything possible to develop the resources of this country; but now some honorable members take a pride in effecting economies and reducing the amount of employment available.
It has been said that this plan provides for equality of sacrifice. I disagree with that view. A man who sacrifices 2s. 6d. out of a pension of £1 per week makes a far greater sacrifice than a man who foregoes 12s. or 14s. out of a salary of £4 or £5 a week. If all incomes were equal, we could talk about equality of sacrifice with some justification. I am totally opposed to any reduction in the pensions, of aged and infirm people. Those who pioneered this country did as much for it as the soldiers who fought overseas for it, and they deserve well of ‘it just as do our soldiers. In my opinion, our obligations to our- pioneers are just as great as our obligations to our soldiers.
I wish to make it clear that I am also opposed to the reduction of soldiers’ pensions. Some of my constituents lost both legs during the war; others lost their eyesight; others were crippled while on war service. There is no justification whatever for reducing the pensions of these people. It is a reflection upon our intelligence to suggest that this is the only way out of our difficulties.
The ordinary practice in private business is that a man who cannot meet his obligations when they fall due asks for an extension of time. If his creditors are satisfied that he has made a real effort to meet his commitments they usually grant his request. In my opinion, the honest thing for us to do as a nation, is to ask for an extension of time to enable us to meet our obligations. It would be far better for us to do that than to make severe cuts in pensions and wages.
Nature has been very good to Australia. There is every prospect of a good wheat harvest and wool clip next season.All we want is a medium of exchange in the meantime. I can see no serious objection to an extension of our note issue. When the Bradbury notes were issued in Great Britain, during the time Mr. Lloyd George was Prime Minister, a member of Parliament asked on one occasion, “What is behind these notes?” His reply was, “The whole Empire is behind’ them”. If we were to issue additional notes they would have all the resources of the Commonwealth behind them. When the £28,000,000 loan fell due some little time ago, it was proposed that the Commonwealth ‘ Bank should meet it, and that the Government should issue treasurybonds to the bank on which interest would be payable at 5 per cent. If that had been done £28,000,000 would have been available for circulation in the Commonwealth and the bank would have been making a profit of 5 per cent., as the result of its operations.
– We have already pledged the credit of the Commonwealth to the extent of £1,100,000,000.
– That is quite true; but there is no reason why we should not issue another loan to-morrow through the Commonwealth Bank in the way that I have suggested. The bank could release the necessary credit, and the interest payment on the advance could be set aside for the redemption of the debt in a given period. If a private person wishes to obtain an overdraft on his property he approaches his bank manager, and, if the security is considered good enough, he is given credit to the agreed upon limit. There is no gold behind a transaction of that nature. The bank simply gives its customer credit, and furnishes him with a cheque book with which he may operate on his account. In the same way, the Commonwealth Government could, through the Commonwealth Bank, draw upon its reserves - the assets of the nation - thus releasing credit for the development of the resources of the country. This measure is merely the expression of a pious hope that, when it is passed, the banks will release sufficient credit to make possible the rehabilitation of the Commonwealth. But .we have no guarantee that they will do so. Nothwithstanding his earlier pronouncements that he would not consent to any interference with invalid, old-age, or soldier pensions, Mr. Lang, the Premier of New South Wales, is supposed to be a party to the agreement. But his Ministers are going about the country declaring that the State Government will not agree to any reduction of pensions, and certainly will not interfere with widows’ or orphans’ pensions.
– Nevertheless, the Premier of New South Wales was a party to the agreement.
– Apparently he was compelled, by force of’ circumstances, to come into line. In the circumstances, can reliance be placed upon his promises ? This Government . has announced its determination to reduce all forms of interest, incomes. Even the salaries of honorable members will be reduced by 20 per cent. I do not object to that; but I remind the House that a bill was introduced into the “New South “Wales Parliament to-day to levy a tax of 5s. in the £1 on all incomes over £500. That will further tie up credit. Certainly, it will not help u3 out of our present troubles.
The one great problem facing us is that of unemployment. This was not discussed at the Melbourne conference. At that gathering a number of amateur economists drew up a scheme to cut pensions,’ interest payments, &c, but avoided entirely any attempt to solve the problem of unemployment, which is so grave that before long it may imperil the safety of the Commonwealth. Within the last few days serious riots have occurred in Sydney and “Newcastle, and on Friday night last Sydney-square was packed so tightly with unemployed men and women that it was almost impossible to move about in the crowd. These difficulties will be intensified unless prompt action is taken by all the governments of Australia to provide a solution.
– Taxation is one cause of much of our trouble.
– I agree with the honorable member. Many people are being taxed almost out of existence. In all our capital cities, as well as in all centres of population, shopkeepers are dismissing employees for the simple reason that they cannot carry on under the present heavy burden of taxation. These dismissed employees are daily swelling the ranks of our unemployed in every ‘ State.
I ‘see no hope for the future arising out of this plan. It may carry us over the troubles of the next few months, but the root cause is left untouched. I look to an increase in the currency to give that much-needed fillip to industry that will enable employers to extend the field of employment. We cannot, with safety, allow the present economic waste to continue.
– Would the honorable member place any limit tor the extension of credit?
– Yes. It should be conducted on strictly business lines. Prior to the appointment of the Commonwealth Bank Board and when Sir Denison Miller was in charge of the bank, the extension of credit was a matter entirely within his discretion. Surely all honorable members agree that an extension of credit will lead to an increase in production.
– The experts wEo evolved -this plan make no mention of a limit to the extension of credit. They say that if the conversion loan is not taken up, the debt will be paid off by the Commonwealth Bank. The wildest communist and the reddest of the “ reds “ have never suggested inflation of the currency to that extent.
– During recent years, many large public works have been in progress *in Sydney. We have spent £14,000,000 on the construction of the underground railway, ‘. which is now almost finished; We have nearly completed the construction of the harbour bridge at a cost of £6,000,000, and no less a sum than £14,000,000 has been expended on the erection in Sydney of palatial buildings for mercantile houses and insurance companies. Up to the present time, the whole of the expenditure on the harbour bridge and the city railway has not returned a penny by way of interest, and to that extent those works may .be . regarded as frozen assets. But they are nearing completion, and large numbers of men who were employed upon them are now being thrown upon the labour market because .no further works are being put in hand. This unemployment problem is engaging the attention of the governments of all countries. The introduction of new machinery in industry leads to the’ dismissal of large numbers of workers. I am afraid we are nearing the time when civilization will crash unless a remedy is found for unemployment. The situation might be eased somewhat if more people could be induced to go upon the land and become self supporting.
I shall oppose the bill at every stage, because I believe that it is entirely contrary to the Labour party’s platform. I was elected upon the policy of the Labour party, and I stand by it to-day. I gave a pledge to my supporters that I would do all in my power for the nationalization of banking and the expansion of the currency so as to provide more employment for our people.
.- The measure before the House is the first instalment, and one of the essential portions of the plan which was agreed upon at the Premiers Conference, held recently in Melbourne, for the economic reconstruction of and the restoration of confidence in Australia. I gladly support the Government’s proposals, because they are practically identical with those which were advocated months ago by the Leader of the Opposition (Mr. Lyons), and a number of his supporters. It is pleasing to note that the Government is proposing a reduction of interest rates. It has been suggested that the Leader of the Opposition and his supporters did not advocate a reduction of interest or a conversion loan. In answer to that, let me say that on the public platform throughout this country we have advocated a conversion loan similar to that now proposed. The honorable member for Wilmot (Mr. Lyons), when speaking in Adelaide recently, dealt with this subject. He was reported in the Advertiser of the 10th of April last as follows : -
When he spoke of the tremendous conversion loans at home and abroad, of the consequent rapid diminution of the burden of interest which now necessitates such crushing taxation, of the automatic release of millions of real credit for industry, and the resultant absorption of the unemployed, he was guilty of no exaggeration of the effects that must spring from a restoration of confidence.
It is therefore evident that the Leader of the Opposition did advocate a conversion loan on a scale similar to that now proposed. When I withdrew my support from the Theodore-Scullin Government, I deemed it my duty to place the position before my electors. I addressed meetings throughout the electorates of Bass, and on every platform I advocated a reduction of interest payments by means of a huge conversion loan.
– In respect of bondholders abroad ?
– Yes. The introduction of this plan into this House demonstrates that some honorable members who declared that they would never be a party to certain economies, have at last realized the desperate financial and economic position of Australia. I regret that the Government has been so slow in the uptake, because its vacillation has cost Australia dear. I honestly believe that had the Government’s plan been put into operation some months ago, an all-round average reduction of 10 per cent, would have sufficed. To-day a reduction of 20 per cent, is necessary, and if the Government’s proposals are delayed for two or three months, the reduction will be 30 per cent. Had this plan been given effect some months ago, there would have been less unemployment throughout the country. It can truthfully be said that all members now recognize our financial difficulties, although it has taken a long time to convince some of us of the grave position of Australia. That position must be faced immediately. I shall support the Government in its attempt to bring about the restoration of confidence in this country. Never before in the history of Australia have we been called upon to face such overwhelming financial difficulties. In the past we have borrowed and spent money too lavishly. I am not blaming any particular government for that, in fact we are all to blame. Some of our expenditure has been injudicious. We have been living far beyond our means, and this excessive expenditure, coupled with the enormous decrease in the prices of our exportable products, has brought Australia face to face with a crisis of great magnitude. For years past, we have been meeting our interest obligations out of the proceeds of new loans. We have borrowed money to pay interest on borrowed money, and the day of reckoning has arrived with a vengeance. [Quorum formed.] The resources of the banks of Australia have been drained severely. Those institutions have advanced millions of pounds to enable the various governments to meet their obligations. The banks have now reached the end of their tether and can find no more money for them and have notified the various governments accordingly. Our national income has fallen from £650,000,000 to £450,000,000. Obviously, with. £200,000,000 less in the national purse, we must reduce our expenditure. If a business man, who has been spending more than his returns, finds that his” income has decreased by 30 per cent., he immediately sets to work to take stock of the position and to keep his expenditure within his income. As with the business man, so with the nation. But, unfortunately, the Government has played with the situation until Australia is on the eve of default. Instead of trying to adjust finances to meet the decline in national revenue, the Government has embarked upon all sorts of wild cat and hair brained visionary schemes, all impossible of realization.
The Federal Executive of the Australian Labour Party has declared for unlimited inflation. It has urged that we should print additional notes to the value of £550,000,000. That would be ridiculous. It would be the quintessence of madness, and would undoubtedly lead to the collapse of our national currency. The Government’s vacillation has led to a tremendous increase in the number of the unemployed. There are in Australia to-day, between 350,000 and 400,000 men and women unemployed because we . have not faced up to the position. Thousands are on the verge of starvation ; many have been evicted from their homes; hundreds are in need of food, clothing and shelter; and bankruptcies are frequent. Yet the Government would not take earlier action because it might be unpopular. It should have risked momentary unpopularity rather than jeopardize the honour of the nation. I suppose, however, that we must be thankful that, even, at the eleventh hour, the majority of honorable members opposite have seen the error of their ways, and the measures to which the Government has pledged itself in accordance with the decisions of the Melbourne conference, will have my support.’ We must get back to sound economic principles. Unpopular action has to be taken, and, as the Prime Minister pointed out, unpalatable medicine will have to be swallowed. Every honorable member regrets the necessity for drastic action. It is distasteful to me to have to support it, but I shudder at the alternative, which is, as pointed out by the Prime Minister and other Ministers, that next month the Government will not be able to pay more than 12s. in the £1 to public servants, old-age pensioners and bondholders. We must curtail our expenditure in proportion of the reduction of the national income, in an orderly way, endeavouring to preserve to all sections as much as possible. This plan promises to the old-age pensioner 17s. fid. a week; if the finances are allowed to drift, he will receive only 12s. My vote shall be cast to ensure to him 17s. 6d., and to public servants 16s. rather than 12s. in the £1. We have been told that the plan is not complete. I do not claim that it is. But, at any rate, it represents a substantial effort to meet the situation and give effect to the principle of equality of sacrifice. Bondholders are asked to suffer a reduction of 22£ per cent., those in receipt of governmental wages and salaries, 20 per cent., and old-age and invalid pensioners, 12£ per cent. All sections of the community are to bear an equitable share of the burden of financial re-adjustment.
I am unable to understand the attitude of the Australian Labour party. Because some honorable members who were previously in the Labour party were more far-seeing than others who were devoid of imagination and somewhat dull, and months ago advocated a plan similar to that before us, but not so drastic, they were virtually expelled from the movement. What becomes of the solidarity of the party, both inside and outside the Parliament, when some members of it are permitted to vote against a vital measure introduced by the Government, and approved by the majority of the caucus? I quote from the minutes of a meeting of the Federal Executive of the Australian Labour Party -
The Federal Executive of the Australian Labour Party-
I ask honorable members to note the following words: - as the authority charged with the responsibility of having the decisions of the Labour movement given effect to, met in the Trades Hall, Melbourne, on October 13th, 1930, and succeeding days.
One of the decisions of the executive was -
By the utilization of the nation’s credit the annual interest burden on internal loan commitments should be progressively eliminated by liquidation of such loans as they mature.
That I interpret to mean unlimited inflation, at any rate to the amount of the internal debt. Further resolutions were -
That this executive approves of the decision of the Prime Minister in restoring Mr. Theodore to the position of Federal Treasurer.
That the federal executive deplores the action of Labour members in adversely criticizing decisions of the Labour caucus through the press, and all members are called upon to refrain from criticism of this kind in the future.
If that command is to be enforced by the federal executive “ as the authority charged with the responsibility of having the decisions of the Labour movement given effect to,” not many members will be left on the Government side next week. The Labour conference in Tasmania approved of the decisions of the federal executive with an addendum -
That this conference endorses the attitude of the federal executive in condemning the action of members of the party who have publicly criticized the action of the Federal Labour caucus, and demands unfailing loyalty of all members to the platform of the party and loyalty to all decisions of the Parliamentary Labour caucus.
Is that to be enforced?
– Why is the honorable member ‘ worrying ?
– That decision does not worry me; but will the honorable member for Corio (Mr. Lewis) be expelled for “ ratting “ on a decision of the Parliamentary Labour caucus? If he votes against the decision of the party he will do so at his own peril, unless the federal executive is to fall down on its job. It seems, however, that Labour members are “immune from discipline in relation to the plan now before the House; they may criticize the action of the Government, and the majority of the Labour party as much as they choose without fear of a reprimand. It is, however, very pleasing to me to know that what is, in effect, the plan I advocated many months ago, has been at last adopted by the Government. I regard that development as a vindication of my action.
.- The honorable member for Bass (Mr. Guy) seems very much concerned about the power of the federal executive of the Labour party to discipline members of the Parliamentary Labour Party. I understand that even the members of the Opposition, to which the honorable member for Bass now belongs, are as rigidly under the control of outside organizations as the members of the Labour party are said to be. I believe that the whip was cracked over honorable members opposite with more severity than it has ever been used on honorable members on this side of the chamber. T,ba honorable member for Bass (Mr. Guy) contended that a reduction in interest rates was first suggested by the Opposition; but the first suggestion in that direction came from this side of the chamber. We were assured that if wages were reduced, and the cost of production lowered, interest rates would automatically decrease. That was the extent to which the Opposition was prepared to go with respect to reduced interest rates. Wages were very drastically cut in many directions, but no attempt was made to reduce interest rates. The present proposal is that interest rates shall be reduced with the ‘ humiliating condition imposed that invalid and oldage and war pensions shall also be- drastically reduced.
I have never advocated repudiation, and I do not now intend to support such a policy. I have always endeavoured to meet my obligations, and I consider it the duty of others to do so. Last year the people of Australia were invited to subscribe to a conversion loan of £27,000,000. The then Acting Treasurer (Mr. Lyons) assured honorable members and the public that those contributing to that loan would be repaid every penny to which they were entitled in the matter of interest and principal. On that definite assurance thousands of persons contributed to the extent of their ability; but we are now informed that those whose bonds are redeemable on the 15th December, 1932, are expected to voluntarily convert their holdings. For the information of honorable members,
I quote the following statement which appears on the face of a £100 treasury bond : -
6 Per Gent. Treasury Bond.
This Bond entitles the Bearer to the pay ment at the office of the Commonwealth Bank of Australia at Sydney, Melbourne, Brisbane, Townsville, Rockhampton, Adelaide, Perth, Hobart, or Launceston, of One Hundred Pounds Sterling on I5th day. of December, 1932, together with interest thereon at the rate of six pounds per centum per annum from this date in accordance with the attached coupons, and such sums are secured on the consolidated revenue of the Commonwealth of Australia.
Secretary to the Treasury.
Dated 15th day of December, 1930.
How is that definite contract into which the Treasurer on behalf of the Government has entered to be honoured? Although the holders of £100 bonds redeemable on the 15th December, 1932, were promised that they would receive £100 sterling, they are now asked to voluntarily convert their holdings to a loan carrying a lower rate of interest. It is said that the proposed conversion is to be voluntary; but, in my opinion, it is to be compulsory. Certainly the bondholders are being asked to convert under duress.What will be the position of those who decline to voluntarily convert their holdings? If I were to present a bond at any of the places mentioned on the bond, would I receive £100 sterling? That is a point upon which I should like a definite assurance from the Treasurer before I come to a decision as to the attitude I shall adopt in regard to this proposal. Is the holder of every £100 bond payable in December, 1932, to receive £100 sterling when such bonds can be purchased on the open market for £80? There are also 5 per cent. bonds maturing at the end of this year, the latest stock exchange quotation for which is “ sellers £80, no buyers “. If I buy a £100 bond in the open market for £80, can I receive £100 for it on the 15th December of this year? Will bondholders be paid in accordance with the definite stipulation on the face of the bond? The Government; which obtained the people’s money under certain conditions, now proposes to alter those conditions, which simply means repudiation, or obtaining money under false pretences. It is practically daylight robbery. The honorable member for South Sydney (Mr. E. Riley) pertinently asked what inducement will there be for people to invest in government bonds in the future if the undertakings which have been entered into by the Government are not to be honoured. Certain bonds issued by the Government some years ago were to be free of taxation, but it would be interesting to know whether the Government also proposes to repudiate that promise. The honorable member for Bass said that some of the members of the party with which he is now associated also favour a reduction in interest on bonds held overseas; but no mention is made in this proposal of a reduction in the rates of interest on such bonds. This conversion applies only to bonds held in Australia, and I should like to know why there should be any discrimination. There have been reductions in the basic wage. The present basic wage in the six capital cities of Australia is £3 17s. from which the reduction of 10 per cent. must be taken, leaving £3 9s. 4d. I want honorable members to visualize the case of a worker who has a wife and four children. In most of our capital cities it cost 25s. to rent a cottage in which to house such a family. Assuming the basic wage to be the round figure of £3 10s., and deducting the rent of £1 5s., only £2 5s. is left to feed six mouths and clothe six bodies. This works out at 7s. 6d. per head per week. Why, the Government of Victoria allows 12s. 6d. per week for the maintenance of a newly-born child ! I should like those who advocate further cuts of the basic wage to. be required to exist upon it for twelve months.
The following remarks, made by Mr. Mellon, the Secretary of the Treasury of the United States of America, are extracted from the Christian Science Monitor, of Tuesday, the 5th May, 1931,:-
Special from Monitor Bureau.
The standard of living must he maintained at all costs in the present depression, Andrew
Mr. Mellon declared that the world is in process of finding a new level of stabilization following a depression in part traceable to the World War. “ Eventually,” he declared, “ a readjustment must take place. Prices must be revised, and costs of production and output must be brought down to a point where the demand will again be stimulated, and goods will move into consumption. In short, a balanced condition must be restored; and this may be done without a general reduction in wages, provided the period of readjustment is not too long drawn out, and on condition also that we reduce costs by yet greater efficiency in labour, in management, and in distribution.”
Although I did not like the scheme that was propounded by this Government some months ago to reduce rates of interest, I much prefer it to that now put forward. It was proposed to tax interest on bonds at the source, at the rate of 3s. 6d. in the £1. I believe that provision was to be made whereby small bondholders would obtain a rebate of that deduction if they were able to prove that their total income did not exceed the ordinary income tax exemption. I understand that there will be no such provision in this plan. We all know that, patriotically responding to the appeal that was made to them last year, thousands of persons of .small means many of them in their declining years, put all that they possessed into bonds in order to help Australia. They were conrfident that the promises of the country would be honoured. Unfortunately, the Government is going to default to those bondholders.
I believe, with the previous speaker, that for many years we have been living beyond our means, on borrowed money. A good housewife regulates her expenditure according to her income. If through any cause that income decreases, she adjusts her expenditure accordingly. On the other hand, there are spendthrift housewives. No matter how much the breadwinner gives them, they spend beyond their means, and have to borrow to carry on. I liken some of the leaders of past governments, and more particularly the Prime Minister and Treasurer who occupied the treasury bench immediately prior to this Government assuming office, to those squandering housewives. They indulged in an orgy of extravagance, and to-day we are reaping the harvest. At that time our products brought high prices in the markets of the world, and it was easy to borrow. To-day prices have fallen alarmingly, and it is impossible to borrow abroad. The position of Australia is akin to that of a boxer who has received a knock-down blow, and is temporarily stunned. He is down, but not out. Australia is down, but it is far from being out. All we need is a respite, and a stimulant in the form of financial assistance. Unfortunately that is not forthcoming in our hour of need.
The honorable member for Adelaide (Mr. Yates) criticized the Minister for Markets for saying that this bill held out a ray of hope. He said that the Government had been promising rainbows for a long time. I think the honorable member has been chasing them over-long. I prefer a ray of hope to chasing rainbows. [Quorum formed.] The national income for 1927-28 was £650,000,000. It is estimated that for the coming financial yearit will be only £400,000,000, a drop of £250,000,000. Governmental expenditure in 1927-28 was £187,000,000, while for next financial year it is estimated to be £198,000,000, an increase of £11,000,000. Thus, coincident with a huge drop in income, there is to be a fairly substantial increase in expenditure. Just as a prudent housewife reduces her expenditure to meet a reduction in income, so we should reduce costs in conformity with reduced revenue. Far from doing that, however, we are actually increasing expenditure. This plan represents an attempt to remedy the trouble, if only in part. The practice which is followed in domestic economy should apply in public economy also, and expenditure should be regulated in accordance with income. Under the plan, there is to be a reduction of oldage, invalid and soldiers’ pensions. That is a bitter pill to swallow. Speaking the other night, I compared the sacrifice demanded of the bondholders with that made by a soldier who had lost two limbs or the sight of both eyes at the war. There can be no question as to which is the greater sacrifice. If a bondholder with £150,000 in gilt-edged securities were asked whether he would lose all his money or have both eyes gouged OUt
I do not think he would hesitate in his choice. He would say, “ Take my money, but leave me my sight.” In the same way, he would, I am sure, prefer to lose all his wealth than suffer the loss of his legs. The soldiers, apparently, have not made sufficient sacrifice, because they are to be asked to submit to a 20 per cent. reduction in their none-too-generous pensions.
Discussing the subject of armaments, President Hoover recently made some pertinent remarks on the enormous expenditure which various countries were making on defence. He is reported in the Christian Science Monitor, of the 4th May, as follows: -
The world expenditure on all arms is now nearly $5,000,000,000 yearly, an increase of about 70 per cent.’ over that previous to the Great War. We stand to-day with nearly 5,500,000 men actively under arms and 20,000,000 more in reserve.
These vast forces, greatly exceeding those of the pre-war period, still are to be demobilized, even though twelve years have passed since the armistice was signed, because of fear and of inability of nations to co-operate in mutual reductions.
Yet we are all signatories to the KelloggBriand Pact, by which we have renounced war as an instrument of national policy and agreed to settle all controversies by pacific means. Surely with this understanding, the selfdefence of nations could be assured with proportionately far less military forces than these.
Dealing with the same subject, Viscount Cecil urged complete disarmament. In a letter to the organizers of the International Declaration in support of World Disarmament, he said -
It is of the utmost importance that we should be able to convince the governments of the world that their peoples are determined on obtaining from the Disarmament Conference a large step in the direction of the complete abolition of aggressive armament.
Here in Australia we have a defence force which is costing us about £4,000,000 a year. Would it not be possible to curtail that expenditure, and use the money to provide employment for the 300,000 men who are now out of work? I submit that suggestion for the consideration of the Government. Another saving might be effected by the abolition of State Parliaments. There is no other country in the world with the same population as Australia possessing so many Parliaments as we have. I do not suppose that this subject was discussed at the
Premiers Conference, because the State representatives there could hardly be expected to regard favorably proposals for the abolition of their own legislatures. Nevertheless, we have in each State a Parliament consisting, with the exception of Queensland, of two Houses, and a Commonwealth Parliament as well, the maintenance of which is a very costly item. Then we have a Governor-General for Australia, and a Governor for each State. Surely it would be possible to economize on these items instead of cutting soldiers’ pensions. I support the Government’s proposals in the main. I recognize that it has submitted various other proposals at other times, and that it is not the fault of the Government that they havenot been put into effect. They have been blocked in another place. I regard this as an emergency measure which, in the circumstances, I am justified in supporting, believing that it will assist in the rehabilitation of Australia, and the absorption of our unemployed.
Sitting suspended from 12 midnight until 12.80 a.m. (Friday).
– So many speeches have been made on this bill, and it has been considered from so many points of view, that I donot propose to address the House at any length upon it; but, on an important matter of this kind, one does not care to record a silent vote. It is regrettable that, in the face of one of the greatest crises that has ever occurred in Australian history, this National Parliament should present the spectacle of disunity seen to-day. We have been brought face to face as a. people with the ugly possibility of national insolvency, and it is profoundly to be regretted that we cannot act together in devising means for meeting the situation. The spectacle that I deplore so much is that of a great party, which was returned to this House, some twenty months ago about 46 strong, now hopelessly divided on this important issue, and dependent on the Opposition for the carrying out of its proposals. I think that such a position is unprecedented.
– When the honorable member voted the Nationalist Government out of. office, his party was split in two.
– At that time there was a certain element of disunity in the Ministerial party, but that does not affect my argument that, on the important issue now before the House, the Labour party is hopelessly divided.
The proposals embodied in this bill were introduced by the Prime Minister (Mr. Scullin), in a speech which, I think, was altogether admirable. It was a simple, straightforward statement of the position that faces the Commonwealth, and the Prime Minister indicated that he submitted the proposal to the House as the only way out of the difficulty with which we are confronted. Two other speeches from the. Government side, in commending these proposals, were also excellent - that of the honorable member for Reid (Mr. Coleman), who in a temperate, thoughtful address, set clearly before the House the Government’s point of view, and that of the Minister for Defence (Mr. Chifley), which was a manly, sincere and straightforward utterance, giving the reasons that actuated him and the Government in submitting these proposals. The position of the Government, however, has been weakened considerably, in my opinion, by certain other speeches from the Government side. The first element of discord was introduced by the Treasurer (Mr. Theodore), who followed the Prime Minister. He said that this plan was now submitted by the Government as the only way out of the present impasse, because of the attitude of the opposition, both in this House and in another place, to the real financial proposals of the Government. That argument weakens the Government’s position, because it seeks to throw upon the Opposition the responsibility for these drastic measures. I, as a member of the Opposition, refuse to accept any such responsibility. These proposals are undoubtedly drastic, and I believe that they are necessary, but the responsibility for them rests with the Government itself.
The Government came into power some twenty months ago, and, within a short time of its taking office, it must have become aware of the serious financial position into which the Commonwealth had drifted. Presumably, the Labour party, having been returned with a definite policy, had considered opinions as to the way in which the financial situation should be met.
– The honorable member’s friends in another place took care that the fiduciary currency proposals were not passed.
– I shall come to that matter in a few moments. The Government should at once have formulated its financial policy, with the object of dealing with the dreadful situation in which this country finds itself; but I suggest that it did nothing for a long time after assuming office. In the meanwhile, the financial position went from bad to worse, and the Government then brought down its fiduciary currency proposals. It submitted them to Parliament as its idea of the way in which the financial difficulties should be solved. We were told then that that ,was the only solution. But it took the Government a long time to make up its mind that that was the only way out of the trouble. The Government knew, when it took office, that there was a Nationalist majority in another place, and that any piece of legislation that was distinctly Labour in character would, undoubtedly, be blocked by the other branch of the legislature. Therefore, I say that not only members of the Ministry, but also those on its own side who are vilifying it - members of the caucus - are responsible for the present proposals, because, as I understand the position, the caucus determines the “policy of the Government, and cannot rid itself of responsibility for the delay that has occurred in bringing down these financial measures. It was the duty of the party in power to formulate its financial policy at the earliest possible moment. It knew that it could pass its measures without difficulty in this chamber. If it honestly believed that the Nationalist majority in another place did not reflect the real opinion of the country, it was the duty of the Government to challenge the Senate, and obtain a double dissolution. That should have been done long ago, and, if the policy of the Government had met with the endorsement of the electors, it could have been put into operation long since. According to the Government, there would then have been no necessity for the drastic proposals that we are now asked to adopt. It seems to me that there is no escape from that position, and 1 emphasize it only to show that the Opposition in this chamber is not responsible for these measures which are so hateful to all sections of the House.
– Who is responsible for that?
– The Labour party, which was returned to power at the end of 1929. We are told by those on the Government side who oppose these proposals that their policy throughout has been that of a fiduciary currency issue - an extension of credit, as they call it. If that was their policy, the party in power should have seen that it was given effect long ago.
– Did not the Deputy Leader of the Opposition say in Sydney, a few days ago, that the present plan is the policy of his party?
– Yes; it is the policy of the Opposition, aud that is the taunt that is being thrown in the teeth of the Government by members of its own party. But I claim that the Opposition is not responsible for the bringing down of these proposals. The present policy of the Government embodies the views of the . Opposition, yet members on the Government side have said that it was forced to bring down this plan by the action of the Opposition. I maintain that if the party opposite had taken a bold stand on its own policy, and if, on an appeal to the country, that policy had been endorsed by the people, no necessity would have arisen for the present proposals.
– The honorable member says that they are very drastic, yet he claims that they represent the views of his own party? .
– Yes ; that is one reason why I have eulogized the speeches of the Prime Minister, the Minister for Defence, and the honorable member for Reid. They recognize now that this is the only way out of our difficulties.
– Not the only way.
– If the honorable member for South Sydney thinks that there is another way, he should have insisted upon caucus taking it. But if the other way is the policy submitted to this House some months ago, then our adoption of it would have made our position infinitely worse than it is now.
– The Labour party is in power, and its policy should have been tried.
– Why was it not tried ?
– Because of the obstruction of the Senate.
– If the Labour party really believed that its policy at that time was the best one to adopt in the interests of the Commonwealth, it should have forced the hands of the Senate even to the point of a double dissolution.
– I agree with the honorable member.
– I believe that it did not force the position, because it realized that its policy was unsound.
I wish to make it quite clear that although the Opposition disclaims any responsibility for the occasion that has demanded the introduction of these proposals, it believes in the principles involved in the bill.
– It believes in the reduction of wages and pensions.
– Yes; but only, as the Minister for Defence has pointed out, because that is absolutely necessary. We hate having to vote in favour of the reduction of wages and pensions, but as that is essential in the interests of the country, we shall do so.
I come now to a consideration of the proposed conversion loan. I have carefully re-read the resolution agreed to at the Premiers Conference in Melbourne. I find that three points were made in it. The first was that the financial position of the Commonwealth had been most carefully examined; the second, that it was agreed by the representatives of the Commonwealth and the States that they were unable to meet current government charges; and the third, that if a general failure was to be avoided a reduction of government expenditure, including a reduction of interest on government securities, must be brought about. I direct attention to the word “ must “. It was decided that reductions were inevitable in wages and salaries, old-age, invalid and soldier pensions, and in interest payable on internal loans.
– Does the honorable member believe in “the reduction of interest rates?
– In the circumstances, yes. We are told that this is to be a voluntary conversion. In my opinion the use of the word “ voluntary “ is an abuse of language. The resolution of the conference made it clear that the reduction must be brought about. The position is that we must go to the bondholder and say, “ We cannot pay you the interest that we contracted to pay; therefore, the rate of interest must be reduced.”
– That is default.
– Yes ; but not repudiation.
– It is only repudiation when Mr. Lang does it!
– The honorable member for Darwin (Mr. Bell) drew a clear distinction between default and repudiation. We should be repudiating our debts if we were able to pay them and refused to do so.
– Will the honorable member define repudiation?
– Default means “I cannot pay”; repudiation means “I can pay but I will not “.
– I could not put it more clearly than that.
– Is it not repudiation to alter a contract during its currency ?
– Yes, if the alteration is made without the consent of both parties. That is why I- say that it is an abuse of language to call this a “ voluntary “ conversion. We should go to the bondholder and tell him that we are unable to pay interest at the rates we have contracted to pay, and that if he insists upon the maintenance of those rates we must default. I believe that if we made an appeal to the bondholders we should find that those who could afford to do so would willingly accept interest at the rate of 4 per cent, instead of some higher rate.
– What if they would not convert ?
– Then we should be taxed to the last penny in order to enable us to meet our obligations. It is the duty of the Government to take every possible step to provide money to meet its liabilities. It is not repudiation to acknowledge inability to meet one’s obligations; that is default. Default may be perfectly honorable, whereas repudiation is always immoral and dishonorable.
– What about the overseas bondholders ?
– If necessary, I should make a similar appeal to them. We must pay our way if we are able to do so. The Prime Minister told us in his speech on this bill that it will be impossible for us to meet our commitments which are falling due in the near future unless we take some such steps as are outlined in this plan. As the Minister for Defence (Mr. Chifley) said very truly this evening, it is useless to talk about alternatives unless they can be adopted immediately. We need relief at once. The only alternative to this plan is default; but if we default, our position will be infinitely worse than it will be if this plan is adopted. I accept the general principles of the plan, because of the absolute necessities of the situation which faces us. I hope to have something to say about the proposals in regard to oldage, invalid, and soldier pensions when the measures dealing with them are before us.
– I cannot give a silent vote on this bill. I recognize that the Government has been forced into its present position by the Nationalist party.
– The honorable member is joking!
– I am not joking; this is a serious matter. I am surprised that the honorable member for Warringah (Mr. Parkhill) should consider it a joke. When a Labour Government presents a bill of this description and it is received with approbation by the Opposition, it must be regarded as suspect. If the Labour party had been in opposition, and a Nationalist Government had brought down a bill of this kind, it would have been bitterly opposed.
– Such a bill would not have been necessary had a Nationalist Government been in office.
– It has been said that the proposals in this bill do not amount to repudiation; but, in my opinion, they involve repudiation in its worst form. Honorable members opposite are receiving this bill with enthusiasm because they realize that it will be followed by other measures which will bring about a reduction of wages - a thing that they have advocated for a long time. I admit that the Opposition is not in favour of a reduction in interest; but nevertheless it feels that the bondholders may lose a great deal more than is now contemplated if this bill is not carried. “What is the bondholder to lose? He will lose 2 per cent, on money now invested, but he is to receive a guarantee of interest at 4 per cent, for the next 10, 20 or 40 years. There may be many reductions in the cost of living within the next 40 years, but the bondholder is to receive that guarantee for that period. I am informed that this plan provides for equality of sacrifice, but I see no equality in it. From the £52 which is paid annually to the old-age pensioner, £6 10s. is to be taken. From the bondholder who has invested £100 is to be taken a miserable £2 or less. Is that equality of sacrifice? I fail to see it. We have on many occasions definitely promised the returned soldiers that their pensions would not be interfered with, yet that promise is to be broken by the members of the Government. Only a few weeks ago I asked the Minister for Health a question, in respect of soldier pensions, and his reply to me was, “ You can tell them that this Government will never let the boys down.” Now the Government proposes to reduce soldier pensions, miserable as the amount is in many instances. In this plan there is no provision for the unemployed. It will not help to place one man in a job. The curtailment of our expenditure will not solve the problem with which we are faced. The purchasing power of the people must be maintained to enable them to buy the bare necessaries of life. The country is already overtaxed, and, consequently, many so-called luxuries have to be gone without. This further increases unemployment. For instance, the poultry farmers are complaining of the loss of thousands of customers from this cause. An overseas market’ can be sustained only when there is a strong home market creating an exportable surplus. In six or eight months’ time yet another plan will be submitted, and possibly the Government will endeavour to make another cut in wages and salaries and pensions. This will be a continuous job, because we shall never get out of our financial difficulties while we continue to borrow money. The plan advocated by the honorable member for Adelaide (Mr. Yates) is the only plan likely to get us out of our difficulties.
– What plan is that ?
– Surely the honorable member realizes what that plan is.
– I do not.
– It is the release of credits and the expansion of currency.
– What does the honorable member mean by the release of credits? ‘
– They are simple words and. easily understood. Other countries which are paying smaller pensions and lower wages than those ruling in Australia are in a position similar to ours. Therefore, the lowering of wages is not likely to bring prosperity to this or any other nation.
– What does the honorable member mean by the release of credits ?
– That has been explained to the honorable member on so many occasions that it is really time that he understood it. It is unnecessary to print additional notes, because money must be available. The banks have said that so soon as the various governments attempt to balance their budgets by reducing governmental expenditure, they will release credits. I suggest that that will never get us out of our difficulties. It is surprising to me that honorable members opposite think that we can continue to borrow, and at the same time permit the Commonwealth Bank to refuse to make credits available. There is no doubt that America and France have cornered all the gold, and so long as those two countries hold immense gold reserves, it will be almost impossible for Great Britain and Australia to trade together. I suggest that representations should be made to the governments of the British Empire to issue an Empire currency.
– That is not a bad idea.
– It is really a good idea. We have to remember that £250,000,000 of fiduciary notes have been issued overseas, but we are not allowed a fiduciary issue in this country because the Commonwealth Bank Board, which was set up by the Bruce-Page Government, refuses to permit this Labour Government to give effect to its policy.
– We have about £40,000,000 of fiduciary notes now.
– I admit that. The only drawback is that that issue is not sufficient for our purposes. I am surprised that honorable members opposite cannot recognize in this bill the principle of repudiation, because the suggestion of an honorable member on this side of the House to suspend payment of interest for twelve months was immediately called repudiation.
– Is the honorable member supporting this bill ?
– I am not. I shall be surprised if the honorable member for Richmond supports any reduction in soldier pensions. I feel my position keenly, because I have to face in my electorate some hundreds of returned soldiers and old-age and invalid pensioners, and I should not care to meet them if I supported the Government’s proposals, after having solemnly promised them not to support any reduction in pensions. No Parliament should have the power to fix wages. We have set up an Arbitration Court, and that, in itself, should be sufficient to meet all the demands of industrial unionists. Many economies could be effected, if it is economy that the Government is seeking, before we reduce pensions.
– What sort of a spin is the honorable member prepared to give the bondholder?
– The bondholder has invested his money in Commonwealth bonds, just as another person has invested his money in industrial enterprise, and we know only too well that the great majority of those who have invested in industrial enterprise have lost their money. That is not the case with the bondholder. He still retains every penny of his capital invested in bonds.
– Why not support the bill?
– I cannot do that, unless there is to be a real equality of sacrifice.
– What does the honorable member suggest?
– I suggest that we reduce by 22^ per cent., not the interest on bonds, but the capital invested in them. If we do that Ave shall get somewhere near equality of sacrifice. Business men and shareholders in many instances have lost their capital ; but the bondholders have not lost one penny and they are to have a guarantee of interest payments for the next 10, 20 or 40 years.
I have no desire to cast a silent vote on this bill. The Government’s proposals are the most momentous that have ever been discussed in this Parliament. They have been placed before us as a result of the conference which was held in Melbourne in August last year. At that conference the various Premiers, the Prime Minister, and the Treasurer of the Commonwealth, met a gentleman from overseas named Sir Otto Niemeyer. The outcome of that conference, so far as we could gather from the press, was a recommendation by Sir Otto Niemeyer that there should be a reduction in governmental expenditure, including Public Service salaries, invalid and old-age pensions and soldier pensions. I have a vivid recollection of meeting the then Acting Treasurer (Mr. Lyons), when he was returning from that conference to Tasmania. He informed me of the policy laid down at that conference, and stated the position to be just as we find it to-day. The Commonwealth and State Govern- * ments had been informed that the banks were not prepared to continue to finance them unless, and until, they were prepared to reduce governmental expenditure in an attempt to balance their budgets. I then informed the Acting Treasurer that it Avas absolutely impossible for me to accept that policy. To-day I refuse to accept the proposals which the Government has placed before the House. The Leader of the Opposition (Mr. Lyons) at that time impressed upon us that there must be a reduction, not only of the salaries of public servants, but of all wages throughout the community. Professors of economics and others assured us that a 10 per cent, reduction in wages and salaries, to be followed by a decline in the cost of living, would provide more work for the people. _ That prediction was not verified. Instead of more men and women being employed as the result of reducing the wages of many thousands of persons, unemployment increased, and rationing was more widely adopted in nearly every industry. I pointed out then that a reduction of the standard of living of the workers was almost invariably followed by a corresponding reduction of employment, because, when the spending power of the people is reduced, less money is put in circulation, the turn-over of retailers is reduced, and merchants and manufacturers suffer in sympathy. Since August last, we have been battling on. The Government asked those opposed to its present plans to submit an alternative. I consider the financial proposals of the Government such an alternative but, unfortunately, they were not able to place them on the statute-book. I believe that, if Labour had had a majority in the Senate, and could have enacted its financial proposals, there would be no need now to ask Parliament to reduce salaries and pensions. I do not claim to have played a very important part in the Great War, but I remember the recruiting campaign, when patriots were beating the drum and waving the flag, and the promises that were made to those who would enlist. Yet no other section has been exploited as the returned soldiers have been. Even after their return, when they were seeking investments for their gratuity money, exploiters sold to them land that was worthless. Patriotism did not prevent profiteering then ; and now, in another great crisis, the soldiers are again to be exploited by repudiation of the promises solemnly made to them. I have argued with some of my own colleagues in regard to war pensions; I know that some pensioners are in receipt of good salaries, but my contention is that, if we start to interfere with pensions, we do not know where the interference will end. Even a man with a salary of £500 or £600 a year, who won his pension by his sacrifices on active service, should not have it taken from him. To the aged and infirm, Parliament has a moral obligation. They played their part in the building up of the nation, and are entitled to the modest £1 a week which they now receive. We are told that some of the pensioners live in tents, small houses, and one-roomed shacks; they are forced to do that in order to have ordinary decency and comfort. That applies also to the invalid pensioners. I recognize that there are some invalids whose circumstances are pitiable, and yet are unable to get a pension because the doctors will not certify that they are totally incapacitated. However, those who are in receipt of pensions should not suffer any reduction. The Treasurer (Mr. Theodore) said that 2s. 6d. a week is not very much, but the loss of 5s. would be felt severely by those who are dependent on the fortnightly pension of £2. I hope that, before the Government’s plan is accepted, further consideration will be given to all pensions.
I am opposed to this bill, because I regard it as an attack upon the standard of living of the workers, and as the direct outcome of the Melbourne conference of last year when Sir Otto Niemeyer said, according to a newspaper report, that Australian standards were too high. Apparently, there are in the community people who would reduce our standards to the level of those in other parts of the world, but I hope that will never be done. The existing standard of living has been dearly bought by the workers through years of agitation and struggle. The mere reduction of wages, pensions, and salaries will not get Australia out of its difficulties. Some honorable members have pointed out that other sections of the community are already suffering. That is true, and my sympathy is extended to those whose incomes have been reduced. But I have no share in the responsibility for their suffering; the reductions to which they have had to submit were not brought about by any action of the Labour party. I am convinced that the starving of the workers will not balance budgets; on the contrary, a curtailment of the purchasing power of the people will make financial and economic recovery more difficult. The honorable member for Fawkner (Mr. Maxwell) said that the parties now sitting in opposition are not responsible for the present financial difficulties of the Commonwealth. Surely the Labour party, which has been in office for only a few months, cannot be blamed. “When the Government assumed office, it had to face a substantial deficit and heavy commitments. Although it has reduced governmental costs by two or three million pounds, members of the Opposition say that it has done nothing. I lay the responsibility of Australia’s financial difficulties at the doors of the Bruce-Page Government and tha Ministries that immediately preceded it. Money was deliberately wasted by the setting up of huge commissions, and even in the building of the Federal Capital. The Canberra project should have been abandoned when Australia entered the war, for it must have been obvious to everybody that for many years ahead the country would have to meet very heavy commitments. Had more attention been paid to the finances immediately after the war, Australia, probably, would not have been in such distressful circumstances today. I shall vote against the bill.
– No wonder the honorable member resigned from the Ministry.
– At any rate, I did not adopt a yes-no attitude. I shall vote as my conscience dictates.
– The honorable member has tried to sit on the fence.
– I have not. I left the Ministry because .1 realized that I could not remain a member of a government when I intended to vote against an important feature of its financial policy.
.The statement has been made that my attitude on this bill is doubtful. It is not. I. support the plan unhesitatingly.
– And the honorable member gives the same support to the Gibbons plan.
– It is reasonable to request that after midnight the clowns of the circus should cease their buffoonery. Those who are opposed to the plan submitted by the Government are at great pains to discover arguments to justify their opposition. The honorable member for Bendigo (Mr. Keane) has come to the rescue by suggesting that we should legislate to reduce the interest payable on Australian overseas debts.
– I did not mention legislation.
– Such a gesture to the unthinking section outside should be avoided at this critical juncture. The issue which we have to decide is tragically real, and much trouble would have been avoided in the past if those who had accepted the responsibility of’ legislating in this Parliament had not pandered to the prejudices of the uninformed and had approached national problems in a national spirit. The overseas debt repre sents about £500,000,000 borrowed from people residing in various parts of the world, but operating financially through London and New York. It is absurd to say that this Government can take direct action to relieve the position by repudiating its obligations to those from whom money has been borrowed. Negotiations have been brought to a successful issue in connexion with Australia’s obligation to the Imperial Government.
– My reference was not to our commitments with the Imperial Government, but to our internal obligations.
– The inference was that action should be taken along the lines that I have indicated. The honorable member for Fremantle (Mr. Curtin) also inferred that action should be taken ro compel some definite understanding on the part of those from whom we have borrowed this money. Action has been taken along those lines by Australian legislators in responsible positions, and has ended in disaster.
– For instance?
- Mr. Lang, the Premier of New South Wales, was the first to pursue such a course, with deplorable results. Suggestions of that nature mus’t be dismissed as impracticable. The road chosen -by’ thi 3 Government is a hard’ one, but it is imperative that it should be followed. The income of the nation has dropped ‘ alarmingly, and it is necessary to endeavour to effect a better distribution of the resources that remain. Our financial institutions have been very generous in providing governments with the necessary funds to carry on public and social services, but they have reached their limit. I admit that this unfortunate position prevents Labour from carrying its policy into effect. As a responsible government, we are now called upon to do the greatest good for the greatest number, and we must hope that this plan will resuscitate the affairs of the nation, and permit of greater benefits being conferred on the community in the future. It has been said in this chamber, and apparently accepted as an economic fact that, unless income is increased, no benefit could be derived by the people. I do not accept that. Certainly, by withdrawing a certain amount from sheltered investors, and diverting it into other channels, the purchasing power of the community will be increased, and that money will become productive. In that respect the plan will be a decided benefit.
I shall refer now to those who are creating the primary wealth of the country. If a man has borrowed money on his land, and his interest commitments are reduced, perhaps considerably, he is enabled either to liquidate liabilities and obtain further credit, or engage labour to assist him in his productive efforts. There again the plan will be beneficial.
– Where does the scheme definitely state that there will be a reduction of interest?
– I accept the statement of the Prime Minister (Mr. Scullin) on that point. On no occasion have I had occasion to discredit any of the utterances of the honorable gentleman.
– The Prime Minister said that this Government would never cut pensions.
– He said that it would not do so until it was driven to the last ditch. There is no doubt that that has come to pass. The Chairman of the Commonwealth Bank has very definitely defined the position. He and his co-directors have a very important task and they have notified those who are responsible for our public arid social services that their overdraft has reached its limit. If that courageous action had not been taken there would have been a general breaking down of industry in the Commonwealth. Both Federal and State Governments are struggling to maintain their community services. The New South Wales railways have a yearly deficit, amounting to £5,000,000. It is necessary to give them an opportunity to recover.
– Is this the first year in which the State railways have had deficits ?
– It is not; but it has been found necessary to inform national executives that if the present rate of expenditure is not checked they will he unable to pay 20s. in the £1.
– It certainly is the first time that the banks have thrown a spanner into the works.
– The directors of the Commonwealth Bank had to function in accordance with the legislative powers which govern their appointments, which are not, perhaps, just as the honorable member for Kennedy (Mr. Riordan) and I desire them to be. However, they must continue in their present form until constitutional alterations are made. The advances granted to the Commonwealth and the States by the Commonwealth Bank have been liberal. No matter who had been in charge of that institution, he must have acted as the executive of the bank has done. Each week the Government was overdrawing, its income being only 60 per cent, of its commitments.
– Does not the honorable member consider that the position could have been avoided if proper action had been taken three or four years ago?
– I admit that governments, institutions and individuals have blundered. We have to put up with the result. This country has had a glorious “ night out “. For fourteen years it has lived beyond its means. Governments, by over-capitalizing every undertaking, have introduced the system of inflation. We must recognize the mistakes of the past, and endeavour to live them down. The position now is that we must prevent the nation from defaulting ou the 15th July.
If any other logical and practicable suggestion for meeting the situation can be put forward, it will be worthy of consideration. So far, however, not one word has been uttered by the opponents of the plan to indicate what alternative course the Government could pursue. We are now called upon to live within our income.
– That is not contemplated in the plan. According to the plan, there is to be a deficit of £14,000,000 at the end of the year.
– The Prime Minister and the Premiers of the States, acting upon the best information available, arrived at certain conclusions which have been embodied in the plan now before us, and the financial institutions of the country have given certain undertakings which will allow the plan to be carried out, and enable Australia to meet her obligations. It may suit certain honorable members to oppose the plan, but this is the only practicable proposal which has been put forward. It has been said that those who support the plan are merely carrying out the wishes of the Opposition ; that they are bringing about their own political deaths. The fact remains, however, that the Government has a task to perform, and it must go forward, even at the risk of political extinction. I believe that the people of Australia will recognize the Government’s honesty of purpose, and will stand by it.
The honorable member for Adelaide (Mr. Yates) said the other night that the acceptance of President Hoover’s financial proposals would involve the abandonment of certain principles which have until now been firmly held in Britain. I believe, however, that his proposals will operate for the benefit of the world at large. His plan has not even been put into operation yet, but already there are signs of returning confidence in financial circles. President Hoover’s proposals have nothing in common with those advocated in certain quarters in Australia to the effect that we should not honour the contract entered into with overseas investors in our loans. The Government is doing the right thing, I believe, in demanding a sacrifice in this time of necessity from those in Australia who are drawing incomes from the interest on Commonwealth bonds. It is true that we borrowed the money, but it has been spent on carrying out works in Australia which have benefited the people as a whole, including the. bondholders themselves. Overseas bondholders, however, have not benefited in the same way by the expenditure of the money they lent. If overseas bondholders feel disposed to grant us concessions on the lines of the Hoover plan, so much the better, but it would be a serious blow to the credit of Australia if we were, on our own initiative, to break our contract with British and foreign investors.
– Those who oppose the Government’s plan do not say that we should go back on our contract with overseas borrowers.
– The honorable member for Bendigo (Mr. Keane) clearly indicated that, as also did the honorable member for Fremantle (Mr. Curtin). Those who have supported the Government’s plan have been charged with weakness. That is an improper charge. The support of this plan involves grave political risk. Certain honorable members who recently left the Labour party went to great lengths to discredit the action of the Government, but they failed to put forward a single constructive suggestion to meet the situation. They openly support a policy which in New South Wales has disorganized industry, brought the primary producers to the verge of ruin, and broken one of the finest financial institutions in Australia. Any one who moves amongst the primary producers, and the small business men in country districts, must know that what I say is true. I do not claim that the proposals of the Government will bring about a complete revival of industry, but they will enable Australia to avoid default which would entail enormous hardship and suffering.
.Honorable members who oppose this plan have professed great sympathy for the unemployed, but we should realize that there are at present in Australia nearly 400,000 persons out of work, and this plan offers them the only chance of getting anything to do.. At present they are receiving no income at all. It is distasteful to any government, and particularly a Labour government, to be compelled to reduce pensions. I have recently been reading the speech of the Prime Minister (Mr. Scullin) in which he said that he would never consent to reduce pensions or, at any rate, that he would do so only as a last resource.
– That is the yellow streak.
– The honorable member for Adelaide (Mr. Yates) knows that there is no yellow streak in the Prime Minister. To give the honorable member for Adelaide his due, he has always stuck by certain financial proposals. I do not say that those proposals were distinguished by their sanity, but he stuck to them for what they were worth. He has been honest. I have always been averse to the reduction of invalid and old-age pensions. I was for some time warden of a municipality, and in that capacity assisted many old persons to obtain pensions. I know how hard it will be for them to suffer a reduction of those pensions, but what is the alternative? If this plan is not adopted, the pensions will be reduced, not only by 124 per cent., but by 40 per cent. The inclusion in the Government’s plan of a proposal for the reduction of interest represents a great -victory for the Treasurer. If honorable members opposite are not sincere in their assertions that interest ought to be reduced, we on this side will not agree to the reduction of wages and pensions. The whole plan will break down if interest is not reduced.
– I suppose the Treasurer had another great victory when it was agreed to reduce old-age pensions.
– The Treasurer realizes that this plan involves a reduction of the pension paid to aged and invalid persons, but it is preferable to reduce it by 2s. 6d. a week than by 8s. a week, as the Opposition would have done, had it had “an opportunity to do so. The honorable member for Gippsland (Mr. Paterson) stated some time ago that the pensions would have to be lowered by 20 per cent., 30 per cent, or 40 per cent.
– Do not put words into my mouth which I have not used.
– Hansard shows what the honorable member said on that matter. A reduction in interest rates will stimulate industry, and cause employment to ‘be provided for large numbers of men. When industries have to pay 7 per cent., 8 per cent, and 9 per cent, for money, enterprise is stifled. I hope that under the Government’s proposal it will be possible for the primary producers to obtain loans at 5 per cent, or 6 per cent.
The honorable member for Bendigo (Mr. Keane) referred to the overseas exchange position, but I point out that our primary producers, whose commodities are exported, have considerably benefited by the adverse exchange rate. The honorable member asked why the interest on government debts should be paid this year; but I wish to know what guarantee there is that tho financial position will toe improved next year. We shall then have next year’s liabilities to meet, and we should endeavour to straighten out our finances as soon as possible.
Special consideration should be shown for our returned soldiers. The majority of the incapacitated ex-soldiers receive pensions that are inadequate. I know a number of young men who are good workers, hut who have been in indifferent health ever since their return from the war. A number of others, however, who left good positions when they enlisted, were replaced in their employment upon their return from the front, and they have had the benefit of fairly large pensions. I take no exception to that, but, owing to the hopeless financial position of Australia, the pensions of all those ex-soldiers who are regularly employed should be reviewed, and, if necessary, suspended for the time being. These men should be kept under observation, so that if, at any time, their health should fail, their position could be re-considered. Many of the Tasmanian ex -soldiers were placed on land on which no able-‘bodied person could earn a living, but they were compelled to pay high interest rates. A committee should, he appointed to investigate such cases.
Question - That the bill be now read a second time - put. The House divided. (Mr. Speaker - Hon. Norman Makin.)
Majority . . 26
– The honorable member may not now cross the chamber, but I shall direct that his vote be recorded with the ayes.
– The honorable member for Hunter (Mr. James), who has a weak heart, has been unable to reach the chamber, because of having to climb the stairs, in time to record his vote.
– The Standing Orders do not allow me to do anything in that matter.
Question so resolved in the affirmative.
Bill read a second time, and committed pro forma.
Motion (by Mr. Scullin) agreed to-
That the House, at its rising, adjournuntil) 2.1 5 p.m. this day.
House adjourned at 2.15 a.m. (Friday).
Cite as: Australia, House of Representatives, Debates, 25 June 1931, viewed 6 July 2017, <http://historichansard.net/hofreps/1931/19310625_reps_12_130/>.