12th Parliament · 1st Session
Mr. Speaker (Hon. Norman Makin) took the chair at 2.80 p.m., and offered prayers.
– In view of the announcement a few days ago on behalf of the trading banks, and to-day on behalf of the savings banks, that the rates of interest will be reduced, does the Government intend to proceed with the Bank Interest Bill?
– If the undertaking by the banks to reduce interest is carried out, and I have reason to believe that it will, there will be no need to proceed with the Bank Interest Bill.
– Several newspapers, including the CanberraTimes, publish to-day the following cablegram from London -
The Daily Herald states that the Bank of England is about to change its financial policy, and abandon deflation in favour of a slight inflation.
The Daily Herald opines that this is the best news from Threadneedle-strect for a long time. Deflation inevitably caused bad trade, unemployment and wage cuts. “ lt may bc hoped “, it adds, “ that the Joint
Stock Bunks will follow the lead of the Bank of England, and follow with new courage as well as caution “.
If the . Prime Minister has read that message, will he consider the advisability of re-introducing at an early date the Fiduciary Notes Bill?
– I have not read the paragraph, but the announcement itcontains is very interesting. The Government will watch for further developments.
– His Excellency the Governor-General, in his reply to the address presented by the Senate against the re-gazettal of regulations under the Transport “Workers Act which the Senate had disallowed, said that the House of Representatives had “tacitly and constantly supported the transport workers regulations”. Referring to the advice tendered to him by his Ministers, he used the words, “ supported as it is by the considered opinion of the House of Representatives “.
– This House will have to consider those regulations in view of that statement, .
– As the regulations have never been tabled in this House, and, therefore, could not have been the subject of either favorable or unfavorable comment by it, will the Prime Minister inform the Governor-General that in this vital particular His Excellency has been incorrectly informed?
– There is no doubt that the regulations are in accord with the considered opinion of the majority of honorable members of this House.
– How do you know that?
– Having regard to the interim report submitted by the committee representing returned soldiers, doos the Prime Minister intend to proceed with the proposed reduction of war pensions?
– When I announced’ that the Government had agreed to the request of the returned soldiers’ organizations that the proposed reduction of pensions might be considered by a committee representing them, I stated that if the committee’s report were presented in time, such portions of it as were acceptable to the Government would be embodied in the bill, and that if the report were not available on the due date, the Government would proceed with the proposal outlined by the Treasurer. I expect that the bill relating to reductions of pensions and salaries will be introduced to-morrow. Another report from the soldiers’ committee is due. I do not know what it will contain, but so far as it is acceptable to the Government the amendments needed to give effect to it will be proposed. If the committee is not able to complete its report by to-morrow, but subsequently submits a report to which the Government can agree, amending legislation will be introduced later.
– Has not the right honorable gentleman had a report of yesterday’s proceedings ?
– Nothing beyond what was published in Hansard yesterday.
– Has the Minister for Home Affairs received a report on the buffalo fly by the Queensland Minister for Agriculture (Hon. H. F. Walker), and the representatives of the Council of Scientific and Industrial Research, who accompanied him? If so, what action does the Government propose to take?
– A report has been received from officers of the Council of Scientific and Industrial Research, who went to Queensland to investigate the spread of the buffalo fly. A copy of the report made by the Queensland Minister for Agriculture was forwarded to the Prime Minister and referred to me. The matter is now being considered by a subcommittee of the Ministers concerned, namely, the Minister for Health, the Assistant Minister controlling the Council of Scientific and Industrial Research, and myself, and a report will be submitted to Cabinet at an early date.
– I have received a copy of the following resolution by the Warburton branch of the Australian Natives Association : -
This branch protests strongly against the importation of Russian timber, which is produced under conditions altogether different from the standard of living in Australia, and against any further shipments.
Is the Minister for Trade and Customs aware that the Canadian Government, convinced that Russian timber is cut and transported by forced labour, has prohibited the importation from that country of lumber of all kinds. Have inquiries yet been concluded concerning the shipment of Russian timber which recently arrived in Sydney? Has the Minister been advised of any further shipment or shipments of Russian timber intended for Australia? In view of’ the number of Australian sawmills idle, and the extent of unemployment amongst timber employees, is the Government prepared to follow the example of the Canadian Government by prohibiting any further importation of timber from Russia?
– I have information to the effect that the Canadian Government, after investigations, decided to prohibit the importation of timber from certain parts of Russia. Inquiries are proceeding in regard to one shipment of timber from that country which has reached Sydney, and a portion of which has been unloaded. I have no information in regard to further shipments. The Government decided to refer the matter to the Tariff Board, under section 6 of the Industries Preservation Act, for investigation and report as to whether, in the opinion of the board, there is justification for the imposition of a dumping duty. Meanwhile, if any attempt is made to clear timber for home consumption cash security equivalent to 10s. per 100 super feet will be taken by the Government for the payment of any dumping duty that may be found to be due. Up to date the department has not been able to get any invoice showing the value of the timber, or information as to the price at which it will be offered for sale in Australia. The Government has the matter well in hand, and when inquiries are completed, I shall let the honorable member know the result and the decision arrived at.
– I understand that the Minister is referring for the consideration of the Tariff Board the question of placing a dumping duty on Russian timber. If that body finds that this class of timber is being sold in the country of origin at a price commensurate with that charged in Australia, and, therefore, is not being dumped into Australia, does the Minister propose to take any further action to prevent the importation of this timber, which is produced under cheap labour conditions?
– If the honorable member will peruse the reply that I gave to the honorable member for Indi (Mr. Jones), he will find that it fully explains the position.
Report in “ Canberra Times.”
– I wish to make a personal explanation with respect to an inaccurate report in this morning’s Canberra Times of a speech which I made yesterday. The report states -
Mr. Paterson gave general support to the bill, which he believed to be necessary in the interests of bondholders, as well as the general public. He suggested, ‘ however, that an addition should be made to the financial agreement between the Commonwealth and the States which would make it possible to alter the rate of interest in the conversion loan at a future date without the consent of all the parties to that agreement.
I hope that I shall never be guilty of making such a statement as that. When I referred yesterday to the financial agreement, I had been dealing with the promise contained in the bill to grant to bondholders immunity from further income taxation. I had pointed out that one parliameut cannot bind another, and that, therefore, to give the bondholder a guarantee that any promise made to him should not be broken by some succeeding parliament, it would be necessary to embody it in the present financial agreement between the Commonwealth and the States. Such a promise could not then be broken without the concurrence of the whole of the parliaments concerned.
– With regard to international regulation and control of the whaling industry, as recently recommended by the committee appointed by the League of Nations, is the Prime Minister able to advise the House as to the whole or any of the terms of the Government’s reply to the SecretaryGeneral at Geneva?
– I shall go into the matter, and let the honorable member have a reply later.
– In connexion with the propaganda campaign for the proposed conversion loan, upon which the Prime Minister is now engaged, is it the right honorable gentleman’s intention to adopt the slogan which was used by his colleague, the honorable member for Wilmot (Mr. Lyons), that “ Australian bonds are as good as gold “ ?
– Is it the intention of the Prime Minister, when broadcasting speeches on the new conversion loan, to inform the people that the appeal may be repeated in the near future, when the present plan has failed?
– Honorable members would be serving their country if they did their best to make the conversion loan a success.
– Can the Minister for Markets fix approximately the date when the contents of the proposed treaty with Canada will be made available? The nature of the treaty is apparently known in Canada.
– Probably next week.
Misrepresentation in “Hansard.”
– In Hansard of the 17th June last, page 2712, I am reported as having made a certain statement. The honorable member for Corangamite (Mr. Crouch) was speaking at the time, and he referred to statements that had been made outside this chamber, questioning the honour of honorable members on the Government side of the House. Mr. Lyons interjected, “ No, no.” I am then reported to have said -
The Leader of the Opposition says “no,” but it has been reported in the press that Mr. Kenneth Henderson, secretary of the All For Australia League, actually made such a statement.
I did not make that statement. I do not know Mr. Kenneth Henderson, nor did I read his remarks in the press; but I remember that the honorable member for Corangamite, during his speech, did make a somewhat similar statement.
– I desire to make a personal explanation in reply to the honorable member for Angas (Mr. Gabb). When I received the proof of my speech, I noticed this error, and corrected it. I was, therefore, rather surprised to find that the interjection had been credited to the honorable member for Angas. I struck his name out and substituted mine. It is a matter for astonishmentto find the name of the honorable member for Angas attached to any statement other than one calling attention to the state of the House. I did not think that so intelligent a remark could be credited to him.
– Following upon a report in the Melbourne Herald that it is proposed to make further drastic economies in the Postal Department,I should like to know whether that entails further dismissals from the Service.
– The suggested economies have not yet been fully considered, but up to the present there has been no suggestion of further dismissals. When such, a suggestion is under consideration I shall advise the honorable member of that fact.
– Has the Minister for Defence finalized his negotiations with the Naval Board regarding the distribution of surplus military clothing to the unemployed ?
Mr.CHIFLEY. - The lists of clothing were received to-day, and I propose to get on with the work of distribution as quickly as possible.
– Can the Treasurer state whether it is a fact that the Government of New South Wales has to-day to meet interest payments amounting to £1,500,000 falling due in London? Has he any information as to whether New South Wales is going to follow the plan it recently adopted, and repudiate these payments also?
– I cannot say offhand what amount the Government of New South Wales must pay in London to-day, but I shall endeavour to obtain the information, and supply it to the honorable member.
– Can the Minister for Home Affairs state when the ordinances governing the issue of miners’ rights will be operative in the Federal Capital Territory ?
– The mining ordinance has already been gazetted, and regulations under it will be issued in the near future.
– In view of the oft-repeated statement of the missing New Guinea Airways pilot that if ever he were forced to land, he would stand by his plane until found, will the Minister for Defence take steps to have a more intensive search made for this unfortunate airman ?
– A search has been in progress both by air and by parties on foot, over as wide an area as possible, having regard to the topographical conditions. So far, however, no favorable result has been reported to the Prime Minister’s Department. I shall have further inquiries made, and pass on to the honorable gentleman any information I receive.
– Is the Treasurer in a position to make a definite statement with respect to the exchange on Imperial pensions payable in Australia?
– Arrangements have been completed under which pensions will now be payable and credited to the recipients in Australia, plus the premium arising out of the greater value of English sterling. If the honorable member wants details as to how much exchange is paid in respect of particular pensions, and to what date the extra payments go back, I shall be glad to supply it.
– What I wish to know is whether the new arrangement is in operation yet?
– I do not know whether any payments have been under it, but the arrangement has been completed.
asked the Minister for Defence upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follow : -
Retrenchment of Captain Aubrey
asked the Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Prime Minister, upon notice -
– The information is being prepared, and will bo made available as soon as possible.
asked the Prime Minister, upon notice -
– The information is being obtained as far as possible.
Exclusion of Liquor Advertisements
asked the PostmasterGeneral, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Minister for Defence, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Minister for Home Affairs, upon notice -
Will he furnish the following information in regard to government houses at Acton occupied by Messrs. C. S. Daley, P. E. Dean, H. Jones, and G. H. Monahan: -
total cost of construction of each house and additions, if any;
present valuation of each house;
weekly rentals paid by each occupant; and
the unimproved capital value of the land on which each house is erected ?
– The information is being obtained, and will be conveyed to the honorable member as soon as possible.
In committee: Consideration resumed from 25th June (vide page 3098).
Clauses 1 to 3 agreed to.
– It is proposed to omit this schedule, and to substitute another for it.
– What changes have been made?
– Only technical improvements which have been thought desirable by the Government’s legal advisors. I propose to move -
That the schedule be omitted with a view to insert in lieu thereof the following new schedule: -
DEBT CONVERSION AGREEMENT.
Agreement made the day of One thousand nine hundred and thirty-one between the Commonwealth or Australia (in this Agreement called the Commonwealth) of the first part, the State of New South Wales of the second part, the State of Victoria of the third part, the State of Queensland of the fourth part, the State of South Australia of the fifth part, the State of Western Australia of the sixth part, and the State of Tasmania of the seventh part (each of the parties of the second, third, fourth, fifth, sixth, and seventh parts being in this Agreement referred to as a State, and the expression “ the States” in this Agreement meaning where the context so permits or requires all of such parties) :
Whereas by section 105a of the Constitution it is provided that the Commonwealth may make agreements with the States with respect to the public debts of the States, including (inter alia) the consolidation, renewal, conversion, and redemption of such debts :
And whereas at a Conference between Ministers of the Commonwealth and Ministers of the States convened in Melbourne on the twenty-fifth day of May, 1931, it was resolved, as part of a plan for establishing the financial stability of the Commonwealth and of the States, that a conversion should be arranged of the internal public debts of the Commonwealth and of the States and the following conditions were provisionally agreed upon as recommendations by the Conference to the Australian Loan Council, namely: -
Holders of all existing securities to be invited to convert their holdings into new stock - conversion to apply to all securities the holders of which do not dissent as prescribed by Commonwealth law.
On conversion all existing securities to be subject to a general reduction of 224 per cent. in the interest yield provided that holders of 3,3½, and 3¾ per cent. stocks who acquired such securities prior to 4th August, 1914, shall not have their interest reduced below 3 per cent.
New securities to be restricted to three flat rates of interest, viz., 4, 3f, and 3 per cent., and to be spread over ten (10) fixed maturity dates as follows, subject to the Government having the right to redeem in whole or in part at any time. after 31st December, 1950:-
Tax-free securities with definite dates of maturity -
Tax-free securities which are “ Interminable,” “ Redeemable at option of Government,” &c. -
Holders to be invited to convert into new securities, subject to the general reduction of22½ per cent. in the interest yield, with the proviso set out in clause 2 above, the general conditions attaching to the new securities to be the same as those attaching to the original securities.
Government Securities Held by State Savings Banks.
And Whereas the Australian Loan Council has approved the said conditions with modifications :
Now this Agreementwitnesseth:
– Will the Loan Council have power under the new schedule to modifythe new agreement?
– No. The conditions of conversion are laid down in the Conversion Bill, and the effect of the amendment to the schedule will be the opposite to what the honorable member suggests.
Last night, on the motion for the adjournment of the House, I explained that the Government was anxious to send this bill to another place, so that honorable senators might be able to discuss the general plan; otherwise they will have to adjourn, owing to lack of business.
In addition to the present alterations, which are chiefly of a technical nature - no important principle is involved - there are other alterations which the Government thinks will have to be made on points to which attention hasbeendrawn by the legal officers in some of the States. The Crown Solicitor of New South Wales is in Canberra at the present time, conferring with the Commonwealth SolicitorGeneral, and, arising out of this, some further technical amendments to the schedule will probably be required, although none affecting any principle of the agreement. These amendments will have to be agreed upon, and submitted to the respective Governments for approval, before the agreement can be signed. But if we wait until that is done, we shall be unable to pass the bill through this chamber until the end of next week probably, and, in the meantime, we shall oe preventing the important discussion upon the measure that will occur in another place. I ask honorable members to pass the bill with the schedule in its amended form, and I give an undertaking that the further amendments that will be necessary will be inserted in the bill in another place. The measure will have to be returned to this chamber, and, if desired, every opportunity to deal with it further will be afforded to honorable members.
– May we move amendments at that stage?
– If. honorable members desire to submit amendments affecting such matters as rates of interest, I suggest that that had better be done in connexion with the Debt Conversion Bill. If the committee passes the bill through this chamber, honorable members will have the right to move amendments when it is returned from another place. So far as the Government is concerned, the utmost latitude will then be allowed.
Mr.Beasley. - The Prime Minister has not always accorded full latitude recently to members of the group with which I am associated.
– The chairman could not permit such an undertaking to be honoured, because, when the bill is returned from the Senate, this committee will be limited to the consideration of the Senate’s amendments.
– The course I suggest is unsual, but so are the present circumstances. To obtain the agreement of seven governments takes time, and
Ave do not desire to delay the Senate discussion on the bill. ,
The CHAIRMAN (Mr. McGrath).I suggest that the Committee should negative the schedule. Then, if the new schedule is put before the committee, I will explain the position.
.- 1 desire to assist the Prime Minister in achieving his object, which, I understand, is to obtain an immediate discussion in the Senate on the general plan of which this bill is part. My suggestion is that Ave should pass the bill in some form, but without the latter part of the schedule, and send it to the Senate, where amendments can be made, and the Prime’Minister can undertake that, upon its return to this chamber, full opportunity will be given to propose amendments to any of the provisions inserted in the schedule. I direct attention to the Standing Orders under the heading, “ Senate’s amendments on bills originated in the House.” Standing Order 191 reads -
The amendments made by the Senate shall be agreed to either with or without amendments; or disagreed to; or the consideration thereof postponed; or the bill ordered to be laid aside.
Standing Order 192 is as follows: -
No amendment shall be proposed to an amendment of the Senate that is not strictly relevant thereto; nor can an amendment be moved to the bill unless the same be relevant to, or consequent upon, either the acceptance or the rejection of a Senate’s amendment.
Honorable members will see that, upon the return of the bill from another place, this committee will be able to deal Avith the bill only by way of acceptance, rejection or amendment of the Senate’s amendments. The recitals set forth matters that have been agreed to, and that part of it cannot be amended by this committee, because the committee cannot determine that the Premiers Conference agreed to certain things which it did not agree to. The only part of the schedule which really concerns this House is that which begins, “ Now this agreement witnesseth “. Those words introduce the operative part of the agreement. In the circumstances,
I suggest that, to meet an exceptional case, the committee should adopt the unusual course of striking out from the schedule all the words after “ Now this agreement witnesseth “. If that is done, an incomplete schedule will admittedly be sent to another place; but steps can be taken there to complete the schedule, and this committee can later deal with it as it thinks fit.
.- This is an instance to which the old proverb, “ More haste less speed “, may be applied. We have already accepted the amendment by passing clause 3, which reads, “ The agreement, a copy of which i3 set forth in the schedule to this act, i3 approved “. We cannot alter an agreement that has been signed by the parties.
– The agreement has not yet been signed.
– If the agreement is signed in its present form certain provisions of it will be accepted which are most objectionable to me and to some other honorable members. The honorable member for Maribyrnong (Mr. Fenton), among others, supported my protest against the provisions of paragraph 11 of the agreement, which provides that where overseas trade money has been temporarily invested in short-term securities, because of exchange difficulties, the holders shall be given the right to convert into short-term new security. That means, in effect, that Americans who have been paid large sums of Australian money for films and petrol and have invested it in 6 per cent, short-term bonds, in order to save £30 per cent, exchange, will be treated differently from our own people. I also object to preferential rights being granted to the purchasers of 6 per cent, bonds over those who bought the 3 per cent, bonds. If Ave can alter the agreement, I suggest that we should make it read, “ This agreement, with the exception of paragraph 11, shall have full force and effect”, &c.
– Paragraph 11, to which the honorable member has referred, is in the recital to the agreement.
– Surely if the committee accepts the schedule as it is, it will also have to accept the conditions set out in the recital.
– With modifications.
– We want modifications to be made.
– The recital to the agreement is really an estoppel of argument against it to the extent that it affects the fact that the Premiers Conference agreed to certain matters, including those mentioned in paragraph 11.
– It is only an estoppel in regard to the fact recited, which is that the conference agreed to various matters including inter aiia clause 11.
– The argument of the honorable member for Kooyong is that this recital is only like an initial note to the proposals.
– It is a provisional note.
– Then it could all be struck out. It seems to me that the best thing to do would be to strike out the whole of the schedule down to the words, “ Now this agreement witnesseth “. If the recital to the agreement is ineffective, it is useless to include it in the schedule. I understand that measures are to be introduced which will cover all the matters mentioned in the recital.
– I suggest that the honorable member should explain the object of a recital.
– A recital to a document is a statement of facts which the parties who have signed it are estopped from denying.
– That is a partial description of a recital.
– It further sets out facts which are later to be included in the operative words. The “ conference between Ministers of the Commonwealth and Ministers of the States “, held in Melbourne, resolved upon certain things. Those things are enumerated in the schedule in paragraphs 1 to 16, under the heading “ Conditions as finally adopted by the conference “. Those paragraphs cannot be altered in substance by this Parliament.
– Will not another place be in a difficulty if the bill is sent to them with a schedule that contains nothing after the words “ Now this agreement witnesseth “ ?
– If the Commonwealth Parliament, of which the House of Representatives is a part, accepts this recital, as I submit that it has done by agreeing to clause 3 of the bill, it cannot alter the substance of it. In any case, the substance of these sixteen paragraphs is to be incorporated in certain measures, one of which we have been discussing for the last two or three days. I am of the opinion that the so-called short cut suggested by the honorable member for Kooyong will lead us nowhere. Short cuts are dangerous in legal matters. Equal treatment should be meted out to the 3 per cent.,5¼ per cent., and 6 per cent. bondholders. Those who ‘ now buy for £77 10s. bonds that are due in December next, will receive a return for the first seven years equal to over 8 per cent. It is ridiculous to allow that, and at the same time, penalize the purchasers of 3 per cent. bonds. I protest against the inequality of the arrangement, and propose to move an amendment in committee. I should like the Attorney-General to give an assurance that our rights will be protected if the suggestion of the Leader of the Opposition is accepted.
.- I have another suggestion which, I think, will meet the situation. It is that the bill remain in this House, to be proceeded with when the Government thinks proper; and in the Senate a formal motion for the printing of the report of the Premiers Conference, be submitted. That will enable honorable senators to debate fully the whole plan.
– Honorable members will realize that there has been no desire on the part of the Government to rush this measure through. The desire is to enable another place to consider the general economic plan, and that will be possible if the suggestion of the Leader of the Opposition is agreed to, that the Minister in charge of the Senate submit a motion for the printing of the report of the Premiers Conference. Matters concerning the equitable treatment of bondholder and bondholder and rates of interest can be discussed on the debt conversion bill, and amendments moved, if necessary. The point raised by the honorable member for Corangamite (Mr. Crouch) can best be dealt with when we are debating the conversion bill. I propose that this bill remain as it is in this chamber until the conversion bill and other financial measures have been passed. The necessary technical alterations can then be made, and the agreement signed.
.- I submit that though time is of the essence of the contract, reporting progress on this bill, as now proposed, will not expedite matters. If the Senate debates the plan on a formal motion that the papers dealing with the Premiers Conference be printed, it will still have to discuss this bill. I make the suggestion that this bill be sent to another place in its present form, and that if any amendment is suggested to the schedule, the whole schedule be thrown out and a fresh one inserted so as to permit the schedule to be dealt with afresh by this committee.
– Surely the Prime Minister is in charge of the House, and it is for him to decide what action shall be taken.
– I intend to proceed with the course that I have suggested. I have merely desired to extend courtesy to honorable members, to enable them to express their views in the matter. I agree in part with what the honorable member for ‘Oxley (Mr. Bayley) has said, but I think that if the members of another place discuss this plan under a motion for the printing of the report of the Premiers Conference, they will not need to make long second-reading speeches when the bill is presented to them. To that extent the consideration of the bill will have been expedited.
Debate resumed from the 30th June (vide page 3190) on motion by Mr. Theodore -
That the bill be now read & second time.
.- Last evening, when the Prime Minister was, by wireless, opening the campaign in connexion with the most gigantic loan operation ever undertaken by the people of Australia, certain statements were being made in the House, which, if permitted to remain unchallenged, would be detrimental to the success of that great venture. The honorable member for Kennedy (Mr. Riordan) called attention to what he considered were omissions from the Melbourne conference plan, and said that if relief were not assured to the people on the land, the whole scheme would fail. The honorable member particularly said that the Melbourne conference had done nothing to relieve the position of private mortgagors. If the honorable member will refer to page 116 of the conference report, he will find that Mr. Davy, Attorney-General for Western Australia, presented a report by the legal sub-committee, which included the draft of a bill to be entitled “ The Mortgagors Interest Reduction Act of 1931”. The interpretation clause of the proposed bill provides - “ Mortgage “ means any deed, memorandum of mortgage, instrument or agreement whereby security for payment of money is granted over real’ or personal property, or any interest therein and includes an agreement for sale and purchase of real or personal property, where payment of the unpaid purchase-money and interest thereon is secured on such property.
That definition covers all private mortgages, and the subsequent provisions of the bill ensure relief to mortgagors in respect of interest. The draft .was approved by the conference, and already legislation in conformity with it has been enacted by the Queensland Parliament. The honorable member for Kennedy also said that power to enforce interest relief is lacking. The draft measure agreed to by the conference provides for the decision by a judicial authority of all applications by mortgagors for a reduction of interest. Mr. Davy, in explaining that portion of the bill, said -
The procedure will be that tlie mortgagor gives notice of application to the court, and a copy of that notice is served on the mortgagee. On the hearing, the magistrate will have to make an order for the reduction at tho rate of four shillings and six pence in the one pound - that is, the 224 per cent, reduction - unless the mortgagee is able to demonstrate some good reason why that should not be done. A reason would be that he had already made a reduction of tlie interest rate, or that he had made a substantial reduction in the capital debt.
The effect of that is that the only mortgagees who would be immune from a compulsory reduction of interest would be those who had already voluntarily reduced it to the rate stated in the bill, or who had already reduced the capital liability.
– Has any legislation to that effect been passed in New South Wales?
– The representatives of the Commonwealth and the States agreed to a plan which included this principle, as expressed in the draft bill submitted by the legal sub-committee. Therefore, we need not concern ourselves at this juncture with the possibility of one Premier refusing to give effect to the agreement. The throwing of a spanner into the machinery at this critical stage might have serious consequences. The honorable member for Kennedy said further that the Melbourne conference paid no attention to the circumstances and necessities of the primary producers. At page 163 of the report Mr. Theodore said -
There are a couple of matters arising from the Australian Loan Council in Which the conference will be interested. One matter might be regarded as part of the general plan. These matters arc, first, the question of getting finance by way of advances from the banks or by loan from the market for the purpose of having £2,500,000 distributed amongst the necessitous wheat-farmers of Australia to relieve them on the lines agreed to at the February conference in Canberra; and, second, the necessity, pending an approach to the market, of getting temporary advances from the banks of £0,000,000, to be made available at the rate’ of £1,000,000 a month, to be used by the respective governments in the best way thought desirable to create employment primarily. The Loan Council has adopted the plan, and the matter has been left in the hands of the chairman of the Loan Council to negotiate with the banks on these two points. If we agree at the conference, we might incorporate it as one of the measures making for the general rehabilitation. The total amount involved would be £8,500,000 and would be allocated on a basis already agreed to.
That became part of the general plan agreed to by the conference.
– It has not been carried out.
– No part of the plan has been carried into effect yet; but all the governments of Australia are committed to it, and I have quoted that passage to prove that attention’ was given to the need’s of the primary producers.
– Is the honorable member satisfied that the rate of interest will drop?
– I am satisfied that the undertaking given by the representatives of Commonwealth and State Governments and the banks will be carried into effect. Honorable members have stated during this debate that no security or relief is given to the primary producers. I dispute that. The Mortgagors’ Interest Reduction Bill ensures a reduction of interest that will lighten the burden of men on the land and those engaged in private business. The relief thus to be afforded in respect of registered and unregistered mortgages and agreements may be fairly estimated at £6,000,000 or £6,500,000. It is idle to say that such a reduction of the interest burden will not substantially benefit private mortgagors. Unless effect be given to that portion of the agreement the whole plan will fail. Upon those who will derive a definite benefit from the agreement a great responsibility will rest, and I feel confident that they will appreciate what is being done for them.
With one portion of the criticism by the honorable member for Kennedy I agree. Unless the primary producers and those engaged in allied industries are assisted to dispose of their product, the plan will fail to achieve all that is expected of it. This plan may assist primary production, but the conference does not appear to have provided for the sale and distribution of the produce, and therefore the producer will not reap the full benefit that is intended. Already we are experiencing extraordinary and unaccountable fluctuation in the prices of primary products. For instance, despite the declaration by the Empire Wool Conference in Melbourne, that the world’s available supplies- were not equal to requirements, prices at the Brisbane wool sales dropped on one day by from 7 per cent, to 13 per cent; next day they rose by from 5 per cent, to 8^ per cent. That indicates that in connexion with the sale and distribution of this commodity there is an unhealthy influence which should receive the attention of all’ the Australian Parliaments. What will be the use of conveying a sense of security to the producers in these industries unless ‘we give immediate consideration to the sale and distribution of their products? A noted Australian authority, Sir John Higgins, who accepted a responsible position during a previous national crisis in this country, attended by special invitation the recent Empire Wool Conference. When Australia was previously faced with a serious position, the right honorable member for North Sydney (Mr. Hughes), then Prime Minister of this country, in formulating a plan for the maintenance of our national solvency, and the giving of the sense of security to the community, took steps to safeguard the interests of our primary producers. Sir John Higgins, when speaking before the Empire Wool Conference, is reported as follows: -
Sir John Higgins said that at no previous stage of the life of the Commonwealth had the importance of the wool industry been brought home to the people with greater force than at present. He hoped legislators would realize the unwisdom of any land schemes which would reduce the area given over to the production of wool. If success on co-operative and stabilizing lines could bc secured (as has been done by tlie wool industry during the war), why could not the same methods in times of peace? The lessons of the war were soon forgotten. There was now a lack of confidence in the industry itself. Sections of tlie trade were working apart to the detriment of the whole industry. Growers should receive a price covering cost of production and returning a fair return of interest on capital. In other words, the industry could not continue unless it was remunerative. It was paramount that prices should be stabilized. That, however, did not mean price fixing. There was no valid reason why central control and marketing organization should not be as successful iti the wool industry as in regard to other industries. The remedy for their present trouble lay in co-operative organizations with collective marketing by the producers themselves. While speaking of stabilization, he wished to impress on them that there was no desire to fix prices in any way by artificial methods. A stabilization scheme was entirely different to tlie operations of a monopoly, and there was no suggestion of control by the Federal Government, or through the Government. The idea was that a company should be founded by those engaged in the industry, and which should be approved or sponsored by the Government. Tlie company should not be established with the object of gain, any profit that might accrue to go to the growers. There should be control of output by collective systems of marketing. Stabilization did not mean fixation of artificial prices by Government decree or monopolistic control. They should seek to gain an average price calculated over a cycle of years, and not calculated on one year. They should endeavour to stabilize the price, eliminate slumps and booms, and encourage greater wool consumption. An empire wool stabilization scheme was absolutely necessary. Stabilization was synonymous of insurance. There was nothing revolutionary in the method recommended. There would be a minimum of alteration in the general methods of handling Australian wool clips. If over a cycle of ten years greasy wool could be stabilized at lod. per lb., the grower and manufacturer would be in a much more satisfactory position. Some form of rationalization scheme might be desirable, viz., the elimination of senseless competition, the ruthless scrapping of out-of-date machinery, and the removal of out-of-date methods of management. It was not a pooling scheme. With a proper stabilization scheme they could attain Empire preference without resorting to tariffs. They all wanted a closer welding of the various parts of the Empire. He was confident that would be brought about more by economin unity than by any other means. If a company to secure stabilization or insurance was formed the price basis to be calculated over a period of years, it would, in his opinion assist greatly in solving their problems. There was no intention for artificially fixing prices, or to form a pool, a combine or a cartel.
Sir John Higgins recognized that all was not well with Australia, and he definitely stated that the interests of the primary producers should be safeguarded under any plan of rehabilitation. The honorable member for Kennedy (Mr. Riordan) did quite right in drawing the attention of this Parliament to that serious omission from the Government’s plan, and unless some action is taken in the immediate future to control, to some extent, the sale and distribution of our primary products under a scheme such as that previously adopted, I am afraid that the present plan will fall far short of what is necessary in order to pull Australia, out of its present difficulties. I am not optimistic about the immediate beneficial effect of this plan, although I believe that it will - and this measure will be a contributing factor - assist the people of this country to mould their own destiny. It gives them an opportunity to remove the serious obstacles now confronting them, but those obstacles cannot be overcome unless this plan gives to the primary producers a greater sense of security in respect of the sale of their products. Our primary industries are deserving of some consideration. Our secondary industries have, of recent years, received considerable assistance. The increase of 30 per cent, in the exchange rate, and the lower- ing of wages by 20 per cent., have given an added security to manufacturing interests. Another benefit to be conferred on that section of the community is a reduction in the rate of interest, as now proposed under this bill.
– In what way does the lowering of wages benefit the community?
– It will confer some benefit upon the manufacturers. At present the primary producers have not a sense of security. It has been said during the course of this debate that the primary producer will receive the full benefit of the increase in the exchange rate, but that 13 not so. Under the recent shipping agreement, which becomes operative as from to-day, the producers of perishable commodities which are exported will receive the benefit of an increase in the exchange rate of TJ per cent. only.
– Who receives the balance?
– The shipping companies. For instance, according to stock market quotations, the fall in the price of lambs is ls. 6d. per head. That is due to the increased rates for refrigerated space.
– Then, if the exchange’ were pegged at considerably less than £30 10s., there would be no loss to the primary producers?
– Only 30 far as producers of perishable commodities are concerned. Producers of wool, wheat and other non-perishable commodities receive under the new agreement the full benefit of the increased exchange rate. I support the Government’s plan for the revival of industry and the restoration of confidence among the people, but I hope that, in the near future, consideration will be given to the need for legislation designed to assist the primary producer, not only in the direction that I have indicated, but also in many other directions. I suggest that the Government should institute a scientific investigation in respect of the effect of the operation of the tariff on the primary industries of this country.
– This bill is one of the numerous measures which the Premiers Conference decided should be introduced by the Commonwealth and State Parliaments in an effort to solve at least some of Australia’s financial problems. I agree in general with the proposals, though they are nauseating to all honorable members. One is loth to imagine what would be the result of the non-operation of this plan on the part of any of the responsible parties to it, particularly in view of the unfortunate position of the unemployed, the primary producers, and the general community of Australia. This bill deserves the support of every honorable member. It proposes to reduce the interest rates on our internal debt. Before taking action in respect of our overseas debt, we must first set our. own house in order. We have to choose between the Governments plan and default. Under these proposals, every section of the community will bear a share of the sacrifice, although I keenly regret that it has been found necessary to call upon the old-age and invalid pensioners to share that burden, and I hope some modifications can be adopted regarding returned soldiers. It is the duty of honorable members to stand by this plan and so come to the rescue of this country . in its hour of need. There are, unfortunately, some honorable members who, for selfish political reasons, will not stand up to their responsibilities in the hour of our nation’s greatest financial crisis. Had the Government taken action twelve months ago, there would have been no need for such drastic reductions in expenditure as are now proposed, but better late than never. The responsibility for Australia’s present position is not wholly ours. We are responsible for the debts that we have incurred, and the parties that have occupied the treasury bench have to bear equal responsibility. We have to face this position unitedly, but we are not totally responsible for it, because most of the countries of the world have been in financial difficulties, and their troubles have greatly injured us. Even the United States of America, which has a gold reserve of £900,000,000, and France, with a. gold reserve of £400,000,000, are in a worse position than is Australia. The main factor contributing to our unfortunate internal position is the action of the United States of America in depleting the gold reserves of other countries by insisting upon the payment of interest, due to it on war loans.
There is nothing generous in America’s proposal to relieve her European debtors of some of their obligations. Twelve months ago, she recognized that it was essential, in her own interests, that some audi scheme should be put into operation. It is for her own sake, and not for the sake of Europe, that the United States of America now proposes to reverse the policy which has done so much damage, the policy by which she has exacted heavy payments in gold and in kind from those nations to which she had been accustomed to look for a market for her goods. This policy of the United States of America is primarily responsible for the economic difficulties which confront the world to the detriment of Australia to-day, because those countries which, normally provided a market for our primary products, have become so impoverished that they can no longer buy from us as formerly. It has now become necessary for us to stop the drift towards default by cutting interest rates, and reducing payments.
Last night an honorable member in a corner opposite referred disparagingly to the relief which had been so far afforded to us by Great Britain, comparing it with what that country, and some of the British banks, had done for certain European countries. “Whatever has been done for Germany and Austria by Great Britain and British financial institutions has been done in the hope of averting an economic debacle, and the entire collapse of the social order, events which would have destroyed the market in those countries for British goods. If Britain had not come to the help of Germany and Austria when she did, it is probable that those countries would before long be suffering under some form of soviet government.
There are many objections to the Government’s proposals for cutting war pensions, but it is claimed that the alternative is worse. The Commonwealth has made itself responsible for the payment of £21,000,000 annually in pensions. It has now been found necessary to reduce this amount by £4,200,000, as well as to reduce payments to civil servants, and the interest payable to bondholders and increase taxation. Not only has the Commonwealth to make large payments to pensioners, but the Governments of Australia are committed to find £15,000,000 this year for the relief of unemployment, an obligation which did not exist before. There is no doubt that the unemployed are deserving of our sympathy and assistance. They are receiving nothing but the dole, and it is the duty of all of us to make some sacrifice in. order that they, and their wives and families, may not suffer unduly during this time of stress. We must also direct our policies to ensure that some career will be available for the lads who will grow into manhood in the immediate future. Not only is the Government proposing to cut expenditure heavily, but it is proposed to raise an additional £8,000,000 by means of sales tax and primage duties. Even then there will be a gap of £14,000,000 between revenue and expenditure.
It is to be regretted that efforts were not made earlier to rectify the position. If that had been done it would not be necessary, I believe, even to suggest the reduction of pensions. Not long ago, the Government invited an eminent financial expert from Britain to visit Australia, and advise the Government on its affairs. Commonwealth and State representatives, sitting in conference in Melbourne, signed an undertaking to put into effect the recommendations of this expert, which were accepted as the only means of rehabilitating Australia, and of avoiding even heavier sacrifices in the future. As soon as this was done, opposition was raised to the scheme, and opposition from the same quarter met every other proposal for the rehabilitation of the country. This opposition emanated from the representatives of the Australasian Council of Trade Unions in New South Wales, which has been directly responsible for the wrecking of the Niemeyer scheme through the influence which was exerted over the New South Wales members of Parliament. A little later, warnings were issued by Sir Robert Gibson, and immediately he was made an object of attack by the Australasian Council of Trade Unions. There is no doubt that the representatives of that body have worked to bring about the entire collapse of our social system. They have declared that they will not be satis- tied with anything less than the destruction of the capitalistic system, upon which society is at present organized. They have said that they will not rest until that system is destroyed, and until the workers own and control the factories, the fields, and the workshops. They regard’ the present as a golden opportunity for achieving their ends, and they are exploiting that opportunity to the fullest extent. [Quorum formed.]
As soon as the representatives of the Australian Governments signed the agreement embodying Sir Otto Niemeyer’s proposal, the destructionists of the Australasian Council of Trade Unions made a most bitter attack on that gentleman. Later they controlled the Labour party during the election in New South Wales, and, by making lavish promises to the gullible electors of Sydney, were able to secure for their party an overwhelming majority. The electors were told that unlimited funds would be available as soon as a Labour Government assumed office, and the electors evidently believed them. The present Government of New South Wales has done more than anything else to prevent Australia from getting out of her difficulties. It has been responsible for largely increased unemployment in New South Wales, and for an ever-growing volume of misery and want. Until it is recognized that a definite plan is being followed in New South Wales to make the present position worse, and steps are taken to combat that plan, little progress can be made towards rehabilitation. In Queensland the workers have had to submit to a reduction in wages, and other sacrifices have been imposed on the community in an endeavour to straighten out the finances of the State, but no real success can be achieved, and increased payments restored until New South Wales puts its house in order. The New South Wales Government has repudiated interest payments, and has deliberately, I believe, wrecked the Government Savings Bank in the hope of bringing about industrial ruin and social chaos. The element which controls that Government - the bosses of the Australasian Council of Trade Unions - has endeavoured to wreck the Federal Labour Party, and to spread ruin through out the country. Not long ago the Commonwealth Government appointed Mr. Duffy to the Commonwealth Bank Board as the representative of Labour. Almost immediately afterwards he wasattacked by the Australasian Council of” Trade Unions for failing to carry out Labour’s objective. Any one who takesa stand for the welfare of Australia today is subject to attack by the same clique. It is time the people of Australia took a wider view of their duties as citizens, and cast out these disruptionists, neck and crop.
– Get some machine guns !
– We need not do that. What is required is the exercise of political intelligence by the electors of Sydney, who have always been the most gullible in Australia. They are so ignorant on political matters that they can be deceived by almost any promises made to them for election purposes. Australia as a whole is suffering because of the financial condition to which New South Wales has been reduced.
It must be agreed that the Premiers, at the recent conference in Melbourne, did good work in devising means of solving the problem confronting Australia, and it is the duty of every member of this Parliament to stand by the resolutions of the conference. I am not much concerned whether the rate of interest on government securities is reduced by compulsion or by suggestion. Wage-earners and pensioners are compelled to accept reductions of their income, and bondholders must be prepared to do the same. The f ear has been expressed that the conversion loan may not be successful, but I believe that the public will realize that its failure would be disastrous. The Government knows that stock to the value of £227,000,000 out of the total of £556,000,000, will be converted voluntarily. Those bondholders who are responsible for the balance of the stock, amounting to £329,000,000, will be well advised to agree to the reduction of their interest. I hope that all sections will support the Government in its decision to do, not what is popular, but what is essential in the interests of the country.
.- In speaking on the Debt Conversion Agreement
Bill, I made it clear that I intended to support the conversion loan, and I have’ no cause to depart from that intention. But I agree with those who think that we should lay all our cards on the table, and be honest with ourselves and with the people. Instead of calling this a voluntary conversion, we should admit that, if bondholders do not convert voluntarily, a certain degree of compulsion will have to be applied. Overseas bondholders hold stock to the value of £532,000,000 and the internal loans of Australia total £556,000,000. Last night an amendment was submitted in this House for the purpose of bringing the British bondholder into line with the Australian investor, and I admit that something ought to be done in that direction. The amendment provided that this bill should be withdrawn, and a new measure brought down, making provision for the same sacrifice by the British investor as mustbe made by the Australian bondholder. I voted against the proposal, because it appeared to me, as a layman, that it would not be competent for this Parliament to require bondholders domiciled outside Australia to convert. If the amendment had been agreed to, effect could not have been given to it, but I believe that there is a method by which the interest now paid to bondholders overseas could be reduced. Since Great Britain is prepared to grant Australia a war debt moratorium, I suggest that representations be made to the British authorities that they should pass legislation requiring those resident in Great Britain who hold Australian bonds to accept a reduction of their interest. Joint legislation may be necessary; but, if no action be taken, the overseas bondholders will be at a distinct advantage. The purchasing power of money is altering throughout the world, and since the greater part of Australia’s interest bill has to be paid outside the Commonwealth, every possible means of effecting economy by a reduction of interest should be used. If the position cannot be overcome by joint legislative action, as I have suggested, I hope that the Prime Minister will indicate what steps are likely to he taken to see that the British bondholder does not enjoy an advantage over the Australian investor.
We are too ready to make overtures to the financial interests. It was stated by one of the State Premiers, at the recent conference in Melbourne, that while they were making slashes in wages, and in the expenditure on social services, they were asking another section to participate in the rehabilitation plan voluntarily. We should not attempt to delude the people into believing that this conversion scheme is purely voluntary. Judging by the re-1 port of the Premiers Conference, there is no guarantee that interest on mortgages, and private interest generally, will be reduced.
– It was agreed at the conference to draft bills for that purpose. The measures were drafted for introduction into each ‘State Parliament, and the form of the bill was agreed to unanimously.
– I came to the conclusion, on reading the report, that the Premiers considered that to be a State matter.
– On almost the last day of the proceedings, Mr. Davy, of Western Australia, on behalf of the legal committee, brought down a draft of the bills drawn up for this purpose, and they were subsequently adopted. They have been put into shape by our own law officers, and have been sent out to every State.
– Only last evening the honorable member for Kennedy (Mr. Riordan) said that the legislation passed in Queensland was more advanced than that in any other part of Australia, and yet nothing had been done in that State that would be of value to the people in the direction of- reducing private interest.
– My recollection is that the Premier of Queensland informed the conference that Queensland already had a measure on the statute-book which provided for the reduction of interest on mortgages, and that it was working satisfactorily.
– Surely, if such an act 1 were on the Queensland statute-book the honorable member for Kennedy (Mr. Riordan) would know of it. If, as the Prime Minister has said, measures are to be introduced in the various Parliaments to provide for the reduction of interest, it will be a help to the people.
– It will be a breach of agreement if such measures are not introduced.
– Unless the interest rates on mortgages and other advances are reduced, the discrepancy between government and private interest rates will be similar to that between interest on overseas and local government stocks. The primary producers of Australia are looking for a reduction of interest rates, and if this is not effected these people will have been fooled. Interest charges are responsible, to a large extent, for the present unprofitableness of many primary-producing ventures.
While I intend to support the proposed conversion loan, although I am opposed to other portions of the Premiers Conference plan, I must say that I am very doubtful whether, even if it is successful, it will have the good effect that the Prime Minister and many other persons in the community expect it to have. In my opinion, by far the most important problem which faces us at present, is that which relates to the reduction of unemployment. We must get our unemployed citizens back at work. Every time the honorable member for Wilmot (Mr. Lyons) makes a speech in this chamber he emphasizes the urgent need for a solution of this problem. Unemployment was discussed time after time at the Premiers Conference, and it has been referred to in nearly every speech that has been made in this chamber for the last few months; but, so far as I can see, nothing tangible is being done to solve the problem. We were told when the reduction of 10 per cent, was made in the basic wage some time ago, that this would be an incentive to employers t_, re-engage the workers that they had dismissed. It was regarded as an absolute certainty that industry would be stimulated by this wage reduction. In addition to the 10 per cent, reduction, wages have been reduced in accordance with the cost of living figures. But the only result of these reductions has been an increase in the number of unemployed people in the community. We have no guarantee that our approval of the Premiers Conference plan will not increase the volume of unemployment in Australia. In my opinion, that must, inevita’bly, be the result” of the putting into operation of this scheme, for less money will be in circulation and the purchasing power of the people will be reduced. [Quorum formed.] When I spoke on the Debt Conversion Agreement Bill in this House on Thursday last, I quoted some remarks made by the Premier of South Australia, Mr. Hill, when he placed the Premiers’ plan before the South Australian Parliament. According to a report in the South Australian press on the 17th June, the honorable gentleman 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.
It is quite clear from that statement that Mr. Hill expects that £2,000,000 more will have to be spent on dole payments than would be spent if this plan were not put into operation; and that he does not expect that additional public work will be put in hand. Taking the dole to be from 4s. 6d. per week in some States to 10s. per week in others, I estimate that the number of unemployed persons iu the community will be increased by about 100,000 if Mr. Hill’s estimates are realized. For this reason I say that this plan will only result in the perpetuation of the principal evils from which Australia is at present suffering. It is quite likely that in the course of a few months we shall be called upon to consider other measures of a similar nature to those which will be placed before us in the next few days.
It is quite evident that economies are to be effected in Government expenditure by the making of severe retrenchments. Sio less than 700 men ,are to ‘be retrenched in the Victorian railway service, and similar retrenchments may be expected in the railway services of the other States. The dismissal of these men in different parts of Australia will undoubtedly lead to a reduction in the number of persons employed in other directions. I think that private employers may dismiss just as many persons as the various governments dismiss.
If Parliament is to be adjourned immediately after the passage of the measures necessary to give effect to die Premiers Conference plan for the financial rehabilitation of the Commonwealth, I suggest to the Prime Minister that another conference of Premiers, or some similar conference, be convened to discuss ways and means of reducing the volume of unemployment in this country. Since the honorable member for Bendigo (Mr. Keane) has been a member of this House, we have heard a good deal about the possibility of employing many additional men in prospecting for gold. The honorable member has told us frequently that many more men are searching for gold in Victoria than were engaged in. that work a year or two ago. I believe that if the Ministers for Mines in the various States would make information available as to the possibility of gold-mining developments in various localities many more men would be encouraged to go prospecting. I suppose that in the constituency of almost every country member of the House there is some gold-bearing country which has not been fully exploited owing to the recent high production costs, and low price of gold. At Tarcoola, in my own electorate, there is a very large gold-mining field of which the Treasurer knows a good deal more than I do. This area has not been worked for a long time because of the high production costs, and the low price of gold. But lately production costs have fallen, and the price of gold has risen. If some encouragement were given them, many unemployed men and youths would take up gold prospecting.
The Council for Scientific and Industrial Research could also, I have no doubt, make information available of ways and means for supplying our home market with many primary products that are at present being imported. The honorable member for Indi (Mr. Jones) has told ns on numerous occasions that we are at present producing only 5 per cent, of the tobacco smoked in Australia. In other words, we are importing 19 times as much tobacco as we are growing. The other members of the Select Committee on the Tobacco Industry have also, at different times, given us valuable information on this subject. Tobacco can be grown in almost every State in the Commonwealth.
There are possibilities of profitable primary production in other directions It is generally agreed that under present conditions wheat-growers should he granted some protection, and I do not think that many people would suggest that we should just now encourage an increased production of wheat. The wheat-growers are producing for an overflooded market, and are at present not receiving the costs of production. A great number of them are attempting to grow wheat in localities where that cannot be profitable. I suggest that a conference of State Ministers for Mines and mining experts would be able to determine how many persons could be absorbed in various forms of mining in Australia, while other conferences of a like nature could advise what should be done with various types of lands for settlement purposes. Despite the fact that such investigations would cost a little money, the outlay would be infinitesimal compared with the good results that would follow the adoption of the recommendations submitted. Obviously, the restoration of confidence, as spoken of by means suggested, will not, of itself, rectify the present adverse economic position of Australia. That can be done only by absorbing our unemployed. I was informed by the South Australian Minister for Mines that, while, a few years ago hundreds of men were engaged in that State in gold, copper and silver-lead mining activities, to-day practically none is employed in such pursuits.
I have again addressed myself to these subjects to emphasize the urgent need to take prompt steps to absorb our unemployed, and the necessity to make overseas bondholders undergo a sacrifice proportionate to that of Australian bondholders.
– I cannot understand why those honorable members opposite who raise objections to this conversion plan persist in the statement that it will not relieve, but rather tend to increase, unemployment. The honorable member for Grey (Mr. Lacey) gave utterance to the amazing statement that the Premier of South Australia, a state which is a party to this agreement, visualized an increase of 100,000 in the unemployment roll of Australia. I have not seen any such reference by the gentleman referred to, and can only assume that the honorable member is allowing his super-heated imagination to operate by attributing to the Premier of South Australia a hypothetical view which he does not hold.
– The Premier of South Australia said that the Australian deficit would be increased by £2,000,000 this year because of the necessity to increase unemployed relief.
– The honorable member intimated that the Premier of South Australia had in mind an increase of 100,000 in the number of unemployed.
– I did not say that. I said that an additional £2,000,000 in. unemployment relief would mean a further 100,000 unemployed, as the relief dole varies from 4s. 6d. to 10s. I was referring to the whole of Australia.
– That is a purely hypothetical statement of the position. I contend that, if this agreement had the enthusiastic support of all parties, instead of being subjected to carping criticism and predictions of disaster, confidence would be quickly restored.
Three main factors are responsible for the growth of unemployment in Australia. The first is the deplorable financial position of our governments, which has engendered the belief that each of the seven governments of Australia is on the verge of collapse. The second factor is the lack of confidence on the part of the community generally, caused by excessive taxation. Nothing depresses industry more than high taxation. But high taxation in itself is not the factor. The ever-present fear on the part of the taxpayers that the limit has not been reached; that they are to be attacked again and again by State and Federal Governments, is responsible for the lack of faith among the employing classes as to what the future holds in store for them. The more the people are taxed, the more their ability to invest their money in enterprise is reduced, and the less is their opportunity to give additional employment. I do not think that any honorable member will deny that. Th* stupendous tariff that has been imposed on the community is the third factor that has contributed to existing unemployment. It is only necessary to look about to see the effects of the tariff on unemployment. Practically all of the importing houses of Sydney and Melbourne have closed their doors. The enthusiastic predictions of the Minister for Trade and. Customs (Mr. Forde) have failed tomaterialize. While a few small factories may have sprung into existence, it is indisputable that that advantage io much more than counterbalanced by the staggering number of persons thrown out of employment as a result of the tariff. I have it on reliable authority that in New South Wales alone 500 commercial travellers are unemployed. Previously, they gave support to the railways ; now some have to line up in queues to receive the dole, so that they and their families may exist. They have been ruined through importing houses’ having to close down because of the impossibility of importing goods. Heavy primage duties and sales tax have helped to bring about increased costs. The output of a. large number of businesses has been reduced, particularly that of the printing industry. There has been a tremendous decline in job printing, with the result that thousands have been thrown, out of work. After considering those three factors, one has a clear idea of the causes that have brought about the prevailing unemployment.
– One of the greatest reasons is the low price obtainable for primary products.
– I know that the honorable member for Maribyrnong (Mr. Fenton) views only one side of the subject. I have given indisputable facts to show that the tariff is mainly responsible for the increase in unemployment.
How, then, are we to restore confidence? While at present it is not practicable to alter our tariff policy, there will be an irresistible demand for a reduction of the tariff from all sections of the community, and particularly from our primary industries after this economy plan is put into operation. It will be impossible to keep the door shut and prevent our primary producers from establishing favorable trade relationships with the other side of the world. Our immediate task is to restore confidence. During the past twelve months it has been said, from one end of the country to the other, that government costs must come down. Honorable members in the “ Amen “ corner have damned this agreement. It is a pity that their leader has not used his undoubted ability to better purpose. He spoke recently in severely denunciatory terms of the Government, of which he was once a member, and out of which he was forced. Only a few months ago the honorable member, when supporting Lang interests in the East Sydney byelection, made many of those inflammatory utterances which have -done 30 much to bring about the present feeling of insecurity. The burden of his cry was, “You must tax the bondholders first. You must get at these Shylocks !” Night after night he shouted those catch-cries to the howling mobs of East Sydney. He borrowed them from his friend, companion, and ally, Mr. Lang. The Lang plan was his sheet anchor. What is that plan? Its avowed purpose is to bring about the reduction of interest rates, government and private, to 3 per cent. [Quorum formed.] The remainder of it is so much illogical nonsense. What hypocrites and humbugs are those honorable members who, now when the Government is making an attempt, with the support of the Opposition, to reduce interest as the commencement of a general plan for the curtailment of government expenditure, accuse us of political dishonesty, and declare that we are endeavouring to safeguard the interest Shylocks while attacking old-age, invalid, and war pensioners and wage-earners.
– Who are the hypocrites ?
– The honorable member is one of them; he was amongst the loudest in support of the Lang plan.
– The charge of being a hypocrite, coming from a miserable worm like the honorable member, is a compliment.
– The Lang plan, which represents the level of the honorable member’s intelligence, demanded that the interest rates should be reduced. The supporters of that plan are now about to have their demands- granted, yet they accuse supporters of the Government’s proposals of political dishonesty and a desire to attack the poor and aged, and the soldiers, in order to protect the interests of the money lenders. Men who adopt such a hypocritical attitude are not worth wasting words over, but their misrepresentations cause a lot of harm. They are endeavouring to throw a spanner into the machinery. While all parties are co-operating in a big endeavour to restore confidence, those who initiated the clamour for a reduction of interest are seeking to betray Australia. The honorable member for West Sydney (Mr. Beasley) said last night that whilst the conversion plan is voluntary, the reduction of pensions and wages will be compulsory; but he did not mention that the bondholders are expected to make a sacrifice that will be permanent. No prospect is offered to them that if times improve the interest rate will be increased - that the contract which is being broken by the Parliament will be restored; but I am amongst those who have declared that if the economic and financial position of the country improves sufficiently, pensions should be restored to the present level.
– There ia a lot of emphasis on the “ if”.
– Obviously if conditions do not improve the pensions cannot be restored to the old rate. It is definitely understood, however, that if the interest on bonds is reduced to 4 per cent., it will not rise above that rate, and circumstances may even bring about a further reduction.
– The honorable member is deliberately misconstruing my contention, which was that the ‘bondholders are not being asked to make any real sacrifice.
– The honorable member for Gippsland (Mr. Paterson) gave the concrete case of a small bondholder whose income would be reduced below that of an old-age pensioner. That will be one of the many cases of hardship, but I am afraid that they aire inevitable; if we start to make sympathetic exemptions we do not know where they wiLl end. Unfortunately some honorable members do not recognize the injustice that will be done to the bondholders, both large and small. There are men who have invested the savings of a lifetime in government bonds with complete faith that the contract made by the borrower would be honoured to the letter. Their circumstances are pathetic, but what can we do for them? I see no prospect of relief from their dilemma except by their withdrawing their capital and living upon it. “We are told that that would not be fair because a bond for which they paid £100 is now worth probably not more than £78, but if they need the money immediately they will have to accept the loss of capital that is risked by a man who invests his money in shares. A few days ago a man told me that twelve months ago he had bought for £100 shares which to-day are worth not more than £50. Hard though the lot of the small bondholders may be we cannot possibly guarantee to them more than the market price of their stock. This plan is bound to cause hardship, and whilst our sympathy goes first to the small bondholder, what of the man who invested £10,000 in government bonds, believing that he was assuring to himself, his wife and family an adequate income for life?
– What about the man who invested all his money on the racecourse?
– There is no analogy between the two, especially when people have invested in Commonwealth securities in response to an appeal by the Government to show their patriotism by coming to the aid of the country. I would be one of the last to support a measure that virtually legalizes robbery, if it were not for the fact that we are doing the best we possibly can for the bondholders. Australian Governments have bitten off more than they can chew, and now we are saying to the bondholders, “ In order to safeguard the money you invested, and assure to you a reasonable rate of interest, and a chance to recover ultimately the par value of your bonds, we offer this plan. If you refuse it, you are liable to get nothing, not because we will not, but because we cannot pay you.” In regard to the reductions of salaries and pensions, we cannot ask the 1,250,000 people who invested their money in bonds to sacrifice 22£ per cent. of the interest unless we reduce other costs of government. That is what this plan proposes. We are asking the bondholders to surrender 22£ per cent, of their interest, the public servants 20 per cent, of their salaries, and the aged, and infirm, and the soldiers, 12£ per cent, of their pensions.
– The proposed reduction of war pensions is more than 12-J per cent.
– The reduction suffered by individual soldier pensioners will vary according to their circumstances. It is the intention of all parties when considering this emergency legislation to . endeavour to reduce the inevitable hardship to a minimum, and to make concessions to those who cannot afford to make a sacrifice. There is no desire on the part of supporters of the plan to inflict hardship wantonly and in cold blood; we want to save Australia, and to preserve to the bondholders, the pensioners, and the public servants as much as possible of what they now have. We could be engaged in no grander task. I differ totally from those honorable members who declare that this plan will withdraw so much money from industry that further unemployment, widespread distress, and complete loss of confidence will result. The honorable member for West Sydney (Mr. Beasley) referred slightingly to the Hoover plan as another move by international capitalists to save themselves.
– That is true.
– All honorable members on the Ministerial side have at various times spoken enthusiastically of the benefits that would accrue to the world from a cancellation of war debts. This is the first move to that end, and it comes from a totally unexpected quarter.
– From what quarter could it come other than the principal creditor nation?
– We did not expect that creditor nation to make this friendly gesture; on the contrary we have been abusing it as the international Shylock. A cablegram published in the Sydney Morning Herald of the 27th June, indicates the benefit that is likely to be derived by the world from the adoption of the Hoover plan, and I believe that if the payment of war debts is postponed for one year, the effects will be so beneficial that all nations will agree regarding the advisability of cancelling this burden. This plan may be the prelude to the economic regeneration of the world. The cablegram to which I refer reads -
London, June 27.
Not for many years has there been such a marvellous change in financial and commercial conditions as that witnessed this week, following President’s Hoover’s dramatic announcement of a proposed one year’s war debts moratorium. A week ago the Stock Exchange and most commodity markets were plunged into gloom and despondency, everybody fearing what was going to happen to Germany. Monday saw a complete reversal of the position.
Everywhere President Hoover’s proposal was, acclaimed with enthusiasm. Practically every market rallied sharply, and almost every section of the Stock Exchange advanced. Wheat, cotton, rubber, copper, tin, zinc, and silver rose considerably. The only commodities falling to respond were perishable goods, which are mostly so plentiful that an advance in impossible.
Good conditions continued throughout the week, markets yesterday closing firm. The Stock Exchange official list shows many extraordinary rises. The most marked, naturally, have been in foreign stocks, with German stocks leading. British funds, although firm, have been somewhat disappointing, which is probably due to the approaching end of the half-year and mistrust regarding the Government’s, financial intentions.
Dominion stocks made a fine recovery, materially assisted, by the announcement of the British Government’s concessions. A satisfactory feature was. the improvement in the price of several Australian bank shares, which for some, time past have been very depressed. Mining shares also improved considerably on the rise of metals.
– Now read the cablegram published in this morning’s, newspapers regarding the further flight of capital from Germany, because of French opposition to the Hoover plan..
– The message I have read indicates the direct consequences of the great friendly gesture by the United States of America, and it is a happy augury for the success of the Hoover plan. If it is adopted, the revival noticed on the London market will spread throughout the world, and the depression, which is becoming an obsession in many countries, willlife like a fog, and gradually disappear. No more hope ful sign has been vouchsafed humanity since the close of the Great War. Unknowingly, the Australian Governments have synchronized their proposals for a rehabilitation of the national finances with the launching of the Hoover plan, and that is a happy portent of the success of the conversion loan and the immediate restoration of confidence throughout the Commonwealth. The honorable member for West Sydney (Mr. Beasley) has mentioned a statement which appeared in this morning’s newspaper, but that does not disclose a position different from that to which I have just referred. The prospect of postponing interest payments on war debts for a year - and, I think, for ever - will cause such a reaction in the economic currents throughout the world that it is quite obvious that now is the psychological moment for Australia to make an economy move. We should not hesitate to go straight ahead with this job of reconstruction. I feel sure that if we do that, whatever sacrifice we are now called upon to make will be returned to the community in manifold benefits, if not in the near future, then within the next few years. The honorable member for Grey (Mr. Lacey) was very pessimistic about the unemployment situation, and said that if this plan were not designed to relieve unemployment it would be of no use. There is some truth in what he says, but if we do not start with some plan we shall never relieve unemployment. What has been the position in Australia during the last eighteen months or two years? First we had the tariff plan, which was to solve the unemployment problem, but since it has been introduced, unemployment has risen from 12 per cent. to 30 per cent. The latest figures show that there are close on 400,000 trade unionists out of work in Australia. That number is underestimated.
– It does not. include clerical workers.
– Up to the present nothing has been done to. relieve unem-. ployment, so we. cannot go far wrong in trying this plan. This is our last resource. We have to reduce. the cost ofl government. We are acceding to the demand of the supporters of the Govern- ment that the bondholders shall share in the general sacrifice. Now that we propose under this bill to place a burden upon the bondholders, some of those honorable members are opposed to it. Do they want to see the restoration of confidence in this country, or do they want this country to be in a state of chaos and revolution? This plan of reconstruction must be accompanied by the encouragement of private enterprise. We must depart from the system of highlysocialized State enterprise which has been in operation in this country for the last 30 years. Whatever its merits, it has, in many respects, frozen private enterprise, particularly from abroad; has kept capital out of this country excepting for the purpose of government loans ; and has brought about a mania for wild speculation, such as we see in Sydney, which is not good for the country in a time of crisis. I refer to sky-scraper speculation, and also to the mushroom companies and combines that have sprung up in the community. They do not help this country at all. Therefore, accompanying this plan of reconstruction must be the encouragement of private enterprise. The Government of New South Wales is adopting at a critical time like this the insane plan of confiscating wealth so as to relieve unemployment. It proposes to lake £16,000,000 out of the pockets of the community of New South Wales, in addition to the existing taxation. It is proposing other taxation so as to keep the people on the dole, and to carry out certain government works of the same unreproductive nature as those which litter that State to-day. If that policy is pursued, what will be the position of New South Wales at the end of the year ? Once this money has been expended that State will become bankrupt. It might just as well smash now as to pursue its present policy and smash at the end of the year. It may be asked in what way is private enterprise to be encouraged. Let me say that there are plenty of works iu New South Wales that private enterprise, if given the chance, would carry out and thus relieve the Government of its responsibility in respect of unemployment. When Dorman, Long and Company finished the North Shore Bridge, it offered to build a bridge over the magnificent Hawkesbury River at a cost of nearly £1,000,000, but its offer was turned down.
– What were the conditions ?
– The company wanted a reasonable rate of profit.
– What amount of profit ?
– The honorable member last night talked about a business which he at one time sold, but he did not say whether he made a profit out of it. The fact that he is a member of this Parliament is evidence that he must have been a success as a business man. I ask him whether he gave his goods away..
– Yes. That is why I am here.
– The role of philanthropist is a new role for the honorable member. He would not expect this firm to carry out this work at a loss, and, therefore, his question as to what profit the firm proposed to make is useless. There are plenty of other works that will have to be carried out. For many years no more loan money will be available. If we are assuming that the old borrowing policy will be adopted once this country is in a position of stability, we are going to be sadly disillusioned. This conversion loan sounds the death knell of borrowing in Australia for many years to come, even during the lifetime of this generation. If we do not put a stop to the borrowing of money in Australia, we shall, so soon as Australia is placed on the road to prosperity, have State Premiers such as Lang, Hogan and Hill approaching the Loan Council for an increase in their loans, as they did before. It is because the Governments of Australia have, in the past, borrowed consistently, that Australia is to-day in a difficult financial position. The people will not lend their money to the Governments of Australia unless they know that it will be expended on reproductive works. We cannot allow hundreds and thousands of our citizens to live on the dole, to hump their swags, and to become chronic loafers. Work has to be found for them. The Government’s plan, if successful, will lead to the political and economic rejuvenation of Australia. We must adopt a. new national policy, including the carrying out of public works by private enterprise, not only in Australia, but also from overseas. If that policy is adopted successfully, we shall, in a few years, have a new Australia, not a revolutionary red communistic Australia of the kind that some honorable members in this House would like it to be, but a solidly based Australia, fit to carry the millions of people who will eventually inhabit this country.
.- This bill marks the second phase of the rehabilitation scheme with which a considerable number of honorable members on this side disagreed at the secondreading stage. That there is a necessity for a reduction of interest, as proposed under this conversion loan, is beyond argument, but the actual result of the operation of this legislation will be a saving in interest payments for the year of £6,000,000. It is evident that the Government’s plan does not propose the provision of moneys to encourage private enterprise or government works for the absorption of our unemployed. That, I consider, is a serious omission from the plan. Last evening the honorable member for Adelaide (Mr. Yates) suggested that the bill should be withdrawn with the object of redrafting it so as to include interest payments due to oversea bondholders. I do not agree with that. We can assume that Australia will not be able to borrow money for many years. That will, to some extent, be a blessing, although it will place a handicap upon industry. Half of our national debt of £1,100,000,000 is owed overseas. I fail to understand why the Premiers Conference did not deal with overseas interest in the same way as it dealt with internal interest. Surely, if it is right that the interest rates applying to Australian bondholders should be reduced by 1-J per cent., it is also right that we should bold in Australia for one year, the £36.000,000 which we owe in interest overseas. By not sending it overseas we would save in a year £11,000,000 in exchange and bank charges, or a total of £47,000,000. If I were in charge of the Government at the moment I should put aside the sloppy platitudes of certain honorable members about interest sharks, and endeavour to give relief to our unemployed. This loan conversion will save an interest payment this year of £6,000,000. It may, but I do not think it will, restore confidence in the community. I would hold in Australia our overseas interest debt of £36,000,000 and thus save £11,000,000 in exchange and bank rates. I should be prepared to pay oversea bondholders 1 per cent, on the interest owed to them, and give the people of Australia the use of the £47,000,000 thus saved. I can see no other means of relieving the unemployment situation. I believe that every honorable member is looking forward to the completion of this conversion legislation. That some honorable members are becoming homesick is understandable, seeing that they hardly ever get to their homes, and efforts may be made before long to adjourn Parliament. I think, however, that the position confronting Australia is so serious that we should remain in session in order that we may observe the effects of the legislation now before us. I am convinced that, as sure as I am standing here, we shall, before six months have elapsed, be called upon by the Government to do what I am now suggesting. It is a very serious thing to ask honorable members to agree to a reduction of old-age and invalid pensions. The Government’s proposals involve taking £3,500,000 from the pensioners, and £1,700,000 from civil servants, who only three months ago, agreed to reductions involving the loss of £400,000. To do as I have suggested would not be repudiation. I believe that what we owe we must pay, but the time has arrived in the history of Australia when it is very necessary to keep all the money we can in the country, and here is a means by which we can keep £47,000,000 at our disposal for the relief of unemployment, and for the rehabilitation of industry. I am not suggesting that we should withhold all the interest due to overseas bondholders. We should pay them what we can, but not more than we can. The Ministers who have spoken on these proposals have refrained from saying one word about what is being done in connexion with overseas interest. Neither in the party room nor out of it have I heard anything regarding the
Government’s intention. It is evident, however, that the bondholders, both in Australia and overseas, must be required to make some sacrifice in this time of crisis. President Hoover’s plan will be helpful as indicating the direction in which public opinion is running.
I believe that no honorable member should do anything that would prevent a reduction of interest. As I said when I was speaking on No. 1 bill, I am dubious as to what reduction of interest will be effected on private mortgages and overdrafts as the result of putting into operation the Government’s plan. Ministers have assured me that the position will be amply covered by State legislation. I am prepared at this stage to leave the matter there, but I know that only last week I had occasion to renew a mortgage of £900, on which I have been paying 6 per cent, for the last eight years. The mortgagee was written to on my behalf, reminding him that the money was due on the 23rd June, and asking him on what terms he would renew the loan. He replied that he wanted £200 cash down, and would renew the remainder at 7^ per cent. - an increase of l£ per cent., not a decrease’. If that is what was done to me, who may be said to possess some influence in the community, what will be the lot of the average worker who may find himself in the same position as I was in last week ?
I believe that excellent work has been done by the Loan Council, and its appointment has been justified. Loan expenditure has been cut down by no less than £29,000,000; but although savings have been effected, and more are proposed, we should not forget that the first sacrifice was demanded of, and exacted from, the workers. They suffered a reduction of wages as the result of Arbitration Court decisions a good while before any sacrifices were asked of the bondholders.
I take exception to the clause in the bill which makes seven years the minimum conversion term. In to-day’s mail I received four or five very informative letters from deserving persons in my electorate and out of it, pointing out how hardships may be inflicted by this provision. One writer says that, answering the appeal of the then
Acting Treasurer (Mr. Lyons), he put £2,000 into the conversion loan, of which we heard so much last year. The date of maturity in his case was 1935, when he will need the money for use in his business. Now the earliest date upon which he can get his money will be 1938. Other letters are in the same strain, although the amounts referred to are smaller. The holdings of small investors should not be subject to the same treatment as those of the large investors. Some of the holdings are so small that the return from them is not even taxable under the income tax provisions. Some amendment of the act to cover these cases will certainly be necessary in the committee stage of the bill. The letters I have received are from persons who are quite prepared to make some sacrifice, but their money should not be withheld from them when they really need it. Of course, the rights of overseas bondholders should be protected, and we should pay them a minimum of 1^ per cent, on their money. The scheme I proposed, besides saving for use in this country the interest which otherwise would go overseas, would effect a saving of £11,000,000 in exchange and bank charges. This would do a great deal towards revitalizing industry, and absorbing the unemployed. As I have pointed out, it has yet to be shown that the State legislation contemplated under this plan will, for a certainty, provide for a reduction of interest on mortgages and private overdrafts.
– I rise for the purpose of calling attention to one aspect of this proposal which I regard as very important, and concerning which there should be no misunderstanding on the part of the public. The principal operative clause in the agreement, under the bill associated with this measure, namely, the Debts Conversion Agreement Bill, provides -
That the Commonwealth shall be authorized to arrange and effect a conversion on the basis of a 22J per centum reduction of interest on the public debts, &c.
I hope that members of the Government will give me their attention, because the matter is important. “We have not this afternoon had the Treasurer in the chamber, but I can understand his absence, knowing that other important bills with which he is concerned are being prepared. The governing Provision of this bill, which is to be found in clause 13, provides that -
The equivalent amount of new securities to be exchanged for an amount of existing securities shall be based on a reduction of existing rates of interest by 22-J per centum, and shall, where necessary, be determined by actuarial calculation in the manner set out in tlie schedule of this act.
The reader is referred to the schedule to ascertain the manner of the conversion. Bondholders are to be invited to eonvert their present securities into others for longer terms at 4 per cent., or less, according to circumstances, and the reduction of interest is stated to be 22^ per cent, of that at present being paid. The speech of the Treasurer indicated that the interest deduction was to be 22^ per cent. Taking the example given in the schedule, a 6 per cent, security, due on the 15th December, 1938, is to be converted on this basis: For each £100 of existing 6 per cent, securities, the equivalent amount of new 4 per cent, securities will be £104.1760095, or, approximately, £104 3s. 6d. So there is to be a new security, which is to bear 4 per cent. It will be observed that there is a premium of £4 3s. 6d., which is the difference between 6 per cent., less 22^ per cent, of 6 per cent., and 4 per cent, up to the date of maturity of the security, which is the 15th December, 1938, and, after that, the interest on this security will be reduced from 6 per cent, to 4 per cent. The position of the bondholder will be that, up to the date of the maturity of the original security, he will receive a payment representing interest, at 6 per cent., reduced by 22$ per cent., that amount being made up by the interest paid on £100 at 4 per cent., together with a premium of £4 3s. 6d.
– Is the premium to be paid in cash, or added to the value of the bond?
– In the case of small sums, it is to be paid in cash, but the bondholder has the option of paying the additional amount required to make up £1Q, or a multiple of £10, in which event the premium will be added to the bond.
– Generally speaking, it will be added to the bond.
– In considerable amounts, it will. I understand that, after the date of the maturity of the original securities, the bondholder will receive interest at 4 per cent, on either £104 or £100, and, in the latter case, he will have the £4 ia his pocket, which he may invest as he thinks proper; but, after the date of maturity of his present holding, his interest will be reduced to 4 per cent That is substantially the position. These premium amounts are calculated to make an adjustment which will provide the existing rate of interest, less 22£ per cent., to the date of the maturity of the existing security, after which the rate is to be cut down to 4 per cent. The whole transaction in this case, therefore, works out at 6 per cent., less 22 J per cent, of 6 per cent., up to the date of the original security, and thereafter, 4 per cent, on the amount of the original holding. That is- the financial result of the operation.
– -The bondholder will not be so well off as if he were taxed 22^ per cent, on his interest.
– Apparently, while he suffers a reduction of 22-J per cent, in his interest rate during the outstanding period of his existing security, after that he suffers a reduction of 33-) per cent.
– That is on the assumption that he could renew at 6 per cent. May we not assume that money will become very much cheaper?
– Probably we may. 1 am raising this point Only in order that there may be no misunderstanding. The position, as I see it, can be justified and supported ; but, unless the matter is made clear in this debate, I am afraid that, if what I contend is correct, it may be said hereafter that this is more than a 22^ per cent, reduction. If there is to be a reduction of 22£ per cent, until the date of maturity of existing securities, and thereafter it is assumed that 4 per cent, will be the market rate, and if the argument is used that the holder of the security, after his existing contract has run out, can have no reason for complaint if he obtains what is now regarded as the then probable rate of interest, the case is clear, and one which can well be advanced. But, if one examines the speech of the Treasurer (Mr. Theodore), and the statements in the press on this subject, purporting to be an explanation of the bill, I think that it will be discovered that the general conception is that, for a fixed term agreement to pay interest at a certain rate, there is to be substituted, speaking generally, a longer term agreement, the interest throughout that longer term representing a reduction of the present rate by 22$ per cent., subject to exceptions in the case’ of securities bearing low rates of interest. I think that that is the common understanding. If that is inaccurate, I suggest that it is very desirable to make the position quite clear in this House. It would be most unfortunate if, on such an appeal to the people as is now contemplated, a serious misunderstanding of. the nature of the proposal should be allowed to persist uncorrected.
– All stocks from 5^ per cent, upwards will be put back to 4 per cent.
– Yes, and a certain premium payment will be made; but what does that represent? I am claiming that it only represents an adjustment against the stocks bearing still lower rates, and is designed to prevent the rate of interest during the remaining period of a security from falling below its existing interest rate diminished by 22$ per cent. After the period of maturity of the existing security has been reached, in the case of the converted security the financial’ result is that there will be a reduction, in some instances, of or more than 22$ per cent. It is important that there should be no misunderstanding when an appeal is being made to the public to accept this proposal voluntarily.
Another point to which I desire to direct attention has arisen since the precise terms of’ the conversion bill have been before the House. Honorable members are aware that the Debt Conversion Agreement Act will be the authority for the- enactment of the Debt Conversion Act, insofar as that act will bind bondholder,s who do not dissent from the proposal within, a given time; It; is important, therefore, to see that the Debt Conversion Act accords with, the Debt Conversion Agreement Act. The authority conferred by what I would call the “agreement act” is an authority to the
Commonwealth to arrange a conversion on the basis of a 22$ per cent, reduction of interest. Those are the words in the Debt Conversion Agreement Bill, and it is proposed to leave them unchanged. The legislation .introduced in pursuance of that authority is this Debt Conversion Bill. Is this a bill for a conversion on the basis of a 22$ per cent, reduction of interest ?
– Might it not be in conformity with the agreement if the 22$ per cent, reduction were effected in the aggregate, and not .with respect to individual recipients of interest?
– That would be an entirely new view of the nature of this operation. Then the interest of some of the bondholders might be reduced to almost nothing at all, leaving others where they are. That is certainly not the intention. There is some doubt as to whether the debt conversion bill can be described as effecting a conversion on the basis of a 22$ per cent, reduction of interest. I can see that there are arguments to support the proposition that it is such a conversion; but the reference to the 22$ per cent, reduction is not limited in the agreement to the still unexpired period of existing securities. If it were so, my point would be met. It appears to me that there Ls authority only to effect a reduction of 22$ per cent., and it is quite arguable, by reason of the facts and circumstances to which I have referred, if I am accurate in my opinion, that the bill, does something more. The Government was good enough, after my speech last Friday week, to afford me an opportunity of considering, in conjunction with the Commonwealth SolicitorGeneral, the form of the agreement bill, and certain amendments were prepared which are now befor the House. At the time- when I was considering those matters, however,. I had not seen the conversion bill, and this particular point had not occurred to* me. I suggest that careful consideration be given to the question- whether, this bill accords with the> authority conferred by the agreement, or- whether, on the other hand, there is not some risk of a difficulty arising owing to the fact that it may be said, with a considerable degree of plausibility, that the reduction of interest rates, at least in relation to the period succeeding the unexpired period of certain existing securities, will be more than 22$ per cent. It is desirable that a clear statement shall be made on this subject.
– It is very difficult to make a clear statement, because actuarial calculations are involved.
– What I wish to have definitely stated is whether the 22$ per cent, reduction will cover the whole period of the new security, or whether it will, as a maximum, cover only the unexpired period of the existing security, after which the reduction will, in some cases, be at a heavier rate. It is the total financial result that I want to get at. It is important that a definite statement be made on this subject, otherwise members of the public may take the view that they have been misled into thinking that they were making only a 22$ per cent, sacrifice altogether, whereas they were really making a 22$ per cent, sacrifice for the balance of the period of their existing security, and a greater sacrifice taking into account the final results. This is a point that should not be allowed to remain unsettled.
.- I shall support this bill because it will ensure that the principle of equality of sacrifice will be expressed in regard to bondholders, and will tend to help to correct the difficult financial position of both the Commonwealth and the States. If these two highly desirable objects are attained, it will be to the advantage of Australia. Also by accepting the conversion in this form we shall be doing the utmost that can be done to bring about a reduction of interest rates in respect of private as well as public borrowings. In my opinion, a measure of this kind is necessary in the interests of the bondholders themselves. By converting their present holdings into the new stock, bondholders will undoubtedly be doing a great deal to safeguard their capital. But it is important that the conditions shall be such as will ensure fair play as between the different classes of bondholders. An effort has been made to ensure equality of sacrifice in a general way by dealing with the different issues of existing stock according to actuarial calculations. The schedule gives a statement of the method of determining the actuarial equivalent of new securities. In some cases there will be a premium obtained on conversion. But there are certain ambi- guities in the drafting of the bill to which direct attention. One point raised a few minutes ago by the Deputy Leader of the Opposition (Mr. Latham) merits careful consideration. Besides that I am quite satisfied that there is ambiguity in the provisions of the bill which relate to the different classes of tax-free bonds. I have been assured by both the Prime Minister (Mr. Scullin) and the department concerned that the intention of the Government is that the holders of taxfree bonds shall enjoy the same privilege of immunity from taxation as they enjoy under their present contract, but that they, in common with other bondholders, shall make a sacrifice of interest to the extent of 22$ per cent. I direct attention to sub-clause 2 of clause 13 which reads -
Securities which have been issued with optional dates of redemption shall, for the purposes of calculations under this act, be deemed to mature upon the latest date in respect of which the option of redemption of the securities may be exercised.
Sub-clause 1 of clause 14 reads as follows : -
On the conversion of existing tax-free securities, the interest on the new securities issued in exchange therefor shall be free at Commonwealth and State income tax until the original date of maturity of the existing; securities.
We should make quite clear what we mean by “ the original date of maturity of existing securities “. It would b* quite fair to take the first possible optional date of maturity as the date of maturity if, when that time arrives, the Government is willing to redeem the bonds in cash. But, if the Government is unable to redeem in cash, the holders of such stock should have the right to hold their privilege until the later of the optional dates of maturity. I hope that the Treasurer (Mr. Theodore) will get the Parliamentary Draftsman to look into this point. Sub-clause 2 of clause 13 makes a specific provision ii, regard to the determination of optional dates of redemption; but the use of the words “ for the purposes of calculations under this act “ in that sub-clause makes it doubtful whether the same provision will apply in respect of the redemption of tax-free bonds. The point could be cleared up if a definition of “ the original date of maturity of the existing securities,” were given. Perhaps the words “or original optional date “ could be inserted after the words “ original date “. My object in directing attention to this point is to ensure that the Government shall act as fairly as possible towards different classes of bondholders.
Sitting suspended from 6.10 to 8 p.m.
Motion (by Mr. Martens) put -
That the question be now put.
The House divided. (Mr.speaker - Hon. Norman Makin.)
Majority . . 44
Question so resolved in the negative.
.- I am sorry that I have delayed the taking of the vote on the second reading, and I thank the Prime Minister (Mr. Scullin) and the Treasurer (Mr. Theodore), who agreed, prior to the dinner adjournment, that I should speak before the division was taken.
The Deputy Leader of the Opposition (Mr. Latham) stated that although the debts conversion plan is based on the reduction of interest rates by22½ per cent., this bill provides for that reduction only until the original date of maturity of the converted bonds, and that after that date, in the case of a 6 per cent, bond, the reduction will actually amount to331/3 per cent. At first glance that might appear to be so, but that conclusion is not quite correct. Let me take the example to which the honorable member referred, the 6 per cent. bonds maturing in 1938. An actuarial calculation proves that the factor to be dealt with computes the security as £104 3s. 6d. for each £100 of the existing security, over the full term of the new security. Actually, there is a” slight diminution in the rate of interest after the original maturity date of the bond. It is found, on distributing the 1938 6 per cent. bonds over three periods, that there is a new factor for each period. For the 7½ years until the original maturity date, the new security would be worth £104 3s. 6d., but at the end of 10½ years from the date of commencement of the new security it is £105 10s. 6d., although the holder is still receiving interest on the £104 3s. 6d. At the end of 13½ years the amount of capital is £106 14s. 7d., and at the end of 30½ years £1115s.11d. ; yet interest is being paid on the £104 3s. 6d.
– Does the factor vary with each period?
– No, not according to the bill; but by ignoring the new factors the interest rate does fall, or, as was shown by the Deputy Leader of the Opposition (Mr. Latham), the reduction of interest is greater than 22½ per cent. Although for the first period of 7½ years up to 1938 the interest would be 4 per cent., making the factor £104 3s. 6d., the amount of interest drops during the different periods to £3 9s. 4d., £3 9s., and at the end of the 30-year period, to £3 7s. 3d. However, a start had to be made somewhere, and I suppose that the actuaries adopted the easiest method of determining the factor upon -which to work. If the basis adopted is assumed to be correct, those calculations also are correct. “When the committee stage is reached we shall bo able to refer in ‘greater detail to the basis of calculation. It is difficult to determine upon a starting point that would be absolutely fair during the currency of the loan to holders of bonds at various rates’ of interest, and at the same time to make a reduction of 22$ per cent., for a certain period, but not for ever. We may hope, however, that with the passing of the present depression,, money will become cheaper, and that, even without a measure such as this, the interest rate will not be 6 per cent, in 1938, but considerably less.
Many people appear to think that a bondholder is- a subject for execration on every possible occasion; that he is doing something improper when he lends money to- the Government. I am quite aware that the majority of honorable members do not hold that view, but some do, while many persons outside are firmly convinced that bondholders do nothing that isi conducive to the public welfare, that they are actuated by one desire, to act as blood-suckers,, and draw interest from the community to the last penny. That is an altogether wrong opinion to hold concerning these people. Whenever we want to borrow money we are only too pleased to praise those who can lend it, but once we have obtained the money, we- have often quite a different tale to tell. There is an old truism that the best way to lose a friend is- to lend him some money. He spends his time dodging you and hates the sight of you, because you represent a debt, and he has no good to say about you on payment day. In every country to-day the bondholder is- execrated, and declared to- be this, that, and the other thing;: but in the past when we required money for the purposes of creating employment it was quite a different matter. The bulk of the money that has been borrowed by Australia has been spent on developmental’ works, and possibly 75 per cent, of it has gone in wages from which benefit has been derived, not only by the persons directly employed, but also by other sections of the community dependent upon them.
The money has been spent largely on works which to-day are either earning interest in some form or. other, or giving benefit to the community. Of the total local debt, States and Commonwealth, with which this bill deals £229,000,000 is held by what may be called public bodies, and £327,000,000 by the general public, and mostly by the small holders.
The bondholder is not a blood-sucker endeavouring to draw from the community the last penny. But we have now a huge burden of interest which we contracted to pay at a time when prices were high, and we were in a position to pay high rates, and are come to a time of falling prices. We are no longer able to pay those high rates, and although it is only natural for us to ask the bondholder tO’ share in- the sacrifice which every individual in the community is expected to make, our attitude towards him should be exactly the same as that which we adopt towards every one else in the community. We should tell him that in the present state of the country we can no longer pay the rates of interest that formerly we could afford to pay, and that we expect him to throw in his lot with the other sections of the community and accept lower rates of interest.
I think that the Government is right in omitting from the bill all reference to what is likely to happen to the bondholder who dissents. It is provided in the measure that if a,person says nothing he is to be taken as having consented to the conversion of his existing securitiesinto the new securities, and that the person who does not consent must state his dissent.
– Is the fourteen days’ gracesufficient ?
– The time could beextended, because people in the back country ought to- be given sufficient opportunity to get into touch with their bankers. That, however, is a matter for the committee stage. I am thinking of what is likely to happen if the bondholder dissents and lets his stock run. Many people may think that by dissenting they may get their cash. I am sure that there are individuals, thinking themselvescumming, who will try to gain some advantage over the patriotic section of the- community who are prepared to accept a reduction of interest and an extension of the redemption period for their stock; I think they are much mistaken in believing that, by registering their dissent, they will gain advantage. But if a great number of the bondholders adopt that attitude, the conversion loan cannot be a success; and if it is not a buccess, it will be a case of God help the country. Almost the only alternative to the success of the plan proposed at the Premiers Conference is inflation, and if we have inflation the £100 bond will no longer be worth the £78 it is to-day. The holders of it will be lucky if it is worth 78s.From a selfish point of view, those who think they will be gaining by dissenting from the conversion of their stock may be the losers in the long run.
– One of the terms of the conference resolution is that the conversion must take place.
– What the word “ must “ means we can only assume, but the bill is not founded on compulsion. The success of the whole plan of rehabilitation depends upon the successful conversion. It is based upon a free conversion by the people, and it is just as well for the bondholders to know that if they do not convert they will be losers in the long run. The right tone to strike is that every one mould make a sacrifice. Some can illafford to do it. A reduction of interest may bring many down in the social scale ; but it is very often easier to sacrifice money than many other things. But every one must come into the general sacrifice, including the people to whom we owe money at the present time. It is true that we entered into a contract to pay certain rates of interest for certain periods, and that contracts can be amended only by mutual agreement, but we are now asking the people with whom we have entered into a contract to alter its terms. I support the bill, and I hope that the conversion loan will be a huge success, that it will be an object lesson to our own people, and that it will prove to the rest of the world that the people of Australia are determined to work together to do the best for their country.
.-I do not intend to discuss the general principles of the bill ; I merely rise to direct attention to an important feature in relation to the intervals between the maturity dates of the conversion loan, and to ask the House to consider whether these dates may not make it almost impossible in the years ahead to find capital for the development of the country. The dates fixed for the maturing of the conversion loan are seven years, ten years, thirteen years, sixteen years, nineteen years, 22 years, 24 years, 26 years, 28 years, and 30 years from the present time. If at any time before seven years have expired new money is borrowed with maturing dates of five, ten, or fifteen years, the new loans will mature simultaneously with a certain part of the conversion loan. To my mind three years is altogether too short an interval. The interval between maturing dates should be at least from thirteen years to nineteen years, and from nineteen years to 25 years.
– There could then be two loans maturing at the one time.
– Provision could be made ahead to meet that contingency.
– By ante-dating the right to redeem.
– It is not desirable to give such an option to the Government.
– Yes. But it is necessary for us in regard to this huge conversion to remember that we are planning the whole budgetary programme for those who come after us for practically the next 50 years. If, say, ten years from now, there should be a further period of deflation, or another crisis, we shall have created for the administration of that time a problem almost as perplexing, and certainly as gigantic, as that which confronts us to-day. There can be no stability in the money market of this country for the next twenty years. I do not agree with the view that some people hold that it will be possible to attract large capital sums from outside Australia.
For at least a decade there is bound to be a psychological reaction overseas, which will affect the confidence of overseas investors in Australia, and it seems to me that We shall be almost entirely dependentupon internal resources for development capital. But when “we are obliged seven years from now to convert £50,000,000 of maturing bonds, and are faced with the need to raise new money, a serious position will arise.
This conversion bill is practically the starting point of the financial unification of Australia. The State debts now become the responsibility of the Commonwealth Parliament. The stocks and bonds will be Commonwealth stocks and bonds, and upon the Commonwealth Government more than the Loan Council will devolve the whole responsibility for the conversion of the loans when they fall due.
– Is that not the position now under the financial agreement ?
– No. The Loan Council is as much a State authority as it is a Commonwealth authority, and reflects to a very substantial measure the desires of the States.
– The representatives of the States predominate on the Loan Council.
– They do in point of numbers, but I have no doubt that the Commonwealth Treasurer, as Chairman, has a great influence in determining the decisions of the Loan Council. For the future these conversion proposals will cast upon this Parliament the major responsibility in connexion with the public debt of this country.
– This has enormously eased the existing position of the public debt.
– I admit that for the next seven years the problem of Australia’s public debt will, because of the postponement of its maturity, be greatly relieved by this bill. The financial agreement gave certain immediate advantage to some of the States, but disadvantages revealed themselves, and later this conversion plan, although it relieves us of a present difficulty, may land us in immense difficulties in after years, just as the Russian armies when apparently victorious were suddenly plunged into the Masurian Lakes, and utterly destroyed. In those circumstances I feel, in reviewing this bill, without repeating what I said on the agreement bill, that the frequency with which conversions will have to be arranged will be a danger to future generations. During the last ten years we have not had anything like suck frequency of maturity as is proposed in this bill, and we must remember that theaverage conversion, if no new loans areraised, will be £50,000,000. If we should raise annually, during the next five years,, from £10,000,000 to £20,000,000 on a tenyears term, we may throw upon a particular Parliament the responsibility of converting upwards of £100,000,000 during its lifetime. That leaves out of account the fact that our average borrowings in the last ten years have been about £40,000,000 annually. I do not expect a similar rate of borrowing in the near future, but assuming that we borrow from £10,000,000 to £15,000,000 a year after the ship of state has been restored to an even keel, the conversion of this money simultaneously with stocks maturing under the schedule in this bill will present’ an almost insuperable difficulty to those who come after us. The House should consider before the bill reaches the committee stage, how far it is wise statutorily to prescribe fixed periods of maturity. I suggest that the Treasurer should have some reserve right to redeem certain of the loans earlier than the date fixed in the statute if his resources and the best interest of the States at the time indicate that that is the proper course. In the main I agree with the contention that contracts should be honoured, but in the last analysis this House has to recognize that iron necessity makes impos sible the honouring of the contract we have entered into, and rather than face the possibility that ten, fifteen, or twenty years hence this Parliament may be called upon to take action similar to that now proposed, we should give to the Treasurer a reserve option to redeem stocks at his ‘Convenience, provided that, the option be exercised within a reasonable period of maturity. That would not be an injustice to those who are now required to convert.
– Does not clause 7 provide for that?
– Only in certain circumstances.
– “What determines the amounts that become due on the various dates of maturity?
– That involves an intricate calculation which would tax the capacity of a mathematician. By the rigidity of this provision in the bill we are piling up trouble for posterity. This Parliament is now paying for the lack of foresight on the part of those who financed Australia during the pre-war period, and we should not now recklessly say to ourselves that nothing matters so long as we get out of our immediate difficulties. Australia will not be benefited by getting out of the hole in which it is at present, if it is to flounder in another ten or fifteen years hence.
.- I am glad that the Government has recognized the desirability of not curtailing debate on a measure of such paramount importance as that which is now before the House. The Treasurer when moving the second reading quoted as precedents for this proposal various conversion bills submitted to the British Parliament, and he mentioned particularly’ the great conversion loan of 1888 at the instance of the then Chancellor of . the Exchequer, Mr. Goschen. The honorable gentleman’s remarks conveyed to my mind that the 1S88 conversion was analagous to that now proposed - that this bill is not radically new in all its aspects, as similar action had been taken previously.
– I did not compare the two conversion schemes from that point of view. I dealt only with the provision that assent was presumed in the absence of dissent, and the shortness of the period in which dissent could be signified.
– There are two points of similarity between the 1888 conversion loan and that now before the House. The first is the curious fact that the amount to be converted then was only £2,000,000 in excess of the amount covered by this bill, and the second is the presumption of assent in the absence of dissent, and also the shortness of notice given to the bondholders. There the similarity ends.
– Of course the two schemes are entirely different. This conversion proposal is the result of a national crisis. The British conversion loan of 1888 was not prompted by emergent conditions.
– Quite so; but the honorable gentleman did not make that clear in his speech. It would he hard to imagine circumstances more dissimilar from those of the Commonwealth to-day than those in which the 1888 conversion was effected. Mr. Goschen quoted, in support of his bill, four reasons mentioned by Henry Goulburn, who as Chancellor of the Exchequer in the Peel Administration, arranged the 1844 conversion, namely, (1) the general expectation of the country that, in view of certain circumstances, the conversion would be accepted; (2) the amount of capital seeking investment, and the fall in the rate of interest; (3) the strong position of the revenue; and (4) the manageable proportions of the floating debt. Mr. Goschen said that the reasons for the 1888 conversion were equally as strong as,. if not stronger than, those advanced by Mr. Goulburn in 1844’. But contrast the conditions in Great Britain in 1888 with those in Australia to-day; Government stock was above par; Australian stock to-day is below par. The British revenues in 1888 were buoyant; ours, unfortunately, are depressed. Mr. Goschen thus summarized the conditions which influenced him -
An immense amount of money is seeking investment. Prices of sound securities have risen to an extreme extent; other securities have been passing government securities in the race, because government securities have ever hanging over them the fear that they may bc converted at any moment whilst other securities enjoy immunity from this danger.
A general reduction of interest had taken place, and illustrating the strong position of government securities, Mr. Goschen said -
I am now able to borrow for the nation on treasury-bills for six months at the rate of fi 12s. 7d. per annum. Out credit was never better, nor our revenues more sound. Investors in every other security are receiving less, and holders of government securities must accept the fact that they, too, must be content with smaller incomes from government stocks
In short, that conversion was the natural consequence of the decline of interest rates.
– And the loans were maturing?
– Some were, bin others were not. The conversion followed, instead of preceding, a general fall in interest rates. All government securities on the market were quoted lower than private stocks, because of fear, not that they would not be redeemed, but that they would be.
– If there was justification for the great conversion loan of 1888 the justification for the present proposal must be ten times greater.
– Yes; but the Treasurer will readily see that the results of a conversion of this kind may be vastly different from the results of a conversion made in the very opposite circumstances. Furthermore, an important difference between the two schemes Ls that those who dissented from the 1S88 conversion were paid off.
– It is true that Parliament, at the suggestion of Mr. Goschen, followed the precedents of 1844, and, I think, 1822.
– By deciding when and where the holders should be paid off.
– Parliament reserved to itself tlie right to pay off the dissentients when, and under such conditions as it thought fit, but it paid them off in full. One must, however, take into account the circumstances in which the 1SS8 conversion was. effected. The influence of money in the House of Commons and the House of Lords then, was infinitely more powerful than it is now. and in the minds of those who dissented then, there was a greater feeling of security than there is likely to be in the minds of Australian bondholders who may dissent from this proposal to convert their investments into long-dated securities.
I must, however, confess that the very grave circumstances confronting the Commonwealth have forced the Government to adopt this drastic experiment. As I indicated last week in a debate on another measure, I believe that the cause of our present difficulties are international, and that although we may resort to certain expedients to meet them, the real problem can only be overcome by international action. But as the Government has taken certain action, I, for one, do not intend by undue criticism to make a difficult position more difficult.
There are aspects of the scheme which I do not like. The Government, wisely or unwisely, has decided upon drastic steps to remedy the position. Viewed from the political stand-point, the courageous course whichit has taken is beset with difficulties. The objective of the bill is a reduction of interest rates. I should be the last to oppose it, because I have always held that, if we sanction a reduction of pensions and the other economies included in the Government’s plan, details of which will, I presume, be before us shortly, certainly we should not object to a reduction of interest rates. Because of the certain political risks in this matter, it would have been infinitely wiser, from the point of view of party political tactics, if the Government had thrown the whole of this responsibility upon some other party. Already its emergency proposals have riven the Labour party temporarily at all events, if not permanently. In the circumstances no one can accuse the Government of trimming its sails to this or that particular political wind. I believe that the Ministry is making an honest attempt, in collaboration with all State Governments, to take what appears to be the right course in exceedingly difficult circumstances.
The conversion loan has been launched, wisely or unwisely. I intend to give it my support. I hope that it will be entirely successful; but I repeat that the root cause, lies in our international relationships and our troubles can be solved only by international action. Recent world events give point to this suggestion. I refer to the proposal made by Mr. Hoover, the President of the United States of America, to postpone the payment of all international debts arising out of the war. With many honorable members, who have referred to this matter, I believe that this announcement is merely the forerunner of proposals to cancel all war debts, which, I am convinced, are largely responsible for this world-wide problem that is engaging the - attention of all nations. We have already noted certain repercussions favouring this view. Following the announcement made by President Hoover, there was a rapid rise in London Stock Exchange securities and commodities, the movement affecting even the prices for Australian exports. This remarkable response to the gesture of the United States of America with regard to war debts may explain the paradox of a world choking with goods, and scores of millions of people anxious to consume them, but unable to purchase. Australia, through her overseas trade, Ls closely identified with world economic forces, and while we may do something to set our own house in order, our return to prosperity must, to some extent depend upon the economic rehabilitation of those countries with which we have trade relationships. There are several imperfections in the scheme, but I hope that we shall be able to do something to improve the general plan when we are considering the details of this bill. The Government, in launching this conversion loan, is acting courageously, and, I believe, in a non-party spirit, with a view to solving our problems in the best way possible.
– I agree with other honorable members who have spoken in this debate that such an important bill as this should not be forced through this House without adequate consideration. The magnitude of the issues involved demands the most careful scrutiny of the Government’s proposals, and in the discussion which must ensue upon them it is possible that even the humblest member in this House may contribute suggestions of value to the nation. It is anomalous that, in a country like Australia, and in a time like the present, when science has made possible the conquest of the air and contributed so much to the material well-being of humanity, we should be still adhering to an old-fashioned system of finance which permits a limited number of persons in control of banking institutions to make money plentiful or scarce, and control the destinies of the people. While we are producing an abundance of all that is required for the sustenance of our people we have an army of unemployed, numbering between 300,000 and 400,000. This condition of affairs should not be tolerated by any enlightened people. Suppose, for the sake of argument, that all of the unemployed, of Australia could be assembled into an army, and that that army marched upon, say, the city of Adelaide.
Suppose, further, that the inhabitants of that city, alarmed at the threatened invasion, deserted their homes and allowed this army of 300,000 unemployed persons to take possession. The newcomers would find there ample accommodation in the beautiful homes of the people whom they had driven out of the city, wardrobes would be discovered full of wearing apparel, and there would be a superfluity of food, but no money. Is it reasonable to assume that the new inhabitants of that city, being then in the full enjoyment of all the comforts which it could give them, would desert it merely because there was no currency ? Is it not more reasonable to think that, instead of marching out again to sleep by the roadside and endure once more the pangs of hunger, and all the hardships inseparable from a condition of unemployment, they would resolve among themselves to establish a currency system to meet their particular needs ? This being the case, it is about time that we took similar action to control our currency, which plays such an important part in the development of this country. Adam and Eve, in the Garden of Eden, were not concerned about currency difficulties, and certainly did not allow considerations of a gold backing of the currency to prevent an expansion of their activities. They obtained all the necessary comforts of life without the aid of a currency system. Similarly, we should, without further delay, take legislative action to control our currency system so as to ensure the issue of credit at a lower rate of interest than has ruled hitherto. We should, in short, rise to the necessities of the time in which we’ live, and not allow representatives of banking institutions to strangle industry by withholding credit and so enriching themselves. We are told that credit is restricted because the national income has declined by £200,000,000 a yean-. Yet when the value of our annual production was £300,000,000 or £400,000,000 less than it is to-day, we had not misery and poverty throughout Australia. We are suffering hardships now because the financiers of the world have been able to corner the. money market. Money has been made scarce, yet it is nothing but a medium of exchange. Had we discovered £500,000,000 of’ gold we might still be in a position of difficulty. The United States of America is faced with a financial crisis although it has a gold reserve of £900,000,000. If that money were put into circulation to-morrow there would be a dislocation of commercial activities, and the nations, as a whole, would suffer considerable injury from inflation. That shows that this Government would be quite justified in taking drastic action to make credits available. It should grasp the nettle firmly. Unfortunately the Ministry’s efforts to govern this country have been thwarted to some extent by another place. Some honorable members declare that this conversion proposal is tantamount to repudiation. I think that it is nearer to conscription of wealth, a thing which I have previously advocated in this House. Eather than default we should conscript the whole of the money that we require today. If such a proposal were agreed to by both Houses of Parliament it would save Australia about £8,000,000 or £10,000,000 per annum. We have the power to do that, but we do not exercise it. Certain honorable members on this side are trying to prevent the Government from giving effect to its proposals-
– We refuse to agree to a reduction in old-age pensions.
– The honorable member and his colleagues pose as the friends of the old-age pensioners, but these might well sa.y “ Save me from such friends “. The honorable member and his colleagues claim to have some knowledge superior to that possessed by other honorable members, and that they alone aire the real Labour members.
– We, unlike the honorable member, are not suffering from cold feet in respect of this legislation.
– The honorable member claims to be politically 100 per cent, perfect. These great fighters with repeated paralogisms have twined them heads into veritable arsenals of sophistry. I look upon this proposal as the first ‘instalment of a series of enactments, the like of which has never before been contemplated in any national parliament. This bill is a step in the right direction. It will not achieve all we desire. In this age the masters of the nation are the financiers, and those who try to ignore that fact are merely deluding themselves. We cannot, in the circumstances, do without the air of the financiers, so we are compelled to use flattery and cajolery in an attempt to get them to release credits. There is such an abundance of credit available in America that that nation is finding it difficult to lend money at even 2$ per cent. In Great Britain the position is somewhat similar. The strange thing about, finance is that money can be created by legislation and by banks. It can be made plentiful or scarce. If the gold standard were restored in Australia, before long nearly the whole of our population would be faced with starvation, because of the quantity of gold available being insufficient for the requirements of the community. Some honorable members contend that gold has a standard value which never fluctuates. That is a delusion. Two thousand years ago a man who had gold equal to that contained in a sovereign would be in a position to buy a mansion. We know that in the days of the Nazarene, the Good Samaritan was able to pay with two pennies a fortnight’s board at an inn for an unfortunate and injured man whom he found on the roadside. If, in those days, a man had had as much gold as the honorable member for Angas (Mr. Gabb) has in one day taken from the race-course, he would have been able to emulate Solomon, who took unto himself 600 wives. The value of gold changes. The only thing whose worth never changes in this world is water. There are times in Australia when for the want of a storm sheep, and probably men, die of thirst. Yet there is as much water in the world to-day as there was when this universe was created. The newspapers of this country have instilled into the people the idea that there is something mystical about finance which makes it necessary for bankers to have control of it. Because of that system of control no credit or currency is available for the relief of the primary producers, many of whom are On the verge of ruin. It is, therefore, time that we changed the system.
I am prepared to support drastic legislation at a critical time like this. I should hit hardest the wealthy people in the community. I am referring not to those who have contributed to government loans, but to those who have shirked responsibilities in that direction. L do not know who is our most wealthy citizen in Australia, but it is said that Mr. Warwick Fairfax, who occasionally writes me up, and gives me a little praise in his newspapers, is worth about £5,000,000. His name has not been closely associated with our conversion loans, and, therefore, I should treat him harshly. His object is to obtain sufficient money to enable him to buy the Canberra Times, and other newspapers, so as to have only one newspaper published in this country, and one reporter present in the gallery of this chamber. The wealthy people of the community who shirk their responsibilities to this nation should be compelled to do their duty. Those who subscribe to the conversion loan will not, in the long run, make n bad bargain, because I have no doubt that ere long money will be available at 2 per cent. If, after this proposed conversion has taken place, another loan becomes necessary, it is probable that the people will not be ready to invest their money in it, and in that case we shall have to resort to a greater degree of conscription of wealth. There is no reason why we should not do that. As we conscript mcn to defend our nation from our enemies, so we should conscript wealth to save our nation from financial ruin. Most of our overseas debt is owed to Great Britain. I look upon Australia as the greatest prize in the Commonwealth of Nations. We are not spending much money on defence because the Mother Country, which protects us, has a powerful army and navy. That saves us considerable expense, and we are, therefore, justified in borrowing from Great Britain, even at a high rate of interest, so that we may be immune from enemy attack. I, therefore, have no quarrel with the British money lenders. I am sorry that we have had to borrow from them, but in borrowing money from Great Britain
Australia is paying it a great compliment. We have greater assets in proportion to our liabilities than possibly any other country in the world, with the exception of the United States of America. Their value may be depreciated; and, in fact, it has been depreciated by the financiers. In my own electorate, there are over 2,000,000,000 trees, each of which is worth 10s. at the stump for house-building purposes. When Abraham Lincoln started out in life, he had to go into the forest and cut down trees. There is in my electorate one tree which, if cut up, would provide sufficient timber to erect a twostory hotel. A motor garage in Robertson was made by using the stump of a tree. The value of such assets as our forests is very hard to estimate. Any person who has loaned money to Australia has a very fine investment. We have . such natural wealth that we should not be confronted with the difficulties with which we are grappling to-day; but we have allowed a few bankers to dictate what we shall do. I dare say they know a little about finance; but I would as soon expect the honorable member for Angas to give me correct information were I to ask him for a race tip as I would expect these professors to give candid information in - regard to financial matters. If, when difficulty is experienced, parliamentarians look to these professors for a lead in financing the operations of the country, they are placing in their hands a power which they ought not to possess, enabling them to make a competency out of the giving of advice which in the majority of cases is misleading.
This proposal commends itself to me, and I think that it should receive the support of this House. I would use it later as a lever to obtain support from honorable members opposite in the application of another instalment of the same medicine. Those honorable members must realize that when we next go to the country the people will return this Government with a majority sufficient to enable it to give effect to much more drastic proposals than this, and thus make Australia a very fine country to live in. My only fear is that we may become so prosperous that we shall scorn work, and thus our virility will become to impaired that we shall he able to offer little resistance to a stronger nation should it care to attack us. We must be careful to avoid degenerating in that way. Financial reform will enable this country to progress, thus rendering it unnecessary for any section of the community to endure the hardships that have been imposed within recent years. I am pleased to be a member of the Parliament responsible for making such a wonderful change, and for a conversion scheme of the magnitude of that which we have before us to-night.
.- The Government is to be congratulated upon having decided, at long last, to correct the situation in which this country finds itself. It is regrettable that it did not take this action earlier. Had it done so, the remedy would not have been so drastic as it is at the present time. It is true that from time to time spasmodic efforts have been made by the Government to reduce the cost of government in this country. But they have been so inadequate that they have done little more than aggravate the disaster, with the result that the remedy that is now to be applied is the only one that will prove effective, and the cut must be made both long and deep. However, the House - by which I mean the majority of honorable members - is solidly behind the Government in its endeavours. This administration is proving itself in the time of its political death more entitled to be termed great than it has given evidence of being during the whole of its previous existence. Many hard things have been said about these proposals. The honorable member for Adelaide (Mr. Yates) in particular, and so recently as by interjection during the speech of the honorable member for Eden-Monaro (Mr. Cusack), has characterized them as repudiation pure and simple.
Mr.Yates. - Hear, hear !
– If he has said that once, he has said it at least half a dozen times during the course of this debate. If he is in earnest in that contention, he does not understand either the meaning of repudiation or the substance of the proposals put forward by the Government.
– He knows what their effect will be, at all events.
– If he knows what their effect will be, he should support the Government, because ultimately that effect must be for the good of, not only the bondholders who, he says, will be penalized, but also the country as a whole.
– We have heard all that before.
– And the honorable member will hear it again, because it is a fact. It is said that bondholders are beiug called on to make a sacrifice. Sacrifices have been made, and they are being made at the present time, by many sections of the community. The primary producers of this country have already made their share of the sacrifice. There has been a reflection of it also in our secondary industries; and the last thing to be affected is government expenditure, in which I include those sums that are spent on social services.
I have listened in vain for any alternative suggestion from those honorable members who sitin the corner, and who are known to be supporters of the Lang plan. The honorable member for Lilley (Mr. Mackay) has put forward an alternative that was suggested before - that rather than reduce the interest rate upon loans a special tax should be levied upon interest. I think that he, and others who make that suggestion, Overlook the real import of this proposal. The Commonwealth Government, and the Governments of the States, encountered two hurdles, which they had to take in their stride if they Were to avoid default. One was to escape the charge of repudiation; and the other - a higher and stiffer hurdle - to meet the loans as they fell due. We have been told by the Prime Minister, the Treasurer, and the Premiers who sat in conference, that it was an impossibility for this country to meet these payments. We are doing the only thing that will prevent repudiation and defaultj by saying to bondholders, “Your rate of interest must come down “. The honorable member for Adelaide insists that, by reducing the rate of interest, we are inflicting a penalty upon bondholders. The honorable member for West Sydney (Mr. Beasley), the honorable member for Martin (Mr. Eldridge), and other honorable members who are associated with them, do not regret that, if it be so. They say that bondholders are blood-suckers, and that they should be made to suffer. But will they suffer ? They would, if the sacrifice were not nation-wide. It has been asserted for many months that the cost of living in this country was coming down. The honorable member for Bendigo (Mr. Keane) has over and over again denied that that was so; but if the sacrifice be placed upon the shoulders of every member of the community there can be but one result, and that is a considerable drop in the cost of living. Therefore, every £1 earned, whether it be in the form of wages, salary or interest, will be worth far more in the months and the years that are to come than it has been in the past or is at the present time. So I say in all earnestness, that while on the face of it we may be calling on bondholders to bear what appears to be a greater share of the burden than is being placed on the shoulders of others, in reality we are doing nothing of the kind. It is because I am convinced that that is so, and because I support the Government in its determination that we shall, at any rate, endeavour to live within our means, that I give my hearty and whole-hearted support to this proposal. I say to the people of Australia, that even as we in this House are putting party politics on one side and are allying and aligning ourselves with the Government, so must the bondholders of this country rise to the occasion, accept their responsibility, and voluntarily convert their holdings in the various loans. Objection has been raised in some quarters to the proposal to allow bondholders only fourteen days in which to notify their objection to convert. It is true that fourteen days is the time specified in the bill, but we must remember that this matter has been discussed formally and informally for at least a fortnight past; in fact, ever since the decisions of the Premiers Conference were announced. The intentions of the Government have been known for some time from one end of Australia to the other, and there are very few of the people concerned who have not already made up their minds as to what they will do. Already the great bulk of the money has been promised to the Government. Last night the Prime Minister was handed a telegram, even before he completed his broadcast, stating that the Society of Engineers had decided to agree to the conversion of its moiety. After we have finished with the bill, it will be discussed and dealt with in another place, and even after it becomes law bondholders will have a full fourteen days in which to make up their minds. I am of opinion that a greater measure of success will be achieved if the campaign is short, sharp, and determined, than if it is conducted over a long period. I wish the Government, or rather the people of trm> country - for it is their concern - every success in the conversion scheme. We in this Parliament can do little or nothing. We simply provide the machinery, and it rests with the people to make a success of the proposal. The people have not failed us in the past, and I am confident that they will not fail their country at the present time.
– I take this opportunity of expressing my keen regret that, owing to the action of another place, the Government has felt impelled to put aside its former financial programme for the rehabilitation of Australia by the issue of a fiduciary currency, and the taxation of interest. Had that ‘ programme been carried through, it would, in my opinion, have been far more efficacious than this one in restoring confidence, stimulating industry, providing work for the vast army of our unemployed, through the instrumentality of State Governments, and in providing relief for our necessitous wheat-farmers, whose cost of production, under present conditions, is greater than the return they receive for their product. The Government, however, under pressure of circumstances over which it has no control, has had to put aside its financial programme and substitute for it what has become known as the Premiers’ plan.
I have experienced extreme difficulty in reconciling my life-long convictions with support of the plan now submitted to the House, seeing that it involves the reduction of civil servants’ salaries and wages, and the cutting of pensions paid to the aged and infirm, and to disabled and incapacitated soldiers. A plan which proposed these things, together with a restriction of social services, “would, in ordinary circumstances, be anathema to me. I find it all the harder to approve of the Government’s proposals, because I have always believed, and still believe, that we cannot find a solution for our economic difficulties by reducing the purchasing power of the community, and with it the ability of the people to consume the products of industry. I have yet to learn that any country has achieved success by the adoption of such measures; indeed, all the evidence points the other way. If the cutting of salaries and wages, together with the reduction of pensions and social services, were all that the plan proposed, it would meet with my uncompromising opposition. In addition to those things, however, the plan provides for the reduction of rates of interest payable on the public debt, and also provides machinery by which State parliaments can interfere with the private contractual obligations entered into between individual citizens, and reduce interest rates all round. Because these proposals are included, I intend to vote for this measure.
I realize that many friends and supporters of mine, who helped me during the last general election, will be grievously disappointed that I can find it possible, in view of my record and utterances, to rise in this House and announce that I am prepared to support the proposals of the Government. It has been suggested - indeed, it has been declared with a good deal of emphasis - that the proposals embodied in the Government’s “plan are entirely opposed to the philosophy of the Labour movement. I have yet to learn that such a declaration is true. Every Labour supporter who knows anything of existing social conditions is aware that the three factors operating to deprive workers of the full product of their labour are rent, interest, and profit. This plan proposes a very definite reduction of interest rates, which are a charge on the production of the country, and this must eventually lead to a reduction in the cost of production, leading in turn, I hope, to an improvement in the standard of living. It has been suggested, as I have said, that the Government’s proposals for economy are opposed to the principles of the Labour movement, and that the Government, therefore, should surrender the reins of power solemnly entrusted to it by the electors at the last election. Only one thing could justify such a surrender, namely, that by going into opposition members of the Labour party would be able to fight relentlessly against the present economy proposals with a view to submitting an alternative plan for the endorsement of the electors when opportunity occurred. That, however, is not the desire of those who have suggested that the Government should resign. All they wish us to do is to cross over to the other side of the House and allow those whose policy we are said to be implementing to carry the plan into effect, while we confine our opposition to high-sounding rhetoric. If it is true that the proposals embodied in the Government’s plan are contrary to Labour principles, it is also against Labour principles to deceive the people into believing that, by rejecting this plan, it will be possible to keep salaries and pensions at their present level, and to maintain existing social services. It was never part of Labour’s programme to delude the people with false hopes, or to practice deception upon them. I do not for a moment believe that, by defeating the Government’s proposals, it would be possible to maintain government expenditure at its present rate. I realize that, because of the fall in our national income, and reduced revenues consequent upon the world-wide economic and financial depression, it is impossible for us to go on spending as we have done in the past.
The Prime Minister (Mr. Scullin), when introducing this measure, set out in unmistakable terms the problems confronting Australia. He made it clear that there had been, a drop of £200,000,000 in the national income, and an increase in the cost of government, due to the abnormal demand for unemployment relief. This, together with the fall in revenue, had resulted in a combined deficit for all the governments of Australia of £30,000,000 for this year, while, unless something drastic was done to stop the drift, the combined deficit at the end of the financial year 1931-32 would be £70,000,000. In the meantime the banking institutions, particularly the Commonwealth Bank which has been carrying by far the largest share of the burden of financing the obligations of the respective governments, had informed the right honorable the Prime Minister and the Treasurer, and through them the Parliament and the people of Australia, that they were no longer able to provide accommodation beyond the limit of £25,000,000. It is true that the banks have extended that limit, and if I understand the position aright, the total overdraft of the respective governments with the banking institutions has now reached £25,700,000. At the earnest request of the Government the banks expressed their willingness to carry our financial liability only up to yesterday. In the future the Commonwealth and State Governments will be compelled to rely upon their own revenue to meet their future commitments. As pointed out by the right honorable the Prime Minister, the Commonwealth revenue for the month of July is estimated at £4,700,000, while the estimated expenditure for that period, without any reduction in the present expenditure, will amount to £7,100,000, leaving a deficit of £2,400,000. Since our revenue is insufficient to mee.t our commitments, and the financial institutions have refused further accommodation, whence can we obtain the necessary money to pay for our social services, invalid, old-age and war pensions, and the salaries and wages of those to whom the Government is indebted? In these circumstances the only course is to adopt the plan submitted by the Government.
Because I believe that the step taken by the Government is the only one by which we can meet the imperative necessities which the situation demands, I intend to support the plan submitted by the Government, hoping that, in due course, it will help to rehabilitate the finances of this country, restore confidence, set the wheels of industry in motion, and absorb hundreds of thousands of unemployed who are spread throughout the length and breadth of the
Commonwealth. It may be that many of the fond hopes cherished by those supporting these proposals will not be fully realized; but that is only one of the disappointments that may await us. While I have some misgivings as to whether the plan will achieve all that is hoped of it by its sponsors, I can see no other way out of the present difficulties. Had it not been for the action taken by another place in blocking the legislation of the Government, I should have been vigorously supporting the Government’s former financial proposals. This Government is not to blame for what has happened, nor is it responsible for the mistaken policy adopted by its opponents in another place. The Government was earnestly desirous of giving effect to the financial policy which it promulgated, but time and circumstances wait for no man. Had the policy rejected in another place been proceeded with with a view to precipitating an election, disaster would have fallen heavily upon the people of this country, and the Government would have been no longer able to pay pensions to the sick, the aged, and the infirm, and others with whom they have entered into contractual relations. I believe that in view of all the circumstances the Government is adopting the wisest, safest and soundest course, and I now declare that my vote shall be cast in support of this plan in its entirety.
.- A good deal of criticism has been directed against the group of which I have the honour to be a member. We have been charged by various speakers with being hypocritical and inconsistent, and the honorable member for Oxley (Mr. Bayley) used the word “ blood-suckers “ as a specimen of his parliamentary vocabulary. We plead not guilty to these charges. We say quite frankly that the problem facing this country is not a technical or a financial problem, but a moral problem. That is stating the position in as few words as possible. Because of the difference in our point of view, to that of those opposing us, some honorable members have indulged in some very cheap criticisms against us. We say that in order rightly to consider this subject we must start somewhere near the beginning of things. Can any one in this chamber deny that as human beings we live in a world that surrounds us on all sides with all the needs of life bountifully provided by the Creator and lavishly placed at our disposal by nature ? Moreover these blessings are provided in the midst of natural beauty, so exquisite that it surpasses the capacity of the most eloquent adequately to describe it. In spite of these facts, millions of the human family are committed to lives of poverty, destitution, defeat, and that most terrible of all human experiences, despair. This all happens amidst an ugliness too terrible to depict. We say that only by turning our thoughts in directions such as these are we likely to realize the extent to which it is true that the means proposed by the Government cannot come within any degree of solving the problems to which they profess to be applied. We urge that it is given to us, to a considerable extent at any rate, to shape our present environment almost in any direction we wish, and not only that, but even to shape the unborn future. If we seek guidance in these matters we cannot do better than go to nature herself.
I ask honorable members to give a moment’s thought to their own bodies. It is the efficiency of our physical organs in the performance of their normal functions that constitutes health and permits of life. It is the inefficiency of those organs which creates sickness, leads to disease and brings about ultimate death. What is true of the human body is also true of human society which to-day is dangerously sick. The highest morality is to respect the laws of nature. If we neglect or refuse to conform to them we must perish. I am endeavouring to show, as I said earlier, that the problem before us is not a financial, but a moral one.
I should like to be permitted to read the opinion of Mr. A. 0. Barfield, who said -
How often does it not work out in practice to-day that the interest of a funded loan is repaid with money borrowed from the same source as the principal ! And “ loans “ of this kind are already, in all but name and one other thing, gifts. The other thing is the power to control which the lender retains by means of his nominal ownership over the borrower. And it is here that the real obstacle to the financing of consumption will arise. I doubt if it is possible to exaggerate the tenacity with which those financial interests and institutions which virtually “ own “ that actually common pro- perty, our credit, will cling to the power of control which it gives them, over national policy and individual destiny. I do not say that such control has always been exercised in a wholly unwise or consciously reactionary manner; but he would be a rash man who would praise the way in which if is being used to-day. We are faced here, then, not With a technical difficulty, but with a moral one. Does our credit, which is really the product of our common endeavour and goodwill, “ bolong “ to ourselves or to the financial institutions which hold it in its financial form ?
– Who said that?
– Mr. A. 0. Barfield in an interesting article entitled “ The Problem of Financing Consumption “.
The members of this group are opposed to the Government’s rehabilitation plan. We are not questioning- the Government’s difficulties, but its policy. We say that it is not the function of a government, claiming to be a Labour government, to introduce the policy of the Nationalist political party. That is what the present Government is doing. The proposals now before the House include a reduction of the pensions of the aged and infirm, as well as war pensions, which we consider is cowardly and inhuman and against which we rebel. The aged and the infirm represent those of our citizens whose condition should inspire our deepest compassion and command our strongest powers of protection. In the case of returned soldiers I cannot think of any repudiation more base and more likely-
– I cannot permit the honorable member to use such language concerning a legislative measure before this Parliament.
– I am sorry that the Standing Orders do not permit me to use the right language in circumstances of this kind. One cannot speak in terms that are too strong in denouncing the cowardly and inhuman attack made on the aged and the infirm, and on our wounded soldiers, under the proposals before the House.
The reduction in pension rates is estimated to result in a saving of £3,350,000, and the reduction in wages, which also is entirely unwarranted, is expected to bring about a further saving of £1,700,000, a total of £5,050,000. These are not voluntary, but forced, reductions. The honorable member for Oxley (Mr. Bayley), said that we must realize that the time has come to cut deeply, and in every direction, or words to that effect. It is sad to hear a man, who claims to be a representative of the people, offer such an opinion as that at the present juncture. [Quorum formed.] The cuts in pensions and wages are to bring about a saving, as I have said, of £5,050,000, not by a voluntary method, but by a process of compulsion. I fail to see that the group with which I am associated has merited the attempted derision and abuse of some honorable members who have taken part in ‘this debate, because of our expressions of disapproval, both of the spirit, and the nature of these compulsory cuts, while the bondholders are to be treated in a favoured manner, and are to bo permitted voluntarily to contribute to whatever extent, if any, they may think fit to something which is called a sacrifice in a great national crisis. With respect to the bondholders, we say that this measure is the only part of the rehabilitation plan of the Government of which we approve, only in principle, but not in the method employed. We say that if the Government had been sincere-
– The honorable member is not in order in imputing insincerity to the Government.
– That is what I wish to convey, and it is a pity that members are required to cloak their meaning ; but I shall have to submit to your ruling. It would have been better had the Government approached this subject from the angle from which we think it should. Without making any cut in pensions or wages, the Government should have introduced legislation which would have compulsorily reduced the interest for bondholders to 3 per cent, all round. That method would have yielded the Government, not only the amount that it is estimated will be saved by the reduction of wages and pensions, but almost half a million in excess of that sum- viz., £5,500,000. This, therefore, would have protected pensioners and wage-earners against the cut against them. It is our intention, at a later stage, to propose amendments in that direction.”
I claim, consequently, that our attitude has been thoroughly sound and consistent throughout. To-day, most of us have received, from ex-soldiers’ organizations, a post-card on which is depicted a returned soldier, prostrate on the ground, with a bayonet thrust through his body. There is a Union Jack at the other end of the pole to which the bayonet .is attached, and below appear the words, “Your King and country need you - no longer “. This accurately depicts the present situation.
Frederick Soddy, an eminent English scientist, in his work entitled Wealth, Virtual Wealth and Debt, states -
Democracy, so far, has but settled the shadow, and has yet to grasp the substance of sovereignty or be discredited for all time. Its first step must be to end the conspiracy of silence in its organs of publicity and instruction concerning the one prerogative of government which underlies and controls all effective political action, and to insist upon its monetary system being as public and open to criticism, and conscious alteration aa its political system.
With adequate knowledge of the physical realities that dominate the economic affairs of peoples, the road is clear for unlimited progress and the attainment of universal peace ami prosperity. The evils that in the past have paralysed the very heart of nations lie patent and beyond concealment. So they pass beyond the power of further harm. Only that rarest kind of courage - intellectual fearlessness and honesty to face tilings as they are, and not as they appear - is required to abolish poverty and economic degradation from our midst in less time than the war took to run its Course. On the international horizon there dawns the hope that a rational solution may be found to the problem of modern war, and a better use be made of the prodigal gift of science than to destroy the surplus wealth and population in fighting for markets and in the increase of national debts.
That statement furnishes us with a view that has been entirely lacking in the debate on this important measure. Because of that I submit with respect that our opponents are not capable of dealing with the problem facing them to-day.
We live in an age in which science has been prostituted - an age of a Christless Christianity. I conclude where I began, hy stating that the real problem confronting us is a moral one, and that the allegedly terrible men of the Lang group in this House are its only members who urge that point of view. We say that the policy of our opponents, if put into operation, will make the condition of Australia worse instead of better. We submit that, so far as mere intellectual attainments may serve us, the practical problem of the transformation of society will be solved only when the workers of this and other countries of the world have devised a scientific policy - a policy based on scientific theory. We hold that social science is indispensable; ‘and it has been in this spirit that I and the members of the group to which I belong have always spoken in this House. In this spirit we oppose as inadequate and useless the Government’s plan under review for the rehabilitation of the finances of our country.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 8 agreed to.
Clause 9 - (1.) Every holder of existing securities of any amount may make application to the Treasurer for their conversion into new securities of an equivalent amount determined in accordance with the provisions of this act.
– I move -
That the word “may”, sub-clause (1), be omitted with a view to insert in lieu thereof the word “ must “.
The purpose of the amendment has been stated by the members of this group when speaking to the second reading. It is that the conversion, instead of being of a voluntary nature, shall be compulsory. The Government claims that its scheme for the restoration of financial solvency in this country involves an equal sacrifice on the part of all sections of the community. We claim that if sacrifice is arbitrarily to be demanded of invalid, oldage, and soldier pensioners, as well as of public servants, the same principle should apply to those who hold government securities. It is not necessary for me to set forth again in detail the views of the group with which I am associated; they have already been expressed on the second reading. At the same time, I believe every opportunity must be taken to expose the preferential treatment extended to one section. I cannot sit quietly in my place in this chamber and see. those whom I directly represent slaughtered by the proposals of the Government in an arbitrary manner. The group to which I belong will take the opportunity of dividing the committee on this question, in order that we may ascertain where every member stands.
The plan before us is of such a nature that one would not expect it to emanate from a Labour Government; but we are living in abnormal times, and we must be prepared for unusual happenings. This Government can no longer claim to be a Labour government; on the contrary, it is the real enemy of the workers. That is no reason, however, why we should submit quietly to things of which we do not approve. We shall demonstrate against them on every available opportunity. We in this group do not admit that the bondholders are being called upon to bear any real sacrifice. As the bill proceeds we propose to make our position clear regarding its provisions in this respect. This clause presents the first opportunity to test the views of the committee as to whether preferential treatment should be given to one section. We propose, to ask the committee to say whether the conversion shall be voluntary or compulsory; whether bondholders are to be treated as other sections of the community are to be treated under the Government’s scheme.
– The amendment is an attempt to make the conversion compulsory by compelling bondholders to apply to the Treasurer for the conversion of their holdings into new stock. That aspect of the conversion was considered fully on the second reading. The policy of the Government, as set out in the bill, is an essential part of the plan agreed to at the Premiers Conference, namely, that the conversion shall be on a voluntary basis. It is true that that leaves to the Parliaments of the Commonwealth and the States the problem of dealing with any stock belonging to bondholders who might express dissent.
– Where is that provided for?
– Should there be any considerable body of persons holding government securities who signify their dissent, the problem of dealing with their cases will have to be met when the final date for the conversion has passed; but we are not called upon to deal with that problem now; Indeed, for the sake of the success of the conversion loan, and the better conditions which will follow it because of the greater confidence which it will inspire in business people and the community generally, it would be” inadvisable to consider it at this stage. Because of the effect on Australia’s credit of the successful conversion of our internal loans on a voluntary basis, the Premiers Conference, after a full discussion, unanimously agreed to the voluntary element contained in this bill. It would be deplorable if at this stage we were to depart from the voluntary principle. The honorable member for West Sydney (Mr. Beasley) visualizes great difficulty arising after the 31st July, the date fixed for the conclusion of the conversion operation. If it is then found that any considerable number of bondholders have not converted their holdings, the problem that will arise will have to be dealt with by this Parliament. That problem, however, is one for a later stage, if it requires to be dealt with at all. It would be undesirable at this stage to alter the principle, or change the fundamental basis, of this rehabilitation plan, which has been agreed to by all the main parties to the scheme. We should carry the conversion throug”h on a purely voluntary basis.
– There is much logic in what the Treasurer (Mr. Theodore) has said. We cannot make the suggested alteration to this clause without throwing the whole agreement into the melting pot. The success of this conversion loan is vital to the rehabilitation scheme to which we are looking so earnestly. The bondholder must realize that he has no alternative but to convert.
– He must realize that as the result of his own knowledge, judgment and discretion.
– Unfortunately, we are all too ready to rely on words and ideas, instead of facing the facts. The Treasurer would have us believe that the scheme set out in this bill is the result of a striking unanimity of opinion on the part of the Premiers Conference; but, as a matter of fact, the conference discussed the matter for a week or two. The strongest objection was offered by the representatives of the Commonwealth to the floating of the conversion loan on a voluntary basis. The alternative to the success of this scheme was pointed to by the representatives of the Commonwealth-
– The alternative is an appalling one. The Treasurer says that Parliament can deal with the situation that will arise if the conversion loan is not a success; but if a considerable proportion of the bondholders decline to convert their holdings, the position of Australia will be critical. Even if we felt like accepting the amendment of the honorable member for West Sydney (Mr. Beasley), it would not be competent for us to do so, because the Premiers Conference agreed that the loan should be floated in this form. If the views of the Prime Minister and Treasurer had prevailed, the conversion would not have been in this form.
– Are we to be entirely subservient to the Premiers Conference?
– I do not know; the honorable member might ask the Treasurer that question.
– We must accept the bill in this respect, or reject the whole scheme.
– I am not prepared to reject the whole scheme; but it is most unfortunate that the Treasurer does not tell the bondholders plainly that there is for them no alternative to conversion; that the Commonwealth and States cannot pay the rate of interest agreed upon, and cannot redeem the bonds on the due dates.
– It would not bo politic to tell bondholders who intend to dis.=ent what would be the consequences of their action.
– I do not know whether it would be politic or not: but we must face the stern realities of the case. This conversion must succeed. Whether it is politic to tell the bondholders that they must convert, one thing is certain, we must not allow this conversion to fail. We have to consider how we can make assurance doubly sure. If this conversion loan is 100 per cent. succesful, it will make a profound impression upon the world, and may react upon the credit of Australia in such a way as to greatly assist her to rehabilitate herself. To make the conversion mandatory would be to wreck the whole plan that we have in view, and for that reason only I shall refrain from supporting the amendment. But the bondholders of this country should be told the facts.
The Treasurer has referred in several of his speeches to the conversion loan floated by Mr. Goschen in Great Britain in 1888, and has suggested that that operation is an analogous case to this. It would be difficult to conceive of tan cases more different from each other The Goschen conversion loan was put on the market during a period of the greatest prosperity that Great Britain has ever known. At that time her coffers were full to over flo wing, and she had reached the very zenith of her commercial and industrial prosperity. Interest rates were much lower than were being paid to bondholders. It was for that reason that the conversion was proposed. But here the position is entirely different. In Great Britain there was no question of default; here default stares us in the face. In Great Britain there would have been no difficulty whatever at that time in paying off her bondholders ; we cannot pay ours. However, I do not desire to say any more on the subject at this stage, except that the bondholders should be under no illusion. Whether it is politic or not, they should be told the naked truth, which is that they cannot get their money at present. I earnestly advise all bondholders to come with me and convert at the earliest possible moment.
.- In my opinion, the members of the Premiers Conference, and also the Prime Minister in his speech on this bill, have told the bondholders and all others concerned in this rehabilitation scheme that certain sacrifices are expected of them, and that, if these are not made, every section of the community will receive only 12s. 6d. for every £1 of the Government’s indebtedness to them. The bondholder, in common with other people, must realize, unless he is prepared to “ pull his own leg “, that it is practically compulsory for him to convert his holdings. The changing of the word “ may “ to “ must “ would mean the putting of the truth into the bill. The bondholders must convert. Why should they have any greater privilege than, say, the returned” soldiers? The bondholder subscribed his money to war loans during the war, and made a profit by doing so; the soldier offered his life and suffered a heavy loss by doing so. Yet the soldier is told that he “ must “ submit to a 20 per cent. reduction of his pension, while the bondholder is told that he “ may “ submit to a reduction of his income from interest. Why should the bondholder be singled out and put in a different position from any other class in the community? It is not possible for everybody to have money to invest in loans, and because members of the poorer section of the community are not in the position of the bondholders, and are not backed up by the press, they are told that they must make the sacrifice. The bondholders, who have the support of the press, are told that they may make application to convert. We are told that each day this legislation is delayed, the country is going to the bad to the extent of £50,000. If this legislation is to go through, let us be frank about it and tell the bondholders what the Government has told the old-age, invalid and soldier pensioners, and the public servants - that they will be paid only 12s. 6d. in the £1 if they do not make the sacrifice, and convert. There is no more repudiation in the one suggestion than in the other. I do not favour compulsion, but if it is applied to one class of the community I shall not vote for the protection of another. If the weaker section is to be conscripted, the stronger section will also have to be conscripted.
There is another factor in connexion with this clause. Many workers, after saving a few pounds, were actuated by patriotic impulse, and invested their all in war bonds. The honorable member for Warringah (Mr. Parkhill) said last night that there are 1,250,000 persons in Australia holding bonds of from £5 to £500 in value. Many of those people are now suffering hardship because of the prevail- ing depression, and they should be given the opportunity to redeem their bonds when they mature. The banks and insurance companies should he asked to underwrite portions of this loan to enable that to be done. I cannot support a proposal that applies the principle of compulsion to the defenceless, and that of voluntarism to the big-moneyed section of the community. I shall, therefore, vote for this amendment.
.- It is difficult to understand why the Government should go to the trouble of making broadcast appeals to the most powerful section of the community in an effort to coax and persuade its members to do something, and at the same time refuse to extend any thought or courtesy to the- most defenceless section, which will have to make the sacrifice under compulsion. The Government did not consult the aged and infirm, seeking their approval of what it proposes to do. There was no wireless appeal to the public servants or to the workers, whose wages and conditions this Government was returned to power to maintain and improve, nor was there ‘ any appeal made to our incapacitated and limbless soldiers. It is because of this that I and the party to which I belong feel that an amendment such as this is absolutely necessary. We might even urge that it is justified on the grounds of that blessed word “ economy.” If conversion were made compulsory, the Government would save all the costs that would be entailed by adopting the voluntary system. Incidentally, it would be interesting to know what those costs will total. I do not know whether brokerage is involved, but certainly very extensive publicity will be entailed, together with the payment for services in endless other directions. I and those with whom I am associated contend that the payment of the existing pension rates to incapacitated soldiers and their dependants constitutes a solemn obligation upon the nation that must be honoured to the full. To do - otherwise will be a disgrace to Australia for all time. If this amendment is adopted it will be possible for the Government to secure a relief in expenditure that would more than cover the full amount, which it is anticipated will be saved by the reduction in wages and pensions.
.- The amendment moved by the honorable member for West Sydney (Mr. Beasley) clearly ignores the fact that this bill is based upon a nation-wide agreement. It also ignores the whole plan that has been the subject of a general debate during previous sittings in this chamber. It is negative in its effect, and entirely destructive of the plan, which aims at the conversion of Australia’s internal indebtedness. Therefore, I must oppose it. The amendment also ignores the fact that this conversion plan relates not only to Commonwealth debts, over which this Parliament has undoubted control to prescribe the terms of conversion, but also covers State debts, in connexion with which the State Governments must be consulted and their views respected. Otherwise, they would be entitled to be exempted from any nation-wide conversion plan. In the circumstances, it seems to me to be begging the question to move an amendment in the form that has been submitted by the honorable member for West Sydney.
The honorable member for Martin (Mr. Eldridge) referred to the cost involved in effecting this conversion. Apparently, he has not studied the proposals of the Government, which indicate clearly that absolutely no expenditure will be involved in advertising ‘and other charges.
– That is not so.
– I qualify that by saying that the Treasurer (Mr. Theo dore) gave a definite assurance that the expenditure would be negligible.
– There will be no brokerage costs, and no underwriting commission.
– Exactly. In the circumstances the costs will be negligible.
This conversion is in no sense comparable with previous appeals to the loan market. After all, although in outward form the scheme may be voluntary, it is compulsory in its ultimate effect upon those who do not convert, and it is that which really counts. The Treasurer has indicated, and every one recognizes, that if the conversion loan fails, apart from the calamitous effects of failure, further steps will have to be taken by this Parliament to ensure that the bondholders contribute their share of the sacrifice, either through taxation of by other means. Having heard the appeals of the Prime Minister and the proposals of the Government, and having read of what took place at the Premiers Conference, the bondholder is well aware of what will take place if he does not respond to this appeal. But the fact that the conversion is in its outward form voluntary means a lot to Australia if it should be successful, and it is that in which I am interested. It will do a tremendous amount of good to our external credit. I can speak from a practical knowledge of the subject. Whilst abroad I saw in Continental, American, and Canadian papers scare headlines reflecting on our solvency as a nation. The utterances of various members of this Parliament, and others, in relation to our financial difficulties, were given a great deal of prominence. In New York, Professor Huxley, addressing an influential gathering referred for purpose of comparison to “ bankrupt Australia “. I think his words were “ a nation as bankrupt as Australia.” That . is how our credit is regarded overseas, owing to the difficulties through which this country has passed during the last eighteen months having been given an undue amount of
Ipublicity in the world’s press. Wherever went I did what I could to establish confidence in Australia. A man occupying the eminent and well-informed position of British High Commissioner in Canada asked me in October last whether our stock was worth holding, and wherever I went I was asked the same question. That was long before the spectacular fall in the price of Australian stocks. My argument is that if this conversion loan is successful on a voluntary basis, its effect on our credit and on our international reputation will be of permanent benefit to Australia, and, from that viewpoint, I cannot see my way to support the amendment.
. - I oppose the amendment, because I have regard for the large number of small bondholders mentioned by the honorable member for Warringah (Mr. Parkhill), as numbering about 1,250,000, whose holdings run from £5 to £500. The amendment would cut out all hope that those small bondholders would have of getting their money back on the maturity dates. I am hopeful that, during the progress of the measure through committee, someprovision may yet be made to enable them to do so. Special consideration is made in the bill for large bondholders who have put overseas trade money into shortterm bonds. If any one is to be given a concession, I think it should be the small bondholders. Last year a strong appeal was made to people to invest any sum of money small or large, and to my knowledge many persons who had their small savings invested in concerns, which were more profitable to them than Government bonds, from patriotic motives put them into the December conversion loan. I also know that many of them subscribed for 6 per cent, bonds maturing in two years, because for some specific purpose they wanted their money back at the end of that period. They are now to be denied that opportunity, although the bonds they hold bear on their face a promise on the part of the Commonwealth Government to redeem them at par at a certain date. Their money was really got from them under false pretences.
The Treasurer (Mr. Theodore) when explaining these proposals used these words -
The necessary sacrifice is due to national inability to pay.
He was practically admitting default. We have also heard from honorable members opposite that if the terms of a contract are altered by one party without the consent of the other it is repudiation. The Government’s plan, therefore, means both default and repudiation. I am hopeful, however, that some provision may be made by which the small bondholders who put their money into Commonwealth loans from patriotic motives may have a chance of getting it back on the dates of maturity.
– Where will the Government get the money?
– If the Government cannot redeem these bonds at the date of maturity, provision may be made for the suspension of payment until a certain time. On the 15th December, 1922, the war indebtedness of Great Britain to the United States of America, amounted to £837,291,443, the rate of interest being 4¼ per cent. per annum. On the 15th March, 1923, the accrued interest owing by Great Britain to the United States of America was £107,914,036. It had evidently been accruing for a number of years. On the 15th March, 1923, the original debt and the accrued interest were funded into a debt of £947,000,000 at a reduced rate of interest. That is an example we could follow. In the Melbourne Argus some time ago appeared the following cablegram : -
London, 19th February.
In reply to a question in the House of Commons to-day, the Chancellor of the Exchequer, Mr. Snowdon, said that the French debt to Great Britain in 1920, when the repayment agreement was concluded, amounted to £600,000,000. Under the agreement, Great Britain remitted 02 per cent, of the debt making the amount due £227,000,000.
– What connexion have those figures with the amendment?
– There is no money to repay the small bondholders. Perhaps some provision may be made by which they can be paid when the money becomes available, but if the amendment is carried that will not be possible.
.- In addition to the consideration that if the conversion were made with naked and brutal compulsion, hardship would be caused to many persons, another reason why as little force as possible should be used is the effect it would have in depreciating the capital value of stocks on the market. I am concerned, not so much with the loss to the bondholders, as with the effect on the general interest rates for ordinary business which the depression of the market value of the bonds would have. One influence in keeping up the interest rates has been the high return which investors have been able to get for their money by buying government bonds at a discount. Nothing is so likely to depress them further as the introduction of unnecessary compulsion in connexion with this conversion operation. I strongly oppose the amendment, firstly, because it would prevent cash from being paid at maturity to necessitous bondholders, and secondly, because compulsion would be found further to depreciate the capital value of bonds, and thereby tend to maintain high rates of interest for loan money generally.
Mr.CURTIN (Fremantle) [10.52].- Obviously, there is a good deal in the contentions both for and against the amendment. The plan envisages interest receivers other than those who draw interest from government bonds. It takes into account interest rates on all classes of private loans by institutions, companies, corporations, and private individuals, dividend rates on preference shares, and rents on leases of all kinds, and proposes that all income from these sources shall be subject to a reduction of 25 per cent. This will require legislative action by every State Parliament.
– That is not to be done; it was proposed at an earlier stage.
– But even at a later stage we were led to understand that the States would take action to reduce rates on interest generally.
– On private mortgages.
– And interest on bank advances and overdrafts is to be reduced.
– That legislation cannot be enforced on the same principle as the conversion loan. It will be applicable to all recipients of interest from private mortgages, and no option can be allowed to them if that phase of the plan is to be as real and as enforceable as those parts which relate to wages and pensions with which this Parliament has to deal. I cannot see how the States can operate their portion of the plan in respect of interest reductions generally, except by compulsion.
– There is a particular proposal as to mortgages, which is founded on a NewZealand act.
– That may be so, but obviously, if bondholders are to have the option of deciding whether they will or will not be subject to it, the plan as a complete whole will fail. In regard to the remarks of the honorable member for Wakefield (Mr. Hawker) concerning external credit, I agree that a voluntary 100 per cent. conversion would do much to restore overseas confidence in Australia, but I cannot overcome the thought, which I think emanated from Sir Josiah Stamp recently, that what is economically inevitable, cannot be morally wrong. If it is economically inevitable that this country shall reduce the interest rates on governmental loans, it is quite palpable that we should intimate to the people in the most decisive manner that the interest rate must be reduced accordingly, and that Parliament has no option in the matter. As a matter of fact, the experts who advised the Melbourne conference clearly specified the alternative that would be open to the bondholders if there was not a complete performance of that part of the plan relating to the reduction of interest rates. They said -
Such a measure would bc equivalent to a permanent tax to the degree of the reduction of interest. The new bonds should, therefore, bc free of future additional taxation for a limited period. An alternative method would be to -issue securities for a limited period free of all taxation at a correspondingly low rate of interest. The conversions could only be achieved by a great- patriotic movement backed by a large volume of consent on the part of bondholders. So that those not consenting might be repaid, the conversion loan would need to be underwritten by the banks, insurance companies, &c. As private debts would not bc included in the reduction of the rate of interest, the conversion operation should be accompanied by a simultaneous reduction of bank interest rates, and mortgage rates. Legislation would be needed to empower trustee companies and others to convert their holdings into the new loan.
In that statement there is an. implied recognition of the economic inevitability of this plan. Therefore, if the Government finds it impolitic at’ this stage to hold out a threat against bondholders, somebody must take the responsibility of informing them that if they do not .agree to convert the whole of their securities by the prescribed date, the Government will have no alternative but to solve the problem created by their refusal by obtaining in respect of interest as a whole the same relief as would have been given if they had converted. In that respect the very positive .statements by the right honorable member for North Sydney (Mr. Hughes) have given to the plan influential help. The authors of it were quite ready to recognize the application of compulsion to those who are at present the recipients of government expenditure other than interest. This discrimination excites popular discontent, and is responsible for a good deal of the irritation and hostility with which the plan has been received. It may be, of course, that we have to treat tenderly those who invest their money in public securities. I do not feel the need for that at this stage. I do not intend to vote for the amendment moved by the honorable member for West Sydney (Mr. Beasley), because I believe that any variation of the plan will involve its complete destruction. [ am opposed to the plan as a plan, but I recognize that it is a complete scheme. I have accepted the premises that thu Government’s proposals represent a complete plan, and that it must stand as a whole. It follows that any variation of its essential principles would destroy its. homogeneity, and therefore the plan itself would cease to exist. I believe that, if the amendment were carried, many honorable members who now support the plan because of the absence of any compulsion in regard to interest reduction would have to reconsider their attitude. Possibly, then the opposition to it would come from an entirely new quarter. It may be I should have to reconsider my hostility to other parts of it. I do not propose to vote for the amendment, because I believe that it would mean the wrecking of the plan as a plan, which must either be accepted or rejected as a whole, and would involve an entirely new re-orientation in the minds of the public, and particularly of political parties, towards the general scheme.
– The Treasurer (Mr. Theodore) has suggested that, because this plan was evolved at the recent conference of Premiers in Melbourne, Parliament must become subservient to the resolutions of that gathering.
– That does not follow. This Parliament may reject any measure of which it does not approve.
– There is no doubt that the honorable member has used the argument all through that because the Premiers agreed we must also agree. Apparently, he holds the view that, because certain gentlemen who, for the tim being, happen to be the Premiers of the various States, see fit to meet in conference at Melbourne and decide upon a certain scheme to improve the finances of the country, this Parliament must accept the decisions of that conference in their entirety, and refuse to sanction any departure from proposals there agreed upon. If other honorable members are prepared to accept that dictation and surrender their rights in this chamber in the way I have indicated, the responsibility will rest upon their shoulders. I certainly am. not prepared to do so. If we endorse the view that decisions of the Premiers Conference must be adopted without variation, future policies for governments may. be determined in the same way, and there would be no need for discussion in the Commonwealth and State Parliaments. That would be the logical outcome of the arguments put forward by the Treasurer. The honorable member for Martin (Mr Eldridge), elaborating the amendment moved by me, urged that we should treat public servants, invalid and oldage and war pensioners, in a manner similar to that in which it is proposed to treat bondholders by making the reductions voluntarily. This morning the Prime Minister (Mr. Scullin), in reply to a question which I asked concerning the intentions of the Government with regard to the report of the committee representing returned soldiers’ organizations now meeting in Melbourne, said that so far only an interim report had been received. The committee pointed out that the time at its disposal did not allow of a more complete examination qf the Government’s proposed economies in war pensions, and in reply to its request for further time the right honorable gentleman intimated that the Government proposed to “go right ahead with its scheme. From his attitude we may assume that the interests of returned soldiers so far as the views expressed by the conference are concerned do not weigh with the Government.
– The Prime Minister promised definitely that, if necessary, certain legislation would be enacted to meet the position.
– Probably, the honorable member for Maribyrnong (Mr. Fenton) knows better than I do what are the intentions of the Government because he is again on the .inside. But there is a general belief that, when these emergency measures have been passed, Parliament will adjourn until probably some time next year. It would, therefore, appear that if certain organizations which have interested themselves in the Government’s economy plan expect their recommendations to receive consideration, the sooner their leaders get that idea out of their heads the better. It would be better to tell the people quite frankly that, whatever may be their recommendations, the Government intends to do nothing for them. The right honorable member for North Sydney (Mr. Hughes) this afternoon treated the House to a frank expression of his views concerning the effect of this plan upon the holders of government securities. He showed that for bondholders there was no alternative. Why, therefore, humbug the people by pretending that this is a voluntary scheme? Why not face the position honestly and tell the people that the conversion is to be a compulsory and not a voluntary operation, and thereby save the costs that will be incurred if the bill is passed? The honorable member for Fremantle (Mr. Curtin) has argued that the adoption of my amendment would mean the wrecking of the plan. Is not that the objective of all who are opposed to the Government’s proposals, especially those provisions relating to reductions of invalid, old-age, and war pensions, as well as Public Service salaries? If certain honorable members object to the plan, as I do, on the grounds that it is a distinct violation of Labour principles and policy, I submit that they are quite justified in adopting any and every means available to them to wreck it. I have no hesitation in saying that I will do anything in my power to prevent its adoption per medium of my vote in this House because I wish the people I represent to know frankly where I stand with regard to these economy’ proposals. There has been much talk about’ finding an alternative to provide the means to balance the Commonwealth and State budgets. We say that there are other means than the cutting of pensions and wages to balance the budget, and we will put them forward at the proper time. The honorable member for Reid (Mr. Coleman) spoke of the scare headlines which he noticed in the press of the United States of America when he was returning recently from England, featuring decisions of the Labour caucus in Australia, and stated that they reflected seriously upon the financial stability of this country. Other honorable members have spoken on this matter from time to time. Only yesterday the honorable member for Wimmera (Mr. Stewart) emphasized the world-wide crisis through which Australia, in common with other nations, is passing, and argued that international action was necessary to provide the remedy, and not mere references to resolutions or anything else in Australia. How does the honorable member for Reid reconcile the view that Australia’s difficulties are due, in part, to certain decisions of the Labour caucus with the situation that has developed so suddenly in Austria and Germany where there is no Labour caucus - countries whose financial stability has been so threatened as to necessitate prompt aid from the Bank of England, the Bank ofFrance, andthe Federal Reserve Bank of the United States of America? The institutious in question, as we know, have willingly undertaken to provide financial assistance to Germany and Austria in order that they may carry on government in the form approved by the international financial organizations. But there was not any talk of first restoring confidence from within as we hear in Australia. Therefore, I am not impressed by the remarks of the honorable member for Reid about the scare headlines in the press of the United States of America. Such a thing should not be used as an argument to. cut down pensions and wages and as an incentive to violate Labour principles by a Labourrepresentative. Those who have travelled the world before, know the ‘financial situation in one country may be used by financial interests in another country to suit their own purposes, and that where the workers have accomplished most the more bitter is the attack. I refuse to accept the view that confidence overseas in Australia is dependent upon, and may be destroyed by, the decisions of any particular section in this . country. If a resolution in one direcion will bring about certain results overseas, then why cannot a contrary resolution have the opposite effect. Such argument is pure humbug. The arbitrary system which the Government proposes to apply to the wage- earners and the pensioners should also be applied to the bondholders.
Question - That the word proposed to be omitted (Mr. Beasley’s amendment) stand part of the clause - put. The committee divided. (The Chairman - Mr. McGrath.)
Majority . . . . 46
Question so resolved in the affirmative.
Clause agreed to.
Motion (by Mr.Scullin) proposed -
That the House do now adjourn.
– I wish again to direct the attention of the Attorney-General (Mr. Brennan) to the failure of his department, and of the Government, to deal with the question of the missing documents in the Jacob Johnson case. I have received further correspondence from Mr. Johnson in regard to this matter, and I propose to have it also placed on record, so that those who have been following the case may know exactly what has happened in regard to it. I have raised the matter in this House probably a dozen times, and I shall continue to do so until the documents have been recovered and justice has been done to this man. The letter that I have received from him reads -
I desire to remind you that instead of me getting some satisfactory explanation from the Government as a result of my circular letter to nil members dated 10th April, my position is worse now than before the Acting AttorneyGeneral (Senator Daly) deputed a Mr. Yates to investigate the matter of my prosecution, inasmuch that all my important documents which were handed by me to Mr, Yates for the purpose of assisting him in his investigations, and which Mr. Yates later forwarded on to Canberra, together with his report on the matter, are now, I am informed by the Attorney-General’s department, missing.
My last three letters to the AttorneyGeneral’s Department, dated 18th May, 9th June, and tlie 17th June, in connexion with this matter, have been entirely ignored. It would, therefore, appear that further correspondence with them is a wasteless effort.
– I call attention to the state of the House.
A quorum not being present,
Mr. Speaker adjourned the House at 11.25 p.m.
Cite as: Australia, House of Representatives, Debates, 1 July 1931, viewed 6 July 2017, <http://historichansard.net/hofreps/1931/19310701_reps_12_130/>.