House of Representatives
19 February 1952

20th Parliament · 1st Session

Mr. Speaker (Eon. Archie Cameron) took the chair at 2.30 p.m., and read prayers.

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– I desire *> inform the House that the Right Honorable the Baron Glendyne, of Sanquhar, a member of the House of Lords, is within the precincts of the chamber. With the concurrence of honorable members, I shall invite him to take a seat on the floor of the House beside the Speaker’s chair.

HONORABLE Members - Hear, hear!

Lord Glendyne thereupon entered the chamber, and was seated accordingly.

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Prime Minister · Kooyong · LP

– On the occasion of the accession of Her Majesty Queen Elizabeth the Second, there is no necessity for me to repeat the sentiments that were expressed so warm-heartedly in this House recently, but I am sure that it will be in accordance with the general feeling of the House for me to move as. I now do -

That the following resolution be transmitted through Eis Excellency the GovernorGeneral to Her Majesty the Queen: - “We, the Members of the House of Representatives in the Parliament of the Commonwealth of Australia, offer cur congratulations on Your Majesty’s accession to the Throne. We desire to assure Your Majesty of our loyalty and allegiance, and to express our earnest’ hope that

Your Majesty’s reign may be a long and successful one, marked, by the prosperity and progress of the countries of the Commonwealth.”.

Leader of the Opposition · Barton

– On behalf of the Opposition, which is now Her Majesty’s Opposition, I second the motion that has been submitted by the Prime Minister (Mr. Menzies). As. the right honorable gentleman has indicated, it can be taken that Her Majesty will be accorded the same devotion, loyalty and allegiance as was accorded to her father, so loved and so beloved.

Question resolved in the affirmative, honorable members standing in their places.

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– I have received the following letter from His Excellency the Governor-General : -

DEAR Mb. Speaker,

Further to my acknowledgment of the 7th’ February I have- the honour to inform you that I have now received the following telegram from Her Majesty Queen Elizabeth the Second in reply to the Resolution passed by the House of Representatives, on the 7th February - “ I much appreciate the kind terms of the Resolution passed by the House of Representatives of the Parliament of the Commonwealth of Australia. Please assure the Members of the House how deeply I value. their sympathy. ELIZABETH R.”.

Yours sincerely, (Sgd.) W. j. McKell

I also desire, to inform the. House that I have received the following messagefrom the President of the Greek Chamber of Deputies : -

Chamber of Deputies profoundly moved by the passing of your beloved. Sovereign and sincerely participating in the deep mourning of the peoples of the British Commonwealth. Adjourned yesterday’s session, and after an appropriate address of its President in memory of the late King George VI.,. kept one minute’s silence. I have been entrusted by the Cham- ber to convey to your House its heartfelt condolences to which allow me to add own feelings of deepest sympathy.

Prime Minister · Kooyong · LP

by leave - I move -

That this House thanks the President and Members of the Greek Chamber of Deputies most sincerely for its Message in connexion with the death of His late Majesty, King George VI., and records its appreciation of the feelings of respect and sympathy to which the message gives expression.

Leader of the Opposition · Barton

– I have the honour to second the motion.

Question resolved in the affirmative.

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Issue of Writ


– I have to announce that I have this day issued a writ for the election of a member to serve for the electoral division of Lyne, in the State of New South “Wales, in place of Eldred James Eggins, deceased. The dates in connexion with the election have been fixed as follows : - Issue of writ, the 19th February 1952 ; nominations, the 4th March, 1952; polling, the 22nd March, 1952; return of writ, on or before the 19th April, 1952.

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Mr. Drummond presented a petition from members of the executive of the New England New State Movement, in the State of New South Wales, praying that amendments be inserted in the Constitution to enable the Parliament, in certain circumstances, to take steps to test public opinion in an area and to admit any such area as a State of the Commonwealth.

Petition received and read.

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Government Economic and Financial Policy

Motion (by Mr. ERIC J. Harrison agreed to with the concurrence of an absolute majority of the members of the House -

That so much of the Standing Orders be suspended as would prevent the Leader of the Opposition (Sr. Evatt) from making his speech without limitation of time when moving the motion of censure of the Government of which he had given notice.

Leader of the Opposition · Barton

– The Government’s budget was introduced in September of last year. The time has now come for us to examine the consequences of the Government’s economic and financial policy. There is no dispute that since January, 1950, there have occurred in this country price increases without parallel or precedent in the history of Australia. At this stage I shall not attempt to measure praise or blame for the fundamental fact that I have just stated. If we want evidence of it, we can turn to the enormous percentage increase of the basic wage as fixed by the court and varied from time to time on information supplied by the Commonwealth Statistician. That is an inescapable fact. I do not think it will be disputed that since January, 1950, the policy applied by the Treasurer (Sir Arthur Fadden) in order to counter inflation has consisted of a series of retreats. By way of illustration, I remind the House that in January, 1950, the Government announced that the regulations in relation to capital issues control would not be repealed, although the present Government parties had attacked those regulations when they were in opposition. In January, 1950, the Government stated that, although it would keep the regulations in force it would automatically approve of every application for a capital issue. That announcement gave the all-clear signal to Australian industry to go ahead with plans for expansion. Under that authorization, much capital was expended.

I turn to a later date. In October, 1950, the Prime Minister (Mr. Menzies) made two very important broadcasts on the economic and financial policy of the Government. He announced that capital issues control would be re-imposed, and he dealt with many other matters. Honorable gentlemen will remember how comprehensive was the plan that was then announced by the Prime Minister on behalf of the Government. But, in point of fact, between October, 1950, and the 1st February, 1951, all applications for capital issues were granted as a matter of course. That, too, is an inescapable fact. Since February, 1951, which brings the date closer to us, to within practically a year - the absence of a policy for countering inflation has caused the utmost confusion in the business community, because many trading concerns were fortunate enough to obtain approval of their capital issues applications without objection. In fact the applications were granted without any review, as a matter of automatic decision.

Another small point that I think should be recalled is that in his broadcast of October, 1950, the Prime Minister also announced that an excess profits tax would be passed into law. But the Government delayed over that matter. I think that such a tax, although it would not have been fully effective by itself, could have played a very important part in an overall plan to cope with inflation. But nothing was done and the project wa3 abandoned. During the last five or six months the new economic policy of the Government has revealed with considerable clarity that it has acted upon certain economic theories, to which I shall not refer. The first feature of its policy has been to create a. shortage of money in the hands of the people by imposing additional high taxation, which has now reached record proportions. As a matter of fact, in this financial year there will be an increase of £160,000,000 in taxation. The total tax impost for the year will be not less than £957,000,000. Of course, as we know, the Government’s plans were based upon a nominal surplus of £114,000,000. We on this side of the House have suggested that the true surplus would turn out to be far nearer £250,000,000. I think that the interim reports on the financial position bear out that prophesy. At any rate, that is the comment that I make on the figures that have been given. The Government budgeted for a surplus, and has been taking money away from the people in amounts never attempted before.

The second feature of its policy ‘ ha3 had equally important effects. The Government has applied and is applying, with the utmost rigour, a policy of restriction of bank credit. This policy makes one look back to the year before last, when the Treasurer (Sir Arthur Fadden) said, “ This Government does not stand for restriction “. My colleagues will deal with various aspects of this great subject. All I do is to ask honorable members not to forget that members of the present Government were amongst the most bitter critics of the financial and economic policy of the Labour Government that was led by Mr. Chifley. In the four years of Mr. Chifley’s prime ministership following the end of the fighting in World War II., his Government effected no fewer than five separate reductions of taxation which, in the aggregate, were worth £280,000,000 per annum, based on the value of the Chifley pound. Calculated on the value of the £1 to-day, the amount would be much larger. In addition, large outstanding war obligations were met, and the repatriation and re-establishment of members of the forces cost £108,000,000. The relief of people who were injured by the war cost us £85,000,000, and we made a contribution of £35,000,000 to our kinsmen in Great Britain. Mr. Chifley’s view, which this party adopted, and the truth of which is I think, becoming more evident every day, was that “ the main key to this post-war financial achievement has been that throughout the whole period full employment of labour has been maintained “. That was basic. Of course it is not enough to say simply that one believes in full employment. ] shall elaborate on that matter a little later.

Now let us examine more closely the policy of the Government, two aspects of which I have already mentioned. Our case is that the Government allowed the inflationary situation to drift for a period of eighteen months subsequent to December, 1949, when it took office. Finally the position reached a stage at which it became impossible for the Government, notwithstanding its election promises, to increase the value of the Australian currency. The question was whether it could prevent the value of the currency from being diminished further and further as month followed month. The point was reached when tlx? view expressed in this House by Mr. Chifley during the Twentieth Parliament, was proved to be correct. That view was that the only way out of our financial difficulties was to attempt on a national basis not to restore the value of the pound to the value of earlier years, but to stabilize it at its then value without any interference with production, full employment - which he regarded as basic - or standards of living. Such a policy would have involved a number of measures. It would have involved co-operation with the States, with management and with trade unions. Now and again the Prime Minister in his speeches and broadcasts - the two broadcasts that [ have mentioned provide an illustration of the fact - veered towards that overall policy of stabilization. But the policy was not adopted.

L point out at once, because I consider that it should be clearly understood, that the trade unions of this country have never objected to a just system of prices and wages stabilization, provided that the lag of wages behind prices were accounted for and the standard of living were maintained. They have said so over and over again. The Australian Council of Trades Unions recently made a pronouncement to that effect at a conference in Melbourne over which the Chief Judge of the Commonwealth Arbitration Court presided. I concede that in times like the present such a stabilization cannot be effected by the Australian Government alone, because co-operation with the States in that respect is a constitutional necessity. But the Government has abandoned any attempt that was indicated now and again - not very definitely, but implied, I think, in the Prime Minister’s broadcasts to which I have referred - to put into effect this overall plan of stabilization so as to try to maintain things where they were without any further decline in the value of the currency. Instead, the Government has adopted a negative policy, of which there are two main features. One is high taxation, to which I have already referred. The second is the very rigid bank credit restrictions that are being imposed upon industry. To the best of our ability we pointed out to the House that there would be a double effect to the adoption of such a policy by the Government. In some aspects the policy would be clearly inflationary. Sales tax this year has been estimated to yield the colossal- figure of £117,000,000, which is three times greater than the amount of sales tax collected in the most difficult year of the last war. The collection of such a huge amount of sales tax must be inflationary, because sales tax is passed on to the public in the prices that consumers pay for the goods that they buy.

Parallel to that taxation procedure we have the second branch of the Government’s policy - severe restriction of bank credit. We suggest that that is a threat to Australian industry and the accepted policy - I thought it was accepted by all parties - of the full employment of our people. As a matter of fact our banking legislation provides that the Commonwealth Bank’s advances policy shall, amongst other things, be directed to the maintenance of full employment. What has happened ? Everybody knows that the inflationary spiral has continued and that, as the motion that I shall move will indicate, people on small fixed incomes are placed in an almost desperate position as the prices of necessary commodities, especially food, increase. Wage and salary earners under awards are in a better position because their conditions are fixed by the courts and their pay is adjusted every quarter. But their standards have fallen, too, because the basic wage is always struggling to meet costs which have been incurred in the previous quarter and so it lags behind costs. The wage of the marginal worker who is the key man in the heavy industries of the country is practically frozen by inflation which has reduced the value of his special skill, gained from the years he spent in his apprenticeship.

The excessive taxation, against which I am sure, that complaints have been received by all honorable members, and the drastic restrictions of bank credit have set in motion forces which are making towards unemployment and which are affecting secondary as well as primary industries. Government spokesmen have claimed that bank credit restriction is the policy least likely to interfere with individual freedom, but it brings about the most serious interference of all. If these restrictions had been embodied in regulations they could have been interpreted by the courts or reviewed by Parliament. But the Government has not adopted that method. The power to make vital decisions on advance policy has been handed over to bank managements which determine the degree to which an industry may be called “essential”. I maintain that the bankers themselves would not claim that they are entitled to decide political and economic questions which extend beyond the normal scope of their business. Under the Government’s policy each bank and, I presume, each bank manager, must determine the degree of essentiality of applications for the continuation or increase of bank accommodation. A statement issued by the president of the Bank of New South Wales stated the following three points: -

Through the rigid operation of the central bank’s control, the trading banks may be forced to restrict lending, even for essential purposes. In this event the central bank will have a heavy burden of responsibility for curtailing productive activity.

That is because of the width of the instructions and the fact that important economic decisions must be made, not by the Government or the Parliament, but by the banks. The statement continued -

Too much attention, indeed, has been attached by the central bank and the Government to the importance of directly restricting bank loans, the total of which to-day represents the financing of only about two-thirds of the volume of goods and services financed before the war.

That statement was- made by a man who was putting forward the view of the banks, and it is therefore very important. Those words show that the Treasurer’s recently stated policy is most dangerous, because the banking system is now supporting less, in the physical sense, than it did before the war. The statement proceeded -

Inflation is popularly described as too much money chasing too few goods.

That is a nice expression, and has some truth in it. The statement went on -

It avails little if, in the effort to curtail the volume of money, the flow of goods is restricted by financial stringency.

By imposing on the national economic structure of this country its policy of rigid restriction and contraction of bank credit, the Government has now set in motion forces which, unless they are reversed will bring about slumps and depression. The Government’s policy has already caused substantial unemployment. Acting together, the Government’s taxation policy procedure and its credit restriction are now destroying the confidence of both primary and secondary producers in this country by paralyzing vital incentives to production.

I desire now to make a contrast betwent conditions which exist to-day and those that existed two years ago. Two years ago Australia had a rapidly expanding economy and the policy of full employment was not then opposed by those who comprise the present Government. Every one was prosperous, and the transition to peace had been safely negotiated under the leadership of the late Mr. Chifley. Living standards were improving and inflation was being kept in reasonable check. There was complete confidence in the future, and national development was the main aim of our economic policy. Investment was keeping pace with the demands of national development. Credit was available for new homes, new industries and new capital equipment, and there was an increasing flow of consumer goods. Australia appeared to be on the threshhold of great development. To-day all that has been reversed. We now have a contracting instead of an expanding economy. The Government has a policy of “ disemployment “, to use its own term, which is a mere synonym for unemployment.

Mr Riordan:

– It is surely not unemployment.


– No, it is merely disemployment. The Government started that policy by dramatically announcing one day that 10,000 public servants would be dismissed. No facts were stated to suggest that those public servants were not doing essential work. It was merely said that it would be a good thing if a proportion of public servants were retrenced Ten thousand was the number decided upon. I shall not go into all the details of the retrenchments, which have been mentioned over and over again, nor shall I describe the absurd anomalies created by that action of the Government. However, uncertainty is now abroad. Every one is uncertain of the immediate future, and living standards are declining. Skill margins in wages are disappearing. Inflation is destroying the value of money. Prices are still rising, yet purchasing power must decline if this disemployment continues. We have reverted to controls of credit which threaten industry and employment, and are quite contrary to the full employment policy which is basic to the Commonwealth Bank Act.

Judging by some Government pronouncements, its policy is one of economic conscription. That end is being achieved through restriction of credit, because a fully accredited Government spokesman has indicated that the policy is to squeeze less essential industries out of production and to force their employees into other jobs. That is plain economic conscription. This is the first time in the history of Australia that a government lias planned deliberately to put people out of work without having previously arranged for their employment elsewhere. Disemployment is the new phrase. It is a euphemism to describe what is, in effect, a pool of unemployed persons from which those in it may emerge to find employment or fail to do so.

The immediate effects of this policy are very serious. Thousands of employees in the textile and clothing industries have been dismissed. Thousands of others are working part time. Factories are closing clown because retailers are unable to place orders. The boot manufacturing industry is also threatened. One of the first of the decentralized textile industries, at Yass, has closed its plant and the factory at Goulburn has reduced production by half. The Lithgow factory is also closed. I am speaking now only of New South Wales. The position in Victoria is not better. If anything it is worse. The Government of Victoria has been compelled to discontinue important public works because of lack of finance. There is a definite recession in the building industry. Building materials are available now in that industry solely because homebuilders cannot obtain finance. Retail stores are being forced to adopt high pressure selling methods. They are selling goods at below cost of replacement and are reducing essential reserve stocks. Nobody would object to a reduction in costs by the adoption of proper methods but the means by which this is being achieved should be studied to ascertain whether they are beneficial to the Australian economy or detrimental to it. Representatives of Australian manufacturers have openly condemned government credit policy and have asserted that government contracts could not be secured, with the result that plants have been closed. Simultaneously, imports have been greatly increased. Overseas manufacturers are in a happy position. They are not affected by capital issues controls or by credit restrictions.

The clothing and textile industries provide the best illustration of the adverse economic consequences of the Government’s policy. I have precise figures to support that statement. A severe depression has been created by the Government restriction of credit combined with the flood of imports. The industries that 1 have mentioned are very important to Australia. That was proved during the recent war. Our clothing factories produced uniforms then not only for Australian servicemen but also for allied forces throughout the Pacific area. The Melbourne Age stated recently -

Our textile and clothing industries embody an enormous capital investment in various phases. Over the years, the enterprises have been built up against keen competition till the whole group has become one of Australia’s most important manufacturing clusters. Anything that threatened this part of the structure would require close examination and prompt action by office holders at Canberra whatever their party affiliation. It would be an extraordinary inept working of economic surgery if casualties were to occur in an industry whose products (apart from the normal demands of the Australian people) include a range of materials which are indispensable to the armed services and which were essential to the supply and equipment of allied forces in the war.

The industries referred to are largely decentralized in accordance with the policy of the Labour Government after 1945. In country towns there is no alternative employment for the so-called “ disemployed “ operatives. This serves to illustrate the special danger of a policy which takes little or no care of the injurious consequences of a disemployment policy to workers or to managements or to the community where a particular project is situated.

The facts relating to unemployment have been disputed, but a special survey of the allied textile and clothing industries by ‘ the Chamber of Manufactures showed that, up to the 8th February last, the total number of hours worked each week in Victoria alone had declined from 1,046,000 in 1951 to 792,000 at the present time. That represents a fall of more than 24 per cent, in the total number of hours worked each week in February compared with .the normal pay week for 1951. In the two industries taken together, the number of employees in Victoria has dropped from an average of 26,175 in 1951 to 20,620 for the pay week ending the 8th February, 1952, which indicates that there were 5,555 dismissals in Victoria alone, or more than one-fifth of the total labour force. The actual percentage was 21 per cent, but the number of hours worked declined by 24 per cent., which is explained by the fact that even those still employed are working fewer hours each week because the work available is being rationed. Once a trend of that kind begins it is very difficult to resist its impetus. A further increase in the recession will considerably affect associated trades, and may become catastrophic. This recession has taken place in very important industries which have a bearing upon defence preparations. The products of the Australian clothing and textile industries were regarded by the armed services of the United States of America as among the best procurable during the war. That was made clear by the evidence of such a witness as Colonel Eddy in the course of lend-lease negotiations when the hard equipment which we obtained from the United States of America was being balanced against the clothing and other supplies which Australia provided for the United States forces.

The President of the Victorian Worsted Manufacturers’ Association recently emphasized the importance of bank credit restrictions in contributing to the slump. He said -

Another factor which is affecting my section of this industry is the inability of a large majority of knitters and some weavers, to pay for yarn already delivered to them. The terms of payment for yarn as laid down by my Association are: “ Net cash by the end of the month following the month of delivery “. A comprehensive statement prepared as at the 7th January, 1952, shows that overdue amounts owing to the members of the Association at that date totalled £567,552.

That is the position in one comparatively small section of this great industry. His statement continued -

This indicated that the worsted spinners are being called upon by their clients to act as bankers! We have paid for our wool and wooltops, paid wages and spun and delivered yarn to customers who cannot find a market for the woven piece-goods and knitted garments they have produced, and consequently they cannot pay our accounts. Our financial position is being further aggravated by the fact that we are holding large stocks of raw materials purchased to meet the normal requirements of our customers, plus substantia] quantities of finished yarns awaiting delivery.

According to its president, the manufacturing section of this industry is hearing the main brunt of the Government’s policy of credit restriction. Honorable members will understand that the refusal to make credit available, not because the security offering is insufficient or because there is any bank risk, but as part of the Government’s policy operating through the central bank, must have repercussions which will be felt by those who sell and those who buy. Those repercussions are being felt not merely throughout industry proper but also throughout trade and commerce generally. Justification of this policy has been attempted on behalf of the Government. The word that is now being used by Government spokesmen is not “ unemployment “ but “ disemployment “, the suggestion being that unemployment will be only temporary. In the clothing and textile industries in Victoria 5,555 dismissals have already occurred and many employees are working short time. The Victorian figures enable us to estimate the. extent of unemployment in Australia that is resulting from this policy. On a conservative estimate the total number of persons displaced from industry could not be less than 10,000. I have indicated the concerns in New South Wales which have felt the combined force of a flood of imports and credit restrictions. Many firms have had to close down their factories, if not wholly, at least in part. In an official but anonymous statement attributed to senior federal Ministers on the 30th January last, an attempt was made to justify this policy of what I prefer to call economic conscription, if its effect is to make employees turn to other industries to which they may not be entirely suited. These ure the words used in the statement in justification of the policy -

What is happening is some disemployment - temporary idleness during change of occupation. This results from less essential and less efficient industries being squeezed by the economic policy and forced to reduce staff.

That statement was issued by officials on behalf of senior Ministers. Apparently the less essential industries are not only clothing and textiles but also radio, footwear, electrical hardware, retail establishments, and the like. Is that the considered view of the Government?

Mr James:

– Who has said that those industries are less essential than others?


– That matter is left entirely in the hands of the particular banker concerned. As far as I understand the position, there is no appeal from his decision, even to the Commonwealth Bank. The Government does not give a ruling. At a deputation that waited on the Minister for Trade and Customs (Senator O’Sullivan) recently, which was attended by members representing the parties on both sides of the House, the Minister said that he regarded the textile and clothing industries as essential to Australia. If that is the view of the Government, this policy must be immediately reversed or modified. But is it the view of the Government? What are the essential industries in the opinion of the Government? I challenge the right of the Government to adopt a process of bank credit restriction to institute what is in essence economic conscription. The view of the Parliament and not of the Government should prevail in determining which industries are necessary and which projects and undertakings justify the issue of bank credit. I have never before heard of such a serious matter being determined in the way that this Government is determining it. We challenge the right of the Government to apply its method of credit restriction and to institute what is in essence plainly economic conscription. The Government wants unemployed persons gradually to find their way to employment other than in the particular industry from which their previous employers have been forced to dismiss them as a result of economic pressure. Where they go is left merely to chance. The only satisfactory way in which to encourage more essential industry is to make employment in it more effective by providing more attractive conditions. 1 do not think that in any instance industry and employment should be curtailed by credit restrictions; but. if such a policy is applied, those affected by it should have the fullest opportunity to take up alternative employment for which they are reasonably fitted. However, under the Government’s slap-dash policy of disemployment everything is left to chance. Individual bank managers make decisions from which there is no appeal to the central bank, the Government or the Parliament. The Director of the New South Wales Chamber of Manufactures replied as follows to the Government’s statements that I have quoted: -

None but a dangerous fool could conceive that in the clothing and textile industries there was a pool of labour which, when released by “ temporary idleness “, would flow to “ undermanned basic industries “.

It must be clear that the skill and work required in the clothing and textile industries are different in character from that needed in other industries and, therefore, that such a policy would not achieve the results it was anticipated that it would achieve. Unemployment is being caused in a w.ay that is deliberate and which does not fulfil any public purpose or any purpose that is economically sound; and the House should pronounce judgment upon such a policy. Full employment will be impossible in this country unless Australian industries are maintained and developed. Our industries should not be injured or destroyed in this way. No established industry should be attacked or retrenched by the indirect means authorized by Government policy in its arbitrary restriction of bany credit which is the life blood of industry and is a necessary condition of full employment. In short, what is happening is that the goodwill of established industries is being destroyed and unemployment is being caused and no good purpose is being served. There is no evidence of careful preparation or advanced planning in what has been, and is being, done. Bather, there is evidence of hitting blindly without careful examination of the situation from either a notional or a humane or common-sense point of view.

The system of credit restriction now being enforced hands over to the banks effective control of industry and commerce in this country and it is not being done for the exercise of ordinary banking functions, because the advance policy applies only in instances in which the applicant for accommodation would normally be entitled to a continuance or an increase of accommodation. It is at that stage that Government policy intervenes and the banker becomes, for the time being, an agent of the political power. The function that is actually being performed by bank managements - and I do not think that it is satisfactory from either their point of view or from that of the public - is to carry out the general policy of prohibiting, or curtailing, business activity regardless of any decision which would normally be given on banking grounds. Let us examine the procedures that are followed. They are unsatisfactory and unjust to both banker and customer. The decision is given in private and is final. Apparently, there is no appeal from the decision to the central bank.

Mr Thompson:

– A hidden hand !


– The consequences are tremendously serious .and may cause irreparable injury to employer and employee. Discriminations inevitably result because one bank manager may take a view essentially different from that which another banker may take. But, .above all, there may be businesses in the same position except for one factor. As the figures in relation to capital issues suggest, there may be instances in which an employer in an industry has received his authorized capital increase to a substantial degree whereas another employer in the same industry has failed to obtain such an increase. Therefore, whilst the first employer will not need bank accommodation the second must have it ; otherwise he will not be able to keep his business going. Thus there is discrimination for one firm in possession of liquid reserves through the decision to increase capital or through the automatic granting of applications of the kind to which I have referred, while another equally entitled to such consideration cannot obtain it.

What, if any, is the economic theory behind this policy? During the depression years the theorists proposed a policy of deflation. Credit was reduced. Money was not granted to provide work for the unemployed, or to enable industry to continue in operation. Once the policy of credit restriction began to operate, unemployment mounted rapidly, and the world starved. One person in every three in this country was unemployed. The economic thorists. whose views were accepted then, now concede that they were wrong at that time.

The present position is analogous, in some respects, to the economic depression of the ‘thirties. The idea is that, by a restriction of credit in this haphazard and slapdash way, results that will benefit the community can be obtained. The real responsibility for the present position is not that of the hanks. It is not a matter of brink management. The real responsibility belongs to this Government. It is the duty of the ‘Government to safeguard the economy of the nation, and maintain employment. Under the banking legislation, the Government, subject to this Parliament, controls central banking policy. But the fact is that, as the statement which I have quoted admits, the Government has set out to use the credit mechanism for the purpose of curtailing industries and employment in a manner contrary not only to the spirit but also to the letter of the Commonwealth Bank Act, which provides that the advance policy of the Commonwealth Bank shall be exercised for the purpose, among others, of maintaining full employment.

Once-flourishing businesses are being injured by the policy of credit restriction. Today, bank accommodation cannot be obtained by some industries. We are familiar with this situation. It has existed before. A company, which is perfectly solvent, is refused bank accommodation solely on the ground of the Government’s economic policy, which may be stated thus : - “ We can close this industry down, and some people may find employment in other industries, which we regard as more essential.” I contend that it is not an economic policy at all. It is causing unemployment, without any certainty that the situation will not deteriorate, and a catastrophic position will result. Firms which are perfectly solvent, and the assets of which far exceed their liabilities, require bank accommodation to enable them to meet trading bills, pay for stock, and meet wages against current production. From the standpoint of .bankers, those firms are entitled to financial accommodation. That such assistance is not granted to them is due entirely to Government policy, in conjunction with the Commonwealth Bank. One of the great features of Government policy which was announced several years ago was that the Parliament would decide banking policy, but, unfortunately, the Parliament makes that decision only if the Government disagrees with the policy of the Commonwealth Bank Board. The fact that there is no disagreement between the Government and the board is conclusive evidence that the Government supports this policy, and is really responsible politically for it.

Criticism of the restrictive policy is not limited to the industries that I have mentioned, but is widespread. The heads of retail stores in Sydney and Melbourne have referred to the adverse effects of the credit policy on their business. The president of the Chamber of Manufactures has been most outspoken in his condemnation of the policy. The president of the Co-operative Home Building Societies has said that the clamping down of credit restrictions on their activities bas caused a complete closure of work in many instances. Yet they are still refused additional financial accommodation. The president of the Beal Estate Institute, and representatives of time-payment houses, the electrical trade, and home appliance industries, have been outspoken in protesting against credit restrictions. State governments and local government authorities are also affected by them. Honorable members will recall that the House discussed that situation towards the close of last year, and I shall not refer to it again in this debate, other than to point out that local governing bodies are finding that credit has been seriously restricted. State governments are in a similar position. The Government of Victoria has reduced by approximately 6,000 the number of persons who were employed on public works. The State housing scheme in New South Wales has been curtailed, and further cuts are inevitable. Therefore, full employment is being jeopardized. If the Government deliberately initiates unemployment in this way, a chain reaction may be caused that will create serious unemployment. Wholesale dismissals from government employment, excessive rates of taxation, and withdrawals of credit, have caused a quite unnecessary slump in Australia.

I now desire to refer briefly to another aspect of the industrial position. As is illustrated by the clothing and textile industries, defence depends not only on military equipment and trained personnel, but also on adequate reserves of food and clothing, and the maintenance of plant and equipment that can readily be converted to defence purposes. Honorable gentlemen on this side of the House claim - and I think that their claim is now generally admitted - that our secondary industries helped to save Australia in 1942. Those industries were largely established by the tariff policy of the Scullin Labour Government in the early 1930’s. The Labour party’s plan for post-war reconstruction provided that secondary industries, such as the textile and clothing industries, should be developed so that they can be expanded rapidly in the event of another war. Such industries, when they were established in country towns, contributed to the general prosperity, and to the orderly development of our rural areas. But this Government, as a result of its policy of cutting down secondary industries, is dissipating vital reserve defence plants and trained personnel.

I admit that the policy of restricting bank credit is an integral part of the Government’s attitude towards the problem of inflation. That attitude was described in a sentence by the Treasurer (Sir Arthur Fadden) on a certain famous occasion when he said that the excess money in the hands of the people should be put, for the time being, in a place where it can do the least harm. The implication was that that place was the coffers of the Government. That is why the Government’s financial policy provides for an enormous and unprecedented surplus which, according to newspaper statements, will exceed the original estimates. because defence projects have not been developed so rapidly as was expected. Parallel with the enormous burden of taxation which, in the matter of sales tax alone, amounted to three times the maximum receipts from that source during the darkest years of World War II., there is the indirect but cruel and brutal weapon of withholding hank credit at the will of bankers, who, I agree, are carrying out government policy and are not themselves responsible for that policy. However, its results are now apparent. The inflation of prices is still proceeding, especially in relation to food, and an artificially created series of slumps is being experienced.

Primary producers, too, are being injured by the economic policy of the Government. I do not believe that the disastrous slump in production that has occurred in the dairying, wheat-growing and potato-growing industries is due solely co drought. The Government’s policies on taxation, credit restriction, and the contraction of general purchasing power have reacted against the primary producer. Two or three weeks ago, a great meeting of producers was held in the Riverina, and delegates blamed the enormously increased rates of tax imposed by this Government for the decline of production. I desire to mention, shortly, the problem of food production simply for the purpose of commending to the House the careful consideration of certain positive suggestions which have been made by the Minister for Agriculture in New South Wales, Mr. Graham. He announced a ten-point plan, and, on this occasion, I refer especially to those points which deal with relief from taxation for primary producers in the case of increased production of foodstuffs, the provision of concessions to rural workers, the restoration of the 40 per cent, initial depreciation allowance in respect of agricultural machinery which was introduced by a Labour Treasurer, the late Mr. J. B. Chifley, and which should never have been interfered with, as it was so gratuitously, by the present Government. Mr. Graham also advocated the relaxation of bank credit restrictions and the restoration of the special facilities which were formerly provided by the Commonwealth Bank in respect of advances for agricultural machinery. Another point dealt with the problem of the migrant worker. At this juncture, I should like to mention the proposals which were put forward recently by the honorable member for Lalor (Mr. Pollard) for providing additional workers in rural industries for a fixed period of five years. All those proposals recognize the injury that has been caused to food production, partly by high taxes and partly by credit restrictions.

I emphasize, too, the need for consultation with the trade unions and producers, in both primary and secondary industries. The condition of successful co-operation in this crisis is that the Government abandon its high handed attitude of blind adherence to the negative policy of excessive taxation and the equally negative policy of arbitrary restriction of bank credit. It is already evident that the Australian policy of full employment is being seriously undermined. It is also evident that, notwithstanding repeated warnings to the Government, the enormous increases in taxation have curtailed, to a substantial degree, both primary and secondary production, while restrictions on bank credit are bearing harshly on the industrialist and the workers alike. I therefore move -

That the economic and financial policy of the Government, especially its high taxation and drastic restrictions of bank credit, is causing injury to industry and production, both primary and secondary and is under mining the established national policy of full employment. At the same time, as a result of inflated prices and the Government’s failure to restore the purchasing power of the Australian pound, special hardship is being inflicted on families dependent upon fixed incomes, such as social services and repatriation benefits, and the standard of living of wage and salary earners has fallen and is falling: because of its persistence in so injurious a policy the Government has lost the confidence of the country and is deserving of censure.

Mr Calwell:

– I second the motion, and reserve until later my right to speak to it.

Minister for Defence · Wakefield · LP

– Rarely has this House heard such a superficial review of an important subject as that given by the Leader of the Opposition. (Dr. Evatt) this afternoon. At no time did the right honorable gentleman reach the nub of the problem. Instead, he endeavoured to magnify whatever little disagreements and inconveniences the community may be suffering from at present. Although he and his supporters appear to hold up their hands at what is happening, I suggest that, privately, they are very elated because they imagine that talk of the kind that we have heard to-day will gain political kudos for them in their electorates. They will soon realize, however, that although some people can be fooled occasionally, many years will elapse before the people of this country are prepared to forget the eight years of fooling that they endured during the term of office of Labour governments, and to accept such nonsense as the Leader of the Opposition has uttered this afternoon.

The right honorable gentleman referred frequently to the late Mr. Chifley, and to the policy that was instituted and applied under his Prime Ministership. The truth is. of course, that almost every utterance of the Leader of the Opposition denied that policy completely. He spoke of control of capital issues and control of credits. Those controls were introduced and operated by the. Chifley Government, and were administered by the very officials who are administering them to-day. Would honorable members opposite have us believe that whereas, under Labour, there were no inequalities or distortions in the application of those controls, to-day inequalities and gross injustices are rife? This attempt by the Leader of the Opposition to castigate the Government because of its economic policy is extraordinary, particularly in the light of certain observations made by Mr. Chifley not long before his death. For instance, addressing a meeting in the Macquarie electorate as late as the 24th April, 1951, Mr. Chifley said-

  1. am really perturbed and indeed alarmed at the growing spiral of inflation in this country and for that matter in other countries.

Referring to the Menzies Government, the right honorable gentleman continued -

Neither this nor any other Government can lie Warned for the inflationary elements.

I emphasize the next passage -

Every man in public life who has a sense of responsibility must give serious consideration to the country’s honour, economic prestige and standing: abroad and to the heritage of its future citizens. I hope the Government will do something to correct the present disturbed state of our economy whether such action is popular or unpopular.

The Leader of the Opposition is trying now to “ cash in “ on measures that he considers to be politically unpopular. His attitude is most-

Mr Peters:

– Statesmanlike !


– It is better described by a prominent Labour leader, Mr. J. Ferguson, M.L.C., president of the Australian Labour party, who said on the 13th October last year -

The Labour party is not the movement that we were taught to understand and respect, but a combination of individuals burlesqueing under the title of Labour; not believing in Labour principles, but using the title of Labour to achieve their own ambitions and their own narrow ends. If by some accident Labour became the Federal Government overnight 1 am afraid it would be obliged to do much what the Menzies-Fadden Government has done.

The real nub of the problem* of inflation is production. The Leader of the Opposition mentioned that, but he did not develop the thesis. He very rightly pointed out that the inflationary spiral and the soaring of prices are substantially due to excess spending power chasing diminishing quantities of goods; but the main problem in Australia is that of increasing production. During the budget debate he spoke much as he has spoken to-day. On both occasions he said high taxes were destroying incentive. That comes well from the leader of a party which imposed the highest taxes in the history of this country! However, I do not complain about that because we were at war at the time and huge revenues were required. High taxes were necessary then, just as they are necessary now. The Leader of the Opposition criticized the Government’s action in budgeting for a surplus, but I remind him that the Labour party in Great Britain followed that course in almost every year of its term of office, and there can be no suggestion that taxes were light in those years. Apparently what is good for Labour to do in Great Britain is not good for Labour to do in Australia.

It is just as well that the House should understand the problems that we are facing. There arp three main problems - defence, production and development.

I do not care very much in what order they are placed, but to-day I shall deal first with the problem of defence.

Mr Curtin:

– Oh!


– The honorable member may object, but the Labour Government in Great Britain placed defence first and the Australian Government has done likewise. The Opposition criticism of the Government’s policy assumes an amusing aspect when one recalls that, as recently as during the budget debate last year, the Leader of the Opposition criticised the Government for the meagrenew of its provision for defence. Whether the allocation for defence was meagre or sufficient, the fact is that an adequate policy of defence preparations at a time of full employment necessarily involves the subtraction of man-power and resources from normal civil activities. There is no alternative. Therefore, it is folly for the Leader of the Opposition, on the one hand to say that his party is interested in defence and considers that the Government is not going far enough with its plans for the nation’s security, and on the other hand to criticize the Government for taking a course of action that is vital to the defence of the country and to complain that it is introducing industrial conscription behind a screen of credit control. If we are to prepare adequately for defence and have a strong navy, a strong army and a strong air force, the necessary man-power must be drawn from the community. We must withdraw citizens from civil occupations. When we expand the permanent forces from a total enrolment of 34,000 to 50,000, the additional men and women must be transferred from other activities in the community. When we place orders for clothing, food and defence equipment, the necessary man-power must be transferred from civil production. Such defence preparations inevitably involve a certain degree of economic dislocation. That truth was acknowledged by an authority to whom the Leader of the Opposition frequently refers - the late Mr. J. B. Chifley. I remind the right honorable gentleman of the sentiments that Mr. Chifley expressed because, as the leader of a political party that was sustained in office for a long period by Mr.

Chifley, he should take notice of his former leader’s attitude to such important problems. The: late Mr. Chifley said -

No guarantee can be given to anybody that they can stay put in a particular industry, but there will be work for all. It is realized that there will have to be transfers of works and in many cases transfers of whole communities to other forms of work. The most any Government can do is to see that there is work for everybody. I am quite certain that everybody will not be able to stay at home, because there will have to be transfers of labour if there is going to be expansion.

Mr. Chifley was referring to civil expansion at that time because defence had not then assumed its present importance. Nevertheless the principle that he stated still applies. Mr. Chifley also said - and I impress this quotation, upon the Leader of the Opposition because it may be a useful guide for him in the future -

I am not going to fool any one in that regard. It might even involve a plan of movable towns to provide reasonable living conditions and amenities while big projects ure in progress. In the past there have already been transfers of labour, such as from rail to motor, and from motor to air transport. The transfer of labour from radio to television is a future example. The Government’s policy is to provide jobs for all the people all the time - but no one can say where at any time. I subscribe entirely to those sentiments.

We have heard a diatribe from the Leader of the Opposition against capital issues control and credit control. Capital issues control was instituted and maintained by the former Labour Government in exactly the same way as it is being administered by the present Government. This Government is wholeheartedly behind capital issues control and credit control because it believes that, unless such controls are exercised, it will not be able to organize the diversion of the national effort to defence production and to the expansion of our defence forces that is essentia] in present circumstances. Therefore it offers no apology for those controls. They have been designed to achieve a special objective, and apparently they are beginning to exert the influence that the Government expected. I assure the Parliament and the people that we are observing the effects of these controls very closely, and that, should there be any indication that they are too severe, they will be revised immediately. Notwithstanding the complaints of the Leader of the Opposition and other critics throughout Australia, we are convinced that no undesirable results have been caused by these measures.

The Leader of the Opposition referred at length to the textile industry and asked whether or not this was an essential industry. The answer is that of course it is an essential industry. However, I direct the attention of the right honorable gentleman to the fact that the industry has expanded greatly in the post-war period. Any industry, however important it may be, can be expanded until it reaches a stage at which it overproduces. I do not say that the textile industry in general has been “overexpanded. In fact, I do not believe that that has happened. However, certain sections of the industry are undoubtedly producing more than is needed to meet, the present demand.

Mr Peters:

– Then why does the Government allow dumping?

WAKEFIELD, SOUTH AUSTRALIA · LP; LCL from 1951; LP from 1954

– That interjection indicates a novel attitude to this subject. Not very long ago there were complaints throughout Australia about shortages. In order to overcome those shortages, retailers, and also wholesalers to a certain degree, lodged orders for supplies of goods from overseas. Nobody questioned the desirability of that course of action or criticized the method that was employed. Those supplies of goods came to Australia, not to be dumped, but to supply a demand. They were subject to duties at the normal rates. Had Australian manufacturers considered that they had just cause for complaint against the importation of those goods, they could have referred their objections to the Tariff Board and action would have been taken immediately. But no objections were raised. The Prices Ministers of the States recently decided that these goods should remain subject to prices control. The whole purpose of prices control is to deal with commodities that are in short supply. It is a gross exaggeration of the position to say that the textile industry is in dire straits. “We have been told that people have been thrown out of their employment and cannot obtain other work. According to the information at my disposal, which I believe to be up to date, in all Australia 2,S00 people are receiving unemployment benefit. I believe that approximately 2,400 of them are in Queensland. They are unemployed as the result, not of the Government’s policy but of drought, fires and seasonal conditions. We have relatively few unemployed persons. Nobody wants the pool of unemployed about which honorable gentlemen opposite are always talking. I would say that there is less unemployment in Australia than in any other colin try in the world.


– The Minister should have a look round.


– I should be interested to hear from the honorable member for Eden-Monaro (Mr. Allan Fraser) something different on that score. The specific purpose of the Government’s economic and financial policy is to divert man-power and materials to essential industries connected with defence and development. The Government realizes that, to support our defence preparations, there must be a policy for the development of this country. In the existing conditions of full employment, as I describe them, it will be impossible to make progress with defence preparations and developmental projects unless man-power and materials are diverted from the less essential industries. That is the purpose of the Government’s policy, and I believe that that purpose is being achieved.

It may be that the Government’s policy is causing inconvenience to some individuals. In this country, as in every other country, there are people who are not engaged in permanent employment. They follow seasonal occupations. They work for periods in certain jobs, and then engage in other types of employment elsewhere. It may be true to say that there will be transfers of labour from the more stable industries, or from industries that previously were considered to be stable. But, despite all the forecasts of a depression, the fact remains that the Department of Labour and National Service is still seeking to fill a number of unfilled jobs. I believe that at present there are over 60,000 jobs waiting to be filled. Approximately 2,800 people are receiving unemployment benefit, but there is a pool of unfilled jobs of the size that I have mentioned. In those circumstances, I do not think that any sane or sincere person would try to make the people of this country believe .that a depression is in the offing.

We heard a little from the Leader of the Opposition about a dreadful slashing of loan funds for the State governments, lt is well to remind the right honorable . gentleman of what has been done for the State governments in connexion with loan funds during the post-war years. In 1946-47, the total sum of loan moneys raised for the States was £30,SOO,000; in 1947-48 it was £45,500,000; and in 1948-49, it was £49,600,000. In 1949-50, the year when this Government came into office, the total sum was £82,900,000, and in 1950-51 it was £145,900,000. This year, despite the cuts that have been made, it is £225,000,000. It is nonsensical for the Leader of the Opposition to suggest that this Government is deliberately cutting loan funds for the States in order to prevent the States from proceeding with urgent developmental works and giving employment to their people. Employment is waiting for them. Those statements have been made only in an endeavour to obtain some political advantage. The right honorable gentleman and those who sit behind him know perfectly well that they are completely distorting the conditions that obtain in this country at present. The objective of this Government is defence, production and development, and it will ensure that that objective is attained, for the benefit of the people of this country.


.- I support the motion that has been moved by the Leader of the Opposition (Dr. Evatt) on three grounds; first, that the anaemic policy generally pursued by the Government in respect of economic matters, both internal and external, affecting Australian interests has resulted in a general deterioration of the economic life of the nation; secondly, that during the last two years the Government has failed to pursue full-blooded and energetic measures to arrest the economic inflationary trends, of which it is fully aware and about which it has made frequent declarations; and, thirdly, because general instability has been caused in both primary and secondary industries by its ill-timed financial policy.

Responsibility for the conditions that exist in Australia to-day must fall upon the shoulders of the Government. A little over two years ago, the present Government parties made it clear that inflationary trends were beginning to operate in Australia. They gave a solemn pledge that, if they were returned by the people as the Government of this country, they would take all the steps necessary to check those inflationary trends and, to use a term that has now become almost a classic, that they would put value back into the £1. The Government has had two years in which to give effect to its policy. Shortly after the Government took ‘office, a question was directed to the Prime Minister (Mr. Menzies) about the steps that he proposed to take to put value back into the £1. I think the right honorable gentleman correctly stated the position in his reply to that question when he said that before value could be put back into the £1 it was necessary to stabilize prices. Then, having stabilized prices, the necessary steps to increase the purchasing power of the £1 could be taken. Later, the right honorable gentleman said that inflation is the clearest proof of want of balance in the economy. During the last two years, we have heard from the treasurybench statements about the difficulties that Australia is experiencing in respect of inflation and about the Government’s determination to restore the stability of our economy. Perhaps the best statement that was made upon that matter was that which was made by the Prime Minister in the course of a speech that he delivered in this chamber on the 3rd October last, in an attempt to justify the budget proposals and the policy of budgeting for a surplus. I mention this fact in order to demonstrate how far economic conditions in Australia have slipped and fallen in spite of the efforts that the Government has taken to deal with the chaotic position that it recognizes exists in 011 r economic life. In his statement, the Prime Minister referred to seventeen major points of policy that were being put into operation by the Government in respect of inflation. They varied from the 100,000,000 dollar loan from the International Bank to such matters as dismissing 10,000 public servants, budgeting for a surplus, credit restrictions and capital issues control. In addition, lie stated that a legion of minor policies fitted in with the general major policies that were to be pursued. The Government has had two years in which to deal with this problem. The only way to test whether its policy has been sound and satisfactory from a national point of view is to consider what has been the effect of that policy upon the purchasing power of the £1. During the period of two years ended the 31st December last, retail prices in Australia rose by no less than 40 per cent. In the last eighteen months when the Government has had more opportunity to pursue its policy vigorously than during the first six months that it was in office, prices rose by 30 per cent. During the same period the basic wage for the six capital cities of Australia rose from £6 2s. a week to £10 10s. a week, an increase of £4 8s. a week, £1 of which was an increase of real wages. Therefore, in spite of the Government’s economic policy, the cost of living has increased appreciably. The effect of increased costs in industry has been that the “ C “ series index numbers have increased by 40 per cent. I need hardly point out to honorable members that such a big increase of retail prices has had a most serious effect upon people in receipt of fixed incomes, and a tragic effect on pensioners. The Government’s policy has failed utterly and indisputably to control inflation and cope with the perilous economic position that has been evident during the last two years. The Opposition considers that a very strong protest should be registered about the way that the economic affairs of this country have been allowed to drift during that period.

The Minister for Defence (Mr. McBride) endeavoured to defend the Government’s policy by stating that it had adopted some of the principles of the previous Labour administration which governed this country for eight years. The essential difference between the control that was maintained by the Curtin and Chifley Governments, and the control that has been exercised during the last two years by the present Government, is that Labour’s controls on the various economic phases of our life producd a stability of prices that compared ‘ very favorably with those in other countries of the world. Statistics show that, at the end of World War II., price levels in Great Britain, New Zealand, and Australia were remarkably low. Indeed, Australia had probably the lowest price level of any country that had been affected by the war. In order to control effectively the forces of inflation, which during war-time could operate with disastrous effects, the previous Labour administration considered that not anaemic measures but full-blooded economic regulation was necessary. Inflation could have taken control of the nation and ruined our war effort. Therein lies the vital difference between the method that was adopted by Labour to deal with the economic problems of this country during war-time, and the policy that has been pursued by the present Government to deal with the inflationary trend during the last two years. When the Government brought down the Defence Preparations Bill we were told that the international position was such that Australia should be geared to the fullest possible economic effort in order properly to make provision for the possibility of war and to resist any attempt to invade this country. As the Minister rightly said, the Government knew when it introduced that measure that it was embarking upon a policy of defence that was bound to have an inflationary effect on the economy of Australia. We were told that, in order to mobilize the production of this country, industry was to be divided into three groups, namely, essential, less-essential, and nonessential industries, and that the economic theory to be put into practice would enable workers to be transferred from nonessential industries to less-essential industries, and from less-essential industries to essential industries. The Government stated that, as this country was to be put on practically a war footing, it was necessary to introduce controls to prevent from occurring in peace-time, conditions that could operate during war-time to the detriment of our economic life. Therefore, the censure that lies at the door of this National Government is that, realizing that effective economic control was necessary, it failed to take steps adequately to prevent the disastrous rises of prices that have taken place during its term of office. So it boils down to the soundness or unsoundness of government policy. The Opposition contends that the only conclusion that can be arrived at from a consideration of the effects of the Government’s economic policy is that that policy is unsound. As a consequence of that unsoundness, inflation has taken such effective control of our economic life that, unless steps are taken in the very near future to control it properly, it will get entirely out of hand.

Three factors have accentuated the inflationary tendency in the last two years. I agree with the Prime Minister (Mr. Menzies) that one of those factors has been the necessity to look to our defences. Nevertheless, the other two factors - immigration and high prices for our exports, which have a great bearing on our economic life - should have been recognized by the Government, which should have taken steps to meet the position that they produced, so as to prevent inflation from getting out of hand. Each of the three factors that I have mentioned, either could not be avoided or was to the benefit of the Australian people. Defence was essential. Immigration was both essential and of the utmost importance. The high level of prices for our exports meant a considerable increase of purchasing power for a section of the community that has had a very raw deal in the past in respect of the return it received for its labour. Whilst those three factors taken together are good and of national advantage, they have created internal problems the stress and strain of which had to be watched with the greatest care if we were not to have further problems falling upon ria. It is in this respect that I consider the Government has failed, because by its administrative actions and throughout the whole of its policy, the Government has shown a tendency to pass the buck, to either future generations or- future years. For instance, we have been admitting to this country about 150,000 persons a year. That means that every facility that the country possesses, both in productive re- sources and services, must be increased to allow us to absorb this new access of population in as short a space of time as possible. To do so requires additional houses by the thousands and an increase in the production of goods and services, such as postal facilities, transport, hospitals and education. When the immigration policy was embarked upon it wa» necessary, therefore, to mobilize the resources of the country so that we could fit the immigrants into our community without accentuating the difficulties, problems and inconveniences from which our people were already suffering. In spite of the steps being taken in that direction, and in spite of the figures that the Minister for Defence gave to the House this afternoon .regarding assistance to the States, we find that, as a consequence of the Government’s policy respecting public loans and credit facilities, essential works such as power projects have been retarded, employees have been dismissed from public works projects and the additional power that was essential for an increase of production and for lighting of homes, has not been provided. It is certain that in the coming months, both in Victoria and New South Wales, stringent restrictions on the use of power will be in operation, yet we find that, instead of facing our production and economic difficulties now the effect of the Government’s policy is to put the tackling of those problems off to some indefinite time in the future, with the result that the difficulties that the people are facing have been accentuated in every direction.

The textile industry, which is important to Australia, has suffered severely as a consequence of the policy that the Government has followed during the last few months. The Minister for Defence suggested that the industry was overproducing, although he did not say so definitely. Part of the Government’s policy has been the importation from abroad of vast quantities of merchandise as well as capital equipment, and during the last twelve months a large volume of clothing and textiles has been imported. Not only has that fact seriously affected our own essential textile industry, but in addition the Government’s policy of credit restriction has had a most retarding and disturbing effect upon it. The textile industry is an important industry in my own electorate. I have made inquiries in various textile factories to discover to what degree employment has had. to be curtailed and how credit restrictions have affected their business. I found out that in one moderate-sized establishment 80 employees out of 300 have been displaced in the last twelve months. In another establishment which manufactures textile goods of a type essential for defence, TO persons have been displaced. In another factory which manufactures blankets and similar kinds of goods, 80 workers have been displaced. In still another factory a complete night shift, numbering 45 employees, has been put off. On each occasion I was told that two factors were certainly responsible for the conditions in the industry. One was excessive importations, and the other was credit restriction. I shall explain how the restriction of credit facilities has acted upon the textile industry. I cannot say for certain, but I conjecture, that retail establishments have been classed for the purpose of the Government policy on credit, either as less essential or non-essential. As a result, their credit facilities have been greatly restricted and, in many instances, according to what I have been told, retail establishments have been called upon to reduce their bank overdrafts substantially. The consequence has been that they have been cautious in their buying of new stock, with the further result that industries, such as the textile industry, which are essential in war, or in preparation to meet war, have found that orders are slackening. They are therefore unable to keep at work the same number of employees as they employed before. One of two things then occurs. Either there is a general reduction of staff, such as I have mentioned in at least four establishments in my own electorate or, in order to keep their staffs together and not lose skilled, specialized workers to other industries, the factories commence to work on short time. As a result, their hours are reduced to 36 or 30 per week. Employment is found for the same number of people, working a shorter week. Consequently, instead of essential industries obtaining additional labour, in a very large number of instances where women are employed, particularly in country towns, when work ceases in the textile mill, the women return to their homes. They do not transfer to another industry, and a vital section of our productive force is taken OUt of our economic life.

Men who are discharged are not being transferred to essential industries, nor even from non-essential industries to less essential industries because the policy of decentralization which has been carried out in Australia has resulted in people making their homes in country districts.


– Order ! The honorable member’s time has expired.


– I listened to the honorable member for Bendigo (Mr. Clarey), in the hope that I would hear some constructive suggestions. I have been very disappointed to hear a mere recital of facts which we know. One wonders what are the reasons for this censure motion. I listened very attentively to the Leader of the Opposition (Dr. Evatt) in order to find out, and I have come to the conclusion that it has been motivated by political opportunism on the part of the Opposition, which is trying to take advantage of some confusion in the community and of some uneasiness which has been caused by a changed state of conditions, which is perfectly natural, and which every one expected. The Opposition is trying to take advantage of this state of affairs in order to gain some political advantage. An Opposition has, at all times, the right to oppose. That is its function. But I suggest that it should always oppose with a sense of public responsibility. On this occasion, a censure motion has been moved without any sense of public responsibility whatever.

One might describe this motion as gloriously irresponsible. I suggest that the people will not be deceived by it because, over the years, the Opposition has shown that it is more concerned about gaining advantage for its political party than in saving Australia in its crisis. “Who can deny that there has been an economic drift in this country and in every other country in the world? The drift is not confined to this country. It is not even greater in this country than in other countries. The western democracies are hand in hand in their preparation for defence in the event of attack. We are in the middle of a cold - and indeed a hot - war at the present time, and the necessity for defence preparedness throughout ihe democracies has had an extraordinary effect on their economies. This young country which is charged with the responsibility of developing a new nation with a handful] of people in a geographical position vital to the western democracies must do so with all speed. It cannot do that unless there is a proper understanding by Government and Opposition of the responsibility that rests upon the shoulders of all the representatives of the people. Immense basic developmental works are needed in this country. Some of those works are associated with our great immigration programme which has had a tremendous effect on the economy of this country.

Honorable members know, without being told by the Opposition, of the existence of world inflation. Who would suggest that something should not be done to regulate this position? The enormous rise in bank deposits in recent years ha3 indicated the immense amount of surplus money in the hands of the people. A vicious competition for man-power and material has taken place in the last few years, particularly while defence preparations have been in progress. Can the Leader of the Opposition deny that? To hear him make such allegations as his statement that credit restrictions should not be imposed on any industry, one would imagine that there was ample man-power to produce all the goods required in this country. In the electric power industry, of which [ know something and which was mentioned by the honorable member for Bendigo, the labour turn-over reached 125 per cent, a year, because of the vicious competition that I have mentioned. Mushroom industries of a nonessential character have developed throughout the length and breadth of the country and in some cases their products have been an enticement to people to spend surplus money. An. already very great shortage of food, housing and essential goods has been accentuated by the use of man-power in the production of materials which are not essential.

A factor which has not yet been mentioned but which has had a vital effect on the economy of this country, and on the position in which the Government finds itself at the present time is the stage that was set by the previous Labour Government. Labour governments for the eight years preceding the accession of this Government to office, were largely responsible for the drift that took place in the economic position of this country. I instance one action of the Labour Government which, although I am not opposed to it in principle, was most unfortunate for the interests of Australia.

Mr Curtin:

– The 40-hour week.


– Yes, the 40-hour week, which was arbitrarily introduced by the McGirr Government of New South Wales, and has caused more harm to this country than anything else that has ever happened to us. I am not afraid, for political reasons, to say that. I say that 40 hours is a desirable period of work under normal conditions, but I do believe that the conditions of this country did not warrant the arbitrary introduction, by legislative act, of the 40-hour working week.

Opposition members interjecting,


– Order ! I must ask honorable members on my left to maintain order.

Mr Sheehan:

– But the honorable member for Bennelong (Mr. Cramer) is telling lies.


-Order ! The honorable member for Cook (Mr. Sheehan) will withdraw that remark.

Mr Sheehan:

– I withdraw it.


– And he will apologize for making such a statement.

Mr Sheehan:

– I apologize.


– The 40-hour week, together with industrial appeasement by previous Labour governments, has greatly contributed to the present state of our economy. The Chifley Government overrode every industrial judgment of every court in Australia and permitted the unions to avoid carrying out maintenance work on Sydney power stations. Industrial appeasement by Labour governments has cost the manufacturing industries of Sydney hundreds of millions of pounds through lost production.

We heard the other day that certain boiler tubes at a Sydney power station were found to be corroded. I know of the condition of the boilers in that power house. There are two causes of the corrosion of those tubes. The first is the low quality of the coal used; the second is the appeasement of unions by Labour governments which prevented the authorities from using their labour force on maintenance work. Those two actions have drastically reduced the power output in Sydney and have directly caused a serious condition of chronic blackouts. The responsibility for the blackouts in New South Wales lies directly upon the Labour Government of New South Wales and the Chifley Government.

While he did not say so in specific terms, the honorable member for Bendigo obviously referred to his belief in pricefixing. It may be as well to ask what price-fixing has done for this country.I suggest that it would be difficult to assess the damage that it has done. The honorable member for Bendigo tried to tell us about price levels at the time a Labour government was in power in Australia. It should be remembered that no official statistics can ever become available of the true price levels existing when prices were controlled by the previous Labour Government, because many business transactions were carried out from under the counter and were consequently never recorded. Everybody in New South Wales, and I believe in the other States, knows that during the period of prices control the black market was enormous.

Opposition members interjecting,


– Order ! If honorable members will not maintain orderI shall have to enforce it. I do not intend to allow this debate to get out of hand.


– It is a fact that prices control and government interference ha ve been the main causes of our serious shortages of butter, meat, potatoes and, indeed, of houses. The previous Labour Government was responsible for encouraging the people not to work. There is no doubt that the Labour party and the Labour Government carried out propaganda designed to lead people to believe that the great beneficent state would see to all their future needs. The previous Labour Government was constantly prating of full employment. Of course there should be full employment, but recently we have had not full employment but over-full employment. That caused a ruinous and vicious competition for labour. Yet at that time there was a government in power which was constantly appeasing the unions and telling the people that there was no need to work, that there would always be plenty of money and jobs without the necessity for working. The people believed it, and the result of that belief has been that man-hour production in Australia has become lower than that of any other country in the world. That has definitely been caused by the policy of industrial appeasement adopted by Labour governments in their eight years of office.

Never at any time did past Labour governments attempt to reduce government expenditure. At all times those governments were competing with industry for labour and materials. To-day in the Labour-governed State of New South Wales there is an enormous government stock-pile of building materials, and the people who need those materials have been deprived of them. That is a sample of the things that Labour has done for us. I have heard it said among people that the Australian £1 should not have been devalued. Who was responsible for devaluing the £1? There arc people who will tell you to-day that that devaluation has had a grave effect on our economy. When sterling left the dollar group, the Chifley Government, instead of acting precipitately, should have ensured that the matter was thoroughly investigated and our currency properly adjusted. I know that there is a difference of opinion on these matters, but nevertheless the Chifley Government was responsible for this further act of economic ineptitude.

One of the greatest factors which prevents any Australian government from adjusting our economic situation is the pressure exerted by the Labourgoverned States of Australia. It is very difficult for a federal government to try to adjust our economy in the face of the lack of co-operation - it might almost be said a deliberate attempt to throw a spanner into the works - by the State of New South Wales, and, to some -degree, by Victoria. The effect of that attitude on our economy is considerable, and those who are watching economic conditions know that the McGirr Government of New South Wales is completely irresponsible and is not in the slightest degree cooperating with the Australian Government in its attempt to arrest our economic drift.

From time to time we hear of the enormous pressure for more money which is constantly exerted on the Government by New South Wales. Every time the Loan Council meets, greater and greater demands are made by that State. Yet there is no State of Australia which is economically worse off than New South Wales. In the Liberal-governed States of South Australia and Western Australia there is co-operation with the Australian Government, and the people of those States are consequently far better off than are the people of noncooperating States. New South Wales shows a complete sense of irresponsibility, and indeed could not spend any extra money. The McGirr Government cannot spend the money that it has already, and yet it is continually calling for more merely to embarrass the Australian Government. In 194:7, Mr. McGirr promised the people 90,000 houses in three years. He also promised that there would be no more blackouts. The people did not get their 90,000 houses, and .to-day blackouts are worse than ever before.

Mr Curtin:

– They have not had the honorable member to help them since that time.


– I have not been connected with electricity generation in New South Wales for two and a half years, and in that time the blackouts have increased. Mr. McGirr promised the people stream-lined transport; but what did they get? He promised them more schools and hospitals, and what did they get - exactly nothing. The New South Wales Government has done more harm to Australia’s economy than any other government has ever done.

The policy of the Australian Government has been criticized at a number of points. Criticism has been levelled at the Government for imposing heavier taxes. I say that the Government was entitled to take this course of action because it will benefit the people. The Government would not have been worth its salt if it had not imposed higher taxation at this stage. Criticism could have been levelled at the Government if it had increased taxes and then had increased Government expenditure. Heavy taxation can be justified only when it runs parallel with a reduction of government expenditure. Even though it may impose sacrifices on some sections of the community - and I know that the taxation policy needs review in certain respects - I still say that it is in the interests of the people that these taxes have been imposed. In the same way the central bank credit control and the capital issues control have already done an immense amount of good for the community. There is no doubt about that. Whilst I do not agree with the. Government on certain restrictionsrelating to home ownership, I believe that it has done some good in having allowed an adjustment to take place. However, there is great need to watch carefully from day to day the very delicate mechanism of the economic policy because it can get out of hand overnight and thuscause unnecessary injury. I seriously suggest to the Government that attention should be given immediately to the credit restrictions affecting home ownership.. Because of those, restrictions, very much greater pressure has been exerted, particularly by State governments, for moremoney with which to build houses through housing commissions. Such operationsare not in the best interests of the community. If the credit restrictions on home ownership are not relaxed, the smallbuilders who form one of the most important sections of the community, will1 be driven out of business-

Opposition members interjecting,


– Order! I haveintervened twice already and I again ask for order on the Opposition benches. I shall not appeal again.


– I wish to make to theGovernment three suggestions to which I. attach much importance. There is no doubt that the restrictions that it initiated have been beneficial “to the country and that it is following the right course in the interests of the people as a whole. A day will come when the people of Australia will thank this Government for having had the courage and honesty to face this difficult problem. I suggest that there are now three basic needs. The first is the development of Australia’s rural industries. T know that that matter is in hand and that what I suggest will be done. Secondly, special attention should be paid to the development of basic industries for . the production of coal, steel, and building materials, for the bottleneck in supplies of those materials threatens to reduce the number of completed buildings in Australia. Thirdly, credit should be released for home ownership. Failure to do so will mean the encouragement of a renting community and a government landlord system which is diametrically opposed to the interests of democracy, particularly to the form of democracy that Australia is endeavouring to build. Much good has been done in the levelling out process, but at this stage attention must be given to the three points that I have enumerated in order to justify fully the work that the Government is attempting to do.

The motion submitted on behalf of the Opposition contains no worthwhile material. It contributes nothing that would be helpful to the nation but is merely an endeavour to mislead the people into believing that something is wrong with this Government’s actions. The Government is on the right track. It has been in office for only two years and in one of those years it was unable to do all that it wanted to do because it did not have a majority in the Senate. If it is given time and is allowed to pursue its policy, the people will have lower prices and the country will be developed from the proper sources instead of having labour and material dissipated on unessentials


.- The honorable member for Bennelong (Mr. Cramer) has suggested that the Government should be given time. I agree with that. It should be given a long stretch.

For the first time since the cessation of hostilities workless people are wandering from factory to factory seeking employment and in many cases they are unable to get it because of the economic policy of the Government. Thousands of people in .the clothing and textile industries have been dismissed and many thousands more are on short time. Great numbers are in danger of dismissal. Factories in the metropolitan areas and in country districts have been forced to close, some of them permanently. Some textile factories in Victoria were established as a war measure and so that the population could be decentralized, and these, though they were supplementary to primary production, have been closed. The Government cannot disclaim responsibility for this nor does it desire to do so. In Victoria alone, more than 3,000 employees in the textile industry, out of a total number slightly in excess of 11,000, have been thrown out of work in the last few months. Unemployment is growing also among employees of the clothing trades. Many clothing workers are engaged only for three or four days a week. One of the causes of this unemployment is the flood of imported goods from overseas countries where labour is cheaper. In 1939, £43,000 worth of socks and sockettes was imported into Australia. During the war, those imports practically ceased, but in the first four months of this financial year £900,000 worth of those articles was imported. Such a flood of goods from other countries must close factory doors in Australia and that is only one item in the textile trade. Overseas manufacturers have supplied 70,000,000 yards of rayon to Australia. Will not that close factory doors ? Will not the introduction of fullfashioned hose from overseas put Australian workers out of employment? In 1939, 34,000 overcoats and men’s suits were imported into Australia. Last year 215,000 suits of clothes were imported. In 1939, 12,000 dozen pairs of men’s hose were imported but in 1951 the number rose to 47,000 dozen pairs. In 1939, 5,000 dozen pairs of children’s hose were imported compared with 50,000 dozen pairs in 1951. Of blankets and blanketing, £45,000 worth was imported in 1939, but over £1,000,000 worth was imported in 1951. Some honorable members opposite have claimed that the people were spending too much money on consumer goods, and that some of it had to be diverted to defence projects. Actually, however, the people are still spending their money on the same sort of goods, and the only difference is that the goods are now being imported from overseas instead of being manufactured in Australia, which is seriously to the detriment of Australian workers and Australian manufacturers. Local industries should be protected. Australian workers should not be thrown out of employment, and Australian industries should not be destroyed. The Labour party has never believed that the tariff wall should become a barrier behind which Australian manufacturers could exploit the public; neither does it believe that the remedy for exploitation is to permit the unhampered importation of goods from cheap labour countries. If the. idea is that inflation can be cured by importing the products of cheap labour, then we should go the whole way, and import our goods from those countries where labour is cheapest. We should not be content to import from countries in which labour is only second or third cheapest. Of course, if we imported from those countries in which labour is cheapest the result would be disastrous, not only to Australian industry but also to the industry of the British Commonwealth as a whole.

Government supporters have claimed that the transfer of labour from some industries to other employment is a healthy sign, and they congratulate themselves that such transfers are the direct result of the Government’s policy. They profess to believe that the persons who have lost their employment as clothing and textile workers or boot-makers will go into the coal mines or the logging camps or the building trade or on to the farms, but will they? Of course they will not, and everybody knows it. The Prime Minister (Mr. Menzies) said in his policy speech in 1949 that it was impossible to turn artisans into primary producers overnight. It was not practicable, he said, to make a coal-miner out of a man who had been employed in light industry. I agreed with him in 1949. , He disagrees with himself to-day.

I challenge any supporter of the Government to show that those who have lost their employment in the textile industry have since obtained employment in a more essential industry. I live in a district in which the clothing and textile trades are carried on. I asked some of those who had been put out of work in those industries whether they had since obtained employment, and some said that they had. Some, I learned, are now making paper bags, others are making artificial tops for tables, whilst others are employed as messengers in government departments, and as attendants at insane asylums and elsewhere. Surely it is not contributing to the cure of inflation to turn the makers of socks into messengers in government departments, warders in insane asylums or attendants in Parliament House, especially as the socks, which were formerly made in Australia, are now being imported. The Labour party is convinced that the policy of the Government is contrary to the best, interests of the people.

While thousands of our- own Australians are being thrown out of employment, hundreds of thousands of other persons are being brought into Australia. We are bringing textile workers from Britain, and we are destroying the textile industry in Australia. Surely such a policy is the negation of common sense. Government supporters maintain that the persons who lose their employment in various industries will drift into primary production. The cry now is for the production of more and more food. I remind honorable members that one of the reasons for the establishment of light industries in intensely cultivated rural areas was to provide labour for seasonal work such as pruning, case-making, &c. That was why the textile industry was established in Shepparton, and its presence there is now welcomed by the primary producers. Of course, members of the Australian Country party in this Parliament do not welcome the presence of industries in their electorates because it reduces the chance that Australian Country party candidates will be elected to the Parliament. However, the primary producers recognize that such light industries are complementary to primary production. Now the light industries are being destroyed, and the effect upon primary production is very serious. Even more serious is the effect upon the national economy, and upon our relationship with other countries. We are now importing into Australia hundreds of millions of pounds’ worth of goods which people already in Australia could manufacture. Since the defeat of the Labour Government two years ago, Australia’s overseas funds have dwindled from about £800,000,000 to little more than £200,000,000. I observe that the professor, the honorable member for Warringah (Mr. Bland) is listening keenly to what I am saying. I am sure that he realizes that during the period of officeof this Government there has been an excess of imports over exports and that our overseas balances have decreased to an alarming degree. Every loan that the Government obtains overseas, whether from the United State of America, or as the result of the efforts of the Treasurer (Sir Arthur Fadden) in other countries - recently the right honorable gentleman was depicted in a periodical scaling the Alps to secure a loan of £5,000,000 from the people of Switzerland - comes to this country in the form of goods. Each additional overseas loan worsens our financial position overseas. Instead of being a creditor nation, we become a debtor nation. Having become a debtor nation, when the proceeds of the sale of our primary products overseas are no longer sufficient to pay for the commodities that we require to keep Australian industries in operation we shall become nationally bankrupt. The mounting sea of importations and the diminishing of our overseas balances to the point of extinction, will reduce us from a creditor nation to a debtor nation. When we seek to obtain oils and petrol, rubber, and the one hundred and one other commodities that are essential to our economy in peace and in war, and are unable to pay for them with our primary products, and we have no overseas reserves because they have been deliberately destroyed, or negligently allowed to be frittered away by the actions of this Government, we shall become nationally insolvent. National insolvency will mean that unemployment will grow to vast dimensions. People will walk the city streets and trudge the country roads in a hopeless quest for work. Honorable members opposite will ask whether the dismissals of employees in the textile trade is of any significance. They will say that the Leader of the Opposition (Dr. Evatt) has spoken in terms of 5,000 or 10,000 dismissals and that I have spoken in terms of 20,000 dismissals, and they will undoubtedly question whether, having regard to the vast number of people in this country, such dismissals really matter. I warn them that from little things great things grow.

Mr Treloar:

– Only if you magnify them.


– I do not need to magnify them. From the tiny acorn grows the mighty oak ; from the pebble dislodged on the mountain side comes the avalanche that destroys vast cities and towns; and from the trickle in the hills comes the flood that engulfs cities and towns and devastates the land. I observe that honorable members opposite are smiling. They do not want to tackle these problems in their infancy notwithstanding the fact that only if they are dealt with in their infancy can they be effectively tackled. Unemployment has a cumulative effect. The displacement of men in one industry causes others in other industries to become unemployed. If a few hundred men in the textile trade are put off their displacement may cause the loss of employment to 40 or 50 other persons. Thus, the tide of unemployment grows. This country can avoid the evils of unemployment if the proper steps are taken now. Notwithstanding the endangering of our financial relations with other countries by the actions of this Government our people may be saved by actions outside their control, by increased demands for our wool by the peoples of other countries, by increases of the overseas prices of primary products, and by floods, pestilences and other national disasters in overseas countries that result in increased demands for our products ; but governments and statesmen should not depend upon outside factors of that kind for the peaceful and happy development of the country in which they live. They should adopt a policy which will ensure that, despite what happens overseas, the economic security of our people and their freedom from unemployment shall be assured. That is why we direct attention to the trickle of dismissals that is rapidly becoming a flood and to the over-importation of goods and the dissipation of our overseas reserves, that have made necessary the raising of overseas loans to meet our commitments. Unless the Government takes remedial action the proceeds of these new loans will in turn be dissipated in the purchase of additional imports.

I appeal to .the Government to take corrective steps while they may be taken in order to retain Australian industries that are essential to our economy in time of peace as well as in time of war. If the Government wants to discourage people from purchasing certain overseas commodities it should not permit them to be imported. It should not discourage the manufacture of certain commodities in Australia and by restriction of credit and the lowering of tariff duties encourage the importation into Australia of twice the quantity of those goods that could possibly have been manufactured in our own factories. That is what the Government has done and is still doing. It should immediately review its credit restriction policy as it affects the textile trade. In days gone by, if a man had an asset he could very easily liquify it. I know of the proprietor of a textile factory in Brunswick who went to l.i is banker to obtain financial accommodation to enable him to carry on his business. The banker admitted the value of his assets but told him that as the Capital Issues Board, which controls investments, did not regard his industry as being highly essential, he could not provide the requisite accommodation. Controls of that kind are utterly absurd. A flood of importations is coming to Australia from overseas. When Japan reverts to its former position as a manufacturing country - and it will do so before many months have passed - unless Australia takes steps to protect its industries against cheap labour importations from Japan many of our secondary industries, both light and heavy, will be destroyed. These are the issues that confront the Government and it is its responsibility to face up to them.


.- During the course of this debate we haveheard from honorable members opposite very little that is new. They have failed completely to point the finger to any course of action that the Government should have taken and has failed to take. We have heard a great deal of vague criticism. We have heard some dire threats of what might happen; but, so far, honorable members opposite have not backed up their threats with anything concrete. All that has come from them is a number of pious hopes that the country will soon find itself in great difficulty. That, in fact, sums up the speech that the honorable member for Burke (Mr. Peters) has just made. We shall not derive much profit from a debate of this kind unless all honorable members are prepared to look frankly at the root causes of the state of the country because regardless of the side on which we sit in this House not one of us can be satisfied or feel much cause for confidence when we examine the position in which our people find themselves at the moment.

Honorable members opposite have emphasized two factors, mounting unemployment and rising prices. I shall speak about unemployment later because I believe that it is clearly a secondary consideration. But the problem of rising prices is a different matter. Every honorable member, whether he represents a great or small or a city or rural electorate, has forcibly brought to his attention every day the shifts to which people are compelled to resort in order to meet constantly rising prices. Rising prices are due to a variety of factors some of which it is beyond the capacity of this country to control. On that point there can be no difference of opinion. The. late Mr. Chifley repeatedly pointed out not only when he was in office but also when he was out of office that, in the face of world inflation and the tremendous demand for the goods that this country was producing there was little that we could do to keep down the general level of prices in Australia.

Mr Costa:

Mr. Chifley kept down prices.


– If he had kept down prices when his Government was in office, honorable members opposite would to-day be on the treasury bench. However, there are certain factors which were definitely within the power of past governments to control and which, because of their failure to do so, have contributed to present inflation in this country. I shall not now argue whether such action is right or wrong, but I believe that the primary cause of rising prices among those factors which past governments could have controlled was the introduction of the 40-hour working week at the time when it was introduced.

Mr Griffiths:

– Does the honorable gentleman believe that?


– I shall not enter into an argument on that matter because it has been debated at length on previous occasions. However, it was obvious that unless the reduction of working hours was accompanied by an increase of output there would be a decline of production, ft was also obvious that if the same, or even higher, wages were paid for less production there would be a greater demand for the lesser volume of goods. That is precisely what has happened in this country. Whether we like it or not, we are in the position in which a rise of prices is automatically followed by an increase of the basic wage, which in turn is followed a further rise of prices. That system has been in operation in this country for many years and, in varying circumstances, it has been held up as a model to the world ; but I believe that any one who is charged with the responsibility of government must look very closely at that system in so far as it provides for an automatic increase of the basic wage whenever there is an increase of prices of commodities. That is exactly what it boils down to. I say to honorable members opposite, particularly those who represent industrial electorates and claim to be concerned about the welfare of the workers, that it must have been brought home to them that the people whom they lead and whom they claim to represent are the greatest sufferers under this pernicious system in which wages and prices perpetually chase each other. If any honorable member opposite has any solution of that problem to offer I shall be glad to hear it.

Another cause of inflation, in dealing with which one is not calculated to win support, has been the tremendous drain of governmental expenditure upon the country. After all, this Government, like its predecessors, has more or less been committed to a programme of extracting great capital in terms of labour, effort, money and equipment from the productive side. The Government had to undertake an enormous rearmament programme which was essential but, at the same time, drew much productive effort out of the pool. Furthermore, we live in an age when, regardless of party politics, we must commit ourselves to enormous expenditure on social services. At a time like the present when we are faced with rising costs we must look very closely at our social services programme. I say frankly that we have reached saturation point in our expenditure upon social services. We simply cannot afford to make provision for further social services. If we insist on doing so and continue to bluff the people that we can afford to do so increased inflation must follow as night follows day. In addition, we have been committed to an enormous immigration programme. 1 do not criticize the Government’s immigration policy, but it is obvious that of the many hundreds of thousands of immigrants who have come to this country there is a far greater proportion of consumers than effective producers, and those consumers must be housed, clothed and fed whereas there is not sufficient housing, food and clothing to meet our own present requirements. That has been a big factor in forcing up prices. These things which have been so important components in the cause of inflation are all very well in themselves ; but we must make up our minds that if we continue along the path that we are now following, incurring great expenditure in respect of social services, defence preparations and immigration, and accepting continual increases of the basic wage, it will be quite hopeless to expect anything in the nature of a fall of prices or a reduction of taxes.

If I have one criticism in particular to make of honorable members opposite, especially the honorable member for Bendigo (Mr. Clarey) who invariably addresses the House in a reasoned way, it is that they have been so vague in their criticism of the Government. After all, what do they want? What sort of Australia are they envisaging? They criticize high prices. Do they want low prices and low profits which, they know, must be accompanied by low wages? If they want those things, let them say so. Are they opposed to high prices, high profits and high wages ? Listening to some honorable members opposite one might be led to believe that Australia was in the depths of a depression. The Premier of New South Wales does not agree with the honorable member for Shortland (Mr. Griffiths), who has just interjected, because last Christmas - rather timely in my view - he called the people of that State to witness the remarkably happy position in which this country finds itself to-day compared with any other country. Let honorable members opposite point to any country, regardless of its system of government, that is as well off as is Australia. This is the happiest and most prosperous country in tile world to-day. We know that some goods are in short supply, yet nobody starves in this country to-day, and very few people go hungry. No one is out of employment for long, and, certainly, there are more jobs in proportion to the population in Australia than is the case in any other country.

The honorable member for Bendigo made some representations, very properly, on behalf of the men and women who have lost their employment as a result of the reduced demand for various kinds of textiles, but we must face the position. The late Mr. J. B. Chifley, when he was the Prime Minister, pointed out to the House that a country cannot change from a war-time economy to a peace-time economy without experiencing a certain measure of dislocation in employment. All that a government can do is to ensure that the changeover shall be facilitated by such action as lies within its power. I contend that the present Gocvernment has done everything possible in that respect. The Department of Labour and National Service has been retained, and any person who is unemployed may seek its assistance in finding work. Many jobs are vacant, although I admit that they may not fully meet the wishes of persons who are seeking employment. In the long run, however, suitable positions will be found for every one who is now out of work.

The honorable member for Bendigo complained that the Government had failed to re-introduce economic controls that would effectively halt the rising cost of living. When I asked the honorable gentleman to mention some of the controls that he had in mind in that respect, or to inform the House of the action that the Government should have taken to combat inflation, he did not reply. 1 invite any member of the Opposition to answer the following questions: - What kind of controls does he envisage would be effective in Australia at the present time? Does he suggest that the prices of all commodities, including meat, wool, butter and eggs, should be controlled, and that wages should be pegged? Or does he mean that only the prices of goods should be controlled? Opposition members must know, as they are honest men, that it is futile to attempt to control the cost of any article unless the cost of the labour that produces it is also controlled. I, for one, contend that a general system of prices control is ineffective. The worker who has only his labour to sell loses far more than doe3 any other section of the community by the acceptance of wage pegging. Control of the price of labour is the first step towards the direction of labour. However, I am not required to defend myself, because I have never advocated prices control or wage pegging. Opposition members who support the reintroduction of prices control by the Commonwealth should at least attempt to answer the questions that I have asked. So far in this debate, their spokesmen have made only a vague and ineffective suggestion to the effect that some steps - some economic controls unspecified, anonymous, unknown, and unheard of - should be taken.

I shall examine the history of controls, and the contribution that they have made to the present inflationary conditions in Australia. What are the shortages that weigh most heavily on the people? What articles are so difficult to buy because their prices are so inflated? What shortages impose the greatest hardship upon families? We all know what they are. The first that come to mind are basic commodities such as butter, eggs, bread, meat, potatoes and onions. The prices of all those commodities have been controlled in recent years, and I believe that the shortage of those foods is directly attributable to such controls and directions. In every industry that was subject to controls in wartime and to direction in the post-war period, production has fallen. I am afraid that something of that philosophy regarding controls bas been accepted by the present Government. I invite honorable members to compare the production of wheat, meat, butter, potatoes, eggs, apples and pears, which are, or have been, the subject of controls, with the production of wool, which has not been controlled. Since the last war the woolgrowing industry is the only primary industry that has nearly approached the record level of production. Only once before in our history has the number of sheep carried in this country been greater than it was last year. The reason for that was that the wool industry had not been the subject of this terrible organization, this dead hand of direction, this fixing of profits and sales.


– Is not heavy taxation affecting the wool-growers?


– As the honorable member for Eden-Monaro (Mr. Allan Fraser) has implied, taxation will have a somewhat similar effect. I am not one of those persons who defend the extraordinarily high taxation that it is the duty of the Government to impose at the present time because I like it. I believe that heavy taxation is having a most adverse effect, particularly on primary industries, but so long as large sums are required for defence purposes, social services and a national health scheme, we must be resigned to the fact that we shall have to pay heavy taxes.

I shall now refer briefly to the subject of textiles. We have heard a part of the story from Opposition speakers, who have pointed out, very properly, that men and women have been dismissed from the textile industry. But those honorable gentlemen did not complete the story. Some months ago, Opposition speakers read to this House the prices of articles of clothing, and urged the Government to take action to reduce those charges, which were regarded as exorbitant. One of the developments, partly as a result of government action, is that large quantities of those goods have been imported. In any shop in Australia to-day, such articles are available at prices less than those charged some months ago.

Mr Ward:

– What rot!


– That process will continue. Reference has been made to the evil effect of credit restriction on the housing programme. One has only to open a newspaper to see that the cost of housing, and of houses, is coming down every day. Is that desirable, or is it not desirable ?

Mr Ward:

– It is not happening. That is the only difficulty.


– The interjection of the honorable member for East Sydney (Mr. Ward), like so many of the statements that he has made in the past, is simply not in accordance with the facts. It is wrong to blame the Government for the so-called dumping of imported goods. After all, Australia is a trading nation. We hope to sell our surplus production of wool, wheat and meat. But we cannot hope to sell goods on a one-way basis. We must import if we wish to export. We mint buy, if we hope to sell. It is proper for the Opposition to consider, first and foremost, the conditions of workers in any particular industry, but, somewhere, a balance must be struck between the conditions and the demands of workers in industry, and the demands of the consuming public in Australia. When all is said and done, the consuming public are primarily the workers. At least the consuming public whose buying capacity is limited, are workers. It is quite impossible for us to think that we can insulate our economy in Australia in such a way that we can always protect the local industry and the Australian worker regardless of the effect of that policy on our own home market, and on the sale of our surplus production abroad. If we limit our imports, we may be certain that, in a short time, our exports will also be limited.

I believe that the Government, so far as it has gone, has proceeded, not with any great degree of genius, but with horse sense and some courage. I consider, too, that the steps that it has taken would have been taken in a general w.ay by the Labour party had it been in office at the present time. I hope that the Government will continue on its present course and, above all, I hope that it will tell the people the truth about our economic position. I hope it will tell them that they cannot continue to get something for nothing; that if they want cheaper goods they must produce cheaper goods ; that if we need a large defence force, it must be paid for in higher taxes ; and that only people who do not subscribe to those basic principles have any right to criticize the Government.


.- This motion of censure is long overdue. I support it because, despite my physical incapacity, I travel round quite a lot, and I know that there is considerable hostility amongst the general public to the Government’s economic policy, particularly to its apathy towards soaring prices. Undeniably, there is conflict between the two Government parties. In this Government, as in all coalition governments, there has been bargaining for portfolios. The right honorable member for Cowper (Sir Earle Page) will recall the bargaining that went on between the Australian Country party, of which he was leader, and the then United Australia party, in the early days of the second Lyons Government. This country has experienced inflation before. “When I first was elected to this Parliament in 1928, the Australian economy was on the verge of collapse. The Bruce-Page Government deliberately sought defeat by introducing legislation which virtually would have abolished the Commonwealth Court of Conciliation and Arbitration. The present right honorable member for Bradfield (Mr. Hughes), and five of his colleagues, joined with members of the Labour party in putting the Bruce-Page Government out of office. The right honorable gentleman, whose enthusiasm for the reform of our arbitration system is well known, would not permit the Commonwealth Arbitration Court to be stripped of its powers. The Scullin Government’s attempt to restore financial and economic equilibrium was hampered by an amendment of the Commonwealth Bank Act that had been made at the instigation of the Bruce-Page Government in 1924. That amendment placed the bank under the control of a board which was not responsible to the electors of this country. Control of the bank was removed from the Treasurer entirely, and the board was able to force upon the Scullin Government acceptance of the Premiers plan, a feature of which was a reduction of social services. The education allowance payable to children of deceased soldiers of “World War I. was withdrawn. Admittedly soldiers’ pensions were continued. The reductions of dependants’ allowances were made following a conference between the then Treasurer and the president of the Returned Sailors and Soldiers Imperial League of Australia. Apparently, the attitude of the league was, “ Cut the allowances of dependants but don’t touch our pensions “. That was hardly the Anzac spirit. I am sure that most Australian ex-servicemen would prefer to sacrifice their own pensions rather than permit the allowances of dependants of their fallen comrades to be substantially reduced or abolished.

Under the Premiers plan the allowance of fi a week payable to the mother of a deceased serviceman was made subject to the means test. Any mother who had another source of income, was deprived of the allowance or was paid a lesser sum. I voted against the Premiers plan as did 17 other members of the Australian Labour party, but the then Opposition, led by the present Chief Justice of the High Court, Sir John Latham, supported the Government and the plan was implemented. One Labour opponent of the plan was John Curtin, who subsequently became Prime Minister of this country. I believe that we are heading for a similar disaster to-day. History has an unhappy knack of repeating itself. I hope that no government of this country will ever again invite overseas bankers to come here and tell us what we should do to restore economic stability. I pray to God that we shall never again be in such a situation. I do not want to see another depression, but many people in this country believe that a depression is coming and they fear that this Government is not doing anything to avoid it. They wholeheartedly support the motion that has been submitted to-day by the Leader of the Opposition (Dr. Evatt).

I shall not dwell upon credit restrictions. That matter has already been dealt with by other speakers. I do wish to say something, however, about the effect that the Government’s economic policy has had upon factories such as the former munitions factory at Rutherford, New South Wales. I was one of those who took an active part in having that factory converted into a woollen mill at the end of the war. The Government’s credit restrictions have led to unemployment at Rutherford. We are told that the aim is to divert workers from non-essential to essential industries, such as coal-mining, but men will never be diverted back to coal-mining unless that industry is made much more attractive and much more secure than it is at present. Coal-mining is arduous and unhealthy work. I am no chicken now. In fact, I never was a chicken. I have always been strong and robust, but for at least six years after I left coal-mining I was expectorating continually, due to the “ dusting “ of my lungs in the coal mines. Had I continued to work in the mines I should probably be pushing up daisies now in Kurri Kurri cemetery. Eliminate dust and reduce the danger of explosions, and we may get men in the mines. The honorable member for Bennelong (Mr. Cramer) criticized the miners. What does he know about them or the conditions under which they work? Let him try to convince the Government of the necessity for expending money in order to eliminate the dangers of the miners’ occupation instead of going to the mining areas to try to persuade the men to increase production. The farmers, of course, get financial aid through the Treasurer (Sir Arthur Fadden). “Artful Artie” looks after their interests, but I cannot get help to make the mines safe. The Treasurer leads a political party that helps to keep the Liberal party in power. Naturally, therefore, he can obtain concessions from the Government. The Liberal party is always willing to smooth over “Artful Artie “. The Rutherford factory is of vital importance, especially in view of the warning that the Prime Minister gave two years a£0 that we should be at war within three years. The present cold war may burst into si hot war at any time.

The Government should not allow Japan to dump in Australia materials that could be manufactured at the Rutherford factory. Article 12 of the Japanese Peace Treaty provides that most-favoured-nation treatment may be accorded to Japan by the Allied nations. Apparently Japanese textiles will be allowed to enter Australia to the disadvantage of Australian manufacturers and workers. The relatively small quantities of such goods that have been imported recently have already caused grave unemployment in the Hunter electorate. Many men and women in that area who have been engaged at the Rutherford factory are being dismissed because the factory cannot obtain defence contracts, although it is capable of making materials that would be suitable for the manufacture of uniforms for our armed forces. Its products would be better than materials that are made in Japan by cheap labour. We are supposed to protect the interests of the Australian unionist, but the Government apparently proposes to cause unemployment by permitting the entry into Australia, vnder the terms of Article 12 of the Peace Treaty, of goods produced by Japanese sweated labour. The quantity of goods that we are now importing from Japan is almost infinitesimal in comparison with the volume that we may expect when the terms of that article are applied.

The effects of credit restriction will be tragic for the reasons that I have already stated. Very few members of the present Parliament were here in the years 1928, 1929 and 1930, but the right honorable member for Bradfield (Mr. Hughes) is one of them, and he should be able to remember what happened during that period. Usually I disagree with the right honorable gentleman’s views, but I admire his moral courage. He has more courage than have many bigger men and I give him credit for the fact that he opposed the Bruce-Page Government during the period of economic stress to which I have referred. As the honorable member for Bendigo ,(Mr. Clarey) has said, the Government’s present policy in relation to credit restriction dovetails with other elements of its economic programme. I believe that credit control is related to plans that the Government proposes to put into effect under the terms of Article 12 of the Japanese Peace Treaty to which I have already referred.

Members of the Opposition and many other Australians fear that another economic depression is threatening Australia. We want to avert a repetition of such dreadful conditions as were forced upon us in the ‘thirties as a result of the action of the Bruce-Page Government in 1924 in placing the Commonwealth Bank under the control of a board. This Government has again placed the Commonwealth Bank under the control of private bankers and others who are not responsible to this Parliament or the Treasurer. The Labour Government put the bank under the control of a Governor, who’ was responsible to the Treasurer of the day, who, in turn, was responsible to the Parliament. Because the bank was controlled by a board in the early years of the economic depression, the Scullin Government was told, when it asked for a fiduciary note issue of £18,000,000 in order to stem the rising tide of unemployment, that it must tighten its belt and spend less. That advice was tendered to it by Sir Otto Niemeyer, whom the Commonwealth Bank Board brought from overseas, supposedly to cure Australia’s economic ills. Some Australians believe that the present Prime Minister is scheming now to do what the Bruce-Page Government did in 1929. when it wilfully and deliberately allowed itself to be defeated at a general election in order that the Labour party might come to power and clean up the mess that it had caused. I earnestly hope that the Labour party will never become a party to another Premiers plan. I warn it of the danger now. Should it ever repeat its former mistake,

I should have to reconsider my political allegiance. I was not a party to the Premiers plan. Eighteen members of the Labour party in this Parliament opposed that scheme, and I am proud to remind the Prime Minister again that the late John Curtin did not vote with Scullin for it. I warn him also that, if he proposes to court defeat so that the Labour party may return to power and clean up the mess that he has made; it will never support another Premiers plan. The former plan brought about many dire results for which we should hang our heads in shame. For example, the old-age pension was reduced by 2s. 6d. a week. But the Labour party was not to blame for that. Sir John Latham was the guilty man.

Sitting suspended from 6 to 8 p.m.


– The honorable member for Henty spoke about securing cheap housing materials. I receive many inquiries about that matter. If the honorable gentleman will inform me where cheap housing materials can be obtained, I should be very pleased indeed. The honorable member for Bennelong (Mr. Cramer) accused the New South Wales Government of blackmarketing and of using what he called hot money. The Premier of New South Wales has com* plained that because of the policy of this Government in relation to the restriction of bank credit, housing schemes in that State cannot be proceeded with. I should like the Prime Minister (Mr. Menzies) to say how far he thinks we can go in the direction of the restriction of bank credit. We all remember what happened in 1929 and 1930, when the Scullin Government asked for £18,000,000 of currency and was refused it by the Commonwealth Bank Board which had been appointed by the Bruce-Page Government in 1924. ‘ When the Scullin Government assumed office it found that credit had been severely restricted. I fear that this Government will walk out in the same way as did the Bruce-Page Government, and leave the task of cleaning up the mess to a Labour government, with the possibility of the need for another Premiers plan. Let me emphasize that the Scullin Government was not entirely responsible for the Premiers plan. The

Opposition rose in mass, with Sir John Latham, now the Chief Justice of the High Court of Australia, to help to put it through.

Minister for the Army · MORETON, QUEENSLAND · LP

– Help who ? The Scullin Government ?


– You were here. You voted for the Premiers plan, but your friend Bernie Corser did not.


– Order ! The honorable member for Hunter (Mr. James) must not refer to honorable members by name.


– The honorable member for Wide Bay (Mr. Corser) did not vote for the Premiers plan then. He stuck to the age pensioners, but the Minister for the Army (Mr. Francis) dumped them. Restriction of credit is having a tragic effect upon persons with fixed incomes such as age pensioners, persons in receipt of other social services benefits and persons in receipt of superannuation payments. I did not support the first Premiers plan, and I certainly shall not support the next one.

Motion (by Mr. Eric J. Harbison) agreed to with the concurrence of an absolute majority of the members of the House -

That so much of the Standing Orders be suspended as would prevent the Prime Minister (Mr. Menzies) from making his speech without limitation of time.

Prime Minister · Kooyong · LP

– Technically, the Government is under censure as a result of the motion proposed by the Leader of the Opposition (Dr. Evatt). I think most honorable members will agree that the attack so far has been weary, flat, stale and unprofitable. The position of the right honorable gentleman is perfectly clear. He has in this motion, as on many other occasions, sought to determine what grievances exist and then to capitalize those grievances by attacking whatever the Government may do in relation to them. The Government is in the most melancholy position of being quite unable to be right on anything, in the eyes of the always right honorable gentleman. So far as I have been able to understand the economic, financial and national views of the Leader of the Opposition, he is well qualified to oppose. He is opposed to increased taxes. Indeed, with the faintest encouragement he would undertake to reduce taxes to-morrow. He is opposed to any cut in the works programmes of the Commonwealth, the States and local government or semigovernmental authorities. So far as I have understood him, he is opposed to credit controls. He is opposed to any policy that will transfer a man from one employment to another. In other words, he is opposed to any redistribution of out resources of man-power. Quite obviously, from all that we have heard from him, he is violently opposed to a surplus budget. That is a fair, though by no means complete, list of his oppositions.

The only things that he has made it clear that he favours are increased expenditure upon social services - because, whatever this Government does in that connexion, it never goes far enough for him - and Commonwealth prices control. He clings to that policy like a wrecked mariner clings to the nearest broken spar. He must have Commonwealth prices control. If only he could have that, all our cost rises would vanish, all our wages rises would vanish, all the increased costs of imports would vanish, and all the things that produce inflation would come to a stone end. He would raise a wand and say, “ Commonwealth prices control will” do the trick “. As I have said previously, the one thing that he is convinced of is that he can control prices in New South Wales very much better than can Mr. McGirr. I venture to say to the House that that mental attitude towards the problems of this country in an aspiring national leader is quite terrifying. Either the right honorable gentleman does not believe in the existence of an economic problem, or, as I firmly believe, he is recklessly willing to persuade people that there is no’ such problem. For so long as he considers that there is even half an ounce of political profit to be got from that kind of campaign he will continue it. It is indeed remarkable that, although the right honorable gentleman has never been unwilling to trade on the reputation of his predecessors, as every member of this House knows, he has enunciated, in the motion before the House, a point oi view on the problem of inflation and of the distortion of our economy which is in the teeth of the views that were held and expressed by his predecessor, Mr. Chifley. It would indeed be very interesting to speculate about this subject. But until the division bells have rung and the votes have been counted nobody can tell the result of the vote on the motion of censure before the House.

Mr Fitzgerald:

– Does not the right honorable gentleman know what the decision will be?


– I speak in terms of pure theory. I realize that the honorable member for Phillip (Mr. Fitzgerald) knows better than his interjection implies. It would be very interesting to know what would happen if, by some entirely unexpected turn, the Leader of the Opposition won the division, the Government went out by the vote of the members of this House, and the right honorable gentleman came in and by Friday next was forming a government. It would be very interesting to know what his economic policy would be, for, after all, he has concealed his views with masterly skill. It would have nothing to do with the economic policy of 1941 because, as I can demonstrate without the slightest difficulty, everything that he has said since he has traversed the paths of economy and finance has been in the teeth of the policies of the Chifley and Curtin Governments during the war. So I should be fascinated to hear the details of his economic policy. It might almost be worthwhile to me to accept his suggestion that I am on the way out quickly, and that the mess will be left for Labour to clean up. It would be interesting indeed to learn what such a new government would do, because that is a problem that the people of Australia would like to solve. Quite obviously, as the right honorable gentleman is opposed to everything that we have done, his alternative government would have to do something else. “What the something else would be we do not know. “Would it abandon bank credit control? “Would it abandon capital issues control? “Would it budget for a deficit? Would it allow people to seek capital as they chose? Would it finance ‘State works, semi- governmental works, and local government works to the amount of many millions of pounds by the issue of treasury-bills? The right honorable gentleman cannot have it both ways forever. He has succeeded in having it both ways quite a -bit in his time, but I repeat that he cannot have it both ways forever. Every honorable member who sits behind him may very well consider the grisly spectre of their gain occupying the treasury bench as a result of the vote on the motion before the House. We know perfectly well that if they thought that there was the slightest prospect of dislodging the Government in the division they would be as silent as the grave.

I turn now to the question of whether there is an economic problem. This country has never been called upon to deal with a more complex or difficult economic problem than that which exists in Australia to-day. We have a very great shortage of men in basic industries, as all honorable members know. We have a grave shortage of coal and of power. We have a heavy over-demand for capital investment, both public and private. That demand cannot be satisfied, because we have a deficient supply of men, money, plant, and materials. Because the demand cannot be satisfied there results uneconomic competition for all of those elements, which drives up the price of each. It drives up costs, renders short supplies even shorter and intermittent supplies even more intermittent. Irrespective of political views there is no sane, sober, objective thinker in this country who does not know that these statements are completely true. Every such person also knows that we have underproduction, and that that underproduction does not arise from any single cause. It is quite true that in some cases - I am happy to say not a majority - it arises from reduced individual effort, whether the effort of the man who employs or the man who ls employed. As we do not live in -a kindergarten, we know perfectly well that there is a seriously reduced individual effort in too many places in Australia. We know, too, that under-production arises from inadequate or intermittent supplies of power and plant. Manufacturers in Sydney who depend on electric power have expressed the opinion that the 40-hour week is not a 40-hour week because of the blackouts, but is a 30-hour week or even less, and that the inadequate supply of power means, in a period of shortage, that we are wasting the plant that we have. Our under-production arises also from a loss of managerial incentive and, indeed, of managerial authority, with all the reduced efficiency of administration that such a condition produces. Another feature of our problem is that we have heavy taxation. I should like to say to those honorable gentlemen opposite who propose to. develop an argument on the subject of taxation, to which I shall revert later, that heavy taxation is the inevitable concommitant of what has been called compendiously the welfare state. Heavy taxation is necessary if we are to provide comprehensive social services benefits.

Mr Ward:

– And higher parliamentary salaries?

Air. MENZIES.- Nobody will compel the honorable member for East Sydney (Mr. Ward) to accept anything that he does not want to accept. We have in Australia, for better or for worse, a wage system which, being tied as it is at the base, not to production, but to the cost of living, constantly and inevitably accelerates the rise of costs and prices, without, as we now know in these modern times, very much if any real benefit to the wage-earner. That is the kind of problem that we have.

I shall not take up the time of the House by discussing, as I have done on other occasions, the broad outline of the policy that we are pursuing. However, T shall deal as briefly as I can with two or three of the matters on which most of the discussion so far has turned, and which provided the key-note of the speech of the Leader of the Opposition. The first of these is credit restriction.

Mr Ward:

– What about putting value back into the £1 ?


– I shall speak about credit restriction. The honorable member for East Sydney has always been a champion in turning discussion from the subject that a speaker in the House is dealing with. That of course, is because of his curious characteristics, of which we all know and which we all deplore. I propose to say something about credit restriction, because, after all, on that issue rests the main attack of the Leader of the Opposition if this poor misty, vaporous thing is to be described as an attack. How Labour can challenge credit control in this country is beyond me,

Mr Pollard:

– It does not challenge it.


– Apparently the honorable member for Lalor (Mr. Pollard) did not listen to his leader’s speech. Some one told me that the honorable member had been asleep during the speech so I can understand him interjecting in that fashion. I repeat that how Labour can attack credit control is beyond my understanding. After all, the freezing of a large volume of bank deposits was the Chifley policy, and it was expressed in this House by honorable gentlemen opposite, when they were in office, as being designed to present what they described - and I use their own phrase - as “ secondary inflation “. So the Chifley Government’” legislation, and indeed before that legislation was passed, its control of bank credit by the central bank, was one of the cardinal articles of Labour’s faith. Therefore, of all people, members of the Labour party ought to be the last to repudiate it as an instrument of antiinflation. Of course, honorable gentlemen opposite, or at least some of them, realize that the policy is a good policy - they must come so far as that - but they claim that our application of it has been unduly severe, and in the course of discussion on these matters they have had something to say about housing and allied subjects. I shall come to the subject of housing shortly, because there are some interesting things that I have to say about it. But basically the Leader of the Opposition, whose principal attack was on credit control, is flying in the face of the soundest economic policy as recognized not only here but also in the United Kingdom, the United States and Canada, in every one of which countries similar policies are being pursued and in every one of which there is a tremendous need of increased production in the face of rapidly increasing inflation. Because of the rising price level, the falling value of money and rapidly rising costs which constitute inflation are, as all sensible men admit, being fostered by certain circumstances, we ought to attack those circumstances. The conditions that are fostering these phenomena are well known. I almost apologize for restating them. I should not trouble to do so if it were not for the implicit denial of them by the aspiring alternative Prime Minister. Those things include an excess of purchasing power as compared with the supply of goods. Does the right honorable gentleman deny that that is a characteristic of inflation? Does he deny that the whole basis of inflation is increased purchasing power seeking goods that are not in sufficient supply? If he does deny it, he will break completely new ground in the science of economics, and he will get no economist and no sensible thinker to support him.

Yet, though he cannot deny that too much money seeking to buy too little goods is one of the basic factors of inflation, he has nothing to say about increasing the supply of goods, and nothing whatever to say, except in terms of criticism, about any policy that seeks to reduce the excess of purchasing power. In brief he says, “ Yes, I agree with that as an abstract proposition so long as you do not touch purchasing power and do not talk too- much about production “. That is cheap politics. It is the kind of thing that a huckster might sell at a street corner. It is not the kind of comment that might be expected in an intelligent assembly in an intelligent community. Everybody knows that one of the factors that produces an increased demand for an insufficiency of goods is too great a supply of credit. Is the right honorable gentleman disposed to deny that we have had too great a supply of credit? If he does so, then when did this too great supply of credit come to an end? I shall refresh his mind in a moment with a few figures on the subject. After all, it was the government of which he was a member - he was occasionally in touch with it and must be assumed to have known what it was doing while he was abroad - which passed the banking legislation of 1945 and took great kudos to itself over the restriction of credit. I invite honorable members opposite to tell us the point of time when the control of credit by the ChifleyEvatt administration, which honorable members opposite have always considered to be so good, become bad. Did it stop being good and become bad merely because there was a change of government?

I remind the honorable member for Lalor, who has just interjected, that the present Governor of the Commonwealth Bank is the person who was Governor during the Chifley regime. Everybody knows that one of the contributing factors to this inflationary problem is that we have had growing unsatisfied demands for capital for the development and maintenance of industry, and demands for capital by States and other governing bodies. Does the Opposition contend that the demand has not been too great? Does the Opposition say that that demand ought all to be satisfied? Does the Leader of the Opposition say that at the last meeting of the Loan Council the Commonwealth should have underwritten not £225,000,000 of loan moneys, but £400,000,000? Are we to understand that if the right honorable gentleman is on deck as Prime Minister next week or next month he will underwrite whatever programme the States care to draw up ? Is that Labour policy ? Of course, everybody knows that if Labour had been in office, as we were during the last Loan Council meeting, and had any sense of responsibility for the stability of this country, it would have put a ceiling on borrowings and, for all I know, might have put on a ceiling that was lower than the one we have put on. But if the policy of Labour on which the people are to judge is unrestricted spending on public works by inflationary means, let Labour say so. Let the right honorable gentleman come out of his mists and at least be clear on something for once. Anybody who faces up to our basic problems must know that, it is the most elementary common sense to pursue such measures as will reduce excess purchasing power. The elementary measure in that respect is taxation. These measures also include such measures as will make credit more difficult to obtain except for justifiable purposes and as will control capital issues for private purposes and reduce public capital demands to manageable proportions that are capable of being financed and carried through. They also include the using of such means as are available to effect transfers of employment to industries that are important and which, at this moment, are as short of labour as some entirely irrelevant industries are flush with labour. The right honorable gentleman has .completely forgotten that with the national economy distorted as it was by the pressures of war, war-time governments, including his own, sought to concentrate resources and to avoid inflation. These were two great objectives. They sought to do so by a series of measures which included taxation which was infinitely heavier than the taxes now being imposed, retardation of housing, capital issues control of a kind immeasurably more stringent than that which now operates, and man-power direction, man by man, from job to job.

I do not complain about the exercise of war-time powers, but I say that for a right honorable member who has been active in giving effect to such powers to say, for purposes of mere political opportunism, that there is no economic problem now and that therefore the Government does not need any authority resembling those powers, is the most arrant political humbug. The Leader of the Opposition has sought to cash-in on very natural national, public and personal resentments by denouncing every measure designed to correct the economic distortions of the post-war period, although just before the war ended-

Mr Tom Burke:

– The Prime Minister should examine his own conscience.


– If the honorable member for Perth (Mr. Tom Burke) will attend to his own conscience I shall undertake to look after mine. It is very spirited of him to come to the defence of his leader, who certainly needs such defence. Although honorable members opposite, when in office during the war, agreed that this type of action had to be taken in order to deal with the distortions of war, the Leader of the Opposition has said that there is no economic distortion in the present post-war period. He has said, by implication, that the Government does not need to take this action now. Yet, it was this right honorable gentleman himself who, just as the war was about to end, presented to the people of Australia for their approval, a constitutional amendment and stated that in the post-war period the Australian Government would need powers which’ he asked the people of Australia to give to it for ever and a day. Now, having failed to secure those powers, he has said, “ But, my dear fellow, it turns out that they are not necessary. You should not be doing any of these things. You should go back to the good old doctrine of laisser-faire “. The Leader of the Opposition can pedal backwards more rapidly than any one I have ever seen. Only yesterday he was the devoted servant and apostle of socialism. To-day he spoke like a true-blue Liberal. He said, in effect, that the Government could remove all controls and let the whole thing boil out by the roof.

Mr Calwell:

– When did he say that?


– He did not put it as well as that, but he said it.

Reverting again to credit policy it is a fact that since the beginning of our history many people have been granted or refused credit on a variety of grounds. But to-day it is good tactics to lay the blame for all refusals of credit on the Australian Government. There must have been occasions, years ago, when persons were refused credit on the ground that they had insufficient security. But all such tiresome questions are now resolved on other grounds. The bank manager now says to a would-be client, “ Oh, you want credit do you ? “ Then he says to himself, in an aside, “I do not like the look of this fellow” and so he says, “ The Government’s credit policy prevents me from letting you have the accommodation you desire “. It is interesting that there has been no record in the last twelve months of any one having been refused credit without the refusal having been attributed to the credit policy of the iniquitous Menzies Government. The Government’s credit policy, as it affects the banks, has two purposes. The first purpose is to prevent undue additions to the money simply and the consequent aggravation of inflation. The second is to direct such money supplies as may be available into the most essential channels. Are these purposes seriously challenged by the Labour party? Of course not. Again, the instruments that have been used to give effect to these purposes cannot sensibly be disputed by Labour. One such instrument has been the special accounts system in the Commonwealth Bank to which the trading banks can be required to pay a certain proportion of their deposit acretions. The other instrument has taken the form of instructions issued by the central bank to the trading banks on advance policy. Have these two instruments been challenged by the Opposition ?

Mr Rosevear:

– They were challenged by the Prime Minister.


– I am asking whether they have been challenged by the Opposition.

Mr Calwell:

– They were challenged by the Prime Minister.


– I have no evidence of it. I have asked honorable gentlemen opposite whether they challenge the use of either of these instruments. The interjections indicate not only that they do not but also that they claim paternity of these measures.

Mr Rosevear:

– And the Prime Minister challenged them.


– Until the honorable member for Dalley (Mr. Rosevear) interjected, I thought that Labour claimed these two instruments to be essential counter inflationary measures. The Labour Government provided in its legislation of 1945 for their use although one of them had operated under a previous administration by regulation. It is interesting to discover that the two purposes of the Government’s credit policy that I have mentioned are unchallenged, and that the two instruments that have been used to accomplish these purposes are unchallenged. It is necessary, therefore, to look a little more closely to see where, if anywhere, a challenge to the Government’s policy arises. If there is any force in such a challenge it resides in the proposition that the Government has been too severe or too undiscriminating in the exercise of its power. Between the end of the war in 1945 and December, 1949, under Labour administration, the deposits of the trading banks in the special account of the Commonwealth Bank rose by £120,000,000. We have continued to increase these “ frozen accounts “, as they have been described - although they can be thawed out - and we have done that in the presence of a phenomenal growth in money supply and national income. If liquid funds in the hands of the public, such as bank notes and cash deposits - resources readily usable by ordinary private citizens - are considered, it will be found that the total amount increased from £612,000,000 in 1939 to £2,060,000,000 in 1950. There has also been an increase of the sum total of personal incomes in Australia from £748,000,000 in 1939 to £2,186,000,000 in 1950. In the presence of this rising flood of monetary capacity, that is purchasing power, we have continued to increase these special accounts, as did the last Labour Government. That increase has not been made under a system of stupid rigidity. When I hear people say that something dreadful has happened and that bank credit is being dried up by this Government, I think that it is a proper time to point out that the average monthly advances of the trading banks and the general division of the Commonwealth Bank, which for this purpose I shall call a trading bank, increased in 1948-49, which was the last year of office of the Chifley Government, by £54,000,000, whereas in 1949-50, when we were supposed to be engaging in some stupid restrictions, they increased by £82,000,000. In 1950-51, the average monthly advances of the trading banks increased by £98,000,000, and between June, 1951, and January, 1952, which is the very period in which it has been said that we have been squeezing all credit out of the people, the average monthly advances increased by £134,000,000.

Mr Fitzgerald:

– That would be all very well if there wa3 some value in the £1.


– That is a mere parrot phrase. If the honorable member for Phillip (Mr. Fitzgerald) worked out a few sums he would discover that in view of the £54,000,000 expended in the last year of office of the Chifley Government, the expenditure of £134,000,000 in the seven months that T have mentioned is not the result of an extravagant and severe application of credit control, but of a wise, sensible, and human application of that control. The figures are there, and they speak for themselves. There is very good reason for this remarkable exaggeration by honorable members opposite, and this explanation has been produced, as I have already told honorable members, because strange statements are frequently made about these matters. Between June and December last the Commonwealth Bank released to the trading banks no less than £89,000,000 of special, account money. That was done because the bank has not gone crazy merely because there has been a change of government, and it knew that the import surplus in Australia has, to the extent of the surplus, reduced our overseas funds from their peak. But it must be remembered that those funds are still greater than they were when the Government assumed office. Because of that, the liquidity of the banks in Australia has been affected. Therefore, very sensibly, the Commonwealth Bank has said, We shall restore your liquidity to a proper and reasonable extent by releasing £89,000,000 of special account money”. Consequently, the average monthly advances made by the banks increased in the seven months by £134,000,000. So much for the quantity of bank credit.

I shall now turn to the quality of bank credit, because there are fantastic stories in circulation about this matter also. The qualitative control of credit is directed to the question of the purposes for which advances should be granted. The present advance policy instructions of the Commonwealth Bank to the trading banks were given in November, 1950, and there have been no major alterations since that date. These directions in all their substance have been standing since November, 1950.


– It depends, of course, on what is called “major”.


– I am talking of matters which have the remotest con nexion with the subject before us. When I say “ major “ I do not take into account small verbal changes. I shall read to the House three paragraphs from these instructions, because it would be well if they were on record.

Mr Pollard:

– Why does not the Prime Minister read them all?


– I do not want to use more time than necessary, otherwise I should do so. I shall read three instructions which I am sure will commend themselves to the honorable member for Lalor (Mr. Pollard).

Mr Pollard:

– They should be recorded in Hansard.


– I am reading them for that purpose. The first paragraph reads -

The broad objective of this revised policy is to reduce still further the dependence of industry, commerce and agriculture on bank finance by causing customers to seek finance from sources outside the banking system, which do , not add further to the economy’s money supply.

As honorable members will understand, money derived from sources outside the banking system represents money subscribed by somebody. It is taken from the existing supply of money whereas money that has been obtained from inside may be new money. Therefore, the direction properly says that as far as you can you should go to sources outside the banking system because such supplies of money do not add further to the economy’s money supply. The next part of the direction reads -

This may involve some change in the attitude of banks towards their customers’ overall requirements. Broadly, finance for (i) capital expenditure and (ii) permanent nonfluctuating working requirements should be obtained outside the banking systems, leaving only fluctuating operating requirements to be provided by bank overdrafts.

It is realized that the principles of the general policy stated above cannot always be rigidly applied and, therefore, some exceptions and modifications are set out in an appendix to this statement. This relates particularly to cases where the social need is urgent, such as housing, or where facilities for finance outside the banking system are not readily available.

Banks will be expected to interpret the requirements of advance policy, and only doubtful cases, or cases where reference is specially provided for in the appendix, should be referred to the Central Bank for guidance as to whether the class of business concerned falls within Advance Policy. Where the applications for finance are for £1,000 or less even if doubtful under Advance Policy they should be dealt with finally by the hanks.

Would anybody quarrel with the suggestion that those paragraphs represent a fair statement of credit policy? I shall now mention one or two matters which have arisen out of those directions and which have given some cause for dissatisfaction. It is said that one cannot get an advance from the bank to buy land. The truth is that under this policy up to £15,000 can be obtained from a bank for acquiring a property that is to be worked as a full-time occupation by the buyer and is not to be bought as an investment. In spite of these instructions, up to £5,000 can be obtained for the purchase of property additional to the property that the working farmer owned first and which he proposes to work.

Somebody has said, “ I cannot go to the bank and borrow money to pay my taxes “. It is not to be assumed that anybody can go to the bank and borrow money to pay his taxes. Each case must turn entirely on the reason why the person needs to borrow money from a bank for that purpose. If, in fact, the person has used the whole of his income for speculation, he can hardly expect to go to the bank and say, “ I want you to create money to pay my taxes “ ; but subject to investigation by the bank of the reasonableness of the circumstances, taxpayers can -borrow from their banks to pay their taxes with one condition only attached to the loan - that the bank will require the loan to be repaid within six months. As a general rule, the payment of taxes is only one operation a year, and six months seems to me - and I am not the ultimate judge of these matters - to be a not unreasonable provision. If, however, it turns out that this year under all the circumstances the term ought to be longer the point could be discussed. But that does not justify the conclusion that these general directions in the general banking policy are in themselves wrong.

I have heard it said that importers who had loaded themselves too much with goods could not be financed by the banks. The truth is that, under these directions, imports may be financed provided that they are sold in the normal course of business and that stocks are not accumulated beyond normal requirements. Knowing this to be an inflationary period, would anybody suppose that the banks ought to be authorized to finance people who want to build up stocks and gamble on the future demand for them? These are elementary, ordinary, sensible directions.

It is said that there is a restriction on credit for housing. There has been more wicked nonsense pronounced on this subject lately than perhaps on any other subject. The Premier of New South Wales is never weary of saying that his whole housing programme has gone because he cannot get money from the Commonwealth and the caterwauling that is going on in Victoria about everything falling to the ground because the Commonwealth will not produce money is really the silliest thing that I have heard for many years.

Opposition members interjecting,


– Honorable members opposite may get what they can from such comment. They need whatever comfort they can get. They have said that there is a restriction on credit for housing. I shall have something to say about the housing record of this Government. Under the advance policy instructions which were issued by the Commonwealth Bank to the trading banks on the 30th November, 1950, the position in respect of bank accommodation for housing is briefly that the banks may grant accommodation to individuals up to £3,000 for building homes for themselves and this amount may be increased to £3,500 where land on which the home is to be erected has to be bought. Similarly, banks may grant accommodation up to £3,500 to individuals to buy existing homes for their own use. Banks may finance co-operative building and co-operative housing societies. Builders and building companies may be financed for their shortterm working requirements. If honorable members are talking about the kind of housing that concerns this country most, the housing for people who are earning wages or limited salaries, £3,500 is still a substantial advance on a home.

The trading hanks are freely permitted to lend to co-operative building and housing societies.

Mr Ward:

– But they are not doing it.


– Not because of their instructions. It is all very well to say that some bankers refuse to do so. I am defending the bank credit policy of this Government and of the Commonwealth Bank, and I say that under that policy trading banks are freely permitted to lend to those bodies. Whether they undertake the business is their own concern, but it cannot be said that they are not permitted to do so.

Mr Curtin:

– That is different.


– I knew that in some way there was supposed to be an attack on the Government and a vote of censure on it. I did not know that I was supposed to deal with a vote of censure on the managers of the banks. I am fairly busy looking after my own problems.

Mr Curtin:

– They put the Government in.


– It was a fair exchange because they certainly put the honorable member’s party out. But I am directing myself, little as honorable members opposite may like it, to defending the credit policy of the Government, and it is of no use for them to try to scrimshank out of it by saying what some bank manager did or did not do. I am discussing the credit policy for which the Government must accept responsibility. It is based on legislation introduced by the previous Labour Government. We can change it by direction if we so desire. Under this Government’s policy the trading banks are freely permitted to lend to bodies such as I have mentioned and it cannot be said with truth that they are being prevented from undertaking housing business by restrictive or illiberal advance policy instructions.

I want to say something now about housing finance by the Commonwealth Bank. It should be well known that very substantial funds for housing are being made available by the Commonwealth Bank and the Commonwealth Savings Bank. In the financial year 1950-51, the housing division of the Commonwealth Bank approved 3,400 new housing loans which totalled £4,800,000. In addition, accommodation was provided by the Commonwealth Bank and the Commonwealth Savings Bank for cooperative building societies. Last year the amount provided under that head was £8,300,000, which brought the total for the last seven years to £36,700,000. In addition, housing finance was provided by the Commonwealth Government, and its contribution has been enormous. To listen to some of the howling that I have heard in the last few months, one would think that this Government had simply cut off supplies under the Commonwealth and State Housing Agreement. Yet, the fact is that under that agreement advances on relatively cheap terms are being made to the four States which participate, including New South Wales, and the Commonwealth shares in any losses that are involved in the letting of houses by the States. The amount advanced to the States in 1950-51 under that agreement was £21,600,000. This year the amount that is to be made available is not £21,000,000, but, in fact, £26,500,000. In order to bring the average cost of imported houses nearer to that of locally built houses, the Commonwealth pays to the States a subsidy of up to £300 on each prefabricated house imported into Australia. This financial year, £2,600,000 has been paid out for this purpose, which is sufficient to pay the maximum subsidy of £300 on no fewer than 8,600 prefabricated houses.

I now propose to say a word about war service homes. The organization for the provision of war service homes was established in March, 1919, so that it has been in existence for 33 years. During all that time its function has been to assist in the provision of homes for exservicemen. Honorable members will be interested to know that from the beginning of July, 1949, until the end of December, 1951 - which, except for a few months, is the period of office of this Government- 33,956 war service homes were provided, and the expenditure under this heading was £41,250,000. When honorable members opposite profess to be horrified by the smallness of these figures, which I suppose they do, although the figures seem to me to be impressive, I need only point out by way of comparison that during the four years before July, 1949, only 12,452 war service homes were provided, not 33,956, and the expenditure was £15,500,000, not £41,250,000. During those four years a Labour government was in office.

Mr Rosevear:

– That was during the war.


– No, it was after the war. That is why I selected that period. Of the total number of war service homes provided during the 33 years the scheme has been in operation, more than onethird have been provided during the last two years.

Apart from war service homes, the Commonwealth has housing programmes of its own, estimated to cost £9,500,000. I do not wish to go into wearisome details, and I can sum up the matter by stating a figure that will stick in the mind. In this financial year of 1951-52, the Commonwealth Government itself will provide funds to the order of £60,000,000 for housing, and that is entirely apart from what will be available from the Commonwealth Bank or from other sources.

The next matter I turn to is unemployment.

Mr Rosevear:

– Disemployment !


– I said unemployment, and I usually mean what I say. I have not the slightest doubt that the greatest political ambition of honorable members opposite is to see unemployment. I have not the slightest doubt that unemployment is their stock-in-trade. I have not the slightest doubt that they are prepared to thrive on misery, and if misery can be created, so much the better. That is the only explanation of some of the lamentable remarks made during this debate. For a political leader to get up in the National Parliament, and in the hearing of hundreds of thousands of people to talk of the “ coming depression “, and the desire of the Government to bring about unemployment - to speak in such a way as to undermine faith and confidence in the future of the country - is a scandalous and unpardonable thing. The only way to create unemployment in Australia is to destroy faith in the future of the country. When honorable members opposite are asked to supply particulars in support of the charges they make, what a sorry spectacle they represent! One would think that if there were anything in the nature of mass unemployment, if there were in fact this extraordinary derangement of industry of which honorable members opposite have spoken, it would be reflected in the registrations for unemployment benefit. The Labour Government instituted in good faith an unemployment benefit scheme. A man who loses his employment may, within a week, put himself down for unemployment benefit.

Mr Fitzgerald:

– Of 25s. a week.


– Does the honorable member mean that the amount is so little that an unemployed man would not bother to register? The honorable member should do himself more justice. Is he trying to persuade the House that the unemployment benefit is so small that it is not worth picking up ? It is the Labour party’s scheme. I have read about this dangerous unemployment for weeks and weeks. Therefore, I point out to honorable members that the figures relating to unemployment benefit throughout Australia, not last year, but on the. 19th January last, were as follows: - New South Wales, which is the greatest industrial State, 275; Victoria, 37; South Australia, 1; Western Australia, 49; Tasmania, 4; Queensland, 2,290.

Mr Riordan:

– That is right.


– I am very glad that the honorable member has come to the party. Because of his close and intimate knowledge of Queensland affairs, he will know that the unemployment figure for Queensland is conditioned by seasonal fluctuations. I am sure he will remember that when he was in office in 1948 the unemployment figure for Queensland on the exactly corresponding date, was, not 2,290 but 2,7f>0.

I now wish to say something about the particular industry regarding which all the pother has developed - the textile industry. To listen to honorable members opposite, one would think that what has happened in the textile industry is the result of the Government’s credit policy. I have already shown how hollow that argument, is, but members of the Opposition have declared that unemployment in the textile industry is due in large measure to the restriction of credit.

Mr Fitzgerald:

– Hear, hear!


– The honorable member says, “ Hear,, hear ! “.. I felt sure that some one would. However, any one who understands the position must realize that the condition of the textile industry is in no way due to credit policy. The truth is that there has been a recession in this industry in the United States of America, t hope that the Australian Government’s credit policy was not responsible for that. There has been a recession in the industry in the United Kingdom to a remarkable extent. There has also been a recession in Europe, in the Middle East, and in the Far East. One distinguished authority on textiles said, to me recently: “The point overlooked by your people is that Australia happens to be the last country that has felt the impact of this recession “. When I asked him the reason for the recession, he said : “ It is elementary. It has happened all over the world “« This man is a manufacturer who has every interest in keeping his factory going. He continued : “ They have been over-buying and over-stocking. Now they find that they have been left with their stocks, and they must go quiet with their new orders until they clear their shelves”. I happened the other day, in a financial capacity, to be talking to a very distinguished Australian textile manufacturer with whom the honorable member for Melbourne (Mr. Calwell), who is now interjecting, would have no quarrel. T asked him what were the causes of the recession and whether it had anything to do with credit policy. He said quite plainly that the cause of the recession was gross overordering by the trade, particularly from overseas, and that it had nothing to do with government restrictions. That is the position in relation to the textile industry. In case some honorable member is interested to find out whether the alleged restrictions here have produced this temporary recession in the Australian textile industry, which, after all, covers many industries, including some which have grown up very q. the last few years, let rae tell him something about the growth of the number of unemployment insurance recipients in the textile and clothing trades in Great Britain. On the July of last year, well before the last election in the United Kingdom, so that Winston Churchill cannot be blamed for it, the number of unemployment insurance recipients was 6,864 in the textile trade, and 8,094 in the clothing trade. The figures grew month by month until, by the 12th November, 1951, the total number of recipients in the two industries was just under 50,000.

Mr Rosevear:

– Who was the local authority whose words the right honorable gentleman just quoted?


– -I shall tell the honorable member privately one of these days.

Mr Rosevear:

– The Prime Minister quoted his utterances publicly. Why does be not also mention his name publicly?


– All I can say is that he is a man of the highest authority whose word is to be taken. The honorable member for Dalley has a perfect answer if he can avail himself of it. If he can produce authoritative testimony to the effect that it is the credit restriction policy in Australia that has caused this recession, it will be very interesting because he will still be left to explain how a similar recession occurred in Great Britain under the Labour administration, and on a much wider scale than ia the case here, and how it has occurred in the United States of America and other countries. The truth is that this is a perfect example of the rather curious form of propaganda which says “ Blame it all on the Government”. If some one is paid off this curious form of propaganda says “ The Commonwealth robbed him of it; the Commonwealth had the wood on the Loan Council”. If some one cannot obtain credit from a bank the cry is “ This is because of the credit policy of the Commonwealth Bank”.

Mr Rosevear:

– It is easy to quote an anonymous authority.


– Some anonymous authorities are infinitely more respectable are others known by name. I shall not discuss this matter further. My colleague, the Minister for Labour and National Service (Mr. Holt) -will be able to give chapter and verse in relation to it. The truth is that a transfer of employment is occurring.

Mr Calwell:

– A transfer?


– Tes. It is perfectly true that in the last six or eight weeks there has been a perceptible and, in some cases, substantial improvement in the employment position in the railways, the transport industries, the steel industry, and, to a certain extent, in the coal industry.

The other matter that I want to say a word about is the complaint about high taxes. I confess that I am bothered by this one. I do not even now know where the Opposition stands. Am I to understand that the Opposition believes that the total budget of Australia, which is now greater than it was during the war, is unwarranted? Am I to understand that the Opposition favours the reduction of social services payments and of payments into the National Welfare Fund? Am I to understand that Opposition members favour the reduction of the defence appropriation? Am I to understand that they favour the reduction of payments to the States? Of course they know perfectly well, or at least those of them who have known the responsibilities of office do so, that if they went through the Commonwealth budget to-morrow with carte blanche to slice things out of it, the.y would not slice £10,000,000 out of it. Yet they say that by some remarkable feat we should at this very moment not increase taxes which, after all, have not been violently increased but that we should reduce them. At the risk of reiterating what has often been stated I am bound to say that this argument comes very strangely from the Opposition. During the war honorable members opposite brought taxation to a record peak and had borrowing capacity which is now the envy of every debtor. They have complained about the taxes that we have imposed. Let us examine the position. A taxpayer with a wife and one child who earned £400 of taxable income during the war, when they were in office, paid £53 13s. in tax. To day, under our provisions, such a taxpayer would pay £5 13s. A taxpayer in similar circumstances with £500 of taxable income who previously paid £88 16s., now pays £14 19s. A taxpayer with a taxable income of £800, who formerly paid £207 7s., now pays £60 9s., and one with a taxable income of £1,000, who formerly paid £293 4s., to-day pays £103 6s. As honorable members who have examined this matter are well aware, the rate of tax in Australia, with all these problems and obligations is, at all stages, and on all levels, very much below the rate of tax imposed in the United Kingdom and New Zealand. I wonder what the Leader of the Opposition would have done if he had been at the meeting of the Loan Council when it had to consider works programmes. Are we to understand - because he should come clean on this matter - that he would have refused to underwrite the works programmes of the States? We took what was a very remarkable step. No government in the history of Australia had ever taken such a step. This is the first Government that said to the States, “ Here is your works programme modified to £225,000,000. We undertake to see that you get the money.” No previous government, regardless of party, entered into such .an obligation. I wish that the Leader of the Opposition would explain to the Premier of Victoria and the Premier of New South Wales that if he had been in my place he would have refused to underwrite their works programmes and that the States could have whistled for their £225,000,000. If that is his policy, he should say so. If it is not his policy, he would have guaranteed these moneys. Would he undertake to explain to us sometime or other how he would have done so and, at the same time, have reduced taxation? A financial schoolboy would know better than to talk the sort of nonsense we have heard on this matter. How would the right honorable gentleman have reduced taxes, increased social services, increased public works, left every industry alone, wiped out credit control, restored the size of the Civil Service - and that is one of his complaints - found more money for the States, found more money for semi-governmental and local-governing authorities and sustained a deficit in his budget and, at Lbc same time, have come out as the champion who would attack and defeat inflation?

Finally, we are very well aware that re-adjustments - and we are talking about the problem of re-adjustments - are painful. Many good people in this country are experiencing trouble. That kind of thing gives no Government any pleasure. It is cause for constant and serious watchfulness, but unchecked inflation will hurt or destroy hundreds for every one who is now troubled. We can protect nobody by doing nothing. Meanwhile, I warn, the people of Australia that they should not be led aside by current propaganda. I know that much evil propaganda is going on. I hear it from time to time. No doubt honorable members opposite are aware of it and one or two of them I have no doubt are engaging in it. The man on the land is being told that the Government is being unjust to him in that he is being asked to pay provisional tax. If any Labour member of this House engages in the telling of that story may the words choke him; because I want to say to honorable members opposite, who would be very glad to forget it, that provisional tax in this country is a part of the payasyouearn system of tax of which every Labour member of this House is a pledged supporter. Even if my friends opposite, who are cackling so heartily, do not wish me to do so, I remind the people, particularly men on the land, that this whole business has no novelty. This was a part of the taxation scheme that was introduced by the Chifley Government and the Labour party in this Parliament. Indeed, I do not want to quarrel with it. All I quarrel with is the hypocrisy of people who go around whispering in the ears of the farmers and graziers, “ Oh ! this is a dreadful thing that this Government is doing to you “, when they ought to know that they themselves introduced this law and until this year always professed to be very proud of it.

Mr Pollard:

– What about the abolition of the averaging system ?


– I shall come to that matter. I am glad that the honorable member for Lalor has reminded me ot it. Provisional tax operates in just about the same way as the tax on wages and salaries and I see nothing unfair in making applicable to one section of the community a rule that applies to all. But in point of fact under this Government the provisional tax law is being administered with great humanity. The fall of wool prices has been taken into account; administrative orders have been given by the Commissioner of Taxation and the Government has paid special attention to current disasters and all special circums’tances that affect current incomes.

The second story that is being worked - no doubt it will -be worked very hard shortly - concerns averaging. Some dreadful thing has been done by this Government! I say bluntly that the modification of the averaging system that went through this House does not discriminate ; it reduces an existing discrimination. The fact is that 87£ per cent, of primary producers in Australia will still have the full benefit of averaging whilst no other income tax earners have that benefit. The remaining 12$ per cent, of primary producers have a modified benefit which this year will give to them £27,000,000 of tax advantage over other taxpayers with similar incomes. The sooner that is understood the better, because this is spoken about as if it were a discrimination, whereas in truth what it does is to reduce an existing discrimination. It does not, in fact, go the full distance of remedying that discrimination.

The last story that is being run is the great story that people are paying more than 20s. tax in the £1. If that means that they are paying more than 20s. tax in the £1 on one year’s income, I just want to say that that is impossible. I shall take a man with a taxable income of £10,000. Under his present rate of tax, he will pay 12s. 4d. in the £1. A taxpayer with a taxable income of £100,000 will pay tax at the rate of 16s. Id. in the £1. What the critics are doing - I this plain - is to add the actual tax on last year’s income. After all, people as a rule have to provide for their tax for an income year out of the income for that year. Most of us have had to do that. But the critics add the actual tax on last year’s income and the provisional (tax on this year’s income. So, between the two, the tax is more than 20s. in the £1. In other words, the critics treat the total as if it were being imposed on one year’s income whereas in reality it is being imposed on two years’ income.

The attack on the Government completely fails. It was hopeless, and it is hopeless. All I want to say on behalf of the Government is that it is our duty in administering these policies, which have come under no analytical attack, to be fair all round in the distribution of such burdens as may be involved in preserving the prosperity of the nation, in building up the stability which future growth demandsand in encouraging those basic industries upon which all future development depends.


.- The Prime Minister (Mr. Menzies) has occupied one hour and 25 minutes in trying to defend his Government against the charge levelled against it by the Opposition. That charge includes the following : -

That the economic and financial policy of the Government, especially its high taxation and drastic restrictions of hank credit, is causing injury to industry and production, both primary and secondary, and is undermining the established national policy of full employment.

Iam glad that the Prime Minister took so long because he made a speech which spells the doom of his Government. He has had a full opportunity to state the case for the Government following upon the adoption of its budget proposals by both Houses of the Parliament in September last and he has failed to prove to the satisfaction of the House and of the country that those budget proposals put into legal effect have worked for the benefit of the nation. This nation is in a bad condition to-day, and everybody knows it. The laboured efforts of the Prime Minister, when he tries to deal with all the arguments that are being advanced in every part of Australia against his Government, lack conviction. Hp has convinced nobody, not even himself, and when he descends to abuse by tolling people that he hopes their words choke them, he proves that he is notprepared to appeal to their reason.

His speech was entertaining in part; it was arrogant in part; and it was somewhat insulting to certain honorable members on this side of the House, who have a perfect right to put their point of view, even by interjection, because the Prime Minister is at all times a provocative speaker, and invites interjections. His case rests upon a series of beliefs, but not upon facts. He said that his credit restriction policy is in accordance with an act of Parliament, but he did not read the section of the act which is germane to this discussion. I refer the House to section 8 of the Commonwealth Bank Act, which provides -

It shall be the duty of the Commonwealth Bank, within the limits of its powers, to pursue a monetary and hanking policy directed to the greatest advantage of the people of Australia, and to exercise its powers under this Act and the Banking Act 1045 in such a manner as, in the opinion of the Bank, will best contribute to -

the stability of the currency of Australia;

the maintenance of full employment in Australia; and

the economic prosperity and welfare of the people of Australia.

This Government is not carrying out the statute. There is no stability in the currency of Australia. Every quarter, we see rises in the basic wage, consequent upon rises in the cost ofliving, of as much as 10s. a week and even more than that amount. The Government has failed to maintain full employment in Australia. The Prime Minister coins a new euphemism when he talks about transfers of employment. That is only another name for industrial conscription. That is only another way of saying that certain people are forced out of employment in the occupations that they wish to follow, and are to be forced to take other occupations which the Government regards as more essential to the economy of the nation. The Government has failed to maintain the economic prosperity and welfare of the people of Australia. The Government has failed dismally, miserably and abysmally. It has not protected the best interests of the people; it has not safeguarded the future of this country, and. therefore, it should be destroyed. It must ultimately be destroyed if we are to have stability in our economy; and that is a vast understatement.

The Government has not shown the courage about which it has boasted in dealing with the problems that confront us. Indeed, it has shown more callousness than courage, because it has selected certain industries, which it regards as non-essential, and says, “ They must go “. The textile industry is an example. It is all very well to tell us that the textile industries are in trouble throughout the world. There is also malnutrition and starvation in most of the world, but that is no reason why the workers of Australia should be undernourished or starved. Most of the people of Asia have not had a square meal in their lives, but that is no reason why Australian workers should be reduced to the same set of conditions. What we say in criticism of this Government is nothing to what its friends who are members of the Associated Chambers of Manufactures are saying about it. 1 remind the House that it was the chambers of manufactures in Victoria and some other States that levied their members ls. a head for every employee in order to provide a “ slush fund “ to defeat the Chifley Government. They helped to put this Government into office, and they now find, to their dissatisfaction and chagrin, that this Government is hurting them in a way that they did not think possible. I receive quite regularly the letters of the Associated Chambers of Manufactures of Australia which are issued in Canberra by Mr. Withall. He talks about this policy of disemployment, which is the economists’ new term for unemployment. Mr. Withall has written -

  1. . The acceptance of the principle of disemployment as a normal political theory, would mean the surrender by the average citizen of a personal right that hitherto he had regarded as fundamental, namely, the right of choice and security in the work he has trained himself for.

He proceed s -

Disemployment is a form of manpower control in which the victim pays all the costs and there is no compensation for the lost trade, profession, capital, plant or goodwill …

The term disemployment carries with it a very much more dangerous implication. It means a conscious policy, deliberately directed towards creating a state of unemployment. It is the process of manufacturing unemploymont by artificial means. It is not a passive process. It is deliberate and active, a most dangerous experiment.

In order that they may convince the Government of the things that should be done, the Associated Chambers of Manufactures have set out the measures that they believe should be given effect to, including the relaxation of credit restrictions, reductions of sales tax, the repeal of the 10 per cent, company tax, and the curtailment of imports. The Associated Chambers of Manufactures consider that those are some of the remedial measures that fall within the province of the Government. Representatives of the chambers of manufactures in the States have been most forthright in expressing their views. The. director of the Chamber of Manufactures in New South Wales, Mr. C. R. Hall, has stated -

None but a fool would dare label the clothing and textile industries as non-essential. . . . None but a dangerous fool could conceive that in the clothing and textile industries there was a pool of labour which, when released by “ temporary idleness “, would flow to “ undermanned basic industries “.

We need secondary industries. It has always been the hope of the importer that our secondary industries would bc destroyed. We need industries in order to provide employment for our people. We need to fill this country. If we do not fill it, we shall lose it. This Government is doing its best to destroy industries that will give employment to native-born Australians and to those who are coming to join their fortunes with ours. The Government, when it talks about full employment, dishonestly uses the name of the late Joseph Benedict Chifley. Members of the Government trade on C’hifley’s name. They try to trade on Chifley’s fame. While he lived, he was abused by members of the present Government, and was criticized by them when he talked about full employment. He put full employment first. He said that full employment must be maintained, and that unless it is maintained we shall experience the miseries of a depression. This Government is undoubtedly indifferent, al the best, to the things that are happening in Australia to-day. I have seen in recent times newspaper reports on the stock exchanges. The Melbourne Herald on the 6th February last published the headline - “ Share Market is Weak “. Two days later, the heading was “ Share!1

Slump Again “. Three days later, it read “ Share Market Lower “, and on the following day “ ‘Change Slightly Steadier “. The next day the heading was “Share Prices Sliding” and on the following day, “ MoreFalls on ‘Change “. Headings on subsequent days were, “ ‘Change Loses Ground “, and “ Share Market Subdued “. That series of headings shows that the people of Australia have lost confidence in the Government. We have not destroyed confidence in the Government. It is not anything that the Labour party has done which has caused persons who dabble in stocks and shares to refrain from buying shares in various undertakings. The Government has destroyed itself, and has destroyed the confidence of the people, because it has failed in its policy. That is precisely what is stated in. the motion that has been submitted by the Leader of the Opposition.

Two months ago, the president of the Bank of New’ South Wales, Mr. Martin McIlrath, who is certainly not a supporter of the Labour party, made the following statement at the annual meeting of the bank : -

Rigid restrictions and prohibitions on bank loans were provoking uncertainty and confusion.

That is a banker’s criticism of this Government - a banker’s condemnation of it. At the same meeting, Mr. McIlrath said -

It avails little if, in the effort to curtail the volume of money, the flow of goods is restricted by financial stringency.

That answers the case made by the Prime Minister to-night. One of his own banking supporters answers him. His budget was never accepted by the majority of the Australian people as being a just budget or a budget appropriate to the conditions of the times. It was attacked by two newspapers in New South Wales, the Sydney Morning Herald and the Sydney Daily Telegraph. The financial editor of each of those newspapers condemned the Government. Mr. J. C. Horsfall, editor of the Financial Review stated in an article in the Sydney Morning Herald -

The debate on the budget so far has been notable for one thing, and one thing alone.

The Fadden Budget has been condemned out of the mouth of the Prime Minister.

The Government is charged with the responsibility of cutting taxation to the minimum consonant with effective Government. It should not be a penny more. Only in that way can the Government be true to the principles of free enterprise on which it has been elected.

About the same time as Mr. Horsfall wrote that - late in September of last year - an article, published in the Sydney Daily Telegraph stated -

The Commonwealth Treasurer (Sir Arthur Fadden) has brought down one of the worst budgets the Commonwealth has ever seen.

The Labour party said the same thing then and we are saying now that the conditions about which we complain are the outcome of the budget. It has not taken us five months to discover what was wrong with the budget. When the budget was presented we prophesied the things that have happened. All that we are saying now has been said all over Australia by manufacturers, primary producers, bankers, and lots of other people who ordinarily do not vote for the Labour party and who have never helped to finance that party.


– It is hard to find anybody who did vote for the Government.


– As the honorable member for Shortland (Mr. Griffith) says, it is difficult to find anybody who will admit that he voted for this Government. The Government has no mandate for the policies to which it is giving effect. Its mandate, given in answer to its election promises, is to do precisely the reverse of which it is guilty of doing to-day. The Government promised to reduce taxation, not to increase it. It promised to abolish controls, not to add to them. It promised to put value back into the £1, not to plunge the nation into chaos and disaster. Why does the Government not seek a mandate for what it is now doing? Why does it not ask the people whether they want an army of unemployed? Why not ask the workers whether they want transfer of employment and disemployment ? Somebody has described disemployment as a state of unemployment during transfer between positions. If that be the correct definition, many Government supporters will be disemployed after the next election.

The Government should consult the people if it wants to change its policy. We should have an election. Let the people decide whether the Government’s present policy is the one they want. The people have never had a chance to vote on that policy. It is the very opposite to all the things that honorable members opposite said they would do, but instead of dissolving the House of Representatives now the Government will wait until next year and then send its supporters in the Senate to be slaughtered electorally. They will be made the sacrificial offering whilst members of the Government parties in the House of Representatives wait and hope that the storm will abate and that they will have a better chance of reelection at some future date. Honorable members opposite know the extent of the unpopularity that is theirs in every part of Australia to-day. During the recess some of them, particularly members of the Australian Country party, wrote to newspapers - a foolish thing for any politician to do - in an endeavour to shield themselves from the criticism that has been their lot. I shall quote one or two such letters. One, written by the honorable member for Canning (Mr. Hamilton) was replied to in the West Australian on the 14th January, by an elector who wrote -

Sir - Mr. Hamilton, M.H.R., urges wheatgrowers to maintain production. In the same issue a taxation official reveals the reason why they will not. He shows that a farmer with a fi 0.000 income will pay £25,979, in tax, £0,979 more than his income. 5Tet the Prime Minister has said that no taxpayer will be asked to pay more than 20s. in the £1 in any one year The writer continued -

If the Government desires our co-operation instead of our resistance, then let it abandon its policy of victimization by restoring the averaging system which assures that we will pay as much but not more taxation than others with similar incomes.

Mr. Hamilton complains that some farmers have turned a somersault. Docs he infer that they should bc denied the right to emulate the actions of their political representatives?

The honorable member for Mallee (Mr. Turnbull) also has been writing to the newspapers and, on the 14th December, 1951, The Countryman, the official journal of the Australian Country party in Victoria, published the following reply :-

Dear Mr. Turnbull, - In an article in The Countryman it is stated you do not know why the Federal Government, of which yon are a member, is, I think, proving so unpopular. You state you can find no real reason why it should be. Let me tell you, and take also my assurance, that I’ve given a lot of consideration to it before voicing my opinion, that at the next election your Government will be overwhelmingly defeated and it will take years and years to re-establish yourselves

The anti-inflation programme was propounded by an economic theorist who never did a day’s work, and would not know how to sew up a bag of grain.

Your Government has accepted it and is increasing taxation and bank interest rates. Can any one in their wildest imagination think that is good for the increase of production J

Who wants to work harder and produce more when it means only more for your Government!

Then the correspondent says -

I am a true blue Country party man, and I am disgusted at the apathy of your Government to the real producers of wealth.

I pass now to Queensland. On the 27th December of last year, Queensland Country Life, also an Australian Country party publication, published a series of letters under the heading “ We Are Not All Suckers “. Mr. John S. Manchee, of Yamburgan, Noondoo Siding, and Mr. D. M. Kennedy, of Monte Cassino, Kilcoy, agree that -

The primary producer is not complaining about taxation. He is complaining about unjust taxation. Not even our bitterest political opponents when in power questioned the fairness of the averaging system. It had to be our supposedly own party which dealt us “ the unkindest cut of all “.

The Postmaster-General (Mr. Anthony) who is now at the table of the House, has been criticized too by supporters of his own party. He was criticized also in quite a recent issue of the Canberra Letter. Perhaps he can explain why he has reversed his policy and why to-day he is doing the opposite of what he promised to do. Let there be no mistake about this : Honorable members opposite did promise to reduce taxes if they were elected to office. The joint Opposition policy speech delivered by the present Prime Minister in 1949, stated -

We still believe that rates of taxation must be steadily reduced, as national production and income rise, and as economies are affected in administration.

Instead of reducing taxation, the right honorable gentleman has increased it to an all-time high.

Mr Rosevear:

– And defends his action.


– Yes. He has defended his somersault this evening and he thinks that he has convinced the people that he still leads the same political party as they voted for two years ago. Let him test his belief before the people, and then we shall see. Let him enter the byelection contest in the electorate of Lyne and put his case before the dairy-farmers there. Let the representatives of the Australian Country party go there, too, and see what sort of a case they can make in support of a .complete reversal of form in the short space of two years. This is the Government that promised to get rid of inflation by reducing taxation! It now proposes to get rid of inflation by increasing taxation, and it pretends all the time that it is acting honestly. It is the same coalition of political parties that promised to abolish controls. In the policy speech to which I have already referred, the present Prime Minister said -

We will resist the return of oppressive government controls of all kinds.

And there are more oppressive controls to-day than there were even in the darkest days of the war !

The credit restriction policy and the capital issues control policy of this Government are bankrupting some firms, denying opportunities of expansion and development to many other firms and causing confusion and chaos in financial circles that ultimately results in such headlines as those in the Melbourne Herald to which I have referred. The Prime’ Minister did not make his promises alone. The Leader of the Australian Country party joined him, and that party is as much involved in this disaster, this tragedy, this political betrayal, as is its partner, the Liberal party. This is what the absent Treasurer (Sir Arthur Fadden) had to say -

If the socialists are defeated, therefore, rates of taxation, both direct and indirect, can and will be steadily reduced. In short, our policy is a progressive reduction of taxation on individuals and the community in general, commensurate with national economic and financial policy.

A Government that has reversed its policy deserves the censure of this House, deserves to be exposed before the electorate, and deserves to be destroyed.

The Prime Minister referred to some figures relating to taxation. He said that taxation was high during the worst days of the war. That is so. But taxation during the last year in which the Labour party held office was lower than taxation is to-day, because the 10 per cent, levy that was imposed last year has raised the rates this year beyond those that applied when the Labour party left office. Furthermore, this Government increased the amount of sales tax collections from £23,000,000 a year, the level at which the Labour party left it, to £57,000,000 in the first financial year when it was mismanaging the finances of the country and to £114,000,000 for the current financial year. Sales tax bears most heavily upon taxpayers who have children and least upon those who have no family responsibilities. There is much more evidence of the unpopularity of the Government that I could quote.


– Order ! The honorable gentleman’s time has expired.

PostmasterGeneral and Minister for Civil Aviation · Richmond · CP

– The honorable member for Melbourne (Mr. Calwell), who has just spoken, had a great opportunity. It was his first speech on a censure motion in this House as Deputy Leader of the Opposition, and we might reasonably have expected him to take advantage of the opportunity to excel. We can well sympathize with him because, after having listened to the speech of the Prime Minister (Mr. Menzies), who dealt categorically, chapter and verse, with every criticism expressed by the Opposition, he was forced to evade reference to everything that the right honorable gentleman had said and to resort instead to a recital from a sheaf of newspaper cuttings, the size of which I have never seen in this House before. Instead of telling us what the Opposition would do if, by chance, it were restored to power, the honorable member for Melbourne recited from the Sydney Morning Herald ! Does he follow the programme and policy enunciated by the Sydney Morning Herald** He recited from the *Daily Telegraph, the Victorian Countryman and various “Western Australian and Queensland newspapers, and he referred to the views of Mr. Latham “Withall. In fact, be quoted innumerable outside authorities, but he did not say, on behalf of himself and the political party that he represents, what he and his colleagues would do to rectify the situation of which they have complained if they were in office.

The Prime Minister issued a challenge. He said, in effect, “ Here is our budget of £1,04.1,500,000 “, and he specified the sums that had been set aside for social services, defence, public works, and the underwriting of the works programmes of the States. Then he said to the Leader of the Opposition (Dr. Evatt), “ If you were in power, would you reduce any one of those items, and, if so, how would you finance the affairs of the country without having to resort to that most perilous of all measures, the use of bank credit and Inflation?”. The Opposition has not answered that question. It is a significant question and the people of Australia want to hear the answer. They do not want to listen to a lot of doleful quotations from complaints by various individuals. “We all are afflicted with problems as a consequence of the present economic situation. That state of affairs is not peculiar to Australia; it is worldwide. “What the people want to know is what the Opposition would do in this situation if it were in the place of the Government. So far we have heard no statement of any proposals that the Opposition may have. We have merely heard a series of statements that the Government is fostering a depression, causing unemployment, putting people out of business and so forth. It is true that the employment situation in Australia has changed in recent months. I took the trouble to secure from the Commonwealth Statistician to-day, official figures in rela tion to that change. The figures that he supplied to me showed that, whereas there were 150,000 unfilled jobs in Australia six months ago, the figure to-day is little more than 100,000. ,So that is the grave condition of unemployment of which members of the Opposition speak! Because the number of vacancies in industry and elsewhere has- been reduced from 150,000 to about 100,000, the Opposition declares that the Government should be censured and has lost the confidence of the electors. “Let us have another election “, cried the honorable member for Melbourne. He has been saying that ever since he was tipped out of office more than two and a half years ago. After this Government had been in office for only a little more than fifteen months, we gave to the honorable gentleman the opportunity that he sought so eagerly. In April of last year, when the people of Australia were given the opportunity which the Opposition said that it was eager to be given, they returned us with almost exactly the same numbers as before.

There are one or two other points upon which I shall touch because Opposition speakers ‘have misrepresented the situation. One of the matters about which the honorable member for Melbourne has been so plaintive is that we have. according to him, failed to honour promises to reduce taxes that we made in December, 1949. Does not the honorable gentleman and every other honorable member opposite know that in June. 1950, within six months of this Government having come to office, the Korean war broke out, and that that necessitated an increase of defence expenditure by Australia and every other democratic power? Australian defence expenditure has increased from £41,000,000 for 1949-50 to £187,000,000 for this financial year. We have not finished yet. As a matter of fact, we have only begun the job. Every citizen who knows the realities of the situation realizes that the face of the earth has been changed as a result of the aggression in Korea, where our troops are fighting so gallantly to-day, and where 400 or more of them have already laid down their lives.

The honorable member for Melbourne quoted from a circular issued by the Bank of New South Wales. It is a very well-balanced document. The bank is entitled to express its view about the remedies that should be applied to cure the economic ills of the community. The circular contained a passage that the honorable gentleman failed to quote. It is as follows: -

There are many signs that basic industries and transport services which have suffered from acute labour shortages for several years are now having les« difficulty in finding labour. Greater concentration of labour and equipment on these industries is an essential part of any final solution of the inflation problem in its widest sense.

That is a complete vindication of at least a substantial portion of the Government’3 budgetary policy. It is readily admitted that no government is perfect. A government must use its best judgment to govern wisely. It may make errors of judgment. In a motion of this character, it is the duty of the Opposition to be a little specific about the remedies which it suggests should be applied. Nothing

Specific of any consequence has been suggested and no real proposals alternative to those of the Government have been advanced by the Opposition. We read in the press that there has been some difference of opinion between the Leader of the Opposition and certain members of the federal executive of the Australian Labour party. Since it is the executive that formulates policy, it is understandable that in this House neither the Leader of the Opposition, his deputy nor any Other member of the Labour party can make an official declaration of policy.

Our imperative need is to increase the production of basie materials. That is best illustrated by the fact that although we can buy unessential luxuries and gadgets in almost every store, a man who wants to build a house finds it almost impossible to buy tiles, roofing materials, timber, bricks, cement or bath tubs. A man who wants to buy a radio set or a motor car has the choice of a dozen or more makes, but the railways of Australia, which have to provide transport facilities for essential goods, are hard-pressed for rolling-stock. It is easy to buy 50 different brands of handbags, of all shapes and sizes, but the farmer who wants to buy barbed wire, galvanized iron, or irrigation machinery in order to increase the output of food finds that he cannot buy them for love or money. The aim of the Government has been to redress this imbalance.

Our powers are very limited indeed. War-time powers, such as those that were exercised by our predecessors, no longer exist. Therefore, in order to achieve some degree of balance we have to rely entirely upon financial and budgetary measures. The regulations relating to capital issues control, which have been so much criticized by the press and, inferentially, by the Opposition, are an important element in out control of the use of resources and materials. The Capital Issues Board would reject an application for the construction of a new cinema or a speedway grandstand, but it would readily accede to a request by a company that wanted to manufacture more cement, or engage in timber cutting or in activities that would increase coal output or expand the iron, steel and associated industries. Those activities have top priority. High priority is given to applications by companies formed to increase the output of fertilizers, agricultural materials of all kinds, and heavy earth-moving machinery and equipment of that nature. Those things are basic to the progress and development of this country.

Will anybody argue for a moment that the Government should not exercise whatever powers of a financial nature that it possesses to divert man-power and materials from unessential industries of the kind that I have mentioned to industries that come within the category to which ] have just referred? Is it not proper that our limited available resources of materials should be diverted in the manner that I have mentioned by capital issues control? The Commonwealth Bank, which has also come under criticism, has used its authority to limit credit for use in what may be considered as less essential industries. It has not mentioned specifically, let us say, the textile industries. It has been suggested that there are direct instructions that those industries are not to get requisite credit, but the Prime Minister has revealed what every banker has known for the last fifteen months, that is, that the Commonwealth Bank’s instructions were issued in December, 1950, and have not been altered since. Whatever credit arrangements were available to the textile industries in 1950 are still available to them to-day. There has been no discrimination in that respect. Steps to control inflation through the agency of credit restriction are commencing to Iia ve the intended effect. The time at my disposal this evening does not permit me to state them at length. Let it suffice to say that they are commencing to show results.

The last basic wage quarterly adjustment was the smallest for several quarters. There was a time when workers in receipt of the basic wage hailed a good increase with a measure of delight. To-day, however, the workers view high increases with a grave degree of apprehension because they know that such increases will soon be absorbed by rising prices, and a depreciation of the value of their assurance policies and money in the bank, lt was vitally necessary that the Government should take positive action. Wage rates in this country were rising very rapidly for a number of reasons. I have already referred to the effect of the war in Korea. We had a large income from the sale of our exports. For example, receipts from the sale of wool which amounted to £313,000,000 in 1949-50 when we came to office, rose to £656,000,000 in the following year, an increase of more than £300,000,000 in our wool income in a single year. That additional income was circulating through the community in which the quantity of goods was comparatively static. The result was that our wage spiral was revolving more rapidly probably than was the case in the United Kingdom, the United States of America and New Zealand. Had that state of affairs been permitted to continue it would have spelt ruin for everybody but the speculators and prices racketeers. As the thrifty, hard-working, industrious’ people who deposited their savings in the Commonwealth Savings Bank or invested them in life assurance policies were afraid that their money would be whittled down by galloping inflation, it was the duty of the Government to grapple with the situation and arrest the drift.

The honorable member for Melbourne (Mr. Calwell) has stated that the Government is unpopular. I do not deny that many of our measures have been unpopular because, until now, they have been misunderstood. However, I am convinced that there is a growing appreciation of the wisdom of the Government’s budgetary proposals. It is very difficult, indeed, for a government to do things that are particularly unpleasant to its supporters. I have never seen a Labour Government game to do so. This Government decided to take whatever steps were necessary to halt the inflationary trend, to the extent of inflicting harsh conditions on the farmers, increasing the rates of taxation and modifying the averaging provision. We also took the risk of losing our friends who wanted to extend their factories, by re-introducing capital issues control. We took the view that it was our duty to do unpopular things provided we were convinced that they were necessary in order to restore the economy of the country. We deliberately took the risk of implementing unpopular measures in the belief that the time would come when the value of those measures would be recognized by the people with whom we would be temporarily unpopular. There is now a rapidly growing appreciation of those unpopular acts, particularly by the little man in the community, who is caricatured by the newspapers as John Citizen. John Citizen has taken a hand in such a way that he has become one of the most potent influences in arresting inflation. However, before he could act it was necessary that he should have confidence in the steadfastness of purpose of those who were charged with the duty of guiding the economy of this country. He had to be confident that his savings in the bank and the money in his pocket would be worth as much in a few months as it was then. In other words, he had to resist the pressure to buy to-day because goods would be dearer to-morrow. How many times during the last few years have honorable members heard salesmen exhort customers to buy before prices rose further? Their stock-in-trade has been, “ I advise you to buy this article now. It is the last one that we have at the old price. Put it away if you do not want it immediately, because prices will be dearer in six months’ time “. That psychology no longer operates. To-day John Citizen is holding on to his money. He is not following the advice which the honorable member for Melbourne gave to the people of Melbourne a few months ago, when he exhorted them to spend their money and buy all that they could because money would soon become worthless. That kind of advice could result only in sending inflation galloping. But John Citizen has used his common sense and has realized that this Government means business and is stabilizing values. People who previously pushed things .at us with a “ take it or leave it “ attitude are new beginning to want to give service. A new atmosphere is developing in the community. No longer is John Citizen spending his money rashly and in an inflationary manner. It may be suggested that people have not the money to spend. Statistics show, however, that deposits in savings banks in Australia have increased by more than £100,000,000 during the last twelve months. John Citizen’s attitude to-day is due, not to lack of purchasing power in his pocket, but to a belief that his money will be worth more to him later. He could never have gained that confidence had it not been for the fact that this Government was willing to introduce unpopular measures in order to arrest the inflationary trend.


– Order! The Minister’s time has expired.


.- The Postmaster-General (Mr. Anthony) encountered fairly heavy weather in defending the policy of the present Government. However, his speech was significant for two or three reasons. In the first place, he has displayed more audacity than any other member of the Government by daring to put forward the Korean war as an alibi for the Government’s complete failure to honour its election promises to the people, and, indeed, for a complete reversal of the policy on which it was elected to office. The fact is that at that election speakers who represented the present Government warned the people of the darkening of the international situation. They claimed to have fore-knowledge of exactly thekind of events that have since occurred and they made their promises to the people at that time in full knowledge of what they claimed would be the development and worsening of the international situation.

The speech of the Postmaster-General has been notable for the most blunt statement yet made on behalf of the Government in justification of the use of the financial instrument as a weapon of industrial conscription in this country. The Postmaster-General, unlike his colleagues, has made no apologies whatever for the deliberate use of that instrument for that purpose, for the forced unemployment of labour, for its deliberate transfer to the dole or to other forms of work by financial compulsion. He said that that was the Government’s duty and obligation in accordance with its policy. He also said that workers no longer hail with joy an increase of the basic wage. That is quite true. That strange position has developed in the last two years, during which period this Government has been in office, and itself constitutes the greatest indictment of the record of the Government in its attempts to combat inflation. The very fact that an increase of wages is to-day regarded by the workers as a cause for anxiety rather than jubilation, is an indictment of the complete failure of the Government’s financial policy.

This afternoon and to-night the House has heard a number of extraordinary utterances, but the most extraordinary spectacle that it has witnessed has been that of Ministers now seeking to shelter behind the excuse that they are following the economic policy of the late Mr. Chifley. They say, “ We are doing what Mr. Chifley advocated. We are following the Chifley policy “. That has been their defence against this censure motion. It was begun this afternoon by the Minister for Defence (Mr. McBride), who was quickly supported by the Prime Minister (Mr. Menzies) to-night. Honorable gentlemen opposite have quoted the words of Mr. Chifley as their justification. The man whom they attacked in his life-time they now invoke as their protector. The policy that they vilified and condemned they now seek to wrap around themselves as a defence. That behaviour is as politically craven as it is contemptible and dishonest. For the words that they have attributed to Mr. Chifley have been torn from their context. The policy that honorable gentlemen opposite are following is not the policy of Mr. Chifley. If it were, they would stand politically perjured, because they were elected to office on the promise to destroy that policy. But it is not Mr. Chifley’s policy that they are following, because hia policy was the maintenance of full employment, a fact that was emphasized this afternoon by the Leader of the Opposition (Dr. Evatt). The Government’s policy, on the other hand, is to undermine and threaten the very basis of full employment.

The Prime Minister said early in his speech that his Government was technically under .censure to-night. Whatever be the result of the vote on this motion, the Government is indeed under censure in every State, city, town and hamlet in this nation. The Prime Minister is no longer loved and admired to-day. He is hated and despised. Because he does not realize that fact, he struck once again that extraordinarily false note that has marked his every speech in defence of his Government. The heavy humour, the sneer, the attempt to slide over or evade real issues, the display of cheap cleverness, are all wasted now on the people of Australia who are surfeited with displays of his own superficial cleverness. The people are fed up with his posturing. They are weary of his circus tricks and his dramatic utterances.

Mr Rosevear:

– And of his ham acting.


– Yes, and of his ham acting. They are also afraid of the dangerous situation into which he is once again leading this country. That fear and that mounting anger of the people against the Prime Minister are getting them into the mood in which they will once again force his removal from office, as they did in 1941 when he was previously leading Australia to the point of ruin.

The very basis of this censure motion is that the Government’s policy is injuring industry and undermining the policy of full employment. The people in any factory, shop, farm or home in the country would confirm that, according to their experience of the way that things are happening in this country, the contention advanced in the motion is true. This afternoon the Leader of the Opposition gave detailed proof of his charge. He produced facts and figures from all over Australia to support it. He produced the evidence of captains of industry and of leaders of the trade union movement to demonstrate the uncertainty, the injury and the insecurity which the Government is causing everywhere throughout the country. No ordinary member of this House requires such evidence. Any honorable member requires only to visit his own electorate and talk with the people in shops, homes and farms, or on street corners, to discover that the feeling that permeates this country corresponds exactly with the contention advanced in the motion. The fear, the uncertainty, and the injury which this Government is causing to the economy of the country is the aim in Australia of the Communist party. The Communist party’s deliberate aim is to cause conditions of uncertainty, insecurity and chaos; but the Government has in two years achieved more towards that objective than the Communist party could hope to achieve in a generation. The Government is doing the Communists’ work for them in this country. Thoughtful students of affairs know that the Government is playing right into the hands of the Communists by causing the very conditions of unemployment, insecurity and disruption in which Communist agitation can flourish and in which the Communists can hope to gain converts to their hateful policy.

To the degree to which Ministers have faced up to the charge that their policy is resulting in these things, the replies that they have made have been curiously illuminating. The Prime Minister, the Minister for Defence, and the PostmasterGeneral, in particular the lastnamed, have said, in effect, “We admit the disturbing effect of our policy, because we deliberately planned that it should have such a disturbing effect. If conditions become too bad we may try to reverse it, but so far there has been no crash.” That is a summary of the case that was advanced by the PostmasterGeneral and other speakers. So might a dangerous fool at the wheel of a motor car reply, when warned that he is heading the car for a precipice: “I am deliberately driving towards it, but when the car starts to crash I may try to reverse it “. “When the crash occurs it is too late to reverse the car. The phrase “ dangerous fool “ is that used by the Director of the Chamber of Manufactures. In this year of grace, as the Leader of tho Opposition has pointed out, and as the Postmaster-General has frankly admitted, for the first time in the history of the Australian people a Government has set out deliberately to put people out of work. The Postmaster-General said that the Government’s policy was designed deliberately to put people out of work in certain industries so that they could be forced into other forms of employment. It is not good enough merely to say that this policy has not yet caused a financial depression. The time to abandon the policy is before it does cause a depression.

The second defence of the Government’s policy is that it has not yet produced mass unemployment. The evidence offered in support is that the official unemployment registrations are very small. It has been stated that there are only 2,S00 registered unemployed in the whole of Australia, of whom 2,400 are registered in Queensland while only 270 are registered in New .South Wales and only 60 or 70 in Victoria. Does any Minister really believe that the official registration figures accurately represent the volume of unemployment in Australia? Are Ministers living in a dream-world so bounded by the horizon of their office desks that they cannot see what is going on in this country? If they cannot, then any of the private members who support the Government could enlighten them from their own experience in their electorates. Actual unemployment in Australia is substantially larger than the official registrations indicate, for two reasons. The first is the pitiful in- adequacy of the unemployment benefit, which, for a single man, is now less than one-eighth of the basic wage because the Government has allowed the figure to remain unchanged while money values have declined. Many men who lose their jobs seek employment for quite some time before registering for the 25s. a week. The second reason is that there is always a considerable delay between actual unemployment and its appearance in the official registration figures. There are more unemployed in Goulburn alone than the number indicated for the whole of New South Wales in the official registrations.

The Government’s third excuse has been that even if people are out of work this is not unemployment but merely disemployment. It is no comfort to the textile worker in Goulburn or to any other worker who has lost his job to tell him that he is not unemployed but is merely disemployed. To him, the two conditions are exactly the same. But the depth of ministerial irresponsibility was plumbed and the inability of Ministers to cope with these problems was demonstrated this afternoon by their reaction to the illustrations by the Leader of the Opposition of the immediate adverse effects of the Government’s policy.

The Leader of the Opposition listed nine main adverse effects of the Government’s policy. A hilarious reaction came from the ministerial benches when he mentioned that retail stores were being forced to adopt high pressure selling methods, selling goods below cost of replacement, and reducing essential reserve stock. When he mentioned that effect of the Government’s policy the Minister for Defence (Mr. McBride) laughed and interjected, “ What is wrong with that ? “ Government supporters applauded the interjection and asked whether the Opposition did not want to reduce prices. That was a demonstration of complete irresponsibility. Does any honorable member really regard as healthy the present position in the retail trade where, because of the operation of the Government’s policy, traders are being forced to sell goods below cost of replacement and to deplete the essential reserves necessary for the conduct of their businesses?

I think it worth while to recount the nine illustrations of the immediate effects of the Government’s policy which the Leader of the Opposition cited this afternoon. I shall note with interest whether there is again a display of hilarity and irresponsibility when the reference is made to retail traders. The Leader of the Opposition pointed out that thousands of employees in textile and clothing industries had been dismissed and that thousands of others were working part time. Factories were closing down because retailers had been unable to place orders. The boot industry was also threatened. He stated that one of the first decentralized textile industries had closed its Yass plant and had reduced the staff of its Goulburn factory by half. Its Lithgow factory had also been closed. The Government of Victoria had been compelled to close down important public works because of lack of finance. There was a definite recession in the building industry. Supplies were now available solely because home-builders could not obtain the finance necessary to purchase them. The Leader of the Opposition pointed out that retail stores were being forced to adopt high-pressure selling methods, and had had to sell goods below cost of replacement and to reduce essential reserve stocks. Statements had been made by representatives of Australian manufacturers, openly condemning Government credit policy and asserting that plants that had been closed down had been unable to secure Government contracts. Simultaneously, imports had been greatly increased. Finally, he pointed out that film attendances, always an index of prosperity, had dropped and that the industry had embarked on a special campaign in order to fill empty seats. Not one effective answer has been given by a ministerial speaker to these points.

During this debate honorable members have beard for the first time in this House for many years that sinister and hateful word, “ over-production “. The Minister for Defence admitted the existence of dislocation in the textile trade although he would not admit that it was due to the Government’s financial policy. Nor would he admit that it might be partly due to the volume of imports that have poured into this country. He said that the dislocation of the textile industry might be due to the fact that the management and the workers in the industry had been over-producing. For years past, members of the Government have been pleading with the workers of Australia to produce more and have informed them that they have nothing to fear if they do so. They have stated that they will never again permit to occur the conditions that occurred in the 1930’s when the workers were told that they were unemployed because they had over-produced. The Minister has now stated that, in his opinion, the position of the textile industry is probably due to over-production. Yet the Postmaster-General, during this debate, once again urged upon the workersthe need for production. How can he ask them to produce more if, by producing more, they will put themselves out of work? If the Government continues to apply its present policy, it will have no right to expect greater production from the workers. It will have a right to expect greater production only if it carries out the promise that it made to them that the volume that they produced would not be used against them, as it had been used in the past, to force down the conditions and terms of their employment.

The Prime Minister cited figures on taxation which, as every honorable member must have recognized, were completely misleading. He said that this Government had not increased taxation rates but had reduced them. As evidence in support of that statement he said that a man who earned £400 a year to-day would pay far less income tax than a man who earned £400 a year in 1944 or f945. He completely disregarded the changed purchasing power of the £400. The correct comparison would be the income tax paid by a man who earned the basic wage to-day compared with the income tax paid by such a man in 1944 or 194.5. A man earning the basic wage to-day pays eight times as much in direct taxation as such a man would have paid in 1944 and 1945. At the same time, he has to pay tremendously increased indirect taxes on all the things that he might seek to obtain as a result of his effort and industry.


– But the income of such a man is greater than it, was in 1944 and 1945.


– His income is exactly the same. It is the basic wage. The basic wage earner had in 1944, as he has now, just enough to keep himself and his family in frugal decency. But it must be remembered that this Government takes from such a man eight times as much through direct taxation as was being taken from him during the worst stages of the last war. The Prime Minister used all sorts of phrases to defend the economic policy that is being applied by his Government. He talked of qualitative controls, non-fluctuating working requirements, fluctuating operating requirements, liquidity of bank credits and various other high-sounding matters. I ask him to say what those phrases mean to the pensioner who is hungry and lonely because the purchasing power of his pension is 23 per cent, less to-day than it was when the Chifley Government fixed it at £2 2s. 6d. It was then 36 per cent, of the basic wage and now it is 28 per cent. The pension rate would need to be increased by 30 per cent., from £3 to £3 18s. a week, in order to give to a pensioner the purchasing power that he had in relation to the basic wage when his pension was £2 2s. 6d. a week and the basic wage was £5 16s. a week. What do these highsounding phrases of the Prime Minister mean to the textile workers, the boot employees and other workers who have found that their occupations have disappeared? What do they mean particularly to those in country areas in which there is no opportunity to transfer to another local industry? What do they mean to the Australian manufacturer who knows that his credit has been restricted and that his stock is unsaleable because of the insecurity caused by the Government’s policy, while imports are being allowed to pour in from overseas ? What do they mean to the average mother who knows that the purchasing power of child endowment has been reduced by nearly 50 per cent, in two years, and that the security of employment of her husband can be no longer taken for granted? Finally, what do they mean to the man whose income is fixed? A man who has retired and who has secured an income through his own thrift or through contribution to a pension or superannuation fund now finds that his income is insufficient to live on.


– Order 1 The honorable member’s time has expired.

Debate (on motion by Mr. McMahon) adjourned.

page 92


Bush fires - Taxation - Anniversary of Bombing of Darwin.

Motion (by Mr. Eric J. Harrison proposed -

That the House do now adjourn.


– I direct the attention of honorable members to the effect of bush fires on our defence effort and our food production. The present climatic conditions in New South Wales and other eastern States are such that if there were saboteurs in our midst they could destroy, by means of a few boxes of matches, millions of acres of food-producing country, thousands of sheep, houses and other property, as well as many of the lives of our people. It is well for us to realize in the midst of our defence efforts that we could be attacked in this way. It is, therefore, high time that this Parliament did something to avoid the drastic consequences of more fires of the type that occurred recently on the South Coast and Riverina districts of New South Wales and in many other parts of Australia. The Stretton report published in Victoria in 1939 indicated that 71 lives had been lost in the fires that year, millions of acres of forest had been burned, and houses, bridges, tramways and machinery had been destroyed by bush fire. Many cattle, horses and sheep had also perished in bush fires or had been asphyxiated by scorching and debilitated air.

To-day the same sort of perils face us. One is filled with horror when moving through the fire-devastated parts of New South Wales. This year has probably been one of the worst years for bush fires because it has been a hot dry period following four unusually wet seasons. The wet seasons encouraged a luxuriant growth of grass and other vegetation which has dried off this year and has reached a very dangerous inflammable state. It is well to note that the wise aborigines used to burn off the countryside when the grass grew long and dry in order to provide young green grass for their game. There are Some people who say that you cannot do anything about a very bad bush fire. I should like such defeatists to have seen the bodies of the two Otton girls who were burnt to death in the recent bush fires in the Bega district. Perhaps such a melancholy sight would have altered their attitude.

For a very small expenditure of money America has provided very efficient bush fire fighting services. In one forest area in America which covers 230,000 square miles, prior to 1920 £18,000,000 worth of timber was burnt each year. Firefighting trucks were introduced and the losses were reduced to £1,600,000 a year. Aircraft spotters and fire fighters were introduced in 1940 and the losses were reduced to a few thousand pounds worth of timber a year. All that was done for the expenditure last year of only £58,000 on aircraftspotting and on what is known as smoke jumpers, who use parachutes to get from the aircraft to the fire areas. For a similar small expenditure this country could overcome the terrible menace of bush fires.

Without wishing to hurt any one’s feelings I must say that the fire-fighting equipment that I have seen in New South Wales, although handled by competent and gallant men, is completely inadequate and primitive. It is a terrible sight to see men, without the proper equipment, almost sweating blood in the agony of fighting fires in tremendous heat and asphyxiating smoke. Such men are’ unpaid, and in many cases unthanked. but ! they are doing a tremendously important and patriotic service.

A report made by Mr. J. C. Foley in 1947 indicates that the same meteorological conditions always obtain before we have bush fires. First of all there are low .humidities then dry winds and high temperatures. In every case of disastrous bush fires those conditions have obtained for several days beforehand. That being so, it should be possible to take precautions against bush fires when such conditions are observed. The Bega and Riverina bush fires were known to be smouldering for some time before they broke out. Forest fires which started the conflagration at Bega were smouldering for a couple of months beforehand and the great Riverina fire was known to be smouldering for three days before it finally broke out. During that time it could easily have been bandied. When it got away that fire travelled 50 miles in twelve hours, burnt 200,000 acres and killed 50,000 sheep as well as destroying thousands of miles of irreplaceable rabbit-proof fencing. Ten atomic bombs could not have done so much damage. I ask the Government to study this situation and to ascertain what can be done to ensure that the States shall meet their responsibilities. They should abandon the practice of proclaiming periods for burning from a central point and should allow the proclamation to be made by the shire authorities, who have local knowledge. The control of fins should be handled properly by experienced men and they should be provided with the equipment that is necessary. It could be obtained at the cost of a few dollars.


.- I support the honorable member for Macarthur (Mr. Jeff Bate) in seeking proper supervision of fire-fighting. A fund is available in New South Wales, but it is inadequate. Generally speaking, the responsibility to purchase equipment is on private land-holders in New South Wales. The Government subsidizes them to some degree, but the result is that in some areas in which the holdings are larger, the owners can afford to’ buy modern fire-fighting units. In other areas the equipment that is available is very poor. The subsidy should be very much larger. One knapsack in the right spot at the right time can do more good than 50 fire-fighting units in the same spot some hours .later.

Some points have arisen from the disastrous fires that occurred recently in New South Wales and .northern Victoria. The fires showed the necessity for a thorough investigation of the causes. The Victorian Premier has given an assurance that inquiries will be made in that State and a similar declaration has come from the Minister for the Interior. Those assurances refer to the fires that started in Victoria and the Australian Capital Territory. No assurance has been forthcoming from the Chief Secretary’s Department in New South Wales that action will be taken to discoverhow the fires started in New SouthWales and what can be done to prevent them in future. Apparently the New South Wales Parliament is attempting to shield its own instrumentality, the New South Wales Railways Department, which has been responsible for lighting many fires. The fire to which the honorable member for Macarthur referred was caused, in my opinion, by complete negligence on the part of the New South Wales Railways Department. After burning-off was completed on a small side-line, three men were left in charge of the area as a patrol. They were given two knapsack sprays. Instead of one man patrolling while the other two went to lunch, the three of them went to a waterhole together to have lunch. When the fire started, they were too late to control it.

A full inquiry should be held into the ability of the railways to burn off in the summer. Why is the New South Wales Railways Department allowed to burn off at the end of January, when burning off should be completed at the latest by the end of December? That department attempted to burn off the railway line area at Holbrook early in February, but when the local policeman said he would not guarantee the lives of anybody burning off there, they did not persist. Great hostility has been expressed in my district to burning off by the railways at a time when other people are prevented from lighting a fire in the open at all. In some areas fires are constantly lit every year by the railways department. One of my constituents has had six fires lit on his property in three years. Possibly in some areas the sides of the railway lines could be sprayed with weed killer so that burning off would be unnecessary. If the State Government is not prepared to conduct this inquiry, the Australian Government should do so because the fire to which I have referred burnt through two States and was responsible for damage estimated at £5,000,000 at the very least. It covered an area of 4,000 square miles.

I direct the attention of the Government also to the taxation that is imposed on insurance received from payment for sheep that are burnt. In country areas, a system of accounting is followed under which people hold sheep on their books at a nominal figure. This practice has been followed for years. Generally the sheep are shown at the rate of from 8s. to 10s. each. Those figures have no relation to the value of the sheep if they are to be sold. Where owners have had sheep insured and they have been burnt, they have been paid at the rate of £4 or £5 a sheep according to current values. But the owner will be charged income tax on the amount between the8s. shown on his books and the £4 he receives for the sheep unless he can purchase something before the 30th June of next year. Ministerial direction should be sufficient to ensure that the amount regarded by the Taxation Branch as profit shall be held over for the following year so that a man who purchases sheep within eighteen months of being burnt out shall not be liable to income tax on that sum.

Mr Rosevear:

– Why are the sheep shown at 8s. when their value is £5 ?


– That is the general practice.

Mr.Rosevear. - Tax-dodgers.


– No, that is not correct. The figure is worked out on a formula. That is the generally accepted practice throughout the country. Honorable members have been informed that provisional tax has been waived in many cases where it could be shown that the person had suffered severe loss. By waiving provisional tax, no advantage has been granted to the taxpayer concerned. Those people must be put back into production and they should be given assistance by way of a loan of the income tax that they now owe, interest free and repayable over a period of from three to five years. The losses have been enormous. One man told me that he estimated that he had lost £100,000 in twenty minutes. Another man, who has been on the land for only eight months, lost 1,200 of his flock of 1,300 sheep as well as his house. Such people do not want charity. They want the right to use the money that they owe in taxation from last year and for which assessments are now being received. They should have the use of that money interest free and should be permitted to repay it over three or four years. If the Government cannot lend the money interest free, it should be lent at the rate of interest that the rural bank is charging, that i3, lj per cent.

Finally, I ask the Government to consider the payment of a subsidy on imported fencing materials. Unfortunately, Australia is not able to provide all the fencing materials that are required. Land holders are very loth to pay 6s. 6d. for imported steel posts when Australian posts are being produced at 2s. 6d. The Government should consider a subsidy that would reduce the price of the imported posts. The Government has a duty to ensure that the enormous area of New South “Wales that has been burnt out shall be returned to production as early as possible.

Mr. NELSON (Northern Territory) 1.11-0] . - My purpose in rising to-night is to direct the attention of the Government and of honorable members to the fact that in Darwin to-day there is being commemorated an event which, when it occurred, shocked the Australian nation to its foundations. It is significant that the anniversary of the event has passed practically unnoticed by the rest of Australia. I refer to the anniversary of the bombing of Darwin on the 19th February ten years ago. It depresses me to find that an event of such outstanding importance is only a memory outside the place where it occurred. I appeal to the Prime Minister (Mr. Menzies) to place the commemoration of this tragic event on a national basis in the future, and I do so in order that the lesson impressed upon us ten years ago may never be forgotten. In the raid on Darwin hundreds of men and women in the services and among the civilian community lost their lives when the ruthless aggressor struck. It was the first occasion on which, as a direct result of enemy action, the blood of our own kith and kin was spilt on thu mainland of Australia. Thousands of civilians lost their homes and all their worldly belongings. If honorable members could realize the heart-breaking difficulties which the unfortunate inhabitants of Darwin bad to contend with in order to rehabilitate themselves they would do everything possible to ensure that no raid of that kind should ever occur again in Australia. Many of the older people found the task of rehabilitating themselves quite beyond them. Their youth had passed, and they just could not make the grade. Men who had given most of a lifetime to the task of holding our northern frontier found themselves, in the evening of their lives, in severe economic straits. I ask the Government not to ignore the warning which Australia then received. The best safeguard against a repetition is to develop and populate our northern areas, and the adjacent islands, particularly New Guinea. I ask the Prime Minister whether such an outstanding event in the history of the nation as the Darwin raid should not be commemorated by the nation. Australia cannot afford to forget that day. Ten years ago it was Darwin. It might be the turn of Sydney or Melbourne next.


.- The Minister for Territories (Mr. Hasluck) has just told me that he sent a special message from the Government to the administration in Darwin on the occasion of the anniversary of the bombing of that town. It was not so much in commemoration of the event; it was a suitably worded message which showed that the Government had not forgotten. When we consider methods of preventing similar raids in the future we are forced to conclude that the best way is to provide for adequate all-round defence. If Singapore had not fallen there would have been no bombs on Darwin. Some one might claim that we should commemorate the fall of Singapore. Foi my part, I should prefer to commemorate V-P day rather than the fall of Singapore or the bombing of Darwin. In any case, I hope that Australians will not forget the lesson that the bombing of Darwin should have taught every one of the present, and, I hope, future generations.

The honorable member for Farrer (Mr. Fairbairn) raised the matter of income tax payable by graziers who had suffered losses from fire. I shall bring his representations to the notice of the Treasurer. I am not in a position togive him a reply on so complicated a matter. The Australian Government is directly concerned with the control of bush fires, and with volunteer bush fire brigades, only in the Australian Capital Territory. Elsewhere, the prevention of bush fires and inquiries into their origin are the responsibility of State governments. In Canberra, we have appointed a board of inquiry to find out if possible the cause of the two big fires that started in the Australian Capital Territory. I agree with the honorable member for Farrer that similar boards of inquiry might well be set up to inquire into the cause of other big fires, such as those at Holbrook and elsewhere. However, the Australian Government cannot initiate action in that direction. It has been obvious to me while flying over the ranges on the way to Canberra that some people have, for their own selfish purposes, started fires in forest country. On Sunday last some small fires, that had obviously been recently lighted, were still burning. A royal commission in Victoria, as was pointed out by the honorable member for Macarthur (Mr. Jeff Bate), declared that 95 per cent. of bush fires were acts of man and not, as some might be disposed to say, acts of God. I assure the honorable member that the Commonwealth will co-operate in every way possible with the States to prevent bush fires. If State authorities wish the Commonwealth to assist in inquiring into the causes of fires they should prepare a request to that effect. At the time of the occurrence I joined with the honorable member for the Australian Capital Territory (Mr. J. R. Eraser) in paying a tribute to the people of Canberra and of the Australian Capital Territory who turned out voluntarily in response to radio calls to assist the bush fire brigade in the magnificent work they did on both occasions. We learned a great deal which, perhaps, we should have known before. I hope that, as a result of what we learned, the bush fire brigades in the Australian Capital Territory will be better equipped in the future, and. better able to face a similar situation should it arise.

The honorable member for Macarthur (Mr. Jeff Bate) referred to the possibility of sabotage. All honorable members will, I think, agree that the greatest danger to Australia under present conditions is not that some one might blow up a factory. Nor is there much danger that some one might drop an atomic bomb in Australia; the difficulty of getting the bomb here would be too great. However, food production in Australia, as we have seen recently, could be very seriously impeded by some one running round with a box of matches.For that reason, I look upon bush fire prevention and bush fire brigades as a part of our civil defence organization. We may be able to bring bush fire brigades to a higher state of efficiency, not by taking them over from the States, but by acting in close co-operation with the States. I have been working on this problem during the last three months, and I hope to achieve results in the near future.

Question resolved in the affirmative.

House adjourned at 11.10 p.m.

page 96


The following answers to questions were circulated: -

Social Services.

Sir Earle Page:
Minister for Health · COWPER, NEW SOUTH WALES · CP

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

  1. Approximately 2,800 including dependent wives and children.
  2. To extend the medical and pharmaceutical benefits of the pensioners’ medical service to this group of persons would cost approximately £8,000. However, extension of the service to these people is impracticable at present because of differing bases of eligibility for pensions under the British and Australian systems.

Civil Aviation

Mr Swartz:

z asked the Minister for Civil Aviation, upon notice -

Has any decision been made regarding Commonwealth assistance for the construction of an aerodrome in Toowoomba, Queensland, which *ould tie capable of handling all commercial traffic?

Mr Anthony:

– The answer to the honorable member’s question is as follows : -

The Commonwealth owns an aerodrome at Oakey, near Toowoomba, developed during tha war and to which regular services serving Toowoomba now operate. In addition, the Commonwealth owns land in close proximity to Toowoomba which has been used as an aerodrome for light aircraft, but which is not of sufficient size for aircraft generally employed on regular air transport services. The present position in regard to availability of material, finance for works, &c, is such that I see no prospect of this aerodrome being developed in the near future, nor will this be done unless there is some indication of the traffic developed at Toowoomba justifying it. In the meantime, consideration is being given to the question of purchasing additional land in the vicinity of the present aerodrome in case the future may justify its development.

Basic Materials

Mr Swartz:

z asked the Minister for Supply, upon notice -

  1. What quantities of the various ba6ic materials controlled by the International Materials Conference have been allocated to Australia for the first quarter of this year?
  2. How do these allocations compare with our estimated requirements?
Mr Beale:
Minister for Supply · PARRAMATTA, NEW SOUTH WALES · LP

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

Allocations of basic metals to Australia for the first quarter 1952, together with the estimated requirements which were furnished to the International Materials Conference when those allocations were- to be considered arc as follows: -

All the above figures are in metric tons. The only other’ material currently allocated by the International Materials Conference is sulphur. Australia’s allocation of this commodity is 68,200 long tons for the first six months of 1952 against our stated requirements of 167j000 tons for the whole of the year.


Mr Menzies:

s. - On the 6th February, the honorable member for Bennelong (Mr. Cramer) asked the following question : -

Can the Prime Minister say whether donations that are made by the public to bush fire relief funds that are organized by municipal authorities are allowable ‘deductions for taxation purposes? If he is not sure what the present position is will he as a matter of urgency give consideration to the subject and if possible make a public pronouncement of governmental approval in order that municipalities and shires which have not already done so will he encouraged to open public appeals for funds?

There is a provision in the income tax law that authorizes the deduction of gif ts of £1 and upwards to a public fund established and maintained for the relief of persons in Australia who are in necessitous circumstances. This concession applies to gifts of property (other than money) which was purchased by the donor within twelve- months immediately preceding the making of the gift. The concession does not extend to gifts of stock bred by the donor and fodder grown by him. The Commissioner of Taxation has advised me that, as a general rule, gifts to bush fire relief funds are allowable deductions. By way of example, he has cited the French’s Forest Fire Victims’ Appeal Fund established in November, 1951, and the Blue- Mountains Bush Fire Appeal Fund launched last month. The Commissioner finds it necessary, however, to examine each of these funds to ensure that they comply with the requirements of the act which he administers. If particulars of the constitution of a fund, including the way in which it is organized and applied, are forwarded to the Commissioner at Canberra, an urgent decision regarding the deductibility of donations will be given by him. As indicated in my reply to the honorable member’s question, publicity is being given to the deductibility of gifts to these funds.

Government Economic and Financial Policy

Mr Joshua:

a asked the Prime Minister, upon notice: -

  1. Is it a fact that the cutting-hack of orders because of the inability of the people to buy has spread to country woollen mills and -that one mill in the Ballarat district dismissed’ 84 employees last week?
  2. Will he investigate the heavy falling off in orders from wholesalers which has taken place in the last two months?
  3. Is this artificial recession the result of the credit restrictions and import policies of the Government?
  4. Will he do what he can to stop the aggravn tion of the .position T
Mr Menzies:

– I have no evidence to support the suggestion that reduction of orders normally placed with certain factories arises from the inability of people generally to huy or results from the credit and import policies of the Government.

Services Canteens Trust FUND

Mr Ward:

d asked the Minister for the Army, upon notice -

  1. What amount of money remains to the credit of the Services Canteens Trust Fund?
  2. What is the total amount paid out by the fund to date?
  3. What have been the operating costs of the fund to date?
  4. Who are the members of the trust and what remuneration do they receive?
  5. What are the types of cases which are assisted from the fund ?
  6. Is there any limit to the amount of assistance which may be granted in individual Cases
  7. Upon what basis is the amount of assistance determined?
  8. What is the total number of applications received by the fund since its establishment and in how many cases has assistance been granted?
Mr Francis:

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

  1. £5,320,341 as at the 31st December, 1951.
  2. £545,858 as at the 31st December, 1951.
  3. £75,646 as at the 31st December, 1951.
  4. Brigadier A. S. Blackburn, V.C., C.B.E., E.D., Mr. M. E. L. Jones, Miss C. G. Stevenson, Mr. J. A. K. Wicks, Brigadier S. B. Holder, O.B.B., Group Captain W. L. Hely A.F.C., Mr. E. Harding, Major-Genera) E. W. Woodward, D.S.O., O.B.E., Mr. J. H. Jamison, and Captain 0. H. Beeher, D.S.C., R.A.N’. The trustees do not receive any remuneration as trustees. Under section 11 of the Services Trust Funds Act 1947-1950, the trustees are not entitled to receive from the fund any remuneration for any work done by them in relation to the administration of the fund and under section 14 of the act a trustee or a dependant of a trustee shall not receive benefits from the fund.
  5. Assistance for education and welfare of children of ex-serviceman of World War II., relief of distress and welfare of such exservicemen and their dependants as provided by the act.
  6. No, the act provides for the trustees to determine the amount of assistance to any eligible person or class of eligible persons.
  7. Each case ib considered on its merits.
  8. Assistance has been granted to 19,277 eligible persons out of a total of 28,240 applications. The trustees and members of regional committees in all States are exservicemen selected on the nomination of exservicemen’s organizations and annual reports are submitted to Parliament.

Cite as: Australia, House of Representatives, Debates, 19 February 1952, viewed 22 October 2017, <>.