House of Representatives
18 September 1952

20th Parliament · 1st Session



Mr. Speaker (Hon. Archie Cameron) took the .chair at 10.30 a.m.,. and read prayers.

page 1682

QUESTION

DOLLARS

Dr EVATT:
BARTON, NEW SOUTH WALES

– Following upon tho. answer that the Prime Minister gave to a question I asked yesterday on the subject of the non-availability of dollars to the New South Wales Government for the purchase overseas of electrical power equipment, I now ask the right honorable gentleman whether he will make available the papers in connexion with the New South Wales Government’s application for the dollars?

Mr MENZIES:
Prime Minister · KOOYONG, VICTORIA · LP

– Yes, I shall do so. I shall lay the papers on the table at the appropriate stage. I shall make extra copies available for any honorable members who. wish to have them.

Later:

Mr MENZIES:
LP

– I lay on the table the following papers for which the Leader of the Opposition has asked : -

Correspondence between the Government of the Commonwealth and the Government of New South Wales regarding a proposal for the Electricity Commission of New South Wales to purchase a Generating Plant from the United States of America.

page 1682

QUESTION

SHIPPING

Mr LUCK:
DARWIN, TASMANIA

– I ask the Minister representing the Minister for Shipping and Transport whether the Commonwealth shipping line is represented on the board or panel that determines freight rates on the Australian coast? Is it a fact that since the establishment of the line freight rates on general cargo between Tasmania and the mainland ports have increased by nearly five times ?

Mr HASLUCK:
Minister for Territories · CURTIN, WESTERN AUSTRALIA · LP

– There is inexistence a freight rate committee on which the Department of Shipping and Transport is represented by officers. I understand that it is customary, after that committee has made an examination of the costs involved, for appropriate adjustments to be made to freight rates. The honorable member’s suggestion that freight rates have increased fivefold since the inception of the Commonwealth shipping line is approximately correct.

Dr Evatt:

– Which inception? The one in 1920 or the one in 1945 ?

Mr HASLUCK:

– Since the inception of the present line in 1945. I have with me now the figures that were prepared for me in connexion with the recent debate on this matter, and can quote them to the honorable member. They show that between 1945 and 1952 the rates between Burnie and Melbourne rose from 26s. a ton to £4 16s. 6d. a ton. In the same period the rates between Burnie and Sydney rose from 28s. 6d. a ton to £6 6s. 3d. a ton. As a standard of comparison, in the same period the rates between Melbourne and Sydney rose from 29s. 8d. a ton to £6 10s. 6d. a ton.

page 1682

QUESTION

NATIONAL SERVICE

Mr BRYSON:
WILLS, VICTORIA

– Will the Minister for the Navy say whether it is a fact that cases of meningitis have occurred among national service trainees on the corvette H.M.A.S. Cowra, and that a number of traine.es have been placed in quarantine? If that is so, will the Minister take immediate action to ensure the safety and good health of the trainees, particularly in view of the fact that a similar complaint has occurred among military trainees ?

Mr McMAHON:
Minister for Air · LOWE, NEW SOUTH WALES · LP

– We have had no cases of meningitis on board H.M.A.S. Cowra. We had one case of that complaint on board H.M.A.S. Colac, and the national service trainees were immediately taken off the ship and put into a special hospital ward at Flinders Naval Depot. The ship itself has been diverted to Western Port and will be kept there during the necessary isolation period.

Mr WARD:
EAST SYDNEY, NEW SOUTH WALES

– In view of the anxiety of parents as a result of the recent outbreak of serious illness in national service training camps, will the Minister for the Army issue the necessary instructions to enable members of the Parliament to enter such camps for the purpose of inspecting conditions in them at such times as honorable members may desire to do so? If the Minister is not prepared to comply with this request,’ will he state the reason for his refusal?

Mr FRANCIS:
Minister for the Army · MORETON, QUEENSLAND · LP

– No anxiety exists in the minds of parents about the matter to which the honorable member has referred.

Mr Ward:

– Rubbish !

Mr FRANCIS:

– The only anxiety about this matter exists in the honorable member’s own mind, which is full of rubbish.

Mr SPEAKER:

-Order !

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– I rise to order. Am I to understand, Mr. .Speaker, that you take exception to the Minister’s remark that the mind of the honorable member for East Sydney is full of rubbish? If so, do you intend to call upon the Minister to withdraw that remark?

Mr SPEAKER:

– I called the Minister to order, and I think that is a sufficient answer.

Mr Peters:

– He is only a larrikin.

Mr SPEAKER:

– Order ! Which honorable member made that remark?

M.r. Peters. - I did.

Mr SPEAKER:

-The honorable member for Burke will withdraw and apologize.

Mr Peters:

– I withdraw, but I believe that the Minister should also withdraw his statement.

Mr SPEAKER:

– The honorable member will apologize for making his remark.

Mr Peters:

– I apologize.

Mr. Francis, rising in his place,

Mr Haylen:

-. - Is this Francis the talking mule?

Mr SPEAKER:

-Order! If the House is not prepared to listen to answers by Ministers there will be no point in proceeding with questions, and I shall call on the business of the day.

Mr Ward:

– Why does not the Minister answer my question?

Mr FRANCIS:

– Since I have been Minister for the Army I have invited honorable members to visit national service training camps. Every honorable member opposite has had the opportunity to make such visits.

Mr Ward:

– That is not what I asked. The Minister wants a Cook’s tour.

Mr SPEAKER:

-Order ! The honorable member for East Sydney has asked a question and as he appeared to require an answer, he should listen to the answer.

Mr FRANCIS:

– A great number of honorable members opposite have accepted my invitation to visit national service training camps-

Mr Ward:

– I wish to go in when I want to, not when the Minister wants me to.

Mr FRANCIS:

– The honorable member for East Sydney has not accepted my invitation. He is keeping out of camps as long as he can.

Mr CALWELL:
MELBOURNE, VICTORIA

– Can the Minister for the Army inform me whether it is a fact that a number of cases pf cerebrospinal meningitis have occurred in recent weeks in army camps? If his answer to that question is in the affirmative, will he make a statement on the matter at an early date, and give the full details of such cases and other cases of serious illness among national service trainees and regular army personnel?

Mr FRANCIS:

– I am at a -loss to understand why the honorable member for Melbourne has asked this question, because I gave a clear statement to the House on this subject only 48 hours ago. Perhaps the honorable gentleman was absent from the chamber on other duties and did not hear my statement, so I now direct his attention to it and I shall give him a copy of it.

Mr Ward:

– More cases of serious illness have occurred since the Minister made his statement.

Mr Calwell:

– I have received a telegram to-day about the matter.

Mr FRANCIS:

– There have been no cases of serious illness. I shall give the relevant figures for the information of the House. The honorable member for East Sydney said previously that there was an epidemic of German measles in Army camps. That statement is completely inaccurate, just as his previous statements have been on this matter. I deprecate very strongly the effort to create the impression in the community-

Mr Ward:

– That there is any disease in the camps?

Mr SPEAKER:

– Order! Is the Minister answering the question addressed to him by the honorable member for Melbourne ?

Mr FRANCIS:

– Yes. The honorable gentleman referred to oases of other diseases in the camps without any qualification.

Mr SPEAKER:

– I heard the honor- :i bie member for Melbourne mention cerebro-spinal meningitis.

Mr FRANCIS:

– He also mentioned other serious diseases. I inform the House that there are 7,200 men in camp in the whole of Eastern Command, and that there are only eighteen cases of German measles. That ratio of one in 400 is substantially less than the occurrence of German measles in the civilian community in New South Wales.

page 1684

QUESTION

HEALTH AND MEDICAL SERVICES

Mr KEKWICK:
BASS, TASMANIA

– Can the Minister for Social Services inform the House of the amount expended by the Chifley Government on social services during ite last year of office, and of the amount of such benefits provided by the present Government ?

Mr TOWNLEY:
Minister for Social Services · DENISON, TASMANIA · LP

– Speaking from memory, the Chifley Government’s expenditure on social services during its last year of office was approximately £S.1.,000,000. This Government has increased expenditure under that heading by £87,000,000 to £168,000,000 for the current financial year.

page 1684

QUESTION

EMPLOYMENT

Mr MINOGUE:
WEST SYDNEY, NEW SOUTH WALES

– Is the Minister acting for the Minister for Labour and National Service aware that unemployment increased by almost 100 per cent, during August and that that increase brought the total number of unemployed persons to over 100,000? Will he state the number of jobs that the Commonwealth Employment Service claims to be vacant, and where such jobs, if any, are available? What action does the Government intend to take to check unemployment which is increasing daily?

Mr McBRIDE:
Minister for Defence · WAKEFIELD, SOUTH AUSTRALIA · LP

– I have not at hand the figures for which the honorable member has asked. I shall obtain the information and supply it to him at an early date.

page 1684

EGYPT

Mr SWARTZ:
DARLING DOWNS, QUEENSLAND

– Has the Minister for External Affairs any further information about developments in Egypt, including the reported rural programme that has been introduced by General Naguib

Mr CASEY:
Minister for External Affairs · LP

– The situation in Egypt has been quite adequately described in the public press. The honorable member will be aware of the circumstances in which General Naguib came to office, and also of the broad outline of the land and other reforms that he has instituted or has begun to set in progress. Apart from that, there appears to be law and order among people in Egypt, and the lives and property of British subjects have been respected. I believe that Egypt can look forward with some confidence to the implementation of the land and other reforms that will have considerable social and economic effects.

page 1684

QUESTION

INDUSTRIAL ARBITRATION

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– My question is addressed to the Prime Minister. In view of the fact that several State governments have now briefed counsel to oppose strenuously the employers’ application to increase hours of work, reduce wages and discontinue quarterly adjustment of the basic wage, will the Australian Government take similar action and thus do something of a positive nature to prevent the worsening of the industrial situation and the reduction of the living standards of 2,600,000 wage and salary earners in this country?

Mr MENZIES:
LP

– I answered fully a question about this matter yesterday. Other questions on it are intended as propaganda and are designed not to affect my mind, but to influence the Commonwealth Court of Conciliation and Arbitration.

page 1684

QUESTION

SOCIAL SERVICES

Mr DAVIS:
DEAKIN, VICTORIA

– I ask the Minister for Social Services whether it is a fact that the Government has increased the rates of social services benefits under each budget that it has presented since it assumed office? Is it also n fact that the Chifley Government did not increase the rates of those benefits under its last budget which was introduced in 1949?

When did that Government last increase those rates and what was the amount of such increases? For how long did pensioners have to wait before those increases were paid to them?

Mr TOWNLEY:
LP

– This Government has increased the rates of social services benefits under each of its three budgets for the financial years 1949-50, 1950-51 and 1951-52. The increases made were 7s. 6d., 10s. and 7s. 6d. a week respectively. The Chifley Government last increased the rates of these benefits in October, IMS. It did not increase them in 1949; and one year and three months elapsed before the increases for which provision was made in 1948 were paid to recipients.

Dr EVATT:

– Is it not a fact that the purchasing power of social services benefits when the Chifley Government went out of office substantially exceeded that of the present rates of benefits, even after allowing for the increases made under this Government’s current budget? I also ask the Minister whether the questions that have just been addressed to him with respect to social services benefits were furnished to the honorable members who have asked them?

Mr TOWNLEY:

– The answer to the right honorable member’s question is in the negative.

Mr CURTIN:
WATSON, NEW SOUTH WALES

– Will the Minister for Social Services consider issuing a regulation under the social services legislation to provide for payment of unemployment benefit in advance in necessitous cases? Such payment would alleviate the distress that is occurring in many families where the wage-earners who register have to wait for a period of three weeks before the first payment of unemployment benefit is made to them.

Mr TOWNLEY:

– The honorable member has asked whether I will consider issuing a regulation under the Social Services Consolidation Act. I have no discretionary power to issue such a regulation. If the suggestion of the honorable member were to be adopted alteration would have to be made to two sections of the act, I think sections 107 and 119. There would also be many administrative problems involved in the adoption of the honorable member’s suggestion. About 20 per cent, of applications for the employment benefit do not become effective, lt is obvious that if money were to be made available in the period between the time of application and the end of three weeks, problems of repayment would be involved in those instances in which persons have obtained employment in that period and in many cases the money would not be recovered. However, provision is made by State welfare authorities for the assistance of persons who find themselves in necessitous circumstances over the intervening period. My department is now examining the possibility of commencing payments sooner than has been customary.

page 1685

QUESTION

MEAT

Mr WHEELER:
MITCHELL, NEW SOUTH WALES

– Can the Minister for Commerce and Agriculture inform the House of the nature of the negotiations that are going on at present with the United Kingdom for the sale of Australian pig meats? In view of the fact that the present level of the market generally is being kept up by the English demand for canned ham, will the Minister ask his experts to bear in mind that any sudden alteration of the price of this product would have a serious effect on the local industry?

Mr McEWEN:
Minister for Commerce and Agriculture · MURRAY, VICTORIA · CP

– Negotiations with the British Ministry of Food in respect of pig meats are. now in progress. Pig meat is the only class of carcass meat that is not included in the long-term agreement with the United Kingdom. Pig-raisers were the only Australian meat producers who asked that their product should not be included in the agreement. Consequently, negotiations in respect of carcass pig meat are conducted with the British Ministry pf Food year by year. Last year, the Ministry of Food was unwilling to pay the price that was requested on behalf of Australian producers, which was based upon the cost of production. I was not prepared to enter into any contract that required Australian exporters to sell their product for less than the cost of production. Therefore, the sale of Australian carcass pig meat overseas is completely uncontrolled. The meat can be sold by anybody in any part of the world where a market is available. The Australian Meat Board will receive and sell to the Ministry of Food at the prices negotiated with the Ministry any pig meat that Australian exporters care to place with it for that purpose. In these circumstances, Australian processors found that they could develop a lucrative trade in canned hams with the United Kingdom, where the prices of canned meat are not controlled. A lucrative trade has, in fact, proceeded during the last year. During the last few weeks the British Ministry of Food informed me by cable that, as a result of an increased supply of British hams, it was able to contemplate the placing of ham and gammon on the list of unrationed foods on the local market in the near future and that, as it intended to do so, it proposed to place imported canned hams under price control. I immediately asked the Ministry to delay the imposition of price control on canned hams at least until ham canned under the terms of existing trade arrangements had been disposed of. I am still pressing that view with the British Ministry of Food, and the honorable member may be sure that I shall try to protect the interests of Australian pig producers.

page 1686

QUESTION

PAPUA AND NEW GUINEA

Mr WARD:

– In view of the original claim of the Minister for Territories that Colonel J. K. Murray was retired from his position as Administrator of the Territory of Papua and New Guinea on account of his age, and the Minister’s later statement that it was on account of inefficiency, will the honorable gentleman; in the cause of justice and fair play, produce evidence to support his charge, or unconditionally withdraw it? Alternatively, will he arrange for the appointment of an independent public inquiry to examine the whole of the circumstances associated with the enforced retirement of Colonel Murray ?

Mr HASLUCK:
LP

– Although there may be some things in the past history of the territories -which require an investigation, I do not regard this matter as one in which the public interest would be served by an inquiry. The original statement made about Colonel Murray’s retirement made no reference to the reasons for his retire ment. It was only after some public references had been made to the administrative action that, putting it as gently as we could, we pointed out that Colonel Murray was now at an age greater than that at which all other persons in the territory retired, and, by implication, we suggested that he was not any longer in possession, of the administrative capacity to do his job. We have not adduced any new reasons for the retirement of Colonel Murray, and the honorable member for East Sydney is only trying to invent them.

Mr MULCAHY:
LANG, NEW SOUTH WALES

– Will the Minister for Territories inform the House of the qualifications of the successor to Colonel Murray as Administrator of the Territory of Papua and New Guinea? Is it a fact that the gentleman was an employee of the Liberal party organization?

Mr SPEAKER:

-Order! I did not hear the question because of the conversation that is taking place on the front Opposition bench.

Mr HASLUCK:

– For the sake of definiteness, I think I should inform the House that no successor to Colonel Murray has been appointed in a formal sense. The position in the Territory of Papua and New Guinea at the present time is that Brigadier D. M. Cleland is Acting Administrator. He is Acting Administrator by virtue of the fact that, some time ago, in response to a public advertisement, to which 120 replies were received, he was appointed Assistant Administrator. When Colonel Murray went on leave, Brigadier Cleland automatically became Acting Administrator, and he has continued in that office. His appointment as Assistant Administrator was made, as I have said, after an advertisement inviting applications for the position had been published, and a report had been made by the Public Service Commissioner to the effect-

Mr Ward:

Mr. Ward interjecting,

Mr SPEAKER:

– Order ! The honorable member for East Sydney has been interjecting all the morning. I ask him to refrain from doing so.

Mr HASLUCK:

– Brigadier Cleland was appointed Assistant Administrator as the result of a recommendation by the

Public Service Commissioner to the effect that his qualifications for the. post were outstanding among those of other applicants. His principal qualification is a distinguished war service record, in recognition for which he received the award, first of the M.B.E. and then of the C.B.E. His war service included a period as Chief of Staff of ANGAU, from approximately the beginning of 1942 to 1944, during which time he was responsible for administration in New Guinea. He had an extensive period of service there. Any one who is acquainted at first hand with that period knows that Brigadier Cleland’s service in New Guinea was of an outstanding kind, and that he earned the universal respect of all those associated with him. It is quite true that, subsequently, he engaged in politics and was employed by the Liberal party, but that was riot one of the qualifications which led to his selection for this post. If any other testimony to the worth of Brigadier Cleland in this post is needed, I invite honorable members opposite to consult with those of their colleagues who recently visited the Territory of Papua and New Guinea. If they do so, I am sure they will find that people in the territory recognize that he is doing a first-class job, and one that is very much in the interests of the territory.

Mr TOM: BURKE:
PERTH, WESTERN AUSTRALIA

– Will the Minister for Territories say on whose recommendation the post of Assistant Administrator was created? Did Colonel Murray ask for such assistance, or did the Public Service Commissioner recommend the creation of the post ? If not, was it created as the result of a. Cabinet decision? What circumstances gave rise to the necessity to appoint an Assistant Administrator?

Mr HASLUCK:

– The history of the creation of this post is that, during the term of office of my predecessor, it was found that there was a need to create another senior position in ‘ the territory in order that a greater delegation from the Administrator downwards might be made. My predecessor had the idea of appointing two deputy administrators, one to operate in the trust territory, and the other to operate in the Australian possession of Papua. After that proposal had been further examined by the Public Service Commissioner for the Territory, by the secretary of the department and by myself as Minister, it was decided that it would not be. in conformity with the administrative union of Papua and New Guinea to cause a separation of the two parts of the union by appointing two deputy administrators. .So, instead of appointing two deputy administrators I decided to appoint one assistant administrator. It was in those circumstances that the post of Assistant Administrator was created. The question was one entirely for the Government to determine. The decision was not made with any intention to replace Colonel Murray or to do anything other than to contribute to the administrative efficiency of the territory.

page 1687

QUESTION

COMMONWEALTH HOSTELS LIMITED

Mr FITZGERALD:
PHILLIP, NEW SOUTH WALES

– Is the Prime Minister in a position to inform the House of the decision made as the result of the petition he received from the employees of Commonwealth Hostels Limited? All those persons were public servants who transferred to this organization and were promised security in their employment less than twelve months ago. Forty-two of those persons, some of whom are married ex-servicemen with families, have received notices of dismissal. Is the Prime Minister aware that positions with the service of Commonwealth Hostels Limited are at present being filled by young immigrants who have recently arrived in Australia? Cannot those jobs be given to the 42 employees who have received notices of dismissal?

Mr MENZIES:
LP

– I shall ascertain the position and advise the honorable member.

page 1687

QUESTION

JAPANESE WAR CRIMES

Mr CHAMBERS:
ADELAIDE, SOUTH AUSTRALIA

– I wish to direct a question to the Minister for External Affairs with regard to reports that are. continually being presented to the Australian people, that Japanese prisoners of war who are serving sentences on Manns Island are about to be removed to Japan. Those reports have not been confirmed or denied.

Mr Menzies:

– The matter has not been considered.

Mr CHAMBERS:

– The Prime Minister has said that the matter has not been considered. I should like to know whether that is correct or otherwise. My point is that the prisoners were sentenced after the cessation of hostilities, and the world knew that at some period peace would be declared.

Mr SPEAKER:

-Order! What is the honorable member’s question?

Mr CHAMBERS:

– As the prisoners were sentenced for atrocities which are probably without precedent in any other period of history, will the Government give an assurance to the Australian people, and particularly to ex-servicemen, that the war criminals will continue to serve their sentences in Japan ? Will there be an Australian authority in Japan to ensure that the war criminals are not released after they have been returned to Japan?

Mr ERIC J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– That is not in conformity with the Opposition’s own policy. The honorable member’s party would have let them off altogether.

Mr CASEY:
LP

– I do not propose to reply by arguing this case with the honorable gentleman. The matter is currently under investigation, and it will be considered by Cabinet as soon as practicable.

page 1688

QUESTION

DISALLOWED QUESTION

Mr. Morgan proceeding to ask a question.

Mr SPEAKER:

– Order ! The question will go on the notice-paper.

Mr Morgan:

– I desire to take a point of order.

Mr SPEAKER:

– Order ! There is no point of order.

Mr Morgan:

– This is a very important matter.

Mr SPEAKER:

– Order ! The honorable gentleman will resume his seat.

Dr Evatt:

– I take a point of order, Mr. Speaker. Is the honorable member disentitled to take a point of order after you have given a ruling ?

Mr SPEAKER:

– Order! The question was out of order.

Dr Evatt:

– Cannot the honorable member take a point of order?

Mr SPEAKER:

-Order ! No, not on that matter.

page 1688

SOCIAL SERVICES CONSOLIDATION BILL 1952

Bill returned from the Senate without amendment.

page 1688

QUESTION

COMMONWEALTH OIL REFINERIES LIMITED

Mr SPEAKER:

– I have received from the Leader of the Opposition (Dr. Evatt) an intimation that he desires to submit a definite matter of urgent public importance to the House for discussion, iiaamly -

The negotiations now being conducted by the Government in connexion with the disposal of the Commonwealth’s interest in Commonwealth Oil Refineries Limited, and the detrimental consequences of any such disposal on Australia’s defence and its vital industrial activities.

Is the proposal supported?

Eight honorable members having risen in support of the proposal,

Dr EVATT:
Leader of the Opposition · Barton

– A number of statements made outside the House, andseveral made inside it, have made it quite clear that Cabinet Ministers are at present endeavouring to dispose of the Commonwealth’s interest in Commonwealth Oil Refineries Limited. The interest of the Commonwealth in that company is substantia], being one share more than 50 per cent, of the shares. The company is organized under the company laws of Victoria and pays taxation as though it were an ordinary public company. On the 11th September, the Prime Minister indicated, in an answer to a question in the House, that the Government was about to engage in discussions with the Anglo-Iranian Oil Company, which was formerly known as the Anglo-Persian Oil Company. One share less than half of the shares in Commonwealth Oil Refineries Limited are owned by the Anglo-Iranian Oil Company. The remainder, as I have said, are owned by the Commonwealth. It is important to emphasize at the outset that the controlling interest in the Anglo-Iranian company is owned by Her Majesty’s Government in the United Kingdom. In the last resort, it not. only has a controlling interest through its shareholding and voting power, but it also has on the board of the company two ex officio representatives who have the power of veto on all matters relating to international affairs and defence.

One of the representatives of the United Kingdom Government on the board of the Anglo-Iranian Oil Company is Lord Allanbrooke, who was Chief of the General Staff practically throughout World War II. His presence on the board as the representative of the United Kingdom Government emphasizes the enormous defence importance that the British Government attaches to the company.

The basic oil agreement made by the Australian Government was entered into in 1920, under the Prime Ministership of the present right honorable member for Bradfield (Mr. Hughes). It was extended on two occasions by the Bruce-Page Government, first in 1924 and later in 1926. The agreement prohibits the Australian Government from trafficking in, or dealing with, its interest in Commonwealth Oil Refineries Limited without the consent of the Anglo-Iranian Oil Company, which, according to the agreement, must be given the first option of purchase of the Commonwealth’s shares. I do not think there can be any dispute about the enormous value to Australia of Commonwealth Oil Refineries Limited since its formation in 1920, although there may be some dispute about several aspects of the company’s activities. The total capital investment of the Commonwealth in Commonwealth Oil Refineries Limited was £425,000, which was made in three instalments, the first having been made in 1920 by the Hughes Government, and the other two in 1924 and 1926 by the Bruce-Page Government. The actual dividends alone that the Commonwealth has received from its investment in Commonwealth Oil Refineries Limited have amounted to a sum that exceeds the Government’s capital investment. A total amount of £434,000 has been received in dividends, and having regard to the balance-sheets that have been issued since the company’s inception, the company’s very conservative methods of administering its accounts, and the large sums that are set aside for depreciation, I believe that the Commonwealth’ .5 share of the capital assets of Commonwealth Oil Refineries Limited now exceeds in value £3,000,000. That amount is additional to the return of capital by way of dividends. The capital investment has therefore been returned over and over again to the people, who are the real owners of these shares.

During World War II. the value of Commonwealth Oil Refineries Limited to our defence was tremendous. Because of the link, through the company, with the British Government and the AngloIranian Oil Company, we were able to build up at crucial points, and in very difficult periods during the Pacific conflict, vital stockpiles of petrol.

The directorate of the company is well known. Three of its members represent the Commonwealth, and the remaining four represent the Anglo-Iranian Oil Company. Just as the Anglo-Iranian company is organized to give the British Government reserve power on military matters and the like that affect the company, under our agreement the Australian Government has somewhat similar powers in relation to Commonwealth Oil Refineries Limited. The technical and commercial management of the company is, under its charter, left entirely in the hands of the company itself, and the Government does not interfere in that respect. The Government, however, has reserve powers which are of tremendous importance. One of the representatives of the Commonwealth on the directorate of Commonwealth Oil Refineries Limited since its inception has been a direct representative of the Department of Defence.

Let us examine the reasons that led to the establishment of the Anglo-Iranian Oil Company, because they are analogous to the reasons that led to the establishment of Commonwealth Oil Refineries Limited. The Anglo-Persian Oil Company was a comparatively new company in 1909. The British Government purchased the controlling interest in it through the instrumentality of Mr. Winston Churchill, who was then First

Lord of the Admiralty. At that time he said -

Our ultimate policy is that the Admiralty should become the independent owner and producer of its own supplies of liquid fuel. . . We must become the owners, or at any rate the controllers at the source, of at least a proportion of the supply of natural oil which we require.

I have explained to the House the activities of the Hughes and Bruce-Page Governments in relation to Commonwealth Oil Refineries Limited. The modern world is, from an economic point of view, largely a world of oil, oil reserves and oil resources, and they bear an intimate relationship to defence. The first steps to acquire oil interests for tho British and Australian Governments were taken by three men, Churchill in England and Hughes and Bruce in Australia. “When Mr. Churchill introduced the proposal to obtain for the British Government a controlling interest in the Anglo-Persian Oil Company he pointed out that two gigantic groups practically monopolized the oil business of the entire world. The first was the Standard Oil group in the United States of America, and the second was the combination of the Shell and the Royal Dutch companies, which was a European group. At that time the Anglo-Persian Oil Company was comparatively small in its activities. Mr. Churchill claimed, as we claim in relation to Australia now, that the British Admiralty would from time to time have to experience, “ in common with private consumers, a long and steady squeeze by the oil trust all over the world “. The names of the oil companies have changed on occasions. The Standard Oil Company is no longer known by that title. The American courts dissolved it and it rose again under another name and is active in Australia, as we all know. The name of the Shell Company is now the British Imperial Oil Company. Mr. Churchill said in regard to the Shell Company -

We have no quarrel with the “ Shell “. We have always found th,eni courteous, considerate, ready to oblige, anxious to serve the Admiralty, and to promote the interest of the British Navy and the British Empire - at a price. The only difficulty has been price. On that point, of course, we have been treated with the full rigour of the game. But it seems to me that our relations might become, from our point of view, even more pleasant, if, instead of being compelled, as we might easily be, to accept whatever price they might think it right to charge, we had an independent position.

In that year the Asquith Liberal Government laid down the principle that isembodied in our legislation. At that, time, Mr. Churchill was a Liberal but his proposal was also supported by theConservative party and Labour party in England. He expressed a point of view that might be remembered with, advantage by those who mouth the silly catch-cry of “ socialism “ in every instance of governmental intervention in industry. Such persons completely overlook the fact that all government partiesintervene to prevent exploitation by monopolistic interests or to protect national security. Mr. Churchill stated -

The general principle of partial State ownership has not been impugned and I do not expect that it will be impugned in this discussion. After all, it is only what we do in regard to the ship-building trade of the country by the competition of the Royal dockyards, the general manufacture of cordite, which is a very complicated operation, and the Whitehead torpedoes and in regard tothe general purposes of the navy.

A similar position exists in this country. The Government is not warranted in trying to terminate its interest in Commonwealth Oil Refineries Limited, which has been a profitable investment for it. Why should this permanent partnership between the Australian Government and the British Government, through Commonwealth Oil Refineries Limited and the Anglo-Iranian Company, be terminated? Obviously, the present arrangement is of value from the point of view of defence and international affairs. Why, therefore, should it be threatened? Who would benefit from such a change? Not the people of Australia, but one or two oil companies which want to obtain a free hand over the Australian market.

The oil industry has passed through a critical period in this country. Lord Bruce, when he was Mr. Bruce, pointed out in a public speech that Commonwealth Oil Refineries Limited successfully prevented the major oil companies in this country from putting up the price of petrol. On that occasion he said -

We cannot allow this country to be exploited in regard to one of its most vital commodities.

Naturally, owing to price fixation, the element of competition has not been, so prominent in recent years; but that element could again become prominent. Commonwealth Oil Refineries Limited, if it is energetically administered, can remain the safeguard against the possibility of exploitation by the oil companies which are still showing, most recently by their advertising campaign in respect of one-brand petrol filling stations, that they are attempting to get rid of competition. Above all, those companies are anxious to get rid of competition from Commonwealth Oil Refineries Limited. In articles that have been published recently in the press, it has been suggested that Commonwealth Oil Refineries Limited is of only minor defence importance. Such articles have gone so far as to suggest that the basis of the Government’s holding in Commonwealth Oil Refineries Limited is unconstitutional. It is difficult to take that point seriously, because it has been canvassed for the last 30 years. Although Commonwealth Oil Refineries Limited has incurred the enmity of the major oil companies, the validity of the Government’s holding in it has never been challenged in the courts. Consequently, it is too late for the Government or the press to make suggestions of that kind.

The plain fact is that a permanent and increasing stockpile of oil and petrol is vital to- the defence of this country and in order to meet the requirements of industries that are associated with defence. The Government can effectively stockpile oil and petrol only by turning over such stocks in order to maintain the quality of the stocks. That involves continuous distribution and consumption. Such continuity of operations is of the essence of Commonwealth Oil Refineries Limited. For that reason, the maintenance of governmental control of Commonwealth Oil Refineries Limited is essential to defence preparations. I repeat that in this matter we have had warnings from Churchill, Hughes and Bruce about the possible exactions of private monopoly interests whose natural objective in Australia to-day, as it was in England in 1914, is to reduce, or even eliminate., governmental competition. There is no Australian shareholding, except nominally, in the major oil companies; nor has the British Government or the American Government any interest in them. They are purely private concerns. They do their job in their own way ; but we must do our job in our way. Recent investigations by a congressional committee in the United States of America revealed that the primary objective of the major oil companies is to increase prices of oil and petrol. .

An important aspect of this matter is the extraordinary somersault that this Government has made since January last. On the 17th of that month, the Minister for National Development (Senator Spooner) announced an agreement between the Government and the AngloIranian company for the establishment by the latter of a refinery in Western Australia. The Minister stated that that refinery would supply petroleum products for both the Australian and overseas markets and that Commonwealth Oil Refineries Limited would handle the distribution of its products in Australia. * Extension of time granted.]* It was also stated that that agreement would involve an increase of the capital of the Commonwealth Oil Refineries Limited of £12,000,000, and that the Commonwealth had agreed to provide half of that additional capital. That refinery was to be the largest in Australia. Storage was to be provided for an additional 1,000,000 tons of crude oil, intermediate and refined products. The Minister for National Development said that that provision “ would be an important contribution to Australia’s reserve stocks of petroleum products for defence purposes “. That announcement was of tremendous importance. It revealed an expansion of the refining industry in Australia, which is one of the primary objectives of Commonwealth Oil Refineries Limited under its charter. Under that agreement the AngloIranian company was to undertake the project in Western Australia and Commonwealth Oil Refineries Limited was to be associated with it. That is another example of the vital partnership that exists between the British Government through the Anglo-Iranian company, which that Government controls, and Commonwealth Oil Refineries Limited, in which this Government has a half interest.

The arrangement met with universal satisfaction in this country, but, of course, we know that it did not result from a unanimous decision of the Cabinet. According to reports in a section of the press, it represented a triumph for the point of view of the Postmaster-General (Mr. Anthony) over that of other Ministers, including the Prime Minister, the Minister for National Development and the Minister for. Defence (Mr. McBride), who, apparently, wanted to get rid of the Government’s investment in Commonwealth Oil Refineries Limited. That report was never contradicted by any of those Ministers. Since January last, the Government has turned a complete somersault in this matter, because the Commonwealth was to increase its capital in Commonwealth Oil Eefineries Limited by £6,000,000. Now, the Government’s theory is that it should get rid of its interest in the company altogether. Apparently, the major oil companies have succeeded for the time being in reversing the Government’s original verdict, and have, for the time being, obtained a verdict against Commonwealth Oil Refineries Limited.

It is almost incredible that the Government should dispose of its interest in this organization, which has been successful financially and has been conducted in accordance with a principle that was adopted 40 years ago by all political parties in Great Britain. At present, the major oil companies are conducting an Australia-wide campaign to make it more difficult for individuals to purchase petro] of the brand they desire. I emphasize that Commonwealth Oil Refineries Limited has resisted the encroachments of the major oil companies in that campaign and has actively assisted every independent dealer in petroleum products, in most instances, without making any charge. The objective of the major oil companies is to eliminate the small competitors and, ultimately, to eliminate Commonwealth Oil Refineries Limited. Those companies seek to establish a sort of tied-house system which, in the long run, would result in the establishment of a monopoly; but Commonwealth Oil Refineries Limited has beaten back this aggression in all the States. This Government is propos ing to get rid of the people’s interest, in Commonwealth Oil Refineries Limited, but in 1946 the New Zealand Government entered into an agreement with the AngloIranian Oil Company similar to that of the Australian Government with Commonwealth Oil Refineries Limited. The New Zealand Government adheres to the view that its association with this oil concern is vital to the defence and the security of New Zealand. The British Governmenthas followed the same principle in retaining its interest in the Anglo-Iranian Company. This is a great matter and it is impossible, upon a procedure of this character, to deal with all its ramifications. I have referred to the views of Mr. Churchill and Lord Bruce. The right honorable member for Bradfield (Mr. Hughes) has taken the lead in this matter, and we are well aware that he and other honorable members on the Government side are opposed to the sale of the Commonwealth’s interest in Commonwealth Oil Refineries Limited. In a pamphlet issued yesterday, the right honorable member said, “ We dare not, must not, sell Commonwealth Oil Refineries Limited “. I hope that the right honorable member will be given an opportunity to add to the reasons for the attitude that he has already put forward in that pamphlet and in a recent speech.

Apparently the Government has not yet taken the final step in the disposal of its interest in Commonwealth Oil Refineries Limited. I remind the Government that these assets do not belong to it, nor do they belong to the Parliament. They belong to the people, and the Parliament should have an opportunity to deal with the matter long before any final action is taken. I have no doubt that if an independent vote of this House were taken there would be a great majority in favour of retaining our interest in Commonwealth Oil Refineries Limited. That concern has been a financial and an economic success, so all the usual arguments why a government project must be sold have no value in this case and fall to the ground. Above all, because of the growing importance of oil and oil products in the world, and especially because of their importance in naval and military affairs, it is vital to preserve this link with the British Government through the Anglo-Iranian company in order that the defence interests of the nation may be safeguarded. Whatever division of opinion there has been in Cabinet, let the Parliament speak on the matter and let the Government review this matter and retain this valuable asset in the interests of the defence and security of Australia.

Mr. MENZIES . (Kooyong - Prime

Minister) [11.27].- The Leader of the Opposition (Dr. Evatt) has just made a very interesting speech. It would have been even more interesting if any of his facts had been right. In reality, the proposition that he has put before the House is one of great confusion. Before I point out how true that statement is I desire to say that we have listened with profound interest to the right honorable gentleman working himself into almost a frenzy on behalf of the Anglo-Iranian company. That had all the charm of novelty. Only the other day the Prime Minister of Iran set about confiscating Anglo-Iranian oil under the guise of nationalizing it. I do not remember any protest being made by honorable members opposite, and I do’ not remember them explaining that this was a great company that had the blessing of Mr. Churchill.

Opposition members interjecting ,

Mr SPEAKER:

– Order ! The honorable member for Watson (Mr. Curtin) must not interject.

Mr MENZIES:
LP

– I know that honorable members opposite do not like these facts, but that does not trouble me at all. I remind honorable members that theirs is a new-found enthusiasm, and one that I am sure the Anglo-Iranian company will put down on its record of novelties when it gets a copy of these speeches. It has been said by the Leader of the Opposition first, that the existence of Commonwealth Oil Refineries Limited has certain benefits for the Australian people and that it has been a profitable investment for the Commonwealth. I agree with that. He said, secondly, that the company has had some significance in our defence scheme. I take leave to doubt that very much. Thirdly, the right honorable gentleman said, on evidence which was apparently about 30 years old, that the company had had some influence on the course of Australian prices. It would be very difficult to find during the last quarter century any evidence at all to support that statement. The best proof of the tenuous nature of the argument about defence value, so strenuously advanced, is to be found in the fact that between the 3rd March, 1942, and the 17th November, 1946, a period which the right honorable gentleman will recall, the refinery of Commonwealth. Oil Refineries Limited did not work at all. Therefore, we find that at the very time when we are supposed to have had the advantage of refinery capacity for defence purposes, the refinery capacity was nonexistent. I merely mention that in passing. Now it is quite true that when the Commonwealth originally entered into the investment with Anglo-Iranian Oil Company Limited or Anglo-Persian Oil Company Limited as it then was, certain provisions were set down as being the objects of the company. Their terms were -

  1. the creation and development in Australia of the industry of refining mineral oil;
  2. the erection, equipment and operation of an oil refinery or refineries in Australia for refining mineral oil ;
  3. the sale and disposal of the products of refining mineral oil.

And such other objectsas may be incidental or necessary.

In 1920 the whole emphasis was on establishing the business of oil refining in Australia. During the 32 years that have elapsed since that time there has been not a great deal of refining, and during the crucial period of the war years there was no refining at all. It may well be that the existence of a refining capacity in Australia is of great defence significance, and I should not dream of denying that. That was in the minds of those who made the original bargain; but I believe that the House may have got the impression that the Anglo-Iranian Oil Company Limited is going out of business and Commonwealth Oil Refineries Limited is folding up. When Anglo-Iranian Oil Company Limited first came to Australia and mooted its proposals to the Government it indicated that as far as it was concerned it would be happy with any one of three propositions.

Firstly it was going to establish, a refinery in a big way in Western Australia, the investment in which concern would be of the order of £40,000,000, £50y000,000 or more. Secondly, it indicated that it was going to use the products of that refinery to supply Commonwealth Oil Refineries Limited as a distributing agency, and that Commonwealth Oil Refineries Limited would, when the refinery in Western Australia came into operation, go out of the refining business itself, because it would not be worth while to retain a small plant at Altona when there was a large plant operating in Western Australia. Anglo-Iranian Oil Company suggested that the Commonwealth might come in as its partner in the whole enterprise, and of course the Leader of the Opposition believes that it should have done so. He would have conjured up the £20,000,000 or £25,000,000 required for the refineries and the necessary share in the working of Commonwealth Oil Refineries Limited. We had our choice and we decided that we should not go into the refinery business. Having discussed the matter with Anglo-Iranian Oil Company Limited we decided that we should accept in principle its second proposal, which was that we should contribute our share of the increased capital in Commonwealth Oil Refineries Limited. The third alternative was to go out of the business altogether. The decision announced in January was quite clear. It was a Cabinet decision that we should contribute our share of the increased capital of Commonwealth Oil Refineries Limited. At that point, the parties carried on discussions and legal documents were in course of preparation.

When the legal documents had been prepared, it appeared from them - and they represented, the true substance of the discussions between the parties - that the operations of Commonwealth Oil Refineries Limited in future would, in fact, have nothing to do with refining and that the organization would be a distributing body that would buy its products from the Anglo-Iranian Oil Company Limited. In other words, it then appeared that Commonwealth Oil Refineries Limited was to be placed in a position which it would be very difficult indeed to distinguish from that of distributors of many other important commodities in Australia. Therefore, the law officers of the Government were asked to consider whether it would be within the capacity of this Parliament to appropriate further money for an enterprise of that kind. That is a question of law and I shall not debate it here. It did not come to me for decision. That single question was remitted to the law officers of the Crown, and both of them advised that the Parliament could not validly appropriate money for the purpose that I have described. The Government ther said, “ All right, but we will not rest on this opinion”, and it took opinion from very eminent outside counsel.

Mr Pollard:

– Who were they’

Mr MENZIES:

– Having obtained opinion from very eminent outside counsel-

Mr Pollard:

– Who were they? They might be eminent in the opinion of the Government but not in the opinion of the Opposition. The right honorable gentleman knows how lawyers differ.

Mr SPEAKER:

– Order ! The honorable member for Lalor (Mr. Pollard) must remain silent.

Mr MENZIES:

– I do not mind telling the honorable member. The law officers of the Crown were the AttorneyGeneral (Senator Spicer) and the Solicitor-General, and the outside counsel was Mr. Barwick, Q.C., of Sydney. The Government obtained opinions from the best sources available to it, and was advised that it was not within the capacity of the Parliament to appropriate money for investment in a concern that was to be a mere distributor of petroleum products. I shall not argue about that advice.

The Government promptly and properly placed the result of those opinions before Anglo-Iranian Oil -Company Limited, with which it has had a long and pleasant association. It referred the opinions to the company both through its representatives in Australia and through its representatives in London. I asked the Minister for Immigration (Mr. Holt) to go to London, as he was familiar with the negotiations that had been conducted, so that he could discuss the matter on the spot. The company has completely accepted the view put forward by the Government.

Mr Keon:

– Surely the right honorable gentleman is not astonished by that?

Mr MENZIES:

– Apparently the honorable member would have it that the representatives of the company are fools who do not know their business. He cannot have it both ways. He cannot eulogize the company in one breath and a ttack it in the next breath.

Opposition members interjecting,

Mr SPEAKER:

– Order ! I ask the House to come to order. Interjections are too numerous and most of them have no bearing on the subject under discussion. If the Prime Minister is heard in silence, other honorable gentlemen may expect similar consideration.

Mr MENZIES:

– The position disclosed in that way left two main courses of action open to the Government. First, it could introduce to this Parliament legislation to provide for an increased appropriation of capital and, at the same time, tell this Parliament that it believed, on. the best advice it could obtain, that the legislation would be invalid. That would be a ridiculous position, for any government to get into. Secondly, it could deal with the matter in the light of the facts of life, and the facts of life in this instance are that it can either dispose of the Commonwealth’s holding or decline to increase that holding. The Leader of the Opposition has assumed that the Government is selling its shares in Commonwealth Oil Refineries Limited. I make no such assumption, because, I point out, two further courses of action remain open and are at present the subject of intimate discussion between representatives of the Government and the company. I say only that, in the light of the facts, the time is premature for anybody to say that the Government is selling its shares in Commonwealth Oil Refineries Limited.

The real problem, to which we must address ourselves primarily, is whether or not the Government should buy something more and increase its capital investment in Commonwealth Oil Refineries Limited, which, in the new circumstances, is to become merely a distributing organization. Two other matters deserve mention. The point has been made that Commonwealth Oil Refineries Limited gives to the country the benefit of refinery capacity. I have demonstrated that it is an irrelevant point. In the first place, any refining that is to be done in Australia by the AngloIranian Oil Company Limited will be done at the great refinery that the company is establishing, quite independently of the Government and with its own resources, in Western Australia. Australia will have the benefit of the activities of that refinery. In the second place, three other companies are at this moment either about to erect or making plans to erect refineries in Australia. The refining capacity that will result from the four projects is expected to be 6,000,000 tons annually and, when I point out to honorable members that the total consumption in Australia last year was 5,500,000 tons, they will realize that, over the short period of time for which this Government will have been in office, the refining capacity of Australia will have been raised to rather more than 100 per cent, of our rate of consumption. Therefore, if it be of the essence of defence that we should have refining capacity in Australia, it is bound to be said of this Government that it has taken steps never taken before to encourage companies to establish refineries in Australia.

Having listened to the Leader of the Opposition, I am not sure that his greatest trouble is that the Commonwealth investment in Commonwealth Oil Refineries Limited turned out to be a profitable investment. He has said that because it has been a profitable investment, the capital value of the Government’s shares has risen to a certain point. I say to him that, if the Government decides to sell its shares in Commonwealth Oil Refineries Limited, it will not only tell this House about its decision very promptly but also will not sell the shares at bucket shop prices. Hxtension of time granted.] The position of the Government in this matter, as in other matters, is perfectly clear. If we decide, in the exercise of our judgment and, in this instance, in the light of clear legal opinion, that we shall sell ‘ our shares, we shall sell them for what they are worth. We shall not give them away. But I emphasize that the decision on whether those shares shall be sold or not depends upon the negotiations that ,are now current. Therefore, it is premature for persons who know nothing about the course of those negotiations to speculate about their result. The Leader of the Opposition has made a false assumption concerning the Government’s actions. He has made a grievous mistake in relation to the oil refining capacity -of this country and its significance. Finally, he has beaten himself back to the proposition that the Government ought to have an interest in Commonwealth Oil Refineries Limited so that it can require stocks of petroleum to be maintained in Australia. There are two answers to that. First of all, under this refining programme that is proceeding in Australia in our time, there will be more capacity than was ever dreamed of when the Chifley Labour Government, of which the right honorable gentleman was a member, was in office. Secondly, he himself should remember that the preceding Labour Government introduced legislation requiring the oil people to carry stocks of a certain kind. That legislation was supported by us, and is in operation. The government of the day, backed by the Parliament of the day, can alter that act and, at its own sweet will, order the oil people to carry increased quantities. Such action can be taken whether the Anglo-Iranian Oil Company Limited is a partner of the Commonwealth or acts entirely independently of the Government, as it does in some countries. The whole of this case falls to the- ground. It is premature, it is based on error, and it will not stand examination.

Mr KEON:
Yarra

.- In 1933, the present Prime Minister (Mr. Menzies) appeared before the Royal Commission on Mineral Oils and Petrol and other Products of Mineral Oils. The royal commision had been appointed to investigate the monopoly control of petrol in this country, and the present Prime Minister held a brief for the Shell Oil Company of Australia Limited. He was still arguing that brief on behalf of the oil company in his speech this morning. While I am referring to that royal commission, let me examine the position that was established by it. I am sure that the House will be deeply interested in this matter. The royal commission established that the oil supplies arranged for this country were dependent upon and controlled by two small groups. It found that -

Crude petroleum is a world staple product, and for many years there has been a struggle between large-scale organizations to secure concessions or control of areas and sources of production.

It also found that -

Profits may be made wholly in the country of export, and little or no profit be shown in the books of account kept by the marketing unit in the country in which it trades.

The remainder of the report is in a similar strain. The royal commission established in 1933 the position that has lately been established in the United States of America, namely, that the oil supplies of Australia, apart from Commonwealth Oil Refineries Limited, are completely under the control of, and are dominated by, a small group of monopolists who control the oil supplies and oil production of the world. The royal commission reached its findings in 1933, but exactly the same position exists to-day. Only last month, the United States Department of Justice issued a criminal indictment against five major oil companies in the United States of America, and used the very words that were used by the royal commission in relation to the oil companies controlling supplies of petrol in Australia. This demonstrates that the position to-day is exactly as it was in 1933, when it was examined by the royal commission. Australia is completely dependent, for defence and industrial purposes, upon supplies of oil from overseas. Those supplies are controlled by monopoly groups operating without any nationality and morality, and our only protection, in the present as it was in the past, is Commonwealth Oil Refineries Limited. We have ample evidence of the stand-over methods adopted by those monopoly groups. Only a few weeks ago the State Ministers in charge of prices control were told by the spokesmen for the oil companies that if they were not granted an extra 3d. a gallon, they would not i i oliver petrol to the country districts. That is an example of the stand-over methods that have always been adopted by the oil companies towards people who are dependent upon them for supplies.

Conversation being audible,

Mr Mullens:

– I rise to order. I have supreme difficulty, Mr. Speaker, in hearing the informative speech of the honorable member for Yarra because of the extraordinary levity shown by some members of the Austraiian Country party, who would be better occupied in paying attention to this rural problem.

Mr SPEAKER:

– Order ! There has been too much levity, which has not been confined to one side or one section of the chamber, ever since the House assembled this morning. The House should, take control of itself, and allow the debate to proceed in an orderly m annex.

Mr KEON:

– Our national economy, and defence preparations, are dependent upon oil supplies from overseas. As I have shown, those supplies are controlled by world oil monopolies, which are in a position to hold this country to blackmail at any time they like to choose in relation to prices and supplies. We have no answer to them, other than the answer that can be provided by a company such as Commonwealth Oil Refineries Limited. Everybody knows what the position was prior to the establishment of that organization. Why did a United Australia party government - the forerunner of the present Liberal Government - establish Commonweal th Oil Refineries Limited? Does the Prime Minister tell us that a former Prime Minister, Viscount Bruce, the right honorable member for Bradfield (Mr. Hughes) and all the members of the United Australia party were rabid bolsheviks and socialists at the time when the Government established Commonwealth Oil Refineries Limited? They established that organization in the national interest, because Australia was being bled white by the overseas oil monopolists which, according to the submission of the United .States Department of Justice are still in existence and are exploiting their own country and any other country they possibly can. The evidence of their machinations has been adduced, not in 1933, but in 1952. Yet the Australian Government proposes to get rid of Commonwealth Oil Refineries Limited, which is our only protection against the activities of those monopolies.

The Prime Minister has informed us that the Government proposes to dispose of Commonwealth Oil Refineries Limited because it exists illegally. I invite honorable members to consider the position. A United Australia par tj’ government established an illegal situation, and the present Government announces that it has discovered that such an act wa? illegal. Everybody knows perfectly well that the. Government could just as easily have carried on Commonwealth Oil Refineries Limited, as it is being carried on at the present time, by increasing ito* capital, allowing the operations of the refinery to continue, and’ purchasing shares in the organization that is being established by the Anglo-Iranian Oil Company Limited for the erection of another refinery. The contention that the existence of Commonwealth Oil Refineries Limited is unconstitutional is absolute nonsense, and ;< will not hold water “ for five minutes. Is it not amazing that the constitutional aspect was not discovered until after Cabinet had made its decision regarding Commonwealth Oil Refineries Limited?

Another argument used by the Prime Minister was that there was no evidence that the existence of Commonwealth Oil Refineries Limited had any effect on the price of petrol. It may similarly be said, “A policeman is on this beat. There have been no robberies on the beat, and, therefore, we should get rid of the policeman “. The Prime Minister is using the same kind of argument in an endeavour to justify the decision of the Government to get rid of Commonwealth Oil Refineries Limited. He says, in effect,, “ Since Commonwealth Oil Refineries Limited has been established, it has, by and large, charged the same prices as have been charged by the other oil companies “. We are entitled to believe that the existence of Commonwealth Oil Refineries Limited has deterred the other oil companies from increasing their prices. What have the major oil companies done in the United States of America and other countries where they are in a position to adopt blackmail methods, and charge whatever prices they like to charge? Commonwealth Oil Refineries Limited has been successful, and has been able to act as the policeman. The Prime Minister’s own evidence that prices have not run riot in Australia since the establishment of Commonwealth Oil Refineries Limited is ample demonstration of our claim that it should not be touched, and should be kept in existence for defence reasons, and in the interests of the national economy.

The Prime Minister also discussed refining capacity, I leave aside his argument about the refining that is now being carried out in Australia, and shall consider what the position will be if Commonwealth Oil Refineries Limited ceases to exist. At any moment, the major oil monopolies may refuse to provide crude oil for use by refineries in Australia, consequently we may have refining capacity, and no crude oil to be refined. At least, we had some protection under the agreement with the Anglo-Iranian Oil Company Limited, which was required to supply Australia with, a certain quantity of crude oil annually. If that protection is removed, it will not matter what kind of refining capacity or plant the oil companies have in Australia. They will be able to do as they threatened to do a few weeks ago, when they told consumers of petrol in country, districts, “ If we do not get an increase of price, you do not get any petrol “. When Commonwealth Oil Refineries Limited is out of the road, the major oil companies will be able to say, “ If we do not get our price, you do not get any crude oil “. The contention that the existence of refining facilities provides us with all the protection we require does not bear critical examination.

When we study the defence, aspect, we see that this Government has destroyed our only native supply of oil at Glen Davis, which, at least, was capable of extension, and was producing petrol. Having destroyed ‘ that, it proposes to destroy the only legal right that Australia has to claim supplies from any oil company in the world. It is fantastic te suggest that we shall still be in a favorable defence position if Commonwealth Oil Refineries Limited is wiped out. The oil companies owe no loyalty to any country or to any Prime Minister. They owe no loyalty to any defence system in any part of the world. They are completely amoral, and have demonstrated that they are prepared to take advantage of any difficult situation involving the countries to which they nominally owe allegiance, in order to increase the prices of their products.

Mr SPEAKER:

– Order ! The honor able member’s time has expired.

Mr CASEY:
Minister for External Affairs · La Trobe · LP

.- I felt sorry for the Leader of the Opposition (Dr. Evatt) when he was speaking because I think that, clearly, and possibly for a variety of reasons, he had had no time to absorb his brief on this subject. He made the mistake - and I am not saying that it is not understandable - of saying that there was some connexion between the refinery project of the Anglo-Iranian Oil Company Limited in Western Australia and Commonwealth Oil Refineries Limited. The Prime Minister (Mr. Menzies) dealt with that matter in the most effective way by simply stating the fact that there is no connexion between Commonwealth Oil Refineries Limited and the proposed Anglo-Iranian refinery. The construction of that refinery will be proceeded with whatever happens in the re-arrangement of the capital of Commonwealth Oil Refineries Limited. That refinery will be an enormous enterprise to deal with no less than 3,000,000 tons of crude oil. A very large quantity of petrol and petroleum products generally will be derived from that project. It will employ about 1,000 men and will be entirely an Anglo-Iranian Oil Company Limited project, o Commonwealth Oil Refineries Limited has been almost entirely a distributing entity. That fact is reflected in the figures relating to the Commonwealth Oil Refineries Limited organization. Its employees in the immediate past totalled 1,960 of whom only 41 were employed in the refinery at Altona which was established 28 years ago and is now almost completely out of date. Throughout its life, from 90 to 95 per cent, of the function of Commonwealth Oil Refineries Limited has been that of a distributing company.

Mr Calwell:

– And its validity has never been challenged.

Mr CASEY:

– No, because money was found for it at a time when it was available for development purposes. Commonwealth Oil Refineries Limited was founded originally with the intention of development towards a refining company, but that development did not take place to any substantial extent. A notional refinery was established at Altona, but I do not expect that it will last many more years. The Leader of the Opposition sought to draw a parallel between the association of Anglo-Iranian Oil Company Limited with the British Government, and with Commonwealth Oil Refineries Limited and the Australian Government. The parallel is wholly unreal. The Anglo-Iranian organization is an enormous one that is engaged in drilling for oil, finding oil, and refining, marketing, and shipping oil for itself, whereas Commonwealth Oil Refineries Limited has been only a relatively minor retailer of petroleum products. It was refreshing to hear the right honorable gentleman present the AngloIranian Oil Company Limited and its predecessor, the Anglo-Persian Oil Company Limited as one of the great capitalist enterprises of the world.

Dr Evatt:

– The British Government controlled it.

Mr CASEY:

– Yes, indeed, the British Government owned a proportion of it. But if the right honorable gentleman had delved further into history, he would have discovered that the AngloPersian Oil Company Limited was initiated by an Australian, William Knox D’Arcy, who came from Rockhampton in the electorate of the honorable member for Capricornia (Mr. Pearce). It has had an honorable history and has done great things, but to compare the AngloPersian company and the Anglo-Iranian company with Commonwealth Oil Refineries Limited and keep a straight face is absurd. There is no parallel. As for the future of Commonwealth Oil Refineries Limited, it will continue to be solely a distributing company for oil products. I have no very fixed ideas against the investment of government funds in commercial and other enterprises. I believe that those matters have to be determined on the merits of each case. But I believe, with honorable members on this side of the House, that there must be a sound reason before government funds are invested in commercial or non-political enterprises. The public interest must be served in one way or another. If there is a monopoly which is against public interest, if the people are being exploited by a monopoly and there is a possibility of controlling such exploitation by means of government investment, the reason is a good one, but the investment of public moneys in commercial enterprises merely for the sake of so doing has no function or purpose at all. That has been recognized in recent years by the Labour party in more sophisticated Labour circles in Great Britain, United States of America and Canada.

Mr Calwell:

– What about the defence argument ?

Mr CASEY:

– The defence argument has been answered by the Prime Minister. Tt is answered by the existence of a refinery and not a simple distributing organization. It might be said, and not in a sense derogatory to Commonwealth Oil Refineries Limited, that it has been equivalent to a scries of small grocer shops. The distribution of oil can be done with great ease. Refining is the difficult, technical, highly expensive job and it requires decades of know-how. In addition to Anglo-Iranian Oil Company Limited, the ‘Shell, Caltex and StandardVacuum organizations are to establish in Australia refineries with cracking plants and all . the accessories that are really useful in defence. The establishment of those important defence instrumentalities is being encouraged by this Government. The distribution of products in peace and war is simply a commercial job. Those are the facts of the case. The Government would have invested in a distributing company if a constitutional disability had not arisen. That is shown by the provision of £1,500,000 for the purpose in the budget before the constitutional disability appeared. . A new era is dawning. In the past, oil has always been refined where it was mined. The trend of thought now is towards the decentralization of refining from the oil-fields to the countries in which eventually the oil products will be used. We shall be beneficiaries of that system. Four of the major oil companies are planning to establish large-scale refineries in this country. When they are completed, they will be able to refine 6,500,000 tons of crude oil in Australia. That is practically equal to the whole of the present Australian consumption of petroleum products, and the output will, grow. To hear the honorable member for Yarra (Mr. Keon) one would have thought that the Government had turned down the business of finding and refining oil in Australia. Until oil is found in Australia, we have to import it. Four great groups are to erect refineries in Australia to deal with crude oil from overseas. The attitude of the Opposition is pathetic. It has taken this action entirely for political purposes. Its case has no validity. The right honorable gentleman has exposed himself as one who really does not understand the proposition that he has advanced. It is difficult to believe that he confused refining and distribution. There is no reason why, from the standpoint either of defence or of prices control, this Government should maintain its interest in Commonwealth Oil Refineries Limited at the present level.

Mr Calwell:

– So it is going to sell.

Mr CASEY:

– I have not said that we are going to sell. I have said that there is nothing to be gained from a maintenance of that interest. As the Prime Minister has said, that decision has yet to be made. The honorable member for Yarra (Mr. Keon) said that, under present circumstances, the Government’s interest in Commonwealth Oil Refineries Limited enabled it to control prices. A system of prices control is in operation in all the States.

Mr SPEAKER:

– Order! The Minister’s time has expired.

Mr DALY:
Grayndler

.- Mr. Speaker-

Motion (by Mr.Eric J.Harrison) put -

That the business of the day be called on.

The House divided. (Mr. Speaker - Hon. Archie Cameron.)

AYES: 54

NOES: 45

Majority . . 9

AYES

NOES

Question so resolved in the affirmative.

page 1700

NATIONAL WELFARE FUND BILL 1952

Second Reading

Debate resumed from the 27th August (vide page 638), on motion by SirArthur fadden -

That the bill be now read a second time.

Mr TOM BURKE:
Perth

.- This bill proposes a major alteration of the system of financing social services in this country. The Treasurer (Sir Arthur Fadden), in his budget speech, said - lt is proposed to amend the relevant legislation to provide that the amount to be appropriated to the National Welfare Fund in this and subsequent years shall be equal to expenditure from the fund. Under present arrangements, the annual appropriation to the Fund is related to variations in collections of payroll tax.

I point out that the arrangements to which the right honorable gentleman then referred were made only last year by this Government.

Conversation being audible,

Mr SPEAKER:

– Order ! If the House does not come to order, I shall vacate the chair. The proceedings of the House since we met this morning have been no credit to it.

Mr James:

– It is all on your right.

Mr SPEAKER:

-Order ! That is not so. The honorable member for Hunter (Mr. James) will keep quiet.

Mr TOM BURKE:

– Formerly, taxpayers were required to pay a social services contribution, the proceeds of which were allocated to the National “Welfare Fund. That contribution was hypothecated to provide a basis for the payment of social services that were then in operation and other social services, as the country was able and the Parliament was willing to provide them. “When the Treasurer introduced the bill under which that system was altered, he said that the Government sought only to simplify taxation procedure, and he assured the House that the Government would maintain the general position that then existed. But now, a major alteration of the method of financing social services has been proposed. The Treasurer, in his secondreading speech on this bill, directed attention to the fact that he intended to alter the arrangements for financing social services. In the course of the speech, he said -

Under the formula, the total appropriation to the Fund is directly related to pay-roll tax collections; that is, to aggregate earnings This direct relationship could mean too great a contribution from revenue under some condi tions, such as, for example, when aggregate earnings are rising because of a larger volume of employment or rising rates of wages and salaries, and expenditure from the Fund is remaining relatively stable or even declining.

That is the point that I propose to cite now. He there attempted to justify the departure by citing a set of conditions that differ from actual existing conditions. He said’ that if, for example, aggregate earnings were to fall, the contribution from revenue to the . fund would fall at a time when expenditure from the fund might be heavy. The Treasurer and the Government seek to justify on a suppositional basis their departure from a practice f.hat they accepted as recently as last year, when they undertook not only to maintain the fund but also to increase it so as to provide solidity and security in relation to future social services. My colleagues and I propose to show that this departure is not to be made for the purpose of ensuring a healthy condition in the fund. “We propose to demonstrate that the reason for the Government’s sudden action is to enable it to take a large sum from moneys that would be ordinarily payable into the fund, and pay it into Consolidated Revenue to meet the general expenses of the current year. That action is in line with the other actions of the Government ever since it gained office. The Government’s policy lias contributed largely to financial uncertainty, confusion ,and the growing complexity of financial and taxation affairs in this country. I shall have more to say on that point at another stage.

In order to understand this issue thoroughly it is necessary to go back to 1943, when the original legislation was introduced by the Prime Mnister and Treasurer of the Labour Government, Mr. Chifley. He introduced a proposal for the establishment of a national welfare fund. In his secondreading speech on the 11th February, 1943, he said, according to Hansard of that date at page 555 -

The chief purpose of this bill is to establish a national welfare fund to finance the scheme. The fund will take the form of a trust account under Section C2a of the Audit Act 1901-1934.

He then proceeded to explain the formula that had been adopted to finance the scheme as it then was, and as it was proposed to be continued. Concluding, he said -

These balances will not be allowed to remain idle, but will be invested and will provide a useful source of temporary finance for war purposes, which will be replaced by permanent borrowings when the moneys are required later for welfare purposes. Interest from the investment of any moneys standing to the credit of the National Welfare Fund will be credited to the fund.

The’ attitude of the. present Government, which was in Opposition at that time, is best summed up in a speech by Sir Frederick Stewart, the then honorable member for Parramatta, on an amendment that had been moved. He said - This is not the time for providing for a rainy day. As I pointed out in my secondreading speech, this is the rainy day.

As far as I can discover, the Opposition of that day voted en bloc against the proposal to establish the fund. They used the same old worn-out argument that conservatives have always used, which is that the present is not the appropriate time to make an advance, that advances of any kind should be deferred. So it has always been and apparently always will be. According to conservatives there is never a time when advances may be made. The present Government is making a departure in relation to the continued payment into the fund of amounts that would strengthen the fund as the late Mr. Chifley originally intended it should be strengthened. The Estimates for the current year show that it is expected that a total of £40,000,000, which is a substantial increase over last year’s actual receipts of £37,169,996, will be received from pay-roll tax. This is significant when we bear in mind the fact that the formula for payments into the National “Welfare Fund is based on pay-roll tax contributions.

Under the formula established recently the Government took £103,000,000, which was the amount then paid out in social services, as the basis for the amount of the payments that were to be made into the fund. Working on that basis the Government estimated that an additional amount over and above the pay-roll tax contributions, would be required to finance the continuance of payments into the fund. The future payments into the fund, with that formula discontinued, are liable to fluctuate. The revenue from pay-roll tax will naturally increase if wages rise as a result of basic wage adjustments or other causes. The continued inflationary situation, allied with the continued high level of employment and overtime payments, will mean that the estimate of £40,000,000 may well be exceeded. On the Government’s own formula pay-roll tax should yield this year a total of £184,000,000. The Government proposes to pay into the National Welfare Fund an amount of only about £164,000,000, but the fund’s reserves will not be increased by that payment. The only net addition to the fund will be interest on its securities, the receipt of which Mr. Chifley foreshadowed when he introduced the legislation. An amount of £20,000,000 out of the £184,000,000 that will be collected in pay-roll tax will be put into the Consolidated Revenue Fund for general purposes. That is the only reason for the Government’s departure from this recently accepted system.

We say that if that be the Government’s intention, it should be frank with the House and the country about it instead of sheltering behind the proposition that at some future stage the amount paid into the fund under the existing formula might not be sufficient to meet disbursements. In such an eventuality it would bc very easy for the Government to devise a new formula or to make additional contributions to the fund. Instead of doing that the Government, through the medium of the Treasurer, has lamely, and, I think, deceitfully-

Mr SPEAKER:

– Order ! The honorable gentleman may not use the word “ deceitfully “ in that connexion.

Mr TOM BURKE:

– I understand the limitations of the English language, Mr. Speaker.

Mr SPEAKER:

– Order ! The limitations of the English language are very wide. The honorable gentleman must withdraw the expression.

Mr TOM BURKE:

– That is so, but knowledge of it is not always so wide. I withdraw the word “ deceitfully The Treasurer has misled the House and .the country in relation to this matter. He has claimed that his reason is a fear that at some time in the future payments under the formula may not be sufficient to meet disbursements from the fund. The clear implication is that the Government is seeking to use immediately for other purposes revenue from ordinary contributions to the pay-roll tax. By so doing it may jeopardize the future of our social services system. If the Treasurer’s alleged fears are justified, then they must foreshadow a diminishing economy in this country. There is only one condition that would cause a reducing amount to be paid into the fund. That is diminishing industrial activity. The Government alleges that it has as great a horror of unemployment and depression conditions as has any member of the Parliament. If that be the case, then it has a bounden obligation, in pursuance of its professed beliefs, to maintain the level of business activity and employment and to assist in the increase of the working population by natural means and immigration. Action on those lines would lead to an increase of the amount available to the fund under the formula, and the fund could then confidently be expected to meet requirements. We say that the Government has not been frank with the House and the country in its approach to this matter, and for that reason the Opposition opposes the bill and intends to vote against it.

The Treasurer said in the course of his second-reading speech -

In further examining the matter, the Government has had in mind that excesses of Income over expenditure have established, in the National Welfare Fund an adequate reserve for the continued payment of social services and health benefits, for which purpose the fund was originally established. During the four years that ended on the 30th June, 1952, the balance in the fund increased by £115,000,000 to £185,000,000.

We say that, in view of the great cost of social services, that amount of £185,000,000 does not provide a large balance, because an amount of £165,000,000 is expected to be paid out in social services in the current year.

Mr Freeth:

– What would the honorable member suggest as a reasonable reserve ?

Mr TOM BURKE:

– If the honorable member for Forrest (Mr. Freeth) were to bring down his contributory social services scheme, which he told the electors of Forrest in 1949 he would take back to them in 1952, the figure would have to be something like ten times £185,000,000. It is not possible, however, to speculate on even the amount of reserve necessary. I point out that in order to give the social services that the honorable gentleman talked about in his election speeches, the fund would have to be vastly in excess of the present figure, lt might reasonably be argued that the fund should have in reserve twice at much as it requires for its operation in each current year. The Government believes that those allocations will be adequate to make provision for social services commitments. The balance of the fund is to be loaned to the Government by means of treasury-bills.

As the Treasurer has pointed out, a part of the fund has not been used to finance general governmental commitments. Such a practice is not regarded as being normal, but the Parliament accepts it at a time, such as the present, when taxes are abnormally high. However, the Treasurer and his colleagues were most trenchant in their criticism of the Chifley Government for having adopted that practice. During the general election campaign of 1949, they said that they would refuse to resort to that practice, but instead, would establish a fund that would be adequate to meet expenditure on social services commitments. Having regard to present expenditure on social services, the basis upon which the Government now proposes to make provision for future expenditure under this heading will be inadequate. Whilst, presumably, a large proportion of the cost of the new health scheme that has yet to be introduced will be met by contributions through insurance societies’ funds, nevertheless the Government will be obliged to finance that scheme to a substantial degree. Having regard to the present rate of expenditure on social services and the additional benefits that have yet to be provided, the commitments of the fund are likely to exceed the amount that will be made available to it under the proposed new formula which is to be directly related to collections of pay-roll tax. A decrease of collections from that source would not only result in a decrease of the revenue available to the fund, but also be accompanied by decreases of revenue from all sources, including income tax, sales tax and all classes of charges that are made for revenue purposes. Consequently, in a situation such as that which the Treasurer claimed to have envisaged in evolving this proposed formula, the Government would be called upon to meet increased expenditure on social services from a decreased total revenue.

The Government is not being frank with the Parliament and the people in this matter. It is disguising its real intention in introducing this measure. During the current financial year, it is proposed to pay into Consolidated Revenue a sum of £20,000,000 that should be paid into the National “Welfare Fund, which the Parliament established as s trust fund for the specific purpose of meeting expenditure on social services. That amount will increase to £25,000.000 or £30,000,000 annually, if inflation should make another spurt and cause further increases of the basic wage. However, such a proposal conforms to the pattern of this Government’s administration of public finances. In yet another instance, it is now proposing to use for general purposes revenue that will be collected for a specific purpose. Yet. present Government supporters in th, past were loud in their condemnation of such a practice. The Government must be indicted for its mismanagement o* public finances to such a degree that it is obliged to resort to makeshift measures of this kind in order to extricate itself from temporary difficulty. As a result, it will assuredly land itself in still greater difficulties in the future. In addition, the Treasurer sought to mislead the House and the country.

Mr Turnbull:

– I rise to order. Is not the remark of the honorable member that the Treasurer sought to mislead the House, unparliamentary?

Mr SPEAKER:

– I have allowed previous speakers to use the word “ mislead “ ; but the Standing Orders make it clear that an honorable member . shall not impute bad motives to any other honorable member. The honorable member should withdraw the word “ sought “.

Mr. TOM BURKETT, shall withdraw the remark that the Treasurer sought to mislead the House and say, instead - it is a graver indictment - that the Treasurer has unconsciously misled the House. It is clear that the right honorable gentleman is not fully conscious of hi3 responsibilities and does not realize the gravity of decisions that he is called upon to make in his official capacity.

Mr Turnbull:

– T/hat is only the honorable member’s opinion.

Mr TOM BURKE:

– It is also the opinion of the majority of the people. If the honorable member for Mallee (Mr. Turnbull) is so keen to come to the defence of the Government, I invite him to test his confidence in the Government by persuading it to seek the verdict of the people at the earliest opportunity. The Government, in order to meet its current commitments, is departing from sound financial practice by diverting to Consolidated Revenue money that would normally be set aside to meet future contingencies. By that means it will not solve any of its difficulties, but will merely put off the day of reckoning. Of course, when that day inevitably comes, the Government will be ejected from office. It may be some consolation to honorable members opposite to know that they will not be in office f,or much longer and thus will not be called upon to solve the difficulties that must arise from their present policy. Nevertheless, they are. acting in a reprehensible manner by failing to honour the promise that they gave to the people that they would establish an adequate fund to meet expenditure on social services. For the reasons I have stated, the Opposition opposes this measure.

Mr BLAND:
Warringah

.- As I- have done on other occasions, T confess that I am obliged to the honorable member for Perth (Mr. Tom Burke) for having presented to the House a reasonably accurate statement of the history of the origin of the National Welfare Fund and of the ideas that actuated those who established it. But I am at odds with him in respect of the conclusions that he drew from that statement. I propose to point out the fallacies that exist in much of what he said. I pass over his allegations that the Treasurer (Sir Arthur Fadden) has misled the House and that the Government is now proposing to do something that will upset the whole scheme of social services. If there is any way in which we shall place the National Welfare Fund in jeopardy it will be by following the example of the Australian Labour party in its policy of refusing to face the fact that the national income from time to time is a certain amount. Honorable members opposite delude themselves when they believe that the national income is the same to-day as. it was two, or three, years ago. The only way in which we can place our economy on a sound basis is by recognizing that the national income to-day is only half the amount he suggested it is. We shall place our whole economy in jeopardy unless the Opposition is prepared to support the Government in readjusting it on the basis of our new cost structure. The ideas that the honorable member enunciated contained a. serious fallacy. He pointed out that the Treasurer had said that tho total appropriation to the National Welfare Fund at present was directly [elated to pay-roll tax collections, that is, to aggregate earnings, and that this could mean too great a contribution from revenue under certain conditions, whilst under a different set of conditions, such as would exist if aggregate earnings were falling, the contribution from revenue to the fund would not be enough when expenditure from the fund was heavy.

The need to avoid the danger in the ideas that the honorable member enunciated has been burnt into the history of public finance in England during the last 100 years. There is one general principle in respect of public finance. That is that all revenue raised by a government should be paid into one consolidated fund and that all expenditure should be met from that fund. The establishment of separate funds in the way that the honorable member indicated not only has made it possible for him to make the absurd statements that he has made, but also has caused honorable members generally to be inundated by letters from pensioners’ organizations in which they attribute the most absurd motive to this Government in introducing this measure. Under this bill the Government proposes to do precisely what should be done. Every one knows that the system of assigning certain revenue to a particular fund has never been satisfactory. I am sure that the honorable member for Macquarie (Mr. Luchetti) will admit that such a system has never been accepted as being satisfactory in respect of the National Aid Roads and Works Fund to which all collections from petrol tax are paid. When revenue from certain sources is paid into a special fund, the difficulty arises that the Government cannot know whether it will be sufficient or in excess of the requirements for which it is collected. The only sound method is to pay all revenue into one consolidated f und and to meet all governmental expenditure from that fund.

Mr Luchetti:

– Local government authorities do not share the view that the honorable member has just expressed with respect to federal aid roads assistance.

Mr BLAND:

– In any event, sovereign bodies can act along certain lines regardless of what subordinate agencies may be required to do, and it has been the practice of sovereign States to act in the way that I have indicated. I remind the honorable member for Perth that the nation must meet its total disbursements out of the total income of the community at any given time. Unlike private individuals, governments cannot simply put aside something for a rainy day because they must meet their expenditure out of their income. On this matter, I recommend honorable members to read the report of the Auditor-General in which he refers not only to his own view but also to the view that has been expressed by the High Court. He points out that the integrity of parliamentary control of finance is destroyed when the Government is committed to obligations and the Parliament has no alternative but to accept them. That places the Parliament in a false position.

Mr BLAND:

– .The statement that Mr. Chifley made when he introduced the bill to set up the National Welfare Fund is its own condemnation, and we should be careful not to follow a practice which is a departure from the financial rectitude that we should be careful to observe. Mr. Chifley created a fund, and said that it could be used readily for purposes that the Government might deem wise without the knowledge of Parliament and without recourse to treasurybills or bank credit. He said that when it was necessary to recoup the fund, that could be done by borrowing. That kind of diversion of funds to specific purposes is one of the commonest and also one of the worst practices in public finance, because there are times when the vast alleged balances in the funds go astray. It is within the knowledge of many honorable members that at one time a New South Wales Treasurer resorted to the practice of using the money in governmentcontrolled trust funds, and when the time came for those- funds to be recouped by borrowing it was found to be. impossible to raise any loans at all. Therefore, trust funds that had been set aside for beneficiaries by the courts and other authorities, were immobilized and the beneficiaries were not able to enjoy them because the Government could not pay its way. The diversion of trust funds should be avoided, and if a fund is created there will always be a temptation for funds to be diverted to other purposes. That is a highly reprehensible procedure. The honorable member for Perth insisted that the existence of a trust fund was in itself a guarantee to the beneficiaries that the money would always be available to meet their claims. I believe that the existence of the National Welfare Fund neither adds to nor subtracts from the security of the beneficiaries as it exists at present.

The claims of beneficiaries must be met from the productive resources of the community at the time claims are made. They cannot be met from resources that may exist in the future. They must be met here and now. Therefore, the suggestion made by the honorable member for Perth and by those who have supported him, that the position of beneficiaries would be improved by the existence of funds such as the National Welfare Fund is completely fallacious. The fact is that their position will not be improved in that way.

The Treasurer’s statement sets out clearly and succinctly the provisions of the measure. He said that the existing method of financing by the National Welfare Fund had proved to be unsuitable. He also said that insufficient money to pay social services flowed from the social services contribution and the pay-roll tax, and that those sources had to be supplemented by votes from the Consolidated Revenue Fund. The Treasurer then said that in the light of those circumstances the Government had proposed to build up a completely different fund. He presented the alternatives, and suggested that in the future a fund should be accumulated by paying from the Consolidated Revenue into the fund exactly the amount that would have to be spent from the fund. Recently, in answer to a question by the honorable member for Melbourne Ports (Mr. Crean) about the National Welfare Fund, the Treasurer pointed out that there was a credit balance in the fund at the 30th June, 1952, of £185,000,000. I had hoped that the Treasurer would have accepted the consequences of the statements that he had made about the operations of the fund. Having told us that the fund could not be supported by the ordinary method which had previously applied but would have to be financed in future, from Consolidated Revenue, I had hoped that he would have said that he intended to abolish the fund and use the £185,000,000 to its credit to pay pensions this year - and such claims on the fund as might arise in this year - and that he would then close the fund down.

While the credit balance of £185,000,000 is in existence, it is a temptation as well as a snare to a Treasurer, and provides an opportunity for obscuring the accounts in the way in which they were obscured by the methods used by the last Labour Treasurer. I draw attention to the comments of the Auditor-General, at page 189 of his recently issued report, in which he points out the dangers associated with this method of public financing. I had hoped that the Treasurer would have closed the fund and relied in the future upon paying claims out of Consolidated Revenue. I draw the attention of honorable members to the size of this fund and to the extent of the benefits that are being paid from it at the present time. The Treasurer, in answer to a question asked of him by the honorable member for Melbourne Ports, provided full details of the operations on the fund since its creation, in 1.943-44 until 1951-52. It is important to consider the various purposes for which this fund is being used. I had hoped that the Treasurer would have made some comment about the rate at which this fund is growing, and the commitments that he is obliged to meet in consequence of legislation brought down during this sessional period and previously. If the Government is expending taxpayers’ money in particular directions we should have some knowledge of the purposes to which such expenditures are applied. “We are committed to a policy in which there seems to be no end to the demands that can be made by people upon the resources of the community. Unless we can discover the benefits that accrue from the payments out of this fund we shall continue to work in the dark.

I suggest that there should be a counterpart in the field of the social sciences to the Commonwealth Scientific and Industrial Research Organization in the field of the natural sciences. It is imperative that there should be an independent and detached examination of the results of attempts that are being made to achieve certain objects through the National Welfare Fund. I do not doubt but that the Department of Social Services has within it an agency that is concerned with investigating what is being done, as well as agencies to do what has to be done. Far too little attention is being paid to examining what should be done, and the consequences of what has been done. For instance, I would like to know the extent to which housing is creating immobility, and therefore adding to our difficulties in the relief of unemployment. I would like to know whether the payments being made as child endowment are being used for the benefit of children, or whether they are being used for other purposes. I would also like to know a lot more about the value of pharmaceutical benefits, because they are benefits in which there is a world of obscurity.

No one knows what is being done. All that one knows is that there is a constant attempt on the part of governments to satisfy the demands of the people and that there is no end to those demands. The time has now arrived when we should pay much more attention to the thrifty, by whose savings we live, and keep a stiff upper lip in regard to the protestations of the thriftless, whose demands are always far in excess of their deserts. I hope that the Treasurer will insist that part of the money retained in this fund, if he keeps it in existence,- will be allocated for an examination of what is being done through the expenditure of hundreds of millions of .pounds. I should like to see a body like a social sciences research bureau attached to the Australian National University at Canberra, in association with the Department of Social Services or, better still, attached to the Commonwealth Scientific and Industrial Research Organization. Whatever may be done in that direction, it is essential that we shall take some action to find out what we are doing through the expenditure of these vast sums of money. In his statement to the House recently, the Minister for Social Services (Mr. Townley) called the expenditure of money on social services an investment for the future. I wonder whether that investment is paying dividends, or whether it is landing us with a set of demands that will bankrupt us altogether.

Mr CLAREY:
Bendigo

.- I disagree with many of the statements that were made by the honorable member for Warringah (Mr. Bland) in the early part of his speech. He apparently places a great deal of reliance upon a theory that it is impossible for governments to create trust funds. He made the remarkable statement that while it is possible for individuals and companies and semigovernmental bodies to create reserves, it is impossible for a sovereign Parliament to do so. He has placed a good deal of reliance on what he considers to be the almost divine theory of the Consolidated Revenue Fund. That fund was created to overcome cer. tain unsatisfactory government practices in days gone by, but apparently the honorable member believes that we have now reached a stage of perfection in governmental accounts that cannot be improved. [ think that that, theory is entirely wrong. It is certainly possible for governments to create trust funds, as is shown by the National Welfare Fund. The actions of this Government and of past governments in other directions also have shown that it is not impossible for governments to create trust funds. It has been suggested that it is not possible to create reserve funds that imply some monetary backing, but we are creating reserve funds by the stockpiling of goods for defence. Each year we are paying money out of revenue in order to buy goods to put into storage for possible use in the years to come.

The National Debt Sinking Fund was established by act of parliament in the same way as the National Welfare Fund was established, and it is obviously doing an exceedingly good job. We should establish funds in times of prosperity so that, in times of economic stress, we shall be able to discharge commitments to the people that otherwise we might be obliged to dishonour. The theory advanced by the honorable member for Warringah cannot be substantiated. Certainly the honorable gentleman failed to convince me of its merit, and I remain firmly of the opinion that the National Welfare Fund must be maintained in the interests of the people. The bill should be examined with a great deal of care. The object of establishing the National Welfare Fund was to guarantee the stability of our social services system. Will this bill help it to serve that purpose? The honorable member for Warringah contends that the interests of the community would be best served if the accumulated reserve in the National Welfare Fund were used in order to discharge current social services commitments. The Treasurer (Sir Arthur Fadden), however, acknowledges the necessity for retaining The fund and has not objected to its existence. Nevertheless, I disagree with his assertion that, the amount of £185,000,000 now in the fund constitutes an adequate reserve. The Treasurer, in view of his opinion, proposes to alter the formula by which a proportion of revenue is added to the fund each year in order to provide for future contingencies. All honorable members are probably familiar with the biblical story of Pharoah’s dream of the seven fat kine and the seven lean kine, which led him to make provision for famine during the seven good seasons by stockpiling food.

We should give earnest consideration to our commitments in relation to social services and ask ourselves whether our revenue will be sufficient to enable us to maintain the very high ratio of social services payments to which we are now committed. Only a very rash man would say that the exceedingly high revenues of recent years will be maintained for many years in the future. One has only to consider economic history in Australia in order to realize that lean periods occur at regular intervals. An economic survey ‘ of conditions throughout the world that was made prior to World War II. disclosed the somewhat startling fact that the world generally experienced minor economic depressions at intervals of seven years and major depressions at intervals of about forty years. In Australia, periods of prosperity during which export prices have been high have frequently been followed by periods of low prices and consequent distress. Only a bold man would dare to say that the prices we receive for our products to-day, and the high revenue that the Government is receiving, will continue at the same levels for many years to come. Therefore, I consider that we should be extremely unwise to decide that a total of £1S5,000,000 in the National Welfare Fund will be sufficient to provide for the contingencies of the future and enable us to maintain at all times the present scale of social services payments.

The Minister for Social Services (Mr. Townley), during his second-reading speech on the Social Services Consolidation Bill recently, cited certain figures t1 at we should pause to examine before we approve of the bill now before the House. He said that our total social services payments in 1938-39 amounted to £16,500,000, whereas our estimated payments for 1952-53 amounted to £173,725,000. Average expenditure on social services during the last three years has been £138,000,000. The rate at which our social services commitments have increased emphasizes the necessity for the maintenance of an adequate reserve with which to meet all future contingencies. The tendency generally throughout the world to-day is to increase the scope of social services. That tendency has become clearly apparent not only in Australia but also in the United States of America, Great Britain and New Zealand. Therefore, we must prepare to increase the scale of benefits and extend social services generally over a wider field. Our commitments will be affected also by certain natural physical factors over which we have no control. The longevity of the people is increasing and, as time passes, more and more members of the community will become eligible for the age pension. The Government would be foolish indeed if it did not prepare now to cope with the financial problem that will be caused by that circumstance. The Minister for Social Services has said that the means test should be ameliorated. Whenever we take steps to relax the means test, we heavily increase our social services commitments. En view of the factors that I have mentioned, it is possible that our social services commitments next year, or perhaps the year after that, will exceed the amount of £185,000,000 that is now held in the National Welfare Fund.

Some critics maintain that the fund is a mere illusion, but I point out to them that, during the period of four years that ended on 30th June, 1952, the money invested from the National Welfare Fund earned a total of £3,500,000, which has been added to the fund. The investment of money from the fund is the wise and proper course to pursue. The fund has increased from £25.500,000 in 1943-44 to £185,000,000 at the end of 1.951-52. In other words, it has increased by an average of about £20,000,000 a year. I strongly maintain that, as our social services commitments increase, the importance of accumulating greater reserves in the National Welfare Fund, in order to ensure against the inevitable economic difficulties of the future, increases. Only during periods of prosperity can we provide for the lean years. Our experience in the past should impel us now to strengthen the fund instead of freezing or strangling it. I remind the House of the great difficulties that we experienced in the years 1930, 1931 and 1932 in discharging our limited social services obligations at that time. Only three social services benefits were available then. They were the age pension, the invalid pension and the maternity allowance. As history records, all three of those benefits had to be curtailed because of the paucity of government revenue. The only way in which to prevent a repetition of such distressing circumstances is to provide now a fund that will be adequate to meet the needs of the people in bad times. We must never deprive our pensioners of any of the meagre comforts that they now receive.

Contributory schemes also meet great difficulties in times of economic depression, as was demonstrated in Great Britain in the period from 1930 to 1934. The British Government at that time had great difficulty in preserving its contributory social services scheme. The fund on which the scheme operated was established by means of contributions paid by the Government, employers and workers, and it was used in order to provide unemployment, sickness, age and other benefits. When revenue shrank during the economic depression, the British Government had to resort to all sorts of devices in order to find money with which to maintain that fund, Thus, experience of the past indicates that, unless provision is made in advance for bad times, financial instability will force a reduction of social services standards, which would be undesirable in every way. Therefore, I submit that, from the standpoint of security, this is a bad measure. The Government has failed to recognize its responsibility. Under this bill, certain commitments that were prescribed by statute in the past will be avoided in the future, and no provision is being made to compel the Government to meet those commitments when the time arises. For those reasons, I oppose the bill. I believe that it is bad in character, that the proposal is ill-considered and that the legislation, if it is adopted by the Parliament, will cause insecurity and instability in the minds of the great majority of people. This proposal will be repudiated by the electors, because it is not in the best interests of Australia.

Dr DONALD CAMERON:
OXLEY, QUEENSLAND · LP

.- The object of this bill is to deal with social security measures. Every one, in these days, acknowledges the necessity for social security, and although we may differ about its scope and degree, we all agree that the demands for wide social services must be met. I propose to examine the remarks of the honorable member for Bendigo (Mr. Clarey), and in particular his reference to Pharoah. No doubt, Pharoah was a wise man, but I point out to the honorable member that Pharoah stored up, not money, but goods.

Mr Clarey:

– That is correct.

Dr DONALD CAMERON:
OXLEY, QUEENSLAND · LP

– That is a different proposition from the one stated by the honorable member, lt may be possible to stockpile goods, but it is most difficult to stockpile money. But the honorable member for Bendigo has asked us, in effect, to stockpile money. I emphasize, in this connexion, the statement of the honorable member for Warringah (Mr. Bland) that the existence of the National Welfare Fund neither improves noT worsens the prospects of social services. The fund was established, in the first place, to provide for certain definite social services, and they are, in fact, adequately provided’ for, and the purpose of this bill is to stabilize the fund at a certain level. However, the fund has been increasing steadily year by year, and that was not the original purpose for which it was established. It was not intended that the fund should consistently and always increase, but that it should make provision for certain social services, and that has obviously been done. The requirement in respect of social services is to make the finance which is needed for those purposes available in adequate amounts and in a suitable manner.

I support the statement of the honorable member for Warringah, which was made with such precision and clarity, that there should be one Consolidated Revenue Fund, and that all payments should be made into it, and all disbursements should be made from it. There is always a difficulty with special funds. When a special fund is established and increasing demands are made upon it, there is a tendency for the fund to be inadequate. When I make that statement, I refer to special funds in general. A special fund, when it becomes inadequate, tends to be bolstered by expedients, such as a special tax. We, in Australia, have had experience of those expedients. A special tax is imposed, and then we establish a vested interest in it; and because in the popular e: team, it becomes necessary to preserve the fund, which is regarded as sacrosanct, it is also necessary to preserve the tax. Consequently, we establish a vested interest in a special tax. In truth, of course, the benefits which we seek to secure can be supplied in other ways.

The existence of a special fund also tends to create the impression that all sorts of benefits can be obtained from it although the necessary provision has not been made by those who designed and originated it. The history of the National Welfare Fund exemplifies the point I have been making, and I shall remind the House of it. When the fund was first established, it was to be provided from an amount of money equal to one-quarter of the receipts from the tax on income derived from personal exertion, in the main, or a sum of £30,000,000, whichever amount was the less. For a time, the fund was financed on that basis. Then the basis became unsatisfactory and was altered, and a special social services contribution was levied. That action immediately created the impression, about which I have spoken, that all sorts of benefits could be obtained from the fund, because people believed that the special social services contribution was to provide all sorts of benefits, despite the fact that new elements were continually being added to the purposes for which the fund had been provided, and the social services contribution was not necessarily being increased proportionately. The next thing that happened was that the receipts from the pay-roll tax were added to the fund in order to augment it. Immediately, we had the kind of vested interest in that tax about which I have spoken, and many people became interested in preserving it. All those things are great objections to special funds.

In 1950, another alteration had to be made to the mechanism of the fund by the addition of a formula. The social services contribution, which had become unsuitable for the purpose, was abolished, and a special formula was added to the mechanism of the fund which was designed, in the words of the Treasurer (Sir Arthur Fadden) - to ensure the fund the addition of income approximately equal to what the income would have been had social services contribution continued to be levied separately.

But this arrangement quickly became unsuitable, and its unsuitability was discussed by the Treasurer in his secondreading speech on this bill. So, the formula itself, which might have been more than adequate in some circumstances, and less than adequate in other circumstances was, in its turn, removed. It appears to me, and probably most people have the same opinion, that the bill proposes a more satisfactory method of managing the mechanism of the fund. The bill proposes that an amount shall be made available each year equal to payments from the fund. This procedure will enable us, in a much simpler way, which is less open to objections, to make provision for all the changing demands which may be expected to be made, or may actually be made, on the fund. I refer to such matters as child endowment, tuberculosis payments, hospital benefits, and the like. The fact remains that we must relate our social services, like everything else, to our national resources.

It is not wise to imagine that the resources of a country are limitless. Although they may be great, they are not limitless, and social services, like every other kind of expenditure, must be related to those resources. It may be that there are times when a country, like an individual, may have to overdraw its account. It may be perfectly proper for central bank credit to be used to finance certain activities, but this method has its limitations.. It is true of a country, that over a period of time, social services have to be paid for out of its resources. That remark is also applicable to individuals. The great merit of this bill is that it recognizes that fact and proposes to relate our desires with reality, and the practical ability of the country to do what we wish to do. In my opinion, we merely delude ourselves if we imagine that we can accumulate a great monetary fund which will take care of our social services. The honorable member for Bendigo apparently wishes the country to build up a sufficiently large fund to meet all demands upon it, no matter how large social services may become, no matter what new elements may be added to them, and no matter what demands may be made upon them. I submit that such an approach is entirely unreal, and that, in fact, social services, like everything else, can only be provided for by the resources of the country. It is out of the resources of the country that social services must eventually come.

That thought leads me to say something about the provision of social services which, I think, is to the point as we are considering the National Welfare Fund. I believe that social security measures, in general, should contain elements which, in the first place, enable the individual to help himself, and, in the second place, encourage self-reliance and a sense of personal responsibility. A special fund does just the opposite of those things. How are those desirable objectives to be accomplished? It may not be perhaps an absolute rule, hut it is certainly a general principle of wide application that when a new social service is introduced, some contribution should be made by the individual involved direct to the scheme. I believe that if we are to provide additional social services, as undoubtedly we are, that principle must be observed. But we shall not secure that objective, and we shall not make use of that method merely by setting up a continually growing National Welfare Fund and imagining that we can get all cnr needs out of it. We cannot do so. Our social services must be related to our resources, and, in the future, we must also relate them to the individual effort to secure them. It is on that basis that this Government has made a beginning with its health and medical services contributory schemes. I believe that it is on that basis, and on the basis put to the House by’ the honorable member for Warringah that all payments should be made into the Consolidated Revenue Fund and benefits paid from it, that we should proceed. This bill goes a long way towards securing those objectives.

No one doubts for a. moment that the modern State should have adequate, large and expanding social services. No one wishes that any State should exist without them, and every one desires that adequate measures should be taken to secure them. But I do not believe, in spite of the contention of the honorable member for Bendigo, that we can secure expanding and adequate social services by the preservation of an expanding welfare fund. I do not believe that such social services can be secured in that way, mid I consider that the Government has been most realistic in stabilizing the fund at the present level, and taking other action to secure a large and expanding measure of social services. f return to the point that I have made several times in this speech, which is that social services can only expand in relation to the resources of the country. We cannot secure social services as the result of stockpiling money in the fund, but they can be secured by the other measures which, I believe, this Government is taking in its financial measures, by the introduction of such schemes as the health and medical services, and by other measures which, I trust, we shall lake and which will, in the end, result in the abolition of the means test and the participation of all people in a pensions scheme on a contributory basis. Expanding social services cannot be secured on any other logical basis. I believe that the merit of the bill lies in the fact that it is founded on that basis. i do v.of share the gloomy feelings of the honorable member for Bendigo. I believe that this bill will be welcomed by every one who properly understands it. I believe that it Ls a step in the right direction towards the goal that we are seeking which is the elimination, of the special funds and the placing of social services on a much more secure basis, with capacity for expansion in relation to the resources of the country.

Mr CREAN:
MELBOURNE PORTS, VICTORIA · ALP

– It is refreshing to note that the emphasis of honorable members on the Government side has been placed on the importance of physical resources in the life of the nation rather than on financial considerations, but having made that declaration, they seem suddenly to have turned back to financial orthodoxy. The honorable member for Oxley (Dr. Donald Cameron) apparently is critical of the existence of the National Welfare Fund, yet has suggested that social services should be. financed by a contributory system. That appears to indicate a contradiction in thinking on the Government side. It is interesting to reflect on the introduction of the National Welfare Fund and the part that it has already played in the economic life of the community. It seems that there is no contradiction in establishing a reserve which is derived from revenue in times when revenue is flush and in using that reserve at other times to stimulate the economy when that is necessary. This Government is cutting across the now accepted principle in government finance that money can be drawn off from the community in. times of inflation and can be injected into the economy by proper monetary and fiscal control, if a deflationary situation should arise. I suggest that it was in that light that the former Treasurer, Mr. Chifley, established the National Welfare Fund.

It is interesting to look hack to 1945 when the fund was established and to read the remarks and the criticism that were made then by the present Treasurer (Sir Arthur Fadden) concerning the proposal. Honorable members will find it illuminating to carry the comparison further and to read the comments of the Treasurer subsequently when the bill was amended some years later and the right honorable gentleman criticized what he called the assets of the fund. In his opinion, the fund was bankrupt because it was invested simply in treasury-bills. Apparently the. right honorable gentleman holds a much different opinion in 1952 about the existence of treasury-bills and the role that treasury-bill finance can play in government finance. In the report that >v,’is made available to honorable members yesterday the Auditor-General, in com- men ting on the use of treasury-bill finance, stated -

I’ have pointed out to the Treasury that no legal authority exists to permit the use of the Loan fund to meet any deficit in the Consolidated Revenue Fund, whether it arises from a temporary lag in revenue or from failure to realize the total revenue estimated by the end of the financial year. Consideration is being given by the Treasury to the preparation of the necessary legislation.

In other words the Treasurer does not believe now that anything is wrong with treasury-bill finance but constitutionally or legally there is some gap at the moment which may be deemed to indicate that it is not quite legitimate. Rather than discard it, however, the Government wants to make it legitimate and apparently intends to bring in legislation later in this sessional period to bridge the gap. I invite honorable members to consider the growth of the fund and the suggestion that the fund is illusory or does not exist. Recently I asked the Treasurer a question regarding the growth of the fund. On examination it is found that the supporters of this Government who, when they were in Opposition, were so critical about the method of implementing the fund have continued it. for two or three years. The fund has grown from £99,000,000 in 1948-49 to £185,000,000 in 1951-52. Those assets have been invested in treasury-bills. There has been no difference between the method of finance that was adopted by the Government parties and by the Opposition when it was in office. After all, treasury-bills, because they are, in effect, internal loans on the part of the Government itself, are simply loans by one section of the Government to another section of it. In principle there is no difference between this system and the scheme that was suggested by the honorable member for Oxley for the establishment of a contributory scheme of social insurance. The’ problem under such a method would still be how to invest the funds. “Would the honorable member suggest that they be invested in private enterprise or would he invest them in Government loans as they accumulated? The only point at issue is whether this reserve should be invested in what is called short-term finance, or in long-term finance. Somehow or another it is suggested that there is something reprehensible about this fund and, in fact, the money that has been accumulated does not exist. To my mind this fund has played an important part by alleviating the effects of inflation in the community. I suggest that the people are more concerned at the moment about the purchasing power of the pension than they are about the existence of the £185,000,000 that composes the fund. They are more concerned with the value of money than doubtful of the capacity of the Government to pay.

The policy that was pursued by the Chifley Labour Government when revenue was flush and there was no difficulty in inducing the public to subscribe to loans in Australia was. as it were, to effect some measure of compulsory saving by the operation of the National Welfare Fund. That is in accordance with sound financial theory. The honorable member for Warringah (Mr. Bland) has said, in effect, that Government receipts and expenditure should balance. That approach to government finance is out-moded. In some years, a government budgets for a deficit and in other years for a surplus according to the economic circumstances. Canons of public finance that applied ten or fifteen years ago have been thrown overboard to a considerable degree. One such canon was recognition of the principle that Government members have mouthed, although they did not stand up to it in practice, that physical resources are more important than financial considerations in the long run. It is true that the amount that the community can pay in real terms is dependent upon the total national product of the community, but it is equally true that amounts provided shall be distributed equitably among all sections of the community. That consideration emphasizes the danger of inflation which gives a distorted share of the national income to some sections of the community and allows only an unfair share of it to others who depend on fixed money determinations. The manner in which this fund has been used in the past has helped to some extent to allay the effects of inflation in the community and has brought about a more just distribution of the national income.

If, for the sake of argument, we were to introduce the contributory system that seems to be favoured by the honorable member for Oxley, a number of considerations would arise immediately. We should have to determine the basis of contributions. In most countries, a flat tax has been adopted irrespective of the income of the people. The systems in New Zealand and the United States of America are examples of that regressive method of contribution. We should also have to decide whether only the worker should contribute or whether contributions should he made, as well, by employers and by the Government. Assuming that that scheme had been established, we should have to consider what we would do with the contributions while the fund was being strengthened. Would the money be invested as has been done in the case of the National Welfare Fund? Would it then lie suggested that such a fund was illusory and did not exist because the Government had spent it? While the £185,000,000 that is now in that Welfare Fund was being accumulated, it was used for other government activities. Nobody has criticized that procedure. The money would have been spent whether the fund existed or not. If the fund had not existed, apparently £185,000,000 would’ have been raised by additional loans. In other words, the national debt of Australia would have been larger by £185,000,000. The method that has been adopted is really a form of compulsory lending or saving by the community, and the effect on the economy has been good because it has allayed the effects of inflation. Had the money been raised by other means, and so caused an increase in the national debt of £185,000,000, interest would have been levied on it and if the rate had been nearly 4-$ per cent, as it is now, about £7,000,000 more would have been required from taxation to meet the interest bill.

Apparently, however, honorable members opposite consider it was wrong to do what has been done. If it had not been clone they would apparently have regarded the procedure as being orthodox and the money that is in the fund would not have been illusory at all.

The suggestion that has been made that the fund is illusory merely because it is invested in short-term government securities rather than in long-term government securities is so much bunkum. In support of my contention, I shall quote from a book that I have obtained from the Parliamentary Library entitled The American Social Security System, by Eveline M. Burns. On page 114, the author, in a footnote, refers to borrowing by the United States Government from the Old-Age and Survivors Insurance Trust Fund. The footnote states -

Efforts have been made from time to time to lead the public to believe that there is something improper in this use of the “Reserve Funds.

The author refers to an article, entitled “ Our Present Dishonest Federal Old-Age Pension Plan “, written by John T. Flynn, and published in Readers’ Digest in May, 1947. Then the footnote states -

On this, the remarks of the Advisory Council on Social Security (1948), reiterating the views of the Advisory Council of 193H, impertinent.

Those remarks were as follows: -

We do not agree with those who criticise this form of investment on the ground that the Government spends for general purposes the money received from the sale of securities tn that fund. Actually such investment is as reasonable and proper as is the investment by life insurance compania; of their own reserve funds in Government securities. The fact that the Government uses the proceed? received from the sales of securities to pay the cost of the war and its other expense.? i entirely legitimate. It no more implies mishandling of moneys received from the sale of securities to the trust fund than it fine* of the moneys received from the sale of United States securities to life insurance companies, banks, or individuals.

That is the well-expressed opinion of a body of financial experts which reported to the United States Senate. I believe that the Treasurer has been influenced by the criticisms that he made of the National. Welfare Fund, not when he was the Treasurer but when he was an aspirant for that office. He sought then to throw cold water upon the reality of the fund, and implied in 1947, that it was bankrupt. If it was bankrupt before this Government came into office, it is neither more nor less bankrupt now, because while the right honorable gentleman, has been the Treasurer of this country, Government borrowing from the fund has risen from £100,000,000 to £185,000,000. Honorable gentlemen opposite often say that we on this side of the chamber would use treasury-bill finance recklessly. We recognize, as they have recognized belatedly, that, in some circumstances, treasury-bill finance can play a very important part in the economic life of the community. Inflationary conditions still exist in this country. Therefore, we ought to be increasing this fund. The annual appropriations to it are based upon collections of pay-roll tax, which reflect the economic activity of the community. If revenue from the pay-roll tax declines, it is true that payments to the fund also will decline. In times when industry can alford to pay, as it can do now, the fund should be strengthened. If industrial activity were to taper off a little, payments to the fund would decrease, because pay-roll tax collections would fall, and that would be, in a way, a stimulus to the revival of industry.

The fund is based upon the sound principle that it should be strengthened in flush times because, in times of recession, depression, transitional unemployment, or whatever term we use, drawings from it would exceed contributions to it. The word “ fund “ implies that accumulations in good times will be drawn upon in. bad times. The proposal of the Treasurer is that the fund shall be frozen at its present level. In those circumstances, it will no longer be appropriate to refer to it as a fund. It will be only a vague kind of trust agreement, or something of that sort. To my mind, a fund is something that is built up in good times and drawn upon in bad times. One of the lessons of the depression is that the way in which to stimulate a national economy is not to reduce social services benefits and wages, but to increase them. Social services benefits are paid to the people whose need is the greatest. They will not be able to save; they will need to 3pend every penny of the assistance given to them, and that expenditure will cause greater economic activity in the community. It seems to me that this action by the Government is an example of the expression of the old depression philosophy. The Government is saying that it is prepared to meet all the obligations of the fund as they arise, but I prophesy that if things became a little tight it would say, “This year, we cannot afford to pay £180,000,000 into the National Welfare Fund. We shall pay only £160,000,000 into it, and we shall reduce the taxes of those people who subscribe to our political philosophy “.

While there is inflation in the community, the Government i3 under an obligation to maintain funds such as this. There is nothing immoral or wrong in paying money into a fund and drawing it out for expenditure upon other purposes. The time will come when payments from the fund are greater than payments into it. Then, the money that has been paid into the fund in good times will be paid out to those who need it, and they, in turn, will inject it into an economy which is running down. The Opposition says that the Government is proposing to take a retrograde step. The National Welfare Fund underwrites the security of the Australian people, especially that of the weak, the poor and the unfortunate. It assures them that there will not be a recurrence of the events of 1931, when it was said that financial considerations were superior to all others. The existence of the fund is a guarantee that that will not be said in 1952. Nobody worries whether the level of. the fund is £185,000,000, £2S5,000,000 or nothing. The level should depend upon the circumstances of the times. The time has not arrived when the fund should be reduced. On the contrary, the Government should consider strengthening it. The Opposition has sufficient faith in the economic future of this country to say that the Government’s proposal is wrong and that the development of the fund should be, npt halted but speeded.

Sir EARLE PAGE:
Minister for Health · Cowper · CP

.- I found it difficult to follow the honorable member for Melbourne Ports (Mr. Crean). He has said repeatedly that we are in a period of inflation, but the Leader of the Opposition (Dr. Evatt) has suggested that the one method by which we can extricate ourselves from present difficulties is to inflate still further. To my mind, that would be a very queer remedy to apply to the present situation. So far from sharing the views that have been expressed by the honorable member for Melbourne Ports and the honorable member for Bendigo (Mr. Clarey) upon this matter, I congratulate the Treasurer (Sir Arthur Fadden) upon having made quite plain and clear the position of the income and expenditure of the National “Welfare Fund. In my opinion this bill, if passed, will place the National “Welfare Fund upon a realistic basis for the first time. Its operations will be easily understood by the public, and mythical reserves will no longer be a matter for speculation, and, in many instances, undue optimism.

In dealing with funds of this kind, it is necessary to ensure that, when the need arises for them to be used, there will be some real money in them. The honorable member for Melbourne Ports has suggested that the Government could properly use money from this fund for expenditure upon any government activity. To-day, the State governments cannot raise the money that they require for very urgent and essential public works. In those circumstances, is it suggested that, this year, the Commonwealth should pay into the National Welfare Fund from its revenue £40,000,000 or £50,000,000 more than will be required to be expended upon social services? Is it suggested that we should increase the size of the fund in that way, despite the fact that, even if no further contribution were made to it next, year, the money standing to its credit would be sufficient to make all necessary social services payments in that year ?

The matter of importance is not how much goes into the fund, but how much must be paid out from it to beneficiaries every year. The Chifley Government, in its last full year of office, paid out from the fund £80,770,000. It has been estimated that this year £163,000,000 will be paid out from the fund to finance social services and health benefits. Payments from the fund have more than doubled in two and a half years. For ordinary social services, excluding health services, the relevant figures are £74,000,000 in 1948-49, and £140,000,000 in 1952-53. Expenditure upon health services in 1948-49 was £7,000,000, and it has been estimated that it will be £28,000,000 this year, or four times as much as in 1948-49. I do not think that any honorable gentleman opposite will say that the cost of living has risen by 400 per cent., or even by 200 per cent., in the last two and a half years. This year, this Government is providing from its revenue, to build up the fund, very much more than has been provided by any other government for that purpose. In previous years, the total receipts of the fund varied from £27,000,000 in one year to £110,000,000 in 1948-49. This year, this Government, from its revenue, will find £163,000,000 for the fund, or about £50,000,000 more than was found at any time by its predecessors. Surely it will not be suggested that, in addition, we should make available for this purpose another £40,000,000 or £50,000,000? Last year, £137,000,000 was expended from the fund and £172,000,000 was paid into it. Receipts exceeded expenditure by £35,000,000. Is it suggested that that surplus should be increased ? The Treasurer is acting very wisely. He has said, “ We have a certain sum on our books “. That is really where it is at the present time. It has been said that the moneys of the fund have been used for all kinds of purposes. If the fund had not been in existence, fewer public works would have been undertaken last year. As honorable members know, in that year this Government made available to the States, from its revenue - which is the proceeds of taxation - about £150,000,000 to enable the States to undertake certain capital works, which should have been financed entirely from loan funds. As I have said, the Treasurer is acting wisely in this matter. I consider that the contention of the honorable member for Warringah (Mr. Bland) is correct, and that social services payments should be made from general revenues collected from the taxpayers. It is idle to think that such payments now come from the proceeds of a special tax. Ever since the fund was established, disbursements on social services have been derived from different taxes as time has gone on. It is rather interesting to examine the history of the fund under the Labour Government. In the six years that that Government had control of the- fund it changed the method of financing it no fewer than four times. In fact, the only difference between the various amending bills that have been introduced has been contained in amend.ments to section 5 df the act, which deals with the methods of financing the fund. Under the 1943-44 legislation the fund was financed by an amount equal to onequarter of personal income tax, less £21,000,000 if the States Grants (Income Tax Reimbursement) Act 1942 was in operation, or £30,000,000, whichever was the less. An amount of £30,000,000 was the definite limit to be placed on contributions to the fund in any one year. Last year the Treasury paid into the fund £35,000,000, or £5,000,000 more than the amount of £30,000,000 mentioned in the provision that I have just cited. An alteration was made in the legislation in 1945- 46 to provide that payments into the fund were to be, for the first six months of that financial year, £15,000,000; for the second six months, £20,000,000; and subsequently an amount equal to pay-roll tax collections. This amount was put into the fund by means of a special tax, and the basis of collection of that tax showed exactly the ideas of the Labour party regarding the means test, because the tax, which was ls. 6d. in the £1, was levied on every person who earned £2 a week and upwards. Labour’s policy was that everybody in the country should contribute to social services, and so the tax was levied on income of only £104 a year. Later on it was discovered to be absolutely imperative to alter the act and the basis of collection was liberalized by a reduction of the amount of contribution on the lower grades of income. In 1946- 47 the law was again altered and the fund was then financed by an amount of £51,000,000 plus an amount equal to pay-roll tax collections. Another alteration was made in 1947-48, when the fund was financed by an amount equal to collections of pay-roll tax plus social services contribution.

Those were the four fumbling ways in which the Labour Government tried to deal with this matter. It had no consistent line of policy. It merely tried out experiment after experiment in order to put the fund on a solid basis. I do not blame that Government, altogether, because it had to deal with conditions as they existed at the time, just as the present Government has to meet existing conditions. An examination of the whole system will show that both loan and revenue expenditure are now regarded as one. We have to use general revenue for expenditure on capital works that should be a burden on posterity. I know that at Grafton there is still, in use a post office that was built in 1885. It would have been unfair to the people in 1885 to require them to bear the cost of erecting a post office that is still being used 77 years later by people not then born. Many of our postal works are constructed from moneys taken from a 30s. per cent, sinking fund that I established twenty years ago. One of the reasons why loan moneys and revenues are now considered as one is the difficulty of obtaining sufficient money in order to fill the needs of each appropriate category of expenditure. The Treasurer has asked, in effect, why he should add to the reserve in the National Welfare Fund when money is urgently required for other purposes. He has decided that, in order to put the whole thing on a proper basis, the provision of social services shall be made an integral part of our budgeting, so that we shall know exactly our commitments in regard to social services and other matters, and how much revenue we shall have to raise. The Government does not wish to wipe out the reserve in the fund. Last year the Treasurer attempted to improve the position of the fund by a formula based on payroll tax collections, which led to the payment of a great amount into the fund in that year. But he foresaw that if a great number of people were unemployed this year the pay-roll tax would be lower in total, and pay-roll tax collections as a means of financing the fund might prove to be a broken reed. He decided, therefore, to introduce legislation to make payments into the fund a charge on Consolidated Revenue. That is a wise thing to do. It is in accordance not only with the canons of sound governmental finance, but also with our existing financial circumstances, because everybody will agree that we should not overtax the people this year if we can avoid doing so.

Honorable members opposite stated, in their criticisms of the budget, that they wished taxes to be reduced. If we were to raise an extra £40,000,000 to be paid into this fund this year, where would the money come from unless taxes were increased ? I am absolutely certain, from my experience in this Parliament, that if we intend to maintain trust funds of this sort it is useless to attempt to do so unless there is some way in which the money so raised can be protected from being pirated for other governmental purposes. It is of no use to say that the Government has money invested in bonds which oan be obtained if the need arises, because that money is not available in ready hard cash, and the necessary amount must be raised either by loans or by new taxation. A proposal for raising money by either or those methods would be difficult to pass through the Parliament. It would be difficult to obtain the money even after parliamentary approval had been obtained.

It is much better for everybody to know exactly where they stand. Under this proposal, when we say that we intend to increase age pensions or other benefits, everybody will know that they will have to help to meet the cost. In fact, the method adopted by the Labour Government in its 1945-46 legislation for the raising of the social services contribution was a recognition of that fact. That legislation was introduced to impress upon all persons in the community that they could not have the benefit of social services unless they helped to pay for them. It was for that reason that the Labour Government taxed the lower ranges of incomes. There is, therefore, every reason to contend that the finances obtained from the reserves built up in a contributory scheme should be under independent control. There is no question about the fact that if these trust funds are to be a real bulwark against “ventualities, it is necessary to have them properly protected. I remember that in the 1930’s the Council for Scientific and Industrial Research would have gone out of existence if I had not made available to it £500,000 of a surplus that I had from child endowment. It would have been impossible for the Parliament to have taken that money back from the council without the passage of a bill, which would not have met with popular approval. Other organizations which could not obtain funds at that time went out of existence, and some of them are still out of existence. I agree with the principle of the bill, and I congratulate the Treasurer on having introduced it.

Mr JOSHUA:
Ballarat

.- It seems to me that when the Government prepared this bill it looked for the weakest points of the proposal and then advanced them as its main virtues. We have just seen an example of the truth of that statement in the speech of the Minister for Health (Sir Earle Page), in which he congratulated the Treasurer (Sir Arthur Fadden) for having put plainness and clarity first when he presented the bill. The measure does not make things clear. On the contrary, it clouds the issue and make certain aspects more obscure than they were before. For that reason I heartily support the honorable member for Perth (Mr. Tom Burke) in his opposition to the bill. The Government has shown a lack of frankness in regard to this measure, although some honorable members on the Government benches have impressed me as being sincere. I think that the most sincere of them is probably the honorable member for Warringah (Mr. Bland). The National Welfare Fund has been a bookkeeping instrumentality right from its inception. The question before the Government that established the fund was how to establish a fund that would provide, in the first place, some flexibility in meeting the various huge amounts that had to be paid out, and in the second place, a degree of permanence and continuity in relation to social services payments. It is impossible to increase social services benefits one year and decrease them the next year without causing a great deal of difficulty for everybody. One of the important things about a welfare. fund is that it should place clearly before the people and the Government the real facts of the position. Che people want to know how much, in total, they pay for social services, and what they receive in return. If we examine how the fund was established we shall realize that the Labour Government had in mind the essential requirements of such a fund. First, it related the income of the fund to industrial output. That gave the fund a real basis of wealth. A considerable amount of criticism has been voiced about the policy of building up reserves in the fund out of pay-roll tax, ,and I could agree that such a system could be altered, with benefit, in certain ways that I shall not now discuss. We need only to bear in mind that for the present the establishment of the pay-roll tax to provide portion of the income of the fund gives it a basis, of real wealth and relates it to the ability of the community to provide for welfare measures. The payments which have been made into the fund year after year, both by this Government and the previous Government, have been in excess of actual expenditure by about £20,000,000 a year. That course was necessary in order to strengthen the fund. I remind honorable members that the fund was established as recently as 1945 and that a certain degree of experimentation with it has had to be undertaken. However, despite its brief history, it has proved to be successful and to-day the balance to its credit is substantially in excess of current expenditure on social services. All honorable members will agree that the balance in the fund should be reasonably in excess of requirements in order to place social services benefits on a permanent footing. The Chifley Government, when it established the fund, provided that it should be financed from special sources. Persons with no experience in bookkeeping may have had some difficulty in calculating how much they were actually contributing for social services benefits; but an examination of their income tax assessments generally enlightened them on that point. The assessment showed clearly the proportion of the tax that was paid to the National Welfare Fund from which social services benefits are financed. Many persons gained considerable satisfaction from knowing the amount that they contributed towards the welfare of the aged, sick, and infirm. A separate assessment of social services contribution enabled persons to ascertain that amount.

To-day, the fund has a credit balance of £1S5,000,000. The present may be an opportune time to review the proportions of that balance, but it is not an opportune time to review the system upon which the fund is based. No need exists to make major alterations to the present system. The honorable member for Warringah made a sensible suggestion with respect to the principle which underlies the fund, when he said that an independent and impartial body should be appointed for the purpose of examining social services benefits as a whole in order to ascertain the actual value of the benefits that are made available to the community. Such an investigation would be of great value from the point of view of the fund itself, and I trust that that suggestion will be adopted. However, the alterations that are proposed to be made under this measure will make it more difficult for the average person to ascertain the real position in respect of the fund. These proposals will obscure the working of the fund. In this respect., the bill is the second step in a series of manoeuvres that are designed to obscure the real position. Last year, the Government took the first of those steps when it altered the system of contribution. When the Chifley Government was in office every person was enabled to ascertain from tax assessments the actual amount that he, of she, was obliged to pay in respect of social services benefits. This Government altered that system on the plea that it was confusing. It decided to jumble income tax and the social services contribution together with the result that taxpayers are now unable to ascertain how much of their tax is paid into the National Welfare Fund. The second step in that direction is being taken under this measure, the object of which is to limit the balance in the fund. These manoeuvres have done much to obscure the position of the individual taxpayer in relation to payments that he, or she, makes in respect of social services benefits. Last year, the Government said that it would pay the sum of £180,000,000 into the fund and that announcement sounded good in the ears of the average person. However, towards the end of last year, the Government transferred £30,000,000 from the fund to Consolidated Revenue. Under the old system, the average person could ascertain where he stood in relation to the fund, and the Government could budget specifically to meet the requirements of the fund. This Government should show more consistency in this respect. I refer, for instance, to the Wheat Prices Stabilisation Fund.

Mr SPEAKER:

– Order ! I shall not permit the honorable member to discuss the Wheat Prices Stabilization Fund under a measure that deals with the National Welfare Fund.

Mr JOSHUA:

– The point I make is that when a fund is established for any purpose, it is the general practice to build up reserves against contingencies and when such reserves exceed a reasonable margin the rate of contribution is reduced or a proportion of the excess reserve is refunded to contributors. That principle has been observed in respect of many funds that are in the nature of insurance funds against bad times and this Government has subscribed to it in certain instances. I can see no reason why it should not subscribe to it in respect of contributions to the National Welfare Fund. It should maintain this fund on such a basis as would enable it to budget with reasonable accuracy to meet social services expenditure. When the balance in the fund is disproportionately large, the rate of contribution to it should be correspondingly reduced or a proportion of the excess balance should be refunded to those who subscribe to it. At the beginning of each financial year the Government should estimate its requirements for social services expenditure and any amount that is subscribed in excess of those requirements should be refunded to subscribers, or the rate of contribution should be correspondingly reduced. However, as I have already said, owing to the alterations that this Government has made to the social services scheme, individuals cannot now ascertain how much they actually contribute to this fund. I have no doubt that that is one of the main objects of the Government in introducing this measure. It has purposely sought to obscure the position in order to forestall any demand that the rate of contribution should be reduced. I perceive in this measure evidence of an. unfavorable trend. The Minister for Health recently re-instituted the meanstest in respect of medical and hospital, benefits.

Mr SPEAKER:

– Order ! I ask the honorable member to confine his remark* to the bill, the purpose of which is to vote a certain sum of money from Consolidated Revenue to the National Welfare Fund.

Mr JOSHUA:

– Apparently, the general object of the Government is tointroduce a contributory system on a flat-rate basis, instead of obliging taxpayers to. contribute towards the payment of social services benefits in accordance with their ability to do so. Under the Government’s plan persons in the lower ranges of income will be obliged to contribute to the fund irrespective of their capacity to do so, whilst persons in the higher ranges of income will be relieved of a part of their obligation in this respect. . Honorable members’ know that fewer than 250,000 income taxpayers pay something less than 55 per cent, of the total collections of income tax.

Mr SPEAKER:

– Order ! I again ask the honorable member to confine his remarks to the bill, which makes no reference whatever to income tax.

Mr JOSHUA:

– I repeat that this measure will obscure the real position in relation to the National Welfare Fund with the result that the average person will not be able to ascertain the amount of contribution that he makes in respect of social services benefits. I also repeat that that is clearly the object of the Government in introducing the measure. I oppose the bill.

Mr THOMPSON (Port Adelaide) rs.56].- The Minister for Health (Sir Earle Page), when he dealt with the history of the National Welfare Fund, spoke about the extractions that the Labour Government had made from the people for this purpose. I was astonished when he said that social services contribution was payable by a person with a taxable income of £104 or more. He admitted that persons with an income under that amount were not obliged to pay social services contribution, but said that persons with an income of that amount, or in excess of it, paid a flat rate of ls. 6d. in the £1. That statement is incorrect. The fact is that when Labour was in office a person with a taxable income of £105 paid social services contribution at the rate of 3d. in the £1, and that as the income increased, that rate was correspondingly increased to a maximum of ls. 6d. in the £1. At the same time, in actual practice, after allowance was made for concessional deductions, many persons with an income of from £400 to £500 were not obliged to pay either tax or social services contribution. That was the position when the Labour party was in office. The Minister may have inadvertently made the mistake that I have just indicated.

I was interested to hear the honorable member for Warringah (Mr. Bland) say that it was not desirable that revenue should be paid into a special fund for a special purpose. He contended that all governmental revenue should be paid into one consolidated fund and that all governmental expenditure should be met from that fund. He also said that when persons contributed to a social services fund they adopted the attitude that they were entitled to obtain certain benefits from it. I appreciate that point. Much misunderstanding existed with respect to the amounts that were actually paid into the National Welfare Fund. For instance, a woman told me that when she was unable to continue in employment because of sickness, she applied for the sickness benefit but was told, that as her husband was in employment she was not eligible to receive that benefit. That is the position to-day. The average person still contends that if he contributes to a specific fund he is entitled to obtain some return for that contribution. I think that what I have put to the House strengthens some of the arguments by other honorable members about the fund not being of a specific nature. The Minister for Health said that since the Chifley Government established the National Welfare Fund, alterations have been made in its structure from time to time in that the amounts to be charged to it and the method of raising the money have been varied. I believe that that is so, but the Chifley Government desired that there should be no repetition of occurrences during the depression when our revenue fell to a record low level. In the 1930’s, when our revenues decreased, we were told by certain gentlemen who came to Australia from London to act as advisers to the Government, that we should have to reduce our social services payments or we would not be able to get the necessary financial assistance from overseas to carry on. Happenings at that time were really the reason why the Labour party established the National Welfare Fund. The fund was designed to provide money for the payment of social services at any time including times when our national revenues decreased to a point at which it would be difficult to pay social services out of current revenue. At present the fund has a credit balance of £185,000,000. According to the AuditorGeneral’s report, all that money, excepting about £1,000,000, has been used by the Government to discount treasury-bills, thus saving the Government about 1 per cent, per annum interest on the value of the bills. In those circumstances the money in the fund is not earning sufficient interest. If this measure is adopted by the Parliament, the balance of the fund will remain static at the present figure of £185,000,000, excepting’, perhaps, for the interest that it may earn, which, during the past year, was less than £1,000,000.

The Labour party believes that when revenue is buoyant we should strengthen the fund in order to provide against the time when revenue will be less buoyant. If £185,000,000 is just sufficient to pay for our social services at present, then in the future it will not be sufficient because it is quite apparent that our social services commitments will increase. The Treasurer proposes that whatever is paid out of the fund each year shall be recouped from revenue at the end of the year so that the fund will stand constantly at a credit balance of £185,000,000. If our revenues decrease the Government may want to use that money for purposes other than social services, and we must therefore make provision for a time when our revenue collections are not as great as they are at present. I fully agree with the statements about the National “Welfare Fund that were made by’ Mr. Chifley. He was a great advocate of the policy that when the country’s income was high we should not mortgage our future, but we should, as far as possible, provide for it out of that high income. I believe that this measure foreshadows a departure from the principles laid down by Mr. Chifley. The Minister for Health has asked why another £40,000,000 should be put into the fund this year. His meaning was that if we continue to work on the same formulas that were used by the Government during the last financial year, another £30,000,000 or £40,000,000 will have to be put into the fund. That would increase its credit balance to about £225,000,000. I do not believe that we are in such a poor financial position that we cannot afford to pay a fair proportion of our income into the National Welfare Fund.

Some honorable members have mentioned the proceeds of the pay-roll tax in connexion with the National Welfare Fund. When pay-roll tax was introduced it was designed to pay child endowment and to relieve industry of increases that may have been made in the basic wage, tn any event, the effect of the relevant decisions of the Commonwealth Arbitration Court was that child endowment probably relieved industry of the burden of basic wage increases. Therefore, the pay-roll tax was designed specifically to provide child endowment. The national accounts indicate that child endowment is paid from the National Welfare Fund. If that is so there can be no objection to including pay-roll tax in the National Welfare Fund. If the Government were in financial difficulties I could understand its action in bringing forward this measure, but according to the Treasurer’s last budget the Government believes that it is in a position to reduce both income and land tax, and thereby remove certain burdens from the people that were? perhaps, not very onerous. Therefore, the Government is not in an unsatisfactory financial position. Statements have been made from both sides of the House about the means test, and about the universal desire to abolish the means test or to ease it considerably. If we are progressively to remove the means test it is all’ the more necessary that we should strengthen the National Welfare Fund. I do not lose sight of the fact that in this bill the Government is making provision to pay social services this year out of revenue, but I also have in mind that the National Welfare Fund was established to make provision for and to meet the needs of the future. Consequently, the Labour party cannot support the measure. We must make the future secure for our people because we realize their great need. We know that the Government has increased social services, but we are gravely concerned about whether we shall continue to collect such high revenues in the future as we have in the past. Therefore, we ask the Government to retain the system that operated last year, and to try to strengthen the National Welfare Fund. To do so the Government will not need to freeze vast sums of money, because it can use them, in the interests of the people in the same way as they have been used in the past. Then, if at any future time, we do not obtain sufficient revenue to meet our social services commitments we shall not have to reduce the payments to our people because we shall have a fund sufficient to pay them.

Mr Tom Burke:

– The Government wants another £20,000,000 this year. It does not care about the future.

Mr THOMPSON:
PORT ADELAIDE, SOUTH AUSTRALIA

– I appreciate the force ‘ of that remark. By this measure the Government will increase its effective, revenue from £20,000,000 to £40,000,000, but we believe that that should not be the viewpoint of the Government and that it should use the taxation field to collect the extra amount that it requires. The Government should realize that it is wise for it to have a little less this year and to continue to build up the National Welfare Fund, because after all it will still have the use of the money set aside in that fund.

Mr WILSON:
Sturt

.- I support this bill because it will remove a means by which it is possible for governments to pull wool over the eyes of the people. When the Labour Government was in power, it claimed great credit for the fact that it had established the National Welfare Fund. The truth is that, although there was a big credit entry on the books when that Government was defeated, there was not one penny of cash in the fund. All the money had been invested by the Labour Government in treasury-bills. The people had been led to believe that there was a substantial cash reserve to provide for social services but, in fact, there was nothing in the fund but a collection of government I 0 TPs. If a government wants to accumulate a fund for a particular purpose, the money paid into the fund should be invested in securities other nhan its own securities. Had the Labour Government established a genuine fund, it would have been able to invest the money with private banks or in good securities other than Commonwealth securities. By investing the money in its own I 0 U’s, it merely gave to the people a false impression of the situation. Let us imagine what would have happened had some call been made upon the National Welfare Fund. How could the Government have met that call? Would it have emulated Micawber and simply said., “ We shall give you all an I 0 TJ. We have no cash with which to pay you, but we shall band out an I 0 TJ and say, Thank God that’s paid ‘ “ ?

The bill will bring the financial position of our social services into a state of reality and will do away with the Labour Government’s method of making misleading book entries. It provides that sufficient money shall be paid into the National Welfare Fund each year to meet the payments that will be made from the fund. The honorable member for Port Adelaide (Mr. Thompson) spoke of the possible abolition of the means test. I say definitely now, as I have done many times previously in this House, that the abolition of the means test is an urgentlyneeded and essential reform. But

Heaven forbid that we should ever institute a form of national insurance under which accumulated funds would be invested as the National Welfare Fund was invested by the Labour Government ! If the people are to have social security, their funds must be invested in securities other than government I 0 U’s. Obviously, any scheme of social security that involves the abolition of the means test should provide for a fund that will return each year, sufficient revenue with which to meet the commitments of the scheme for that year. In other words, the sort of scheme we want must be financed by what is known as the assessment method instead of the insurance method. Under the assessment method, collections are made each year and an identical amount is paid out during that year. Under the insurance method, moneys that are raised are invested.

The bill is entirely free of complications. It deserves the wholehearted support of every member of this House, because it will bring our social services into line with reality. It will enable every citizen to know how much is to be raised each year and how much is to be expended each year. The National Welfare Fund, which until now has been represented merely by I 0 U’s, will remain in existence and nobody need fear that money that has been raised for social security purposes will be used for any other purpose. Obviously, if that reserve is called upon at any time, the only assets that the Government will have in the fund will be its I 0 U’s. Therefore, in reality, if the Government decides to pay out in social services benefits the credit that is recorded in the National Welfare Fund, it will have to raise money for the purpose by taxation or by some other means. For the reasons that I have stated, I warmly support the bill and commend the Government for the decision that it has made. I trust that the measure will be accorded a speedy passage.

Mr JAMES:
Hunter

– I have been keenly interested in this debate because of my long experience of social services schemes, which dates back many years prior to the inauguration of the National Welfare Fund. My mind goes back to 1929-30 when, if such a fund had existed, our social services system would not have suffered so severely as it did under the impact of the economic depression. The honorable member for Sturt (Mr. “Wilson) has said that the bill will bring our social services system into a state of reality. “Would he say that our social services system in 1929 was in a state of reality? I plead with the Government to reconsider its plan, which, eventually, will reduce the National “Welfare Fund to bankruptcy. The amount of £1S5,000,000 now in the fund was provided by the Chifley Labour regime. Surely nobody will suggest that the late Mr. Chifley did not understand public finance ! As Government supporters know, Mr. Chifley was appointed to the royal commission that inquired into monetary and banking systems, not by a Labour government, but by a non-Labour government masquerading under one of the former aliases of the present Liberal party, which has changed its title often in the hope of fooling the people, as a criminal changes his name in the hope of deceiving the police. Mr. Chifley and another member of that commission, who supported the goverment of the day, presented a minority report which later, as Prime Minister and Treasurer, he proceeded to put into effect.

We hear much talk about unemployment and the possibility of an economic depression and we must not ignore the danger. God forbid that we ever witness again in this country such conditions as prevailed in 1929-30 ! I say that in all reverence. What happened to the pensioners at that time because we lacked a national welfare fund? Government supporters should know the answer to that question. Benefits were drastically reduced. Even the dependants of men who were killed in World War I. were made to suffer. Mothers who had lost their sons were denied even the allowance of £1 ls. a week that had been paid to them previously. Finally, the old-age pension was reduced by 25s. 6d. a week. Such economies would not have been necessary if the National Welfare Fund had existed then.

The honorable member for Warringah (Mr. Bland) has advocated a contributory system of social services.

I know something about such systems, and I realize that persuasive arguments can be advanced for and against them. I point out that the payment of contributions would impose a severe strain upon the meagre earnings of thousands of workers, whereas- the same contributions would scarcely be noticed by more fortunate persons. The hardship of a compulsory contributory scheme should not be inflicted upon the less fortunate members of the community. We have heard manydemands for reduced taxation. I consider that tax rates should be increased so as to enable the Government to make ample provision for the aged and the infirm, who should not be thrown on the scrap-heap, like old iron. These Australians contributed to the national revenues in more fortunate days and they helped the nation to develop. They deserve our sympathetic consideration in their age and invalidity, and we should ensure at least that they shall be adequately maintained.

There is a fairly large population of pensioners in the electorate that I represent. Most of them formerly were coalminers, those notorious individuals who are so often condemned by Government supporters. Many of these persons own their own homes. Some of them own other property as well, and, for that, reason, they are penalized by the social services authorities. Belief should be given to pensioners who own properties from which they do not derive income. Under the present system, the authorities take into account the improved capital value of their properties and, if it exceeds the limit specified in the means test, they reduce the pensions accordingly. That is totally unfair. Other persons are required to pay tax only in respect of the income that they receive. These pensioners are deprived of a part of the pension because they own property, even though it does not provide them with income. Many such properties are dilapidated and are, in fact, an encumbrance upon the owners, who should not be penalized in the unjust way that I have described. One man, whom I knew, had approximately 180 acres of land that was not worth 2s. However, the fact that he owned the property disqualified him from obtaining an age pension. He offered the land to the parish priest, who refused to accept it, because he would have been obliged to pay taxes on it. I hope that the act will be amended so that the value of a property shall be assessed upon its income producing capacity. A citizen is not taxed upon the amount that lie has in a bank. A Treasurer who proposed to exploit that field would be accused of advocating the imposition of a. capital levy. A person is taxed upon the income producing capacity of his assets.

Reference has been made in this debate to the necessity for a modification, or the abolition, of the means test. I believe that the means test should be eased to a certain degree, but I see an objection to its abolition. When the maternity allowance was introduced in 1912, no means test was imposed, and even the wealthiest members of the community were entitled to receive it. They called it the “bangle bonus”. Of course, the worker needed the money in order to ensure that his wife should receive proper medical attention during the critical period of her life when she was ushering a new citizen into the world. I firmly believe that if the means test were abolished, some of the wealthiest persons in the community would apply for the age pension. I agree that the means test should not be applied to persons who are in receipt of a meagre income from a superannuation fund.

Mr TURNBULL:
MALLEE, VICTORIA · CP

– What limit does the honorable member suggest?

Mr JAMES:

– I believe that the means test should not be applied to a person who has an income of less than £5 or perhaps even £7 a week. But the means test should not be completely abolished. If it were, an avaricious person with an income of £1,000 a week would apply for the age pension.

Mr ACTING DEPUTY SPEAKER:
Mr. Bowden

– Order! I think that the honorable member has made sufficient reference to the means test.

Mr JAMES:

– The pay-roll tax should be retained, because the receipts from it are applied to finance social services benefits, particularly child endowment. This tax was first introduced in Australia by a New South Wales government, and was at the rate of 6s. in the £1. In 1941, the Minister for Labour and National Service (Mr. Holt) introduced legislation to provide for the imposition of a payroll tax in the Commonwealth sphere. This tax, which yields £51,000,000 a year, should be continued. I earnestly hope that the amount of £185,000,000, which is now credited to the National Welfare Fund, will not be reduced, but I fear that the fund will stagnate, and ultimately will be exhausted. I pray that Australians will never again experience a financial and economic depression of the kind that caused so much suffering in thiscountry during the 1930’s. The National Welfare Fund should be retained in order that we may have something substantial to lean upon in a time of emergency. In my opinion, the amount credited to the fund should be increased. Some honorable members may not be aware that the fund was established in 1943 by the Curtin Labour Government. I believe that the next Labour government,, when it assumes office in the not distant future, will take every possible precaution to safeguard the stability of thefund.

I urge the Government to grant moreequitable treatment to widows. At present, a B class widow, who is a person over 50 years of age without children, receives a pension of £2 15s. 6d. a week, which is 12s. 6d. a week less than the ageor invalid pension. By what process of reasoning the Government has reached the conclusion that a widow can livemore cheaply than an age or invalid pensioner, I do not know.

In conclusion, I urge the Government not to whittle away the National Welfare ‘ Fund. Who can say what the future holds for Australia? The fund should be retained so that, in the event of financial crisis, the recipients of social services will not be the first section of the community to suffer a reduction of thenbenefits, as happened in 1929-30.

Mr DALY:
Grayndler

.- I support the case submitted on behalf of the Opposition by the honorable member for Perth (Mr. Tom Burke), and join with previous speakers on this side of the House in condemning the Government for its decision to depart completely from the original intention for which the National Welfare Fund was established. Opposition members have shown that the fund was established for the purpose of maintaining the ability of the nation to meet the cost of social services, should the revenue from income tax and the social services contribution decline to such a degree that the amount available was insufficient to meet that charge. The National Welfare Fund Bill 1.943 was introduced by the then Treasurer, the late Mr. J. B. Chifley, on the 11th February of that year, and, in the course of his second-reading speech, he said -

In the financial statement which I have just submitted to the House, outlined the Government’s post-war aims in relation to the economic advancement and social security of this country. To secure these aims the Government is convinced that it is necessary to ensure minimum social standards throughout the community. It therefore proposes to introduce a comprehensive scheme of national welfare and to develop it progressively:

Mr. Chifley then described the extensive range of social services that were to become an established fact in the Australian community, and proceeded -

The chief purpose of this hill is to establish a national welfare fund to finance the scheme. The fund will take the form of a trust account under section 02a of the Audit Act 1901-1934.

Mr. Chifley, in his reply to the secondreading debate, referred to the necessity to safeguard the continuance of social services, and the need for the establishment of the National Welfare fund. He said-

I am not, and the Government is not prepared to say to men who have been commanded to offer their lives in the defence of their land that, when the war is over, they are of less importance than a pit pony.

He dealt with the difficulty experienced by the less fortunate sections of the community in living without the assistance of a comprehensive range of substantial social services. He elaborated the point that the National Welfare Fund was to be established in order to ensure that persons in necessitous circumstances should not be reduced to a position of less importance than a pit pony. He then said -

I remind honorable members opposite that their friends, the private bankers and the commercial leaders, are the people who, employing the word “inflation” in 1930-31, forced upon the governments of this country the deflationary measures that drove thousands upon thousands of Australian citizens into the degradation and near starvation of the dole. This Government says “ Never again ! “

In that spirit, the Labour government of the day saw fit to establish the National Welfare Fund, in order to provide and maintain substantial social services benefits to the people. Mr. Chifley also gave details of the scheme, and explained that certain investments would be made in order to safeguard the fund. The real purpose of the legislation, as enunciated by him, was to establish a substantial fund, and ensure that an amount of money should be paid into it that would be adequate to maintain social services payments, even during a depression, so that the recipients of benefits should not suffer substantial reductions of payments when the revenues of the government declined. In the intervening years, this fund has become substantial. Thanks to the foresight of Mr. Chifley, the balance in the fund at the end of the last financial year was £185,000,000. The fund has been increased to such a degree that successive governments, if they continue along the course set by Mr. Chifley, will be able to guarantee the payment of social services benefits even in a period of declining revenue, and even to abolish the means test on a number of social services.

Let. us examine how the fund has been made stable. On the 9th September last, the honorable member for Melbourne Ports (Mr. Crean) asked the Treasurer (Sir Arthur Fadden) the following questions : -

  1. What were the amounts paid into the National Welfare Fund in each financial year since the inception of the fund, showing separately (ft) payments from social services contribution, (6) pay-roll tax and (o) other Government contributions?
  2. What were the payments from the National Welfare Fund in each financial year, showing separately the expenditure under each category of social service?
  3. What were the amounts standing to the credit of the fund at the end of each financial vear ‘!

For once an enlightening answer was given by the Treasurer. He was able to do so without difficulty because he was dealing with a fund established by a Labour Government on which he could give facts relating’ to security in the real sense. He to id honorable members that in 1943-44, the total receipts by the National Welfare Fund from all sources were £27,890,000. In 1944-45 the receipts were £30,255,000, and in 1945-46 the fund received £47,002,000. The total was £65,102,000 in 1946-47 and £88,546,000 in 1947-4S. In the. last financial year, the total receipts of the National Welfare Fund, including social services contributions, taxation, interest on investments and other ‘Government contributions totalled £172,838,000.

In reply to questions regarding the disbursements from the fund, the Treasurer stated that in 1943-44 only £2,364,000 was paid out of the fund. The amount increased to £2,707,000 in 1944-45, and it grew annually until last year, when £137,608,000 was paid out from the fund on social services. Even allowing for an income of £172,83S,000 from all sources and an expenditure of £137,608,000 in 1951-52 the credit balance in the fund grew from £25,525,000 in 1943-44 to the magnificent total of £185,027,000 in 1951-52. The basis laid down by the Treasurer of the day, Mr. Chifley, ensured to this Government and future governments an established sum on which to work to preserve true social security and to extend it. Honorable members opposite have spoken about the abolition of the means test and the need for removing it from every form of social service that is included in the disbursements from the fund. Had honorable members been really sincere, they would have adopted the fund as the basis for the abolition of the means test in relation to many social services, and would have enlarged it.

I do not want to reflect on the intentions of the Government; that is the last thing that I want to do. But I can see in the proposal before the House a back doorway by which the Government hopes to avoid the pledge that it made to the Australian people that ultimately it would abolish the means test on social services. Its intention to pay out the exact amount that is paid into the fund each year will have the effect of freezing the fund and depriving it of money that would have provided finance in later years to abolish the means test on social services. What is the purpose of the Government in halting the progress of the fund? Is it not a fundamental principle to save for a rainy day when times are good and income is plentiful ? Does not a wise man accumulate in such circumstances a reserve for the day when he may be unemployed or unable to earn a good income? Mr. Chifley established the fund on that basis in times of prosperity. He recognized that a responsibility devolved upon the Treasurer to preserve the fund in a sound financial position. He placed in various funds money that could be used if earning power should recede and taxation returns should fall, thus endangering social services benefits. This Government’s attack on the fund will destroy completely the purpose for which the fund was established. It will mean ultimately the restriction of social services benefits because the fund may be substantially reduced as unemployment rises, with a consequent fall of government revenue. The Opposition opposes this measure because it foresees the complete destruction of the scheme as a result of it. The measure departs completely from the principle on which the National Welfare Fund was established. The Labour Government, planned the fund in a sound, sane and business-like way so that revenue would be accumulated to safeguard the social services benefits of the nation. This Government, while boasting that it will advance a wider social security programme, is deliberately destroying the only fund that will give any stability to social services schemes. I agree with other honorable members on the Opposition side that if this Government’s policy continues to foster unemployment, the day is approaching when the people will be asked to accept reductions on certain items of social services because the Government will be unable to pay them out of dwindling income. The fund should have been retained on the old basis. The Government is not providing for a surplus to make up financial leeway in the years when income may be inadequate. The formula for the new basis that is being laid down by this Government was explained by the Treasurer in his secondreading speech as follows: -

Under the formula, the total appropriation to the fund is directly related to pay-roll tax collections, that is, to aggregate earnings This direct relationship could mean too great a contribution from revenue under some conditions such as, for example, when aggregate earnings are rising because of a large volume of employment or rising rates of wages and salaries, and expenditure from the fund is remaining relatively stable or even declining. Under a different set of conditions, however, for example, if aggregate earnings were falling, the contribution from revenue to the fund would fall at a time when expenditure from the fund might well be heavy. Thus, the weakness of the present formula is that the income for the fund which it produces is directly and solely related to aggregate earnings and has no regard for likely calls on the fund in varying circumstances.

I” disagree entirely with the statement that was made by the Treasurer. He destroyed the argument that the nation must prepare for a rainy day. That is why the right honorable gentleman is now trying to whittle down the amount that is to be paid into the fund. He does not believe in the basis on which the Labour Government established the fund, although he paid, a compliment to those who established the fund when he said -

During the four years ended the 30th June, 1052, the balance in the fund increased by £115,000,000 to £185,000,000.

Is not that an indication of the need for a continuation of the basis upon which the fund was established by tha Labour Government? It was intended to be the means by which ultimately the means test could be removed from a number of social services. I repeat that the Government fears that this fund will grow if the principle be unchanged, and that as a result, it will have to redeem its pledge to the people to abolish the means test. Instead of doing that, it wants to make substantial concessions and remissions to the wealthy interests who put it into office. That is another reason why the Opposition opposes the measure. The Treasurer said that under the amendment of the law that he proposes to make, the existing balance of about £185,000,000 will be preserved. In other words, the fund is to be frozen at that amount. I only hope that it will meet the rising cost of living in some way so that the people who receive social services benefits will have the benefit of purchasing power commensurate with the benefits that they will get from their frozen assets.

Mr SPEAKER:

– Order ! The honorable member should get back to the bill that is before the House.

Mr DALY:

– I see no reason why the fund should be frozen at £185,000,000. The Opposition opposes this measure and any change in the structure of the fund. I consider it to be an attack on the stability of a fund that is needed to safeguard and maintain social services at their present level. I believe that those who are dependent on social services have much to fear in the way of a reduction o+’ the benefits that they are receiving. I join with other honorable members on this side of the House in hoping, not very optimistically, that the Parliament will reject this measure., and that it will maintain the fund, which has given security to those who are dependent on social services.

Mr CALWELL:
Melbourne

.- From out of the past, we can get an indication of the Government’s intentions with this legislation. Out of the past also, we glimpse the future regarding the continued existence of the National Welfare Fund. The former Treasurer, Mr. Chifley, brought down the bill which established the fund on the 11th February, 1943, and this is what he said in moving the second reading -

In the financial statement which I have just submitted to the House, I outline the Governments’ post-war claims in relation to the economic advancement and social security of the country. To secure these aims, the Government is convinced that it is necessary to ensure minimum social standards throughout the community. It, therefore, proposes to introduce a comprehensive scheme of national welfare and to develop it progressively. The welfare scheme includes health, sickness, un employment and other associated services . . The chief purpose of this bill is to establish a national welfare fund to finance the scheme. The fund will take the form of a trust account under -Section 62a of the Audit Act 1901-1934.

In a remarkably short speech for such an important occasion, Mr. Chifley indicated that this fund would be invested from time to time and would provide a useful source of temporary finance for wai- purposes, which, would be replaced by permanent borrowings when the moneys were required later for welfare purposes. The honorable gentleman who spoke for the Opposition on that occasion was Sir Frederick Stewart, the former member for Parramatta. He left no doubt in the mind of the House where the Opposition stood on the question of the establishedment of the National “Welfare Fund. I contend that the attitude which the Liberal party-Australian Country party Opposition of that day adopted towards that piece of legislation is, in reality, the attitude which the members of the present Government parties are adopting to the fund. Sir Frederick Stewart said- -

No member of the Government party could reasonably accuse me of an unreadiness to support social legislation initiated by the Labour party. My attitude has invariably been to judge such legislation on its merits, quite regardless of what party had initiated it. This measure, however, leaves me cold, because I regard it as a deliberate confidence trick and a sham, practised on the very class of people of whom Government members are prone to consider themselves the special representatives. The bill proposes to establish an entirely new legislative practice.

He argued on that line, and then he said -

The Parliament is asked to hypothecate a sum years in advance of the legislation authorizing its expenditure.

Later, he stated -

There is a very real danger . . . if we break down the old tradition of making the appropriation subsequent to the legislative commitment. Because this measure introduces that dangerous practice, it is unacceptable to the Opposition.

The Opposition of that day carried its objection to the measure to the point at which it divided the House upon the motion for the second reading of the bill. I find that, of the honorable members who voted against the measure, seven still remain in the Parliament. The Prime Minister (Mr. Menzies), the VicePresident of the Executive Council (Mr. Eric J. Harrison), the Minister for the Army (Mr. Francis), the Minister for Health (Sir Earle Page), the Minister for Immigration (Mr. Holt), and the honorable member for Corangamite (Mr. McDonald) are here. And you yourself, Mr. Speaker, who voted with the tories on that occasion, are still with us. The

Liberal party and the Australian Country party did not want the National Welfare Fund in 1943, and they do not want it now.

Mr Bland:

– Hear, hear!

Mr CALWELL:

– I am glad that I have a willing witness in the person of the honorable member for Warringah (Mr. Bland). They do not want a welfare fund. We say that if the Government abolished the National Welfare Fund, people who are now receiving benefits from it might not get those benefits. The age and invalid pensioners might not be paid.

Mr Townley:

– Why?

Mr CALWELL:

– Because there would not be a national welfare fund. If a government does not have money in a fund with which to pay the people who are entitled by legislation to be paid from that fund, it may say, “ We shall pay them with treasury-bills, or they will not be paid at all “. The former Prime Minister who introduced the legislation under which the National Welfare Fund was established said that it was necessary to have a trust fund, and to strengthen it in good times so that when bad times came there would be money available with which to make payments to those who were most in need of the payments.

Mr WILSON:

-There was no money in the fund when the Labour party left office.

Mr CALWELL:

– There was a lot of money in it - much more than there is now. But that is beside the point. We are talking about the Government’s real purpose in proposing to halt the development of the fund, to freeze it at its present level, and to pay into it each year only as much as will be paid out of it. In those circumstances, the only source from which the fund could be increased would be the investments that it has already. The interest on those investments, according to the Treasurer, is worth about £1,800,000 a year. That would not help the fund very much.

On the basis of the formula for which provision was made in the Original legislation, and which this bill proposes to abolish, payments into the fund would be approximately £185,000,000 a year.

The Government proposes, under the new formula, to pay in about £164,000,000 a year, the sum that is being paid out annually at the present time. That would result in a benefit to the revenue of £20,000,000 a year, but that benefit would be gained at the expense of the people who benefit from the fund. We object to that. We say that the Government cannot halt price increases or the rise of the cost of living, but the people who are benefiting from the fund are adversely affected by inflation, and the fund might require much more money than is now being paid into it if their present social position is to be maintained. We say that if wage rises continue, the annual sum diverted from the fund to Consolidated Revenue might easily be £30,000,000 or £40,000,000.

What logic is there in the Government’s attitude? We suspect the Government on many counts, and for many reasons.

Mr Townley:

– The suspicion is mutual.

Mr CALWELL:

– I have no doubt that the feeling is reciprocated. It always is. We want the Government to say clearly why it wants to interfere with the fund at all. The condition of the country does not justify amending legislation of this kind. Does the Government wish to go back to the days of Sir Frederick Stewart, and to do what he failed to do - to get rid of the fund that he did. not want to be established? If it does not want to interfere with the fund, it is doing something that will, at least, give rise to the suspicion that it does. The Government cannot deny that it is proposing to halt the fund, and to freeze the sum that will be paid into it annually. Honorable gentlemen opposite say quite clearly that that is what they want to do. Their intention is that the ingoings shall not exceed the outgoings in any one year.

Mr Bland:

– What harm could that do?

Mr CALWELL:

– Ultimately, it would disadvantage beneficiaries from the fund in days of rising prices. There is no provision elsewhere-

Mr Bland:

– The Social Services Consolidation Act specifies the payments that shall be made to each beneficiary. The fund does not fix those payments.

Mr CALWELL:

-We consider it to be very desirable to have a fund, because we believe it to be a guarantee to the beneficiaries. Under the present system, when times were bad, there would be more money in the fund than there will be under the proposed system, and that would give to beneficiaries a feeling of security. If the fund declines, they will, very naturally, fear that unemployment benefit and age and invalid pensions will not be paid. That is a legitimate fear, and doubtless it will have an effect upon the result of the Flinders by-election. This Government proposes to interfere with the fund, because it desires to keep all benefits at their present level. The Minister for Social Services (Mr. Townley) will not deny that he does not want to increase them very much.

Mr Townley:

– We have doubled them.

Mr CALWELL:

– The Government doubled them under pressure, but it has not increased them enough.

Mr SPEAKER:

– Order ! The question of rates of benefit does not come within the scope of this measure.

Mr CALWELL:

– I was about to tell the Minister that myself, Mr. .Speaker. The Government, by its actions, may be preparing the way for the abolition of the fund. We suspect that it really wants to get rid of the fund and to return to the days of Sir Frederick Stewart, when the Parliament first made a legislative commitment and then made an appropriation of money to meet the commitment. We believe that to be what the Government wishes to do. If it does abolish the fund, those who will suffer will be the most needy and most defenceless sections of the community. All that the Treasurer has said in his second-reading speech has not quietened our fears, and will not quieten the fears of people outside the Parliament. The right honorable gentleman said -

It will mean that expenditure upon social services and health benefits will be accurately reflected in the Budget itself.

His desire for arithmetical accuracy is so great that he is prepared to run the risk of doing an injustice to very deserving people in Australia 1 “We are worried about the purpose behind this bill. We do not believe that the measure can be defended on Treasury principles. The system which the Government proposes to alter has operated for nine years very successfully - so successfully that the fund has grown greatly. lt could continue to grow, and it should be allowed to do so in an inflationary period. If this were a deflationary period, perhaps some valid arguments could be advanced in support of an alteration of the present system, but surely, in a period of inflation, it . is good business and good national housekeeping to strengthen funds which the Government controls so that they may be used if deflation strikes the land.

Mr Bland:

– Has the honorable gentleman read the report of the AuditorGeneral ?

Mr CALWELL:

– I do not always read his reports. There may be a number of matters on which one could legitimately dispute the validity of the claims of the Auditor-General. We consider that the Government is not, as the Parliamentary Draftsman has stated, merely ‘taking the opportunity to remove from the act a definition which, through amendments of the original act, is no longer necessary. We consider the original act to be still a good one which there is no need to alter in any respect, and that the Government should maintain it. If the Government alters the act, it must have base motives for doing so. We oppose the proposed alteration. We fought the Opposition of the day when we established the fund. As I remarked earlier, a former honorable member for Parramatta led the opposition to the establishment of the fund. Doubtless, his successor will follow that line and, eventually, will try to destroy the fund. We shall put the position to the people of Australia as strongly as we can, inside and outside the Parliament. On this nefarious move to get rid of the National Welfare Fund, we shall certainly make our voice heard by the electors of Flinders in the byelection now proceeding there.

Mr GRAHAM:
St. George

– Members of the Opposition have painted a dark picture of the future social security of the Australian people. I support the bill. Clause 3 reads as follows : -

Section three of the Principal Act is repealed and the following section inserted in its stead: - “ 3. In this Act, ‘ the National Welfare Fund ‘ or ‘ the Fund ‘ means the Trust Account established by this Act and known as the National Welfare Fund.”.

The subtle and carefully worded suggestions of the honorable member for Melbourne (Mr. Calwell) are untrue. He has said that we seek to abolish the fund. If it were reasonable for him to endeavour to convince you, Mr. Speaker, that that is so, it is not unreasonable for me to point out to you that clause 3 of the bill proves that the honorable gentleman has made an inaccurate statement.

Before adverting to the main problem in relation to this measure, I wish to make some reference to the speeches that have come from the other side of the chamber during this debate. We have left this portion of the battleground mainly to the Opposition to-day because honorable members opposite’ wish to get in as many blows as possible. The honorable member for Melbourne has it made quite apparent that, like Matthew Flinders, they are looking for an investigator to assist them to recover lost ground. In the early days of the last Parliament it was the Government which needed an investigator to examine the facts of the National Welfare Fund in order to discover where moneys alleged to be in it had gone. I am led to believe that when we took office we found that the . moneys alleged to be in the National Welfare Fund were represented in large measure by I 0 U’s signed by the previous Administration. The late right honorable member for Macquarie, who was Prime Minister and Treasurer of the Labour Government, had been able by devious and, according to the Auditor-General, certainly not legal, means, to arrange for moneys in that fund to be replaced by promissory notes that were to be redeemed by the Government at some future time. That point leads to the fundamental issue in this measure, which is that the prime burden of providing social security rests on the Government, and on the people who support the Government by paying taxes into general revenue. I consider it to be cardinally wrong that the burden should be borne in any other way. It is proper that the Government of the country should accept the onus of providing social security for those members of the community who require various forms of assistance. It is also proper that the cost attendant on discharging the onus should be met by the Government from the revenues that it has raised from taxes.

The honorable member for Hunter (Mr. James), who is an old and respected member of this Parliament, took us back to 1929 and gave us the customary dismal song that always comes from the Labour party about the days of the economic depression. He took us back into the very depths of the depression.

Mr FuLLER:

-We can never forget it.

Mr GRAHAM:

– As the honorable member for Hume (Mr. Fuller) has stated by way of interjection, they can never forget it, but I have extreme difficulty in remembering it, as it occurred more than a score of years ago. Members of the Labour party are still living in the past, as they have always done. As far as they are concerned there is no future. They derive the greatest pleasure from harking back to the position during the depression which, after all, hit this country in spite of, and not because of, the Labour Government that was then in office. I do not believe for a moment that any reasonably normal Australian believes that the depression could have been prevented by the Australian Government of the day. After all, Australia is a small country which is affected by world economic changes and is able to do very little about the matter. The honorable member for Hunter has told us that the medicine that would have cured the illness, of that period would have been a fund similar to the National Welfare Fund. An examination of the situation during that period will show that it would have been quite impossible for such a fund to have been used specifically for pensions and to meet the normal needs that are part and parcel of social security. His reference was quite inaccurate. Ho also referred to the visit to Australia of Sir Otto Niemeyer. After all, it was a Labour government which brought Sir Otto to this country as its financial adviser and the dragging out of the old catchcry about the London bond-holders is to my mind so much humbug and sheer untruth. Anybody who is familiar with the history and the economy of this country knows that to be so, although a great deal of political capital ha.s been made out of the visit of Sir Otto Niemeyer. Like most political capital, it has been based on untruth.

It would be worth while to refer to certain figures that will show just how the social security system in this country has been developed. In the financial year 1938-39, expenditure on age and invalid pensions was £15,992,000, which amount represented 2.053 per cent, of the national income, which in that year was £779,000,000. The following table shows the relevant figures up to and including the financial year 1951-52 : -

The percentage of expenditure on age and invalid pensions to the national income was the same in 1945-46, under the Labour Government, as it had been in 1938-39 under a non-Labour government. It rose slightly in 1946-47, then fell in 1947-48 to a level slightly below the 1938-39 percentage. The House will have noted that national income increased from £779,000,000 in 1938-39, to £1,752,000,000 in 1947-48 and to £2,293,000,000 in 1949-50, the lastmentioned financial year having been the transition year for the first half of which the last Labour Government was in power. In 1948-49, the amount expended on age and invalid pensions was £40,819,000., which represented 2.106 per cent, of the national income. That was the position when we took office. By last year the expenditure had jumped to £58,784,000 which represented’ a percentage of 1.815 of the national income of £3,238,000,000. Honorable members will agree that there has been a regular increase of expenditure on age and invalid pensions during this Government’s term of office and that the Government’s claims, which the honorable member for Perth (Mr. Tom Burke) has described as a boast, that there has been a great expansion of social security payments in all avenues, are justified by the figures that I have given.

I turn now to the main point in relation to this measure, which is whether we require such a fund as the National Welfare Fund in order to be able to finance expenditure on social services, and whether the moneys collected for any such fund should be separate from the revenues raised by means of general taxation. That is the crux of the matter. The Opposition contends that, no matter what the position may be from time to time during the year in relation to general commitments, the National Welfare Fund should be a separate entity which should be augmented from time to time, and from it should be drawn the finances necessary to make social services payments of all descriptions. At this stage I shall give to the House some information relating to a similar fund that operated in the United Kingdom. This information appeared in a report in the Melbourne Herald of the 27th August last, and is of interest because it is necessary for us to appreciate the fact that the cost of social services benefits of all descriptions may ultimately bring us to a stage at which it will be improper to rob Peter in order to be able to keep on paying Paul. There is a limit at which we must stop and a standard at which it becomes improper to keep taxing the people who are producing the real wealth of the community in order to provide for people who, for one reason or another, are unable to provide for themselves. I am well aware of the fact that, as the national income last year was £3,238,000,000, it does not seem to be unreal to make available social services and repatriation benefits at a cost of £340,000,000. which will be the cost in the current year. The report to which I have referred reads -

Britain’s pension fund is moving into the red, according to the latest Ministry of National Insurance figures.

The Ministry estimates that the national insurance fund - the pool into which old-age and widows pensions, unemployment relief and other benefits are paid - will run into debt by 1955.

This is three years earlier than any Minis terhas yet admitted.

Although in. the year ended last March there was a surplus of £146,000,000, expenditure will begin to exceed income in two years.

The annual deficiency will rise from £100,000,000 in 1957-58 to £275,000,000 in 1967-68, and be £420,000,000 in 1977-78, says the Ministry.

This necessitates Cabinet deciding soon how to meet the deficit.

There are four ways open:

The Government could further increase weekly insurance payments;

It could reduce benefits;

It could raise extra taxes; or

It could use the fund’s reserve of £1,350,000,000, although this step would be purely a temporary measure.

The point that I am making is that there must be some limit to the amount that can be paid out of a fund, and it is quite apparent, from the information contained in that report, that the United Kingdom Government has been paying out more than it could afford to pay from its comparable fund. Only last year Mr. Aneurin Bevan and his followers rebelled against the Attlee Government on the provision of more money for armament and the proposal to impose certain charges on the recipients of certain medical benefits and social services. If the fund is to be limited to a certain amount, it will be necessary to have some gauge with which to assess expenditure from it from time to time. Having regard to existing circumstances and to possible developments, it is not unreasonable to relate the amount to be provided for social services to total budget investments. The backing of the general community would be a better guarantee than would be provided by a. certain balance in the National Welfare Fund. I have put my finger on the essential weakness of the argument that honorable members opposite have advanced. We must approach this problem on the basis of sound economic policy. Therefore, the best course that the Government can follow is to reestablish complete co-ordination of its total commitments at all times. I do not think that honorable members opposite will disagree with that view, that is, of course, if they are prepared to forget that a by-election will be held in the near future and if they will bear in mind that the primary considerations in this matter are those of sound finance and the future security of the aged and invalid and all others who receive social services benefits.

If there is one matter upon which all honorable members should be able to concentrate their attention without indulging in acrimonious debate it is the provision of social services. Having regard to our national commitments as a whole, the concept of a separate fund for this purpose is too rigid to be successful. We should be better advised to relate social services commitments to total budgetary commitments. The honorable member for Melbourne Ports (Mr. Crean), who is developing a reputation as a financier-

Mr Freeth:

– A potential Treasurer.

Mr GRAHAM:

– I am afraid the honorable member will be frightfully old when, if ever, he becomes Treasurer. However, he emphasized that continuity of sound budgetary policy is vital, that although governments must change there should not, in the interests of the country, be substantial, or sudden, changes in national financial policy. 3 agree with that view, which, coming from a member of the Opposition, was refreshingly novel, and I compliment him upon his having expressed it. I believe, however, that if he examines this matter further he will come to the conclusion that the proposition that I have stated is sound, that we should relate social services commitments to governmental commitments as a whole. It is undemocratic that a government should find upon assuming office that all sorts of commitments are tied round its neck. A government should be responsible for general and financial policies and should be allowed the maximum degree of elasticity in arriving at its decisions. I support the bill.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– I felt rather sorry for the honorable member for St. George (Mr.

Graham) who has just resumed his seat. There is nothing sinister about him. Indeed, he has a kindly disposition. However, the poor gentleman has been tricked into supporting a proposal which he would realize, if he understood it, cuts right across the things that he believes in and is foreign to his personal qualities. The proposal contained in the bill is neither more nor less than a part of a sinister scheme to bring about a reduction of social services benefits on the pretext that the National Welfare Fund cannot meet the requisite expenditure. The” Government, by refusing to continue the practice of the Chifley Government of adding to the fund when finances are buoyant and unemployment is limited and of merely reimbursing it during a period, such as the present, when unemployment is increasing, is simply biding the time when the fund will be made bankrupt. When that time arrives, it will say to the pensioners, in effect, “ We are sorry. We shall have to reduce social services benefits because the fund has dwindled from a sum of £185,000,000 in 1951 to so low a level that it will be dangerous to continue payment of benefits at existing rates “. In those circumstances, the workers will be obliged to pay, in addition to ordinary tax, a special levy on their wages. Thus, as the honorable member for Sturt (Mr. Wilson) has urged, the ordinary working people will be obliged to meet a greater portion of the cost of social services benefits. The Government will abandon the Chifley Government’s principle that the greater proportion of that cost should be borne by those who are best able to bear it. This Government will make those persons who inevitably will be obliged to seek assistance when they are advanced in years provide the wherewithal to finance social services benefits. The late Mr. Chifley, when he spoke as Prime Minister on the Social Services Consolidation Bill in this chamber on the 22nd November, 1950, said -

One important point that I emphasize is that the Liberal party and the Australian Country party now recognize what they scathingly condemned in the past, namely, thi’ inauguration of what they called the “ Welfare State “. Ministers of the Conservative party argued years ago that people, even invalid*. should provide for their own needs, and had no right to expect the State to assist them.

The Vice-President of the Executive Council (Mr. Eric j. Harrison), has even said that no person has any right to expect to receive a pension and that it is not the duty of the State to provide such benefits for the aged.

Mr ERIC J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– That is entirely wrong.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– It is correct and the Minister knows it. Mr. Chifley continued -

That attitude has changed since the Labour Government enacted social security provisions during and since World War II. I shall not mention all of them, but I refer specifically to the establishment of the National Welfare Fund, and to the social services contribution which may be described as a specific tax to provide for social security. The administration of conservative governments from federation until 1930 was conspicuous for inactivity in respect of providing social services.

I emphasize the following words which Mr. Chifley also uttered on that occasion : -

The Seullin Labour Government was forced by the financial institutions of this country to reduce pensions in 1930-31, and, as I have mentioned, restrictive provisions were applied to the estates of pensioners byl the Lyons Government. The conservatives now recognize the “ welfare State “.

It is perfectly true that the Scullin Government was forced to reduce rates of pension because the Senate, in which the non-Labour parties were in a majority at that time, would not pass the requisite legislation to enable the government of the day to control the Commonwealth Bank. Mr. Chifley emphasized that even the tories had come to recognize the welfare State. Indeed, ‘the Treasurer (Sir Arthur Fadden), when speaking in this chamber on the 12th October, 1950, about the advisability of retaining the National Welfare Fund, said -

The avowed purpose of the social services contribution when introduced in 1945 was to provide a firm basis for the financing of the National Welfare Fund.

The Treasurer made that statement only two years ago. If he meant what he ‘then said - I give to him credit in that respect - he has now turned a complete somersault in his attitude towards the need to finance the National Welfare Fund on a sound basis. He cannot have it both ways. I suggest that he was correct when he made the statement that I have just quoted. The Government cannot claim that it is financing the National Welfare Fund on a sound basis when it now proposes to pay into the fund only the revenue for which provision is made in this measure. In fact, it is now proposing to utilize for general purposes considerable sums that are to be raised specifically for the purpose of financing social services benefits. Having> regard to increasing unemployment, we are fast approaching a stage when demands upon the fund will be substantially increased. Whereas the average weekly number of persons in receipt of unemployment benefit was 9,371 in 1946-47, 3,939 in 1947-48, and only 1,573 in 1948-49, which was the last year of office of the Chifley Government, a statement that has been supplied to me by the Minister shows that 17,403 persons were receiving unemployment benefit on the 9th August last. The number of unemployed increased to 20,446 in the following week which ended on the 16th August, and, according to a report published in the press to-day, the number has increased still further until there are 24,000 odd persons now unemployed. Apparently a depression has settled on this fair land, because the number of unemployed is increasing and Ave shall have to provide social services for them. The National Welfare Fund is the only source from which finance can be obtained to relieve the plight of the unemployed.

Mr Hulme:

– Nonsense!

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– It is not nonsense.

Mr SPEAKER:

– Order !

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– What I have said is certainly not nonsense, there is a constantly increasing army of unemployed in Australia.

Mr SPEAKER:

-Order ! The matter to which the honorable member is now directing attention is not covered by the bill before the House, The measure deals with finance purely and simply.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– I shall not persist with that line of argument, Mr. Speaker. I shall summarize my remarks by saying that the credit balance of the

National Welfare Fund must be maintained at a high level, and that the fund itself must be kept on a sound basis to meet the contingencies that I have mentioned. Duringthe financial year 1951-52 the total receipts into the National Welfare Fund were £172,838,000 and the total payment from the fund was £137,608,000. During that period the surplus of receipts over expenditure was £35,230,000, and had the method been adopted last year that the Government now proposes to adopt under this legislation the Government would have robbed the National Welfare Fund of £35,230,000. This Government has no mandate and no right to rob the fund of that amount. When it assumed office it found a national welfare fund that w;js being financed in a manner that enabled the Government to accumulate a great sum during a time when revenue was buoyant in order that during bad times when people were unemployed the accumulated money could be used to relieve that unemployment. Without any mandate from the people, this Government has altered the method of dealing with the National Welfare Fund so that instead of continuing to accumulate a surplus for a rainy day it will henceforth put into the fund the same amount as it draws out and no more. That is a further illustration of the ability of this Government to do two things, that is to break its promises and to innovate methods for financing its budgetary programmes. In 1950, the Government discovered the wool tax. Last year the innovation was to compel primary producers and others to pay a provisional tax.

Honorable members interjecting,

Mr SPEAKER:

– Order! The honorable member for Hindmarsh (Mr. Clyde Cameron) is straying very far from the subject-matter of the debate.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– This year, in order to try to finance its programmes, it has decided to change the method of administering the National Welfare Fund so that there will be a surplus available to the Government, although that surplus will belong legitimately to the National Welfare Fund.

Mr Curtin:

– Plundering!

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

-As my honorable friend has said, the Government is plundering-

Mr SPEAKER:

– If the honorable member for Watson (Mr. Curtin) said that, then he is completely out of order. So is the honorable member for Hindmarsh in using the word, which must not be used in this House.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– It is not on the list of prohibited words.

Mr SPEAKER:

-Order ! The honorable member for Hindmarsh will withdraw the expression.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– I withdraw.

Mr SPEAKER:

– Order! The honorable member for Watson will withdraw his interjection.

Mr Curtin:

– I withdraw.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– The honorable member for St. George said that when the Government assumed office it found that there was no money in the National Welfare Fund, and that it had to appoint an investigator to find out where the money that should have been in the fund really was. I do not know where he got that information unless he obtained it from his adviser, the honorable member for Warringah (Mr. Bland), who seems to he smiling quite confidently at the moment, but I have studied a statement that the Treasurer recently supplied to one of my colleagues, it which he acknowledged the fact that when the present Government assumed office the amount standing to the credit of the National Welfare Fund was £131,115,000.

Mr Leslie:

– Where was the money?

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– In the fund, of course, where the Treasurer has since admitted he had found it.

Honorable members interjecting,

Mr SPEAKER:

– Order ! I must again ask honorable members to maintain order. We had a very bad experience of disorder this morning, and it seems to me that during the last twenty minutes or so the House has been tending to return to the same state. I shall not permit that, and if honorable members will not behave themselves they will find themselves outside. The honorable member for Hindmarsh is to be allowed to continue his speech without interruption.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– The Treasurer apparently has discovered the £131,115,000 that the honorable member for St. George said was not in existence, because in his statement he clearly indicated that such an amount does indeed exist. The Treasurer’s accounts have been audited, and the Treasurer himself seems to have no doubt that when he assumed his present office the money was in existence. Therefore, the statement of the honorable member for St. George was quite wrong. Moreover, he was unfair to the late Labour leader when he said that Mr. Chifley had used devious, if not illegal, means to fill the fund. That remark was really out of character for the honorable member for St. George, because he has not made a similar statement before. Since his remark was completely without foundation I am sure that the honorable member will express regret for having made it. As a consequence of the system of financing the National Welfare Fund established by the Chifley Government, which this Government adopted and continued for some time but modified slightly last year, the £131,115,000 which the Chifley Government provided has increased until it is now ‘£185,027,000. That great sum has been collected not as a result of this Government’s activity, but because the Government has had the common sense to continue the system established by the Chifley Government. The Government has now discovered that the Chifley Government’s scheme has proved to be far too successful, and it does not want this success. The Government wants to be able to say in time of trouble, “ We are very sorry to have to advise you unemployed people and people on social services that we shall have to reduce your pensions and other social benefits. The fact is that we cannot afford to pay them because the substance of the National Welfare Fund has been dissipated “. The Government will provide itself with the alibi of lack of money in order to introduce the hair-brained scheme advo cated by the honorable member for Sturt (Mr. Wilson). That is to make the pensioners pay for their own social services.

I was staggered by the acknowledgement of the honorable member for St. George that the Chifley Gov, mment had done more than any other Australian government to increase the value of the social services,, because the Minister for Social Services (Mr. Townley) utters constantly the parrot cry that this Government has increased social services to a greater degree than has any other government in our history. The honorable member for St. George said that during the yen- 1938-39 the total amount paid in social services was £15,000,000. In the statement supplied to my colleague, the Treasurer said that in the last year of the Chifley Government’s regime, 1949-50, the amount of social services benefits increased to £92,000,000.

Mr Graham:

– When I spoke about the Chifley Government I was speaking about age and invalid pensions only.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– I am obliged to the honorable gentleman for that interjection, because I am reminded that it was the Chifley Government that introduced widows’ pensions, unemployment benefit, sickness benefit, maternity benefit and a host, of other benefits. Until the Chifley Government assumed office the previous non-Labour governments had shown that they were not prepared to grant more than a meagre pittance to age and invalid pensioners. If the Chifley Government had not assumed office in 1941 we still would have been paying only age and invalid pensions. The only reason that this Government is maintaining the present social services is that it has not yet the courage to take them away.

Mr SPEAKER:

– I ask the honorable member for the last time to dis.cuss the provisions of the bill.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– I considered that I was well within the ambit of the debate because I was answering the honorable member for St. George.

I ask for leave to continue my remarks later.

Lea.ve granted; debate adjourned.

page 1738

INCOME TAX AND SOCIAL SERVICES CONTRIBUTION BILL 1952

In Committee of Ways and Means:

Sir ARTHUR FADDEN:
Treasurer · McPhersonTreasurer · CP

– I move -

Interpretation.

  1. – (1.) That, in this Resolution - “ life assurance company “ mean a company the sole or principal business of which is life assurance; “ mutual income “, in relation to a life assurance company (other than a mutual life assurance company), mean -

    1. so much of that part of the taxable income of the company which has been derived from its life assurance business as bears the same proportion to that part of the taxable income as the amount of the profits divided for the same year of income among the life assurance policy holders of the company bears to thetotalprofits divided among those policy holders and the shareholders of the company in respect of the company’s life assurance business for the same year of income; or
    1. where no profits in respect of the company’s life assurance business are divided for the year of income but, by virtue of the company’s memorandum or articles of association, any profits to be divided among the life assurance policy holders of the company are required to be a certain proportion of the total profits to be divided - that proportion of that part of the taxable income of the company which has been derived from its life assurance business; “ mutual life assurance company “ mean a life assurance company the profits of which are divisible only among the policy holders; “ the Assessment Act “ mean the Income Tax and Social Services Contribution Assessment Act1936-1952 as proposed to be amended by the Income Tax and Social Services Contribution Assessment Bill (No. 3) 1952. (2.) That a reference in this Resolution to taxable income be read as a reference to taxable income of the year of income.

Incorporation.

  1. That the Assessment Act be incorporated and read as one with the Act passed to give effect to this Resolution.

Imposition of Income Tax and Social Services Contribution.

  1. – (1.) That a tax by thenameofincome tax and social services contribution beimposed at the rates declared in this Resolution. (2.) That, notwithstanding anything contained in this Resolution, income tax and social services contribution be not imposed upon a taxable income which does not exceed One hundred and four pounds derived by - (a)a person who is not a company:

    1. a company in the capacity of a trustee; or
    2. a company specified in clause (f) of sub-paragraph (2.) of paragraph9 of this Resolution.

Rates of Income Tax and Social Services Contribution Payable by Persons other than Companies.

  1. – (1.) That the rates of income tax and social services contribution payable by a person other than a company be as set out in the First Schedule to this Resolution. (2.) That the rates of income tax and social services contribution in respect of a taxable income to which Division 16 of Part III. of the Assessment Act applies be as set out in the Second Schedule to this Resolution. (3.) That the rate of income tax and social services contribution in respect of a taxable income in any case where sub-section (1.) of section eighty -six of the Assessment Act applies be as set out in the Third Schedule to this Resolution. (4.) That the rates of income tax and social services contribution payable by a trustee he as set out in the Fourth Schedule to this Resolution.

Further Tax and Contribution on Property Income.

  1. – (1.) That where, in the case of a person other than a company or in the case of a company in the capacity of a trustee, the taxable income or any part thereof is derived from property, and the total taxable income exceeds Four hundred pounds, the rates of income tax and social services contributionbe -

    1. the appropriate rate or rates declared toy the last preceding paragraph; and
    2. in respect of so much of the taxable income derived from property as exceeds One hundred pounds but does not exceed Ten thousand pounds - thefurther rates set out in the Fifth Schedule to this Resolution. (2.) That where the total taxable income does not exceed One thousand pounds, the maximum amount of income tax and social services contribution payable by ‘reason of clause (b) of the last preceding sub-paragraph be an amount calculated at the rate of Twelve pence for every pound by which the total taxable income exceeds Four hundred pounds.

Limitation of Tax and Contribution’ Payable by Aged Persons.

  1. – (1.) That this paragraph apply to a taxpayer who -

    1. being a man, has attained the age of sixty-five years, or, being a woman, has attained the age of sixty years, on or before the last day of the year of income; and
    2. is a resident of Australia during the whole of the year of income, but do not apply to a taxpayer in the capacity of a trustee. (2.) That where the net income of a taxpayer to whom this paragraph applies does not exceed Two hundred and seventy-two pounds, the maximum amount of income tax and social services contribution payable by him by reason of the provisions of paragraph 4 of this Resolution be one-half of the amount by which hisnet income exceeds Two hundred and fiftyfour pounds, or, if his net income does not exceed Two hundred and fifty-four pounds, no income tax and social services contribution be payable by him. (3.) That where the net income of a taxpayer to whom this paragraph applies does not exceed Six hundred and sixteen pounds and during the year of income the taxpayer contributes to the maintenance of -
    3. his wife, being a person who is a resident of Australia during the whole of the year of income and has attained the age of sixty years on or before the last day of that year; or
    4. her husband, being a person who is a resident of Australia during the whole of the year of income and has attained the age of sixty-five years on or before that day, the maximum amount of income tax and social services contribution payable by the taxpayer by reason of the provisions of paragraph 4 of this Resolutiou or of clause (a) of subparagraph (1.) of the last preceding paragraph he one-half of the amount by which the sum of the net incomes of the taxpayer and his or her spouse exceeds Five hundred and seven pounds, or, if the sum of those net incomes does not exceed Five hundred and seven pounds, no income tax and social services contribution be payable by the taxpayer by reason of those provisions. (4.) That, for the purposes of this paragraph, the net income of a person be ascertained by deducting from the gross income of that person all expenses (not being expenses of a capital, private or domestic nature) incurred in deriving that gross income.

Minimum Tax and Contribution.

  1. That where, but for this paragraph, the amount of income tax and social services contribution which a person would be liable to pay under the preceding provisions of this Resolution, after deducting all rebates to which he is entitled in his assessment, is less than

Ten shillings, the income tax and social services contribution payable by that person be Ten shillings.

Rates of Income Tax and Social Services Contribution Payable by a Company.

  1. – (1.) That the rates of income tax and social services contribution payable by a company, other than a company in the capacity of a trustee, be as set out in the Sixth Schedule to this Resolution. (2.) That where the taxable income of a company specified in clause (f) of subparagraph (2.) of the next succeeding paragraph does not exceed Two hundred and eight pounds the maximum amount of income tax and social services contribution payable by the company be one-half of the amount by which the taxable income exceeds One hundred and four pounds.

Additional Tax and Contribution on Certain Companies.

  1. – (1.) That there be imposed upon the taxable income of a company income tax and social services contribution at the additional rate of Two shillings for every pound of the taxable income. (2.) That this paragraph do not apply to -

    1. a company that is a private company for the purposes of Division 7 of Part III. of the Assessment Act;
    2. so much of the taxable income of a company which is a non-resident as consists of income from dividends;
    3. a company in the capacity of a trustee ;
    4. a mutual life assurance company or the mutual income of a life assurance company;
    5. a co-operative company as defined by section one hundred and seventeen of the Assessment Act; or
    6. a company which is not carried on for the purposes of profit or gain to its individual members and is, by the terms of its memorandum or articles of association, rules or other document constituting the company or governing its activities, prohibited from making any distribution, whether in money, property or otherwise, to its members.

Elimination of Pence.

  1. That where the amount of the income tax and social services contribution which a person would be liable to pay under the preceding provisions of this Resolution, before deducting any rebate or credit to which he is entitled in his assessment, is an amount of pounds, shilling and pence or shillings and pence -

    1. if the pence do not exceed six - the amount be deemed to be reduced by the amount of the pence; and
    2. if the pence exceed six - the amount be deemed to be increased by treating the pence as One shilling.

Tax and Contribution where Amount to be Collected or Refunded would not exceed Two Shillings.

  1. – (1.) That, notwithstanding anything contained in the preceding provisions of this Resolution, where a person has, in accordance with section two hundred and twenty-one h of the Assessment Act, forwarded to the Commissioner a tax stamps sheet or group certificate issued to him in respect of deductions made in a year from his salary or wages, and the difference between the available deductions and the income tax and social services contribution which would, but for this subparagraph, be payable by that person in respect of the taxable income derived by him in that year is not more than Two shillings, the income tax and social services contribution payable by that person in respect of that taxable income be an amount equal to the available deductions. (2.) That the last preceding sub-paragraph do not apply -

    1. in relation to a person who is liable to pay provisional tax and contribution in respect of his income of the year immediately succeeding the year referred to in that subsection ; or
    2. in any case in which the amount of income tax and social services contribution which would, but for this paragraph, be payable is Ten shillings and the available deductions exceed Ten shillings. (3.) That, in this paragraph, “the available deductions “ mean the sum of the amount represented by the face value of the tax stamps duly affixed to a tax stamps sheet referred to in sub-paragraph (1.) of this paragraph and the amount of the deductions specified in a group certificate so referred to.

Levy of Income Tax and Social Services Contribution.

  1. – (1.) That the income tax. and social services contribution imposed in pursuance of the preceding provisions of this Resolution be levied and paid for the financial year which commenced on the first day of July, One thousand nine hundred and fifty-two. (2.) That, until the commencement of the Act for the levying and payment of income tax and social services contribution for the financial year commencing on the first day of July, One thousand nine hundred and fiftythree, the Act passed to give effect to the preceding provisions of this Resolution also apply for all financial years subsequent to that which commenced on the first day of July, One thousand nine hundred and fifty-two.

Provisional Tax and Contribution.

  1. That provisional tax and contribution be imposed and be payable, in accordance with the provisions of the Assessment Act, in respect of the income of the year of income ending on the thirtieth day of June, One thousand nine hundred and fifty-three.

page 1740

THE SCHEDULES

page 1740

FIRST SCHEDULE

Basic Rates of Tax andcontribution.

The rate of income tax and social services contribution for every £l of each part of the taxable income specified in the first column of the following table is the rate set out in the second column of that table opposite to the reference to that part of the taxable income: -

page 1741

SECOND SCHEDULE

Rates of Tax and Contribution by Reference to an Average Income.

In the case of a taxpayer to whose income Division16 of Part III. of the Assessment Act

Applies, the rates of income tax and social services contribution are -

page 1741

THIRD SCHEDULE

Kate of Tax and Contribution by Referenceto a Notional Income.

For every £1 of the taxable income of a taxpayer deriving a notional income, as specified by sub-section (1.) of section eighty-six of the Assessment Act, the rate of income tax and

Social services contribution is the rate ascertained by dividing the tax and contribution which would be payable under the First Schedule upon a taxable income equal to his notional income by a number equal to the number of whole pounds in that notional income.

page 1741

FOURTH SCHEDULE

Rates of Tax and Contribution Payable by a Trustee.

For every £1 of the taxable income in respect of which a trustee is liable, in pursuance of either section ninety-eight or section ninety- nine of the Assessment Act, to be assessed and to pay tax and contribution, the rate of income tax and social services contribution is the rate which would be payable under the First, Second or Third Schedule, as the case requires, if one individual were liable to be assessed and to pay tax and contributionon that taxable income.

page 1741

FIFTH SCHEDULE

Further rates of Tax and Contribution in Respect of Taxable Income Derivedfrom

Property

The further rate of income tax and social services contribution for every £1 of each part of the taxableincome derived from property specified in the first column of the following table is the rate set out in the second column of that table opposite to the reference to that part of that taxable income:-

page 1741

SIXTH SCHEDULE

Rates of Tax and Contribution Payable by a Company other than a Company in the Capacity of Trustee.

When I explained the Government’s plans for financing its operations in the financial year 1952-53 in my budget speech on the 6th August, 1952, I announced the Government’s intention to reduce taxation by approximately £50,000,000 in the current financial year. I have already outlined to honorable members in some detail the changed economic circumstances which have made it possible this year to lighten the burden of taxation, whereas last year I had the unhappy task of increasing it. The proposed resolution now before the committee, which declares the rates of income tax and social services contribution payable for the current financial year, represents a substantial part of the total reduction.

The main effect of the proposed resolution will be to remove the special levy of 10 per cent, which it was found necessary to impose last year on individual taxpayers. The advantage to individual taxpayers in the current year will amount to £23,000,000. Although the gain to individual taxpayers in the financial year 1952-53 will, be £23,000,000, the benefit in a full year will be in the vicinity of £36,500,000. The reasons for the lower amount in 1952-53 are twofold. The reduced scale of instalment deductions from salary and wages will not come into operation until the 1st October, 1952. This, of course., is due to the time which is required for the compilation, printing and distribution of a new scale of weekly deductions, the work on which cannot be commenced until after the Government’s intentions are made known. Any overdeduction in the first three months of the current financial year will be refunded when assessments are made early in the 1953-54 financial year. The reduced provisional tax payable in respect of 1952-53 income will not in all cases be payable before the 30th June, 1953, because of delay in the lodgment of returns and the consequent lateness in the issue of assessments of businessmen, primary producers and other taxpayers liable to pay provisional tax.

When the details of the budget were announced, I circulated to honorable members statements showing the comparative amounts payable by taxpayers with varying family responsibilities for the years 1951-52 and 1952-53. I also circulated a schedule comparing the taxes payable on similar incomes received by individuals in the United Kingdom- and New Zealand. These tables clearly indicated that, in both the United Kingdom and. New Zealand, the taxes are considerably higher than the Australian taxes declared in this proposed resolution. Since these schedules were circulated, the New Zealand Minister Eoi- Finance has announced certain tax reductions, but, despite the proposed reductions, the individual tax liability in New Zealand is still higher than it is in Australia.

The Leader of the Opposition (Dr. Evatt) attempted in the budget debate to show that taxpayers in 1952-53 would be worse off despite the reduction to be made in the rates. He based his argument, in the first place, on the level of total collections in. 1951-52 and the estimated collections for 1952-53. Any comparison made on this basis is most misleading because of the various factors which intrude into the problem. The instability of the approach can be simply illustrated by stating that the tax collected in a year does not all relate to income of that year. For example, in the financial year 1952-53 the only collections that will relate to the 1952-53 income will be those represented by the proceeds of instalments and provisional tax. A very considerable amount of tax will be collected which will relate to the 1951-52 financial year and previous years’ income. As a matter of fact, in 1951-52, collections from current income were £335,500,000, whereas for 1952-53 the estimated comparable figure is £275,400,000.

The right honorable gentleman attempted to show that a taxpayer with a dependent wife and two children would be actually worse off after the reduction had been made. To illustrate his theory, he instanced the case of a taxpayer with a wife and two dependent children having an income of £500 in 1.951-52 who, on that income, would be required to pay E9 lis. tax. He visualized basic wage adjustments as increasing the income in 1952-53 to £600, on which tax liability would be £18 16s., and from these figures he deduced that the taxpayer would be £S 5s. worse off because the increased income would buy bini only the same volume of goods and services.

The essence of this claim is that taxation rates should be levied in such a way that full account shall be taken each year of changes in money income in order to preserve a constant real income in the hands of taxpayers. One needs only to remind the right honorable gentleman that when the Labour Government was in office, and all the circumstances that he now visualizes were in evidence, that Government paid no attention to the principle which he now advocates. I believe it to have been wise in that decision and I further believe that, if the Labour party were returned to power, lie would not adopt the argument that he is now advancing. No government in either this or any other country with any pretence to responsibility would attempt such a task. Even if it were possible to determine the cases in which increased income did no more than preserve a basic purchasing power, there would be no proper means of determining the basic figure. The truth is that it cannot be said with any degree of certainty in any case that increases of income do not increase the real purchasing power because of the variety of tastes of individuals.

The taxing legislation is no place in which to attempt to offset fluctuations in money values. The realities of the situation are as have been set out in the schedules that I have circulated, and no amount of confused argument, such as ha3 been indulged in by the Leader of the Opposition, can gainsay them. What the taxpayer who has been the subject of the Leader of the Opposition’s example will know is that, without the decrease effected by the Government, he would have been required to pay £20 14s. instead of £18 16s. as ia proposed.

A further proposal in relation to individuals is the extension of the age allowance first introduced last year. This provision exempts from tax liability men over 65 years of age and women over 60 years of age whose incomes do not exceed the maximum permissible income for age pension purposes. In 1951-52, the figures stood, for a single person, at £234 and, for a married couple, at a combined income of £468. The increase of 7s. 6d. a week proposed in the age pension requires a commensurate extension of the exemption points for the age allowance. Accordingly, the exemption is to be increased by £20 to £254, in the case of a single person, and by £39 to £507 in the case of married couples. Where the income slightly exceeds these figures, equity will be preserved by a provision ensuring that the basic tax and contribution shall not exceed half the excess over the permitted income.

Several important alterations are proposed so far as rates applying to companies are concerned. The first and most important is the discontinuance of the 10 per cent, advance payment required in the last financial year. Last year all companies, whether public or private, were required to make the advance payment in respect of their tax liabilities on 1951-52 income. This advance payment will be credited against the tax assessed on the income of that year and companies will not be required to make a further advance payment of 10 per cent, of the current year’s tax. The cost to revenue in the current financial year is estimated at £14,000,000. When the full effect of the decision is felt, the benefit to companies will be of the order of £19,000,000.

A reduction of 2s. in the £1 is to be made in the rate to be applied to the first £5,000 of the taxable income of public companies. The proposed concession will provide relief to all public companies, but it will be of special assistance to those companies in the lower profit-earning ranges. Very strong representations have been made from the smaller public companies throughout Australia to the effect that the increases made last year were weighing with particular severity upon them. The inquiries which have been made into these claims have satisfied the Government that, in the changed economic circumstances, a return to the concessional rate is justified. The cost to revenue is estimated to be £1,500,000 in a full year and £1,100,000 in the current financial year.

Ever since uniform income tax was introduced, mutual life assurance companies have been conceded a tax advantage of ls. in the £1 on the primary rates imposed on their mutual income, as compared, with the primary rates imposed on the income of public companies. This advantage is to be preserved after the reduction of 2s. in the £1 proposed on the first £5,000 of taxable income, as explained above. At present, the rate of tax applicable to the incomes of mutual life assurance companies and to the mutual income of partly mutual life assurance companies is 6s. in the £1. The new rate for these companies for the financial year 1952-53 will be 4s. in the £1 on the first £5,000 and 6s. in the il on the balance of income.

For many years the method of taxing the undistributed income of private companies has been a vexed question. Ever since Commonwealth income tax was imposed, periodical attempts have been made to devise a plan by which, without depriving private companies of the power to. grow and develop by ploughing back a reasonable amount of their earned profits, the Government may be assured of obtaining the proper amount of tax on the income which is ultimately used for the benefit of shareholders. Every plan so far enacted has either been proved to be capable of avoidance or been criticized as being too harsh and inflexible. All of them have contained great complexity and have led to delays and uncertainty in the ascertainment of liability.

The committee- which the Government appointed after it was returned to. power was-, accordingly,, asked to devote special attention to the problem of finding, once and for all,, a plan which might be relied upon to provide substantial justice both to the taxpayers and to the revenue and to achieve simplicity and stability in these complex provisions. After long and careful consideration, the committee has recommended a plan which i; believes will solve most, if not all, of th difficulties which have heretofore prove insoluble. The details of the plan wil be explained at length in another measure that I shall introduce later to-night.

This proposed resolution embodies that part of the plan which provides for the imposition of tax at a flat rate of 10s. in the £1 on undistributed income of private companies in excess of the retention allowance. I do not wish to burden the committee with the full details of the lew plan in connexion with this proposed resolution, but the relativity of the flat rate of 10s. in the £1 on excessive retentions by private companies will be clear when the other measure is explained.

As, a concomitant of the Government’s proposal to exempt the income of nonprofit organizations concerned with the sporting activities of humans, it is proposed to provide an exemption for other non-profit-making organizations if the taxable income does not exceed £104. The kind of organization that will be covered by this exemption embraces clubs, lodges, societies and the like. The taxable income of these organizations consists, for the main part, of a small amount of bank interest or Commonwealth loan interest on sums invested pending decisions on its expenditure. Apart from this, the income arises mainly from members’ subscriptions and other receipts from members which are not liable for income tax. In order to prevent anomalies, it will be provided that, where the taxable income of the organization exceeds £104 but does not exceed £208, the amount of tax and contribution payable shall not exceed half the excess of the taxable income over £104.

The proposals 1 have outlined apply to the current financial year, 1.952-53, and, therefore, will apply to the income of individuals derived, during the year ending the 3.0th June, 1953, and, of companies during the year- ended the 30th June, 1952. . The- usual printed memorandum explaining;, in detail, the proposals contained in this proposed resolution will be circulated amongst honorable members at an early date. “With the advantage of having considered the events that have occurred since 1 announced the Government’s plans on the 6th August, and after having heard the criticism of the Opposition of those proposals, I find no reason to change the views that I expressed at that time, nor to wish to alter the proposals which we then made. Indeed, all the events since that date> and the paucity of the criticism of the Opposition, convince me that the steps that the1 Government has taken are the right steps.

Progress reported.

page 1745

INCOME TAX AND SOCIAL SERVICES CONTRIBUTION ASSESSMENT BILL (No. 3) 1952

Bill presented by Sir Arthur Fadden, and read a first time.

SECOND Reading.

Sir ARTHUR FADDEN:
McPhersonTreasurer · CP

by leave - I move -

That the hill he now read a second time.

The provisions of this bill are designed to give effect, to income tax adjustments outlined in the course of my budget speech. Foremost in importance is the proposed simplified plan for the taxation of the undistributed incomes of private companies. When explaining the proposed resolution dealing with rates of income tax and social services contribution, I made reference to difficulties that had been encountered, almost from the inception of income tax, in securing a basis which would at once reasonably protect the revenue and allow development margins for private companies. The existing basis of. taxing undistributed incomes was first evolved in 1934. but it has undergone almost continual adjustment since that time. In the process, complexity has been added to complexity until to-day the whole system of private company taxation, is,, of its very nature,, cumbersome, extremely difficult of administration, does not provide adequate protection of the revenue and does not give satisfaction to the companies- to which it applies.

The difficulties of the system are intensified by the inherent need to recognize that, practically without exception, com panics- must retain some of their profits for consolidation and development of their businesses. The utmost difficulty has been experienced by successive governments in securing a proper balance between a fair compensation- to the revenue for the loss occasioned by the non-distribution of profits to shareholders and a just provision of retention allowances, free of undistributed income tax, to enable the reasonable development of company businesses. Difficulty has also been- experienced in combating schemes of tax avoidance, of extraordinary variety and ingenuity, devised by companies to exploit defects in the system. As a result, the legislation has become most unstable.

The view of the Government is that taxing legislation which is so unstable is self -evidently unsound,, and renders unduly difficult the management and control of those companies that fall under the ever-changing laws. Accordingly, the Government has given particular consideration to a plan of private company taxation that might be expected to overcome many of the defects of the present law, particularly in regard to complexity, whilst providing some degree of stability in the future. In the present bill, therefore, the Government, having regard to the proved short-comings of the existing system, invites the Parliament to endorse proposals founded on an entirely new approach to the problems of private company taxation. In the sense that the departure from the present system is almost complete, the proposals are radical, but they are based, in principle, on the unanimous recommendations of members of the Commonwealth Committee on Taxation. Honorable members have already had the advantage of reading the very full report of the committee on Reference No. 15- the Taxation of Companies Private and Non-Private and their shareholders - which I tabled in this House on the 12th August last.

The outstanding feature of the proposed method of private company taxa- tion is its relative simplicity by comparison with the present system. Whilst I do not seek to persuade the House that the full meaning and implications of all the provisions of the proposed legislation are to’ be gained from a. cursory reading, of (Jio bill, I do suggest that, having, regard to the problems- that have to be surmounted, the proposals are as simple as the subject matter allows. Under the proposed system, graduated and, I believe, proper retention allowances are provided. The retention allowance is the income which a private company may retain and use in its business free of any impost other than the basic company rate of tax, but which becomes subject to tax if subsequently distributed.

The present scale of retention allowances begins with 50 per cent, of the first £1,000 of income, and the percentage of retention descends in an irregular pattern upon each additional £1,000 of income until 10 per cent, is reached on the excess over £10,000. The permitted retention at £6,000 of income at present is £2,050, or 34.16 per cent, of the total income, and is considered reasonable. Above that amount of income, it has been necessary to liberalize the allowance to achieve balance, and it has, therefore, been decided to increase the percentage retention to all income in excess of £6,000 to a flat 25 per cent. The enlarged scale of retention will provide for all the reasonable requirements of companies by re-investment of profits in their businesses, and should ensure that tax on undistributed income will not impair the development and financial stability of any private company. If a private company chooses to withhold from distribution to its shareholders profits in excess of these increased retention allowances, the excess will be subject to tax at the rate of 10s. in the £1 in lieu of the rate ascertained by assuming a notional dividend in the hands of shareholders.

The substitution of a flat rate of tax for the individual shareholders’ graduated rates is a major step in the direction of simplification. Private companies, which may become liable to the tax, will no longer experience irritating delays in ascertaining their full tax liabilities. These delays are unavoidable under the existing system. It should not be thought that this flat rate of tax will necessarily preclude private companies from gaining the use of profits over and above the permitted retention allowance which the directors feel should be retained. As the Commonwealth Committee on Taxation has pointed out so plainly, arrangements may be made for shareholders to re-invest with the company the residua of the dividends after payment of tax. In fact, many private companies have been following this practice for some years past. If, however, any private company deliberately retains income in excess of the retention allowance, it may reasonably be assumed to be converting that income into capital which becomes a part of the permanent capital structure of the company, and that it does not contemplate the distribution of the taxed fund to its shareholders. If it should do so, however, it is proposed that there shall be no abatement in the shareholder’s assessments on account of the tax paid by the company.

One of the most fruitful sources of complexity and dispute is the present system of identifying and rebating to shareholders the tax payable on dividends distributed out of funds which have borne undistributed income tax. It is confidently expected that, under the proposed system, private companies will distribute their income up to the permitted retention allowances so that no question of rebate will again arise.

Perhaps I should here deal with the claim persistently made to the effect that Australian taxation of companies and shareholders is a form of iniquitous double taxation which imposes a far greater burden on company profits than do the systems of other countries. This claim is usually associated with a contention that a rebate of the company tax should be allowed to the shareholders when tax is being levied on the dividends they receive so as to prevent an undue proportion of the earnings of companies being absorbed by tax. It is not unusual foi the claim to be made that most other countries do not subject company profits to tax more than once. In any discussion of these problems, it should not be overlooked that an examination of any particular form of taxation, in isolation from the general fiscal system of any country, may present a misleading picture. But, for what it is worth, a comparison of the taxation of Australian companies and their shareholders with similar taxation in the major Englishspeaking countries, even though the systems may differ, need not be avoided.

In Australia, public companies will, in this financial year, be required to pay tax at 7s. in the £1 on the first £5,000 of taxable income, and 9s. on the balance. The shareholders pay tax at the graduated personal rates on the dividends distributed to them out of those profits. In the United Kingdom, the standard rate of tax for companies and individuals alike is 9s. 6d. in the £1. In addition, every company pays 4s. 6d. in the £1 on its distributed profits, and may pay as much as 3s. in the £1 beyond that, by way of excess profits tax. In short, for every £1 of its distributed profit, the company must pay at least 14s. and it may, by reason of excess profits tax, pay considerably more. It is true that dividends paid by companies resident in the United Kingdom are not subject to ordinary income tax in the shareholder’s hands, but where a shareholder’s incomes, including the dividends, exceed £2,000, sur-tax is payable. The rate of sur-tax may be as high as 10s. in the £1.

In New Zealand the rate of income tax and social security charge payable by companies ranges from 4s. 3d. in the £.1. to lis. in the £1, according to the company’s income. The maximum rate is payable where the company’s income is £7,950 or more, so that, in practice, a relatively small proportion of company profits is taxed at a rate of less than lis. in the £1. Whilst dividends are not directly subject to New Zealand tax in a shareholder’s hands, they are taken into account in determining the graduated rate of tax payable on any other income derived by him. This, of course, can have an appreciable effect on the overall tax payable by the shareholder. In Canada, the standard rates of income tax payable by corporations are 22 per cent, on the first 10,000 dollars of taxable profit and 52 per cent, on the excess. Shareholders pay tax at 1 a graduated rate on dividends received by them, and the only rebate allowed against that tax is 10 per cent, of the dividend. As the Canadian rate of tax on the highest brackets of income earned by individuals is 86 per cent., the effective rate of tax on dividends may be as high as 76 per cent., or, converted to its Australian equivalent, more than 15s. in the £1.

The United States of America recognizes fully the principle that the profits earned by a company and a distribution of those profits received by a shareholder are distinct subjects of taxation. As in the Australian system, company profits are taxed, and a separate tax is imposed on dividends received by the shareholders. The standard rate of United States of America income tax payable by corporations is 30 per cent, on the first 25,000 dollars of taxable profit and 52 per cent, on the balance. In addition, an excess profits tax is imposed, and the total levy for ordinary tax and excess profits tax may absorb as much as 70 per cent, of the company’s profits. Dividends are subject to United States of America tax in the hands of individual shareholders without the allowance of any rebate.

From what I have said, it will be clear that, in none of the countries mentioned, is full credit given in the assessment of an individual shareholder upon dividends received by him for tax paid by the company upon profits out of which the dividends are distributed. It is necessary to bear in mind, moreover, that the higher the rate of tax payable by the company, the lower is the proportion of profits available for distribution. As the rate of company tax in Australia 5.3, generally speaking, lower than in any other important English-speaking country, Australian companies are in a position to distribute correspondingly larger amounts by way of dividends to their shareholders. Another and perhaps more cogent reason why rebates of the primary tax paid by companies should not be allowed against the tax paid on dividends is that, in all transactions in shares since 1940, the price of those shares has been determined by the parties having regard to the expected net return to the investor in dividends after payment of tax. If that net return were to be increased by granting a tax rebate on the dividend, shareholders as a class would gain a further benefit from the enhanced market value of their shares - an advantage not enjoyed by investors in Commonwealth loans or any other form of security. I should emphasize that, although rebates of primary tax and the proposed fiat rate on the undistributed income of private companies are not to be allowed, the freedom from tax of dividends paid out of 1950-51 and previous incomes which have ‘ borne tax at shareholders’ rates will be continued for a period of five years. Private companies are thus afforded the opportunity, until the 31st December, 1957, of distributing to their shareholders dividends out of funds which have borne undistributed income tax calculated at the shareholders’ individual graduated rates which will be tax-free in the shareholders’ hands. Acceptance of the new plan of private company taxation represents an important step towards simplification both in law and in practice. I have said that because of the liberal provision of retention allowances, on the one hand, and the ability of private companies to arrange for the continued use by way of loan or re-investment of distributed profits, private companies will be enabled to place themselves entirely outside the field of undistributed income tax. If these expectations are realized, Australia will have found a method of providing a practical and equitable solution of taxing problems that have caused concern to the legislators of this and other countries over many years.

A most important amendment proposed in this bill is the allowance, for the first time in the history of Commonwealth income tax, of a concessional deduction in respect of expenses incurred by parents in educating families. Having regard to the ever-increasing costs pf education, this concession will represent a very acceptable and practical form of taxation relief at the present time. taxpapers will be avowed a deduction as from the 1st July, 1952, of amounts paid to schools, colleges or universities for the full-time education of dependent children under the age of 21 years. The allowance will be subject to n maximum deduction of £50 for each child. I emphasize that the allowance will include tuition fees, board., text books and extras, so long as the amounts claimed have been paid directly to the educational institution in connexion with the full-time education of the child. It would not be practicable to allow a deduction for casual payments made otherwise than to an institution providing fulltime education, even though those payments -may relate to the child’s educa-

Sir Arthur Fadden. tion. However, the Government has paid particular attention to the claims of parents who Jive in isolated areas or whose children are unable to receive a normal education because of physical handicaps. To meet these special cases, it is proposed io extend the concessional allowance to payments which are made to tutors orgovernesses for the full-time education of children. This allowance also will be subject to the general maximum annual deduction of £50 for each child. I have great pleasure in announcing this con. cession to a most worthy cause.

The next important provision relates to leases and goodwill. A number of the proposals in this bill are designed to implement recommendations by the Commonwealth Committee on Taxation for the removal of anomalies from existing legislation. One of these proposals is that which relates to the taxation of goodwill associated with leasehold business premises. The taxation committee has expressed the opinion that the provision relating to goodwill probably has caused more dissatisfaction and confusion than any other provision in the income tax law. Taxation of amounts received in connexion with leasehold transactions is based on the assumption that lease premiums, although they have some of the attributes of capital, are in reality no more than commuted rent or rent paid in advance. On this principle, deductions are allowed in the assessments of persons paying lease premiums, and correspondingly, the premiums are included in the assessable income of the persons receiving such amounts. For many years past, this treatment has been extended, by statutory definition, to amounts paid and received for the purchase and sale of goodwill attached to leasehold premises. Whatever theoretical justification may be found for this basis of assessing consideration for goodwill, there is no doubt .that it has given rise to a great deal of resentment because, to many vendors of goodwill, it has seemed to be the levy of income tax upon a capital receipt. Moreover, the application of the legislative provisions relating to goodwill has proved difficult to administer in practice. As I have already mentioned, consideration for good’will is taxable only where it is attached to leased premises, that is, where it is local goodwill. It is often very difficult to determine whether goodwill is local or personal.

It is clearly in the interests of the purchaser of goodwill to establish that the consideration he has paid should be treated as a premium because, under present practices, he gets a deduction of the amount paid spread over the term of his lease. The vendor naturally seeks to demonstrate that it should not be so treated because then he is not taxed on the amount received. This conflict of interests has led to numerous appeals being lodged against the assessments of one or other of the parties to sales of goodwill. To overcome these difficulties, it is proposed that, as a general rule, consideration for goodwill shall he exeluded from the lease provisions of the income tax law. The effect of this exclusion will be to exempt the vendor f rom taxation on the sale price of goodwill, but, conversely, the person paying the consideration will not be allowed a deduction of that amount. This amendment will apply to consideration payable in. transactions made after the 31st December, 1952. However, parties to transactions after that date may deem it advantageous that consideration payable for goodwill shall be treated as a lease premium, as it is under the present law. Upon unanimous agreement to that effect, duly notified to the Commissioner of Taxation, those parties may preserve the present basis of assessment whereby the vendor is taxed and the purchaser is allowed a deduction in respect of the consideration for the goodwill.

It may be asked why the operation of this proposed amendment is being deferred until the New Year. The Government’s reply is that it has an obligation to both of the parties to transactions of the nature I have described. From what has been mentioned already, it is apparent that those interests may be diametrically opposed. Because of this conflict of interests, it is considered essential that reasonable notice should be given of the proposed amendment so that prospective vendors and purchasers and their taxation advisers may have every opportunity of becoming familiar with the new provisions. It would be quite impracticable to apply the amendments to past transactions. Even if it were possible to undo something already accomplished by agreement, retrospective application of the law would mean that vendors would have to persuade purchasers to forego deductions to which they are entitled. It is most unlikely that purchasers would enter into arrangements of this nature.

During the last session of the Parliament, honorable members had before them the Government’s proposals for granting deferment of the tax liability of primary producers because of a reduction of income, and the Government’s measure to reduce the burden of taxation on insurance moneys received for the loss of live-stock through bush fires, floods, &c. On that occasion, I promised, on behalf of the Government, to examine the claims of primary producers who are exposed to a heavy burden of taxation upon receipts arising from forced sales of live-stock due to loss of fodder through bush fires and drought conditions. This examination has been completed, and I am happy to announce that it has been found to be practicable to grant relief, not only in those cases, but also in cases where pasture or fodder is destroyed by floods. Beginning with the income year 1951-52, the primary producer will, in all these cases, be given the opportunity, upon submission of evidence of the facts, to elect to include in his taxation return for the year in which the forced sale occurs only onefifth of the resulting profit. Then onefifth of that profit will be included in his assessment for each of the next four succeeding years.

Another proposal in the bill that will be of particular interest to primary producers is the provision that concerns partnership transactions which involve trading stock. I need not remind honorable members that, for the purposes of income tax, trading stock includes livestock. For .some years, it has been open to doubt whether a transfer of interests in partnership assets, including live-stock and other forms of trading stock, amounts to a disposal of that stock. Acting upon legal advice that such a transfer is, in effect, a constructive disposal, the Commissioner of Taxation has, in many of these eases, assessed the transferors on the market selling value of the live-stock and allowed the transferees a corresponding deduction. “Whilst this interpretation was favorable to the transferees, it was unacceptable in some cases to partners who became liable to tax on what was, in substance, an unrealized, profit.

In order to avoid hardship in these eases, it is proposed to give to the parties to such transfers of interests an opportunity to determine their respective tax liabilities. In effect, to them will be given a right to elect, so long as they agree unanimously among themselves, whether tax shall be payable on the unrealized profits, or whether the liability shall be deferred until an actual sale of the transferred stock has taken place. This right of election will apply, not only to transfers in current and future years but also- retrospectively to the 1st July, 1950. By agreeing unanimously to exercise their right of election, partners who have been taxed 6n unrealized profits deemed to have arisen from transfers of interests effected after that date will have the opportunity to be re-assessed on the new alternative basis.

Reference has already been made in the House by the Minister for Territories (Mr. Hasluck) to the Government’s future taxation policy in relation to income derived in the Northern Territory. Provisions designed to give effect to that policy are included in the present bill. As the general outline of the Government’s proposals has already been made public, it is not my intention on this occasion to do more than recapitulate the essential features of the proposed amendments. Honorable members are aware that, for many years, income from primary production, mining and fisheries in the Northern Territory has been entirely tax-free, if earned by a resident of the territory. That exemption expired on the 30th June, 1952. The Government proposes tax concessions which should provide an effective stimulus to the reinvestment in the Northern Territory of profits derived from primary production in the territory. The concessions to which I refer will enable primary producers in the Northern Territory to write off, over a period of five years, by way of deductions from assessable income, the cost of plant and machinery purchased by them after the 30th June, 1952.

Moreover, in regard to structural improvements completed after that date, the primary producer will have the option to deduct the full cost in the year of completion, or to write off that cost over a period of five years in the same manner as the cost of plant and machinery is written off.

The Government’s proposals include special provisions designed to cushion the transition from tax freedom to tax liability. By reason of these special provisions, primary producers and persons engaged in mining in the Northern Territory will be relieved of the full burden of taxation in the years immediately following the termination of the exemption. Particulars of the proposed concessions will be given in an explanatory memorandum that will be circulated for the information of honorable members in a few days’ time.

As I have already indicated, several of the provisions in the bill are designed to give legislative effect to recommendations of the Commonwealth Committee on Taxation. One group of these provisions relates to the taxation of retiring allowances, the deduction of contributions by employers and others to employees’ pension funds, and the exemption of income of funds established to provide retirement benefits for selfemployed persons. With regard to the taxation of retiring allowances, doubtless honorable members are aware that, where such allowances are paid in a lump sum, only 5 per cent, of the amount received is included in the assessable income of the recipient. It has become evident in recent years that undue advantage has been taken of this concession. Tax has been avoided by the payment of large sums, which purport to be retiring allowances but which are, in effect, deferred remuneration for past services or advance payments of future pensions.

In order to close this avenue of tax avoidance, it is proposed to limit the concessional basis of taxation to retiring allowances which are reasonable in amount, having regard to the length of the employee’s service and the value of his services as measured by his remuneration. The determination of what is a reasonable amount will not be left to the discretion of the Commissioner of Taxation or of any other authority. The basis of limitation will be written into the law itself. Shortly stated, the concessional basis of assessment on 5 per cent, only of a retiring allowance will be restricted to a sum equivalent to three years’ salary for 40 years of service. In the case of longer or. shorter periods of service, the sum subject to the concession will be proportionately greater or smaller. This means, approximately, that four weeks’ salary for every year of service will be regarded as a reasonable lump sum retiring allowance, of which only 5 per cent, will be subject to income tax. There will be an overall maximum of £10,000, however, to which the concessional basis of assessment is to apply. Where the lump sum retiring allowance is £10,000 or more, the tax-free ‘proportion may be as high as £9,500, but no higher.

Even in these days the receipt of a retiring allowance of £9,500, undiminished by any levy of taxation, cannot be regarded as a trifling concession. If an employee retired at the age of ‘ 65 years and received such a sum, it would enable him to purchase a life annuity of between £850 and £900. I am sure, therefore, that no unbiased person will find just grounds for complaint when an amount exceeding either £10,000 or the maximum retiring allowance calculated in ‘ accordance with the formula is required to bear the normal weight of taxation. The Government has recognized, however, that retiring allowances paid before the introduction of the bill would have been received in the belief and on the understanding that the income tax law as it stands at present would apply to those allowances. In order to obviate any hardship in such circumstances, it is proposed that the limitations that I have mentioned shall apply only to retiring allowances paid after to-day.

With regard to contributions to employees’ pension funds, the present maximum deduction which is allowable to the employer in respect of any employee is £100 or 5 per cent, of the employee’s remuneration, whichever is the greater. A higher deduction may be allowed, however, if the Commissioner of Taxation is satisfied that the special circumstances of any case warrant such allowance. It is proposed to increase, as from the 1st July, 1952, the general maximum for each employee from £100 to £200. Contributions up to that sum will be allowable as deductions to the employer, irrespective of the employee’s rate of remuneration and independently of the exercise of any discretionary power by the Commissioner.

The Government has considered also ways and means to encourage selfemployed persons to establish pension funds for their mutual benefit. It has been decided that the most appropriate mean3 of achieving this objective will be to extend to the income of such funds the same freedom from tax as now applies to the income of employees’ pension funds. Accordingly, an appropriate provision is included in the bill. A concessional deduction will be allowable to the contributors in respect of payments to funds of this nature. However, the aggregate deductions allowable to a contributor in respect of life insurance premiums, pension fund contributions and comparable payments made by him in any one year may not exceed the general maximum of £200. In order to ensure that the proposed exemption will not open the door to schemes of tax avoidance, it is proposed to place upon the trustees of each fund the onus of demonstrating that the fund is a genuine one. It is hardly necessary for me to add that, if it be found that taxpayers seek to take unwarranted advantage of the concession, the Government may be obliged at some future date to consider whether further restrictions should be placed upon the operation of the concession, or whether it should be withdrawn altogether.

Further proposals in the bill are designed to effect minor changes in the principal act. No important principle is involved in these amendments. I suggest, therefore, that they may be more appropriately studied in the printed memorandum which, as is now customary, will be circulated among honorable members at an early date.

In’ the policy speech upon which this Government was elected, we undertook to rationalize the taxing laws of the nation, to reduce the rates progressively, to simplify the enactments and to grant concessions in quarters where they were warranted. I take the liberty of recording, for the information of honorable members, the following major reforms which have been effected during this Government’s two years of office: -

The amalgamation of the two separate levies of income tax and social services contribution, with the consequent elimination of the confusion and complexity associated with the previous system.

The substitution of simple schedules of income tax rates for the previous complicated system of graduated rates, running into several decimal places.

The simplification of return forms, which, together with the improved rating schedule to which I have just referred, enables any taxpayer to calculate, with certainty,his own taxable income and the tax payable thereon.

The conversion of the basis of concessional allowances from rebates of tax to deductions from income - a reform of special benefit to the family man.

The rationalization of conditions attached to the allowance of concessions for dependants, particularly in regard to parents and to student children up to 21 years of age.

The increase of the maximum concessional deductions allowable for medical, dental and funeral expenses, and for such payments as life insurance premiums and superannuation fund contributions.

The introduction of an age allowance which confers upon older folk in the lower income groups complete freedom from income tax and social services contribution.

Far-reaching concessions in the interests of primary producers, such as the special 20 per cent. depreciation allowance on plant installed and structural improvements effected up to the 30th June, 1955. and the concessional treatment of insurance recoveries on. live-stock.

Last, but not least, the system of selfassessment of provisional tax introduced this year, which will have the effect of smoothing the incidence of income tax, to the benefit of business men and primary producers.

I believe that when these major reforms are considered together with the major items that I have explained tonight, all thinking persons will agree that the Government has fulfilled its promises fully and faithfully. I commend the bill to honorable members.

Debate (on motion by Mr. Calwell) adjourned.

page 1752

BILLS RETURNED FROM THE SENATE

The following bills were returned from the Senate: -

Without amendment -

Sales Tax (Exemptions and Classifications) Bill 1952.

Distillation Bill 1952.

Excise Bill 1952.

Dried ‘Fruits Export Control Bill 1952.

Without requests -

Sales Tax Bills (Nos. 1 to 9) 1952.

page 1752

REPATRIATION BILL 1952

Bill received from the Senate and (on motion by Mr. Francis) read a first time.

Second Reading

Mr FRANCIS:
Minister for the Army · Moreton · LP

by leave - I move -

That the bill be now read a second time.

Early this year the Government appointed a Cabinet sub-committee, which consisted of ex-service members of the Cabinet, to consider various increases of the pensions and allowances payable under the provisions of the Repatriation Act. I had the honour, with other Cabinet Ministers, to be a member of that sub-committee. It met at various times the federal executives of a number of ex-servicemen’s organizations which submitted their views, and those of their organizations, respecting matters that affected ex-service men and women. Their representations were carefully considered by the sub-committee, which later made to the Government recommendations that have been incorporated in the bill.

The main purpose of the bill is to reflect in the act the increases of war pension and service pension decided upon by the ‘Government in connexion .with the present budget. I shall explain these, but they should be viewed in relation to the increases granted last year to which I shall refer briefly. The rates to which I shall now refer are weekly rates.

Having regard to the character of last year’s budget, the Government decided that the appropriate step would be to increase the pensions and allowances of those pensioners who are dependent mainly upon pensions or allowances, that is, members who are ‘blind, totally and permanently incapacitated, or suffering from amputation of two limbs; certain classes of members suffering from tuberculosis; widows with children; and widows over 50 years of age or permanently unemployable. They receive a special rate pension, or the equivalent by special payments. The increase granted was £1 15s., from £7 to £8 15s. The widows mentioned receive domestic allowance in addition to pension. That allowance was increased by £1 2s., from 10s. to £1 12s. Increases were also granted to sei’ vice pensioners who are dependent upon pension. The rate was increased by 10s. in the case of the pensioner himself, by 6s. for his wife and by 2s. 6d. for the first child.

In the present budget, increases of pensions and ‘allowances have been made to apply to other classes of war pensions. The rate for a .general rate pensioner whose incapacity is assessed at 100 per cent., was increased from £3 10s. to £4, the rate for his wife from £1 10s. 6d. to £1 15s. 6d., and that for each child from lis. 6d. to 13s. 9d. Wives and children of persons receiving special rate pension, or the equivalent, also receive the benefit of the increases.

The rates for children of deceased ex-servicemen are increased as follows : - First child, from £1 2s. to £1 6s. 6d; other children, from 15s. 6d. to 18s. 6d. ; orphans, where the ex-serviceman’s wife also is dead, from £2 to £2 8s. Some persons who are in receipt of a special rate pension or the equivalent, are also in receipt of attendant’s allowance of £.1 10s., or £3 in certain cases. These allowances have been increased to £1 15s. and £3 10s. respectively. Service pensions will be increased by 7s. «6d., and the rate for a wife of a service pensioner by 5s. The rates which set the ‘total of Commonwealth (payments to service pensioners also will be increased. The rate for an unmarried pensioner will -increase from £4 to £4 7s. 6d. ; for husband .and wife, where both are service, pensioners, from £7 to £8 ; and where the spouse is not a service pensioner, from £5 17s. 6d. -to £6 5s.

The foregoing relates to items that are covered in the Repatriation Act, but “to see them in their proper perspective they should be viewed with other budget items such as important increases of allowances and other payments under provisions apart from the act. For example, sustenance paid while a member is in a repatriation hospital is always kept in accord with the general rates of pension for ex-servicemen and their wives and children, and will therefore be increased to conform with the increases of the general rates that I have described. Subsistence allowances in connexion with travelling for medical treatment or pension purposes will be increased from a maximum of ’20s. to 25s. a day. In the case of attendances for treatment or pension purposes for a period of leS3 than one day, an allowance is paid when the pensioners lose wages. That allowance will be increased from a maximum of 2s. 6d. an hour, or 20s. a day, to 3s. an hour, or 24s. a day.

Trainees under the Commonwealth reconstruction training scheme or the new Korea-Malaya training scheme attending technical schools or universities receive at present a training allowance of £4 10s. plus up to £2 for dependants. The new rate will be £6, plus up to £2 for dependants. The Government has also liberalized the assistance for members undertaking part-time courses. The amount available up till now has been £60. For new cases, and some current cases, that will be increased to £75, and in certain cases where fees, as distinct from books and equipment, exceed £75, the cost of fees will be met. The allowances for certain groups under the children’s educational scheme, and the allowed incomes for all groups, will be increased. The groups are about ten in number, arranged according to age and stage of education, study at schools or universities, or training with an employer. The allowance commences at present at thirteen years of age, but the Government has approved of its commencement at twelve years in future. The increases of allowances range from 2s. 6d. to 17s. 6d., and the increases in allowed income range from 10s. to 30s. The department in many instances provides an amount towards the funeral expenses of ex-servicemen and their dependants. The amount at present is £20, but it will be increased to £25.

With this description of the budget proposals, it will be useful to give a few examples of the incomes of various classes of pensioners under the increased pensions and allowances and the extensions of benefits.

An ex-serviceman who is blinded or totally and permanently incapacitated, or is suffering from tuberculosis and is receiving the maximum special rate pension, who has a wife and two children aged twelve and fourteen years, will receive, by way of war pensions, education allowances and child endowment, a total of £13 19s. 6d. a week. Blinded pensioners, and, in some instances, totally and permanently incapacitated pensioners will receive an allowance of £1 15s., or £3 10s. in special cases. A pensioner who is in receipt of general rate pension at the 100 per cent, rate, and is eligible for service pension, will receive £4 7s. 6d. He may also have other, income of 10s. without affecting the rate of service pension. If he is married, and his wife is also ineligible for service pension, the Commonwealth payments will be £8; and the couple may have other income of £1 15s. between them without affecting the rate of service pension. A widow with three children aged ten, twelve and fourteen years will receive, by way of war pension, education allowance and child endowment, £10 17s. a week. It should be kept in mind that all the payments mentioned are free of income tax and social services contribution, and that there is no means test in respect of pensions and domestic allowance for widows.

The bill provides for some amendments to the act that are not associated with the budget. They are to improve consistency as between various provisions of the act, new provisions to give clear authority to the Repatriation Commission in respect of measures which it has necessarily had to undertake in its administration, and amendments of the nature of machinery for general improvement. It will be remembered that the 1950 amending legislation inserted a new table, table B., in the first schedule, so that the rates of pension could be based on the rank of an ex-serviceman, instead of on the rate of pay. The reason for this was to avoid unfair differentiation of rates of pension which were beginning to develop in consequence of the considerably increased rates of pay of members. The rates of pension for certain ranks in the 1914-18 war and the earlier years of the 1939-45 war were no more than and in some cases less than, those payable for lower ranks in cases where the members were discharged late in the 1939-45 war on relatively high rates of pay. Practically all cases under the first schedule have now been transferred to the new table B, and therefore the bill provides for omission of table A, which continued the now outofdate scale based on rate of pay.

Consequent upon the amendment to the first schedule, alterations to the third schedule and at other points are necessary, and in rewriting the first schedule, and a portion of the third schedule, the new rates of pension arising from the budget increases have been written in. Other amendments relate to the extension of pension and benefits to members of the forces of dominions other than Australia who were domiciled in Australia before enlistment. The original provision in respect of the 1914-18 war relating to pension was based on domicile in Australia. The similar provisions in respect of the 1939-45 war, and the Korea and Malaya operations, were based on residence in Australia, but as the basis of domicile is more equitable, that basis is to be adopted at all the relevant places in. the act.

The Repatriation Commission controls many hospitals and institutions, and, as is the case with other similar medical institutions, post-mortem examinations are made at repatriation hospitals. The effect- of the proposed new section 120a will be to avoid any possibility of a conflict with State laws regarding them. The conditions under which these examinations are now made and will, under this section, continue to be made, are, firstly, that no such examination is undertaken if the deceased member has expressed a wish against it and, secondly, even where no such wish has been expressed an examination is nevertheless not made without the consent of the widow, the widower or nearest relative, as the case may be, having been first obtained. Care has been taken to ensure that nothing will be done which will interfere with the rights of a State to conduct such an examination, or to impede in any way a coronial inquiry where one is considered necessary.

A further amendment is designed to give clear authority to the Commission in respect of the adjustments it is necessary to make as between payments of various types to the same person. Developments over many years have been such that the Commission now is responsible for the administration of war pensions under three different acts, ex gratia pensions under several other provisions, and about ten different kinds of allowances. In many instances, persons who have applied for, or are in receipt of, war pensions are also in receipt of one or other of the allowances mentioned, and the amount of the allowance is subject to adjustment according to the amount of war pension payable in respect of that period. The most common example arises from medical sustenance paid to a member while he is receiving medical treatment in a repatriation hospital or at an outpatient clinic. Warpension, or an increase of war pension, may later be granted with arrears back over the period during which sustenance was paid, and from the arrears of pension adjustment has to be made in respect of the sustenance, or part thereof, paid during the period. The department is continually under the necessity of making adjustments in payments of these interdependent types, and the Commission considers there should be specific authority for ite action in safeguarding public funds, and also to make adjustments where, through other causes, overpayments occur and are recoverable.

I commend the bill to honorable members.

Debate (on motion by Mr. Chambers) adjourned.

page 1755

NATIONAL WELFARE FUND BILL 1952

Second Reading

Debate resumed (vide page 1737).

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– Before the suspension of the sitting, I was explaining that this bill was designed for the purpose of preventing the National Welfare Fund from providing a surplus from which to meet social services payments, particularly should a depression occur, or the expenditure on social services temporarily exceed the capacity of taxpayers to meet it. I pointed out that this fund was established by the Chifley Government in order to ensure that, in the future, it should not be necessary to reduce the rates of social services benefits on the ground that not sufficient money was available to maintain them. That Government established the fund on a basis that enabled it to provide a sufficient surplus to meet the demand upon it in lean years and to ensure that the rates of benefits should not be reduced during such periods because of lack of finance. Last year, this Government made the first alteration to that sound system of financing the fund. The Treasurer (Sir Arthur Fadden), in his secondreading speech, said -

On that occasion a formula was embodied in the National Welfare Fund Act which was designed to ensure for thefund an income approximately equal to what the income would have been had social services contribution continued to be levied separately.

The system that operated when social services contribution was imposed separately from income tax was set out in the bill that the Chifley Government introduced on the 15th February, 1949. That bill provided that -

The basic rate of contribution for every £1 of the contributable income shall be Threepence increasing uniformly by three-eightieths of one penny for every £1 by which the contributable income exceeds £100, but the rate shall not in any case exceed One shilling and sixpence.

Mr Thompson:

– The contribution was not levied on a flat rate of ls. 6d. in the £1.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– No, although the Minister for Health (Sir Earle Page) endeavoured to lead honorable members to believe that it was. Last year, this Government decided to abolish the system of imposing social services contribution separately and to amalgamate the contribution with income tax. In that way, the Government proceeded to rob the people of a great proportion-

Mr SPEAKER:

– Order ! The honorable member must not impute such a motive to the Government.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– Well, the Government misappropriated a proportion of the collections in respect of social services and, instead of paying the whole of them into the National Welfare Fund it is now using such revenue for the purpose of balancing its budget. The fund was established in 1943-44 by a Labour government which decided to place in reserve, when times were good, sufficient money to maintain the rates of benefits when times were bad. When the Chifley Government went out of office in 1949-50 the fund had a surplus of £131,000,000 for the purpose of financing social services benefits should current receipts be less than current expenditure. That was done by the Chifley Government in order to avoid a repetition of what happened when the private banks and the Senate, which was dominated by the non-Labour parties at the time, forced the Scullin Government to reduce rates of pensions during the depression in 1930.

Mr SPEAKER:

– Order ! The rates of pensions are- not under consideration.

Mr CLYDE CAMERON:
HINDMARSH, SOUTH AUSTRALIA · ALP

– The object of the measure now before the House is to limit the amount that is to be.’ paid into the fund to the amount that is to be paid from it. The measure does not contain any guarantee that money which the Government withdraws from the fund will later be fully reimbursed. Thus, the Government will use the fund to help it to balance its budget. It will be able to utilize for general purposes a proportion of contributions to the fund which it is not entitled to utilize in such a way. For instance, if the proposal embodied in the bill had operated last year, the Government would have robbed the people of no less an amount than £35,000,000 and would have used that sum to balance its budget and to enable it to make, concessions to its wealthy friends by abolishing land tax and reducing other taxes in their interests. This proposal will ultimately result in the complete dissipation of the National Welfare Fund that was provided by the Labour Government. Then, this Government will have a pretext for saying that rates of pensions and other social services benefits must be reduced because of lack of funds, or that it has no alternative but to introduce a contributory scheme for the purpose of financing social services benefits. Under such a scheme, the workers will be obliged to pay a wage ‘ tax, as the honorable member for Sturt (Mr. Wilson) has advocated, whilst at the same time persons in -the higher ranges of income will be allowed to get off scot-free so far as contributions for this purpose are concerned. In 1938-39, the cost of social services totalled £15,000,000, but by 1949-50 the Labour Government had increased the value of social services benefits to six times that amount. The total expenditure had then increased to £92,000,000, .and, in addition, that Government had a surplus of £131,000,000 in the National Welfare Fund.

Mr SPEAKER:

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

Mr ALLAN FRASER:
Monaro · EDEN-MONARO, NEW SOUTH WALES · ALP

.- By this bill the Government proposes to abolish the requirement that collections of pay-roll tax and a proportion of collections of personal income tax shall be paid into the National Welfare Fund. I note that the Minister for the Navy (Mr. McMahon) is at the table. I remark on that fact because it seems clear, looking at events in recent years, that he has played a part in influencing the Government to destroy the National Welfare Fund in this way. Under the measure, it is further proposed that the amount that shall be paid into the fund shall be the amount that it is proposed shall be expended from it in any financial year. The effect of the Government’s present proposal will be to freeze the balance which now stands to the credit of the fund and to destroy the fund as a useful instrument for financing social services benefits in the future. After this measure becomes law the National Welfare Fund will become nothing more than a bookkeeping device. Ordinary folk may think that they are not very greatly interested in this change. As a rule, they have no reason to be keenly interested in abstract discussions on technical questions of finance and the arrangement of monetary funds. If this were merely a question of a change of method of accounting, little more would need to be said in this debate. In those circumstances, the argument with respect to the pros and cons of the proposal could be left to the experts. But that is not the case. The bill that the House is now considering affects the economic security of every age and invalid pensioner, every family which is receiving child endowment, every person who is receiving unemployment and sickness benefits and every person who is receiving social services benefits “of any other kind. It also affects the economic security of everybody who is paying social services contribution as a part of income tax and who may some day stand in need of assistance in the form, of social services benefits. The bill affects the economic security of all those classes of persons because the fund that this bill proposes, at best, to cramp and restrict, and, at the worst, to destroy as an effective instrument of financing social services is the very fund from which all social services benefits are paid. This argument therefore is one that personally concerns every one who now pays social services contribution by way of tax on personal income as well as every one in Australia who is now in receipt of social services benefits and who requires some assurance that the payment of such benefits shall be continued in their hour of need.

The argument between the Government and the Opposition in this matter is simple. It can be separated entirely from financial technicalities. The issue is whether further destruction should bc wrought of the legislation on which the edifice of our social security is based. I say further destruction because this Government has already destroyed much of that edifice which Labour proudly erected in the interests of the Australian people. Most honorable members will have seen the placard, “ Whelan the wrecker is here “, affixed to buildings about to be demolished. A sign, “ Kooyong the wrecker is here “ should be suspended over the Government benches because this measure is to be -judged not only upon the explanation of it that the Government has given but also in relation to the legislative pattern of which it forms a part. That is a pattern of destruction, particularly in respect of social services. Labour’s free hospital scheme has been destroyed by the Minister for Health (Sir Earle Page).

Mr SPEAKER:

– Order ! I cannot allow a debate on the subject of social services.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– That pattern is a series of destructive legislative measures. This bill must be examined as a part of that .pattern under which the Government has reduced the scale of social services benefits and has removed the protection that was granted to families through the provision of child endowment. Now, as a part of the same legislative pattern, the Government ha-j introduced this measure which will destroy the National Welfare Fund. This bill, also conforms to that pattern in that its introduction has been unexpected. This Government is always doing the unexpected. Furthermore, like most of its other measures, this bill is also at variance with the pledges that it gave to the people during the last two general election campaigns. This Governmentpromises to do one thing and then proceeds to do- exactly the opposite. It made a solemn promise that it would maintain the scale of social services benefits; but, instead, it abolished the land tax. It promised to establish a secure financial foundation for the financing of social services benefits, yet it now seeks to stultify the National Welfare Fund. In this instance, it has excelled itself because this measure is at complete variance, not only with its election promises to the people, but also with measures in relation to the same subject that it presented to the Parliament only two years ago.

In order to be able to judge the full effect of what the Government now proposes to do, it is necessary to recall events that happened several years ago. What- is this National Welfare Fund ? Why was it established and what purpose does it serve in this nation? To obtain the anwer to those questions we must turn to the year 1943 - a year of war, a year of peril, a year of work and sacrifice and a year in which patriotism was the call to the nation above every other call. It was in that year of bitter struggle that Mr. Chifley, who was then Treasurer and Minister for Post-war Reconstruction, introduced into the Parliament legislation to establish the National Welfare Fund. At that time of austerity and sacrifice he outlined to the nation the Government’s post-war aims for economic advancement and social security for every Australian citizen. By doing that he gave to the people who were in the midst of a great war, in the midst of sacrifice, austerity and suffering, something to dream of, something to hope for, something to believe in and something to fight for. He gave to them the hope of a better day to come and a happier and more secure way of life when the fighting was over. He proposed to do that by means of the establishment of the National Welfare Fund. Mr. Chifley explained that the National Welfare Fund was to be established to achieve the Government’s aim of ensuring minimum social standards for every one throughout the country when peace should return. He was determined to give to the people security against sickness, against unemployment and against the hazards of age and invalidity. The National Welfare Fund was deliberately established as the best means of achieving all the then Government’s objectives in order to reward the people for their sacrifice and effort during the war and to establish a better Australia for all Australians.

Mr Curtin:

– To make Australia a land fit for heroes to live in.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– That is quite right. Mr. Chifley told the people that many of the Government’s social welfare aims could not be achieved until victory had been won. The people were asked to make their contributions of effort and sacrifice, to forgo immediate benefits and to place the winning of the war in the forefront of every considera tion. They were told that when peace had been won all the promised benefits would accrue to them. Mr. Chifley said that in the meantime credit balances would be provided in the National Welfare Fund ready for use in the post-war years, and that such credit balances would not be allowed to remain idle but would be invested in short-term securities and used to finance the war and. other activities and so earn interest for the fund. The fund, together with the accumulated interest would then be available for’ use in the post-war years. Every party that is now represented in this Parliament subscribed at that time to the promise of a better Australia, and a happier and more secure Australia, after the war. The present Prime Minister (Mr. Menzies) made the most eloquent speeches about this matter to the people of Australia, and the people accepted the pledges as having been made in good faith. They also accepted the National Welfare Fund in the belief that it would be a powerful instrument of social justice in the future for a much happier, much more secure and much more prosperous Australia. At the 1946 general election the Liberal, Australian Country and Labour parties endorsed the idea of the National Welfare Fund and the purposes for which it had been established. More than once during the course of history great ideals held up to the people in time of war have been betrayed after the victory has been won. The ideal of a glorious post-war Australia has already been repudiated by this Government in many ways and if the National Welfare Fund is to be -destroyed there will, in my opinion, be one more great betrayal of a social security pledge made to the ordinary people of this nation.

Mr Bland:

– Security still remains.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

-The honorable member says that security still remains. I point out that the National Welfare Fund was deliberately established in time of war as a pledge to the Australian people that when the war was over their social standards would be secure.

Mr McMAHON:
LOWE, NEW SOUTH WALES · LP

– The fund does not. represent one tangible asset.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– I shall quote the Treasurer (Sir Arthur Fadden) to show that there are tangible assets in the fund.

Mr McMAHON:
LOWE, NEW SOUTH WALES · LP

– I ask the honorable member to mention one tangible asset.

Mr ALLAN:
GWYDIR, NEW SOUTH WALES

– FRASER. - I shall do that when I quote the speech of the Treasurer.

Mr.- MoMahon. - Quote it.

Mr SPEAKER:

– Order! The Minister for the Navy (Mr. McMahon) is out of order.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– I shall now address myself to the Treasurer’s secondreading speech, which the Minister for the Navy invited me to quote. The Treasurer said -

In further examining the matter, the Government has had in mind that past excesses of income over expenditure have established, in the National Welfare Fund, an adequate reserve for the continued payment of social services and , health benefits-

Mr McMAHON:
LOWE, NEW SOUTH WALES · LP

– That does not answer my question.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– Of course it does. It also shows that the Treasurer accepts that the reserves in the fund are real, that they constitute real reserves, and, indeed, that they are adequate reserves.

Mr McMAHON:
LOWE, NEW SOUTH WALES · LP

– “What kinds of funds are they?

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– I know what they are and so does the Minister. Does the Minister deny the statement of the Treasurer that these funds constitute a real and adequate reserve? If he does deny that let him say so when he rises to speak in this debate. Until he does so, the statement of the Treasurer stands as authoritative and the Minister is committed to it. The Minister is committed to the statement of his leaders that this fund is real, that the reserves are adequate, that they exist for the purpose of maintaining social security and that they can be used for that purpose.

Mr Wilson:

– The promises that the honorable member has mentioned are no different from the promises contained in the bill now before the Parliament.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– The legislation before the Parliament is designed to freeze the balance in the fund, and from now on once it has been decided that the Government will expend a certain amount during the year on social services - and that amount can be fixed as low as the Government chooses - then that specific sum and no more will be paid in and no more than that sum will be available in that year for the payment of social services.

Mr Freeth:

– How does the money become available?

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– I have explained that, and I shall be glad to explain it to the honorable member in greater detail at a more appropriate time.

Mr SPEAKER:

– Order ! The House must come to order. I do not intend to tolerate disorderly conduct. Interjections must cease because, at the proper time, every honorable member will have a chance to say, within limits, what he wants to say.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– In order to explain to the honorable member who interjected how money comes into the fund it is necessary to consider other legislation that was introduced by Mr. Chifley at the termination of hostilities in 1945. He then explained the then government’s promise that at the end of the war it. would place the financial arrangement for social services on a completely new and secure basis. He then immediately proceeded to honour his promise because it was a habit of Mr. Chifley, and it is a habit of the party to which he belonged, to honour promises. He amended the National Welfare Fund Act in order to ensure that from then onwards all the social and health services of the Commonwealth would be securely financed through the National Welfare Fund. Moreover - and this is the point about which the honorable member was seeking information - Mr. Chifley provided for the later certainty of great credit balances by providing that a stipulated portion of the proceeds of the income tax, to be known as social services contribution, and the whole of the proceeds of the payroll tax, should from then on be paid into the National Welfare Fund. He demonstrated a great faith and a great idealism and his action indicated the determination animating the Labouparty.

Accountants may differ about matters of precise detail, professors of public administration may “talk about the sacredness of consolidated revenue, and Treasury experts may quarrel over the nature and value of trust funds, but what the Labour Government then sought to do is something that the ordinary wan and woman in this nation can fully appreciate and understand. That was to establish an inviolable protection against the return to Australia of depression conditions such as existed in the 1930’s, when elected governments were forced by bankers’ ultimatums to reduce pensions rates, dole rates and social services rates generally, below the level necessary for human existence. Labour men who witnessed the sick tragedy of those days will never forget them and will never cease to use all their strength to build a sure bulwark against the return of such economic and social tragedies. That was why the National Welfare Fund was established, and that was the ideal accepted and endorsed by the whole of the men and women of Australia, no matter what financial experts may say. That was the promise that the Australian people still desire to see fulfilled. In 19.30 a Labour government occupied the treasury bench in this House. It had received an over-whelming mandate to legislate for social and economic progress, but it possessed no power. It faced an anti-Labour Senate and was confronted by an anti-Labour banking combination headed by the Commonwealth Bank Board itself. All the experts agreed that there were no funds available to maintain Australian social services, at a time when hundreds of thousands were unemployed. The banks issued their ultimatum to the then government with the threat that if it were not accepted, finance for every purpose would be cut off from the elected government of the country.

To-day we again face a time of economic uncertainty and of rapidly growing unemployment. The figures of unemployment published in to-day’s press are more ominous than we have seen for some time. There is no reason whatever why there should again be a depression in Australia, and the National Welfare Fund, strongly built and wisely administered, could be a powerful weapon against the development of any depression and in the protection of those most liable to be injured by any such depression. Now the National Welfare Fund is to be paralysed and stultified. Members of the Liberal party and of the Australian Country party to-day give lip-service to the idea of social services.

Mr Hulme:

– Nonsense!

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– As the interjection implies, some of them do not even do that. They hate the idea of the welfare State, and social services are an integral part of the welfare State. My opinion is that their real allegiance to social services is of a very weak nature indeed. They accord a grudging acceptance to those social services that have already been established and, as a general rule, oppose vigorously and bitterly the establishment of new social services.

Mr Bland:

– That is not so.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– The honorable member for Warringah (Mr. Bland) has in his. time bitterly and vigorously opposed the extension of social services to the ordinary people of Australia and possibly still does so. The Government and its supporters talk about abolishing the means test, but they are now preparing, to destroy the National Welfare Fund, which is the very basis of our hopes-

Mr SPEAKER:

– Order ! The means test is not the subject of discussion.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– In destroying the National Welfare Fund, the Government will destroy the only basis on which a secure and continuous provision of social services can be founded.

What is the real reason for this attack on the National Welfare Fund? The argument has been adduced that the fund cannot be used as a reserve for the purposes of social services. But is that the real reason for the Government’s proposal to paralyse and stultify the fund? That reason has not been advanced by the Treasurer, who presented the bill. In fact, his speech contained a complete contradiction, of the view that a real national reserve cannot be accumulated to finance social services in times of emergency. He rejected the reason presented by other speakers on the Government side of the House in support of their contention that a reserve of that kind cannot be established. Admittedly, this attitude is a result of his later and better thoughts since 1945, when he was an adherent of that school of thought which believed that, because the fund had been invested in treasury-hills, or I 0 TPs. as he then called them, it was completely bankrupt. He did not hesitate to say so at that time. However, since then, the right honorable gentleman has grown older and wiser, and to-day he clearly recognizes that the balance in the fund constitutes a real reserve which can be safely and wisely used for the maintenance of social services. As the Treasurer has said that an adequate reserve already exists in the fund and has given that as one of the reasons why further payments need not be made into the fund from the sources that were previously used, there is literally no excuse for the Government’s failure to use some of that reserve in order to finance higher pensions rates and to ameliorate the means test.

The immediate effect of the bill, as the honorable member for Perth (Mr. Tom Burke) has pointed out, will be that at least £20,000,000 that otherwise would have been allocated for social services this financial year, will not be so allocated. Thus, the Government’s unwillingness to provide for the social security of the Australian people becomes obvious, and the hollowness of its promises to provide new and improved social services is exposed. For all those who are dependent on social services, all those who are interested in placing social services finance on a secure basis, all those who wish to abolish the means test, and all those who desire social services payments in Australia to be established on a basis of right instead of a basis of destitution, this legislation should contain a vital warning. It is a warning to them to bestir themselves politically, to recognize the attempt that is being made to destroy the existing social services system, and to play their part in preserving and extending the structure that was erected by the Curtin Government and the Chifley Government.

These social services are a part of the social justice to which every Australian of goodwill - -

Mr SPEAKER:

– Order ! The honorable member is contravening my ruling. This bill deals, not with social services, but with the National Welfare Fund.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– The benefits payable from the National Welfare Fund, Mr. Speaker, are a part of the social justice—

Mr SPEAKER:

– Order ! The House dealt with social services last week in another measure.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– The proceeds of the National Welfare Fund are a part of the social justice to which every Australian of goodwill is entitled in return for his contribution of service to the community. When we call upon Australian workers, in the name of patriotism, for greater efforts, we have a minimum duty to assure them, by way of the National Welfare Fund, of a minimum degree of security in times of emergency, illness or old age. When we invite Australians, as we constantly do, to reject the evil, revolutionary courses of communism, we have a minimum duty to provide them with a guarantee of security within the existing framework of democratic society.

Mr SPEAKER:

– Order ! The honorable member appears to be trying to contravene my ruling. I do not propose to allow him to do so.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– I have no wish to do so, Mr. Speaker. I merely point out that the National Welfare Fund can be used to guarantee social justice and security. Because I believe that these essential rights of the people are threatened by the plan to destroy the National Welfare Fund, I hope the day will soon come when the people who have definite views on this matter will have the opportunity to deal with the Government which prepared that plan.

Mr FAILES:
Lawson

.- The honorable member for Eden-Monaro (Mr. Allan Fraser), in his usual theatrical manner, has tried to establish a case on false premises. He has attempted to convince his hearers that the Government is planning to destroy the National

Welfare Fund, which has been, accumulated during the last nine years. The truth is that the purpose of the bill is merely to retain the fund intact at the present total of £185,000,000 and to allow it to increase by the amount of the interest that will accrue from year to year. The Government considers that the fund is now sufficiently substantial to provide an adequate reserve, and it proposes that, from now on, the amounts that shall be expended from it for the purpose of providing social services shall be recouped from the Consolidated Revenue. Fund. The National Welfare Fund was established in 1943-44 with a payment of £27,000,000 from the Consolidated Revenue Fund. The Government at that time freely admitted that the whole amount of the fund would not he used for the purpose for which ostensibly it was established but that some of it would be used for war purposes. The then Opposition argued that, in that event, the fund should have been given a title to indicate that it was to be used for war purposes.

The history of the fund shows that, in the first year of operation, an amount of over £2,000,000 was paid from it. In the following year, 1944-45, approximately £2,750,000 was paid out, although in that year approximately £30,000,000 was paid into it from the Consolidated Revenue Fund. In 1945-46, when an amount of £47,000,000 was paid into the fund, £53,000,000 was paid out. That was the first year in which revenue from the pay-roll tax was credited to the fund and age and invalid pensions were paid from it. I shall not discuss the figures for each year in detail. Over the nine years of the existence of the fund, about £615,000,000 has been paid out of it for the purpose for which it was established. This has left a credit balance of £185,000,000.

Mr McMahon:

– The balance was only £99,000,000 when the Labour Government was thrown out of office.

Mr SPEAKER:

– Order !

Mr FAILES:

– It is interesting to note that over £345,000,000 has been paid out of the fund since this Government was elected in 1949. In other words, considerably more than half the amount paid into the fund since its establishment has been disbursed under the present regime in less than three years. That is a very creditable record.

One point that has arisen in this debate is of crucial importance. I have been reproached from time to time by Labour supporters in the electorate of Lawson who have said that there was £120,000,000 in the National Welfare Fund but that this Government has dissipated it. The fact is that there never was £120,000,000 in hard cash in the fund as those persons believe and as the Opposition has been trying to convince the people generally during this debate. Many Australians imagine that the credit balance in the fund was held, so to speak, in bags of sovereigns under the counter. The fact is that the National Welfare Fund has been a credit fund from the time of its inception. The amounts to its credit have been invested in Government securities. Its value lies entirely in the fact that it is a credit fund from which withdrawals can be made as book entries. That fact has never been disputed by anybody who understands the situation. The former Treasurer, Mr. Chifley, admitted, after the present Treasurer (Sir Arthur Fadden) took office, that the fund did not exist in cash and that when payments had to be made from it, the necessary cash had to be obtained from some other source. On another occasion we had a similar trust fund, the War Gratuity Fund, and when withdrawals had to be made from it, we had to raise cash by means of taxation. Exactly the same conditions apply to this fund. Even if it were allowed to accumulate until the credit balance reached a total of £1,000,000,000, money could not be drawn direct from it to finance social services in the event of a depression. The cash would have to be obtained by means of taxes or some other revenue device. In these circumstances, the Government reasonably contends that the present credit balance of £185,000,000, is adequate to provide for any contingency that we can foresee, and that the amounts paid from the fund from year to year for the purpose for which it was established should be recouped from revenue obtained in the normal way by taxation. There is no reason why members of the Opposition should continue to labour the issue as they have done throughout this debate. They are seeking to discredit the Government for party political purposes and are trying to delude the people into the belief that the fund existed in the form of cash when the present Government came into office and that it has been dissipated by the Government since then. That is deliberate misrepresentation. Honorable members opposite know perfectly well that the fund was never in the form of cash but existed only as a credit entry. The amount of the fund does not matter, provided that it is within reason and that the Government can draw upon it for the purposes of social services. That is all that is required. The pith of the bill is simply to make provision for the fund to be stabilized at the present figure of £185,000,000, and to recoup the withdrawals from it for social services purposes from year to year from the Consolidated Revenue Fund. There is no occasion for further debate on this legislation. It is a simple bill, and should be passed without further equivocation on the part of the Opposition.

Mr MULLENS:
Gellibrand

.- The honorable member for Lawson (Mr. Failes) has said that there is no occasion for further debate on this bill. Sitting in my place this afternoon in the peaceful serenity of this House, and listening with some avidity and curiosity to the speeches of Government authorities on the measure, I came to the conclusion that, perhaps, there was something in this intricate analysis of figures, and this legerdemain, and I thought that I had missed the whole significance of it in the general confusion. Therefore, I decided to examine tha matter, and with a little study that lasted an hour or so, I tried to get to the basis of the position.

Mr McMahon:

– Then the honorable gentleman is the only member of the Opposition who has attempted to do so.

Mr MULLENS:

– As the result of my study, I have come to the conclusion that it is fair and reasonable to ask the following question at this stage : - If everything proposed by the Government in this bill is as innocent as the Minister for the

Navy (Mr. McMahon) would have- us believe, and is so devoid of malintent as to be completely innocuous, why has the bill been introduced? Why has not the Government let well alone?

Mr Failes:

– That is what the Government is doing.

Mr MULLENS:

– Ah, but there has been a vital change of method. Why? That is the supreme question. I am intensely curious about it. Why has the Government gone to all this trouble? The bill makes provision for a change of method, for which the Government should have a valid reason, obvious or implied, real or superficial, overt or hidden. At first glance, it appears that the Treasurer (Sir Arthur Fadden), by his emphasis, and the Minister for Health (Sir Earle Page) by his fervent and furious defence of the proposal, are busily engaged in endeavouring to kill a fly with a hatchet. But there has been so much semi-smother about this proposal, and so many apologetic references to it, that I am convinced there is a nigger in the woodpile. I shall endeavour to expose him.

On the 11th February, 1943, the then Treasurer, the late Mr. J. B. Chifley, introduced a bill to provide for the establishment of a special fund called the National Welfare Fund. Does any honorable member, in his sober senses, assert that this distinguished Treasurer in the public life of Australia would, out of sheer caprice and without any substratum of reason for his action, attempt to establish a national welfare fund unless he had an excellent motive for doing so? Why, the very name “ National Welfare “ is full of implications and significance to members of the Labour party. The idea was conceived by a man who, perhaps, had the brightest financial brain that has ever been known in this Parliament. I ignore the cynical laughter of the newly arrived honorable member for Warringah (Mr. Bland) at that statement. Out of this lowly conception, there developed over the years a fund which to-day has a credit balance of £185,000,000. Was that a sheer accident? As the honorable member for Lawson has stated, the fund began in a lowly way with the sum of £27,000,000, but as it increased by a well-defined arithmetical progression over the years, the present credit balance of £185,000,000 was reached.

Mr Davidson:

– It was not arithmetical at all.

Mr MULLENS:

– Well, it may have been geometrical progression. History is platitudinous, but true history repeats itself.

Mr Davidson:

– So does the honorable member.

Mr MULLENS:

– The honorable member for Dawson (Mr. Davidson) would give the world to be able to repeat himself, because he is generally dumb. Some honorable gentlemen can remember the former honorable member for Parramatta, Sir Frederick Stewart. Listen to this voice from the past. It has its echo in the chamber to-night. Sir Frederick, who was the spokesman for the Liberal party and the Australian Country party on the bill, was a Doubting Thomas. He led the opposition to the establishment of the fund, the purpose of which was to buttress the position of the aged, the indigent and the infirm. He objected to what he described as an “ entirely new legislative practice”. Other members of the Liberal party and the Australian Country party opposed the bill, but they were hard pushed to find even a semivalid reason for their criticism. They had no peg on which to hang their argument. Note how history is repeating itself to-night!

On the 7th September, 1945, Mr. Chifley introduced legislation for the purpose of imposing the social services contribution and increasing the pay-roll tax. Once again, members of the Liberal party and the Australian Country party voiced carping criticism of the fund, and their suspicions about its purposes. Why? Was their anything sinister about the fund? Was not its psychological effect more important than mere bookkeeping practice, because, for the first time in the history of Australia, it pinpointed in the national accounts, for the pensioners, the aged, the indigent and the infirm to see, a special fund to which they were entitled to look for their main support?

The present Treasurer saw a degree of humour in the situation in 1945. The

Social Services Consolidation Bill was introduced in close proximity to a bankruptcy bill. The right honorable gentleman saw, in that circumstance, an occasion for mirth. He considered that the country was headed for economic disaster. I suppose he said, on that historic occasion, that a future Treasurer would be obliged to clean up the mess. Like an elephant, he never forgets. In common with his colleagues, having vivid recollections of times of stress and stringency, he considers it to be time, in this year of grace 1952, to embark on a course of action that ultimately may mean the abolition of the reserves in the fund.

This is a matter of clear, common sense. It has been enshrouded with mystery by the profundities of the experts, and I am trying to reduce the position to a basis of common sense. What would be more satisfactory to prospective recipients of moneys from the National Welfare Fund? A steady accumulation of moneys from year to year, or a static reserve of £185,000,000 that will yield an interest return of £1,800,000 a year, and nothing more? That is the essence of the proposition. Let Government members place whatever construction on it they will! Payments out of the Consolidated Revenue Fund are subject to the exigencies of the moment. In other words, such payments are dependent entirely upon the will of the government of the day, and are subject to the general environment in which they are made. The fact that the Treasurer has introduced this legislation simply means that the whole matter has been tossed into the arena as a political football. It is a poor consolation to the man in the street, when honorable members opposite speak to him, in the same semi-facetious vein as was adopted by the present Treasurer in 1945, about treasury-bills, shortterm investments, long-term investments, government I O U’s, whether the fund really exists or whether it does not, and whether it has a tangible cash backing or whether it has not. It is poor consolation to the age and invalid pensioners and other recipients of social services benefits to know that, sooner or later, their prospects will depend upon the climate and political atmosphere of the moment. I know from what source I should prefer to draw my social services benefits. I prefer a fund that is clearly defined and increases from year to year to a fund with a rigid reserve, fixed and unalterable. Even the reserve of £’185,000,000, allowing for the replenishment of the reservoir from year to year, is little more than the estimated cost of social services in 1951-52, namely £173,000,000. “Well may some Government supporters ask : Does the fund exist, or does it not? An unfavorable or hostile Treasurer - and it would not be difficult to visualize who that person would be if the hard times round the corner press nearer to us - would have a stock answer, which would be something like this : “ The fund is exhausted, and the economic condition of the country is such that the Consolidated Revenue Fund will no longer provide social services benefits at the present rate”. In other words, the pensioners and others least able to bear the burden will be the first to be called upon to make sacrifices.

Mr Hulme:

– Will the honorable member introduce some logic into his speech, just for a change?

Mr MULLENS:

– Would the honorable member for Petrie (Mr. Hulme) recognize logic if he heard it?

Mr Hulme:

– Yes.

Mr MULLENS:

– I doubt whether that is so. Gibes have been thrown at the Labour party with reference to action taken by a Labour Government in 1930, but there is no harder school for the average man than the school of experience. He has had it. He has every reason to be sceptical. My word he has ! What sympathy, what milk of human kindness would be shown to him in a time of stress and trial? Honorable members know as well as I do that a pruning Treasurer would automatically look to a fund such as this one and that those people would be the first to feel the axe. Several phrases in the second-reading speech of the Treasurer are worthy of special attention. Objection was taken by the right honorable gentleman to the fundamentals that underlie the establishment of the fund by the Labour Government. In his secondreading speech, the right honorable gentleman referred to “sensitivity to variations of pay-roll tax “. If the right honorable gentleman was referring to an increase of revenue accruing from pay-roll tax, I fail to understand his viewpoint because in times of prosperity and inflation, the returns from pay-roll tax obviously would be all the better. The earmarked fund, whether in the form of a book entry, a nominal entry or a temporary loan by means of treasurybills to the Government is obviously flourishing. But if “ sensitivity to variations of pay-roll tax” involve a reduction in times of stress, obviously contributions to the fund will be much less. The Treasurer referred to “ too great a contribution from revenue when taxation is rising “. He also referred to a replacement to an estimated extent of expenditure for the current year. The very word “replacement” signifies that this is an anticipatory measure. The Treasurer anticipates something and he is seeking a way out. He is trying to crack a nut with a hammer. I can understand the wording of the bill and appreciate the time and energy that have been put into it, but I can see no valid purpose in it. It has a concealed purpose. There is more to it than meets the eye. It will result eventually in a weakening of the fund. If it does not collapse because of the lack of sustenance from Consolidated Revenue, it will certainly have an important psychological effect on the recipients of benefits from the fund. I know that it is difficult to see danger to-day when things are apparently flourishing, but surely every honorable member can visualize the time when economic stress and anxiety will be just round the corner. I consider this measure to be fraught with many dangers. A conspiracy of silence has surrounded the bill. I have a deep suspicion of it and I do not trust the Government. There was no necessity for it. Certainly there was no crying need for it. I believe it to be a preliminary overture to an offensive that will become more definite as the economic situation deteriorates further.

Mr Fitzgerald:

– The Government is getting the axe ready.

Mr MULLENS:

– There cannot be any other possible explanation. The National Welfare Fund embodies all the hopes of the ordinary man and woman. It represents pensions, prospective payments in the event of sickness and unemployment and, in fact, the whole protective screen that separates the ordinary man and woman from the threat of poverty, desolation, and want that is continually stalking them. I suggest that if the Government removes that tangible evidence of support, it is only conditioning those who would be helped by the fund for the onslaught that will take place later.

Mr ERIC J HARRISON:
WENTWORTH, NEW SOUTH WALES · UAP; LP from 1944

– The honorable member has a suspicious mind.

Mr MULLENS:

– Is that so? When I look at the empty benches on the Government side, the peaceful serenity of those well-endowed gentlemen opposite and the complacency of those who argue as the honorable member for Warringah has argued, I am astonished at the lack of understanding that is apparent. The honorable member for Warringah has said, in effect, “I do not believe in a separate fund. I believe in the submergence of these funds, in consolidating them in revenue, and in making the whole matter one of debit and credit, of receipts and expenditure “. On the other hand, the Treasurer said, “I believe in a separate fund”. I am not doing him an injustice. That is a businesslike approach to the matter. It is what I knew as an accountant. It is an established practice of business. But he failed to tell the House that while he believes in a separate fund, he does not believe that such a fund should grow to solid and substantial proportions. The irony of it all is the attitude of a former Treasurer who is now the Minister for Health. He believes in a separate fund. He is a whale for clarity. He said to-day in this House, “ I want no mystery. The real problem to me is to make sure that the money shall be available “. I detect a note of caution there. Perhaps he visualizes the time when the money will not be in the kitty. He then made another significant remark, and I ask honorable members and my colleagues on this side of the House to note that this is indicative of the Government’s attitude towards the fund. There is a nigger in the wood-pile, but the Minister for Health has inadvertently spilled the beans. He said, “ There is no undue optimism “. Freely translated, that means, “Let nobody in the future be very optimistic about what they can get out of the fund. We have set a static balance of £185,000,000. It will not increase willynilly, in the way that those socialists permitted it to rise to £185,000,000. It will increase only at the rate of £1,000,000 a year. Let no one show undue optimism.” The logical corollory of that is that if the present Treasurer does not hold that office when the time for undue optimism comes, and when the pensioners are looking hopefully towards this fund, an ex-Treasurer, the present Minister for Health, will say that there is no room or scope for optimism.

One honorable gentleman opposite has said that I am suspicious. I was bred in a hard school. For some years before I entered this Parliament, I was an inhabitant of His Majesty’s penal establishment at Pentridge. I have been taught to look, as it were, for what is hidden, and I am convinced that I have found it to-night. I mistrust the intentions of this Government. I think that it has hidden something and ia trying to slip it by us, because it becomes deeply resentful when any one tries to debate the matter. Optimism ! I am not unduly optimistic. This fund is on the toboggan. Its reserves will fade, like mists in the morning sun. This uncalled for, unexpected, unprecedented and unnecessary change, which some honorable members opposite have been pleased to say is only a change of a method of book-keeping, has come like a bolt from the blue. A system established by the greatest Treasurer that this country has known is to be altered, without any valid reason, as far as I can see. Do not tell me that the alteration is meaningless. That would be an insult to my intelligence. Whatever doubts I have - and I want you to know, Mr. Deputy Speaker, that I have doubts about this alteration - whatever anxiety I feel, and whatever uneasiness I take from this chamber will be reflected and intensified many times in the thousands of pensioners and others who are interested in this fund, not as » book entry but as a real and tangible guarantee of their prospects for the future. My anxiety will be minute compared with their worry and distress at what they feel may be an implied, if not an overt, attack upon everything that is close to their material welfare and well-being.

Mr MCMAHON:
Minister for the Navy and Minister for Air · Lowe · LP

– On an occasion of this kind it is sometimes desirable to introduce one. or two facts into the debate. Although I have listened very carefully to the speeches made by members of the Opposition I have not heard one of them try to describe the purpose of the National Welfare Fund. The honorable member for Gellibrand (Mr. Mullens) said that he wanted to get to the bottom of it. He wanted, as it were, to scratch the bottom of the pit. But, so far as I have been able to ascertain, he did not even get on to the top of it. Indeed, far from getting on top of it, he did not even reach the middle. He asked, “ Why the change ? “ The reason for the change is that increments to or increases of the fund no longer serve any useful purpose, because the reserves are adequate. Theoretically, sufficient notional reserves exist in the fund now to meet any demands that may be made upon it.

Mr Edmonds:

– Why not increase the increments?

Mr McMAHON:

– There is no need to do so. A notional increase would mean nothing in point of fact. If the honorable member for Gellibrand and the honorable member for Eden-Monaro (Mr. Allan Fraser) believed there was any validity in their arguments, they should have done something which they did not bother to do - that is, explain what useful purpose would be served by a continuation of notional payments to a notional fund. The fact that they spoke of goodwill, kindliness and sacrosanctity showed that they were not prepared to analyse the bill, but were trying to gain political capital from an appeal, not to the intelligence and logic but to the. emotions of the people.

The honorable member for Gellibrand touched upon the somewhat technical subject of the sensitivity of this fund to pay-roll tax collections. Let me explain to him that, under the present system of payments to the fund, if prosperity increases and, consequently, pay-roil tax collections increase, payments into the fund increase also, at a time when we do not want that to happen because the sums paid out from the fund will probably be decreasing. Correspondingly, if prosperity wanes and payments into the fund decrease also, it is highly probable that payments from the fund will increase. This problem is not peculiar to this Government. A Labour Treasurer realized that there is no dogma in this matter, and that the National Welfare Fund is not perfect. He established a formula for payments to the fund in 1943-44, but he changed it in 1946-47 and again in 1947-48. He made it clear that he did not regard the fund as sacrosanct, or as having any inherent qualities which demand that it be retained in its original form. When he considered it necessary to do so, he made changes that he considered to be desirable, not from the stand-point of the fund but from that of his budget.

Let us examine the history of this fund. It was established by a Labour Treasurer as a subterfuge. It was not meant to be a real and tangible asset that could be drawn upon in times of necessity to supplement taxes. When the late Mr. Chifley was Treasurer, any surpluses in the fund were taken from it in the form, not of ordinary treasury-bills, which are marketable, but of internal treasury-bills. Such a bill is, in effect, a loan by one government department to another, or, as it were, a loan by a man to himself. An internal treasury-bill is nothing more than a piece of paper issued by one department to another. The department that uses the money says to the other department, “ Tell us when you want this money back. Then we shall tell the Treasurer about it, and he will get it for us by means of increased taxes “. The Opposition has so far failed to explain how, if it had been found necessary to draw on the reserve funds, the money could have been obtained. Members of the Opposition have stated, in the course of other debates, that they are opposed to higher taxes. Where, then, would the money have come from? It is obvious that the honorable member for Gellibrand had no proper understanding of the position, and the honorable member for Yarra (Mr. Keon), who is his close colleague in the party-

Mr MULLENS:
GELLIBRAND, VICTORIA · ALP; ALP (A-C) from April 1955

– I rise to a point of order. What has this to do with the National Welfare Fund?

Mr ACTING DEPUTY SPEAKER:
Mr. Bowden

– The Minister will continue.

Mr McMAHON:

– .What was the purpose of the fund? It was introduced by the late Mr. Chifley as a war-time subterfuge, and it was an appropriate action to take at the time. As the honorable member for Gellibrand pointed out, and I thank him for it, the present Treasurer then pointed out that some future Treasurer would eventually have to clean up the mess. That is exactly what the Treasurer is now trying to do. He is trying to clean up the abominable mess left by the Labour Government as a result of a series of strange budgetary expedients.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– What has happened to the £35,000,000 which this Government paid into the fund?

Mr McMAHON:
LOWE, NEW SOUTH WALES · LP

– It is not possible to clear up immediately the mess left by eight years of Labour mismanagement. The honorable member for Eden-Monaro said that this bill represented an attempt to freeze the fund, and then to destroy it. It is true that we propose to freeze the fund, and for very good reasons. We do not consider it to be wise to put any more into a fund that now stands at £186,000,000.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– Why?

Mr McMAHON:

– It would not serve any useful purpose to do so. The bill provides, also, that the fund cannot be touched until legislative authority has first been obtained. I quote the Treasurer’s own words -

As the fund would be applied only as directed by Commonwealth law, the passage of legislation would be necessary before the balance in the fund can be drawn upon; or, in other words, the balance in the fund cannot be drawn upon without Parliament’s express approval.

The honorable member for Gellibrand said that this was a tangible fund. Very well, let it be so, but it will be a fund of such a nature that a future Labour government will not be able to dip into it without the express approval of the Parliament. No longer will it be possible to filch money from the fund.

Mr ALLAN FRASER:
EDEN-MONARO, NEW SOUTH WALES · ALP

– The Minister claims that there is nothing in the fund now. How, then, can anything be taken from it?

Mr McMAHON:

– The honorable member for Eden-Monaro has claimed that it is a tangible fund.

Mr SPEAKER:

– These exchanges must cease, or I shall take action.

Mr McMAHON:

– It has been said that we are attempting to destroy the fund. Far from attempting to destroy the fund, we are providing that it can not be touched in the future without the approval of the Parliament.

The next point to be considered is the total amount in the fund, and the purposes to which it can be applied In this we are dealing with bookkeeping entries only, and I want to contrast the payments made in 1948-49, the last year that the Chifley Government was in office, with the estimated payments for the year 1952-53. In 1948-49 the Chifley Government drew out of the fund £41,600,000 for age and invalid pensions. This year, it is’ estimated that the present Government will draw for the same purpose the extraordinarily large total of £72,485,000.

Mr SPEAKER:

– Order ! I am not going to allow these matters to be discussed. The House is considering the fund, not individual social services.

Mr McMAHON:

– I recognize that, but the honorable member for EdenMonaro discussed some individual items, and I thought that I might be permitted to reply to him, and to explain those items. The Government is attempting to achieve simplicity of accounting. We have not been able to see any sense in retaining an arbitary and complicated formula which is not related to any given set of facts, and which does not give any real security to the fund. Those who have watched the activities of the Treasurer since 1949 will realize that he has done more than any other Treasurer to simplify .the taxation structure. We now have before us another example of his determination to simplify bookkeeping methods. Once there is sufficient money in the fund, no useful purpose is served by increasing the reserve. On this point I quote the Treasurer’s own words -

In further examining the matter, the Go vernment has had in mind that past excesses of income over expenditure has established, in the National Welfare Fund, an adequate reserve for the continued payment of social services and health benefits, for which purpose the fund was originally established. During the four years that ended on the 30th June, 1952, the balance in the fund increased by £ 115,000,000 to £185,000,00.

The idea, therefore, is not to continue adding to the reserve, but to decide how much would have been drawn out of the fund this year, then to allocate that amount out of revenue, and so keep the fund pegged at its present level.

Mr Haylen:

-What does the Government propose to do with the excess collections ?

Mr SPEAKER:

– Order !

Mr McMAHON:

– The first purpose of the bill is a simplification of the method of keeping accounts, and the second is a relation of social services payments to revenue.

Mr Bryson:

– But what is to happen to the excess collections?

Mr SPEAKER:

– Order !

Mr McMAHON:

– As I said previously, I rose to see whether it would be possible to introduce a little of the essence of fact into the debate. I do not wish to distort the facts, to introduce vague and nebulous ideas about social services payments or to make emotional appeals such as I have heard an honorable member opposite make. As I left the House after having heard one honorable member opposite make his speech on the bill, somebody said to me that the speech had been like the emotional appeal of a slab of deceased mullet. That description could well be applied to similar emotional appeals that have come from honorable members opposite.

Mr Ward:

– Was not the Minister selected by a newspaper as one of the best-dressed men. in the Commonwealth?

Mr McMAHON:

– Some honorable members are conspicuous because of their dress, and I can well understand the chagrin and irritation of the honorable member for East Sydney that he was not selected instead of me.

Mr SPEAKER:

-Order! If the House does not come to order I shall leave the chair. The proceedings are no credit to the institution.

Mr McMAHON:

– This bill has only two purposes. The first is a simplification of bookkeeping methods, which has been long overdue. I believe that honorable members opposite who are honest will admit that the Treasurer has been successful in that respect. The second purpose of the bill arises from the fact that the Treasurer considered that it would be unwise to increase the reserves of the fund when money was required for other urgent purposes. He considered that it was of no use to build up those reserves any further, because the fund already was in credit to an amount at least equal to the total drawings that would be made in any one year. So he has taken the very sensible and right course of terminating the crediting of further payments to the fund. I commend the bill to the House, because I consider that it provides a progressive reform. It will reform the method of keeping the nation’s accounts and will be appreciated by the great mass of taxpayers and electors.

Mr MORGAN:
Reid

.- All honorable members on this side of the House share the anxiety thatwas so ably expressed by the honorable member for Gellibrand (Mr. Mullens). We are gravely concerned by the implications that underlie the virtual destruction of the basis on which the National Welfare Fund was originally established. We regard that fund. as a sacred trust, and also as sacred to the memory of our two great war-time Prime Ministers, the late Mr. Curtin and the late Mr. Chifley. We also regard it as our sacred duty to ensure that the solemn promises that those two great men gave, and the tradition that they laid down, shall be fulfilled; and that this fund shall be maintained on the lines on which it was established. The fund was established to provide means for the payment of various social services such as age and invalid pensions, sickness and unemployment benefits, child endowment, and family allowances, as well as of other social services that might be established in the future. It was intended to be an ever-expanding fund which would be able to meet the growing needs of the community in relation to social services. Honorable members opposite, particularly the Minister for the Navy (Mr. McMahon) seem to have only one criticism to offer against the fund, and that is that the amounts placed in it are in effect, only book entries. They have asked us what assets lie behind the fund. Surely the assets of the whole of the nation support this fund. It is surely also supported by the solemn promises of the men who established it. Surely the Government will honour the promises that were given by our war-time Prime Ministers, who said that never again would the people of this country, particularly those who made such great sacrifices during the war, be let down as were the people generally after World War I.

The remarks of honorable members opposite in relation to the assets of the fund being mere book entries amount to mere loose talk. Bank deposits of amounts such as £10,000 become, in effect, merely book entries, because no bank keeps on its premises in actual coin or gold or any other form of currency every deposit made by every customer. At most it keeps in ready cash about 5 per cent, or 10 per cent, of the total amount of deposits, in order to be able to meet the day-to-day requirements of its customers. If all the customers of a bank demanded their money at the same time the result would be that the bank would not be able to pay the depositors their money. The position is totally different in the case of a nation, the government of which has certain commitments to meet which it has behind it the whole of the resources of the nation. It is a shame to think that the Government is not prepared to honour the obligation that has been laid on it in relation to this fund.

The cost of the social services payments provided through the medium of the fund has risen from about £17,000,000 in the last financial year prior to the war, before either the Curtin or Chifley Governments took office, to an estimated total of £164,000,000 in the current financial year. Many of the increases of sociaservices benefits that have been granted during that period resulted from the good work done by the Social Security Committee set up by this Parliament, and I consider that it is fitting that some mention should be made of the fine tribute that was paid to that committee by the Director-General of Social Services in his annual report. He referred to the improvement of social services that had occurred since the committee was established and since the Department of Social Services was made a separate government organization. He pointed out that much of that improvement had resulted from advocacy by that committee. It is a significant point, which is pertinent to the Government’s attitude to the social services principle, that that committee was discontinued after the Government took office. As a matter of fact, when the Prime Minister (Mr. Menzies) was Leader of the Opposition he withdrew his supporters from the committee. That action seems to me to be in line with the Government’s feelings about social services. The truth is that the Government does not wish any more social services to be granted. If that committee had continued to operate no doubt it would have-

Mr SPEAKER:

-Order ! The honorable gentleman is getting right outside the scope of the bill.

Mr MORGAN:

– Very well, Mr. Speaker. It is significant that the Government has discontinued the Social Security Committee. Perhaps that is an indication of the motive behind the introduction of this measure which will virtually destroy the National Welfare Fund and the basis on which it was first established. When the present Government took office in 1949 the fund had a credit of £130,000,000, which has since grown to £185,000,000. The fund would continue to grow if the Government allowed it to remain on the basis on which it was established. The Government wishes to curb the growth of the fund. One can’ only wonder why that is so, and I suggest that the Treasurer should explain the reason.

Mr Daly:

– He has said that the fund can serve no further useful purpose.

Mr MORGAN:

– That is the point. The Opposition is concerned about the implications of this- measure and the motives behind it. The fund was originally intended to meet increasing social services commitments because of the growing needs of the community. The fact that the Government wishes to curb the growth of the fund is further evidence of its non-fulfilment of preelection promises.

It is obvious that there will be further large demands on this fund from time to time. I do not wish to discuss individual items of social services or the amount that may be involved, but in a general way it can be said that with our ever-increasing population, social services payments must increase. Already such payments have risen to six times the amount expended ten or twelve years ago. With the number of immigrants who are now coming to the country, it is inevitable that great demands will be made on social services funds, particularly in respect of unemployment and sickness benefits. If the ‘ fund were allowed to increase it would soon have a credit of between £200,000,000 and £300,000,000. The Government would then have a golden opportunity to give effect to another of its preelection promises. I refer to the abolition of the means test.

Mr SPEAKER:

– Order ! That subject is not within the scope of the bill.

Mr MORGAN:

– It would have been within its scope had the Government fulfilled its pre-election promises.

When the Commonwealth and States entered into the Commonwealth and State Housing Agreement, consideration waa given to the fact that many tenants of Housing Commission homes would be permitted to purchase such homes at less than cost. That would have caused the Australian Government and the various State governments certain losses in respect of homes built during an inflationary period. The Commonwealth and State Housing Agreement provides that the Commonwealth shall bear 60 per cent, of such losses and that the Commonwealth commitment in this respect shall be met from the National Welfare Fund. That commitment may well amount to many millions of pounds.

How the Government expects to provide such a sum, if it hampers the growth of the National Welfare Fund, I do not know. The Opposition believes that the Government should maintain the fund so as to enable it to meet sudden demands upon it, such as an increased volume of unemployment benefits. The Government is now being called upon, from week to week, to provide larger sums for the unemployment benefit. It may be that before long there will be 250,000 unemployed persons in Australia, as there were in 1940. In that event the Government will be called upon to provide many millions of pounds in respect of unemployment benefit. If it fails to maintain the National Welfare Fund according to existing standards, it may have no reserves on which to draw in order to meet such a contingency. The Opposition contends that this fund should remain inviolate as a guarantee of the Government’s good faith and as a fulfilment of pre-election promises.

I hope that consideration will be given to the withdrawal of the bill. Honorable members on this side of the House appreciate that the Government is most uneasy about the ever-increasing volume of social services, and the introduction of this measure appears to be the first attempt to back-pedal in that regard. That seems to be the real motive behind all the financial juggling and , 4 : …pook “ that has been going on.

Mr Ward:

– What is to happen to the social services contributions, which have been referred to?

Mr MORGAN:

– That seems to me to be a mystery. Nobody seems to know what is to happen to them. Honorable members opposite have said a great deal about book entries. I suggest that there are certain book entries which need explanation. I take it that the reserves in the fund are to meet contingencies which may arise from time to time, but the Government proposes to place a limit on the amount in the fund, so that in the event of sudden demands upon the fund there may not be sufficient reserves to meet them. Should another economic depression occur, the Government will be able to say that there are no funds in hand, that the. people must pull in their belts, and that social services, including commitments to the aged, invalids, orphans and widows, must be reduced.

Mr SPEAKER:

– Order ! The honorable gentleman is clearly out of order again.

Mr MORGAN:

– The same old cry will go forth. The people must pull in their belts. Even at this juncture, the Opposition asks the Government to do the right thing and to preserve this fund. Honorable members on this side of the House register an emphatic protest against the introduction of this bill and take this opportunity to say that when the time comes, the damage that is being done to-night will be rectified.

Question put -

That the bill be now read a second time.

The House divided. (Mb. Speaker - Hon. Archie Cameron.)

AYES: 53

NOES: 41

Majority . . . . 12

AYES

NOES

Question so resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 1772

ADJOURNMENT

Papua and New Guinea - Employment - Public Service -Primary Production

Motion (by Mr. Eric J. Harrison) proposed -

That the House do now adjourn.

Mr CHAMBERS:
Adelaide

– If the gag had not been applied earlier this week-

Mr SPEAKER:

– Order ! The honorable gentleman is not in order in reflecting upon a vote of the House.

Mr CHAMBERS:

– I take this opportunity to refer briefly to the remarkable action of the Government in dismissing Colonel Murray as Administrator of the Territory of Papua and New Guinea. I desire to say a few words in his defence.

Mr SPEAKER:

– Order ! The honorable member is about to open up a debate upon a subject which the House has already debated fully. It is not customary to raise such matters in these circumstances. However, that is a matter for the House to decide.

Mr CHAMBERS:

– I served for a period during the recent war in New Guinea and, subsequently, when I acted for some months as Minister for External Territories, I visited the Territory of Papua and New Guinea. At that time, Colonel Murray was Administrator of the territory. I believe that it is my duty to inform honorable members of observations that I made during that visit. It is all very well for Government supporters to sneer about this matter and to defend the Government’s action in dismissing Colonel Murray. During my visit to the territory I met practically every member of the administration staffs in both Papua and New Guinea. I also met many planters and missionaries, as well as representatives ofex-servicemen’s organizations, in those areas. I inform honorable members opposite who are great defenders of the interests of ex-servicemen that, without exception, every one of those persons spoke in the highest praise of the work that Colonel Murray had performed in his capacity as Administrator. He did a grand joh. I was astonished to hear the Minister for Territories (Mr. Hasluck) say in this chamber a few days ago that one reason for the dismissal of Colonel Murray was the fact that whilst it might have been possible for him to carry on tinder certain conditions, onerous responsibilities had recently developed in the administration of the territory. Surely honorable members, particularly those who served in the territory during the war and had an opportunity to assess the destruction that had been caused during that period, will agree that no greater responsibilities could confront the administration than those with which it was faced during the immediate post-war years. Colonel Murray carried out those duties with great credit to himself and to the Government that he represented.

Before concluding, I wish to refer to an insulting remark that was made about Colonel Murray. Whatever else may be said about that gentleman, he is not “ troppo “.

Mr SPEAKER:

– Order ! The honorable member may not refer to a debate that has taken place during the current session.

Mr CHAMBERS:

– I merely wish to indicate that, during the war period the word “ troppo “ was used-

Mr SPEAKER:

– Order ! The honorable member has made it quite clear that he is referring to something that wa3 said in a debate that has taken place in this chamber during the current session, and I rule that he may not do so.

Mr CHAMBERS:

– Very well, I shall say that Colonel Murray is not a mental defective.

Mr Failes:

– Who said that he was ?

Mr CHAMBERS:

– A Minister said so.

Mr SPEAKER:

– Order! The honorable member is defying my ruling.

Mr CHAMBERS:

– The person who made the insulting remark should apologize to Colonel Murray. The former Administrator is a man of great intellectual capacity. He has rendered a great service not only to the Territory of Papua and New Guinea, but also to the Commonwealth of Australia. Although he may not have been able to see eye to eye with this Government, at least he was prepared to treat the natives of the territory in a manner that would have done credit to any administering country. Surely he is entitled to respect as a decent citizen of Australia. . I hope that the person who cast that stigma on him will have the courage to withdraw it.

Mr WARD:
East Sydney

.- In deference to your ruling, Mr. Speaker, I do not propose to deal with aspects of this matter that were discussed recently in this chamber. There are, however, other aspects which I consider to be of the utmost importance, and which have not been debated in the House. The Government proposes to make a political appointment to the position of Administrator of the Territory of Papua and New Guinea! This is a most serious matter in view of the fact that that territory is administered by Australia under trusteeship. I hope that the Government will, in its report upon its- administration of Papua and New Guinea, make known to the Trusteeship Council of the United Nations the circumstances associated “with the enforced retirement of Colonel Murray and the political appointment of a former party organizer named Cleland. Mr. Cleland may have a reputa- ti on in this country as a political organizer of some ability and success, but he has very few qualifications for the job to which the Government proposes to appoint him. I have nothing against Mr. Cleland as a man. He is a legal gentleman. He has had no special training that would fit him for the position to which the Government intends to appoint him other than the fact that he was in New Guinea for a period during the war. He has little knowledge of the peacetime problems that confront the territory. Colonel Murray, on the other hand, is a Bachelor of agricultural science, and a bachelor of arts, and he has a reputation for his knowledge of tropical agriculture. He has also earned a reputation for his ability to develop the capacity of natives to co-operate in the development of their own territory. The Government’s policy is what it calls the “ European “ development of the territory. That does not mean the introduction of white workers. It means the introduction of European capital. Foi this purpose an abundance of cheap black labour is required because, in the absence of such labour, investment of funds in the territory would not be regarded as profitable. That is why the Government wants Colonel Murray out of the way. He has always protected the natives and encouraged the formation of native co-operatives. If the native cooperatives continue to flourish as they have been flourishing under Colonel Murray’s administration, and are able to extend their activities, the natives are less likely to offer for employment at the low rates of pay and under the poor conditions now applying. If the Minister cares to get in touch with the Reverend Mr. Clint, an Anglican missionary who has had great experience in helping the natives to develop their co-operatives, he will find that that gentleman has evidence that, on one occasion, certain natives were penalized because it was claimed that they were discouraging other natives from responding to the appeals of a native recruiter. The journals of the co-operatives make it clear that they are very much afraid that the Government proposes to introduce a new policy into the territory and that, in order to do that, its first step was to get rid of Colonel Murray. Obviously, Colonel Murray has not proved to be an easy tool in the hands of the Government. Colonel Murray has consistently protected and upheld the interests of the natives and certainly would not be favorably disposed to the destruction of the native co-operatives.

The United Nations Trusteeship Council will be very interested in this Government’s administration qf the territory. Part of this country’s responsibility as a trustee is to ensure that the native peoples shall not be exploited by financial interests whose only aim is to tear the wealth out of the territory for their own profit. If the Government were to permit that to be done, it would be betraying the sacred trust that has been reposed in it.

I wish to correct a misstatement in regard to a quotation made by the Minister for the Interior (Mr. Kent Hughes).

Once again I emphasize that I am not referring to a debate that has already taken place. I propose to quote matter that the Minister deliberately refrained from quoting simply because it was favorable to Colonel Murray. The Minister made certain derogatory references to Colonel Murray. That was a discreditable action because Colonel Murray has not an opportunity to defend himself adequately against the charges made in this chamber.

Mr SPEAKER:

– Order ! The honorable member may not refer to the previous debate.

Mr WARD:

– I propose to quote certain passages that the Minister failed to quote.

Mr SPEAKER:

– Order ! The honorable member must observe my ruling.

Mr WARD:
EAST SYDNEY, NEW SOUTH WALES · ALP; LANG LAB from 1932; ALP from 1936

– Very well. I shall not refer to the previous debate. I shall refer to a book written by Dr. Lucy Mair, an anthropologist, entitled Australia in Nc-w Guinea, which states, at page 209 -

It was his fate to ‘bo, in theory, the emissary of such a policy, and, in fact, its principal promoter in the face of active opposition in New Guinea from the majority of the unofficial community and most of the senior members of the Public Service, and, in Australia, of passive resistance from the Department of External Territories and what too often looked like indifference on the part of the Minister.

That refers to myself, but examination will reveal that there was no indifference on my part. The extract continues -

Only his indomitable spirit and uncompromising integrity, could have been equal to the task which faced him. Despite the outcry that every change was “ a departure from the Murray tradition “, no one could have been a worthier successor to his famous namesake.

At page 283 the author writes -

In October, 1945, Australian New Guinea entered on a great experiment. This was not, as most of its critics assume, a leap in the dark. It was an attempt to make up in a short space of time the considerable leeway between Australian practice and what has been found possible in some other colonial territories and is now demanded by world public opinion. The Ward policy was not devised and is not supported by unpractical visionaries; it has not the dubious advantage of popularity as a good cause. The small body of men who are loyally working for a development of New Guinea that will offer wider opportunities to its native inhabitant? have reached their conviction as a result of first-hand study of the facts in all cases, and of experience in the administrative service in many. At their head, in the present Administrator of Papua-New Guinea, is a man wholly devoted to the new ideals. The forces opposed to them are the same forces which in every colony have opposed the same type of advance; vested interests too short-sighted to look beyond the advantages of a cheap and docile labour supply, the scepticism of the “ old hand “ towards new ideas, the resentment of senior members of a service at an influx of juniors with a different type of apprenticeship from theirs.

They are the interests that are influencing the policy of the Government.

Mr SPEAKER:

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

Mr HASLUCK:
Minister for Territories · Curtin · LP

– I want to refer to only one of the remarks of the honorable member for Ea3t Sydney (Mr. Ward). I can only assume that he has not yet received an answer to a question on notice which was circulated to-day. That answer to the question on notice dealt with the matter of native co-operatives, and it showed in circumstantial detail that during the term of office of the present Government the activities of native co-operatives in New Guinea have trebled compared with their activities under the previous Government. This Government is using native co-operatives, and will continue to use them to advance its general policy of serving native welfare and the advancement of native peoples. If honorable members will study the answer to the question on notice that I have just mentioned they will find in it a complete refutation of the sort of charges that the honorable member for East Sydney has made to-day. He tried to convey the general impression that we were in favour of the exploitation of native labour, and that we were backing up a certain set of commercial interests in opposition to the interests of the natives. That is completely false.

This Government has declared, again and again, and has demonstrated by every one of its actions in New Guinea, that it has the welfare of the natives in New Guinea at heart no less than any other government. In the actions that it is taking it is doing far more than the previous Government did to serve th?. interests of those natives. I have studied very carefully the record of the previous Government’s activities in New Guinea, when the honorable member for East Sydney was Minister for External Territories, and the impression that I have formed, and I think it is not an unjust judgment, is that the wide activities of the honorable member for East Sydney as Minister arose - and I do not subscribe to the suggestion that he was in any way indifferent to the natives - not so much because he loved natives, as because he hated capitalists. That hate actuated his political actions far more than any enthusiasm for the welfare of the natives of New Guinea. I do not want to be drawn, as the honorable member for East Sydney seems to wish to draw me, into any detraction of Colonel Murray. I do not dispute for one moment the statements made with some feeling by the honorable member for Adelaide (Mr. Chambers) about Colonel Murray’s activities and enthusiasm. T have no doubt that at the time the honorable member for Adelaide knew Colonel Murray he was fully worthy of that commendation. I knowthat he is, very rightly, highly regarded in the territory for his past services. This Government, in publicannouncements, has paid tribute to that, past service, but the fact that a man has served well and honorably for six years, two and a half of which have been under this present Government and three and a half under the previous Government, does not mean that he will, in perpetuity, be the man best suited to carry out the very onerous duties of his office.

The change made in the appointment of Administrator had nothing whatever to do with any change of policy; it was solely a matter that related to the efficiency of the administration, a matter for which this Government has full responsibility and on which it would lack a sense of its duties if it did not discharge those duties.

Mr KENT HUGHES:
CHISHOLM, VICTORIA · LP

– I desire to say only two things. The first is that I disagree Very strongly with the honorable member for Adelaide (Mr. Chambers) about his interpretation of the word “ troppo “. I was longer in the tropics than he was, unfortunately; but I have always used the word in the sense of being momentarily or temporarily off balance, and not of being mentally defective. The latter sense was the sense in which the honorable member used, the word. The second matter about which I desire to speak relates to the speech of the honorable member for East Sydney (Mr. Ward). Any accusation against this Government of making an appointment with some party political bias comes more strangely from him than it would come from any other honorable member of this House, because recently a member of his own family was appointed to a high technical position in the Australian Aluminium Production Commission.

Mr KEON:
Yarra

.- I desire to obtain information from the Government about the important matter of employment. Yesterday the Department of Labour and National Service issued a news release in which it stated -

The demand foi-‘ labour declined during the five weeks ended 29th August. There was a further fall in unfilled vacancies registered with the Commonwealth employment service and the indications are that the numbers in employment have declined.

That statement appeared in the Sydney Morning Herald under the headline, “ Workless Increase “. It appeared in the Sydney Daily Telegraph under the headline, “Labour Demand Falling”. It appeared in the Melbourne Age under the headline, “ Startling Increases in Unemployment Figures “, and in the Melbourne Sun News-Pictorial under the headline, “Out of Work Numbers Fall Steadily”. I invite the Minister to explain to me how a statement as I have read could be headlined as it was in the Melbourne Sun News-Pictorial.

Mr McMahon:

– What has that to do with any government department?

Mr KEON:

– It has a lot to do with it.

Mr SPEAKER:

– Order! The honorable member for Yarra, (Mr. Keon) is entitled to be heard.

Mr KEON:

– The statement by the Department of Labour and National

Service indicated that employment had declined, that the recipients of unemployment benefit had increased by 10,000 during August and that in Victoria, where the Melbourne Sun NewsPictorial is published, such recipients had increased by 3,152. How could those facts, under any circumstance’s, be headlined “ Out of Work Numbers Fall Steadily”. On many occasions, when members of this Government, particularly the Treasurer, have tried to justify the expenditure of dollars on newsprint, they have told me how important it is to have these, impartial, fair and just organs of public information supplied with the necessary information to enable them to carry out their duties. In this instance, we have two clear examples of- deliberate misrepresentation, designed to bolster the fortunes of the Liberal candidate in the Flinders by-election. Despite the report issued by the department, the number of recipients of the unemployment benefit in Victoria increased by 3,152 to 5,571-

Mr Jeff Bate:

– Over what period?

Mr KEON:

– During the month ended the 30th August’. I suggest that if the honorable gentleman is curious’ about this matter, he should obtain a copy of these journals. The department states that unemployment has increased and that the number of recipients of the unemployment benefit is increasing, but the report in the press was published under the headline, “ Out of work number fall steadily “. The newspaper report reads as follows : -

Unemployment has fallen steadily since mid August, according to figures released to-night by the Department of Labour on the number of benefit claims.

Mr Francis:

– Read on!

Mr KEON:

– I shall do so. The report continues -

The number of mcn drawing the benefit throughout Australia doubled early in August to 20,453-

I remind the House that the article is published under the headline, “ Out of work numbers fall steadily “. The report continues -

In Victoria especially there has been a steady downward trend.

That ia the position in respect of available employment. The report proceeds -

The Labour Department said there were signs of revival in the textile industry, especially in woollen mills.

The report adds that factory employment fell during August in most electrical, rubber goods and paper industries.

However, gains were recorded in coal mines, iron and steel smelting, ship building, defence work and in a few firms engaged in making agricultural implements, plant and machinery.

There was little change in the numbers employed in the building industry, but the demand for most building workers had fallen substantially. “ There are reports of better work in recent months, so that production has not always fallen proportionately with reductions in staff”, the report says.

Not only did the Sun News-Pictorial publish that report about the number of unemployed in a manner which could do no other than mislead people, but the Brisbane Courier-Mail, another journal in the Murdoch chain of newspapers, also thought that it would do its bit to assist the Government in its dire distress, so it published a similar story under the. heading “ Over the Worst Unemployment”. I ask the Government to endeavour to ensure that newspapers shall publish accurate information about a matter of this kind. Unemployment is far too serious a matter to be so lightly regarded. We all know that the Government desperately desires to win the Flinders by-election, but surely honesty in reporting is of more value to it than is some temporary political advantage.

I suggest that the Minister should summon Sir Keith Murdoch to attend him in his office, and tell him that if he does not have these matters reported more correctly in future, the allocation of newsprint for the chain of newspapers which be controls will be reviewed. If the Minister is too afraid of Sir Keith Murdoch to take that action, I suggest that he should ask the employees of the newspapers concerned, who work in this building, not to place the Government in a false position by distorting the figures relating to the unemployment position and by aggravating that distortion with misleading headlines. It is obvious to all Australians that the unemployment position has seriously deteriorated, and that the number of persons seeking the unemployment benefit has greatly increased. Nobody should be deceived by the headlines in the Sun News-Pictorial. But if, perchance, anybody is deceived by them, he should change his newspaper. The plain truth of the matter is that unemployment has increased immeasurably. The number of recipients of the unemployment benefit has practically doubled as the result of the policies applied by this Government.

Mr JEFF BATE:
Macarthur

– Before I proceed to discuss the subject which I wish to raise, I shall comment briefly on the charge levelled by the honorable member for East Sydney. (Mr. Ward) against the Minister for Territories (Mr. Hasluck). The honorable member said that the Minister had been guilty of making a political appointment. Such an accusation was utterly fantastic. As honorable members are aware, the Minister for Territories appointed the Leader of the Labour Opposition in the Western Australian Parliament to the highest public position in the Northern Territory. f How, then, can he seriously be charged with having made a political appointment in the Territory of Papua and New Guinea? When the honorable member for East Sydney was Minister for Labour and National Service in 1942, he appointed Comrade “ Jock “ Garden as liaison officer between himself and the unions. The honorable member should be the last person in this Parliament to charge the Minister with having made a political appointment. Let us consider the sort of man that “ Jock “ Garden is. He is reported to have said -

The time is overdue now for restoring legality to the Communists, who are doing a great job in the struggle against fascism.

I leave that matter, without further comment.

Statements have- been made by some honorable members, particularly the honorable member for Yarra (Mr. Keon), that primary production in Australia is declining. The time is appropriate for me to place on record in this House the fact that primary producers are enjoying a magnificent season, and that there is a tremendous volume of production in the primary industries, particularly in New

South Wales, where even the State Labour Government cannot prevent the land from yielding the fruits of a most bountiful spring season. I have compiled figures to show that dairy production, the surplus of which is manufactured into butter, will increase this year by approximately 40 per cent. The whole of the increased butter production will be shipped overseas. The production of wool, vegetables and meat, particularly sheep meat, will also greatly increase. This greater production is not due wholly to a bountiful season. It is due, to a great degree, to the strong and vigorous agricultural policy applied by this Government, which has done everything in its power to encourage rural industries, and discourage unessential industries.

On Australia Day, the Leader of the Opposition (Dr. Evatt) declared in a speech that the Commonwealth Bank should provide additional money for factories and housing. The right honorable gentleman apparently gave no thought to the needs of the primary industries, which must increase production in order to restore economic stability and give the banking liquidity which is necessary to finance imports and to carry on the affairs of the country. This Government has been able to bring about an increase of primary production, not only by fixing incentive prices, which have had a tremendous bearing on production, but also by providing the requisite labour for the primary industries. Farm labourers have been brought from Italy and Holland and, as a result of its wise administration, many young Australians who have been fooling’ about in unessential industries have returned to the economically surer activities of primary production. The Government has been able to make sure that we shall soon have inexhaustible supplies of superphosphate. I congratulate the Minister for Defence Production (Mr. Eric J. Harrison), because he has been able to assure the supply of 10,000 extra tons of sulphur, each ton of which will provide about 9 tons of superphosphate. Approximately 100,000 additional tons of superphosphate may enable us to grow 2.000,000 more acres of wheat, which we badly need. The Minister for Commerce and Agriculture (Mr. McEwen) has told us that, after two and a half years of negotiation with the State Ministers in charge of prices control, he has made arrangements for the supply of over 50,000 tons each of lead and zinc, which will enable our factories to produce fencing materials, piping and other galvanized products that are essential to primary production. Those products will enable farmers to take full advantage of good seasons so that we shall be able to develop a strong agricultural economy.

Mr Pollard:

Mr. Speaker, I direct your attention to the state of the House.

Mr SPEAKER:

– Order ! I am not going to call for a quorum at this hour. In fact, I am satisfied that a quorum is present.

Mr Pollard:

– That is not so.

Mr. Speaker ‘having counted the House,

Mr SPEAKER:

– After counting the number of members present I find that there is not a quorum. That being so, I think we shall adjourn.

House adjourned at 11.47 p.m.

page 1778

ANSWERS TO QUESTIONS

The following answers to questions: were circulated: -

Health and Medical Services

Mr Fitzgerald:

d asked the Minister for Health, upon notice -

  1. When will the Parliament, be informed of the national health scheme submitted to the health department of each State?
  2. Where can details of the scheme be obtained ?
Sir Earle Page:
CP

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

  1. No national health scheme has been submitted to the health department of any State.
  2. The health services being provided and those contemplated have been the subject of policy statements to this House from time to time. Any further details will be furnished on request to the Department of Health.

PAPUA and New Guinea.

Mr Ward:

d asked the Minister for Territories, upon notice -

  1. How many native co-operative undertakings were in existence in the Territory of Papua and New Guinea when the present Government came into office in 1949?
  2. In what fields of activity were these co-operatives operating?
  3. What is the number of native co-operatives at present functioning?
Mr Hasluck:
LP

– The answers to the honorable member’s questions are as follows : - 1 and 2. One hundred, comprising 47 copra producer; 46 copra producer and consumer store; 1 timber producer; and 6 consumer store societies.

  1. One hundred and forty-five, comprising 31 copra producer; 70 copra producer and consumer store; 19 consumer store; 2 building; 19 rural progress rice societies; and 4 wholesale associations. During 1950, 70 small societies (included in 1 and 2 above) were amalgamated into 21 larger societies.

Postal Department

Mr Swartz:

z asked the Minister acting for the Postmaster-General, upon notice -

  1. Has any further decision been made regarding extensions and alterations to’ the Toowoomba Post Office?
  2. When is it anticipated that this work will be completed and will the additional accommodation provide for all the administrative personnel of his department in the City of Toowoomba?
Sir Earle Page:
CP

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

  1. It is proposed to erect a new telephone exchange building at Toowoomba on a site at the rear of the post office and, at a later stage, to completely remodel and extend the post office building.’ Preliminary outline plans have been drafted for both the new telephone exchange building and for the alterations to the post office. It will now be necessary for the Department of Works to prepare detailed sketch plans and estimates for these works and because of the magnitude of the projects, this will take some time. It is likely, because of the major nature of the proposals, that they will be referred to the Parliamentary Standing Committee on Public Works for approval.
  2. It is not possible at this stage to estimate when the building work will be completed. The new accommodation, whan provided, will house all the administrative personnel attached to the department in Toowoomba.
Mr Swartz:

z asked the Minister acting for the Postmaster-General, upon notice -

When will the work be completed on the new non-official post office at Newtown, Toowoomba, and on what date will this post office be opened? .

Sir Earle Page:
CP

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

Vacant possession of a suitable building in Newtown, West Toowoomba, recentlypurchased for the Postal Department, has been obtained and sketch plans nave been prepared for the conversion of the structure to meet postal requirements. It is expected that the necessary alterations will be put in hand at an early date, and when completed a non -official post office will be established in the premises. royalaustralian Air Force.

Mr Swartz:

z asked the Minister for Air, upon notice -

  1. Has there been any alteration to the previous decision to establish two full-time Royal Australian Air Force bands in Australia?
  2. If so, what are the new proposals, and what arrangements will be made for the provision of somepermanent bandsmen for the Amberley station, in Queensland?
Mr McMahon:
LP

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

  1. It is now proposed to form only one Royal Australian Air Force full-time band. This military band is being formed at Laverton, Victoria.
  2. For the present, it is intended to retain at Amberley the non-commissioned officer in charge of the volunteer part-time band. No other full-time musicians will be provided at Amberley.

Ministerial Visits Overseas

Mr Ward:

d asked the Prime Minister, upon notice -

  1. In assessing the cost of overseas delegations, is it the practice to include all items of expenditure resulting either directly or indirectly from the visit of the ministerial party or delegation, such as the cost of functions arranged in its honour or for its entertainment by Australian representatives abroad?
  2. Arc such items also included in travelling or living-away-from-home allowances paid to any member of the delegation?
  3. Are members of an overseas delegation provided with a clothing allowance for the purpose of equipping themselves for the journey; if so will he furnish details?
Mr Menzies:
LP

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

  1. In assessing the cost of delegations proceeding overseas direct items of expenditure such as fares are included. Indirect expenses such as cables, telephone, car hire are also included. If the delegation itselfgives a function, the cost of that function is included. If an Australian representative abroad arranges a function in honour of the delegation, the cost would be borne by that representative, as part of his normal representational duties.
  2. No.
  3. An official proceeding overseas, whether a member of a delegation or not, msv be entitled to. an equipment allowance. Such an allowance is governed strictly fay rules laid down by the Public Service Board. Shortly, the allowance is normally £25; receipts for every item must be produced; and the officer is re-imbursed only if it is considered that a particular item is essential. In addition, an allowance is not payable on each occasion an official proceeds overseas.

Cite as: Australia, House of Representatives, Debates, 18 September 1952, viewed 6 July 2017, <http://historichansard.net/hofreps/1952/19520918_reps_20_219/>.