Senate
9 July 1931

12th Parliament · 1st Session

  1. Senate
  2. 12th Parliament
  3. 1931

The President (Senator the Hon.W. Kingsmill) took the chair at 3 p.m., and read prayers.

NAVAL BOARD.

Senator DOOLEY.- On the 3rd July, Senator Foll asked the following questions, upon notice: -

  1. What are the names of the members of the Naval Board?

  2. What is the remuneration received by such members?

  3. What is the total cost per annum to Australia for the maintenance of the Australian Fleet?

  4. What are the ships actually under commission at the present time?

I . am now in a position to inform the honorable senator as follow : - 1 and 2.First Naval Member and Chief of Naval Staff. - Vice-Admiral W. Munro Kerr, C.B., C.B.E. - Salary, £3,000 per annum,less deduction under Income Tax (Salaries) Act 1930 (16 per cent.), £450; total, £2,550 per annum. Second Naval Member. - Captain Cyril H. G. Benson, D.S.O., R.N., paid as Captain Superintendent of Training, Flinders Naval Depot. - Active and command pay 77s. per diem (less 12½ per cent.) ; ration allowance,1s. 8d. per diem; entertaining allowance, 8s. per diem; total, £1,406 0s. 2d. (Receives no payment as Second Naval Member). Finance and Civil Member. - Colonel T. J. Thomas, O.B.E., paid as Finance Secretary, Department of Defence. - £1,1 12 (less 12½ per cent.), £973 per annum. (Receives no paymentas Finance and Civil Member of Naval Board).

  1. The total provision for naval expenditure (including new works) in Estimates, 1930-31,’ was £1,762,683.

  2. The sea-going ships in full commission are: - H.M.A.S. Australia, H.M.A.S. Canberra, H.M.A.S. Albatross, H.M.A.S. Anzac.

page 3580

TAXATION

Cost of Collection

Senator Sir GEORGE PEARCE.Some time ago I asked a question in regard to the cost of collection of income tax and sales tax per £1,000. I should like to know if a reply is yet available ?

Senator DOOLEY:
Assistant Minister assisting the Minister for Works and Railways · NEW SOUTH WALES · ALP

– The information is not yet available.

page 3580

QUESTION

GOLD BONUS

Senator CARROLL:
WESTERN AUSTRALIA

– Has the Minister’s attention been drawn to the following telegram published in the Age, of the 8th July:-

GOLD BONUS REDUCTION.

ToVary According to Exchange Premium.

Canberra, Tuesday. - The PostmasterGeneral stated to-night that he had induced the Treasurer, in the event of the present exchange premium decreasing, to increase the gold bonus proportionately, so that the Government’s proposed 50 per cent, cut in the gold bounty under its economy proposals would not have the effect of reducing the bounty below 20s. per ounce with exchange rates at par.

If so, I should like to know whether the Government approves of one of its Ministers making a statement on policy before the Prime Minister has bad an opportunity to consider the question.

Senator DOOLEY:
ALP

– I understand that the Prime Minister is making a statement in another place this afternoon upon the matter referred to by the honorable senator. I shall endeavour to provide the honorable senator with a reply on the adjournment.

page 3580

QUEENSLAND BORROWING

Personal Explanation

This loan was for a period of twenty years from the 1st October, 1921, bearing interest at the rate of 7 per cent, per annum payable half-yearly, on 1st April and 1st October, the issue price being 99less underwriting, &c - 4 nor cent.

It may be asserted that, because of the profit made by transferring these funds from New York to London, the rate charged to Queensland was less than 7 per cent., but if credit is taken for any profit which is made through a favorable rate of exchange, consideration should also be paid to the extra cost involved in transferring money overseas to meet interest payments when the rate of exchange is adverse. Until the expiry of the loan in question, no one can say what that extra cost will be. The fact remains, however, that what I said by way of interjection was correct - the American bondholders received 7 per cent. on. the money they loaned to Queensland.

Senator DOOLEY:
ALP

– by leave - I was about to ask leave to make a statement on this subject when Senator Glasgow rose. The Treasurer (Mr. Theodore) was communicated with yesterday concerning a statement made during a debate in the Seriate last night, to the effect that while he was Treasurer of Queensland he had borrowed money at an interest rate of 7 per cent. I have now received an explanation from the Treasurer as to the facts concerning the flotation referred to. In 1921, Queensland floated a loan in New York with a nominal rate of interest of 7 per cent. Sterling at that time was quoted in New York at 3.90 dollars to the pound. The Treasurer, in converting the dollars borrowed in New York to sterling, made a profit for Queensland of over £500,000 on a 12,000,000 dollars loan. This brought the effective rate of interest on the New York loan to approximately 5½ per cent. The effective rate of interest on London borrowing at about the same time was 6½ per cent.

page 3581

INTERNATIONAL DEBTS

Hoover Plan

Senator DOOLEY (New South Wales-

Assistant Minister) [3.11]. - by leave - I desire to inform the Senate that advice has been received that an agreement in principle has been reached between the United States of America and France with respect to what is known as the Hoover plan for a debt moratorium. As several important features have not been finally settled the British Government is renewing the invitation previously issued by it for a conference in London. The. main outlines of the agreement are understood to be as follows : - 1.France agrees to the suspension of payments of the conditional annuities, payments of the suspended annuity to be spread over ten years.

  1. The United States of America agrees that the unconditional annuity will continue to be paid to the Bank for International Settlements, and France agrees that the amount so paid may be re-lent to Germany, probably through the Railway Administration.
  2. The Federal Reserve Bank of the United States of America is to provide a credit for Poland, Roumania, Czechoslovakia and Jugo-Slavia.

The effect of the proposal as between Australia and the United Kingdom is that Australia will be relieved for this financial year of a payment to the United Kingdom of £3,920,000, being interest payments on war debts. Australia in her turn will not receive reparation payments amounting to £830,000.

page 3581

QUESTION

NEW SOUTH WALES GOVERNMENT

Overseas Obligations

Senator PAYNE:
TASMANIA

asked the Minister representing the Prime Minister, upon notice -

  1. Is it a fact that repudiation of obligations is repugnant to British tradition and policy and to the Commonwealth of Australia?
  2. Is it a fact that the New South Wales Governmenthas repudiated its overseas obligations?
  3. Is it a fact that the burden of meeting same has been placed on the rest of Australia?
  4. Does the Government intend to take any action, should the Government of New South Wales seek the assistance of the British Government, through the Dominions Office, by which it may avoid an appeal to the electors ?
Senator BARNES:
Vice-President of the Executive Council · through Senator Dooley · ALP

– The answers are -

  1. and 2. These questions ask for an expression of opinion which it is not customary to give in answer to questions.
  2. The obligations of New South Wales have been met by the Commonwealth, which is taking steps to recover from the State the amount due.
  3. The matter referred to does not appear to be one in which the Commonwealth Government has power to intervene.

page 3582

GOLD-MINING INDUSTRY

Reduction of Bounty

Senator E B JOHNSTON:
WESTERN AUSTRALIA

asked the

Minister representing the Prime Minister, upon notice -

  1. Is it a fact that the Legislative Assembly of Western Australia has passed a resolution condemning the Federal Government for its action in discriminating against the goldmining industry of Australia, by subjecting it to a reduction of 50 per cent, as compared with proposed reductions of 20 per cent, in the bonuses paid to other Australian industries ?
  2. Is it a fact that this proposed reduction in the gold bonus was not submitted to the recent conference of economists and Premiers in Melbourne, but is a subsequent proposal emanating entirely from the Government?
  3. Does not this action, in effect, amount to repudiation?
Senator BARNES:
through Senator Dooley · ALP

– The answers are -

  1. A telegram has been received from the Premier of Western Australia advising that a resolution was carried by the Legislative Assembly of that State in opposition to the proposed reduction of the gold bounty.
  2. The recent conference of Commonwealth and State Ministers, while agreeing on the broad general principles of the rehabilitation plan, and on the need for a reduction of 20 per cent, in adjustable Government expenditure, decided that the detailed steps to be taken to give effect to the reduction in expenditure should be left to the individual Governments. No special decision was reached by the conference on the question of bounties, as the expenditure on bounties is a matter solely for the Commonwealth. The Prime Minister has announced that no reduction will be made in the gold bounty in respect of the six months ending 30th June, 1031, and that in the event of rates of exchange falling, the rate of bounty willbe proportionately increased.
  3. No. The proposed reduction in the gold bounty is consistent with the resolutions of the conference. The financial position is such that it is only with the greatest difficulty that the Commonwealth is able to meet its current liabilities. The reductions which the Government proposes in bounties and other expenditure are unavoidable owing to the present financial situation.

page 3582

FINANCIAL EMERGENCY BILL EXEMPTIONS

Senator LYNCH:
WESTERN AUSTRALIA

asked the Leader of the Government in the Senate, upon notice -

  1. Regarding the 20 per cent, reduction on salaries and wages as agreed to by the Premiers Conference and accepted by the Government, will the Government apply that reduction to all persons drawing salaries and wages from the Commonwealth Treasury?
  2. If not, what person or class of persons does the Government propose to exempt from such reduction?
  3. What are the reasons for such exemption, if any?
Senator BARNES:
through Senator Dooley · ALP

– The answers are -

I, 2 and 3. This matter is dealt with in the Financial Emergency Bill. No exemptions are provided for.

page 3582

PUBLIC WORKS COMMITTEE

Resignation of Senator Daly: Appointment of Senator Kneebone

Motion (by Senator Dooley) agreed to-

That Senator Daly be discharged from attendance on the Parliamentary Standing Committee on Public Works; and that in accordance with the provisions of the Public Works Committee Act 1913-21, Senator Kneebone be appointed a member of the committee.

page 3582

COMMONWEALTH DEBT CONVERSION BILL

Second Reading

Debate resumed from the 8th July, (vide page 3488), on motion by Senator Dooley -

That the . bill be now read a second time.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

.- This bill, which deals with the conversion of Australia’s internal debt is, in many respects, an extraordinarily complex measure, and does not lend itself very readily to controversial debate.

Senator Thompson:

– I think it does.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– In certain respects it does not. It relates to questions of fact, and the only aspect from which it can be debated is its possible effect upon Australia’s indebtedness. Such a huge debt conversion scheme has never been attempted in this country, and, with one or two exceptions, it stands unique in the history of the world. It is true that in Great Britain and one or two other countries huge debt conversions have been effected, but the proposed conversion is a record so far as Australia is concerned. To the extent that these huge debt conversions have taken place in other countries this conversion is not original; nevertheless it presents certain difficulties in this country that probably were not en- countered in other countries,, and on that account I have no doubt that the Treasury officials and their advisers had to give to the matter long and deep thought before the bill was prepared and submitted to Parliament.

As I have said, there can be no real difference of opinion in regard to the provisions of the bill. It has been brought down because of our very serious financial position, a position that is without parallel in the history of our country. Considering the nature of that position, which it is not necessary that I should emphasize, it will be admitted by everybody that extraordinary action was unavoidable. The. bill proposes the only action that probably could be taken. The acceptance of some of its provisions will involve on the part of many of us a radical departure from what may he regarded as ethical standards. But “ needs must when the devil drives “. While we cannot contemplate with any degree of pleasure the course of action proposed, and while some of the provisions will stick in the throats of many of us and be extremely difficult to swallow, still we must give our consent to the proposal in a time like the present.

The Premiers Conference, held in Melbourne, featured strongly the principle of the voluntary conversion of our debt. I have read the reports of the very interest ing debates that there took place. Some of the members of the conference appeared to think that straight out compulsion should be applied; but the general feeling was that the principle of voluntarism should be embraced, and that it would be infinitely better for the conversion to take place, if at all possible, on that basis. On its face, this bill seems to honour that principle. Those who hold Commonwealth bonds and stocks are to be asked to convert them voluntarily ; but as a matter of fact the soft glove of voluntarism serves merely to cover the mailed fist of compulsion.

Senator E B Johnston:

– What will happen if they refuse to convert voluntarily ?

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– That matter does not arise at the moment ; but it will have to be considered should such an eventuality have to be faced. I agree that an element of compulsion is vital to the success of the scheme. The people of Australia to-day largely mistrust governments.

Senator Thompson:

– Certain governments.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– It may be said that they mistrust all governments, as well as all political parties. They do bo, not only because of their experience in the past, but also as a result of the peculiar frame of mind into which they have drifted and which has led them to doubt even themselves. They are apprehensive as to the future. That apprehension is evident in many directions. There are strong grounds for believing that those who have any money are inclined to hoard it. The closing of the Government Savings Bank of New South Wales was largely due to the mistrust of the people of the State Government, and the administration of the bank. Those who were fortunate enough to get in before the doors closed withdrew what they had on deposit. Many of them transferred their balances to other banking institutions: but quite an appreciable number decided to keep it in their own homes or in other places. Persons who to-day have a little money to spare are hanging on to it for all they are worth instead of opening banking accounts as was the practice in the past. This state of mind indicates clearly that we cannot be at all sure of the voluntary conversion of this debt. I do not like having to say that, because I realize that it would be infinitely better if we could put this through as a purely voluntary measure, by appealing to the people on the high ground of patriotism and national necessity to trust future administrations to do the right thing. But there are very definite indications that such an appeal would not meet with the measure of success that is necessary. We cannot afford to risk failure, because that might cause us to sink into the maelstrom of national bankruptcy, from which it would be very difficult to emerge. These considerations almost justify our taking any steps that would ensure the success of the conversion operation.

Senator Payne:

– Does the honorable senator suggest that there should be compulsion?

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– I am pointing out that compulsion is really at the back of this scheme.

Senator Cooper:

– We do not know what lies behind it.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– It can readily be imagined. There looms in the background of this proposal the bludgeon of compulsion.

Senator McLachlan:

– Is it not the bludgeon of taxation rather than of compulsion ?

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– The honorable senator may have it that way if he chooses ; but there is the blugeon of compulsion so far as this conversion is concerned.

Senator Daly:

– What has that to do with the principle of the bill?

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– It has quite a lot to do with the principle of the bill. If the conversion is not successful, other steps will have to be taken; because it is morally certain that we cannot afford to pay the bondholders the money that is owing to them.

Senator Daly:

– Does not the honorable senator think that common sense will dictate a voluntary conversion?

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– Common sense may lead to the voluntary conversion of the debt ; I hope that it will. But if the principle of voluntarism does not prove successful, this Parliament will be under the painful necessity of considering some other measure that will meet the position.

Senator Herbert Hays:

– Does not that apply to all loans?

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– It does not apply to all loans to the same extent that it will apply to this impending conversion. We have never before been faced with precisely the same situation as that which now confronts us, because we have always been able to make satisfactory arrangements, either here or overseas, and have never deemed it necessary to consider the probable course of action in the event of a conversion loan not being entirely successful. We must not overlook that possibility with regard to this conversion.

The bill itself hints that the principle of voluntarism may not be entirely successful, and suggests the possible adoption of some other method. What I wish to emphasize is that the other method suggested would involve the dishonouring of solemn engagements made between the Commonwealth Government and its bondholders. Under these contracts the Government has undertaken to pay bondholders a certain rate of interest, and to redeem the bonds on the due date. All honorable senators will agree that if the principle of compulsion is applied to this conversion loan, it will mean the breaking of such contracts, a course of action which, I am sure, would be extremely distasteful to everybody. We all remember the promise made by the then Acting Treasurer (Mr. Lyons) when inviting subscriptions to the loan of £28,000,000 in December last. This bill, if it does nothing else, will involve a grave departure from the contract then entered into between the Commonwealth Government and those persons who made cash subscriptions or agreed to convert maturing securities into the new loan. The effect of any failure to honour a contract of that nature may last for generations, because there has always been a feeling, for which we ought to be very grateful, that when the Federal or any State Government enters into an agreement with its citizens it always honours it in the spirit as well as the letter. Assuming even the partial failure of the voluntary principle in respect of this proposed conversion, it would now appear that contracts entered into betweenthe Commonwealth Government and citizens of Australia as recently as December last, will be broken.

Senator Payne:

– The Government is ir> the same position as a. business man who is unable to meet his obligations.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– That may be so.

Senator Kneebone:

– There is a big difference.

Senator Thompson:

– Why not negotiate this compulsory hurdle when we come to it?

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– I have said all that I wish to say on that point. Senator Kneebone has reminded us that there is a big difference between obligations entered into between private individuals and contracts made between the Commonwealth Government and its citizens. I agree with him. The inability of a private individual to meet his engagements may cause a certain amount of trouble, but the effect of his failure is restricted in its scope, whereas the failure of a government to honour its obligations to the people of Australia may cause widespread suffering, and result in great hardship, not only in the immediate present, but also in the near and distant future.

Senator Payne:

– We must all do our best to make the conversion loan a success.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– I am sure we shall, because we all realize that the complete success of a conversion loan of such magnitude will do much to re-establish confidence in Australia overseas. On the other hand, if it fails, it will be difficult for us to avoid further trouble overseas because we may be sure that investors there are watching very closely the steps which are now being taken to put our house in order. If we demonstrate our ability to convert our internal debts to the lower rate of interest without resorting to compulsion, the benefit to Australia overseas will be incalculable. It will be a striking manifestation of the faith of Australians in their own country. In that happy event, I am sure that, given a reasonable chance, it will be possible for us as a nation to emerge from our troubles better and stronger than ever.

Senator Payne:

– That is the right tone to adopt.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– I agree with my honorable friend, and I am sure that he, as indeed all of us, will do his utmost to ensure the success of this huge conversion loan. I am convinced that if the position is placed fairly before the people of Australia, the loan will be successful.

I turn now to what I regard as one of the weaknesses of the bill, although I admit it is difficult to see how the provision to which I am about to direct attention could have been omitted. I refer to the probable effect on future finance of the ten fixed maturity dates for the new securities, ranging from 1938 to 1961, a period of 30 years. On each of these dates, an enormous sum will have to be either redeemed or converted. In view of our present financial position. I doubt that it will be possible to pay off any considerable amount on the respective maturity dates, so it is probable that we shall have to issue further conversion loans, and I am wondering if we shall be able to convert them on the due dates.

Senator Thompson:

– We should be able to do if, in the meantime, we do not go on the market for new cash loans.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– That is another point that comes up for consideration. In my opinion, it will be extremely “difficult to arrange for the conversion of these loans in Australia as they fall due. For several years at least, we must expect reduced incomes and increased taxation, thereby limiting the amount of money available for investment in government loans or anything else. I do not think that any honorable senator can look forward with any great degree of confidence to the successful conversion in Australia of the loans falling due in 1938.

Senator Payne:

– Prosperity may return within a few years.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– That time will not come much before 1938. If Senator Payne thinks that prosperity is waiting around the corner, that next year our troubles will end, and money will be available at low rates of interest-

Senator Payne:

– I did not say next year.

The PRESIDENT (Senator the Hon W Kingsmill:
WESTERN AUSTRALIA

– I ask honorable senators not to interject but to reserve their remarks until they have an opportunity , of addressing the Senate. Not only are interjections embarrassing to the speaker, but they also prevent other honorable senators from following the discussion.

Senator Payne:

– I object to words that I did not utter being put into my mouth. I made no reference to next year, and I object to Senator Duncan misinterpreting my remarks.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– If the honorable senator did not mean next year, he probably meant the year after next. I submit that prosperity is not likely to return before 1938.

Senator Thompson:

– The honorable senator is too pessimistic.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– I hope so. But I am afraid that we cannot look for a return to prosperity so soon as some honorable senators appear to anticipate. Economies will be necessary for several years, and at least until 1938 increased taxation will be inescapable. Yet when I say that in all probability conditions in 1938 will not permit of the successful conversion in Australia of the loans then falling due I am said to be pessimistic. I sincerely hope that I am; but I feel that we must view this matter in the light of probabilities. One of the mistakes we have made in the past has been that of being too optimistic.

Senator Payne:

– We have been too extravagant.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– Had we been less optimistic in the past, we would not now be where we are. We have gone on borrowing and spending regardless of the consequences. Those days have gone, and we must now consider not only the probabilities, but also the possibilities of the future.

Even supposing that it will be possible to arrange for the conversion in Australia of the loans falling due in 1938, and the successive maturing dates, where are we going to obtain money for developmental purposes?

SenatorCrawford. - Do without it.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– Even that will not remove all the difficulties. If we have to arrange for these several conversions as they fall due, it will be extremely difficult to obtain new money for internal developmental works. Senator Crawford said that we must do without new money. What does he mean ?

Senator Daly:

– Unless we do we shall never be able to redeem those loans.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– Unless we can obtain new money, many of the developmental schemes which have either been commenced or are contemplated will have to be put aside for another decade.

Senator Thompson:

– Leave them to private enterprise.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– The honorable senator suggests a policy which, so far, has not proved acceptable to the people of Australia. Many areas are clamouring for railways in order that primary pro- ducts grown there might be more easily marketed.

Senator Herbert Hays:

– In some districts railways are being pulled up.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– Many country districts require additional conveniences, such as silos for the storage of wheat and water conservation schemes. Unless we spend money on developmental works such as these, the country will stagnate, and there will be the most intense dissatisfaction throughout the community.

Senator Daly:

– Would it not be more profitable to develop the fishing industry rather than build new railways?

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– To-day is Thursday, notFriday. The honorable senator should talk about fish to-morrow. It is unfortunate that he cannot rise above mullet even when so serious a problem as that which now confronts us is under consideration.

Senator Daly:

– The honorable senator does not understand Australian problems when he makes that remark.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– I suggest that if we are to depend upon selling fish to meet our obligations, the outlook is not very hopeful.

Senator Daly:

– Australia imports fish to the value of £1,500,000 a year.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– I am aware of that ; but even if the fishing industry were developed to the fullest possible extent, it would make only a trifling contribution to the solution of the problem confronting us.

The development of North Australia is peculiarly a problem for this Parliament. That development will require money.

The PRESIDENT:

– I remind the honorable senator that this bill deals with the conversion of certain loans, and I ask him not to dwell on subjects which, are really extraneous.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– I ask, Mr. President, whether the effect of this legislation on the prospect of securing money in the future for developmental works is not apropos.

The PRESIDENT:

– Such matters should not form the chief features of the debate.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– I was pointing out that with huge sums falling due with monotonous regularity we shall probably find it extremely difficult to obtain new money for necessary works. I was pointing out that among other things it is necessary to obtain money for the development of our empty north. It will be impossible to spend money there unless we can get it, and the bill will make it extremely difficult to get money.

I do not know that I want to say very much more upon the measure at this stage. It would be interesting, if one were permitted to do so, to ramble into all the various possibilities that might arise from it. I sincerely hope, however, that it will be carried, and that this huge conversion loan will be a great success; because, if it is, we shall show to the world that we have faith in our own country; that we are prepared to stand on our own feet and face our own problems in a proper way. It may be that we can afford to leave the future to take care of itself; but I felt that a few words upon some of the problems of the future would not be amiss, because, while considering the present, we must keep our eye on the years that lie immediately ahead. As a matter of fact, the bill contemplates a fairly long jump into the future in the matter of maturity dates. I shall vote for the second reading.

Senator KNEEBONE:
South Australia

– I agree with Senator Duncan that this is the most important bill that has ever been submitted to any Australian Parliament. In the first place, at one stroke of the pen, as it were, it effects the unification of the nation’s debts. Upon the passage of this bill there will be only one public debt in Australia. I hope that the National Parliament will exercise a more complete control over the public debt of Australia than it has in the past, when seven different governments in seven different ways were spending all the money they could lay their hands on. The natural corollary to this legislation is an assumption by the Commonwealth Parliament of the entire control of the assets of the Commonwealth, bringing about, in effect and in fact, the complete unification of Australia.

It seems to me that the flamboyant preamble to this bill is not justified by its 27 clauses or schedule. The preamble reads -

Whereas at a Conference between Ministers of the Commonwealth and Ministers of the States, convened in Melbourne on the twentyfifth day of May One thousand nine hundred and thirty-one, to devise measures for meeting the grave financial emergency existing in Australia and thereby averting disastrous consequences, a plan was agreed upon for reestablishing the financial stability of the Commonwealth and restoring industrial and general prosperity by means involving a common sacrifice, including amongst other things the conversion of the public debts of the Commonwealth and the States on the basis of a. reduction of the interest payable:

Senator Thompson:

– That is political camouflage.

Senator KNEEBONE:

– Yes. It reminds me of some of the prospectuses of wild-cat shows. It certainly ‘does not reflect the contents of the bill. For example, there is nothing in the measure providing for reconstruction. A subcommittee of Under-Treasurers and economists, of which Professor “Copland was chairman, was appointed by the Premiers Conference, and its terms of reference were contained in one sentence of the report by the chairman of the sub-committee - 1 submit herewith the report of the TJnderTreasurers and Economists upon the possibilities of reaching budgetary equilibrium in Australia.

The committee was not appointed to inquire as to the effect on industrial and general prosperity, financial rehabilitation, or any of the things mentioned in the preamble to the bill. It reported on the following assumption: -

The estimate for 1931-32 assumes -

No long-term borrowing in London;

No general reduction in rates of interest :

No appreciable improvement in commodity price levels;

No radical change in internal monetary policy.

On this estimate the committee thus assumed the continuance of the present depressed conditions of trade and industry. Later it considered the effects of some changes in these basic conditions. In effect, the committee said that the financial problems should be approached in three steps - First, what further economies were possible; secondly, what increases of revenue might be got from other sources; and, thirdly, if those failed to meet the probable deficit, what further measures were necessary? Those were the propositions dealt with by the committee when it submitted what is now known as the plan which forms the basis of this bill. First of all it set out to see by how much it could reduce the estimated deficit of £39,000,000 for this year. Step by step it suggested a reduction here and a reduction there until the amount was reduced to £11,000,000. The members of the committee then gave up the job and left it at that point, although in another part of their report they reverted to the original conditions and said that they would see if they could do anything else. They left it to the Government to borrow £11,000,000 to bridge the gap, but authorities have since admitted that the gap will possibly be £20,000,000.

The major cause of our national travail to-day is the fact that for four years the nations concentrated on wholesale destruction. Their citizens returned war-scarred to their national homes to find trade dislocated and commerce ruined. They had to set to and build up again. On top of that reconstruction cost they were faced with tremendously increased war debts, representing in- the aggregate a daily interest bill of more than £5,000,000. They have been struggling for ten years under that huge burden until at last, through the Hoover plan, they have been led to the admission that these payments cannot be sustained. It is, therefore, not altogether fair to lay all the blame for Australia’s troubles to internal causes, as some honorable senators are rather prone to do.

Senator Pearce, in supporting the second reading of the bill, referred to the tremendous number of people in Australia who are bondholders; I think that the number he mentioned was considerably over a million. In fact, I formed the impression from the right honorable senator’s remarks that we have more bondholders than householders in Australia. It is, however, a difficult matter to ascertain who are actually our creditors in Australia, where the bonds are held, and how many people there are to whom we have to appeal to effect the conversion provided for in the bill. When this matter was being discussed at the Premiers Conference it was suggested that a committee should approach certain gentlemen in Australia and discuss with them the possibility of a conversion loan. Mr. Jones, who figured prominently at the conference, said -

We called to our aid on this question certain gentlemen who are connected with finance in Australia, and after discussing the general problem with them we asked them whether it would bo possible, in their opinion, to effect a huge conversion of the whole of the Commonwealth loan amounting to £500,000,000, on a basis that would mean a considerably less amount of taxation to the people of

Australia. While they could not apeak officially, for the obvious reason that they had not an opportunity of consulting their people, after having debated the question for some hours they said that it was their firm belief, provided the reduction in expenditure as we suggested was agreed to, that the financial institutions of Australia would get behind a huge conversion loan and would underwrite it. It would mean, in other words, that the loan would be floated when they brought about the underwriting. We examined the question as to how the loans were held at the present time, and we discovered that they were traceable to the extent of £271,000,000.”

Mr. Theodore interjected “Represented by these institutions “, and Mr. Jones went on to say -

We were trying to find out the institutions which we could readily consult. We were told that the insurance companies held loans to the extent of £71,000,000; the trustee companies to £14,000,000, I think; and the friendly societies to the extent of £16,000,000. Then there are also the savings banks. We reached the figure of £271,000,000 held by institutions which could be readily approached.

They said that they could find within two or three hours, or two or three days at the most, whether £271,000,000 could be readily converted. They approached trustee organizations, but these said that nothing could be done unless what would be illegal on their part, could be legalized, that is to say, unless they were given power to scrap old contracts and enter into new ones. An agreement was reached on that point. It is, however, extremely difficult to ascertain how many individual citizens will have to respond to the socalled voluntary conversion loan. Speaking in another place on this subject, Mr. Theodore said -

There is a large number of holders of this great variety of stock. It is known, of course, that on each issue of a large loan in Australia, in recent Tears, there have been very many applicants. How much of such stock remains in the hands of the original subscribers it ia impossible to say; all we know is that, in the numerous Commonwealth loan issues, a vast number of subscribers throughout the Commonwealth have participated, and, no doubt, many of these have subscribed regularly to successive loans. The Commonwealth stock inscribed at the Commonwealth Bank is owned by 101,000 stockholders. There are 189,000 owners of Commonwealth treasury-bonds, whose bonds are lodged for safe custody with banks and savings banks, whilst it is estimated that there are, approximately, 100,000 persons whose Commonwealth treasury-bonds are in their own hands.

Of course that deals only with the Commonwealth side of the picture. The indebtedness of the States is greater than that of the Commonwealth. In this bill we are asked to reduce the interest on the portion of the national debt held in Australia by approximately 22$ per cent. Of the Commonwealth and State internal indebtedness of £556,000,000, the Commonwealth proportion is £400,000,000, and the States £155,000,000. The interest payable by the Commonwealth is £12,000,000, and that by the States is over £16,000,000, making a total annual interest bill within the Commonwealth of £29,000,000. It is proposed to reduce that bill to £23,000,000, and the Treasurer tells us that by doing so we shall establish a credit in Australia. It is extraordinary that a few months ago the experts said that if we attempted to do this, whether by way of taxation or conversion, we should frighten that fickle bird capital out of Australia and jeopardize further loan flotations.

The bill does not accomplish what the preamble says, nor does it prevent the nation from defaulting. It is merely an instrument to legalize partial national default insofar as it breaks contracts by altering the rates and dates of payment. According to the report, £46,000,000 has been loaned to Australia by Australians, on which the interest rate is less than 4 per cent. This bill - if it is 100 per cent, successful as a result of our being able to convert the whole of the £556,000,000- provides for a reduction of 22$ per cent, in interest on our internal debt, and will save Australia from paying £6,000,000 in interest to its own people; but it will only reduce our annual interest bill from £57,900,000 to £51,000,000. “With the reduction in revenue and trade generally, which must follow during the. period when the plan is in operation, the reduced interest will represent a greater proportion of the national income than it does even now, and will not, in my opinion, establish budgetary equilibrium or materially improve the financial position of the Commonwealth. We say as much as we can about the 22$ per cent, cut, because that is the general ground upon which the economists base their recommendations; but to-day there is a tax of 7$ per cent, on the interest on bonds, and, if this measure is enacted, that taxation will be discontinued. In effect, we are reducing the interest to bondholders by only 15 per cent.

Senator Payne:

– For a period the 7$ per cent, tax was indefensible.

Senator KNEEBONE:

– At the time it was assumed to be a just tax. By agreement we are now repealing that imposition, so that, the reduction in incomes from loans will be only 15 per cent. Even if that is done I believe it will result in a considerable amount of damage to Australia’s credit. If effect is given to this proposal, it will result only in a saving on the Commonwealth budget equivalent to a 2d. stamp per head per week of the population of Australia. Some may think that that is worth while, but I do not think it is.

The success of the scheme depends entirely upon all parties to the agreement adopting it. That was the position in connexion with the August agreement, when representatives of all the States, with the exception of New South Wales, agreed to the proposals ; yet not one of the governments carried out its undertaking.

Senator Sir George PEARCE:

– Some of the State governments did.

Senator KNEEBONE:

– The State which I have the honour to represent did more in the direction of carrying out the agreement than any other State.

Senator Payne:

– No.

Senator KNEEBONE:

– The South Australian Government did.

Senator Payne:

– Tasmania did as much as South Australia.

Senator KNEEBONE:

– It is generally conceded, and the report of the conference shows, that South Australia honoured the August agreement To such an extent that it has comparatively little more to do to comply with the present plan.

Senator Sir William Glasgow:

– Queensland complied with the August agreement.

Senator KNEEBONE:

– It is only natural that honorable senators should support the States which they represent. The South Australian Government budgeted for a surplus of £15,000, but it was only a paper surplus. The action of that Government inflicted considerable hardship on the people in the direction of increased taxation and unemployment, which, was higher in South Australia than in any other State. Although the South Australian Government % received £1,000,000 or more in direct financial assistance, either from the Commonwealth or from the other State governments, it finished up with a tremendous deficit.

Senator Sir George PEARCE:

– The effort was worth while.

Senator KNEEBONE:

– I admit that. A definite attempt was made by South Australia to carry out the August agreement, but it could not be done. This proposal, as the experts point out, provides only for meeting one phase of Australia’s financial “ and economic position ; but, if one link in the chain should break, the chain will be useless. The Treasurer (Mr. Theodore) *aid that if one of the major parties to the agreement failed to honour its undertaking, the representatives of the Commonwealth and the States would have to meet again to reconsider and re-survey our whole financial position.

The measure makes a most unfair distinction between our creditors, in that it places some in the position of preferential creditors. I listened with considerable pleasure to the remarks of Senator Payne a few days ago in advocating greater patriotism on the part of the Australian people. It was a fine effort. In this instance it is proposed to penalize those who have been sufficiently patriotic to loan money to their country. They are to be punished while overseas bondholders, who have invested their money in Australian bonds in order to make a profit, are to be allowed to retain those profits.

Senator Payne:

– How can we deal with them?

Senator KNEEBONE:

– I shall come to that phase of the matter later. However we may re-ad just our interna] liabilities, our position as a nation will not improve materially, except that the £6,000,000 we may save by a reduction in interest rates will help us to pay our interest bill overseas. That is the only material way in which it will benefit us.

Senator Sir George Pearce:

– Surely that is something!

Senator KNEEBONE:

– It is; but, on the other hand, we shall lose more than we make.

I am not quite sure that I have correctly interpreted the figures in the report, but we have been told that during the next three years, if this plan were not to operate, £114,000,000 of the internal debt would have to be converted or paid off: namely, £29,000,000 this year;’ in 1932, £34,000,000, and in 1933, £51,000,000, making a total of £114,000,000. These bonds are now to be converted as part of the Commonwealth debt conversion scheme, and are not to be repaid earlier than 1938. That, however, is only a part of the story. Taking the Commonwealth Statistician’s figures we find that for the next five years - that will not bring us up to 1938, when we commence the repayment of the bonds covered by this bill - we shall, between 1931 and 1936, have either to convert or pay off Commonwealth and State internal and external loans amounting to £318,000,000. A portion of this represents internal debt, and is covered by this bill. Every year there will be amounts for which we shall have to negotiate. We shall be spending time and money in converting or altering the basis of our loans with our overseas- creditors, while our local creditors have to wait until 1938 before they can receive anything. In 1931 Commonwealth overseas loans representing £23,000,000 of Commonwealth indebtedness and £16,000,000 of State indebtedness has to be redeemed. Fm

So that up to 1936, or two years before 1938, negotiations will have to be conducted in connexion with this huge indebtedness, of £318,000,000. It seems a stupendous task, and while one hesitates to speak at length at this juncture, it seems that we should move Very carefully before we launch the nation into such a position.

Our main reason for proposing a reduction of 22£ per cent, in the interest on our internal indebtedness is that we cannot pay it. Instead of honestly owning up to the fact tha* we cannot pay, we seek legislative sanction to default or defraud our people of that which is their right, leaving sacrosanct those overseas who have invested their money in Commonwealth stock.

Senator Payne:

– The position is, that we cannot pay.

Senator KNEEBONE:

– If that is the case we should say so.

Senator Crawford:

– It is a case of making a composition with our creditors.

Senator KNEEBONE:

– It differs from that as, in this case, the debtors have decided the terms to which the creditors have to agree. When debtors cannot comply with their obligations they call their creditors together; but, in this instance, the debtors have met and decided the way in which they shall deal with their creditors.

Senator Sir George Pearce:

– How can we get the bondholders together?

Senator KNEEBONE:

– According to the figures I have quoted, the holders of bonds valued at approximately £270,000,000 have agreed to the conversion scheme, and a reduction of 22^ per cent, in interest, which will benefit its by less than £6,000,000, and leave us with a Commonwealth deficit of over £5,000,000. If the interest were to be reduced by 67-j per cent., we would not reach budgetary equilibrium.

Senator Payne:

– What would be the position if we did not pay any interest?

Senator KNEEBONE:

– At the moment I could not say what it would be. One of the unhappy features of this proposal is that financial institutions and organizations such as friendly societies and others are prepared to take less, but only on the condition that some one else is cut. That, of course, involves a reduction in wages, pensions, and so forth, which, from my view-point, is an unsatisfactory feature of the proposal. In effect, we are swapping human lives for interest in a most unfair manner. The bill provides that within 21 days of its proclamation bondholders who do not wish to convert must dissent. If they wish to avoid conversion they may dissent. It is proposed to carry the position a little further, and give mortgagors the benefit of a reduction in interest. I notice that, according to the report of the conference, a mortgagor i8 not to receive the benefit of reduced interest in this way. He has to make application to some authority for a reduction under his mortgage, and the mortgagee can attend and object to the reduction.

Senator Thompson:

– That is a State matter.

Senator KNEEBONE:

– It is part of the plan.

Senator Thompson:

– We need not worry about that.

Senator KNEEBONE:

– We have to consider it in conjunction with the whole proposal.

Senator Thompson:

– It is not our business.

Senator KNEEBONE:

– Whether it is just or unjust, it is part and parcel of the plan subscribed to by the Commonwealth and the States. The reduction in interest, wages, pensions, and so forth must obviously percolate through every strata of society. Our trade, commerce, production, and revenue will be affected. It means cutting down everything. I seriously submit that a 20 per cent, reduction in the direction proposed, will also mean a 20 per cent, reduction in health, wealth, education, food, wheat, sugar, clothes, liquor, revenue, recreation, production, business and in other directions. While we are providing for a reduction in the interest on our internal indebtedness, our overseas commitments remain static.

On top of this general reduction, we are seriously proposing an increase in Commonwealth taxation in addition to the heavy imposts to be made by the States. Having done all this we shall still be £11,000,000 short. During the last twelve months we have seen the effect of the withdrawal from the wealth producers of 10 per cent, of their wages, amounting in the aggregate to £40,000,000. We were told quite seriously that that would mean a saving. Somebody may have benefited, but certainly the nation did not. There has been a falling off in customs revenue of £14,000,000, in excise revenue of £1,000,000, in direct taxation of £4,300,000, and in post office revenue of £400,000. These, with other items, made the total falling off £21,000,000. Therefore, from a government point of view, what may have been gained from the 10 per cent, reduction has been more than offset by the fall in revenue. The sales tax probably brought in between £3,000,000 and £4,000,000. The income tax receipts during 1929-30, based on income earned during the previous year, amounted to £11,000,000. The receipts for 1930-31, based on the income for 1929-30, amounted to £3.1,500,000. This year they will amount to only about £8,000,000, and next year there will be a further drop of 30 per cent, or 40 per cent. Taking all these facts into consideration, it will be seen that the advantage which it is claimed will be enjoyed as a result of the plan, which includes the conversion of our debts, will not materialize.

A great deal has been said regarding the fall in our national income. Included in that income are the loans that have been floated by State and Commonwealth authorities during the years that have passed. They having dropped, our income also has fallen. It appears to me that we can gauge our national wealth or our national income only on the basis of the actual value of the goods that we produce. It may be all right for taxation purposes to make the same money circulate among a number of different persons; but it does not follow that that is actual wealth. The wealth actually produced by the industries of Australia varied from £454,000,000 in 1924-25 to £447,000,000 in 1928-29. I have not the latest figures, but there has been an abnormal drop in the last two years. From a practical point of view it is not fair to say that the wealth produced by our industries has fallen from £650,000,000 to £450,000,000. The actual wealth produced has never reached a total of £650,000,000.

Some persons would have us believe that Australia should direct her attention almost entirely to primary production. If honorable senators will study the figures for the five-year period to which I have referred, or for any previous fiveyear period, they will find that the greatest medium for the production of wealth in Australia has been our secondary industries.

Admittedly, all our industries are inter-dependent, and we could not have secondary industries if we had not primary industries. But the secondary industries employ a larger number of persons, pay a greater amount in wages, and create more real wealth than any other single industry.

Senator Sir George Pearce:

– Included in the figures relating to the wealth i of the secondary industries is the value of the raw material used.

Senator KNEEBONE:

– That is not the case. The figures relate to the actual wealth added by the process of manufacture.

Senator Crawford:

– Where would be the market for the raw material if wo had not secondary industries?

Senator Sir George PEARCE:

– Overseas - the only real market.

Senator KNEEBONE:

– I am sorry that there should be division of opinion in the discussion of such a critical problem, on account of the divergent views held with respect to the relative importance of different industries.

Senator McLachlan:

– The figures relating to secondary industries are swollen beyond the real value as a result of the application of the tariff.

Senator KNEEBONE:

– I shall deal with that question in a moment. I have given the wholesale value of production. Naturally, these goods have an enhanced value when they reach the consumer, because of the faulty system of distribution.

The Deputy Leader of the Opposition in the other House (Mr. Latham) told the people in a special article that was published in the press last Saturday that this is only one of many steps that have to be taken. We ought to know the number of steps contemplated, what they are, and where they will lead us. Apparently, they are being kept well in the background.

Senator Sir George Pearce:

– The honorable senator has been demonstrating that this particular step will not carry us very far:

Senator KNEEBONE:

– I have endeavoured to do so. In the article that he published last Saturday, Mr. Latham said -

It has been urged that the cost of tariff protection must be reduced. I agree with that view, but we must take one step at a time. The measures which we are now considering arc only the beginning of a difficult course which must be followed. We must constantly bear in mind, however, that so long as wheat remains at the present price, it will be impossible for the farmers even to pay their wa£. Most other classes of agriculturists are in the same plight. In the light of these facts, which I regard as being of overwhelming importance, we shall have to consider the tariff position.

I venture to suggest that the making of public statements along these lines while we are considering a plan such as this is not likely to encourage the secondary industries of Australia - which, as I have already pointed out, contribute more to the maintenance of our country generally than does any other industry. Continuing, Mr. Latham said -

For the moment we must bend our energies and enthusiasm to the first step in the work of national reconstruction; that of bringing national expenditure into reasonable conformity with national revenue. External and internal credit can only be restored by the re-establishment of confidence in the integrity of government finance.

Those are very lofty sentiments. But while we are discussing these matters in Canberra, with as much freedom as possible from party politics, Mr. Lyons is moving from capital to capital organizing the anti-Labour forces so that they will be ready to fight the Government whenever an election takes place. , To-day, there are four Labour governments - in name, at any rate - in Australia. ‘ Whenever an election takes place the antiLabour party will be organized against those governments, although they have signed this plan, and may be trying to carry it out.

The other day, Senator Duncan referred to the lack of sympathetic treatment accorded to Australia by the British Government. I feel sure that the honorable senator overlooked the fact that, recognizing our serious position, that Government has consented to Australia’s withholding payments in connexion with her war debt for a period of two years, thus assisting us to the extent of well over £3,000,000 ; or, if exchange be added, over £4,000,000, In making that offer, the British Government said -

We desire this to be recognized as a sincere endeavour on our part, notwithstanding our own difficulties, to share the burden which the Commonwealth Government is bearing at the present time.

In my opinion, it was just as wrong for Senator Duncan to refer to Mr. Ramsay MacDonald’s Government as a “Whitechapel “ administration as it would be to refer to that of Mr. Lloyd George as a “ Limehouse “ Government. In the effort to emancipate the nation we may descend to something in the nature of a fratricidal struggle between the component parts of the “Empire and the Commonwealth representing secondary and primary production. There is some ground for the statement made by Mr. Latham, that a degree of encouragement will be given to those who say, “Let us become hewers of wood and drawers of water.” We shall not develop into the nation we hope to become if we confine ourselves to primary production.

Sir Otto Niemeyer, the author and architect of this plan, said while in Australia that this country had to adjust itself more than it had already done; that it must begin early; that it would be a difficult job, and would take a long time. There is nothing wrong with those statements. But he went on to say -

The people will have to live on wool instead of wheat . . . It will take them some time to get out of the wood.

Having thus mixed wool, wheat and wood, he went away and left us to solve the problem; and when he got over the other side, he is alleged to have told us that we should stew in our own juice.

Those who argue that Australia should confine itself to primary production take a short-sighted view. If we were to do that, we should have to give up the most valuable industries in Australia, and prejudice our chance of balancing our budgets. If we were to tear down’ our tariff wall and allow every other country to have an open go, we would be able to obtain timber, wheat and other products from Russia, in addition to other foreign goods; but will any one suggest that that should be done! It would be dangerous for us to pit one industry against another, and in the midst of. this tremendous financial maelstrom to divide our forces.

The more one considers the bill, the more one is driven back to the view that the present monetary system is responsible for the condition in which we find ourselves. We are suffering, not because we lack the power to produce goods, but because of the depressed markets overseas. Prices have fallen, and we cannot obtain an adequate return for the goods that we produce. The people overseas are just as numerically strong as they were previously, and have just “as good appetites; but they are unable to purchase our commodities, because they are insufficiently supplied with the means with which to buy them.

Mr. Gordon Massey has published a book dealing with Australia’s monetary system. It .is interesting to note that in the introduction to that work, Professor Copland, the designer of this plan, says -

Australia, in common with other countries, is at present suffering from the economic disorganization associated with a rapid fall of world prices

Those words were written last October. He went on to say, and this does not help my argument -

As there is no prospect of production expanding to the extent required in the immediate future, a decline in the standard of living and a reduction in public expenditure is for the moment inevitable.

That is the sum and substance of what is now known as the Copland plan. What has been the effect on Australia of the world-wide deflation ? Two or three years ago, Australia’s communal wealth was estimated to be at least £3,000,000,000. Against that aggregation of material wealth our national debt did not represent a serious problem. Under normal conditions we should have no difficulty in discharging our interest obligations on the due date; but, unfortunately, the national wealth of Australia has been depreciated by at least one-third, while our obligations overseas remain unchanged. We have the same broad acres, the same factories, and the same buildings, the same public utilities, and the same materials; but the operation of our present monetary system has resulted in the destruction of a considerable proportion of their value. Homes have gone, and our national utilities are at a discount. Continued deflation will still further reduce our national wealth and make it the more difficult for the Commonwealth to meet its obligations. Mr. Gordon Massey, in his book, Australia’s Destiny and Australian Money, to which, as I have said, Professor Copland has written an introduction, says -

Australia as a whole has worked itself into a frame of mind that this unhappy trend of affairs is both inevitable and inescapable. There is a widespread opinion that budgets can and must be balanced by means, which, though admirable in principle, are neither explainable in detail nor apparent from existing figures and facts. . . . Unless means are developed to revive all incomes and industry generally, and to restore in part, the declining monetary values, there appears to be no practical method of balancing budgets.

Of course, Mr. Massey gives his idea of what ought to be done. He suggests that the Australian currency should be definitely separated from the gold standard. It should be noted that since he wrote his book we have shipped away one-third of our gold reserve.

Senator Sir George Pearce:

– Are we the better for that?

Senator KNEEBONE:

– Certainly we are not in a worse position-. Notwithstanding the warning that financial chaos . would result if further gold shipments were made, nothing has happened. A few weeks after Sir Robert Gibson, Chairman of the Commonwealth Bank Board, had solemnly warned the Government that shipments should not be made, we read paragraphs in the press to the effect that one day a motor truck was seen travelling down the streets of Sydney, conveying portion of the gold reserve for shipment to London. It passed through the streets unnoticed as if it were any ordinary commercial vehicle conveying a load of bricks to a job. Mr. Gordon Massey states further that the issue of notes should be vested irrevocably in the Commonwealth Bank, and not be convertible to gold.

Senator Sir George PEARCE:

– We now have more notes in circulation than ever.

Senator KNEEBONE:

– That is so; but the records disclose that record seasons for production have been financed with a comparatively low currency issue.

Senator Ogden:

– What has all this to do with the bill?

Senator KNEEBONE:

– There is not the slightest doubt that this proposed conversion operation will have some effect upon the people of Australia. Those who are supporting the Government’s proposals believe that this effect will be , beneficial. Up to the present I have not been able to ascertain what advantages will accrue to the nation, apart from the claim that the passage of this bill will enable the Commonwealth to avoid meeting some of its creditors on the due date; also, that it will alter the terms upon which the bondholder will be paid, and prevent Australia from defaulting in all its obligations. But that is altogether too thin a pretext upon which to claim support for the proposals. Mr. Massey goes on to say-

The present indication is that those who contemplate the need for putting Australia’s house in order see no other way than to beggar the people.

In other words, he means that by such proposals as the plan now under discussion, the people will be made the poorer, the standard of living will be lowered, taxation increased, and our commercial and productive capacity seriously impaired. In effect, he says, our monetary system has failed us. To that view I fully subscribe.

Only a year or two ago, when members of this Parliament were discussing the financial position of Australia, the people were told that economic salvation would be found in a greatly increased volume of production. Our farmers were urged to grow more wheat; our workers to accept payment by results, to speed up industry and agree to the payment of bonuses. Rationalization of industry “was Spoken of as well as all the other agencies calculated to increase production. To-day the reverse policy is being advocated. We are told now that safety lies in the reduction of output. Consequently, there have been restrictions in industry and national wealth production leading to the consideration of default and, in some cases, repudiation. Among the principal causes of our present troubles are unregulated productions, uneconomic distribution, and uncontrolled exchange.

We have been warned of the danger of inflation and have been told that it would make money cheaper; yet, in this measure, it is proposed to reduce the value of the public debt of £556,000,000 by approximately £6,000,000 a year, representing the reduced interest charge payable to »our bondholders. It is, I think, acknowledged that those in control of our monetary system can expand or contract credit, inflate or deflate the currency, get a man a job or threw him on the dole, make ls. wor.th ls. 6d., or, on the other hand, only 9d. This pernicious influence is in evidence in all countries. The Labour party is not the only party which has taken exception to it. Professor Gustav Cassel, of the Stockholm University, addressing the. Institute of Bankers in London on the 27th May, said -

It is time the leading central banks agreed to end the depression by declaring their intention, from now on, to supply the world so abundantly with the means of payment that a further fall qf prices will be impossible.

Notwithstanding that there has been a further fall in prices. This may be counteracted to some extent by the adoption of the Hoover plan for suspension of the payment of war debts arising out of the war.

The PRESIDENT (Senator the Hon W Kingsmill:

– I am afraid the honorable senator is straying rather far from the bill. There .may be a connexion, but certainly not an intimate connexion, between the bill and the honorable senator’s remarks during the last twenty minutes.

Senator KNEEBONE:

– I am endeavouring to show, to the best of my ability, that tie bill will have an important effect upon the industrial, economic and financial reconstruction of Australia. This reconstruction, I believe, will only be possible by the reorganization of our monetary system and the economic reforms which I have mentioned. It is unfair to our creditors to continue under the present uneconomic conditions, and because of our inability to meet our internal obligations, to vary the terms of contracts between the Government and individual citizens. The greater part of the national debt was incurred in times of peace, and the money raised was used for the construction of public works and national utilities. Instead of paying for the last war, we have been preparing for the next war. Scores of millions of pounds have been spent in this way. We say that it has been spent unnecessarily. When two young men can fly around the world in a fortnight, thus demonstrating that they could have dropped bombs on half a dozen capital cities, how absurd must our defence activities appear. I have in my hand a list of at least twenty officers of the Defence Department, whose salaries range from £1,000 to £3,000 per annum. If these officers are good enough to lead our men in time of war they should be good enough to lead them in time of peace. This Government, within the bounds of this bill, should make provision for utilizing their services in peace-time activities.

The bill provides for three alternatives - deflation, inflation, or default. Mr. Grenfell Price, a prominent member of an anti-Labour organization in South Australia., has written a book, The Menace of Inflation, in which are the following statements bearing on the proposal before us: -

Surely, as Mr. J. T. Lang said, with splendid emphasis, in .1927, ‘we have “sufficient British blood to refuse to repudiate a contract … an act that has always been held in the greatest abhorrence in all English-speaking communities … a dreadful thing, which will establish a precedent that must eventually destroy the stability of the country “.

He concludes with these words -

God grant that, in the bitter hour of grave decision, we will uphold the credit of Australia - we will uphold the honour of our men who died!

My conception of the best way to uphold that honour is to oppose this bill, and the others associated with it.

Senator THOMPSON:
Queensland

– Last week I gave my general support to the proposals of the Government arising out of the recent conference of Federal and State. Ministers in Melbourne. I then said it appeared to me that the holders of 6 per cent, stock were being treated rather unjustly. That matter has since been referred to by the Leader of the Opposition (Senator Pearce) and Senator Cooper. To-day I have received a letter from one of the leading firms of stock-brokers in this country, in which is set out in detail the objection which I voiced in general terms the other day. My main object in rising is to place the views of that firm before the Senate. I emphasize that the letter is from men who understand their business, and the atmosphere of stock-broking in this country, and whose views ought, therefore, to be of particular value to the Government at this juncture. Although I am prepared to supply the name of the firm to any honorable senator who is interested, I do not propose to give it for inclusion in Hansard. The letter, which is dated the 7 th July, 1931, reads -

In the Commonwealth Debt Conversion Bill there is a curious, we may say subversive, proposal to give the longest dated loans the best terms and the shortest dated loans tlie worst terms. The matter is so important that we must explain at some length.

If we take the 6 per cent, group as an example: C per cent, due the 15th November, 1938, is to be converted at a premium of £4 3s. Gd. per £100, whereas 6 per cent, due the 15th December, 1932, at a premium of only 18s. 8d. per £100.

Surely this violates all principles of justice, equity, common sense, and expediency! Before the new measure was proposed all loans were quoted at a great discount, and naturally, the one that was guaranteed redemption at £100, the soonest had the greatest intrinsic value.

If all loans had been at a premium it would have been the other way about, and the proposed conversion plan would be the right one.

The good hearted people who came to the Commonwealth’s rescue last December, and took up above £25,000,000- [ believe that that figure is not correct; it should be £35,000,000- 6 per cent December, 1932, are to be treated with peculiar harshness; for they are only to be offered a mere 18s. Sci. per £100 for the disadvantage of converting to a 4 per cent, stock. We should have thought that an effort would be made to treat these people with generosity. There is no doubt that in subscribing they were inspired only s by patriotism, since at the time they could have bought existing G per cent, loans at a discount.

Of course, if the Government’s desire is to damage the Commonwealth’s internal credit so as to make it difficult for this and succeeding Governments to raise further loans, well and good. No doubt there is something to be said on the side of those who believe that the less money borrowed during, say, the next ten years, the better it will bc for the people in the long run; for such a plan will enforce governmental economics that will bc needless without it, and there is no doubt that Commonwealth and States, from a purely financial standpoint, will benefit, .though the people may suffer for some time. But is that the Government’s idea? Is it not rather that, though consulting university professors, banking men, and departmental heads (all of whom ought to be consulted), the Melbourne conference has neglected to get the advice of market practitioners, who alone arc in a position to give advice on questions relating to market points?

As a matter of fact, those practitioners who arc, or should be, best informed on questions* that affect popularity of loans, are least anxious to rush in with advice. The greater their experience, and the more they study, the less they know. Consequently, they must have felt relieved at not being invited to participate in the recent conference. But can the Commonwealth afford to do without their help?

Unless we are much mistaken, the sub:scribers of last December to the 0 per cent. 1!):S2 loan will feel aggrieved and mortified over having been such fools as to come to the aid of their country at a time of crisis. There is no doubt that if that crisis had not boon tided over, our Commonwealth and State Governments would have been forced to default both at home and abroad; for, with the Prime Minister away, and with conditions as they then were, there was not sufficient time before the 15th December (when the old loans fell due) to arrange the conversion plan that is now before Parliament. Moreover, the time was not ripe for it; the depression had to advance a further stage or so before the public mind became prepared for a wholesale reduction of interest. Parliament, as representing the people, should do all in its power to soothe the December subscribers and ease their disappointment. But, instead, it is treating them cavalierly and making them think they are getting the portion reserved for fools. Will not this prejudicially affect the Commonwealth’s credit?

We arc afraid that the Government’s plan will have the effect of creating jealousy and ill will between one class of subscriber and another. But all the difficulties can easily be composed by raising the premium on shortdated loans . to the same us long-dated. In strict equity, 6 per cent. 1933 and G per cent. 1932 should change places; but to turn the plan upside down now will not be wise, and in any case, holders of long-dated loans are sacrificing quite enough. But if all the 6 per cent, loans are converted at a premium of £104 3s. (>d., all holders will be better pleased. Indeed, the concession will be the first step towards restoring the Commonwealth’s internal credit.

In the case of 5-1 per cents, wc would raise the premium on 54 1931 (now £100 23. 6d.) to the same as 54 1930, which is £101 5s. 8d. There is no need to raise it to the level of 5½ 1950 (£103 10s. 6d.), for 1950 only has a total issue of £244,260. The 54 1041 bus an issue of £27,281,070, and its premium is to be £2 4s. 7(1., but we do not think 1931 need get so much. The main thing is to make a concession to those who will bc undeservedly hard hit.

In the case of the 54 per cent.; if the 1931, 1933, and 1934 ave raised to the level of 1935, which is 5s. per cent., we think it will suffice. As a matter of fact, there is no great need to do anything for the 54 per cents., because. 1931 gets a premium of 8d., 1935 5s., and 1943 only 12s. Od.

If the premium on four 6 per cent, stocks is raised to £4 3s. Cd., and one 54 is raised to £1 5s. 8d., the extra annual interest cost will be very little, and the amount added to the Commonwealth’s total indebtedness will only bc £1,840,000, not a great addition to over £550,000,000.

Those words of wisdom, from an eminent and experienced source, I recommend to the consideration of the Government. I suggest - and my suggestion is backed by the firm of stockbrokers to which I have referred - that the 6 per cent, loan maturing in 1932 could either be granted the same premium that will attach to the loan maturing in 1938 - £4 3s. 6d. per cent. - or that it be converted to be redeemable in seven years - the shortest term provided for in the scheme. If that were done, it might involve the granting of concessions to the holders of 5$ per cent, and 5$ per cent, stock in the loan which was floated in December last, but that would not cause any great difficulty, because the 5$ per cent, holdings amount to only £249,860, and the 5f per cent, stock represents only £4,362,360. Compliance with the request would remove, to a great degree, the dissatisfaction which is felt by many of those patriotic individuals who subscribed last December to the loan then floated when they might easily have bought other stock showing a return of 10 per cent, instead of 6 per cent., 5f per cent, or 5$ per cent, to which they committed themselves. I shall place this correspondence at the disposal of the Government in the hope that it will give effect to my suggestion. By doing so, we should go a long way towards satisfying the large number of bondholders who came to the assistance of the country in December last, and pave the way to the successful conversion of our internal indebtedness, which I am sure we all wish to see accomplished.

Senator LYNCH:
Western Australia

– We are given no option in this bill; we must accept it in its entirety if we desire to take the first step towards the financial recovery of Australia. This measure is only the first of a series of steps to set our finances right. If we pass it, without inquiring into the reasons for its introduction, we shall profit but little from what has happened in the past, and we shaH not obtain much guidance for the future. Australia is in financial difficulties. This bill aims at getting the country out of those difficulties. It is useless for us to deny that of all the self-governing British dominions Australia is in the worst posi tion. We ought not to be in that position because we are a young nation with a vast and valuable inheritance. We are where we are for reasons which, in my opinion, were preventable, and largely of our own making. A problem of such magnitude as that which now confronts us has never previously been faced by Australia. Our reputation is at stake; we are in the unenviable position of having to ask our creditors to accept, not only a reduction of interest, but also a reduction of principal. Our task is difficult, for we are faced with the necessity of maintaining Australia’s good name in the eyes of our own people, and also of those who look upon us from a distance. Finding ourselves in such an unenviable position, it is up to us to try by every means in our power to discover what are the causes that have led us into this predicament. Common prudence always compels the individual who happens to get into a pitfall to find out its true geographical position, and the relationship it bears to the main road or track that led him into it. He will so mark it with a finger-post that he and other wayfarers may, in future, steer clear of that particular spot. In like manner, if we examine for a moment the ill-advised road this country has taken in order to reach this pitfall, it will not be so much lost time.

Having recognized that the situation cannot be thrust aside or spirited away - it is there as plain as the noonday sun - our first step is to ask the bondholders to submit to a sacrifice. We are putting our-‘ selves in debt to them in. a moral, as well as a material sense by asking them to forgo some of their worldly substance, some of the means by which they live. No self-respecting com.munity cares to take the serious step of breaking a contract, but we are asking the security-holders of Australia to permit this to be done in order to help us through. But although I have a great regard for the bondholders, and I have said sufficient, I think, to show that I am sharing in the sackcloth-and-ashes attitude which our people should adopt towards them, at the < same . time. I do not think we should attach to them any particular sanctity sq far as their title deeds to money wealth are concerned. Other sections of the community possess title deeds to other forms of material wealth. How do they stand? There are others who are suffering even more than they, and, up to date, no word has been said on their behalf. Title deeds to land are the same as the title deeds of the bondholder, inasmuch as they represent something tangible to which the holder is entitled. What is the position of men with title deeds to land, compared with that of tlie bondholders? They may not have entered into contracts with the Government, but their equities have been diminished by half, if not by 75 per cent., and they have no remedy against society. It is unfortunate that the bondholders are suffering, but it may be a kind of negative consolation to them to know that people in other sections of society are greater sufferers.

The present position has not come about by accident, nor has it been pre-ordained. It is due to causes over which, to a great, extent, we have control. If we can ascertain what those causes are it is up to us to adopt means by which they may be avoided in the future. If production had been carried on in an orderly way, and if, as Senator Thompson has said, there had not been so much interference from the Government, Australia, instead of being in its present awful plight, could have paid its debts. We could have held our heads aloft, and have continued the development of our industries uninterrupted and undisturbed. If every section in the community had worked as the wheat-growers have done, there would have been no depression, at any rate, not a depression of the present dimensions. We find ourselves in our present plight because other sections of the community have not done as well as the wheat-growers. We have stunted production. I have no desire to sail round the subject; I propose to put my finger right on the spot, and show where in our uneconomic management of this country we have departed from the true path of maintaining thu old traditions and the good name of Aus- tralia. I find that, 25 years ago, four times as much coal was exported from Australia as is exported to-day. Considering the wonderful increase that has taken place in the general production of the community, if those engaged in the coal industry had only continued producing four tons where one ton is now being produced, this country would have been in a far better financial condition than it is in to-day. It would have been in a position to pay its way, and there would have been no need for this bill. Why is coal not being taken out of the earth and sold to the people overseas who want it? The answer is that unfortunately a spirit foreign to ourselves and to the Australian character has been introduced with the result that coal production has come almost to a standstill to the consequent impoverishment of Australia.

Senator Kneebone referred to the tariff, f have been 26 years in this Parliament, and when I first came into it I helped to pass a protective tariff in the belief that it would provide more money for Australia, and make it self-contained, which we were told it was designed to tlo. Australia’s protected industries have only brought £2,000,000 a year into this country. Senator Kneebone, who claims that a protective tariff is a wise and good policy, has forgotten how seriously Australia has been impoverished by reason of the fact that the people engaged in. secondary production have not stood up to their job as those engaged in primary production have done. With all our bolstering, coddling and spoon-feeding of secondary industries, all that those associated with those industries can bring into Australia is only £2,000,000 a year compared with £140,000,000 which is drawn from overseas by the countryside. It is a sorry confession. I have gone to the trouble to ascertain how our dairying competitors overseas are faring. I find that the price’ of dairying land iu Denmark is only £30 an acre compared with from £68 to £100 in the northern districts of New South Wales, and still higher values in Victoria. Australians engaged in the arduous industry of dairying are, by their efforts, bringing wealth into this country in spite of the fact that they are competing with Denmark, where the prices of land are far lower than they are in Australia. If the workers in the secondary industries had only stood up to their jobs as well as those in primary industries have done, we could have paid our way as Canada has done, and have had no trouble. The Dominion of Canada is exporting secondary products to the value of £90,000,000, but the value of Australia’s secondary products has stood at £2,000,000 for the past 25 years. Had we followed the Canadian plan, the introduction of this and other complementary measures would have been unnecessary. It is because we have not trod the same path as our sister dominion, and because the Australian people are not doing their work as they should, that the financial position is as bad as it is. The primary producers of this country are standing up to the task imposed upon them. If our secondary industries were producing more we would have a much larger margin on which to operate in meeting our interest and other commitments, and we could, at the same time, enjoy an even higher standard of living. If only a genuine effort were made by all sections engaged in industry to do their part, the burden of those who are now doing more than their share would be considerably lightened, and our whole outlook improved. It is because some people in this country are not putting forward their best efforts that we are confronted with difficulties. We cannot enjoy good conditions unless we work for them. We cannot be a contented, happy, prosperous people unless we shoulder the burden which we, as citizens, are expected to carry, and it is because we are not doing that that we are unable to meet our obligations to-day.

I realize the necessity of introducing capital from abroad, and that if such a policy is not adopted wo shall be compelled to stand still. Our fate of progress will be so slow that it will be impossible for us to present a good record before the nations of the world. After all, we must justify our right to hold this country, and that we cannot do unless we develop it. If capital is not introduced we shall be in for a Stagnant time. I am prepared to take my share of the responsibility. Those who do not advocate a definite and bold policy of public works during an election campaign find themselves at the bottom of the poll. For a short period I was a member of a government in Western Australia, when Mr. Dagleish was Premier. In delivering his policy speech he said that in the matter 6f public works it was time to go slow owing to the difficulties which confronted the Government. But the electors did not diagnose the case in that way. Men who supported Mr. Dagleish could not obtain a hearing. As mentioned by the Leader of the Opposition (Senator Pearce), the ex-Prime Minis- (ter (Mr. Bruce) sounded a warning note which was unheeded, and at the general election which followed, Mr. Bruce and his followers were cast out. A new set of men was brought in, showing that, in this instance, the people were to blame. If a lead is needed it should come from the top and not from the bottom. Solon said, “I did. not always make the wisest laws, but made the wisest laws my people would bear “. All this is evidence that we should give the wisest advice, and if it is not accepted it is not our responsibility. We should give a lead to the people. What would be the position of the men far removed from here who are doing the pioneering work in this country if money were not obtained from overseas? The opinion expressed by some simply means reversing a life-long belief. If governments entered into productive undertakings, our position would be better. What do we find? No sooner does the Government start upon an enterprise than certain individuals take charge, - and governments have nothing more to do with it. It has not always been so, as governments have engaged in enterprise, and have made a remarkably fine showing in the interests, not only of the taxpayers, but of every one.

I leave that phase of the question, and shall now direct attention to some of the inequalities of this measure. First of all I wish to. find fault with the deliberate trend of public feeling, not only in this, but in other countries, in the direction of showing less respect for the thrifty than is shown to others. We- are changing our policy in that regard. It has been truly said that the bondholders represent the people. We are not asking those who do not possess anything to help us for the obvious reason that they have nothing with which to help any one. We are asking those who have some substance to help Australia. Clearly, Australia is thrown back upon those who have something in the nature of savings which they have accumulated. Have we arrived at a stage at which we are encouraging the man who has nothing, or will not exert himself to get something; while at the same time, we are discouraging every man who saves all he can? If we are to adopt that policy we shall be working on entirely wrong lines. Where would Australia be to-day had it not the support and sympathy of those people who have saved money for a rainy day, and a good deal of which has been invested in government war loans, and other such securities? Without their help Australia would be in a sad plight.’ In this instance, as in the past, the most worthy section of the community is again to be asked to steer the ship of state through troubled waters, although by statute and in other ways they have been discouraged. Under this measure they are to be penalized. It is proposed to reduce the interest on bonds by 22$ per cent. Consider the position of two brothers, one as physically and mentally fit as the other. One looks out for himself, and saves all he can, and the other disregards his future. One saves £2,000 over a period of 40 years - there are thousands in this country who have done that - which he invests in a government loan, but the interest which he receives from that investment of £2,000 is under this bill to be reduced by 22$ per cent. A correspondent to the Sydney Bulletin, of the 1st July, puts his position in this way -

I have £1,900 in Commonwealth bonds, returning me £2 3s. per week. My only means. I am bordering on 60, and am unemployed and cannot afford to convert. You say that, “ Everybody knows there is a penalty waiting for those who do not convert “. What form is this penalty likely to take? What would you do if you were in my place?

Having invested £1,900 at 5$ per cent, he would receive 43s. a week in interest which is now to be reduced by 22$ per cent., or 8s. weekly, thereby lowering his weekly income to 35s. Side by side is another man who may be receiving £200 a year or the basic wage of £216 a year.

I may be doing the Government an injustice, but I believe that those in receipt of the basic wage or a lower amount are to escape any form of reduction. Assuming that -I am correct, the person in receipt of the basic wage will escape any reduction while the one receiving £200 in interest gets a clear cut of £45 annually in his income. A person receiving £100 a year in interest will lose £22 10s. a year; one in receipt of £50, £11 5s., and one in receipt of £10, £2 5s. annually. ‘ We now reach the crucial question. How are we to control society if we penalize those who, having saved every penny, draw a small income by way of interest ‘ from Commonwealth bonds, while at the same time a healthy man of 30, 35, or 40 years of age in receipt of £200 a year in wages does not pay anything? They are both workers. I am not in any sense finding fault with the workers of this country who are entitled to obtain as much as they can consistent with the proper performance of their duties. My sympathy goes out to the man who does his work properly. The honest workman is about the most valuable asset that this country possesses. But when this serious differentiation is made between the man who has saved his money and the man who has not, society is taking a downward step. Men will begin to. ask themselves : “ What is the use of being thrifty? Why waste time putting money by for a rainy day “ ?

A few months ago, while travelling down to Perth, I met a man who had worked side by side with another acquaintance of mine on railway construction work in New South Wales. They had known each other -intimately for about 40 years. The conversation naturally turned upon the third party, who had saved his money, while the man to whom I was speaking had not done so, and at the advanced age of 55 or 60’ years was looking for a job. I may say that in the matter of physical powers the man who had saved his money was easily the inferior of the two. I said : “ Have you seen so and so lately “ ? He replied, “ Yes, but he is a big show now, because he has a few buggy houses down in Perth.” For no earthly reason whatever, he was jealous of his former mate, because he was able to keep off the dole and do without the old-age pension.

Under this plan the tendency will be to discourage those who are careful, and to encourage those who are thriftless. Society will be dealt a fatal blow if the day should arrive when the average man will say : “ Why waste time and trouble in being thrifty when there is no reward for. it.”

I have shown the effect upon two persons, one in receipt of income from wages and the other in receipt of income from interest on his savings. The second person is to be penalized to the extent of £45 a year, while the other will escape. Then there is the case referred to in the Sydney Bulletin of the man drawing £2 3s. a week from Commonwealth bonds, who is to be called upon under this bill, to submit to a reduction of 8s. a week. If possible, the Government should ease the burden that is to be imposed upon such persons. By so doing, it will perform a humanitarian act.

When the British Government made the historic conversion, to which attention has been drawn, Mr. Goschen, following the wise precedent set by previous British Chancellers of the Exchequer, made the reduction from £3 to £2 10s. in stages instead of in one operation. The first reduction was to £2 15s., and was to apply for fifteen years. Then the rate automatically dropped to the level at which it stands to-day. The present proposal is to make the whole of the reduction in one operation. If the Government, even at this late hour, can ease the burden on the man of slender means, and on those who have nothing except the interest that they receive from government securities, it is in duty bound to do so.

I notice that an attempt was made in the other chamber to show that there is no difference between this scheme and that put through by Mr. Goschen. The difference is as great as that between the darkest night and the brightest day. The Goschen scheme had this principal characteristic which makes the present proposal totally dis-similar from it, that there was no compulsion of men with whom a contract had been made. Let honorable senators not forget that fact. In all the schemes that were carried through by the

British Government, there was that inestimable and high-class distinction. Here, on the other hand, numberless contracts are to be completely broken; s: ‘ if bondholders will not come to the assistance of the Government, they will later bc visited with a heavier penalty in the form of taxation than they would suffer as a result of the conversion.

The facts of the present situation must be burnt into our minds, so that we shall not have a repetition of the present unfortunate position. If, individually and collectively, we refrain in the future from doing those things that have led us into our present difficulties, some good will result; but if we do not learn that lesson, this depression will have been doubly disadvantageous. Any person who has his wits about him, and who has benefited as a result of the experience of the last few years, will not again travel the road that has landed him in trouble. As Plato once said -

I feel, now that I am at the end of my years, that I am like unto a man who has come a long journey and can recount the incidents, the accidents, and tlie dangers of thu road along which I have travelled.

When a captain at sea is sailing close to a sunken rock, he keeps a sharp lookout. Similarly, this country, having arrived at its present unfortunate position, should severely eschew in the future those dangerous doctrines and policies that have been the cause of all her troubles. If we study the legislation that has been passed in the last 30 or 40 years, we shall find that it has been wholly in the direction of improving the conditions of the workers of this country. I may say that I have played a part in the passage of that legislation, and shall do so in the future. But as a result of the effort to build up the industries of this country, we have created false standards that cannot be maintained, because they “have not the correct foundation. If happiness and contentment are not firmly based upon honest endeavour, they will never endure. O.ur standards have been built up largely with borrowed money. We have reached the stage when any decent and worthy man who wishes to branch out in industry is discouraged at the start.

Senator Dooley:

– W!hy did not the honorable senator support the proposal if the Government to guarantee the wheat-growers 4s. a bushel for their wheat?

Senator LYNCH:

– Why was that proposal associated with political propaganda, which has been punctured wherever it has been tried? We have contracted bad habits, and they must be avoided in the future if this country is to make any progress. You cannot remove a cancer by means of a mustard plaster. What is needed is the surgeon’s knife. The operation is painful, but. essential to the patient’s recovery, and Australia is suffering, if not from a financial cancer, at least from an ulcer. If now this drastic remedy is applied the community as a whole will be much healthier. On the other hand, if the proper economies are not made, there will be another period of depression in store for us. It is for the purpose of centering attention upon the necessity of eschewing our former bad habits as a nation, and enlightening future generations, that I have occupied the time of the Senate this afternoon, and I make no apology for having done so. Unless we now take the proper precautions, there is no guarantee that some day we will not again be in a similar position.

I support the bill in the belief that it is the only course available to us. The necessary economies and other remedies are as distasteful to the nation as a surgical operation is to the individual. But they are unavoidable, because our reputation as a people is temporarily besmirched. Let us take the proper steps to make it clear again. Let us learn a lesson from the present so as to avoid similar pitfalls, and make unnecessary the consideration by a future parliament of legislation such as this.

Senator PAYNE:
Tasmania

– I have listened very attentively to all the speeches that have been delivered this afternoon, and must express my regret at the tone adopted by some honorable senators whose remarks are not calculated to make the conversion loan the success which we all hope it will be. Since we are aware of the causes of our present difficulties, our effort should be to make the people of Australia realize that the proposals now under consideration are the- alternative to national default, with all its serious consequences. I deplore the need for the introduction of this bill and other corollary measures. I deplore the need to ask the people to relieve the Commonwealth of certain obligations to its citizens, who contributed their hard-earned savings to the various loans that have been floated from time to time. This is really a pitiable position for the Commonwealth to” be in, but I think the Government is adopting an honorable course. As it is unable to meet its obligations, it is asking the people to accept a composition of the debt owing. I realize, of course, that every effort should have been made to avoid taking this step, but unfortunately the warnings issued from time to time were unheeded by the Government, with the result that our position has become so serious that we are now forced to ask all sections of the people to make sacrifices.

Although we must also consider future possibilities, I disagree with those honorable senators who, this afternoon, preached the doctrine of despair. I have such firm faith in the recuperative capacity of this country that I believe we can reasonably look forward to a brighter time in the not distant future. This period of depression will not, I hope, last long. If decisive steps are taken to check the. drift, and if all sections of the community are willing to make the necessary sacrifices, I know of no reason why we should not be hopeful about the future. I much regret that Senator Kneebone had no message of hope to give to the people of this country. Throughout his long and carefully prepared speech this afternoon, he utered not one word of hope. Everything that he said was calculated to make the people of Australia’ despair.

Senator Kneebone:

– Under this plan, yes.

Senator PAYNE:

– But the honorable senator submitted no alternative, and if ever there was a time when the people ‘ of Australia needed encouragement it is now.

Senator Kneebone:

– They want work.

Senator PAYNE:

– That is true, and the purpose of these proposals is to widen the field of employment.

Senator Hoare:

– They will not make” work available.

Senator PAYNE:

– This bill will relieve the Commonwealth of a considerable portion of its obligations, and to that: extent it will ease the financial situation, thus making it possible for industry to recover and provide more employment for the workers. What is equally important, it will enhance the possibility of obtaining finance from overseas.

Senator Hoare:

– It is a pity that we ever borrowed overseas.

Senator PAYNE:

– I am surprised to hear Senator Hoare say that. As one of the representatives of South Australia, his interjection savours of base ingratitude, because I cannot imagine how we could have developed Australia without financial aid from overseas. I am certain, also, that we shall have to depend for many years on the introduction of outside capital to carry on developmental enterprises.

Senator Herbert Hays:

– But those undertakings should not be under government control.

Senator PAYNE:

– I agree with the honorable senator. Much of our trouble has been due to interference by governments with schemes that could more effectively have been carried out by private enterprise. All who have studied the present position admit that one of the essentials for future prosperity is the restoration of confidence overseas, and we have had some assurances lately that if we are prepared to adopt the right measures that assistance mil be forthcoming. Many financial institutions overseas, which .have ample capital waiting for investment, regard Australia as the most promising- field for future operations provided we have sane government in this country. This bill represents one of the steps that must be taken to set our house in order. One honorable senator this afternoon emphasized the importance of increasing the natural wealth of this country. He ignored entirely the fact that unless production is possible at a cost which will allow of a margin of profit it is of no value to the nation.

Senator McLachlan:

– In those circumstances, it would be fictitious wealth.

Senator PAYNE:

– That is so. Some people seem to think that an increase in production, regardless of the cost, means more prosperity. That is a fallacy. Production, to be of value, must have a definite relation to cost. Senator Lynch stressed the need for immediate action and a thorough investigation of all the causes that have been responsible for our present difficulties so that we may avoid them in the future. Adopting the honorable senator’s suggestion, I invite honorable senators to consider the position of our primary industries. The artificial conditions, that have obtained in Australia for so many years, due to high tariffs and awards of industrial tribunals, have laid a heavy burden upon our primary producers, and if gross extravagance had not been indulged in by the great majority of the people in Australia we should not have had this present period of adversity. In that case we would not be discussing this measure to-day. There is no doubt that the attempt to bolster up industries at any cost has re-acted on our primary production to such an extent that not one of our primary products is being produced at a profit.

The provisions of this bill are farreaching. Some honorable senators have said that we are deceiving ourselves when we say that the proposed conversion loan will be voluntary. There is nothing in the bill to suggest that it will be otherwise.

Senator Kneebone:

– Has the honorable senator read the report of the Premiers Con f errence ?

Senator PAYNE:

– We are not now dealing with the report, but with the bill before us. It is most- unwise to suggest that the conversion will be other than voluntary. We must be optimistic enough to anticipate that when the bondholders realize the position the response to the appeal for the voluntary conversion of their holdings will be general throughout the Commonwealth. I know that many people will suffer serious loss by this conversion - a loss much greater than the reduction of interest. Numbers of thrifty people in the community, who have in the past deprived themselves of things that they desired in order to provide for their old-age, and to make it unnecessary for the country to provide them with old-age pensions, will be hit hard by these proposals. One case comes immediately to my mind. A man and his wife who, by hard work, industry and self-denial. reared and educated a family, and saved a little for their oldage, now find in their declining years, when they are unable to work, that the income on which they relied will be insufficient for their needs. By the exercise of self-denial they saved sufficient to return “them an income of £350 a year. Last, year they paid in income tax about 20s. or 25s. Living near them is a man in the full vigor of life, with his best years ahead of him, whose income is considerably greater than theirs, but, owing to deductions for his children, his taxable income is also £350 a year.

Senator Daly:

– His real income is less.

Senator PAYNE:

– This year that man will pay in income tax £1 ls. 3d., whereas the old couple will be called upon to pay £21 on the same income.

Senator Daly:

– The other man is rearing a family.

Senator PAYNE:

– He i3 entitled to a deduction in respect of each of his children.

Senator Daly:

– A man cannot rear a family on his deductions.

Senator PAYNE:

– In my opinion, the thrifty people in the community were unjustly taxed last year. Now they are to be called upon to make a further sacrifice. I emphasize that that sacrifice would not now be demanded of them had they not been thrifty. It goes against the grain for me to support a bill of this character, because I know that it will make very difficult the path of many people with , whom I am associated, and others equally deserving. Nevertheless, I believe that 90 per cent, of the thrifty people in the community will be prepared to make that sacrifice in the interests of their country. They will do so, because throughout life they have shown a desire to help their country. By hard work, careful living, and self-denial they have built up their capital little by little in order that they might not become a burden on their country in their old-age. They are the true patriots of this country. If I saw any possibility of giving them special consideration in this measure I should be the first to suggest it, but un- fortunately, that is not possible. The proposals before us have been considered carefully by competent authorities, who have dealt- with every phase of the subject.

It is difficult to believe that the lessons of the last year or two have not yet been taken to heart by many persons in this country. In New South Wales 1,000 men who were fortunate enough to be in constant employment and in receipt of excellent wages, have gone on strike because one of their number was dismissed. I refer to the strike at the Cessnock collieries. It is almost beyond imagination that such a thing could occur in Australia to-day, in view of the experience of the last year or two. I do not propose to discuss the merits of the case-

Senator Hoare:

– What has the strike at Cessnock to do with this bill?

Senator PAYNE:

– That strike has a great deal to do with this bill, for neither this bill nor 50 other similar measures will achieve the object wo all have in view unless there is a change of heart on the part of the nation. The people must be brought to realize that if prosperity is to return to Australia such happenings must be made impossible.

Sitting suspended from 6.15 to 8 p.m.

Private business taking precedence after 8 p.m.,

page 3605

WHEAT INDUSTRY

Guarantee of 3s. per Bushel.

Debate resumed from the 2nd July (vide page 3310), on motion by Senator Lynch -

That the Senate is of opinion that the pledge given to the wheat-growers by means of an act passed by the Commonwealth Parliament for the payment of 3s. per bushel for all wheat grown in the year 1930-31, should be redeemed.

Senator Sir GEORGE PEARCE (Western Australia) [8.0]. - I welcome the opportunity this motion affords me to make a few remarks on one of the most important questions Australia has to deal with at the present time. As Australia is one of the great wheat-producing countries of the world, its solvency being largely wrapped up with the well being of the wheat-growing industry, it is well to look first of all at the position of the industry in the world to-day. In the

West Australian there was recently published a very interesting address given by Mr. H. E. Braine, secretary of the Western Australian Voluntary Wheat Pool, and manager of the Wheat Department of the Westralian Farmers Limited. It was as follows: -

Addressing a meeting of executive officers of Westralian Farmers, Limited, on Wednesday, on the wheat problem, Mr. H. E. Braine (secretary of the Wheat Pool and manager of the wheat department of the company) said that, owing tothe soil moisture deficiency in Canada and the spring wheat belt of the United States, seeding delays in Russia, together with reduction in acreages in other surplus countries, it was possible that some recovery in world wheat prices might take place next season.

At the beginning of his address Mr. Braine read the following extract from a recent leading article in The Times: - “At the prices which can be obtained for wheat to-day there is not a country in the world which can grow wheat at a profit, oven in the most favoured districts and with every help from modern science and mechanization. In the great wheat-exporting countries - Canada, Australia, Argentine and the middle west of the United States - the farmer, where not already ruined, faces imminent ruin. The peasants in south-eastern Europe are in the same desperate position. Nor is it only the grain-growers and the grain-growing countries which arc affected. The destruction of their prosperity and the diminution of their purchasing power re-act on the export trade of the industrial countries, and are among the chief causes of the economic depression from which the whole world is suffering. More than in any other industrial country the effects are felt in Great Britain, three-quarters of whose export trade - a larger proportion than is the case with any of her competitors - is with countries whose purchasing power is based on their agricultural exports.”

Mr. Braine went on to say

The factors that can he more or less controlled in surplus countries are those relating to production. During the ton years, 1921-30, increased acreages led to steadily mounting harvests, larger stocks and falling prices. Leaving out China, from 1921 to 1930 world production increased from 3,289,000,000 bushels to 4,732,000,000 bushels - an increase of practically 1,400,000,000 bushels. World consumption failed to increase at the same ratio and stocks at the end of 1930 were 098,000,000 bushels, compared with 374,000,000 bushels at the end of 1921. It seems evident that the relatively high prices for wheat during the earlier post-war years led to increased production, the responsibility for which must be shared’ by every one of the surplus-producing countries.

The Re-Entry of Russia

The increased production and exports of Russia have been a contributing factor in depressing prices. The average production by Russia for the five years preceding the war was 758,000,000 bushels, and for the five years, 1924-28, 747,000,000 bushels, but production in 1930 was 1,100,000,000 bushels. Russia’s area under wheat increased from 53,000,000 acres in 1924 to 84,000,000 acres in 1930. It seems posible that Russia’s coming harvest may fall considerably below the quantity harvested last year. Opinion seems very evenly divided as to whether Russia, even under its need of money for financing its industrial plans, will be able to further increase production to any great extent. Nevertheless Russia’s production will probably continue to be a world factor of major importance which cannot be lost sight of.

United States Surpluses. “ In pre-war years it was an almost accepted axiom that the United States was approaching a position when it would cease to be a wheat-exporting nation, and it caine as a great surprise to the world to find that the pre-war exportable surplus of about 110,000,000 bushels, had increased during 1925-30, by 100,000,000 bushels. This is very surprising, because, owing to the tariff against imported wheat, there is no doubt that United States wheat-growers would receive a greater sum in tlie aggregate if they grew just sufficient for local needs, say, 060,000,000 bushels, than they now do for 200,000,000 bushels more.

The figures I have just quoted show that the position is well summed up in the words used by the London Times. It is “A desperate position.” No mere tinkering with the problem will solve it for Australia. It must be dealt with in a far more drastic and fundamental fashion. Even the payment of a bounty is totally inadequate. Australia is as favorably situated as any other country for wheat production. Its resources are equal, and in some respects superior, to those of any other country, and it has a people, whose intelligence, energy and industry are equal if not superior to those of the inhabitants of competing countries. It seems to me that this problem is of such life and death importance to us that it needs to be grappled with all our energy and* scientifically investigated in order to ascertain how we can produce wheat at a price which will pay. If we cannot do so no system of bolstering with bounties will keep the industry alive. I quite agree that while we are finding out the proper method of feeding a horse, we must keep it alive, and that some immediate action is necessary in order to keep the farmer alive; but the real remedies must go much deeper than that. Ve must effect a permanent cure if Australia is not to lose one of its biggest industries.

I cannot see much possibility for expansion in Australia in the future if the wheatgrowing industry goes. It is a question of life and death, not merely for the wheat-growing industry, but also for many other industries which are dependent on it. We must, therefore, in the interests of Australia as a whole, set the best minds in this country to work to find out how we can produce wheat in Australia at a price which will pay. It is obvious, as the article in the London Times points out, that if other countries are suffering in the same way the result must be a’ speedy diminution in the production of wheat. Men. will not continue to produce an article if they cannot live on the return they get from it. That being the case, let us see what has been the attitude of Australia up to the present time.

I come first of all to a consideration of the history of the wheat-growing industry in this country during the last eighteen months. It is a tragic one. I read first of all an extract from the West Australian of Wednesday, the 24th June, 1931. It is as follows:-

Calling attention to the “ desperate plight “ of the wheat-growers, the secretary of the Australian Wheat-growers Federation (Mr. T. C. Stott) recently circularized federal members of Parliament, urging the enforcement of the Wheat Advances Act, or the- payment of a substantial bounty to assist the industry. Replies from the parliamentarians to Mr. Stott’s letter have been sent to the executive of the Wheat-growers Union in this State, and were released for publication by the general secretary (Mr. J. D. Seyfort) yesterday -

The Minister for Markets (Mr. Parker Moloney) said: “I think it will be agreed that this Government has given ample proof of its earnestness to help the wheat-farmers. As you must be fully aware of the fate, at the hands of the Senate, of the several measures which we introduced to provide assistance, it is needless for me to recount these circumstances again. The position of the wheat-grower, as well as that of every other distressed section of the community, is being carefully watched, and at tlie present time the Prime Minister- is engaged with the Premiers of the States on the formation of a plan which, if consummated, will do much to bring the desired relief “.

Now let me briefly review the history of the measures which Mr. Parker Moloney says give ample proof of the Government’s earnestness in> dealing- with the situation. The first bill brought forward by the Government provided, among other things, for a compulsory pool of all wheat grown in Australia. Certain provisions were attached to that compulsory pool which made it objectionable, not only to a great number of members of both chambers, but also, in some cases, to the farmers themselves. The Government was well aware that it was throwing in an apple of discord. It also knew that all sections of this Parliament were prepared to do something genuine and real to help the farmers. It could have brought in proposals for the payment of a bounty which, at ‘that time, would have been accepted by both chambers. When the bill reached its second-reading stage here, I moved an amendment for the payment of a bounty, but you, Mr. President, held that it was out of order, because it was not relevant to the subject-matter of the bill, and the Senate accepted your ruling. The amendment, however, was an indication to the Government thai there was, on the part of the Opposition, a willingness to do something real in the direction of assisting the farmers. A bounty at that time would have been of real assistance to the wheat-growers. They would have reaped not only the advantage of the 6d. per bushel, but also the higher prices for wheat that were offering at that time, and for a little while afterwards. But the Government was more concerned about the political side of its programme than with giving any advantage to the farmers, and it insisted on trying to pass its bill for a compulsory pool and a guarantee of 4s. a bushel. In that connexion I may point out that, whilst it got all the virtue for making that particular gesture to the farmers of Australia, the obligation for the payment of the guarantee fell largely on the States, and Western Australia, because of its small population and enormous wheat production, would probably have been obliged to find £2,000,000 in order to pay its share of the guarantee. It would have been . impossible for the State to do so. The bill, however, was lost, and it is very doubtful whether it was constitutional.

A constitutional doubt was raised in relation to the payment of a guaranteed price of 4s. a bushel.

The Government itself evidently had some doubt in the matter, because it inserted a special clause in the bill and later in the Acts Interpretation Act, that if any provision of the act were found by the High Court to be unconstitutional, the rest of the act would not be rendered unconstitutional. Thus if the bill had become law, the ‘4s. guarantee would have been the bunch of carrots held up to influence the. farmers in favour of a compulsory pool. When they had been committed to the scheme, the High Court would have been appealed to, and doubtless would have ruled that the payment of a guaranteed price of 4s. was unconstitutional because of the differentiation as between the States. The farmers would then have been tied to a compulsory pool for two years. When that bill failed to pass this chamber, there was a great outcry throughout the country, and the Government came forward with another measure to provide for the payment of 3s. a bushel. That measure did not contain any compulsory pool provisions or place an obligation upon the States to finance portion of the loss. The two most objectionable provisions of the previous bill were omitted. That bill was passed by both Houses of Parliament. Although the Senate passed that measure the Minister for Markets and Transport (Mr. Parker Moloney), told the farmers of Western Australia that the Senate was responsible for their not receiving assistance. Senator E. B. Johnston and others have asked time after time why the guaranteed price provided in that bill has not been paid. The answer given in the Senate in each case was that the legal advisers of the Commonwealth Bank had informed the Government that there was some doubt as to the ability of the Government to guarantee the Commonwealth Bank against loss. If there was any doubt, the Government could have removed that doubt by passing legislation through this Parliament. There has been no doubt concerning numerous other guarantees given by the Commonwealth Government in the past. Guarantees of all sorts have been paid as a result of legislation passed by this Parliament, and I venture to say that the legal officers of the Crown could speedily have found a way out of the difficulty had the Government desired to do so.

We have had yet- another ingenious explanation of the failure of the Government to assist the wheat-farmers. When the bank raised objections to the payment of a guarantee of 3s. a bushel, the Government introduced a Fiduciary Notes Bil], and said that if that measure was passed they would pay the farmers with fiduciary notes. The result would have been speedily evident. The farmers would have been paid for their wheat in a depreciated currency. Not only would that currency have broken the value of the 3s. a bushel paid to them, but it would also have broken the value paid to them in respect of the original price of the wheat.

The Nationalist party, although in opposition, stepped forward and propounded a scheme. As the Government seemed to be unable to find money to finance the wheat-growers, the Nationalist party proposed that private finance should be called in and organized to assist the wheat-growers. The scheme was taken up by the banks, wheat merchants, fertilizer companies, and various other people interested in the well-being of the farmers. A company was in process of’ formation in New South Wales, which would have made available -capital amounting, I understand, to upwards of £2,000,000. A similar step had been taken in Victoria, and guarantees had been obtained of approximately £1,500,000. Certain steps were also taken by similar organizations in Western Australia, and on similar lines, and I have no doubt that action of the same nature was contemplated in South Australia. To carry out the scheme it was necessary to obtain the consent of the Loan Council, because the money for the assistance of necessitous farmers had to be borrowed by private organizations. When these companies and organizations approached the representatives of the Commonwealth and State governments they were told to wait a while as the Government had some scheme in view, which it intended to bring before the Loan Council. These people who had been kept waiting for months were not encouraged to go on with the proposal. Actually by this means between £4,000,000 and £5,000,000 would have been released to assist necessitous farmers throughout Australia. As the money was to be obtained from private sources it would not have increased the public indebtedness; that is the best way in which to deal with the matter. While this delay and procrastination was proceeding the price of wheat was steadily dropping. The farmers were being told that something was going to be done for them by the Government, and that it had some wonderful scheme in mind. The scheme of private finance was not very tempting, as it proposed only to assist necessitous farmers to the extent of getting in their next crop, nevertheless, it was something substantial. The farmers, however, were in effect told by the Government to await the arrival of a rich uncle from overseas who would produce something from his travelling bag - something glittering and promising. The poor farmers waited, and’ those proposing a private loan also waited the approval of the Loan Council. What happened ? The Government merely submitted a plan to raise a loan when every one knew it was impossible for any government to raise a loan for any purpose. That opportunity passed. We are now in the position that, as the result of the assistance given to the farmers by State governments and private firms and the banks, they have been able to put a certain area under crop. Their last crop has been sold at ruinous prices and they are now looking to the future. What does it hold for them ? In the light of the figures I have quoted there has been- a tremendous production and a tremendous carry over. What are the prospects for the coming harvest? Are they any better? Can the farmer look forward with any confidence to the future ? The position is most ominous, most serious.

I propose to devote the remainder of my remarks to showing that in my judgment there is a way in which assistance can be given to the farmers without raising money and that is by the simple process of taking off their backs some of the loads which this and other Parliaments have placed upon them. In giving evidence before a royal commission ap- pointed to inquire into the position of the wheat-growing industry in Western Australia, where last year a record crop was produced, and where there has been a tremendous growth in the farming industry, one of the witnesses, Mr. McLarty, the manager of the Agricultural Bank, who probably knows more concerning the farming industry in that State than any other man, told a most astounding story. He said that he had calculated, so far as be was able with the figures at his disposal, that the total indebtedness of the farmers of Western Australia was £30,000,000.

I do not wish to weary honorable senators by quoting figures, but there are a few which I wish to place before them. Honorable senators have heard Senator Guthrie, from time to time, direct attention to the extraordinary anomaly which exists owing to the fact that, while wheat is ‘ cheaper than it has been for many years, bread is dearer than it has ever been. On different occasions Senator Guthrie has castigated certain people for the anomaly which exists.

Senator MCLACHLAN:

– Apparently, he has castigated them with some effect at Geelong, as bread is cheaper there than anywhere else in the Commonwealth.

Senator Sir GEORGE PEARCE.There is a bread war there; but Senator Guthrie has not got hold of the right people. He seemed to thin k that it is the flour-millers who are getting away with the loot. What are the facts? A short time ago Mr. Gerald Robinson compiled a table, which appeared in the Melbourne Argus, and said that a study of the price of wheat and flour was enlightening. He compared the figures in Melbourne as between i911 and 1931. I ask my friends opposite to remember that, from the point of view of the wage-earner, 1911 is a very significant year, for the reason that wages had appreciated up till then, and that the actual wage has moved upward very little since, despite the fact that the nominal wage has risen considerably. A study of the tables and graphs that are published in the Commonwealth Year-Booh, reveals the fact that the purchasing power in 1911 was as good as, if not better than, at any period over a quarter of a century. Keeping that fact in mind, honorable senators will find that the figures which I am about to quote are very illuminating.’ In 1911 the average price of wheat was 3s. 6£d. a bushel. In June, 1931, it was 2s. 6d. a bushel. Two thousand lb. of flour cost £8 Os. 5d. in 1911 and £6 15s. in June, 1931. Therefore, the flour-miller did not “ get away with the loot “ ; because the decrease in the price of wheat was reflected in the price of his flour.

Let us take the next stage. A 4-lb loaf in 1911 cost 5.6d. ; but in June, 1931, it cost 8d. Although the price of flour and wheat had dropped, that of bread increased.

I come now to the kernel of the matter, the cost of production. The baker’s weekly wage in 1911 was £3. As I have already said, wages in that year had a higher purchasing power than in any year over a period of 25 years, and within six points of the purchasing power in this year of grace, 1931. But the baker’s wage in June, 1931, was £6 8s. 4d - more than double what it was in 1911.

But the baking of bread does not complete the operation. After the bread has been baked, it has to be distributed. In every other country in the world, the customer goes to the shop for his bread. But we have been so prosperous, and so spoiled by our prosperity, that we are too tired to walk to a shop to buy our bread, and it, therefore, is delivered to us - at a price. Consequently, the bread-carter comes into the picture. I have received from the Bureau of Census and Statistics, Canberra, the following figures showing the hours of labour and the weekly wages of bread-carters in the capital cities for the years 1911 and 1931 :- -

There is the explanation for the rise of 3d. in the price of a 4-lb. loaf of bread, notwithstanding the fact that the prices of wheat and flour have dropped !

But the significant feature is that those bakers and bread-carters are not better off to-day than they were in 1911. Under our system of tariffs and wage regulation, wages have been forced up so as to keep pace with the increase in the cost of living caused by the tariff. Wages have been raised nominally not only in the bread-carting and baking industry, but also in every other industry from which the farmer purchases his requirements.

Is not this the answer to the whole sum - that if the community expects the farmer to produce wheat for 2s. 6d. a bushel, it must bring his costs back to where ‘ they were in 1911? He cannot raise his prices as the ‘baker and the bread-carter can, because he is not able to put a tariff wall around his product. But every other industry from which he purchases goods has been able to shut off competition from outside. They have been taking toll of the wheat-farmer and the wool-grower by the artificial raising of the cost of their products. So long as prices were rising, the farmer was able to pay. The cost, of production was on a gradually ascending scale up till three years ago; but the price of wheat also gradually ascended. Then, however, the scale of prices took a downward turn, and to-day the farmer receives ls. a bushel below what he received in 1911. The community has to realize that he cannot continue on that basis. A bounty of 5d. a bushel will never cure that state of affairs.

  1. again assert that anybody who learns the lesson that is taught by the Commonwealth Year-Booh, must realize that a reversion to 1911 costs would place the wage-earner in no worse position than he is in at the present time. The wage that the bread-carter in Melbourne or Sydney receives to-day has no greater purchasing power than that paid in 1.911.

How are we to retrace our steps? The proposed financial rehabilitation will not place us in the position in which we stood in 1911, although it is a step in that direction, because it represents a lowering of governmental costs, towards which the farmers must contribute out of the 2s. 6d. a bushel which they receive for their wheat. I believe that the tariff is the governing factor in. these labour costs. Those costs have been brought about largely by the tariff, and if it were reduced, the manufacturer would have to lower his labour costs. So long as we maintain the present high tariff wall, there is- no reason why these high nominal wages should come down, (because they are justified ‘by the cost of living. But if the cost of living were brought down, the lower cost would justify a lower wage, and the standard of living would not be altered.

I am supporting this motion, not because I believe it to be adequate, not because I consider that it provides a solution of the problem ; not because I am of the opinion that the farmer can produce wheat under these conditions, ‘but because it is my firm belief that until the people of this country are made to face up to the position they will not alter it. We have heard in this chamber speeches from which it would appear that it is possible to continue piling these burdens on the primary producer, and that some compensation is derived by secondary industries. If those industries have not yet learned the lesson, they will find out this year or next that it is useless for them to make, for example, boots, unless the people are able to buy them-; that, when they kill the purchasing power of’ the farmer they destroy their custom, and what is more, they drive the farmers off the land into the cities, where they make the competition for work more acute in an already overstocked labour market.

The position is a desperate one, and I. do not know of any way in which it can be remedied other than by the means that I have suggested. The artificial system that we have built up has to be reorganized completely. We have to get back to the standards of 1911, because the rest of the world has gone back to them. That is what we do not seem to realize. They were not bad standards, by any means.

I ask honorable senators to remember that in 1911 a Labour Government was in possession of the treasury bench iu the Commonwealth, and that there were four Labour Governments in the States. If the workers of this country were in a downtrodden and desperate position in that year, their condition would be reflected in the legislation that was placed upon the statute-book by the Fisher Government, because it had a majority in both Houses of this Parliament. That Government did not find it necessary to pass legislation for the relief of unemployment, to set aside a grant of £100,000 for the repatriation of excesscoalminers, to provide £1,000,000 for theState Governments to relieve unemployment, or even make grants for road purposes. But it did pass measures providing for the organization of the’ Australian Defence Force, the establishment of the Commonwealth Bank, the inauguration of the Australian noteissue, and other useful domestic legislation. The workers of Australia at that time were so contented with their standard of living and general working conditions that there was no need for the Government to think about providing for doles, or other legislative expedients which in these days engage the attention of all governments. To-day, with advanced Labour parties in all the States, there is an army of unemployed of nearly 400,000 men with no wages at all, and with no standard of living, and Labour and Nationalist Governments alike are at their wits end to provide sustenance for their people. If we are on the wrong track, is it not better that we should endeavour to get back to the right track?

I am supporting the motion, not because I believe that it adequately meets the situation, but because it is one way of making the taxpayers realize that we have been pursuing false ideals - that the system which we have been operating is a sham. On page 1 of the report of the Premiers Conference there is reference to a proposal to raise a loan of £8,500,000. I have just said that I do not think it is possible, in our present circumstances, to raise a loan in Australia of even £4,000^000, but if it is possible to raise £8,500,000, let us see how the Government proposes to utilize it. We are told that £2,500,000 will be set aside for the assistance of necessitous farmers, and £6,000,000 for the relief of the unemployed. Was there ever such a topsyturvy proposal as that in the present desperate position of the Commonwealth? Can any one imagine that £2,500,000 will be adequate for our necessitous farmers, who so urgently require financial aid to give employment on their farms? And in what way is it proposed to expend the £6,000,000 ?

Senator Lynch:

– In constructing sewers.

Senator Sir GEORGE PEARCE.That suggestion was made recently by a supporter of the Government, to the total disregard of the desperate plight of our farmers, many thousands of whom are at their last gasp - undecided whether or not they will remain on their farms or join the ranks of unemployed in our capital cities. If the Government provided each farmer in need with £1,000, he would immediately spend every penny on the purchase of fertilizers, seed wheat, and necessary machinery to enable him to continue his operations.

Senator Sampson:

– If the creditors did not get in first.

Senator Sir GEORGE PEARCE.State legislation makes it impossible for creditors to obtain a lien on the crop of farmers who are given financial assistance. Consequently, every penny which a farmer obtained under this scheme would be spent in giving employment, and continuous employment, to farm labour. If the loan mentioned is raised, I sincerely hope that the proposed allocation of it will be completely revised. I thank Senator . Lynch for having brought under the notice of the Senate, and the people of Australia, the desperate plight of our primary producers. Something must be done to keep our farmers on the land until conditions overseas improve. Meantime we must do all that is possible to get back to sound principles in economics, and so ensure the prosperity of this country.

Senator McLACHLAN:
South Australia

– As one who hails from a State’ which depends so largely for its prosperity upon primary production, I join with the Leader of the Opposition (Senator Pearce) in supporting the motion as a gesture of what is due to those engaged in this particular form of primary production. In various centres there is, I am informed, a belief that the bill providing for the payment of 3s. per bushel for wheat was rejected by the Senate. In truth, and in fact, the measure rejected by this chamber was that extraordinary proposal which provided for a guaranteed price of 4s. per bushel, coupled with provisions for the establishment of a compulsory pool, and our farmers can lay at the door of our present Government any blame that is attachable to the non-operation of the bill providing for the payment of 3s. a bushel. The importance of our primary industries in relation to the financial stability of the Commonwealth is rapidly gaining recognition, even among those dyed-in-the-wool protectionist gentlemen who control the Chamber of Manufactures in Sydney. I had recently an opportunity of examining some of that well-prepared propaganda which is issued so regularly to members of this chamber, and I have noted a growing recognition in it of the fact that the prosperity of Australia is dependent entirely upon the prosperity of our primary producers. This acknowledgement by that influential organization has reacted to a tremendous extent upon those associated with our secondary industries, and I think we should keep it in mind at all times when we are discussing the tariff policy of this country.

I was much impressed by some figures which appeared in that excellent journal, the Sydney Bulletin, of yesterday’s date, The article in question reads -

page 3612

STR ANGLING PRIMARY PRODUCERS

The position of the two great unsheltered primary industries, wheat and wool, and the almost hopeless nature of their struggle for existence against overwhelming odds, is emphasized in the following table of figures (supplied by the Commonwealth Bureau of Census and Statistics 17th June, 1931): -

Wages have fallen since the last quarter of 1930, although the statistician has not yet computed the extent of the average drop. At the same time, while the farmer has to face a shrinkage of 63.G per cent, in wheat prices, and 48. 4d. per cent, in wool, he lias received very little relief with regard to a drop in his cost factors in production, because the latter have not yet reacted to the influence of the relatively small fall in price levels of other -commodities and wages. There is no reduction in rail freights, terminal handling costs, telephone charges, or taxation. _ Still another -example of how wheat-growers are penalized or exploited is shown. by the comparative costs to overseas ship-owners for berthing dues, stevedoring charges, income taxation on freight on ships loading wheat in the following countries: -

It does not require an economist to sec that it will be impossible for Australian farmers to carry on unless price levels arc Brought ‘more or less into alignment with the prices of wheat and wool. Returns for wheat and wool are basic values, .and must be the guiding factor in determining local production costs.

I join with Senator Lynch in extending my deepest sympathy to our primary producers in their present difficulties. Shortly after I came into the Senate I voiced my alarm at the position of our wheat-growers. I voiced it for several reasons. I foresaw what was likely to happen in that great wheat-producing country of Russia - collective farming, forced labour, and industrial conditions against which the people of Australia would rightly revolt. It was obvious that we should be in a desperate position if we had to compete with wheat produced under such conditions. Moreover, we were suffering from those disabilities in relation to climate, production costs, and other economic conditions to which the Leader of the Opposition has referred. As the right honorable gentleman said, our objective should be a lessening of the costs of production. Those costs must come down, and the fiscal burden now pressing heavily on our farmers must be eased.

When in South Australia last week, representations were made to me regarding the burden imposed on the farmers of the State through the sales tax. Wheat-farming in South Australia is being carriey on at a loss; wheat-growers are able to eke out an existence only by combining farming with dairying. Notwithstanding the serious plight of the farmers of this country, a sales tax is to be imposed on separators. We do not give sufficient consideration to our primary producers. The average man in our cities regards the farmer as a man living a happy, contented life amid ideal rural surroundings, away from the noise and distractions of the city. I assure honorable senators that the lot of the farmers, particularly those in South Australia, is very different from that picture. These men are almost without hope. It may be that an adjustment of the tariff schedules would grant them some relief; but it would come too late for many of them. The modicum of assistance suggested by Senator Lynch will not save the farmers of South Australia. Something more comprehensive must be done. We must have regard to the incidence of tariffs, taxation, and levies generally, on our primary producers

I understand that the 3s. mentioned in the motion is more in the nature of a gesture than a definite proposition. That amount would be only as a drop in the bucket to the farmers of South Australia. The plight of the farmers has not been overlooked by those who have the welfare of our primary industries at heart. Months ago meetings were held with a view to seeing what could he done. Had this rehabilitation scheme been inaugurated then the farmers of Australia might have obtained some relief. The assistance proposed in this motion will not meet one tithe of their liabilities. Concerted action on the part of the primary producers and those to whom they are indebted, is necessary. The country storekeepers realize their dependence on the primary producers; the. city merchants are aware that unless those engaged in primary production have money with which to buy their requirements, no trade with the country can be done; bankers realize that unless the merchants can get the custom of the country storekeepers they cannot make advances to them. The economic life of the country is brought to a standstill if primary production ceases. It may be that the farmers will obtain for their crops this year a better return than they expected; but that will not overcome their difficulties. We must look ahead, not for one year, but for a number of years. A heavy frost in Russia, or a drought in Western Canada, or in the United States of America, might give us a good price for our wheat for one year; but it would not put our wheat-growing industry into the position in which Senator Lynch would have it - that sound position which is essential to the future solvency of this country.

I am aware that, in a magnificent spirit, relief was offered to our farmers because of a recognition of the value of the wheat-growing industry to the country, but, unfortunately, nothing could be done. The Government has boxed the economic compass; it has, as it were, gone round the clock, and got to where it should have been eighteen months ago. Only now is it adopting methods which will give the country some confidence in the future, and enable relief to be given to those in need. Unfortunately, any relief which might be forthcoming will be too late in many instances. The columns of the Government Gazette in South Australia contain the names of many farmers who have been adjudicated bankrupt, have made arrangements with their creditors, or have assigned their estates for the benefit of their creditors. South Australia is dependent on its primary industries to a greater extent than are the other States. Unless something is done for the farmers of that State, large numbers of them will soon be found swelling the ranks of the unemployed in Adelaide.

Senator McLACHLAN:

– Only by a co-operative effort to reduce costs can we accomplish anything worth while.

A moral obligation rests on the governments of the country to do something for those men whom they induced to take up land in unsuitable areas. Magnificent as it is, the scheme of Senator Lynch, which I support, will not enable us to deal effectively with some of the problems confronting us. Whatever we do to assist necessitous farmers in their present predicament, we should give them clearly to understand that if they persist in attempting to farm outside the limits of a steady annual rainfall area, such as is Goyder’s line of rainfall in South Australia, they must accept the responsibility for remaining there, and not expect further assistance in the future.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– They were encouraged to take up land in those districts.

Senator MCLACHLAN:

– That is so. Governments induced them to take up land against the better judgment of those who advised them against doing so. Foi these men who, instead of growing wheat, are gambling with wheat I have the greatest sympathy. The shortsightedness of governments has had disastrous effects on them. They must be offered land elsewhere in more suitable districts ; but if they elect to remain on their present holdings, they mustaccept the responsibility.

One of the most colossal fortunes amassed in South Australia was made on the wonderful country in the Willochra Plains, near Quorn. When the lease was about to expire, there was a successful agitation that the land should be cut up for closer settlement. To-day that magnificent country is a moving wilderness. Land which was sold for £2 or £3 an acre - a good price in that neighbourhood at the time - was, during the last drought, one moving mass of sand. If, by chance, a paddock escaped the drift when the wind was from the north, it was covered with sand when the wind changed. On such land it was impossible to grow anything, so that both mortgagor and mortgagee Were ruined. While Senator Lynch was speaking, I expected to hear him at any time quote the words of Goldsmith -

  1. . a bold peasantry, their country’s pride,

When once destroy’d, can never be supplied.

These men are the bold peasantry of Australia, who set out to carve for themselves fortunes from the land. Instead of carving fortunes, they have become’ bankrupt.

Even if this motion is agreed to,. I fear that it can accomplish very little in the way of providing relief toour farmers. Relief will come only when we take our courage in our hands and say, once and for all, that we will no longerbolster up industries in this country which are detrimental to our primary- industries. Just as many of our manufacturing industries are crying out against the tariff on machinery and materials they require, so our wheatgrowing and wool-growing industries and other primary industries are crying out against the burden placed upon them. I believe that, notwithstanding the existing depression, the wool industry will win through; but I see nothing for the wheat industry unless we take it gently by the hand and assist it - through its present difficulties. Whether it be by cooperation between the Governments of the Commonwealth and the States, or by other means, I do not know; but in some way relief must be granted to those engaged in wheat production. There is one thing certain: we must unshackle the primary producer from everything bearing down upon him. We must get rid of some of these unseemly costs with regard to wharf-handling charges. That, of course, is a function of the States, but the Commonwealth can unshackle him from some of the heavy burdens imposed by the tariff. On one occasion I was rebuked for talking about unshackling the primary industries, seeing that, during the regime of the Bruce-Page Government a duty of 6d. per lb. had been placed on butter. If there is ore class of producers deserving of assistance it is the unfortunate small dairy-farmers. I have had to practise my profession among these people. I have seen the disabilities under which they work, and the small pittances they receive for their arduous labours. The wheat-grower in South Australia to-day is in a worse plight than the dairy-farmer. We can do nothing for him in the shape of the artificial assistance given to the dairyfarmer. I may say, by the way, that the assistance given to the. dairy-farmer is re-acting on butter consumption, because’ in all the big centres to-day - it may he due to the depression - one can see advertised for sale such lines as margarine and dripping. I have rarely seen them advertised in Australia before. It is because the dairy-farmer is charging more than the people can afford to give for his butter. He is up against an economic law in a way which some of us foresaw would be the result of giving the temporary assistance afforded to him by placing a duty on butter. For the wheatfarmer nothing of an artificial character can be of use. Pools may be established, but they bring in their train ruin and corruption. Indeed, we know that most of the talk in that direction is purely political. The farmer wants something practical, something that will enable him to tide over the hard times through which he is passing, and enable him to see some future return for the product of his labour. So far, nothing practical has been suggested, and, although I support the motion, I do so because I feel that something has to be done, particularly for the farmers in South Australia and Western Australia, and in the Mallee districts of Victoria. Men are striving in those districts to eke out a living from the soil. They have failed through no fault of their own. They have worked long hours, and worked- hard. There has been, no “ca canny” about them. It would be a pity for the morale of this country if that class of man had to go under. In this period through which we are passing many will go under, as many went under in the ‘nineties ; but it would be a catastrophe to this country if these men, whom I regard as its backbone, are allowed to fall by the wayside.

Senator DOOLEY:
New South WalesAssistant Minister · ALP

– I do not intend to oppose the motion, but I feel that something should be said in reply to the right honorable the Leader of the Opposition (Senator Pearce). I do not want to find fault with his speech ; but I think that he overlooked something when he spoke of increasing the hours of labour and reducing wages to the 1911 standard. If this motion has done nothing else, it has brought from the right honorable gentleman a declaration of what is in his mind. I have been trying to find it out for quite a while. He has given us some indication of where he would land this country. In 1911, when Senator Pearce said that the baker’s wage was £3 a week, and his hours of labour’ 54 a week, I was eking out an existence fossicking for gold. I know that when the price of commodities is cheap the fossicker can hold out longer than when the price is high. But what did most to increase wages and reduce the hours of labour in those days was the fact that rabbiting provided an outlet for the workers. A man could make 10s. a day trapping rabbits when the basic wage was only 7s. a day, and we all remember how freezing works sprung into existence during that time. There was no machine-made bread in those days. To-day all the mixing of dough is done by machinery. If the baker’s wages were reduced to lis. a day and his hours of labour increased to 54 there would certainly be fewer men employed. The right honorable gentleman has overlooked that.

Senator Herbert Hays:

– Would the honorable senator advocate the shearing of sheep by hand?

Senator DOOLEY:

– ‘Some may advocate that, but I. do not. Nevertheless, machinery is largely replacing human labour, and unless we reduce the hours of labour and distribute employment among the labour available, I cannot see how we can get out of our present difficulty, that of finding employment for our people. A reduction of wages accompanied by a drop in the cost of living may be of assistance; but an increase in the hours of labour would only increase the burden on the community as a whole.

The wheat question resolves itself into one of producing wheat on a payable basis. The only hope for the Australian wheat-farmer is to be able to put his wheat on the world’s market cheaper than farmers in other countries can; but I cannot see how he can do it unless land values in Australia are materially written down, and overhead charges considerably reduced. Machinery has not cheapened the cost of production. The farmer may be avoiding the cost of employing hands, but he still has to pay for the machine he uses. So far Australia has not reaped the benefit of the manufacture of the machinery used on the farm; but we are hopeful of being able .to supply from our local factories all the agricultural requirements in machinery so that we may thereby absorb in secondary industries those who have been forced out of primary industries.

The Government is seised with the importance of the wheat industry, and has used its best endeavours to bring some relief to the farmers. It is no fault of the Government that the first bill it introduced to guarantee 4s. a bushel failed. At that time the price of wheat was about 4s. or 4s. 3d. a bushel, and it was a safe proposition to guarantee 4s. No honorable senator contemplated a decline in the price to the present level. I think the Government was justified in appealing to the farmers to produce more wheat to assist in rectifying our adverse trade balance. No one can say that it was not genuine in offering that guarantee. The bill was rejected by the Senatefor reasons already explained, and then the Government brought in another measure, the subject of to-night’s motion, to guarantee 3s. a bushel.

Because of the serious position of theindustry, the Acting Minister for Markets (Mr. Forde), called together at Canberra, in November, 1930, a very representative conference of interests connected with the wheat industry, together with representatives of the State Governments. Various suggestions were made by the conference, including the payment of a bounty, a guaranteed price for wheat, and a sales tax on flour. Each of these proposals was given most earnest consideration by the Government and eventually the Wheat Advances Bill 1930 was prepared and pushed through. Parliament before Christmas, 1930, guaranteeing the farmers a definite price for their wheat, based on 3s. per bushel f.o.b. for f.a.q. wheat, an essential condition of the guarantee being that the farmer would receive 2s. per bushel on delivery of his wheat at a country siding. Under this act repayment of the advance to the Commonwealth Bank was guaranteed by the Commonwealth Government. After the act was passed, the Commonwealth Bank intimated that the Bank’s legal advisers had raised serious doubt as to the power of the Government under the Constitution to safeguard the Bank against any losses under the guarantee proposed by the act; furthermore, that the Bank was faced under an act of Parliament with the responsibility of conducting the business of the Bank and was under obligation to adopt any measure which might be deemed necessary to protect the Bank against loss. In the circumstances, the Acting Minister for Markets intimated in the press that as the Government was unable to obtain the necessary finance from the Commonwealth Bank to give effect to the Wheat

Advances Act, by providing a guaranteed price on the basis of 3s. per bushel f.o.b. for f.a.q. wheat, wheat-growers should, in view of the decision of the Commonwealth Bank Board, proceed with their marketing operations in the ordinary way as though the act did not exist.

Senator Herbert Hays:

– If the Government could not find 3s. how could it guarantee 4s.?

Senator DOOLEY:

– I have already pointed out that when the proposal to guarantee 4s. -was put forward, the price of wheat was so high that the risk was not very great. Subsequently, the price fell so low that the farmer who received 3s. a bushel considered himself lucky.

Senator Herbert Hays:

– Quite, so. The Government would not have been, in a position to fulfil its promise to pay 4s.

Senator DOOLEY:

– I am unable to say that. In the light of subsequent events the rejection of that bill may have been, as some allege, in the best interests of the country. The price of wheat is still falling, and it may be as dangerous to guarantee 2s. 6d. a bushel to-day as it was to guarantee 4s. a bushel some time ago. I do not think it will be denied that the Government has used every endeavour to assist the wheat-farmers; if it has been unsuccessful, it has not been due to any lack of sincerity or of endeavour to do the right thing. There has been a general clamour on the part of the wheat-farmers for assistance, and, notwithstanding the efforts of the Government, they have, unfortunately, not been helped in the way we all wish. The Minister for Markets (Mr. Parker Moloney) has obtained leave to introducea bill in another place to provide for a Commonwealth pool, and thus give the farmers an opportunity to market their wheat in an orderly way by means of an organization under their control.

Senator LYNCH:
Western Australia

– I am pleased with the friendly reception which this motion has received at the hands of the Government and honorable senators. I realize that the Government is sympathetic towards the farmers, but, unfortuna’tely, it has taken an unnecessarily long time for its sympathy to materialize. Honorable senators should endeavour to visualize the position of the farmers, who, when harvesting last year, were told that a measure providing for a guaranteed price of 3s. a bushel had been passed by Parliament. The farmers actually felt that “the extra 6d. a bushel was in their pockets, and many of them budgeted accordingly. What has happened in this instance is almost unique. Effect has not been given to a statute of this Parliament. In these circumstances, this and succeeding governments must stick to their word, and when acts are passed they must become effective, otherwise the outlook for the community will be very serious.

Senator Dooley:

– The Government acted upon the advice of . its financial advisers.

Senator LYNCH:

– The Assistant Minister will realize that the farmers, as well as others, place almost the same implicit faith in an act of parliament as they do in the Bible. When an act is passed providing for certain concessions, every one concerned expects to receive the benefits resulting from it. But the act providing for the payment’ of a bounty of 3s. a bushel has not become effective. I say advisedly that the Government must not act in this way, because it will find itself in the unedifying position of the people disregarding the statutes of this Parliament. The people must be able to trust the Government, and they naturally expect it to give effect to its legislation. Even at this late hour something needs to be done. The Leader of the Opposition (Senator Pearce) correctly pointed out that a large amount of private capital was available to assist the farmers, but the efforts of those who were to provide it were thwarted by the Government, which said that it proposed to adopt another course. The unfortunate farmers are now the sad victims of circumstances. They do not know where they stand ; they are in such an agitated state of mind that their utterances resemble those of the Yarra bank orators. I have never heard such revolutionary declarations as I heard on three or four occasions at a meeting of about 500 farmers’ in Western Australia. They have reached the stage where they cannot trust politicians, and in view of what has happened their distrust is justified.

Bad as is the position in the settled districts, it is infinitely worse in the more recently developed areas. Even in the older districts some of the farmers are living from hand1 to mouth, and upon the extended and very slender credit afforded by others. From the figures 1 quoted previously, it will be seen that, based on the quantities of superphosphate distributed this year, the area under crop this season last year will be reduced by one-third. Imagine the loss of wealth resulting from this decreased production. When the coming season is over, the farmers may be still further disheartened and discouraged as the result of the inactivity of this Government. If the present struggle continues, many of them will, be compelled to fall down on their jobs.

Under the Government’s ‘fiscal policy the unfortunate wheat-farmer is between the hammer and the anvil. He has to sell his products in the markets of the world, and at the same time pay exorbitant prices in consequence of the duties imposed by this Government. He cannot, and will not, stand it any longer. He will naturally say that he would rather be on the dole. Senator Kneebone said that many farmers who should be behind their ploughs are walking the streets in Adelaide. I am well aware of the fact that some points may be overstressed, but the case of the wheat-farmers cannot bo over-stated. In certain of the older districts there may still be a degree of comfort, but it is in the newer districts where the farmers are in a state of desperation. The old-established centres are not responsible for the whole output of wheat; we depend very largely on the more recently settled areas for a large proportion of our export. It is useless* to continue to pile burdens upon these men until they reach the point where they cannot carry them any longer. They have reached the. stage where they are desperate and discouraged. What are we to do? We must take immediate stock of the position. When the Bruce-Page Government was in office, a committee consisting of the Commonwealth “ Statistician, Professor Brigden, and Mr. Dyason was appointed to inquire into the fiscal policy as it affects the industries of this country. That committee found that as a result of that policy, £29,000,000 was added to the value of our protected industries. Protection to the farmers in the same proportion would amount to about £3,500,000 to £4,000,000, or 6d. a. bushel on the crop produced last year. That is all we are asking for. We do not wish the hearts of these men to get down into their boots. If a man’s heart is in his job, he will see it through. If we make the wheat-growers disheartened, as they “have every reason to be, we shall have taken the shortest and most effective step towards destroying the best element in our community; and when it has been destroyed, where will be our national prosperity? There are 70,000 wheat-growers in this country. If we multiply that figure by three or four, we shall realize the number of people who are dependent on this industry, and its importance to Australia, apart altogether from the amount of foreign money that is brought here as a result of the tremendous efforts of the men who work early and late so that we may build up our credit overseas. There is no exaggeration in any of these statements. Everybody has a “ pelt “ at the wheatgrowers, for what reason I do not know. They are the patient beasts of burden of Australia to-day. Is it not grand to think that we have at least one set of Australians who are able to stand up against world competition, and hold their own ? When they are not able to’ do so, our imagination will not be equal to picturing the desperate plight in which this country will find itself. That will be the case unless something is done.

The acceptance of this motion will give the wheat-farmers the assurance that they are not forgotten, and will be a manifestation of what we would like to do for them. Make no mistake, if they are not assisted, this country will suffer. Therefore, I appeal to, I beseech, I implore the Minister to induce the Cabinet to go on the market and endeavour to raise a loan of £4,000,000 to enable these men to keep a firm grip on their homosteads. I venture to affirm that action along those lines would have a magical effect. I ask iiic Minister to convey to his Government the message that the Senate has once more risen to the occasion, as it has done in the past, and has unanimously expressed its heartfelt sympathy with the wheat-farmer in his present plight. When the elected representatives of the people go out of their way to express unanimous and unqualified sympathy with one section of our people, that should count for something. If it does not, what will ? Let the Cabinet fling politics on one side, and forget this “ ism “ and that “ ism “. First things should come first. The immediate necessity is to see that these men are given some practical evidence of our sympathy. If that be done, we shall have taken a step towards the redemption of the promises that have been solemnly made by this Government and this Parliament.

I am gratified at the reception which has been accorded to this motion, and thank honorable senators for their admission of the necessity that exists for helping the wheat-farmers. I trust that something practical, something real, will be done for these genuine Australian people.

Question resolved in the affirmative.

page 3619

ADJOURNMENT

Secretary to Senator Dooley - Interest Payments: Default by New South Wales.

Motion (by Senator Dooley) proposed -

That the Senate do now adjourn.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– To-day certain representations were made to me by representative members of the returned soldiers and Public Service organizations, with reference to a report that appeared in this morning’s Sydney Daily Telegraph in relation to an appointment that has been made to the staff of Ministers in this chamber. 1 bring it under the notice of the Minister concerned, so as to give him an opportunity of explaining the whole position. I trust that he will be able to furnish a satisfactory explanation. If the report is correct, it reveals something’ that is not altogether pleasant. I quote the following from the Daily Telegraph: -

page 3619

QUESTION

KEEPING JOB IN FAMILY

Senator Dooley and his Son.

Diggers Angry. (From Our Special Representative)

Canberra, Wednesday

Returned soldiers and Public Service organizations arc incensed at the displacement of a ministerial private secretary, a married exsoldier with two children, by the appointment of Jack Dooley, ex-mailman, aged eighteen, as secretary to his father, Senator J. Dooley, Assistant Minister for Works.

The article goes on to say -

The question of preference forex-soldiers is the point which concerns the Diggers, but the Public Service organizations are interested in another aspect of the case of the displaced secretary, Mr. N. Lamedey.

Mr. Lamedey, according to the report, was an officer in the service of the Tasmanian Government for some years. “ At the request of the Development and Migration Commission he was transferred to that body because of his special knowledge of migration matters. He served on the commission for some time, and when it was disbanded, made application to be re-admitted to the Tasmanian Public Service. He found, however, that because he had been away from that Service for over two years he was not . eligible to return to it.

I understand that Mr. Lamedey’s case was considered by the Government, which, in the circumstances, found him a position as secretary to Mr. J. Culley, when that gentleman was Assistant Minister; but his position became complicated when, on. Mr. Culley’s resignation, Senator Daly, upon his re-election to Cabinet, reappointed Mr. Eric Tonkin as his secretary. The report states that Mr. Lamedey was promised a position as secretary to Senator Dooley, but “found that all had been arranged in the family circle.”

Since this case was brought undermy notice I have made some inquiries, will disclose one or two inaccuracies inthe report. Senator Dooley’s son is not eighteen but 21 years of age, and I understand that he was or is a telegraphist in the Postal Department. But the point that chiefly concerns the returned soldiers organization - and, I take it, the public of this country also - is that a married returned soldier with two children should find himself displaced by a comparative junior. I say nothing about young Mr. Dooley’s capacity ; being the son of Senator Dooley, he is probably a very capable young man. But the point is that a junior, and a single man at that, should not be appointed to the vacant position instead of a returned soldier. I feel that in all the circumstances some explanation is due to the Senate as well as to the country. We must not allow the impression to be created, particularly at a time like the present, either in this Parliament or outside, that appointments are made as a matter of privilege. The Public Service Board was set up to avoid such occurrences. If this report is true, it would appear that to some extent privilege has entered into the making of the appointment. I should like an explanation from the Minister of the whole of the facts, and I trust that it will be entirely satisfactory to every one concerned.

Senator PAYNE:
Tasmania

.- I desire to direct attention to the nature of the replies that were given to questions that I asked to-day. My questions were -

  1. Is it a fact that repudiation of obligations is repugnant to British tradition and policy and to the Commonwealth of Australia?
  2. Is it a fact that the New South Wales Government has repudiated its overseas obligations ?

The reply to those two questions was -

Those questions ask for an expression of opinion, which it is not customary to give in answer to questions.

I maintain that sufficient care was not exercised in framing that reply, and I’ advise the Minister to see who was responsible. The second question did not ask for an expression of opinion, but definitely and clearly for a statement of fact. My third question was -

Is it a fact that the burden of meeting same has been placed on the rest of Australia?

The answer to that was -

The obligations of New South Wales have been met by the Commonwealth, which is taking steps to recover from the State the amounts due.

That is practically an answer in the’ affirmative; but I object to the phrasing of the latter portion, because it does not constitute a reply to me. The last question that I asked was -

Does the Government intend to take any action, should the Government’ of New South Wales seek the assistance of the British Government through the dominions office, by which it may avoid an appeal to the electors?

The reply that I received was -

The matter referred to does not appear to be one in which the Commonwealth Government has power to intervene.

My comment upon that is that we arc all acquainted with the serious position which has arisen in connexion with the State of New South Wales, and the meeting of its obligations overseas, and are aware of the burden that has been placed on the rest of Australia in order that the honour of this country might be preserved by the Commonwealth Government dis-. charging the obligations that have been repudiated by the Government of New South Wales.

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– This Parliament represents New South Wales as well as the rest of Australia; and the people of New South Wales contribute to its revenues.

Senator PAYNE:

– Why should the other States be called upon to discharge the obligations of New South Wales?

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA · UAP

– Certainly they should not.

Senator PAYNE:

– I am not saying anything about the New South Wales people, but am merely referring to the action of their Government. It appears to me that the Commonwealth Government should ascertain whether it has the power to intervene; because this serious act of repudiation may be. followed by something else that may embroil the rest of Australia in a heavy financial responsibility. I urge the Minister (Senator Dooley) to place my opinion before his colleagues, particularly the Prime Minister. Every effort should be made by the Government to ascertain if it has the power to intervene, so as to prevent an extension of the burdens which the rest of the Commonwealth are being asked to bear on account of the default of New South Wales.

Senator DOOLEY:
New South WalesAssistant Minister · ALP

– In reply to Senator Payne, I understand that all answers to questions affecting the Prime Minister’s Department are submitted to my right honorable leader for his endorsement, and I believe he saw the reply furnished to the honorable senator.

Senator Payne:

– He could not hare read it very carefully.

Senator DOOLEY:

– I am not in a position to say; but busy as ho is, the Prime Minister takes pains to see that correct replies are furnished to all questions. Replying to Senator Duncan, my attention has been drawn to the statement that appeared in the Sydney press. It is a pity that the writer did not obtain firsthand information. Had he gone even to Mr. Lamedey, I am sure that officer would have admitted that he had no grievance, because he has not been displaced in his employment. It is true that I appointed my son as my private secretary. He had been in the employ of the Postal Department for about five years, and had passed the necessaryexami nations to qualify for the position which he held. At my request he was transferred from that department to become my private secretary. If his appointment bad meant the displacement of someone else, I should not have applied for his transfer. In the circumstances, I feel that I was fully justified in making the appointment, and I am sure that my son will give me every satisfaction, because I have complete confidence in his ability. When, some time ago, Senator Daly was defeated in the fresh ballot for ministerial portfolios, he had as his private secretary, Mr. Tonkin, who became my private secretary upon my appointment as Assistant Minister. I have no complaint to make about Mr. Tonkin. He is a thoroughly efficient officer, and 1 understand Mr. Lamedey is also. I may add that, before I appointed my son, I consulted Senator Daly, and asked if Mr. Lamedey would be displaced if I did not take him. When Senator Daly was re-instated in the Ministry, he asked me if I would have any objection to his taking back his former private secretary, because, he said, they got on so well together, and Mr. Tonkin was just the class of man he wanted. As I had no objection, the transfer was made and, as I was then without a private secretary, I appointed my son. I can assure the Senate that no returned soldier, or any other officer has been displaced. Mr. Lamedey is in employment, and is not likely to bo affected in any way. No promise was made to him that he would become my private secretary.

Question resolved in the affirmative.

Senate adjourned at 10.4 p.m.

Cite as: Australia, Senate, Debates, 9 July 1931, viewed 22 October 2017, <http://historichansard.net/senate/1931/19310709_senate_12_130/>.

View PDF View XML View in Voyant