Senate
23 May 1940

15th Parliament · 2nd Session



The President (Senator the Hon. J. B. Hayes) took the chair at 2.30 p.m., and read prayers.

page 1142

QUESTION

AUSTRALIA’SWAR EFFORT

Senator GIBSON:
VICTORIA

– I ask the Leader of the Senate whether Mr. Essington Lewis, the newDirector-General of Munitions Supply, will he empowered to take over from non-essential engineering firms trained mechanics so that war material may be made 24 hours a day and seven days a week, instead of continuing the present system of one shift a day?

Senator McLEAY:
Minister for Trade and Customs · SOUTH AUSTRALIA · UAP

– The Prime Minister,in a statementmade in the House of Representatives yesterday, said that very’ full authority would be taken by the

Government to speed up munitions supply. I should say that the powers to be given to Mr. Lewis will cover the point raised by the honorable senator.

page 1148

QUESTION

AUSTRALIAN WOOL

Sale to Great Britain

Senator GIBSON:

– I ask the Assistant Minister for Commerce - (1) When will the 10 per cent. deducted from the first wool appraised be made available to growers? (2) By what amount per lb. was the first wool appraised below the average price of purchase? (3) When will this amount be available to growers?

Senator McBRIDE:
Minister without portfolio assisting the Minister for Commerce · SOUTH AUSTRALIA · UAP

– The 10 per cent. deducted will be paid as soon as possible after the 30th June next, when the final price paid by the United Kingdom for Australian wool can be assessed. I have not any information relating to the honorable senator’s second question. In reply to this third question, I am advised that any deficiency in the price of 13.437d. per lb. shown to exist at the end of June next will be paid as soon after that date as possible.

page 1148

QUESTION

RECRUITING IN COUNTRY DISTRICTS

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I ask the Minister representing the Minister for Defence whether it is the intention of the Government to provide facilities for recruits enlisting in country districts? Senator FOLL. - Yes.

page 1148

QUESTION

EMPIRE AIR SCHEME

Senator BROWN:
QUEENSLAND

– I ask the Minister representing the Minister for Air - (1) Has the attention of the Minister been directed to an article in the Sydney Morning Herald of the 22nd May headed, “ Empire Air Scheme - Huge Waiting List - Serious Delay - Indignant Applicants “ ? Also to an article in to-day’s issue of the Sydney Telegraph headed, “ The Tragic Story of Australia’s Air Effort”? (2) If so, will the Minister, following the splendid example of frankness displayed by Allied statesmen, make a statement in the Senate in order to place the facts before the people of Australia?

Senator FOLL:
Minister for the Interior · QUEENSLAND · UAP

– I understand that the Minister for Air, in a statement in the House of Representatives this afternoon, referred to criticism respecting delays in certain portions of the Empire air scheme, and explained that the programme was well up to date. It is the intention of the Government to expedite, as far as is humanly possible, the carrying out of the scheme.

page 1148

QUESTION

GOLD TAX

Senator KEANE:
VICTORIA

– I ask the Leader of the Senate whether the Government has considered the advisability of diverting some portion of the revenue received from the gold tax for the purpose of assisting the gold-mining industry in Australia ?

Senator McLEAY:
UAP

– That matter is at present under consideration.

page 1148

ASSENT TO BILLS

Assent to the following bills reported : -

War Pensions Appropriation Bill 1940.

Invalid and Old-age Appropriation Bill 1940.

Sales Tax. Bills (Nos. 1 to 9) 1940.

Estate Duty Assessment Bill 1940.

Estate Duty Bill 1940.

page 1148

QUESTION

INVALID AND OLD-AGE PENSIONS

Senator ASHLEY:
NEW SOUTH WALES

asked the Minister representing the Treasurer, upon notice -

In view of the increased cost of living and of many requests received by senators in this connexion, is it the intention of the Government to make any increase of the rate of invalid and old-age pensions?

Senator McBRIDE:
UAP

– The Treasurer has supplied the following answer: -

The honorable senators question refers to a matter of Government policy which it is not customary to deal with inreply to questions.

page 1148

QUESTION

DESTRUCTION OF RABBITS

Senator UPPILL:
SOUTH AUSTRALIA

asked the Minister representing the Minister in charge of Scientific and Industrial Research, upon notice -

  1. Is the Government still persevering, through the Council for Scientific and Industrial Research, with its investigations of rabbit virus, or any other means for the destruction of rabbits?
  2. If so, when is it likely that the virus or other agent will be released to land-holders for practical use?
Senator McLEAY:
UAP

– The Minister in charge of Scientific and Industrial

Research has furnished the following replies : -

  1. Yes.
  2. No indication of the nature asked for by the honorable senator can be given at present. The question of the release of the virus will depend on the results of the further investigations which are now proceeding.

page 1144

QUESTION

WAR LOAN’S

Senator DARCEY:
TASMANIA

asked the Minister representing the Treasurer, upon notice -

  1. Do the loans, which are being raised by the Government for war purposes, through theprivate banks, carry 5s. per cent. commissions ?
  2. Is it a fact that the private banks received this commission on past loans?
Senator McBRIDE:
UAP

– The Treasurer has supplied the following answers: -

  1. Loans for defence purposes, except £2,000,000 raised by private negotiation through the Commonwealth Bank in December, 1939, have been raised by public subscription from all sections of the community, and the private banks, in common with the Savings Banks and Stock Exchange brokers, have been paid a commission of 5s. per cent. on applications lodged by them or through them by the public. No commission was paid to the banks for their contributions to the £2,000,000 private loan.
  2. For many years the private banks and other institutions have been paid this commission in respect of subscriptions by them or through them to public loans.

page 1144

QUESTION

WOOL PRICES

Senator CLOTHIER:
WESTERN AUSTRALIA

asked the Minister representing the Minister for Commerce, upon notice -

  1. Is the price at which wool is sold to neutral countries known in either Great Britain or the countries of sale?
  2. Is the price at which wool is sold to British manufacturers known in Great Britain?
  3. If the replies to the above questions are in the affirmative, why is such information classed as confidential in Australia when it is not confidential in other countries?
  4. Will the Minister state the prices at present paid in respect of questions 1 and 2 above?
Senator McBRIDE:
UAP

– The Minister for Commerce has supplied the following answers : -

  1. It may be presumed that the prices would be known to the purchasers. On application by prospective buyers to the United Kingdom Government for quotations, the prices would be supplied to them. Prices would, of course, vary according to the type, grade and count desired, and as such would be privy to the

United Kingdom Government control authorities and the individual buyer, who must give a guarantee of non-enemy destination of the product in any shape or form.

  1. In the case of British processors, the issue is rationed according to whether the manufactured goods are intended for (a) home consumption, or (b) export. The issue price was quoted for “ tops “, as under, as from the 1st March, 1940 - 64’s warp (colonial oil combed) : For home trade 42. 5d. per lb.; for the export trade 43.0d. per lb. 3 and 4. The prices mentioned in reply to No. 2 have been published in trade journals both in the United Kingdom and in Australia. The whole question of the price charged to neutral countries for wool has been a matter of continued consultation between the United Kingdom Government and the Government of the Commonwealth. Such consultations are still in a confidential stage as affecting an important feature of the policy of economic warfare.

page 1144

QUESTION

AIRCRAFT MANUFACTURE

Senator CLOTHIER:

asked the Minister representing the Minister for Supply and Development, upon notice -

  1. Will the Minister state what progress has been made in the Commonwealth in the manufacture of aircraft?
  2. What States are working on aircraft manufacture ?
  3. Is the Government satisfied with the progress being made?
Senator FOLL:
UAP

– The Minister for Supply and Development has supplied the following answer: -

The whole question of aircraft construction in Australia is at the moment the subject of discussion with the United Kingdom Government. It is hoped to be able to make a comprehensive statement to the House next week.

page 1144

COMMONWEALTH ELECTORAL BILL 1940

Bill returned from the House of Representatives with a message intimating that it had agreed to the bill with the amendments indicated in the annexed schedule with which it desired the concurrence of the Senate.

In Committee (Consideration of House of Representatives’ message) :

Senator FOLL:
Minister for the Interior · QUEENSLAND · NAT; UAP from 1931

– In order that honorable senators may have an opportunity to study the amendments made by the House of Representatives in this bill. I am agreeable that progress be reported.

Progress reported.

page 1145

SEAT OF GOVERNMENT ( ADMINISTRATION) BILL 1940

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion of Senator Foll) read a first time.

Second Reading

Senator FOLL:
Minister for the Interior · Queensland · UAP

– I move -

That the bill be now read a second time.

The bill proposes to amend the Seat of Government (Administration) Act 1910-1939 by inserting a provision to the effect that a notice in the Commonwealth Gazette of any ordinance of the Australian Capital Territory having been made, and of the place where copies of such ordinance can be purchased, shall for the purposes of the act be sufficient notification of the ordinance. At present ordinances of the Australian Capital Territory arc published in full in the Commonwealth Gazette. As such ordinances are sometimes lengthy and occupy many pages of the Gazette, it is now proposed that the title only of the ordinance shall be published, together with an intimation as to where copies can be purchased.

The economy thus effected in the saving of paper should commend itself to honorable senators. Commonwealth acts and statutory’ rules are not published in full in the Commonwealth Gazette, and no inconvenience should be caused to persons interested by the non-publication in full of ordinances. It is also proposed to discontinue publishing in full regulations made under ordinances of the Australian Capital Territory.

This measure is similar to the Northern Territory (Administration) Bill passed by the Senate last week. I have before me a copy of the Commonwealth Gazette, in which an ordinance of minor importance occupies a whole page. If this measure be passed, only headings indicating the nature of the ordinance will appear in the Commonwealth Gazette, together with an intimation that a complete copy of the ordinance may be obtained from the Government Printer.

As I indicated to the Leader of the Opposition (Senator Collings) in connexion with the Northern Territory Administration Bill, the Government will make known to people interested in the ordinances the fact that they may obtain copies of them if they so desire.

Senator COLLINGS:
Leader of the Opposition · Queensland

– I do not know what the Government expects to accomplish by the introduction of bills such as this at this stage, but I imagine that the only reason is an attempt to effect economy. If that is so there is no sense in opposing the measure, but at the same time it is regrettable that the same thrift is not displayed in many other directions of far greater importance. We should endeavour to encourage among residents of the Aus tralian Capital Territory a far greater interest in things that affect them, and there is no excuse for being secretive in regard to ordinances, which are the enactments by which the territory is governed. The Minister for the Interior (Senator Foll) has said that anybody who is interested in the ordinances may obtain copies of them; but in my opinion every resident of the Australian Capital Territory ought to be interested, and by so curtailing the publication of ordinances the great bulk of the people who are affected by them will not be reached.

Senator Foll:

– At present any persons who read the Government Gazette see the ordinances. Under this proposal copies of the ordinances will be given only to those who are interested in them and apply for them.

Senator COLLINGS:

– There is a local paper which is published in the interests of the people of this territory, and in that regard I ask the Minister the same question that I asked in relation to the newspaper at Darwin - will he undertake that the Canberra Times shall receive copies of these ordinances so that the common people may know of them. If it is necessary to apply to the Government Printing Office, the people will just not bother to ask for copies, except perhaps those who have a pecuniary interest in what is being done. But there are thousands of people who have an interest other than a pecuniary one, and I should like the Minister to give an assurance that ordinances will be displayed in all public places such as post offices, shopping centres, residential centres, police stations, and ambulance stations. The fullest possible publicity should be given to these enactments. 1 repeat that I can see no reason for this measure other than economy, and if that is the sole purpose, it is cheese-paring economy indeed. I could show the Government a hundred and one other ways in which failure to observe practical economy is dangerous to the country at the present time.

Senator FOLL:
Minister for the Interior · QUEENSLAND · NAT; UAP from 1931

– As the Leader of the Opposition (Senator Collings) pointed out, a measure similar to’ this was passed through the Senate last week. This bill has been brought down in the direct interests of economy, and because it is considered by the Department of the Interior that it is quite unnecessary to publish in full in the Gazette ordinances which, although sometimes relatively unimportant, are very lengthy. Instead, notification that an ordinance has been made, and may he inspected at such and such a place, or copies obtained from the Government Printing Office, will be issued. I cannot give an undertaking that the full text of all ordinances will be published in the Canberra Times. No doubt that journal watches very closely matters affecting the Australian Capital Territory, and will make it its business to become conversant with whatever ordinances are made.

Senator Keane:

– “Who will be inconvenienced by the change?

Senator FOLL:

– So far as I know, nobody will be inconvenienced. The only difference is that anybody who is particularly interested in an ordinance will have to apply for a copy, instead of being able to read it in the Gazette.

SenatorCollings. - If we want information about an ordinance, we will have to make application for a copy.

Senator FOLL:

– The honorable senator, of course, will be supplied with a copy of all ordinances and regulations. The total circulation of the Commonwealth Gazette is only about 2,000, and I do not think that a discontinuance of the publication of ordinances will have much effect, because probably 99 per cent. of recipients of the Gazette are not interested in these ordinances. The only people who are interested are those who live in the Australian Capital Territory. I give honorable senators an undertaking that the Department of the Interior will facilitate the obtaining of ordinances by those to whom they are of special concern.

Question resolved in the affirmative.

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

page 1146

LAND TAX ASSESSMENT BILL 1940

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator McBridb) read a first time.

Second Reading

Senator McBRIDE:
Assistant Minister for Commerce · South Australia · UAP

– I move -

That the bill be now read a second time.

This measure deals primarily with the exemption from land tax of mutual life assurance societies, friendly societies and certain other societies, clubs and associations not carried on for pecuniary profit. It also provides a basis for the assessment of perpetual leases.

Mutual life assurance societies at present are granted exemption in respect of all lands owned by them, other than those of which a society is mortgagee in possession, or which it has acquired by virtue of a mortgage. This exemption applies irrespective of whether the lands owned are used by the society for its own purposes or are let to tenants.

In recent years, particularly, certain life assurance societies have invested an increasingly large proportion of their funds in the purchase or erection of large city buildings and blocks of flats which are let to tenants. Honorable senators will appreciate the fact that the freedom from land tax enjoyed by these societies enables them to compete unfairly with taxpayers who own similar classes of property. The bill is designed to remedy this inequality.

Under the bill, the exemption allowable to mutual life assurance societies is limited to the lands occupied by them, and does not extend to lands let to tenants. Provision is made to cover the case of a society which occupies a part of a building owned by it and lets the balance. In such cases, the society is entitled to exemption in respect of a part of the unimproved value of the land corresponding to the rental value of the part of the building- which it occupies.

The present provision, whereby life assurance societies with ‘ shareholders receive a proportion of the exemption allowed to wholly mutual societies, has,, been retained. This . proportion corresponds to the proportion which the value of the Australian policies of the society bears to the total value of its policies.

Friendly societies are, under the present act, entitled to exemption -in respect of all lands owned by them, irrespective of the manner in which they were acquired or to what use they are put. Some of these societies own valuable city properties, only small portions of which are occupied by them for their own purposes, the balance of the buildings consisting of shops and offices let to tenants.

Under the bill, full exemption will be allowable to a friendly society only in respect of lands solely occupied by it. Partial exemption, based on rental values, will be allowable when a part of a building is occupied by a society and the balance is let to tenants. Mutual life assurance societies and friendly societies have been, free from liability to land tax since the inception of the act in 1910, and the Government considers that the time is opportune for their position to be reviewed, particularly as taxpayers generally are being called upon to bear additional burdens.

The bill also deals with societies, clubs and associations which own land used as a site for a building occupied by the owning body. The Commissioner of Land Tax originally allowed complete exemption to these bodies, notwithstanding that portions of their premises may have been let to tenants. Some years ago, however, the Supreme Court of New South Wales decided that “the exemption provided by the law did not apply unless the particular body was the sole occupant of the building.

The Royal Commission on Taxation, in its fourth report, dated the 19th October, 1934, drew attention to the anomaly created by the court’s interpretation of the law, and recommended that it be remedied. The bill implements this recommendation, and provides that a society, club or association which lets a part of its premises shall be allowed partial exemption based on rental values, in respect of the portion it occupies for its own purposes.

Under the bill, the exemption provisions relating to mutual life assurance societies, friendly societies, and other societies, clubs and associations not carried on for pecuniary profit are brought into line. The exemption in each case is limited to the lands occupied by such organizations, and does not extend to lands let to tenants or used in airy other way in competition with other landowners.

The amendment to section 11 of the act made by clause 3 of the bill is rendered necessary following the amendments made by clauses 4 and 7 to sections 13 and 41 of the act. Clauses 4 and 7 provide that, where land is partially exempt because a building erected thereon is partly occupied by an exempt body, the unimproved value of the part to be exempted shall be determined on the basis of rental values. In the absence of the amendment to section 11, it might be contended that each shop or office separately let must be valued as a separate parcel. This contention would necessitate innumerable hypothetical valuations of rooms and offices creating almost innumerable difficulties which are not met with at present. The amendment will avoid the admission of any such contention, and will enable the practical work of valuation to be carried out as in the past.

The amendment to section 27 of the act made by clause 5 of the bill is consequential upon the amendment to section 41 made by clause 7 of the bill. As a. life assurance society will in future be taxable in respect of land leased by it, the reference in section 27 (3) to the exemption of life assurance societies in section 41 becomes meaningless and is deleted.

The amendment made by clause 6 of the bill provides a basis’ for the taxation of perpetual leases by prescribing that, the unexpired period of a perpetual lease shall be deemed to be’ 100 years. Prior to a decision of the High Court in 1929, it was tha practice of the Land Tax Commissioner to calculate the value of a lessee’s estate in a perpetual lease on1 the basis of an unexpired period of” 100 years, but the court’s decision indicated that this basis could not he supported at law. The amendment does -not impose any new liability. It merely restores to the taxable field a tenure of land which was subject to tax from the inception of the act in 1910 until the High Court’s decision in 1.929. It removes the anomaly that lands held under lease, and having a fixed term, are taxed, whereas other similar lands held under exactly similar conditions, except, that the term is in perpetuity, are not liable to tax.

The amendment made by clause 2 of the bill providing for the retirement of the Commissioner and Assistant Commissioner of Land Tax at the age of 65 years will bring the holders of those offices into line with officers subject to the provisions of the Public Service Act, who are required to retire at that age.

Debate (on motion by Senator Collings) adjourned.

page 1148

LAND TAX BILL 1940

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator McBride) read a first time.

SECOND Reading

Senator McBRIDE:
South AustraliaAssistant Minister for Commerce · UAP

– I move -

That the hill bc now read a second time.

This measure is a part of the Government’s War-time taxation proposals. It doubles the present rates of land tax which, under the bill, will, for the financial year 1940-41, be the same as those that applied for the year 1926-27.

The first schedule, rel a tes to residents. Resident taxpayers receive a deduction of £5.000 from the total, unimproved value of the land owned .by them. The rate of tax commences at Id., and l/18750ths of .Id., and increases uniformly by l/18750ths of Id. as the taxable value increases until the taxable value reaches £75,000. For every fi of taxable value in excess of £75,000, the rate of tax is a flat rate of 9d.

The second schedule applies to absentees. They do not receive the deduction of £5,000 allowed to residents in arriving at the taxable value of their land, and, therefore, pay tax on the full unimproved value. For the first £5,000 of taxable value the rate of tax is a flat rate of Id. When the taxable value exceeds £5,000, the rate of tax on the excess up to £80,000 is 2d. and 1/18750ths of a penny, increasing uniformly by l/18750ths of a penny as the taxable value increases, until the taxable value reaches £80,000. For every £1 of taxable value in excess of £80,000 the rate of tax is a flat rate of lOd. Clause 2 provides that land tax calculated in accordance with the formulas in the first and second schedules should be paid for the financial year beginning on the 1st July, 1940, and for al] subsequent years.

Since the termination of the last war, land tax rates have been reduced by over 50 per cent., and the Government considers that the position should now be reviewed and that land-owners, in common with other sections of the community, should bear their share of the additional burden of taxation, necessary to meet war-time expenditure. It is estimated that the additional revenue to be obtained from .,. the increase of the rates will he £1,500,000, of which £1,450,000 will, it is anticipated, be collected within the financial year. The new rates are the same as those in force for the financial years 1914-15 to 1917-18 inclusive, and 1922-23 to 1926-27 inclusive, whilst they are 16 J per cent, lower than the rates that applied for the financial years 1918-19 to 1921-22 inclusive. During the financial’ years 1927-28 to “‘1937-38 inclusive, the rates of tax were reduced on three occasions, whilst for the year 1938-39 and the current financial year they were increased by 11.1 per centover those of the immediately preceding year, bringing (hem to one-half the rates in operation for the financial vear 1926-27.

Senator’ COLLINGS (QueenslandLeader of t,he Opposition) [3.13Q. - This measure is complementary to the taxation proposals of the Government which have already been debated in this chamber. Consequently, I have no desire to delay its passage through the Senate. I can do no more than emphasize what I said in my speech on the Government’s financial proposals. This Government’s predecessors treated their landed friends ho kindly as to reduce land tax by onehalf, an amount of £8,000,000 being remitted to land-holders in this way during a period of seven years. Under this measure the Government now proposes to recover from its friends a sum less th.au the amount of tax previously remitted in one year. Had those remissions not been made the Government, to-day would have had an additional £8,000,000 to assist it in the present national emergency. However, I am reminded that “ It is too late to shut the stable door when the steed is stolen “. T. have no doubt that in the present crisis the Government needs this money. Consequently, although this measure is somewhat belated, I do not oppose it.

Question resolved in the affirmative.

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

page 1149

INCOME TAX ASSESSMENT BILL 1940

Bill received from the House of Represen tatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Mc lini mc) read a first time.

Second Reading

Senator McBEIDE (South AustraliaAssistant Minister for Commerce) [3.1SJ. - I move -

That the bill bc now read a second time.

The principal amendment which is proposed to be effected by this bill relates to a further tax on the undistributed income of public companies. In arriving at the amount of taxable income subject to the r’ further- tax. ‘ Commonwealth income tax, war-time (company) tax. and ex-Australian taxes assessed in respect of income of the company which is taxable under the Income Tax” Assessment Act, will be deducted from the taxable income of the year in which the tax is paid. State income taxes paid are not mentioned in the billy because the presen t act already provides ‘for their deduction in arriving at the taxable income.

Any net loss, other than a loss of- a capital nature, incurred in the year of income in carrying on the business of the company out of Australia will also be allowed as a deduction, except in the case of a company assessed under Division 12, 13, 14 or 15 of Part, ITI. of the Income Tax Assessment Act. Those divisions relate to various classes of companies controlled abroad, where the taxable income is arrived at, on an arbitrary basis. A deduction of 25 per cent, of the amount of taxable income remaining will be allowed as an exemption. This percentage is considered to be reasonable in meeting the legitimate requirements of companies for the retention of profit?., whilst providing for the payment by companies of some additional tax where an undue proportion of profits is retained. T. remind honorable senators that those profits would otherwise be subject only to the flat rate of company income ta.x. Dividends paid out of the taxable income will also be allowed as a deduction, if paid within six months after the close of the year of income. Honorable senators will appreciate that the assessments are to be issued within the financial year, and six months is considered to be a reasonable period to allow after the end of the income year for the payment of dividends.

In order that the lax may be collected within the financial year, the period for payment provided in the bill is 30 days after issue of the notice of assessment. Ordinary income tax will continue to be payable 60 days after assessment. In the went of the subsequent distribution of the income subject to the further tax, shareholders will not be allowed any further rebate beyond that at present granted. If rebates had been granted it would have been necessary to increase the rate of tax proposed, which, aB will ‘be seen from the rates bill to be placed before honorable’ senators at a later date ls ls. in the £1. Private- companies’ will not be subject to the further tax, as they are already liable to additional tax where a sufficient distribution has not been made. The bill provides, however, for certain alterations in the private company provisions tobring them into line with provisions relating to public companies. These alterations are -

  1. The exemption where at present allowed is reduced from 331/3 per cent. to 25 per cent. of the distributable income;
  2. The period allowed for the payment of dividends is reduced from nine months to six months after the end of the income year ;
  3. The period for payment of the additional tax is reduced from 60 days to 30 days after the issue of the notice of assessment ;
  4. The proposed war-time (company) tax is to be allowed as a deduction from the taxable income of the year in which it is paid.

Ref erring to other matters dealt with in the bill, clause 3 provides for the exemption of the payment and allowance received by naval, military and air force personnel who enlist for service outside Australia and serve outside Australia.

Clause 4provides for the exemption from income tax of the dividends paid to shareholders by a company prospecting or mining for petroleum in Australia or in the Territory of New Guinea, until the capita] expended by the company has been recovered from the income derived by the company. This exemption is the logical extension of the exemption granted last year by section 123a of the act in respect of the profits of the companies prospecting for petroleum. A drafting amendment to section 123a itself is proposed in order to correct certain defects in the section.

The bill provides for the deduction of gifts made to a public institution or fund established for the comfort of members of the naval, military or air forces of the Commonwealth, or to the Commonwealth for defence purposes. Under clause 7 the statutory exemption diminishes by. £1 for every £1 by which the income exceeds £250, instead’ of £1 for every £2, as at present. The exemption thus vanishes at £500, whereas formerly it vanished at £750. Clause 13 provides that the amendments effected by the act shall, with one exception, apply to assessments for the next financial year, which will he based on the income of the year ended the 30th June, 1940. The exception is a minor one and relates to the reduction of the period for the payment of additional tax on undistributed income by private companies from 60 days to 30 days, which amendment will apply to assessments made after the commencement of the act. By the early introduction of this bill taxpayers will have ample opportunity to acquaint themselves with its provisions and to make their financial arrangements accordingly. I commend the bill to honorable senators.

Debate (on motion by Senator Collings) adjourned.

page 1150

INCOME TAX BILL 1940

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator McBride) read a first time.

Second Reading

Senator McBRIDE:
South AustraliaAssistant Minister for Commerce · UAP

– I move -

That the bill be now read a second time.

The principal feature of this bill is the substantial increase of income tax proposed to be levied for the ensuing financial year. The additional revenue from income tax which it is anticipated will be collected during the next financial year is approximately £3,500,000. This increased yield, it is estimated, will bring the total income tax collections to £18,500,000.

The financing of the war-time commitments of the Commonwealth makes further taxation unavoidable, and the raising of a part of the additional revenue necessary for war purposes by this direct and equitable form of income tax will, I am sure, have the endorsement of honorable senators.

Another feature of importance in the measure is the adoption ofnew formulas for determining the rates at which income tax shall be paid by individual taxpayers. In order that honorable senators may appreciate the reason for the substitution of these new formulas for the old ones, it is necessary that I should review briefly the history of Commonwealth income tax. This form of impost was first introduced by the Commonwealth in 1915 in order to help to finance its expenditure in connexion with the last war. The tax, which at first raised only a comparatively small amount of revenue, approximately £3,000,000, from individuals, fell principally on higher incomes. Middle incomes carried a portion of the burden of the tax but the incomes of wageearners were practically free from its incidence. During the last war, the rates of tax were greatly increased, from time to time, by percentage additions to the original scales; but the range of incomes over which the tax operated was not appreciably extended. Consequently, the tax became most inequitable in its incidence, bearing with undue severity on the higher incomes, falling much less harshly on middle incomes, and barely touching lower incomes at all.

For a time after the last Avar taxpayers experienced substantial relief from this impost; hut subsequently, in periods of financial difficulties, further percentage additions were made to different parts of the scale, resulting in irregularities and anomalies. The need for a thorough revision of the incidence of the tax was realized in 1931, but, in the depth of the financial and economic depression then prevailing, little was done beyond removing the worst of the irregularities so that the general distortion of the original scheme remained practically unaltered. During the depression an important departure from the original scale was made, increased taxation at a flat rate of 2s. in the £1 being imposed on property income, other than interest on conversion loans. This flat rate increase of 2s. in the £1 on property income was gradually diminished during the years of .recovery from the depression, and was finally abolished in 1935-1936.

Although the special property tax ceased to exist as a separate tax, its effect was not completely eradicated from the taxation scales. Percentage increases of the rates of tax on property income and percentage decreases of the rates on personal exertion income had resulted in a serious extra loading on property income. Whilst some justification might be found for the overloading of the tax on. property income during the depression, the continuance of the overloading after the emergence of the country from the depression cannot be supported. This is one reason for the revision of the existing scale - to correct the disproportionate weight of the tax on1 property income as compared with personal exertion income.

There is . another reason for the adoption of a new scale. A very substantial sum is required now from income tax. and larger sums may be required in the future, depending on the duration of the war and the extent of our war-time commitments; but it is imperative that we should plan according to these considerations. It is necessary, therefore, to overhaul completely the machinery for the imposition and collection of income tax, in order to make it thoroughly effective for the purpose for which it is designed.

In any demand for increased revenue from income tax, it is natural to look to the incomes in the higher ranges to provide the bulk of the additional sum required. On examination, however, it will be found that the present incidence of Commonwealth and States taxation on the higher incomes leaves insufficient in the field to provide the additional revenue required. Whilst the rates of tax on the higher incomes are being increased, it is necessary to seek a relatively larger contribution to revenue from incomes farther down the scale, principally from the middle incomes. This is the second reason for a revision of the existing formulas and, although the general principles on which those formulas are based are being preserved, it is essential to adapt the scales to our present requirements.

An outstanding feature of the new formulas when compared with the old is re-adjustment of the rates of tax on property income in order to make them reasonably proportionate to the rates on personal exertion income. As I have already explained, .several causes have contributed to the existing unfair incidence of the tax on property income as compared with personal exertion income, leaving the rates on extensive ranges of property income double and more than double the rates on incomes from personal exertion. .Et is a generally accepted principle in income taxation that property income should carry a greater share of the burden of the tax than income from personal exertion. There is no justification, however, for a- continuance of the serious disproportion in the rates existing at present. In deciding on the degree of differentiation in the rates, the Government has been guided largely by the practices of the United Kingdom and of the States. It is proposed that the rates oh property income shall be approximately one-third greater than those on personal exertion incomes in the middle ranges of income, and that the difference in the rates shall taper off at both ends of the scale.

I may first state the reasons why there should be less discrimination between personal exertion and property rates in the higher ranges of income than in the middle ranges. In most large incomes from personal exertion there is a very considerable element of property contributing to the derivation of the income. Cases in Australia of individuals earning £10,000 in a year strictly from personal exertion and unaided by property are extremely rare. The proprietor of a commercial establishment may derive an income of £10,000 from his business, although he takes only a small part in its organization or control. Similarly, a grazier or pastoralist may return £10,000 a year, irrespective of the amount of time or energy spent by him on his property. The income in both the cases I have cited is classed for purposes of income tax as income from personal exertion. However, there is little distinction between the personal exertion of the business man or the pastoralist and that of a taxpayer engaged in the supervision and management of large investments, the income from which is classed as income from property.

It is established that the very large element of property in most of the large incomes from personal exertion provides a sound reason for a” lessening of the discrimination in the rate of tax on that income in the higher ranges, as compared with corresponding amounts of incomes from property. In the proposed scales now before this Senate the differentiation in the rates on the higher income?! has been narrowed, not by reducing the property rates, but by raising the personal exertion rates to bring them progressively nearer to the property rates on large incomes.

In the lower ranges of incomes, the property rates have been brought closer to those dealing with personal exertion. Small incomes from property are, generally speaking, derived from the invested savings of a taxpayer by which he is providing for his support and the support of his family on his retirement from active occupation. It is inappropriate that this income should be loaded with .higher taxation in the same manner as property income is loaded in the middle ranges. For this reason the degree of differentiation in the rates on personal exertion and property incomes in the lower ranges has been lessened.

In fixing any scales of rates for Commonwealth income tax, the rates of tax in operation in the States must be taken into account, as both the Commonwealth and the States occupy substantially the same field in regard to this tax. It is not open to the Commonwealth to discriminate as between taxpayers in the States, so as to levy a greater Commonwealth tax on incomes subject to relatively low State taxation and a lesser Commonwealth tax on income subject to high State taxation. Accordingly, when fixing its own rates of tax, the Commonwealth is obliged to take into account the rates of tax operative in the highest taxing State. This applies at every level of income, so that one State rate sets the limit of the Commonwealth tax over one range of income, and another State rate over another range of income. Whilst the limitations placed on Commonwealth income taxation by the varying rates of the States do not seriously affect the present Commonwealth revenue proposals, it is quite possible that the situation will have to be reviewed if the financial strain of the war increases. The application of the proposed new rates of tax on income from personal exertion will result in increases of the amount of tax payable on that class of income as compared with the amounts levied last year. The increase of tax is relatively greatest on incomes from personal exertion at about the £1,500 mark, where the additional tax is approximately 70 per cent. greater than that payable last year. In the new personal exertion scale, tax at a flat rate of 5d. in the £1 will be payable on taxable incomes up to £500. It should be remembered that taxable income on which tax is levied is the amount remaining after subtracting from income the allowable deductions, e.g., allowances for wife and children, medical expenses, etc. The concessional deductions of £50 for wife and £50 for each dependent child have not been altered. The statutory exemption of £250 remains, but it diminishes more rapidly with the increase of income so that it disappears at £500 now instead of £750. This alteration in the statutory exemption will not affect the tax on the lower incomes so very greatly, and this is evidenced by the fact that a married man with two dependent children and an income of £400 will not be required to pay federal income tax. From 5d. in the £1 on a taxable income of £500 from personal exertion, the rate of tax rises in a steady progression until a rate of 15d. on a taxable income of £1,000 is reached. From £1,000 the rate rises less steeply to 47d. on a taxable income of £4,200. Incomes from personal exertion in excess of £4,200 carry a rate of 47d. on the £4,200, and a rate of 90d. on the excess of taxable income over £4,200.

The scale for property income has been fixed by increasing the personal exertion rates by roughly one-third in the middle ranges of incomes, and tapering that increase off at either end of the scale. All rates of tax on property income have been increased, but the increase is not so heavy as in the rates on personal exertion income. As I have already stated, the existing personal exertion and property rates are disproportionate, and one of the objects that the Government has kept in view in framing the new scales is to restore the rates to their proper proportions. In the property scale, the rate of 6d. in the £1 is applicable to taxable incomes up to £500. From 6d. at £500 the rate is increased steadily to 21 d. at £1,000, and from there on less steeply to 61d. on £4,200. Taxable income from property in excess of £4,200 is assessed at 9s. in the £1. The hill also provides for the imposition of tax at the flat rate of1s. in the £1 on part of the undistributed profits of companies. This new tax was explained to honorable senators when the Income Tax Assessment Bill was before this chamber. The ordinary rate of company tax at 2s. in the £1 is not being increased. Last year the company’s ordinary rate was increased from 13.6d. to 2s. in the £1. The Government considers that, having regard to the increased burden which companies were then called upon to carry, combined with the new tax on undistributed profits of a company and the proposed war-time (company) tax, any increase of the ordinary income tax rate on incomes of companies would not be justifiable at present. I commend the bill to the Senate.

Debate (on motion by Senator Collings) adjourned.

page 1153

PETROLEUM OIL SEARCH BILL 1940

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Foll) read a first time.

Second Reading

Senator FOLL:
Minister for the Interior · Queensland · UAP

– I move -

That the hill be now read a second time.

The object of this measure is to make several minor amendments in the principal act. It is proposed to leave out paragraph b of sub-section 3 of section 5 of the principal act, which reads, “ in the purchase of drilling plants for use in connexion with such search “ and to insert in lieu thereof the words “in the purchase of drilling plant for use in connexion with such search The Crown Law authorities have advised that under the existing act the purchase of complete drilling plants only is provided for, and therefore’ the proposed amendment, if adopted, will enable the purchase of portions of plants and of special tools, not at present available in Australia. The Government does not propose to purchase any additional drilling plants, but several of those which are on hire at a rental of 10 per cent. of their total cost, have been subjected to such heavy wear that replacements are necessary. When this amend- ment has been made, bits and other tools can be purchased as replacements from the funds made available. It is also proposed to insert in sub-section 3 of section 5 a paragraph to enable the Commonwealth, when assisting in the search for oil, to work in conjunction with the States. At present the Commonwealth Government, in conjunction with the Victorian Government, is conducting a scout drilling campaign in Gippsland. The Commonwealth made an initial contribution of £5,000, and subsequently agreed to contribute a further £2,500. These amounts were made available from funds appropriated under the Petroleum Prospecting Acts of 1926, 1927 and 1928. Under that legislation payments to State governments for geological survey work were permitted ; but the payment of £7,500 exhausted the funds available. It was considered highly desirable to continue scout drilling operations. Accordingly, the payment by the Commonwealth Government of further sums of £1,500 and £2,500, which, together with the £7,500 mentioned, make a total of £11,500, was authorized by the Treasury, pending an amendment of the Petroleum Oil Search Acts 1936. The Victorian Government has contributed a similar amount. It is now considered desirable that recent payments amounting to £4,000 should be made a charge against the trust account established under the act of 1936, and an amendment of the law is necessary to enable that to be done. It is also proposed to insert an additional paragraph in sub-section 3 of section 5 of the principal act to authorize the making of advances to persons and companies engaged in the initial stages of producing petroleum. This will enable assistance to be given in connexion with tests to ascertain whether the oil indications in the bore holes are sufficient to warrant further expenditure in order to bring the area into commercial production. Any such advances will be a charge against the first profits of the grantee. Under the existing legislation the payment of instalments of advances approved is discontinued when drilling operations cease or when oil is discovered. It is intended that these amendments shall be made retrospective to cover the £4,000 recently authorized, and the purchase and hire of portions of drilling plant which from time to time has been found necessary. When the previous legislation of this nature was passed, unfortunately provision was not made to assist State governments engaged in operations such as those now being conducted in Victoria. The new paragraph under which it is proposed to grant assistance during the initial stages of production should he of benefit, because it is during the initial stages of production that financial help is often needed. Such assistance may be the means of bringing a bore to the stage of payable production. At present, operations, which the Government is subsidizing on the £1 for £1 basis, arc being carried on in Gippsland, and should oilbearing strata be reached the work could be continued with this financial assistance. Under existing legislation that could not be done.

Debate (on motion by Senator Collings) adjourned.

page 1154

WAR. IN EUROPE

Fighting in Belgium and France: Ministerial Statement.

Senator COLLETT:
Minister in charge of War Service Homes · Western Australia · UAP

by leave - read a copy of the statement whichwas delivered in (the House of Representatives by the Minister for External Affairs (Mr. McEwen) (vide page 1188).

page 1154

COMMONWEALTH INSCRIBED STOCK BILL 1940

Second Reading

Debate resumed from the 17th May, (vide page 994) on motion by Senator McBride -

That the billbe now read a second time.

Senator COLLINGS:
QueenslandLeader of the Opposition

– I understand that the sole purpose of this bill is to provide that interest on war savings certificates shall be exempt from Commonwealth taxation. The Opposition approves of that principle, and will support the bill.

Senator DARCEY:
Tasmania

– I have not consulted with my leader on this matter, but I do not think that any inscribed stock should be free from taxation. It is well known that the bulk of inscribed stock is usually purchased by the banks.

Senator Collings:

– Not war savings certificates.

Senator DARCEY:

– Is there anything to prevent that?

Senator Collings:

– Yes.

Senator DARCEY:

– In that case I shall not oppose the measure.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clause 1 agreed to.

Senator McLEAY:
Minister for Trade and Customs · South Australia · UAP

– I move -

That after clauseI the following new clause be inserted: - “ 1a. After section fifty-oneB of the Commonwealth Inscribed Stock Act 1911-1933 the following section is inserted: - ‘ 51ba. Any person who contravenes or fails to comply with any term or condition on which a Treasury Bond, Debenture or other prescribed security is issued or sold, shall be guilty of an offence against this act.

Penalty: One hundred pounds or imprisonment for six months, or both and, in addition, an amount equal to ten per centum of the nominal value of the Treasury Bond, Debenture or other prescribed security in respect of which the offence is committed ‘ “.

The purpose of this amendment is to provide a penalty for non-observance of the condition of the sale of war savings certificates that no person may purchase or own certificates of a. face value exceeding £250. During the debate on this measure in the House of Representatives the right honorable member for Yarra (Mr. Scullin) pointed out that there was no penalty for a breach of the condition limiting the purchase and ownership of securities over £250, and the Assistant Treasurer (Mr. Fadden) promised to have the bill amended to provide for such a penalty. The proposed new clause will render persons who do not observe that condition liable to a fine of up to £100, or imprisonment for six months, or both, and an additional penalty equal to 10 per cent. of the face value of the securities.

Senator COLLINGS:
QueenslandLeader of the Opposition

– I understood that that was to be the object of the amendment,but I should like a little more information on the matter.

I understand that no person may hold war savings certificates to the value of more than £250.

Senator McLeay:

– That is so.

Senator COLLINGS:

– I should like to know whether there is anything in the bill to prevent a person from applying for £250 worth of war savings certificates in his own name and then obtaining more such certificates by means of dummies.

Senator McLeay:

– Yes.

Senator COLLINGS:

-Are the certificates transferable ?

Senator McLeay:

– They are transferable.

Senator ALLAN MacDONALD:
Western Australia

– I shall oppose the amendment. In the first place I do not agree that the purchase of savings certificates by any one person should be limited to £250. This is one of the best means of raising cheap money for the Commonwealth, and if we are to conduct this war successfully the Commonwealth must obtain money at the lowest possible rate of interest. At present the ordinary rate payable on Commonwealth war loans is from £3 2s. 6d. per cent. to £3 5s.0d. per cent., whereas the money which the Commonwealth Government will raise by means of these war savings certificates will bear interest of only 2½ per cent. during the first five years. That represents a distinctsaving to the Commonwealth, and I see no reason why a limit of £250 should be imposed. Even in the Commonwealth Savings Bank, which gives practically the same rate of interest, each depositor is allowed a maximum of £1,000. Why should a differentiation be made between a Commonwealth Bank depositor, or for that matter a depositor in a State savings bank, and the purchaser of war savings certificates? These certificates are easily negotiable instruments; they can be handed from person to person and from parent to child; they can be cashed within 24 hours after their purchase at any Commonwealth Bank or private bank, although no interest is payable unless they have been current for twelve months. In effect, war savings certificates are exactly the same as bank-notes, and I see no reason why holdings should be limited. I repeat that this is one of the easiest means by which the Government can procure low interest-bearing money with which to finance our war effort. There are many people with Commonwealth Savings Bank accounts who have morethan £250 available for investment in war savings certificates, and advantage should be taken of that fact to obtain money which, if the certificates be cashed before the expiration of twelve months, will bear no interest at all. “We have heard various opinions expressed as to the best means of raising money to finance our’ war activities, and war savings certificates will provide the Government with money at the lowest possible interest rate.

Senator Collett:

– The amendment will not prevent the Government from raising cheap money.

Senator ALLAN MacDONALD:

– But it provides for a penalty in the event of a person holding more than £250 worth of certificates.

Senator COLLINGS:
QueenslandLeader of the Opposition

– The remarks of the honorable senator are exceptionally clever, and their real meaning should he exposed immediately. These certificates are to be issued in order to give people of small means an opportunity to contribute a share of the money required to finance our war-time activities. The bill provides that no person may own more than £250 worth of certificates. It is proposed to make interest derived from war savings certificates free of income tax, and the honorable senator knows that if wealthy men could put their money into war saving certificates, rather than into ordinary Commonwealth loans, they would escape the tax. If wealthy individuals do not voluntarily contribute to Commonwealth loans, no doubt they will soon be forced to do so. The attitude of the honorable senator is an unworthy one, having regard to the serious financial situation with which the Government is faced. Apart from the fact that the amendment was introduced in the House ofRepresentatives by a member of the Opposition who is an ex-Prime Minister, I am decidedly in favour of it. A penalty should be provided for every breach of the law.

Senator AMOUR:
New SouthWales

. -What would be the position if a person holding £250 worth of certificates came into possession of a further £250 worth, as theresult of a bequest or a deed of gift?

Senator McLeay:

– That, I think, would be a matter for the Treasurer. The bill clearly provides a limit of £250 worth of certificates.

Senator ALLAN MacDONALD:
Western Australia

– I made no suggestion that any person should be allowed to hold certificates to an unlimited value. I merely drew attention to the fact that poor people, with a little more than £250 to invest, should have the right to lend their money to the Government at the lowest rate of interest at which the Government could possibly borrow. I mentioned that a deposit account at a State savings bank is limited to £1,000, and, in my opinion, a similar limit should be placed on the holding of war savings certificates by an individual. This would enable poor people to help the Government in keeping down the colossal interest bill that the war will pile up.

Senator AMOUR:
New South Wales

– I suggest that progress be reported, in order that information may bo supplied regarding the point that I have raised. If a person who already held £250 worth of certificates found himself, under a will, in possession of a further number of certificates, would he be liable to the prescribed penalty of £100? We should not leave matters of this kind to lawyers. The Government should clear up the position now.

Senator McLeay:

– I am quite willing to report progress, in order that the information desired by the honorable senator may be obtained.

Senator Collings:

– I do not agree to progress being reported at this stage.

Question put -

That progress be reported.

The committee divided. (The Temporary Chairman - Senator Cooper.)

AYES: 19

NOES: 12

Majority 7

AYES

NOES

Question so resolved in the affirmative.

Progress reported.

Motion (by Senator McBride) put -

That the committee have leave to sit again at a later hour of the day.

The Senate divided. (The President - Senator the Hon. J. B. Hayes.)

AYES: 19

NOES: 12

Majority 7

AYES

NOES

Question so resolved in the affirmative.

page 1157

ORDER OF BUSINESS

Motion (by Senator McLeay) put -

That consideration of Government business, Order of the Day No. 2 - Financial Statement - Paper - be postponed until after considera tion of General Business, Notice of Motion No. 1, standing in the name of Senator Macartney Abbott.

The Senate divided. (The President-Senator the Hon. J. B.Hayes.)

AYES: 18

NOES: 11

Majority . . . . 7

AYES

NOES

Question so resolved in the affirmative.

page 1157

QUESTION

WORLD- ARMAMENT COMMONWEALTH

Senator ABBOTT:
New South Wales

.- I move-

  1. For the purpose of guaranteeing to all the peoples of the world the right to live in security, and to ensure and permanently establish good order, freedom, peaceful development and happiness of humanity, an essential term of peace should be that all the nations whether belligerent or not should be invited to join in establishing one world-armament commonwealth, representative of and equally elected by each, to which they shall under an agreed and indissoluble constitution completely and irrevocably surrender the sole absolute and exclusive control, ownership, manufacture and possession of armaments and all - means and instruments of war, and their sovereign rights in relation thereto. 2. (a.) That such body shall thereupon be given possession of all existing armaments, which shall be held upon trust for the whole as one people to be scrapped or disposed of wholly or to such an extent as the representatives of the nations constituting such body shall determine. (b) Such body shall from its inception be entirely and exclusively responsible for the peace and good order and also the guaranteeing of the otherwise unrestricted rights of free self-government of each of the nations, (c) Such body shall also be exclusively responsible for the enforcement of all or any treaty made between the nations, registration of which with such body shall have been mutually requested by such nations, (d) Such body shall also be responsible for the setting up and maintaining such judiciary as may be deemed essential for determining breaches of treaties which may be alleged from time to time, (e) There shall also be vested in such body such incidental powers and authorities that may be agreed upon for the purpose of effectuating the objects for which it is established.
  2. That this objective should be an indispensable condition or term of peace at the conclusion of the present World War, in lieu of a League of Nations, and that the Allies should refuse to lay down arms until this objective is accepted.
  3. That at any time on receiving satisfactory guarantees of sincerity of desire for this objective an armistice should be permitted for the purpose of a calling of a world-wide convention of all peoples, to thus afford an equally fair and simultaneous opportunity of ridding mankind of the crushing burdens of armaments and the constantly recurring terrors of war.
  4. This Senate of the Parliament of the Commonwealth of Australia, in exercise of its constitutional rights in that behalf, authorizes and directs Mr. President to present this resolution to His Excellency the Governor-General, respectfully requesting that it be conveyed to His Most Gracious Majesty the King, with the Senate’s earnest expression of opinion that it should be forthwith communicated to all the nations of the world for the purpose oi examination by them.

In view of the serious position which faces civilization to-day, I feel sure that honorable senators will concur in my view that I should not press this matter at the present juncture. Consequently, 1 propose to deal only partly with the subject-matter of the motion, and to ask for leave to continue my remarks at a later date. To-day we must bend our every thought and energy to winning the war in order that we may be enabled to say to the aggressor in this conflict that never again shall we permit a repetition of his act, and also that we may be enabled to utilize human ingenuity to the fullest with the object of constituting a means of prohibition against the use of force and aggression in the future, and so protecting the world against a repetition of the events of the last few months. This objective is possible of achievement. I remind honorable senators that after the last war nearly all of the nations gladly accepted the principle of the League of Nations, believing, as undoubtedly they did, that it would provide a guarantee against the recurrence of war. We have to admit, however, - that however unanimous may be the opinion regarding the desirability of this course, we cannot depend for international protection upon the League of Nations as at present constituted, because one or two nations are expected to do the dirty work. But if the whole of the peoples of the world . were awakened, as they were after the last war - which I hate to think will be almost insignificant in its consequences, compared with the one in which we are now engaged - they would willingly try to devise better means to guarantee future world peace. I hope that at the conclusion of this war in which, at all costs, we must be victorious, we shall be in a position to say to these dictators, “ You must understand this : we are resolved to deal fairly with you in the long run, and eventually will give you an equal opportunity to participate in any international arrangement which may be adopted for the control of armaments. But first you must completely surrender your arms “.

After mature thought I have reached the conclusion that it would be much better if we considered this motion after the present crisis and in the quiet period which, we fervently hope, will follow the successful defence at the present moment by the Allies. It has been suggested by some of my friends who have not taken the trouble to read the terms of my motion and who, I say with all respect, fail to grasp its purport, that the motion may be misunderstood on the other side of the world ; that it may be construed as a move towards peace. To answer this criticism I would direct attention to the third clause of the motion which declares that “the Allies should refuse to lay down arms till this objective is accepted “. Only in the way suggested can we have a reasonable chance of establishing a scheme to guarantee the future peace of the world. Fortunately we have two particularly concrete human documents to fortify us in our endeavours - the Constitutions of the Commonwealth of Australia and of the United .States of America, the underlying principles of which may provide the corrective of this nightmare of world armaments.

I do not desire to speak at length on this subject to-day because I feel - other honorable senators, I am sure, are in the same frame of mind - too perturbed at what is happening on the other side of the world. Within the last weeks we have read and heard in wireless broadcasts of the terrible plight of those splendid people of the Netherlands, and of the awful sufferings of the industrious Danes and the inhabitants of Belgium. The people of the Netherlands and of Belgium went to bed in peace one night, but before the dawn they wore innocent victims of fearful raids by hordes of German bombing planes and tanks, and subjected to all the horrors of a modern war. Is the world going to stand for a continuance of this state of affairs? Is it not time that we in Australia, as part of the British Empire, actuated by every impulse for good, declared that these things must cease? And in furtherance of our determination, is not every one in this country so resolved to fight until we check the military might of Germany and end for ever aggression by any future Hitlers? I make no apology for submitting the motion to the Senate this afternoon. Ever since I have been a member of this chamber I have held the view that, under the Constitution, the Senate has every right to express its opinion’ on matters of deep importance. This chamber was not created a rubber stamp merely to signify its approval of legislation sent to it from the House of Representatives. Under the Commonwealth Constitution, and in accordance with the Standing Orders and practice of the House of Commons, which have never been challenged, there is in the Senate an inherent right to express its views on matters of foreign and domestic concern and to convey its opinion to His Majesty the King through His Excellency the Governor-General. In that way it is possible to focus world opinion on any matter which the Senate, in its wisdom, may consider vitally affects the welfare of humanity. I regret that hitherto this inherent right of the Senate has not been exercised more frequently, and I venture the opinion that if people outside are inclined to say unkind things of this branch of the Commonwealth legislature, it is because they do not understand what is its exact function under the Constitution. Many people think that it is its duty merely to approve legislation passed by the House of Representatives. If that impression gets abroad it will be because we have failed to exercise those rights and privileges which were won for us by our forefathers in the mother of Parliaments. If the Senate fails in its duty, we, as members of this chamber, deserve to have unkind things said about us.

It is my wish that this motion should be treated as wholly nongovernmental. It in no way commits this, or a future government, to take any definite course. If Ministers take part in the discussion they will do so, not as members of the Government, but as individual senators. I hope that, when the time conies for the resumption of the debate on this motion, there will be a better world atmosphere, and I sincerely believe that the scheme to be envisaged will not take years of organization to complete. Notwithstanding all that Mr. Clarence Street has said it that admirable book of his, Union Now, and Mr. R. G. W. McKay has said in Federal Europe, I prefer the view of Mr. Attlee, that most influential member of the House of Commons - doubtless he would be my political opponent if he were in this Parliament - the Leader of the British Labour party, and now Deputy Leader of the British Government. Mr. Attlee has declared that, at the appropriate time, we must establish some international force for the suppression of aggression in the future.

As I have said, I am hoping that soon we shall be able to discuss this motion at the favorable turn of the tide and in a better atmosphere than exists at the present time. At the moment we are filled with admiration of the magnificent efforts being made by the people of Great Britain and our French ally. The rising spirit of patriotism which is being evidenced in all classes of the people in England and France is most inspiring. The events of the last few weeks have shown also that the people of Australia, too, are resolved to stand together to preserve those liberties which we prize so highly. In other times and in respect of matters of domestic concern, we claim the right to quarrel and argue amongst ourselves; but now, when the Empire is threatened, we have come together in a firm resolve to meet, the menace of slavery and end it. A little later, in that better atmosphere which, by the grace of God, will come, I shall have no hesitation in calling upon my fellow-senators to exercise their inherent right to send out to the world an invitation to consider, in preparation for victory, the proposal outlined in my motion. It can only be for the good of humanity if it prevents a recurrence of aggression by future Hitlers. In this chamber there are members who remember three terrible acts of aggression by the German nation against our ally, the people of France. Some honorable senators can recall the Franco-Prussian war of 1870; nearly all have vivid memories of the Great War of 1914-18; and now we are in the throes of a still more terrible conflict, in which the driving force is the younger generation of a new and criminal Germany, whose purpose, it would seem, is to enslave the world. We are resolved to oppose that menace to the very death.

Whilst eventually I would allow the… German nation to take part in this suggested scheme to control world armaments, I would say that we cannot shut our eyes to the fact that the corruption of the German youth movement has been directly responsible for the present conflict, which so gravely threatens our civilization. Therefore, I suggest that, however magnanimous we may feel at the victorious conclusion of this war towards our present enemy, a period of ten or fifteen years should elapse before we could allow that nation to participate in any organization for the control of arms, because the people of Germany have demonstrated beyond all doubt that, as yet, they are not to be trusted. Having said this much, I ask leave to continue my remarks at a later date.

Leave granted: debate adjourned.

page 1160

QUESTION

FINANCIAL STATEMENT 1940-41

Debate resumed from the 17th May (vide page 993), on motion by Senator McBride) -

That the paper be printed.

Senator DARCEY:
Tasmania

– The war news during the last few days has caused a great deal of disquiet among the people of this country, and the statement made this afternoon by Senator Collett has not relieved the tension very much. Senator Abbott, in his speech on another subject a few moments ago, made mention of the British House of Commons. Yesterday, the Commons passed an emergency measure which will affect profoundly the whole of the British Empire. Honorable senators will, of course, know that I refer to the measure vesting in the British Government supreme control of the whole of the nation’s resources for the prosecution of the war. This drastic legislation followed the formation of the national cabinet, and it was introduced by Mr. Attlee, the Leader of the Labour party, who is now the Deputy Leader of the House of Commons. The measure gives to the Government complete authority over every man, woman and child in Great Britain and over all industrial and private resources. Inferentially, it will enable the Government to control the business of banking. When I spoke on this motion last week I said that although the Government has the power to direct the Commonwealth Bank to make credit available, free of interest, it refuses to exercise it in the interests of the people. Does Senator Gibson think that when the bill which has justbeen passed by the British Parliament is in operation the British Government will allow the banking institutions to do as they like?

Senator Gibson:

– The British act provides that the government “ may “ do certain things.

Senator DARCEY:

– What is the use of using the word “ may “ when the nation is at death’s door? The British Government has obtained power to assume control of all businesses, and surely businesses include banking institutions? What would be the use of such an act if the banks were excluded?

Senator Gibson:

– This Parliament could pass a similar act.

Senator DARCEY:

– That may yet have to be done, but will the present Government do it? My interpretation of the news broadcast this morning concerning the bill passed by the British Parliament on Tuesday is that the British Government will control the British banks. That statute gives the British Government the power to control every man, woman, child and business, and, as banking is a business, it would be only common sense to include the banks.

Senator Gibson:

– Are the banks specifically mentioned?

Senator DARCEY:

– Our actions are either morally right or morally wrong; governments cannot be moderately honest. If the Government refuses to exercise its power over the banking institutions in Australia, it is lacking in recognition of its moral duty. Honorable senators opposite continue to smile. The atmosphere in this chamber and in the House of Representatives has not changed since war was declared. Honorable senators persist in laughing at serious statements, and in neglecting to carry out the responsible duties which they are expected to perform on behalf of their constituents. They will find that the British banking institutions will have to be taken over in order to maintain the solvency ofthe nation. In 1914 the governor of the Bank of England and its directors went cringing to the British Government asking it to save them. The nation must change its monetary policy in order to enable it to obtain money free of interest for war, or in fact for any other national purpose. Now that Labour men are members of the British Cabinet immediate steps will be taken in that direction. We have been told that we should tune in to the Old Country.

Senator Dein:

– In Australia the Labour pary refused to do so.

Senator DARCEY:

– In the matter of finance “we shall have to tune in with Great Britain, if this dreadful conflict is to be carried to a successful conclusion. I remind Senator Abbott who referred so affectionately to the Mother of parliaments that the legislation to which I have been referring was passed by that parliament. In view of the action taken within the last few days by the British House of Commons, will the present Prime Minister (Mr. Menzies) dare to continue to adhere to the present financial policy? The Government, instead of obtaining loans free of interest as it has the power to do, continues to tax the people to an unreasonable degree. In

Britain they have not a peoples bank such as we have in Australia, because the Bank of England is a private institution of which the people know little. Every employee is sworn to secrecy, and the only information disclosed is that concerning its transactions with the British Government. On Friday last I said that Mr. Stokes, a member of the British House of Commons, had asked if the government was prepared to introduce legislation to compel the Bank of England to disclose the names of its shareholders and the way in which the bank was conducted. Sir John Simon stated most definitely that such legislation would not be introduced and investigations in the direction suggested would not be made. In Australia there is no need to pass similar legislation to ascertain the facts. We already have the power, as paragraph 530 of the Royal Commission on Banking and Monetary Systems states that -

In our view the proper relation between the two authorities are these: -

That is the Commonwealth Government and the Commonwealth Bank Board.

The Federal Parliament is ultimately responsible for monetary policy and the government of the day is the executive of Parliament.

Senator Herbert Hays:

– The Government is not bound to adopt the recommendations of a royal commission.

Senator DARCEY:

– Why should it not do so? The Government’s taxation proposals outlined this afternoon by the Assistant Minister (Senator McBride) show clearly that the Government does not propose to utilize the credit of the nation, although if the credit were utilized there would be no need to tax the people. It is the duty of the Commonwealth Bank Board which has certain powers delegated to it by statute, to exercise those powers in the interest of the community. The Commonwealth Bank Board is the servant of the Commonwealth, and, unlike the judiciary, is under its direction. Paragraph 530 continues -

The Commonwealth Parliament has certain powers delegated to it by statute, and the board’s duty to the community is to exercise those powers to the best of its ability. When there is a conflict between the government’s view of what is best in the national interest and the Board’s view the first essential is a full and frank discussionbetween the two authorities with a view to explaining the whole problem…Incases in which it isclear beyond doubt that the differences are irreconcilable the government should give the bank an assurance that it accepts full responsibility for the proposed policy and is in a position to take, and will take, any action necessary to implement it …

The royal commission stated that Parliament is ultimately responsible for any monetary policy. It would be interesting to know if honorable senators opposite realize what responsibility really means.

Senator Crawford:

– But Parliament is not the Government.

Senator DARCEY:

– But the Government, which is the executive of Parlia- ment, has full powerto do whatever the Parliament is constitutionally competent to do. Why does the Government disregard a power by which it can obtain money free of interest. I have cited the finding of a royal commission appointed by the Government, but all ofits findings have been ignored. Eighteen months ago I. asked whether the Government intended to afford Parliament an opportunity to discuss the findings of the commission before an approaching Christmas vacation, and I was given a definite reply in the affirmative, but only a fortnight agoI was told that no such opportunity could now be given. I recall that thelate Prime Minister told his constituents that if the Government which he was their leading was returned power a royal commission would be appointed to inquire into our banking and monetary systems. The commission was appointed, and although it conducted a searching inquiry, and examined numerous witnesses its recommendations have been totally disregarded. Recently I asked the Minister representing the Treasurer what amounts had been subscribed toy thebanks and by the Commonwealth towards the last war loan, and I was informed that it was not in the interests of the nation to disclose the information. Why should it be withheld? The bill which passed the British Parliament within the last few days is of such outstanding significance that is cannot be disregarded. Australia is a. member of the British Commomwealth of Nations, and, if it is in the interests of the: Mother of parliaments to pass such a measure, surely a similar bill should be submitted to this Parliament. I was very glad to learn that. Mr. Grenfell, a member of the British House of Commons: who visited Australia recently, has been included in the National Government, and the only way in which Australia can be saved is. by strengthening our Cabinet with men of intelligence. In the Parliamentary Library, which cost thousands of pounds to establish and a considerable sum to maintain, there are numerous books supporting, the arguments which I have adduced from time to time but honorable senators apparently have not read them. At. any rate no one has had the temerity to say that the views that I have advanced are. entirely wrong. The Commonwealth will either have. to. adopt the financial policy which I am advocating or repudiate its. liabilities. At the termination of the last war, Great Britain had a war debt of £9,000,000,000. The measure recently passed by the British Parliament is to enable it to obtain money free of interest, otherwise it will be unable to finance its war obligations. The Empire is at deaths’ door because it, has. refused to adopt a sound financial system. The British ex-Prime Minister had to go down on his knees at Munich because Britain could not finance a war.

SenatorFraser. - How is Germany arranging its finances?

Senator DARCEY:

– Under a policy which Britain must adopt. For the last four years Germany has been using the resources of thenation, and that is what Australia will have to do if the enemy is to be defeated.

Senator Collett:

– Is Germany financ ing the warwith the resources of the nation ?

Senator DARCEY:

– I do not make statements which. I cannot substantiate. I studied, political economy long: before I became a member of this chamber. If the royal commission recommended that money could be made available by the Commonwealth Bank free of interest why has not finance been obtained from that source?. It is true that the commission did not direct theCommonwealth to obtain money in that way; it would not have been prudent to do so. Several weeks ago I directed the attention of honorable senators to the discussion, which occurred at a meeting of the Loan Council when the Treasurer of Tasmania,. who is one of the ablest men in Australia, said that the determination of the Menzies Government to raise a loan of £10,000,000 through the private banks at 3½ per cent. was an ignoble concession to anantiquatedsystem of finance. He also said that ifwe are victorious in the conflict we shall be ruined financially, and that it is just as necessary to defeat the present financial system as it is todefeat the Germans. He went on to say that instead of facing up to the situation, the Government had connived with the private banks to share part of the boodle obtained through the raising of loans. Was there ever a stronger condemnation of any government? Will any honorable senator opposite say that he disagrees with that finding?

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– Certainly.

Senator DARCEY:

– Apparently Senator James McLachlan believes that the duty of the (Commonwealth Government in this time of crisis is to load taxpayers with heavyimpositions.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– The honorable senator hasnot told the truth.

Senator DARCEY:

Mr. President,I ask that that assertion be withdrawn. 1 shall allow no one to question myveracity or my honesty of purpose. I have been quoting the finding of a royal commission, and I ask that the reflection on any integritybe withdrawn.

Mr PRESIDENT:

-If thehonorable senatortakes exception to the remark, Senator James McLachlan should withdraw it.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– I withdraw the remark.

Senator DARCEY:

– Our national securitydepends on the method by which we conduct this war financially. The action of the House of Commons on Tuesday in passing drastic emergency legislation sums up the position. In 1914,Great Britain, a nation of 40,000,000, with the resources of a huge Empire at itsdisposal, had a national debt amounting to only halfthe tremendous sum that Australia’s national debt has now reached, after40 years of alleged sound finance carried on by governments similar to the one which honorable senators opposite support.On one occasion I was asked by Senator Dein why the LabourGovernment, in 1931, did not use the Commonwealth Bank as a meansofobtaining interestfree money. The answerto that isthat the Labour Prime Minister, Mr. Scullin fell into a trap laid for him by the governor of the Commonwealth Bank, Sir Robert Gibson,who said that be could not issue fiduciary money without first being given power to do so by Parliament. He was wrong. The view he expressed was that of a banker, and not of a lawyer.

Senator Fraser:

– The Scullin Government did not have power to do what the honorable senator suggests, because it had a hostileSenate.

Senator DARCEY:

– In 1935, the Royal Commission on Banking and Monetary System declared that the Commonwealth Government has power to instruct the Commonwealth Bank to issue credit. The chairman of thecommission was a judge of the Supreme Court, and the finding was given after an inquiry lasting for twelve months. ‘The constitution of the ‘Commonwealth Bank has not been altered since 1931, so it is futile to say that the ScullinGovernment had not the power which the royal commission in 1935 emphasized. I repeat that it did have the power, but the Prime Minister fell into a trap which had been carefully laid for him. In making the suggestion that legislation authorizing the issue of fiduciary money should he. passed by Parliament, Sir Robert Gibson knew full well that such a proposal would be rejected by the hostile Senate. Those who have taken an interestin thefinancial activities of the Commonwealth will recall that it was through the then Treasurer, Mr. E. G.Theodore, thatMr. Scullin asked the Commonwealth Bank to advance a certain amount of money in order to carry on the services of the Government during the depression. Incidentally, at that time, Sir Robert Gibson’s attention might have been drawn to the fact that the depression had been brought about by deliberate action on the part of the banks. I have quoted many authorities for that statement, and ithas not been successfully contradicted.

Here is what Sir Robert Gibson, a servant of the Government, wrote in reply to the representations made by the then Prime Minister and the Treasurer -

Dear Mr. Theodore. - With reference to your discussions with the directors of the bank board on the subject of the rehabilitation of the financial and industrial position of Australia, when it was agreed that some concerted effort must be made to cope with the situation and so avoid, if possible, the ultimate disaster which will otherwise eventually face the country, I am requested by my board to convey to you a resolution of the board as set forth hereunder: -

Subject to adequate and equitable reductions in all wages, salaries, and allowances, pensions, social benefits of all kinds, interest and other factors which affect the cost of living, the Commonwealth Bank Board will actively co-operate with the trading banks and the Governments of Australia in sustaining industry and restoring employment.

Although there had been no change in the constitution of the Commonwealth Rank since that time, the royal commission in 1935 expressed the opinion that the Commonwealth Bank had the power to issue interest-free money to the Commonwealth Government. Will any honorable senator opposite deny that that was the royal commission’s finding?Surely it is abundantly clear that the Commonwealth Bank has ample power to issue credit.

Senator Dein:

– Whose money would the Commonwealth Bank have issued?

Senator DARCEY:

– I regret to find that although I have frequently addressed this chamber during the past eighteen months, honorable senators apparently have not yet appreciated the fact that banks do not lend money, but merely advance credit. I have pointed out over and over again that when a loan is floated and fully subscribed, no money reaches the Treasury; all that the Government gets is the right to draw cheques on the private banks for the amount subscribed. As I said last week, when this war started sufficient money to prosecute it was not in existence. It had to be brought into existence, and the task confronting the Menzies Government was to raise that money in a manner equitable to the taxpayers of Australia. Obviously, the best way was to obtain interest-freemoney, using as security the productive capacity of the nation. What security do the banks require for their loans? Their security is the national wealth and the national capacity to produce. The only cost to the nation in conducting this war should be the expenditure on men and materials. In support of my contention, I have quoted many authorities, including the Governor of the Bank of Canada, Mr. R. Hautrey; the former under-secretary to the British Treasury; Mr. Gladstone; Disraeli and Lincoln. Could I quote any higher authority in connexion with what this money racket means to the nation? My arguments have never been refuted and never will be, because I am speaking the truth. If honorable senators are to faithfully discharge their responsibility to the taxpayers in this time of crisis, they should do the right thing. This chamber should not be merely a rubber stamp. Yet, only once have I seen a measure brought into this chamber from the House of Representatives and not passed. I have seen men come into this chamber and cast their votes, although they had not heard any of the preceding discussion and did not know upon what issue they were voting. In fact, that happened this afternoon.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Will the honorable senator tell us how Germany is financing the war? The honorable senator mentioned interest-free money, and I would like to hear something more about it.

Senator DARCEY:

– The Germans are using credit and not money. Have I to keep on repeating that governments do not use money? I should like to see this Government adopt the principle that all contractors engaged on government work should do business with the Commonwealth Bank. They are getting profitable business from the Commonwealth, and they should be required to give something in return. That is a matter of national importance. Were the provision which I have suggested adopted, the Commonwealth Government would pay contractors by cheque, which would merely create a credit in the Commonwealth Bank. [Extension of time granted.]

Senator Collett:

– The honorable senator did not answer the question asked by Senator A. J. McLachlan.

Senator DARCEY:

– As a result of my extensive reading on the subject, I have no doubt that Dr. Schacht was dismissed from the position of Governor of the Reichsbank.

Senator Collett:

– He was brought back.

Senator DARCEY:

– And who brought him back? He was brought back after the visit to Germany of Mr. Sumner Welles. Last week, I told the Senate what Mr. Sumner Welles did.

Senator Allan MacDonald:

– How does the honorable senator know what M r. Sumner Welles did ?

Senator DARCEY:

– That gentleman did not disclose to anybody what he did - that was rather fishy. Mr. Sumner Welles was not the accredited representative of the United States of America, and my opinion is tha t he went to Europe as the personal emissary of Mr. Roosevelt in the interests of high finance. There is no doubt that Hitler could be bought. I have hoard it said that some of the richest Jews are still in Germany, and are friends of Hitler, to whom they supply money. Wars cannot be run without money or credit. As I have said before, when £1,000 is deposited in a bank, that is sufficient security for the hank to issue £10,000 of credit.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Does the German Government pay interest on the money that it is using for war purposes ?

Senator DARCEY:

– Great Britain is not paying interest to America on its loans. It cannot do so. I have already said that lack of finance was the reason why Great Britain’s rearmament was delayed. I should like to read honorable senators an article which appeared in yesterday’s issue of the Sydney Morning Herald -

The Secretary of State, Mr. Cordell Hull, said at a press conference yesterday that the United States of America Government had not yet given serious attention to any suggestion for taking over Allied possessionsin the western hemisphere,either in payment of war debts, for national defence, or with the consent of the Allies.

Many roundabout methods are employed by high finance.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I am still seeking instruction in regard to the methods of finance employed in Germany.

Senator DARCEY:

– I point out to the honorable senator that recently I tried for one and a half hours to instruct Senator Dein, and he has subsequently said that at the end of that time he was no wiser than when I started. In these circumstances, I see no reason why I should waste time in further instruction, although I have the greatest regard for Senator A. J. McLachlan’.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– I have the greatest regard for the honorable senator but not for some of his ideas. Still, I am willing to learn.

Senator DARCEY:

– I have repeatedly been asked about the Douglas Credit System in Alberta and to-day I distributed to all honorable senators the annual report of the board that is operating the system.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– It is an attack on Hitlerism, covering five pages.

Senator DARCEY:

– So far as canbe ascertained - I have studied the matter closely - the German Government took over the banking system. Dr. Schacht was dismissed because he represented high finance and wanted interest on his money. A war cannot be run successfully if 4 per cent. interest has to be paid on the money expended. It is necessary for us to do as the Germans have done. Hitler is utilizing for the Reich the whole productivity of the nation and profits are strictly limited; any profit in excess of the prescribed maximum goes to the State. If organizations such as the Broken Hill Proprietary Company Limited were in Germany they would not be able to pay high dividends and issue bonus shares as they do to-day.

Senator Dein:

– The Colonial Sugar Refining Company Limited as well.

Senator DARCEY:

– Yes, let us include them all. Hitler put a stop to that sort of thing, and has obtained so much credit that he is able to carry on his nefarious activities to the menace of the British Empire and everybody in it. His methods have astonished the world. Honorable senators should heed the action which Great Britain has taken for the first time in its history to conscript industry, man-power and property. The policy of the Bank of England, since its establishment in 1694, has resulted in the gradual enslavement of the people of Great Britain. The present debt of the Old Country is £9,000,000,000, and a further £2,500,000,000 is to be borrowed through the Bank of England to carry on the war. One of these days honorable senators opposite will get a grip of my contentions with regardto fin ance.For public works, credit could be issued through theCommon-wealth Bank free of interest.

Senator Dein:

– From what source would theGovernment, get “the credit?

Senator DARCEY:

– Whereis Germany getting it from,other than out of the productivity of the nation.? The banks lend their money against the credit of the nation.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– The honorable gentleman said that they do not lend money at all.

Senator DARCEY:

– They do not actuallylend money. The general impression of honorable senators opposite is that the banks lend their deposits. I we’ll remember listening to tie propaganda issued at the last elections. It was said that the banks fulfilled a very useful purpose in the community. If Mr. Brown has £500,000, for which he has no present use, he takes it to abank, but he gets only a receipt for it. He is given no guarantee that he will ever see the money again. All that is given on a deposit being made is a receipt, and it becomes a liability of thebank. How could the hanks lend their liabilities? Do honorable senators imaginethat an accountant would pass a balance-sheet in which liabilities had been lent at interest? I have had a wide experience of chartered accountants. I believe that the Minister assisting the Treasurer. (Mr. Fadden) is an accountant. I have discussed this matterwith English, ‘Scotch and Australian chartered accountants, and I have never met one whoknewanythingabout money. There are severalchartered accountants in the House ofRepresentatives. The honorable member for Lilley(Mr. Jolly ) isone. Allthat they deal with is figures and tradingaccounts,butthey know very little of the part that money plays in world economy. I was bailed up by Senator : GibsonwhenI first spoke inthis chamber, and hesaid, “ You have come here to teachus “.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– What about Germany?

Senator DARCEY:

– The German Government has takenover the banking system of thatcountry, andis using it to carry out Germany’s projects;but that government is not paying interest.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Does the honorable senator say that Germany is not paying interest on the loans that have been raised in that country?

Senator DARCEY:

-Germany does notraise loans. Its banking system is now used in the same way as the Commonwealth Bankcould be used. I have told honorable senators, on the authority of the Royal Commission on Monetary and Banking Systems, and the Governor of the Bank of Canada, that there is no need, after borrowing money, ever to pay it back again.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Ishould like that recipe. The honorable senator said that ‘Germany is getting money free of interest.

Senator DARCEY:

– If Germany has done away with the private hanking system, why should it pay money back as interest?

To the best of my belief, three-fourths of the amount of the last Commonwealth loanwasraised through the private hanks. The Government has informed me that, of the£18,000,000 raised,£12,000,000 was supplied by the private hanks. The Commonwealth Bank belongs to the people of Australia. It has alreadypaid profits to theamountof £30,000,000. It foundmoney for theconstruction ofthe East-West Railway.

Senator Herbert Hays:

– The Treasuryfound that. -Senator DARCEY:- The money for that project was provided out of profits from the note issue, which was taken from the private banks , and handed over tothe Commonwealth Bank.

Senator Herbert Hays:

– At that time the note issue was controlled by the Treasury,not by theCommonwealth Bank.

Senator DARCEY:

– The Treasury is part of the Government.

I have cited the greatest British authoritiesduring the last 70 years to show the extent to which governments could utilize the credit of the nation. I have referred honorable senators ‘to the statement by the “Right Honorable Thomas Johnson, a former Lord Privy Seal, who occupied oneof the highest positions in the British realm, that the British hanks hadissued creditduringthe last war to theamount of £200,000,000. The British Commonwealthof Nations is engaged in a death struggle. Nobody believed until a short time ago that it would be possible for the people of Britain and:France to get into the position in which they now find themselves. I remember that, when Britain partly disarmed after the last war, great joy was felt because taxes would be reduced.Now we shall have to find £180,000,000 if this, war lasts for a year’ or two. So long, as bond’s, are issued to private banks, and tha Government has the capacity to tax tha people in order to pay the interest bill, it. will not worry much about how much it borrows. If the Prime Minister (Mr. Menzies) desired to instruct theCommonwealth Bank to morrowtoissue credit to the amount of £50,000,000 he could do it, according to thefindingofthe royal commission, on banking. Why should he not do it? TJ interest at 3 per cent, were paid to the Commonwealth Bank cox. the: next loan of £20,000,000 that interest would go backto thecountry in the form of bank profit. Would anyhonorablesenator say that the privatebankscould find as much money asthe Commonwealth Bank, which is backed by the credit of the nation? The private banks can lend only against their deposits. If the people take moneyoutof thebankstobuy inscribed stock, the landing capacity, of the banks is reduced to the extent of the withdrawal. The Government isinducingthe people to do that by issuing war savings certificates. Against whathas £9,000,000,000 been lent in England?

Senator Dein:

– The assets of the country.

Senator DARCEY.That policy has not been adopted in Australia, because we have a banks’ government in power; otherwise there would not be so many interjections from supporters of the Government when I address the chamber on monetary matters.

Senator Herbert Hays:

– The interjections are not all of a hostile kind.

Senator DARCEY:

– But. honorable senators opposite: always vote againstme on financial measures. I predict that the loan of £20,000,000 will be approved by honorable senatorsopposite, notwithstanding my remarks, but I point out that they have a moral obligation to conserve the interests of. the taxpayers.

The money required to finance our war- time activities is being raisedin three ways. The first is by means of taxes contributed by the people. This money is confiscated out of their earnings. The Government makes a demand for money, and thepeople have to pay it. The sec ond wary is by bank credit, whichis simply counterfeit money, it is not mcauley ate aft When I invited Professor Copland to takenoticeofthecost, of thecommodity known as bank credit, which is manu- factured on the premises) the raw material being pens, ink and pa-pea;, and issold tothe public at a profit not less, than 100 per cent., he did not know how to reply to me. The Prices Commissioner has not yet tackled this: problem.Under the second method, that of raising counterfeit money, the taxpayer, gets no. security, but. the banks,, who merely find the counterfeit money,, get a bond bearing interest. The third way is by borrowing the people’s savings, which I describe as bought money. An interestbearing government security is given for this. All of these three methods are different, buta unit of each kind of money wil buy the same amount of goods, munitions or services.All have the same purchasing power. Bank credit is merely an entry in a ledger. Despite Mr. Dunstan, the Premier ofVictoria, the Victorian Country party carried a motion a few weeks ago demanding that the Commonwealth Bankbe used to finance our war expenditure and the primary producers. The United Australia party Government in South Australia secured the passage of a similar motion in the Parliament of that State by seventeen votes to thirteen, and similar action Avas taken in the Parliament’s of Tasmania and Western Australia. The Parliament of Western Australia agreed’ to the motion on the voices.

Senator Collett:

– At a late hour of the night.

Senator DARCEY:

– It is never too late to do something; in the interests of the people.

Senator Dein:

– What. do the banks lend if it is not money ?

Senator DARCEY:

– After teaching. Senator Wilson for eighteen months that the banks do not lend their deposits, he asked me to name one bank that loaned more than its deposits. I gasped when the honorable senator asked that question. I had to reply that I was afraid that Senator Wilson was suffering from infantile paralysis of the financial faculty, and, therefore, could not grasp what I said. I am afraid that I must give the same reply to the honorable senator who has just interjected. It is as much his duty to find out for himself whether or not what I am saying is true, as it is my duty to say what I know on this matter.’

Senator Dein:

– The honorable senator says that the banks do not lend money. They lend money to me.

Senator DARCEY:

– Recently I visited the Northern Rivers district, where I add ressed eight or nine meetings on “ How to finance the war without increasing taxation”. That can be done. I challenge any honorable senator opposite to produce authorities showing that any statement I have made this afternoon is incorrect.

Senator BRAND:
Victoria

.- I commend the Government on the wisdom of its choice of Mr. Essington Lewis and Brigadier-General Lloyd as Director of Munitions Supply and Director of Recruiting respectively. Both of these gentlemen possess driving power to a marked degree. The time has now come for action. Impersonal talks on the air are useless. Personal touch with tne nation’s eligible manhood is needed. 1 know of scores of returned soldiers with good war records who would be prepared to take the platform or “ soap box “ in urging greater response to recruiting. The number of men in uniform now is relatively less than the number at the same period of the last war, having regard to our population then and now. The statement that we cannot have more men because of lack of equipment does not hold water. Industrially, our position is ten times better than it was in 1914-18. The age limit should be revised on a graduated scale, the younger men being drafted to units which actually do the fighting, and the older personnel being utilized further away from the battle zone. I strongly advocate combing out the fit young men in Victoria Barracks, headquarters of divisions, motor transport units, ordnance workshops, legal corps, pay corps, and similar unite, and replacing them with older men. Hundreds of middle-aged men are only too anxious and willing to perform some national service. Such action, I venture to say, will, indirectly, favorably affect recruiting.

In regard to the Royal Australian Air Force, why are fit pilots, each of whom cost the taxpayer over £1,000 to train, doing clerical work which could be done by other personnel? Why is such a high standard of medical fitness required for Air Force administrative personnel? A reduction of this standard would free the fitter men for more active duties with the air service. Many men with little or no military training would welcome an opportunity to serve voluntarily in the Militia. What does it matter if the personnel of the Militia are now chiefly national service trainees? Representations have been made to me by men of military age in reserved occupations, who are concerned to know w’hy, in their leisure time - at nights and week-ends - facilities cannot be afforded them to receive some military training, in anticipation that the occasion may arise when even the reserve occupations categories w.ill need to be radically amended. They point out that no pay is desired and no uniform is needed. Only instructors in some phase of military training are required, so that when the time comes these men will be enabled to take their place in the ranks with a certain amount of confidence. The objection of expense can be ruled out, as the great majority of these men are in metropolitan areas where facilities, such as drill halls, are available for such training. Scores of ex-service men, with a fortnight’s refresher course, would be only too willing to give their services as instructors without, remuneration.

I hope that the Minister (Senator Foll) representing the Minister for the Army will bring these recommendations to the notice of his colleague, and that any difficulties, or objections raised, will be brushed aside in the interests of a more active participation in the present war.

With regard to munitions supplies, the critical situation overseas demands thai the Government shall take steps under the National Security Act to withdraw, skilled tradesmen from private engineering establishments and transfer them to thu munitions works at Maribyrnong and Lithgow. Private orders must take second place to government requirements. Supplies must be speeded up. Three shifts must be worked continuously. We can rely upon Mr. Essington Lewis to do the speeding up.

Senator CAMERON:
Minister for Commerce · Victoria · CP

– I have read with very great interest the Treasurer’s financial statement, butI have not been very much impressed by it. It is very loosely worded, and, in many respects, misleading. As I shall not have tune to deal with all of the points which I should like to discuss, I propose to speak on the more important aspects. The first is the Treasurer’s statement with respect to unemployment -

The attainment of a high general level of employment and industrial activity necessitates a major change of emphasis in our financial methods.

I propose to show that that statement is misleading. The unemployment position in Victoria is similar to that in all of the States, with the exception of New South Wales, where unemployment is probably worse than in any other State. This problem has a direct bearing on our

Avar effort, because the existence of large numbers of unemployed proves beyond all doubt that the Government is not making the best use of our available man-power for the purpose of building up our material resources. The Treasurer’s statement was issued on the 2nd May, but I have here a report dealing with the unemployed position in Victoria. It was issued on the 8th May, and shows that unemployed registrations in that State up to the 4th May totalled 5,919 in the metropolitan area of Melbourne and 5,249 in the country districts up to the 31st April. At the 5th May, the number of unemployed on relief work was 4,400, whilst benevolent cases at that date totalled 473, making a total of registered unemployed in Victoria of 16,041, which is slightly less than the figure of 16,500 for April. I point out, however, that all of the unemployed do not register. The Central Unemployment Committee in Melbourne, which has a branch in every important centre in Victoria, estimates the number of unregistered unemployed in that State at approximately 8,000, making 24,041 unemployed in all. This figure does not include the dependants of unemployed. A man who is not eligible for sustenance under the permissible income regulations is not likely to register as being unemployed. For example, a father living with two of his children, both of whom earn up to £1 10s. a week, would not find it worth his while to register as unemployed, because he would not be eligible for sustenance. Our committee estimates the unemployed in Victoria at present at 16,041 registered and 8,000 unregistered. Mr. Lees, the secretary of the Central Unemployment Committee, in Melbourne,is an exCommonwealth official and a qualified accountant, and, therefore, he is competent to speak on this matter. Ho wrote to me as follows: -

According to latest figures, the number registered is11,335 and the number on relief work 4.400. making a gross total of 15,735, as against16.601 on the 2nd March, 1940, so far as metropolitan registrations were concerned, andthe 31st January, . 1940, so far as country registrations were concerned. The reduction is not due to any increased absorption of the unemployed by private industry, but in consequence of defence expenditure. It is anticipated that the numbers will increase as the winter advances. A great deal of distress exists in the congested areas in consequence of the inadequate supply of boots and clothing to meet the winter needs. There is also a shortage of firewood. The coal strike has had its effect onfirewood supplies owing to the limitation of railwaytransport.

Nothing has been done to meet the Central Unemployment Committee’s demands on the Government for better treatment of the unemployed single men and women. The Government also has not complied with its request for the rates of sustenance to be increased for married couples without children. These and other matters will be further urged upon the Government through the parliamentary Labour party immediately.

The question of providing a fuller measure of full-time work also demands attention, as it is observed that instead of increasing the number of men on a limited period of full-time work, the Government has decreased the number 400.

The position of the problem in this State indicates that the federal defence expenditure affects the unskilled unemployed labourer very little.

Some joint action will have to be taken by the Federal and State Governments to provide a spirited policy of public works, especially during the winter, to meet the dire needs of the unemployed.

In a letter addressed to the Age, Melbourne, on the 5th May, Mr. Lees wrote -

When the scheme of unemployment relief started in 1930, a man, wife and three children were expected to live on 10s. a week.

As the result ofconstant agitation, the various governments have increased the amount from time to time until to-day the same family receives sustenance amounting to £2 5s. (id. a week. The basic wage at present is £41s. a week. Does the Age consider that£2 5s.6d. a week is sufficientto maintain a family of live or docs it want -us to go back to10s. a week in order to give relief to the taxpayer? Although the increase in the rates of sustenance has been substantial since the introduction of the scheme, it must not be overlooked thatto receivethe £25s.6d.aweek the man must work for it at the awardrates. The original l0s. was , a gift. To-day, 92 per cent, of the sustenance recipients work for their sustenance.

Senator Dein:

– The honorable senator does not object to that, Ihope.

Senator CAMERON:

– Did the honorable senator hear me voice any objection on that point? I am now giving information , on the subject, because I have heard honorable senators opposite refer to the unemployed as people who either do not want or will not work -

The basic wage is considered to be theminimum upon which a family can be maintained in the Stateof Victoria. So far as the suste- nance workers are concerned, a man, wife and threechildren are compelled to live upon a little over one-half of this amount. The Age stresses the point that sustenance may be earned up to £3 17s.6d. a week. This would only be possible in thecase of a man, wife and ten children, and even in such a case where any member of the family earned 9s. a week or over, the amount of sustenance would be reduced.by5s. a week for each member working.

The cost ofliving is rising and sustenance remains stationary, therefore,increases on such items as rent, bread, potatoes, meat,milk, &c., materiallyreduce the purchasing power of the present meagre sustenance earnings. Assuming that the whole amount of their earningsare devoted to the purchase of food stuffs, it would only allow five and one-fifth pence per meal per member for a family of five.Further, provision must be madefor rent, clothing and other necessary items to maintain the family.

He states further -

It is clear from the fluctuations that are taking place at thep resent time that the reduction inthenumber of the unemployed is temporary. The reduction is not due to the absorption of the unemployed in private industry. It is largely caused by numbers of the unemployedenlisting inthe Australian ImperialForce, and many of them being called up for Militia service, whilst others are replacing men in private industry who are compelled to do aperiod of home training. It is found thatthe federal war expenditure gives very little employment to the unskilled man. The fact that the unemployedhave not been given ahigher standard of livingthan thatwhich causes so much misery and starvation to their families onthe ground that no funds wereavailable, whilst at the same time millions can be raised for war purposes, is a serious indictmentagainst existing conditions.

In his financial statementthe Treasurer declared that the employmentposition was improving steadily. I submit on the evidenceofthe registrations ofunemployed in theGovernmentbureau and the evidenceof thecentral unemployment, committee, that therehas been very little, if any improvement. Therefore the Treasurer’s statement is quitemisleading. Whenstatements of thatkind are made without anyattemptto submit facts to support them,honorable senators on this side cannot be expected toattach much value to other pronouncements of some members of theGovernment.The Treasurer also saidthat no further increase of the national income couldbe expected even from the most successful handling of theunemployment position. Are we to take it thatthe thousands of unemployed persons inthis country are 100 per cent, incapable of doingany work, and that nothingcanbedonetoconvert theminto contributors to, rather than dependents on, the national income ? I contend that at least 75 per cent of the workless could be usefully employed to the benefit of themselves and the community as . a whole. This Government is reallyresponsibleto private enterprise for itsexistence, and private enterprise depends on a large reserve army of unemployed for thepurposeofenforcingtheacceptanceof the lowest rates of wages that can be offered.

Senator Dein:

– That statement is absolutely incorrect.

Senator CAMERON:

-It is correct. We have heardthe statementrepeated adnauseamthat, in its war activities, theGovernmentintends tomake the f ullest use of the man-power andmaterial resources of the nation. Thatis not being done, and no explanation has been offered for the failure oftheGovernment to do what it claims to be doing. The reason is that the Governmentknows,and most employers know, that if thewhole of the unemployedpersons in Australiawere absorbed to-morrow those who are in employment and are under-paid and working under “ sweated “, conditions, would immediately demandhigher rates and better treatment.That is the reason why this reserve army of unemployed is kept in existence not only in Australia, but, also in every other country underthe control of the capitalist system.

The Treasureralsosaidthatrising prices were a prolific causeof individual injustice and industrial unrest. With that statement I fully agree. It is indis- putablethattheincreasing cost of living; in terms of commodities, more particularly as; it affects unemployed persons in the community, is the root cause of industrial unrest, as it also is one of the root causes of unemployment, poverty and crime; yet to date, although the war has been in progress: since September, 1939, this Government has not attempted tosolve the problem, to the degree that it is solvable andshould be solved.

Senator Dein:

– Is that the responsibility of the Commonwealth Government alone?

Senator CAMERON:

– Yes, because the Commonwealth Government is endowed with much wider powers thanarevested in State governments which, in actual fact, are subordinate to theCommonwealth.

Senator Dein:

– What does the honorable senator suggest should be done?

Senator CAMERON:

– The Commonwealth Government being armed with plenary powers, could put every able and willing person to work to-morrow-, provided it had the will to do so.

Senator Collett:

– The recent coal strike caused a serious interruption of industrial activities.

Senator CAMERON:

– And that trouble was due to the cause mentioned by the Treasurer, so actually this Government has been an accessory before and after the fact.The Treasurer also said - The Governmenthastherefore set up a control to prevent the unnecessary rise of prices which are likely to take place from fear, uncertainty or greed.

I say without reservation that that statement is absolutely incorrect, and, I believe that the Treasurer knows it to be incorrect. The present foam of price control exists merely to stabilize and prevent? a reductionofprofits: It does not provide for a reduction of the exhorbitant rents paid in every capital city and in almosteverycountry centre, or the unnecessary andinflated overhead charge which are employed to prevent a reduction of prices. The present system of pricecontroldoes not provide for a reductionof the excessive profits now being made as a means ofpreventing an increase of prices. Inthis connexion I cite the following paragraph which appeared in theStockExchangeOfficialRecord,of November, 1939, with respect to the financial position of a company, known asFelt and Textiles of Australia Limited : -

The directors of the company are.: - Sir Walter Massy-Greene, K.C.M.G. (Chairman ), Henri Van de Velde (Managing Director), Sir George F. Pea rce, P.C., K.C.V.O., J. K. Heydon, A. J. Vale, C. Rhodes-Smith and John H. Titchen. Expansion, largely financed with £288,927 of ordinary capital issued for cash in the1937 calendar yearhas resulted in aggregate profits of £33,808 higher at £94,184 for this company and its numerous subsidiaries. The earning rate on average-paid ordinary capital has risen from 12.2 per cent., to 1 5.2 per cent., and unchanged ordinary dividends of 10 per cent. ( £57,899 ) have left nearly a third of the years’ profits undistributed.

When Sir George Pearce who was once a member of this chamber, terminated his political career, he told us that after 30 years of parliamentary life, during most of which time he was a Minister, he was a comparatively poor man. He is now a director of this wealthy company, so either he must have invested sufficient money to qualify him for that position, or he has been rewarded for services rendered.

Senator Dein:

– He did not say that he was a poor man.

Senator Brown:

-he said that he had not a competency.

Sena tor CAMERON. - A man who has not a competency is a poor man. The point I wish to stress is that although profits are increasing, it is not suggested by those controlling prices that profits should be reduced to prevent an increase of prices. When those controlling prices authorize higher rates, it is the poorer section of the community which suffers. There are adjustable rates of wages for workers registeredunder our arbitration legislation, but others exist on wages lower than those received by unionists, or have to depend upon sustenance received from the State. Continual increases of prices affect the unemployed to a greater degree than any other section of the commn unity. Ifthey were in a position to resist as effectively as are other sections their position would be better than it is to-day. Since August of last year, the price of tea was increased by 5d. per lb. Subsequently there was a reduction of1d. per lb., leaving an actual increase of 4d. In Victoria and possibly in other States, the price of bread has been increased.

Senator Dein:

– Not in New South Wales.

Senator CAMERON:

– In Victoria it has been increased by from1/2d. to1d. a 4-lb. loaf.

Senator Dein:

A Labour government is in power in Victoria.

Senator CAMERON:

– A Labour government is never in power when it is opposed by an anti-Labour legislative council.

Sitting suspended from 6.15 to 8 p.m.

Senator CAMERON:

– The form of price control in operation to-day simply has the effect of stabilizing, or preventing a. reduction of, profits and does not in any way prevent an increase of prices. If profits are being increased then prices are being increased. I draw attention to the fact that Sir George Pearce, a former member of this Senate, who is occupying two well-paid Government positions, is also managing director of one of the wealthiest companies in Australia, the profits of which are progressively increasing. Obviously the prices charged by that company must be increasing. In passing I should like to draw attention to the position of Mr. Essington Lewis. That gentleman has been placed in charge of the supply of munitions, but it will be impossible for him to prevent increases of the prices of munitions and of other war requirements while at the same time the company with which he is associated is making profits out of those goods. If he acts as he should as a Government official, then the company of which he is a director can make little or no profit; but if he considers what he regards as the rights of his company, prices will rise the detriment of the people. He cannot faithfully serve two masters. AsI have said, profits cannot increase unless prices increase. Let us examine, for instance, the price of bread. Herewe find a paradoxical situation. There is in Australia more wheat than we can consume or dispose of through normal channels, and according to the Minister for Commerce (Mr. Archie Cameron), the carry-over for next year is estimated at 60,000,000 bushels. Yet the price of bread has been increased, and as there has been no corresponding increase of the purchasing power of the people, fewer loaves will be baked. I ask the Government, or anybody else who is prepared to answer the question : What is to be done with the huge surplus of wheat? The only answer 1 have heard given to that question is that the production of wheat willbe restricted. But a restriction of production means also a restriction of consumption, and if that course is to be followed - all indications are that it will be followed - the Government will not be doing the. best, that can be done in the interests of the people. The Government’s price-fixingscheme in operation to-day is merely a pretence and a fraud. The impression conveyed to the people is that the Government is protecting them against increased prices, but actually nothing of the sort is being done. In this regard the position that has arisen in England is one of the reasons why the Chamberlain Government had to make way for the Churchill Government. The pressure of public opinion, and the resentment of the people generally against the make-believe price-fixing system, was such that the Government was removed from power. So far as we can judge from press reports and broadcasts, the British Government has invited Labour men to assist its endeavours to prevent profiteering, and deal with speculators and others who profit by restricted production and consumption, and increased prices. According to the broadcast and published reports, drastic action will be taken against these people. If the war continues, a similar position will arise in Australia, and the Commonwealth Government will have to do what the Churchill Government now proposes to do or make way for another government which will take that action. Profiteering cannot go on indefinitely. It constitutes a. serious obstacle to the attainment of greater efficiency and national mobility. In Australia there is a large number of unemployed who cannot buy bread and a huge surplus of wheat which cannot be disposed of. But nothing has been done towards remedying this intolerable state of affairs. I point out that when the price of wheat was 2s. a bushel or less, the price of bread was only1d. or 11/2d. a loaf less than it is to-day. That is evidence of the existence of an outside organization - possibly controlled by financial interests - the activities of which have resulted in price increases which apparently have been acquiesced in by the Government. There is no reason why the price of tea should have been increased. If. owing to circumstances over which they bad no control, retailers found that they could not sell their tea and pay their way, they should have been subsidized out of Consolidated Revenue. They who are in the best position to pay would pay the most of the tax involved and those who are in the worst position would pay nothing at all. That amounts to reversing the incidence of taxation. It has been said also that the cost of production is mainly responsible for the increased prices. As a matter of fact, it has been claimed by the manufacturers of bread that the high cost of producing a loaf is one of the main reasons for an increase of the price. I emphasize strongly that in terms of labour time and gold - the only real measure of value and the only way in which one can judge whether or not costs are increasing - the cost of production was never lower than it is to-day. In Inthe same terms, the cost of growing wheat was never lower than it is to-day. That is absolutely true, and I defy contradiction. I have said this repeatedly and I invite honorable senators to show where I am wrong. I repeat that in terms of labour time and gold, the real cost of production of most of our essential commodities, particularly bread, meat and other products which exist in abundance in Australia to-day was never lower. Today, £2 10s. in notes is needed to purchase the same quantity of goods that could be purchased in 1907, and for some years afterwards, by a £1 note which had the purchasing value of a sovereign. I invite honorable senators to dispute that. Had the purchasing power of the £1 note been maintained, then, in terms of our depreciated currency, the basic wage of £2 2s. in 1907 to-day would be £5 5s. instead of £41s. Here is the method by which those figures are arrived at: Two sovereigns at £2 10s. each amount to £5, and 2s. as one-tenth of a sovereign at £2 10s. is5s., giving a total of £55s., which is what the basic wage would be today had the purchasing power of 1907 been maintained. In terms of our depreciated currency, the cost of production was never lower than it is to-day. The people are misled, confused and imposed upon, and unless honorable senators opposite are prepared to take a drastic and radical stand against this sort of thing, they will be replaced just as the Chamberlain Government was replaced. The effect of economic pressure, and public resentment against this trickery and manipulation of finance aimed at reducing the living standards to the lowest possible level, will be such that the Commonwealth Government will either have to change its policy or make way for a government which will take some action.

Senator Dein:

– That is not correct.

Senator CAMERON:

– It is correct. and what I have said will undoubtedly happen unless the Government’s policy be changed.

When presenting the financial statement, the Treasurer (Mr. Spender) said in effect that an additional amount of £000,000 will be required for invalid and old-age pensions in 1940-41. That is a misleading statement. As a matter of fact, the pension of £1 to-day is worth only8s., because there has been a 60per cent. reduction of the purchasing power of our currency. Most of the pensioners do not understand that, but those who do are organizing their fellows and educating them to an appreciation of the facts. Actually, if as the Treasurer has said, pensions expenditure is to be increased, the. pensioners will merely begetting back something which was taken from them. If there was an increase of 60 per cent. over the present pension, it would merely mean a restoration of the status quo ante. I am drawing attention to these tilings because we are now in the midst of a te rrible war, and timesof crisis have the effect of accelerating the bringing to a head of such matters. War-time conditions make it impossible to conceal facts as they are concealed or glossed over in peace-time, when the tempo is slower. 1. consider-‘ that I am doing, the Government a valuable service by directing its attention to these: things. I am not offering merely destructive criticism-. I hope that the Government will rise to the occasion a-nd use the man-power and the material resources of this country to- thedegree, that, they can be used, for defence purposes. Unemployment, a reduction of tha purchasing power- of the people and the inflation of the currency undermine the morale and resistance of the- nation,, mid: I am doing a good service in directing the attention of the Government to th’ese% matters:.- ‘

The- Treasurer has used certain terms which in> my opinion are misleading. It has been said truly that, most persons are the prisoners of phrases and the slaves of shibboleths. If things are said frequently enough, a- considerable- number of people eventually believe them to be true. The Treasurer has stated that we are still living; under a free system, relying on individual initiative and willing cooperation rather than compulsion; but- I claim, that we !nave not a free system of social organization when the means by which people live are in the hands- of a few private monopolists. We cannot be said: to-. have a’, free system when workers are forced, to accept a minimum wage based on. the cost of .subsistence. They are not paid- what they earn, but” their remuneration is fixed on the basis of the minimum sum on which they can’ live. How can a social system be truly said- to be free, if a few employers have the right to deprive the workers of their means of livelihood, to victimize them, and to reduce them to working for sustenance? Such a system approximates to that in operation in Germany. If the people are merely the creatures- of the Government, and can bo involved in war without consultation oi agreement, they cannot be said to be living under a free system. The Government cannot rely on individual initiative when the individual is. restricted to the extent that he; is to-day. Unemployed persons who are able and willing to work would bo- opposed, by armed forces, if they attempted to take possession of unused land, or the capital resources; required to, improve- their position. The conditions .under, which- we- live to-day

Senator Cameron. are such that, if. a man cannot, be employed ait a profit by private: enterprise-, which is so capably represented- by the present Government,, he- must go- without work.- There is noi scope for individual initiative; one must accept the. present coalitions, or put up’ with the consequences of objecting to- them. If private enterprise could employ, at a profit,, every main and woman- who is- unemployed, nobody would be out of work to-morrow.. Therefore,, the Government should step. in;. Private enterprise is- helpless 1n this war.. Individual- initiative is restricted to such an. extent that national1 efficiency and mobility cannot be secured. Individual initiative is obstructed and opposed at every point. The Government says that it relies on willing, co-operation, but actually it relies on compulsory cooperation. Practically all work that is done, particularly that which is not adequately paid for, and is. done ‘ underconditions similar to those under which the coal-miners ave employed,, is the result, not of willing, co-operation, but ofcompulsion. The Government says, in effect,, “ Either work under the’ conditionslaid down or starve “.

What does the Treasurer mean when he speaks of borrowing from the banking system? He does not say what he means. Probably he and a- few of his officers alone could give an explanation that would throw light” onthis matter. What is- meant- by “ expansion of credit “ ? Again, we are left without an answer. In the absence of any explanation, one is entitled to judge in the light of what is happening. Borrow-, ing. from the banking system or expansion of credit are merely euphemistic terms which do not grate on- the ear as- does the word “ inflation “. To use’ terms that are’ obviously misleading is not only to. make confusion worse confounded,, but also to defeat what the Government would claimas being its policy. The insidious reduction of the purchasing power of wages has. been brought about, by inflation,, and anattempt is made to lead- the people to believe that the workers’ wages have a greater purchasing power than- they,. in: fact, have.

A good deal more could be- said regaining this financial statement, and-, therefore, -I make no apology for having drawn attention to these matters. In all sincerity, I point outto the Government that the industrial unrest, to which the Treasurer has rightly drawn attention, must increase unless the present policy of the Government is changed. Saving been directly associated with the negotiations in Sydney recently regarding the dispute in the coal-mining industry, I have no hesitation in sayingthat at least some members of the Ministry are beginning to realize that what I have said is correct. I trust that the lesson that has been taught by the coal strike willensure that there will be no repetition of incidents which were responsible for the trouble. I hope that theGovernment will try to mobilize the man-power and the material resources of the country to the best advantage of theEmpire.

Debate (on motion by Senator Dein) adjourned.

page 1175

COMMONWEALTH ELECTORAL BILL 1939

In committee (Consideration of House of Representatives’ amendments) :

Clause 4 -

Section twenty-six of the principal act is amended by adding at the end thereof the following sub-section: - (2.)TheMinister may,by notice in the Gazette, declare any subdivision to be aremote subdivision for the purposes of this act.”.

House ofRepresentatives’ amendment -

After “’ may “, “insert “ on the recommendation of the Chief Electoral Officer “.

Motion (by SenatorFoll) agreed to -

That the amen dm en t be agreed to.

Clause 7 -

After section seventy-two a of the principal act the following sections are inserted: - 72c (Designation of Group ) .

Houseof Representatives’ amendment -

Omit”sections are”, insert “section is”.

Motion (by SenatorFoll) agreed to -

That the amendment be agreed to.

House of Representatives amendment -

Omit proposed new section 72c.

Motion (by Senator Foll) proposed -

That the amendment be agreed to.

Senator KEANE:
Victoria

.- When the bill was last before the committee the consensusof opinion was that the names of the parties with which candidatesare associated should be shown on Senate ballot-papers. The original clause provided for that and I believe that there was quite a lot of merit in it. In view of the urgent issues confronting the country at the present time, I am amazed that on the eve of a generalelection the Government has seen fit to alter a system of election which has been in operation since 1925.

Senator FOLL:
Minister for the Interior · Queensland · UAP

– This measure has notbeenbrought forward on the eve of an election. It has been before this Parliamentfor a considerable time. Neither did it originate during the present crisis.

Senator Keane:

– Why did not the Government bring down this measurelong before this?

Senator FOLL:

– Like thehonorable senator, members of the Government, I suppose, become wiser as theygrow older. The Government believes that this measure provides a system of election which represents a greatimprovement on the existing system, particularly as it will make iteasierfor the average electorto cast a valid vote. For that reason it has brought down this measure, believing that it isnevertoo late todoanything which will be ofconsiderablebenefit to the community.

Motion agreed to.

Clause 18 (Printing of House of Representatives ballot-papers).

House of Representatives’ amendment -

Omit the clause.

Motion (by Senator Foll) agreed to -

That the amendment be agreed to.

New clause.

House of Representatives’ amendment - After clause 21, insert the following new clause : - “ 21a. After section one hundred and eightyone of the principal act the following section is inserted: - 181a. - . (l.) If, inany matter announced or published by any person, or causedby him to be announced or published, on behalf of any association,league, organization or other body ofpersons,it is,without the writtenauthority ofthe candidate (proof whenof shalllie upon that person). -

  1. ) claimed or suggestedthat a candidate in an election isassociated with, or supports the policy or activities of, that association, league, organizationor other body of persons or
  2. expressly or impliedly advocated or suggested -
  3. inthe case of an election of Senators for anyState - that a voter should place in the square opposite the name of the candidate on a ballot-paper a number not greater than the number of Senators to be elected; or

    1. in the case of an election of a member of the House of Representatives - that that candidate is the candidate for whom the first preference vote should be given, that person shall be guilty of an offence.

Penalty: Fifty pounds or imprisonment for three months. (2.) Where any matter, the announcement or publication of which by any person without the written authority of a candidate would be an offence against sub-section (1.) of this section on the part of that person, is announced or published by or on behalf of, or with the support of, any association, league, organization or other body of persons, every person who was an officer thereof at the time of that announcement or publication shall be deemed to be guilty of an offence against sub-section (1.) of this section. (3.) For the purposes of this section, where any matter purports expressly or impliedly to be announced or published by or on behalf of, or in the interests or with the support of, any association, league, organization or other body of persons, the matter shall, in the absence of proof to the contrary, be deemed to be announced or published by or on behalf, or with the support of, the association, league, organisation or other body of persons. (4.) Nothing in the foregoing provisions of this section shall apply to or in relation to any announcement or publication made or authorized by any bona fide political party or by any bona fide branch thereof respecting a candidate who, by public announcement, has declared his candidature to be a candidature on behalf of or in the interests of that party.’ “.

Motion (by SenatorFoll) proposed -

That the amendment be agreed to.

Senator KEANE:
Victoria

.- In what way will this provision affect the issue of “ vote thus “ cards usually distributed by various political parties?

Senator FOLL:
Minister for the Interior · Queensland · UAP

– This provision has no bearing on the “ vote thus “ cards issued by political parties. Sub-section 4 of the proposed new section exempts any announcement or publication made or authorized by any bona fide political party or by any bona fide branch thereof, respecting a candidate who by public announcement has declared his candidature to be a candidature on behalf of or in the interests of that party. This provision is designed to prevent organizations from issuing advertisements or publishing in any way that any candidate at the election is its candidate, unless it first secures the consent of that candidate so to use his name. Honorable senators are aware that at present certain organizations abuse the practice of issuing tickets of this kind.

Senator COLLINGS:
Queensland Leader of the Opposition

. -I assure the Minister that the Opposition welcomes this change. It is a great satisfaction to me to know that in future I shall not be subjected to the indignity ofbeing told that the second preferences of the United Australia party, Country party, “ non-Communists “ or Communists are to be given to me or to my colleagues. I assure Government supporters in this chamber that they are welcome to all of the preferences of the Country party, “ non-Communists “, and Communists. There are only two parties in any political contest, first, the Australian Labour party and secondly, all who are opposed to that party. If the preferences of other parties have been given to us at any time we regret that that has been the case. We welcome the new provision because it will spare us such indignity in the future.

Senator FOLL:
Minister for the Interior · Queensland · UAP

– I remind the Leader of the Opposition (Senator Collings) that parties nominating candidates will still require to place their preferences somewhere. The honorable senator said that he did not want any United Australia party preferences. I assure him that we have given them to him only because we have been obliged to give them to some one, and not because of any desire to assist his return to this chamber. This provision is designed to curb the activities of a number of unauthorized bodies which do not run candidates for election to the Senate, but nevertheless claim that they represent certain schools of political thought. Under this provision such organizations will be prohibited from advertising, as they have done in the past, that a certain candidate is their candidate, unless they first secure the authority of the individual concerned to use his name in this way. The provision does not affect the distribution of preferences as between candidates of genuine political parties.

Senator AMOUR:
New South Wales

– It will he competent for the three political parties to place only the names of their respective candidates on “ how to vote “ cards, and leave the electors to decide how they should distribute their preferences. Political parties will not be under any compulsion as to how they shall mark their “ how to vote “ cards ; indeed, no political party will be under any obligation whatever to issue “ how to vote “ cards at all. The Leader of the Opposition (Senator Collings) said that he does not want the support of what he calls “nonComs”.

Senator Collings:

– The honorable senator’s party has already decided to give its preferences to the United Australia party.

Senator AMOUR:

– That is a deliberate misstatement; no such decision has been. made. The honorable senator no doubt would like to convey that impression to the Australian public. Although I arn totally opposed to the measure as a whole, I recognize that this provision is not without merit. During past election campaigns the Communist party in New South Wales plastered telephone posts on the eve of polling day with dodgers asking the electors to vote for the Australian Labour party as that party would give effect to the Communist policy. Such propaganda influenced many people to vote against the Australian Labour party. For this reason, I expected Government supporters to endeavour to defeat the provision now under consideration because it will prevent that kind of propaganda, the value of which they fully appreciate. It is obvious that the Communists always try to keep the United Australia party Government in power. Possibly this provision will help to obviate the tactics adopted by Communists in the past with the object of defeating the Australian Labour party.

Senator FRASER:
Western Australia

– I support this proposal. I agree with the Leader of the Opposition (Senator Collings) that those who are not with the Australian Labour party are against it. Senator Amour, on his own argument that the Communists are always seeking to defeat the Australian Labour party, will apparently expect support from that quarter. The honorable senator said that Australian Labour party candidates will not be obliged to advise on their “ how to vote cards, the giving of later preferences to United Australia party, Communist, or non-Communist party candidates. It is obvious, from the remarks of Senator Amour, the Leader of non-Communist Labour senators, that this amendment offers them a way out of their difficulty in connexion with the arrangement of “ how to vote “ cards. All I wish to say is that I did not win my election on preferences from the Communist party.

Senator ASHLEY:
New South Wales

– I should like the Minister to inform me whether we are to understand, from the statement made by Senator Amour, that his party would not give preferences to candidates representing Labour? If so, does that mean that those preferences will go to the candidates representing the United Australia party or Country party? If. at the next election, the non-Communist Labour party wishes to issue “ how to vote “ cards advising their supporters to give their first preferences to candidates representing the United Australia party or Country party, will it not need to get permission ?

Senator FOLL:
Minister for the Interior · Queensland · UAP

– No. In passing, I express the satisfaction of my ministerial colleagues, and I have no doubt, our supporters also, at hearing honorable senators opposite representing the rival Labour parties trying to make up their minds as to which of the two really owns the Communists. It is apparent from what has been said this evening that we on this side have not that doubtful honour. I do not blame honorable senators opposite for endeavouring to dissociate themselves from the Communists, but I would point out that under this provision no political organization will be compelled to issue “how to vote “ cards. It is, however, the practice for political parties to issue these cards for the guidance of their supporters, and usually they show preferences for the full number of candidates offering, in order to avoid, the recording of informal votes. My attention was first directed to this matter recently by a member . of the Opposition, who pointed out that nearly every candidate, at one time or another, was to some extent embarrassed bythepublishedannouncements ofdifferent organizations, such as the temperance bodies or the liquor interests, urging voters to vote for certain candidates who, in their opinion, wouldbe favorable to their interests. On manyoccasions candidates have been placed in a veryunfair (positionbecause of this gratuitous support, and that is one ofthe reasons for the insertion of this provision in the bill.

SenatorFRASER (Western Australia) [8.49]. - I was gladto hear , the Minister say that it is not necessary for preferences to ‘be shown on “ how to vote “ cards.Senator Dein. - It never was

SenatorFRASER. - At one election in Western Australia, the United Australia party advised electors to give their second preferences to a Communist candidate.

Senator Ashley:

-That was also done in New SouthWales.

SenatorFRASER. - I saythis because the Minister hasbeen endeavouring to associate honorable senators on this side with Communists, whereas we have iton record that, whenever it suits them, United Australia party organizations willask electors to give their second preference votes to Communist candidates instead of Labour candidates.

Senator DEIN:
New South Wales

– Theturntaken bythe discussion is very interestingto me because for some years I have noted carefully the activities of theCommunists andthe Labour partyin New South Wales.

The CHAIRMAN:

- (Senator James McLachlan) . - Order! I remind the honorable senator that there is no reference intheamendmenttoeither the Communist or the Labour party.

SenatorDEIN. - I am aware of that Mr.Chairman,but as you allowed SenatorFraser and other honorable senators to refer to thesematters you should, in fairness,permit me to reply to them. SenatorFraser . said just now that in Western Australia in oneelection the United Australiaparty advised electors to give theirsecond preferences to a Communist party candidate. I do not know whetherthat is true, but I doknow that for theSenate elections in New South Wales in 1934, the Labour party advised electors to vote, . Lang Labour 1, 2 and3 ; Federal Labour. 4,5 and 6; then to vote for Sharkey,the Communist . candidate, and to give the remaining preferences to United Australia party or Country party candidates.

The CHAIRMAN:

– The honorable senator mnist not continue along ‘those lines.

Senator DEIN:

– As you have ruled me out of order I shall take another . opportunity to refute the statements made ‘by Senator Fraser, and I hope to -be able to throw a little light on the relations between “the Communist party ‘and the Labour party.

Senator ARMSTRONG:
New South Wales

– In some country districts in New South Wales at the last federal elections, we found attached to posts . and trees placards issued by the Communistparty advising electors to support Labour party candidates. I should add that these placards were issued in what were known as “ border-line “ electorates such as Hume, . and the apparent purpose was to injure the chances -of Labour party candidates. I have nodoubt that the United Australiapartywas behind the scheme. Therefore, if this amendment will, in future, prevent political organizations fromresorting to such tactics, it has , merit, land I shall support it.

Senator KEANE (Victoria) [8.553.- The need for some provision such as this was clearly demonstratedduring the 1937 elections in the division of Wannon. On one night, about three days prior to -polling, I noticed all through the town of Hamilton which is represented in theState Parliamentby Mr.Slater, a Labour member, Communist placards urging the support of the Labour (candidate. Mr. Slater -was with ; me when I interviewed the local police to see if I could discover who posted the notices. As we were talking to the policeman, apla in clothes officercame along and said to me, “ You oughtto iknow”. Then he mentioned the name of a leading United Australia party resident of Hamilton.

Senator E B JOHNSTON:
Western Australia

– It seems to me that this provision goes a little further than has been indicated by the Minister (Senator Foll). I should like to know if the words, “ any matter announced or published by any person, or caused by him to beannounced or published on behalf of any association, league, organization, or any body of persons “ may not be interpreted to include a newspaper. If so, is it not likelynewapapers urging the claims of particular candidates may be committing an offence?

Senator FOLL:
Minister for the Interior · Queensland · UAP

– No objection would be taken by any candidate to a newspaper advocating electors to vote for him, so there would be no difficulty whatever about a newspaper obtaining a candidate’s consent. All candidates would very gladly consent to support by a newspaper.

Senator ASHLEY:
New South Wales

– I am not quite clear about the probable- effect of this clause in. respect of advocacy by newspapers, but I know the value of newspaper support. I have in mind an incident, in the recent byelection for Corio, in Victoria. Three days prior to the polling the Geelong Advertiser, which has a large circulation in the electorate, published in the centre of its leading article a “how to vote” card. That notice, I am sure, influenced a large number of voters.

Senator Foll:

– There is no objection to that being done.

Senator ASHLEY:

– No, because the party to which the Minister belongs exercises a good deal of control over our leading newspapers.

Motion agreed to.

Clause 26-

The schedule to the principal act is amended by omitting FormE and inserting in its stead the following form : -

” FORME.

Ballot-Paper.

Commonwealth of Australia.

State of [here insert name of State] .

Election of [here insert number] Senators.

Directions. - Mark your vote on this ballotpaper by placing the numbers [here insert 1, 2, and so on,, as the case requires] in the squares respectively opposite the names of the candidates so as to indicate the order of your preference forthem.

House of Representatives’ amendment -

Omit proposed now form, insert the following: -

” FORME.

Ballot-Paper.

COMMONWEALTH of AUSTRALIA.

State of [here insert name of State].

Election of [here insert number]. Senators.

Directions. - Mark your vote on this ballotpaper by placing the numbers [here insert1, 2, and so on; as the case requires] in the squares immediately to theleft of the names of the respective candidates so as to indicate the order of your preference for them.

Note. - The letter ‘ A ‘ or ‘ B ‘ or ‘C’, &c., appearing before the square immediately to the left of a candidate’s surname indicates that that candidate and each othercandidate who has the same letter appearing before the square immediately to the left of his surname have been grouped by mutual consent.

The’ fact’ that no letter appears before the square immediately to the left of a candidate’s surname- indicates that the name of that candidate has not been included in any group’.”.

Motion (by Senator Foll.) proposed - That’ the amendment be agreed to.

Senator KEANE:
Victoria

.-I can only repeat the remarks whichI made on the second reading of the bill, that during the time in which anti-Labour governments have had an overwhelming majority in both branches of the legislature this altered form of ballot-paper was never considered; but now, on the eve of a. general election, the Government proposes to change the vertical form of the ballot-paper to the horizontal form merely for political purposes. When the bill was previously before the chamber I stated that the alteration will not only increase the number of informal votes to a remarkable degree, but will also be a distinct disadvantage to the party to which I belong. That is the reason why it has been introduced. Moreover, it will be the only ballot-paper of its kind in use in any part of the’ Commonwealth.

During the next election campaign honorable senators on this side of the chamber will emphasize the fact that the change has been made by the Government merely to aid it in endeavouring to defeat its political opponents. It is amazing to find that the Government with its tremendous responsibilities should permit Parliament to discuss this comparatively unimportant measure for so long, when more pressing business is awaiting our attention.

Senator FOLL:
Minister for the Interior · Queensland · UAP

– There is no necessity for me to deal with the merits of the proposed altered form of the ballot-paper except to say that, as the Deputy Leader of the Opposition (Senator Keane) objects strongly to the proposed change, the party to which he belongs must have secured some advantage under the old system. When it is proposed to alter the form of the ballot-paper in the interests of every one concerned, the honorable senator suggests that we should ad here to the old system. I should have imagined that the honorable senator would have been hesitant to admit that candidates whose names commenced with an early letter in the alphabet gained any advantage, but that is the effect of his com plaint. He realizes’ that the members of his party gained a distinct advantage; but the Government, believes that honorable senators should be not merely nien whose names commence with the letter A or B, but those who possess the necessary qualifications to represent the people. The Government believes that pv cry individual or group of individuals should have a.n equal opportunity when the ballot is taken.

Senator Keane:

– It has taken the Government 20 years to wake up.

Senator FOLL:

– Members of the Labour party took a long time to realize that they could gain an advantage by having candidates whose names commenced with the letter A. Under the new form of ballot-paper every individual candidate or group of candidates will Iia ve. a n equal opportunity, and, therefore, there is no justification for any opposition. T am satisfied that under the proposed system the number of informal votes will decrease and that the method of voting will be simplified.

Senator COLLINGS (QueenslandLeader of the Opposition. [9.8]. - The opinions of the members of the Opposition on this subject were expressed very definitely some months ago. Every trade union organization, progress association, municipal or other body uses a vertical ballot-paper, and when the proposed change is made an increased number of informal votes will be recorded. At a federal election held, in Queensland some years ago the chief returning officer said that if the method of voting were further complicated the time would come when there would be more informal votes than the number required to elect a candidate. That actually occurred in one State when the number of votes received by the elected candidate was smaller than the number of the informal votes recorded. I do not know whether any party will gain any advantage under the proposed new system ; but it is politically indecent to submit a new form of ballot-paper to electors who are accustomed to a totally different ballot-paper on the eve of theelections and in this time of war stress. Under the new system at least 50 per cent, of the electors will be confused.

Senator McBride:

– Surely that is a reflection on the electors.

Senator COLLINGS:

– It is not. As the vertical ballot-paper has been in use for so many years the horizontal form of paper will certainly increase the number of informal votes recorded.

Senator DEIN:
Now South Wales

. - I was particularly interested to notice the conservatism displayed’ by those honorable senators opposite who favour the retention of the vertical paper merely because it has been in use for some years. Apparently it is not a matter of whether the alteration is fair or unfair. The retention of the old form is advocated merely because it has been in use for years. I have never heard a more striking example of conservatism than the remarks of the Deputy Leader of the Opposition (Senator Keane). We have to determine whether the ballot-paper in the new form- gives an advantage to any political party. No member of, .the Opposition has attempted to show .-the way in which it can benefit any brie. Under the present system one party derived some benefit because the names of its candidates appeared at the top of the paper. In. 1934 my name was in a group which was at the top of the ballot-paper, and the majority obtained was 189,000. WhenI saw the figures I realized that that majority was twice as great as it should have been. I know that by a comparison with the vote for the House of Representatives. The Labour party in New South Wales also knew it, and in order to catch that “ fluke “ vote, chose four candidates whose names begin with “ A “ to contest the Senate elections. I do not blame them for doing that; their tactics were quite legitimate, and I can quite understand why honorable senators opposite are now objecting to the alteration. They solved the problem of how to return their representatives to the Senate on a minority vote. Senator Keane said that, in his State at any rate, this legislation will result in a condemnation of the Government. Does the honorable senator charge the Government with doing something that is unfair?

Senator Keane:

– Definitely. Its action is unfair and belated.

Senator DEIN:

– I should like the honorable senator to tell us in what way the Government’s action is unfair. If Senator Keane, or any of his colleagues, can show that the Government’s proposals arc unjust to any particular party, I shall cross the floor and vote with them. Senator Keane said definitely to-night, in words which are capable of no other construction, that he is prepared to misrepresent on the hustings the alteration of the ballot-paper.

A plea was put up on behalf of the informal voter by Senator Collings, who said that as the people have now become used to the ballot-paper in its present form, it is a pity to alter it. I point out, however, that in the 1934 Senate elections, nearly500,000 electors in the Commonwealth - or 14 per cent. - voted informally. Of that number, 193,000 were in New South Wales. Yet Senator Collings says that we must not interfere with the system that is now in operation. That is absurd. Another new principle introduced in this bill is the ballot for positions. No mention has been made of that, although I do not think that the system has been “used in Australia or in any other part of the world. It, too, is an innovation, but it is fair. I am here to support only what is fair, and in my opinion this proposal is eminently fair.

Senator ARMSTRONG:
New South Wales

– I move -

That the amendment he amended by inserting in the ballot-paper the name of the party beside the section representing that party.

This amendment will give to Senator Dein an opportunity to vote with honorable senators on this side of the chamber.

Senator DEIN:
NEW SOUTH WALES · UAP

– Tell us what is unfair in the provision.

Senator ARMSTRONG:

– I shall proceed to do that. In preparing this amendment, I considered that behind this bill was a desire on the part of the Government to remove from the elections all vestige of chance and to place before the people of the Commonwealth a system which they could not possibly misunderstand, so that the votes recorded and finally counted could not be regarded as anything but a true reflex of the people’s will. Apparently, the Government believes that in 1934, under the existing system, alphabetical precedence resulted in the return to the Senate of certain candidates in New South Wales against the majority will of the people. In my opinion, with the ballot-paper now proposed, there will be just as much chance of the people not knowing whom they are supporting, as there is with the existing ballot-paper. If the Government desires to remove all element of chance, and so enable the people to vote for the parties which they desire to support, it should accept my amendment, the effect of which will be to place beside the names of the candidates, the names of the parties to which they belong. There would then be no excuse for any voter saying that, he went into a booth to vote for the Labour party and finally voted for the United Australia party, or vice versa. As the Leader of the Opposition (Senator Collings) pointed out, the ballot-paper now proposed is too confusing. That confusion could be avoided, or at, least minimized, by placing opposite the names of the candidates, the names of the parties which they represent. Then the Government would have no excuse for claiming, as it did after the last Senate elections, that certain New South Wales senators had been returned by a minority vote. If the Government is game to accept this amendment, I shall believe in its bona fides in bringing forward this legislation ; if it, does not accept the amendment its motives will be suspect.

Senator E B Johnston:

– What party name would the honorable senator have placed before his section on the ballotpaper?

Senator ARMSTRONG:

-“ Australian Labour party- non-Communist “. But it is not a matter ofwhat I would have. This legislation affects all candidates. Honorable senators opposite apparently think that there is a certain amount of chance in the present system, and their aim is to remove that element. I have moved my amendment in order to test the Government’s bona fides in this matter.

Senator AMOUR:
New South Wales

– I support the amendment moved by Senator Armstrong. No doubt honorable senators opposite, who will have to face the electors at the next appeal to the country, would like to have the names of their parties alongside their own names. At any rate I am confident that the electors would like to see the names of the parties to which honorable senators opposite belong so that they would know where to place their last preferences. The principle embodied in the amendment was previously accepted by this chamber. In fact, the inclusion of party names was suggested by theGovernment and supported by the Opposition, and for that reason the House of Representatives should have accepted the ballot-paper in the form adopted by this chamber. To be consistent, honorable senators should support the amendment moved by Senator Armstrong. I can see no argument against it.. In my opinion, it would result in the elimination of a large number of informal votes, because, under the present system, voters do not know the parties to which the various candidates belong. Many people put a first preference vote in two places by voting number one for one particular candidate, and then realizing that he has given his first preference to the wrong man. The result is that the ballot-paper is informal. If the name of the parties to which candidates belonged were shown on the ballot-paper, all doubt would be eliminated, and we would be doing a service to the nation, because people in other parts of the world must view with a certain amount of disgust the huge number of informal votes which are cast at elections in this country. I agree with Senator Keane that the alteration of the ballot-paper to the horizontal form now proposed will tend to cause a greater percentage of informal votes.

Senator COLLINGS:
Leader of the Opposition · Queensland

– The Labour party will not support the amendment moved by Senator Armstrong. As we cannot have the ballot-paper which we desire, we very much prefer that the ballot-paper should remain as is now proposed in the bill.

Senator FOLL:
Minister for the Interior · QUEENSLAND · NAT; UAP from 1931

.- The Government does not propose to accept the amendment moved by Senator Armstrong. Many difficulties in connexion with the indication of party affiliations were pointed out by the Electoral Department, and by members of the House of Representatives, when the bill was under discussion in that chamber. It was consi dered undesirable to throw on the Chief Electoral Officer the onus of deciding the titles to be given to certain groups when two or more chose similar or identical party names. A party such as that led by Senator Amour, would have an opportunity to indicate that it is the “ Australian Labour party - non-Communist “, whereas there is no definite proof that it is non-Communist. Apparently that is the reason why Senator Amour is so anxious to include that provision in the bill. At any rate, it is an additional reason why the amendment cannot be accepted.

Senator ABBOTT:
New South Wales

.- Until the Minister for the Interior (Senator Foll) rose, I had intended to ask Sena tor Armstrong how he would get over the difficulty that would . be raised if two groups of candidates desired to be designated by the same party name. The Chief Electoral Officer could hardly be expected to decide a point of that kind. Originally I was inclined to agree with the view advanced by Senator Armstrong, but, after hearing the Minister’s explanation, I cannot support the honorable senator.

Senator FRASER:
Western Australia

Senator Dein said that, if it could be shown that the old ballot-paper gave no advantage to any of the candidates, he would support its retention. The justification for the alteration, we are told, is that the ballot-paper used at the last elections gave an advantage to certain groups of candidates because their surnames began with “A”. To overcome that difficulty, it is proposed not only to introduce a horizontal instead of a perpendicular arrangement of the names of the candidates, butalso by direction of this national Parliament, to conduct a lottery prior to the elections. The candidates themselves are to draw lots to decidetheir positions on the ballot-papers.

The CHAIRMAN:

– The committee is discussing an amendment to clause 26. and the honorable member may not now discussclause 18.

Senator ARMSTRONG:
New South Wales

– I am surprised that a challenge has been issued by Senator Dein and other supporters of the Government. Although honorable senators opposite say that they wish to see fair play, they are not prepared to accept an amendment that would have that effect. The Minister hassuggested that the electors would beunable to distinguish between the parties that might be named on the ballot-papers. The fact is that my party has been recognized in the House of Representativesby the Prime Minister, and it has also been recognized in this chamber and in New South Wales. There is not much in the abjection taken by Senator Abbott that it would be unfair to place on the Chief Electoral Officer the onus of distinguishing between party designations. It is conceivable that two United Australia party groups or two Country party groups might submit candidates,Inthat case we should allow the electors to choose between them.

Senator Abbott:

– Eachof two party groupsmightapply for the same designation.

Senator ARMSTRONG:

– In such a case the electors should make their choice. If honorable senators opposite wish to remove all misunderstandings, they should accept my amendment. It is desirable togiveall possible informationto the voter inorder to prevent informal voting, and enable him to record his vote in favour of the candidates whomhe hopes to seeelected.

Senator CUNNINGHAM:
Western Australia

.I do not think that the proposed amendment would to any degree reduce the number of informal votes. A large percentage of votes are purposely made informal by the electors. Many people resent being compelled to ‘exercise the franchise. Knowing that a penalty is provided for failure to vote, they deliberately make their ballot-papers informal. Oneorganization in Australia advises theelectors to do this. I have come acrossthe agents of that movement on more than one occasion, and Imet thematthe last elections. As to the wisdomofplacing a party designation opposite the squares, would it not be logical to vote merely for parties, dispensing with the names of the candidates? That wouldbe the logical sequenceof the trend of thought that prompted the moving of the amendment. I do not believe that the committee will agree to such a course.

Senator Abbott:

– It would be unconstitutional.

SenatorCUNNINGHAM. - On more than one occasion the people have been asked to amend the Constitution. Many years ago they were invited to do this in order that a poll mightbe taken at an earlier or later date than the date at first fixed. I rose to point out that it is useless to contend that, as the result of arrangingthe names of candidates in a certain order, informal voting would be caused, because, as I have already said, manyinformal votes are cast intentionally.

Senator DEIN:
New South Wales

– I stated earlier that if any member of the Opposition could show that an unfair advantage could begained by any party underthe proposednew form, I would not support it. Whatever the advantageor disadvantage of the proposal of the Government each party would share it. In reply to Senator Cunningham I point out that the number ofinformalvotes deliberately cast is very small. At the 1934 elections 193,000 informal votes were cast in New South Wales. Approximately 16,000 electors made no attempt to mark their ballotpapers at all. About 29,000 Senate electors recorded their first, second and third preferences and then stopped. About 19,000 wrote “1, 2, 3” opposite one group and “ 1, 2, 3 “ opposite another group; their votes were not deliberately made informal. About 10,000 electors duplicated one of the figures between 1 and 7, and many more duplicated one of the higher numerals. About 10,000 did not record a No. 1 vote at all. Approximately 50,000 electors left blank the thirteenth square, which was opposite the name of the Communist candidate, Sharkey. For that reason those ballot-papers were declared informal. Under this measure, however, ballot-papers marked in that way will be admitted as formal. In addition, 5,000 electors invalidated their ballot-papers by using crosses instead of figures. This accounts for at least 160,000 informal votes which, 1 considered, were not deliberately made informal.

Senator Cunningham:

– How would the honorable senator know?

Senator DEIN:

– I feel sure that if I were to examine the ballot-papers used in the last election for the Senate in Western Australia, I should find written on some of them uncomplimentary remarks about the honorable senator who has just interjected. I should have no doubt that such ballot-papers were deliberately made informal. If the big majority of Senate informal ballotpapers were not accidental, how can we account for the fact that whilst about 30,000 ballot-papers were recorded as informal in the election for the House of Representatives, 193,000 ballot-papers were recorded as informal in the election for the Senate. This position arises from the fact that large numbers of electors enter the polling booth failing to realize that senators have to be elected. Consequently, they do not know how to vote for the Senate. If by omitting the names of the parties, I felt that an advantage was to be gained by any one group, I should support the amendment. However, that is not the case. Therefore, I shall vote against the amendment.

Question put -

That the words proposed to he inserted (Senator Armstrong’s amendment) be inserted.

The Senate divided. (The Chairman - Senator James McLachlan.)

AYES: 2

NOES: 26

Majority . . 24

AYES

NOES

Question so resolved in the negative.

Amendment to amendment negatived.

House of Representatives’ amendment agreed to.

Resolutions reported ; report adopted.

page 1184

COMMONWEALTH INSCRIBED STOCK BILL 1940

In committee :

Consideration resumed from page 1157.

Clause 1 agreed to.

New clause.

Amendment (by Senator McLeay) proposed -

That after clause 1 the following new clause he inserted : - “1a. After section fifty-oneb of the Commonwealth Inscribed Stock Act 1911-1933 the following section is inserted: - 51ba. Any person who contravenes or fails to comply with any term or condition on which a treasury bond, debenture or other prescribed security is issued or sold, shall be guilty of an offence against this act.

Penalty : One hundred pounds or imprisonment for six months, or both and, in addition, an amount equal to Ten per centum of the nominal value of the treasury bond, debenture or other prescribed security in respect of which theoffence is committed.’”.

Senator AMOUR:
New South Wales

– When progress was reported earlier to-day I was asking the Assistant Minister (Senator McBride) whether a person who happened to hold more than £250 worth of these treasury bonds would be liable to a penalty if he attempted to dispose of the extra bonds.

Senator McBRIDE:
South AustraliaAssistant Minister for Commerce · UAP

– Hewould be obliged to dispose of bonds which ho held in excess of £250. It would be possible for an executor, of course, to dispose of such bonds before paying the legacy.

Senator Amour:

– What would be the position of the trustee of an estate who held in trust at the one time £250 worth of bonds in respect of each of several persons ?

Senator McBRIDE:

– Inthat case a trustee would ho only holding the bonds in trust. He would not be the owner or purchaser of such bonds, and, therefore, he would not contravene the law.

Senator E B JOHNSTON:
Western Australia

– Many employers, including some banking institutions, are very public-spiritedly making advances free of interest to their employees in order to enable them to purchase, in some cases, £50 worth of these war savings certificates and the employers hold the bonds until they are paid for by the employees. If a bank acting in quite good faith made available to, say, 100 of its employees sufficient money for each man to purchase £50 worth of bonds and held the bonds as security, would not that institution be contravening the law?

Senator McBRIDE:
South AustraliaAssistant Minister for Commerce · UAP

– Banks and other employers could quite properly make advances for the purpose mentioned and could hold the bonds as security. They would not be the owners of the bonds, but would be in the same position as an executor of an estate.

New clause agreed to.

Clause 2 agreed to.

Title verbally amended and, as amended, agreed to.

Bill reported with an amendment and an amendment in the title.

Standing and Sessional Orders suspended.

Report adopted.

Bill read a third time.

page 1185

PAPERS

The following papers were pre sented : -

Northern Territory - Report onAd ministratioa of Northern Territory for year 1938-39.

Ordered to be Printed.

Customs Act - Proclamation prohibiting the exportation (except under certain conditions) of Precious Stones (dated 9th May, 1940).

Judiciary Act-Rule of Court - Dated6th May, 1940.

Patents, Trade Marks, Designs and Copyright (War Powers) Act - Regulations amended - Statutory Rules 1940, No. 82.

National Security Act -

National Security (General) Regulations - Orders -

Protected areas.

Use of land.

Regulations amended, &c. - Statutory

Rules 1940, Nos. 83, 84, 86.

Northern Territory Acceptance Act and Northern Territory; (Administration ) Act - Ordinance No. 7 of 1940 - Mining Development.

Seat of Government (Administration) Act - Notice of variation of plan of lay-out of City of Canberra and its environs, dated 9th April, 1940.

Senate adjourned at 10.4 p.m.

Cite as: Australia, Senate, Debates, 23 May 1940, viewed 22 October 2017, <http://historichansard.net/senate/1940/19400523_senate_15_163/>.