16th Parliament · 1st Session
The President (Senator the Hon. J. Cunningham) took the chair at 3 p.m., and read prayers.
Motion (by Senator Clothier). - by leave - agreed to -
That leave of absence for one month be granted to Senator Lamp on account of ill heal th.
– by leave - I move -
That leave of absence for one month be granted to Senator Uppill onaccount of ill health.
When Senator Uppill was on his way to Canberra he was taken ill, and it was necessary for him to return to his home in Adelaide, but I am glad to be able to report that his condition has considerably improved.
Question resolved in the affirmative.
Senator Allan Nicoll MacDonald made and subscribed the oath of allegiance.
– In view of the grave transport difficulties now experienced in forwarding supplies to Darwin, will the Minister for the Interior inform the Senate whether the. Government will consider the provision of transport aeroplanes, in order that fresh fruit and vegetables and essential medical supplies may always be on hand there?
– That matter is now receiving serious consideration.
– Can the
Minister representing the Minister for Commerce state whether the decision of the Fadden Government to have portion of this year’s wool clip appraised at Albany, Western Australia, has been carried into effect? If it has not, can the Minister furnish any information on the matter?
– The appraisement of wool at Albany has been under consideration since the formation of the present Government, and I endeavoured at the earliest possible opportunity to give effect to a part of the decision reached by the previous Government. If the appraisement of wool is not taking place at Albany at present, it is due to the awkward situation brought about by the unpreparedness of the wool brokers in Western Australia to appraise wool at that centre; but I understand that even that difficulty has now been overcome.
asked the Minister representing the Minister for Commerce, upon notice -
– The Minister for Commerce has supplied the following answer : - l and 2. The Government has decided to conduct wool appraisements at Albany and arrangements to this end are at present being made. The question of conducting wool appraisements at other centres in Australia will be considered.
. -I lay on the table the following paper: -
Report, together with minutes of evidence, of Committee of Senatorsand Members of the House of Representatives appointed by the Government to report upon matters connected with the Apple andPear Board and the disposal of the apple and pear crop.
The committee recommends that an acquisition scheme should remain in operation for the duration of the war, and it submits a number of suggestions for improving the arrangements now in operation. The Government is giving consideration to the committee’s recommendations, and as soon as the policy to be adopted for handling the new season’s apple and pear crop has been decided upon, an announcement will be made.
Tabling of Regulations
– Has the attention of the Leader of the Senate been drawn to an article in a section of to-day’s Sydney press in relation to proposed regulations to control private banks, in which the following statement appeal’s? : -
The Government fears an Opposition attack will be lodged in the Senate, and plans are being made to postpone the tabling of regulations until after the Senate adjourns for Christmas.
Will the Govern merit give an assu rance to the Parliament that all regulations promulgated will be tabled without delay, so that the elected representatives of the people will have an opportunity to take any action that they consider necessary?
– The Leader of the Opposition knows the procedure in regard to these matters.He may accept my assurance that, unlike the Government which it has succeeded, the present Government will not permit any undue delays in those matters.
– Will the
Government avail itself of the advantages presented by Western Australia for the construction of aircraft, and, if so, howsoon ?
– The Government has this matter under consideration, and upon receipt of reports from the experts and the completion of negotiations overseas, an announcement on the subject willbe made.
SenatorCOLLETT asked the Minister representingthe Prime Minister, upon notice-
Will the Government endorse the previous Government’s clear declaration of a policy of preference in employment to members of the Australian forces returning from active service abroad, and also implement it by taking immediate steps to - (a) amend the Commonwealth Public Service Act; (b) consult the State Governments with a view to the introduction of a uniform and comprehensive system of preference applicable to both State services and private industry?
SenatorCOLLINGS.- The Prime Minister has supplied the following answer : -
As the honorable senator is aware, daring the terms of office of the previous Governments consultations took place with the State Governments on the question of a uniform policy of preference in employment to members of the Australian Forces returning from active service abroad. My Government has the matter prominently under notice, and will shortly review the whole position in the light of the views and information submitted.
asked the PostmasterGeneral, upon notice -
Is it the intention of the Government to proceed at once with the plan of the Menzies Government for an improvement of telephone communications between Western Australia and the eastern States?
– It is the intention to proceedwith the installation of additional telephone and telegraph channels between Adelaide and Perth as soon as the necessary materials are available. Due to the effect of war-time conditions on deliveries and the need for giving priority to important defence communication requirements, some little time will elapse before all the materials required for this large project can be secured. Work has, however, already commenced on certain sections, and it is hoped to undertake the main portion during the early part of 1942. The importance of augmenting the existing facilities between Perth and Adelaide is fully recognized, and the honorable senator may rest assured that the work will be completed at the earliest possible date.
Vocation al Training.
asked the Minister representing the Minister for Labour and National Service, upon notice -
With regard to the acknowledged need fora system of vocational training for certain members of the forces who will return from active service abroad: (1 ) Has the Minister perused the reports on this subject prepared fey direction of the previousGovernment; (2) if so, what steps does he propose to take to implement the recommendations contained in those reports ?
– The Minister for Labour and National Service has supplied the following answers : -
SenatorCOLLETT asked the Minister representing the Minister for Transport, upon notice -
In view of the congested conditions existing in regard to passenger traffic on the mainrailway lines of the Commonwealth, will the Government give consideration to a scheme for rationing railway travelling so that nonessential journeys, eg., attendances at race meetings, may be eliminated?
– The Minister for Transport has supplied the following answer : -
The question askedby Senator Collett in regard to the congested conditions existing in the passenger traffic on the main railway lines of the Commonwealth is one which is controlled by the Department of the Interior. Onlyin cases of emergency would his complaint come under the control of the Department of Transport and actionhas now been taken to prepare suitable regulations for the control of transport in emergency in which power will be given to exercise priority in both railway passenger and goods transportation should the necessity arise.
asked the Minister representing the Minister for Repatriation, upon notice -
In view of the statement appearing in the press that there will be an increasein the amount of the invalid and old-age pension (suggested) to £15s. per week, will the Government also increase the amount of the service pension paid to certain classes of returned soldiers to the same amount and from the same date as the invalidand old-age pension increase?
– The Minister for Repatriation states that the matter is under consideration.
asked the Minister representing the Minister for the Army, upon notice -
Will the Minister ascertain if there is any reason for believing that the volunteer defence corps or home guard(as it is now called)is becoming a farce because of the lack of equipment, paucity of instructors, and absence of guidance and direction?
– The Minister for the Array has supplied the following answer : -
There is no justification for the suggestion contained in the honorable senator’s question. I am advised that approximately 900 members of the Volunteer Defence Corps did excellent work on large scale exercises held recently in western Victoria. Manuals incorporating the latest training doctrine have been prepared and distributed. Instructors have been trained and equipment as available is being issued.
asked the Minister representing the Minister for the Army, upon notice -
Will the Minister give consideration to the construction of the vital rail link between Alice Springs and Birdum as a contribution to national defence?
– The Minister for the Army has supplied the following answer : -
Consideration has been given to the construction of the rail link between Alice Springs and Birdum. The suggested link would involve approximately 620 miles of new construction. The cost of such construction would amount to between £5,000,000 and £5,500,000, necessitating supply of upwards of 05,000 tons of steel rails, fishbolts, and in addition to approximately 1,500,000 wooden sleepers, or, if steel sleepers were used, approximately 50,000 tons of steel. The estimated time of construction is three years. In addition to the heavy capital expenditure, the work would require a considerable time to complete (apart from the difficulty in obtaining supply of necessary steel and sleepers), and consequently its value as a defence proposal to meet a national emergency that might arise in the near future, has insufficient merit in relation to other necessary projects. With the recent completion of the construction of the road between Alice Springs and Birdum, the capacity for movement over this section is equal to the maximum capacity of each of the railway sections at each end of the road, i.e., Quorn-Alice Springs railway and Birdum-Darwin railway.
asked the Minister representing the Treasurer, upon notice -
– The Treasurer has supplied the following answers: -
asked the Minister representing the Minister for Commerce, upon notice -
-The Minister for Commerce has supplied the following answers : -
asked the Minister representing the Minister for Supply and Development, upon notice -
Will the Minister inform the Senate^ what progress has been made with the erection of the munitions factory at Rutherford, and further, when it IB hoped to have the factory in production?
– The Minister for Supply and Development has supplied the following answer: -
This matter is dealt with by the Minister for Munitions, who has furnished the following reply : -
Approximately 15 per cent, of the buildings have been completed to date. Considerable progress is anticipated during the next three months and it is hoped that the factory will be in production in six months’ time.
asked the Minister representing the Prime Minister, upon notice-
– The answers are as follows : -
Collection from Soldiers.
asked the Minister representing the Treasurer, upon notice -
Has any arrangement been made for the return of income tax (if any) illegally collected from soldiers in camp during the regime of the previous Government?
– The Treasurer has supplied the following answer : -
The question evidently relates to instalments which have been deducted from the pay of home service personnel for the purpose of meeting any income tax which will be payable by the soldiers concerned. The amounts deducted do not represent tax which has been paid by those soldiers. The Income Tax Assessment Act and the departmental procedure make full provision for refunding all amounts in excess of the tax payable.
The Department of the Army was instructed in September last that adjustments must be made in any case where the instalments deducted had not been calculated in accordance with instructions.
Increased Payment - Nos. 3 and 4 Pools
asked the Minister representing the Minister for Commerce, upon notice -
-The Minister for Commerce has supplied the following answers : -
Debate resumed from the 29th October (vide page 11), on motion by Senator Keane -
That the following papers be printed: - “Estimates of Receipts and Expenditure (Revised) and Estimates of Expenditure for Additions, New Works, Buildings, &c. (Revised), for the year ending the 30th June, 1942;” and “Budget 1941-42 (Revised) Papers presented by the Honorable J. B. Chifley, M.P., in connexion with the revision of the Budget 1941-42.”
– Having had experience in various Government departments during this war, I appreciate the difficult task confronting the members of the Ministry in wartime. I am conscious of our obligations to the people of Australia. Whilst we, on this side of the chamber, have no caucus, I can assure the Leader of the Senate (Senator Collings) and his colleagues that we shall support all measures introduced by the Government to enable Australia to make a complete all-in war effort. I assure my friends who now hold important offices in the Ministry that the war has reached a most serious stage and that the problems that lie ahead are difficult. I sincerely trust that the Government will not shirk its responsibilities and that it will not fail to do everything possible to see that we give of our best to further the cause of the Empire. The members of the Opposition consider it to be their right and privilege to offer criticism, and very candid criticism where they think it to be necessary and where they feel that the Government has fallen down on its job. Since I was relieved of ministerial office five weeks ago I have taken the opportunity to look back and to take stock of what has been said and what has been done by honorable senators opposite. Probably, we best anticipate the actions of Governments by studying what has been said by their supporters in the past. Judging by the speeches of honorable senators opposite as recorded in Hansard, three charges can be laid at the door of the Government so far as its attitude towards the war is concerned, that i3, if honorable senators opposite propose to follow in the future the policies they have outlined since the outbreak of war. Perhaps I should say that these three charges can be levelled against prominent leaders of the present Government. The first is that some of the Labour party’s leaders have a poor appreciation of what constitutes Australia’s front line in this conflict. I do not propose to go into detail on that point; but I urge the Leader of the Senate to give to this chamber, before Parliament goes into recess, the assurance that every effort will be made by the Government to ensure that not only adequate reinforcements for the support of our divisions now in the field are made available, but also sufficient supplies of munitions, are provided. The second charge I make against members of the Labour party is in respect of their refusal of repeated invitations by the right honorable member for Kooyong (Mr. Menzies) and the Leader of the Opposition in the House of Representatives (Mr. Fadden) to join with them in the formation of a national government. Having regard to the present serious situation, the people as a whole look upon the continuance of party political warfare in Canberra as a sordid business. The right honorable member for Kooyong made repeated offers to the Labour party to assist in the formation of a national government; but in their desire to get control at all costs they have been successful, with the support of what we might describe as one or two political misfits, in securing a majority in the House of Representatives. The third charge I make against the Government is that, after having assumed office, and having been given an opportunity to formulate a policy to meet our present difficulties, it has merely brought down a budget which was truthfully described by the Leader of the Opposition in the House of Representatives as one that might win an election but not a budget designed to give Australia a 100 per cent, war effort.
– I think that we know the reason. Any one who has studied the performances of the Labour party must regretfully acknowledge that even in war-time the Labour Cabinet is ruled by the caucus, which in its turn is ruled by outside organizations. We know that when the present Prime Minister (Mr. Curtin), as Leader of the Opposition, was invited to assist in the formation of a national government he was una’ble to come to a decision until he had consulted the Australian Labour party. Sufficient evidence is available to show that even at the party’s caucus meeting, held at Canberra recently to consider a proposal to increase the rate of the invalid and oldage pensions, the caucus tail wagged the party dog so successfully that the Government is now committed to honour in the first session in the New Year its election promise to increase the rate of pension to 25s. a week plus the cost of living allowance. When one studies the policy speech delivered by the Prime Minister in August, 1940, one can easily appreciate the difficult position in which members of the Government now find themselves as the result of making all sorts of airy promises prior to the last general elections. They gave those promises, as it were, in the form of blank cheques, and now they find that those cheques must be filled in and either honoured or repudiated.
During the last twelve months the Menzies Government decided to increase the rate of the soldiers’ pay by adding an allowance of 7s. a week, and, in addition, child endowment was introduced. That allowance was to be paid to a wife with a family as a house allowance. The former Government also made an additional allowance of 6d. a day to the wife of a soldier without children. It proposed to pay a further amount of 7s. a week by way of deferred pay. This Government has decided to make that allowance available in the form of active pay.
– We are not promising; we are acting.
– When the Prime Minister spoke recently over the air and asked people to contribute to the War loan he made many promises; and I am sure that he will honour them. We may differ in our opinions as to whether that allowance should be treated as deferred pay or as active pay. I am satisfied that the majority of the soldiers affected would prefer that the additional payment be treated as deferred pay, making a total deferred payment of 21s. a week.
The Menzies Government also increased the rate of deferred pay from ls. to 2s. for soldiers serving overseas. It is interesting to examine the details of soldiers’ pay in order to consider whether it would not be wiser to make that allowance available as deferred pay. I submit the following table for the benefit of honorable senators : -
– Does not the honorable senator think that the soldiers are worth it?
– I do think that they are worth it. I have quoted these figures merely to support and justify the Fadden Government’s decision that the £1 ls. should be given in the form of deferred pay. At the last general elections, the Labour party promised to increase invalid and old-age pensions to 25s. a week. Members of the now defunct non-Communist Labour party, including the two “ A’s “ opposite, outbid their colleagues and promised 30s. a week. In view of our heavy existing commitments and even heavier future commitments in connexion with this war, this is no time to increase social services. During the five-year period from 1936 to 1941, the cost of invalid and old-age pensions increased from £12,797,726 to £17,366,335 a year1 - a difference of more than £4,500,000, and commitments in this budget will bring these payments up to the staggering total of £20,000,000 a year, which means that the increase during the past six years has been more than £7,000,000. We are informed that in a supplementary budget the Government will increase invalid and old-age pensions to 25s. a week, but I shall not say any more about that until the supplementary budget is introduced. Having regard to the cost of living allowance, and the increase of prices due to inflationary tendencies and other factors, we can appreciate what the figure will be when the war is over. The number of invalid and old-age pensioners has steadily increased from 287,235 in 1936 to 335,681 in 1941- a difference of 48,446. In view of this ever-increasing burden, the Menzies Government in its national insurance scheme provided for the payment of pensions on a contributory basis. I urge the present Government to give serious consideration to the introduction, at the earliest possible date, of a similar scheme.
It is interesting to note the very convincing comments made by the New Zealand Minister for Finance, Mr. Nash, in Sydney, on the 6th November last. I propose to quote what that gentleman said, because he has had considerable financial experience. The Labour Govern- ment of New Zealand should be given credit by the people of all parts of the British Empire, for what it has achieved. I mention this with the object of urging my Labour friends opposite to measure up to what has been done in our sister dominion. The report of Mr.Nash’s speech is as follows: -
In an address to the Legacy Club to-day, the New Zealand Minister for Finance and Customs(Mr. Nash) emphasized that New Zealand was financing most of its war effort by taxation. He said that conscription was being administered in New Zealand as impartially as possible by the Government, some members of which had gone to gaol during the last war because of their opposition to conscription.
He warned Australia and New Zealanders against the danger of complacency, and expressed doubt whether the people ofeither country yet realized fully the magnitude and the possible consequences of the great issues involved in the war,
The Labour Government in New Zealand realized in 1939 that social reforms and ideals, justly regarded as urgent, must become secondary to the conduct of the war. It decided that the people who remained behind must do with less so that the men who went to fight might have more, it decided that no goods must be imported from abroad unless they were necessary to the war effort. Imports had been cut very seriously, but the people wore not suffering unduly.
I commend Mr. Nash on having had the courage to make that statement, which I think is very much to the point.
In discussing the budget I have no wish to weary the Senate unnecessarily, but, in view of the fact that provision is made for a record expenditure of £325,000,000, and for unduly high taxation in certain directions, I propose to cite comparative income-tax figures for Australia, New Zealand and the United Kingdom. This budget imposes a most vicious tax on a few people in Australia who are earning large incomes.
– Large combines.
– The honorable senator is talking nonsense. I am dealing with the personal incomes of individuals. At a later stage I shall quote some figures, which should make the honorable senator realize that theoftquoted statement about a group of wealthy men ruling this country is all nonsense and contrary to facts. The following comparison of income-taxrates in this country, New Zealand, and Great
Britain, is very interesting and illuminating:
I repeat that these vicious attacks at this stage on a comparatively few people in Australia will inflict great hardship. These persons have made commitments and have contributed to Commonwealth loans, and they are again asked to contribute to loans. It is estimated by Treasury officials that of a total of 3,000,000 persons in Australia in 1940-41 who were in receipt of incomes, only 13,600 received incomes over £2,000 a year. Throughout Australia, only 2,100 persons received incomes over £5,000 a year during 1940-41. A taxpayer without dependants with an actual taxable income of £250 a year pays in income tax only half of the amount extracted from his counterpart in Great Britain and pays only threequarters of the rate applicable in New Zealand. On an actual taxable income of £400, Australia asks for £60, whereas New Zealand says”£70 please” and England gets £111. On incomes of £1,000, Australians pay £244, incomparison with £381 by the English taxpayer, or two-thirds. An example of the severity of the Labour Government’s proposals in connexion with the higher grades of income, as compared with the United Kingdom and New Zealand, rates, is clearly shown in the table, where it will be seen that, in the lower grades, Australia receives considerably less, whilst, in the higher grades, it receives more than the comparable grades in the United Kingdom and New Zealand.
It is desirable to give consideration to the estimate of. the Treasury officials of the actual income in Australia for 1940-4.1 to which the proposed taxation measures will apply. The estimated distribution of individual incomes for 1940-41 includes incomes of males, juveniles and members of the forces, but excludes pensions. It is estimated that 2,709,000 persons in Australia, or 90 per cent, of the population, who receive incomes of £400 per annum or under received for the period under review £560,000,000, or 70 per cent, of the national income of £800,000,000. It is estimated that, the persons in receipt of £401 and under £1,000 per annum number 245,000. Their income is estimated at £145,000,000. The number of persons receiving incomes of £1,001 per annum and over is estimated at 46,000, and their estimated income is £95,000,000. Therefore, I say to my Labour friends that if the complete incomes of all of the people in receipt of over £1,000 a year were taken in taxes, the Government would not get sufficient money to balance the budget. The Government has taxed with the utmostseverity, up to 18s. in the £1, a small section of the people, and. has left untouched those in receipt of 70 per cent, of the national income. I suggest that the Government should have adopted the excellent features of the Fadden budget, which provided for the extraction on a sliding scale, from all sections of the community by way of post-war credits, of £25,000,000.
– How much will persons on the higher incomes have left after they have paid the tax?
– I suggest, to the Minister that he should study the Melbourne Cup totalizator figures in order to got some idea on that point. The proposed collection in the nature of postwatered it was one of the best features of the Fadden budget, and before the present Government is much older it will be forced to realize that, fact. “Wages were never higher in Australia than they are to-day, and employment, figures were never more favorable. The wage-earners are enjoying better conditions now than they were before the war. I suggest that the proposal to extract, money by way of post-war credits would have been of great help to the budget and would have had a steadying influence on inflationary tendencies. Post-war credits would have been helpful to any government which had to face the grave problems that will confront Australia.
It is estimated by the Treasury that the payments this year by persons in receipt of £400 a year and under, whose total income is estimated at £560,000,000, will amount, to £3,750,000. Those receiving £401 per annum and under £1,000 per annum, whose income is estimated at £145,000,000, will contribute £9,500,000. Those receiving £1,001 per annum and under £1,500 per annum, whose income is estimated at £28,000,000, will contribute £4,750,000, whereas the small section receiving over £1,500 per annum, with an income of £67,000,000, will contribute no less than £25,750,000. Those figures relate to Commonwealth taxes alone. If we add the State taxes that will be imposed in those parts of Australia where the State taxes are highest, we see that great hardship will ‘ be inflicted on those persons.
I shall not go into details regarding the. excessive taxes to be imposed on- companies. During the course of this debate, honorable senators will have an opportunity to point out, the viciousness of the action of the present Government towards Australian companies. For some unknown reason, there appears to be a desire, because a few companies make large profits, to bring companies generally to a condition in which they will be unable to make progress and in which great, injustice will be done to many shareholders.
– We have to win the war.
– Yes, but we should call upon all sections of the community to help in winning it. I am amazed at the unfair criticism directed against the Broken Hill Proprietary Company Limited, particularly in view of the good work that that company has done and is still doing for Australia. A prominent member of the present Government, who represents Queensland, suggested that that company should be taken over and controlled by the Labour Government. Any honorable senator from Queensland should bear in mind the hopeless mess which the Labour party in that State made of its attempts to run State cattle stations and meat and fish shops. I am pleased to know that up to date the Government has not gone any farther with the suggestion. I desire to correct the impres- sion in the minds of some Labour men that in companies like the Broken Hill Proprietary Company Limited a few persons own all of the shares. I remind honorable senators that there are 20,000 shareholders in the Broken Hill Proprietary Company Limited, and that the average holding of the10,850 shareholders in the Electrolytic Zinc Corporation Limited is under 246 shares. Out of 70,000 shareholders in the Australian trading banks, 52,000, or 74 per cent., own shares not exceeding £500 in value. [ assure my Labour friends that they are inflicting a great hardship on a number of shareholders who are possessed of very modest means. I am at a loss to understand the objection raised to companies in Australia. When the history of this war is written, one of the brightest pages in the story of Australia’s development will be that relating to the expansion of its secondary industries. They were a godsend to Australia when our primary industries were in difficulties because of loss of markets. Who are the people that control these companies? Ninety per cent, of them are men of initiative and enterprise who have risen from the ranks of the employees. This young country needs such men.
The excessive taxation of companies which the Government proposes will do a grave injustice to some sections of the community. The Government’s proposals are inequitable, when we compare the rates imposed on companies with the rates levied on other sections of the community, particularly as a number of small shareholders who look to dividends from companies as a means of livelihood will be affected.I shall not go into details, but I point out that the Federal tax on companies has been increased from 2s. to 3s. in the £1, that the State tax on companies in South Australia is 2s. in the £1 and varying amounts in the other States, and that undistributed profits are also raxed. Indeed, the tax that is paid is taxed again in the hands of the people who receive the dividends. If the Government will consider the cumulative effect of these several taxes it will find that they will inflict a serious hardship on numbers of small companies in Australia which find it essential to set aside a certain amount each year as reserves. In its desire to hit some of the big companies, the Government is doing a great injustice to a number of small companies and their shareholders. I shall deal later with the Government’s proposal in respect of the reduction from8 per cent, to 4 per cent, of the allowable profits made under the War-time Company Tax. A comparison of prices charged by the Broken Hill Proprietary Company Limited for certain main products with the prices charged in the United Kingdom is interesting. The following table sets out the position : -
The budget contains a paragraph of five lines under the heading “Rural Reconstruction “.
The Government proposes to begin promptly inmaking effective its policy to give stability to our rural industries. The existing machinery for debt adjustmentand for the transfer of farmers from sub-marginal areas will be speeded up. Arrangements have been made to have these mutters examined at a meeting of Commonwealth and State Ministers early next month.
The Treasurer speaks of speeding up the machinery for debt adjustment and the transfer of farmers from sub-marginal areas, butI point out that those two matters are handled by the States, although the Commonwealth provides the funds. However, the budget papers do not show that any extra amount has been provided for these purposes.
– It is merely padding.
– That is so, and poor and misleading padding at that. An examination of the budget will show increased land tax, sales tax and income tax, compared with the rates proposed by the Fadden Government. If we consider the cumulative effect of all of these taxes, as well as the inflationary tendency of the budget, we can come ito no other conelusion than that the proposals of the Government will inflict a further burden on those engaged in rural industries who have not the opportunity to pass on increased costs. Many primary producers who are normally engaged in the export trade are in a most serious financial position because of shipping difficulties. The wheat farmer, for instance, has not only to pay for storing his wheat which cannot be shipped,, but he has also to bear any losses which may be due to weevils. The primary producers of this country will find small comfort in those five lines in the budget.
It is interesting to note that the present Government has decided to reduce the expenditure contemplated by the Fadden Government in respect of only two items, namely, the Department of Information, and advertisements relating to the sale of surplus primary products. The Assistant Minister for Commerce (Senator Fraser) will not be able to speak in glowing terms of the Government’s- proposals when addressing the primary producers of Western Australia.
– The proposals of the present Government are better than those of the previous Government.
– If the honorable senator himself and the primary producers of his State believe that that is so they are more foolish than I thought.
The present budget undoubtedly has an inflationary tendency. I do not desire, nor have I the time, to discuss that aspect of the budget now, but I remind the Senate of what has happened in the past. The gap between the expected revenue and the contemplated expenditure is £137,000,000. The Government has till the end of June next to bridge the gap. It may do so by borrowing from the people, by imposing heavier taxation on .them, or by embarking on a policy of bank credit. I was pleased to read what the Treasurer (Mr. Chifley) had to say on the .subject of bank credit, but at the same time I felt somewhat sorry for the Government’s financial adviser., Senator Darcey.
– The Government has jettisoned him.
– Australians war expenditure for 1940-41 was £170,000,000; the estimate for the present financial year is £221,000,000. If we are to do our utmost in this titanic struggle the Government will find a heavy financial task confronting it for the year 1942-43. The amount borrowed for all public purposes for 1940-41 was £86,000,000. This year, the amount required is estimated at £158,000,000, or £72,000,000 more than in the previous financial year. If the Government intends to rely on bank credit to bridge the gap, I foresee difficult days ahead.
Another difficulty that confronts the Government is in connexion with manpower. In this connexion I shall read from the budget speech under the heading “Financial Policy”-
Credit expansion, however, can be successfully used to finance employment of reserves of man-power to expand production of goods and materials. That is to say that any increase in the money volume must be balanced by corresponding increase in production. The extent to which increased production is possible will be determined by the amount of reserve man-power that is available. A thorough survey of that field is now in process. By organization and training many who are now classified as unemployable could he found useful employment said thus materially increase production and at the same time provide for themselves and their families.
Those members of the public who have read comments by various Ministers of the present Government will appreciate that the previous Government accomplished a .great deal in connexion with its munitions programme, its Empire Air Training Scheme, as well as its organization of the Navy and the Army, This, however, is no time to criticize our friends opposite for what they are doing to solve the man-power problem. Undoubtedly it is a difficult problem. The Treasurer says that the Government will make provision for an equitable distribution of nonessential goods, and that “.there must be a switch-over of a very large amount of production from civil needs to war’s demands “. The Government has been in office for five weeks, hut I ,see no evidence of that as yet I listened to the Prime Minister appeal for contributions to the war loan during the week that the Melbourne Cup was run. Honorable senators know that a huge sum of money passed through the totalizator in connexion with the Melbourne Cup and the racing carnival generally, and I suggest that if the Government desires to divert expenditure from non-essential needs to war needs it could not do better than follow the lead given by its predecessors, and establish a scheme of postwar credits. Having regard to our commitments and the possibilities in the future, I suggest that the Government should reconsider that matter.
All honorable senators are concerned with the difficulties that lie ahead. The Opposition is concerned and will be behind the Government in all matters directed towards an all-in war effort. After all, that is the only thing that really matters. As to other matters concerning which we may be forced to disagree with the Government, the Opposition will criticize the Government’s proposals where it thinks that criticism is justified in the interests of the people of Australia who have sent us here. I say, finally, that at the last general elections sixteen members now sitting in Opposition were elected by five States, not because of any airy promises that they made, but because they told the electors that their chief concern was the maximum war effort. Our leader said then that he would not make any promises, but that, if returned, his Government would do its best to win the war and to make the land we love a place fit to live in.
.- The budget of the present Government is a document which we might have expected from the gentlemen comprising the present Ministry. Honorable senators opposite have shown, over the whole period of the war, that they are entirely partisan. Although overtures were made to them on a number of occasions to join with us in conducting the affairs of this country in such a way as to enable us to put forward a maximum war effort, all our advances were determinedly and consistently refused. Consequently, having regard to the election policy speech delivered by the then Leader of the Opposition, we must have expected that the party which now occupies the treasury bench would bring down a budget similar to that which we are considering this afternoon. The first criticism I level at. the budget is that it does not begin to measure up to the problems of the war, and for that reason I believe it was deliberately designed to mislead the people of this country.
It is worth while to look back over the war period and to consider the varying attitude of our people towards the war. When Great Britain declared war against Germany, Australia immediately joined with the Mother Country in its declaration. I am satisfied that a. majority of the people of Australia were completely behind that action. They were willing and anxious to give of their best to bring the conflict to a satisfactory conclusion. The course of this war has been entirely different from that of the war of 1914-18, because, so far as Great Britain and the Empire were concerned, there was a lull of many months before actual hostilities commenced on a large scale. I know that it is extremely difficult for people living in this fair land, which has never had an armed conflict within its shores, to realize all the dreadful implications of war. Consequently, although the Government of the day appreciated the problems that confronted us, it was difficult to maintain an intensity of enthusiasm among the people as the stalemate on the western front continued. With the advance of the German hordes in the Low Countries and the overrunning of France, the position was revealed more clearly to our people, and again there was the urge to do their utmost on behalf of the war effort. Then, while the British forces were putting up a magnificent resistance to German aggression, and the authorities in the Mother Country were feverishly preparing to resist an invasion, the dangers that confronted us were made much more apparent. When the danger of invasion of the Mother Country appeared to have passed, there was another lull in the affairs of the war. Later, we had the magnificent victory in Libya, followed only too soon by the tragic defeats in Greece and Crete, which again stirred our people to a realization of the menace that confronted them.
Later still, with the invasion of Russia by Germany, the nations of the world were thrilled by the great resistance put up by our ally against the advance of the German hordes. With the passing of time, however, a feeling is again growing up in this country that somebody else will win the war for us. I am comforted by the fact that a very large number of people in Australia really appreciate the position, and are actually giving of their best to further the success of our arms. I had the privilege and honour of being ministerial head of the Department of Munitions for a short period and I have had an opportunity to learn something of the work of the thousands of men and women in that department. They are doing a magnificent job. The war is very close to them; they know what it means, and they are doing their best to turn out an increasing volume of the munitions of war and equipment that are so badly needed by our forces. On the other hand, we cannot disguise the fact that very many people in this country seem to be still unaware of the serious position in which we find ourselves to-day. The comment made recently by the General Officer Commanding the Australian Imperial Forces in the Middle East, General Sir Thomas Blarney, that some people in Australia seem to be living in a carnival atmosphere, is only too true. If we need support for that statement we have only to consider what is happening in almost every part of Australia to-day. On every hand we sec an enormous wastage of time, money and energy on sport. Whilst sport is admirable in times of peace - indeed, it is due very largely to the love of our people for sport that our national characteristics have been developed - in time of war undue regard for sport is completely out of place. It is well that our people should realize that, whilst other nations are prepared to help us in this war - I have already mentioned that Russia is giving of its best to the cause ; the United States of America is also helping us to an increasing degree as the weeks go by - the cold fact is that no other nation will pull the chestnuts out of the fire for Australia and the Empire. It is our duty to-day to do our best; not only a conditional best, not only a best which connotes the maintenance of the high standards that have prevailed in Australia for many years, and to which unfortunately the members of the present Government and their supporters have given lip service but also willingness to equal what is being done by the Mother Country. Before we can approach the effort being made by Great Britain, we shall have to go without many of the things that we now enjoy. It is in this respect that I say that this budget has a misleading or doping effect on the people of Australia. It suggests to them that, whilst a small section of the community will be asked to make sacrifices, the majority of the people will not be any worse off than they are to-day. In offering this criticism of the budget, I have no desire to be unfair. I realize that the Prime Minister, speaking in the House of Representatives, has threatened that although the Government is imposing heavy sacrifices on certain sections of the community, other sections may be called to bear more of the burden. The whole point of that, however, is that whereas the budget and its implications have been made known to the people of Australia, the Prime Minister’s statement, to which I have referred, is probably unknown to most of them. It seems to me that the Government has viciously attacked a small section of the people, the voting strength of which is not great, and which the Government considers it to be impossible to win away from its present political affiliations.
– That is not a fair argument.
– I submit that it is fair criticism. I point out to the Government that the burdens cannot be borne, willy nilly, by any one section of the people of Australia, and that before this war is over, we shall all be bearing burdens and making sacrifices which at present are unknown in this country. On the question of war finance and the savage imposition of taxes on higher incomes, it is perhaps worth reading the following extract from an article written by ProfessorIles on the subject: -
It must be remembered that in Australia there are few very large incomes, and that the small and medium incomes greatly predominate. Although it would be impossible for the rich to “ pay for the war “ in the sense of bearing the whole burden of economizing in consumption which it involves, there is an illusory sense in which the rich could be made to do all the actual paying.
Apparently, that is what the present
Government is now doing.
The DEPUTY PRESIDENT (Senator Brown). - I desire to inform the Senate that Mr. Leslie Blackwell, K.C, M.C., a member of the Parliament of the Union of South Africa, is within the precincts of the Senate. With the concurrence of honorable senators I shall invite him to take a seat on the floor of the Senate beside the President’s chair.
Honorable Senators. - Hear, hear!
Mr. Blackwell thereupon entered the chamber and was seated accordingly.
– ProfessorIles continued -
For it would be possible (if it were not for the effects on production) to finance the war in such a way that the poor would not be called upon to contribute, directly to the Government, anything at all in the form of taxes or loans - as they need not if resort were had on a large scale to bank credit. This would mean that the poor could escape making payments in money to the Government. But it would not mean that they could escape the burden. Indeed, they would bear a larger part of the burden under this method of finance than they would bear under the method of direct taxation. Inflationhas the effect of skimming off part of the real incomes of wage and salary earners and of handing it over to the rich (the profit earners) so that they would in effect have the wherewithal to pay additional sums to the Government in taxation and voluntary loans. It is thus a simple matter to ensure that the rich shall have the means to “ pay for the war “, by impoverishing the poor in order that they may. In advocating finance by bank credit, the Labour party would be well advised to take heed of this distinction between paying the money and bearing the burden, and in doing so to remember that inflation is incredibly efficient in producing inequality.
The Government’s effort is doomed to failure. Indeed, it will very seriously retard our war effort in many ways. The people as a whole are quite prepared to bear their fair share of the burden of the war. The rate of tax which the Government proposes to impose on higher incomes would bring forth no objection from me at all if increased taxes were to be spread equitably over all sections of income earners. However, the Government in its taxation proposals, as my leader has already said and demonstrated with figures, is completely out of step with the governments of other countries within the Empire. He mentioned New Zealand, which has had a Labour Government since the outbreak of war. At the beginning of last year I had the pleasure of meeting most of the members of that Government. It has no illusion as to the spreading of the burden over all sections of its people. Indeed, it has shown in no uncertain manner that it believes that the people of New Zealand, as I believe of the people of Australia, are prepared to do their utmost in the prosecution of the war. It has imposed a special war tax on all sections of its people, and I give credit to it for the general war effort it is making. It must be evident to this Government that its proposed taxes on higher incomes will simply dry up the source from which it must hope to draw further taxes in the future. We must realize that no one section of the community has a monopoly of patriotism. We cannot expect those on the higher levels of income to have more patriotism than those on the lower levels. The proposed intensive scale of taxation on the higher incomes will eliminate a very large number of those incomes from the field of taxation altogether, and, consequently, they will not be available in the futureto be taxed by this or any other Government. One of the most serious effects which the Government’s proposed taxes will have on these people is that it will make them feel that an injustice has been done to them..
– Will they go on the dole?
– I might have expected that interjection from the honorable senator. On many occasions in this chamber honorable senators opposite, particularly the Leader of the Senate (Senator Collings), have uttered the canard that it is not the amount of tax that matters, but the amount that is left to the taxpayer after he has paid tax. That is a deliberate half-truth, because the amount that is left to the taxpayer after he has paid tax must be related to the individual taxpayer’s commitments. It is simply fatuous to suggest that a man who is accustomed to an income of, say, £5,000 a year, to take a figure at random, has not to meet commitments far in excess of those which, say, a man who normally earns £1,000 a year has to meet.
I shall now comment briefly upon the effect of the Government’s company taxation proposals. We have heard ad nauseam from honorable senators opposite criticism of the big companies, the so-called greedy profit-makers, the great monopolies of this country. Most honorable senators opposite know the position of those companies just as well as I do. Their statements on this point are deliberately designed to mislead certain people. They know perfectly well that the bigcompanies have enabled us to achieve our present scale of production of munitions and equipment.
– What about the workers?
– Workers are employed by small as well as big companies. Unless the worker has the requisite wherewithal and direction he is incapable by his own efforts of producing the things we require; and, unfortunately, the commodities that we require in war-time are entirely dissimilar to those which we require in times of peace. Engineering capacity which is admirably suited to civil production is in many cases entirely unsuitable for the manufacture of munitions. Thus, we have had to look mainly to the large organizations to assist us in our munitions output.
– And also to our skilled workers.
– I have already paid a tribute to the workers. I said that the munitions workers particularly have an appreciation of the seriousness of our present position. I pay tribute to them, because I have some idea of what many thousands of them are doing. However, the fact remains that unless we could have got the assistance of the large organizations and, indeed, many small undertakings -I do not exclude the small concerns - we should not have achieved our output of war production. What we need in this war are munitions and more munitions in the shortest possible time, and it is to the large companies that we must look for those supplies. It is perfectly obvious that, confronted with severe and savage taxation, these organizations, in spite of their desire to do their utmost, will not be able to contribute as much to our war effort as they have done in the past. I have a knowledge of many of these organizations. They have expended large sums on equipment in order to provide our requirements of munitions, although they realize that they will not be able to recoup themselves of that expenditure when the war is over. That expenditure will be a total loss to them. Many of those organizations are following that policy, but the Government’s taxation proposals will considerably reduce their capacity for this work. It seems strange that honorable senators opposite should suggest that these big organizations are most concerned about placing themselves in a f avorable position in order to be able to take the greatest advantage of the postwar period, and at the same time urge that we should develop the smaller companies and organizations. Surely they realize that whilst the Governments taxation proposals will effect the bigger companies which I have cited the new taxes will also make it impossible for the smaller companies to progress. In that way, the Government will reduce to a considerable degree the ability of the smaller companies to help in our war effort. Yet those smaller organizations have already done magnificent work. The effects of this kind of company taxation will be bad on the bigwellestablished companies which have huge reserves, but they will be worse on small companies, many of which have just altered their production methods to meet our requirements. It will be impossible for these small concerns to continue to expand in anything like the way they would have done had taxation been kept at a reasonable level. The Government would be well-advised to disabuse its mind of these false impressions. I am confident that honorable senators opposite will appreciate the position much more clearly now that they have had an opportunity to see what is being done.
– Would the honorable senator entirely exempt the small companies from taxation?
– I should not be prepared to exempt those controlling small companies or any one else. I should endeavour to impose taxes in a fair and equitable manner, which would enable growing concerns to carry on and expand in a way which would be of some assistance to our war effort. Unless that be done, there will be a damaging effect on the wonderful development that has taken place hitherto in our engineering and allied industries during the war.
I wish to make a brief reference to another of the real dangers of this budget. It is extraordinary to me that the present Government, willy-nilly, has thrown overboard the previous Government’s proposals in regard to compulsory loans. I had an opportunity to listen to the Attorney-General (Dr. Evatt) in the House of Representatives when he said that compulsory loans did not build up the post-war credits but post-war debits, but obviously future debts are increased whether loans are compulsory or voluntary. Compulsory loans have many merits and advantages, and I have not yet heard from a Government supporter, either in this chamber or in the House of Representatives, a reasoned statement of valid objections to that system. Supporters of the Labour party when in opposition, said that they were against compulsory loans, but even at that time they did not say why. Now that they have taken over the reins of government, they are attempting to be consistent, but in doing so they are intensifying their war financial problems.
– Should a man on the basic wage be forced to subscribe ?
– If people of this country had to subscribe to compulsory loans the same amount of money as the people of New Zealand have to pay in taxes, the return would be very much more than was estimated in the Fadden budget, which was opposed by the Labour party. The Labour party in this conn- try considers itself to be an advanced Labour party. Like the soldier who thought that everybody else was out of step with him, it believes that it is the one Labour party inthe British Empire which is in step, but I do not believe it, and before long honorable senators will find out that it is not others who are out of step. The refusal to introduce a compulsory saving scheme has rendered necessary the raising of extra loans amounting to approximately £20,000,000.
– The Government of which the honorable senator was a member proposed to take money from girls receiving £160 a year.
– Had the honorable senator listened to what the New Zealand Minister, Mr. Nash, said probably he would have been greatly enlightened on many points.
-i enlightened Mr. Nash.
– The cold fact is that under theFadden. budget we had to raise by way of loans, in Australia this year, five months of which have already passed, approximately £142,000,000, including £20,000,000 for the States. Incidentally I have not heard very much from a certain Labour Premier who, when the previous Government was in office, was consistently haranguing and criticizing it for the paucity of its loan allocations to the States. I see nothing in this budget which suggests that the Labour Government will be any more liberal to the States in the way of loan allocations than was the previous Government.
– It is an interim budget.
– I agree with that, and the Government will soon be forced to do some of the things which it has avoided doing on this occasion. By the time a supplementary budget is presented, honorable senators opposite will have obtained a good deal of information which will assist them infuture considerations. Whereas theFadden budget provided for the raising of £142,000,000 in loans, the present budget provides for the raising of £158,000,000.
– What is wrong with that?
– If subscriptions to the present £100,000,000 loan now being floated are any indication, the Government has a first-class problem ahead of it. I say without fear of contradiction that the Government will find it impossible to raise loans on the. scale envisaged in this budget, and consequently it will be necessary to fall back upon what my friend Senator Darcey has so consistently advocated in this chamber, namely, bank credit. The Government will be judged by results, and I arn prepared to reserve my final judgment until the results are apparent.
– Ve shall stand or full on that.
– The Government is more likely to fall. It is advisable that the people should know just what the position was when this Government took over the treasury bench. The Menzies Government conducted the affairs of Australia during two years of war, and in all that period, according to the latest figures available, the average increase of prices has been under 10 per cent. I mention that because it is one of the very important factors upon which the Government will be judged. It is fatuous for the Government to talk of an all-in war effort if, at the same time, it encourages rising costs and prices. Consequently, I say deliberately that this is the main factor on which the Government will be judged, and on which the success of its war effort will depend. It is hopeless to endeavour to engage in a maximum war effort if there is to be a rising pile of costs, wages and prices. The omens for the future are already not good. If reports which have appeared in the newspapers he correct - I agree that newspaper reports are not always accurate - adverse effects will soon be felt. By various -means the previous Government held costs and prices down in a way which has not been excelled in any other country engaged in this war. They have been controlled not by flatly tightening down on prices and wages, as is done in Nazi Germany, but by endeavouring first of all to control prices on a reasonable basis. Incidentally I pay a tribute to the Prices Commissioner for his valuable work, which I consider has been exceptionally successful. Secondly, prices and costs have been kept at reasonable levels by allowing arbitration machinery to decide industrial matters. It is reported - I speak only from knowledge gained through that report - that that system has been departed from already. We have been told that, the Government has agreed to a mutual arrangement between certain workers and employers on the question of wages, without regard for the effect that such an arrangement might have upon other classes of workers, and indeed upon the entire arbitration system. I refer to the reported agreement between the brick, tile and pottery interests and their employees. If this be the system under which this Government proposes to settle industrial disputes, costs will rapidly increase. Not only will there be a rise in costs, but also the effect will filter right through the whole structure of our war effort, and its cost will increase materially. The result will be the same as the effect of inflation” in any other country, namely, that the conditions of those people whom such action is designed to assist will become worse.
I have no objection to increasing the rates of pensions, but I believe that the real rate of pension is its purchasing power. I recall that a previous labour Prime Minister who had avowed that he would not reduce pensions, eventually was forced to admit that it was better to reduce pensions and maintain their purchasing power than to retain the then existing rates. I draw the Government’s attention to the fact that, if it travels down the easy way, not only the pensioners, but the workers generally, will be worse off than they have been, and the hardship will be felt particularly by those sections of the community whose support this Government has made violent efforts to obtain. I refer to those persons in receipt of fixed salaries. It is assumed that, owing to cost of living adjustments, persons employed under awards of the Arbitration Court can withstand the effects of inflation. Certainly they can in the early stages, but the large section with fixed incomes has not the advantage of automatic salary adjustments to compensate for increases of the cost of living, and it will suffer first from the results which I fear from the present budget.
.- I am conscious of the extraordinarily difficult task which was presented to the Treasurer (Mr. Chifley) and to the previous Treasurer (Mr. Fadden) in preparing the budget proposals for this year. The task of the present Treasurer was rendered lighter than it might otherwise
Iia ve been by reason of the fact that the financial affairs of this country during the first two years of the war were conducted with great skill. That enabled us to put forward a tremendous war effort and preserve on a perfectly sound foundation the whole financial structure of this country. I take this opportunity to pay tribute to the Menzies Government for its financial policy during those two years. It has to its credit an achievement that is little short of remarkable.
– It increased interest charges.
– It is time the honorable senator became a little less irresponsible, since he is now ‘a Minister. The truth is that, despite the large sum that is required for war purposes, interest rates have fallen since the war.
– But capital charges have increased.
– The fact that interest rates have fallen is due in no small measure to the wise policy adopted by the Menzies Government. I add the fact referred to by Senator McBride that, since the outbreak of war, commodity prices in this country have risen by only 10 per cent. That is another remarkable achievement. When Senator McBride was speaking, the Minister for Aircraft Production (Senator Cameron) indulged in another of those irresponsible statements to which we became accustomed when he sat on the opposition side of the chamber, but which come ill from a Minister of the Crown. He interjected “ Why should prices rise at all ? “ Prices have risen because costs have risen, and it is impossible to keep down the price of any commodity if the price of producing it is increasing. One of the big factors in the increasing costs that have led to increased prices is increased wages. Members of the Joint Committee on Profits have been giving attention to this matter, and have had perfectly clear proof before it that prices in
Australia, on the average, have not increased more than 10 per cent, during the war, and that wage costs are a big item in the price of many commodities. According to the Prices Commissioner, Professor Copland, who has carefully investigated the matter, wage costs have increased by more than 12 per cent, in all cases examined by him, and he expressed the view that that was a conservative estimate.
What is the task with which the Treasurer is faced at present? It is no light one. It is that of how to raise the sum of £325,000,000 from 7,000,000 people, a task which two years ago would have been thought well nigh impossible. In order to provide the colossal sum envisaged in this year’s budget, the contribution from the total population of Australia will be almost £50 per capita. The first thing to be done by any one who considers such a problem is to ascertain its nature, and then to proceed to administer to the community the proper medicine. These are not the days when such a task can be undertaken without imposing sacrifices upon every section of the community.
– Should not some persons pay more than £50 a year?
– Some should pay more and others less; but I am surprised that the Minister should be so enthusiastic about the present budget, because ever since I have been a member of this chamber, he has advocated the collection of the whole of the income tax from persons receiving over £500 per annum. Now he is an enthusiastic supporter of a budget presented by a Government that refuses to impose additional taxes on anybody with an income of less than £1,500 per annum.
A curious feature of the budget speech is that it sets out in perfectly clear language certain principles that are perfectly sound, but the Treasurer does not implement them. He is like a doctor who, having had a look at a patient, has diagnosed the disease accurately, and knows the kind of medicine that should be given, but says, “No, I cannot give him that stuff “. The Treasurer refuses to administer the medicine which he knows the patient should have.
– Because “ Dr. “Fadden has prescribed it !
– That is largely the reason. It is also because the medicine is supposed to be politically unpalatable. This budget is founded on political expediency, and so far as it differs from theFadden budget, is divorced entirely from the principles which the Treasurer himself expounded.
The problem confronting us is of a twofold character. We have reached the stage where we can continue the war effort upon the basis on which we all desire that it should be continued only by diverting men and machines from civil production and seeing that they are employed in the production of goods and services for war. That position is frankly acknowledged in the budget speech. The Treasurer said that, notwithstanding any increased production that could be brought about, there must be a switch over of a large volume of production from civil needs to war demands. With that statement I entirely agree.. That is the physical side of the problem. The financial side is involved in the question as to how the burden of that diversion shall be carried by the community.
– Upon the principle of equality of sacrifice.
– Yes, and according’ to ability to pay. Those are the principles which should be followed at present by any government; but, because the principles followed in the present budget involve the very reverse of payment according to ability to pay, I am opposed to certain features of the budget to which I intend to refer. One satisfactory way of seeing that thecommunity pays in accordance with its ability is to tax people on their incomesin accordance with the amount of those incomes. There is no fairer or more certain way of seeing th at the burden is properly distributed amongst all members of the community in accordance with their ability:
– Would the honorable senator includethe basic wageearner?
– Yes, if necessary. If the basic wage-earner, in order to meet the needs of war, is: to be forced like every other member of the community to make some contribution to the war effort, the fairest way to do it is to tax him, and not reach the same result by the roundabout, unfair and inequitable methods inherent in the present budget. The Leader of the Opposition (Senator McLeay) has already mentioned some phases of the problem confronting Australia. He has referred to the fact that no new burden is imposed on incomes under £400. This section of the community has an income of £560,000,000. It contains 90 per cent, of the earners of income, and comprises 70 per cent, of the national income; yet it contributes only £3,250,000 to the war effort.
– It provides profits for other people, also.
– That is only by means of direct taxation.
– Let us compare the presentGovernment’s policy with what has been done by the Labour Government of New Zealand. Out of the same fund, from the same kind of people, that Government would obtain revenue amounting to at least £56,000,000. The New Zealand system starts with a tax of 10 per cent, or 2s. in the £1. The basic wageearner - indeed, a person earning £2 a week, which is less than the basic wage - contributes £10 out of his £100 to the war effort.
– There are not many such persons in New Zealand.
– Is that the policy that the honorable senator supports?
– It is a better policy than the policy of the Commonwealth Government as. set out in this budget. If it be necessary to get the money for the war effort, then that is the policy which I support.
SenatorFoll. -It is better than robbing the people by inflation.
– That is where we join issue.
– Exactly. I believe that that section of the community which has the use of £560,000,000 must bear its share. It is because I believe that it cannot, in fact, escape from its share of the burden that I believe that the money should be extracted from that section in the only fair way by which it can be obtained. Instead of diverting money from civil production to war activities by means of post-war credits or compulsory loans, as the Fadden Government proposed, this Government runs away from the task altogether. It starts with a miserable contribution, for it proposes to increase taxes by only £22,000,000. Some proportion of that amount it plans to get by means of an increased sales tax. It is amazing to find aLabour Government preferring a sales tax to an income tax based on ability to pay.
– The reason is that the people can see one tax, but not the other.
– It may be that the community does not see the sales tax, but it certainly feels that tax.
– The community has always felt it.
– Exactly. That is my point. Indirect taxation is the most inequitable method of taxing which can be devised.
– Then why did the Government which the honorable member supported impose indirect taxation?
– Because a particular government does a certain thing is not to say that indirect taxation is to be preferred to direct taxation. This Government proposes to levy indirect taxation, which falls inequitably upon people with large families, low wageearners and invalid and old-age pensioners. It does that in preference to taking the straight and honest course, and saying to the man who is earning £300 a year : “ Look here, old chap, it is up to you to contribute £15 a year to the war effort”. The Government has resorted to this method rather than impose direct taxation; but that is not the whole story by any means. Over £70,000,000 of war expenditure is to be obtained from “ we don’t know where “. The Government has run away from the problem of raising that amount of this year’s war expenditure. I submit that the Government is not serious when it tells the people that it proposes to raise £130,000,000 this year by way of loan. Any man who studies this problem must come to the conclusion that the Government will not be able to raise half of that sum in this way.
– We could do so if the interest rate were 6 per cent, or 7 per cent.
– What a splendid idea ! Here we have a Labour senator as a protagonist of high rates of interest ! If 6 per cent, or 7 per cent, is the rate of interest which the honorable senator thinks is necessary-
– I did not say that.
– The honorable senator said that we would soon get the money.
– The money would soon be forthcoming if the interest were 6 per cent, or 7 per cent. The people who make profits would be full of patriotism then.
– The Government expects to get a large proportion of the £70,000,000 from the people earning incomes of less than £400 a year.
– From those earning above that sum.
– If6 per cent, or 7 per cent, interest be necessary as an encouragement, then I say that it is in that section that encouragement is necessary in order to get the money. The fact is that we raised only a little over £60,000,000 by means of loans last year. I cannot see any prospect of raising anything in excess of that amount this financial year. If my prediction be correct, it means that about £70,000,000 of war expenditure will have to be provided by bank credits. In other words - and this is the important factor - at a time when, on the Treasurer’s own statement, the production of goods and services for civil purposes is decreasing, the Government proposes deliberately to increase by over £70,000,000 the amount of credit available in the community.
– The honorable senator did not criticize the expansion of bank credit by the previous Government.
– There is all the difference in the world between resorting to bank credit at a time when there are idle resources in the community which it is desired should be brought into production, and increasing bank credit at a time when it is proposed to decrease the production of civil goods.
– Why did not the honorable senator say that during the depression when 100,000 men were out of work and the Government of the day would not make a “ copper “ available ? Why does he not be consistent?
– I am consistent. The Minister for Trade and Customs (Senator Keane) is not able to point to any speech of mine which is inconsistent with what I am now saying. I invite any member on the Government benches to turn up what I said about this subject last year. If he does so, he will see that I am repeating to-day what I said then. The sum of £70,000,000 of bank credit is to be found and distributed throughout the community at a time when our ability to produce goods and services for civil purposes is decreasing.
– Nonsense ! The honorable senator does not know what he is talking about.
– Order! Honorable senators must discontinue interjecting. The honorable senator is entitled to state his case. Other honorable senators will have a similar opportunity.
– If what I am saying is nonsense, I am glad that it has the imprimatur of the present Treasurer, who in his budget speech made it perfectly clear that we had to have a switch over from civil production to war production.
– That does not necessarily mean reduced production.
– The Treasurer went on to say that the issue of bank credit could not solve that problem. That is the situation as I see it. Unless we get a transfer of income from the community to the Government in order to finance waT production there will be a considerable increase of the prices of commodities.
– What about putting non-essential industries into full production ?
– When there is a decreasing supply of goods and an increasing supply of money, prices of commodities will be the means by which that diversion from civil production to war purposes will ,be reflected in the community. It is because I believe that an increase of the price of commodities which are -available to the civilian population is the most unfair, as well as the most unscientific, method of financing the war effort, that I am opposed to this method of finance.
Another aspect of this problem is of some importance. In Labour circles it seems to be assumed that companies are always fair game. After all, it must be remembered that companies do not exercise votes. Whenever increased taxation Ls necessary it is becoming the practice to increase the taxes on companies, but governments which do that overlook the fact - and governments of all political parties have been guilty of this in some degree - that companies do not exist in reality. There is no such thing as a company that can be felt, that can be hurt or taxed. In other words, the taxes which companies pay are paid by their shareholders. When an increase of company tax is imposed by a government the principle of payment of tax in accordance with ability to pay is again departed from. If a flat rate of tax of 3s. in the £1 be imposed on a company that rate of tax is carried by every shareholder in it, whether rich or poor. The widow-
– Oh! The widow!
– Widows, as well as basic wage-earners, are included among the shareholders of companies. As proof of the inequality of the imposition of such a tax, the widow whose income from dividends represents, say, £100 a year, pays exactly the same rate of company tax and bears the same rate of burden as a man who has invested £10,000 in a company.
– How many widows are shareholders in companies? It is pretty safe to say that most widows are in receipt of pensions.
– The equitable way to deal with income derived from companies is to tax it in the hands of the shareholders.
– Why did not the government which the honorable senator supported do that?
– It did, up to a point.
– We have merely gone a little further.
– The heavier these burdens on companies become the more directly they affect the shareholders.
Whilst it may be possible for most people to bear a tax of 2s. in the £1, the burden placed upon them is infinitely greater when the tax rises to 4s. in the £1. As I have said, this is an inequitable method of taxing. Some taxing of companies is necessary, I agree, even if it be only to deal with undistributed profits; but in respect of the profits of companies which are properly distributed the burdens to be imposed on shareholders should be in accordance with their incomes, and the rate applied to their earnings from dividends should be the appropriate income tax rate. I take exception not only to the proposed increase of the tax to 3s. but also to the proposal of the Government to impose a vicious tax on company profits.
– Who makes the profits ?
– The shareholders.
– They do the work.
– They do not do all the work; but by their efforts they provide the means whereby plant and machinery are erected, entirely new undertakings are started, and thousands of people are kept in profitable employment.
– In profitable employment! The workers-
– Every honorable senator is entitled to be heard without interruption. I again ask the honorable senator to discontinue interjecting.
– I accede to your request, Mr. President, but at the same time I remind you that when we were in opposition we were interrupted so frequently that we could not express our opinions clearly.
– The Government proposes to tax the earnings of companies in excess of 4 per cent. I suggest that that is a very low percentage of profit at which to commence to impose such a tax. The Government’s proposal takes no account whatever of the varying risks associated with certain enterprises, and it accepts as a basis for the imposition of a special profits tax a rate of profit which is not very much higher than is at present obtained on gilt-edged securities. Again, the Government imposes this tax without regard to the ability of the companies to pay it. It does not, and will not, pay sufficient regard to the fact that one company may be carrying on an undertaking which involves considerable risks, and therefore should properly earn a higher rate of profit, whilst another may be engaged in an enterprise in which there is little risk. I suggest that that is further evidence of the failure of this Government to adhere to the perfectly sound principle that should guide us in our taxation proposals, namely, ability to pay.
I wish to commend, as I think I should, the activities of the previous Government in its control of prices. I have already referred to the fact that I believe the achievements of the last two Governments in that regard to have been little short of remarkable. A great deal of their success in that direction was undoubtedly due to the efficiency of the Prices Commissioner, Professor Copland.
– Professor Copland is getting a lot of praise to-day.
– If the honorable senator is uncertain as to the qualifications of Professor Copland to undertake the task allotted to him I suggest that he should read the unanimous report of the Joint Committee on Profits, to which three of his colleagues have subscribed their names, in which the members of the committee thought it proper to commend the work of Professor Copland. Having regard to the record o’f public service rendered by that gentleman, I have been a little disturbed in the last few days to hear that it is proposed to alter the regulations under which he operates at present. It is easy for the Government to suggest theoretical arguments as to why the powers of the Prices Commissioner should not be placed in the hands of one man, and how it may be better if some form of appeal tribunal were established. I commend to the Minister the old adage that the proof of the pudding is in the eating of it. This country has been well served by the form of control exercised by the Prices Commissioner since the commencement of the war. I believe that it would be a disservice to the consumers of this country - in fact to all of us - if his activities were interfered with at a time when the work he has to perform may be of the utmost importance indeed. It has been difficult enough to control prices in this country during these two years of war; but I believe it will be immeasurably more difficult in the future as the result of the proposals contained in this budget. It is in the financial policy such as the Government has expounded that I see the greatest danger to the price structure. Because that danger is very real to-day I should like to see in control of that extremely difficult undertaking a man who has performed such a signal service to his country during the first two years of the war.
– Who has said that Professor Copland will not remain in control of it?
– If he may be overruled by the Minister or by some inexpert committee he will no longer be in control.
– Does the honorable senator think that Professor Copland needed all his ability to allow certain manufacturing interests to “ pass the buck “ of the increased excise on to the workers who in turn cannot pass it on to anybody else ?
– I am glad that the honorable senator has raised that question. I understand that the increased excise was imposed for the very purpose of being passed on.
– Who told the honorable senator that?
– The Treasurer said that it was done in order to reduce consumption. In his budget speech he said -
So far as taxation goes, as a means of reducing consumption, I think that for middle and lower incomes it is better to get the reduction by means of taxes on goods and services not really essential, which can be forgone without injury to health or efficiency.
In perfectly plain language that means that these taxes are being imposed on commodities for the purpose of reducing consumption, and that involves that the Treasurer anticipated that the tax would be collected by the retailer from the consumer in the form of increased prices.
I believe that all honorable senators are concerned at this time, as I am concerned, with the war situationWe all recognize that if the need arises all sections’ of this community should make their contribution to the war effort. We cannot carry on the war on the scale on which it is being carried on at present without imposing tremendous real sacrifices upon every member of the community. It would be a good thing psychologically for this country if the Government were brave enough to indicate that fact in its financial measures, and drive straight home to every member of the community that all of us must bear our burden, that those burdens must be borne now while the war is on, and that they are the necessary insurance premiums which we must pay if we are to retain our liberties as a democratic community.
– The Leader of the Opposition (Senator McLeay) erroneously spoke of me as the financial adviser to the Government. I assure him that Professor Copland is still the financial adviser to the Government, and that he will find that that gentleman’s orthodoxy will be extended almost to any degree in order to retain his position. I shall not be the least surprised if he is prepared to accept any revolutionary monetary change in order to keep his job. The Leader of the Opposition quoted certain figures in order to show that the banks earn very little profit. The Bank of Australasia was founded in 1832 with an original capital of £200,000. In 1936, its capital was £4,500,000 and its disclosed reserves amounted to £4,750,000, whilst its reserved profits used in the business of the bank totalled £3,301,317. When we speak of company profits, and particularly the profits of a banking company, we should not overlook the degree of watering of stock that is done by these companies. The Bank of Australasia is an English company and most of its profits go to England. The value of the bank’s properties is at present shown at only £200,000; but during the nineteen years preceding 1936, £2,648,496 was written off the bank’s properties. Those properties are invariably situated in the centre of cities, and their value is constantly rising. The fact that in a period of nineteen years this bank has written off an amount of £2,648,496 in respect of depreciation of its premises, that is, off its profits, reveals just one way in which these companies hide their real profit.
I have repeatedly told honorable senators that it is impossible from a bank’s balance-sheet to find out actually what profit it really makes. From 1900 to 1932, the net profits of the banks in Australia amounted to £122,351,428. The original capital of the Bank of Australasia was £200,000, and in 53 years, it has paid £6,000,000 in dividends. These are official figures which I have taken from the Year-Book. The Union Bank, which commenced with a capital of £140,000, has paid £8,000,000 in dividends. Consequently, bank profits are much greater than some people imagine. During the last war the banks paid up to 15 per cent, in dividends. The banks make a habit of publishing their smaller profits, but they never disclose their bigger profits. I happen to be a member of the Economic Society of England. Even at present, the banks in England are paying from 14 per cent, to 16 per cent, and the chairman of directors of one bank in presenting the balancesheet, told the shareholders the bank was paying a dividend of 14 per cent, because of the fact that they were lending hundreds of millions of pounds to the Government.
– Tell us what the Australian banks are making.
– I have just given the figures of the Bank of Australasia.
– That bank has never made 16 per cent, profit in its history.
– It has paid up to 15 per cent ; and that does not in any way disclose its real profit. So long as the banks place hundreds of thousands of pounds to secret reserves, it will be impossible to say how much they really make. I venture to say that honorable senators will find that the inquiry by the Treasurer (Mr. Chifley) backed up by the AuditorGeneral into the profits of Australian banks will provide a big surprise.
Honorable senators opposite have stated that persons with incomes up to £1,500 a year will not be touched under the Government’s taxation proposals. During last financial year, the increase of taxes under the lower incomes was increased by over 300 per cent.
– We are talking about this budget.
– Honorable senators opposite said that people earning such incomes are not taxed.
– Under this budget.
– Under the previous Government’s budget, the tax on lower incomes was increased last year by 300 per cent.
– We are talking about additional taxes to be imposed this year.
– But the Leader of the Opposition said that these people are not paying tax; yet his Government increased the rate of tax on incomes by over 300 per cent. I have friends in Hobart, who complained about the increase of tax imposed by the Fadden Government. One man who paid £15 in tax in one year was obliged to pay £45 in tax the following year. Obviously, we cannot continue increasing the rate of tax on small incomes. I point out to honorable senators opposite that the Keynes plan, which the Fadden Government was prepared to adopt, was turned down by the British Government. Keynes had two schemes. The British Government refuses to use the national credit in any way whatever, just as the Fadden Government refused to do so. The Fadden Government proposed to adopt the Keynes plan in order to tax incomes of £100 and over, proposing to pay back this tax, which was to be levied in the form of a compulsory loan. Where would we get the money to pay back those loans? We have not got it now. The same observation applies to war debentures. A war bond of a face value of £1 is sold for 16s. Where will we get the money to redeem those bonds? That is the absurdity of taxation. Personally, I do not believe in taxation at all. Recently, I journeyed throughout Australia as far north as Cairns and as far west as Perth, addressing meetings, at which I showed how the war could be financed without the imposition of additional taxes. The mistake which the Fadden Government made, and I hope that this Government will not repeat it, is that it failed to realize that wars are not fought with money at all. Do honorable senators realize that 75 per cent, of taxes levied to-day are used to pay interest on previous loans? Before the outbreak of this war we were paying nearly £1,000,000 a week on back borrowing. If we realize that wars are not fought with money, we should have no need to impose taxes. Wars are fought with credit. The proof of that fact is that in the first year of this war the Associated Banks of Australia bought £07,000,000 worth of war bonds and treasury bills. That is how we fought this war during its first year; and we can continue to fight it by using credit so long as we get the credit through the right channel. If that credit came through the Commonwealth Bank we need not impose additional taxes. However, the Eadden Government imposed additional taxes last year, and it seems that we shall continue that practice because we have followed it for the last 40 years. Nothing hurts the conservative mind so much as a new idea. I propounded a few new ideas in this chamber, but they were turned down by the previous Government. For instance, I suggested, some months ago, that in order to raise revenue we should insert a clause in every Government contract to compel all contractors to finance their contracts through the Commonwealth Bank. That would only be a reciprocal business arrangement. It would tend to teach the people to use their own bank, and it would bring in hundreds of thousands of pounds a. year in profits to the people’s bank. The Fadden Government flatly turned down that proposition ; I shall bring it forward again.
– But the Government will not.
– In view of the financial mess left to us by the preceding Government, we have done the best we could in the short time at our disposal. But I promise honorable senators opposite that some of the financial ideas which I put before this chamber in the past will be embodied in the supplementary budget.
The general belief is that there are three reasons, and only three reasons, why taxation is necessary. The first is that the money that the public possesses is the only source of money available to the Government to pay for the war or social services. That is a fallacy. We have not taxed the people sufficiently in order to be able to raise the money we require without using credits. The second reason is that the only way to switch the employment of labour and raw material from civil production to production for war purposes is to deprive the public of part of their incomes, so that that part of their incomes is spent by the Government. That is another fallacy. The third of these reasons is that if the public has more money to spend than there are consumers’ goods to buy, inflation must ensue. I shall show that those conclusions are false; yet they were embodied in the financial policy of the Fadden Government. That they are false is proved by the fact that we have been using credit ever since the war started. I shall ask very shortly how much it cost the previous Government to tell the people that if they did not buy war bonds, the war output would be diminished. That is another fallacy. If we had an extra £1,000,000,000 in Australia at this moment it would not give us one extra tank or one extra aeroplane. That should be obvious to honorable senators. One reason why the three grounds which I have mentioned above for the belief that taxation is necessary are ill-founded is stated by the British banking journal, 77ie Banker -
It is not in the least true that the production of arms could not take place, only on a smaller scale, if the public were not providing the money in the form of gifts or loans. If the money were not forthcoming in one of these ways, it would have to be created. And this the State as the monetary authority can do perfectly well at negligible cost and practically without limit.
In England, £600,000,000,000 worth of credit was created during the last war. I hope that we shall not follow a similar procedure. The Commonwealth Bank can lend interestfree money to the Government. Shortly after I was elected to the Senate, I asked whether it was the intention of the then Government to discuss the findings of the Royal Commission on Monetary and Banking Systems before the ensuing Christmas vacation, and the reply I received was “ Yes “. That was nearly four years ago, yet that subject has never been debated. If it had been discussed, the then Government’s financial policy would have been revealed as being in direct opposition to the findings of the royal commission which it appointed. That is the reason why preceding governments failed to provide honorable senators with an opportunity to discuss that matter. Although Mr. Fadden spoke for an hour when introducing his budget, he mentioned the Commonwealth Bank only once. Just before he concluded his speech he said that there was an honorable understanding with the bankers that there should, be no great increase of profits. Mr. Fadden also said that he intended to give effect to one of the recommendations of the Royal Commission on Monetary and Banking Systems, namely that the private banks should deposit some of their surplus reserves with the Commonwealth Bank, to protect their depositors. It has been stated that the essence of bank credit is faith on the part of the depositors that their money is safe in the bank, and faith on the part of the hankers that at the stipulated time, borrowers will return the money which has been loaned to them. That is a fallacy. The essence of bank credit is security. Money cannot be borrowed on faith. If I went to a bank to obtain money and said that I hoped that the banker would have sufficient faith in me, he would say that business could not be done on those terms. In fact I was once told that, when I went to a bank to borrow money and the banker asked me what security I had in the form of bricks and mortar. I got the money on that occasion, but it was not because the banker had faith in me; it was because I had the necessary security. Mr. Nash, the New Zealand Minister for Finance, was here recently and stress has been laid upon what has been done in New Zealand. The fact is that the New Zealand Government bought the bank established by Sir Otto Niemeyer. After the last war the Bank of England sent emissaries, of whom Sir Otto Niemeyer was one, all over the British Empire to set up new banks, ostensibly to help the financial systems of the various countries in which the new banks were to be established. Sir Otto Niemeyer came to Australia but he found he could not establish a bank here because we already had a people’s bank - the Commonwealth Bank. The Commonwealth Bank has been referred to as a central bank, but actually it is nothing of the kind. The term “central bank” is misapplied to the Commonwealth Bank. A central bank is the principal bank of a private banking system, and the Commonwealth Bank is the very antithesis of that, notwithstanding the mutilation which it suffered at the hands of the Bruce-Page Government in 1924. When Mr. Bruce, on the occasion of his last visit to this country, was sent around Australia to tell us what had happened after the Munich pact, he told us about the probable enemies of the Empire. I listened to that gentleman in Sydney, but I did not say anything to him on that occasion because he said that lie intended to visit Tasmania. He did visit Tasmania and once again he told us about the enemies of the Empire. I said, “ What about the enemies within our gates?” He asked me what I meant by that, and I said, “I mean what I 3ay; what about the action of the Bruce-Page Government in altering the constitution of the Commonwealth Bank in favour of the private banks? In my opinion, that was an .act of treachery to the people of Australia “. Mr. Bruce flushed ; he did not like it; but it was quite true. He was one of the enemies within our gates. We had another enemy, Mr. Casey, who introduced an amending Commonwealth Bank bill before the outbreak of this war. The ob ject was to amend the Commonwealth Bank Act in various ways, and to establish a mortgage bank. It was proposed to establish a mortgage bank by selling inscribed stock and debentures to provide the necessary capital. At that time the Commonwealth Bank had £19,000,000 worth of assets, and its deposits totalled £1S4,000,000. The trick was this: The only people who could buy inscribed stock at that time were the trading banks-, so that, in effect, the new mortgage bank would have been under the control of the private banks. There is also another unpleasant point: Under company law, debenture holders can take over an organization if they are not satisfied with the manner in which its affairs are being conducted. Therefore, the private banks could have taken over the new mortgage bank. Fortunately there was so much opposition to the proposed legislation that the matter was dropped. That is a good example of fifth column work in this country. The aim was to rob the people of the Commonwealth Bank, which is the main asset that Australia possesses to-day. It has been said that the Scullin Government was the first administration to reduce invalid and old-age pensions. That action was forced upon the Scullin Government because of the state of this country’s finances after they had been in the hands of the Bruce-Page Government for ten years. When Mr. Scullin returned from Great Britain he found an empty treasury, an adverse trade balance of £30,000,000, and the London loan market closed to Australia simply because a Labour government was in office. Mr. Scullin had to look around for some new means of raising revenue because, under the present financial system, the only way any government can carry on is by continually borrowing money. The only source of money was the private banks, and as that source had been closed the Government could not carry on. That is why I want to see a change. Use should be made of the great Commonwealth Bank, which has the assets of Australia behind it. The private banks created the last depression deliberately; they can create depressions whenever they desire. A depression can be started only by calling up of overdrafts, and withholding further credit. Under the present system, the private banks have the power to do these things at any time. However, they will not have it after January next. In fact, they may not have it now. I am not quite familiar with the arrangements reached between the Government and the private banks a few days ago in Canberra, but it is said that the private banks have agreed to the new proposals.
– Under duress, of course.
– Yes. We have been told that the cost of living in this country has not increased to any great degree. The sales tax was introduced by the Scullin Government to meet the extraordinary position caused by the extravagance of the Bruce-Page Govern ment. When it was introduced, it was only 2½ per cent., and it yielded a little more than £3,000,000 per annum. Under the Menzies and Fadden Governments, the sales tax was 15 per cent, and its contribution to the national revenue was £12,000,000 per annum. Now the sales tax on certain items is to be increased to 20 per cent. That affects everybody; very few items are exempt, and therefore the cost of living must increase. The sales tax is invariably passed on. Therefore it is no use saying that the people are not suffering from additional taxation impositions under war conditions. The Prices Commissioner, Professor Copland, has said that prices have risen by only 10 per cent., but I would point out that he deals only with certain commodities. A few months ago Professor Copland came to Hobart and addressed the Chamber of Commerce, of which I am a member, on the subject of price fixation. He spoke for well over an hour, and when he was about to conclude I said to him, “ There is one commodity which the Prices Commissioner has not dealt with, and that is what is known as bank credit. It is created on the premises, the raw materials being pens, ink and paper. It is indispensible in modern business, yet the banks are permitted to make a profit of more than 100 per cent, on it.” I realized that, as an economist, Professor Copland knew perfectly well that all costs go into prices and have to be recovered from prices. I have never seen a man so confused. I do not think he heard the case put in that way. Hesaid, “ I think, senator, you will find that we shall obtain the money at a much lower rate of interest than you anticipate “. That had nothing to do with my question, but the chairman closed the meeting.
Sitting suspended from 6.15 to 8 p.m.
– Figures have been quoted by every speaker on the Opposition side, and I also intend to present some figures in refutation of the suggestion by Senator Spicer that the cost of living has increased by only 10 per cent, since the outbreak of war. Indirect taxation is responsible for a far greater increase than that. Figures issued by the Commonwealth Statistician show that in
June, 1914, taxes in Australia amounted to £23,161,000, whilst in 1940, the total amount had increased to £144,397,000. All taxation increases the cost of living and lowers the standard of living. New Zealand has been referred to as a country which we should emulate, but there the average family pays £128 per annum in taxes or 41 per cent, of its total income. The result is that a workman in that dominion has to work for five months of the year merely to earn the money with which to pay his taxes. New Zealand has sold out to the private banks and is utilizing national credit to no greater degree than is Australia. That is why taxes are so heavy in that dominion. Taxes in New Zealand have increased from £5,000,000 in 1914 to £42,000,000 in 1941, an increase of 800 per cent. Indirect taxation acts like an anaesthetic for by that means taxes are taken from a man’s wages without his being conscious of the fact.
Interest bills absorb nearly the whole of the revenues of various ventures. The Sydney Water and Sewerage Board had an income in 1937 of £3,086,763, but interest and exchange costs amounted to £1,679,469. Whilst the various railway systems of Australia earned in fares and freights last year £12,500,000, their interest bills totalled £11,459,000. Is it surprising, therefore, that railway fares and freights are high? When the Commonwealth was established, six States federated. There are now seven States and the seventh is the State of poverty. That fact is borne out by the size df the national debt. I remarked earlier in my speech that the war could be financed without further taxes if full use were made of the national credit. I have cited many authorities in the past in order to show that the banks do not lend money. The greatest authorities point out that the banks are institutions for the creation of credit. The total sum held by the nine associated banks in Australia prior to the war was £14,000,000 worth of notes. The silver and copper eoin which they held was the total amount of their legal tender. The rest of the note issue was in the hands of the public for carrying on the retail business of the nation. In the first year of the war the associated banks bought war bonds and treasury-bills to the value of £67,000,000. Many financial reformers say that the powers of the banks to create credit are unlimited, but no such statement has ever been made by anybody having a right to pose as a reliable authority on monetary reform. The banks certainly do create credit. I have shown that in the first year of the war, when they had only £14,000,000 between them, they bought £67,000,000 worth of securities. How do we get into debt to the amount of hundreds of millions of pounds? There was no more currency in circulation in Australia at the end of the last war in 1918 than there was when the war started. The assertion by honorable senators opposite that we cannot carry on the present war unless the people continue to buy war bonds and war savings certificates is utterly untrue.
– The present Prime Minister has said that.
– I have not heard of it. The parties now in Opposition left the country in such a mess that the Labour party had to do something to fill the breach.
– What does the present Government propose to fill it with ?
– It would be useless for me to reply to that interjection, because the honorable senator stated this afternoon that it was impossible to fill the breach. One of the greatest writers on world affairs, Mr. J. B. Priestly, stated -
There is only one sphere of action in the more civilized countries to-day in which men find it necessary, when describing the ordinary operations there, to use metaphors and similes drawn from medieval brigandage, and that is the world of high finance.
Thus I cannot help feeling, in roy innocence, that there must be something strangely anachronistic, crude, violent, barbaric, about that world; and that it is therefore time it was brought into the twentieth century, cleaned up and civilized.
Senator Spicer said that the bank interest rate had fallen. If the banks lent £100,000,000 last year at 5 per cent, interest and could create £200,000,000 this year, they could now afford to lend money at 2£ per cent., because it would cost them no more to create £200,000,000 than £100,000,000. The fact that money is created by the banks is beyond dispute. Mr. Priestly further said -
A corporation is only a pipe-line arrangement for bringing together capital goods and labour; and since present taxes exceed profits, taxes are levied on goods and wages. Taxes crush the buying power of wages. In nearly every purchase you pay -
A corporate income tax.
An excess profits tax.
A capital stock tax.
A petrol tax.
A manufacturers’ excise tax.
A personal income tax.
A commodity licence tax.
An occupational licence tax.
An electricity tax.
A communications tax; and
An insurance tax.
All excessive taxation is due entirely to the payment of interest. We should get down to the real cause of our financial trouble, which I have always claimed is the unscrupulous use of money power. The destiny of the people is in the hands of their governments. If we cannot place the blame for the present world conditions upon the various governments throughout the world, who can be held responsible for them? Incompetent and corrupt governments have brought the world to the state in which we find it to-day, and Australia must accept its share of the blame for those conditions.
– The previous Government.
– Blame is attachable to all governments. I maintain that Australia has never had a government worthy of its heritage.
– Until now.
– The present Government has not yet had an opportunity to prove itself, but I believe that it will prove worthy of Australia. Abraham Lincoln once said -
The privilege of creating and issuing money is not only the supreme prerogative of government; but it is the government’s greatest creative opportunity.
Taxation is the cause of all the poverty and trouble in the world to-day. In 19.14 Australia’s national debt was £4 19s. 6d. per capita, and to-day it is £25. That means that the sum paid in interest has increased by 600 per cent. The sooner the Opposition realizes that we cannot continue in this way, the better. I am accused of quibbling, but I have stated facts which have been supplied by the Commonwealth Statistician.
I will not have my honesty questioned. A man who quibbles is not honest; and I claim to be an honest man.
– Order ! I ask the honorable senator to address the Chair and not to indulge in conversation across the chamber.
– I bow to your ruling, Mr. President, and shall be glad to follow your advice. I shall tell the Senate again how the banks create money. The Encyclopedia Britannica, 14th edition, contains the following under the heading “ Banking and Credit “ : -
Banks create credit. It is a mistake to suppose that bank credit is created to any important extent by the payment of money into the banks. A loan made by a bank is a clear addition to the amount of money in the community.
I direct attention also to the following statement by H. D. McLeod in his textbook The Theory and Practice of Banking : -
The essential and distinctive feature of a bank and a banker is to create and issue credit payable on demand, and this credit is intended to be put into circulation and serve all the purposes ofmoney.
The amounts which the banks lend to governments are created out of nothing, yet the taxpayers have to pay interest on the amounts so advanced. The governments will never pay the money back. Indeed, the banks do not want the money to be paid back, even if it were physically possible to do so. So long as thisbank racket continues, taxes will increase until eventually financial ruin will face Australia. In a book containing 1,400 pages there is set out in Latin, Italian, French and English what could have been stated more effectively in fourteen pages, because all that it explains is the banking system, and that should not take much explaining. McLeod, in his Elements of Banking, has also written -
When it is said that a great London Joint Stock Bank has perhaps £25,000,000 of deposits, it is almost universally believed that it has £25,000,000 of actual money to “ lend out “, as it is erroneously called . . . It is a complete and entire delusion. These “ deposits “ are not deposits in cash at all . . . They are nothing but an enormous superstructure of credit.
Mr. R. G. Hawtrey, Assistant UnderTreasurer to the British Treasury, in his
Trade Depression and the Way Out, said -
When a bank lends it creates money out of nothing.
After an exhaustive inquiry, the Royal Commission on Banking and Monetary Systems appointed by a previous Commonwealth government reported in paragraph 504 -
The Commonwealth Bank . . . can make money available to governments and to others free of any charge.
The following extract is from a publication by Mr. J. M. Keynes: -
There can be no doubt that all deposits are created by the banks.
That is interesting in view of the fact that he has advocated a system by which the people should be taxed on an income of only £2 a week. Instead of doing that, it would be better to create credit so that a person with an income of £100 a year could be left free from the necessity to pay taxes. In his book Post-war Bankingthe Eight Honorable E. McKenna, chairman of the Midland Bank, wrote -
The amount of money in existence varies only with the action of the banks in increasing nr diminishing deposits. We know how this is effected. Every bank loan and every bank purchase of securities creates a deposit, and every payment of a hank loan destroys a deposit. f also place before the .Senate the following extract from the writing by Professor Soddy, the eminent physicist of Oxford University: - fa it possible in these days of disbelief in physical miracles really to caricature institutions which pretend to lend money, and do not lond it, but create it? And when it is repaid them, de-create it? And who have achieved the physically impossible miracle thereby, not only of getting something for nothing, but also of getting perennial interest from it?
Mr. Hartley “Withers, in his publication International Finance, stated -
A credit in the Bank of England’s books is regarded by the financial community as “ cash “, and this pleasant fiction has given the bank the power of creating cash by a stroke nf the pen and to any extent that it pleases, subject only to its own view as to what is [u ndent and sound business.
In July, 193S, Branch Banking, an English hankers’ journal, stated -
There is no more unprofitable subject under the sun than to argue any hanking or credit points, since there arc enough substantial n notations in existence to prove to the initiated that banks do create credit without restraint.
On many occasions in this chamber, I have exposed the bank swindle and the collusion between previous governments and the private banks. For many years previous governments, possibly through ignorance, have connived at this swindling.
– That is a reflection on those governments.
– I am stating a fact. If it is a reflection on previous governments, I cannot help it.
– The honorable senator has not stated a fact.
– It is a fact to this degree that when I. asked a question I was informed that the first war loan of £20,000,000 was to be raised through the agency of the Commonwealth Bank in conjunction with the private banks. That loan was not put on the market as was done with a subsequent loan of £30,000,000. When I asked how much of that sum passed through the Commonwealth Bank and how much through the private banks the previous Government refused to supply the information. However, the manager of the associated .banks “ spilt the beans “ when he said, speaking of the patriotism of the banks, “ I assure you, ladies and gentlemen, that the whole of the £20,000,000 war loan was subscribed by the private banks “. That was not precisely the position, because the private banks subscribed only £14,000,000 of the £20,000,000 required. The Commonwealth had to make up the difference. The £14,000,000 which was subscribed by the private banks was created out of nothing; yet the Commonwealth pays Z per cent, interest on the amount. The interest represents £500,000 a year.
– Can the honorable senator say Why, in such circumstances, bank shares are falling?
– Perhaps it is because the rate of interest is going down. Some British banks are paying dividends at the rate of 14 per cent., or as much as 1.6 per cent. That statement has been made by a reliable authority. During the last war the profits of some Australian banks went up to 15 per cent.
– They are not getting that rate during this war.
– The hanks can create as many millions of pounds as are required. It must be remembered that 2£ per cent, on a certain sum is equal to 5 per cent, on half of that amount. In December, 1937, Australia’s national debt amounted to £1,262,911,649 Os. Id. One person in the community, who signed himself “ Patriot “, was concerned about the magnitude of the debt, and accordingly he sent a Id. stamp to the then Treasurer with the object, as he said, of reducing the debt to a round figure, tinfortunately, his purpose was not achieved, because between the time that he saw in the newspaper the amount of the national debt and the time when he sent the Id. stamp to the then Treasurer, the national debt had increased at the rate of £1 13s. 4d. a second. The debt grows so quickly that it now amounts to £1,000,000 a week. It is still growing. Compound interest on that debt has got Australia into a deplorable state. Some persons in the community are forced to work five months in the year in order to pay their taxes. That is the position already when taxes have really only started.
– I should have thought that the honorable senator would have convinced a Labour government that taxation is not necessary.
– At the moment, I am trying to convince the Opposition. I have stated facts in this chamber for several years, but previous governments have not heeded them.
– Even if the honorable senator were to convince the Opposition now, he would be too late.
– Things are becoming so bad that the Opposition will be forced to listen to what I have to say. This country cannot pile up huge war debts and hope to meet its liabilities by means of taxes. I am obliged to tell the Opposition these facts because it is fighting against a budget which I am defending. There is only one way to avoid inflation.
– What is inflation?
– Inflation is the lowering of the purchasing power of the wages of the people. In South Africa efforts have been made to prevent inflation. Prices of commodities have been fixed, and heavy fines may be imposed on those who sell above such fixed prices. A man may be fined as much as £500, or given two years’ imprisonment, for departing from the fixed price. In Australia persons convicted of exceeding fixed prices were fined a mere £3 or £4.
– They can be fined as much as £500.
– That may be, but the fact is that they are not fined heavily. The reason is that many of the people who ought to be punished in this way find the money for political campaigns. Should the war continue for a few more years what are our taxes likely to be? Last year, the then Treasurer (Mr. Eadden) introduced a budget covering an estimated expenditure of £100,000,000. This year the budget runs into £325,000,000. I emphasize that the interest on the national debt is mounting all the time. Tens of thousands of pounds have been spent in Australia to inform the people that if they do not buy war savings certificates and war loan bonds the war effort will be retarded. I intend to ask what it has cost Australia for advertisements urging the purchase of war bonds and war savings certificates. I shall tell the Senate how the war savings certificates swindle is worked. The private banks have sold certificates to the value of £14,000,000. A bank which can sell certificates of a value of £100,000 puts the amount to the credit of its cash reserves. It can then advance to the Government credit amounting to £800,000 on the strength of that addition to its cash reserves, and it can charge the Government 3£ per cent, on that sum. Do honorable senators know of a bigger racket than that? That is the kind of thing that went on with the knowledge of the previous Government. I hope that it will not continue under the present administration. No private individual may hold war savings certificates valued at more than £250, but the private banks found a way to get over that difficulty. They bought certificates in the names of their employees. These employees bought them voluntarily, on the advice of the manager of the bank. I do not know what would have happened to them if they had not taken his advice. Every fortnight an amount was taken out of their wages for the purchase of these certificates and placed in the hank’s reserves. Although it is said we are fighting for so-called democracy, I maintain that, since this war started, Australia has been fighting with one hand behind its back because of the financial system under which we are governed. ‘On one occasion I told honorable senators that the people who sent us here are under the impression that the 111 members of Parliament in Canberra comprise a national government engaged in the task of ruling Australia. I have told the people repeatedly that their assumption is entirely wrong and that Australia is governed by the associated banks. Under the present system no government, can carry on its functions except by continuing the policy of borrowing. The only way to pay the ever-increasing interest bill is by borrowing still more. All money comes into existence through the banks in the form of a debt. That is why we are called upon to pay such, tremendously high taxes to-day. I have spent a considerable part of my life expounding my financial theories to the people, hoping that they will some day realize what a racket is being put over them under the present financial system, and that an obligation rests on the shoulders of every member of this Parliament to scrap it. Honorable senators opposite have complained that the present budget imposes heavy taxation only in respect of incomes in excess of £1,500 per annum. They forget that the last two governments imposed tremendous burdens on those in the lower income groups and that those with small means are still being called upon to make heavy sacrifices. People have said to me, “Poor people and dole workers still appear to have plenty of money to spend at the races and with which to back their fancy at the dog race meetings”. The real reason why so many working people patronize sporting events of that nature is because they hope by a chance win to have a little extra money with which to buy the necessaries of life. The bookmakers, like the banks, make the odds. My banker said to me one day “ Why not work on an overdraft “.. I said “ T was reading the notice on the wall outside. You are offering 2i per cent, for fixed deposits for two years. What is the current rate for overdrafts ? “ He said, “ The rate to-day is 6 per cent.”. I said “Do you realize what percentage of profit that shows your bank? It is nearly 200 per cent.”. He said “But borrowers pay only from day to day”. I said, “ They not only pay from day to day, they also pay all the time “. He then said “From what I hear and what I can see of you, you attend to everything but your own business “. I said “ Mr. Manager, thank God, I do not owe you anything “. My idea of happiness in this life is to do exactly what I. want to do. If I give a great part of my life for the improvement of the lot of the workers, I feel that I am well repaid. Governments have been in office in the federal sphere for over 40 years, but we have never yet had a balance-sheet submitted to the country. All we get from governments is a statement of revenue and expenditure. How can we know where we stand, unless a balance-sheet is struck? Extension of time granted.] Recently I submitted a balance-sheet to this chamber which had been drawn up by one of the most accomplished accountants in Australia, Mr. D. J. Amos, an employee of the Adelaide City Council. Mr. Amos proved - and I challenge any honorable senator to question any of his findings - that the Commonwealth Government can expend £362,000,000 a year on the cost of government and social services and still have £1,000,000,000 left with which to fight the war. Nobody seems to realize that we can lend against the productive capacity of the nation. It was estimated by the previous Government that the value of the productive capacity of Australia would reach £1,000,000,000 this year. Banks can lend only against their cash deposits and up to 800 per cent, more than the amount of such deposits, but the nation is limited only by the productive capacity of its people. Mr. Amos gave the productive value of Australia in terms of producing units-. In the United States of America, it was estimated that the national value of each inhabitant amounted to £368. If we adopt that figure for Australia and apply it to the nation as a whole, it will be readily seen what tremendous resources are at our disposal to finance the war. We have a Joint Committee on Social Security, which has been charged with the task of recommending means by which the social conditions of the people could be improved. When that committee was appointed by the last Government, I felt that a lot, of time and money would be wasted, because it would not tackle the money question, and, consequently, could not get to the root of the trouble and make worthwhile recommendations. The bad social conditions that exist today are brought about by lack of purchasing power in the hands of the people. When it is realized that the banks have the sole right to create credit, which represents the purchasing power of the people, and that they can stop it at any time, it will be realized what tremendous power is vested in them. During the depression food valued at hundreds of millions of pounds was destroyed on the advice of so-called economists as a means of keeping up prices. It is an economic fact that prices are governed by the amount of money in circulation. If, as orthodox economists say, new money coming into circulation tends to increase prices and thus cause inflation, it must follow that the purchasing power of the people is reduced by the refusal of the banks to issue further credit, or by thi; calling up of overdrafts, it must have the effect of lowering prices. A famous royal commission on unemployment and allied subjects known as the McMillan Commission was established in England and continued its researches for about two years. As a reward for his labours, the chairman was given a seat in the House of Lords. As long as I can recollect royal commissions on unemployment have invariably found that unemployment has been brought about, by over-production. After inquiring exhaustively into the matter the McMillan Commission found that unemployment was caused not by over-production but by underconsumption and. that money would have to be found from some source without increasing taxation in order to protect industry and to keep the people in work. Every man who is out of work is an economic loss to the country. As soon as he gets into debt, his freedom vanishes. I have said more than once in this chamber that debt takes away individual and national liberty. Suppose I am a baker accustomed to buy flour from two or three millers. I owe one miller considerably more than the others. He says to me: “ You must buy all your requirementsfrom me in the future; otherwise I shall put you through the insolvency court/’ Because of my indebtedness to him I lose my individual liberty. A baker very often continues to supply poor people with bread, even though he knows that the prospect of being paid for it is rather remote. He has not the heart to stop their bread when he knows that litt!” children in the house have nothing else to eat. In that way, he runs into debt, and immediately loses his economic liberty and becomes the slave of the miller. In addition, he is compelled to pay any price the miller to whom he is indebted likes to charge. In just the same way many nations are up to the neck in debt to the banks. When the late Mr. Lyons wa Prime Minister he floated a loan on the market at 6 per cent.
– And then “ welched on the interest rate.
– That is so. We must remember that from 75 per cent, to 80 per cent, of all loans are subscribed by the banks. Having realized that it is easy to see who fixes the rate of interest. As I have said on many occasions, interest can be paid only by further borrowing. That is why the national debt has increased so tremendously in the last few years. In Hobart recently I was interested to hear a lecturer, an economist of the Melbourne University give his impressions of a visit to Russia in 1934. Dealing with the Soviet’s financial policy he said that M. Stalin had a habit of putting a. loan on the market at 6 per cent., and, when he got the money, of lowering the interest rate to 3 per cent. I point out that that practice is noi peculiar to Russia. I do not know whether M. Stalin learned of it from Mr. Lyons, or whether Mr. Lyons learned of it from M. Stalin. I have endeavoured to give honorable senators some idea, of the mess we have got into as a result of following orthodox methods of fina.net-. The only way Australia may be saved from financial and economic ruin is bv a complete alteration of the financia system. There should be a revolutionary change in the finances of this country. The word “ revolution “ means a violent departure from existing methods or ideals. A violent departure from orthodox financial methods must be brought about in Australia if this country is to be saved from financial insolvency. To continue as we are going on to-day is madness. History shows that on several occasions one man has been right when the rest of the world was wrong. One of the new economists whom I follow has said that banks do not need to have money to start at all. This man was asked to go to Ottawa to express an opinion on a bank bill then before the Canadian Parliament. He was asked how much capital a bank required before it should be given a charter to trade. To the amazement of his hearers he said, “A bank does not need capital to start business. It needs only buildings, books and pens “. When a bank commences business it invites people to make deposits with it, and when it accepts deposits it simply gives receipts for them. But a depositor is given no security that he will get it back again. If I deposit, say, £100 in a bank, the manager says. “ We will pay you interest at the rate of 2-i per cent, for two years “. I say, “ All right”; and I get a receipt for the deposit. On the other hand, if I wish to borrow £100 from a bank, the bank wants a guaranteed security to twice the value of the loan either in real estate, or bricks and mortar, before it will advance the loan. The banks are like the bookmakers. The latter cry the odds, and you cannot get a bet unless you take their prices. The banks make all the terms. It is useless to go from one bank to another, because they have a gentleman’s agreement. Recently I was talking to the only son of a Queensland farmer who was heir to an estate of 14,000 acres. His father was one of the best stockmen in Queensland. In the bank-created depression in 1929, the bank seized the whole of the 14.000 acres and the owner saw the finest milch cow3 being sold for Ils. a head. He lost the whole of his security because in the depression, which the banks created, his overdraft was called up. Later he was glad to get a job on a farm at 10s. a week. He worked at breaking in horses, and when he was injured in a fall and was obliged to cease duty for two weeks his employer stopped £1 out of his wages. That is an indication of the policy of the banking system in Australia. Is it any wonder that Professor Wadham, who inquired into the wheat industry in Australia, reported that the wheat lands of this country were mortgaged to the banks and financial institutions to the amount of £160,000,000? At that time the price of wheat was 2s. 4d. a bushel. Yet the Government of the day was urging the farmers to grow more wheat. Before this war broke out, the wool industry was in the same parlous state. The debt of the wool-growers to the banks and financial institutions was £175,000,000; and they requested the Government to pay a bonus of Id. per lb. in order to enable them to pay their overdrafts. The banks have never created Id. worth of wealth in Australia, yet they own Australia.
– Ned Kelly.
– They are worse than Ned Kelly. The bushranger takes the risk of being hanged, but the successful banker is admired by his shareholders. I know wheat and wool-growers who never saw a cheque for years because the banks would not finance their clip, or crop, until these were made over to them. Ned Kelly was decent compared with some of them. I do not blame the bank managers. They have absolutely no say in the matter. Many take their instructions from London, and London takes its instructions from the Bank of International Settlements at Basle. That bank is not subject to the law of any country. Absolute power is given to it under its charter. I do not wonder that wars continue. One has only to examine the directorates of any of the big armament firms in England, and ou it he will find ex-admirals and ex-generals who, from time to time, write to the newspapers pointing out how unprepared Great Britain is for war. Undoubtedly, Great Britain was unprepared for this war. I have spoken of corrupt governments. Let us see what happened in the election in which the Baldwin Government was returned to power. The late Mr. Baldwin was asked why he did not go on with an armament programme. At that time there was a very strong peace movement in Great Britain. He said that the Government dare not do it because it would lose the then pending election. So the first concern of that Government, as of many other governments, was to keep its place. In 1939 Mr. Montagu Norman loaned Hitler £50,000,000. He said, “ “We shall have to let Germany have, the money, although we might never get it back. But it is worth £50,000,000 to support Nazi-ism “. At that time the bankers in Great Britain were afraid that communism would overrun Germany. Financially, we are fighting with one hand behind our back. When a totalitarian state makes war on a democratic state, it has complete control over the whole of the financial resources of its nation. There is no individualism in a totalitarian state. Two years ago I said that Germany was using its national credit, ever since it started the armament race. I gave figures showing how the gold reserves of the world were held in 1939. In that year the total gold reserves amounted to 14,301,000,000 American dollars. That reserve was held as follows: United States of America, 8,126,000,000 dollars; Great Britain, 396,000,000 dollars; France, 1,435,000,000 dollars; Holland, 595,000,000 dollars; Belgium, 318,000,000 dollars; Switzerland, 407,000,000 dollars; Germany, 17,000,000 dollars; Italy, 124,000,000 dollars and Japan 97,000,000 dollars. The three most powerful and warlike nations of to-day have not as much gold between them as little Switzerland; yet we were told at that time by the orthodox economists that Germany could not possibly ‘arm and fight a war because it was “ broke “. Germany realized that wars are fought not with money but with credit. The German system of finance is this: Clothes, food and money are rationed. It is the most perfect system of its kind in the world. Dr. Schacht, the manager of the German Reich Bank, wanted to adhere to orthodox methods and to lend money to the nation through the Reich Bank. For that reason Hitler “sacked” him; but when the business people of Germany worked out a financial, system to meet the needs of the nation, Dr. Schacht, waa given back his job. If the Government in Germany wants 50,000,000 marks’ worth of guns from Krupps, it places its order with Krupps, who take a cheque for that amount. Krupps then bank the cheque, and the Government has first call on that deposit. It says to Krupps, “ You have much more money now than you want “. The company must then buy Government stock to the amount of 50,000,000 marks. It is allowed interest on that amount. The system is perfect, because it does not do away with the profit motive. Krupps still get their profit. That is how Germany is financing its tremendous war machine. We cannot do that. We must depend on what the banks give to us. We do not. use our national productive capacity as the Germans do. Until our system is altered we are fighting, financially, with one hand behind our back. There are many things which we could learn from German economics and finance; but we are compelled to adopt orthodox methods. If Germany is better armed and has a different financial system from our own, we must devise a means in order to enable us to meet Germany on its own terms. Therefore, our best plan is to alter our financial system in order to give us the greatest productive capacity in armaments and men. I repeat that we do not need money to fight the war. What we need are credits ; but in the past we have used them through the wrong channel. If the circulation of additional money increases prices, it does not matter from which source that money comes if prices are not controlled. But we are told that they are controlled. We have been told that an increase of only 10 per cent. has. been allowed, due solely to the fact that the costs, such as freight and insurance, are increasing. However, the prices of only some commodities have not increased. One finds that the prices of vegetables and fish, for instance, have increased considerably. That is the case, in respect of everything that means food and shelter to the people. Rents are increasing, but rents do not come within the scheme of price control visualized by the Prices Commissioner. The Geelong Woollen Mills were sold by the conservative Bruce-Page Government, which also disposed of the Commonwealth Line of Steamers. An amount, of £500,00.0- is still owing on the latter deal. The man who bought the Commonwealth Line was sentenced to imprisonment for two years. Personally, I think that Mr. Bruce should have got five years. By cutting out Government participation in industry the profits of private enterprise, including the merchants of Flinders-lane, can be considerably increased. That is what I mean when I refer to corrupt governments. Any one who sacrifices the interests of the people for the benefit of profit-makers is a traitor. He is the fifth columnist of to-day - the enemy inside our gates. The manager of the Canadian Government Bank, Mr. Graham Towers, when giving evidence on oath before a monetary commission, was asked whether the Government bank could loan interestfree money to the Government. He replied, “Yes, undoubtedly; not only that, there is no need for the Government to repay the money to the bank. Through increased prosperity brought about by the spending of. that money, the Government is repaid indirectly, and it is a good policy to adopt “. What did our orthodox economists tell the Commonwealth Government during the depression ? The late Sir Robert Gibson, when governor of the Commonwealth Bank, who was a servant of the Commonwealth Government, said to the Government that unless it lowered social services and reduced salaries by 10 per cent, he would not come to its assistance. The Royal Commission on Banking and Monetary Systems, in paragraph 530 of its report, stated that Parliament is ultimately responsible for finance and everything for the good government of Australia. The Commonwealth Bank has certain powers granted to it by statute. These powers are to be exercised in the interest of the nation. The royal commission stated that at any time when a difference of opinion arises between the Bank Board and the Government as to policy, a free and frank discussion should take place on the matter, in order to show the Bank Board where it stands. If the views of the board and the Government are still irreconcilable, the Government should say to the board that it takes full responsibility, and tell the board how to act. Why did not the previous Government use those powers? It did many things under the National Security Act. Under sec tion 42a of that act any one criticizing the financial policy of the Government is liable to arrest and punishment. That is rather severe on a man who knows the trickery that is going on in the banking system. If he mentions it he is liable to be treated as a criminal. He might be able to save the people of Australia millions of pounds in taxation, but if he says a word that is contrary to the policy of the Government he is liable to be put in gaol. When speaking from the platform of the Town Hall in Hobart, I told my listeners that under section 42a of the National Security Act I was liable to be imprisoned for what I was saying, but that I would rather go to gaol than hold my tongue. I told the people the truth. I have told the Senate the truth on many occasions, but honorable senators seem to have little regard for the truth. I have taken up considerable time in delivering this speech, and I hope that I have not been speaking only to the walls. The desperate position which confronts us today compels me to speak at great length. Things are very bad indeed. I know of many young men who have given up excellent occupations in which they had good prospects for the rest of their lives, in order to join our fighting forces, yet while they are overseas fighting in the defence of the Empire, the private bankers who stay at home seek only to increase their own dividends. In 1914 the then Prime Minister pledged Australia to the last man and the last shilling, but he did not use the Commonwealth Bank for the purpose for which it was created. He ran up a war bill of £360,000,000 by adopting orthodox methods of finance, and when the soldiers came back from the front he took their last shilling in taxation to pay interest to the hanks. That is what will happen again this time if the present system is not altered. I have high hopes that it will be altered, and that justice will be done to the men who are prepared to suffer hardships and undergo the risks of war in order that those who stay behind may live in safety and comfort. I wonder what the twoshillingsaday English “ Tommy “ thinks when he reads that the Midland Bank declared a dividend of 16 per cent., due mainly to the fact that it has lent millions of pounds to the British Government for war purposes. It is time that that racket was stopped. The trouble is to get people to realize just what a racket is going on. I have travelled all over Australia from Cairns to Perth, and have addressed hundreds of meetings on monetary questions. Although I am confident that I have converted quite a number of people, the ignorance of the average man, whether he be a wharf labourer or a university graduate, is astounding. He does not take the trouble to find out just how he is being governed. Certainly he grumbles about taxation. In fact I heard such grumblings in Sydney during the past few days. Two years ago I told honorable senators that not until half their salaries had been taken in taxation would they take any notice of what I had been advocating. But it is coming to pass. Very little will be left of our salaries next year. “When we touch the people’s pockets we sometimes touch their conscience, but we also touch the sensibility as to their personal interests. That is what will happen in this country before there is a realization of what we are being driven to.
– The honorable senator’s time has expired.
– I congratulate honorable senators opposite on their occupation of the treasury bench. I join with Senator McLeay in offering to render any assistance in my power, so long as the efforts of the Government are directed towards ensuring that this country shall maintain a full-time war effort in both men and money. I regret that the change of government occurred when it did, because the country lost the services of a number of men who had gained a great deal of administrative experience in a hard school. In many instances these men were just beginning to gather the fruits of their labour. I resent very much the statement made by Senator Darcey that the Labour Government found everything in a mess when it assumed office. I take great pride in saying, as did Senator McBride and others, that when the history of Australia’s war effort is written, the people will appreciate what was done for Australia by the Lyons Government from the time of the Munich
Pact until the death of Mr. Lyons, by the Menzies Government, and by the Fadden Government. Members of those Governments worked exceedingly hard in the interest of this country, and laid the foundations of a defence policy which has provided a wonderful bulwark for the defence of this country should we be attacked. Therefore I resent Senator Darcey’s remark.
– I criticized the previous Government only because of its financial policy. I said nothing about its work. I adhered to financial matters, and I claim that I have shown that in that respect the previous governments were incompetent.
– The governments to which I have referred can take great pride in their financial programmes and also, as has been pointed out by Senator Spicer, in the fact that costs have been controlled and interest rates have actually decreased. That is a very great tribute to the work of those governments. Commodity prices in this country have risen to a lesser degree than in any other country because of the fact that at the outbreak of war, the then Prime Minister (Mr. Menzies) realized the necessity for adopting a system of price control. That system was introduced as one of the first acts of the Menzies Government. The suggestion made by Senator Darcey and supported, by interjection, by some honorable senators opposite, that the Prices Commissioner, Professor Copland, was prepared to do anything to keep his job, is unworthy of him. I have been in frequent contact with Professor Copland since he was placed in charge of the price-fixing machinery of this country, and I think that the Minister for Trade and Customs (Senator Keane), who is in charge of the department in which Professor Copland holds a position, will agree that he has done an extraordinarily good job in most difficult circumstances. It ill becomes honorable senators to make remarks of that kind about a public servant who is unable to defend himself.
– I said it to his face.
– Professor Copland has given remarkably good service to this country. Although he was in no need of a job, he came forward and accepted one of the most thankless and difficult tasks that could he given to anyone. He has done his work very well indeed.
As long as this Government carries on the defence “programme which has been outlined, and if possible intensifies it, it will receive our support and constructive criticism. I trust that the Government will be given better support than was given to the Administration of which I was a member, not so much in this chamber, but in the House of Representatives, especially during the last six months of its existence. I say quite frankly that despite the repeated statements that the Menzies and Fadden Governments were receiving wholehearted support, during the past six months every form of irritation was indulged in by the Opposition in order to secure a change of administration.
– The Government was “ torpedoed “ by its own supporters.
– The honorable senator says that we were “ torpedoed “. I would point out to him. that when the previous Government did fall it was as tie result of the assassin’s knife, and not by means of a majority vote recorded against it at the polls. The Government fell because of the greed for office of certain individuals and not because of its shortcomings. I regard it as a privilege to have been a member of the Government of this country during these critical years of war, and I believe that the three Prime Ministers whom I have mentioned, can be very proud of the work done by their respective Governments. I remember only too well the state of Australia’s defence at the time of the Munich pact. Under the voluntary system our home defence forces were very small indeed, and very few militia units were at anything like full strength. Our soldiers numbered 35,000.
– On paper.
– That is so. It would have been impossible to muster that number when the men went into camp for a few days in each year. I assure honorable senators that the work of building up those forces was extremely difficult. Credit is due not only to the various governments concerned in that work, but also to the leading men of the various arms of the defence services. They had a colossal task to perform. In the earlier days they were hampered and handicapped by lack of finance, and they also had to counter a lack of enthusiasm among the people. That lack of enthusiasm was reflected in the attitude of various governments with the result that the services were starved. Then came the colossal task of building up the Army, the Navy, and the Air Force, and expanding munitions production. A great deal of credit is also due to those capable men who came to the assistance of the Government; many of them in an honorary capacity. Criticism has been levelled against some of these gentlemen because they had been successful in private enterprise and it was suggested that that they came into munitions work in order to gain personal advantages. As the result of my personal contact with those men I formed an entirely different opinion of them. Many of them have thrown aside their private interests in order to give their valuable assistance to the Government, The3e are the men who were condemned by honorable senators opposite when they were in opposition. The present Government will find the services of those men very valuable, and I believe that it will be well advised to continue to avail itself of their assistance.
The budget contains some of the prosposals embodied in the Fadden budget, but certain features that were of real merit have been dropped by the present Government, which, in my opinion, has not stood up to its responsibilities with regard to the financing of the war. In my opinion this emasculated Fadden budget is a cowardly and dishonest budget, because it does not tell the people what their actual financial responsibilities are. It is a dishonest budget, because, if the policy that the Prime Minister and other members of the Government are preaching throughout the country -
– I rise to a point of order. I take exception to the use of the words “dishonest budget” and ask that they be withdrawn.
– I asb that the words to which exception has been taken be withdrawn.
– I am not speaking in a personal sense, but entirely in a political sense. I know of no more suitable phrase in which to express my opinion of the budget, but out of respect to the wishes of honorable senators opposite, I withdraw the words. The budget will not provide the necessary finance that the Government requires, if it intends to carry out the programme undertaken by it, assuming that the appeal being made by the Prime Minister for the diversion of expenditure on nonessential goods to war expenditure is heeded.
– The Prime Minister did not say what nonessentials are.
– No. If the people are to cut out all luxury expenditure, how can the Government secure the additional revenue that it hopes to get by increased taxes, including increased sales tax, which to a large degree is imposed on luxury lines. There is only one way in which the result that the Prime Minister desires can be achieved and that is by compulsory savings and by the compulsory rationing of certain commodities. But will the people cease to purchase luxuries merely because the Prime Minister has appealed to them to do so voluntarily? I contend that the diversion of a certain percentage of the income of individuals to the war effort should not be left entirely to their whim or grace. I believe that a majority of the people will heed the Prime Minister’s appeal, but we have reached the stage where everybody in the community must play his or her part, be it large or small, in relation to the financing of the war effort. A proposal of outstanding merit in the Fadden budget was that providing for compulsory savings. If everybody plays his part in the transference of expenditure on non-essentials to war expenditure, the burden on each member of the community will be lightened.
Money is more plentiful in Australia now than it has been for generations, and family incomes are larger than they have ever been before. Therefore there should be a saving of the national income, not only for the purpose of financing the war, but also in order to make provision for post-war reconstruction. Although there is every indication that the war will continue for a long time, when it is over thousands of employees now engaged in munitions factories will be forced to find other employment, and at the same time we shall be faced with the problem of providing work for the members of our fighting services who will be returning from overseas. Will that not be a time when the benefit of compulsory savings and deferred pay would prove invaluable? We give to members of the fighting services 6s. a day and 2s. deferred pay, and one of the main reasons for the deferred pay is to provide a nest-egg which will be found useful to the men on their return from the war. Therefore I see no reason why civilians also should not be called upon to accept deferred pay. Under the Fadden budget it was proposed to pay the bank interest rate on civilian deferred pay, but the returned soldier gets no interest on his deferred pay. If there was one proposal of outstanding merit in the Fadden budget it was that relating to deferred pay for civilians, and I believe that we shall yet adopt that principle.
– That is wishful thinking on the honorable senator’s part.
– I desire everybody to play hi3 part fairly in the war effort, and I believe that the time will come when everybody in the community will be asked by the Government of the day to subscribe some money for the financing of our war effort. It is idle for the Prime Minister to speak to the public in generalities by referring to the necessity for reduced expenditure on non-essentials ; he should be specific. The people are looking for a lead as to what they should be called upon to do with regard to the rationing of commodities. The only practical way in which the Government can carry out its policy of transferring funds from expenditure on non-essentials to war expenditure is by compulsory saving and compulsory rationing. I believe that we shall eventually reach that stage.
– The Government with which the honorable senator was recently associated did not do that.
– The Assistant Minister is merely taking up a parrot cry. We did not do it because we had not sufficient members in the House of Representatives to do many of the things that the present Government can do if it wants to. The present Government has been guaranteed support from all sides of the House, whereas its predecessors had no such support.
– Previous governments were given a good measure of support by the Labour party.
– If the present Government is to retain office, it will have to do these things sooner or later. In any attempt to do the right thing in connexion with Australia’s war effort it can rely on support which was denied to the previous Government. Another problem which the Government will have to face is that of providing reinforcements for the Australian Imperial Force overseas and for the other branches of the fighting services. Fortunately, the response to the appeal for men for the Empire Air Training Scheme has been excellent. Everyone in Australia is proud of the part that thi3 country is playing in the air defences of tha Empire, but I believe that we are reaching the position where we shall find that there is a serious shortage of man-power to supply necessary reinforcements to the men overseas and for the production of munitions at- home. I was glad to see that one of the first things the Minister for the Army (Mr. Forde) said he would do was to make a thorough investigation in regard to man-power. I believe that there are thousands of men now in exempt industries who could well be released for military service.
– Why did not the (government of which the honorable senator was a member do that?
– The position is getting more difficult day by day as the. Postmaster-General (Senator Ashley) should know since he has been a member of the Cabinet for several weeks.
– The honorable senator himself was a member of the Cabinet for about six years.
– What does the honorable senator suggest?
– The Government should comb many of the exempt industries.
– What are they?
– If the honorable senator will read the list he will see that there is wide scope for the release of men. In spite of the Government’s natural objection to utilising the services of women, I believe that it will be necessary to use them in order to release men for defence purposes. In my opinion, no stone should be left unturned in order to ensure that adequate reinforcements are sent to our forces in the Middle East.
– Can the honorable senator visualize a limit, being reached in this connexion?
– Of course I can ; but I do not think that that position has been reached yet. It has been reached in some country areas, but in our cities the limit has not nearly been reached. An examination of the list of exempted occupations will reveal that there is ample scope for the release of a large number of men to join the Australian Imperial Force and the Royal Australian Air Force. I regard the supply of reinforcements to our forces overseas as the most vital job Australia has to do. Honorable senators know my views in relation to military service. I am not opposed to the principle of conscription for military service overseas which has been adopted by New Zealand. Although we are proud of what Australia has done under the voluntary system, I am of the opinion that there are many merits in the compulsory system which are absent from the voluntary system.
– Is the honorable senator in favour of conscripting capital ?
– I am in favour of an all-in war effort. When a country is fighting for its existence, the Government should be able to say to any individual “We want your service, or what you have got in the interests of your country “. I say that without hesitation.
– Let us start with the conscription of capital.
– When we have done what I have advocated we may be able to say that we have indeed put forward a whole-hearted war effort.
Senator Darcey said that he feared that his many dissertations on the subject of finance had failed to impress honorable senators now sitting hi opposition, but a. study of the budget reveals that he has also failed to impress members of his own party. When I contemplated, the reading of the Treasurer’s budget speech, I had in mind Senator Darcey’s repeated statement that, under a Labour Government, orthodox methods of finance would be set aside. I remembered, too, that on many occasions Senator Brown had indulged in flights of oratory in which he advocated the introduction of a new financial system. He, too, said that under a Labour Government, the existing financial system would be changed. Nevertheless, the first budget introduced by a Labour Government was largely along orthodox lines. Obviously, members of the Cabinet, When placed in a position of responsibility, saw things differently from the way that they saw them when sitting in opposition. Unfortunately, the proposals of the Fadden budget were not, carried into effect, particularly those which required every person in the community to accept his share of the financial responsibility for the prosecution of the war.
The Government makes a great feature of the fact that it expects to effect a considerable saving compared with the Fadden Government’s proposals. It claims to have found a way by which it will be possible to 3ave £80,000 in connexion with the Department of Information. That is the only economy it can make in a £325.000,000 budget.’ I am interested to know in what direction the saving will be effected, and accordingly, T have placed a number of questions on the notice-paper. Having spent seven or eight months in control of the Department of Information, I do not know of any way in which that department can still give the same service to the country and yet enable a saving of £80,000 to be made. I am aware that the Department of Information has been one of the most abused of departments; it has been the “ Aunt Sally “ of persons both inside and outside Parliament. I say, however, that it contains many men who have done an extraordinarily good job, Many who criticize the department do not realize how much work it does foi other departments. The present Minister for Information (,Senator Ashley) will find, as I did, that if there is a “sticky” job to be done, the Department of Information will be asked to do it. I shall be glad to know whether the estimated saving of £80,000 will be made by a reduction of the estimates of the department itself, or whether that amount represents the saving that will be made in respect of work done for other departments. The Department of Information has done a tremendous volume of work for the service departments, such as all recruiting propaganda,, war loan publicity, commercial advertising, and so on.
– The Commerce Department paid for its advertising.
– I wish to know whether the contemplated saving of £80,000 will be a direct saving in the Department of Information. I wish to know also what services will be affected. I have noticed that the honorable member for Barker (Mr. Archie Cameron) has suggested that the Department of Information should be abolished. I admit frankly that the department could be abolished, but I point out that if that were done, much of the work now performed by it would still have to be done by other departments. Soon after I took charge of the Department of Information, I discussed with my colleagues in the Cabinet and on the Advisory War Council, whether the department should continue. After consideration, both the Advisory War Council and the Cabinet decided that the department should continue to function. I think that the new Minister in charge of that department will find that much of the criticism levelled against it has been unfair. Moreover, much of the work done by it has not been given recognition, because it has been done indirectly. Other people have received the credit. Whatever may be done in an effort to save money, I urge the Minister no’, to reduce the vote in relation to our activities in the United States of America, as was suggested in the press a few days ago. When the Australian News Bureau was first (established an New York, Australia was very little known to our cousins across the Pacific, ft has justified its existence in every way and has given Australia extraordinarily good publicity.
– The present Government has made a vastly greater contribution towards bringing about closer relations with the United States of America than the previous Government. It was responsible for the reduction of the cable rates.
– The reduction of cable rates was brought about prior to tha advent of the present Government. Furthermore, the subsidy paid by the Commonwealth Government to the American Cable .Service was formulated long before the honorable senator ever dreamt that he would become Minister for Information.
A complaint has been brought to my notice in relation to the management of the small arms factory at Lithgow. Unfortunately, we have had at Lithgow a continuation of minor industrial disputes and hold-ups which have been very irritating to the Department of Munitions and very costly to the Australian war effort. I had a call some time ago from a returned soldier who was by trade a ‘fitter and turner. At the time,’ he was not following his own trade, but he was anxious to secure work in one of the factories doing government war work. I submitted his name to the Minister for Munitions, and he was called up to report at Lithgow, where he was given a position as what is known as a section hand. He told me that all he did was to walk about doing absolutely nothing for several days. Me asked the foreman in charge to give him some practical work. He said that, in addition to section hands, there were also the recognized foremen overlooking the work for the ordinary operatives. These foremen are called charge hands. They walk about and give advice to machinists. He was asked whether he would like to be put on a bench. When bo asked’ what he had to do, he was told to fill in the time as best he could. Seeing some pipe brackets lying about, he decided to go on making some more. He had to walk several hundred yards to get the piping, then take it somewhere else to be sawn, shift it. somewhere else to be threaded, and then take it to the driller* and welders and await their pleasure. He worked an eleven-hour shift and received over £11 a week. Prior to taking on that work, his wages were about £6 a week. Although it was a Godsend to him to get an additional £5 a week, he was so disgusted that, in spite of the fact that he could have done with the extra money, he resumed his old job at about £6 a week. This man, who is a good unionist, said that the union leaders have complete control of the factory and that the foremen are helpless. The operatives on the machines have no check whatsoever on the number of articles they turn out in a day. He says that one man simply walks around ali day making sure the fire extinguishers are on the wall.
– Those conditions prevailed during the period of office of governments of which the honorable senator was a member.
– If the only contribution the honorable senator can make is to say that these conditions prevailed under other governments, then the outlook of honorable senators supporting the Government is hopeless. Whether the honorable senator likes it or not, I shall continue to bring matters such as this to the notice of the Government in the hope that something will be done to rectify them. I trust that the Parliament will be kept in session and that there will be no rush into recess in order to stifle discussion of important matters such as this. I am naturally gravely concerned to have a report of this kind from a conscientious returned soldier unionist who is not prepared to take money for which he cannot give an adequate return. I ask the Government to investigate the matter. If this state of affairs exists at Lithgow, or at any other munitions factory, it is a clear demonstration that we are not making our full war effort.
I propose now to deal briefly with another matter which I had intended to discuss on the adjournment of the Senate, to-night, but which I think might more probably be discussed during this debate.
I refer to an attack made by a member of the House of Representatives, the honorable member for Watson (Mr. Falstein) on the Director of Gun Ammunition, Mr. Smith, in the course of which serious charges were made of what virtually amounted to corruption. I do not know any of the circumstances surrounding the case mentioned by the honorable member for Watson. If he is correctly reported in the press, he said that the Director of Gun Ammunition so abused his position as to use the time, material and services of men doing Government work to build a horse float for his own private use, and that the cost of the construction of the float was charged to the Government as munitions work.
– These charges are being inquired into tomorrow by the Joint Committee on War Expenditure.
– The fact that these charges are to be inquired into by a joint committee does not necessarily mean that I should not discuss them further. I point out that if charges of that kind made against a man occupying a high executive position in the Department of Munitions cannot be substantiated, they should be withdrawn and an apology tendered. If the charges are proved, drastic action should be taken Immediately. If they are not proved, the same publicity that was given to them should be given to their rebuttal. If the charges cannot be substantiated, 1 suggest that the Prime Minister should rebuke those colleagues of his who are prone to defame prominent men who are doing their best to serve Australia in a very difficult time. I do not propose to discuss in detail at this stage the measures consequent on the budget as an opportunity will be afforded to do so on a later occasion. I merely say now that I trust that the Government will reconsider ite proposal to combine, the. incomes of husbands- and wives for the purpose of arriving at the rate of tax to be applied to both incomes. Such taxation is aimed specifically at those who are trying to be thrifty and ensure that their families do not become a charge upon the nation after their parents’ decease. I remind the Government, that there, are many wives who have inherited property in their own right. There are others, who, by their own efforts, have entered one of the professions, but who, because they happen to marry, are to be called upon to pay a higher rata of tax on their earnings than their unmarried competitors. Such taxation is a relic of the dark ages. It is taking us back to the days when a wife was a mere chattel of her husband. It is not worthy of a modern Government. I trust that the Government will review this proposal because I feel sure that when it was first made its serious, implications were not fully appreciated.
We naturally regret that, after all the undertakings given by the Prime Minister, by the Leader of the Senate and other Ministers, that they would put forward a full war effort, they have not stood up to their responsibilities by telling the people just what is and will be expected of them before the war is over. Rather have they sought the easy way and as the Leader of the Opposition in the House of Representatives said : “ They have one eye on the electorate rather than both eyes on the winning of the war “.
– -The honorable senator has made serious charges against the management of the Small Arms Factory at Lithgow. I suggest, that he lays the letter from which he has quoted on the table of the Senate or that it be incorporated in Hansard.
– I shall hand it to Hansard. The particulars contained in it are embodied in the speech which I have just delivered.
Debate (on motion by Senator James McLachlan) adjourned.
Australian Imperial Force: Cashiering in 1914-18 - Coal Stocks - Flax Mills - Rifle Clubs - Voluntary Defence Corps.
Motion (by Senator Keane) proposed -
That the Senate do now adjourn.
, - I wish to refer briefly to a speech which I delivered in the Senate >n the 26th June last, which has given rise to some comment. I feel that I owe an explanation to a number of officers of the 18th Battalion, who served in the last war. During my speech on that occasion I clearly stated the reasons that prompted me to refer to this matter. I met a number of officers at the Dubbo Military Camp. They had been there for twelve months training a division preparatory to going overseas. They had done the necessary training with the men, including bivouac and long route marches, and like the men they were very fit. They had served in the last war. They stayed with the Army and had obtained commissions. They complained very bitterly to me that whilst the boys whom they had trained went to the war, including a number of those who had served with them in the last war, they themselves were denied the privilege of going overseas as soldiers. Like many other diggers they felt that they were physically fit and should have been given an opportunity to go along with the boys they had trained. I said that the officers who took them away and who had just come fresh from Duntroon had not been with the men during their training. They said that they prayed for the men but not for the officers. During a speech which lasted an hour and a half I said that I had had experience in the 18th Battalion where the colonel, the battalion major, another major and several subalterns had been cashiered for cowardice. I uttered those words. Apparently it was not a charge that was “ put over “ the last Australian Imperial Force. I would say that probably the military system considered that they lacked judgment; that they were inexperienced and could not size up a difficult situation. However, as the term was known among the diggers, they knew that when a fellow was discharged from the Army whilst the battalion was on service he had “gone up “ for cowardice. I do not want that to go abroad because I understand that a battalion had approximately 26 officers, and as, 1 believe, the 18th Battalion was wiped out four times I assume that it had at least 100 officers. I knew many of them. I do not feel that I should mention some names and not mention all of them. But I knew officers in that battalion who were game and whom nothing could stop. I should not like them to think that the seven subalterns to whom I referred included any of them. Consequently I am bound to withdraw the word cowardice “.
– And apologize.
– I do not intend to apologize.
– The honorable senator was not present?
– I was not present all the time. I went to the war when I was fifteen years of age and was returned to Australia owing to a gunshot wound when I was seventeen years of age. I left Australia in 1915 and came back in 1917. I was not at the war all the time. I have already told honorable senators that I spent a long time overseas. I spent my sixteenth birthday in France. I have nothing in my military record to be ashamed of.
– The honorable senator should be ashamed of some of the statements he has made.
– I am not ashamed of any of my statements. Somebody supplied an article which was published in Smith’s Weekly on the 18th November last from which I take the following extracts : -
SENATOR AMOUR’S ATTACK ON 18th BATTALION OFFICERS.
Australiahas been shocked by the recent statements of Senator Amour, claiming that nine officers of the 18th Battalion, Australian Imperial Force, including Colonel Chapman, Major McDonald, Lieutenant Pritchard, and six other lieutenants, had been cashiered for cowardice and sent home to Australia in disgrace.
Captain John O’Donnell, an officer of the 18th, has written this answer to the Senator, claiming that the allegations are “ cruel lies “- “ First officer mentioned by the Senator, who shelters under Parliamentary privilege, is the late Lieutenant-Colonel A. E. Chapman, V.D., who was the original battalion commander. “ Lieutenant-Colonel Chapman saw service in the South African War and commanded the 24th Infantry Regiment, Australian Military Forces, prior to being appointed to command the 18th Battalion, Australian Imperial Force, early in 1915. “ He remained in command of the battalion during the action which lasted from August 22 to 29, 1915, and which is described in an official account published on Gallipoli underdate September 3 in the following terms: -
This gallant action adds 400 more acres of Turkish territory to the country occupied by ANZAC.The fighting during these operations was almost entirely hand-to-hand and of a very severe nature.”
I am sad to say that that action was admitted by everybody to be a blunder. Many Australians lost their lives in it; and we lost the 400 acres. The article continues - “ Official records show that of 750 members of the unit engaged in the action on August 22 there were 382 casualties, of whom one-half were killed. By August 29 there were very few of the battalion left, and it was withdrawn from the line to reserve. “ Lieutenant-Colonel Chapman left the unit when it was withdrawn to reserve and subsequently returned to Australia, where he was allowed to resign his appointment on December 14, 1915. “He was subsequently issued with the 1914-15 Star, General Service and Victory medals, ample proof that he was not cashiered.”
Lieutenant-Colonel Chapman was allowed to resign. Because he was allowed to resign and because he was issued with certain medals I am bound to say that I cannot substantiate my statement, because I do not know what the decision of the Military Board of that time was. It appears that the board was prepared to give those medals to anybody at all. I do not want to labour the matter. However, I emphasize that many of the officers of that battalion were never in doubt. They were gallant men, like the members of the battalion who did a good job. I repeat that I cast no aspersion whatever on them. I cast no aspersion on Pritchard. He was a game man. He should never have been sent toFrance. He had been seriously wounded and his nerves were shattered. For that reason I do not think that Pritchard was a. coward. He was unable to go on and there was nothing against him for that. That is how I feel about it. I am not concerned about Chapman. I have seen men shot and wounded and have spent many nights attending to them. When I thought of that, and of the gallant men who went overseas, I felt very sad about them. I would never have mentioned the matter in ordinary circumstances. It just crossed my mind when I was thinking of the diggers of the last war who could be serving in this war, and who want to go to this war but have been denied that right and privilege. I hope that the Minister for the Army (Mr. Forde) will take steps to ensure that those men who served in the last war and who to-day enjoy health and strength and prove themselves to be physically fit by continuous training in military camps will have a chance to go to this war. I want nothing more than that. I believe that such men would be an inspiration to our younger soldiers under them and would command their respect because of the confidence which they would create in view of their previous experience under fire. That is my contention regarding the matter. If 1 have offended some officers of the battalion who feel that I have cast some aspersion on them I shall withdraw my statement. I do not want to offend anybody, but I am not at all in sympathy with Chapman.
– This afternoon the Leader of the Opposition (Senator McLeay) asked me, as Minister representing the Minister for Supply and Development, upon notice, the following question: -
In view of the oft-reported serious shortage of coal stocks in Victoria and South Australia, will the Minister advise what steps, if any, have been or are being taken by the Government to step up the production of coal?
The Minister for Supply and Development has now supplied the following answer : -
The necessity for urgently building up stocks of coal in Victoria and South Australia is realized, and the Prime Minister has recently directed that everything possible be done to quickly improve the position. The Coal Commissioner has been requested to take action in collaboration with the Department of Commerce, which controls shipping, to ensure that effect is given to the Prime Minister’s wishes. It is expected that stocks in Victoria will have reached a satisfactory level by the end of December. The position is developing satisfactorily in South Australia, and the honorable senator may be assured that the matter of the supply of coal to these States will continue to receive our close attention.
– I bring to the attention of the Minister representing the Minister for Supply and Development the urgent necessity for acting upon the recommendations made in an interim report presented recently by the Joint ‘Committee on Rural Industries in connexion with the building of flax mills. The committee urged the Government to take, immediate steps to ensure that flax mills would be constructed and machinery installed for the processing of the coming season’s crop. Honorable senators might not realize that the area in production this season is 60,000 acres as compared with 20,000 acres sown last season. The last season was bad whereas this season promises to be unusually good. Should that prove to be the case approximately £500,000 will hare to be provided in order to pay for the raw material alone, whilst approximately £1,000,000 will be required for the processing of that raw material. I now inform the Senate that in some areas the mills are not yet ready. The Flax Production Committee has had ample time in which to get the mills ready to handle the coming crop; but it seems that it is falling down on its job. If that is the case the Minister should, take action immediately in order to ensure that the mills are ready to handle the coming crop.
– The Flax Production Committee has given an assurance that they will be ready.
– I now inform honorable senators that at one particular place the committee has just acquired the land on which the mills are to be erected. I did not intend to go into details, but evidence has been given before the Joint Committee on Rural Industries that the mills must be ready by the end of December at the latest, in order to be able to handle the coming season’s crop. If the committee has just acquired land on which to erect some of the mills this Government will require to act with greater speed than either the previous Government or the board has acted in the past. If the mills are not ready it will mean double, and triple, handling and stacking the flax in the rain. Furthermore, a demand will be made on labour for the construction of the mills in the middle of the harvesting when every available man will be required to handle the crop. I have heard much in this chamber to-day about our man-power problem. That problem in many instances is already upon us, and will become more serious in the future. All of us should realize the seriousness of the delay which will be caused if these mills are not built immediately and the necessary machinery installed in time to handle the coming crop. I hope that my remarks will be conveyed to the Minister for Supply and Development (Mr. Beasley), and that they will be given immediate attention, not merely because I ask that that the mills be constructed, but also because flax fibre is urgently needed in our war effort.
.- I desire to draw attention to the dissatisfaction of rifle club members in regard to the decision to withdraw their private rifles and issue them to other units. No objection is taken to the Government purchasing rifles from owners who have enlisted in the Australian Imperial Force or the Royal Australian Air Force, but when rifle club members have joined the Volunteer Defence Corps, now termed the Home Guard, it is contended that they should be allowed to retain their rifles. About 8,000 men have joined the Volunteer Defence Corps. These men are expert shots. They have trained themselves to become snipers, a role which, some day, the Volunteer Defence Corps may be called upon to play. About 30 per cent, of the 50,000 members of the Volunteer Defence Corps have never handled a rifle. Here is a golden opportunity for the military authorities to utilize the services of these specialists. Instead, the Government proposes to buy back these rifles and re-adjust them for use by other branches of the service. In each British Army battalion there is a section of sniping specialists armed with short rifles fitted with aperture sights. Rifle club members are identical with these sections, yet the Commonwealth Army authorities have recommended that the rifles be withdrawn from our expert snipers and handed over to others, who have still to learn to shoot straight. The rifle apparently is not considered an obsolete weapon or the Small
Arms Factory at Lithgow would not he turning out 1,000 a week. I shall not accept the statement that there is a shortage of rifles; it is the distribution which is at fault. I respectfully ask that the Minister for the Army (Mr. Forde) look into this matter more closely. Here are men who, in peace time, at little expense to the country, have qualified themselves for the task that they may be called upon to undertake. Instead of encouraging them to join the Volunteer Defence Corps the military authorities are discouraging them. Under the defence plans prepared in pre-war days, rifle club members were officially reservists, and were sworn in as such, but as this war progressed, for various reasons, the scheme never matured. Hundreds enlisted in the Australian Imperial Force, hundreds were called up for compulsory service and are now on the active list of Militia units, others again were listed in reserved occupations. Prior to the formation of the Volunteer Defence Corps many thousands of rifle club members were only too anxious to continue in the role of reservists, keeping themselves in practice and giving instruction in local centres to scores of young and middleaged men who hitherto took no interest in defence. Suddenly, all this patriotic activity ceased, and rifle clubs were put in cold storage because no ammunition was available. That is the position to-day, though millions of rounds are turned out weekly in our small arms ammunition factories. Seeing no prospect of serving their country as members of rifle clubs, about 8,000 linked up with the Volunteer Defence Corps. Imagine their disappointment when, instead of taking their own rifles with them, they were told that they could not do so, but must sell their rifles - specially prepared for sniping - to the Government. The whole business shows a short-sighted policy. The Volunteer Defence Corps is hampered in its training, and the enthusiasm of thousands of patriotic citizens dampened. It may be argued that the output of small arms ammunition has not yet reached the maximum required for overseas requirements and a general reserve within the Commonwealth. I am not in a position to say what these requirements are, but I do know that the amount of ammunition allotted to units of our Home Defence Army for training in the use of the Vickers machine gun, Lewis gun, Bren gun, and the rifle is totally inadequate. I shudder to think what would happen if our Militia Forces were called into action with a half-baked knowledge of the weapons with which they are armed. Is there no way of speeding up the manufacture of not only small-arm ammunition, hut also rifles. I hope that the Minister for the Army will take a stand in this matter and remove the suspicion that our Australian Army gets only what is left over. Our Army, including the Voluntary Defence Corps, must be efficient, otherwise our defence is only a sham.
– Lest the interjection which I made when Senator Aylett was speaking be misunderstood, I should like to explain that - 1 share the honorable senator’s anxiety in regard to the erection of flax mills. In its interim report, the Joint Committee on Rural Industries drew the attention of the Minister for Supply and Development (Mr. Beasley) to this matter, and all I wished to imply by my interjection was that the matter had been brought to the notice of the Flax Production Committee, whose responsibility it is to see that these mills are fully equipped to handle the forthcoming crop, which promises to be very heavy, and that the committee gave an assurance that the mills would be in readiness for the forthcoming crop. I agree that this matter should be brought to the notice of the Minister again.- No doubt, the Minister, in turn, will refer it back to the Flax Production Committee, which, I feel sure, will give the same assurance to the Minister as it gave to the Joint Committee on Rural Industries a few weeks ago.
– An assurance is not worth anything in this case.
– I do not wish my interjection to be misunderstood. I am not unmindful of the colossal task which confronts the Flax
Production Committee, and all I say is that it gave an assurance that the equipment would be ready to handle the 1940-41 crop.
Motion - by leave - temporarily withdrawn.
Message received from the House of Representatives intimating that Mr. Conelan and Mr. Lawson had been discharged from attendance on the Joint Committee on War Expenditure; and that Mr. Morgan had been appointed to serve thereon; and requesting that the Senate appoint an additional member to serve on the committee.
Motion (by Senator Collings) - by leave - agreed to -
That the Senate agrees to appoint an additional member of the Senate to serve on the Joint Committee on War Expenditure, as requested by the House of Representatives.
That Senators Ashley and Clothier be discharged from attendance, and that Senators Arthur, Darcey and Lamp be appointed to serve, on such committee.
That the foregoing resolutions be communicated to the House of Representatives by message.
Message received from the House of Representatives intimating that Mr. Perkins had resigned as chairman of the Joint Committee on Social Security, and that Mr. Barnard had been appointed chairman in his stead.
Motion (by SenatorCollings) - by leave - agreed to -
That the Senate concurs in the appointment of Mr. Barnard as chairman of the Joint Committee on Social Security in place of Mr. Perkins, resigned as chairman.
That Senator Keane be discharged from attendance, and that Senator Arnold be appointed to serve, on such committee.
That the foregoing resolutions be communicated to the House of Representatives by message.
Message received from the House of Representatives intimating that Mr. Watkins had been discharged from attendance on the Joint Committee on
Profits, and requesting that the Senate appoint an additional member to serve on the committee.
Motion (by Senator Collings) - by leave - agreed to -
That the Senate agrees to appoint an additional member of the Senate to serve on the Joint Committee on Profits, as requested by the House of Representatives.
That Senator Armstrong be discharged from attendance, and that Senators Courtier and Large be appointed to serve, on such committee.
That the foregoing resolutions be communicated to the House of Representatives by message.
Message received from the House of Representatives intimating that Mr. Frost and Mr. Scully had been discharged from attendance on the Joint Committee on Rural Industries, and that Mr. Raker and Mr. Langtry had been appointed to serve thereon.
Motion (by Senator Keane) again proposed -
That the Senate do now adjourn.
.- On the 18th September last, a formal motion for the adjournment of the Senate was moved by the Postmaster-General (Senator Ashley) in order to discuss an application by Mr. D. A. Craig and others for permission to establish a refinery for the treatment of crude oil, petrol, and bitumen. Serious objection was taken at that time by members of the then Opposition to the fact that the application had been rejected by the Capital Issues Advisory Board. Can the Minister for Trade and Customs (Senator Keane) inform me whether that application has been renewed, and whether it has been granted by the Government?
.- in reply - No further application has been been made by Mr. Craig. The remarks of Senator Brand with regard to rifle clubs will be brought to the notice of the Minister for the Army (Mr. Forde).
The following papers were pre sented : -
Arbitration (Public Service) Act - Determinations by the Arbitrator, &c. -
No. 29 of 1941 - Commonwealth Foremen’s Association; and Amalgamated Engineering Union.
No. 30 of 1941- Amalgamated Postal Workers’ Union of Australia and others; Commonwealth Storemen and Packers’ Union ; Commonwealth Naval Storehousemen’s Association; and Arms, Explosives and Munition Workers’ Federation of Australia.
Australian Imperial Force Canteens Funds Act - Twenty-first Annual Report for year 1940-41.
Sugar Agreement - Tenth Annual Report of the Fruit Industry Suga r Concession Committee for theyear ended 31st August, 1941.
Australian Soldiers’ Repatriation Act - Regulations - Statutory Rules 1941, No. 259.
Customs Act - Proclamation, dated 29th October, 1941, prohibiting the exportation (except under certain conditions) of Calcium carbide; Sodium carbonate (soda crystals).
Defence Act - Regulations - Statutory Rules 1941, Nos. 245, 246.
High Commissioner Act - Regulations - Statutory Rules 1941, No. 258.
Gold Mining Encouragement Acts - RegulationsStatutory Rules 1941, No. 243.
Lands Acquisition Act - Land acquired at -
Bega, New South Wales - For Defence purposes.
Footscray, Victoria - For Defence purposes (2).
Laura, South Australia - For Defence purposes.
National Security Act -
National Security (General) Regulations - Orders -
Control of lights and traffic (5).
Taking (possession of land, &c. (50).
Use of land (12).
National Security (Liquid Fuel) Regulations - Order -
Liquid Fuel (Restriction on Use of certain Substances).
Regulations - Statutory Rules 1941, Nos. 247, 248, 249, 250, 252, 253, 254, 255.
New Guinea Act - Ordinances of 1941 -
No. 5 - Ordinances Interpretation.
No. 17 - Appropriation (No. 3) 1940-41.
No. 18 - Mortgagors’ Relief (No. 2).
No. 19 - Succession Duties.
No. 20 - Dog.
No. 21- Police Offences (No. 2).
No. 23- Customs Tariff (No. 2).
No. 24 - Mines and Works Regulation.
Norfolk Island Act - Ordinances of 1941 -
No. 3- Child Welfare.
No. 4 - Child Welfare Agreement.
No. 5 - Legitimation.
Patents Act - Regulations - Statutory Rules. 1941, No. 240.
Petroleum Oil Search Acts - Statement of Expenditure for period 28th May, 1936, to 30th June, 1941.
Seat of Government Acceptance Act and Seat of Government (Administration) Act - Ordinance No. 16 of 1941 - Motor Traffic
Trade Marks Act - Regulations- Statutory Rules 1941, No. 241.
Senate adjourned at 10.31 p.m.
Cite as: Australia, Senate, Debates, 12 November 1941, viewed 22 October 2017, <http://historichansard.net/senate/1941/19411112_senate_16_169/>.