Senate
11 September 1942

16th Parliament · 1st Session



The President (Senator the Hon. J. Cunningham) took the chair at 11 a.m., and read prayers.

page 218

ASSENT TO BILLS

Assent to the following bills re ported : -

Customs Tariff Validation Bill. 1942. Customs Tariff (Exchange Adjustment) Validation Bill 1942.

Customs Tariff (Special War Duty) Validation Bill 1942.

Customs Tariff (New Zealand Preference) Validation Bill 1942.

Customs Tariff (Canadian Preference) Validation Bill 1942.

page 218

QUESTION

GRAVING DOCK

SenatorFOLL.- Will the Minister for the Interior set out the circumstances surrounding the withdrawal of a large number of men who have been engaged in the construction of the graving dock somewhere in Australia ? Will the withdrawal of these men mean that the completion of that important work will be delayed? Is it not a fact that with the loss of certain territory adjacent to Australia - Singapore, for instance - the completion of this dock is probably one of the most urgent requirements of the allies in this part of the world? Will the Minister give an assurance that the work has not been interfered with or delayed?

Senator COLLINGS:
Minister for the Interior · QUEENSLAND · ALP

– A question of that kind couldhave been asked of me in my capacity as Minister without parading it in the Senate. The honorable senator can be quite sure that the withdrawal of the men from the graving dock–

Senator Leckie:

– Is this not the proper place in which to parade it?

Senator COLLINGS:

– I am giving my own answer. The honorable senator would have beenmuch wiser had he asked the question privately. One hundred men were withdrawn from the dock and were sent to another job in North Queensland, and the work to which they were sent was considered to be of far greater strategic importance than that on which they were engaged. That is the answer to the question, and it has already been given to thepress. Many people who ought to know better are proposing to decide for themselves which jobs are of the greatest strategic importance having regard to the safety of this country.

page 218

QUESTION

PRICE OF POTATOES

Senator AYLETT:
TASMANIA

– Will the Minister for Trade and Customs endeavour at an early date to state the maximum price that will be paid to the growers for next season’s crop of potatoes, the minimum price having already been announced?

Senator KEANE:
Minister for Trade and Customs · VICTORIA · ALP

– Yes.

page 218

AIR RAID PRECAUTIONS

Shelters at Parliament House and Hotel Canberra.

Senator JAMES McLACHLAN.Will the Minister for the Interior inform the Senate why, when the air raid siren sounded on Wednesday morning last, the people in Parliament. House were sent outside, whilst those in the vicinity of the Hotel Canberra were sent inside the premises?

Senator COLLINGS:
ALP

– The answer is quite simple. The air raid shelters for the people at Parliament House (happen to be outside the building, whereas the protection provided for the residents at the Hotel Canberra happens to be inside.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Will the Minister inform the Senate where safety is to be found inside the Hotel Canberra ?

Senator COLLINGS:

– I am not a resident of the Hotel Canberra, but I should imagine that there would be no difficulty for the hotel residents to find theshelter.

Senator A J McLACHLAN:
SOUTH AUSTRALIA · NAT

– Will the Minister take the trouble to inspect the facilities that are provided, not inside the hotel, but outside it? A man of my girth cannot enter the existing shelter.

Senator COLLINGS:

– I shall look into that matter.

page 218

DEATH OF HIS ROYAL HIGHNESS THE DUKE OF KENT

The PRESIDENT (Senator the Hon J Cunningham:
WESTERN AUSTRALIA

– I have been advised by His Excellency the Governor-General that the resolution passed by the Senate on the 2nd September, 1942, in connexion with the death of His Royal Highness the Duke of Kent has been forwarded by cable to His Majesty the King, who has replied as follows: -

Iand my family deeply appreciate the message of sympathy from members of the Senate in the Parliament of the Commonwealth of Australia on the death of my brother, the Duke of Kent, who, I know, was so much looking forward to the time when it would be possible for him to take up his duties as Governor-General. The kind sentiments expressed by the members of the Senate afford me much consolation in my sorrow.

Georger.I

page 219

QUESTION

SHIPBUILDING

Senator CLOTHIER:
WESTERN AUSTRALIA

– In view of the shortage of ships, has the Government given consideration to the extension of the shipbuilding industry inWestern Australia? If so, what decision has been reached ? If the answer be in the affirmative, what classes of ships are to be constructed ?

Senator FRASER:
Minister for External Territories · WESTERN AUSTRALIA · ALP

– The Government has decided to extend the shipbuilding industry to Tasmania and Western Australia for the construction of small wooden ships. The technical officers of those States will meet at an early date to decide on the specifications of the vessels to be built.

page 219

QUESTION

SYNTHETIC RUBBER

Senator AYLETT:

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

  1. Has the Government requested Sir Owen Dixon, Australia’s representative in Washington, to approach DuPont’s, who arc manufacturers of synthetic rubber in the United States of America, with a view to their establishing a plant in Tasmania, or allowing their process tobe used under licence?
  2. What stages have the Government’s investigations reached for the manufacture of synthetic rubber?
Senator FRASER:
ALP

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

  1. No such request has been made. However, as indicated by the Prime Minister, in reply to a question by the honorable member for Wilmot, consideration is being given to the suggestion of the Tasmanian Government that Sir Owen Dixon be asked to approach patents holders in the United States of America for a purpose similar to that which the honorable senator has in mind.
  2. Considerable informationhas been received from American interests, and further details have been promised. The Council for Scientific and Industrial Research has examined all available information on the subject, and it has been established that the provision of extensive chemical engineering equipment and the utilization of large quantities of materials will be necessary before production on any worthwhile scale could proceed. The whole position is still being examined to see just how far its production would interfere with our munitions programme, and to what extent production in Australia is practicable.

page 219

QUESTION

PRICE OF CARROTS

Senator AYLETT:

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

  1. . What are the reasons for the difference of £3 a ton paid by the Supply Department, Melbourne, and the Supply Department, Hobart, for carrots purchased at Smithton and Stanley in Tasmania?
  2. Is it a fact that the Supply Department in Melbourne is paying £12 10s. a ton for carrots at the Stanley wharf?
  3. Is it a fact that the Supply Department, Hobart, purchasing carrots for processing purposes (processed by Jones and Company, Hobart), is offering only £9 a ton for carrots at Stanley or Smithton Station ?
  4. Is it not a fact that if the same price were paid by the Supply Department, Melbourne, carrots could be processed in Tasmania instead of being shipped to Melbourne for that purpose?
Mr FRASER:
Minister for External Territories · WESTERN AUSTRALIA · ALP

– The Minister for Supply and Development has supplied the following answers : - 1, 2 and 3. The carrots for which contracts have been arranged at £9 a ton are to be delivered during the summer months, i.e., December to March, when the main crop is available, and are not being purchased at the present time. Those for which my department is paying £12 10s. a ton are the remnants or the old crop. This latter price is that fixed by the Prices Commissioner.

  1. I am informed that the Tasmanian processors are kept fully occupied in processing carrots already held in cold store, and that the stocks which have been sent from Northern Tasmania to Melbourne are not required for immediate processing in Tasmania. They are, however, required immediately for processing in Victoria to meet very urgent defence orders.

page 219

QUESTION

BROADCASTING COMMITTEE

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

asked the Postmaster-General, upon notice -

With reference to the Parliamentary Standing Committee on Broadcasting, as provided for in section 72 of the Australian Broadcasting Act 1942, will the Postmaster-General inform the Senate -

When and by whom was the Parliamentary Standing Committee on Broadcasting appointed?

As the act provides for the appointment of this committee “ according to the practice of the Parliament . . . “ does he not consider that the constitution of this committee has been illegal?

How many meetings of this committee have been held since the passing of the act this year?

What fees and allowances, if any, have been paid to members, and what other expenses has the committee incurred since the passing of the act?

Has he yet received any report from this committee on its deliberations, and, if so, in view of the alleged unconstitutional appointment of the committee, can such report bo regarded as constitutional?

Senator ASHLEY:
Minister for Information · NEW SOUTH WALES · ALP

– The answers to the honorable senator’s questions are as follows : - 1 and 2. The committee was appointed by resolution of the Parliament on the 3rd September, 1942. However, following the submission to the Government of the report of the Joint Parliamentary Committee on Broadcasting, and pending the meeting of the Parliament, it was agreed on the 5th July, 1942, between the Prime Minister, the Leader of the Opposition and myself, that the standing committee should function forthwith, in order that certain matters should be investigated without delay.

  1. There have been sixteen meetings, at eight of which evidence was taken. In addition, there have been five days upon which evidence was taken, apart from meetings of the committee.
  2. Fees - nil : travelling allowances has been paid at the uniform rate for members of parliamentary committees of £2 2s. a day for members and £2 10s. a day for the chairman for days upon which they were absent from their place of residence on official business of the committee. Other expenses include salaries of the secretary and typist, as well as incidentals (car hire, £1 8s.; fares £5 17s., &c), totalling £26 8s.6d. The salary of the secretary, who is an officer of the PostmasterGeneral’s Department, was paid by that department pending finalization of administrative arrangements for the committee, and will be the subject of a claim for recovery. Salary expenses on this basis, including those of typist, were £176 for twelve weeks following the passing of the act. Travelling allowance paid for the staff totals £501s. 7d.
  3. No, but certain matters have been referred by me to this committee for consideration.

page 220

QUESTION

FLAX

Senator AYLETT:

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

  1. What is the value of the total return of flax fibre manufactured in Australia for the season 1940-41?
  2. What is the total expenditure for the purchase of flax, and processing of flax, including administration and interest on the capital of plant, for the season 1940-41?
Senator FRASER:
ALP

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

  1. Total expenditure, including purchases of original sowing seed and provision for depreciation and interest on capital, £421,482; loss for period ending 30th November, 1941,

£146,761.

page 220

QUESTION

WOOL PRICES

Senator GIBSON:
through Senator Cooper

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

What amount of wool in bales or lbs.or percentages of wool in the last year of appraisement was valued at - 30d. per lb. and over 25d. per lb. and under 30d. ; 20d. per lb. and under 25d. ; 15d. perlb. and under 20d.;10d. per lb. and under 15d.; 5d. perlb. and under 10d.; under 5d. ?

Senator FRASER:
ALP

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

It is not in the public interest that such statistics should be published. In any event, the compilation of such a return would involve a considerable amount of work and would take some time to complete. Having regard to man-power difficulties, it is considered that this additional burden should not be thrown on an already depleted staff.

page 220

QUESTION

EAST-WEST ROAD

Senator COLLETT:
WESTERN AUSTRALIA

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

With reference to the strategic road connecting South and Western Australia -

Is it proposed to extend the road beyond the present western terminus?

Has the Government received representations from local governing bodies in Western Australia advocating extensions in one or more directions ?

If the answer to No. 2 is in the affirmative, what is the attitude of the Government towards such representations ?

Senator COLLINGS:
ALP

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

  1. No.
  2. Yes.
  3. Having regard to the many demands on available man-power for other projectsof higher strategic priority, the military authorities have advised the Government that the extension of this road is not warranted.

page 221

WESTERN COMMAND HEAD-QUARTERS

” Tea Money “ - Services of Personnel.

SenatorCOLLETT asked the Minister representing the Minister for the Army, upon notice -

Is it a fact that, prior to the 31st December, 1941, warrant and non-commissioned officers at Western Command Head-quarters, engaged on special duties entailing attendance beyond normal hours, were refused an allowance for “tea money”?

Is it also a fact that, subsequent to the date given above, the payment of “ tea money “ was authorized? 3. (a) Was this authorized payment made retrospective in the case of officers, but not in the case of warrant and non-commissioned officers; (b) if so, why the discrimination?

Senator FRASER:
ALP

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

  1. Meal allowance was payable prior to the 1st January, 1942, only to officers who were required as night duty officers and who were required to remain on duty throughout the night and were not relieved until 9 o’clock on the following morning. All other personnel, officers and other ranks, working beyond the normal hours were not paid an allowance.
  2. Meal allowance at the rate of1s.6d. per meal was approved from the 1st January, 1942, for all personnel required to commence or finish duty at least three hours before or after the normal time of commencing or ceasing duty.
  3. The payment was not made retrospective for officers or other ranks and there was no discrimination.
Senator COLLETT:

asked the Minister representing the Minister for the Army -

  1. Is it a fact that in the camps and other establishments of the Western Command there is a proportion of officers of the Australian Military Forces not fully or suitably employed ?
  2. If so, will steps be taken to ensure, in view of the alleged man-power deficiency, that any such officers are allotted duties appropriate to their qualifications and experience?
Senator FRASER:

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

  1. Due to replacement by younger men in units and formations or to re-organization, officers are on occasions held in depots under consideration for appointment in the rear services. Every effort is made to place officers suitably and not to hold them in depots longer than is administratively necessary, and where possible they are suitably employed at the depot.
  2. Officers for whom no vacancies exist in appointments suitable to their attainments are released so that their services are available to the country in their civil capacities.

page 221

QUESTION

SOLDIERS DEPENDANTS’ APPEAL ORGANIZATION

Senator CLOTHIER:

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

  1. Does not the Minister consider that the Soldiers Dependants’ Appeal Organization has done excellent work in providing assistance by way of grants of clothing, food, medical attention,&c, to returned soldiers and their dependants and by also providing free legal advice for them?
  2. Is it a fact that 1,117 applications for assistance or advice were received by this organization during the year 1941-42?
  3. Will the Minister give instructions that this organization be supplied with the names and addresses of dependants of men who were billed on service in order that it may continue the work it has been doing.
Senator FRASER:
ALP

– The Minister for the Army has supplied the following answers : - 1 and 2. The work of the Soldiers Dependants’ Appeal Organization (Western Australian War Patriotic Fund) has no official connexion with the Department of the Army and records of its work are not maintained.

  1. The request of this organization to be furnished with the names and addresses of next-of-kin of members of the forces who become casualties has received consideration at intervals over the last two years, but although it is desired to render philanthropic bodies all possible help, it is regretted that the decision already given that this information cannot be divulged to such organizations cannot be varied.

page 221

QUESTION

PRICE OF ORANGES

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

asked the Minister for Trade and Customs, upon notice -

  1. Is it a fact that, owing to the demand, oranges at present are returning to the growers from 8s. to 10s. per case?
  2. On what basis did the Prices Commissioner fix the price at £10 10s. per ton (approximately 3s. 6d. per case) on the quota taken for military purposes?
Senator KEANE:
ALP

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

  1. Yes.
  2. The price of £10 10s. per ton was originally arranged at a conference between the manufacturers of fruit juice and the secretary of the Victorian Citrus-growers Association. Some growers were dissatisfied with this arrangement and the Prices Commissioner was asked to review the price. After the conference between the parties the Prices Commissioner confirmed the price of £10 10s. per ton. This price was higher than the prices paid in previous years for fruit of similar quality. The fruit in question is not fruit normally sold in the open market and in New South Wales State legislation actually prevents its sale in the open market. Moreover the fruit is delivered in bags and is much less costly to the grower to market than fruit delivered in cases in the open market. There is, in fact, no real comparison between the quality and cost of fruit normally delivered for manufacturing into fruit juice and for fruit sold on the open market. Since the original determination the Supply Department has greatly increased its requirements for the military forces, and it is now necessary to draw upon fruit normally sold in the open market such as good quality navel and Valencia oranges. In the changed circumstances and after a conference between thecitrus growers and the Prices Commissioner last week a new determination has been made, namely, £15 per ton f.o.r. Melbourne for Victorian oranges, £15 per ton f.o.r. Tailem Bend for South Australian oranges and £15 f.o.r. country stations for oranges from New South Wales.

page 222

QUESTION

MELBOURNE-LAUNCESTON AIR SERVICE

Senator LAMP:
TASMANIA

asked the Minister representing the Minister for Civil Aviation, upon notice -

  1. What is the type of aircraft now on service between Launceston, Flinders Island, King Island and Melbourne?
  2. What is the age of the craft?
  3. What is its carrying capacity on one engine?
  4. Does the department intend to reduce the maximum load progressively with the age of the craft?
  5. What is being done to prevent a similar disaster to that which took place on the 29 th May of this year?
Senator CAMERON:
Minister for Aircraft Production · VICTORIA · ALP

– The Minister for Civil Aviation has supplied the following answers : -

  1. D.H.80 “DragonRapide’’ aircraft.
  2. The aircraft was constructed in 1936.
  3. The aircraft normally operates on two engines at a maximum all-up weight of 5,300 lbs. For flights over water the maximum all-up loading is limited to 5,100 lbs., which, with full fuel and oil tanks, permits of a commercial load of 1,124 lbs. Recent tests have shown that the aircraft can maintain level flight on one engine at this loading.
  4. There is no justification for reducing maximum authorized load.
  5. Progressively with age, but if there is any evidence of reduction in performance (which could be due to many causes), the department endeavours to determine the cause of such reduction and, unless it can be eliminated, does reduce the authorized loading as necessary to secure safety. As indicated in the reply to question 3, flight tests were conducted on this aircraft and loading limited in the lights of such tests.

page 222

QUESTION

RETURNED SOLDIER PENSIONERS

Senator LAMP:

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

Will the Government issue instructions to the appropriate authorities so as to avoid the necessity of calling up for medical examination men who are returned soldier pensioners?

Senator FRASER:
ALP

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

  1. Returned soldiers in receipt of pensions for minor disabilities are required to attend for medical examination in the usual way. Many of these men are quite fit for administrative and sedentary duties in rear installations and, in fact, numbers of them are at present so employed in the Army; The employment of such personnel releases for duty with field formations, men who are being employed in rear installations and who are medically fit Class I.
  2. The present instructions provide that -

    1. Personnel who are in receipt of second schedule Repatriation Department pensions of £4 per week are not medically examined. On being called up for medical examination they are asked to produce or forward their pension certificate and their basic documents are then endorsed “ permanently incapacitated “ and no further action is taken. (b) Personnel who are unable to attend for physical reasons and who forward their pension certificates to the appropriate area officer are similarly dealt with, (c) Inmates of repatriation hospitals and institutions are similarly treated if classified as totally or permanently incapacitated. Lists of such personnel have been obtained and no action has been taken to call them up for medical examination.

page 223

QUESTION

ROYAL AUSTRALIAN NAVY

Can teens Service.

Senator LAMP:

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

  1. Is it a fact that an allowancehas been paid to the dependants of the canteen staff of H.M.A.S. Sydney?
  2. If so, what are the circumstances of the case, and the amounts paid?
Senator ASHLEY:
ALP

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

  1. Yes. The dependants of only one member of the canteen staff qualified as in 2. below.
  2. Whilst not technically members of the naval forces, members of the canteen staff of His Majesty’s Australian ships do in fact form part of the fighting organization of the ship and are detailed for action stations in common with members of the naval forces. In view of the fact that non-combatants such as Bed Cross, Salvation Army and Young Mens Christian Association officials attached to the fighting forces are eligible for pensions, the Government gave a similar approval for members of the canteen staffs provided it was established that the dependants were in necessitous circumstances. In the case referred to above the maximum pension is being paid, i.e., £4 4s. per fortnight for the widow and £1 per fortnight for the child.
Senator LAMP:

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

  1. Is it a fact that canteens are let by tender on His Majesty’s Australian ships?
  2. If so, why?
  3. Will the Minister review this policy with a view to having an up-to-date canteen system conducted by the Navy Department?
Senator ASHLEY:

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

  1. Yes. The practice is for applications to be invited from persons willing to conduct the canteen. The applicant whose qualifications are most suitable is chosen. He pays a standard rental on a per capita basis according to the number in the ship’s complement. The rental is credited to the ship’s fund and used for the welfare of the men. Prices are controlled through a canteen committee, and tenure is subject to satisfactory service. In small ships, however, the canteen is conducted bya canteen committee, on a co-operative basis. 2.Experience has proved that this system is suitable to the naval service.
  2. The whole question of service canteens was recently reviewed for consideration of Cabinet and the present arrangements applying were approved.

page 223

QUESTION

AUSTRALIAN ARMY

Free Distribution of Apples

Senator LAMP:

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

Will the Minister for Defence arrange with the various forces who are supplied with free apples by the Apple and Pear Board that they give a credit to the board for all apples supplied ?

Senator COLLINGS:
ALP

– The Minister for Defence has supplied the following answer : -

Arrangements have been made to issue to the board, on delivery of fruit, an army order form recording details thereof, and endorsed “Free issue. No financial adjustment”. In view of the fact that the fruit is supplied free of charge, it is not considered that any further documents are required.

page 223

QUESTION

X-RAY EXAMINATIONS

Northern Tasmania

Senator LAMP:

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

What is the reason for the Government X-ray examination in north Tasmania being given to a private radiologist instead of the Launceston General Hospital ?

SenatorFRASER.- The Minister for the Army has supplied the following answers : -

The matter of carrying out X-ray examinations for recruits and other army personnel was investigated by army medical authorities at the request of the Chief Finance Officer in February and March, 1942.

The board of the Launceston General Hospital was asked by the Assistant Director, Medical Services, in Tasmania, whether the above X-ray examinations could be done at the hospital. The board replied that the hospital could not suspend its routine work to carry out the work required at that time by the Army. The board also indicated the cost to the Army of any X-ray work which could be done by the hospital without disturbing the hospital’s usual functions.

A private radiologist was also approached and gave an undertaking that whenever his services were required by the military he would cease his private work and do all the military work required.

The costs submitted by the Hospital Board and the private radiologist were examined and it was found that the hospital charges were in excess of those of the private radiologist. The Chief Finance Officer then gave approval for the work to be done privately.

page 224

QUESTION

VOLUNTARY AID DETACHMENTS

Senator LAMP:

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

  1. Do the members of the Voluntary Aid Detachments on active service receive deferred pay?
  2. If not, why?
Senator FRASER:
ALP

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

  1. Members of Voluntary Aid Detachments, who have served abroad, receive deferred pay at the rates of1s. 6d. per day for members of ranks up to and including Group Leader (i.e other ranks) and 2s. 6d. per day for higher ranks (i.e. officers). Members who have not served abroad do not receive deferred pay.
  2. The matter of deferred pay for all women now serving with the military forces is at present under consideration.

page 224

QUESTION

POTATO INDUSTRY

Senator HERBERT HAYS:
through Senator J. B. Hayes

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

  1. In view of the appeal made by the Minister for Supply and Development for a 50 per cent, increase in potato production, what increased acreage has been contracted for in the year 1942, as against the year 1941? 2.Will the Minister show separately the increase expected or contracted for in each State?
Senator FRASER:
ALP

– The Minister for Supply and Development has supplied the following answers : - 1 and 2. The machinery set up to handle the details of administration in connexion with potato production functions within the jurisdiction of my colleague, the Minister for Commerce, who has supplied the following information : -

Contracts for the main crop of potatoes for 1942-3 are still being made with growers by the Australian Potato Committee. Figures showing the final results will not be available for some time, but preliminary reports show a fairly satisfactory increase in projected plantings. So far as the two largest potatoproducing States are concerned, the figures for Tasmania indicate an increase of 50 per cent., and for Victoria, 47 per cent., over last year’s acreage.

page 224

QUESTION

PRIVATE W. H. LE BROCQUE

Senator ASHLEY:
New South WalesPostmasterGeneral · ALP

by leave - On the 3rd September, 1942, Senator James McLachlan asked a question relative to an application which had been made by Mrs. Le Brocque for the discharge of her husband from the Military Forces. The Minister for Labour and National Service promised to submit a statement setting out the details. He has now provided the following reply for the information of honorable senators: -

Mrs. Le Brocque, who resides in the electorate of the Minister for Labour and National Service, called at the Minister’s Sydney office to seek his advice and assistance. The Minister was not available at the time, and Mrs. Le Brocque was interviewed by a member of the staff. Mrs. Le Brocque stated that her husband at that time was detained at Victoria Barracks, having been absent without leave for three weeks.

Mrs. Le Brocque further stated that she was very ill, and had furnished a medical certificate from Dr. Day, of St. Mary’s, setting out her state of health, and that it was in order to be with her in her illness that her husband, after having been refused leave, went absent without leave.

These particulars were submitted to the Minister for the Army for an investigation to be made regarding Mrs. Le Brocque’s request for the exemption from further service of her husband or, failing that, the withdrawal of the charge against him for being absent without leave.

A reply dated the 25th August, 1942, was received from the Minister for the Army stating that Private Le Brocque was awaiting a district court-martial. The Minister for the Army further stated that, at a previous hearing, and in view of evidence in his favour, Private Le Brocque was offered the opportunity of being dealt with summarily by the commanding officer, but he elected to await a district court-martial. The Minister for the Army undertook to have the application for the release of this soldier reconsidered upon his return to his unit.

The Minister has also made available the following papers, which I lay on the table : -

Exemption from military service - Private W. Le Brocque - Papers in reply to question by Senator James McLachlan.

page 224

QUESTION

ESTIMATES AND BUDGET PAPERS 1942-43

Debate resumed from the 2nd September (vide page 14), on motion by Senator Keane -

That the following papers be printed:-

Estimates of Receipts and Expenditure, and Estimates of Expenditure for Additions, New Works, Buildings, &c, for the year ending the 30th June, 1943.

The Budget 1942-43 - Papers presented by the Hon. J. B. Chifley, M.P., on the occasion of the Budget of 1942-43.

Senator McLEAY:
Leader of the Opposition · South Australia

– At the outset I express the thanks of the Opposition in this chamber to the Prime Minister (Mr. Curtin) for arranging the secret meeting of members and senators to enable Ministers to impart confidential information to us in connexion with the war. I also express our thanks to the Minister for External Affairs (Dr. Evatt), and the right honorable member for Cowper (Sir Earle Page), for the reports which they presented to that meeting on the important work on which they were engaged in the United States of America and the United Kingdom. Both of those gentlemen made hazardous trips and we fully appreciate their safe return. AH who had an opportunity to hear their speeches were impressed with the seriousness of the present war situation. It is now quite obvious that all sections of the community must be urged to do everything in their power to make a 100 per cent, war effort. Both those right honorable gentlemen returned to this country greatly impressed with the splendid performances of our Russian allies in the field, and the heroic stand made by the people of Great Britain. Bearing those facts in mind, it is fitting during this discussion that we who are charged with the responsibility of informing and leading our people should say plainly and bluntly what we deem to be necessary in order to improve our war effort.

We were also privileged to hear an informative address by Sir John Latham concerning Japan and the Japanese people.

Recently the Prime Minister (Mr. Curtin) made it clear that it was with the acquiescence of the Government that supplies originally destined for Australia were diverted to theatres of war where they were more urgently required. In effect, he told the people that the present Labour Government appreciates the fact that in this war Australia’s interests are identical with those of Russia or any of our allies. Successes for Russia mean successes for Australia. It is most gratifying to find that the present Labour Government has now abandoned the ostrich-like attitude it adopted with respect to defence when it was in opposi tion in 1939, when the right honorable member for Kooyong (Mr. Menzies) who was then Prime Minister emphasized that if we were to pull our weight it was essential to send our troops to any part of the world where they were required. By so doing we would be rendering the greatest service in the defence of this country. In order to contrast the Government’s present attitude with that which it adopted when in opposition I draw attention to the following statement which was made in the House of Representatives by” the present Minister for Social Services (Mr. Holloway) on the 29th November, 1939 -

I shall oppose, even to the point of stretching the law to breaking point, any proposal to send Australian soldiers to fight on foreign battlefields.

On the same day the Prime Minister, who was then Leader of the Opposition, declared -

To test the feeling of the House, I move - That all the words after “That” be omitted with a view to insert in lieu thereof thefollowing words “ this House is of opinion that Australia’s man-power is required for the defence and safety of the Commonwealth, and is opposed to the despatch of expeditionary forces “.

I am glad that the Government has had the courage to change its views on this subject. I sincerely hope that the opinion recently expressed by the Prime Minister is shared by his eighteen colleagues in the Cabinet.

Senator Collings:

– What does the honorable senator think?

Senator McLEAY:

– “ Joy shall be in heaven over one sinner that repenteth more than over ninety and nine just persons, which need no repentance.” I sincerely hope that the other eighteen members of the Cabinet have repented. However, when I read irresponsible statements made by some Ministers on this subject I doubt whether they have repented. Indeed, I doubt whether there would be much joy even if those particular Ministers did repent.

Before discussing the 1942-43 budget, I wish to take the opportunity of referring to one or two aspects of our effort in Australia, and to say that we exMinisters appreciate the difficult task that confronts all Ministers in war-time. Whilst some Ministers have done good work, it is quite evident in one or two cases that the Ministers are inexperienced and, in some connexions, are making a first-class muddle of their tasks.

Senator Collings:

– No names mentioned, I hope !

Senator McLEAY:

– If the Leader of the Senate (Senator Collings) would like me to mention a name, I shall say that the Minister for War Organization of Industry (Mr. Dedman) has a very difficult task, but I am quite satisfied that he is making a perfect muddle of his department. I quite agree with the statement made in the House of Representatives by one of his own supporters, that Mr. Dedman is the man who organizes nothing and disorganizes everything. In commenting on the work of that Minister and his department, I take the liberty of suggesting to other members of the Government that they might help him to save himself a lot of trouble, and avoid a great deal of confusion, by advising him to be prepared, in changing men from less essential to more essential industries, to confer with the experts or practical men in the industries concerned before he gets himself into a mess. I make that suggestion in the most friendly manner, but I know from practical experience that in the abolition of the vest in the “Victory” suit, or the organization of the wool or any other industry, Mr. Dedman has adopted an obstinate attitude.

Senator Collings:

– Does not the honorable senator like the “Victory” suit?

Senator McLEAY:

– No, I do not, and I say that when obstinacy is added to stupidity and inexperience it is about time that other members of the Cabinet took action to prevent the unnecessary trouble inflicted on a great number of people engaged in various industries.

In connexion with other departments, the attitude of some Ministers has not helped the war effort. I have noticed on occasions that Ministers have been in conflict with the Prime Minister. We as members of the Opposition object to the tactics adopted and party spirit displayed by one or two Ministers in particular, at this time when we should all pul together and do our best as a united people to put up a united war front.

Senator Collings:

– The Opposition pulled together so well that they got rid of two Prime Ministers in a few weeks.

Senator McLEAY:

– The pressure which our political opponents exercised on two men who “ ratted “ against us was the reason why the Prime Ministers referred to by the honorable senator were deposed from their high office. The people of the world are wondering why Australia, in its darkest hour, has a party Government. When this question was raised in the early stages of the war, the present Prime Minister had to submit it to the Australian Labour party caucus outside Parliament, and that body instructed him not to join in a national government but, if he could succeed in reaching the treasury bench, to do it at all costs, because what they wanted was not the policy of a national government but Labour’s -policy, even in the nation’s hour of crisis. Although the Advisory War Council has helped, I do not think that it goes quite” far enough. The members of the Opposition on that body have had considerable experience, and act in an advisory capacity. Surely the time has arrived when the Government should be prepared to take in men like Mr. Menzies, Mr. Fadden, Mr. Hughes and others, and give them executive authority, in order to give to the people of Australia a lead from a Government that was doing the best possible for Australia in these difficult days.

In dealing with the depressing aspects of Australia’s war effort, I wish to mention one or two things that are causing the public very great concern. I do not propose to spend time in paying tributes to the great body of unionists, or the great bulk of the people of Australia, who are doing their best to help to win the war. So far as that is concerned, there are just as many loyal workers in the Labour .party as there are in our party, and I make no distinction, but I urge both parties to take action against any section of the community that tries to hinder and mar Australia’s war effort. Nobody who follows the history of the E. J”. Rice case in New South Wales could be other than depressed. There we had the sorry spectacle of two prominent Ministers interfering with the management of the important work of the Commonwealth Aircraft Corporation Proprietary Limited. As a man with some commercial experience, I believe that when Ministers interfere with managements there is no hope of maintaining discipline. Similarly, when Ministers interfere with the conduct of the Army, what hope is there of doing so ? I am pleased to see that one member of the present Government has seen the light and changed his views considerably in that direction. On the 18th August last the following paragraph appeared in the press under the headings of “Dismissed employee to be reinstated “ ; “ Conciliation officer on overlapping authority “ : -

In a judgment delivered to-day Mr. A. Blakeley, Conciliation Commissioner, ordered the reinstatement of E. J. Rice to his former position at the factory of the Commonwealth Aircraft Corporation Proprietary Limited, Sydney, as from the 19th August, on two months’ probation. Should the corporation at the end of that period desire a review of the conduct of Rice and apply for such review, he would arrange to hear it.

Mr. Blakeley held that Rice was irresponsible and interfering, and had not seriously applied himself to his important work. Neither had he as a shop steward and representative of his union set a good example to his fellows. He was not free from blame in some pin-pricking and vexatious incidents. He considered, however, that Rice should be given another opportunity to apply himself more seriously to his work.

Although warnings had been given Rice, continued Mr. Blakeley, and the corporation’s executive had expressed dissatisfaction with him, it would appear that Rice would not have been suspended but for the intervention of the Deputy-Director of Security.

I offer an emphatic protest, first of all, against interference by two responsible Ministers in this matter, and add that, in my opinion, Mr. Blakeley, who had eighteen years’ organizing experience with the Australian Workers Union, is not qualified to act in such a case. If any man acting in the capacity of a Conciliation Commissioner can make the findings I have quoted, and then recommend that the man in question be reinstated, it is about time the Government took a hand and insisted on the observation of discipline in so important a factory. On the other hand, this week we have heard the Prime Minister, in launching an austerity campaign, appeal to all to do their best for the war effort. We appreciate the seriousness of the position in New Guinea, the splendid work that our soldiers have been doing, and all that has been done by our allies in the Solomons. We appreciate also the difficulties we are up against in Egypt. We have had speeches from out leaders, and an excellent and highly appreciated address by Sir John Latham to the members of this Parliament. In spite of everything, however, we still read in the press that four coal-mines are idle, and that 2,000 men have held a stop-work meeting in Melbourne because the management will not reinstate a man. who the Conciliation Commissioner recomended should not be reinstated. We have had the experience in one State, where a shortage of coal existed, of ships being held up because the management would not pay the men for time during which they did not work. With these hold-ups in our shipping, knowing that we are up against it, it is time the Government took firm action against the offenders. I am afraid, however, that the Government, because it is a party Government and afraid to split the Labour party, finds it necessary to pander to these people, to avoid offending some of its political supporters.

Senator Collings:

– Does the honorable senator say we have been pandering? He knows better.

Senator McLEAY:

– I say most definitely that that is true of any government which, after urging the coal-miners, since January last, to work regularly, and threatening to call them up for military service if they refused, after months of talk and delay, hands over to theCoalminers Union the right to say whether a strike is or is not legal. I again urge the Government to take a firm stand. I recently had the opportunity to attend a welcome home to a returned soldier who had fought on the other side of the world. When he read in the papers about the strikes, and the incident of a coal ship being held up, he said : “ One begins to wonder whether some of these chaps are worth fighting for.” In the serious position that now exists, I appeal to the Government to apply a firm hand. If it is not prepared to form a national government, and to give able Opposition members executive authority, let it take a firm stand itself. If it does, the members of the Opposition will stand behind Ministers, and give them credit for doing the right thing in this time of crisis.

Senator Collings:

– The honorable senator will stand behind them, and stab them in the back.

Senator McLEAY:

– If the Leader of the Senate were stabbed there, perhaps it would be a good thing for Australia. In discussing the 1942-43 budget, I wish to make some reference to the history of the present Government. It is necessary to do that in order to appreciate the basis upon which this budget has been formulated. At the general elections of 1940, the then Leader of the Opposition (Mr. Curtin), in his policy speech, promised increases of various payments, including invalid and oldage pensions. On the other hand, the then Prime Minister (Mr. Menzies) told the people plainly that in time of war promises should not be made because probably they would not be fulfilled. At those elections, the people of five States returned to the Senate a majority of supporters of the Menzies Government. When the Labour party assumed office late last year, the Prime Minister was faced with the obligation to fulfil his earlier promises, and it is true that increases were made in certain directions. Action to improve the lot of members of our fighting forces who are taking their lives in their hands is favoured by members of all parties; but I draw attention to the fact that although this Government has increased certain payments, the recipients have derived little benefits from those increases owing to the substantial rise in the cost of living. During the first two years of the war, when the Menzies Government was in office, the cost of living in this country rose by 7.9 per cent. ; after the Labour party had been in power for six or seven months, the cost of living had increased by 10 per cent, and I understand that the latest figures taken out in July of this year show an increase of 17.9 per cent. Obviously if we take into consideration other figures which are not included in the cost of living series, the increase to-day will be found to be at least 25 per cent, or 30 per cent, above what it was before the outbreak of war. It is interesting to recall that although many protests were made in this chamber by honorable senators opposite against increases of indirect taxation, including sales tax, this budget provides for additional indirect taxation amounting to £14,400,000. Last year, additional indirect taxation imposed by the Labour Government amounted to £15,000,000, so that the total increase is £29,400,000. On what commodities have these high indirect taxes been imposed? They have been imposed upon such items as amusements, alcoholic beverages, and tobacco, which after all, are amenities which are enjoyed by the soldiers, and which they are entitled to enjoy. Whilst I am pleased to note that provision, is made for substantially increased payments to members of our fighting forces, and wider social services, as I have already pointed out, these increases do not mean very much in real money because of the increased cost of living. Therefore, although increased payments to members of our fighting forces amount to approximately £10,000,000, and increased social services amount to £5,500,000, indirect taxation has been increased by £29,400,000. Therefore, it seems that in fulfilling its promises to the electors, the Government has merely taken the money out of one pocket and put it into another.

Any one who analyses carefully the budget, now before the Senate cannot come to any conclusion other than that it is inflationary. Having regard to the possibility of a lengthy war, we are heading for disaster unless we face up to the financial position fairly and squarely. At this stage, I should like to refresh the memories of honorable senators by citing a few figures from the budget. Civilian expenditure for the current financial year is estimated at £109,000,000, and war expenditure at £440,000,000. The estimated yield from revenue is £249,000,000, leaving a deficiency of £300,000,000, and in the course of his budget speech, the Treasurer (Mr. Chifley) pointed out, quite reasonably, that expenditure might even be higher than the figure given. I remind honorable senators also that during the last financial year, bank credit to an amount of £84,000,000 was used. If” that be added to the gap that is likely to exist at the end of this financial year, basing an estimate on the advice of experts, one can only come to the conclusion that the use of bank credit is excessive, will lead” to inflation, and will impair the financial and economic structure of this country. Of the deficiency of £300,000,000, it is hoped to raise £240,000,000 by way of loan; but I understand from press reports that the Commonwealth Bank has intimated that if we raise £150,000,000 on the Australian market, we shall be doing very well indeed. If Ave use £150,000,000 in the form of bank credit this financial year, and add it to the £84,000,000 for the last financial year, we get a total of £234,000,000. At the present rate of increase - £84,000,000 last year and £150,000,000 this year - it is evident that we shall be in a bad position should the war last for another four or five years. That burden will affect,. not merely one particular section of the community, but all sections. I should like to make my position perfectly clear in this regard : I appreciate the Herculean task which confronts the Government in financing this war, and I realize that nothing must be done to impair our war effort. This is a matter of life and death, and I should not like it to be said that I, or members opposite were in opposition, am prepared to do anything to retard Australia’s war effort; but I am quite satisfied that we are not doing as much as we should be doing. We are not doing as much as New Zealand and the United Kingdom are doing. Nevertheless, having regard to the immense problem of financing the war, it is wise that we should approach this question cautiously, sensibly and courageously. I doubt very much whether the present Government is doing that, because, when honorable members opposite were in opposition, they secured the support of two independent members to defeat the then Government on the Fadden budget, which, I contend, provided the most intelligent and sane approach to this problem that has yet been suggested, namely, post-war credits. Call them compulsory loans, if you wish, but the fact remains that the principle is the name as that involved in soldiers’ deferred pay, and if that system can be applied fairly to soldiers, it can be applied also to munitions workers and others who are paid a great deal more. Obviously, the Government has not had the courage to take that action. It cannot be denied that these workers are enjoying greatly increased earnings. The Government should take a definite stand and compel that section of the community to pay its share of the money necessary to carry on the war, and so counteract the inflationary tendency which is now current throughout Australia.

The appointment of Professor Copland in the early days of the war to control prices was a very wise step. Our pricecontrol machinery has had a steadying influence upon the upward trend which is always apparent in war-time, and I should like to take this opportunity to say that Professor Copland and his staff have performed a difficult task. They are dealing with an economy which is changing from day to day. Obviously, they have not been able to please everybody, but I am satisfied from my own personal experience and association that these men are doing a good job for Australia by preventing inflation, or at least controlling it. I agree that price-control and rationing are essential in war-time, but we must not forget what happened in Germany and other countries whose financial structures were ruined after the last war. Not only are price-control and rationing necessary, .but also it is necessary to increase taxes on those incomes which represent the bulk of the purchasing power of this country, and which are substantially higher because of war conditions. Unfortunately, although the Government committed itself to certain responsibilities by defeating the Fadden Government, it has now shied off the task, and failed to face up to the position. I have no desire to weary the Senate with long quotations, but I consider that the question of inflation is so important that serious attention should be devoted to it. When reading through the Treasurer’s budget speech, I was amazed to find that, although certain definite recommendations have been made, these nimble nineteen have failed to take courage in their hands, and do something which might not please some of their political supporters. On page 12 -of the budget speech the Treasurer said -

Owing to the great increase in employment and economic activity, incomes have expanded and spending power in the hands of the people ia now at a rate greatly in excess of the flow of goods and services that the nation can spare for its civil needs. The Government cannot allow this excess spending power to compete against the nation for the additional m an- power and materials that are vital to our defence, or to bid up for the limited goods thatare available for civil use, or to operate in “ black “ markets and so menace price stability. The Government is determined on this and will take such measures as may be necessary to impose its will.

Why has it not done so? The statement continues -

But whatever direct controls are established for this purpose the excess spending power must be transferred to the Government to pay the fighting forces and for the labour and materials used in producing munitions and war supplies. This is the financial price which must be paid. Whilst relying to a large extent on the voluntary efforts of the people, the Government is resolved that its payment will not be evaded. Effort and sacrifice of comfort by the civil population is the least part of the price. Many in the forces, many of the nation’s sons, pay the supreme price of all. No financial price compares with that.

I quite agree; but thisGovernment does not practice what it preaches. I should imagine that the following reference to bank credit was inserted in the budget speech especially for the benefit of Senator Darcey: -

There are some people who think the war should he financed entirely by Central Bank credit. The Government is convinced that in that way lies grave danger.

That is a sound statement, but the Government lacks action. In view of the gap of £300,000,000 to be experienced this year, it is extraordinary to find that the Treasurer glosses over the financial problem in these words -

The amount of loans required this year is large, but its provision is not impossible. Last year we doubled the receipts from public loans and got £120,000,000. If we double them again we shall get £240,000,000, which will take us a long way on our journey.

The Government’sbest advisers say that it will be lucky if it gets £150,000,000.

Senator Collings:

– The honorable senator is not complimentary to the people of Australia, and the result of the loan will prove the correctness of my remark.

Senator McLEAY:

– I am prepared to assist the Government all I can in its austerity campaign, but I regard its proposed method of implementing that policy as political “bunk”. What is required is compulsory loans. I refresh the memory of honorable senators regarding the way in which the people of New Zealand and the United Kingdom are standing up to the war effort. I shall also referbriefly to the personal incomes in Australia liable to direct taxation for the full assessment year 1942-43. The estimated distribution of income and taxes on income derived in 1941-42 are shown in the following table: -

Ninety per cent, of income earners whose incomes were under £400 a year receive £590,000,000, an increase of £30,000,000 on the previous year. On that class of income, New Zealand has levied a flat rate of 2s. 6d. in the £1. If the same courage were displayed by this Government, it would collect an additional £73,000,000 but it proposes to collect only £23,500,000 from that income group.

Senator Sampson:

– Does the income referred to in the table presented by the honorable senator include company income?

Senator McLEAY:

– No, but it includes the distribution of profits by companies.

To honorable senators who often suggest that the Opposition represents only the rich, I point out that the number of Australian incomes over £1,500 a year is only 24,000. There is no country of any importance where the wealth of the people is more evenly distributed than in Australia. It is not popular, of course, to tell a meeting of trade unionists that they will have to stand up to a flat rate of income tax and thus have their tax increased. If the group earning under £400 a year represents 90 per cent, of income earners, it is the main group from which income tax should be collected. If the Government had the courage to collect income tax from that, group by compulsion, a considerable sum could be raised for post-war credits. When we are faced with the problem of transferring from war to peace, our troubles will be quite as great as they were in turning from peace to war. It would be a godsend to 90 per cent, of the people of this country to find after the war that they had a certain sum of money in reserve. They would then fall within the same category as the returned soldier, whose post-war credit is termed deferred pay. I believe that this Parliament will soon be compelled to increase the income tax contributed by the people in the under £400 a year group. I direct -the attention of honorable senators to the fact that the number of incomes below £400 a year and the incomes received are distributed as follows : -

The amount of personal income open to direct taxation is shown in the fol lowing table: -

I now propose to show what the people of Great Britain and New Zealand are contributing to the war effort, and what their expert advisers are asking them <o do, in the light of experience, to prevent inflation. The following table gives a comparison between Australia, th, United Kingdom and New Zealand of the income tax proposals for 1942-43 in respect of the personal exertion income of taxpayers without dependants: -

People outside who are whispering about how Great Britain has let us down should analyse the foregoing figures, and read the speech by the Minister for External Affairs on national security. Then they should compare Australia’s effort with that of New Zealand and the United Kingdom. Until Australia measures up to what those countries are doing, we have no right to belittle their war efforts by which they are helping to save Australia. Somebody has suggested that if a flat rate of income tax were imposed it should apply to the members of all income groups. The Labour Government made a vicious attack on persons with incomes over £2,000 a year, out only a small proportion of the people have incomes ranging from £2,000 to £40,000 a year. These have been taxed by the Labour Government more heavily than persons in similar income groups in New Zealand and the United Kingdom. Having regard to our war-time economy and post-war problems, I suggest that this matter be re-examined to see if the burden of taxation can be spread more equitably amongst all sections. We shall have an opportunity to debate this matter in detail at a later stage.

Reference was made in the budget speech to the wheat industry. I regret that the Minister assisting the Minister for Commerce (Senator Fraser) is not in the chamber at the moment, because the Opposition has requested the Government to pay the farmers of Australia for the wheat delivered by them in 1939. I understand that lid. a bushel, or nearly £1,500,000, is owing to them, and I have repeatedly requested the Government to pay that sum. Reference has been made to an amount owing for wheat by the Japanese Government, and we have been advised that that money has been paid into a bank and is available. There is still a payment outstanding on the wheat delivered by the farmers in 1940. This sum represents lid. a bushel on a small crop. Those of us who had an opportunity to visit the wheat areas know what a difficult time the farmers are experiencing owing to lack of superphosphate, increased prices of commodities, and shortage of man-power. I shall deal now with the 1941-42 season which produced a crop of 13,000,000 bushels over the quantity of wheat to which the guaranteed price of 3s. lOd. a bushel was to apply. When this matter was discussed some time ago, the Minister assisting the Minister for Commerce said that the representatives of the Australian wheat-growers had agreed that, as the crop exceeded by 13,000,000 bushels the quantity to which that guarantee applied, the price to be paid for each bushel would be 3s. 6d., less charges, on the 153,000,000 bushels delivered. Since then representatives of Australian wheat-growers organizations have written to the - Minister for Commerce (Mr. Scully) and denied that they agreed to any such arrangement. Although in connexion with a previous pool the Government decided to pay an advance of 2s. a bushel in respect of “ illegal “ wheat grown on unlicensed areas in Western Australia, New South Wales and Victoria, when it comes to paying for the 13,000,000 bushels over the estimated total crop of 140,000,000 bushels the Government refuses to pay anything to the farmers.

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– What quantity of “ illegal “ wheat was there ?

Senator McLEAY:

– I think that the quantity was about 500,000 bushels. I shall show how unfairly the farmers have been treated with respect to the 1941-42 crop by comparing their treatment with that which they received during the years that the previous Government was in office. In 1940 the return to the farmer was 3s. 4d. a bushel at country sidings, and in 1941 it was 3s. 7d. a bushel. For the 1941-42 crop, however, the return to the farmer was only 2s. 7 Jd. a bushel. Those of us who have studied farming costs know that 2s. 7-Jd. a bushel is far below the cost of production. Since the war began, the cost of living has risen by 20 per cent, and other costs have increased also. I therefore ask the Government to reconsider this matter. I doubt whether any section of people engaged in rural industries will be in a more difficult position next season than the wheat-growers of this country. I am amazed at the attitude which the Government has adopted towards the wheat-growers of Australia, and can only attribute it to party political considerations. The Government proposes to pay 4s. a bushel at country sidings for the first one thousand bags of this year’s crop delivered by a grower and for any quantity delivered iri excess of 1,000 bags it will make an advance of 2s. a bushel. I understand that about 70 per cent, of the farmers in Australia - mostly small growers - will be paid 4s. a bushel for their wheat, whilst sound and efficient farmers growing wheat in a big way-

Senator Collings:

– Does the honorable senator suggest that the only inefficient farmers are those engaged in farming in a small way?

Senator McLEAY:

– The Leader of the Senate may make that statement if he so desires. It is unfair that efficientfarmers, merely because they are farming in a large way, should be asked to accept the ridiculous price of 2s. a bushel for their wheat. Most of them have large commitments.

Senator Ashley:

– There is no need for them to grow it.

Senator McLEAY:

– A farmer who produces 3,000 bags or 9,000 bushels of wheat will, under the Government’s scheme, be paid 4s. a bushel for the first 3,000 bushels and 2s. a bushel for the remainder. That means an average return of 2s. 8d. a bushel at country sidings. Wheat cannot be produced at that price.

Other important aspects of this subject are the reduction of the supplies of superphosphate to farmers and the shortage of man-power. That shortage will automatically reduce the area placed under crop. Under the Government’s scheme there is power for the Government to control the acreage sown with wheat. T offer no objection to that control, particularly in war-time, because it is impossible to export the surplus production. Should the war last another three years, we shall be in an awkward position through lack of storage facilities. In all the circumstances, it would be better to reduce the acreage with a view to obtaining a total crop of 100,000,000 bushels, and then to pay 4s. a bushel at country sidings for all the wheat that is delivered. The payment for 100,000,000 bushels’ of wheat at 4s. a bushel would be £20,000,000, compared with £21,000,000 for 140,000,000 bushels at 3s. a bushel.

Senator Courtice:

– ‘What would happen if the crop reached 200,000,000 bushels ?

Senator McLEAY:

– With a proper system of acreage control in operation, the total production could bekept within reasonable limits.

SenatorCourtice. - There would be a big margin.

Senator McLEAY:

– Provision could be made to meet that contingency. [Extension of time granted] I ask the Government to reconsider this matter.

I wish now to refer to the reference in the budget speech to a proposal to alter the Constitution. I am convinced that the Constitution needs to be brought up to date, and that at the right time there should be a national convention consisting of the best intellects in Australia, free from party politics, at which the Constitution should be examined in the light of post-war problems. If, however, extreme proposals, framed in the wrong atmosphere, such as the abolition of State parliaments, are brought forward the chance of the referendum being carried will be slight. I should he sorry for any government which had to face the postwar period without some alteration of the Constitution, but, in my opinion, the present time is not opportune for the holding of a referendum.

SenatorCollings. - The time is never opportune for the introduction of any reform.

Senator McLEAY:

– Although the electors have been asked on a number of occasions to sanction certain constitutional alterations they have done so in respect of only a few matters. Honorable senators will remember that the last proposal of this kind was in respect of powers to control aviation, but even those powers were not entrusted solely to the Commonwealth. Unless the proposals to be submitted to the people be drafted in the right atmosphere and submitted to the people at an opportune time, I fear that they will be rejected. That would be a tragedy, because the post-war problems willbe difficult to meet under the best legislative conditions.

I have already referred to the pay of soldiers and shall not say more on that subject now. We shall have a further opportunity to discuss the proposals in connexion with taxation. I therefore pass on to repeat what I have said previously in this Senate, that at the earliest opportunity the Government should introduce legislation empowering it to send members of the Militia to places outside Australia and its territories. It is unfair to our allies not to do so. At present, members of the Australian Imperial Force and of the Militia are fighting side by side under different conditions. We are trying to build up two separate armies. The Government will probably say that any attempt in the direction indicated would split the Labour party.

Senator Collings:

– Has that been said?

Senator McLEAY:

– Yes, on several occasions. In the light of existing conditions, the Government would do well to remove the legislative restriction on full use being made of the Militia so that General MacArthur and those working with him may be able to regard all our fighting men as members of one army. In respect of pay, exemptions and privileges generally, the conditions are the same for both sections of the Army, and therefore I see no reason why their obligations should not be the same. I hope the Government will deal with this matter.

I am not carried away by the highsounding talk and the grand schemes which have been suggested by the Minister for Labour and National Service (Mr. Ward) for post-war reconstruction. References to “ a new order “, or “ Utopia “, and promises of work for every body at good wages do not impress me. There has also been the suggestion of the almost unlimited use of national credit.

Sitting suspended from 12.45 to 2.15 p.m.

Senator McLEAY:

– Our first objective should be to win the war. I agree that in planning to win the war we should, wherever possible, prepare to deal with post-war problems. On this subject, in his budget speech, the Treasurer declared : “ Our aim must be expanded production and increased population “. Statements of policy by various Ministers will have a direct bearing on the problem of increasing our population after the war because, in addition to the natural increase, we shall be obliged to look to people from Britain, the United States of America and other countries. We must encourage people of the right type to come to this country. It is of the utmost importance that we invite people with capital to settle in Australia. On this point, I shall refer to statements madeby certain Ministers which, I submit, will do more than anything else to retard our progress in the post-war period. Making a plea for Labour’s policy of socialization of industry, the Minister for Aircraft Production (Senator Cameron), on the 20th March, 1942, said-

Until the Commonwealth Government nationalizescontrol, Australia will not be doing a complete war effort.

Voicing a threat of repudiation of payment of interest on loans, the Minister for Labour and National Service (Mr. Ward), on the 2nd March, 1942, said-

We should not be asked to pay for the war afterwards by paying interest on any loans that are raised now.

That comment was supported by the Minister for Aircraft Production who on the 5th March, 1942, said-

I, for one, would never dream of criticizing Mr. Ward for expressing a view which has been voiced countless times by the Labour party.

The Minister for the Army (Mr. Forde) made a plea for nationalization of Australia’s great iron and steel industry. The following extract appeared in the Argus of the 17th July, 1941 : - “ Assumption by the Federal Government of control of the Broken Hill Proprietary Company Limited in the interests of the nation “ was demanded by Mr. Forde at the close of the meeting of ‘ the Advisory War Council to-day. “ I believe said Mr. Forde, speaking as principal Labour spokesman in Mr. Curtin’s absence in Western Australia, “that strong action of this kind would allay a growing feeling of suspicion in the community that certain huge monopolistic key industries are growing affluent at the expense of the people.” Mr. Forde said definitely that it was the considered opinion of Labour members that control of the Broken Hill Proprietary Company Limited should be taken.

That great enterprise has proved during the course of this war what private initiative can do in competition with bureaucratic control. I repeatthat statements by Ministers of the kind which I have just quoted on such subjects as socialization of industry, the appointment of political wages boards, compulsory unionism, vicious and inequitable taxation, and the release of excessivebank credit, will do more than anything else to prevent people of the right type coming to settle in Australia when the war is over. The Government should give a lead in this matter. I am opposed to socialism, and the extension of bureaucratic control for the purpose of peace-time reconstruction. The policy which has so far been pursued in this country of encouraging private enterprise and initiative has proved conclusively what can be done by private enterprise. I sincerely hope that the Government will continue along those lines, and that the Prime Minister will repudiate irresponsible statements on these matters by certain of his colleagues. The advocacy of free expansion of credit is the most dangerous feature of the budget; and the effect of that policy will be felt, not only during the war, hut also in the post-war period. I take the following quotation from Professor Copland’s recent book, The Australian Economy : -

The creation of money is the simplest, and may be the least useful activity of the Government. It would be comparatively easy to grant credits to the Government through the banking system, and it might be interesting to pause for a moment to consider the effects of a free expansion of credit. The Government would be able to draw cheques on the Commonwealth Bank quite freely, and as soon as it had brought into employment all idle labour and resources, it would be competing with normal enterprise for the resources available. The result of this competition would clearly be a rise in prices, a rise that would continue as long as the Government was obtaining funds without drawing on the current incomes of the people by loans and taxation. Nothing would be added to the war effort by such a method of financing the war. On the contrary, acute competition between the Government and normal enterprise for resources would lead to confusion and would, in fact, impair the war effort. Moreover, there would be the great disturbance caused to the whole economic structure by an inflationary rise in prices. This would alsobring social unrest. We can, therefore, on all counts, dismiss the alluring prospect of unbridled credit expansion as damaging rather than helpful to a country engaged in the burdensome task of preparing for war on the modern plan of totalitarian warfare.

Senator Collings:

– Do not forget the word “ unbridled “.

Senator McLEAY:

– I am afraid that when the Treasurer was drawing up his budget he did not appreciate the meaning of that word in relation to the expansion of credit.

The voluntary system and the austerity campaign are the results of political funk at a time when a total war effort is urgently essential. It is compulsory for men to fight ; it should be compulsory for people to lend. The Government is pandering to its political supporters, and the extremists are biting the hand that feeds them. The budget displays evidence of the excessive use of bank credit which is liable to produce an inflation that will destroy a sound financial structure. The Government should drop the party political game and play the national game. This can be done only by a government representing the most capable men from all sections of the Parliament. During eleven months of office, the Curtin Government has spoken with two voices. If lofty sentiments, expressed in glowing terms could win pitched battles, then, indeed, we should now be celebrating victory. The Government has failed to practice what it preaches. In this, our darkest, hour, deeds and not words will bring the victory for which we pray with one voice.

Senator DARCEY:
Tasmania

– The Leader of the Opposition (Senator MeLeay) declared that on page 13 of the budget was to be found a statement which had special reference to the policy which I support. If the honorable senator knew anything about central bank credit, he would not make so foolish a statement. There is not such an institution as a central bank in Australia. There never has been, and there never will he a central bank in this country so long as the Commonwealth Bank as it functions at present is in existence.

Senator Allan MacDonald:

– We have had a central bank in Australia for the last 30 years.

Senator DARCEY:

– The honorable senator does not know what he is talking about. The central bank as we have known it in Australia for the last 30 years, is the principal bank of the private banking system. In Great Britain, it is represented by the Bank of England, which is presided over by Mr. Montagu Norman, and in the United States of America, by the Central

Reserve Bank, which was presided over, until recently, by Mr. Jacob Schiff. So. great was the power wielded by the private banking system in the United States of America that in 1912, the late President Wilson appointed a commission to investigate it. That commission found that the bank presided over by Mr. Jacob Schiff controlled three big banks, which in turn, controlled 125 small banks; and these controlled the whole of the industrial output of the United States of America. So great were the depredations perpetrated by the private banking system at that time that President Wilson was compelled to enact the Sherman anti-trust law. Certain trusts were fined 20,000,000 dollars. In order to show their strength, they defied the Government by refusing to pay the fine in gold. They paid it in paper. The Bank of England wields similar power. The late Mr. Gladstone declared that he did not know that the power of the “ City “, represented by the Bank of England, was so great, until he became Prime Minister. As I have said previously, hanks can make and unmake governments. I take the following quotation from the Westralian Banker, of April, 1942 :-

It is a well recognized principle in banking that whenever a bank makes an advance by way of overdraft to a customer, the deposits of that same bank or some other bank increase to a corresponding extent. If, for instance, a m,7 n borrows £1.000 from a bank, the account of the person ito whom he pays this amount is swollen to the extent of the credit thus created.

I have put that fact before honorable senators over and over again. Every bank loan creates a deposit. Nine out of ten people, including many bank managers, believe that the amount shown as deposits in a bank’s balance-sheet represents money placed in the bank by depositors. I repeat that banks do not lend their deposits ; because it is their responsibility to have those deposits on call. To substantiate that statement, I cite the reply given by Mr. Graham Towers, the manager of the Bank of Canada, which is controlled by the Canadian Government, when giving evidence on oath before a committee on the 21st June. 1939, at Ottawa. He said : “ Banks cannot, of course, loan the money of their depositors “. Banks cannot lend their deposits; but they can lend against their deposits. They lend against the right to draw which, in Australia, the private banks secured from the Bruce-Page Government after that government strangled the Commonwealth Bank in 1934. The quotation from the Westralian Banker continues -

Inasmuch as banks have been doing this from time immemorial-

That is, making advances and putting them down as deposits -

It is also obvious that they have been collecting interest on what are merely book entries.

How many times have honorable senators heard me make that statement, and quote the greatest authorities in tho world in support of it ? I have now given them the opinion of Mr. Graham Towers, of Canada, to back it up. The quotation continues -

But the champagne party for the banks has ended with the regulations which were gazetted on the 2Cth November last, which brought banks under Commonwealth Government control. No longer can banks make advances excepting in accordance with Commonwealth bank policy. Further, the banks have to deposit with the Commonwealth Bank their surplus deposits at a nominal rate of interest, which it is understood is less than 1 per cent.

I read in a newspaper published in Sydney a statement by “ the Government spokesman at Canberra” that the banks had already deposited £37,000,000 worth of money with the Commonwealth Bank, on which it is paying 15s. per cent, interest. I say that they have done nothing of the kind. If their surplus profits since the regulation came into operation amount to £37,000,000 banking must be a very profitable occupation.

Senator Sampson:

– “What are surplus profits ?

Senator DARCEY:

– I have been trying to find out for a long time. The quotation continues -

Thus no longer can the trading banks follow the policy of creating credit by making new advances and charging 5, 0, or 7 per cent, on fictional money, which is nothing more or less than a book entry.

One banking man told me that the Bank of New South Wales had deposits of £541,000,000, out of which it had put £2,000.000 into war loans. I said that if its balance showed £54,000,000 worth of deposits, and it put £2,000,000 in war loans, its deposits were then £56,000,000. He said that the. £54,000,000 was money put into the bank in the form of deposits for the bank to lend to its clients, but Mr. Graham Towers says that banks cannot lend their deposits. I told this man that the total issue of currency in Australia stood at only £57,000,000, and if the Bank of New South Wales was responsible for £54,000,0.00, I should like to know what the other large banks in Australia, which all had deposits of over £50,000,000, were doing. He said he had never thought of that. The principal teller of another bank told me that his bank paid good money for every £1 of depositors’ money it lent. I said, “ That won’t cost you much. Surely you know better than to think that your bank lends depositors’ money “. One keen financier who is on a committee with me said, “ The only money that the banks can lend is what is entrusted to them by the public “. Is it any wonder that I cannot make headway against conservative ideas like that? Some one wrote to the Treasurer (Mr. Chifley) and asked what the Government meant by surplus deposits. The Treasurer replied -

I can assure you that your interpretation of the Government’s financial policy is not in accordance with facts. Briefly, the Government holds the view that there is no problem of war finance as such. The only problem is so to organize the man-power and productive resources of the Commonwealth that they will be of the maximum value to the country at this time.

That sounds all right, but how does it work out? The Leader of the Opposition has told us that we must not utilize bank credit unduly, because it means inflation, but it does not matter from what source credit comes if it brings extra money into circulation, prices must rise unless they are controlled. No matter whether the money comes from national credit or private banks, prices must rise. The policy of this Government is something like this : at one end of the counter they will not allow the banks to buy war bonds for themselves or advance money to other people to buy war bonds, so that the dummying that was done by the banks in that direction in the past has been stopped. At the other end of the counter the Government has already passed bills to raise £150,000,000 by the sale of inscribed stock, which is another form of government borrowing, carrying interest at the same rate. I do not think that the banks care twopence because they are prevented from buying war bonds or advancing money to other people to buy them. It will take all the credit they can raise to cater for treasury-bills and inscribed stock, because they are limited in the amount of cash credits that they can advance. Mr. Graham Towers said that not only should the Government bank lend money for public works, but there would be no need to repay it, because the Government indirectly recovered what it spent on public works, because whatever benefited the country benefited the Government. I noticed the following statement published in 1933, about a Loan Council meeting, and I will quote it because it has a strong bearing on what is occurring to-day: -

The last Loan Council meeting (in December, 1932) showed sow e difference of opinion as to policy. The Premier of New South Wales (Mr. Stevens) developed an argument for the continuance of treasury-bill finance for a further period. The Commonwealth Government, together with the chairman of the Commonwealth Bank (Sir Robert Gibson and the Premiers of the other States favoured the flotation of a £20.000,000 public loan (to be underwritten by the banks) at 4 per cent., some considerable portion of which was to bc used for the retirement of treasury-bills, and the balance for public works. The discussion became acute and public. A compromise was reached and a public loan of £8,000,000 at 3f per cent, was attempted. It was a partial failure.

I remember what happened on that occasion. The Government tried to float a loan of £8,000,000 and got only £4,850,000. When I asked in this chamber how the loan of £S,000,000 was made up, I found that the banks had supplied £3,750,000 by forwarding a cheque to the Treasury for that amount. I asked the Minister representing the Treasurer the cost of raising various loans. The cost of raising the first war loan this year of £35,000,000 was £134,432, out of which the banks received as commission £32,67S, simply for making applications on behalf of their clients. They were paid 5s. per cent. That £32,678 was a very good return for writing applications, especially when there was no necessity for it at all, because the loan could have been raised through the Commonwealth Bank and the whole of the £134,432 saved. That is well known to honorable senators, and I have quoted authorities for it over and over again. We are told that the profits of the banks are not to exceed a certain amount. The Treasurer said in reply to a question, “ The banks can make only 2.9 per cent, interest “. Yet they are still borrowing at 2£ per cent, and lending at 6 per cent., and there is no way of telling from a bank’s balance-sheet what profits it makes. I quoted the profits made by the five big banks in Great Britain. Barclay’s bank’s profit was £1,375,000, of which it paid only £175,000 in dividends. The balance, less its overhead, went into secret reserves, but its dividend worked out at 14 per cent., and the four other big banks paid up to 18 per cent. I wonder what the British Tommy thought of that. It was announced over the air recently that there was an agitation to pay him more. 1 should think that he ought to he paid more, when the banks are making profits of at least 18 per cent., and no one can tell what the actual profits are. The present Government has no more control over banking system than had the previous Government which suggested that the first £20,000,000 loan be underwritten by the private banks. I asked how the money was to be raised, and was told that it was to be raised through the agency of the Commonwealth Bank and the private banks. After the loan was raised I asked how much came through the Commonwealth Bank and bow much through the private banks, and the Government refused to give the Senate the information, which, in fact, has never been given ; but Mr. Gillespie, the manager of one of the private banks, addressing the shareholders at annual meeting, spoke of the patriotism of the private banks, and the way they were sticking to the Government, and added, “I can assure you that the whole £20,000,000 of the first war loan was raised by the private banks”. That is why the Government would not tell honorable senators how it was raised. The annual interest bill on that loan is £600.000. If members of Parliament did their duty they would stop the perpetuation of that wrong. I asked Mr. Menzies when he was Prime Minister if his Government would consider getting the necessary credits for the war from the Commonwealth Bank. He replied, “ Yes. up to the point of safety “. I asked him where that point was, and he would not tell me. I also asked him how long he intended to raise war credits through the private banks at 3 J per cent, interest when practically the same accommodation could be obtained interest-free from the Commonwealth Bank. His answer was “ Senator Darcey, if you can tell me where I can get money without paying interest, I will do so “. That was a deliberate evasion to which no man who was interested in the welfare of this country should have resorted.

Senator Spicer:

– What has the present Government done about it?

Senator DARCEY:

– I am not responsible for the policy of this Government. I am responsible to the taxpayers who have sent me here, and so long as I am in this chamber I shall speak only what I know to be the truth.

I shall deal now with treasury-bill finance. Over and over again I have pointed out that a treasury bill is an undated promissory note. The Mr. Gillespie to whom I have referred complained at that time that the most that could ‘ be obtained on treasury-bills in London was 10s. per cent. The private banks were then getting 35s. per cent, from the Menzies Government - more than three and a half times as much. No wonder they complained . about how little they could get in London. In Australia, treasury bills can be purchased only by banks. At one time an attempt was made to allow the public to invest in treasury bills, but the smallest denomination allowable was £1,000, and very few people could afford to invest that amount.

In the course of his examination, Mr. Graham Towers was asked “ Now, as a matter of fact, to-day our gold is purchased by the Bank of Canada with notes which it issues - not redeemable in gold - in effect using printing-press money. . . . to purchase gold “, and he replied “ That is the practice all over the world “. The next question was “ When you allow the merchant banking system to issue bank deposits - with the practice of using cheques - you virtually allow the banks to issue an effective substitute for money, do you not ? “, and the answer was “ The bank deposits are actually money in that sense “. In effect, the banks -create credit out of nothing and lend it to the Government at &i per cent, interest. As a matter of fact, during the regime of the Lyons Government a loan was floated at 6 per cent. On one occasion, a meeting of the Economic Society in Hobart was addressed by a gentleman from the Bank of England who said that the Russian system of raising money was to float a loan at 6 per cent, and then, when the money was subscribed, to cut the interest down to 3 per cent. I pointed out to that gentleman that that system was not peculiar to Russia, and suggested that perhaps M. Stalin had learned it from Mr. Lyons, or vice versa. The next question put to Mr. Graham Towers was “ Then we authorize the banks to issue a substitute for money?” and he replied “Yes, I think that is a very fair statement of banking “. I have been telling honorable senators that for many years, but still no attempt has been made to stop this private bank thieving. The next question was: “ Will you tell me why a government with power to create money should give that power away to a private monopoly, and then borrow that which Parliament can create itself, back at interest, to the point of national bankruptcy “. The answer was, “… we realize, of course, that the amount which is paid provides part of the operating costs and some interest on deposits. Now, if Parliament wants to change the form of operating the banking system, then certainly that is within the power of Parliament.” That is sworn evidence given by the manager of the Bank of Canada, which is on practically the same footing as the Commonwealth Bank of Australia, the only difference being that our bank was established many years earlier. Honorable senators will recall the fight that was put up by private banks to prevent the establishment of the Commonwealth Bank. In 1924 the Bruce-Page Government attempted to strangle the Commonwealth Bank and partially succeeded. As

L told Mr. Bruce when he visited Tasmania, that action was the greatest piece of political .treachery ever perpetrated on the people of Australia, and it was carried out at the instance of the private banks. Mr. Bruce broke the pledge which he took upon entering the House of Representatives, to look after the interests of the people. The benefits which the Commonwealth Bank previously had conferred upon the people of Australia were really wonderful, but they were severely curtailed by the amending legislation passed by the Bruce-Page Government. In November, 1920, the private banks applied to the Commonwealth Bank Board which represented the private banking institutions, for what is known as “ the right to draw “. The first application for the “right to draw” was for £5,000,000 worth of notes and the agreement made with the Commonwealth Bank Board was that when these notes were presented they would be taken up by the banks .at 4 per cent, interest. However, when they were printed and ready for issue the private banks notified the Commonwealth Bank Board that they refused to take any of the money. In October, 1924, the Commonwealth Bank Act was proclaimed, and a conference was held between the Bruce-Page Government, the Associated Banks and the Commonwealth Bank Board. The banks were given the right to draw another £10,000,000, and interest at 4 per cent, to be paid only on the amount actually drawn. One naturally asks why it was that the Commonwealth Bank yielded to the demands of the private banks for these “ rights to draw “ in order to finance the wool sales, when the Commonwealth Bank could so easily have financed the transaction itself. That question has never been answered; but the following facts may, or may not, throw some light upon the subject. Mr. Kell, who succeeded Sir Denison Miller, was only acting governor of the bank before the directorate was appointed, and so had neither the status nor the power of his predecessor. After the appointment of the directorate, the governor of the bank was merely an executive officer. In effect, he was under the power of members of the board who represented the big financial institutions. Moreover, he personally was in a rather precarious position, for previously he had made things so unpleasant for Mr. M. B. Young, a leading official of the bank, that the latter resigned and brought serious accusations against Mr. Kell. The Bruce-Page Administration supported Mr. Kell, refused to appoint an independent tribunal to deal with the accusations, and upon Mr. Kell’s retirement in 1926, granted him a pension of £1,000 per annum. The trouble for the primary producers began with the setting up of a new Commonwealth Bank Board which, in addition to the governor of the bank and the secretary to the Treasury, was composed of certain commercial magnates who were appointed to control the destinies of the people’s bank, although they might themselves be shareholders in private hanks, and in spite of the fact that such institutions as those of which they were directors, were normally lenders on a very large scale of money at interest. The commercial magnates to whom I have referred were: - John J. Garvan, managing-director, Mutual Life’ and Citizens’ Assurance Company Limited, pastoralist, Rochdale Station, Queensland; Sir Robert Gibson, K.B.E., vice-president Associated Chambers of Manufactures, Victorian representative, Central Coal Board, director, Austral Manufacturing Company, the Lux Foundry, ‘ National Mutual Life Insurance Company, Union Trustee Company, Robert Harper and Company Limited, merchants and manufacturers and the Chamber of Manufactures Insurance Company; Sir .Samuel Hordern, director, Anthony Hordern and Sons, universal providers, Australian Mutual Provident Society, and the Royal Insurance Company; Mr. Robert Bond W. McComas, president of various woolbuyers’ associations, proprietor of William Haughton and Company, woolbrokers ; Mr. John McKenzie Lees, Fellow of the Institute of Bankers, London, and formerly chairman of Associated Banks in Queensland, and general manager of the Bank of Queensland, and of the Bank of North Queensland; Mr. Richard S. Drummond, an inconspicuous gentleman, appointed for inconspicuous reasons The rates charged for financing primary produce began to rise at once, until they had more than doubled. Primary producers had to pay £7,000,000 in bank charges during the 1924-25 season as against £3,000,000 during the previous year. When the ‘farmers in Western Australia formed a voluntary pool, they applied confidently to the Commonwealth Bank to finance it as had been done for similar pools in previous years; but it was no longer the same bank and both it and the private banks alike imposed conditions which were intolerable. Obviously, if it cost twice as much in 1924 to ship produce to the London market as it did in 19’23, the position was intolerable and unjust. Finally, when the farmers, finding themselves unable to secure the necessary money in Australia, obtained it from the Co-operative Wholesale Society in Great Britain, the concerted action of the private banks and their new ally, the Commonwealth Bank, frustrated the scheme. When the Cooperative Wholesale Society paid the money in to the London branch of the Commonwealth Bank, that institution, instead of transferring the money to its Perth branch transferred it in quotas of onefifth to each of the five associated banks operating in Perth so that each bank wa3 enabled to exploit the farmers by means of transfer charges. The transportation of 4,000,000 bushels of wheat from Australia to Great Britain cost the Co-opera’tive Wholesale Society ls. a bushel, but for merely transmitting the money the banks charged the farmers practically 3-Jd. a bushel, amounting in all to £60,000. Had that money been treated properly by the Commonwealth Bank the transmitting charge of £60,000 would not have been incurred.

Senator Collett:

– Who dictates the policy of the Commonwealth Bank?

Senator DARCEY:

– The Commonwealth Bank Board of course. Who else could do it? Had Sir Denison Miller lived that would not have happened. The attempt made in 1924 by the Bruce-Page Government to strangle the Commonwealth Bank would have been consummated a few years ago had the amending bill introduced by the then Treasurer (Mr. Casey) been passed. As it was, there was a public outcry against it and Mr. Casey received tens of thousands of letters demanding that the bill be dropped. He told me that in one week it cost him £64 in stamps to reply to people who had written protesting against the bill. That, of course, is what is called pressure politics, and the result was that the bill was dropped. Also, some years ago a mortgage bank bill was introduced at the instigation of the private banks. Under that bill, it was proposed to raise £30,000,000 by selling inscribed stock and debentures in order to raise the capital for the new mortgage bank. Had that been done the private banks would have purchased the inscribed; stock and debentures, and, of course, would have drawn the profits. Also, under company law, if debentureholders are not satisfied with the manner in which a company is being conducted they can take over.

Sir Ernest Harvey, of the Bank of England, arrived in Australia early in 1927 “for the purpose of advising the Commonwealth Bank as to certain phases of central banking “. We have never had a central bank in Australia, but much has been done against the interests of the people. The object of the visit by Sir Ernest Harvey was to make the Commonwealth Bank, which was supposed to be a national bank operating for the good of the people, a central bank operating for the benefit of private banks. Until last year, the policy of the bank of England was to send Sir Ernest Harvey and Sir Otto Niemeyer to various parts of the Empire to establish central banks. Sir Otto Niemeyer secured the establishment of the Central Bank of New Zealand, but it was never used, although it was founded under a Labour administration. Sir Ernest Harvey pointed out that the savings banks business did’ not come within the ambit of a central bank of reserve. Of course it does not. I notice with regret that the Senate is gradually thinning. I recall reading in the press that while Mr. Churchill was addressing the House of Commons a few days ago, over 100 members walked out of the chamber. A statement to that effect appeared in the London Times. I have witnessed a similar occurrence in this Senate, when a member has been endeavouring to place the truth before the clamber. On the last occasion when I spoke on this matter, there were ten senators left, and I had to draw the attention of the President to the state of the chamber. When the Commonwealth Bank was established the deposits of the savings bank department were used to enable it to carry on. That was the greatest, source of real credit the bank had. Mr. King O’Malley visited Hobart and induced the Premier of that State to have £30,000 or £40,000 then in the Savings Bank in Hobart transferred to the Commonwealth Bank. The Commonwealth Bank is refusing business every day, yet it made a profit of over £2,000,000 last year. No wonder the supporters of the private banks talked about “ Fisher’s flimsies “, and said that the Commonwealth Bank was bound to fail. They went so far as to refuse to clear the cheques of the Commonwealth Bank.

Sir Ernest Harvey succeeded in separating the Savings Bank Department of the Commonwealth Bank from the general bank; but, under the Commonwealth Bank (Savings Bank) Act 1927, over 50 per cent, of the revenue of the Commonwealth Bank was taken away from it, and placed under the control of three directors. It was specially provided, by an amendment of the definition of “bank” in the original act, that the Commonwealth Bank of Australia “does not include the Savings Bank “. That separation was not in the interests of the people. It was done to enable the Commonwealth Bank to exercise the same power to close down on the people as is exercised by the private banks. Much of the profit the Commonwealth Bank was earning was made in the Savings Bank Department. But the bill did not merely lessen the bank’s profits, it took away the bank’s cash reserves which enabled it to compete with private banks, terminated its trading operations, and reduced it to a bankers’ bank. It became neither a trading bank nor a savings bank, nor yet a reserve bank, but a thing of shreds and patches, at the mercy of private institutions, which could be destroyed at any time. So said the late Mr. Charlton in the House of Representatives.

But the ownership of tobe bank was still vested in the people of Australia, and it was the first bank in the world to be established by the people for the purpose of functioning in the public interest. Had it not been for the traitorous action of the Bruce-Page Government, it would still bc the strongest bank in Australia. It could have saved any other bank from difficulties, and it could ih ave saved the credit of the country in every way. It can lend interest-free money to the Government or to others. The Battle of Waterloo was fought on credit. The money borrowed to finance that battle has not been repaid. Australia still owes £400,000,000 on the last war, although it has already paid over £400,000,000 by way of interest on the money borrowed to finance that conflict. Even Mr. J. M. Keynes, until he was placed on the Directorate of the Bank of England, said that we need not worry about money at all, because all we require is men and materials. Perhaps, as M. Gustave Le Bon in his great book says, “ We are not governed by reason but by anterior ideas ‘ “, or, as Lord Sempell said -

We have preconceived notions on financial and economic matters which we have held for so long, and which are so deeply rooted, that it is taking two world wars and the actual visible disruption of the system which was the expression of our theories, to induce us even to give a hearing to those who have from time to time been pointing out the direction in which reform is necessary.

When I say that we have not sufficient finance for the adequate defence of Australia, the answer given is “ where is the money to come from “ ? Nothing hurts the conservative mind so much as a new idea, and it seems quite impossible to convince honorable senators of the soundness of my financial beliefs. But I shall keep on trying to convert them. I made a statement in this chamber six months before the war broke out to the effect that the present monetary system had brought the world to poverty, and was rapidly leading us into a war that would destroy our civilization. In April, 1939, I read an article entitled “ Warning Europe “ and embodied it in one of my speeches in. the Senate. No more important statement than that contained in the article has ever been made in this chamber. I spoke for 20 or 25 minutes, ‘but not a newspaper in Australia recorded a line of ]ny remarks. So much, for the freedom of the press! On the 18th November last, Lord Sempell said in the House of Lords -

The interest rate now being paid to the banks for this newly created book entry represents in effect a fee to them for the additional clerical work involved. This cannot, however, I suggest, justify the capital sum being shown as a debt from the State to the banks, nor do I feel that the State should pay, by way of interest on the loan, a fee which should properly bc paid by the citizens enjoying the facilities of the bank.

The Leader of the Opposition in the House of Representatives (Mr. Eadden) stated on the 10th March -

Our war needs have been and can be met by employing sound financial methods which will keep our internal currency stable. The “” financial credit “ which you apparently advocate could do this only by uncontrolled inflation.

I have asked many people from university professors downwards to tell me what is meant by inflation, and not one in 50 knows what it means. It has been regarded as a sort of black death which we must not allow to occur on any account, but now it merely means that if extra money goes into circulation, prices rise. We have a Prices Commissioner to prevent the undue increase of prices. The banks are not prevented to-day from exploiting the public. If they give 2% per cent, for deposits, and. charge their customers 6 per cent, on overdrafts, that is the concern of the people. When the first war loan was raised, the Treasurer of Tasmania said that it would be foolish to continue to borrow on the present orthodox system. It is just as necessary to defeat the present financial system as to defeat Germany, but, when the next loan was issued, the same practice was adopted. A fight is proceeding at present in the House of Commons on the subject of whether loans should continue to be raised in the orthodox manner. Just as persons like myself in this Parliament are regarded as Bolsheviks, so there are Bolsheviks in the Rouse of Commons. They want to 1-now why the people of Great Britain arc paying interest on £6,000,000,000 as the result of the last war.

Senator Collett:

– Does the honorable senator know what national credit is?

Senator DARCEY:

– Yes; it is using the credit of the country to finance the country.

Senator Collett:

– What is the credit of the country

Senator DARCEY:

– A country’s credit is its productive capacity. Last year, Australia’s production of goods was valued at £450,000,000.

Senator Spicer:

– Some of them were war goods.

Senator DARCEY:

– That does not matter. The manager of the Bank of Canada once said that there is no need to pay back the money used to create national assets. If the national credit be used in the defence of Australia that should be a sufficient repayment.

Senator FOLL:
QUEENSLAND · NAT; UAP from 1931

– Is not the credit of the country f airly heavily mortgaged already ?

Senator DARCEY:

– Yes, to the private banks. At the beginning of the war, Australia’s national debt was about £1,200,000,000, of which 80 per cent, came from the private banks. During the depression, a builder in Sydney who had a block of flats valued at over £10,000 and on which there was a mortgage of £1,500 was told by his bank manager that the directors of the bank were concerned about his account and desired that the mortgage be reduced. The client was living in a house worth about £5,000,. and appeared to be a prosperous man. He told the bank manager that the building trade was in a bad way because of the depression, and that he had not done any work for two years. He went on to say that, although he could not pay to the bank any money in. order to reduce “his mortgage, the bank had ample security in the building over which it held a mortgage. They parted with an admonition from the bank manager that he should think the matter over. Later, he received a further communication from the bank asking him to call. Before leaving home, he said to his wife that he might have to sell their house in order to satisfy the demands of the bank. He was met by a smiling bank manager, who placed before him a box of cigars. The conversation was somewhat as follows: The bank manager said : “ Good morning, Mr. Brown. How are you?” The builder replied: “I am well, but I have no money to reduce my overdraft.” The bank manager then said : “ Forget all about your overdraft. Are you aware that a loan of £8,000,000 is on the market?” The client replied: “I am not concerned about the loan, as I have no money to invest. I am concerned about my overdraft with your bank.” Again he was told : “ Forget all about it. I want you to sign an application for £1,000 in that loan.” When the client asked : “ Will that not increase my indebtedness to the bank? “ the bank manager replied: “ No. We will issue you with a receipt for the £1,000, and we will hold the bonds on your behalf.”

Senator Collett:

– I suppose the bank manager threw in the cigar?

Senator DARCEY:

– Possibly. After that, the bank manager became somewhat confidential, and said : “ The quota which I. have to raise in this district is £25,000, and therefore all the Browns, Jones and Robinsons in the district have been sent a notice similar to that which you have received “. Each of the bank’s clients signed on the dotted line. That was called a voluntary loan.

Senator Aylett:

– What did the banker get out of it?

Senator DARCEY:

– He got the usual 5% commission. In connexion with the last war loan the bankers drew £32,678 for services rendered to the Government in applying for war bonds on behalf of their clients. That sounds good business from the point of view of the banks. Is it any wonder that banks pay dividends as high as 18 per cent.? They do not disclose their profits, because they are able to put away large sums in secret reserves which are not revealed by the closest scrutiny of their balance-sheets. All big companies have secret reserves. From time to time shareholders ring the head office of a company in which they have invested money and ask what the next dividend will be. Those who are acquainted with the nature of the secret reserve, operate it to their credit on the stock exchange. In giving evidence before a royal commission the representatives of the private banks said that the banks held Government bonds worth £28,000,000. Honorable senators have heard of stock exchange transactions and of Government investments being at par. Many of these loans are above par. All that investors have to do is to send to the bank a cheque which the bank can then sell on the stock exchange for cash. I have told the Senate of the swindle that occurred in connexion with war savings certificates. Last October I asked how much money had been raised through the private hanks for war savings certificates, and I was told that the amount was £13,000,000. When I asked how the money had been paid, I was told that payment had been made by cheque. That means that all the money subscribed goes to swell the cash reserves of the banks, thereby enabling them to buy Treasury bills and inscribed stock. That practice should be stopped.

Senator Collett:

– Are not the private banks doing a great deal to create national credit?

Senator DARCEY:

– They are doing a great deal to increase the national debt. We are paying £1,000,000 a year to the banks as interest on their investments. The money cycle - that is, the time which elapses between the issuing of money by a bank until it again returns to the bank - is about ten or twelve days. If any working man is asked how much of his last week’s wages he still has in his pocket he will say that he has paid most of it to various tradesmen such as his baker, his butcher, and his grocer, and that he has expended a few shillings on the pictures and in buying a few glasses of beer. That money is returned by the various tradesmen to the banks soon after they receive it. It is not necessary to have a lot of money in order to carry on a banking system. When the last war ended there was no more real money in Australia than when the war started, notwithstanding that the war cost this country £385,000,000. Wars are not fought with money. If I were in a position to do so, I should use the national credit to fight the war. That would be quite constitutional, because in paragraph 530 of the Report of the Royal Commission on Monetary and Banking Reform it is stated that, ultimately, Parliament is responsible for finance and everything necessary for the good of Australia, and that the Government acts as the executive of the Parliament. The Commonwealth Bank has certain powers which have been granted to it by statute. Those powers are to be exercised in the interests of the nation. The law provides that should there be any difference of opinion between the Government and the Commonwealth Bank Board on matters of policy, there shall be a free and frank discussion to straighten things out. Should their views still be irreconcilable, the Government can then say that it will take full responsibility for the result and instruct the bank what it must do. Is anything more definite than that required? No money reaches the Treasury when a £20,000,000 loan is floated : all that the Government gets is the right to draw cheques against the banks. When the Australian Mutual Provident Society, for instance, decides to invest £1,500,000 in a war loan, the procedure is that the manager of the society instructs his banker to apply for bonds to that value. A cheque is sent to the Treasury, and the company gets the bonds. For that service the banker receives £2,500 commission on the transaction. The whole business is a racket, which has been going on since 1649 when the Bank of England was founded.

Senator Collett:

– Is there any mention of banking in the Old Testament?

Senator DARCEY:

– Under the old Jewish law usury was not permitted. Money-lenders were not allowed to charge interest on advances. There is also a record that in New Testament times usurers were driven out of the temple at Jerusalem. In an address which I delivered, in the presence of a number of university professors, at a meeting of the Economic Society at Hobart, I said that the great English financial institution known as the Bank of England was started by a Scot named William Paterson, in the reign of William of Orange, who was a Dutchman, and the most authentic work on the history of the Bank of England was written in French by a professor of the University of Athens. I claimed that that was evidence of the international character of the bank. The Bank of England is no more the Bank of England than it is the Bank of New York. Neither in Australia nor in any other country do governments govern; there is a power over and above governments.

Senator Collett:

– That is most obvious at the present time.

Senator DARCEY:

– The Labour Government in the Commonwealth is doing well indeed, considering all the circumstances. Governments of the same political parties as are represented by the Opposition got this nation into debt, and when the Labour Government came into office it started with a big handicap. A population of 7,000,000 people was faced with a national debt twice as great as the national debt of Great Britain in 1914. [Extension of time granted.] The problem confronting Australia is whether the banks are to be allowed any longer to create hundreds of millions of pounds out of nothing and lend it to the nation at 3-^ per cent., or whether the national credit shall be utilized for the purpose, through the Commonwealth Bank.

Senator Lamp:

– Tell us about Professor Copland.

Senator DARCEY:

– I know Professor Copland well. At one time I was his pupil in the University of Tasmania, which was the first Australian university to establish a commerce course. I joined through the Workers’ Educational Association.

Senator Collett:

– Since then economists have been almost as numerous as rabbits.

Senator DARCEY:

– The orthodox economist is well paid; but why the Government employs economists when there are 75 members in the House of Representatives and 36 members in this chamber I do not know. If we were capable of doing our job properly there would be no need for the Government to employ Professor Copland. It is the duty of the legislature to understand finance, for it is perfectly true that “ finance is government, and government is finance “. No government seems to be able to carry on except by a policy of continual borrowing. At a recent meeting of the Loan Council the Treasurer of Tasmania, Mr. Dwyer Gray, made a remarkable statement, but the Hobart Mercury, which is an excellent newspaper in many ways, deliberately suppressed his remarks, although they constituted the most profound statement ever made at a meeting of the Loan

Council. Nevertheless, the same newspaper used a full column to report the speech of the Leader of the Opposition, in which he said that Mr. Dwyer Gray’s fantastic proposal did not have the support of any Labour Premier at the Loan Council meeting, notwithstanding that resolutions had been passed by the Parliaments of some States urging that the Commonwealth Bank should be used to finance the war. The Leader of the Opposition said that his party believes in leaving financial matters to the experts, who are seldom members of Parliament. He was right in that statement. The Leader of the Opposition has also said that the ideas of the financial expert of the Labour party, Senator Darcey, are not embodied in the budget. While regretting that my views have not been incorporated in the budget, I wish to correct the impression, which apparently is held by the Leader of the Opposition, that I am the financial adviser to this Government. I do not hold that position; it is held by Professor Copland. I have said on other occasions that that gentleman would, no doubt, be prepared to expand his orthodoxy to any degree in order to retain his job. I should not be surprised if he were prepared to accept a revolutionary change of the monetary system if by so doing he could retain his job.

Senator Foll:

– I disagree with the honorable senator.

Senator DARCEY:

– Some time ago that gentleman attacked me in a railway carriage and said what he would do to me if I were a younger man. I replied that if I were a younger man I would take him on physically, in which event he would soon be “squibbing”, as he al ways “ squibs “ when I attack him on financial subjects. Then he came back all smiles. The orthodox economist cannot be offended; that is, if he has a good job.

I think that I have convinced any intelligent man that the present banking system can endure no longer. I cannot see any chance of establishing a new order unless we break the present banking system. As Mr. Dwyer-Gray has said, it is just as necessary to beat that system as it is to beat the Germans, or the Japanese. Thai fact is being recognized in Great Britain to-day. On previous occasions I have pointed out that Mr. Churchill in 1936, in the House of Commons, thundered against the Government’s inattention to defence works, and told it that Germany, in that year, had expended £800,000,000 on armaments. Tue Government of the day did not want Churchill. No government of mediocrities would want a man like him. To-day, however, he has to carry the burden produced by the mistakes of that government; and it is a good job that we have a bulldog like Churchill to carry that burden. Where would we be to-day with men like Lord Baldwin, or the late Ramsay MacDonald, who cut down Britain’s defence expenditure? When Lord Baldwin was asked why he had not increased the defence vote he replied that had he done so the Conservatives would have won the election. At the outbreak of this war, Chamberlain declared that he was greatly strengthened when he realized the financial stability of the Empire. How long did that stability last? Within six months Britain was dependent upon lease-lend.

I repeat that banks are allowed to issue a substitute for money on which we pay interest. There are only three classes of people who get something for nothing. They are: the pickpocket, the coiner, and the banker - but with the banker it is a case of “Arise, Sir Walter !” or “ Arise, Sir Thomas !” ; the bankers are knighted ! Mr. Graham Towers, the manager of the. Bank of Canada, was asked if the Government had power to change the present system, and he replied “ Yes “. He was also asked whether the Government could authorize banks to issue a substitute for money, and he replied, “ Yes “. They can issue it, but to the detriment of the country; and they will have people walking round in rags, as was the case in Alberta. I repeat that banks do not lend deposits. Honorable senators should not forget that fact. I recall the propaganda which was used by the bank’s spokesman when I #as standing for election to the Senate. I knew the gentleman well. His father was a bank manager, and he also was a bank manager. He was also a chartered accountant, and a member of the local

Stock Exchange. He should have known something about finance. He said that the banks performed a very useful purpose. If one wanted to travel on the Continent all one had to do was to get a bank draft. If Brown had £500 for which he had no immediate use he could put it on deposit in a bank and get interest at a certain rate on it. He did not say that Brown would not receive a guarantee from the bank to get that money back. All that Brown is given is a receipt. However, if Brown wanted to borrow £500, he would be obliged to provide security worth £1,000. There was no guarantee that Brown would be repaid his deposit of £500. I recall that in 1892, thirteen out of 22 banks in Australia closed their doors on depositors.

If Parliament wishes to change the present banking system it has the power to do so. Why does it not do so? To-day, we are satisfied that it is not necessary to keep a gold reserve in Australia. We have no such reserve to-day. Reverting to the instance I gave a few moments ago, the Commonwealth Bank gave the private banks the “ right to draw “ £5,000,000. They applied for another £10,000,000. The acting governor of the Commonwealth Bank, Mr. Kell, opposed the proposition, but the private banks got not only that £10,000,000 but also an additional £10,000,000 in the following year. Here was the trick. All the banks had to do was to lend against that £30,000,000. They had the right to draw against it, and if they did so, they had to pay interest at a certain rate. But they could lend almost £200,000,000, against the £30,000,000 worth of notes printed for them, which they did not take up. Can you imagine any bigger racket than that? Incompetent and corrupt governments have been responsible for the rise of Mussolini and Hitler. However, I am tired of reiterating these facts. It is time that members of the Opposition in this chamber found out for themselves whether what I am saying is right or wrong. Every honorable senator has sworn to do his best for his country, and, particularly during a time like the present, he should find out for himself whether what I am saying is correct. If he fails to do so he will be failing in his duty as a member of this Parliament.

Senator BRAND:
Victoria

.- The Government’s announcement of increased pay for members of the fighting services and higher allowances for their dependants has been greeted with general approval. An announcement that the pay was to be free of income tax would have caused similar satisfaction. The words “ equality of sacrifice “ would then be nearer reality. The Fadden Government provided that when members of the Australian Imperial Force proceeded overseas, their pay was exempt from income tax. The same concession was granted to Australian Imperial Force personnel allotted to operational stations within the Commonwealth, or who were retained in Australia for over six months, because of other defence considerations. The concessions were withdrawn by the present Government when the Australian Imperial Force returned from overseas. This brought the Australian Imperial Force, as regards income tax payments, into line with the Australian Military Forces and the civil population. Six weeks after the present Government took office. Japan entered the war and Australia became a theatre of war. Operational stations were reinforced. The returned Australian Imperial Force and the Australian Military Forces were grouped into army corps. Intensive training was speeded up in anticipation of active operations against Japan. This training, to toughen the troops and afford commanders the opportunity of handling their units under active service conditions, was and is still identical with the training of the Australian Imperial Force in Palestine prior to the Libyan campaign. Whilst the members of the Australian Imperial Force were undergoing their final training in Palestine’, they were exempt from the payment of income tax. Their immediate enemy was the Italians; now their enemy is the Japanese. If the members of the Australian Imperial Force were exempt from paying income tax then, why remove that concession now? Australia is more dependent than ever for its protection upon these self-same troops. They are the- backbone of our land forces. Units of the Australian Military Forces are brigaded with Australian Imperial Force units. The officers and non-commissioned officers have been, in many instances, interlocked. That may be the reason why the income tax concession was withdrawn from the Australian Imperial Force personnel. The Government, probably, thought that it would have one-half of a brigade group paying income tax whilst the other half were exempt, and therefore decided that none should be exempt above the prescribed minimum taxable income. Would it not be possible and more equitable to differentiate between combat troops, including personnel at operational stations, and those who are never likely to come into contact with the enemy. Exempt the former by all means. The latter, doing duty remote from operational stations, are no worse off or better off than the citizens who, for good and sufficient reasons, are not in uniform.. “Many are drawing better wages or salaries than they did in peace-time. To exempt the troops who are trained for actual combat with the enemy would be fair and reasonable. I know of one senior officer responsible for the training and efficiency of a brigade equipped with £2,000,600 worth of fighting machines. His income, after paying income tax and other commitments, is about the same as his batman’s income. True, both are destined for active operations, but the officer shoulders responsibility and leads his tank units into action. The personnel of the Army, whose duty it is to go where they may become casualties, and, perhaps, pay the supreme sacrifice, ought to receive every possible financial consideration.- An income-tax exemption would tend to stimulate morale. Such a concession would make them feel that their services in the fighting forces are appreciated.

I hope that the Government will find a formula to grant exemption from income tax to tike members of the actual fighting forces, as against those in uniform whose duties, essential and important though they might be, are carried out in places remote from enemy action. A few bombs dropped here and there by a nuisance enemy air raider are of no consequence.

The statement on the war situation, prepared by the Minister for External

Affairs (Dr. Evatt), and read by the Postmaster-General (Senator Ashley), on 2nd September, contained very little that honorable senators did not already know. Of course, it was necessary to record in Hansard the trend of events, since Japan entered the war. The glowing tribute paid to the immensity of Britain’s war effort ought to silence those narrowminded, biased Australians who have failed to appreciate Britain’s difficulties, world-wide commitments and determination to strike the enemy on the continent of Europe, when the appropriate time affords a reasonable chance of a successful invasion, notwithstanding that SO per cent, of the Empire’s casualties since the beginning of the war was amongst Britain’s own fighting services. No person with active service experience under-rates the enormous difficulty confronting our United States ally in waging an amphibious war against the Japanese in the Solomons and elsewhere. In this most difficult of all offensive operations, th* Royal Australian Navy and the Royal Australian Air Force are playing no small part. It is only a matter of time, when the enemy will be driven from his strategical bases in that zone. The recapture of Rabaul and the Japanese occupied territory in New Guinea will automatically follow. The menace to Australia will still remain, until the enemy is routed from all territories to the north and north-east. Are we going to leave that task entirely to our ally?

The Prime Minister (Mr. Curtin) in a broadcast speech on the austerity campaign said : “ We will make of our nation two complete fighting armies - the fighting forces to smash their way back through New Guinea, Java, Malaya and the Philippines on to Japan, and the working forces that will stand behind them and back them to the limit in mine, factory and workshop “. After listening to that broadcast, 1 can. imagine such comments in army camps as : “ At last the politicians are beginning to show some sense. A .complete fighting army for overseas service instead of the present shandy-gaff army, consisting of soldiers who will fight anywhere the Japanese are located and others who aTe forbidden by law to do so. Now we know where we are. It was the best item in the Prime Minister’s speech “.

Not only would satisfaction be expressed in the land forces. The citizens of Australia, too, would be grateful for the removal of their embarrassment when conversing with men of the United States Army. Will the Government take the necessary steps to implement by legislation the Prime Minister’s pledge ?

Nobody suggests that the whole of this proposed complete fighting army should be despatched across the sea. General MacArthur, the Allied Commander in Chief in the South- West Pacific Area is the best authority to decide when, where and in what proportion the land forces of Australia are required for offensive operations. That proportion is governed entirely by the volume of shipping available. The fact that there is to be no legal limitation to the strength of such a striking force, is what matters. Let us hope that the Prime Minister’s words at the microphone will be converted into action with the least possible delay. The public, and particularly the Army is tired of hearing the words “ offensive action “ which mean nothing. Our war organization and war administration tend towards the defensive. It is top heavy. When the Army really gets into action, casualties must occur, reinforcements will be demanded, and must be forthcoming, if further losses are to be avoided. No matter what reserves may be in training camps, more and more will be needed, and must be trained beforehand. I give credit to the man-power authorities for an appreciation of that fact. The defence authorities are the greater sinners. Too many men of military age are engaged on the home front. If they were released for field service and their places taken by older men, it would not be necessary to denude primary industries of so much man-power. I have found it almost impossible to obtain leave for certain men in the Army to assist in harvesting and shearing. The reply generally is that they cannot be spared unless they can rejoin their unit within 24 hours. As a senior military man of long experience, I can appreciate that attitude, but I cannot understand the policy of discharging fit and capable men, who may have reached the age for retirement, and replacing them in positions, far remote from operational stations, by younger men who ought to be in the fighting army. Before this war is won these “desk and swivel chair soldiers “ will have to be moved on. The same applies to many men in other Federal and State departments. A certain amount of combing out has been done, but not with the ruthlessness displayed in -combing out men in small business establishments. So drastic has this been that hundreds have had to close down. “ Ruined “ is the correct way in which to describe them. In the Commonwealth Parliament there are half a dozen members who should be in uniform doing real war work. If I were as young as they are, I should feel ashamed of escaping service on account of statutory parliamentary exemption. Total war is a long way off yet. The whole of the man-power problem needs revision with a greater priority of exemption to those engaged in food production, otherwise there is serious trouble ahead.

During the winter recess, I visited several industrial establishments engaged in producing war equipment. It was amazing to see the vast quantities turned out. For this satisfactory position and for laying the foundation of such a gigantic war equipment programme, now nearing fulfilment, little credit has ever been given publicly by the Curtin Government to the Menzies Government.

Senator Collings:

– Every credit has been given.

Senator BRAND:

– No, I have been in at least two places where the subject has been mentioned, and no credit was ever given. In making this observation, I am mindful of the magnificent effort on the part of employers and employees. No governmental programme could ever be successfully .carried out without their hearty co-operation and loyal service. Whilst paying tribute to the part played by Government controlled munitions establishments, Australia’s production of war material and equipment could not have reached the present satisfactory position, had not private enterprise come to the rescue. This fact prompts me to refer to the 4 per cent, profit limit proposal since abandoned. This proposal, under the guise of a war necessity, had for its objective the crippling of private enterprise as a preliminary to the complete socialization of industry. However, I shall leave that matter alone for the present.

I pass by that great industrial establishment - the Broken Hill Proprietary Company Limited - without which our fighting services could never have been adequately equipped, and refer to a smaller industrial concern - Charles Ruwolt Proprietary Limited in Richmond, Victoria, one of many of its kind. Twenty-seven years ago, Mr. Charles Ruwolt had a small engineering business in Wangaratta. The premises were somewhat similar to a blacksmith’s shop. He employed half a dozen men. By good management, initiative and skilled workmanship, profits began to appear. Those profits were put back into the business. More modern machinery was installed. He trained his leading hands who in turn trained others. Transferring to Melbourne Mr. Ruwolt pursued the same policy, and to-day there are 5,000 workmen on the pay-roll. When the DirectorGeneral of Munitions was appointed, the establishment controlled by the firm and used for the manufacture of mining machinery changed over to the production of war equipment. Charles Ruwolt Proprietary Limited, like similar undertakings, is the best argument in support of private enterprise.

Senator Lamp:

– Tell us what the firm is making out of it in profits?

Senator BRAND:

– Whatever profits are made are being placed in reserve to meet post-war industrial conditions. The present machinery will need renewal and bringing up to date. That being effected, this, and firms with the same policy, can compete successfully with overseas competitors. The result, will be little or no reduction of the number of employees. I venture to say that many more than the dozen or so shareholders in this company who are members of the family are glad that the 4 per cent, profit limit ideahas been abandoned.

Some time ago, it was officially announced that a committee of four Cabinet Ministers was appointed to coordinate the work of departments that may be concerned in post-war planning and generally to review difficulties and requirements. As post-war reconstruction was such an all-embracing subject of great national importance, the personnel of that committee should not be confined to a group of Ministers whose political views are shared by only half the people of Australia. The matter is too complex to be dealt with by a sectional committee.

When, soon after the outbreak of this war, it became necessary to lay the foundation of Australia’s vast munitions requirements, the Government looked around for a man with intellect, organizing ability and expert knowledge to tackle the job. Mr. Essington Lewis was chosen. What is wrong with searching for a man of similar calibre to coordinate the transition period from war industry to post-war industrial development? Like Mr. Lewis, he should be given ample scope to gather around him experts as well as representatives of organized industrial labour. The demobilization of Australia’s war machinery to peace requirements will be as difficult as was the mobilization of the nation’s industrial machinery from peace to war. It is a job for industrial experts - employer and employee. Party politics must be kept out of it. The nation is already sick to death of party politics.

It is true that the Tariff Board is an independent body set up to gather economic evidence and then submit recommendations to the Government of the day; but the Government is not bound to accept such recommendations. The Tariff Board has already commenced its big task of probing into Australia’s post-war secondary industries. It will have to try to find an answer to such major questions as: Can Australia absorb into civil employment the vast numbers of skilled and semiskilled tradesmen in our present war establishments, as well as those in the ranks of the three fighting forces ? What pre-war industries can be developed and what, new ones established in order to absorb these men? Will the present markets for Australian-made war supplies east of Suez he available for surplus post-war products from our factories? Will Australian manufacturers be able to compete with overseas manufacturers on the present overhead costs of production? What will Britain’s attitudebe?

In pre-war years, Britain said: “I’ll take your cheese if you take our chisels.” Australia has been compelled to make its own chisels and machine tools since war began. What about the United States of America ? For his share in Australia’s protection from Japanese invasion, Uncle Sam will look for some economic consideration.

In conversation with several United States of America officers, I said : “ What do you think of our country?” After paying tribute to the hospitality and friendliness of the people, and to the progress made in the past 100 years, they ventured the opinion that we cannot expect American capital to assist in the development of Australia after the war unless there is industrial stability. The officers apologized for their frankness, but that was their candid opinion. Guaranteed this, there is no reason why more branches of big American industrial establishments should not be set up in this country.

Senator Collings:

– Some of them are here now.

Senator BRAND:

– The more there are here, the better, because they mean more employment and more markets. There is no doubt that Great Britain, the United States of America and the Dominions, as well as Russia, will have to come to an equitable economic understanding. A new economic order is certain if the Englishspeaking nations are to hold together in peace as they are doing in war. Australia, having proved itself a manufacturing country capable of producing almost anything, will demand, and is entitled to, a share of the overseas markets for the commodities produced after the war by the highly skilled tradesmen. In prewar years, under 5 per cent, of Australia’s manufactured goods was exported. This percentage will need to be quadrupled if unemployment is to be averted.

The PRESIDENT (Senator the Hon J Cunningham:

– Order! In conformity with the sessional order that, unless otherwise ordered, the motion for adjournment shall be put, on Fridays, at 4 p.m.

I formally put the question -

That the Senate do now adjourn.

Question resolved in the affirmative.

page 250

PAPERS

The following papers were pre sented : -

Arbitration (Public Service) ActDetermination by the Arbitrator,&c. - No. 32 of 1942 - Amalgamated Postal Workers’ Union of Australia; and Federated Public Service Assistants’ Association of Australia.

Lands Acquisition Act - Land acquired at - Deer Park, Victoria - For Defence purposes.

Southport, Queensland - For Postal purposes.

Land Tax Assessment Act - List of Applications forRelief dealt with during the year 1941-42.

National Security Act -

National Security (Army Inventions) Regulations - Orders - Inventions and Designs (4).

National Security (General) Regulations - Orders -

Control of paraffin wax.

Inventions and Designs (259).

Taking possession of land, &c. (283).

Regulations - Statutory Rules 1942, No. 376.

Northern Territory Acceptance Act and Northern Territory (Administration) Act - Ordinances of 1942 -

No. 7 of 1942 - Crown Law Officer Reference.

No. 8 of 1942- Registration.

Senate adjourned at 4 p.m.

Cite as: Australia, Senate, Debates, 11 September 1942, viewed 22 October 2017, <http://historichansard.net/senate/1942/19420911_senate_16_172/>.