Senate
22 September 1953

20th Parliament · 1st Session

  1. Senate
  2. 20th Parliament
  3. 1953

The President (Senator the Hon. A. M. McMullin) took the chair at 3 p.m.. and read prayers.

page 149

PEARL: FISHERIES BILL

(No. 2) 1953.

Assent reported.

page 150

QUESTION

COAL

Senator ARNOLD:
NEW SOUTH WALES

– Following the discussions that were held with the. miners’ federation last week, is the Minister for National Development prepared to dampen down on open-cut coal mining before dampening down on the pit mines ? If it is proposed that men shall be transferred from the northern fields, will the Government consider paying the costs of any miners who offer to transfer, and also provide housing for them on the southern fields?

Senator SPOONER:
Minister for National Development · NEW SOUTH WALES · LP

– The honorable senator has raised an important issue in connexion with the production of coal by open-cut mining. By and large, the open-cut ventures have made a very material contribution indeed to the coal production programme. It has consistently been the policy pf this Government to protect the interests of the underground miners when deciding the open-cut programme. The production of the underground mines is increasing, and there is a very good potential production from those mines. This is an important aspect of the matter. This subject is very important, and the question raised is not easy to determine because the maintenance of the open-cut capacity at about 3,000,000 tons a year - speaking from memory - is a very important consideration. I discussed this position with officials of the federation yesterday, and the Cabinet has asked me to express my views on the matter. Accordingly, I have asked the Joint Goal Board to advise me. I shall not attempt to forecast the decision that will be made, because of the important considerations that are involved. I cannot give any assurance that the cost of transfers will be borne by the Commonwealth because, unless the position has varied recently, I understand chat the colliery proprietors themselves will,, in. certain circumstances, which I cannot clearly recollect, pay the costs of transfer of miners from the western and northern fields to the southern fields, r understand that a loan is made to the miners concerned and the proprietors undertake that if a man stays in his new position for a certain period they will not require him to repay it. j

Senator WOOD:
QUEENSLAND

– The Premier df Queensland, Mr. Gair, when he was over seas recently, said that he had discussions with a group of financial interests in the United States of America which desired to develop fully the great Blair Athol open-cut coal-field by building a railway to a port to be built in Queensland, and to be known as Nevinport, from which Blair Athol coal could be shipped to overseas markets. As Mr. Gair was reported to have, advised those interests that he would interview the Minister for National Development for the purpose of obtaining a loan from the International Bank for Reconstruction and Development for that purpose, is the Minister in a position to say whether the group of financiers concerned is the same group with whom he, himself, had discussions when he was overseas? If they are the same interests, can the Minister advise the Senate of the basis of such discussions?

Senator SPOONER:

– I have read the press report to the effect that Mr. Gair had negotiations, when he was in the United States of America, on the subject that the honorable senator has mentioned. I have not heard anything about those negotiations since Mr. Gair returned to Australia. From my reading of the press report, I concluded that the financial interests which he interviewed were the same interests as I interviewed when I was in the United States of America. I summarized my views upon the possibilities of developing the Blair Athol coalfield in an article which the Bulletin was good enough to publish.

Senator Critchley:

– That journal would be good enough to do that for the Minister.

Senator SPOONER:

– It is a long story, but it is interesting; and it is set out at some length in the article to which I have referred and which is available to -any one who desires, to read it.

page 150

QUESTION

SUPERPHOSPHATE

Senator SEWARD:
WESTERN AUSTRALIA

– Is the Minister for Trade and Customs aware that in a press statement of the 18th September the Premier of South Australia stated that the price of superphosphate in South Australia would be reduced this year by 19s. 6d. a ton which will lower the price to £13 14s. a ton ? Is the Minister aware that this price reduction follows an investigation conducted by the South Australian Prices Branch as a consequence of an application by superphosphate companies for a substantial increase in price? Does the Minister know that superphosphate is quoted at £16 3s. 6d. a ton in Western Australia and that this price is due mainly to the fact that Western Australian companies have given effect to the appeal of the Chifley Government to use locally obtained sulphur instead of imported brimstone? In view of these facts, will the Minister authorize the Tariff Board to carry out its recommendation of the 20th March last and conduct an immediate inquiry so that the price of superphosphate in States where locally produced sulphur is used will not be higher than in those States which have avoided that extra expense?

Senator O’SULLIVAN:
Minister for Trade and Customs · QUEENSLAND · LP

– I have not seen the newspaper report to which the honorable senator has referred, but I tabled in this chamber last week a Tariff Board report which dealt with a part of the subjectmatter that he raised. If the honorable senator requires further information after reading that report, I shall be happy to obtain it for him.

page 151

SOCIAL SERVICES

Senator COOKE:
WESTERN AUSTRALIA

– Will the Minister representing the Minister for Social Services inform the Senate on what date the increase of 2s. 6d. a week will be paid to age pensioners, invalid pensioners, and widow pensioners.

Senator SPOONER:
LP

– In accordance with what might be called traditional procedure, the payment of the increase in pensions will operate from the pension pay-day immediately following the passing of the legislation by this Parliament.

Senator Cooke:

– Could the Minister state the first period in respect of which the payment will be made?

Senator SPOONER:

– That will depend on what progress is made in passing the legislation.

page 151

QUESTION

TELEPHONE SERVICES

Senator COLE:
TASMANIA

– Will the Minister representing the Postmaster-General inquire from his colleague when it is pro posed to erect the promised line foreman’s house at Queenstown, Tasmania? At the present time the line foreman is living in a sub-standard home at Zeehan. When the nature of the weather experienced on the west coast of Tasmania is taken into consideration, I am sure that the Minister will agree that this state of affairs should not be allowed to continue.

Senator COOPER:
Minister for Repatriation · QUEENSLAND · CP

– I cannot answer immediately the question asked by the honorable senator, but I shall bring it to the notice of my colleague, the PostmasterGeneral, and obtain a considered reply as soon as possible. .

page 151

QUESTION

GOVERNMENT LOANS AND FINANCE

Senator LAUGHT:
SOUTH AUSTRALIA

– Has the Minister representing the Treasurer read press reports concerning the statement of the Leader of the Opposition, made in the Senate last week, to the effect that the Government should float a ten-year developmental loan to meet the needs of Australia, and that the Australian Loan Council should lower the interest rate to 3£ per cent.? Is it not a fact that the governments of Queensland, New South Wales and Victoria, which are Labour governments, have recently gone on to the loan market and offered interest at the rate of SA 15s. per cent, in connexion with developmental loans? Is it also true that in some instances those loans have been under-subscribed, although very well advertised? Is he aware that in South Australia, under the Playford Government, a recent loan, with interest at the rate of £4 12s. 6d. per cent., was over-subscribed within a day or so of its opening? Does the Minister think it possible at present to raise adequate longterm public loans at 3£ per cent., or thereabouts, without some form of compulsion or capital levy?

Senator SPOONER:
LP

– The general purport of the question asked by the honorable senator seems to me to be whether financial arrangements are not better controlled in States which are governed by Liberal-Country party governments than in States in which there are Labour governments. The answer to that question is definitely in the affirmative. Because of the prestige of the South Australian Government, that State is able to raise loans at £4 12s. 6d. per cent, interest, whilst the other .States are struggling to raise money at £4 15s. per cent. I think that the general answer to the proposal made by the Leader of the Opposition in the Senate last week is that a decision to go on to the loan market for loan requirements is a matter of very great importance. Before such a decision is made, the best possible expert advice is obtained. The fact that the . Commonwealth has recently put a loan on the market on certain terms and conditions is evidence of the opinion of the Australian Government and its advisers as to what is a reasonable rate of interest to offer, and also of the views of the States, which are members of the Australian Loan Council and concur in the arrangements that it rnakes.

page 152

QUESTION

BUDGET 1953-54

Senator ASHLEY:
NEW SOUTH WALES

– I preface a question to the Minister for Trade and Customs by saying that it has been brought to my notice that a company which controls a number of picture theatres on the north coast of New South Wales increased the price of its lounge seats from 4s. 4d. to 5s. each a few days before the recent announcement that the entertainments tax would be abolished. Can the Minister say whether such action could possibly have been the result of another budget leak?

Senator O’SULLIVAN:
LP

– The honorable senator seems to have developed an obsession about budget leakages. I am sure that there can be no connexion between the two circumstances to which he has referred. However, if he believes that the exhibitors have acted wrongly, I suggest that he should use his undoubted influence with the Labour Government of New South Wales, which has control of price fixing in such matters, and ask it to investigate the circumstances.

page 152

QUESTION

COMMONWEALTH BANK

Senator HENTY:
TASMANIA

– In view of the propaganda of the Australian Labour party to the effect that this Government is out to destroy the Commonwealth Bank, has the Minister representing the Treasurer noted that during the first full financial year under the direction of the Commonwealth Bank Board that wasappointed by this Government, the Commonwealth Bank has made an increased profit of £2,274,000?

Senator SPOONER:
LP

– It is very unpalatable for the Opposition to have that fact brought to its notice. I have not studied the report of the CommonwealthBank closely, but I have looked through it. I was interested to note not only the higher profit that the bank has made, but also the commendatory references in the report to national prosperity and the stability of the Australian economy. The bank’s factual examination of the employment situation in Australia also directly contradicts the propaganda that has come from the Opposition side of the Senate. In the light of this report, I tender to the Opposition a little advice to the effect that it should keep its hands off the Commonwealth Bank.

Senator O’FLAHERTY:
SOUTH AUSTRALIA

– I am glad that the Minister has such great admiration for the Commonwealth Bank and its board. I should like to know, however, whether he read the passage in the board’s report which states that the volume; of money available in Australia has declined, and that some overseas capital has been withdrawn, partly because of the uncertain economic policy in this country. Can the Minister indicate how he intends to overcome this setback ?

Senator SPOONER:

– I am glad that the honorable senator apparently agrees that the Commonwealth Bank has been improved by the appointment of the board. That was not my impression of the honorable senator’s views when the legislation reconstituting the board was before this chamber, but if he has changed his mind I shall be glad to accept him as a willing convert. I do not quite follow the honorable senator’s references to the Commonwealth Bank’s report. I have no recollection of any reference in that report to the withdrawal of overseas capital from this country. I am convinced that the honorable senator has misunderstood the position, because the trend has been towards the attraction of capital to this country. There has been a steadily increasing flood of capital into Australia for investment, particularly in secondaryindustries. I cannot understand the honorable senator’s reference to a fall of export income.

page 153

QUESTION

HEALTH AND MEDICALSERVICES

Senator FRASER:
WESTERN AUSTRALIA

– I preface a question to the Minister for Trade and Customs with a reminder that about twelve months ago, I raised the question of Commonwealth registration of medical practitioners. Will the Minister inform the Senate whether that matter has been raised either at a conference of Commonwealth and State Ministers or at conferences of State Ministers? If not, will the Minister take steps to ensure that the matter will be raised on an appropriate occasion as it would possibly require legislation by the Australian Government? Incidentally, I direct the attention of the Minister to the fact that a recent conference of the British Medical Association decided that Commonwealth registration of medical practitioners was a national necessity in the interests of the medical profession.

Senator O’SULLIVAN:
LP

– Without knowing a great deal about the matter, I will not deny that considerable advantage would be derived from Commonwealth registration of the medical profession. However, I am not able at present to express an opinion upon the constitutional powers and rights of the Australian Government in the matter. The medical profession in the various States and the State authorities themselves have certain definite rights in this respect. With the approval of the honorable senator, I shall refer the matter to the Attorney-General to ascertain if he has any observations to make upon the subject.

Senator CRITCHLEY:

– Is the Minister representing the Minister acting for the Minister for Health in a position to inform the Senate of the progress made in the negotiations between the Minister and representatives of the chemists in respect of the dispute which has arisen over the charges for dispensing medicines and which has aroused widespread public interest in recent weeks?

Senator COOPER:
CP

– I shall refer the honorable senator’s question to the

Minister acting for the Minister for Health and obtain a reply for him as soon as possible.

Senator ANDERSON:
NEW SOUTH WALES

– I preface a question to the Minister representing the Minister for Health by pointing out that, under the agreement between the Commonwealth and States in connexion with the treatment of sufferers from tuberculosis, the Commonwealth provides money to the States to enable them to provide treatment and hospitalization for sufferers from this disease. Is it a fact that the New South Wales Government is not conducting a proper State-wide chest survey, which is an essential part of the plan to combat this deadly killer? Is it true that the New South Wales Government is not providing proper hospitalization for sufferers from tuberculosis? If these are facts, will the Minister inform the New South Wales Government that unless it takes vigorous steps to implement the agreement in the way that other States are doing, the Commonwealth will consider terminating the agreement and itself undertake the task, in accordance with the powers that it received by referendum ?

Senator COOPER:

– It is true that the Commonwealth makes grants to the States to enable them to build hospitals and provide other facilities to combat tuberculosis. I am unable, offhand, to answer the questions that the honorable senator has raised in relation to the New South Wales Government, but I shall direct the attention of the Minister who is acting for the Minister for Health to them and endeavour to obtain a reply for the honorable senator as soon as possible.

Senator AYLETT:
TASMANIA

– I preface a question to the Minister representing the Minister for Health by pointing out that in some instances, after workers who have been suffering from tuberculosis have been informed that they have been cured, their pensions and the allowance paid to their wives have been discontinued. .Subsequently, on applying for jobs, they have been required to appear before a board of doctors, which has told them that they are still suffering from tuberculosis, with the result that they cannot obtain work. Such men are then in the position of being unable to obtain work because of their state of health, and pensions and allowances are not payable to them and their wives. Is it possible for such persons to appeal to any official body to settle a dispute between Government and industrial doctors?

Senator COOPER:

– I inform the honorable senator that the allowances payable in this country to sufferers from tuberculosis and their wives are the most generous in the world.

Senator Aylett:

– I am not complaining about that aspect of the matter.

Senator COOPER:

– I quite understand the question that the honorable senator has asked. If he will furnish me with particulars of specific instances I shall direct the attention of the Minister who is acting for the Minister for Health to the matter to see whether the position can be rectified at an early date.

Senator ASHLEY:

– Will the Minister representing the Minister acting for the Minister for Health inform the Senate of the present position of the threatened strike by chemists who, I understand, have told the Government that after the 1st October next they will not fill prescriptions for age and invalid pensioners? Oan the Minister state whether any progress has been made in the negotiations that have been taking place between the Minister for Social Services and the chemists in connexion with this matter?

Senator COOPER:

– I am not aware of any threatened strike by the chemists, but it is true that the Minister for Social Services, who is at present acting for the Minister for Health, has been conducting negotiations with the chemists in relation to fees payable to them for prescriptions under the medical scheme for pensioners. I shall endeavour to ascertain the present position in this matter for the honorable senator.

page 154

QUESTION

ROYAL AUSTRALIAN AIR FORCE

Senator VINCENT:
WESTERN AUSTRALIA

– Will the Minister representing the Minister for Air inform the Senate whether the Royal Australian Air Force Aerial Survey Unit has been disbanded? If so, will the Minister state whether the aerial mapping survey of Australia has been completed? If the mapping of Australia has not been completed, will the Minister state what is pro posed to be done to effect the completion of that work?

Senator SPOONER:
LP

– When consideration was given to the survey that the honorable senator has mentioned, the Department of National Development, which is under my control, was closely interested in it because of its association with mineral surveys. I have not the information that the honorable senator has requested, and suggest that he should put the question upon a notice-paper so that I may obtain a complete answer for him.

page 154

QUESTION

EMPLOYMENT

Senator AYLETT:

– Can the Minister representing the Minister for Labour and National Service inform the Senate of the number of males who were employed in all industries in Australia in 1950 and of the number of males who are employed in all industries in this country to-day? Alternatively, can he inform the Senate of the increase of the number df such employees since 1950?

Senator SPICER:
Attorney-General · VICTORIA · LP

– I do not think that the honorable senator would seriously expect me to carry in my head the figures for which he has asked. I shall obtain the figures for him.

page 154

QUESTION

REPATRIATION

Senator O’BYRNE:
TASMANIA

– Is the Minister for Repatriation aware that, as a result of the Page health scheme, free hospital and medical treatment, which previously was made available to the wives of totally and permanently incapacitated exservicemen in Tasmania, is not now available to persons coming within that category? Will the Minister review the position of such wives with a view to making available to them medical health and social services benefits equal to those made available to war widows, and thus relieve their husbands of the additional expenditure of insuring them against sickness, particularly as totally and permanently incapacitated ex-servicemen are having a struggle on the present rate of their pension to provide the ordinary necessaries of life for their wives?

Senator COOPER:
CP

– I was not aware that wives of totally and permanently incapacitated ex-servicemen in Tasmania trod free medical benefits. If that is so, the scheme was probably introduced by the Tasmanian Government. No such benefits were ever provided by the Repatriation Department. Representations have been made to me by the organization which the honorable senator has mentioned, and they are receiving sympathetic consideration. There are difficulties in connexion with the provision of free medical benefits in the manner suggested by the honorable senator. One is that prior consideration would hove to be given to serving members of the forces. I have already drawn attention to the fact that totally and permanently incapacitated ex-servicemen may register their wives as single units under the hospital benefits scheme for ls. a week, and that children may be included for a further small sum. That would completely overcome the difficulty However, I have promised the organization that I shall bear in mind the representations that have been made on this matter.

page 155

WAR GRAVES

Senator COOPER:
CP

– On the 9th and 10th September, Senator Tangney referred to the standard of the headstones erected on the graves of deceased servicemen in Western Australia. As promised, I brought the honorable senator’s remarks under the notice of my colleague the Minister for the Interior who has obtained the following report from the Secretary-General of the Anzac Agency of the Imperial War Graves Commission : -

The type of headstone erected over the graves or eligible deceased servicemen by the Imperial War Graves Commission in Australia during the period since 1946, is identical in design and in quality with headstones erected 4. the Commonwealth Government over similarly eligible graves during the past 30 yours.

The white Ulam marble used for headstones was subjected to very thorough and searching tests before it was adopted for general use in Hie manufacture of servicemen’s headstones, ami has proved to be eminently satisfactory for that purpose. It is agreed’ that, in the early stages after erection, in certain lights the inscription on the headstone is difficult to read. This condition, however, rapidly improves on exposure to the weather, and the inscription becomes clearly legible.

To ensure that the headstones were clearly legible immediately on erection, it would be necessary to colour in the incisions into the stone, but there are many disadvantages by the following of such a course. Firstly, and the greatest disadvantage, . is that the capillary attraction of the marble would result in the paint used for colouring the incisions being drawn into the stone itself, thus creating a blurred appearance of the letters. This “ blurring “ would be permanent, and in a short time would become most unsightly.

The headstones erected during the past seven years are in all respects equal to headstones erected in war cemeteries throughout the world, and no cause for complaint has arisen in any other area.

Senator McLEAY:
Minister for Shipping and Transport · SOUTH AUSTRALIA · LP

– On the 9th September Senator Critchley asked the following question: -

Is the Minister for Hepatization aware that an appeal for funds has been launched in South Australia in order that the Australian Imperial Force cemetery at West-terrace, Adelaide, may be maintained appropriately ? As the care and upkeep of war cemeteries is a national responsibility, will the Government make available adequate finance for that purpose?

The following answer has been supplied by the Minister for the Interior: -

The Commonwealth Government has accepted the responsibility for the proper marking and maintenance in perpetuity of the graves of all deceased servicemen or ex-servicemen, whose deaths are attributable to war service.

So far as can be ascertained, the appeal referred to by the honorable senator relates to a proposal for the establishment of a cemetery for the burial of all deceased servicemen, irrespective of whether the death has been accepted as being due to war service or otherwise.

At the conference of Commonwealth and State Ministers, held in Canberra in August of this year, the Premier of South Australia submitted a case for financial assistance from the Commonwealth Government for a similar scheme. The Prime Minister had indicated when the matter was discussed earlier that consideration would be given to the question of financial assistance if the scheme were to be established on an Australia-wide basis and not by one State alone. Other State Ministers at the August conference generally indicated that there did not appear to be any desire on the part of the Returned. Sailors, Soldiers and Airmen’s Imperial League of Australia in their respective States for the establishment of special servicemen’s cemeteries. In the circumstances, no further action is proposed by the Commonwealth.

page 155

QUESTION

UNITED NATIONS

Senator WEDGWOOD:
VICTORIA

– Will the Minister representing the Minister for External Affairs inform the Senate whether a congratulatory message has been forwarded by the Australian Government to Madam Pandit, on her elevation to the position of President of the General Assembly of the United Nations ?

Senator SPICER:
LP

– I understand that the Minister for External Affairs, who is attending the current meetings of the General Assembly of the United Nations, has, onbehalf of the Australian Government,’ congratulated Madam Pandit on her appointment. The honorable senator will be aware that Australia supported her candidature for the position.

page 156

QUESTION

ATOMIC WEAPONS

Senator COOPER:
CP

– On the 16th September, Senator Cole asked a question, without notice, about the possibility of members of Parliament viewing the forthcoming tests of atomic weapons. The Minister for Supply has furnished the following answer : -

The forthcoming tests of atomic weapons will not take place at Woomera, but at a place in central Australia far beyond the present extent of the range. I regret that it will not be possible to arrange for members of Parliament to view these tests.

page 156

QUESTION

WATERFRONT EMPLOYMENT

Senator McKENNA:
TASMANIA

– On the 15th October, 1952, I asked the Minister representing the Minister for Labour and National Service a question in relation to the provision of a badly needed new building and facilities for watersiders at Hobart. Further to the Minister’s answer on that day, is he now able to inform mo when work on the provision of these facilities will be commenced? When is it considered that the work will be completed? Is the Minister aware that the absence of the proposed facilities caused great inconvenience to waterside workers who were transferred from other States to Hobart during the last fruit season, and that, in consequence, mainland watersiders will be unwilling to so transfer in the future? Does not the Minister know that the absence of such facilities causes continuous inconvenience to the hundreds of waterside workers who are stationed permanently at Hobart?

Senator SPICER:
LP

– I shall make immediate inquiries from the Minister for Labour and National Service about the matter that has been raised by the Leader of the Opposition, and endeavour to obtain a reply for him as soon as possible.

page 156

QUESTION

HOUSING

Senator BENN:
QUEENSLAND

asked the Minister representing the Minister for Social Services, upon notice -

  1. What protection does the War Service Homes Division afford an intending purchaser of a home under the provisions of the WarService Homes Act, and what liability doesthe division incur in a case where a purchase is effected of a home which is structurally defective at the time of the purchase and requires extensive and costly repairs fourteen months subsequently?
  2. Is it a fact (a) that on the 1st February, 1952, the War Service Homes Division agreed to the purchase by Mr. David Irwin of a home at Clifford-parade, Mount Gravatt,

Brisbane, at a cost of £1,950 and on a deposit of £240; (6) that on the 1st April, 1953, the War Service Homes Division called upon Mr. Irwin to effect certain repairs to defects in his home which should have been apparent to the division’s inspector prior to purchase; (o) that such repairs will cost approximately £180?

  1. If so, will the Minister ascertain why these defects were not brought to notice prior to purchase, and will he make a special arrangement with Mr. Irwin to meet the cost of repairs which are now deemed necessary?
Senator SPOONER:
LP

– The Minister for Social Services has supplied the following replies to the honorable senator’s questions : -

  1. The War Service Homes Division inspects existing properties in respect of which applicants desire assistance under the War Service Homes Act to determine whether they are structurally sound and at a price which would be reasonable having regard to their finish, &c. The inspection in respect of a property which has been completed is naturally limited to what is apparent to a reasonably competent valuer and cannot safeguard the applicant to the same extent that he would be safeguarded in the event of the supervision of construction being carried out by the division. The division accepts responsibility where one of its officers fails to detect structural defects which should have been apparent in an inspection as indicated above, but does not accept responsibility for defects which could not reasonably have been apparent at the time of the inspection. 2. (a) In the case of Mr. David Irwin, who lodged Lis application on the 17th November, 1951, the valuation was made by a private valuer who was doing this type of work for the War Service Homes Division at the time and the valuation was determined at £1,794 compared with the purchase price of £1,950. The applicant was informed of the fact that the purchase price was in excess of the valuation, but despite this he proceeded. The valuation took into consideration that the finish of the home was not as good as that which would have been provided had the division built it, butat the time there were no apparent structural defects which could have been seen by a competent valuer doing his work conscientiously. (6) With a view to assisting Mr. Irwin to remedy the defects which had developed since his purchase) the War Service Homes Division, after many discussions with him, issued a notice which is the only legal basis under which it could make an additional loan to the applicant to enable him to carry out the repairs and pay the cost over the balance of the loan, (c) It is possible that the cost would be in the vicinity of £180, but prices have not been obtained from contractors.
  2. Thu honorable the Minister investigated the circumstances in this case following representations on behalf of the applicant by the Honorable Jos. Francis, Minister for the Army, and informed Mr. Irwin fully in accordance with the above through Mr. Francis, but at the same time he advised Mr. Irwin that in view of the development which had taken place, he may prefer to sell this property and discharge his liability to the division when assistance would be given for a second home. The Minister feels that the offer by the division in these circumstances is most reasonable as it is primarily the applicant’s responsibility to maintain the home and remedy defects which develop after purchase by him.

page 157

QUESTION

HARTNETT MOTORS LIMITED

Senator SEWARD:

asked the Minister representing the Treasurer, upon notice -

  1. Have the arbitration proceedings yet been completed between Commonwealth Engineering Company and Hartnett Motors Limited; if so, with what result?
  2. ‘If not, when is it anticipated that they will be completed? ,
Senator SPOONER:
LP

– The Treasurer lias furnished the following reply to the honorable senator’s questions: -

  1. . T understand that the proceedings have not yet been completed.
  2. I have no information on this point, which seems to be a matter for the arbitrator and the parties to the dispute.

page 157

QUESTION

ROYAL AUSTRALIAN NAVY

Senator WORDSWORTH:
TASMANIA

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

  1. !..< it a fact that the Department of the Navy is finding difficulty in obtaining air pilots for the Fleet Air Arm?
  2. If so. what ave the causes of this situation, and what steps are being taken to encourage recruiting?
Senator SPOONER:
LP

– The Minister for the Navy has supplied the following reply to the honorable senator’s questions. -

  1. Yes.
  2. The reasons why sufficient young men of the required qualifications are not coming forward are not clear, but rejection of candidates on medical grounds is of the order of 50 per cent. Steps to recruit suitable candidates have been intensified since the middle of 1952 and the emphasis continues on frequent advertisements in the newspapers of all States and on films and lectures to suitable bodies. An officer is about to start a special recruiting drive in Victoria and South Australia, where the numbers volunteering are low in proportion to the appropriate section of the population of those States. Other steps being considered are an alteration in the age limits of candidates, which are at present 17-J to 22%, both upwards and downwards, and the possibility of making the conditions of service more attractive.

page 157

QUESTION

DRIED FRUITS

Senator MATTNER:
SOUTH AUSTRALIA

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

In the event of America having a surplus of dried fruits and similar products for sale to Groat Britain in the near future, will the Minister ask the British Government to purchase this surplus from America, and control its disposal through the existing trade channels, in order to prevent any dumping on the British market, and so maintain a stable price for our own dried fruits ?

Senator McLEAY:
LP

– The Minister for Commerce and Agriculture has supplied the following answer to the honorable senator’s question : -

The situation to which the honorable senator refers involves a possibility which has caused the Government serious concern. The Commonwealth Government will request the Government of the United Kingdom to take such steps as will ensure that Australia’s dried fruits are not prejudicially affected on the United Kingdom market by being exposed to the competition of subsidized exports from the United States of America or anywhere else.

page 157

QUESTION

MARGARINE

Senator KENDALL:
QUEENSLAND

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

  1. Is it a fact that part of the process of converting coco-nut to margarine includes bringing the oil to boiling point?
  2. Is it a fact that the Health Department has recently stated that boiling destroys the germs which cause typhoid and allied fevers?
Senator McLEAY:
LP

– I have received the following answer to the honorable senator’s questions from the Minister for Commerce and Agriculture: -

The questions relate to a manufacturing process of which I have not any knowledge.

page 158

PUBLIC WORKS COMMITTEE

Message received from the House of Representatives intimating that Mr. Lawrence hadbeen appointed to fill the vacancy existing on the Parliamentary Standing Committee on Public Works caused by the death of the Honorable Allan McKenzie McDonald.

page 158

ESTIMATES AND BUDGET PAPERS, 1953-54

Debate resumed from the 17th September (vide page 148), on motion by Senator Spooner -

That the following papers be printed: - Estimates of Receipts and Expenditure, and Estimates of Expenditure for Additions, New Works and other services involved in Capital Expenditure, for the year ended 30th June, 1954.

The Budget, 1953-54 - Papers presented by the Right Honorable Sir Arthur Fadden, M.P., on the occasion of the Budget of 1953-54.

National Income and Expenditure 1952-53

Senator McCALLUM:
New South Wales

– As I said before the debate was adjourned last week, the Government’s proposal to reduce the company tax is of very great value because it will arrest the process which is popularly known as capital erosion. The reduction of the tax will enable larger reserves to be built up, and that will result in more plant being used in our great industries and also in our smaller industries. The accretion of capital is not a matter that is exclusively connected with the maintenance of what we call a capitalist economy. Even in a socialist or Communist economy it is necessary to build up capital, but the process in those economies is somewhat different from that which is in operation in our economy. In a Communist economy the central planner simply decides that a certain amount of the year’s production shall be devoted to the acquirement of capital goods. He lays down the law. For many years a deliberate attempt was made to keep down the standard of living in the Union of Soviet Socialist Republics in order to make provision for capital equipment. We do not do that sort of thing but, indirectly, we achieve the same accretion of capital. The proposed reduction of company tax will enable companies to build up reserves. In addition, so far as private individuals are concerned, income tax reductions will have a similar effect. That is one of the most important reasons for reducing taxation generally.

I know that socialist economists think that we should not reduce taxation. I have heard interesting comments made by socialist professors whose advice goes’ to honorable senators opposite and whose voice is heard in the magazine called Voice. They say, “ Taxation is not too high. It could be much higher still “. I differ strongly from those gentlemen. I think that, in addition to the reduction of company tax, we need the reduction that the Government proposes to make in respect of income tax. Those honorable senators who listened carefully to the budget speech will agree that that reduction will be very considerahle. Over all, it will be approximately 12½ per cent, and will range from 100 per cent. on the very lowest taxable incomes to approximately 10 per cent. on the highest incomes. The important thing about it is that the greatest part of the relief will be given to the people on the low and middle incomes. But something is to be given to everybody.

Graduated taxation is a sound principle, butwe have carried it too far during the last few years. In the stress of war, nobody objected to its operation. In wartime, it is necessary to grab what is available. Obviously, the man who has most to lose should pay the most tax. But I think it is absurd to make taxation something which is intended merely to gather revenue, a penal instrument of which destroys a particular class or group in the community in doing so. As I pointed out before this debate was adjourned, the money held by people with large incomes is used ultimately for social purposes because much of it goes, by means of taxation, gifts or legacies, to educational and other institutions. The principle that applies to company tax applies also to tax on individual incomes. It is a very sound principle that a man should have the right to spend or save as much of his income as he can. There is a self-reversing law of life to the effect that the man who spends his money unwisely often suffers. Either he loses his money or he learns wisdom.

I prefer to learn wisdom that way rather than to have all my savings made for me by the State. I do not wish to have to rely on the age pension, should ungrateful electors dismiss me from this Parliament before I have qualified for the annuity which the Parliament provides. I prefer to be able to save something for myself for my old age. No doubt in common with many others, I think I know how to spend wisely a considerable portion of my income.

I know that many people say that those with large incomes spend their money on luxuries and that such expenditure is harmful, but a great deal of it must go on wise expenditure. For instance, they encourage the good book traders - not the dispensers of rubbish, but those who provide the solid mental nourishment for all ages. Similarly, all forms of art must benefit directly. If honorable senators look back through the ages they will see that the great periods in art coincided with periods when there were very wealthy people. I refer particularly to the great Renaissance in Italy and France, and indeed in the whole of Europe, which coincided with the accumulation of a large amount of wealth. People such as the Medicis, the banker princes of Italy, were then the patrons of art. I do not believe that patronage by the State can produce as benevolent or as good an effect because it is inevitable that people, such as electors and members of Parliament, will want a quid pro quo whenever the State pays something in the interests of art. We are not willing to pay out large sums of money simply to encourage art and literature for their own sake. We like to encourage the kind of art and literature which appeals to us personally. I should hate to pay out government money to some of the architects and artists I know, but the only way in which art of all kinds can flourish is through experimentation, which can come about only if there are many patrons with money to spend, thus encouraging people to try their hand at the various forms of art.

I therefore regard this handing back to the people of money to spend as an altogether beneficent action. In addition, I find the abolition of the special property tax a beneficent thing. I under stand that that tax was a war-time measure, and I cannot see the need for it now. Of course, if we had in this country a great number of people who had inherited vast accumulated fortunes which were made many years ago, there would be some reason to make a distinction between property and earned income for taxation purposes. But in this country, the greater part of the money invested is money that has been earned here. We wish to encourage people to earn more and to invest more, because we want them to be more dependent on themselves. It is, therefore, gratifying that this altogether unnecessary discrimination has been abolished.

Sales tax is the kind of tax that I have never liked. It is, of course, one of the virtues of a good tax that it may be collected easily. That is one of the factors which the Treasurer and his administration consider. The taxation authorities want a tax that is hard to evade and easy to collect. With sales tax, they can be sure that they will glean practically the full amount. To that extent it is a good tax, but apart from that it is entirely bad. It increases the price of goods that are sold. By reducing sales tax from 50 per cent, and 33-J- per cent, to 12-J per cent., a large number of articles will be affected and the inflationary pressure will be lessened. The goods involved will be made cheaper. Thus, the Government proposes to give to the people a present- of a definite sum of money. That is much better than to increase salaries, because reducing sales tax is deflationary action, not inflationary. I think that there is no part of the budget which deserves more commendation than the proposed very drastic reduction of sales tax.

With regard to pay-roll tax, I think that the advantage will be even greater than with sales tax. Personally, I should have preferred to see pay-roll tax abolished entirely, but the Treasury officials investigated the matter very carefully and found that that could not be done without encroaching on certain other reductions which the Government wished to make, notably the reduction of income tax. I understand that it was estimated that if pay-roll tax were abolished entirely income tax could be reduced by only about 2 per cent. Payroll tax will still be discriminatory, but in future it will be discriminatory against large employers. The proposal of th Government will be very helpful to small employers.. I understand that approximately 50,000 employers will be freed entirely from this incubus. In addition, large employers will gain because they will pay less tax. On the average, large employers are able to stand up to competition better than are small employers.

One of my firmest convictions is that the system of financing industries by investment must stand or fall with the increase or decrease of the number of small employers. I believe in the little capitalist. The Liberal party also believes in him. That belief was one of the banners under which the Liberal and Australian Country parties were elected to office in 1949, and it is a principle by which they will stand firmly. If it were true, as Marx said 100 years ago, that capital tends to get out of the hands of the small man into bigger and bigger aggregations, until ultimately there is nothing except a few large monopolies, then capitalism would be a bad thing. But the facts have belied the Marxist theory. It is true that there are monopolies and that many businesses expand in size, but it is not true that the opportunities for the small man are vanishing. In fact, they are increasing. It is possible for more and more small industries to come into existence, and many of the big corporations could not live without many subsidiary small enterprises. The opportunities for the small man are increasing every day and this Government is determined that they shall continue to increase.

Honorable senators on this side of the chamber take great pride in the reduction of the pay-roll tax and the removal of about 50,000 small men from its effect because that will encourage the proper kind of individualism in commerce. I refer to the individualism of the small men employing two or three hands, each of whom can become a small capitalist in his turn. I take great pride, also, in supporting the provision that will enable a person who gets a large sum of money for writing a book, painting a picture or producing some other work of art to average his earnings. Honorable senators will be conversant with the old legend of Grub Street, about a man who lives in poverty in a garret, produces a masterpiece and makes a fortune. True life is not always like that, but many people who make a living through writing live through a period of hardship as journalists or free-lance hacks. Such a person, after living on less than the .basic wage for some years, may get a large sum of money for a book or a picture, and it is unfair that he should be compelled to pay the full rate of income tax on it. The Government is providing that such a person shall pay only one-third above the average” rate of income tax for that year. That is good and it will have a beneficial effect upon Australian literature and art.

I direct the attention of honorable senators to the matter of social services, because some of the provisions relating to them in the budget have been attacked. The provisions for increased pensions, both to civilians and ex-servicemen and their dependants, are not large, but it is not true that this Government has. failed to make as great a provision as could be made over the years. The amount of increase in the budget proposals this year is not the total amount that has been provided by this Government. It has made some increase in each budget since it was returned to office. This year the Government is trying to reduce taxation. Yet social services, one of the most fertile sources of expenditure, is not being reduced but is being increased. In addition to the comparatively small increase of pensions that is to be given in the budget, there has been a marked rise in free medical benefits and medical services. Pensioners will have a chance to spend money to much better advantage also, because the effect of other sections of the budget will be to reduce prices. The Government is giving to those who are not actually on the pension now, but who will be, a chance to save because it is liberalizing the provisions that attach to social services.

I regret that the Government is not able at this stage to convert the whole system of age pensions into one of contributory insurance. I believe that that should still be our goal, but it will require very large expenditure in the initial year of its operation. I believe in the principle because it is a just one. We should not penalize thrift in any way, but we must remember that this system of age pensions began, like the tree in the Scriptures, from a mustard seed. It was never intended that the pensions should be a provision in time of age for everybody. The original intention was that those who were unable to save for their old age should receive something from the community. With the increase of taxation and the narrower border-line between indigent persons and those in better circumstances, many have come to look upon the age pension as the proper provision for their old age. That should not be the whole basis of the system. It should be put on a contributory basis and not swallowed in some social services tax and a general pool. Some provision like the payment of insurance should be made to enable a person to provide for his or her old age. Since we cannot do that yet, the best that the Government can do is to liberalize the provisions that operate now. Those who talk glibly about abolishing the means test should consider what it involves. It would necessitate a drastic change both in the amount that the Government would pay out and in the general social attitude to the pension. There can be no such thing as the abolition of the means test until a proper system of social insurance has been fully planned and implemented. The Government has done the next best thing.

There is one outstanding point about the budget. Whether honorable senators like it or not, they must be impressed with thewisdom and the careful scrutiny thai has gone into the making of it. Some financial wizard has been at work on this budget. As I read it last week-end, I was more and more pleased and astonished. It includes quite a number of suggestions that have been put forward by me and by other honorable senators on this side of the chamber. When I noted how carefully one consideration had been balanced against another, and how widespread were the benefits that were so carefully graded, 1 had the greatest admiration for those who prepared it. The man to whom credit should be given publicly is the

Treasurer (Sir Arthur Fadden). The right honorable gentleman has had the advice of skilled and wise men, but when two rather drastic budgets preceding this one were prepared, the Treasurer had to suffer general criticism. Honorable senators opposite condemned “ this terrible man Fadden”. They, and others, took pride in directing bitter personal attacks against him. Those attacks were unjust. The policy that was propounded in the budget was not that of the Treasurer alone, but of the Government and the parties that support it. Since the Treasurer had to take all the kicks then, he deserves now all the praise that is furthcoming. I say most deliberately that this is not only a good and welcome budget, but a wise budget which reflects great thought almost amounting to genius.

The Government has not reduced actual expenditure and yet it has made savings. Some people may say that there is danger in that, but while the Government has not actually reduced expenditure, it has reduced the proportion of expenditure. The population of Australia is considerably greater than it was last year. Our population is continuing to increase and the national income this year has increased by 10 per cent. Consequently, the total expenditure may be regarded as a proportional reduction in expenditure, and, to that degree, I welcome it.

I shall now mention a matter which is directly associated with the budget but. which I shall elaborate on a future occasion in this chamber. I believe that it will be necessary in the near future to return to the States the power to raise the greater part of their own revenues. I shall not enter upon the controversial question of how the restoration of such power should be made, or whether the States should have power to levy income tax or other classes of taxes. At this juncture. I emphasize that healthy and amicable relationships can not be continued between the Australian Government and the State governments until such power is restored to the States. I do not blame this Government in any way whatsoever for failing at this stage to take steps in that direction. I do not believe that the Government should, as some people have contended, simply throw back to the States the .power to levy income tax and say to them, in effect, “ You do this ; and if you make a mess of the job it will be your own fault “. The Government has acted with great wisdom and discretion in its dealings with the State governments. It has made an offer to the States, and it is now allowing time to them to consider that offer. The solution of this problem must be worked out by negotiation, but our system of federation will be destroyed if we fail to find that solution.

I shall sum up what I consider to be the principal features of the budget. First, the Government proposes to effect substantial reductions of income tax, both company and personal. The fact that the average reduction will be 12^ per cent, is of enormous merit and reveals the degree to which the Government is prepared to trust the people to save and to control their own expenditure in the interests of the economy as a whole. I applaud the proposal to increase to £130 the concessional deduction in respect of a taxpayer’s wife and also the decision to permit the wife to earn a modest income of £65 a year without reducing the amount of that deduction. I suppose that that income of £65 a year could be described as pin money. I agree that it is wise to encourage the mother of a small family to earn a limited income.

Senator CRITCHLEY:

– To go out to work ?

Senator McCALLUM:

– No ; because any wife who goes out to work earns far more than £65 in a year. I do not recommend that mothers of small families should be encouraged to go out to work. However, there are many pleasant ways in which such persons may earn small incomes. I have heard of instances in which such persons have” derived a small income from poultry, and they have not been incommoded by engaging in such activity. I welcome the proposal to increase the concessional deduction in respect of expenditure on medical and dental treatment to an amount pf £150 for each dependant. I have no doubt that when the Government’s health and medical services scheme is fully implemented many people will derive considerable benefit from that concession. The Government has shown wisdom in liberalizing the concessional deduction in respect of expenditure on education. I rejoice that this benefit will be extended to every parent who incurs expenditure on the education of children. Such a concession will be a great inducement to all parents to give their children an education beyond the elementary stage. I have already dealt fully with the proposed reductions of sales tax. Those concessions will not only have the effect of returning income to the individual, but will also be an effective weapon in the battle against inflation. I rejoice to an even greater degree that so many employers are exempt from the payment of pay-roll tax. I regret that, at this stage, the Government has not been able to abolish that tax entirely ; but the concessions proposed to be made are very welcome insofar as they will benefit small business people. Finally, I congratulate the Treasurer and the Government on the courage” that they have shown in evolving the proposals that the budget contains. I confess that I was one of those who was surprised when I learned of the proposals. Although I expected that some of the concessions that are actually to be made would be made, I did not think that the proposals as a whole would be so thorough-going and planned so carefully, wisely and courageously.

Senator RYAN:
South Australia

– I sympathize with Government, supporters in the difficulty that they experience in their efforts to justify the budget. “Whilst I admit that the budget has certain good features, by and large its contents justify condemnation by all persons in the lower income groups. The budget was hailed by the majority of the newspapers as an achievement on the part of the Government, but such a reaction from that quarter is merely typical of the press generally. However, it is noteworthy that some newspapers were quick to direct attention to the many unjust features of the budget.

Senator GEORGE RANKIN:
VICTORIA · CP

– The Tribune, for instance.

Senator RYAN:

– Quite a number of reputable journals have condemned the shortcomings of the budget. However, the majority of the newspapers have en- deavoured to stampede the public and to distract the minds of the people from the injustices which will be perpetrated under it. The Prime Minister (Mr. Menzies), in defending the budget in another place, merely indulged, in propaganda on behalf of the Government. I am confident that the people will not be misled by his remarks. I shall deal with three features of the budget. I refer first to the Government’s claim that the general public will benefit to an amount of £3 9,000,000 in the current financial year as a result of the proposed reduction of income tax whilst companies will benefit in this respect to an amount of £23,000,000. The Government claims that sales tax will be reduced by £8,760,000 in the current financial year, but, in fact, the actual reduction will not exceed £1,000,000. It has become customary to devise popular titles for budgets according to their contents. For instance, the 1951-52 budget was the horror Midget. That was the infamous budget which did so much to detract from the welfare of the people and to retard national development. Last year, we were presented with an incentive budget. I shall be forgiven, I hope, for being a little egotistical in reminding the Senate of what I said about that budget. I asked -

An incentive to what? Will it act as an incentive to halt the downward trend of the economy, or will it be an incentive to further inflation, fear and unemployment, higher taxation, deflation of pension values, the raising nf dollar loans, and the provision of benefits for the privileged few?

That prognostication was thoroughly justified by the effects that the so-called incentive budget had on the economic life of this country in the ensuing twelve months. Now, honorable senators opposite are proclaiming the virtues of this budget; but more than eloquence is required to justify it. In the past fortnight, protests against the budget and, indeed, condemnation of many of its provisions, have emanated from various sections of the community. Honorable senators opposite cannot be entirely ignorant of those protests. Resentment has been expressed by no less a person than the president of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia, Sir George Holland. The tenor of his criticism is “Whisky prices before war pensions “. The pensioners, too, who have received a very raw deal in this budget, are protesting most vociferously against the Government’s niggardliness. The South Australian Pensioners League hopes to organize a mass protest meeting. Just imagine such a large section of the community being moved to protest against its treatment at the hands of a government! The secretary of the association has given reasons why all pensioners should attend the mass meeting. The budget has been attacked also by the Partially Blinded Soldiers Association at its federal conference in Adelaide. The Australian War Widows Guild, too, has complained about the treatment meted out to its members. Housewives generally throughout the Commonwealth are far from satisfied with the budget, and its critics include also trades and labour councils and even economists. There is common agreement amongst these people that the budget benefits only the middle and upper classes in the community, and that the lower income groups have been neglected. Even the churches have protested publicly against the raw deal that has been given to people on the lower rungs of the ladder. Dissatisfaction is rife amongst my constituents, who number about 250,000, in South Australia.

When this Government accepted office, it also accepted full responsibility to legislate for the peace, order and good government of the Commonwealth of Australia. By looking after the interests of only one section of the community it has failed completely to discharge - that responsibility. Compare present-day economic conditions with those in evidence during the regime of the Chifley Government. In those days, the Australian economy ‘ was stable. Throughout the eight years of Labour’s rule the basic wage rose by only £1 12s. a week. The result of that stability was full employment, flourishing business and commercial enterprises, and contented family life. Overseas borrowing was unnecessary; yet very soon after the Menzies Government came into power, it committed this country to heavy interest and capital payments on overseas loans. The Chifley Government reduced taxes as the economy improved. Year after year, generous tax remissions were given to every section of the community. The purchasing power of pensions was stable. Although the age pension was only £2 2s. a week, it had real value and could purchase substantially more than can be bought for the present pension. There was value in the £1, and, above all, the improvement of our economy was continuous. Industrial standards too were improving and every worker benefited in some measure from that improvement. The 40-hour week was introduced, and provision for annual holidays was written into awards which until then had lacked that essential concession. Provision was made also for sickness pay. Prior to the present Government coming to office, the five-day working week had been introduced in industry, and the standard of remuneration of the workers was high. When the anti-Labour parties assumed the government of this country they accepted an implied obligation to further improve our economy by building on the firm foundations that had been laid by the Chifley Government. I shall now remind honorable senators opposite of some of the fictitious promises that they made in 1949. During the general election campaign of that year, the present Prime Minister (Mr. Menzies) was asked -

Will you be able to reduce the cost of living?

I remind the Senate that living conditions were stable at that time. The right honorable gentleman replied -

We regard that as one of our first responsibilities - to increase the purchasing value of the Australian fi, to increase production, and thus bring prices down.

Those promises have not been honoured. At the time that the former Labour Government relinquished office there were stabilization schemes in existence which ensured the prosperity of the rural community, and our overseas markets were well developed. Indeed, arrangements had been made for the sale overseas of the exportable surplus of our primary industries for several years ahead. However, soon after the present Government entered office there was a notable decline of rural activity in this country. . There followed increases of the basic wage, and we then

Senator Ryan. i became aware that inflation wa3 on the march. It has been customary for the basic wage to be increased following rises of prices, but until the basic wage was pegged last week it had always been onequarter behind current prices. Taxation was kept at a reasonable level by the previous Labour Government, but it has been increased tremendously by the present Government, in violation of its promise to the people. During the 1949 general election campaign the present Prime Minister was also asked -

Will you make further reductions in taxation ?

The right honorable gentleman replied -

Yes, the rates of taxation will be steadily reduced, including the indirect taxes affecting the cost of living.

The Chifley Government,- in its last year of office, imposed taxation at the rate of £57 12s. a head, excluding defence expenditure. During the first year that the present Government was in office taxation was increased to £75 15s. a head. In 1951 the horror budget increased taxation to £89 9s. 3d. a head. Last year taxation was slightly reduced, to an average of £77 10s. a head. Despite all of the verbosity of supporters of the Government, taxation in this financial year will be £76 a head, a reduction of only 30s. a head compared with last year. The Government has laid great stress on the proportion of revenue that is being earmarked for defence purposes. However, I emphazise that per capita taxation, excluding defence expenditure, is now much higher than it was during the regime of the Chifley Government.

Prior to my becoming a member of this chamber I was actively engaged in trade union affairs. Under the metal trades award workers in that industry received a margin of £2 12s. 6d. a week above the basic wage. That rate became the accepted marginal rate throughout industry in this country, although the margin fluctuated in specialized industries. The conditions in relation to hours of work, holidays, and sickness benefits that were written into the metal trades award were subsequently applied to industry generally. In 1949 the marginal worker in industry received a basic wage of £6 5s. a week, plus the marginal rate, which brought his income up to about £350 a year, on which a taxpayer with a wife and two children paid tax of £3 15s. The same worker in industry to-day, receiving a higher basic wage, plus the marginal rate of £2 12s. is required to pay tax of £22 14s. a year, which is £8 12s. less than the tax that he paid last year. I especially direct the attention of honorable senators to the fact that, despite the proposed reductions of taxation this year, such a worker will be required to pay £14 3s. more in tax than he paid in 1949. The withdrawal of this additional amount from the family purse of the worker must have its repercussions on the commercial and economic life of this country; The Government proposes to reduce taxation this year by £39,000,000. On a basis of about 3,000,000 wage-earners, the average reduction of income tax will be about £13 a head. That is equivalent to 5s. a head a week.

Senator Courtice:

– Perhaps !

Senator RYAN:

– That will be the general effect of the budgetary proposals in relation to taxation. The marginal workers to whom I have referred comprise the largest proportion of workers in industry in this country. By the Government’s proposed income-tax concessions they will benefit by the princely amount of only 3s. 4½d. a week.

Government supporters interjecting, Senator RYAN. - It is all very well for honorable senators opposite to interject when they are not fully conversant with the aspect of a matter that is under consideration. However, I urge them to study closely the economic position of workers in industry in this country today. About a year or two ago many workers earned additional income by working overtime on Saturdays, Sundays and holidays. Now, however, by far the great majority of wage-earners are harnessed to the basic wage plus marginal rates.

Senator KENDALL:
QUEENSLAND · LP

– Has the Australian worker ever been better off than be is to-day?

Senator RYAN:

– Yes, he was better off in 1949. I shall now refer to the national productivity, and endeavour to show how the workers’ marginal increases have declined concurrently with their increased production. I am sorry that the Minis ter for Shipping and Transport (Senator McLeay) is not present in the chamber. During the period that the very important wages and hours application was before the Commonwealth Arbitration Court, the Minister - whether or not by design to influence the court, I do not know - frequently exhorted the workers to work harder and longer in order to develop this country. He made such an appeal when opening a certain event at Glenelg only recently, when he said -

This country could not develop, compete or make headway on a 33 hour week.

The Minister for Shipping and Transport was also reported to have said that his inquiries had revealed that wages were never higher, the working day was never shorter and that the loading rate of ships was never slower. Yet, in the issue of the Advertiser published in Adelaide yesterday, the Minister of Marine in South Australia, Mr. Mcintosh, was reported as follows : -

Cargo handled at S.A. ports during year ended June, 1953, was a record according to statistics released by the Minister for Marine (Mr. Mcintosh) on Saturday . . . Overseas exports from all S.A. ports rose to a record of more than 1,720,000,000 tons, an increase of nearly 500,000 tons on 1951-52.

I do not know whether the statements of the Minister for Shipping and Transport had any direct influence on the decision of the Commonwealth Court of Conciliation and Arbitration to peg the basic wage. Nor do I know whether the statements carried the imprimatur of the Government, but I should have thought that the Minister would not make such a statement as that publicly in view of the very responsible position that he holds. The 40-hour week was granted by the court after lengthy proceedings. The Minister complained about other benefits which also emanated from lengthy proceedings of the court. However, I should like to quote an industrial authority in South Australia who knows more about industrial conditions than the Minister does and is recognized as one of the leading industrial authorities in Australia. Recently, he was invited by the Government of the United States of America to travel at its expense through that country. He was able to examine the various aspects of the industrial life of America, including its high state of mechanization. I refer to Mr. A. B. Thompson, who has made the following statement:-

The labourer in the United States gets $2 per hour, and he works a 40 hour week. In other words he receives $80 for a week’s work, but he can buy an electric washing machine for $00, or for three-quarter’s of a week’s wages. The worker in Australia has to pay five weeks’ wages for his washing machine. The worker in the United States for a week and ti half’s wages, or $120, can buy his refrigerator. In Australia it costs the worker about 10 weeks’ wages. Wage policy in Australia must not only permit wage rates to increase with the rising cost of living, it must also permit wage earners to share in the rising productivity of Australian economy. In other words whilst our economy is expanding, we must have an expanding purchasing power.

In other words, while our economy is expanding we must have expanding purchasing power in order to keep abreast of it. This can be done only by reducing the cost of commodities or by increasing wages. This principle is recognized in the United States of America, which is generally accepted as the leading industrial country of the world. “Workers* there receive a basic wage of 80 dollars a week, which is equivalent to £40 a week in Australian currency.

Senator Scott:

– “What do they pay for 1 lb. of butter?

Senator RYAN:
SOUTH AUSTRALIA · ALP

– They pay in proportion to the economy of the country. Mr. Thompson’s statement continued -

The March issue of the Quarterly Summary of Australian Statistics clearly shows an expanding economy (figures can be quoted from this source ) . More basic commodities are being produced this year than ever before. We are producing more coal and electricity for industrial purposes, more bricks, cement, timber and iron for the building of homes and factories. The output of washing machines, refrigerators and other manufactured articles is shown by the Commonwealth Statistician as having increased tremendously. General Motors-Holdens who made nearly. £4 million profit this financial year, have more than doubled the output of the Holden car without »ny apparent increase in their wages staff. Admittedly they ploughed back £o million to improve their plant and equipment, thereby making their production methods more efficient. Increased productivity in this country lies more in the hands of the employer than in the hands of the worker. The slogan that the Australian worker must work “ harder and longer “ is merely to remove the employers’ responsibility. The average worker in the United States does not work as hard as the Australian ‘worker, because mechanization and efficiency in production has relieved him of much of his burdens.

I hope that that information will deter the Minister for Shipping and Transport from criticizing workers in the future. According to the March issue of the Quarterly Summary of Australian Statistics the land, plant, equipment and buildings owned by all manufacturing interests in Australia in 1949 was valued at £479,000,000. The products of those interests in 1949 were sold for £1,425,000,000. The amount paid for wages and materials was £1,195,000,000, leaving a profit of £230,000,000 out of which to provide for reserves, taxation, depreciation and shareholders’ dividends. That profit represented 50 per cent, of the invested capital. A profit of 50 per cent, was made in 1950 also. In 1951, which was the year in which the “ horror “ budget was introduced, a profit of 70 per cent, was made. In 1952 profits amounting to £300,000,000 represented 80 per cent, of invested capital. “What share of these profits have been given to the workers? They have been refused increases of their marginal rates. They have not participated in the increased profit. That can be proved from the figures for national gross production which in 1949 amounted to £2,267,000,000 and to £4,219,000,000 in 1953. The workers have not participated even minutely in this increased production.

In America employers pass some of their profits on to the workers-, but in Australia workers’ conditions are stagnant and the basic wage has been pegged. The marginal rates of the workers have been pegged ever since this Government has been in office. Workers have had their applications rejected by the Commonwealth Arbitration Court despite the fact that they have doubled the productive capacity of the Commonwealth. The people have responded magnificently to appeals for increased production and they want to know why the Government has not proposed a greater reduction of taxation for them. Income tax has been reduced by £1 10s. a head. The worker in receipt of marginal rates will receive only an additional 3s. 4d. a week as a result of that reduction. Soon, that amount will not be worth as much as it is worth now because the workers will not receive the quarterly adjustments of the basic wage in order to compensate them for price increases which are now taking place. A question asked in the Senate this afternoon indicated that a certain company, which controls a number of picture theatres on the north coast of New South Wales, apparently anticipated the abolition of entertainments tax and increased the price of its lounge seats. No doubt, following the usual practice, the price of the seats will be reduced to their original figure when the budget proposals become effective.

My colleagues and I, in common with the majority of public bodies in Australia, vehemently protest against the relationship which pensions now bear to the basic wage. When Labour was in office that relationship was approximately 33 per cent. In order to make pension rates bear a similar relationship to the present basic wage, the Government should have increased pensions to £4 a week.

Senator Kendall:

– That is not true.

Senator RYAN:

– It is true. The honorable senator obviously does not like the truth. This Government is harnessed to promises which it has failed to honour. My protest about pension rates is not an isolated one; it is also being made by many people in the community. I have already referred to certain public bodies which have protested at the miserly attitude of this Government. During the regime of the previous Labour Government pensioners had a fair degree of purchasing power.

Senator Scott:

– What about the increase that this Government made in 1949?

Senator RYAN:

– There was also an increase in 1948. Honorable senators may remember that in 1949 the present . Prime Minister (Mr. Menzies) said that existing pension rates would be retained and reviewed according to variations of the cost of living. The rates which existed then have not been retained. Had that been so, this Government would have been more generous than it has been.

The proposal to abolish entertainments tax means that approximately £7,000,000 will not be taken from the community in future. I was a regular contributor to that tax. I did not squeal about it or about the way in which it was collected, ft seems to me that it would be more beneficial to the people generally if entertainments tax were retained and pension rates increased more generously.

Senator Kendall:

– It would mean an increase of pensions of only about 2d. a week.

Senator RYAN:

– No, it would mean an additional 5s. a week at least, because on the statement of the Treasurer (Sir Arthur Fadden) himself, the increase of 2s. 6d. a week will require an annual sum of £3,000,000. Therefore, £7,000,000 would give pensioners an increase of more than 5s. a week. Even so, the promise to maintain existing pension rates would not be fulfilled, but the lot of pensioners would be slightly improved. Much hasbeen heard from honorable senators opposite about the increase of the permissible income which pensioners may earn. My reply is that approximately 95 per cent, of pensioners are incapable of working. The proposal to increase the permissible income by 10s. a week is, therefore, paltry.

I congratulate the Government on its proposal to reduce sales tax in respect of sporting equipment. I point out, however, that under the Labour Government sporting goods were in the 8-J per cent, category. This Government raised the rate to 33^ per cent. Last year it reduced the rate to 20 per cent., and now it proposes to reduce it to 16$ per cent. There is, therefore, some consolation in the budget for the sporting organizations of the country and also for the manufacturers of sporting goods. My criticism of the sales tax proposals is that the reductions will result in revenue from this source being only £1,000,000 less than it was last year. According to the Treasurer, the purchasing power of those on the lowest rung of the ladder is to be increased by the munificent sum of 3s. 6d. a week! Costs have risen since the last basic wage adjustment, and therefore the purchasing power of wage-earners has been reduced. It seems to me futile to reduce the rate of sales tax on luxury items from 50 per cent, to 16 $ per cent., but perhaps the Government appreciates that it gained little by the collection of sales tax on such goods last year and hopes to dc better by placing them in the 16$ per cent, category, thus enticing people in the lower income groups to purchase such goods. However, I think it is doomed to disappointment, because wages are- pegged and wage-earners have only a certain amount of purchasing power. They are not magicians and cannot extract money from the air. Certainly, the pensioners, even with the additional 2s. 6d. a week which the Government proposes to give them, will not be able to buy goods which are subject to sales tax at the rate of 16 per cent.

Last year in this Senate I suggested to the Government a means of putting more money into circulation for the benefit of the real spenders in the community. I refer to .the workers. Give wage-earners money to spend and they will spend it. If their spending power is harnessed, naturally there will be a restrictive attitude in the community. The demand for goods will not be so great, and a smaller quantity of goods will be produced. Figures which appear in the Monthly Review of Business Statistics for July of this year show that there are fewer employees in industry and in the retail trades to-day than the Government would have us believe. If the Government would put more money into circulation, the workers would spend more and unemployment would be less general. When Labour was in office, there was full employment. Why is that not possible with this Government?

It is frequently said that items which are taken into consideration in the basic wage formula are not subject to sales tax. The Minister for National Development (Senator Spooner), who represents the Treasurer in this chamber, repeated that statement when he introduced the Estimates and Budget Papers in the Senate recently. I should like to know of an item, included in assessing the basic wage, which is exempted from sales tax.

Senator Henty:

– Bread, for instance.

Senator RYAN:

– I claim to know something about the manufacture of bread, having spent a lifetime in that industry. I understand that Senator Henty also has been associated with the bread industry, and I ask him whether he considers yeast a component of bread. I am assured that it is. [Extension of time granted.] Yet when I perused the sales tax information sheet, I was astonished to find that yeast is subject to 12£ per cent, sales tax.

Senator Henty:

– That is only when yeast is taken as a medicine.

Senator RYAN:

– Yeast is used in the manufacture of bread and I protest against a tax- being placed upon an item of everyday diet.

Senator MAHER:
Queensland

– In speaking in support of the budget proposals, I direct the attention of honorable senators to the fact that through it the Government seeks to achieve the aim of all good Treasurers - a balanced budget. ‘The Government proposes to reduce taxation over a very wide range by £118,400,000. That reduction has never been equalled by any previous Australian government. In the past financial year, the Government remitted £80,000,000, and in round figures the total taxation remissions from the two budgets will be £200,000,000. For some time past the Prime Minister (Mr. Menzies), the Treasurer (Sir Arthur Fadden) and all supporters of the Government in the Parliament have been urging that prosperity can be achieved only by greater production. During the past year, the people have responded splendidly to the Government’s lead in that direction. The national income has reached a record high level. In 1952-53 it amounted to £3,579,000,000, or 10 per cent, above the income for the previous year. Nothing like that level has been achieved previously in Australian history.

It is true that the Estimates provide for a little more expenditure in the current year than last year, and some honorable senators might ask how the Government can remit £81,000,000 in taxation during the remainder of this financial year and yet spend as much as it did in the previous year. The taxation concessions have been made possible by the 10 per cent, increase of the national income. That is the reward to the Australian taxpayers who pulled their weight during the year to achieve such a high national income. The more the people produce the greater will be our prosperity and the greater will be the taxation concessions. I am a country man and I express appreciation .of the work of the Australian primary producers who provided more than half of the increase in the national income by their industry on the farms and pastoral properties. National revenue from exports last year totalled £871,000,000 and that was 25 per cent. higher than the figures for the previous year.

Senator Ashley:

– Good seasons helped.

Senator MAHER:

– I agree that that is so. Higher export prices that were obtained by constant consultation between the Government and leaders of the primary industries concerned helped to make this fine contribution to the economy. As a result, the Treasurer estimates that revenue will total £1,063,000,000. After deducting £81,500,000 for taxes that will be remitted during the balance of the fiscal year, the Treasurer estimates that revenue will be £982,000,000 and expenditure £981,930,000. It is expected that the surplus will then be £215,000. That is a highly satisfactory budgetary prospect, and it is expected to be achieved after providing £200,000,000 for defence. Nobody will question the defence vote in view of the tense state of world affairs. The budget proposals provide for tax reimbursements to the States amounting to £189,000,000. Disbursements in social services to assist the sick and needy will total £184,000,000, and the Government proposes to spend £116,000,000 on war pensions and repatriation. Those four items alone account for the greater part of the total expenditure, as they total £689,000,000. Sometimes it is a good thing to see ourselves as others see us. As Burns has written -

O wad some power the giftie gie us.

To see oursel’s as ithers see us.

In that connexion I direct the attention of honorable senators to comment that was published in the Manchester Guardian, which stated -

The Australian budget is a remarkable one, and we may look on it with some envy.

The country has seen great improvement in its economic fortunes in the past twelve months. The Australian Government considers that inflation has been arrested, and ispulling out the stops.

There may be doubts whether this is altogether wise, when there are still so many international uncertainties, and the Australian economy is by no means invulnerable.

But the point is that the Australian Government is ready to take the risk, and it may well be that its gamble on prosperity will be as fruitful as was the gamble in West Germany.

The stimulus it may give may be far out of proportion to the actual relief afforded.

The British Chancellor of the Exchequer might well look at the Australian experiment closely. A little more hope of the same kind might be a valuable tonic here, too.

That is a tribute from a newspaper far removed from the atmosphere of Australian party politics which pursues an independent line and tends more towards the left side of politics than to the Liberal side. Its comment is worth recording. I congratulate the Treasurer upon the production of a budget that will go down in history as a remarkable achievement. The good effects of the budget upon Australia’s welfare will be revealed fully as time passes. It is clear that it will increase spending power, lower costs in industry and provide the incentive for a greater productive effort. The Treasurer has confounded his critics and he deserves a special tribute, because few men in Australian politics have had to face such a barrage of bitter political attack and outrageous personal abuse from friends as well as foes during the past two years. The Treasurer has presented a budget which surely vindicates him and the policy upon which he has worked. I am sure that his fellow Australians are grateful to him. Senator Ryan implied in his speech that he advocated the continuation of the inflationary wage spiral.

Senator Brown:

– Nonsense! Senator Ryan did nothing of the kind.

Senator MAHER:

– The honorable senator wanted a continuation of the quarterly adjustments of the basic wage. He wanted wages to continue to rise in accordance with what he described as an expanding Australian economy. I ask Senator Ryan whether it would not be better for a worker to receive £15 or £1S a week on a 3teady basis from month to month and year to year under a stabilized cost of living than to suffer the instability that has resulted from the constant movement of wages as a result of the automatic adjustments by the Commonwealth Court of Conciliation and Arbitration? Because of the adjustments, wages have automatically chased costs. Inflation has been one of the important forces operating on the economy during the past seven or eight years, hut I do not fear it now that the court has ended the quarterly adjustments. I have noted with regret that some of the trade union leaders, backed by Communists, have commenced an agitation for the .restoration of the quarterly wage adjustment. I am certain, however, that the great majority of wage-earners are opposed, to this move because they know from sad experience that the higher wages rise, the higher goes the cost of living also, with disaster to everybody as the ultimate result. There will not be any general justification for increases of prices once wages become reasonably stable. The “States possess prices control machinery -which could be used to restrain any pro.fiteer who sought to exploit the consumers. At present, the States have the exclusive -power to control prices. Many people were conditioned by certain sections of the press and various political organizations to the belief that the high prices ^received for wool in 1951-52, and since, were responsible for the continued inflation in the Australian economy. It would be a sorry day for this country if the great prosperity of any of its exportable industries were to be interpreted in terms of disaster. Every one should rejoice that wool attracts such wealth to this country. Without doubt, wool is the sheet-anchor of our economy, and our current prosperity is due in large measure to the continuance of high wool values. Whatever inflationary pressures still remain can be absorbed in increasing industrial production. One of the features of this Government’s administration has been the great expansion of manufacturing enterprise during the three and a half years that it has been in office. Inflationary pressures still remaining can be absorbed also in the importation of essential goods. For these reasons, we can now face the future with greater confidence. This budget will help to place the Australian economy on a sound footing, where it will remain with great benefit to all Australians so long as the community is protected from the attacks of cranks who advocate credit expansion in a period of unrivalled prosperity and of those who desire to have the self-adjusting quarterly basic wage mechanization restored.

Senator Ryan dealt with the problems associated with the National Welfare Fund from which the Government finances social services benefits, including the age pension. Expenditure in this sphere during the current financial year is estimated at £184,000,000, which is £18,000,000 more than was expended under this heading last financial year. That is big money. I am strongly in favour of providing the maximum financial help possible in respect of all benefits that are financed from this fund. These objectives are so worthy that the whole of our taxation revenue could be absorbed by this fund alone. It covers a wide and humane field, and there is practically no limit to the amount of money which people with good hearts and consciences would like to contribute for such worthy purposes. At the same time, we must get down to earth and recognize that in these matters we must fix some limit. All the evidence indicates that greater demands will be made upon this fund from year to year. More and more persons will become eligible to receive assistance from it. Thus, expenditure under this heading could quickly increase to an amount which would place a “great strain upon our economy. I agree with the statement made by the Minister for Social Services (Mr. Townley) that increased benefits can be provided from the fund only “ if current production is able to stand the cost, and current producers are willing to share the cost “. If the present . upward swing in the national income continues I have no doubt that social services benefits will be- further increased.

Members of the Opposition who have dubbed this budget the “ 2s. 6d. budget “ have failed to take into account the concessions to age pensioners- which will supplement the actual increase of the rate of pension by 2s. 6d. a week. I shall itemize those other concessions because I believe that one cannot repeat a good thing too often. I recall that when I was a member of the Queensland Parliament, Mr. Forgan Smith, who was Premier of the State at the time, whenever he was challenged on the score that he was reiterating something which would win support for his Government, always replied, “ You cannot repeat a good thing too often “. Therefore, I shall itemize these proposed concessions and have them recorded in Hansard so that all and sundry may be informed of the good things that will accompany the actual increase of 2s. Gd. in the rate of pension under this budget. First, the property limit beyond, which no pension is payable is to he increased by £250 to £1,250 for a single age pensioner, and by £500 to £2,500 for a. married couple of pensionable age. At the same time, the value of a home owned by a pensioner will not be included in that property limit. Secondly, the permissible income will be increased by 10s. to £2 a week, making it £4 a week for a married couple of pensionable age. An aged couple will be permitted to have an income of £11 a week between them. I know of many age pensioners who are in good health and can take odd jobs. This concession will be of considerable value to such couples. Thirdly, a. couple of pensionable age will be permitted to have money in the bank, or other property, to the value of £319. Fourthly, they will be permitted to hold life assurance policies with a surrender value of up to £750 for each person. Fifthly, they will be entitled to free medical and pharmaceutical benefits which will be specially provided for pensioners.

Senator Aylett:

– That is stale news.

Senator MAHER:

– If the honorable senator grows old and decrepit, I have no doubt that he will welcome free medical and pharmaceutical benefits. Sixthly, the exemption from payment of income tax by aged persons will be increased from £275 to £375 for a single pensioner, and from £507 to £750 for a married couple.

Senator Aylett:

– Not a single additional benefit will be provided for pensioners under this budget.

Senator MAHER:

– If the honorable’ senator were not one-eyed, he would readily agree that I am stating the facts. Seventhly, of the 375,000 persons now in receipt of the age pension, no fewer than 120,000 will receive increases of the rate of pension of from 12s. 6d. to 32s. 6d. a week.

Senator Aylett:

– Government supporters made that statement three months ago.

Senator MAHER:

– It will bear repeating. As I have already said, one cannot repeat a good thing too often. Eighthly, between 10,000 and 20,000 persons who have qualified by age for the age pension but have not been in receipt of it will now become entitled to receive it, because, under this budget, the means test will be widened to permit them to do so. These concessions must be brought into focus when one is considering the increase of 2s. 6d. a week in the pension rate. Since the Menzies Government assumed office, it Has increased the rate of pension by 64.7 per cent. When th«age pension wa3 established by the Parliament in 1909, the rate of pension was 10s. a week whereas, when the proposalscontained in this budget are implemented,, the age pension will be payable at the rate of 10s. a day. Another interestingfact is that of the pension rate of £3 10s. a week for which provision is now being made, no less than £2 8s. will have beer* provided by right-wing governments similar to the present Liberal-Country party composite Government, whereas Labour governments will have been responsible for making provision for only 22s. of the new age pension of 70s. a week. Having regard to the circumstance* that have existed since this Government assumed office, particularly the heavy calls on revenue in so manydirections, this Government has done verywell not only for the recipients of theage pensions but also for all who derivebenefits from the National Welfare Fund. I am not without hope that a satisfactory form of national insurance on a contributory basis will yet be evolved.

The Leader of the Opposition (Senator McKenna), in the course of his speech, advanced a wholly untenable argument with regard to the loan market when he said that lack of confidence was the cause of the poor public response to government loans in recent years. He supported his colleague, the Leader of the Opposition in the House of Representatives, i» contending that a reduction of the rate of interest could be effected by waving some kind of magic wand. The honorable senator argued that it was wrong for thi* Government to finance capital work? from the Consolidated Revenue Fund to an amount of £200,000,000. I agree with him that it would be far better to use loan funds for that purpose, hut I ask the honorable senator where such funds are to be obtained. The Australian Loan Council has resorted to every device to raise loans, and Labour Premiers, who constitute quite a batch of the members of the Loan Council, have been eager to raise the maximum loan funds possible. The Australian Government also has been keen to see the States accommodated with adequate loan money because it would enable it to avoid the necessity for disbursing taxation revenue to the States to finance their public works. The States have become a drag upon this Government’s revenue owing to the difficulty experienced in raising sufficient loan funds, not for purposes which can legitimately be financed from tax collections, but for capital works. The representatives of this Government and of the State governments on the Australian Loan Council are at- one in their desire to attract investments in governmental loans; but it is one thing to call the spirits from the vasty deep and quite another thing to make them appear. It is one thing to say that the sum of £200,000,000, or £300,000,000, is required for public works but quite another thing to get that sum from public investors: The Chifley Government raised loan funds at a low rate of interest at a time when enterprise had not adjusted itself to the changing post-war scene. At that time, there was an abundance of money; but the scene has changed substantially since then. It was not the Australian Government but the Australian Loan Council which increased the rate of interest progressively from 3$ per cent, to the present rate of 4£ per cent.

Sitting suspended from 5.45 to 8 p.m.

Senator MAHER:

– Interest rates were raised deliberately as a bait to attract investment in a market that was unable to meet so many competitive demands for money. Even at the advanced rate of interest of 4J per cent., the loan market has been completely unresponsive. The Leader of the Opposition advocates a lower interest, rate and asserts that lack of confidence is the reason for the shyness of investors.

Senator O’FLAHERTY:

– Hear, hear!

Senator MAHER:

– Senator O’Flaherty says, “ Hear, hear ! “ Let us look at the logic of the situation. The belief that interest rates should be lowered is held by the Leader of the Opposition in this -chamber, the right honorable member for Barton, Senator O’Flaherty and other honorable senators opposite. I shall put into the witness-box no less a person than the Governor of the Commonwealth Bank, Dr. Coombs, who said in his report dated the 28th August, 1D53- -

The financing of public investments in 1952-53 presented difficulties since the Loan Funds sought by State Governments were far beyond the resources of the Loan Market.

What is the use of talking about cheaper money and an alleged lack- of confidence on the part of investors? It would not matter a straw whether the interest rate was 3 per cent, or i& per cent. The official dictum of the Governor of the Commonwealth Bank is that there is an insufficiency of money available to meet the astronomical demands of the States. The Leader of the Opposition, by his references to this subject, virtually challenges the judgment of the Australian Loan Council, most members of which are Labour Premiers. Why did the Australian Loan Council decide to raise the interest rate? That decision was made because the council recognized plainly that money is a commodity.

Senator Cameron:

– It is not a commodity.

Senator MAHER:

– In spite of the abstruse knowledge of economics possessed by .Senator Cameron, I maintain that money is a commodity, and that its value rises and falls in the market just as the price of other goods rises and falls. When money is abundant and there is only a limited outlet for its use, it can be borrowed cheaply. However, the scene changes completely when the demand for loan money overtakes the supply of money available for investment. The old but very reliable law of supply and demand, the truth of which Senator Cameron always denies, is a good guide in these matters. There are several factors which account for the drying up of public investment in loans. The first is high taxation which transfers savings to the Treasury. If those savings were: left in the pockets of the people, they would become fruitful. With a reduced level of taxes, more money would find its way into loans. But we cannot have it both ways. Secondly, there is keen competition for loan funds amongst State governments, semi-governmental bodies, local authorities, and public and private companies. The demand by companies for funds is a not inconsiderable factor in these days because much money is required for new enterprises and the expansion of existing ones. Those are the factors that have caused the drying up of the flow of public investment in loan issues.

The Australian Government is just 33 eager as are the State governments to see lean issues succeed. Let mo describe the position in the current financial year. A the Loan Council meeting held in may last, the States asked for £317,000,000 to cover loan requirements for 1953-54. They reduced that demand to £231,000,000 after much rancorous and shabby bargaining. The representatives of the Australian Government considered that there would be a chance of providing £200,000,000 on the basis of net loan raisings of £105,000,000, supplemented by £95,000,000 from Commonwealth sources. It must be clear that any loan moneys raised during the current financial year in excess of £105,000,000 would correspondingly reduce the liability of the Commonwealth Treasury. For that plain reason the Commonwealth is just .13 eager as the States are to see some buoyancy in the loan market. The more loan money that can be attracted, the less will be the drag on the Commonwealth Treasury. Therefore, the Commonwealth and State representatives on the Loan Council are in agreement on that point, and it is all humbug for the Leader of the Opposition to complain about the use of revenue funds for capital works in this instance. There are insufficient loan funds available to meet the extraordinary and unprecedented demands of the States, and if the Commonwealth were to insist upon its share of the available loan funds to finance capital works as demanded by the Leader of the Opposition, the States would obviously get less than they are getting to-day. There are two alternatives. Either we must use revenue funds for capital works as the Treasurer (Sir Arthur Fadden) proposes to do- £28,000,000 is to be expended on war service homes, £27,000,000 on new post offices and allied expenditure and £14,000,000 on the Snowy Mountains scheme - or we must close down vital undertakings. That is the grim choice. I know the answer that would be given by Dr. Evatt and by the Leader of the Opposition in this chamber.

Dr. Evatt gave an indication during his election campaign and in his budget speech of what he would do. He would turn once more to central bank credit. Hundreds of millions of pounds would have to be made available in central bank credit if the demands of the States were to be met in toto. That new money would be added to the high purchasing power already in the hands of the Australian people and of the banking system at a time of high employment and abundant liquid funds when the national income has reached the enormous total of £3,579,000,000, the highest level in Australian history. To pump new money into the financial system in these circumstances would be plain madness, and would shoot the inflationary spiral up like a rocket at the Woomera range. There is no shorter cut to social and economic ruin than monetary inflation. Dr. Evatt most certainly has the recipe for the destruction of our economy. Nothing could be more satisfying to the Communists than to see Australia’s present economic stability, which has been achieved at great sacrifice during the past three years, weakened by an injection of new money from the printing presses. There could be only one result of such action. Workers on wages and people who have bank savings would suffer financial losses proportionate to the amount of printing press money that was utilized. A simple illustration is that of a milkman who adds water to the fullcream milk from his dairy. By this dishonest act he breaks down the value of the milk just as Dr. Evatt and the Leader of the Opposition in this chamber would break down the value of wages and savings.

If there is one thing more thru another that will attract increased si1 port to public loans, it is this budget with its announcement of reduced taxes. Energetic and industrious citizens cannot stand up to record tax payments and find money for loan subscriptions as well. I am neither a prophet nor the son of a prophet, hut I make the forecast that, as the result of this budget, Commonwealth loans will attract more support in the current financial year than they did last year. However, it may be many years before the loan market is able to meet the tremendous demands of the States for money for developmental works. If, however, the States would- become more selective and keep their requests within the bounds of practicability they might do better. I have noticed that in connexion with some recent semi-governmental loan issues the Australian Loan Council has agreed to permit the borrowing authority to retain subscriptions in excess of the amount sought from the market. That is a mistake. It is a good, sound principle in connexion with gilt-edged investments, to ask the public to lend a specific amount, and close subscriptions when that amount has been subscribed. Oversubscriptions should not be accepted. As has been mentioned during this debate, confidence is a big factor in these matters. The return of subscriptions to some applicants helps to maintain a healthy state of affair i”11 connexion with loan investments. The psychological effect of this policy could have an important bearing on the filling of subsequent loans.

The real test of successful government unquestionably lies in the overall prosperity of the country. The Australian people are to-day enjoying record prosperity, under the administration of this Government. On Christmas Eve of 1952 the people of this country had £352,000,000 of currency in their hands - not in the banks - for spending purDoses. That was the total note issue. Nothing like that has happened before during the whole of our political and economic history. Furthermore, depositors had a record amount of almost £1,000.000,000 standing to their credit in the Commonwealth Savings Bank. Moreover, the national income has exceeded a.11 previous records. The policy of this Government has definitely halted the upward movement of the inflationary spiral. The perils both of inflation and of deflation have been avoided, and the level of employment in Australia to-day is only fractionally below a state of full employment. In the light of this record, and of the generous budget provisions, I am confident that the Australian people will renew their support for the Government parties at the next general election.

Senator AYLETT:
Tasmania

– Unlike Senator Maher, I shall endeavour to make a speech off my own bat, instead of reading something that some one else has written. The speeches of supporters of the Government have reminded me of the story about the boy who ran to repair the stable door after the horse had got away. Honorable senators opposite are trying to effect repairs after the horse of inflation has got out of control. Neither the Minister for National Development (Senator Spooner) nor the Attorney-General (Senator Spicer) has denied that inflation has increased since this Government took office. Indeed, they have not denied that almost the whole of the inflation in this country has taken place since the present Government came to power. The Ministers have not denied that the present Government has been responsible for the economy of Australia, getting completely out of control. The Government has brought down this budget in an effort to try to correct the ills that have been caused by its actions in the past. The Treasurer (Sir Arthur Fadden) stated in his budget speech -

During 1952-53 retail prices rose by less than 4 per cent., compared with approximately 20 per rent, in each of the two preceding years.

By that statement the right honorable gentleman admitted that during the past three years prices have risen by 44 per cent, under this Government’s administration. Inflation is caused when the spiral of prices gets completely out of control. The reasons for the existence of this state of affairs are to be found in the budget speech. The Treasurer stated that £6,500,000 more will be paid to the States than was paid to them last year. Apparently the right honorable gentleman thinks that that is a wonderful thin?. In the past, wages have been increased following rises of prices. Senator Maher said, in effect, that the tail wagged the, dog when he stated that wages rise first and price increases follow. I point out that the amount that will be given to the States during this financial year will be an increase of only 4 per cent, on the amount that was given to them during the last financial year. This is in keeping with the Treasurer’s statement that prices have risen by about 4 per cent, since last year. Were it not for the fact that the Commonwealth has decided not to reimburse the States in future for the cost of their administration of prices control, the States would finish up just about square. Actually, they will be about £1,000,000 worse off in this financial yea r than they were in the last financial year, and nobody could convince me that they had adequate funds last year. I think that I have cut the ground from. under the Government’s feet. It3 supporters appear to believe that it is doing a wonderful job for the States, but in fact the States will receive less in this financial year than they did last year.

  1. now come to business undertakings. The Treasurer stated in his budgetspeech -

Total estimated expenditure of business undertakings shows an increase of £3,750,000 over expenditure in 1952-53. Of this increase, £3,170,000 is on account of the Post Office, £407,000 on account of Commonwealth Railways, and £173,000 for broadcasting services. The increases are due partly to wage increases which occurred at intervals during 1952-53 and of which the full year effect is now being reflected in the budget. In the case of the Post Office, some increased provision is necessary for handling an increased volume of business and for the operation and maintenance of new telephone facilities.

The Government has claimed that there will be- only a small increase of expenditure in this financial year compared with the last financial year, and the Treasurer has admitted that almost the whole of the increased amount will be, necessary to meet the requirements of the Postal Department. Supporters of the Government have stated that almost the whole of the additional amount will be absorbed by increased wages, brought about by inflation. The Government is screwing down on the Postal Department rather than increasing this business undertaking which, in addition to producing more revenue for the Government, could absorb some of’ the ex-servicemen who have fought in Korea and are now looking for jobs. Many other men are also out of work. There is not a better revenue-producer than the telephone branch, yet the Government is restricting its activities instead of extending them as rapidly as possible.

The Government is not providing adequate facilities to keep pace with our steadily increasing population. Indeed, it is lagging behind sadly in the provision of the facilities that were needed by our population before immigration commenced. Therefore it is apparent that further increases of population in these circumstances will add to the number of unemployed persons in this country. I come now to capital works and services. The Treasurer stated -

The estimates for capital works and services have -been further reduced this year and show a total of £101,500,000 compared with actual expenditure of £103,600,000 last year and £110,600,000 in 1951-52.

The provision of capital works has been undertaken by the Australian Government itself, and also by means of the contract system under which private enterprise has carried out work. Despite the fact that both prices and wages have risen tremendously, and that there is a pool of unemployed persons, the Government continues to retard expenditure on public works instead of developing the country in order to meet the needs of its expanding population. It is obvious that, if the same number of men are to be kept in employment on public works, there must be increased expenditure to offset increases of wages and prices.

Senator Grant:

– But wages have been pegged.

Senator AYLETT:

– Yes, unfortunately that is correct. With prices still rising, the unfortunate wage-earners will lag further behind and will not now have an opportunity to catch up. How can this .country possibly be developed further when the Government is deliberately retarding expenditure on capital works? An analysis of the budget shows that it is fictitious. Although the Minister for National Development and the AttorneyGeneral skimmed over a number of the budgetary provisions, I assure honorable senators opposite that many unemploved persons, including ex-servicemen “ of

World War II. and the Korean War, will study them very closely.

Senator Paltridge:

– Where are these unemployed persons?

Senator AYLETT:

– They are all over the country. The Treasurer also stated -

The provision for other items of expenditure in 1953-54 is less than last year. Expenditure on territories is expected to increase by £1,000,000 but a saving of £2,500,000 is expected in res poet of bounties and subsidies whilst the estimate for miscellaneous services, mainly immigration, is £3,100,000 less than last year and other statutory payments £300,000 less than last year.

Surely the Government realizes that the cutting of bounties and subsidies by £2,500,000 must result in an increase of prices. Yet honorable senators opposite have eulogized the Government for reducing prices and controlling inflation. From a security point of view how can the Government justify spending £200,000,000 on defence whilst it is reducing immigration expenditure by. £3,100,000? Is the Government genuine in its proposals? If this country is in. such a position that it requires £200,000,000 each year for its defence, a fact which I do not dispute, then the restriction by the Government of the flow of immigrants who are needed to help defend this country is a criminal act.

Honorable senators opposite may ask how the Government could continue immigration at its present rate. I invite them to examine the record of the Labour Government in this respect. When the Labour Government brought immigrants to this country it had reproductive works on which to employ them. It did not keep them in hostels on a paltry allowance at the expense of the taxpayers. The Government has had to restrict immigration because its Ministers have instituted a policy of wholesale inflation. The present Minister for Immigration (Mr. Holt) eulogized the Labour Government for its sound immigration policy which he desired to continue. Now he is restricting immigration year by year. If this country cannot regain its stability the suitable immigrants who are at present available will go to other countries. The Government has not informed the people that it proposes to curtail the most vital necessity for the development and security of Australia.

The Government has estimated its total expenditure for the financial year 1953-54 at £982,000,000, which is only £7,000,000 greater than the total expenditure of 1952-53. The States have already been allocated an additional £6,500,000, according to the Treasurer (Sir Arthur Fadden), which leaves only £500,000 for the Government to spend over and above what it spent last year. The States are lagging behind. They cannot absorb any increase in population either by way of natural increase or immigration. The Government has almost eliminated immigration. But thousands of good Australians who were born and educated and reared in Australia will be looking for jobs which are not available.’ The Government has reduced its expenditure and the State governments have had to reduce their expenditure. Consequently, these young people must come on to the unemployment market unless private enterprise can absorb them. How can private enterprise absorb them if the Government restricts the availability of capital? If the Government eased its restrictions on credit, private enterprise could absorb them, but it cannot absorb them whilst the restrictions continue.

Who is responsible for the major spiral in inflation? Since this Government came to office in 1949 there have been many rises in sales tax. Last year sales tax was reduced and now Government supporters are patting one another on the back because the. Government has proposed another reduction. In the course of his speech, oil the budget papers, the Minister for National Development (Senator Spooner) made the following statement : -

It is proposed to remove .those rates of sales tax which now stand at 50 per cent., 33 J per cent., and 20 per cent. The majority of goods now subject to sales tax at those rates will bc subject to a rate of 16$ per cent. Some goods, however, mainly sporting goods and equipment, which are now taxed at 20 per cent., will be transferred to the general rate of 12$ per «Mit.

Let us examine the spiral of prices that has taken place. In the first place, the Government increased sales tax on many commodities to a rate of 66$ per cent, and it increased the rate on other commodities to 40 per cent, and 50 per cent. It also imposed a sales tax of 20 per cent, on commodities which had previously been exempt. That imposition of 20 per cent, resulted in increased prices of more than 20 per cent, above previous prices. This Government brought about a wholesale spiral in prices by introducing legislation which accelerated inflationary trends throughout the country. Now it is patting itself on the back for proposing a second reduction in sales tax which still amounts to millions of pounds more than it did in 1949 when the Government took office. If the Government claims that it wishes to restore stability to the economy why does it not reduce sales tax to the rates that obtained in 1949? There can be no stability of prices whilst this inflationary trend continues.

Honorable senators opposite have dealt with the subject of physical fitness. They have contended that the Government has made a contribution to physical fitness by spending millions of pounds on putting fifteen-year-old boys into uniform and sending them to camp in order to instil the killing instinct into them whilst they are children. I suggest that it might be desirable to keep the killing instinct out of a child’s mind until he comes of adult age. This policy is not resulting in the physical development of youth. However, throughout Australia gymnastic clubs such as the police boys’ clubs, have most up-to-date gymnasiums and they have organized football teams, basketball teams, cricket teams, and tennis teams, which enable their members to develop fit bodies. Those clubs exist for the benefit both of boys and girls. We want female youth to grow up physically fit just as much ns we want the male youth to grow up physically fit. I have searched the budget papers in vain in an endeavour to discover what allocation the Government has made for the physical fitness of the youth of this country. Perhaps Ministers may give consideration to including such an item in the budget. In that way they could Catch votes and do something useful for the rising generation at the same time. I do not mind giving Ministers hints about how to catch votes and they will find that this proposal will benefit the country. The Labour Government provided money in its budgets for the physical fitness of youth. This cheeseparing budget makes no such allocation. Instead of assisting youth the Govern ment has placed a sales tax of 12-J pel cent, on every article that they need in order to make themselves physically fit. There was no 12% per cent, tax on those articles in 1949. Yet honorable senators opposite claim that the Government is bringing the country back to stability.

Senator Scott:

– The Government has brought the country’ back to stability.

Senator AYLETT:

– I ask the honorable senator to compare the stability which he contends exists to-day with the stability of this country in 1949. In 1949, nobody in Australia who was willing and able to work was unemployed. There wah a job for everybody here and a job for everybody that we brought into this country. Unemployment began when this Government took office and it has continued to grow ever since. Government supporters cannot convince me that the Government has achieved stability whilst there is an army of unemployed people in our midst. The Government has to pay doles to unemployed persons every week. It was instrumental in bringing inflation to this country and it now proposes to introduce legislation which will only partly rectify some of the ills that it originated. If the Government honestly wishes to reduce prices why doe3 it not eliminate the whole of the increases of sales tax that is imposed? That would bring prices down. Instead of taking that action the Government ha.? praised the Commonwealth Court of Conciliation and Arbitration for pegging the wages of industrial workers. The Government has also reduced subsidies, which will cause prices to rise further and the workers will suffer.

Honorable senators opposite have also eulogized the Government in connexion with the increase in primary production which they say is another sign of stability. The purchasing power of our currency, compared with that of countries such as Canada, South Africa, the South American States, New Zealand and Great Britain, has decreased considerably “during the last three years and is far below that of those countries. Whereas they enjoy stable economic conditions, during the last three years our economy has declined. In 1949, when this Government ramp t«> office, it. took over a stable economy. At that time the Australian people enjoyed a higher standard of living than the peoples of the countries to which 1 have referred. This Government has, therefore, been responsible for the decline in the purchasing power of our currency and the lowering of our standards of living.

The members of the Government have said that employment has increased whilst the Government has been in office. What a sorry state of affairs would exist if it had not done so ! Soon after the Government came to office there were nearly 100,000 unemployed persons. Yet there was no unemployment when the Chifley Government was in office. Because of the increase of population, in 1950 approximately 91,000 additional jobs had to be found. Approximately 70,000 had to be found in 1951, 68,000 in 1952, and 36,000 in 1953, making a total of approximately 265,000. Those figures refer only to male persons. The Government cannot pat itself on the back and take credit for the fact that employment has increased. It is necessary for it to increase sufficiently to absorb everybody who is willing and able to work in this country. When the Government can say that that stage has been reached, the Opposition will be only too pleased to give it credit for what it has done.

The figures which I have given do not include statistics in relation to female employees. As honorable senators arc aware, since this Government has been in office many females have lost their employment, and their places have been taken by males. It is, therefore, obvious that many females are at present out of work. How can employment be found for our increasing population if this Government embarks on a policy of curtailing development? Is it not logica] that private enterprise will follow such a lead? When the Government begins to throw men out of employment it brings about a lack of confidence on the part of investors. Consequently, they are not prepared to invest their money. That is when the rot begins to set in. If a policy of cheese-paring on the part of the Australian Government is pursued, and if that policy also extends to the States, unemployment must occur on a large scale.

Senator Vincent:

– Does the honorable senator believe that taxation should be increased ?

Senator AYLETT:

– I shall refer to taxation in a moment. The AttorneyGeneral (Senator Spicer) will not agree with me when I say that Government legislation started the spiral of prices. The honorable senator stated in the Senate recently that the high price of wool was responsible for the inflationary trend. He said that when approximately £350,000,000, which was received from the sale of wool overseas, was let loose in the community, wholesale inflation commenced. If that is so, it is pertinent to ask who should bear the major responsibility for that state of affairs. It must be remembered that this Government collected, by way of tax, approximately three-quarters of that sum. The balance was left to the wool-growers. Therefore, in effect, it was this Government which brought about inflation. How can it say that the wool-growers, many of whom were taxed at the rate of 15s. in the £1, put that large sum of money into circulation when, in fact, they did not have more than one-quarter of it?

The Attorney-General also indulged in a eulogy of the Government because it proposes to make a wonderful addition, as he called it, to the pay envelopes of persons on £800 a year. He said that such persons will receive an additional 5s. a week. However, the age and invalid pensioners, on £175 a year, are to receive only an additional 2s. 6d. a week. The man on £800 a year will have his income boosted to £813, whilst the pensioner on £175 a year will have his income increased to only £182. That is apparently what the Attorney-General considers British justice in a democracy. The supporters of the Government have said that this is a poor man’s budget. If that is so, let us consider the man with an income of £20,000 a year. Under the budget proposals, he will receive an additional £1,000 a year, because his rate of tax will be reduced from 15s. in the £1 to 14s. At the present time he is left only £5,000. When the budget proposals become effective he will have £6,000 net. The man with an income of £100,000 a year - and I am now dealing with the income group which probably includes some of the

Liberal party Ministers - will receive an additional £5,000 a year. At present the income left to him after the deduction of tax is £25,000 a year. When the new tax rates become operative the amount left to him will be £30,000 a year. I should like to see the kind of budget that the Government would refer to as a rich man’s budget!

Senator Marriott stated in the Senate last week that the last three budgets introduced in this Parliament will go down in the history of Australia. He referred, of course, to the three budgets introduced by the present Treasurer (Sir Arthur Fadden). For once, I agree wholeheartedly with my fellow Tasmanian. They certainly will go down in history, because the first of those budgets was the austerity budget, the second the horror budget, and the third, which is now before the Parliament, the 2s. 6d. or rich man’s budget, whichever way it is looked at. The honorable senator also praised the Government for having established the Woomera rocket range. Whilst it is pleasing to know that this Government was prepared to carry on the work commenced by the previous Labour Government, and did not repudiate the contract that that Government made with the United Kingdom Government in this connexion, it is not fair for the Menzies Government to attempt to take all the credit for the project. The work was well on the way when the Chifley Government was defeated. The foundations had been In id. I remind honorable senators opposite of that fact, because there are many people outside the Parliament who might have gained the. impression that it was this Government which established the rocket range.

Senator Marriott also stated, in the course of his remarks, that it is stupid to criticize the national health scheme introduced by the Minister for Health (Sir Earle Page). It is a fact, however, that the Government is having difficulty in selling the scheme to the people. The Government robbed the people by taking from them ls. 6d. in the £1, which was paid into the Consolidated Revenue Fund, to defray the cost of a national health scheme. It then forced the people to pay a second time by requiring them to join an approved medical benefits society. If they do not do so they are not entitled to full benefit under the scheme. If they are unfortunate and become ill and have to go to hospital, they must pay a third time. No wonder the health scheme is subject to criticism. The Government knows that it has no possible hope at the next general election while it is saddled with this scheme.

Honorable senators opposite have claimed that Australia should have a contributory social services scheme. That has been the object of the Liberal party for many years. I remember when the present Prime Minister (Mr. Menzies) resigned from the Lyons Cabinet because the government of the day would not introduce a contributory scheme. The government did not have the courage to proceed with it then, because it knew that it could not sell the scheme to the people, and because it knew the proposal was unjust. It is not fair to ask a person, possibly a cripple, on a miserably small income, to pay as much to such a scheme as a man receiving thousands of pounds a year. Those who are born with health and wealth should contribute for those who are weak. The Labour party’s policy is that those who can best afford to pay should pay for the less fortunate.

Senator Marriott praised the Government for its activities in the construction of war service homes. I will not take away from the Government any credit that is its due for anything it has done towards the construction of war service homes, but I condemn it for its cheeseparing policy and its decision to curtail this expenditure. A fortnight before the budget was introduced, ex-servicemen were. told that they could obtain financial assistance to build or buy a house if their applications were approved by the War Service Homes Commission. A week before the budget was introduced, they were informed that they could apply for finance and it would be approved. Within two weeks of the introduction of the budget they were told they would have to wait about nine months before they would obtain any assistance. The Government is to be condemned for its restrictive policy towards applicants for war service homes. Many of them are living in unhygienic conditions and they are being forced by this Government to wait for houses and finance to build them until the Government brings in a budget next year.

Senator Vincent:

– What dreadful nonsense !

Senator AYLETT:

– It is true. The Minister for National Development (Senator Spooner) praised the Government because the taxpayers would get deductions of taxation ranging from 100 per cent, to 10 per cent. I do not complain about deductions, and the extra money that will be put into the pockets of the people, but the Opposition complains bitterly about the increase of only 3£ per cent, in the pensions rates. There is no justice in the budget proposals as they apply to pensioners. Wealthy persons will get substantial taxation concessions, but those who are existing on a level below a decent standard of living will benefit by only 3£ per cent, increase of their pensions. The Government cannot convince the people that this is a poor man’s budget. It will give 10 per cent, to the man on £50,000 a year and 3i per cent, to the person on £175. This budget is designed to assist the wealthy section of the community.

Senator’ Maher said that Australia could now look forward to some stability because wages had been pegged, but prices are still rising. The Government is eliminating the only control that is being exercised over prices by stopping the payment of £1,000,000 to the States for the administration of prices control.

Senator Pearson:

– South Australia does not want it now.

Senator AYLETT:

– The honorable senator speaks for his own State, but the other States are not of that opinion. The Government has admitted that wages are pegged. If prices continue to’ rise, the economy of the nation will go haywire. Senator Maher said that sufficient money was not available in Australia to meet the demands of the States for loans for urgent reproductive works. Does that mean that urgent public works must cease? That is the inference to be drawn from Senator Maher’s words. If there is not sufficient money in Australia for loans, there is another way out, and the Government is using it. The construction of war service homes, land settlement of exservicemen and similar projects upon which capital is repaid as well as interest, must be a sound investment. If Senator Maher is correct and there is not sumcient loan money in Australia, will the Government neglect those projects or Wl it obtain money? The Government has obtained money from treasury-bills issued by the private associated banks and not by the Commonwealth Bank. The Commonwealth Bank has the backing of the nation. When interest is paid to it, that revenue goes into the pockets of the people. But the Government has gone to the private trading banks for the issue of credit.

Senator Maher said that the Govern.ment had overtaken the lag in the supply of materials. It did so by cutting off finance and putting men out of work. Is the Government going to meet the challenge to develop the country and provide homes for Australians as well as for the growing flood of immigrants, or does it intend to stop dead? It has restricted credit, and as a result a man seeking a home has to find 50 per cent, deposit instead of the 10 per cent, that Was required a few years ago. Exservicemen who fought in the recent wars cannot get finance for houses. In the circumstances, does the Government believe that it can sell this budget to the public as a good budget and one that i3 designed to help the poor man? While the Government carries on as it has been doing, people will continue . to live in slums, and men and women will keep on looking for jobs that do not exist.

Senator SCOTT:
Western Australia

– I am amazed that Senator Aylett could have made so many mistakes in one evening as those contained in the speech that he has just delivered to the Senate. First, the honorable senator said that the Government was not providing money in its budget for physical fitness. Then he turned a complete somersault. He said that the Government had caused unemployment since it took office and that thousands of people in Australia were looking for work. In the next breath, as a further criticism of the budget, he claimed that the Government had reduced expenditure on immigration by £3,000,000.

Senator Aylett:

– That is so.

Senator SCOTT:

– Does the honorable senator suggest that at a time when, as he claimed, incorrectly of course, thousands of persons in Australia are unemployed, the Government should increase the intake of immigrants and thus increase unemployment still further? The honorable senator also claimed that there was no unemployment when the Chifley Government was in office. I refer him to the Year-Booh, volume 39, page 432, where he will find that in September, 1949, when the Chifley Government was still in office, 43,030 members of trade unions in this country were unemployed. J ask honorable senators to remember that figure, because, to-day, under a Liberal government, the number of persons in receipt of unemployment benefit at the 29th August last had decreased to 22,029 persons, and that decrease was the eighth consecutive monthly decrease. The figures in respect of payments of unemployment benefit throw further light upon unemployment under the Chifley Government. Notwithstanding the fact that when that Government was in office that benefit was paid at the rate of only 25s. a week, whereas, to-day, under a Liberal government, it is paid at the rate of £2 10s. a week, twice as much was paid in unemployment benefit during the last three years of the Chifley Government as has been paid during the first three years of the present Government’s term of office. Those are facts. Unlike Senator Aylett I have not stated lies. The honorable senator based his arguments on a lot of twaddle. His speech consisted of untruths from beginning to find; and he told such untruths because he knew he could do so with impunity in this chamber whereas if he told them outside some one would “ go “ for him.

The honorable senator said that this Government, in 1951, increased the rate of sales tax on certain articles to 66f per cent. That is a fact, and for such action the Government is prepared to take full responsibility. It took such action as a part of a programme that was designed to curb inflation in this country. For in stance, when wool prices rose to unprecedented levels it obliged wool-growers to pay the sum of £100,000,000 in prepayment of income tax that normally they would not have been obliged to pay until the following year. Furthermore, the Government at that time budgeted for a surplus of £114,000,000. It realized that as a result of the high income being earned by the sale of our wool and other products overseas at a time when sufficient goods were not available to meet consumer demand it had no alternative but to skim off surplus purchasing power in the community. When the Government imposed tax up to 20 per cent, on the incomes of wool-growers, approximating £100,000,000, Senator ‘ Aylett rushed to the defence of the growers and said, in effect, “Fancy the Government having the audacity to tax the woolgrowers in this way ! “

Senator Aylett:

– Where is any statement by me to that effect recorded in *Hansard**

Senator SCOTT:

– I shall be pleased to refer the honorable senator to the record of his remarks in Hansard to the effect that this Government was fleecing the wool-growers when it imposed a tax of 20 per cent, on their gross earnings. He made that statement in a debate in this chamber about two and a half year3 ago. In order to check inflation, the Government took a number of measures that were most unpopular.

Senator Grant:

– What caused inflation?

Senator SCOTT:

– The maladministration of the preceding Labour Government. At the general election that was held towards the end of 1949, the people elected the Chifley Government from office because Labour failed to check inflation. The people said, in effect, “ We are finished with Labour. We have had this mob. They do not know how to run the country”. When the present Government assumed office it found the country in a deplorable state. First, it had to undertake the task of stepping up production. Whereas indus– try required 18,000,000 t/ms cf coal a year, under Labour only .14.000. n00 tr>-« of coal were being produced. Tn order to step up steel production this Government was obliged to subsidize the importation of coal to an amount of £3,000,000 a year. In 1949, under Labour, butter, tea and sugar were rationed. A person who desired to buy a gallon of petrol had to go along with a note in his hand to a garage proprietor before he could do so. This Government abolished petrol rationing. Persons who desired to buy a sewing machine, refrigerator or motor car when the Chifley Government was in office had to put their names on a list and were obliged to wait up to four years before those articles could be supplied. Those conditions were due to the fact that the Labour Government did not have sufficient courage to tackle the problem of increasing production. Whereas, at that time, our steel mills were working to only 65 per cent, of their capacity, to-day they are working to 95 per cent, of their capacity. When the present Government assumed office it had to arrange for the importation of 1,000,000 tons of steel annually, but to-day Australia is able to export steel. Whereas in 1949, coal production was 4,000,000 tons short of our requirements, we are now exporting coal. Having regard to the brief period that this Government has been in office, its achievements in those respects are truly remarkable. To-day, inflation has been checked. That is why the Government can now present this budget which, in respect of the concessions that it makes to taxpayers and industry generally, is unprecedented in the history of this country. No other government in the world has been able during the current year to grant tax reductions equal to those that are proposed to be effected under this budget. That is an achievement of which the Government can well be proud.

The inflationary trend started when Labour was in office in 1947-48. In that year costs rose by 10£ per cent., and in the following year they rose by 12& per cent., but during those years the Labour Government failed to make provision for any increase in the rate of the age pension. To-day, when, according to the latest C series index, costs have risen by only 4 per cent., the Government proposes under this budget to increase the rate of the age pension by 2s. 6d. a week. The Government has now succeeded in stabilizing the economy. It has done so because it has had the courage to introduce effective measures regardless of their unpopularity. Under this budget, it proposes to reduce income tax on the average by 12^ per cent, and approximately 3,000,000 taxpayers will benefit from such reductions. Are there any squeals from members of the Opposition about those concessions? No. Honorable senators opposite remain silent. I have before me a comparison of income tax rates in Australia, Great Britain and New Zealand. It shows that whereas in this country a single man whose taxable income is £600 a year pays £43 19s. in tax, in Great Britain he would have to pay £97 18s. 4d. and in New Zealand £S3 18s. lOd. In other words, he pays about half of what he would have to pay in New Zealand, and considerably less than half of what he would have to pay in the United Kingdom. If his income is £800, his tax in this country is £77 6s., compared with £162 lis. 8d. in Great Britain and £135 6s. 7d. in New Zealand. Once again, therefore, he pays only about half of what he would have to pay in New Zealand and much less than half of what he would have to pay in the United Kingdom. On an income of £1,000 the tax in. this country is £117 6s., in Great Britain £232 Us. 8d. and in New Zealand £192 16s. lOd. The figures for an income of £1,500 are £246 in Australia, £407 Us. Sd. in Great Britain, and £335 10s. lOd. in New Zealand. It is clear, therefore, that our tax rates are considerably less than they are in those other countries. Indeed, taxes in Australia are less than they are in any other English-speaking country. We, as a Government, have been able to reduce taxes as we promised to do at the 1949 election campaign.

Senator Aylett:

– The Government raised taxes first.

Senator SCOTT:

– I have already explained that taxes were raised in 1951-52 because of the continuance of inflation which had started during the regime of the Chifley Government. Now we have honoured our promise completely because income tax rates in the current financial year will be about 15 per cent, lower than they were when we took office in 1949. Therefore, income tax rates for the current financial year compare most favorably not only with those applying in Great Britain and New Zealand, but also with the rates that applied in the last year of office of the Chifley Government. In 1949-50, under the income tax scales imposed by the Chifley Government in its last budget, an Australian taxpayer in receipt of an income of £600 a year paid £53 10s. income tax. This year, he will pay £43 19s., a decrease of about £10 or 20’ per cent. In 1949-50, a taxpayer who received £800 paid £91 10s. in tax, but he will pay only £71 6s. this year. That is a decrease of approximately £20, and once again it is the equivalent of 20 per cent. Over that income range, therefore, taxes in the current financial year will be 20 per cent, less than they were under the last Chifley budget. Tax concessions in this year’s budget vary from 9.4 per cent, on high incomes down to 100 per cent, at the other end of the income scale. In addition, the concessional allowance for medical expenses is to be £150 instead of £100. I do not hear any objection to that from honorable senators opposite. Aged people, too, will enjoy a valuable tax concession. The exemption for men over 65 years of age and women over 60 years of age will be £375 instead of £254. For a married couple, the exemption has been fixed at £750. This liberalization will be of substantial benefit to recipients of annuities and superannuation payments. Last year such a. person who received £300 a year had to pay £7 in tax. This year, he will pay no tax at all. This concession will assist people in advancing years to enjoy some of the comforts to which they are entitled.

Last year, for the first time in our history, a concessional deduction was allowed for education expenses incurred in respect of all children under the age of 21 years who are receiving full-time education. This budget announces an increase of the maximum concession from £50 to £75, and also a liberalization of the scope of the concession to include such items as the purchase of text-books, living expenses and fares. Once again therefore the. family man will benefit. This, of course, is a family man’s budget.

Another important feature of the Government’s taxation proposals is the raising of the pay-roll tax exemption . from £1,040 to £4,160 a year. That alteration, I understand, will affect approximately 50,000 employers out of a total of 90,000. It will certainly be of considerable assistance to farmers and proprietors of small businesses whose employees number perhaps five or six. Those employers will no longer be compelled to make pay-roll tax returns every month. Most farmers, of course, are not skilled book-keepers, and keeping their taxation returns up to date is a worrying task. That problem will be eased substantially by the pay-roll tax proposal. We all regret that the Government has not been able to abolish the pay-roll- tax completely, but that, I understand, would have involved an annual loss of £42,000,000 to revenue. To forgo such a large revenue collection in one step would present a serious problem. However, I congratulate the Government upon having made a move towards that end by reducing substantially the number of employers liable to furnish pay-roll tax returns. The Government will receive the thanks of small farmers and businessmen throughout the length and breadth of Australia for this concession.

Having stabilized the economy, the Government has found itself in a position to reduce sales tax considerably. Only two rates are now to apply, the 12£ per cent, rate and the 16f per cent, rate. Two years ago there were five rates and last year there were four. The tax on certain goods has been reduced from 20 per cent, to 12-J per cent., and other commodities, including matches, have been completely freed of the tax. Senator Ryan said that sales tax concessions would reduce the revenue from this tax by only £1,000,000. I have examined the budget, however, and I find that the estimated loss of revenue is £11,700,000. That alone will be a great concession to the Australian people. It will assist a reduction of the cost of living. People will be able to get more for their £1. They will realize that the Menzies £1 is stable. Honorable senators opposite frequently claim that the Menzies £1 is worth only half as much as the Chifley £1; but the real value of the Chifley £1 was impossible to determine because there was little opportunity to buy anything with it. For instance, at times, a pound of butter cost between 6s. and Ss. in Sydney, and petrol ration tickets were on sale for 2s. each. The Menzies £1 will buy anything that the purchaser wants. This Government has a proud record in relation to taxation. Last year it abolished the land tax but members of the Australian Labour party have since stated that if that party is returned to power in the future it will re-introduce that tax. “We have abolished entertainments tax, so that family men will be able to take their families to places of entertainment without having to bear this burden. The taxation of public companies has been reduced by ls. in the £1 on the first £5,000 of taxable income and 2s. in the £1 on the remainder. This concession will assist the expansion of those companies and enable them to pay bigger dividends to their shareholders. I am sure that some members of the Opposition >lo not realize fully the importance of this concession. Many ordinary people in this country have saved money and bought small parcels of shares in public coin.pr. nies. I have done so myself, and I, as well as they, look forward to receiving dividends. The taxation of private companies has been reduced considerably. The new rates of taxation on these companies will be 4s. in the £1 on the first £5,000 of taxable income and 6s. in the £1 on the remainder. The Government has granted all-round taxation concessions in order to provide an incentive to producers to increase production, in connexion with which this Government has a proud record. We derived an income of £420,600,000 from our exports of wool in 1952-53, compared with £337,000,000 in 1951-52.

Senator BYRNE:
QUEENSLAND · ALP; QLP from 1957; DLP from 1968

– How does that compare with the production of wool in 1949?

Senator SCOTT:

– Speaking from memory, Australia produced about 3,057,000 bales of wool in 1949, and it is expected that this year’s clip will exceed 3,750,000 bales. Therefore the production of wool has increased by almost 700,000 bales during the last three years. The following table compares the income that we derived from the export of certain commodities in 1952-53 and 1951-52: -

The total value of the exports of the commodities that I have mentioned, including wool, in 1952-53, was £627,700,000,. compared with £461,600,000 in 1951-52. It is therefore evident that the taxation, concessions that this Government hasmade to the people of this country since coming to office have resulted in greatly increased production. Last year the Government granted liberal depreciation allowances to the farmers, and all over Australia considerable improvements have since been carried out ora farms. In many districts of Western Australia areas of from 20,000 acres to- 30,000 acres have been cleared for wheatgrowing. A similar development hastaken place in the wool-growing areas of Western Australia.

Senator GRANT:

– The Government hasnot honoured its promises.

Senator SCOTT:

– If the honorable senator who has just interjected were Ito visit Western Australia the fannerswould get hold of him for some of the statements that he has made in this chamber. I believe that .Australia has the greatest potential for development of the English-speaking countries. Inflation has been checked, and there is now no reason why this country cannot be developed’ further. This budget will assist the attainment of that objective, because it will provide a real incentive to the people of this country. I am sure that they will appreciate the concessions that have been* made and continue to expand production-

Senator BYRNE:
QUEENSLAND · ALP; QLP from 1957; DLP from 1968

– Although it is a thing that we do not like doing, honorable senators on this side of the chamber are constantly required to put the record straight after it has been distorted by supporters of the Government. Senator Scott has completely distorted the political and economic situation that existed in this country in 1949, and its subsequent development. In 11 hal year .the Government parties went to the people on a series of promises, and immediately after the people had been persuaded that they should be entrusted with the reins of office, honorable senators opposite absolutely violated those promises and adopted a course of action that waa diametrically opposed to the promises that were made in 1949. They did so either in complete ignorance of the situation and the steps that should be taken to strengthen our economy, or with malice. Those are the only alternatives. The promises were abandoned as soon as the present Governmnent came to office. Although the honorable senator painted a very rosy picture of the economic development of Australia during the last three years, I point out that cost of inflation could ultimately Cause a national crisis in this country. The Treasurer (Sir Arthur Fadden) stated in his budget speech -

At this moment there are problems with us which could thwart our efforts to expand just ais effectively as inflation did. One is the problem of costs which, during the inflation period, mounted to excessive levels, especially >n some industries.

The inflation period referred to is the period that this Government has been in office. Despite the figures that Senator Scott has cited in relation to the increase of the production of butter, I remind the Senate that the consumption of that commodity in this country has declined considerably because the cost is too high. Indeed, some of the States have increased their quotas of production of margarine because many people cannot afford to buy butter. We «re costing ourselves out of the export butter market. The picture is not so rosy as the honorable senator would have us believe. During the last three years there lias been virtually a cessation of many public works of major national importance which are essential to our national development. Year after year, at meetings of the Australian Loan Council, the Prime Minister (Mr. Menzies) has harangued the State Premiers, and the financial relationships between the Commonwealth and the States have been the worst since federation. This is a matter “that causes grave concern to everybody who considers it objectively. I have endeavoured in a few words to correct some of the distortions by Senator Scott. I shall now canvass the main points of the budget in an endeavour to see how its provisions will work out.

This is the third of a trilogy of budgets - the -budgets of 1*951, 1952 and the current budget - which must be considered together. It is not possible to consider fully the budget now before the chamber without having regard to the other two budgets. It is obvious that these three instruments have been designed as political rather than economical and financial instruments. They have been brought down by the Government at all times having in mind primarily political rather than financial implications. Honorable senators opposite may well ask. “ How could the 1951 budget be regarded as a political instrument, when it affected every one in the community and could only be an extremely bad political budget?” Significantly enough, that budget followed immediately after a’ general election. The election policy was disregarded, and when that budget was brought down there was no immediate prospect of any other election of the House of Representatives or the Senate. It was a timely thing to do, and was done without any danger of political repercussions on the government of the day. What was its ultimate effect? It plunged the country into an economic depression. It was obvious that the Government parties thought that they would be able to let in a bit of sunshine before the next election. When the three budgets are considered together the Government’s intention is obvious. The 1952-53 budget was framed having regard to the fact that a Senate election would be held in 1953. It let a glimmer of light into the hearts and minds of the people. This budget has undoubtedly been concocted for the same purpose. The Government has attempted, for political reasons, to do something for everybody, but an analysis of the budget shows that instead of doing so the Government has offered some things for a few, and nothing for most, people. The budget must be regarded primarily as an instrument designed for political purposes. But it is becoming obvious that it has failed even in that purpose. I do not suppose thai any budget designed in the circumstances and for the purposes which the Government designed this budget has gone sour as quickly as this one. The immediate reaction to the budget in the community was satisfaction. But all its tinsel has quickly tarnished and the real dross is becoming apparent to everybody. Honorable senators opposite are not as happy about it as they expected that they would be.

It is obvious that the budget cannot fulfil the financial function which should be fulfilled by a budget in the present serious state of the Australian economy. Of course, any instrument will fail which subordinates justice to political expediency. This budget has completely subordinated justice to the commands of expediency.

Senator Pearson:

– Does the honorable senator make that charge seriously?

Senator BYRNE:
QUEENSLAND · ALP; QLP from 1957; DLP from 1968

– I intend to try to substantiate it. The heavy taxation concessions proposed for companies constitute such a major proportion of the total taxation rebates proposed that we must tread into the paths of conjecture as to why this extremely liberal concession was made.

Senator Pearson:

– Does the honorable senator object to that proposal?

Senator BYRNE:
QUEENSLAND · ALP; QLP from 1957; DLP from 1968

– I am simply stating it as a fact. It is the first of three points which I intend to advance to substantiate my statement that this is a political budget. My second point relates to the heavy concessions proposed for those who draw their income from property as distinct from those who draw their income from personal exertion. Yesterday a .wealthy gentleman told me that the budget proposals relating to income tax would make him at least £5,000 a year better off. The Government has proposed a tremendous concession to people who rely on investments instead of personal exertion for their income. My third point is illustrative of the general situation. The existing tax payable by a man in receipt of an income of £8,000 a year from personal exertion is £4,155. The proposed new tax payable by that man will be £3,715, a reduction of £440. The man earning £4,000 a year from personal exertion and £4,000 from property at present pays £4,385 a year.

It is proposed that he shall pay £3,715, a reduction of £670. But a person who draws his whole income of £8,000 from investments and who is liable for the payment of £4,485 at present, will pay £3,715, a reduction of £770. The person who derives his income exclusively from personal exertion will have his tax reduced by only £440 whilst the person who lives on his investments, which may have been inherited, will have his tax reduced by £770.

I thought that the Government desired to encourage personal exertion. But this budget is slanted in favour of people who sit by and draw dividends. That is the inescapable conclusion at which we must arrive on the basis of the facts that I have presented. A completely fantastic proposal has been made by the Government in relation to the taxation of single men and married men with children. It is proposed that a single man shall have his tax reduced by £7 14s. a year, which is equal to 3s. a week. A man with a wife will have his tax reduced by £8 12s., or 3s. 4d. a week. A man with a wife and one child will have his tax reduced by only £7 2s. a year, or 2s. 8d. a week. The man with a wife and two children will have his tax reduced by only about 2s. 2d. a week. In view of the Government’s proposals in relation to the taxation of income from property and income from personal exertion, and also of the tremendous reductions that are proposed for companies, as well as of the preference that has been proposed for single men over married men, one wonders on what logical basis the budget has been devised. The term “ small man’s budget “ is a complete misnomer for this budget. The inference that it was a “ small man’s budget “ might have been drawn at first glance. That is why I say that the tinsel hn« tarnished and the dross has become apparent. The budget will not assist the small man or achieve what the Government hopes that it will achieve.

The Government has two financial obligations; it has to collect revenue and it has to commit itself to certain expenditure. So far as the financing of capital works is concerned it must be realized that any sacrifice that has been asked for b.y the Government will not be borne by the Government”. That is not as it should be. It does not accord with the Treasurer’s expressed intention in relation to departmental expenditure for capital works. In this budget capital works expenditure for 1953-54 has been estimated at only £2,400,000 less than last year’s expenditure. Despite the fact that the Treasurer announced his intention to reduce departmental expenditure some time ago, the budget indicates an increase of £2,000,000 in departmental expenditure. It is probably true that wages have increased. The Treasurer should not regard that as an excuse on which to lean, but as a challenge to be accepted. The Treasurer has not accepted the challenge, and the estimate for departmental expenditure has increased by £2,000,000. The estimates of only three departments are lower than last year’s expenditure by those departments.

Tt is obvious that the additional burden will not be borne by the Government. It will be borne by a big section of the taxpayers and recipients of social services and repatriation benefits. That aspect of the budget was carefully analysed by Senator Tangney, who examined the effect of the new rates of social services and repatriation benefits. The Government has not done justice to these people. I do not know whether it even claims to have done justice to them but, obviously, it has not done them justice in view of the increased cost of living. With a cynicism that is almost inexplicable, the Government has told pensioners that it cannot give them, as much as they should receive, but that it will liberalize the means test in order to enable them to earn more. In other words the Government has told these people that.it cannot give them their just due so they must earn it for themselves. That is a completely cynical approach to this question. The cynicism becomes even more pronounced when the labour market on to which these people are told to go is considered. Every day, men who have been retired prematurely and are living on pensions come to my office. They cannot obtain work unless they are strong and able to do, for instance, a casual day’s gardening. The majority of men in respect of whom the means test has been alleviated are completely unemployable in the present employment conditions in this country. It is cynical to deny people financial justice by holding up to them the opportunity to work, knowing that such an opportunity is not available. When the budget is looked at in the light of the matters to which I have referred, honorable senators will appreciate how completely ineffective and defective it is.

Perhaps, when the Government decided to increase pensions by 2s. 6d. a week, it had in mind the fact that there will be a general election next year. It may be financially convenient in 1954 to give an additional sum to the pensioners. It is possible that an increase of social services benefits will be made between now and the general election. If the Government intends to do so, and also intends to use that increase as a political instrument before the election, it will be trading in human misery. I am sure that if it does so, at the appropriate time the people of Australia will censure it.

A great deal of the discussion that has taken place concerning this budget has been in relation to the availability of loan finance, which is really a question of new capital in the community, something which is badly needed in a growing country. That matter has been discussed in the House of Representatives by the Leader of the Opposition (Dr. Evatt) and the Prime Minister (Mr. Menzies), and has been referred to in the Senate by many honorable senators, including Senator Maher. Unfortunately, I was not in the chamber during the whole of the honorable senator’s speech. It seems to me that this is one of the most important matters to which we can direct our attention when considering the financial proposals of the Government.

The fact that Commonwealth capital works are financed from Consolidated Revenue means that an increased taxation impost must rest on the shoulders of the people, unless an alternative method of raising money can be devised. It ‘is an historic fact that the financial difficulties which this Government has experienced in raising loan moneys were not experienced by its predecessor in office, the

Australian Labour party. Those difficulties are applicable only to this Government. I know that many reasons for them have been given, including indecision in determining the rate of interest and the whole approach of the Government to the question of the value of bonds. The Minister for National Development (Senator .Spooner ) has at times announced the policy of the Government to the effect that bonds should follow the market ; that they are the same type of investment as industrial investments, and should take their chance in the rise and fall of the market. I cannot .B why bonds should be put in the same category as industrial stocks. If a person wishes to buy industrials on the market he is inspired by only one consideration, which is the return he will receive from his investment, either by way of capital accretion or income. He takes his chance according to the rise and fall of the market, but with government bonds, all kinds of considerations are placed before potential investors when the bonds are issued. The income to be earned from the investment and the security offered are only two of those considerations. Government loans are frequently given names which are calculated to appeal to the sense of security or patriotism of the investor. On that basis, many people put money into government securities for motives not exclusively concerned with capital accretion or the income to be earned from the investment. For that reason, I do not think that it is equitable to try to attract investment by appealing to’ the emotions of possible investors, and then to say to them that the bonds will follow the market. ,

It seems to me that it is the responsibility of the Australian Government, whether it is this or some other government, to endeavour, to find a new approach to bond investment so that investments can be held at a constant value. I presume that this matter has been already considered by the Minister for National Development. It is a difficult and complex one, and a solution will not be easily reached. I think responsibility in this field rests on the Government because the continuous flow of loan moneys i3 one of the most essential components in the national development of Australia. There is a hunger for capital all over the world. To some extent, we are contributing, capital under the Colombo plan, in some ways, this country could well he the recipient of overseas capital investmentwhether under the Point 4 plan of Mr. Truman, or some other method. Therefore, I contend that there is a primary obligation on the Australian Government to devise means by which the Australian people can be assured that if they supply capital their security will be maintained at its value. To me, that is the most important problem for the Australian Government to-day.

We know that, for many reasons, theloan market has contracted. That being. «-o, we at least expect the Government to analyse the reasons for that contraction and try to prevent a recurrence. I presume that when there is money availablefor investment there are two main sourcesof attraction. There is the bond market, or government investment, and there is private investment. Apart from those who respond to emotional appeals, thosewho respond on a purely profit and loss level will be attracted to investment* which offer the most attractive security and which will return the greatest income..

Last year, in the course of the budget debate in the Senate, I stated that,, because no attempt had been made by the Government to divert capital investment to the bond market, there would be a recession in bond investment as had happened during the previous year. That is precisely what did happen. What isthe Government doing in this budget toset its face against the flowing tide?” The budget contains many concessions to investment in companies, both public and private. If that is to be one of the-‘ Government’s measures for the absorption of capital, the more attractive company investment is the more the loan market will be starved. First, companytax is to be reduced by an aggregate of” approximately £28,000,000. Secondly, there is to be a reduction . of therate of tax on income from company dividends, and thirdly, there is to be a reduction of the ordinary personal” exertion rate of tax. Therefore, thosewho have the money invested in industrial stocks will have the benefit of a« threefold taxation concession. That, I think, inevitably will have the effect of attracting money to the industrial stock market and away from the bond market. If that money goes into industrial stocks and promotes the production of essential consumer goods, although it may not he the ideal thing as far as the bond market is concerned, it will still have some value. But honorable senators should ask themselves what kind of companies will attract the money.

This budget proposes substantially to reduce the rate of sales tax on luxury goods. A tremendous impetus will thus he given to companies that manufacture such goods. When prices control, which is the only other obstacle to the unlimited manufacture of luxury goods, is taken away, the door is left wide open for capital to be invested in industrial stocks of companies producing luxury goods, first, because they will be able to sell their goods when the rate of sales tax on them is reduced, and, secondly, because there will be no ceiling imposed on such goods by State prices control. That control is being removed because the Australian Government has refused to subsidize the States in respect of their costs in maintaining the control. In addition, there are all these taxation concessions to companies. The inevitable effect must be further to dry up the sources of investment capital for the bond market. We shall then see, if not a recession, at best no improvement in the market. We shall not necessarily see that improvement in the production of consumer goods which is a part of the answer to inflation.

Senator Scott discussed tonight the question of whether incentives to increase production have been provided by this budget. Of course, whatever incentives the budget contains are being given about two years too late. In the horror budget, the Government concentrated on the question of monetary control. It did not deal adequately with the question of immediately increasing production. It will be remembered that, at that time, honorable senators on this side of the chamber stated that the budget contained no such incentives. ‘ We said then that the Government had killed all incentive and that it would not obtain the neces sary increase of production. Now, two years later, the Government apparently recognizes that what we said then was correct. It is trying in this budget to provide the incentives that should have been provided two years ago.

What exactly does the Government hope to achieve by this budget? I have referred to the question of increasing production.. Perhaps the best way to answer the question that I have posed is to refer to the words of the Treasurer. During the course of his budget speech, the right honorable gentleman said -

By reducing taxes and so making wages and profits more worth earning, the Government can provide an inducement to greater effort and efficiency. Furthermore, reduced taxation should give greater scope and encouragement to savings from which the funds for industrial expansion and national development are derived. Finally, a combination of harder work, greater efficiency and a higher level of savings undoubtedly holds the key to the third main problem, the promotion of greater national productivity.

Debate interrupted.

page 189

ADJOURNMENT

The Parliament

The PRESIDENT (Senator the Hon.

  1. M. Mcmullin). - Order! In conformity with the sessional order relating to the adjournment of the Senate, I formally put the question -

That the Senate do now adjourn. -

Last week Senator Benn requested me to make representations to Mr. Speaker in connexion with the accommodation that is provided for honorable senators in the House of Representatives. I have received a letter from Mr. Speaker dated the 22nd September in which he states -

I have your letter of to-day enclosinga copy ot a question addressed to you on seating for Senators in the House.

Under Standing Oder No. 308, Senators are given the privilege of admission below the Bar of the House without orders from mc. There is seldom sufficient room for Senators who deBire to attend sittings of the House, and on important occasions there is never enough room. On three different evenings lately, there have been more applicants for seats in the House than there are sea ts available.

I am unable to increase the present seating for Senators unless I refuse admission to taxpayers who come here infrequently, often but once in a lifetime.

There are about 40 seats only inthe present Speaker’s Gallery, and on occasions suchas the one mentioned, the Upper Galleries and portion of the Press Gallery, arc also used exclusively by ticket holders.

When there are vacancies in the diplomatic bays, Senators have been admitted to those seats and so, sometimes, have other visitors.

In the present circumstances I do not see how . I can provide a remedy. I may add that Iam sure the House would not recognize any power in the Senate to instruct me on any matter.

Question resolved in the affirmative.

page 190

PAPERS

The following papers were pre sented : -

Commonwealth Bank Act -

Appointment - M. J. Clarke.

Balance-sheets of the Commonwealth Bank and the Commonwealth Savings Bank as at 30th June, 1953; together with the Auditor-General’s reports thereon,

Commonwealth Telegraphs Agreement - Commonwealth Telecommunications Board - Second General Report to 31st December. 1952, and Statement of Accounts to 31 st March, 1952.

Defence Transition (Residual Provisions) Act - National Security (Industrial Property ) Regulations - Orders - Inventions and designs (2).

Public Service Act - Appointments - Department -

Attorney-General’s - H. E. Foster.

Interior - L. B. Capon.

Public Service Arbitration Act - Determinations by the Arbitrator, &c. - 1953 -

No. 58 - Fourth Division Postmaster?, Postal Clerks and Telegraphists’ Union.

No. 59 - Commonwealth Public Service Artisans’ Association.

No.60 - Commonwealth Storemen and Packers’ Union.

Science and Industry Endowment Act - Report by the Auditor-General on the Accounts of the Science and Industry Endowment Fund for year 1952-53. Seat of Government Acceptance Act and Seat of Government (Administration) Act -

Canberra University College - Report for year 1952.

Regulations - 1953 - No. 12 (Building and Services Ordinance).

Senate adjourned at 10.32 p.m.

Cite as: Australia, Senate, Debates, 22 September 1953, viewed 22 October 2017, <http://historichansard.net/senate/1953/19530922_senate_20_s1/>.

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