22nd Parliament · 1st Session
The PRESIDENT (Senator the Hon. A. M.McMullin) took the chair at 3 p.m., and read prayers.
– Can the Minister representing the Minister for Immigration say whether it is the aim of the Government that all new Australians should be. naturalized? Is it not a fact that less than 40 per cent. of them are naturalized Australians, and can he say what steps are being taken to increase the number of those naturalized?
– Broadly speaking, it is the objective of the Government that, in the fullness of time, and when they have shown that they are suitable persons to be naturalized, all immigrants shall be naturalized. I am not aware that, at the moment, only 40 per cent. of immigrants -who have come to Australia are naturalized Australian citizens. However, I shall refer the honorable senator’s question to the Minister for Immigration, and obtain a full answer for him.
– In view of the claim made by the Leader of the Opposition in the House of Representatives, and by the Opposition generally, that high rates of profits earned by Australian companies are one of the chief causes of inflation in Australia, is the Minister representing the Treasurer in a position to say whether there is any information available which contrasts the profits earned by Australian companies with the profits earned by companies in other parts of the world?
– Yes. Over the week-end I came across an article in a magazine dealing with this subject. The article contained a tabulation of the profits earned by Australian companies and companies overseas, and stated that the information contained in the tabulation was based on information obtained from publications issued by the National City Bank of New York, the Research Department of the Bank of Canada, the monthly statistical bulletin of the Commonwealth Bank of Australia, the “ Australian Financial Review “ and the London “ Economist “.
The tabulation contrasted the profits earned over a five-year period, and showed that, before provision for taxation was made, the profits of Australian companies were lower in relation to shareholders’ funds than in Canada, the United States, or Great Britain. It showed also that that position had remained the same in each of the five years for which the information was available-.
– Can the Minister for Shipping and Transport say whether it is a fact that the Commonwealth Railways are importing sleepers for the TransAustralian railway and the north-south line? Is the Minister in a position to assure the Senate that every effort has been made to procure sleepers from Western Australia and South Australia for those railways?
– I am not aware of the number of sleepers being imported into Australia. I am under the impression that the vast majority of the sleepers used in this country are supplied by Australian mills. I shall have an inquiry made about the number of sleepers, if any, being imported, and inform the honorable senator accordingly.
– I preface my question to the. Minister representing the Minister for Health with the following information: During the past two years, wonderful advances have been made by the use of psychiatric sedatives at the Parramatta mental hospital, which have rendered the use of electro-convulsive therapy, or shock treatment, a thing of the past. Use of one of the new drugs, chlorpromazine, commonly known as largactil, has now been discontinued at the Parramatta mental hospital, although the results of its use have been astounding. This course of action by the medical staff at the hospital is said to be due to the import restrictions imposed by the Menzies Government. Patients are now regressing, and the use of camisoles, or straight jackets, is returning. Many refractorypatients are now returning to their former habits, and the occupational hazards of those engaged on the staff of the mental hospital are increasing. Will the Minister have inquiries made immediately into what is undoubtedly a serious situation which has been caused, perhaps inadvertently, by import restrictions, and which is retarding the welfare of the inmates of this and other mental institutions?
– 1 do not think that the honorable member’s question is a matter for the Minister for Health. The Parramatta mental hospital is under the direct jurisdiction of the New South Wales Government. If the importation of drugs has been restricted, that is a different matter, and is the concern of the Minister for Trade. Perhaps the honorable senator could make inquiries of the New South Wales Government on this matter.
– My question, which is addressed to the Minister representing the Treasurer, is supplementary to the question asked by Senator Henty about the distribution of profits among companies generally. Can the Minister give the Senate any information about how general is the distribution of share holdings in these companies among the Australian people? Is it a fact that the actual number of shareholders who participate in the profits of companies is a substantial proportion of the Australian population?
– I have some information on that point. I recently read an article which detailed a survey of Australian companies, lt was based upon inquiries made from 1,300 Australian companies listed on the stock exchanges in this country. Of the companies that received inquiries, 704 responded and gave information. Those 704 companies stated that they employed 449,676 people. The total number of employees of 704 companies was 449,676. Shareholders in those 704 companies totalled 1,060,892, so that there were twice as many shareholders as there were employees interested in the welfare of those companies. Tt is also interesting to note that one in twelve of those 449,676 employees held shares in the companies that employed them. Therefore, the attacks that are being made on the Australian companies are, in effect, attacks upon a very thrifty section of the Australian population, who show their confidence in the future of Australia by investing their savings in Australian industries.
– Will the Minister representing the Treasurer name the journal to which he referred in his answer to a question that was asked by Senator Henty? Will he. also mention the date of the article that he mentioned in reply to Senator Wright, and the journal in which it was published, so that those articles may be followed up? Will the Minister indicate whether the article in the journal to which he referred first showed the position of profits in relation to capital subscribed, as well as the profits in relation to shareholders’ funds?
– Answering the last portion of the honorable senator’s question first, I will say that only the Australian Labour party would relate profits to capital as distinct from shareholders’ funds, ft is completely nonsensical to relate profits to subscribed capital without taking into account the profits that have noi been distributed but have been reinvested in the business. If they were not reinvested in the business, they would be in the hands of the proprietors of the company to reinvest elsewhere and obtain an income from them. ! know of nothing more absurd than trying to set a standard of profits on paid up capital instead of profits on shareholders’ funds. The journals from which I obtained the information are the “ I.P.A. Review” of April-June, 1955, and the issues of the same journal for April-June, 1956.
– Has the Minister for National Development read statements reporting that high rates of interest are being paid by ex-servicemen to obtain temporary finance with which to complete war service homes transactions? It is reported that rates as high as 15 per cent, to 20 per cent, are being paid. Has the Minister any information on the matter, and any proposal to prevent the payment of such high rates of interest?
– There have been press reports on this matter and they have given rise to some concern. I asked the War Service Homes Division to obtain for me a factual statement on the position.
– Does it include group homes?
– They were not included as they do not come into this category, ‘ and would not be involved in these transactions.
– I did not want to be misled.
– There was some difficulty in obtaining the information because it is not normally recorded, but it has been obtained, and this is what the War Service Homes Division considers to be a fair statement of the position: 50 per cent, of the cases investigated obtained finance at 5 per cent., or the current bank rate; 14 per cent, of the applicants paid between 5 per cent, and 10 per cent.; 334 per cent, were paying 10 per cent, and 21 per cent, were paying a rate in excess of 10 per cent. So, as is frequently the case, the reports on this matter have been very greatly exaggerated. Ninety-seven per cent, are obtaining their money at a rate not exceeding 10 per cent. The honorable senator asked me what can be done about it. No one likes to see high interest rates being paid by ex-servicemen, but it is not easy to find a solution. The demand for war service homes is so great that it cannot be encompassed with the funds made available by the Government. An applicant is given a letter stating that it is anticipated that his money will be available on an estimated date about fifteen months ahead. It is open to the applicant to use that letter if he so desires. What are we to do in the circumstances? Should we refrain from giving the letters? I think that exservicemen view the letters as a great help. We cannot tell them to use the letters on this or on that condition. My own view is that they would not like their freedom of choice restricted as they think themselves capable of looking after their own interests. I think their attitude is that, having regard to the comparatively short period they have to wait, it is better to pay these high interest rates than to continue to pay. rent for the cottages which they occupy.
– I ask the Minister for Shipping and Transport whether it is a fact that subsequent to Sir Harold Clapp’s report recommending a uniform railway gauge system throughout Australia, a Cabinet committee of this Government reported favourably on such a system being introduced. Is it also a fact that more recently a committee of Government members toured Australia gathering facts in relation to the uniform gauge system? As certain districts in Western Australia will be vitally affected by the introduction of a uniform gauge system, and require early information, will the Minister make a full statement to the Senate on the findings of the committee, if such findings are available? Will he also inform the Senate of the Government’s intention with regard to the introduction of the uniform railway gauge in Western Australia in particular and throughout -Australia in general?
– As to the first part of the honorable senator’s question I have no knowledge at all. As to the second part dealing with the activities of the committee of Government members who have, in an unofficial capacity, been examining the subject of a uniform railway gauge in Australia, I can only inform him that I believe the investigations made by that committee are now nearing completion and that when they are completed it is proposed that that committee will submit a report. I have not yet received the report and do not expect to receive it for some weeks, possibly a couple of months. As soon as it is received it will be examined by me and, subsequently, by the Government.
– My question is directed to the Minister for Shipping and Transport and follows on the question asked by Senator Critchley in regard to the importation of railway sleepers. Is it a fact that following experiments by the Commonwealth Scientific and Industrial Research Organization in connexion with soft woods, Australian pine can be successfully used for the purpose of fencing posts? Could not this process be successfully applied to railway sleepers? Having in mind the new process, has the Minister seen a report that a South Australian timber mill is cutting sleepers for railway purposes?
– I am not aware of the experiments that have been undertaken by the Commonwealth Scientific and Industrial Research Organization to which the honorable senator refers or whether, as a result of them, it has been established that softwood timbers can be successfully treated for use as railway sleepers. I can only promise that I will make inquiries of the commissioner, and let the honorable senator know whether anything is being done in this field.
– I ask the Minister for Shipping and Transport whether part 4he revenue which has been, and will be, raised by the last increase of the petrol tax can be exempted from distribution under the present iniquitous petrol tax formula, and can instead be set aside for the repair of flood damage to roads and bridges in the Murray valley, in New South Wales, Victoria and South Australia, where such damage has been extensive. -
– The Government has already announced its intentions as to the distribution of the extra revenue collected from the petrol tax. This will be done on the basis of the old formula, as was announced when the increased tax was imposed.
– The week before last, I asked the Minister representing the Postmaster-General whether he would ask the Postmaster-General to intervene on behalf of the postal workers and their union to have their just claims in the present dispute granted. This dispute has now extended over the whole Commonwealth, and I suggest that neither the Minister nor any one else could justifiably argue that the postal workers are all wrong and that only one individual - the Public Service Arbitrator - is right. I ask the Minister to confer again with the PostmasterGeneral in an effort to have the claims of the postal workers granted, so that the great service which they have rendered to the public over the years may be fully resumed.
– I assure the honorable senator that, during the present upheaval in the Postmaster-General’s Department, the Postmaster-General’ and his officers have been in close and constant touch with the leaders of this unauthorized regulation strike.
– I am asking that the Postmaster-General get in touch with the Public Service Arbitrator.
– The PostmasterGeneral and his officers are keeping the matter under constant review from day tt> day.
– I direct a questionto the Minister representing the PostmasterGeneral relating to the important “ Guest of Honour “ session conducted by the Australian Broadcasting Commission on Sunday nights at 7.15 p.m. eastern standard time. What authority or person selects the guest of honour for this session? After the selection! is made, is any control exercised over the subject-matter to be discussed by the speaker, particularly as to whether it hasa reasonable appeal to a wide section of listeners to the national service?
– I have every reason to believe that very careful consideration is. given to the selection of the guest of honour quite some time before any notice is given, that the person concerned will be on the air at a certain time. In order to make the position quite clear, and in order to obtain, the most up-to-date advice, I shall refer the question to the Postmaster-General and1 obtain a considered reply.
– I ask the Leader of the Government in the Senate whether it isthe Government’s intention to give a full report on the Suez position at an early date. If it is the Government’s intention to givesuch a report, can the Minister tell us whenit will be given?
– I am quite sure that when the Government deems the time impropriate a statement will be made. I feel confident that honorable senators realize that a matter so delicate is not spoken about until the time is considered opportune, that is until it is considered that the greatest possible good will be done and the leastpossible harm may ensue.
– Has the attention of the Minister representing the Minister for Trade been directed to a report that Prince’s Pier, Port Melbourne, is to be closed during November, on account of the berths at this pier being allocated to visiting warships and other craft for a period- before, during and following the holding of the Olympic Games in Melbourne? In view of the fact that Prince’s Pier is the main outlet for overseas sailings from the Port of Melbourne, and also that the export season is expected to be at its peak about November, will the Minister inquire into the accuracy of this report and take any action necessary to avoid any hold-up in the export of perishable goods?
– I am sorry to say I have not noticed the newspaper report to which the honorable senator refers, and therefore I am unable to say whether it is accurate. In view of the importance of the matter, I shall mention it to my colleague, the Minister for Trade, and obtain all possible information for the honorable senator.
– Has the Leader of the Government in the Senate noticed a report in the press that in order to assist in the spread of myxomatosis in areas where there are no mosquitoes, the Commonwealth Scientific and Industrial Research Organization intends to import quantities of European fleas? The rabbit was originally an importation, and as these fleas will multiply just as quickly as do rabbits, and as we already have enough pests in Australia, will the Minister take steps to safeguard the Australian people from the importation of these fleas?
– I have not seen the report referred to by the honorable senator, but I am quite sure that on such an important matter a responsible body like the Commonwealth Scientific and Industrial Research Organization will proceed with the utmost caution and care.
– On Wednesday last Senator Vincent addressed a question to me concerning the erection of a wooden building on the roof of Parliament House. He asked: Who is responsible for its erection in a place where the general public may see it? Why is it necessary, and has the construction and design been approved by any competent authority? I am now in a position to inform the honorable senator that a small wooden building is being erected by the Works Department on the roof of Parliament House above the Cabinet room to house a replacement of the airconditioning plant in the Cabinet room and the Prime Minister’s suite. I am informed that when it is completed and painted white it will, to a large extent, be absorbed by the walls of the main building in the immediate background and will not be readily noticeable from the nearby roadways.
– I have received from the widow of the late Honorable Archie Galbraith Cameron, M.P., a letter of thanks for the resolution of sympathy passed by the Senate on the occasion of his death.
asked the Minister representing the Treasurer, upon notice-
– The Treasurer has supplied the following answers: - 1 and 2. In accordance with Article 16 of the Japanese Peace Treaty, the International Committee of the Red Cross is to distribute moneys received from Japan and from the sale of Japanese assets in Thailand among the countries concerned for the benefit of former prisoners of war. To ensure that each country receives its correct proportion, the society decided that it was necessary to check the lists of former prisoners of war submitted to it by all countries. Latest information from the society’s representative is that this task should be completed in October, but this is not definite. A further difficulty is that the Philippines, which has submitted lists of former prisoners, recently concluded a separate reparations agreement wilh Japan and subsequently ratified the San Francisco Peace Treaty. It is not certain at this stage whether the Philippines is now entitled to a share in the Article 16 moneys. Indonesia has neither ratified the treaty nor submitted lists of former prisoners to the society for check. It is believed that the position of both countries will be clarified in the near future. It will be appreciated “therefore that neither the date of distribution nor the amount that will become available from the International Committee of the Red Cross can yet be stated definitely.
asked the Minister representing the MinisterinCharge of the Commonwealth Scientific and Industrial Research Organization, upon notice -
– I have been supplied with the following answer: -
Tests have been made on a number of antibiotics and sulpha drugs for their value in curing foot abscess of sheep, but so far with no great success except in a few cases where treatment was made soon after the onset of the disease. This was of little value because cases are usually detected only when the lesions are well advanced. This disease is caused by a bacteria, Fusiformis necrophorus. Preliminary efforts to prepare an effective vaccine using laboratory animals have been unpromising. Research into these problems is being continued and at the present time arrangements are being made to increase the staff engaged on this work. Advertisements have recently been issued for two additional graduates to undertake field and laboratory work concerned with footrot and foot abscess.
– On 4th September, Senator Wedgwood asked me the following question: -
Has the attention of the Minister representing the Minister for Territories been directed to a report from Port Moresby that Public Works Department carpenters are building special accommodation for a woman at the Bomana gaol? Has an appeal been lodged on behalf of this person, and if so has bail been refused? If no appeal is pending and the Bomana gaol has accommodation only for native prisoners and for a few male Europeans, will the Minister please explain why the prisoner was not moved to the mainland for detention?
The Minister for Territories has now furnished the following reply: -
No information is held in the Department of Territories regarding the case mentioned, but a report is being obtained from the Administrator of Papua and New Guinea. The Bomana gaol at Port Moresby, which is reported to be an excellent institution, has accommodation for native prisoners, and European prisoners serving short term sentences. In the post-war years there has not been any requirement for accommodation at this institution for European female prisoners. A prisoner may only be removed from a territory to a State gaol on an order made by the Governor-General in Council on the recommendation of the Administrator of the territory and with the concurrence of the Government of the State to which it is proposed to transfer the prisoner. In view of the time required for the completion of formalities involved, it is not the practice to transfer prisoners who have been sentenced to short terms of imprisonment.
– On 30th August, Senator Henty asked the Minister representing the Postmaster-General the following question: -
I direct attention to the fact that in the telephone Directory under the list of Commonwealth Government Departments appears the Commonwealth Trading Bank of Australia. Will he take steps to see that that entry is removed from that list when the new telephone directory is printed as it is considered to oe a handicap to ihe Commonwealth Trading Bank to be listed as a Commonwealth government department?
The Postmaster-General has now furnished the following answer to the honorable senator’s question: -
Generally, the listings for the Commonwealth Bank which appear in the Commonwealth government departments sections of the telephone directories are merely cross-references to the main entry in the alphabetical section of the directory. In the Sydney directory, the listing includes the telephone number of the head office of the bank and a cross-reference to the alphabetical section where the main entries are shown in derail, whilst there is no listing for the bank in the Commonwealth Government departments section of the Melbourne directory, all entries appearing in the alphabetical section. The Commonwealth Trading Bank is listed specifically in the Commonwealth government departments section of the Western Australian telephone directory only. Crossreferences where they appear have been included for a number of years at the request of the head office of the bank in each State and although not essential, they assist telephone users in locating the numbers concerned. The references could be withdrawn if the Commonwealth Bank so desires and the post office is approaching the bank accordingly.
– On 4th September, Senator Poke asked the Minister representing the Postmaster-General the following question: -
Is the Postmaster-General aware that there is a possibility that outside labour will be brought in to assist in the sorting of mails in Tasmania? Is he aware that if such labour is used it will be regarded most unfavorably by members of the Postal Workers Union? Does he not think that this would aggravate the present situation and will he take steps to prevent the engagement of such casual labour in view of the present situation?
The Postmaster-General has supplied the following information in reply to the honorable senator’s question: -
The postal traffic handled by the post office is continually increasing and the rate of development is approximately 8 per cent. per annum. While some of this increase is met by improvements in handling methods, it will be obvious that the post office staff must be increased steadily if the public demand is to be met satisfactorily. At the same time, there is a continuous turn-over of staff similar to that being experienced by employers generally and in some centres the staff is not up to full strength. Because of these factors the department is in some areas, seeking additional full-time staff preferably suitable men prepared to qualify for appointment to the permanent establishment. Naturally, the department is anxious to recruit as quickly as possible all the staff required to meet its commitments to the public, particularly in Tasmania where some delays are at present being experienced in the delivery of mail. There is, however, no present intention of employing on the sorting of mails in Tasmania, officers or employees of the department who are not eligible to belong to the Amalgamated Postal Workers Union.
Debate resumed from 6th September (vide page 1 84), 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 involving Capital Expenditure, for the year ending 30th June, 1957,
The Budget 1956-57 - Papers presented by the Right Hon. Sir Arthur Fadden in connexion with the Budget of 1956-57, and
National Income and Expenditure 1955-56.
Upon which Senator McKenna had moved by way of amendment -
That all the words after “ That “ be left out with a view to insert in lieu thereof: - “ the Estimates and Budget Papers 1956-57 tabled in the Senate are unacceptable and should be rejected because they seek to implement policies which are seriously detrimental in their effect on the interests of Australia and for which the Government deserves to be censured “.
– Members of the Opposition in this Parliament are not the only persons in Australia who are concerned with the utter failure of the Government to meet the present unstable financial position and the greatly increased prices resulting from inflation. The budget reveals that the Government’s only answer to the problems facing the country is that all charges shall be increased. At the same time, it exhorts members of the public to reduce costs, and in an attempt to do so it gives effect to a policy by which the earnings of wage- earners are controlled, thereby fixing a static base wage. While the Government does that to the earnings of workers, it proposes to charge more for the mailing of letters, the installation and rentals of telephones, as well as for charges for local and trunk-line telephone conversations. These extra charges will increase costs in industry and business undertakings generally throughout Australia, and that, in turn, will have a severe effect on the community, particularly on people with fixed incomes who have no means of passing on these increased costs. On the one hand the Government, as I have said, proposes to increase the cost to the public of postal services generally, and, on the other hand, it is callously indifferent to the claims of workers in the PostmasterGeneral’s Department whose base wage has not been increased since 1953.
These workers have done their utmost to avoid industrial disturbances and stoppages, but their claim has been passed to and fro, like a shuttlecock, between the Arbitrator and the Government, with the result that they cannot get any consideration whatever in the way of an adjustment of their salaries to make them fair and equitable. The Public Service Board says that it will not act against the policy of the Government. That means that the board is governed by government policy. At the same time, the Government says that it will not interfere with the determinations of the Public Service Board. So we see that, while, on the one hand, the Government increases postal, telephonic and telegraphic charges to the highest level that we have ever experienced in Australia, it refuses to give to workers in the Postmaster-General’s Department the right to enjoy margins to which they are legitimately entitled. The margins that these workers once enjoyed have been whittled away. A conduit worker in the department should enjoy a margin of from £1 to £1 5s. a week above the basic wage, but in some States he is paid less than the real basic wage enjoyed by State public servants. The Government has applied pressure to these workers to such a degree that the service is in danger of being disrupted. The present position is most unjust. The Government should give early consideration to the situation which has arisen, so that employees of the PostmasterGeneral’s Department may have their submissions reopened with a view to their margins being restored, or at least that their rates of pay in relation to the basic wage, as declared by the court and observed by the States, shall be maintained. The Government has stated time and again that its main object is to keep costs down, and yet it has decided to introduce television into this country. Television will be most expensive both for the Government and for viewers. However, the new service will operate in only two of our States, and the huge expenditure involved will, therefore, be spread over the people of those States. The people of those two favoured States - if they can be called favoured - have been indirectly taxed in regard to television by the Government placing a charge of £7 on every cathode tube used in television sets. That is another indication of the way the Government extracts revenue at every possible point from the people. It taxes people at the breakfast table, when they are at their pleasures, and everywhere else.
The budget is designed to take £1,239,153,000 from the people, which is £9,000,000 more than will be expended by the Government on services for the people. The Government has, therefore, disregarded all its own warnings about reducing costs in order to relieve inflation. We of the Opposition are not alone in our contentions about this budget, and I intend to indicate the opinions of responsible and highly respected people in the community which agree with the opinions of the Opposition. Mr. K. F. Coles, the president of the Associated Chambers of Commerce of Australia, said -
The budget contains no surprises. If the diversion of £108,000,000 surplus results simply iri the transfer of this large amount to public spending programmes it will be open to serious challenge.
The fact that the Government is taking an additional £108,000,000 from the people puts the Government in the position of an underwriter, a moneylender or banker to the States. Every honorable senator should be up on his feet protesting against this budget, because the citizens of the States are providing this huge revenue, whereas only a trickle of it goes back to the States for expenditure on their essential programme. In a period like the present when there is unemployment among the people, the States should have direct access to more of the proceeds of taxation than is permitted by this Government. Mr. Latham Withall director of the Associated Chambers of Manufactures, said -
The budget means no real improvement for industry. Increased postal and telegraphic charges will be another burden on both business and private individuals.
Mr. Monk, the president of the Australian Council of Trades Unions, said -
The budget failed completely to deal with the inflation problem. How can the Workers be expected to restrain their wage claims while the Federal Government is unable to deal with Australia’s main economic and social problems.
Mr. D. H. Sargood, the acting president of the Melbourne Chamber of Commerce, said -
Higher postal and telephone charges will add a further turn to the inflationary spiral. The Federal Government advised restraint to others, but added some £3,000,000 to charges for its own services.
I remind honorable senators that the Government took that action in a department where is has frozen wages. Mr. M. J. Pettigrove, the secretary of the Taxpayers Association said -
If ever-mounting taxation was a cure for Australia’s economic ills, the present Federal Government would live long in history as the great financial physician.
Mrs. Gladys Hain, the president of the Housewives Association said -
The budget is uninspired and uninspiring from the housewives’ point of view. I am glad some social service pensions are up, but the poor pensioner gels nothing.
I remind honorable senators that the opinions that I have just mentioned are those of people who represent a fair crosssection of the public, and, therefore, the Government should take careful note of them and honorable senators should support the amendment moved by the Leader of the Opposition (Senator McKenna) and force the Government to review the budget in the light of the criticism that it has received, not only in this chamber, but also throughout -the country. It has pleased some honorable senators to take the opportunity presented in this debate to speak about’ unemployment throughout the country generally, and in Western Australia in particular. It is astonishing that honorable senators who represent the people of Western Australia should have put forward arguments that are most damaging to their own State and, moreover, which are based on false premises. At present, there is mounting unemployment in Western Australia among tradesmen, semi-skilled workers and unskilled workers.
– That is, of course, because of maladministration by the Western Australian Government.
– There was no maladministration in Western Australia. Senator Scott stated that the Government of Western Australia had used up its allocation of money for housing too early in the year and had left itself without finance for the latter part of the year. I suggest that that was good administration. The Western Australian Government proceeded with a vigorous housing problem, and pushed forward the construction of houses without any hold-ups. Although that meant that the housing allocation was spent too soon, nevertheless we got more and better housing for the same money in that State by adopting that method. In other words, there were no long hold-ups in the construction of houses while the State was allocating finance. There is more likely to be maladministration in other States where £750 to £1,000 is added to the cost of every house built because State governments hold back money in order to spread their housing allocations over the whole year. Ultimately, the cost of these houses has to be met by the householders and the community in general, and the Western Australian Government has saved the people a considerable amount of money. When housing funds in Western Australia ran out, this Government did not allow the State Government any further money. The Commonwealth and State Housing Agreement provides, in effect, that the State Government will not be obstructed in the supply of homes, but this Government has devised a method under which it purports to restrict undue expenditure. In that way, it has strangled the housing effort in Western Australia.
A big oil refinery was constructed recently in Western Australia, and the work absorbed a considerable number of skilled and semi-skilled men. The project has now been completed but, contrary to the prophecies of this Government, it has not given employment to many workers. The labour force that was called to Western Australia for the construction of the refinery has been thrown upon the labour market in Western Australia. The Western Australian Government has expended efficiently the money at its disposal to maintain full employment, but its efforts have been undermined by this Government, which deprives it of funds while paying lip-service to a policy of full employment.
In addition to the tradesmen who were left on our hands in Western Australia when the refinery was completed, we have had a greater influx of immigrants in relation to population than any other State has had. We have the potentialities to absorb those workers and immigrants, but if this Government continues to restrict development, and will not allow the Western Australian Government to maintain legitimate capital expenditure, unemployment must grow. The Commonwealth Government holds the purse-strings, and it must accept responsibility for the present state of affairs. The result of the recent State election in Western Australia was positive proof that the Western Australian Government is acceptable to the people, and has spent its funds efficiently. A record number of Labour candidates was returned, and the number will improve. It is shameful for representatives of Western Australia to rise in this chamber and endeavour to make political capital by using falsely based arguments that damage the State they represent.
No government has paid more lip-service to the development of the north-west of Western Australia than has this Government. Supporters of the Government have talked about it, and they have said that that area is valuable and should be developed, but the Government has done practically nothing. Some foreign capital has been introduced to develop the rice industry, and I think it will be successful, but that reflects no credit on the Government. The concessions that have been granted to people living north of the 26th parallel are mere chicken-feed. If the Government continues in this fashion, the north-west of Western Australia will decline further. It is the only part of Australia that has gone back in relation to population and general development, and that trend will continue under this Government. The previous Labour Government constituted a northwest development committee, which introduced sound and practical proposals. A geological survey was carried out, and it led to the discovery of oil in Western Australia. Dr. Raggatt’s report, which was submitted to the Labour Government, marked the spot where oil was struck. It is all very well for Senator Scott to put forward a proposition-
– I rise to order. I direct attention to Standing Order 419, which states -
No Senator shall digress from the subjectmatter of any Question under discussion; nor anticipate the discussion of any subject which appears on the Notice Paper.
There is on the notice-paper a matter dealing with the development of the north-west of Western Australia, and I submit that Senator Cooke is out of order.
– Would you indicate to me, Mr. Deputy President, when the notice of motion to which Senator Henty has referred was first placed on the notice-paper?
The DEPUTY PRESIDENT (Senator the Hon. A. D. Reid). - Order! The matter to which Senator Cooke referred is on the business paper, and the point of order raised by Senator Henty is well founded. The honorable senator cannot discuss any subj’ect which is already set down for discussion in the Senate.
– I can see quite clearly that I have proved my point. This Government proposes to do nothing else about the development of the north-west. There has been an item on the noticepaper for twelve months’. It has been debated but not decided. The subjectmatter has been considered at diverse times over a period of three years, but nothing has been done. I have proved my point, and I shall not press the question. I shall direct my attention now to the problem of inflation. This Government has strictly controlled the wages of those workers who come under its jurisdiction, but it has nol restricted profits. It has allowed foreign capital to come into Australia, and huge profits have been distributed in addition those ploughed back into industry. The result is economic infiltration, which can be very dangerous.
No steps have been taken by the Government in this budget to stem inflation. If the Government wants to reduce costs so that the goods we produce can be sold on the markets of the world, it must turn its attention to the other side of the picture, and reduce excess profits and the costs of services. It must put a brake on the expenditure of money outside Australia. I refer in particular to the defence vote. We have very little in Australia to show for the expenditure of that money. More than £1,000;000,000 has been spent by this Government over a period of years, but we have not made any progress with roads, transport, bridges and similar developments that are valuable in defence. On the other hand, the greater proportion of our defence vote has been expended outside Australia. At the same time, the Government has borrowed heavily overseas, and has put Australia in pawn.
If the Government is sincere about maintaining full employment, particularly in Western Australia, it should increase its defence expenditure and defence developmental work in that State to absorb the unemployed. The Treasurer (Sir Arthur Fadden) has been asked to table papers on the negotiations between the Federal Government and the Government of Western Australia. The Treasurer has refused to table them, offering the excuse that he might embarrass the Premier of Western Australia. 1 have the authority of the Premier of Western Australia to say that he would be prepared, and pleased, if those papers were made available to this Parliament for examination and discussion. He says he has nothing to hide. The papers set out the position clearly, properly and factually. The position, he claims, has been abused and misrepresented by representatives of Western Australia in this Parliament. At the first opportunity I shall ask that the papers in respect of that matter be tabled so that they can be examined and debated in this chamber which is supposed to be a chamber representing the States-
.- The Senate should be grateful to the Treasurer (Sir Arthur Fadden) for his frank, honest and lucid exposition of Australia’s present economic position. [Quorum formed.] I compliment the Treasurer on the production of a surplus of £61,612,000 amidst the welter of the inflationary increases on the expenditure side of the national finances. The revenue estimate for the current year of £1,121,000,000, which is £52,300,000 greater than the comparable figure for 1955-56, is truly astronomical and reflects the .current prosperity of this country and the strong influences of inflation. With the cost structure rising very strongly as each financial year passes, I should like to examine what the Government has been doing to meet this situation, and I should also like to contribute a few thoughts on the subject of the increasing menace of inflation.
I listened with interest to Senator Cooke, but I did not hear one single suggestion from him as to the means of combating inflation which is here like a hungry wolf howling outside the door. However, I heard him advocate courses which would gravely stimulate inflation and make that wolf hungrier still. The Government is doing its best, under present-day conditions to restrain intiation by first of all taking the necessary action in respect of the money supply. Increases in the flow of purchasing power must be held down as near as possible to the supply of available goods and services, and the Government is doing its best to meet that situation. On the monetary side, as I see it, an attack on inflation can be best made by the following eight moves: Voluntary self-restraint, reduced governmental expenditure - both Commonwealth and State, taxation, creation of antiinflation savings schemes, a restrictive monetary policy, and reasonable control of imports. I shall not have time this afternoon to deal with the relation of import controls to the inflationary and general budgetary position but, during the debate on the Appropriation Bill, I propose to deal with that matter. The seventh move I suggest is a cut in immigration, and the eighth is a cut in tariff protective duties. All of these factors relate to the severe inflationary pressure in this country.
Considering the first essential step, it would be very powerful in the struggle against inflation if voluntary self-restraint in spending were exercised by-
– Buying less potatoes.
– The honorable senator raises the potato question. The whole point there, of course, relates to the fact that the farmers who plant potatoes and onions have been precluded from doing so this year because of excessive rain. Exeat in isolated areas they have not been able to plant, with the result that we have not the usual abundant crops of potatoes. The market competition for the potatoes available sends the prices upward. There is no call on anybody to pay those prices as other good vegetables can be bought on the market quite cheaply. 1 say, therefore, that the scarcity of potatoes and the high prices secured for them in market competition have no bearing whatever on inflationary pressure. There are bigger fish than that to fry in applying ourselves to the consideration of the restraint of which I speak. Voluntary self-restraint should be exercised by governments, by business authorities and individuals. It is all very well to preach to people to exercise voluntary restraint in spending. It is far easier, I regret to say, to give the advice than it is for one to carry it out. There should be at this particular time a willingness on the part of us all to discipline ourselves. If we showed that willingness, it would at least set a good example; and that applies to the National Government, State governments, business groups and individuals alike.
The Treasurer must be complimented on his rejection of excessive departmental estimates of expenditure for the current year. I was pleased to note in the press that Sir Arthur Fadden had sent estimates back to certain departments asking that substantial cuts be made, having regard to the circumstances of the times. Abundant room still exists for substantial cuts in controllable Commonwealth and State expenditure. I sincerely trust that the Treasurer will continue to reject departmental estimates based on extravagant planning programmes which directly aid inflation instead of combating its effects.
– St. Mary’s filling factory.
– I never liked the St. Mary’s project from the start and I do not like it now. That is straight talking. The valuable reports of the Public Accounts Committee furnish striking proof that topranking officers of a number of departments have, by lavish expenditure, accelerated inflationary movements instead of dampening them down. Taxation is an excellent medium for combating inflation and for absorbing surplus spending power. - If taxation remained at present levels, and Commonwealth and State government expenditure did not equal or exceed the total amount collected from the taxpayer and goodly surpluses were assured, those surpluses could be drained into a reserve fund and held against the inevitable rainy day. Action of this kind would contribute something tangible towards halting inflation. Taxation can be a most formidable check to inflation if surpluses remain unspent. There is not much use in accumulating surpluses and spending them again, because the desired effect is not being achieved.
– What effect would that have on employment?
– I do not worry about employment at this particular time because there is no unemployment in Australia except in an isolated area of Western Australia, where, we have heard, some unemployment exists. The honorable senator who interjected will recall a period in the history of this country when there was unemployment on a tremendous scale. It was a very sad and terrible period in our history, but there is nothing like that to-day, so we do not have to worry about that aspect of the matter. Everybody is employed. In expending government funds, both the Commonwealth and State Treasuries are drawing money away from the people who earned it, and are spending the taxation yield at, perhaps, a more rapid rate ‘than the taxpayer, who earned it, would have done.
The Commonwealth Treasury returns for the income year 1955-56 show that revenue amounted to £1,130,700,000 and expenditure £1,069,100,000, leaving a balance of £61,600,000. That surplus was transferred to the Loan Consolidation Investment Reserve Fund. According to the “ Information Bulletin No. 3 “, issued by the Treasury last July, the budget results of all the Australian States show a net overall deterioration of £11,497,000 for 1955-56, as compared with the previous year. That is really bad. The Commonwealth Treasurer has balanced his budget, but all the States, with the exception of Tasmania, have produced deficits. It will thus be seen that in the last financial year, the lever of taxation has not made a worth-while contribution towards holding down the volume of money in active circulation. However, I am pleased to note that the Treasurer estimates a surplus of £108,700,000 for the current year, of which £108,500,000 will be applied to the Loan Consolidation Investment Reserve Fund.
I wish it were possible, as a means of putting an effective stranglehold on inflation, to hold this money in that reserve fund, unspent, but for reasons which the Treasurer stated in his budget speech, this appears to be unlikely because there are calls for this money.
– And very good calls, too.
– I agree. However, if the Commonwealth merely collected large sums of money from the taxpayer and spent it all in the course of the year, the lever of taxation would not have been used as an effective check against inflationary pressure.
– That money will be returned to the States by way of loans.
– I agree.
– Interest will be charged on it, also.
– I do not know of any one who gets money for nothing, particularly these days. I strongly favour the introduction of a compulsory savings scheme on a formula to be devised by the Treasury to embrace all youths, male and female, under 21 years of age. The wages awarded nowadays to young people by industrial tribunals have reached fantastic levels in comparison with the wages earned by married men with heavy family responsibilities. I realize that many young people save their money and make regular deposits in the savings banks, but I fear that the great majority waste their substance. There seems to be no true appreciation, by the rising youth of the country, of the value of money, and many parents who experienced the devastating effects of the depression period in the years 1930 to 1932, have expressed concern to me about the way in which their teenage sons spend their weekly earnings on various types of foolishness - mostly horse and dog racing, and, I suppose, a few beers at the local hotel. As a result, when the week-end is over, they have to go to mum and ask her for a loan to carry on until next pay-day because they are broke. A compulsory savings scheme would do a great deal of good for young people in this category, because if they were made to invest in savings they would be able to collect at a time when they were about to assume greater responsibilities in life.
– I thought that the honourable senator did not like controls.
– I do not call a compulsory savings scheme a form of control. lt would be a wise form of compulsion to make young people save their money, and they would not be hurt in the process. It would ‘help the unthinking youth of our community to save their money, and would t>e one form of restraint, which is so necessary in the fight against inflation. Another means of combating inflation would be to introduce savings certificates similar to war -savings certificates such as were issued -during World War II., and which attracted Widespread investment. A drive to interest both young and old people in purchasing savings certificates could be undertaken by Commonwealth officials who are mow employed in pushing the sale of inscribed stock and Commonwealth bonds. Honorable senators will agree that the :point has been reached in our economy where it is becoming urgently necessary to augment considerably the people’s savings if funds are to be available for developmental projects.
A means of combating inflation to which I attach the- greatest value is a restrictive monetary policy. This could be a powerful force- brought to bear on money supply, and would attack inflationary pressures at the very source. When money becomes tighter, obviously the spending plans of individuals and business concerns have to be modified considerably, and the idea is to reduce the pressure on spending in the economy. There are other direct restraints also, such as high interest rates and other selective controls, all of which are functioning at the present time. Every one of the steps taken to enforce the restrictive monetary policy is most painful and hard to take, and that applies to most of us.. Anything which involves the curtailment of credit is bound to meet with severe criticism and strong opposition. The withdrawal of credit should be handled with great skill and care, otherwise the economic life of the whole community can be greatly weakened. There is a very necessary restrictive monetary policy operating in Australia at the present time, and sponsored by this Government. I receive and hear complaints from time to time that it has operated too rigorously against the primary producers, many of whom feel that the bank hire-purchase subsidiaries absorb a good deal of the money which would otherwise flow into the ordinary banking accounts to be loaned to that section of the community who, by their exports, help to keep Australia’s credit good overseas. I have no direct evidence of the truth of those statements, but I have heard them from many primary producers, and it would be bad if such were the case.
When speaking in Parliament last week on the subject of the restrictive monetary policy, Dr. Evatt said -
Great and powerful interests have no difficulty in obtaining bank credit . . . Great buildings are being erected in the cities, and credit for the erection of these buildings is advanced by the banks.
It is easy to make assertions of that kind, but I notice that Dr. Evatt did not advance any proof of his statement. I should say that most of the buildings referred to by Dr. Evatt are financed by the shareholders of the particular companies interested in their erection. I should say also that many big. enterprises have, over the last few years, accumulated profit reserves for the particular purpose of expansion, and it is from those reserves that they are finding the money to erect the buildings. Again, buildings are erected from time to time with investment funds contributed by insurance companies, trustee companies and the like. I have no hesitation in saying that if the banks are extending credit to great and powerful interests, as suggested by Dr. Evatt, and contrary to the restrictive monetary policy of the Government, whilst at the same time witholding credit from the rest of the community, that would constitute a grave scandal and should be the subject of an inquiry. I invite the Leader of the Opposition (Senator McKenna) or any other honorable senator opposite to produce proof of Dr. Evatt’s statement.
There is no doubt in my mind that the immigration programme is a concealed but powerful force making for inflation. It has been stated that it. costs, in round figures, about £2,500 to set up an immigrant in this country and that immigration places a strain on our overseas funds. Then, of course, the provision of homes and services of all kinds to meet the enormous flow of immigrants, is, I think, becoming too much of a strain on the Australian economy, having regard to the lowering trend of our London funds. While we had ample funds at credit overseas it was easy to finance a large scale programme of immigration, but with those funds now right on the borderline of danger to the economy of our country, it is time we pulled in our horns a bit on the score of excessive immigration. Therefore, I fully support the policy of the Government in making progressive cuts in the intake of immigrants. The Treasurer has made provision to cut back the gross intake to 1 15,000 immigrants for the current year, which is 18,000 fewer than for the year 1955-56. I regret to have to say it, but by the force of events, I fear that’’ we shall be obliged to make very substantial cuts next year to escape the concealed inflationary pressures from this particular source.
I come now to a consideration of what I consider to be the greatest inflationary pressure of all, and I am prepared to have substantial difference of opinion from honorable senators opposite on this particular point. The Labour party believes in the control of prices and profits as an antidote to inflation, but in my opinion such controls would be quite hopeless. I go further and say to the Opposition that control of prices and profits, and even of wages will not of itself check the present inflation.
– We say that.
– I am glad to have senator Critchley’s support for my proposition. Such controls may conceal and defer the effects of inflation, but, sooner or later, if the fundamental causes are not dealt with, there must be an explosion. If the safety valve of the boiler is tied down, it will not hold the steam in check very long if we keep on shovelling more fuel into the firebox. We may take all sorts of measures to combat inflationary pressures, but if we tie down the safety valve of the boiler there will be an explosion without doubt if we keep shovelling more fuel into the firebox. Direct controls as advocated by Dr. Evatt and the Leader of the Opposition (Senator McKenna) may tend to suppress inflation but they will not cure it. Every increase in wages, whether it be by automatic or statutory adjustment, means shovelling more fuel into the firebox, it means stoking up the forces of inflation. There is not the slightest escape from that point at all, and I hope to show that the Government’s method of combating inflationary pressures is the correct approach to be made at this stage.
The Treasurer has declared in his budget speech that the Government does not believe in the freezing of wages, profits or prices. At this particular juncture, I think that is a sound policy. I do not think anybody has all the answers, but time will show whether this course is right or wrong. Although honorable senators opposite claim that prices and profits are the main causes of inflation, I submit that contention cannot bc borne out by the facts. We had enough experience of the painful effects of prices control during the war and the early postwar period. Every member of the Senate is painfully aware of what were the effects of prices control during that period. The term “ prices control “ is, of course, a complete misnomer, because the word “ control “ suggests that it is possible to stop prices from rising, whereas any office boy in the prices fixation offices during the war and early post-war periods could explain clearly to anybody why it is impossible to achieve control of prices. There can be no such thing. All that one can do in this direction is to regulate prices in accordance with costs in particular enterprises. In my opinion, therefore, a prices controller should be termed a prices regulator. If, in the regulation of prices, the prices of various commodities are clamped down too rigidly, the production of goods will decline, as occurred in the periods that I have mentioned. Manufacturers, farmers, or others who are subjected to the rigid regulation of prices will either go out of production or else divert their production into black markets. That is the only answer. During the period of the war, as the prices of blankets were rigidly fixed, a certain firm that was manufacturing blankets, on finding that it could no longer make a fair margin of profit by that means, changed over to the manufacture of rugs, the prices of which were not controlled.
– Will the honorable senator explain the difference between the regulation, and the fixation of prices?
– The term “prices control “ creates the impression in the public mind that it is possible to control prices. 1 have already explained why it is impossible to control prices, but it is possible to regulate them; in doing so, the cost structure must be taken into account. For example, there are price fixation offices throughout Australia to-day. In Queensland, as Senator Brown knows, the Labour Government has meddled with price fixation for many years past, but although it has fixed the price of beef, petrol, and many other items of merchandise in that State, everybody knows that the prices of petrol and beef are increased when charges increase. In fact, the officer administering prices control in Queensland does not control the price of petrol, he merely regulates the price in accordance with the upsurge of costs. In any event, I believe that most of the price fixation officers are redundant, because competition does the job much better.
As price fixation has failed in the States, by what magic would it succeed if, as advocated by Dr. Evatt, Senator McKenna, and all the henchmen who support them, power to control prices were referred to the Commonwealth by the States? I contend that, as the control of prices has not succeeded in the States, it could not possibly succeed if it were administered by the Commonwealth as a result of the reference of power by the States. I maintain that, as it is impossible to clamp down on inflationary movement by the control of prices, every enterprise would be affected, no matter how.. many hundreds of prices control officers were appointed. Although it is possible to exercise restraint in relation to prices, the control of prices would not eliminate the inflationary forces that are at work. I think that it would be completely ineffective for the States to transfer their power to control prices to the Commonwealth Government.
I come now to the subject of profits. The Leader of the Opposition (Senator McKenna) voiced the policy of the Labour party, when he advocated the control of profits. His parliamentary supporters have loudly declaimed against profiteers, racketeers and other strange fellows whom, they allege, are exploiting the workers in order to gain excessive profits. Most businessmen of my acquaintance have to struggle under highly competitive conditions in order to make a reasonable margin of profit, lt is a constant struggle for survival in the highly competitive markets. If isolated cases occur of the making of excessive profits by big companies they are subjected” to what 1 consider to be the most sensible means of profit control, that is, high taxation. Honorable senators can be assured that the Treasurer (Sir Arthur Fadden) has not missed a point on this score. Public companies which have earned what would be regarded by the Leader of the Opposition as excessive profits, have been quickly brought back to the field by the taxation laws of this country. They have been compelled to pay from what the Opposition describes as excess profits, larger amounts of taxation appropriate to the volume of profit earned. Most public companies pay company tax of 8s. in the £1, which is at a higher rate than is levied on the majority of persons who derive their income from personal exertion. Therefore, the argument that company profits exert a heavy pressure on the inflationary spiral does not hold water. The budgetary statements show that wages paid during 1955-56 amounted to £2,562,000,000, compared with company income during the same period of £550,000,000. I am endeavouring to illustrate the comparative pressure on the inflationary spiral. The wages paid during the last financial year were of the order of £2,562,000,000, while the income of all these predatory companies which, according to the Leader of the Opposition, are making excessive profits, stood at £550,000,000. Therefore, the aggregate of wages paid was about five times as much as company income, and so contributed greatly to higher costs and consequential inflation. I do not want any one to interpret my remarks to mean that I wish to be hard on the wage-earner. I know his position, but it is beyond all doubt that the prime factor in the development of inflationary conditions is the high level of labour costs.
– In other words, the honorable senator advocates reduced wages.
– I shall not allow the honorable senator who has interjected to put words into my mouth, but shall develop my case logically, in my own way, as I proceed. When it was proposed to relax wage-pegging regulations in 1946, Mr. Colin Clark, an eminent economist employed by the Labour Government of Queensland, advocated strongly and publicly the retention of the wage-pegging because, he said, a rise in wages would mean the beginning of a vicious spiral; His exact words were -
A rise in wages will cause prices to go up, and will increase the cost of production.
It has worked out as he predicted. Wages rose, and, as Mr, Clark said, prices were increased immediately. The result has been that for ten years we have experienced a vicious circle: wages have been raised, and almost immediately prices have gone up. That has led to further increases of wages, and still higher prices, until we have reached the point at which the £1 of 1939 is worth only 7s. 3d. in purchasing power, if we accept the word of the Commonwealth Statistician. The result is that no one is any better off. That is our trouble; every wage increase is followed by higher costs for goods and services, and that nullifies at once the value of the rise in wages. That, in turn, causes trade unions to press for higher wages in an attempt to overtake rising costs. The industrial courts agree that costs have risen, and so they raise wages. The next thing that happens is that costs rise again, and so the spiral of rising costs goes higher and higher, like a thermometer at Marble Bar. Unfortunately, wageearners uTe gulled by trade union leaders into the belief that the more money they receive the more wealth they will accumulate. That is the great fallacy and the rock upon which political and industrial demagogues perish; they include one as notable as Dr. Evatt, who said last year in the House of Representatives that inflationary conditions could be checked by increasing wages. Such a statement is absolute folly, and utterly inexcusable in a parliamentary leader. If the wage-earner is to gain more wealth, he* must produce more goods. If wages rise- without any corresponding rise of production, all that happens .is that prices rise in the same ratio as wages have risen, so that no more .goods can be bought with the increased income than could have been bought when the wages were lower.
The great economic truth which emerges is that -.purchasing power does not rise with increased wages, whereas .money decreases in value. I submit that no increase of wages means any increase of purchasing power to the recipients unless the increase applies to only a limited field of industry. Let us suppose that 1 have a factory in which 500 men are engaged in the manufacture of green goggles. By good management 1 end the year with a fair margin of profit, and decide that 1 will share that profit with my employees. I, therefore, call them together, and offer them a 10 per cent, rise in their wages and salaries. A rise of that kind, isolated from a general rise in wages., would convey increased purchasing power to my 500 employees. They would derive a real advantage, because the increase of 10 per cent, in their salaries and wages applied in a limited field of industry. But a rise of the basic wage or any rise over a wide range of industries, is a horse of a different colour.
– Which rise first - wages or prices?
– Wages rise first, and then .higher prices follow. We have seen that that has been so over the last ten or twelve years. When wages have advanced over the’ whole range of industry, particularly when the basic wage has risen, there has been no corresponding increase of purchasing power for the recipients. “Wages represent 80 per cent, of the costs incurred throughout industry generally, and, therefore, it must be obvious that every rise of the basic wage is cancelled out within a few months by consequential rises in costs. The proof of the pudding is in the eating, as I shall show by a homely illustration. 1 remind honorable senators that, in 1939, mem’bers of this Parliament were paid at the rate of £1,000 per annum. To-day, the amount received is £3,’000 per annum, but the purchasing power of that greater sum of money is not ‘greater than that of £1,000 seventeen years ago. The same principle applies throughout the whole of industry; a rise of wages over th whole of industry conveys no increased purchasing power. An increased wage in these circumstances, is so much Dead Sea fruit. Some of ms may carry round a pocketful of banknotes on pay day but, as I have said, those notes do .not purchase more goods than fewer notes bought seventeen years ago. When the basic wage was £5 a week, the man in receipt of that wage <could buy as much clothing and food as .he can buy to-day for £15 a week. Despite all the argument and disputation on the part of unionists and parliamentarians, we are no further ahead. Indeed, we are worse off, because our cost structure is such that we cannot sell the output of our greatly expanded manufacturing industries in the world’s markets. We have priced ourselves out of those markets. If we could get back to the conditions which existed in 1946, the markets of the world would be open to us, and we would enjoy tremendous manufacturing activity, with resultant high employment and great prosperity. Many trade union leaders are not qualified for their task, and cannot see beyond their noses. They continually advocate higher and higher wages - increased wages which they get through the industrial arbitration tribunals, and which carry no increase of purchasing power. Wages have increased, but the purchasing power of those wages has not gone up, so the money has decreased in value. The president of the Rural Bank of New South Wales, Mr: McKerihan, really got to the root of the matter when he recently suggested that as a cure for inflation all involved would act wisely if they were to’ get together and voluntarily accept a 20 per cent, cut of wages, prices, dividends, interest, costs and profits. Mr. McKerihan stated that under that plan sacrifices would have to be made, and that for a time all the people would suffer.
– Mortgages would also have to be ‘written down.
– The plan has not reached the stage where it is a practical proposition; therefore I cannot detail what would happen to all items of costs. Mr. McKerihan realized that sacrifices would have to be made immediately if that plan were adopted, but he stated that they would be rapidly compensated for because of the progress in our industry that would follow those cuts. He said - and I agree with him - *that if costs were .reduced by 20 per cent., our secondary industries would open up a big export trade with other -countries on a competitive basis. Although Mr. McKerihan’s suggestion will perhaps be regarded by a great majority of honorable senators as completely impracticable at this stage, it is my belief that such a course will ultimately be forced on us. If we do not accept that plan voluntarily, then sooner or later we shall have to accept it compulsorily; because inflation, if it continues, will, in the words of Lord Keynes, reach dizzy heights and thereafter collapse and fall to the lowest depths.
I sincerely hope that those who attend the next meeting of Commonwealth and State Ministers will thoroughly explore the whole matter, and make serious recommendations about inflation for acceptance by all authorities. I have much pleasure in supporting the budget.
– Part of the amendment that is now before honorable senators is to the effect that the Estimates and Budget Papers should be rejected “because they seek to implement policies which are seriously detrimental in their effect on the interests of Australia, “arid for which the Government deserves to be censured “. I propose to prove that the allegation contained in the amendment is true. I also direct attention to the fundamental principle of this nation’s economy, which is the maximum production and profit for the owners of capital and the minimum consumption for the non-owners of capital. As that policy is given effect, we find that huge surpluses necessarily pile up, which cannot be sold or purchased. That situation is not peculiar to Australia; it is general. Moreover, consumption is being reduced, which means that the purchasing power of wages - as distinct from money wages - is going down. More so in this country than any other country we find economic disequilibrium, or an unbalanced economy, where consumption continues to lag more and more behind production.
Not one word has been said by any honorable senator on the Government side to indicate .that the Government, has any knowledge of the position, or any idea of establishing and maintaining a workable economy in this country. Direct and indirect taxes on wages and small salaries aggravate inflation. The Treasurer (Sir Arthur Fadden), in his budget speech said -
As I have said on other occasions, inflation cannot be remedied by government action alone.
That is an admission by the supreme governing authority in this country that it is unable to do anything to remedy inflation. That is one of the reasons why the amendment has been moved. It has “been moved to direct attention to the failure of the Government in that respect. The Treasurer continued -
The kind of measures we have taken are designed to restore a state of general balance in the economy and I think they have had a degree of success in that direction.
The Treasurer did not indicate the way in which the Government has succeeded. He just made a statement, which is not correct. He continued -
But inflation is a pervasive thing. It draws upon many sources and is helped along by a multitude of actions on the part of individuals and of groups. This has to be more widely recognized and there must be a common will to resist inflation and do the things necessary to avert it - to produce more, to save more . . .
We produce mountains of primary and secondary goods which we cannot sell. Where, then, shall we get by producing more of those goods? If we save more, or if those who are foolish enough to take the words of the Treasurer literally save more, what will happen? Actually, we depend on consumption production, and the more we reduce consumption - particularly consumption by those actually engaged in essential production - the more we shall slow down industry. That is precisely what was done in the 1930’s. We slowed down industry, and so increased unemployment. Indeed, that process went on until 1939, and not one member of the government of the day and not one mathematical economist could point the way out of the depression. In saying that, I make particular reference to the late Professor Giblin, who could do no more than point out what has been pointed out in this budget speech. The Treasurer spoke of the necessity to produce more, to save more and to look for ways of reducing costs and of economizing in resources whatever the line of activity might be. The right honorable gentleman added -
Given such an effort by the whole community, I have no doubt that inflation can be mastered and our economic and social life freed from the dislocations and injustices it entails.
There we have merely a general statement, plus a pious hope. That statement was made by the Treasurer with the support of members of the Government, and, without being too critical, I shall say that they have much to learn about economics and political power. Economic power and political power are one and the same in substance. Where there is economic power and political power is not being used constructively, obviously the Government has failed. We are getting into a position similar to that into which we were manoeuvred in the 1930’s. Mr. C. D. Kemp, director of the Victorian Institute of Public Affairs, had this comment to make on inflation in the Melbourne “ Sun “ of 13th August -
Australia was suffering more -from inflation than any other English-speaking country, . . .
Since 1938-39, retail prices in Australia had risen 178 p.c. compared with 154 p.c. in Britain, 135 p.c. in Ireland, 104 p.c. in N.Z., 103 p.c. in South Africa, 90 p.c. in U.S.A. and 80 p.c. in Canada.
Comparison of 1939 and 1956 prices showed that haircuts had risen from 1/- to 4/6, steak from 1/3 to 4/6 lb. and suits from £4 to £16.
The rise in the cost of living had been a near tragedy for great numbers of people in the middle-range income group and also for age pensioners.
Inflation had lowered their standards of living and prevented them building up capital resources.
That statement was made by a man who was appointed by the business community of Melbourne as director of the Victorian Institute of Public Affairs. In my opinion, he is correct. I have endeavoured to say what inflation really means. I have listened to the speeches of honorable senators on the Government side, I have read the financial reviews published weekly in Sydney and have read various bank periodicals, but none has attempted to state exactly what inflation means. I shall answer that question myself by saying that inflation signifies that there is in circulation too much currency for the work it has to do. The process cannot be defined in precise terms owing mainly to expanding and contracting conditions of. monetary transactions, but the amount of money that should be in use is what is required at its gold value to carry through the total transactions needed from time to time.
Gold became, and is ‘still, the measure of the value of currencies, because over the years it has proved to be the most reliable in practice. Gold could not be manipulated or ‘misrepresented by governments, bankers and counterfeiters to the same extent as other forms of money, particularly bank notes or paper money.
Before World War I., the £1 note had a purchasing power equal to that of a sovereign. A sovereign represented a quarter of an ounce of gold. The notes were convertible and a person could go to a bank and demand either gold or notes. During World War 1., notes were made non-convertible, and there has been fluctuating inflation ever since.
I have said that the £1 note had purchasing power equal to a quarter of an ounce of gold. The fixed price of gold now is £15 12s. 6d. an ounce. Let us take round figures and say that it is valued at £16 an ounce. Divide four into £16 and the quotient is £4. That means that we require at least four £1 notes to buy what £1 purchased previously. That is on the pegged price of gold, and the price is pegged for the same reason that the price of labour power or wages is pegged; it is a means of increasing profits. In Australia, we pegged the price of gold so that the gold companies could carry on, and we tax the people to pay their profits so that the United States of America and others can get cheap gold. That is the policy of the Government and it proves conclusively that those responsible for drawing up that policy either do not understand the position or have not the moral courage to say precisely what is behind it.
Senator Maher has made reference to the cost of production. Actually, the cost of production should be divided into two categories. There is the real cost as assessed either in labour time or gold. Gold is still the measure of the value of currency, and costs have never been lower in terms of labour power and never higher in terms of inflated currency. So that honorable senators will understand the position and not be confused by a mass of figures, I shall cite my own experience which is similar to that of many others. During the 1914-18 war, I was working as a plumber. For 24 hours’ work which yielded 30s., I could buy a ready-made suit of - English twill. For 48 hours’ work, or £3, I could buy a better suit than the suit I am wearing now. To-day, if I were working at the trade and receiving £20 a week, as some plumbers are, I should have to work 40 hours to buy a ready-made suit costing £20; and if I wanted a tailor-made suit, similar to the one T am wearing, I should have to work for more than 60 hours. In addition to that the worker to-day, whether he be a plumber, carpenter, or anything else, with modern equipment, compared with what we had in days gone by, can do as much work in one day as we did in two days. He is working longer and faster for less of the necessaries of life as assessed in terms of labour power. If we want to assess the position in terms of gold, we must remember the price of gold is the index of the extent to which the currency is inflated. The price of gold has been pegged in order to keep from the people a knowledge of the extent to which the currency is inflated.
On 13th January last I addressed a number of waterside workers. 1 worked on the waterfront from 1910 to 1912 during a slump in the building trade. I told them that for ls. 3d. an hour in those days a worker could buy - if he were able to drink them - five imperial pints of baer of 20 oz., and would also receive five free lunches. At the time I addressed them they were receiving 8s. lOd. an hour, but all that would purchase was two imperial pints of beer and two lunches, and I doubt if they could even get two lunches. It is a gross exaggeration for Senator Maher or anybody else to say that wages are fantastic. Senator Maher dealt only with monetary wages. Real wages are calculated by what a person is able to buy in food, clothing, housing and the other essentials he requires. Relatively, and in the aggregate, the real wage has never been lower than it is to-day and the inflated wage has never been higher.
Who are the inflationists? It is the Government acting in collaboration with the private banks, issuing money greatly in excess of what would be required in terms of gold. It means, in effect, that goods and services are able to be purchased with virtually worthless bits of paper. As I have said before in this chamber, the Government is in the same category as the gentleman who circulated the forged £5 notes. To the extent that he was able to circulate them and persuade people to accept them he was receiving goods and services for virtually worthless bits of paper. The only difference between them is that although the notes circulated by each have no intrinsic value the one is done legally and the other illegally. The people are being misled by this talk about inflation.
– Would the honorable senator like to go back to the gold standard?
– We went back to the gold standard, but what did we find? We found that real wages then were never lower in terms of gold. In 1931, we again went off the gold standard and> more than that, the Governor of the Bank of England, Mr. E. C. Vickers, resigned because of the fraudulent policy that was adopted by the Government and the bank to deceive the people of England.
– He was an advocate of inflation.
– He was not. If the honorable senator reads what he has written - it is in the library - he will find exactly what he said. That is the stand he took, and many others, prominently associated with banking in England, took up a similar stand.
As I have said, purchasing power has (never been lower. Senator Maher wants us to blame the young people for spending so much and he wants a compulsory system of saving. To the extent that that could be done it would react on our production because people would not buy the things they needed. It may be that some young people -spend their money foolishly, but in cases where they are not spending their money foolishly, a compulsory saving scheme would react on production.. More than that, when money goes into the savings bank it is recapitalized. When the Victorian Government or the State Electricity Commission borrows £10,000,000 from the savings bank at 41 per cent., that interest is added to the price of articles or services so, in effect, the workers pay the interest. When they draw their money out of the bank under existing conditions, as well as having paid the interest, their money has not the- same purchasing power as it had when they deposited it. So the whole scheme of monetary control is a colossal racket and is made- possible because none of the schools, teach the children what they should know about these things. I refer to State and denominational schools and also to the universities.
Economists can be classified in two cate.gories There is the purely mathematical economist and the geometrical economist. The mathematical economist believes that a part is greater than the whole or that the Government is greater than the people. The geometrical economist believes that the opposite is the case. These economists often approach questions in the same way as do members of this Government. The amendment that has been moved by the Leader of the Opposition (Senator McKenna) is much more moderately worded than it would have been had I been given the job of wording it. I would have charged the Government with being accessories to the fact of the wholesale robbery of the wageearners.
Now, I come to the age pensioners. Quite recently they were given an increase of 10s. a week, bringing their pension to £4 a week. I said at the time that the increase merely made up a portion of a deficiency, and that has been proved. As soon as the Government increased pensions to £4 up went the rental of a room. The average rent being paid now is £2 5s. a week, and more in many cases. How can pensioners be expected to live in those circumstances? We had a deputation to the Treasurer (Sir Arthur Fadden). He was very impressed with the deputation which, quite dispassionately, presented a well thought out case. He said, “ I will consult with my colleagues “. I can imagine that his colleagues are not prepared to do anything for the aged pensioners. Senator McKenna said that these men and women made this country. They made it possible for people such as we to be where we are, but now they are on the outer.
The overall effect of this economic disequilibrium, or unbalance, in Australia is that private monopolies are steadily extending while the small primary producers and business- people are either being ruined or bought out of existence. The owners of capital are becoming wealthier and fewer in number and the non-owners are becoming poorer and increasing in number. That is the overall effect of the unbalanced economy which is being implemented by the present Government. It is either afraid to take the steps necessary to deflate the inflationists, or else it lacks the knowledge of how to do it. I have mentioned the ever expanding private monopolies. Ever since the Government has had the- opportunity to govern, monopolies have been operating, practically uncontrolled’. In the background those who wield’ economic power - the people who own the- land and the means of production - have been the real government behind the scenes, directing the policy which the Government applies.
How long will this state of affairs continue? There must be an inevitable reaction, because the law of cause and1 effect governs organic life as well as inorganic life. Already we have, seen the reaction in widespread industrial unrest. In addition, it is correct, as the Leader of the. Opposition in another place (Dr.. Evatt) has. said, that in Melbourne and Sydney palatial; offices and residences, and, hotels, for the Olympic Games are being built, but in Melbourne alone, according to the statistics of the Victorian Housing Commission, approximately 9,000 families are living in hovels. That is a material expression of the present economy - increased wealth for the wealthy and increased poverty for the workers. We cannot ignore these effects and the reactions of the people to them. The postal workers dispute is an example. There used to be about 80,000 of these workers; I do not know how many there are now; but they are not the kind who would readily engage in a regulation strike, merely for the sake of so -doing. After years of experience I can say that the workers who would be the last to take a stand against the Government are government employees. That fact should indicate to honorable senators the pressure to which postal workers are being subjected, and which has given rise to their present course of action. But the Government is doing nothing to settle the matter. The Postmaster-General (Mr. Davidson) has made general statements, advising the postal workers not to strike, and the press has -supported him, but no attempt has been made to admit the extent to which these workers are being robbed by the Government, both directly and indirectly. Although they go to an arbitration court and have their wages fixed, private, monopolies control the purchasing power of those wages by -selling the necessaries of life at the prices they choose. I remind honorable senators of the effects of recent increased prices,. :not only on postal workers- and all employees on fixed wages, but also on pensioners. Recently the price of bread has. been increased because the flour millers increased the price of flour. But the millers did not go to arbitration. They- are a lawunto themselves and their decision has not been challenged.
Senator Maher spoke about union leaders. I regret that the union leaders are not speaking or acting as emphatically as they might do. If they did there would be far more industrial trouble than is being caused at the moment by the postal workers. The effect of the Government’s economic policy is going on all1 the time. It is exhibited in maximum expenditure by wealthy business organizations on palatial offices, hotels, residences and clubs, and the bare minimum of expenditure on housing for the workers and schools for their children and social services for the pensioners and other needy persons.
It is well, within the possibilities of practical politics to meet the needs of these people without inflicting hardship on anybody, but the position is allowed to go from bad to worse and- I foresee, as I foresaw in 1939, that, unless there is a war, Australia will suffer one of the worst depressions in- its history. I can. recall depressions that, have occurred, as. far back as 1893, but since that time no intelligent approach has been made to combat the economic circumstances which have caused them. The present agony will be prolonged unless another war comes. When war broke out in 1939, hundred of thousands of workers, who were physically fit, were found jobs in civilian life or entered the services. Their families were provided for, and all the things which, in 1938, the Government said’ could not be done, were accomplished, in 1939 and the following years. Wars have been used deliberately and knowingly to liquidate enormous surpluses of men and material. That is the state of civilization which we have reached and this Government has made no offer of help to change it.
War is likely to break out over the control and ownership of the Suez Canal. On 16th October, 1951, the Prime Minister (Mr. Menzies) had this to say -
Australia has agreed, in principle, to take part in a Middle East command to defend the Suez Canal zone.
As I interpret his words, they mean that if he receives a command from somebody Australian troops will go to the Suez Canal zone. That sort of statement is likely to read to another world war. The Prime Minister’s approach in the first instance was bellicose. If Australia were asked for military assistance it would not be proper for the Minister for Defence to make a statement on the matter without the consent of the Australian Parliament. The Prime Minister and senior members of his Government should be qualified by their experience to know that in this changing world, and particularly in the atmosphere of tensions to which nations are being subjected, the last thing they should do is to make deliberate and unnecessarily provocative statements. What would such a war be about? It would be about who is to receive the profits from the Suez Canal. Last year they amounted to £18,000,000. On 9th August last the Melbourne “ Age “ quoted the London “ Observer “ as follows: -
The company’s 800,000 shares were estimated to be worth £A.90,000,000 on the eve of the nationalization.
About 44 per cent, of them are owned by the British Government, which bought them in 1875 for a little under £4,000,000 sterling from the Egyptian Khedive, who was seeking to stave off bankruptcy.
The company’s cash investment is believed to total £A.62,000,000. Its investments and fixed assets in Egypt are estimated at £A. 11,500,000.
Under the 1949 agreement with the company, Egypt was receiving 7 per cent, of gross profits.
Now, Egypt is not satisfied with that. The dispute is not over the canal itself but over who is to have the privilege of drawing the high profits from the canal. The Egyptians claim they should have it.
– I do not think the honorable senator is putting it rightly. The idea is to have an international waterway without discrimination. It is not a question of profits.
– I ask Senator Maher to permit me to develop my argument. I believe that if a more intelligent and dispassionate approach had been made in the first instance through the United Nations it would have been possible to arrive at an amicable settlement; but to say that we shall do this and we shall do that merely serves to antagonize people. This Government’s approach both internally and externally has served only to make the position worse. When delivering his budget speech, the Treasurer pointed out that after careful consideration by the Government of the international outlook. £190,000,000 is being provided this financial year for defence. He went on to say -
Provision has also been made for commitments in respect of the Australian contingent of the Commonwealth Strategic Reserve in Malaya and the remaining forces in Korea and Japan.
There is not one word about spending any money upon making an approach to establish and maintain peaceful relations among the nations. Although the Treasurer does not say so directly, he implies that the money will be spent if necessary on taking part in a war of aggression, just as the Prime Minister (Mr. Menzies) made the same implication in another place on 16th October, 1951. In the light of all the circumstances, 1 submit that the amendment moved by the Leader of the Opposition is thoroughly justified. Whatever the outcome of the acceptance and implementing of this budget may be, it has to be remembered that the Government will be primarily responsible. If it thinks for one moment that the wage-earners and small salaryearners who are being robbed under this budget will take it lying down, it is making a mistake. Although these people may not understand the causes, they know and feel the effects of a budget such as this. No matter where we go, everybody is complaining about exorbitant prices. Why are exorbitant prices allowed to obtain? Why is it almost impossible for us to live as we should do? Why should we have to mortgage our earnings for years ahead? The people are beginning to realize that they are born in debt. They live in debt and die in debt. They are beginning to appreciate that they are mortgaged from the cradle to the grave.
Unless a more intelligent and sympathetic approach is made to this problem by the Government, it will be faced with a great deal of trouble. As one who has had 50 years’ experience of organizing the workers and studying their reactions in various trades and callings, I know that the Government will be faced with nation-wide opposition to this budget. I predict that just as the postal workers are making an Australia-wide protest, so will the move spread to the waterside workers and to transport workers in general, because the effect of channelling the wealth of the country into the pockets of the few has been to solidify the ranks of the workers. If the Government thinks for -S> moment that it can manage the country as was done in the ‘nineties, it is making a grave mistake.
Honorable senators opposite say that they do not want to reduce wages. The actual fact is that wages are being reduced automatically by increasing prices, and the Government does nothing about it. The freezing of wages prevents any monetary increase, but, at the same time, it does not prevent their effectiveness from being reduced by increasing prices. The Government must make a more intelligent and sympathetic approach to this problem. It must appreciate the position of the workers who want houses.
– They are not willing to work for them as other people have had to do.
– If they had not been willing to work, the honorable senator would never had been here.
– People must work if they want things in this world. They cannot expect to be given them by a fairy godmother all the time.
– All wealth is created by the workers engaged in essential industries and services, and they constitute the majority.
– This silly class warfare which the honorable senator preaches all the time does no good.
– The honorable senator makes a vicious snobbish approach to the problem. He must realize that he cannot deal with the workers in that way.
Sitting suspended from 5.45 to 8 p.m.
– When the sitting was suspended for dinner, I was referring to the overall position of the workers under existing conditions. Senator Kendall said, by interjection, that the workers were to blame for the present conditions because in many instances they would not work. He did not qualify that statement in any way. Let us consider who is responsible for creating the wealth of the country - who is responsible for providing food, clothing and shelter for the members of this Senate. The workers who are actively, usefully, and gainfully employed in essential industry carry society - including Senator Kendall - on their backs. The arrogant snobbery of
Senator Kendall, the arrogance of educated ignoramuses, represents an attitude of mind which more than anything else has antagonised the workers. The capitalist classes regard the workers as inferiors. Doubtless, Senator Kendall, when on his quarter deck, regarded the naval ratings on the lower deck as so many inferior beings to be used at his will. That attitude of mind is general amongst employers.
I come now to the modern slave problem. In most instances to-day, the wages of the workers are based on the cost of subsistence, not on the actual wealth created. During times of depression, and even to-day, the average worker is supposed to grovel on his knees seeking the consent of an employer to enable him to earn a living.
– Is not the honorable senator himself a capitalist?
– I shall come to that in a moment. 1 claim to have a working class mind. My approach to the subject is to imagine myself again occupying the position that I occupied years ago.
– The honorable senator has a good imagination.
– I am proud to say that I was a working man, not an arrogant person like the honorable senator who has just interjected.
– What is a capitalist?
– Cannot Senator Scott define a capitalist?
– Is he not a person in receipt of an income of over £3,000 a year?
– A capitalist is a person who owns land, buildings, or machinery, and who controls the means by which the workers live. I do not own either land or buildings. Indeed, as some of the older members of this chamber will recall, it was a toss-up at one stage whether I would enter the Senate or go to gaol. Certainly, had the late William Morris Hughes and the late Sir George Pearce had their way, I might have been in gaol.
– Not still?
– I should say that 1 have not found the degree of mentality manifested in this chamber higher than one would expect in a gaol. However, 1 return from that digression to a consideration of the aged workers. During the period of the last world war, many aged persons were recalled to industry. They performed valuable work in supervising trainees in aircraft production, and in certain sections of the Postal Department. When the war ended, they returned to retirement. They then found that, as a result of inflation, the value of their superannuation was much less than formerly. Yet, we claim to be civilized people. The Lord’s Prayer is recited in this chamber at the commencement of sittings. I should say that, for as long as I was able to do so, during the time that I was PostmasterGeneral in the Labour Government, I kept those aged workers in employment. [ only regret that it was not possible for me to do more for them than I did. Should another war break out, the Government will draw from the ranks of the unemployed the men required for the defence forces, and when the war is over, promises made to those men will be forgotten.
Let us consider the position of the average worker. He does not enjoy a right to work; he can work only subject to the convenience and goodwill of the owners of capital. I believe that all wealth that is socially created should be socially owned, not privately owned. I warn the supporters of the Government that there will be a change in the conditions of labour, because where needs must, the devil drives. If honorable senators opposite approach this matter intelligently, they will make the change constitutionally, without very much pressure being brought to bear. But, if they do not do so, the change will be made by the workers themselves, as has occurred in overseas countries within recent years.
I said a moment ago that the workers to-day are existing in a slave economy. Even the slaves of years ago received more subsistence than the machine slaves of to-day, because the slaves of other days took months to do what the slaves of to-day can do in a few days, with the aid of machinery. In bygone days, when a slave died his employer buried him; now, in many instances workers depend on their relatives to defray the cost of their burial, lt is no exaggeration to say that we are living in an age of machine slavery and savagery, in an age of machineguns and atomic bombs. If we look at the position as we should, we will find that there is considerable room for improvement. I do not blame any individual member of the Government, because it is a collective responsibility. If the Prime Minister commits his followers to a policy that they cannot justify, and they acquiesce in that policy, they are just as responsible for it as he is. 1 have often said that the national household should be organized on the same basis as a reasonably wellconducted private household is organized. If we did that, we should give the highest priorities to the young, the ailing and the aged. That is not being done in the national, household at the present time, and the budget before us will make the present position even worse. If governments are influenced by, and act in accordance with, mediaeval ideas, they will find that those ideas will not work in these days, and the time will come when they will be painfully disillusioned. In 1896, a professor of economics in the University of Rome said that there were times when men would have to wait for the hard school of disillusionment to educate them when their reason had failed. If we do not act reasonably in the immediate future we shall have to learn our lesson in the hard school of disillusionment, whether we like it or not. Men and women and children must live. When this Government first came into power, its supporters said that it would put value back into the £1. The press of Australia printed that promise in bold type, and the people were misled by it.
– Order! The honorable senator’s time has expired.
– I rise to support the budget and to say that, with few exceptions, I endorse it in its entirety. I honestly believe that our financial position . and that of the rest of the world has not improved sufficiently for us to do other than continue bur present anti-inflationary proposals. That means, of course, that there will be few benefits for anybody for some time. I find it somewhat difficult to follow Senator Cameron’s remarks. 1 had some difficulty in hearing him, but, in addition, I found it difficult to understand the views that he expressed. I can only assume that his economic policy was outmoded when he was a child; it was certainly outmoded before I studied economics at the university. As I have .said, I found much difficulty in following his economic ideas.
– The honorable senator :is not on her own in that respect.
– Unfortunately, I am unable to give the honorable senator the -brains to understand my remarks.
– I certainly cannot go back sufficient years to understand them. The honorable senator said that he did not support Senator Maher’s suggestion for compulsory savings for youths under 21 years of age. His objection was that it would react on production. That proposal has the merit that it would react on production and have an anti-inflationary effect, because it would reduce the inflationary situation from which we suffer.
The honorable senator said that we on this side of the chamber are not prepared to do anything for age pensioners. I remind him that there are other sections of the community as well as age pensioners who need assistance. I was, and still am, in sympathy with the needs of age pensioners, but I am out of sympathy with their claim to be given a pension equal to onehalf of the basic wage. The basic wage was computed on the capacity of industry to pay a man, his wife, and three children. It is not a needs wage.
– It should be.
– The basic wage was computed on the capacity of industry to pay a man and his wife and three children, and, therefore, I cannot agree that each of two pensioners should be given an amount equal to one-half of the basic wage. They have no children to support, besides which they are permitted to augment their pensions considerably. In saying that, I -do not want to be misunderstood. I am in sympathy with them, and do not desire that they should suffer hardship, but I think that they are spoiling their case when they ask for a pension equal to a half of the basic wage. The position of a single pensioner living alone is somewhat different, and I shall deal with that matter at a later stage.
We have also heard a great deal from the Opposition of the contention that the basic wage should be increased because of the high price charged for potatoes, which is one of the items on which the C series index is based. I agree with Senator Maher -who said that a good housewife should be able to substitute other vegetables for those which are out of season. It should be possible at the present time to provide a substitute for potatoes. It is easy to do so; in fact, I do it every day when I am at home, chiefly by using rice instead of potatoes. In my opinion, it would be a good thing if Australian housewives used more rice than they do now. When in Darwin recently, where I saw- the new rice venture that is being developed in the Northern Territory, I was interested in the comparative figures showing the consumption of rice in different countries. I learned that in Australia we consume li lb. of rice a year for each person in the community, compared with 5i lb. in the United States of America and 600 lb. in China. I believe that it would be a good thing if more housewives turned to rice instead of complaining so much about the price of potatoes.
Senator Cameron also referred to the possibility of war arising out of the Suez Canal crisis. He expressed the view that the matter should have gone to the United Nations immediately, but I believe that if that course had been taken the result would have been a more complete deadlock than that which has arisen, because I am certain that Russia would have vetoed any proposal put forward there.
The honorable senator also said that we on this side believe in the freezing of wages. That is an old story, but it has already been adequately dealt with by other speakers.
– It was denied by the Treasurer in his budget speech.
– We do not believe in the freezing of wages; all we ask for is that there shall be a uniform system of wages throughout Australia, and that the system should be reviewed periodically. The honorable senator predicts that we are heading for the worst depression ever known. As one who supports our immigration programme wholeheartedly, 1 can give the honorable senator one reason why I, do not think we shall suffer from a depression. I believe that so long as we maintain our immigration programme we shall keep our developmental programme going and we will be able to provide employment for the people. For that reason, I believe that we should keep our immigration programme at as high a figure as possible. I am glad to know that it is not proposed to reduce the intake of immigrants seriously. Senator Maher said that the intake of immigrants was to be reduced by about 18,000 this year, but I point out that it is to be reduced by only 10,000 below last year’s target. The fact is that last year the target was exceeded, and we may exceed it again. It is proposed to reduce last year’s target by 10,000.
– It is not enough.
– I do not agree with the honorable senator, because I believe that it is essential that we maintain our programme and show the world that we have confidence in ourselves and in our future, and that .we want people to come here to help us to develop our country. We have always believed in maintaining a balance of equality between British and foreign immigrants. Due to the present situation in the Suez Canal area, the British Government commandeered the ship that we were using to bring British immigrants to Australia. If necessary, that ship will now be used to take people to the Suez Canal zone. If it is out of commission as an immigrant ship for, say, a year, we shall not be able to bring many thousands of British people to this country. That being so, if we maintain the same rate of European immigration as last year, our programme as between British and European immigrants will become unbalanced. At present we have in Australia a happy band of southern European immigrants. They are so contented with conditions and standards of living here that they are clamouring to bring out their friends and relatives. Because, for the reasons that I have indicated, we have had to accept fewer British immigrants, it has been necessary to restrict the number of southern Europeans in order to save our programme from becoming unbalanced.
– The immigration programme is unbalanced now.
– No, we have very nearly maintained an equal balance between British and European immigrants. If we desire to bring more British immigrants here we should appeal to business houses to sponsor more British people. The Government is bringing out all the immigrants from Britain that it possibly can, with the limited amount of accommodation available on ships, and if we want more British people then businessmen should sponsor them and bring them out here. I point out that there is no restriction on the number of British immigrants allowed into this country.
I am very pleased that under the budget help will be offered to widows and invalids with children. Those people were possibly overlooked to a certain degree in the last budget, and it was their turn to have some substantial assistance. The age pensioners received some ‘benefit under the last budget a year ago, but I am quite sure that their case is being kept well under review. It should be remembered that age pensioners get a great many benefits as well as the monetary pension. That fact is frequently overlooked, particularly by the pensioners themselves, when their claims are being discussed. When putting forward their suggestions they do not mention free drugs, free medical services, concession tram and train fares and so on. With the exception of the single pensioner the age pensioner has had very fair treatment from this Government. The single pensioner, 1 suggest, will have to be the next to be assisted, and I am much in favour of the Government’s proposal to advance money on a £l-for-£l basis to any organization which will build homes and provide pleasant housing conditions for single elderly people. That type of assistance will grow into still more effective assistance for our single aged people. I hope that it will grow, and, indeed, I am sure that it will.
It would have pleased me to have seen some modification of certain pensions for aborigines. There are two matters in particular that I would like to see dealt with. One is the maternity allowance for mixed blood aborigines, which at present is based on a mathematical formula and not on genetics. That is to say, the allowance is based on the proportion of white blood that an aboriginal mother may have. I say that human nature cannot be determined by a mathematical formula. In many cases a half-blood aboriginal and a three-quarter caste aboriginal live side by side in a government reserve, and the half caste is able to draw a maternity allowance whereas the three-quarter caste is not. That is because the former has. a little more white blood than the latter. I shall enlarge on that matter when I am speaking on the Estimates, but it is one that I believe should be further considered by the Government.
Another point that I wish to raise concerns old age and sickness benefits for aborigines. At present, because old aborigines living on government reserves are looked after by the Government and are supplied with housing, clothing, blankets and food, they are not given pensions at all. In most aboriginal reserves there is no work available for such people, and therefore they can find no way of earning a little spending money. It is humiliating for any human being to be without a penny in his pocket and to be dependent on friends and relatives for spending money. Before the next budget is brought down perhaps the Government could consider these matters.
I was delighted to find that the Government has increased the grant to the Snowy Mountains Hydro-electric Authority by almost £3,000,000 - from £15,000,000 to £18,000,000 - this year. This increased grant indicates a triumph by private enterprise. Contracts have been accepted by the Snowy Mountains Hydro-electric Authority, and not only have the contractors broken world records, but they are going on to shatter their own records. The reason why the additional money is necessary is that the contractors have got so far ahead with their programme that the authority, in order to keep up payments to these contractors, has had to ask for more money.
– Apparently that is good administration by the Snowy Mountains Hydro-electric Authority, but if the State should ask for more money under similar circumstances it is bad administration.
– It is a triumph of private enterprise. The Public Works Department of New South Wales was to have built the Adaminaby dam, but it was lagging so far behind schedule that thai work has now also been let out to private enterprise.
– In Western Australia housing went ahead in the same way, the Government ran out of money, but additional allocations were not made to that State.
– The Commonwealth will benefit by the additional money granted to the Snowy Mountains Hydroelectric Authority because the Snowy
Mountains scheme will be in operation years before if was first thought possible. Senator Aylett, in speaking of the grant to the authority led me to believe that he considered .that because the money was coming from Consolidated Revenue, it was somehow different from loan money” that the States had claimed. 1 point out to the honorable senator that the authority pays back to the Commonwealth not only interest on the money that it is given, but also the principal. Therefore, every penny of the money granted to the authority, plus interest, will ultimately be paid back. Indeed, for every £1 borrowed by it from the Commonwealth it will eventually pay back £4. For the £420,000,000 which will be paid by the Commonwealth it will pay back £1,600,000,000, which is a good investment by the Commonwealth. That is in spite of the fact that the water for irrigation is to be supplied free, because the repayments will be made out of the sale of hydro-electric power.
When honorable senators were recently discussing the floods in Australia, we agreed that the conservation of water was Australia’s greatest problem. Therefore, we must study our water problems thoroughly. The River Murray is our greatest natural asset, and I would say that the Snowy Mountains scheme is our greatest national development scheme.
– It was initiated by a Labour government.
– That may be so, but this Government has carried it on. During the recent debate in the Senate on floods, I suggested that the Commonwealth should set up a committee of the four States which have responsibilities in the flooded area. I suggested that Queensland should participate because the head waters of the Darling river rise in Queensland, and with the Murrumbidgee and the Murray converge on poor South Australia. There is an urgent necessity to have an all-over water policy for the rivers of the eastern half of Australia at any rate. At present, we have no national policy for economic and industrial development along those rivers, for the conservation of water in the catchment areas, or for the distribution of the water of the eastern rivers. There is urgent need for sound planning for the three separate aspects that I have mentioned - economic and industrial development, conservation and distribution.
I have given thought to ways in which this work could be undertaken. Each problem is so vast that it is quite impracticable to suggest that any one commission could tackle all three. In fact, I believe that a separate commission would be necessary for each aspect. I suggest, therefore, that the Commonwealth Government should set up three separate commissions under one chairman. He could be the Minister for National Development representing the Commonwealth, and the States should be represented on all three commissions. I have sought some legal advice on this matter, and I have been told that it should be possible to define the powers and functions of the suggested authorities, which could be established by the Commonwealth alone under the defence power. However, in my opinion, the alternative is for the Commonwealth and the States concerned to agree to the establishment of the necessary authorities and the powers and functions to be conferred on them. The States could refer the necessary powers to the Commonwealth or the authorities could be established by joint legislation, as was done in the case of the Joint Coal Board.
I believe that the Snowy Mountains Authority has certain powers which could allow it to take on the conservation of a vast area of the catchment, but I do not think it has sufficient powers - nor has it the ability to tackle such a big project as I have in mind, because it has its hands full already. Clause 17 of the agreement states -
The Authority shall have power to construct, manage, protect . . .
The word “ protect “ leads me to believe that the Snowy Mountains Authority could tackle the problem if it is able to do so. Clause 6 of the agreement states -
The Governor-General may, by proclamation, define the boundaries of the Snowy Mountains area and may, from time to time, by proclamation vary the boundaries as so defined.
But it is doubtful whether it would be practicable to vary the boundary to take in the whole Murray valley catchment. Therefore, I suggest that a commission should be set up to protect all catchment areas on the eastern side, and it could be called the Murray Valley Commission or something of that sort. It would be advisable for the Snowy Mountains Authority to be one of the commissioners. Under the River Murray Agreement, asamended in 1948, many powers are vested in the River Murray Commission to enable it to take some of this responsibility, but nobody is taking the responsibility. Clause 28A of the -agreement states -
The truth is that there are too many bodies concerned in this matter, and at present there is no over-riding control. Other clauses of the agreement are -
There are not sufficient funds available to the River Murray Commission to do all that work. Tt does not seem to me to be practical for a commission to have to rely on other bodies to act, and then report back to it. That is why I suggest that there should be three separate commissions. The River Murray Commission would carry out its present functions of supervising the distribution of the water among the three States. The commissioners are all engineers, and their functions are to allocate the water, determine the works to be carried out, and the money needed for construction. Although the commission has representation from three States and the Commonwealth, it has worked splendidly, and I think that that system could be augmented.
– What about the Murrumbidgee?
– The same commission could take over the catchment of all those rivers. It is a job for one commission. Most of our methods of flood mitigation have been undertaken under the River Murray Waters Act. Efforts have been made to control the water, once it is in the rivers, by dredging, erecting dykes and locks and by damming, but it seems to be essential, if we are to mitigate floods, that the catchment areas should be given much more attention. If six inches of the forest cover of humus is destroyed, it is equal to a two inch cover of water storage. I believe it is within the power of man to control this vegetation cover in the areas concerned.
– Man has ruined it so he should be able to rebuild.
– The ruining has been in progress for years, and it is time for us to do something to preserve this area. My second suggestion is that there should be established still another commission to be called the Eastern Rivers Development Commission. It would deliberate on all developments along the rivers and in the catchments, including the distribution of power, and of water for irrigation. It would determine the water policy from one side of the continent. This commission should be set up immediately so that it could study the flood situation, collect data and try to learn something from the disaster we are now suffering. The third commission I suggest - the River Murray Valley Commission - should look after the catchment. It is essential that the commissioners should live in the areas they are to control. A fault at present is that no member of any of the various State bodies lives in the area concerned. Nobody polices any policies. Although in the Snowy Mountains area a ruling has been given that grazing should be discontinued there, nobody is policing that regulation, and grazing continues. I heard a Minister in another place, when speaking about the flood situation, say that there was not sufficient technical knowledge on which to proceed. I disagree with that statement. I have been in those areas and I consider that they have a tremendous amount of technical; knowledge. A great deal of scientific research has taken place and it now has become a problem of authority and finance; in other words, it has become a politicalproblem. My point is that the Australian Government is prepared to lend, over a period of years, £420,000,000 to develop this hydro-electric scheme, but it is spending nothing to ensure its investment. Any business person with any practical knowledge realizes that if one has a valuable asset it is reasonable to spend at least 5 per cent., if not 10 per cent., in ensuring that asset. If the Commonwealth would do that, possibly £20,000,000 or £40,000,000 could be spent in preserving the catchment area which would ensure the success of a scheme such as the one that is now being undertaken.
I am not offering any criticism of the work which the Snowy Mountains Authority itself is doing in that area. I am convinced it is doing all in its power to protect the catchment area. In fact, 85 per cent, of the money which is at present being spent in that particular catchment area is being spent by the Snowy Mountains Authority. It is spending £140,000 a year whilst the New South Wales Government is spending a mere £10,000. It is important to realize that every £1 spent by the authority in that direction is £1 less available to be expended on the hydro-electric scheme. I repeat that it is essential to have overall control. At present, there are at least seventeen various bodies from the two States which have a minor interest in the area. Nobody is seeing to it that these bodies look after the catchment; and I am led to believe that it has become a party-political matter. The New South Wales Government is spending the major proportion of its money in and around Sydney and is neglecting distant areas, possibly because there are not so many Labour voters in those areas. That Government is not bothering about this catchment, and I think the statement can be substantiated that it is not bothering much about country roads.
– The VictorianGovernment is not doing much either.
– This area happens to be in New South Wales.
– There are roads in Victoria, too.
– New South Wales stands to gain far more from the project. That State will gain most of the electricity which is to be generated. It is vitally important that there should be a stable and efficient catchment area if we are to develop a hydro-electric scheme such as this.
I shall take just a few minutes to explain to some who may not already know about the primitive methods of grazing adopted in this areas. The graziers who obtain these snow leases for grazing in the summer, to begin with, set fire to the snow grass. They do not like that type of grass because it is not attractive to sheep and cattle. They burn in order to allow the sweeter grasses to come through. Sorrel is one of the snow grasses, and I suppose most people know that it has no binding qualities for the soil. Once the soil becomes loosened, the frost action adds to the trouble. Quick frosts and thaws loosen still further this type of soil which is then washed away after the first shower of rain. Cattle tramping on the soft soil hardens it temporarily and allows still further water precipitation. It destroys the spongy quality of the soil. Burning also destroys the trees, which in this area do not grow again as quickly as trees in lower areas. When they begin to shoot, if the cattle are allowed to graze among them they eat off the young shoots, thus ensuring that the trees will be permanently destroyed.
The loss of the trees is a double tragedy. First of all, there is the loss of humus which forms underneath the live trees and which has a water-holding capacity. Then, the trees have a shade value, and the loss of trees precipitates the melting of the snow. That, I think, is going to be our next problem in South Australia, when the snow waters suddenly thaw. The trees have been burnt off and there is nothing to ensure that the thaw will be a slow process. So, once again the rivers will be flooded. In their natural state, the bogs manage to hold the water, and I am led to believe that in the Snowy Mountains area 50 per cent, of these bogs, which add to the water-holding capacity of the land, have been destroyed.
– By private enterprise.
– No, it is because the New South Wales Government has allowed these people to graze in the area. It is interesting to realize the rate of deterioration in these areas. For Senator Hendrickson’s benefit I point out that in 1900 the total flow of the Murray was 48 per cent, in summer and 52 per cent, in winter, whereas by 1944 the total flow was 24 per cent, in summer and 76 per cent, in winter. The flood danger from which we are now suffering has certainly been aggravated.
The very fact that these mountains are soil mountains should add to their waterholding capacity, but we are allowing thai asset to be wasted. European mountains, in contrast to these, are rock mountains, but the fact that these are soil mountains is our great asset if we would only take the trouble to watch the areas. There are three distinct areas in these mountains which have to be considered because they comprise three separate problems. There is the lower forested belt below the snowline up to 5,000 feet. Then there is ihe snow-gum belt between 5,000 and 6,000 feet, and with that area is associated bogs and grasslands. Then there is the treeless alpine .belt above 6,000 feet. The damage in these areas varies, but it is general throughout. I repeat that there are four erosion problems. There is over-grazing on the snow leases, burning off to stimulate growth, the extremes of climate that are probably more accentuated in these mountains than anywhere else in the world; and fourthly, the scarring of the areas by tourists. To overcome those problems is a job for any one commissioned to take it on, but because of the importance of this catchment area I feel that the Government would be warranted in setting up such a commission. As I have said, the Snowy Mountains Authority is doing a tremendous amount. Whenever it cuts new roads it plants the areas, grows turf and cuts the land into rolls. It pegs out areas during the germination of seed and having seeded a patch it thatches it so that the water coming down the mountain will not wash away the seed. The soil is covered with straw and sprayed with bitumen. The authority is doing a wonderful job in replanting areas which it cut through in the making of roads.
I repeat that it is essential that we have one policy for the development of the whole of the eastern rivers of Australia. We should be able to support three separate commissions, one for developing policies and watching developmental processes, trie second to do work similar to that which the River Murray Commission is doing at the present time, and the third to watch the whole catchment area. I urge the Government to take the initiative and to act straight away. The Minister told us that he was waiting for the States to make some approach to him. I feel that it is too urgent a matter for delay. It is of vast national importance, and I urge the Minister to take the initiative, call a committee together and see if it is not practicable to set up these three commissions. I have much pleasure in supporting the budget.
.- In rising to oppose the motion for the printing of the budget-papers, and to support the amendment to that motion moved on behalf of the Opposition by Senator McKenna, 1 have pleasure, on behalf of honorable senators on this side of the chamber who have just heard the speech by Senator Buttfield, in expressing our appreciation of the intelligent and. detailed study of the problem of water conservation and erosion which she has made, particularly of the rivers which feed into the system in the Snowy Mountains area, lt has enlightened all those who have had the pleasure of following her address. However, in relation to some of the principles that she enunciated, more particularly in reply to Senator Cameron, I seriously disagree with her point of view.
Because of the very cruel familiarity of the terms which appear in the budget-speech on this occasion, as they appeared in previous ones, 1 have been led, in determining what thoughts I might express on this most important matter, to make a study of budget-speeches that have been delivered in the significant period since the budget of 1951-52. As there appeared to be a common and continuing problem, I wished to discover whether any process of economic logic had been applied over this period of six or seven years, or whether the economic and financial policies proposed in any one. year by the Government had been at best no more than stopgaps to meet a particular situation, or at the worst, had been inspired by a desire to meet a current political situation in election years. I think the answer to that question is a most important one, for which the Australian nation is watching and waiting.
At the risk, perhaps, of boring the Senate, I think it is worth while for me to try to sum up, in brief, the principle inherent in each of the budget statement:; over the years to which I have referred. That will not be an unduly long process, because I have tried, fairly, and I trust, accurately, to take out what is the vital point, the real principle, entailed in each of the budget-speeches. I refer first to the budget-speech for the year 1951-52. in which the Treasurer (Sir Arthur Fadden) said -
The recent steep rise in prices and costs bears witness to the acuteness of the problem of inflation. It follows thai the problem of inflation must be mastered if our defence effort and our developmental plans are to be carried through and our standards of living preserved.
That was the statement of the position on inflation in that year. It could very well be the statement of the position in the country several years later - the position with which we are faced to-day, and which is hardly being met by the Government. The proposals of the Government at that time were, first of all. to increase imports, resting on the theory that as there were too few goods and too much money, the supply of goods must be supplemented by importing them from abroad, and various encouragements were given to imports which were looked to as one of the solutions. This proposal was to impose a money restraint on the purchase of goods, and also a restraint on the production of unessential goods.
At this stage, I am not canvassing the wisdom or unwisdom of the proposals. I am merely pointing out that that was the position as stated in the budget speech of 1951-52. The financial remedies which were applied included control of credit through bank policy, retention of capital issues control as one of the essential ingredients of a remedy to meet the situation, rigorous pruning of government expenditure, concentration of resources on priority works, both public and private, and increased taxation.
If that was the problem then - and it is still, in substantial terms, the problem now - and those were the remedies then, it would at least be logical to suppose, unless very important qualifications had intervened, that the same remedies should be applied now, for good or ill. 1 am not suggesting that they should be applied, or that they were right then, or that their re-application would be correct now; but I am looking for some kind of logical approach, over a period of years, to a continuing situation.-
I move now to the budget of 1952-53. Again, inflation is selected as the most damaging ingredient in the economy - inflation, in the sense that prices and costs were rising. The Government then spoke of some loss of business confidence, some transitional, sectional unemployment. At that time, the figures cited by the Treasurer showed that 12,000 men and women were receiving unemployment relief although there were 32,000 registered vacancies. On this occasion,, at 30th June last, 31,517 persons were registered as unemployed. So, what was then called transitional and sectional unemployment must be described in much more severe terms to-day.
What were the remedies that the Government proposed on that occasion? First, there was- a reduction of taxation to serve as an incentive to industry because of some signs of unemployment. Would it not be logical, if a- reduction of taxation was the proper remedy for unemployment in 1952-53, it should, a fortiori, be the remedy now when there is more unemployment than there was then.
The budget proposal’s in 1952-53 were to reduce taxation, and loan raisings of an essential character were to receive some special assistance from bank credit - a policy against which, in similar, if not identical circumstances, the Government has now set its face. Is it any wonder that if there is confusion in the mind of the Government there must be greater confusion in the minds of the Australian people in every section - of the primary producer, the manufacturer, the exporter and the importer - when similar situations do not receive similar treatment? The position in 1952-53 was almost a complete parallel of the position as it is described in the present budget speech.
I move now to the budget speech of 1953-54. This was the budget in which, with amazing complacency, the Government rested on its labours. Perhaps it could be called the Sunday budget, because on that day the Government rested. The Government congratulated itself on its achievements. “ We have practically attained that stability we set out to achieve “, the Treasurer said’, and he and the other members of the Government congratulated themselves on what they had done. The speech went on in even more glowing terms -
Now that we have attained the first great goal of economic stability, what is to be the next stage?
In retrospect, one approaches these conclusions with the greatest cynicism. According to the Treasurer, the next stage was to be the development of our resources. Now, three or four years later, we find the States hungry for loan money. The States are entrusted with the practical and constitutional responsibility of developing our basic resources but we find them starved for loan money.
The Government said also, in that year of governmental complacency, that the next goal was to be the extension of industry. To-day, severe restrictions on credit operate over the whole field of industry. At every stage and at every turn this restriction is hamstringing industrial development. The Government then said also, “ We must increase our population “ yet in this year of grace, the Government has a deliberate policy of reducing the immigration intake.
Finally, there must be the building up of our standard of life. However, this budget contemplates an actual social injustice to a great section of the community. It contemplates the existence of a great number of unemployed and that, after all, is the very zenith of social injustice. And the best that Senator Buttfield can say, apparently, is that all the Government can undertake to do is give social justice in parts, that “ it is somebody’s turn to get social justice to-day, and to-morrow somebody else will get it if we can do it “. Social justice is not something .which can be ladled out in spoonsful; it is the right of every person in the community. Every person has a right to see that he shares equally with others in any distribution of any commodity which is available. Senator Buttfield says that, perhaps, those who are not getting social justice to-day will get it to-morrow.
– I said we must each take our turn.
– But social justice is not a thing for which people form a queue -and take their turn; it is something that must be handed out absolutely impartially to all sections. As to the goal proposed in 1 953-54, that of building up our standard of life, all I can do is repeat the view expressed by the Leader of the Opposition that if that was the goal, then it was a goal of very low aim.
In view of the economic situation in 1953-54, the Government proposed, after assessing the position, to reduce taxes once more. To-day, it has a parallel again; and again we do not find that remedy being applied. In those circumstances, are not our suspicions justified and confirmed? Are we not justified in asserting that the Government is making no logical economic approach to the problem at all? There are ad hoc applications to meet a particular danger and the levee banks of the river of inflation are just being built up carelessly -and plugged here and there as inflation threatens to burst through, bringing devastation and desolation to the whole of Australia. That is the only conclusion that can be drawn from this conflict of remedies which are applied to a continuing situation. In that year, the Government proposed taxation concessions. It pruned governmental expenditure and increased social services benefits. To-day, there is no pruning of governmental expenditure. The proposed departmental expenditure for this year is greater than it was last year.
So, we move to the budget of 1954-55. Here, complacency reached its zenith. The Government sat back, completely relaxed in what it described as stability of economic conditions. Imports were worth £682,000,000 and exports were valued at £816,000,000, and although they were down on the previous year, there was nevertheless a big surplus in the balance of payments -current account. Under those conditions, the Government was able to relax imports control. The cost problem was still withthe country, as it is to-day, and the Government recited that problem in these terms -
The first thing to do is obviously to ensure that costs rise no higher.
That was in 1954-55; and that was the object of the remedies applied by the Government in what it called a financial and economic instrument - the budget for that year. The obvious effect of the wrong application of the remedies it devised is seen to-day, not in anything we say but in the words of the Treasurer himself and, worst of all, in the condition of the country. After all, it is not what we say here but what the Government does that is reflected ultimately in the whole economy. The Government at that stage realized the real problem in Australia’s trading position and recited it in these terms -
Good though recent times have been, there can be no mistaking the signs that stresses are again threatening to develop in our economy. During recent months shortages of labour have increased, particularly in the basic industries such as iron and steel and building, and in the basic services such as railways. Some supplies have also become scarce, amongst them steel and certain building materials. Meanwhile numerous industries and public undertakings not actually short of labour and materials for current purposes have been strenuously trying to get more of both in order to expand their activities. Again, demand for consumption goods is still tending to increase; as it does so it provides a stimulus for still further industrial expansion and still further demands for resources. There is a degree of unhealthy financial speculation going on, though so far it is linked mainly to certain sections of the market.
The Government had achieved a certain measure of stability by using the imports position, the availability of imported goods and our capacity to import them. That is a door which has been closing over the years and which is almost completely shut to-day. The import instrument is no longer available to-day because we are getting a complexity of problems, one of which is creating a new dilemma from which it is becoming extremely difficult for the Government to extricate itself. To-day, imports are not available because our costs position has got to such a level that we cannot export. Our reserves are going down, our costs position is bad and cannot be cured because we cannot import in pursuance of previous economic theory; and now the Government is on the horns of a tremendous dilemma. I cannot see any solution to the problem, and I am sure the Government itself cannot even hazard a guess as to what should have been done.
– But is not the costs position most favorable to the importers?
– The point is that we are producing goods at such a level that we cannot find markets for them, and this immediately puts a strain on our overseas balances. Thus, we have to maintain import restrictions and, therefore, that method of increasing the supply of goods and so reducing the pressure of money on goods is now closed to us. There was no proposal in the budget specifically relating to costs, although taxation reductions were proposed.
Now we come to the budget for 1955-56, and again there are these familiar terms of gathering strains in the economy. Wages and costs have started to rise, creating upward pressure on prices. The Government’s way of stating it is that although costs and prices have started to rise, they have not gone very far. To-day, it is a different story. They have gone very far, indeed. They have gone to the point where they are causing concern to all responsible sections of the community. The problem mentioned in the 1954-55 budget, the interrelation of costs and prices in the overseas balances is mentioned by the Treasurer again in this budget in these words -
As to the supply position the truth is that, if we have so far had no major shortages, it is only because we have been importing heavily from abroad - much more heavily than our overseas earnings can justify.
There was the writing on the wall. The problem of costs was starting to make itself felt. The only way in which the position was being held was by importing goods. That was becoming increasingly difficult, and, to-day, it is becoming almost impossible. That highlights the point I am trying to make, that throughout the piece no economic logic has been applied to the situation. Is it any wonder that we are now getting into a position in which it is virtually impossible to apply logic of any kind? The Treasurer went on in words which were most ominous - . . Besides this, it is known that some sections of business have spent heavily on adding to their stocks in order to keep pace with larger turnovers. This most formidable upsurge of spending has been facilitated by a far too generous expansion of credit on the part of the banking system together with the rapid growth of hire-purchase finance.
The Government referred to that problem, in most express terms, as a contributing factor to inflation. We all now have recollections of the conference that was called by the Prime Minister (Mr. Menzies) who, lacking constitutional power, appealed to the hire-purchase organizations to pull their weight in the economy. On one historic night here, the Minister for National Development (Senator Spooner) stated that the ball was then at their feet. It is evident from subsequent happenings that the right honorable gentleman’s appeal fell on deaf ears. Yet, that was one of the crucial things that had to be handled. It could not be dealt with by legislation, but only with the goodwill of those who were engaged in that kind of business. From their failure to assist the national economy, certain conclusions can be drawn, to which 1 will refer. The final significant comment in the Treasurer’s speech on that occasion was contained in these words -
Does any member of this chamber think that a policy of blind adherence to the principle of laisser faire will find support in the minds of the Australian people, particularly those who are out of work? Does any honorable senator think that they will adhere to a laisser faire economic policy and say, “ We do not want controls, neither do we want jobs “? Does any honorable senator believe that that kind of thinking will be engaged in by a pensioner who is buffering social injustice? Yet the Government takes upon itself the right to determine the opinion of the Australian people and to say, “ They will make this choice, not because we give them the opportunity, but because that is our political philosophy, which we think should be adopted “.
Senator Buttfield endeavoured to refute the economic theory that Senator Cameron had propounded, saying that it was out of date before she herself studied economics. I . remind the honorable senator that her party is obviously pledged to an economic policy which also was out of date when she studied economics at the university.
I turn now to the current budget, in which the Treasurer said -
We have no full and exact measure of cost and price changes over the whole field of the economy, but it is common ground that costs and prices have been lending lo rise for the past couple of years and that latterly the rate of increase has become more rapid. The movement has reached a stage at which it is beginning to affect seriously the relative economic position of people and classes of people and to disturb the competitive position of firms and industries, lt is also at the spiralling stage in which a cost or price increase affecting one commodity sets in train a series of cumulative cost and price increases, multiplying the original increase.
That was a gloomy recitation. The right honorable gentleman then went on to mention some of the causes of the present situation in the following words: -
This is no piece of abstract theory; it is a strict account of what has happened in Australia and is happening to-day. Costs and prices have been rising in a cumulative fashion and have now become a crucial problem for many branches of industry. . . .
Since many elements have had a part in the rise of costs and prices it is clearly not a problem that can be settled at a stroke.
The Government is now reaping the whirlwind. It is said that the problem of inflation has always been related to money and goods. Imports are no longer available in sufficient quantity to effect a balance, because costs have limited our ability to import, and no other remedies are available. If hire-purchase control is an important factor in the economy, and that factor has not been brought under control, then I wonder just where this country is going. The passages I have quoted are not my theories or statements; they are the Government’s considered and responsible summaries of the situation from year to year, together with the remedies that it thought should be applied, or which were applied. This budget sets out the final, cumulative effect of that line of thinking and .of the application of those remedies. The Government’s handling of the situation is having a disturbing influence upon industry, and is confusing the minds of the general public.
As I remarked before, the Government’s appeal to the finance companies fell on deaf ears. If that was such an important and significant matter, why should the Government now shrug its shoulders and say, in effect, “ It didn’t matter, anyhow “ - which is exactly what the Government is doing, because no further action is being taken to limit hire-purchase finance or the rate of interest that finance companies are offering for money on the open market. lt was a vital problem then; its solution will have a vital bearing on controlling inflation.
A few weeks ago, the Acting Prime Minister (Sir Arthur Fadden) called the State Premiers together in Canberra to consider the question of a uniform wage policy. The conference was not successful. 1 do not propose to debate the rights or wrongs of the matter. I merely point out that the Government regarded the conference as so important that, when Mr. Gair, the Premier of Queensland, said that the date set down would be inconvenient for him, he was requested to make a special effort to be present on that date and did, in fact, attend.
– Has not the honorable senator any opinion on the rights or wrongs of the matter?
– I have been tracing the course of the economy. The Government’s actions have confused the people. As I have said, since the finance companies have ignored the Government’s plea, the Government has figuratively shrugged its shoulders, and said, “ It did not matter, anyhow “. Then we had the trade negotiations in London. The re-evaluation of the trade with England was of vital importance, and dominated the mind of the Government for some time. The Minister for Trade and the Prime Minister were in England, and they succeeded to a minor degree. But that does not seem to matter. Their negotiations were to bring about a solution of our trading difficulties, but their mission was almost a complete failure and now we hear nothing more about it. Apparently, that is another thing that does not matter.
Then, there is prices control. We considered that prices control would be a contributing factor to the control of inflation and in assisting the economy; but we have heard no more about that. The Government said that it took its stand on its doctrinaire political beliefs, but, apparently, that is quite unimportant now. No government of sincerity and honesty of purpose, and with a real ability to assess a situation, can go on shrugging its shoulders after one of its main proposals has been tried and found wanting, and then say that it does not matter. Either it is dishonest in suggesting that a certain solution is vital, or it is dishonest at present. The Government cannot approbate and reprobate; it cannot have been honest then and be honest now. I ask this question: “What is the new element injected by this budget into the economy which will have any effect in providing a solution of our difficulties? “ No alteration is proposed in taxation, bank credit or anything else. Here we have a situation which is bad, and which is becoming worse on the Government’s own admission. Here is an opportunity to use the budget as a great economic instrument, but no new element is being injected by it into the economy. Things cannot go on as they are and the Government cannot, by a series of economic statements over a period of years expounded in the most erudite language, find a solution of our difficulties. Throughout the period of office of this Government there has been a complete lack of application of economic logic to the economic and financial situation of this country, and for that lack of application Australia is paying dearly. Because of its failure to solve our problems, the Government must answer to the Australian people for the economic fate that must befall this country. The Government, lacking any positive solution by the application of remedies in its own hands, now puts forward in the following terms the most fatuous statement ever to appear in any budget-paper: -
More than this, one need be no great optimist to believe that, locked away in this vast land of ours, are resources capable of enlarging our export potential and diminishing our need for imports.
That reminds me of the field of Waterloo, when Wellington yearned for nightfall or Blucher. Completely unable to do any more for himself, he appealed to nature or an ally to help him. Is that the situation to which this country is coming? Shall we continue to receive these statements during the life of this Parliament - most scholarly and erudite as they may be - while every year these new unknowns and variables and imponderables in our financial system become increasingly insoluble.
The defence vote which is considered to be the glory of the Government would hardly be considered a matter for dismay by our enemies, and certainly it would hardly be a cause for great consolation to our friends. Behind it lies the unsound and precariously poised economy of the nation, and that economy will certainly be a dismay to our allies and a consolation u> our most bitter enemies. The problem which faces Australia to-day is how to preserve our national defences in the national, interest. We should make it not merely a token instrument in terms of a substantial defence vote; we should preserve and strengthen a sound economy which should become the pride of the Australian nation, the dismay of its enemies and the consolation and aid of its allies. I support the amendment.
– On this occasion we are participating in a. debate about the budget introduced by the Treasurer (Sir Arthur Fadden), and it is a matter of pleasure to recall that he has established a record for producing budgets, to the National Parliament, this being his ninth. We all recognize the sense of responsibility that he has displayed in his task as Treasurer of the nation. I listened to Senator Byrne with unremitting attention, and I can only conclude that so devoutly did he desire nightfall that in the words of Falstaff, “ I wish it were nightfall and all well “. I believe that when the darkness came it brought ‘distraction to him, because he pleads for a consistency in the application of logic to the finances of the Commonwealth whose economy is dictated by a variety of external considerations. Wehave a national Parliament with limited powers, six State governments and powerful governmental agencies, not the least of which is the Commonwealth Court of Conciliation and Arbitration. Each of those instrumentalities has its separate function.
Senator Byrne commenced his criticism of the budget by saying that in 1952 the Government reduced taxation but in 1956- it did not. He omitted to say that in 1951 taxation was severely increased. I am not here to justify any of these measures, but it would be a common-sense reflection toremind ourselves that there would be no need for variation in the budget at all if we applied mathematics to the process and left the whole matter to a statistical formula. I am not the most enthusiastic member of the Senate about the state of our economy. Indeed, I confess to a’ gooddeal of anxiety and disquiet, and I intend to analyse the situation in the time at my disposal.
I think it is fair to say, because of the respect one should have for the presentation of an argument, that there is another side to the picture different from that confused presentation made by Senator Byrne. I believe it is satisfactory to remind ourselves that, over the period to which he referred, the economic strength of Australia has grown most significantly. We have only to instance our oil refineries, which have altered the economic situation in a remarkable degree. Our exports of refined oil this year are valued at £9,000,000. They are the product of oil refineries representing, for the most part, imported capital totalling about £100,000,000. I shall have something to say regarding agricultural production, but it should be remembered that that section of the community, which Senator Benn besmirched, has made a great effort to improve the volume of production by a significant figure.
Credit must be given for power development, the increase of steel production and the rate of immigration, which has increased the population. Speaking of immigration, Senator Byrne said that what could be fairly said of the Government was that it was now reducing the intake of immigrants. A small reduction is forecast in this budget, but the Minister for Immigration (Mr. Harold Holt) has fought vigorously for the maintenance of our immigration intake. There is considerable contention on that point, and it is no secret that different views are held on the Government side. For my part, I find myself firmly in favour of maintaining the degree of immigration which the present budget supports. When we study the contribution that immigrants are making to such vital industries as steel and building, and realize the purposes of our immigration policy, we cannot escape the responsibility of supporting it to the full limit of our resources at this juncture in our national development. I believe that we ought to adopt a different approach from that of Senator Byrne when he said, “ It is a complex problem, and one for which 1 myself confess my inability to offer a solution “. I do not think that that represents a real contribution to the occasion. We have an individual viewpoint and, for what it is worth, this is our opportunity to express it. It is disturbing to read in the budget speech .that it may be that we are now approaching the critical stages of inflation.
– We have been doing that since 1949.
– Yes, with an appreciation of a delicately poised economy which required very careful management. As to the methods that have been applied to meet the situation, I believe that we might exchange our points of view, but at the moment all I say is that we find in the budget speech a statement that it may be that we are now approaching the most critical stages of this inflationary post-war period. We should not treat inflation as mere flapdoodle, but one of the subtle and insidious influences that subtracts from the value of people’s earnings and savings.Therefore, if we are convinced of the need to increase the savings of the people, the best way to correct the situation is to get on to a basis of balance in the economy.
While, as a Liberal, I wish to make my criticisms of the present methods, I do so with appreciation of the budget that has been presented, and with a sense of horror of the alternative that the Leader of the Opposition in another place (Dr. Evatt) has presented to the country, whether it be his own or Dr. Burton’s, and I am no more attracted by the version put forward by the Leader of the Opposition in this chamber (Senator McKenna) of what Dr. Evatt thinks.
The viewpoint maintained in the budgets since 1949 has been that, if we maintain taxes at a fairly high level we shall, in some way, drain off spending power which otherwise would be available within the economy. I do not believe that any honorable senators on the Opposition side will be very ready to tear that .proposition to pieces. I believe they will recognize that their own advisers were of that opinion in the period from 1945 to 1949, when inflation was already very virulent. For myself, I believe that if we are going to encourage individual savings, we should ensure that the savings of the people will be worth something. I repudiate completely the idea that it is the function of the Government so to increase the rate of taxation that the people will have less to spend. J believe that the people should have left to spend the balance which they earn after the exigencies of government finance have been provided for. Then it will depend upon the thrift of the community, or its wastefulness, whether the people save that excess by their individual exertions. 1 think an error is being made in maintaining a rate of taxation which has, for its purpose, the draining off of excess spending power. We are budgeting now for a revenue of some £1,200,000,000 as against an expenditure, in round terms, of £1,100,000,000. It is not secret that thai increase is largely the product of the budget of last May. The only difference between the proposals in this budget and those of 1951 is that we have taken the increased taxes in stages. It is easier for an old man to mount the stairs little by little, and so it is also for the people, figuratively, in connexion with taxation. Last year, we budgeted for an increase of taxes of £50,000,000 or £70,000,000, and this year we have increased them by £100,000,000. I be,lieve that this increase was placed on the economy so that it would do the least damage possible to our export industries. Nevertheless, we have increased taxation. What for? To finance State public works, because the capital resources of the community, in the estimation of the Government, are not sufficient to provide that finance by loans. I heard Senator Benn eugolize Mr. Gair for good husbandry in the affairs of Queensland. All I can say is that he must have been roaming in the cactus for a long time if he thinks there is good housekeeping up there. If one looks to Queensland or New South Wales a degree of prodigality and irresponsibility is . evident Moreover, I believe we must take some share of the blame for that irresponsibility.
We have to make up our minds whether capital works are to be provided from revenue. After a succession of budgets providing about £100,000,000 for Commonwealth capital works we are now, as a matter of ordinary budgeting, providing for the deficits of the States on the loan market another £70,000,000 or £80,000,000, or, say, £200,000,000 in all. One cannot erode ‘ from the current earnings of a community to that extent and discharge a liability for housing, pensions and defence work, all of them non-productive, and, at the same time, permit savings to accumulate within the community. If honorable senators opposite feel that a corrective is needed by way of taxation, it should be found in the solu tion of this problem of providing capital moneys. I hope that the first condition that will be applied to the availability of these moneys to the States will be that the States conform to the basis of the federal economy. If there is going to be discordance between State and Federal economy, chaos and a deliberate imbalance will be produced. A condition of the availability of these moneys to the States should be that the States bring their economy into line with the level that is fixed in the federal economy. In this respect I refer to the trend in regard to wage fixation. Honorable senators will remember that cost of living adjustments were suspended in October, 1953, and that the economy swung into perfect balance by the following April. Then, it was inevitable that marginal increases should be provided, and we witnessed the unholy contest between the States and the Commonwealth with regard to the cost of living issue.
The only reason why the States, in their industrial sphere, adopted the cost of living system, was because the federal court had applied it to its needs basic wage. When the federal court announced that it was wholly inapplicable to a stable wage based upon the capacity of industry to pay. one would have thought that elementary faithfulness to the purpose of national responsibility would have required the States to conform to a decision not of the Commonwealth Government but of the Commonwealth Arbitration Court. Instead of that, we have a contention between the States and the Commonwealth, the direct purpose of which is political and not for the advantage of wage-earners. I say without hesitation that that purpose is to disrupt the federal arbitration system. It is not without significance to recall, as we are discussing unity tickets and as we are making the light grow brighter, that it was Mr. Sharkey who said that his objective was to destroy the State-controlled arbitration court. So, I plead for a sense of responsibility with regard to the administration of these Commonwealth funds to the States. It should be made an imperative condition that the States conform to the level of economy which the federal court, as recently as this year, stated’ was the ultimate capacity of the Australian economy to pay.
The next thing I desire to say with regard to capital moneys that are taken, not by way of revenue to-day, is that as a Liberal I believe that an individual is entitled to retain such earnings as are not required for the discharge of current governmental revenue requirements. I believe that for his capital contribution he should be given an individual credit representing his savings. If that is to be done by way of forced loans the least the individual is entitled to is credit by way of a developmental bond, or something that will enable the savings to produce his bond. He can then say, “ Those are my savings “. He who wishes to spend them can do so, but the vast majority will save them if that spirit is inculcated in the community. If, however, we develop an attitude of mind in which we expect every year a budget to extract from the individual’s earnings everything except the bare necessities with which he can build his house, establish his business, live, and maintain his family, and his excess money for spending is to be drained off into revenue, he will have no motive to save and will deliberately dissipate his savings.
The Government applies death duties on values appropriate to 1939 values. The incidence of that system is that, to-day, estates are imposed upon for a far greater proportion of taxation than was the case when that graduated scale was fixed. The same scale cannot be directly applicable to estates on pre-war values and, at the same time, on post-war values.
Let me say one word with regard to gift duty. To think that forced loans were contested 300 years ago! To-day, we continue to impose a capital tax on property that is given away, mostly as between the members of families. It is a capital tax upon the voluntary distribution by the pater familias to his family, and to me it is completely abhorrent. I am against it not because it represents a great amount of money; it amounts to merely £1,000,000 a year. It is the most expensively raised tax in the Commonwealth and is the most damaging from the Liberal point of view. What is the reason for such a tax? It induces the big owner of property and the man who has a big income not to incur the poultice of gift duty by distributing his estate. In some cases it happens that, because of the time of his life at which a son goes out from his father’s farm, and also because the transactions between him and his father have not been placed upon a legal basis of earnings, credits and debits, a capital tax has to be paid so that he can get his share of the estate. So much for matters of finance.
Now I want to say a few words about some matters of trade. When I spoke in the budget debate last year, I said that 1 was very keen that we should re-examine the practicability of an excess profits tax. I acknowledge gratefully the courtesy of the Treasurer (Sir Arthur Fadden) in that matter. No request emanated from me,’ other than, perhaps, a report of my remarks in “ Hansard “, but, to my delighted astonishment, I received from the Treasurer a full dossier of the Government’s consideration of an excess profits tax. The documents showed that it had been the subject of meticulous examination by the Commonwealth Committee on Taxation. It seemed to me that that body was fully justified in reaching the conclusion that an excess profits tax should not be applied because, first, the income tax of to-day is really an excess profits tax; secondly, it would be difficult to discriminate justly between various kinds of businesses for the purpose of fixing an appropriate figure at which to begin imposing the tax; and thirdly, because it would be difficult to administer the. tax. Having read the documents, I came to the conclusion that the decision of the Government not to impose an excess profits tax should meet with complete approval.
I remind the Senate that the Tariff Board, in its annual reports, has maintained very strongly for a number of years that tariff protection should be given only to efficient Australian industries. The board, very forcefully and convincingly, has expressed the view that the great danger to the Australian economy is the cost element. However, I have a feeling, not based on any real knowledge, that we could temper the protection afforded to Australian industries in such a way as to make greater their desire to function with less tariff protection, so that there would be less inclination to absorb excessive costs.
I believe that I am expressing the view of the Government when I say that a policy of import restrictions is wholly unpalatable to us. 1 express my dismay at the fact that we seem to be drifting towards an acceptance of governmental control of the entire import trade of the country as a permanent feature of the economy. I believe that the difficulty of administering a control of this kind is so great as to make it a very dangerous instrument, even if, as a control’, it. is justified. I should like the Minister, when he replies to the debate, to inform us why imports cannot be governed, in the main, by the results of trading, so that a man who exports is given credits which can be exchanged, through the ordinary channels - they would be controlled mainly by the Commonwealth Bank - with persons who want to import goods. That, is too wide a subject to deal with in detail now, but. I hope that, at some stage during, the session we shall generate enough energy to devote some real study to it.
I want to express my regret that the Commonwealth Arbitration Court has been displaced by the new organization established for that purpose. I believe that we. have exposed ourselves to a rather confused1 industrial arbitration system which is capable of generating real irresponsibility. Ohe- has only to think of the actual form of the commission which has been entrusted with power finally to determine wage adjustments - a vital factor in our economy. I believe that the present organization requires very earnest consideration.
Turning to the contention between theStates and the Commonwealth, I. consider it is quite obvious that the States are not using the cost of living adjustments of the basic wage for anything but political propaganda purposes. The Commonwealth Arbitration Court, which was the author of cost of living adjustments, stated quite deliberately that that process was. inappropriate to a standard wage based upon the capacity of industry to pay. My colleague; Senator Maher, advanced, a most earnest argument in relation to industrial wage adjustment, but I would state the position rather differently from, the way in which he stated it - that is to say, that the court determines the wage, that there it remains, and that the wage-earner derives no benefit from increases because- price increases follow in their wake. I agree substantially with that approach, but I believe that history shows that prices do vary from season to season in such a way as to necessitate periodic adjustments of wages. The Commonwealth Arbitration Court, after it had suspended statistical quarterly adjustments, of the basic wage, undertook to examine each year the capacity’ of industry to- pay, so that wage-earners could be: guaranteed a fair wage based on. that capacity.. Honorable senators opposite may say that the Commonwealth arbitration tribunal is. unjust and that they have no confidence in it, but I do not think that the great’ majority of the Australian people share, that view.
I stand firmly for the principle of periodic adjustments of the wage, so that from time to time it can be adjusted’ to the highest figure that industry is capable of paying. I delight my mind with the reflection that when justices of the peace in England fixed’ the wages of farm labourers as far back as Tudor times, it was their habit to adjust the wages - they were then, I think, ls. 3d’, or ls. 4d. a week - according to variations of the prices of meat and milk. So we cannot preen ourselves that we are applying a new principle. It is a matter of adjusting wages in accordance with fluctuations of the economy. f believe that the lack of confidence in our banking system is a contributing factor to the inflation that was made particularly evident in the budget speech. I believe that there is a spirit of competition between the reserve bank and the trading banks, but the fact that the reserve bank, which finally controls national credit, is the father of the Commonwealth Trading Bank, which competes with the private trading banks, has created some suspicion. That destroys complete confidence. Until eighteen months ago there was competition between the banks and, consequently, over-much lending. To-day, the reverse is the case. The stocks of the banks have run out and there is restriction of lending. In my humble view, it would contribute greatly to the balance of our economy if there were a completely independent reserve bank which had exactly the same relation to the Commonwealth trading bank as to every other trading bank, and which would be supervised in accordance with its general financial policy.
I now wish to deal with what 1 believe is the really disquieting aspect of our economy. Within the next twelve months, it will be necessary for both sides to forget party politics and unite in an effort to redress this aspect of the economy, or fail to do so at the country’s peril. I refer to the aspect which is outlined in the White Paper issued by the Treasurer (Sir Arthur Fadden), which reveals that the farm incomes of Australia have varied from £321,000,000 in 1948-49 to £448,000,000 in 1949-50, to £443,000,000 in 1951-52, to £580,000,000 in 1952-53; to £519,000,000 in 1953-54, to £440,000,000 in 1954-55 and to £414,000,000 in 1955-56.
– In three successive years the trend of farm income was downward.
– That is so.
– There has been a shortage of £105,000,000 in the three years.
– Yes. This year, farm income represents the smallest proportion of the national income for any post-war year. At the same time, the wages’ and salaries section of the community has improved from £1,060,000,000 in 1948-49 to £2,500,000,000 in 1955-56. Although there has been a downward trend in farm incomes since 1950-51, in that period there has been a great increase of the incomes of private enterprise, and of the salary and wage-earning sections.
I have before me a table which puts this matter in a very short compass, but, nevertheless, in a most significant manner. It shows that the volume of farm production from 1950-51 to 1954-55 has increased by 12.8 per cent. It shows, also, however, that in the same period the overall value of that production to the farmers has .declined by 7 per cent. Although there has been an increase in the volume of production by 12 per cent., its overall value to the farmers has been reduced by 7 per cent. From the point of view of the farmers, the difference between what they pay out for what they buy and what .they receive for what they sell represents their basic wage, and in the period I refer to the prices received declined by 15.4 per cent. The prices they paid for their requirements increased, in the same period, by 42.1 per cent. That is the divergent trend between the income received and expenses incurred on agricultural farms. On a per capita .basis, the figures show that, whereas in 19.50-51 the per capita income of the family unit - taking all the big landowners as well as the small -was £2,744, it declined to £1,307 ;in 1954-55. That is the return for the farmer’s capital and his family’s labour.
– Is that figure the farmer’s gross income?
– No, it is his net income - the -equivalent of his basic wage. It is what he has received as a return for his capital and labour as a family unit. These figures show that there is a perilous decline in the incomes of the agricultural community, in comparison with other sections.
If honorable senators examine the export section of primary production they will find that the returns are going in a direction divergent from their expenses. If honorable senators realize -that .export industries are the basis on which our economy -is pivoted, they will appreciate that a drought or a flood -might easily affect agricultural export income to the extent of £100,000,000 or £150,000,000, and also that we are taking very severe risks in maintaining farm incomes at the level to which I have referred. The figures I have before me show that the quantum index of rural .exports an 1952-53 was 125, the following .year it was .1 18 and the year after that it was .122. That was fairly constant, but the export price index declined during that period from 505 to 496, to 450, to 404. That is a total decline of 20 per cent. The total value , of exports in that period declined from £721,000,000 to £632,000,000. On a per capita basis, it represents a decline from £83 to .£68 between the years 1952-53 and 1955-56. They were the farm incomes, the returns, not of a 40-hour week for an individual labourer, but of an undertaking gathered together at greatly increased capital costs - and costs :are still increasing against the farmer, whilst his export .and import .returns are both diminishing. This country still depends upon him to .produce the major portion of its export income. It is ‘true that we have reason to >be optimistic .about the increase in our manufactured exports, but that is going ito be a -long and arduous programme. Figures that are available show that we have every reason to be proud of the achievements of the Minister for Trade (Mr. McEwen) in that respect over the last year; but -everybody must recognize that that part of the export trade is going to be difficult to develop and that if we leave our farm incomes at this level of the economy, we shall expose our export position and our overseas balances to a much more significant risk than is generally realized.
– How does the honorable senator suggest the position should be remedied?
– I think a remedy would lie in a more purposeful advocacy of the case for the agricultural industries before the Arbitration Court in the fixation wages When considering the capacity of industry to pay, we must keep forcibly in the forefront of our minds the capacity of the mainstay of Australian industries, the agricultural industries, to pay. I believe further that by the development of a progressive transport policy, eradicating Healy from the waterfront, it would be possible to reduce transport costs and to avoid positions similar to that about which 1 heard this morning and in which the Austral Bronze Company Proprietary Limited found it more profitable to transport bronze to Melbourne by air than to take the risk of delays and consequent expense with sea transport. I believe also that the farmers must have economical rail and road systems so that transport costs may be reduced still further. I believe further that it is essential that we place more emphasis on banking facilities available to farmers, because the figures I have show that the cost of interest to the farming community increased from £17,000,000 in 1950-51 to £29,000,000 in 1954-55.
– The. farmers are being driven to hire purchase.
– That is a danger from which we must divert them because the purchase of agricultural implements on hire purchase is ruinous to any country. In a country so susceptible to drought, flood and differences of season, short-term mortgages are not satisfactory for financing farms. Long-term mortgages such as building society terms are essential. Further, when borrowing from international funds, instead of permitting the loan to be dispersed with one expenditure, it would be much more satisfactory to place advances to agricultural industries under the control of one authority so that when the money is repaid it becomes available for further advance and, in this way, establishes a revolving fund which could be invaluable in assisting development.
I make those suggestions because they have occurred to me as being worthy of consideration. I realize they are incomplete, but I am simply emphasizing that this problem demands very earnest consideration. Those who advocate a State cost of living as against the decision of the Commonwealth Arbitration Court are doing a great disservice to the farmer who has no standard wage. His basis for a return is overseas prices. I have tried briefly to present some of the very favorable features of the economy as I see it, and some of the disappointments, but I emphasize that these disappointments are not to be despaired of; they are to be taken into consideration because by considering them it may be possible to evolve some remedy for the rate of inflation which, I believe, is a very great menace to our community to-day.
– At the outset I also would like to congratulate Senator Buttfield on the knowledge she imparted to the Senate to-night in connexion with the problem of river siltation which causes floods. Whilst I do not agree that all the suggestions she has made could be cures, I believe that our rivers and roads are a national problem and should be controlled by the National Government. All roads and rivers which are so essential to the economy of Australia should be controlled by this Parliament which is entrusted with the destiny of Australia.
– I should like to know the honorable senator’s ideas on this problem.
– Senator Gorton would probably oppose any idea I put forward because he is opposed to anything progressive in connexion with the building of roads and the conserving of water. Honorable senators can imagine what a tragedy it would have been had we been confronted with a flood similar to the recent one during the years 1941, 1942 and 1943. They can realize what the position would have been if the great highway to the capital city of Australia, Canberra, had been impassable to trucks and cars in those years. In those days, there were thousands of military trucks traversing those roads, and nothing has been done since to maintain them. I have heard the Minister, for
National Development (Senator Spooner) say that the Australian Government will contribute £1 for £1 with the States; but he knows as well as 1 do that his suggestion is similar to the old three-card trick. Where are the States to get their £1? This is a responsibility of the Australian Government, and the present Government assured the people of Australia in 1949 that it was competent to control the affairs of the nation. However, 1 agree with Senator Buttfield that these problems can be surmounted if they are tackled efficiently in the future.
Senator Wright said that wages are the cause of all our troubles. Next time he speaks, 1 should like him to quote the percentage in the primary producer’s cost of production for which wages are responsible. [ should like him to quote also the interest the farmer pay;; to the banks, other moneylenders and those people from whom he purchases his machinery on time payment. If he examines the position 1 am certain he will find that wages are not the cause of the primary producer’s troubles. On the contrary, he will find that those people who farm the farmers, the Collins-street farmers and the Pitt-street farmers, are responsible for any ills the primary producer may have. I remember that in the 1930’s the farmers were not able to pay any wages at all. In those circumstances, it could not be said that wages interfered with their financial prosperity. Again, in those days, there was not one bank that would lend a farmer any money on the security of his farm. Were wage rates the cause of the trouble in those days? The thought is in the mind of many people in this country to-day that wage rates should be based on the ability of industry to pay. If that principle were applied in all cases, railway workers, at least in some States, would not receive any wages.
– That is a good point.
– Nevertheless, the railway workers give of their best for 40 hours a week. It is not their fault that the railways do not pay. Let us compare Senator Wright’s expressed opinion that wage rates should be based on the ability of industry to pay, with Senator Buttfield’s assertion that the rivers should be harnessed. In the initial stages of water conservation, no revenue is derived from the project. How, iri’ that instance, could the wages of the workers be based on the ability of the industry to pay? I contend that all workers are entitled to a decent standard of living.
Senator Buttfield might not know that the Prime Minister (Mr. Menzies), the VicePresident of the Executive Council and Minister for Defence Production (Sir Eric Harrison) and other members of the Liberal party boycotted the ceremony that was conducted by Mr. Chifley at the launching of the Snowy Mountains scheme, because they considered that it would be a failure. Today, however, they take to themselves great credit for the scheme.
Senator Wright said that the Treasurer (Sir Arthur Fadden) should be congratulated on this budget. In my opinion, the Treasurer deserves even greater criticism than that directed by Henry Gullett against the right honorable member for Cowper (Sir Earle Page), whom he described as the tragic Treasurer. This is the most tragic budget that has been introduced since federation. The people of Australia are patiently waiting for this Government to honour its promises of 1949. It promised the people that it would give them a better economy than they enjoyed during the Chifley Government’s regime. Not one supporter of the Government has made a constructive suggestion as to how the problem that has arisen from this Government’s handling of the economy during the last seven years can be solved. The people are waiting, somewhat impatiently, for the Government to stabilize both exports and imports, and to guarantee full employment for all. Of course, they want a condition of full employment at wage rates that will guarantee to the workers and their families the standard of living to which they are entitled. They do not want a situation in which both a man and his wife have to go out to work in order to gain sufficient income while their children roam the streets.
Last Wednesday night, the AttorneyGeneral and Minister for the Navy (Senator O’sullivan) replied to the speech of the Leader of the Opposition (Senator McKenna), which was one of the most constructive speeches that I have ever heard delivered in this chamber. The Minister said that the Government had fulfilled all its promises, including the promise to tear up ration books. But has the Government put value back into the £1? Only this afternoon, Senator Maher said that, compared with 1939, the value of the £1 was now only 6s.
– The figure he mentioned was 7s. 5d.
– I accept the correction. No member of the Government disputed that figure. In 1949, the present Prime Minister and the present Treasurer said that the value of the Chifley £1 was 12s. 6d.
– What about the value of your motor car?
– My car cost the same amount as yours. The cost was exhorbitant, due to the incompetency of this Government. However, I do not wish to deal with motor cars at the moment. The “ Hansard “ report of this afternoon’s proceedings will record Senator Maher’s assertion that the purchasing power of the £1 to-day is only 7s. 5d., compared with the £1 of 1939. Therefore, this Government has not restored the value of the £1.
– Did the value of the £1 drop by 7s. 6d. while Labour was in office?
– In 1949, supporters of the Liberal and Australian Country parties stated during the general election campaign that the Chifley £1 was worth only 12s. 6d.; Labour did not admit that that was so. However, assuming that that was the value of the £1 then, on Senator Maher’s statement this afternoon that the £1 is now worth only 7s. 5d.. obviously the value of the £1 has decreased by 5s.. Id. since this Government has been in office. We are still waiting for the value to be put back into the £1 .
The PRESIDENT (Senator the Hon. A. M. McMulIin). - 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.
Question resolved in the affirmative.
Senate adjourned at 10.30 pan.
Cite as: Australia, Senate, Debates, 11 September 1956, viewed 22 October 2017, <http://historichansard.net/senate/1956/19560911_senate_22_s9/>.