12th Parliament · 1st Session
Mr. Speaker (Hon. Norman Makin) took the chair at 2.30 p.m., andoffered prayers.
Payment by Instalments.
– It has been repre sented to me that on account of the present financial stress, great difficulty is experienced in certain quarters in making payment of State and Federal income tax. Will the Treasurer consider the granting of permission, with the approval of the Taxation Commissioner, for payment to be made by instalments?
Mr.SCULLIN.- The Taxation Commissioner is empowered to accept the payment of income tax by instalments, and I believe that whenever a reasonable case is made out he permits that to be done. As Treasurer, I have never objected to his recommendation.
-Will the Minister for Trade and Customs, in accordance with the undertaking given by the Prime Minister to have investigated complaints regarding alleged increases in prices on account of the tariff, have an inquiry made into the following reported substantial increases in the prices of Chevrolet motor car parts: -
– My department is quite prepared to receive complaints of this character from either honorable members of this House or members of the general public. Each case submitted is judged upon its merits. A special officer is. engaged upon this investigation, and we intend to pursue the matter whenever we find that the public are being exploited by manufacturers taking advantage of the Government’s protective policy. We hope that, as a result of our inquiries, a much better state of affairs will be brought about than that instanced by the honorable member.
Facilities for Political Parties
asked the PostmasterGeneral, upon notice - .
Were the proceedings of a social meeting of the Ascot Vale branch of the Australian Labour party recently broadcasted for about two hours of the Saturday night’s programme by 3LO; if so, are similar broadcasting facilities available to branches of other political parties throughout the Commonwealth.
– Yes. It is the policy of the department to exercise the strictest impartiality in the treatment of political broadcasting, and whatever facilities are made available for one party will be granted to any other party.
Mr.R. GEEEN asked the PostmasterGeneral, upon notice -
Will he make a statement to the House regarding the installation of automatic telephones in country districts?
– A great deal of experimental work has been undertaken, and seven rural automatic exchanges have actually been installed. The experience gained has been sufficient to warrant the department proceeding with the gradual extension of services of this character, and, with that object in view, tenders for the supply of the necessary apparatus were invited in. February last. Unfortunately, however, the financial position of the Commonwealth imposes a definite restriction on development work of this nature, and, as far as can be seen at the moment, it is only in most exceptional cases that the department will feel justified in installing rural automatic exchanges. It would obviously be unwise to incur the expense of replacing existing installations where a reasonable service is already being afforded. The department regrets that, in the circumstances, it is unable to proceed with the installation of these services as vigorously as was intended in the first place.
Safes and Strongroom Doors
asked the Treasurer, upon notice -
– The answers to the honorable member’s questions are as follow : -
Transfer to Canberra
asked the Prime Minister, upon notice -
– This matter is being considered.
asked the Minister for Defence, upon notice -
What is the name of the officer who performs the duties of the Adjutant-General whilst he is absent from duty under the rationing system ?
– Major-General W. A. Coxen, or in his absence Brigadier-General C. H. Brand.
asked the Minister for Works andRailways, uponn otice -
– The answer to the honorable’ member’s questions are as follow : -
asked the Minister for
Markets and Transport, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Minister for Trade and Customs, upon notice -
What has been the class, quantity, value and destination of agricultural machinery exported from Australia during the year 1929-1930?
– The information is not yet available, but will be furnished as early as possible.
asked the Minister for Home Affairs, upon notice -
In view of the serious financial position of. Australia and the necessity for a reduction in Government spending, does the Government intend to proceed with the building of baths at Canberra?
– Yes. The construction of the baths was the subject of investigation by the Parliamentary Standing Committee on Public Works, which recommended that the work be proceeded with. In arriving at its decision, the committee particularly had in mind the provision of facilities for children to learn to swim. At present, children in this Territory have no such facilities, and arc growing up without acquiring the art of swimming. Moreover, the construction of the baths has provided work, and has relieved the unemployment situation in the Territory.
Special Rate on Casing.
asked the Minister for Trade and Customs, upon notice -
– The answers to the honorable member’s questions are as follow : -
asked the Minister for Health, upon notice -
Will he supply statistics for the years 1927, 1928 and 1929 relating to chronic nephritis in each of the States of New South Wales, Victoria, Queensland and South Australia, giving the figures for males and females separately, and for the following life periods: - 10 to 20 years. 20 to 30 years, and 30 to 40 years?
– The information is not immediately available, but will be compiled and forwarded to the honorable member.
Freedom from State Taxation.
asked the Treasurer,upon notice -
In view of the fact that the present loan is, and previous Commonwealth loans have been, floated on the condition that they are free of State income tax, can this condition be altered and State taxation imposed by agreement amongst the States or by any other means ?
– The present Commonwealth loan, and previous Commonwealth loans, cannot be made subject to State income tax either by agreement amongst the States or by any other means. The position is governed by section 4 of the Taxation of Loans Act 1923, which provides that interest on Commonwealth loans raised after the commencement of that section shall be subject to State income tax but that the section shall not commence until a date to be fixed by proclamation. The intention was that the section would be proclaimed to commence as soon as all the States passed laws making their own loans subject to State income tax. As some of the States have not yet passed such laws, section 4 of the Taxation of Loans Act has not yet come into operation, and the States, therefore, have no authority to impose income tax on any Common- wealth loans issued to date.
Coal Consumption in Australian Waters.
asked the Prime Minister, upon notice -
– The answers to the honorable member’s questions are as follow: -
asked the Prime Minister, upon notice. -
Whether he has yet replied to the letter forwarded to him by the United Graziers Association of Queensland, on the 3rd instant; if so, is he prepared to indicate the nature of his reply?
– It is assumed that the communication to which the honorable member refers is one relating to the cattle industry. The association has been informed that the representations put forward in that communication are receiving consideration. Reports are being obtained from the departments concerned, and I am, therefore, not yet in a position to indicate the intention of the Government in regard to the matter.
asked the Minister for Trade and Customs, upon notice -
What payments have been made during the year ended the 30th June, 1930, in respect of bounty on galvanized iron, fencing wire, wire netting, and traction engines, respectively?
– The payments were as follow : -
Practice in Canada.
M r. SCULLIN.- On the 19th June, the honorable member for Bendigo (Mr. Keane) asked me the following question, upon notice -
Is it a fact that the Canadian Government, by an order in council, has adopted a standard working week of 44 hours?
I have had inquiries made in this matter. My attention has been drawn to the terms of an order in council approved by His Excellency the Governor-General of Canada on the 27th March, 1930, and published in the Labour Gazette, Canada, of April, 1930, pages 384-5, relative to hours of work for Dominion Government employees. The order in council approved of the recommendation of the Minister of Labour that, except in cases where the work of employees was intermittent in character, or the application of this rule was not deemed to be practicable or in the public interest, the hours of work of any employees of the Dominion Government who were still required to work more than eight hours daily, be reduced to eight hours daily, with a half holiday on Saturday. For purposes of convenience a copy of the order in council has been made and placed on the table of the Library.
– On the 17th July, the honorable member for Darwin (Mr. Bell) asked the following questions, upon notice -
I am now in a position to inform the honorable member as follows: -
– On the 7th July, the honorable member for Corio (Mr. Lewis) asked the following questions, upon notice -
I am now in a position to inform the honorable member as follows : -
The following papers were presented : -
Nauru - Report to the Council of the League of Nations on the Administration of Nauru during the year 1929.
New Guinea - Report to the Council of the League of Nations on the Administration of the Territory of New Guinea from 1st July, 1928, to 30th June, 1929.
Message reported transmitting Estimates of Revenue and Expenditure for the year ending 30th June, 1931, and recommending appropriation accordingly.
Ordered to be printed, and referred to Committee of Supply.
In Committee of Supply (Consideration resumed from 9th July (vide page 3904) on motion by Mr. Scullin -
That the first item in the Estimates for Additions, New Works, Buildings, &c, under Division .1 - the Department of Defence - namely - “ Naval Establishments - machinery and plant, £1,500 “, be agreed to.
.- We are charged with a particularly heavy responsibility in considering the budget which the right honorable the Treasurer (Mr. Scullin) has presented for the judgment of . this Parliament and of the people of Australia. The action taken by Parliament in reference to it .will be watched and scrutinized very closely by the people generally. The most satisfactory feature of the budget appears to me to be contained, in the last sentence, in which the Treasurer said that the Government was “ determined to balance the budget and to take all measures necessary to ensure the honouring of our obligations, both at home and abroad “. I unreservedly support that statement. I am sure that all sections of the community will welcome the expression of this firm resolution and determination, and, in carrying it out, the Prime Minister (Mr. Scullin) can be assured of the support of the Opposition.
The credit of Australia is, unfortunately, low at the present time. The Treasurer, in his speech, quoted a list of prices of Commonwealth stocks in London as compared with the prices of New Zealand and South African stocks, which was heard and has since been read with little satisfaction by any honorable member or any member of the public. My view is that the prices of our stocks are unduly and unjustly low. A decrease in those prices has very naturally been brought about by the concurrence of factors affecting world conditions to which the Treasurer referred, combined with certain matters which particularly affect Australia’s economic position. The Treasurer spoke of the severe economic disturbance now prevailing in nearly all countries, and referred to the disastrous collapse in commodity values. These conditions are general throughout the world. The Australian position is particularly affected by the low prices obtainable for our” wool, wheat, metals, and other products. The flow of loan moneys from overseas has ceased, and drought conditions in Australia have also particularly prejudicially affected our position.
It would be fair, however, if our critics were to consider certain other aspects of the financial position in Australia. For example, in 1929-30 the Commonwealth debt was reduced to the extent of no less than £6,367,482, and the debts of the States were redeemed to the amount of £3,169,777, making a total debt reduction for the year of £9,537,259. That is an important and very satisfactory element in our present financial position. It is a feature of our public finance to which insufficient attention is generally devoted. It is also proper to recall, when comments of a general character are made upon the financial position of Australia, that the increase in the public debt to which reference is often made has been almost entirely due to increased borrowing by the States. Honorable members are doubtless familiar with the figures recently quoted in the House, which showed that, during the seven years from 1922 to 1929 while the last Government was in office the net increase in the debt of the Commonwealth was less than £13,000,000, whereas the net increase in the debts of the States was £207,000,000. As members of the Commonwealth Parliament, and principally concerned with the responsibilities of the Commonwealth as such, as distinct from those of the States, it is important that we should bear these facts in mind.
The budget reveals a gap to be bridged between the estimated expenditure aud the estimated revenue, on the basis of present taxation and. other receipts, of more than £14,000,000. The Government proposes to bridge this gap by increasing taxation in such a way as to augment the revenue from this source by £12,550,000 and by using £1,500,000, the accumulated interest on profits from exenemy properties. It must be recognized that this latter sum has been accumulating since the early years of the war, and is not a recurring receipt. There is much to be said for the proposition that that money would be more properly used to reduce the deficit or to increase the sinking fund. The utilization of this sum to assist in balancing the accounts this year is an unfortunate, though, perhaps, unavoidable feature of the present budget. It should also be observed that the budget figures do not present fully the real difficulties of our present situation, because, owing to an alteration in the date of the payment of interest on recently converted loans, the payment of a considerable sum of money, which would normally have been paid during the past year by way of interest on converted loans, has been postponed until this year.
– How much ?
– The amount; is £570,000. I mentioned that in the budget speech.
– I .may say that I only received my copy of the Estimates at 11.30 o’clock this morning, by the courtesy of the Treasurer, and I have, therefore, been at a disadvantage in preparing this speech. I submit that it is altogether unreasonable to expect honorable members to enter upon a debate upon the finances of the Commonwealth without the information which is provided in the Estimates and budget papers. The summarized figures presented to us in the budget speech and in the preliminary budget papers are quite inadequate to enable us to consider in detail many of the questions which must be considered on this occasion. I hope that in future provision will be made for the distribution of the Estimates and budget papers prior to the delivery of the budget speech, so that hon.orable members and the public may have an opportunity of scrutinizing them in detail.
Although there is, as I have said, a gap of many millions between the estimated expenditure and the estimated revenue, on the basis of present taxation, the expenditure of the Commonwealth is not only to be maintained at its present level, but is to be increased by £1,094,000 over the expenditure of last year, and by about £4,000,000 over the expenditure of 1928-1929. It is expected that £3,370,000 more will be received this year than was received last year from taxation and that £2,900,000 more will be received this year than was received last year from the post office.
The fact that it is proposed not to reduce but to increase the expenditure of the Commonwealth brings out in strong relief two opposed views of dealing with the present difficult situation. The remedy of the Government is, in effect, “Maintain the present rate of public expenditure and even increase it in somedirections, and obtain the money by increasing the taxation of the people.’’ There is a great temptation to governments, at a time when unemployment is prevalent, to seek some degree of popularity by a lavish distribution of public moneys. The other, and I submit, the correct way, of dealing with the situation, is to reduce both public and private costs. It is imperative at such a time that costs should be reduced, and Commonwealth and State Governments alike should set an example in this respect. This view was expressed by the last Prime Minister, Mr. Bruce, at the conference of Premiers held in May of last year, at which he pointed out that borrowing could not be continued at the rate at which it had been maintained during recent years. In this connexion he said -
A critical examination of our present position leads inevitably to the conclusion that the basic cause of all the economic troubles of Australia to-day is the high cost of production, the reduction of which is the first step that we must take to bring about a solution of our problems.
He went on to point out that our primary products were being produced at a cost which exceeded the price which could be obtained for them in competition on the world’s markets, where they had to be sold, and that our secondary product* were being produced at a cost which, prohibited the export of them, and required the imposition of higher and ever higher protective duties in order that the home market might be retained for them. This is occurring at a time when wages are being increased, the standards of living raised, and the hours of work shortened, in some of the countries which are our strongest competitors. Mr. Bruce went on to say that -
These facts speak for themselves. The lesson they teach is clear and unmistakable. It is that we must take up immediately the task of setting our house in order by reducing costs of production to an economic level. This done, our industries will begin to expand, and new avenues of employment will be opened for our people. .Our primary industries will benefit by the increased market afforded for their production due to the greater volume of wages paid to the workers in healthy and progressive secondary industries. Our home market for both primary and secondary products will be- enlarged, and the margin between production costs and the prices in the world’s market will be increased.
He then added that there were two alternatives facing Australia. He said -
Two alternatives face Australia to-day. Hither we can resolutely attack this problem of reducing our costs of production, and by to doing reduce our costs of living, expand our avenues of employment, maintain and augment our standards of living, and increase our national wealth; or we can refuse to recognize the needs of the position, and allow our national wealth to diminish, and unemployment to increase until, faced with a national crisis, we are forced to lower our standards of living and re-orientate the whole of our national life. Between these two alternatives can there bc any hesitation?
Those alternatives were placed before this chamber, and the members of r he present Government repudiated, in effect, everything that the then Prime Minister said, contending that a reduction of the costs of production would be an error, and would not meet the position. I understand that the Government still supports that contention.
I ask honorable members to consider the position of the Commonwealth to-day. When presenting the budget, in his capacity of Treasurer, the Prime Minister (Mr. Scullin) referred to the price of Australian stocks overseas. Let me refer to the, unfortunately, too well-known figures of unemployment. At the end of the September quarter of last year, the unemployment percentage was 12.1. At the end of the December quarter, it was 13.1 per cent., at the end of the March quarter, 14.6 per cent., and at the end of the June quarter, 18.5 per cent. Those figures do not show any improvement in conditions in the last nine months. It is true that the facade of our industrial system remains apparently intact. Except iu the pastoral industry, no great reductions have been made in award rates. But behind the facade, what can we see? First of all, that the unemployment percentage is IS. 5, which is equivalent to one man out of every six being out of work. We next see that very many of those who are employed are rationed in their employment, and receive less for their week’s, month’s, or year’s work than their award rates would give them if full time were worked. One hears here and there of evasion of awards, and there can be very little doubt that this is taking place. The Commonwealth Parliament cannot be indifferent to this state of affairs. It is a crime against the community even to maintain the expenditure of the Commonwealth this year at last year’s rate, and a much greater one to increase that expenditure. A private employer knows that he cannot spend more than he receives, and that when he cannot borrow, he must keep his expenditure within his receipts, or go through the bankruptcy court. Through Parliament, a government has the right and power of imposing taxation and of increasing its receipts as it thinks proper. There is that important difference between a government and a private individual. There is a tendency to believe that there is an unlimited reservoir of wealth from which funds may be drawn for governmental expenditure. That, of course, is not the case. The point comes at which taxation weighs so heavily on the people that further taxation is unproductive and defeats its own object. It is almost’ certain that this point has very nearly been reached in Australia, when we regard the taxation of the Commonwealth and the States in the aggregate. I submit that we must consider any proposed taxation in relation to the circumstances of the people at the present time. In concluding his budget speech, the Treasurer said -
Although the additional taxation and charges involve a sum of £12,550,000, it is proper to regard a great proportion of this as imposts to replace, and not to supplement, the taxation of previous years.
The honorable gentleman then set out a table of taxation, and continued -
It will be seen that notwithstanding the increased taxation imposed for the current year, the per capita taxation will be less than that of 1927.
The context shows that the year indicated was 1926-27. It appears to me that that observation reveals a complete inability to realize the change that has taken place in conditions since 1927. The governing consideration that all of us should bear in mind when weighing the budget proposals is that mentioned by the Treasurer earlier in his speech, that “ the loss in Australia of real income consequent upon these factors,” which he had outlined, “is variously estimated for the year just closed as between £50,000,000 and £70,000,000.” In 1926 Mr. Sutcliffe, a well-known economist, examined the national dividend of Australia, and estimated that the total income of persons in the Commonwealth for 1924-25 was the sum of £635,600,000. A reduction in income of between £50,000,000 and £70,000,000 is about 10 per cent, of that figure. Recently another economist, J. B. Brigden, in a book entitled Escape to Prosperity, made a calculation of the fall in the total income. After considering the facts, he says -
Nothing is gained by exaggerating or by minimizing the degree, but I prefer to stick to my optimistic estimate of a 10 per cent, fall only in the total income of all people.
A similar estimate has been made by the Ritchie Professor of Economics at the Melbourne University, Professor Giblin. Accordingly, there is a tremendous difference between the taxable capacity of the people in 1927 and their taxable capacity at the present time. To illustrate what I have said, I shall take two items only, wool and wheat. In 1926-27 the income from the sales of those commodities abroad amounted to £87,000,000, while in 1929-30 it was £55,000,000, a fall of £32,000,000. It is obvious that the fall may be still worse this year. I hope that that will not be the case, and I am sure that all other honorable members entertain a similar hope. But there is no guarantee that it will not be so.
In a prosperous year an individual can afford to spend money that he is not justified in spending in a year in which income is greatly reduced. In a year of decreased income, he should, as a general rule, reduce his expenditure, unless he is reasonably certain of satisfactory and prompt recovery. The same rule applies to a government. In 1926-27, the year to which the Treasurer referred for his comparison of taxable burdens, there was a surplus of £2,535,597 on the year’s accounts. Last year, 1929-30, the Treasurer imposed further taxation, estimated at the time to yield no less than £1,200,000 from customs and excise, and £885,000 from income tax. He anticipated a surplus of over £14,000. Later, the Government introduced a number of prohibitions of imports and raised the duties on certain goods to a point intended to be prohibitive. As a result of those measures, and the general depression of trade, the customs and excise revenue was less than the estimate by £2,675,000. The people of Australia did not save the whole of that amount in their personal expenditure, because the prices of commodities did not go down to that extent, although many of those commodities had still to be bought. Direct taxation last year improved on the estimate, from the Treasurer’s point of view, by £968,386; but the final result of the financial transactions for the year was a deficit of £1,470,164. The volume of imports has greatly diminished, and will probably still further diminish owing to the decreased purchasing power of the people. But, despite that diminished volume of imports, the Government proposes to raise an additional £5,700,000 by means of revenue duties, including a primage duty. It also expects to raise £5,000,000 by means of a sales tax, £1,000,000 by increasing postal charges^ and another £1,000,000 from income tax, making in all over £12,500,000. Each of those taxes will so increase costs as to impair greatly the recuperative powers of the people. While I agree that the budget should be balanced, I suggest that it should be balanced with a minimum’ burden on the people by way of taxation.
The budget proposals are not a permanent solution of the problems confronting us; indeed, they do not attempt to be even a beginning of a permanent solution. This tremendous burden of taxation is to be imposed for the purpose of increasing Commonwealth expenditure this year. I say, emphatically, that Commonwealth expenditure must come down. I propose to suggest a minimum which should not be exceeded. In the amendment of which I have already given notice, I have taken what I submit is a reasonable view when I suggest that the expenditure of 1928-1929 should not be exceeded during the present financial year. That year was a much more prosperous one than the present financial year has any chance of being. I, therefore, ask the committee to agree to the total expenditure set out in the budget being reduced by about £4,000,000.
I know that I shall be asked to show how that can be done. I remember that the late Government, when replying to criticism, frequently asked the then Opposition to show how expenditure could be reduced. In attempting to do so, the then Opposition took refuge in generalities, excepting in the year 1928-1929, when its leader (Mr. Scullin) said that he accepted the challenge, and would show where reductions could be made. His contention then was that the expenditure proposed for 1928-1929 was excessive. If it was excessive then, how much more excessive is it now, when increased by £4,000,000 ? In that year, the right honorable gentleman suggested some reductions of small amounts in the estimates for the Prime Minister’s Department. I doubt whether they would have totalled £100,000. That was as far as he went. Something much more drastic than the proposals he then made is now necessary. It is neither the duty nor the responsibility of the Opposition to prepare a budget, or to present to Parliament an alternative scheme to that contained in the budget. I am, however, prepared to indicate the items of expenditure which should be considered, with a view to a reduction of £4,000,000.
In submitting my views to the committee, I have been considerably hampered by the absence of the Estimates. It may be that they will supply answers to some part of what I am about to say. In dealing with this subject of suggested reductions of expenditure, it must be recognized that the Government alone has the full information to enable it to devise and carry out a scheme of reduction in respect of quite a number of items. Nevertheless, I am prepared to accept the responsibility of showing where reductions can be made.
But, before I do that, I wish to say that I recognize the force of much that has been said by the Prime Minister in replying to criticisms of the budget. When I read a statement. by the right honorable gentleman, which appeared in the press on the 14th instant, in which he pointed out the inescapable obligations and the statutory commitments of the Commonwealth, I could easily have believed that I was reading a’ statement by the late Prime Minister or by the right honorable member for Cowper (Dr. Earle Page). The items are the same, and the language almost identical. The present Treasurer is now saying exactly what was said with respect to these subjects by the late Treasurer and the late Prime Minister. There is often much entirely irresponsible criticism of government finance, I said that when I was a member of the last Government; I say it now as Leader of the Opposition. There are inescapable commitments, some of which have unavoidably increased. The most obvious of these are certain interest and sinking fund payments. It may be observed, in passing, that one set of interest and sinking fund payments - that in respect of war loans - is £120,000 less than it was the year before last. There are other items which, on grounds of policy, no political party is prepared to decrease excepting in an absolute national crisis, which none of us thinks has yet, in fact, occurred. Old-age, invalid, and war pensions fall within this class. In respect of those items, all that we have a right to ask for is careful and responsible administration of the existing legislation. There are, moreover, some statutory commitments which, like the salaries of the judges are entirely beyond the reach of Parliament itself.
– The honorable gentleman saw to that.
– Those appropriations are required by the Constitution, and therefore cannot be altered by Parliament. It was for that reason that I said they were beyond the reach of Parliament. The cost of administration is, however, something over which Parliament has control. I agree that many critics frequently exaggerate the cost of administration and of the Public Service.
Having made these concessions, I must point out that occasions may arise, and I believe this to be one of them, when not only administration, but also the policy of the Government, must be reviewed in the interests of the people, and every possible economy effected.
In the first place, this Parliament should set an example. I ask the Government to introduce a bill to reduce the salaries of Ministers and mem- bers for the current year. I do not think that the salaries of either Ministers or members have been too high, or that they have been, in general, unreasonable, but I do think that they should be considered in relation to conditions prevailing outside. What I am saying now applies also to the Public Service. I think that we have an efficient Commonwealth Public Service, and I do not say that they are overpaid in normal circumstances, but in their case, also, salaries should be reviewed, bearing in mind the sacrifices which members of the public are daily compelled to make in order to support themselves and their families, and to meet their obligations. I remind honorable members that one of the obligations of members of the public is to pay federal taxation, and we have to ask ourselves how far we are justified in asking them to pay taxation to maintain salaries and allowances at their present level. Broadly speaking, every member of the public has suffered a large reduction of income in the past year, and will continue to suffer such reduction, perhaps in an increased measure, during the coming year.
– Not the bond-holders.
– How does the honorable member suggest that their returns should be reduced?
The CHAIRMAN (Mr. McGrath).Order !
– No reduction has been made in interest rates up to date.
– Can you reduce the bond-holder?
– Yes, you can. Why not ration him as you have rationed the worker ?
– I ask the honorable member for Adelaide (Mr. Yates) to remember that when I call for order, I insist on being obeyed.
– I did not hear you call for order, Mr. Chairman.
– I recognize that this is an unpleasant subject for all concerned.
– Honorable members opposite are listening with blanched faces.
– This is just political propaganda.
– I ask the Government, for the sake of the political reputations of all of us, to consider this matter seriously, and to keep in mind the situation as it affects the general public. I remind honorable members that there is at the present time 18.5 per cent. of unemployment in Australia. I. remind them that thousands of citizens are being rationed in their employment to the extent of one week in four, as honorable members familiar with employment conditions in the cities know well. I remind members of the Government that many farmers and graziers had no income last year, and that the general income of practically every private citizen has been reduced. I remind honorable members that in the Defence Department a very severe rationing scheme, running as high as two months out of twelve, has been introduced by the present Government. I remind members that in the Public Service, employees who are not members of organizations have already had their salaries and allowances reduced. I remind members that the wages of shearers have been reduced by 20 per cent. In Queensland, the employees of the States, as well as other citizens, have had their wages reduced, while in New
South Wales, members of the Public Service have suffered, reductions of wages and salaries. To some extent, similar action has been taken by the Labour Government in Victoria. On the 7th July last, immediately following a cabinet meeting, the Premier of South Australia, Mr. L. L. Hill, issued to the press the following statement, which was published the next day: -
For the year ending the 30th June, salaries paid from revenue amounted to £1.844.934, and wages to £2.fi02.0.r>0, a total f £4.446,984. This represented 30 per cent. >f the expenditure. The figures for 1929-30 are not yet available, but they would not differ widely from those given” for 1928-29. Obviously, this item must be reduced, either by a general retrenchment, which would add to our unemployment problem, or by a general review of wages and salaries.
The Government is reluctant to suggest this notion, but the great reduction in the income of the States has reduced the amount available for the payment of salaries and wages. Such i reduction, however, will not be so real as may at first appear, provided that it is common to the whole of Australia, as is inevitable. A reduction, combined with recent falls in profits and land values, will so reduce the cost of living that two-thirds of the reduction will ultimately be offset by the increased purchasing power of money.
That is the opinion of the Labour Premier of South Australia. It is impossible for us to ignore, in this Parliament, what i« taking place outside in the case of nearly every person who receives an income, from whatever source.
It is obvious that we cannot reduce expenditure without spending less. We cannot make omelettes without breaking eggs. If we are n reduce expenditure, we must do without something. We, in this Parliament, are not justified in using our posi tion and our powers to prevent ourselves .,”1 the servants of the Commonwealth, from sharing in the losses which the community, as0 a whole, is suffering. We -ire the guardians of the public interest, and not of our own interests, and the first thing we should do, I suggest, is to declare, by parliamentary action, that Ministers and members are prepared to recognize that they share, not only in the prosperity, but also in the adversity of the community as a whole. The amount actually to be saved by a reduction of the salaries of members and Ministers necessarily cannot be large, having regard w the total amount involved,, but action in that direction would do much to strengthen the confidence of the people in their parliamentary representatives.
The cost of Commonwealth administration, including Parliament, the Public Service, and the post office, is as follows : -
I see now that 1 should have added something further to cover salaries of Ministers.
– From what estimates is the honorable member quoting?
– From the budget papers. Owing to the fact that we have not received the general Estimates until to-day, it has been impossible to analyse this expenditure into its elements; but, judging by the last report of the Public Service Board, the expenditure on salaries and wages in the Public Service this year will be at least £10,200,000. The salaries and wages paid in the Public Service for 1929-30 were on the basis of £10,160,875 per annum - obviously the amount will be. higher this year - but, in order to arrive at the full salaries and wages bill of the Commonwealth, one has to add to that., figure the allowances paid to members of Parliament and Ministers. The expenditure is now iu the region of. £10,300,000, in addition to which about £8,000,000 has to be added to obtain the cost of the departments mentioned. I suggest that there should be room for a saving of. at least £1,000,000 on the expenditure of the £17,792,300 - which represents this cost of Commonwealth administration, and that it should take the form in part of a reduction of salaries and wages, not at an even rate all over, but with a higher rate of reduction on the higher salaries.
When I turn to the departmental votes, as shown on the ordinary Estimates for this year, I find that there is an increase of £22,000 on last year’s expenditure, in spite of the fact that it is stated in a footnote that £33,829 has been saved by a reduction of the cost of the Development and Migration Department. If that saving has been made, it means that the ordinary votes for the departments are £55,829 higher than last year, and, apart altogether from the adjustment I have already suggested, that £55,829 should come off this year’s expenditure.
When I come to the figures relating to the post office, I find that the estimated expenditure for this year, £13,583,000, is no less than £903,000 above the expenditure for 1928-29. It is quite probable, unfortunately, that during the present year the post office will be rendering less service than was rendered in the year 1928-29. Honorable members have seen the diminished figures in regard to telephone installations, and the greatly increased figures relating to the cut ting-off of telephones. Increased postage rates will further decrease the work to be done by the post office, and it seems to me to be a reasonable thing to expect that the expenditure of the department should be brought back to the 1928-29 level. It might lead to some loss of service; but at the present time we must make up our minds that we cannot afford to live at the old rate; and if the Treasurer, who is also the Prime Minister, were to say to the PostmasterGeneral, “ It must be done,” then it would be done.
In connexion with the Public Service generally and the post office it is. import ant to remember the large amount involved in payments extraneous to salaries. To my mind there is large scope for saving in this direction without affecting wages and salaries at all. The number of members of the Public Service who receive these benefits is comparatively limited. On page 12 the sixth report of the Public Service Board shows that the amount of extraneous allowances paid for the year 1929-30 was as follows : -
Commenting on these figures the Public Service Board reported -
Reference has been made in earlier reports to the expenditure involved in these special payments and to the view of the board that economies should be effected in certain directions, particularly in respect of higher duties allowance and travelling time payments.
And in its fifth annual report, on page 13, the board reported that the amount involved was £558,481 and commented upon it as follows: -
References have been made in previous reports of the board to the extravagance involved in the granting of travelling allowances to officers under the unduly liberal conditions of arbitration determinations, particularly as to employees engaged in line parties either on a permanent or a temporary footing. The board is satisfied that a considerable saving in the cost of travelling allowances (£167,802 for 1927-28) could fairly be made without injustice to any employee. Evidence has been forthcoming that in many, cases the amount of allowance paid is considerably in excess of the actual expense incurred by officers. Application was made by the board to the Public Service Arbitrator for a revision of the determination, and considerable evidence was submitted in support of a claim for reduction in allowances, but without success. Many thousands of pounds have been frittered away in travelling . allowances, while at the same time efforts are being made by departments to. effect economies in other expenditure. Payments of travelling allowances are designed to reimburse actual expenses incurred, and not to return a profit to officers.
Increased expenditure on Sunday pay is mainly attributable to the expansion of telephone networks throughout the Commonwealth and the provisions of continuous services. Sunday duty is compensated for. at double rate, excepting where equivalent time off duty is allowed, when half-rate extra is paid for the duty performed on Sunday.
Considerable increase is shown in expenditure on what we term “ higher duties allowances.” Arbitration determinations provide for the granting of such allowances where officers are required temporarily to perform the duties of higher positions during the absence of the permanent occupants on sick leave or for other reasons.
The payment of these allowances is open to abuse, it being well known that the value of services temporarily rendered in higher positions does not, in many cases justify the payment of an additional remuneration, where the temporary occupant is merely carrying on, awaiting the return of the regular officer who will take up any problems left over by his locum tenens. The fact that officers who have time and again drawn higher duties allowances have failed to secure promotion upon the position in which they have relieved becoming vacant is a clear indication as to the departmental view of their efficiency for the particular work. Much of the expenditure on higher duties allowances is unjustified. The practice has gradually been extended until the financial effect is serious.
A further instance of wasteful expenditure occurs in connexion with payments for travelling time granted under the liberal provisions of arbitration determinations. The- expenditure on this item was £23,893 for 1927-28, and practically the whole of this should be saved. Travelling time payments are intended to compensate officers who are required to travel upon departmental duties outside regular official hours. In addition to reimbursement of expenses incurred during a journey, these special payments are made because of the alleged sacrifice of an officer’s private time whilst on a train or other conveyance.
It has been shown that allowances of various descriptions involve an expenditure of more than £500,000 annually, some of this being due to arbitration determinations of a generous nature. It is questionable, however, whether the public finances can reasonably be expected to provide payments which in many instances are largely in the nature of gifts to officers, without any actual commensurate service being rendered the community. The board holds strongly that the Public Service should be adequately if not liberally paid as regards salaries in order to secure the best possible efficiency, but it cannot countenance the supplementing of these salaries by special allowances which are wasteful and nonproductive in service.
– Those payments were being made before this Government came into office.
– They have been made for many years ; but when the last Government introduced legislation to deal with the subject, honorable members opposite saw an opportunity to place their own construction upon the proposals in order to obtain the Public Service vote. J invite the attention of the Government to the valuable recommendation of the Public Service Board which I have just quoted. Let us take, for instance, the travelling time payments made to some public servants. When an officer to whom the relevant determination of the Public Service Arbitrator applies is travelling on public business, he draws his salary, a travelling allowance which is often in excess of his expenses, and also a travelling time allowance. It is unreasonable and unfair to ask the public to provide such payments, particularly at this juncture. It is pleasing to make them when plenty of money is available; but at present the system is unjust to the public. I submit that all these payments should be reviewed, and that it would be easy to save £200,000 without doing any injustice to any officer. The reductions in ministerial, parliamentary and public service salaries which I suggest should he made for the current year only, or until such time as our financial position improves.
– Does that practice apply only in the Postal Department?
– No ; throughout the. whole Service where the determinations of the Public Service Arbitrator are in force. At the present juncture the Commonwealth cannot afford to make such payments, particularly as they are in addition to the salary or wages of the officer concerned. The rates of overtime, for Sunday duty, higher duties allowances and other such payments should be reviewed in the interests of the public.
Reference has been made to an amount of £180,000 which represents for the current year an increased “ cost of living “ allowance of £6 for certain officers. Attention has been drawn to the fact that that increase is due to the salaries of certain officers being adjusted on the basis of an annual cost of living index figure instead of on the half-yearly or quarterly figures. The suggestion has been made that public servants should be asked to voluntarily forgo this payment, but I do not think that public servants should be expected to do so. Any one receiving payment for service rendered to the Commonwealth should not have his salary reduced upon a voluntary basis. If any reduction is to be made in salaries or wages, it should be done by Parliament as part of a general policy of reduction in which, all should share.
In connexion with the details of expenditure I shall refer only to specific items upon which I wish to comment. I ask honorable members to refer to page 4 of the budget. In the first item, “ Interest and sinking fund there is an actual diminution of payments on account of war and repatriation services of £120,000, as compared with 1928-29. In the matter of the repatriation of soldiers - quite apart from war pensions - it is proposed to spend £140,000 more this year than in 1928-29. I realize that appeal tribunals have increased expenditure to a certain extent in the Repatriation Department; but I suggest that the administrative costs of the department should be scrutinized very carefully. These figures represent, in part, increased living allowances, as intimated by the Treasurer in his budget speech ; but surely the number of difficult problems being dealt with by the Repatriation Department must be diminishing.
– Cases are always being reviewed.
– Yes ; by the appeal tribunals.
– More work is being undertaken this financial year than last year.
– We are apt to suppose that, because pensions are increasing, the work of the department must also be increasing. That does not necessarily follow, because many increases in the total amounts paid in pensions are due to the birth of children, which involves very little additional work. A very careful scrutiny of the expenditure of this department should be made to see if a reduction cannot be made.
I now come to the maternity allowance, for which £660,000 is provided. This raises an important question of policy, andI contend that, during this year, the Government should endeavour to effect some economies in this regard. An income limit should be placed upon the recipients of the maternity allowance. At present there can be no justification, excepting in necessitous cases, for imposing taxation upon the people as a whole to pay a maternity allowance of £5 on the birth of every child. Such payments should be made only to those receiving £6 a week or less. It is pleasant and comfortable to be able to distribute money in a more generous way; but it must not be forgotten that it all comes out of the pockets of the people. It ought to be possible, by making this change, to save at least £200,000 without imposing undue hardship.
I come now to the payment of bounties. The Commonwealth cannot afford to continue the payment of bounties at existing rates to a number of industries. It is unlikely that, in some cases, in the coming year, the amount set down in the budget as the probable expenditure will be required. It will be remembered that this Government gratuitously increased the wine bounty from1s. 6d. to1s. 9d. a gallon. When it took office the rate stood at1s. a gallon. It first proposed to raise it to1s. 6d. a gallon, but having found that the amount to be provided by way of excise would make available a greater sum than was at first thought, another 3d. a gallon was added. That item should be reduced.
It is proposed that £300,000 shall be expended this year by way of bounty upon the manufacture of iron and steel products. Last year only £260,000 was claimed on this account. Unfortunately, the present will be a year of depressed trade; I, therefore, suggest that £60,000 less than the amount stipulated will suffice to meet requirements. That would be £20,000 less than was expended last year.
– It will not be spent unless it is claimed.
– But it is proposed to increase the taxation that is imposed on the people in order to raise this additional amount! Provision has been made for the payment of £170,000 this year on account of the cotton bounty. In 1928-1929 the sum of £98,000 was found to be sufficient. This year, having regard to the financial stress of the Commonwealth, the amount provided might well be reduced by £60,000. That would still leave the sum available higher than the expenditure in 1928-1929. On these three bounties alone, if the Government is prepared to reduce expenditure, it is possible to save at least £130,000. This year, both those who are in receipt of bounties and those who are in receipt of other moneys from public funds, must be prepared to do with less than has been given to them in the past. I appeal to the Government to abandon the proposed bounty on sewing machines, £6,000, and on flax andliseed, £10,000. In a time of financial stress, it is a great mistake to impose on the people asa whole these additional subsidies to industry. There does not appear to be any provision, for the payment of a bounty on shale oil. An amount of £31,000 has been set down for assistance to primary production; but in the absence of the details, I am unable to comment upon that.
I come now to other parts of the statement of receipts paid into and expendidure made from Consolidated Revenue.
The provision for the Commonwealth railways is greater by £37,000 than was the expenditure for 1928-1929. The administration of the railways is very carefully scrutinized at the present time. There ought to be certain additional expenditure on rolling-stock; and if rollingstock for the east-west railway is included, that expenditure is in the interests of the people as a whole.
There is an apparent increase of £400,000 on the item “ Territories of the Commonwealth “ ; but, obviously, that is due to an alteration in the method of keeping the accounts of the Federal Capital Territory.
– Actually, there is a decrease.
– We are all aware that, in fact, there has been a decrease in the cost of the administration of the federal Capital Territory, brought about by the cessation of constructional works. Any government would have found it possible to make a saving on that item, and would have made that saving.
The- next item with which I wish to deal is, “ Payments to or for the States “. Some of those payments are fixed and inescapable. I refer, in particular, to the contributions of the Commonwealth with respect to interest on State debts which have to be provided under the financial agreement. It would be quite improper to suggest that there should be a reduction of that large amount.
I desire to refer, particularly, to the Federal Aid Roads’ Grant of £2,000,000. The policy of the Commonwealth iu relation to roads should be reviewed and altered, on account of our changed circumstances. This £2,000,000 is payable under an agreement that was adopted by statutes of the Commonwealth and the Parliaments of the States. There is no warrant for any payment on account of roads, apart from that made under the agreement. The roads agreement was developed and entered into under these circumstances : The Commonwealth, at that, time, was in a position financially to assist the States with respect to capital expenditure on the making of new roads suitable for modern traffic, and in the re© conditioning of old roads to such an extent that, in effect, they became new roads. The essence of the agreement was that the
Commonwealth would assist in regard to capital expenditure, but not in regard to expenditure upon maintenance. The whole of the States, under the agreement, expressly accepted, the obligation to maintain the new roads. A further fundamental feature was that the States should find 15s. for every £1 provided by the Commonwealth. Apart from that, the States had, and have, no right to claim one penny from the Commonwealth. The Commonwealth did not, as is sometimes suggested, control the details of this expenditure. The agreement provided that particulars of the roads that were to be made should be submitted for the approval of the Commonwealth Minister for Works; only to that extent did the Commonwealth intervene. The Commonwealth no longer has money to make available for this purpose. The States are not prepared to find, in future, 15s. for every £1 provided by the Commonwealth; therefore, the Commonwealth is free to withdraw from the agreement, and is quite entitled to abstain from making any contribution to the States for road construction in the future. The present Gorvernment proposes to change the roads policy, and to pay to the States £2,000,000 per annum without any obligation on their part to spend any sum on capital assets, or to find 15s. for every £1 advanced to them. I put it to the committee that, having . regard to the financial and economic situation of Australia, wc must refrain from the construction of many new roads for some time.
– But the honorable gentleman knows that, under the proposed change, the States can spend some of that money upon maintenance. As a matter of fact, the taxpayers of the States are being relieved from the necessity ,to pay additional taxation.
– It is now proposed that the money that is made available by the Commonwealth may be spent by the States either upon capital assets or .upon maintenance, as they think proper. I am submitting arguments against that policy. I say, first, that we must do without many new roads in the future, because we cannot afford them; and secondly, that we cannot justify such a payment from Commonwealth funds for road maintenance. What would be the. position of the States if this grant were withdrawn? In the last year, under the agreement, they had to find the whole of the money required for the maintenance of all roads, in addition to 15s. for every fi provided by the Commonwealth for capital expenditure. If the agreement is terminated, as I suggest, they will have to find money for the maintenance of roads, but will not be under the obligation to find 15s. for every £1 provided by the Commonwealth. I agree that some portion of that extra 15s. would probably be required for maintenance of roads recently constructed; but there would still be a considerable saving to the States.’ Therefore, I put it to the committee that in future the roads grant should be very substantially limited. Of course* current works must be completed; and, having regard to the unemployment position, a certain sum might be allowed to the States even for maintenance. The Government alone knows what works are current, and how much is required to complete them. I would object upon principle to any contribution by the Commonwealth towards maintenance expenditure, apart from the existing most acute unemployment; and it appears to me that a grant of £500,000 instead of the £2,000,000 proposed ought to be ample for the future. Certainly, it is all that can be justified in the existing financial circumstances of the Commonwealth.
I shall, deal now with the proposal of the Government to make a further payment of £1,000,000 to the States for the relief of unemployment. This is a very difficult question, and it is hard to suggest that the proposed grant should not be made; but I do suggest that it should be cut out. In the first place, it is not the function of the Commonwealth, with its present powers, to deal with unemployment. The Prime Minister (Mr. Scullin) has often said in this chamber, that while the Commonwealth hopes to relieve the unemployed position through the tariff, by the provision of more employment, yet the problem is primarily one for the State Governments, and that they are in
– That applies to Australia generally.
– I am quoting from the official record of the speech.
– That is a mistake.
-.- The line that I have quoted is obviously intended to indicate the destination of the money. This matter has frequently been mentioned,, but it has never been particularly discussed until the present time. Once again I say that the provision of this money involves the Commonwealth in discharging a function which does not properly belong to it. Hew. South Wales has never asked for this money, and it is not fair to the other States to make a grant of this character. The people in the other States have unemployment problems, and are quite as badly off as many of the coal-miners. I am glad to see that the coal industry is recovering its export trade by degrees, and I fail to see any necessity for a subsidy for the export of coal.
The Estimates still provide for £3,000 for industrial peace tribunals. I observed the other day that . the chairman, Mr. Charles Hibble, had resigned, and I do not know that any other chairman has been appointed. We are all aware that these tribunals have not been operating. They failed throughout the coal strike, and it is not necessary to provide money for them. This sum of £3,000 ought to be omitted from the budget.
The total amount of the possible savings to which I have referred is £3,999,000, and comprises the following items : -
I propose to say a few words regarding loan expenditure. During this year, I suggest, we might very well reduce this expenditure below the limits proposed by the Treasurer. It is intended to spend £2,500,000 on postal works and buildings. These are very largely in the nature of extensions; I suppose that nearly all would be new works. Are we able to afford this expenditure at the present time ? It is very doubtful whether we are justified in extending postal facilities at this rate. It is proposed to provide £500,000 for the building of war service, homes. That . is a reduction of about 50 per cent, in the expenditure of last year; ‘ Every honorable member knows that there are thousands’ of houses vacant at the present time. There is no necessity for expenditure for this purpose on such a scale at this juncture. The sum of £300,000 is to be provided for the Federal Capital Commission. I am aware that a considerable amount will be required for the completion of the School of Anatomy, but I do not know whether the balance of the proposed loan expenditure is essential. For river Murray works we have an item of £200,000. There, again, one needs full details, and I suggest that more careful consideration should be given to the possibility of the utilization of the waters to. be impounded by the Hume dam before further expenditure is involved in raising the height of the weir above its present level. It is proposed to construct a lighthouse steamer out of loan money for a sum which may amount to £120,000. This matter has been so recently debated in this chamber that I shall not refer to it again beyond saying that it appears to me that, having regard to the present financial position, we are able to get along perfectly well for a few more years with the Kyogle, and thus save this expenditure. With these economies in loan expenditure, and the consequent savings in interest and sinking fund payments, . it is possible to avoid an expenditure of £4,000,000.
I informed the committee at the outset that I would indicate where savings to that extent could he made, and I have now discharged that responsibility. It would have been much easier to discuss the budget in a general way, as the present Prime Minister often did when he was Leader of the Opposition, and to avoid the responsibility of making definite suggestions, thereby running the risk of incurring unpopularity among certain sections of the community. But I have not hesitated to say exactly where I suggest that savings can be made. At the same time, the Government is in a much better position than the Opposition to determine the practicability of particular savings, and to consider whether savings are possible in ether directions. Some of these economies, I admit, depend on changes in Commonwealth policy, and we have to make up our minds to review at least some of these matters of policy to which I have referred.
All that I have said is based upon the view that we are not safe in regarding our present position as due merely to a temporary depression from which an early recovery is certain, or, at least, highly probable. Of course, if there is such a recovery, well and good; but we must order our affairs to meet what, unfortunately, is probable, and that is a further reduction in the prices of our primary products, and an extension of the economic depression generally. There is no sign of a substantial recovery in the prices of wool or wheat. The income of our people is still diminishing. Further heavy taxation, as now proposed, will have the effect of even further diminishing the national income, and I verily believe that unemployment will be increased oven beyond the present almost staggering figures. The sales tax is a new one, and it will mean the establishment of a new and extensive department. At the beginning, at least, the collection of this tax will prove complex and costly, and it will greatly increase charges.
The Commonwealth, in 1928-1929, carried on with an expenditure of about £4,000,000 less than is proposed by the Government for the current year. We should spend no more than the amount disbursed in 1928-1929, and, if possible, we should spend less in this year of diminished income. Therefore, as an instruction to the Government to reconsider the Estimates for the purpose of reducing expenditure, including the salaries of Ministers and members, by about £4,000,000, in order to reduce expenditure approximately to the level of that of 1928- 1929, and in order to prevent an increase in the cost of living and the unemployment consequential upon additional taxation, I move -
That the item be reduced by £1.
– I have not the slightest intention of following the Leader of the Opposition (Mr. Latham) in his dissertation on the budget, and I have no apology to offer in reply to the reflections on this Government implied by his eulogistic references to the late Administration. I propose, however, to offer a few remarks upon a quotation that he made from a sermon by Mr. Bruce, the late Prime Minister, which was delivered in hundreds of places in Australia during a number of years. The reiterated statement of Mr. Bruce was that the cost of production should be reduced, and his argument was interpreted by the members of the Labour party to mean that wages must come down. The Leader of the Opposition has asserted that his party has been misrepresented in that matter. But I know, and the workmen of Australia will now know, that this Government stands as a barrier against the reduction of wages and the lowering of the standards of living in this country.
– Wages will come down in spite of the Government.
– Whether that is so or not, I have declared where the Government stands. The occupancy by this Government of the Treasury bench is a guarantee to the working people of Australia that their wages will not be taken to assist the Government to meet the present difficult financial situation.
– I say that every time I speak.
– And I am saying it now on behalf of the Government. The Leader of the Opposition (Mr. Latham) has adversely criticized practically everything the Government has done since it assumed office. He has criticized its arbitration policy, its bounties policy, and, in fact, every policy it has advanced in any connexion; but his criticism of its finance policy and its estimates of expenditure and revenue is surely the most remarkable of all, and must stand as an exhibition of audacity unexampled in our political history. The Government which the honorable gentlemen opposite supported, which was the Government of yesterday, came into power with a surplus of £6,500,000 in the Treasury, and administered the affairs of the country in years which were fat, with abundant revenues. It distributed public money with a lavish hand wherever it thought it could attract votes. Yet it finished its last year of office with a deficit of £5,000,000. It left behind it, as evidence of its capable administration, not only this accumulated deficit, but also unpaid bills overseas to the extent of millions of pounds. It is extraordinary that a member of such a spendthrift Government should now accuse this Government of having committed the errors for which he was, himself, largely responsible.
The honorable gentleman says that the Government has not reduced expenditure. The Labour party does not regard the mere reducing of expenditure as a virtue, for it knows that if less money is spent the consuming power of the people is diminished. This must, of course, reflect itself in a decrease of production. This Government, therefore, would not think of taking credit to itself for having merely reduced expenditure. The situation in which it finds itself to-day was created, by its predecessors in office.
Let us look at the loan position for a moment. In the last year of the previous Government’s administration, it expended on loan works £8,200,000; but this year this Government proposes to expend out of loans only £4,000,000; yet, honorable gentlemen opposite, in their new-born enthusiasm for economy, suggest that we should reduce our public borrowing to a still lower figure. It has been said that we are increasing expenditure to the extent of more than £1,000,000, but the increase is due to causes over which we have had no control. The first notable increase is in our interest bill and payments to sinking fund. Our interest and sinking fund bill this year will reach £26,699,000. But that is not all, for we shall be required to contribute towards the interest bill and sinking funds of the States no less than £8,635,000, and we shall also have to pay £400,000 in exchange and interest on London overdrafts, which was left unpaid by the Government of which the Leader of the Opposition was a member. Our total expenditure under these three headings will be £35,734,000, which is £1,341,000 more than was spent in the last year the previous Government was in office. Surely honorable members opposite would not suggest that the Go vernment should refuse to meet, or even try to escape, the making of these payments, for we have always understood that they regard the meeting of interest charges as a sacred obligation. They are the very last who would advise the pursuit of that policy. They would much rather see the Government take some steps to lower the standard of living than see it do anything which might imperil the meeting of its sacred obligations to the money-lenders and the great banking corporations.
– Would the Minister prefer to repudiate the payment of the interest on loans?
– I certainly would.
– The honorable member for Warringah (Mr. Parkhill) has no doubt asked me this question confidentially, and, as between the two of us, with no one else listening, I say to him that if I had to choose between the repudiating of the responsibility for making provision for the men, women and children of this country to earn sufficient to provide themselves with bread and butter and clothing, and to maintain themselves in decent habitations, and the repudiating of the payment of these interest charges. I know which I should prefer.
– And so do I know which I would prefer ; but the Minister has answered my question.
– The honorable member can now answer it for himself. Our old-age and invalid pensions expenditure has increased to £11,400,000, which is £1,276,000 more than it was in the last year of the previous Government’s administration. Does the Leader of the Opposition suggest that we should make any economies here?
– The increase in pensions was provided by us.
– The virtue and thu fault, if there is a fault, both belong to the previous Government, which frequently found it convenient to increase pensions just about election time. The old-age pension was increased from 10s. to 15s., and then to 17s. 6d., and later to 20s.; and the making of such increases was regarded as a virtue whenever votes were required. The previous Government created the conditions which have caused this increase of £1,276,000 in our pension payments.
– But the present Government, by increasing taxation, will reduce the value of the pension.
– Does the honorable member for Forrest (Mr. Prowse) want us to economize in pension payments? I am for the moment, dealing with increases in expenditure for which the previous Government was responsible.
I come now to our expenditure on war pensions, repatriation, and so on. These are mounting up rapidly. I understood the Leader of the Opposition to say that we should make an investigation into this expenditure, and that if we did so, we should probably be able to save something.
– I said that a saving could probably be made in the administration costs.
– I know what the honorable member meant, even if I have not indicated exactly what he said. If the previous Government were still in office, could we expect it in this time of emergency, to deal more mercifully with soldiers’ pensions than it would have dealt’ with the wages of the workers? Our expenditure on soldiers’ pensions and repatriation will amount this year to £9^376,000. This expenditure covers, of course, a great deal more than pension payments direct to ex-soldiers; it includes expenditure on mental and general hospitals, living allowances, the education of soldiers’ children, and a variety of other things. The cost of administering the department this year will be about £250,000. Practically the whole of the increase in administration costs this year is due to the creation, by the previous Government, just prior to the last election, of pensions appeal boards. Apart from the appeal boards which the last Government created, the cost of administration has gone down by between £30,000 and £40,000. The ramifications of the department are wide, extending throughout Australia, and many thousands of cases have to be dealt with annually.
I come now to the grants to the States. This year we shall be required to pay to the States no less than £3,910,000, which includes £2,000,000 in respect of the roads agreement. Our predecessors in office were responsible for the federal aid roads policy, which, doubtless, was adopted to assure them of support in the various States. Is it now suggested that we should throw this agreement overboard ?
– The States desire to end the agreement.
– That is not so.
– They want to end it, because they cannot find sufficient money to enable them to take advantage of the Commonwealth grant.
– Some of the States are very anxious that the agreement should be continued; but they are in difficulties because they cannot meet their obligations. “We all know that the States are impoverished to-day.
– I repeat that they desire to terminate the agreement.
– Even if that is so, what folly it would be for us to allow it to be terminated ! That would probably mean that a great deal of the money that has been advanced to the States for the making of roads in all parts of the Commonwealth would be wasted, for the roads could certainly not be maintained in proper order by the States without assistance. That would mean that the asset which has been secured through the expenditure of this money would depreciate rapidly, and ultimately disappear altogether.
– The money was made available by the previous Government for the construction of new roads and not for the maintenance of existing roads.
– It would be folly for us to stand by and see the roads already made deteriorate, and the Government has therefore wisely decided to allow some of the roads money to be used, in certain circumstances, for maintenance purposes.
The Government has also decided to assist the States to provide work for the unemployed. A great deal of the unemployment that has occurred must be put down to the extravagant policy and lack of foresight of the previous Government, the supporters of which are now calling upon us to reduce expenditure which cannot be reduced. It is unquestionably the responsibility of the Government to ensure that the women and children of Australia shall not be allowed to starve, and that our workers shall be given some sense of security. The Government has decided that the best way to distribute any money that it has for relief works is through State instrumentalities. The alternative would be to set up new machinery of its own, which would be uneconomical and probably less effective.
Summarized, .the position is that the previous Government spent £34,393,000 in its last year of office in interest and sinking fund charges, contributions to interest charges in sinking funds in respect of State debts, and exchange and interest on London overdraft; and that this Government will have to spend £35,734,000 this year in respect to those items, the increase being £1,341,000. The previous Government spent £10,124,000 in its last year of office in old-age and invalid pensions, and this Government will have to spend £11,400,000 this year in this direction; the increase being £1,276,000. The previous Government spent £9,027,000 in its last year of office on war pensions and repatriation, and this Government will have to spend £9,376,000 this year in that connexion, the increase being £349,000. The previous Government spent £2,520,000 in its last year of office in grants to the States, and this Government will have to spend £3,910,000 this year in that direction, the increase being £1,390,000. In the total expenditure under these items of £60,420,000 no economy whatever could be effected by this or any other Government if contractual obligations are to be honoured.
I come now to a consideration of thePostmasterGeneral’s Department. The Leader of the Opposition evidently desires us to reduce our expenditure on postal services. The business of this department is increasing from year to year, but not the number of the persons whom it employs. The matter was inquired into by the Public Accounts Committee not so very long ago. That committee investigated from every aspect the activities of the post office as an industrial organization, and its conclusion was that, by the introduction of new processes, better organization, the abolition of relay stations, and the greater mechanization of the operations, there had been a considerable increase in the volume of the work done with practically the same number of men as were formerly employed. The committee discovered that the number of persons employed in the post office was not increasing even in proper ratio to the increase in population.- It pointed out that, although there were 2,000 additional post offices, 200,000 more telephone instruments in use, 1,000,000 more miles of line to maintain, 100,000,000 more mail and postal articles handled than was the case previously, and that, although there had been a 12 per cent, increase, in the population, the employees in the Post Office Department had not increased in number proportionately.
For the two years used as a basis of comparison by the Leader of the Opposition, 1928-29 and 1930-31, the increased cost involved in the administration and general work of the post office amounted to £902,000. The honorable gentleman contended airily that we should reduce the expenditure for this year to what it was in 1928-29. But how could we do so, when the increase in interest and sinking fund alone on the post office expenditure amounts to about £400,000 this year, and about £500,000 embraces all other increases for additional mail and aerial services, ships’ mails, and various other charges. Practically half of the additional expenditure during the two years - 44 per cent. - is accounted for by increased interest charges on the enormous expenditure of public money on the institution, incurred by the preceding Government. It is very evident that- this Government can do nothing to remove that situation.
Now I come to defence. We have reduced the expenditure on that department by just upon £1,000,000. Although the Leader of the Opposition and his colleagues are continually shouting that economy must be effected, immediately this Government proposes to economize, whether it be in connexion with the War Memorial, defence generally, the decennial census, the Federal Capital Commission, or the Development and Migration Commission, they oppose what is put forward, either by their voices or their votes. I remark, incidentally, that the costs of the Defence Department are now below what they were in 1929. This Government has effected that economy. But it must not bc forgotten that in the works section of this department a tremendous burden of interest has been piled up by preceding governments. Apart from that, it may be fairly claimed that practically every department under Commonwealth control is now being carried on with fewer men and with greater economy than in the past.
The annual maternity grant now stands at £660,000, and the Leader of the Opposition suggests that it be reduced by £200,000 He urges that it should not be paid to anybody receiving over £6 a week. The honorable gentleman might just as easily ask that the vote be reduced by £500,000. As a matter of fact, the last Prime Minister, Mr Bruce, set his officials to work to investigate this matter, and they found that the number of persons receiving over £300 who claimed this bonus was so small that it would not pay to establish and maintain an army of investigators to discover them.
A similar attitude was taken by the Leader of the Opposition with regard to invalid pensions. It is suggested that these pensions are being paid to many undeserving persons, and to many who are not totally incapacitated.
– Who said that?
– It has been stated in the newspapers. I would not like to say that the honorable member was guilty of such a statement. It has been broadcast, together with the suggestion that the matter should be investigated. But, within the past few months, officers of the department that I control, independent of the Pensions Office itself, have examined some 10,000 cases, and have found that, so far as the majority of the pensioners are concerned, they are physically incapacitated, and only about 1 per cent, of them ever come within the realm of doubt.
– 1 think that that is right.
– Then there is no need to argue the subject, further. As tn bounties, on which it is claimed an additional £50,000 is being spent this year as compared with the expenditure of two years ago, I suggest that the Leader of the Opposition should have gone back a little further when, during three years, the Bruce-Page Government expended in bounties roughly £2,250,000, or about £750,000 a year. That Government gave bounties to the wine, iron, steel and cotton industries, and what was done had to be maintained by this Government. Industries having been brought into existence, we could not allow them to be cut ofl at a moment’s notice. That would merely have meant the wasting of the millions of pounds that have been spent in establishing and developing them.
Other special appropriations involve an expenditure of £473,000, while the item “Miscellaneous” accounts for £783,000. The honorable gentleman raises no objection to the total amount involved in the establishment of the Federal Capital. It is enough to know that this Government has effected an immense saving under that head. Any honorable member merely by looking out of any of the windows of Parliament House, can see that the Federal Capital has become a place of the dead compared with what it was a fewyears ago. The responsibility for this enormous capital outlay on Canberra lies with the honorable gentleman and his Government. Theirs, also, is the responsibility for the expenditure of unnecessarily great sums of money to evolve a city whose dwellings are scattered as are the stars of the heavens, with a village here and a village there. The numerous hostels of Canberra, largely empty, like so many mausoleums of the dead, are monuments to the incapacity of our predecessors in office. In the extensive gardens surrounding this building are buried the foundations of offices which have never been constructed, costing many hundreds of pounds. This is not the work of this Government, but of the governments of honorable’ members opposite. To this Government is bequeathed the task of finding the staggering load of interest associated with these monuments to the stupidity of its predecessors.
There has been a slight increase in the vote for “ Other territories,” principally because this Government has to maintain the commissions inaugurated by the Bruce-Page Government. There are 2,000 or 3,000 persons living in the vast Northern Territory. That area, they thought, must be subdivided. One Government was not enough for it. Two had to be brought into existence. That was done, and the Bruce-Page Government appointed cumbersome and expensive commissions to govern thatcommunity, so that the burden of expense might be increased. That expenditure falls upon the Government of to-day. Similar remarks may be applied to the vote for railways. Any slight increase in the cost of maintenance is the result of the policy of the late Government. This Government cannot be blamed. The Bruce-Page Government incurred additional expenditure and additional interest in connexion with- the Commonwealth railways, and the burden to-day falls .upon this Government. It is inescapable. So with the east-west railway. If it is not earning as much as it did, and if the expenditure upon it is u little more to-day than it was in the past, the reason is that the wise and discreet Government that preceded the present one subsidized aerial concerns which take away from the railway some of the revenue that it was earning.
Look at it which way you will, the proposals emanating from honorable members opposite merely amount to a plea for a reduction of the existing wage standard, to the detriment of the men, women, and children of thi3 country. Hundreds of thousands of our workers are unemployed, and the method of salvation advanced by honorable members opposite to overcome the evil is to spread its ramifications, so that all may be drawn within the net of degraded conditions. They advocate that available work and money should be further rationed and distributed so that the standard of living established by the arbitration laws of this country may be destroyed- Personally, I do not regard that as a solution of the problem. This hideous gospel of saving the country by a reduction of the standard of human existence is not a new one. We have previously heard this gospel of cheap labour. But if a .10 per cent, reduction of wages will benefit the country, how much better it would bo for the com munity if that reduction Were made 20 per cent. ! And if a 20 per cent, reduction would bring prosperity, why not increase it to 50 per cent., and so evolve a veritable paradise? In the middle eighties, when there was no Labour party, no arbitration court, when the unions were weak, and the “ brains of the world “ were the masters, it was reported that in New South Wales, girls were working in the brickfields of Newcastle for from 10s. to 12s. a week, and a royal commission reported that in Victoria thousands of people were working under conditions, that; were abhorrent to humanity. On the evidence adduced, it had to be admitted that men and women were working in factories and other places for a pittance that was insufficient to keep body and soul together.
– Is all this in defence of the budget?
– It is not, but it is an incontrovertible answer to the arguments advanced by the Leader of the Opposition to-day. The honorable member wants economy, but to achieve it he desires to degrade human existence and deprive people of the essentials of life: bread, butter, coal, and clothes. The contention of the honorable gentleman and his colleagues is that the lower you reduce wages and the standard of existence, the better it will be. First, honorable members want a reduction from 2s. to ls. Then they claim that as ls. will be as good as 2s. was, you might as well reduce the amount to 3d., which will be as good as ls.
– That is what the honorable gentleman has been saying for twenty years. Why does he not say something new?
– I am saying it because it is an essentially sound exposition of the attitude of honorable members opposite, and the basis of things so far as the working classes are concerned. Year after year, honorable members opposite have presented such arguments, but instead of the country advancing in prosperity, things have become worse. Their gospel is being applied in Great Britain to-day, and, as a result, unemployment is increasing considerably. That gospel has been preached for years in the hope of reconstructing Great Britain.
A lower standard of living is regarded as the salvation of the country. It is the doctrine which was expounded by Lord Inchcape when he said that the standard of living must come down after the war, otherwise Britain would not recover her lost markets. Great Britain is now recovering her overseas markets; but the purchasing power of her own people has been practically destroyed. Never before has unemployment been so rampant in that’ country. That is our answer to honorable gentlemen who tell us that a policy of economy and a cutting down of wages will enable us to reestablish our finances on a sound footing.
A review of the last eight years might be of .interest to honorable members in this connexion. When Mr. Bruce became Prime Minister in 1922, he made a number, of glowing speeches in which he indicated what his Government would accomplish. He told the electors that, if given three years of office, his Government would restore to the country a state of prosperity which would endure for ever. He had, not three years, but eight years of unrestricted power. There was no one to question his progress or his authority. His Government was all-powerful. The then Opposition, though not so weak in numbers as is the present Opposition, was, however, almost as impotent. What did his Government accomplish in those eight years? We have but to look around us to see that he failed to bring about that enduring prosperity which he promised. For the origin of the difficulties which confront us to-da.y, we must go back to 1924. There are many in our midst who are only too willing to blame workingclass organizations for our present trouble. In my opinion, the bankers of Australia are largely responsible for our present position. In 1924, when the late Sir John Garvan was chairman of the Note Issue Board, the banks decided to exercise their right to draw additional notes. Sir John Garvan refused their demand, describing it as utter madness. The right honorable member for Cowper, (Dr. Earle Page), as Treasurer, endorsed his action, and later stated in this House that if he had acceded to the demand, the result would have been credit inflation and false prosperity. But the bankers insisted on exercising their right, and additional notes were issued. On the 13th June, 1924, the right honorable member for Cowper said -
The banks, mindful of their own interests, have no such regard for the public welfare as is undoubtedly required. Their individual outlook and interests render them unsuitable for the exercise of that prevision necessary for the construction of a sound policy.
The right honorable gentleman pointed out, in this chamber, that the demand of the banks meant credit inflation, with a consequent rise in prices, undue consumption, and a false stimulus to production. Honorable members will recollect that about- this time the late Mr. H. E. Pratten delivered some very powerful speeches in this Ho.use in which he pointed out the inevitable result of the Government’s policy. Realizing the force of his remarks, Mr. Bruce offered Mr. Pratten a position in his. ministry. Its action on that occasion was typical of that Government, for do not honorable members recollect the circumstances in which the right honorable member for Cowper (Dr. Earle Page) was made Treasurer of that Government, and, later, how the honorable member for Henty (Mr. Gullett), who had denounced that Treasurer as being the most tragic the country had known, was also offered a portfolio? The present Leader of the Opposition (Mr. Latham) also joined that Ministry in somewhat similar circumstances. Mr. Bruce adopted the policy of inviting the malcontents among his socalled supporters who had the courage of their convictions to join his ministry. To find room for them, other members, whom he feared less, were pushed out by the neck. In course of time, the Government came to consist, in fact, of Mr. Bruce, Dr. Earle Page, Mr. Latham, and Mr. Gullett, who succeeded Mr. H. E. Pratten. Soon after his inclusion in the Ministry, the late Mr. Pratten addressed a number of manufacturers, when he pointed out that the bankers would not part with overseas money arising from exports, and that, therefore, Australian governments had to go abroad to obtain funds while the banks kept their overseas money to finance a flood of imports. That has been going on for a number of years. Mr. Pratten pointed out the inevitable result of a policy of drift. That policy has led up to the present crisis. In the year following Mr. .Pratten’s acceptance of a portfolio in the Bruce-Page Ministry, there was an election. At that time, I was the Deputy Leader of the Labour party. In the caucus meeting of the party,- I pointed out that, if a policy of drift were continued, a financial crisis was inevitable. I urged that the party should make no promises to the electors, but should point out how the Bruce-Page Government was allowing the country to drift towards financial disaster. I urged that we should tell the people plainly what lay before the country if that policy were continued. I felt that the people should know that the situation was critical, and that the Labour party, if returned, would at once set about putting things right.
– The Nationalist and Country parties did that at the last election, with the same result that befell the Labour party in 1925.
– The Labour party accepted my advice, and appealed to the electors accordingly, with the result that many members of that party lost their seats in this House. As I have said, the Labour party made no promises to the electors on that occasion ; but Mr. Bruce, in his policy speech at Dandenong, made promises unlimited and unrestricted - one might almost say he made £40,000,000 worth of promises - none of which he kept. Among them was a promise that his Government, if returned, would introduce a scheme for child endowment.
– No denial by the honorable member will alter the fact. Mr. Bruce, perhaps, did not put it so plainly; his remarks were subtly framed. But there can be no question that the people accepted them as a bona fide promise that his Government would introduce a scheme of child endowment. He told the electors that the Labour agitators lived upon destitution and misery; that his Government felt under an obligation to provide for the unemployed. He also promised legislation providing for unemployment insurance, which, he said, would cut the ground from under the feet of the agitators. Not one of those promises did he keep. But, as a result of them, his Government was returned.
– Did not almost the first speech of the present Prime Minister include a promise of legislation for unemployment insurance?
– Of course it did. Unemployment insurance is one of the planks of the Labour party’s platform.
– Then what is the Government doing about it?
– The first duty confronting the Government is to clear up the mess left by the late Government. Unfortunately, the whole social policy of the Labour party must stand over until the financial position has been restored.
– That is what we said. .
– The Government is doing its best in the present difficult circumstances. The demand of the Leader of the Opposition (Mr. Latham) for a reduction of expenditure cannot be acceded to. Although at present the Government is unable to carry out the policy for which it stands, its actions in this time of crisis will receive the endorsement of the majority of the people. The Government has nothing to lose by a comparison of its policy with the negative policy of the Opposition.
.- There is no need for me to condemn the budget, because it contains its own condemnation. But, if anything further were needed to complete that condemnation, it would be the defence of the budget just made by the Minister for Health (Mr. Anstey). The honorable member travelled all over the world during his remarks; he almost took us back to the time of the great flood. He told us what happened in the past; but he was careful to say very little about the present or the future. “When asked to explain the budget and why he could not reduce expenditure what did he do? Burly as the Minister is, he hopped about playing financial “tiggie” hiding first behind an old-age pensioner, then behind a wounded soldier, only to be seen a moment later behind a monthly nurse. He said that certain items of expenditure . were inescapable; that if they were reduced the people behind whom he had been hiding would be injured. Then he played an old political game. .He said “Show me an item which can be reduced.” After that he began a heresy hunt. He pointed to various items, saying, in effect, “ No reduction can be made here; if an attempt is made to reduce this, or that, item, there will be trouble.”
That the budget condemns itself is shown by the public outcry against it. Press and public have joined in a universal denunciation of the Government’s financial proposals. In some cases the press has almost exhausted its vocabulary of adjectives. The budget is described as “Calamitous”; “A gambler’s budget”; “Devastating”; “Crude”. The striking feature about the budget is the Government’s failure to realize Australia’s serious position. In a year when the income of the people has fallen dramatically, governmental expenditure is to reach a record. The proposals of the Government will place such burdens on the people that automatically their incomes will be still further reduced. The Minister for Health suggests that the Leader of the Opposition (Mr. Latham) is desirous of reducing our standard of living and of cutting down wages. He has no justification for his statement yet there is nothing more certain than that the imposts placed upon the people by this budget will have the effect of reducing their effective wages. No plan is indicated in the budget for dealing with the crisis that now confronts us. An attempt has been made to deal with the deficit in the same panicky way. as that in which the Government sought a few months ago to overcome the problem created by the exchange position and the shortage of credit overseas. Without giving the matter any consideration, it rushed blindly into a policy of imposing high duties and embargoes on the importation of goods, in the hope of adjusting our trade balance. It prevented the importation of many classes of goods, and restricted the importation of other classes, although most of the goods have been paid for, or arrangements have been made to pay for them with mon:ey raised privately at low rates of interest. This would have stimulated trade, increased the national income at this time of its depression and prevented unemployment in many avenues. Nevertheless, the Government rushed in where angels might have feared to tread. It threw the workers to the wolves, ruined hundreds of businesses, and raised the percentage of unemployment to a higher level than has ever been known before in the history of Australia.
The budget gives the lie to every one of Labour’s pre-election promises. A great feature of the Labour platform has always been that it is wrong to raise money by indirect taxation, because the burden falls on the workers. I remember hearing the Minister for Health (Mr. Anstey) in 1924, stating that, instead of raising £10,000,000 by income tax, and £30,000,000 by customs duties, the Government should raise £30,000,000 by income tax and £10,000,000 by customs duties; yet this budget provides for raising only £11,000,000 by income taxation, but greatly increases the amount to be raised by indirect taxation, which must be borne by the consumers. Such taxation is inequitable, because it cannot be subject to graduation. The result will be increased want, destitution and unemployment. Study the budget as we will, we can discover in it no contribution to the solution of our present problems. There is no hint that Ministers or members of this Parliament should share in any way the sacrifices being demanded of the people. The Leader of the Opposition (Mr. Latham) pointed out that practically everybody, during the last twelve months, had suffered losses of income, with the exception of members of Parliament and people in sheltered positions such as members of the federal services. Members and supporters of the Government have sought to lay the blame for our present troubles on the past Government, and, if we resent the charge, we are accused of adopting a partisan attitude. Apparently, when the charge is made against us from the other side, it is to be regarded only as a pleasant interlude, but when we defend ourselves we are indulging in party propaganda.
The existing crisis has been aggravated by the attainment to office of the Labour Government. The advent of the present Government has made money practically unobtainable overseas. The rates at which we have been able to borrow have become successively worse, until they now compare very unfavorably with those obtainable by South Africa and New Zealand. This is because of the past record of Labour in office, both in State and Federal spheres, and their preelection promises. The Labour party promised to introduce the millennium, but things are worse now than before. Confidence in Australia has been weakened by the policy pursued by this Government since it assumed office. For instance, it has cut down defence expenditure by £875,000 as compared with the 1928-1929 expenditure, and this is rightly looked upon by people overseas as a failure by Australia to pay the premiums on its life insurance policy. The opinion of thinking men in England on Australia’s attitude is summed up by a recent statement of Mr. Phillip Snowden. Chancellor of the Exchequer, who said that nearly all Australia’s financial and economic troubles were due, not to the late Government, but to the policy of excessive protection. The Government’s method of applying that policy has caused irritation throughout the world, and provoked retaliation from some of our best customers. It has dislocated trade, and interfered with the development of industry. The Arbitration Bill introduced by the Government a few weeks ago attempted to relieve the arbitration court of the necessity to take economic facts into consideration when framing awards, and this has also tended to shake public confidence, as has the fact that the bill made it possible practically to place the control of arbitration in the hands of trade union secretaries. The Government brought down proposals to deal with the banking system of the country which would have placed the country’s credit under political control. It has already abandoned the. gold standard in connexion with our currency. The Government’s whole policy has tended to bring about a continual increase in the percentage of unemployment until that percentage now stands at the appalling figure of 18.5 per cent., higher than it has ever been known in Australia* and twice as high as at the beginning of last year. All these things must influence very materially the opinion of investors overseas. Nevertheless, mem bers of the Government keep on saying that the last Government left the country in a mess which they are trying to clear up. As a matter of fact, this Government is getting the country deeper and deeper into the mire. Upon assuming office, it took over a deficit of £4,900,000; after nine months it has increased that deficit to £6,500,000. It found an overdraft of £2,900,000 which, in nine months, it increased to £5,000,000.
Unfortunately, the present depression is not a local one; it is world-wide. It was stated on the 22nd May by Mr. Phillip Snowden, in a speech delivered in the Grocers’ Hall, London, that there was some common if not sole cause, and, in his opinion, it was the appalling fall in price levels throughout the world, and the lag between the drop in wholesale prices of primary food-stuffs and raw materials, and the retail prices of finished goods. This condition is universal. In Britain at the end of April the index figure for wholesale prices was 117.2 as compared with 161.9 at the end of April, 1925, a fall of 2f. per cent. The retail price had only fallen from 173 at the end of April, 1925, to 155 at the end of April, 1930, equal to the reduction of 10.4 per cent. This condition obtains also in other countries. In France the wholesale prices index figures had fallen from 653 in March, 1929, to 503 in March, 1930. In Germany, the fall during the same period was from 140 to 126; in Belgium, from 869 to 774; in Italy, from 461 to 400; in the United States of America, from 98 to 91; in Britain from 138 to 119; and in Australia, from 1,860 to 1,647, the lowest recorded since 1920. In Australia the wholesale prices for our great staple products, such as wool, wheat, butter, &c, were lower than they had been for many years and practically at pre-war rates while retail prices were practically double what they were before the war. The price of wool has dropped from 26.21d. in 1924-25 to lid. in. 1929-30, while wheat has fallen from 7s. 2d. in 1924-25 to 4s. 3d. in 1929-30. Financial writers recognize this disparity between wholesale and retail prices as the basic cause of the existing depression, and the consequent large volume of unemployment. If the prices being paid to primary producers for the raw materials of industry and for food-stuffs have suffered a great reduction, while the retail prices of the manufactured goods remain high, it is obvious that the purchasing power of the community must be seriously diminished that retail goods cannot be paid for at present prices and people cannot be kept in work. The Labour party blames the Bruce-Page Government for the fact that the prices of wheat and wool have fallen. Could any more ridiculous statement be invented? I maintain that the expenditure provided for in this budget, together with the increased taxation, -will have the effect of increasing the present already high retail prices, and of delaying our trade recovery. Every one agrees that such a recovery can only take place when retail prices come down to something approaching wholesale prices and both touch bottom. Prosperity will then return, but only on the basis of the new and lower price levels.
We’ must be prepared to deal with the facts of the situation, and so to frame our national policy as to prevent any increase of governmental expenditure and, ‘if possible, to reduce it, because of the lowered national income to provide the taxation necessary to meet it. Honorable members opposite accuse the Bruce-Page Government of being responsible for the present depression in Australia. According to them the last Government, in some occult way, brought about a world-wide reduction of prices of wheat and wool. If that criticism is applicable in Australia, it must be applicable also in Germany, France, the United States of America, and everywhere else, but of course it is not, as every impartial writer recognizes. Mr. E. C. Dyason, in a paper read before the Victorian branch of the Economic Society of Australia and New Zealand, in April last, said -
The present discrepancy in the national economy, notwithstanding the polemics of the political parties, is primarily due to a change in world conditions, and not to any reduction in the productive capacity of the Australian nation. It is a reasonable criticism to say that we did not make sufficient provisions to meet such a contingency, but what other nation did? Look at America, Britain and Germany to-day. Look at the Argentine. The central lesson to be learnt from the present world situation seems to be that we have not yet learnt how to avoid slumps.
Mr. J. M. Keynes, a noted economic writer, commenting quite recently on this point, made this observation -
I pointed Out last year that the -disparity of movement between prices and wages since 1924 had faced employers with the task of increasing efficiency by 10 per cent, if they were to hold their own. I ventured to guess that efficiency was perhaps increasing at the rate of 1£ per cent, per annum, with the result that they might have reduced their relative disadvantage from 10 per cent, to 10 per cent, in four years ending in 1928. Unfortunately, the course of events during 1929 has further aggravated their problem instead of mitigating it; for prices have fallen by a further 4 to 5 per cent, while wages are unchanged. Moreover, while the difficulties in which the return to gold involved our own industries in the period after 1924 were mainly local to this country, the fall in the wholesale prices of raw materials has now taken on the character of a world-wide disaster. The storm centres are to be found to-day, in my judgment, neither in Great Britain nor in the United States of America, but in the great producers of raw materials overseas. For these areas are being reduced to very grievous distress by the combined circumstances of the fall in the prices of their chief products and the difficulty of obtaining funds on the International Loan Market.
There we have two independent opinions that the conditions underlying the preset’.* depression in Australia have nothing whatever to do with governmental action, and that it is part and parcel of a worldwide depression. Yet the Labour party claims that it is trying to pull Australia out of the mess in which it was left by the late Government. The falsity of the claim is easily seen by a review of the facts.
The second line of attack by the Labour Government is that the present position of Australia is due to the extravagance of the Bruce-Page Government in its spendings from revenue, to its loan policy, and to a flood of imports consequent upon its loan policy. The answer to the first charge is that the present Government, which condemns the late Government for having spent so much, is itself spending this year £4,000,000 more than was spent last year when the Bruce-Page Government was in office. At the same time the Treasurer claims that there is not one excess officer in the Public Service, despite the fact that the present Government has retained in their positions hundreds or thousands of men in the post office to whom notice of dismissal had been given prior to the defeat of the late Govern- ment. He also says that the departments are being run in a most economical fashion. The Minister for Health (Mr. Anstey) claimed a few moments ago that the present Government has saved enormous sums of money and, according to the Sydney Morning Herald this morning quoting ‘the Prime Minister, this saving amounts to £5,000,000. If the Government is spending an additional £4,000,000 over what was spent in 1928-29 and is also saving £5,000,000 in certain departmental expenditure, the obvious conclusion is that it is spending, on the ‘remaining services £9,000,000 ‘in excess of what was spent by the last Government.
The Bruce-Page Government has been blamed for having borrowed all sorts of sums, from £50,000,000 to £200,000,000, during its term of office. The total indebtedness of, the ‘Commonwealth and the States is, in round figures, about £1,100,000,000 and the Minister for Health would make it appear that the late Government was more or less responsible for the annual interest bill of £35,000,000, ignoring the fact that a great part of this sum is interest on State loans. The truth is that the greater part of the indebtedness upon which this interest has to be paid was incurred before the Bruce-Page Government came into office. The budget papers show that the total increase in the public debt of the Commonwealth during the six and a half years in which the Bruce-Page Government held office - the Minister for Health was wrong in saying that the period was eight years- was less than £13,000,000. They also show that the returns from reproductive works were so great that the amount of interest payable by the taxpayers of Australia when the Bruce-Page Government went out of office was less than it was seven years previously. The British Economic Mission pointed out that that was the position in 1927, and it still remains the position. Although some of the works upon which loan money was spent have not yet become reproductive, so great a proportion of the war debt has been paid off that the annual charge upon the taxpayer for interest payments has been diminished during the Bruce-Page regime.
In regard to a flood of imports, if we examine the figures we see that, during the last three years of the BrucePage Government administration, the adverse balance of trade was steadily altering. There was an adverse trade balance of £19,000,000 in the year 1926-27, but by 1928-29 there was a favorable balance of trade of something like £1,500,000. The policy of the BrucePage Government, therefore, tended to bring about a favorable balance of trade, and in a moment or two I shall show how unnecessary it has been for the present Government to impose excessive duties and to place embargoes upon imports to correct our present difficulties. In every country in the world, as the result of the diminished purchasing power, there has been -as big a falling off in imports as there has been in Australia - without the panic measures of the present Government - simply because people, in depressed times, have not been able to buy goods either inside or outside their own country. During the six and a half years in which the BrucePage Government was in office, the increase of the Commonwealth debt was, as I have said, £13,000,000, but the debt of the States increased by £207,000,000, and I do not remember hearing our friends opposite commenting adversely on the policy of excessive borrowing as practiced by their Labour friends in the States. As a matter of fact, the BrucePage Government made a very determined and successful effort to co-ordinate and curtail public borrowing in Australia. In 1924 it brought into being a voluntary loan council, and when it met the States at that council, it put up the proposal that the total debt of Australia should not be increased to a figure higher per head than it stood at the time. The adoption of the proposal would have meant a total borrowing for the whole of Australia of not more than £22,000,000 a year. It was, however, unable to secure agreement along those lines, but it put the policy into operation so far as the Commonwealth was concerned, with the result that during the six and a half years it was in office there was a decrease of £6 9s. per head in the indebtedness of the Commonwealth. But there was, in the same period, an increase of £21 per head in the debt of the States, making the net increased debt per head for the population, Commonwealth and State, about £15 per head. The Bruce-Page Government, as I have said, carried out the policy it proposed, and when it tried to get its views adopted by the State Premiers to ensure that they would reduce their borrowings, Mr. Lang, then Labour Premier of New South Wales, left the loan council. I have not heard from those now sitting behind the present Commonwealth Government any criticism or censure of Mr. Lang’s action in leaving the loan council. Mr. Lang said that he did so because there had been an attempt to exercise restraint by the council, and, like a Mad Mullah, for two years he borrowed in Europe and America at all sorts of prices, doing very much to harm tha public credit of Australia.
It was the Bruce-Page Government that brought in the financial agreement to secure a common sinking fund for the Commonwealth and the States. Honorable members who are now on the treasury bench fought that proposal of a financial agreement. Their votes indicate that they were opposed to an agreement with the States which, undoubtedly, has been responsible for the prestige of Australian stocks being even as high as it is overseas at the present time. Without that agreement the Commonwealth and the States would have continued borrowing indiscriminately, and there is no doubt the cost of raising Australian loans would have been very much higher than it, is to-day. From the sinking fund created under the financial agreement, by the Bruce-Page Government in 1923, £10,000,000 was spent last year and in the previous year to redeem Commonwealth and State debts. Of this, almost £4,000,000 was each year used to improve the exchange position overseas, which has become exceedingly acute. The loan policy of the Bruce-Page Government during its term of office was such as to maintain Australian credit on a parity with that of New Zealand and South Africa. From 8th February, 1.923, to 15th January, 1929, there was never a variation of more than 4 or 5 per cent, in the rates at which our stocks were quoted between South Africa and
Australia. . The figures given in the budget speech show that, from ‘ loth January, 1929, to October, 1929, there was a difference of, roughly, £5 5s. between the prices quoted for Australian and South African stocks. As a matter of fact, that difference was fairly con.stant throughout the whole period in which the Bruce-Page Government was in power, whether prices generally went up or down; but as soon as the Labour Government came into office, the price of Australian stocks, in comparison with those of South Africa, be-‘an to drop. The Labour Government came into power on the 22nd October. By the end of October there was a difference of £6. It was £7 5s. in November, £8 5s. in December, and £14 15s. in January of the present year. Since then during the whole of the period this present Government has been in office there has been a difference of from £10 to £13 between the price of Australian stocks and those of South Africa. The last figure of which I have any knowledge relates to the day after the late Treasurer (Mr. Theodore) resigned. By some strange coincidence, the price for Australian stocks then slightly revived. It .may have been due to the fact that about that time the Senate had thrown out a measure which the present Government regarded as vital. At any rate, the figures relating to the price of Australian stocks show that the money market and the investors of London have very little confidence in Labour administration. Everything that Labour has done has tended to prevent a proper solution of our difficulties. Mr. Philip Snowden’s opinion is that the present period of depression and unemployment is due to the lag between wholesale and retail prices, that no recovery can be expected until these prices touch bottom, but that as soon as they do, an immediate and great recovery of trade may be expected. As I have already said, that recovery of trade must be at a lower level. The present budget should, therefore, be examined to see whether it does anything to bring about that recovery, or does anything to reduce or increase retail prices. If. it tends to prevent a fall in retail prices it stands condemned, because the effect will be to retard general employment and quick recovery. Every action of the present Government, its tariff and its taxation, has tended to maintain the retail index figure at a high level, thus preventing it from touching bottom, despite the fall in wholesale prices of wool and wheat, which are practically down to pre-war level. The Government claims that its tariff has largely improved the position in regard to imports. It is interesting to note that, although the aim of every past increase in the tariff has been to restrict imports, this has always been followed by an increase in imports, with the result that succeeding governments have imposed higher tariffs, on the ground that previous tariffs had proved ineffective. More credence could be given to the claim that there would have been a flood of imports with the Government action if the Treasurer, in his speech on the application of the embargoes, had not admitted that the embargoes would not apply to more than £10,000,000 or £11,000,000 worth of goods, and that the action of the banks in regard to exchange, about which the Minister for Health (Mr. Anstey) complained a few moments ago, had interfered with the importation of some £40,000,000 worth of goods.
I shall show that this panicky action of the Government has tended to increase depression by forcing countries which have been good customers to adopt retaliatory measures. I combat the statement that the drastic action which the Government has taken to reduce imports was necessary. If we study the figures of European countries for April of last year, and for April this year, we find (hat, in practically every instance, there has. been a reduction of from 20 per cent. to 33 per cent, in them. In April, 1.929, Germany imported 1,255,000,000 reichmarks worth of goods, and in April, 1930, only S8S,000,000 reichmarks worth. Cn France, the decrease during the same period was from 5,138,000,000 francs to 4,566,000,000 francs. In the United States of America, the decrease was from 411,000,000 dollars- to 308,000,000 dollars, and in Great Britain from £104.000,000 to ,£84,000,000. It is quite evident that in Australia the operation of economic laws would, as they did in 1921-22, have brought about a big reduction in our imports, and without causing dislocation and ruin, as the Government’s present .tariff policy is doing. We are not receiving the same quantity of goods from overseas, because the purchasing power of the people, not only in Australia, but all over the world, has decreased to a marked extent. An analysis of the causes of the present position, as submitted by Mr. Philip Snowden, the Chancellor of the Exchequer in Great Britain, enables us to appreciate how the Government’s action is militating against a speedy recovery. He suggests the action which the Government will bc forced to take is one to reduce retail price levels, and, consequently, the cost of living, and the cost of production. But the Government’s policy and actions keep price levels and cost of living up. In Great ‘ Britain, the wholesale prices of foodstuffs or primary commodities used in manufacture are only 17 per cent, above 1913, while the retail prices of such commodities art’ 55 per cent, higher. Further, in the past five years, wholesale prices have fallen more rapidly than the retail prices as measured by the official cost of living index figures. The producers of commodities sold at wholesale prices are placed in a very difficult position. [Quorum formed.) Receipts of the producers can be measured, as economists point out, by reference to wholesale price index figures; but those selling at wholesale prices must pay wages and other expenses which are governed by retail prices and the cost of living. The discrepancy, therefore, operates to the disadvantage of the producers. To what extent, can this discrepancy be remedied by the Government or by concerted action ? Wholesale prices relate, as a rule, to primary products or to commodities used in the early stage of manufacture. Kctu.il prices relate to finished good3 at the time they reach the consumer. The latter must include thu cost of the primary product measured by the wholesale price, the cost of manufacture, transport, commission, and final distribution. The Government should endeavour to make it as easy as possible for retail prices to be reduced at the earliest possible moment. An examination of the budget clearly indicates that there is nothing in it that will tend to reduce retail prices, the cost of living, the purchasing power of money, or to increase employment.
The Prime Minister (Mr. Scullin) estimated the drop in our national income last year as a result of the fall in the value of our production, at from £50,000,000 to £70,000,000, and suggested that it may, possibly, be more during the current year. The decrease will be more pronounced this year as last year certain credits were then available in London, and, in consequence of the altered position, are not now at our disposal. It is quite evident that if there is a falling off of, say, £100,000,000 in our national income, we cannot possibly maintain governmental expenditure at the same, rate as in the past. We shall not be able to obtain the same governmental income from the people even if we desired to do so. It is evident that if the same amount of taxation* is collected on a substantially reduced national income the rates will have to be enormously increased before a similar amount can be collected. The great bulk of our income taxation is obtained from the higher incomes on a graduated tax, and every reduction in the higher incomes tends. to reduce the rate at which these incomes are taxed. The imports into Australia will also be considerably reduced in consequence of the diminished purchasing-power of the people. The Government also proposes to collect a primage tax of 2£ per cent., which will be paid by every one who handles the goods on which it is imposed, and, as every one who handles such goods will make a profit, the cost of living must necessarily be increased. According to information available the imposition of a sales tax of li per cent, in Germany resulted in. prices being increased by from 15 per cent, to 20 per cent, on the original cost because of pyramiding effect. It will also be found that the sales tax which this Government intends to impose will ultimately be paid by the consumer. It may cause keen competition in some directions, and sacrifices may be made immediately by those in the wholesale trade; but the tax will automatically and ultimately be passed on to the consumer. If the taxpayers are to be confronted with all these additional imposts, the Government will find it impossible to raise additional taxation, and, consequently, the drop in the national income will be more severe than anticipated. At the Premiers’ Conference held in April of last year, the then Prime Minister, Mr. Bruce, pointed out that Federal and State taxation was equivalent to 19.6 per cent, of our total production. If the value of our production is reduced to the extent of £80,000,000, if federal taxation increases, as disclosed by the budget, and if the State taxation remains stationary the percentage of taxation to our total production will be about 24.75. This unparalleled percentage, which is equivalent to ls. in every 4s., almost five shillings in each pound is undoubtedly beyond the payingcapacity of the people. In the budget provision is made for a total expenditure of roughly £83,000,000, against which the Treasurer expects to receive £82,152,488. Since the Government has decided to use the Postal. Department as a taxing machine, I am taking the post office receipts with those from other sources, because in no other way can we now determine the exact position. The Treasurer budgets for receipts of over £82,000,000, as compared with the total receipts last year of , £77,745,657, and £75,399,673 received in the preceding year, when the Bruce-Page Government was in office. If the huge amount anticipated is raised, £1,500,000 which was left in the Treasury from interest on exGerman properties must be used even then to balance the ledger. If the Government’s taxation proposals fail to return the revenue anticipated, we shall be faced with even more acute depression, and probably a higher deficit than at present and still higher taxation imposts. In the interest of .our credit overseas and the well-being of the Australian people, Government expenditure must be reduced wherever possible.
I intend to support the amendment of the Leader of the Opposition (Mr. Latham) which provides that the total expenditure for the present financial year shall be reduced by £4,000,000. I do not endorse every item of reduction that he suggests, but I shall indicate more suitable opportunities for reduction. Before dealing with the current year’s receipts and expenditure, I should like to briefly examine the financial policy of the Labour Government during the time it has been in office. When the exTreasurer (Mr. Theodore) brought down his budget last year he ridiculed some of my estimates. But what are the facts ? He increased the estimate of departmental expenditure by £61,000 because, he contended, I had underestimated the expenditure. In consequence of the economies instituted by the Bruce-Page Government, the departmental expenditure was £30,000 less than my estimate, and also £91,000 lower than the exTreasurer’s estimate. In regard to the land taxation receipts the ex-Treasurer said that it was impossible to raise the £2,800,000 which I estimated. He anticipated receiving £2,600,000, but the actual receipts were £2,840,077, which was £200,000 closer to my estimate than to that of the ex-Treasurer. The position was similar with respect to income taxation. The customs revenue up to April of this year was in excess of the ex-Treasurer’s estimate. The Government said that, on assuming office, it was in a deplorable position in having to face a deficit of £4,987,000. It has been in office only nine months; but the more deplorable position at present is that it has a deficit of £6,500,000. In a period of nine months the Treasurer (Mr. Scullin) has made the position infinitely worse than when he took office. The Government said that it was scandalous that we should go out of office with a debit balance in London and in Australia of £2,950,000, but the present Government now has a debit balance in London and in Australia of £5,000,000, or £2,000,000 more than when it took office. The Government also said that it had to float new loans amounting to £40,000,000 for the States. That has not yet been done. In fact, when one examines last year’s expenditure, and considers the manner in which the financial position was handled, the only satisfactory feature of the whole business is the way in which the debt position was handled. Its expenditure out of revenue and its taxation were greater and yet it had a deficit. In respect to the handling of the loan position the Government has merely carried out the programme of their predecessors as adopted by the Loan Council. The Loan Estimates of the last Government were adopted, and the provision that it made for sinking fund payments adhered to, with the result that the budget has this one favorable feature. I trust that it will remain a favorable feature for many years.
I come now to the Estimates for the- current year. Under Part 1, the expenditure last year was greater by £412,000 than it was in 1928- 29. The increase would have been £1,000,000, but interest payments totalling £600,000 were held over to this financial year, and they will swell the current year’s expenditure. This Government, last year, raised, by way of taxation, £1,870,000 more than was raised by the last Government in 1928-29; yet it had a deficit of £1,490,000. The figures in relation to the public debt show that the amount placed in the sinking fund exceeded that borrowed. This latter was reduced by the last Government as the outcome of a meeting of the Loan Council held in August, 1929, at which it was decided that the total amount raised for the States and the Commonwealth should be reduced by 25 per cent. The reduction in loan expenditure this year has been made possible by the completion of certain public works that were commenced by the last Government. The provision for the Grafton to South Brisbane railway this year is £100,000, while the expenditure last year was £586,000, and in the previous year, £675,000. Upon other railways the expenditure this year is to be only £90,000, compared with £880,000 in 1928-29 due to the Central Australian railway being completed. The difference between the provision for war service homes this year and the expenditure upon that item in 1928-29, is £1,100,000. Those savings practically account for the difference between the loan programme this year and what it was two years ago. The question arises whether there should not be a further cut in loans in this bad year.
To me, the most gratifying feature of tb is year’s Estimates and of the Treasurer’s speech is that they do credit to the last Government’s rigid control of departmental expenditure, because they say that there is not one excess officer. The Prime Minister pointed out in his speech’ that the service is running smoothly, that there are not too many officers for the work, and that it cannot be rationed even though there are demands for economy. The clerical staff of the Defence Department is not to be reduced, although the personnel of the Military Forces is being rationed. I have already objected to the retrenchment of these forces. I believe that a great deal of difficulty will be experienced in replacing thom if they are allowed to drift away.
The saving of £30,000 upon the adlaiinistration of the Federal Capital Territory is entirely the result of the inquiry made by Mr. Christie at the instruction of the last Government. This Government has merely carried his recommendations into effect.
The ordinary votes of the departments exceed last year’s expenditure by £22,000: and, as the abolition of the Development and Migration Commission has made possible a saving of £33,000, the increase on the remaining items is £55,000. Why this should be, in ti year when our national income has fallen so greatly, and it is necessary to exercise the most rigid economy, passes my comprehension. There is not the slightest evidence of rigid economy throughout the budget. Economy is being practised only in relation to items the expenditure upon which would have been curtailed whether times were good or bad in accordance with the Labour party’s policy. Honorable members will remember that when times were good, in 1921, the Labour party made a determined effort to reduce the expenditure upon defence by no less a sum than £2,831,000. Now that that party has obtained power, it is givinug effect to that plank of its platform; but it is not economizing in other directions.
Under special appropriations, provision bas been made for the payment of new bounties to all sorts of industries, some of which, possibly, are desirable but not imperatively necessary at this time. The flax industry, however, has failed on three occasions; and the previous attempt to make sewing machines in Australia also met with no success. It would be much better to do without such industries at this juncture than to impose additional taxation for the purpose of subsidizing them.
The outstanding feature of Part I. of the Estimates for the current year is that the Government proposes to spend £925,000 more than was spent last year, and £1,328,000 more than was spent in 1928-29. As there has been a defence cut of £885,000 compared with the latter year, the expenditure on the remaining items apparently has increased by £2,200,000. I refuse to believe that it is not possible to reduce the vote for this first part of the Estimates by at least £1,000,000. It is true that there are increased interest payments. The Minister for Repatriation (Mr. Anstey) spoke as though the increase in the interest bill during the last few years had amounted to £35,000,000. That is not the case. This year the interest payment on account of loans raised for works will be £420,000 greater than the payment thathad to be made in 1928-29 ; and, as there will be a decrease in the interest on the war debt, amounting to £120,000, the net increase will be only £300,000. In the item miscellaneous services there is an increase in interest and exchange of £130,000 compared with last year, and £240,000 compared with the previous year. But, despite this fact, I believe that, with closer administration of the Repatriation Department, a definite reduction could be made in the cost of administration of that department to £1,000,000 a year - the figure at which it stood a couple of years ago - without interfering with soldiers’ pensions in the slightest degree.
The increase in the amount allotted to old-age pensions is clue largely to the prevailing unemployment. If the Government’s policy tended to reduce expenditure and to relieve, instead of increase, the burden of taxation, there would be less unemployment and fewer applicants for the. old-age pension. It is evident that there is some special factor at work. If the Government adopted a course that would have the effect of reducing by £4,000,000 the total expenditure of the Government, I venture to say that the reflex effect upon unemployment would be such that the aggregate oldage pensions payment would be considerably reduced and the increase in the total amount necessary would approximate the natural increase of the year before last of less than £300,000.
It will not be necessary to expend anything like the amount stipulated on account of the iron and steel bounty. In a time of depression very few have the necessary capital to purchase much galvanized iron, wire-netting, and other articles upon which this bounty is paid. Therefore, the amount specified for that item could bc considerably reduced.
Under Part IT. - Business undertakings - also, it should bc possible to effect reductions totalling just on £1,000,000. The increase iu expenditure on account of the post office, compared with 1928-29, is £903,000. If honorable members will study the budget papers, they will find that the increase in this department between 1927-2S and 1928-29 was only £290,000. Those .were two prosperous years, with expanding business, many more telephones being installed. This year, on the contrary, is one of depression, in which less mail matter will bc sent through the post on account of the higher charges and fewer telephone subscribers will have to be catered for. The other day the Postmaster-General stated that in the last eleven months 37,400 telephones had been disconnected. As provision has been made for the connecting up of only 15,000 this year, the total number of subscribers will be diminished by 22,000. That, together with the diminution in mail matter and maintenance, makes it not unreasonable for honorable members to ask that the expenditure of the department should bc kept to the 1928-29 level. There is no excuse for the huge increase of £503,000 over 1929-30. On business undertakings including railways, therefore, decreases could be effected’ totalling’ £94.0,000, making a total under Parts I. and II. of approximately £2,000,000.
Then there should be a reduction of the capital expenditure upon the Federal Capital Territory. A commencement could be made by refraining from proceeding with the construction of public baths in Canberra. A few weeks ago the Nationalist and Country parties, who sit on this side, endeavoured to prevent that work from being approved.
– The Opposition did not push it to a vote.
– We desired to save this country the expenditure of the £15,000 that is involved. It is idle for the honorable member for Angas (Mr. Gabb) to say that he did not have an opportunity to record a vote upon the proposal. The right place for him to influence his Government is in caucus. When any proposal of the Government reaches this chamber every effort of the Opposition to prevent it from being carried is futile.
– If a vote had been taken on it, I would have shown where I stood.
– It is not yet too late; the honorable member can vote against the item when it comes before us. There should be a reduction of at least £300,000 in the expenditure upon this city during the present year. There should he no further capital expenditure that can be avoided or that is not already committed; we should content, ourselves with the maintenance of existing services until we get out of our immediate troubles.
I should like to reply to the charge of the Minister for Repatriation (Mr. Anstey) that the Bruce-Page Government was entirely responsible for the expenditure upon Canberra. The fact is that the building of this city was begun by the Fisher Labour Government. That Government chose the design to which the. Minister for Repatriation now objects. A good deal of the expenditure that has since been found to have been unnecessary was then incurred. The early date on which the Parliament was to assemble here was settled by the Labour party. The present member for South Sydney (Mr. E. Riley) moved in Melbourne the motion which determined the time when the seat of government should be transferred to Canberra, and he was supported by the then honorable member for Dalley (Mr. Mahony). It is idle for the Labour party to object now to the expenditure that has been incurred, and to try to absolve itself from any blame, seeing that it initiated the work and inspired the action that led to the transfer of the Parliament to Canberra in 1927 and the undue haste that caused extravagant expenditure. That party is responsible for the haste and the additional expenditure incurred. Although South Australia and Victoria make a great song about it, Labour was undoubtedly primarily responsible for the action taken at that particular time.
In Part IV_ of the Estimates, the payment of £1,000,000 to the States for the relief of unemployment is provided for; but I can find no reference in the Estimates to the additional £1,000,000 which the Government says has been given to the States under the roads agreement. Although a record of this payment may be discovered, ultimately, in the budget papers, I think that it will be hard to locate it even there. I protested when it was announced that the Government intended, without being requested, to grant £1,000,000 to the States on account of unemployment relief, and I protest against this grant now. If the £1,000,000 to be paid to the States under the roads agreement was to be raised by taxation in six and a half years’ time it was a matter that the Parliament should have dealt with at that time. Regarding the sum now proposed to be paid toward the relief of unemployment, the States themselves should shoulder the responsibility of raising this amount. The Commonwealth should not be called upon to make this payment, particularly at the present time. In New South “Wales, £3,250,000 is being raised this year by a special tax for the purpose, of relieving unemployment. That State considers itself quite capable of dealing with the problem. Surely it is no function of this Parliament to hand out largesse to the States unconditionally. If we do this, we shall increase the difficulties of the States in raising money for themselves; they may have better means of solving the problem of unemployment than this Government’s proposal. Here is another instance where a saving of £1,000,000 could be effected.
On the figures that I have given, a reduction in expenditure of well over £3,000,000 could be made on the few items to which I have directed attention. I am satisfied that after a detailed investigation of the budget by treasury officials, and a free hand as regards policy, a reduction of £5,000,000 could easily be made over the whole range, and that would obviate the necessity for the sales tax. The Government declares that its expenditure cannot be further reduced; but this committee should say to the Ministry, as the public are declaring, that the costs of government must come down. This year the Government has taken into account accumulated income arising from the interest on ex-enemy properties to the. extent of £1,500,000; but next year the Government will be faced with the unpleasant task of having greatly to reduce expenditure, because this windfall will be gone. Their task will be found easier for Ministers, and less irksome for everybody, if it is bravely faced immediately.
There is no escaping the fact that a permanent drop in price levels must take place. In the last century, after the war with Napoleon, the index figure of price levels, in England dropped to a marked degree. During the war, they rose between 1789 and 1809 from 85 to 161;. but between 1809 and 1849 they fell from 161 to 64. In the United States of America, there was a similar experience after the great Civil War. In 1866, the price level index figures there had fallen from 100 to 51 - a drop of practically 50 per cent, in 23 years. The world generally is threatened with a period of low prices, and the costs of government in this country must be kept down. A revival of trade can come about only when prices have touched bottom, and will take place on a lower level of prices. Every increase in governmental costs must tend to increase price levels.
– These statements will be recorded in Hansard, and the day will come when the right honorable gentleman will be reminded of them.
– I said this in 1921, and it is just as true to-day. If we do not adopt a policy that will bring about a reduction in the costs of government, there must eventually be a general crash which will force those costs down; so it is far better to deal with the problem from year to year steadily and gradually.
Extraordinary and novel methods of raising revenue are proposed by the Government. The extra taxation being imposed is the result of the Government’s policy, which has destroyed confidence overseas in Australia for the time being. Local industry has been terrified; it does not know where it stands. Customs duties have been sacrificed to the extent of about £8,000,000 by the panic legislation of the Government, and the mere fact that the Government will receive that amount less customs revenue does not signify a remission of taxation to the people to that extent. The consumers will still have to pay that £8,000,000 because of the increased cost of the local goods they buy, as well as the increased taxes levied by the Government to recoup it for its loss of customs revenue. Therefore, to the £12,500,000 to be raised by taxation there must be added the £8,000,000 that we shall lose in customs revenue as an additional charge upon the people. This means that £20,000,000 of extra taxation and costs will be imposed on the consumers. The increased customs and excise duties are estimated to yield £5,700,000; the sales tax, £5,000,000; the increased postage rates, £1,000,000; and the increased income tax, £850,000. Seven months ago the Government increased the customs duties to the extent of £1,200,000 for the balance of the year, which was equivalent to £2,000,000 for the year. A super income tax was also imposed, amounting to £1,285,000. Therefore, it is necessary to add £3,285,000 to the £12,500,000 being raised by way of extra taxation. No less than an extra £16,000,000 is to be taken out of. the pockets of the people by increased governmental taxation! That is a staggering load for Australia to carry, and, in proportion to its population, is without parallel in any part of the world. Only a super-optimist, connected with Mr. Doyle’s Optimists’ Club, would ever dream of an increased revenue from the heavy additional income tax to be imposed in this year of reduced national income. The taxes to be imposed may eventually reduce price levels to zero, just as a con queror who makes a desert calls it peace. The great hulk of this extra revenue is to be raised by indirect taxation.
Sitting suspended from 6.15 to 8 p.m. [Quorum formed.]
– At the dinner adjournment 1 was pointing out that this budget demonstrated the most shameless repudiation by the Government of its election promises, first, in the direction of reducing expenditure, which actually it has increased to the extent of £4,000,000, and, secondly, in the direction of reducing taxation, which actually it has, during the last nine months, increased to the tune of £16,000,000 a year. That amount of additional taxation has been placed upon the people of this country in one year. It is a stupendous impost without parallel in the history of Australia.
– It is all due to the mal-administration of the BrucePage Government.
– I have already pointed out that, as every honorable member with the exception of the Minister for Markets and Transport (Mr. Parker Moloney) knows, Australia’s present financial position is due to general world depression. These taxes are being levied in such a manner as to increase enormously the burden of the worker, the man with the smallest income in the community. During the last seven or eight years we have listened to diatribes from the Labour party as to the iniquity of indirect taxation. Now it is raising an additional £16,000,000 in one year by way of taxation. Of that amount £2,000,000 is direct taxation and £14,000,000, or seven-eighths of it, is indirect taxation.
These taxes are being levied in such a way that they will be pyramided on the consumer, while the Government will receive only a minimum return. There is, first of all, a primage tax of 2£ per cent, on all imports. That tax is a little parasite that will stick to the consumer like a tick sticks to a cow. To make certain that this parasite will not be lonely the Government has arranged for its twin to accompany it. I refer to the 2£ per cent, sales tax. These parasites are to stay with the commodity for as long as it changes hands. The Government is taxing not only everything imported, but most things made in Australia. It is imposing these taxes in such a way as to ensure that the consumer will pay them. If an article on which primage is paid passes through ten hands the consumer will probably pay a tax of 15 to 20 per cent., whereas the Government will collect only 2% per cent. In addition, articles which make up the great necessaries of life are also taxed. The Government is so anxious to carry out its election propaganda, and its promise to look after the- small man, that it has taxed everything that hu buys and enjoys, with the exception only of amusements. There is to be a slight tax on films of Id. a foot, which will bring in about £50,000 or £60,000, and the industry will have to pay an income tax impost which it has previously escaped, which will bring iu an additional £25,000 or £30,000; but there is no suggestion of a tax being placed on the wealthy picture theatre interests, such as the Bruce-Page Government suggested should be done.
This Government has also levied an additional tax on petrol - a straight-out tax on transport. Petrol is the main factor of the motor transport of this country. As a result of this further tax of 4d. a gallon, the petrol tax is now 7d. a gallon. It is estimated that the cost of petrol landed in Australia is roughly 7d. a gallon, so that there is a 100 per cent, tax on all petrol coming into this country. - It is true that thu last Government imposed a tax of 2d. a gallon on petrol for the purpose of road construction. That tax was used for the purpose of providing roads, and the road-users by that means helped to pay for the roads of this country. I trust that the Government has no intention of using this tax for purposes other than road construction. The federal aid road agreements with the States represented the biggest progressive step in the good roads problem yet attempted, and I 3hall resist any attempt to throw again the whole cost on the local residents.
All these forms of taxation are increasing the cost to the consumer. Take the duty on newsprint of £1 a ton. Immediately it is imposed all the metropolitan daily newspapers of Sydney increase their prices. The following is a statement by the Labor Daily : -
To Readers and Agents. - The federal budget means greatly increased cost in the production of the Labor Daily. With a heavy duty on newsprint, and a tax on our net sales, it would be impossible to continue publication at Id. a copy. Consequently, the directors cif the Labor Daily regretfully have decided to increase the price of the paper from Id. to Hd.
When the Labor Daily does this it is not a question of exploitation such as has been spoken of recently by honorable members supporting the Government. The Labor Daily, which already has carried into effect its wagereduction scheme by forcing its employees to take 10 per cent, of their wages in shares, which are practically valueless, has now increased its price. The duties on 450 tariff items have been increased, and there will be an increase in the cost of each article to the consumer. In addition, the Government has introduced a new tax to Australia, the sales tax. The Labour party has always been the pioneer of new taxation, particularly in respect of “ nuisance “ taxes. It excelled in that class of tax in Queensland .and in New South Wales. This Government has delved into the archives of history to find a new means of taxing people. Its policy of embargoes has decreased customs revenue. It has found that the excessive tax on incomes has practically destroyed the profits of various businesses, and so, in desperation, it has decided to impose a tax on gross receipts, regardless of whether or not there is any profit in the sale. So it has hit on the plan of taxing sales independently of profits.
– The right honorable member does not contend that the Labour party of Australia is the first to introduce that tax?
– This sales tax is being imposed independently of profits.
– Other countries have imposed a similar tax.
– I shall deal with the position of those countries directly. When the Bruce-Page Government proposed last year to put a tax on the gross receipts from amusements, the Labour party rose in indignation and expressed its abhorrence of this principle. Now it is imposing a sales tax on gross receipts in respect of everything else, with the exception of amusements. This is not purely a sales tax. It is not quite the same as was imposed in other countries. This tax is hybrid, and, like a hybrid mule whichhas a kick coming to any one who handles it, will have a kick coming to the Government at the end.
The sales tax has had a long and stormy history. It was first imposed in ancient Egypt, and led to a revolution. It was imposed by Augustus, in Rome; but, instead of being 2½ per cent., as in this case, it was 1 per cent. That also led to revolts and rioting. This tax bred revolution in; France. In Spain, the Alcavala is often said to have been really responsible for the decadence of that country, which practically started from the date of the imposition of the sales tax. The only two provinces that enjoyed prosperity were those that were especially exempted from the tax by one of the Spanish queens. This tax is in existence in the Philippines, Mexico, and Canada. In Canada the sales tax largely takes the place of income tax. In addition, the Canadian customs tariff is low. In Australia the customs duties and the income taxes are both high. Because of the heavy foreign investments in Canadian industry, any increase in income tax would have been a deterrent to foreign capital, especially of the United States of America and Great Britain. So a sales tax was levied for the purpose of relieving income tax in that direction. The tax was placed on the people of the country instead of on capital invested in Canada. The tax has been so successful and so popular that every government has sought to curry favour with the electors by continually reducing it! At one time it was 5 or 6 per cent.; now it is 1 per cent. In Australia wo raise £11,000,000 by means of income taxation. We collect, as well, an unparalleled sum per head by means of the customs tariff. It is quite impossible for the people to carry this extra load of taxation. The conclusion drawn from history is that the sales tax - the taxing of gross receipts - constitutes the last resort of countries which find themselves in such fiscal difficulties that they must subordinate all other principles of taxation to that of adequacy. There are four general principles of taxation. There is first of all that of adequacy - if there is no revenue, taxation must fail. Secondly it must be innocuous - do as little harm as possible. Thirdly, we have Adam Smith’s four points - ability to pay, certainty, convenience and economy. The fourth is equality between individuals and various classes in the community. The sales tax sins against all four principles. If this is a tax on the consumer it is a tax on expenditure, inverting the ability to pay. It becomes an inverted income tax and the tax will be pyramided cumulatively on the consumer. If the tax is on the producer, it is grossly unjust, because it becomes a first tax on gross receipts, and gross receipts are not an indication of the real profitableness of business. It will discriminate in favour of big business, which carries on all processes to a finished state, against small businesses, which carry out the separate steps to such undertakings. There is also an administrative objection to this tax, because it is difficult to prevent evasion. A large staff is employed and if not employed the taxpayer more or less determines whether he pays. The costs of administration will increase, which will place a further burden on the taxpayers. Then the tax is inequitable and fiscally unjust. A consumption tax should be regulated, as there is consumption and consumption. There is such a thing as consumption of luxuries. There is convenient consumption and necessary consumption. A sales tax on necessaries of life is an inverted income tax. It hits the small man much more than the big man. This tax provides for no discrimination between luxuries and necessaries of life. It will be found that it will fall relatively lightly on taxpayers with higher incomes, for their amount of consumption does not increase according to their wealth. That is a characteristic of this form of taxation which has led to instinctive opposition to it by the farming and labouring classes in all centuries. In this regard, the sales tax is a discredited remnant of a wornout system. The tax is essentially undemocratic in its nature, and it exaggerates rather than attenuates the inequalities of wealth, for it hits the small man much more heavily than the big man. Surely our present tariff is a heavy enough tax upon the poor. If it is not thought to be heavy enough the primage duty added to it should certainly be more than enough. But to that is added also the sales tax, which is a kind of twin disaster. An honorable member opposite interjects that no sales tax is being imposed upon food-stuffs, but the sales tax will be imposed upon everything that the primary producer requires and uses. He will have to pay the sales tax as well as the primage duty.
I object to this form of taxation because of the effect it will have upon our primary industries. The Government has asked the primary producers to assist it to get out of the difficulties in which it finds itself. It has said to them: “Grow more wheat and we will give you all the encouragement that is in our power But how does it propose to give encouragement? Simply by bringing along a system of taxation which must increase the cost of production and make it much more difficult than it is at present for the producers to export their goods at a profit. It is hard enough for the primary producers to carry on under present conditions, and I do not know how they will get on if these additional burdens are placed upon them. The Government has made some kind of a show of desiring to help the primary producers; but by imposing these taxes upon them it will take away from them more than it has ever thought of giving them. It introduced a bill to provide for the establishment of a wheat pool, but now it says : “ We will leave you in the lurch entirely. We will not give you the help we intended to give you”. Instead of helping the men on the land it is firing this leaden bullet into them! The imposition of this taxation must adversely affect the small producer and exaggerate the present inequalities of taxation, and the poverty and destitution that exists in the country. So far from enabling us to recover from the depression which prevails, the pursuit of this policy must increase the cost of living, advance the prices of retail goods throughout the community, delay the day of reckoning, and bring about a disastrous crash from which it will take the country many years to recover.
[8.18 J.I wish to express my regret that the Government has not imposed additional taxation on the land monopolists of this country.
– Look who the Government is putting up now!
– I was not “ put up “; I got up. If the honorable member does not look out I will move for the imposition of a duty on spats. This is the first occasion upon which I have participated in the budget debate in this Parliament, but I realize that budget proposals have caused many discussions in the parliaments of other days. I shall not discuss at any great length the pros and cons of our financial position; but I feel obliged to make a few observations principally on the “ cons.”
I am sorry, as I have said, that the Government has not indicated that it intends to increase the taxation on land monopolists. It does not seem to be alive to the seriousness of the operations of these gentlemen, who are doing a great deal of damage to the country and, therefore, to the whole community of Australia. During the last few years a great deal of country suitable for fairly close settlement has reverted into large holdings. In Eden-Monaro, for instance, a few land-holders are gradually acquiring more and more land, with the result that to-day districts which were once settled by as many as twenty families are iu the hands of one or two men. This is very injurious to the progress of Australia. Only recently a son of one of our landholders, Mr. Pratten, who owned a farm near my home town, secured possession of an area of land on which three families had been reared. This particular land was advertised for sale by auction, but it was disposed of before the date of the sale arrived, having been purchased by a man who receives anything from £20,000 to £30,000 as his wool cheque. It frequently happens that a man with a large wool cheque in his pocket will come along and offer, say, £7 5s. an acre for land which is not really worth more than £5 an acre. These people buy the land irrespective of its value, and they do not care whether it is put to its best use or not. In such circumstances I consider it to be the duty of the Government to break up the estate into reasonable farm holdings and make them available to the sons of our farmers under reasonable conditions. One of our troubles to-day is that the sons of farmers, who are well fitted to engage in primary production, are obliged to accept employment as unskilled labourers, simply because they cannot get land. It is said sometimes that the sons of farmers, and Australians generally, will not settle on the land, and that their womenfolk are averse to country life; but that is not the case. The trouble is that the land monopolists are able to pay inflated prices for land because of the fat cheques they have received for their wool during recent years. Many of our country towns are to-day land-locked. When shearers make a good cheque they usually come back to their home town and spend the money there; but when the wealthy land monopolists, who own most of the land around our country towns, receive big cheques for their wool they spend very little of it in the country. ‘Frequently they are able to buy their stores in the city at a lower price than a country storekeeper has to pay wholesale for similar commodities. This means that the business in concentrated in the city to the disadvantage of the country. I hope that the Government will give some consideration to this important matter.
I wish to protest against the removal of the naval college from Jervis Bay. The land on which the college is situated was granted to the (Commonwealth Government by the New South Wales Government for naval college purposes, and I submit that the Government will be guilty of a breach of faith with New South Wales if it removes the college from it present location. The training of naval officers cannot be measured by the pounds, shillings and pence rule. It is possible that at Jervis Bay another Nelson may be trained who in a time of national emergency may save Australia from invasion and prevent the loss to our people of hundreds of millions of pounds. The defence policy of Australia is of vital importance, and naval training must undoubtedly be part of our de- . fence system. I understand that it is proposed to remove the naval college to one of the bleakest spots in Australia. I make that statement on the authority of the following paragraph which appeared in the Shoalhaven News, published at Nowra -
The Flinders Naval Base is situated in the most bleak spot in Australia, surrounded by a marsh, owned by some retired admiral, which no doubt accounts for it being there. The harbour is shallow and full of shoals. You cannot get a ship like the cruisers we have within five miles of the depot, only a destroyer or small craft, and when they have to run torpedoes they have to hire a motor conveyance to convey them to Port Phillip, a distance of 45 miles. These facts no doubt influenced Admiral Evans to suggest the removal of the Flinders base to Jervis Bay, which, of course, was absolutely ridiculous to the Victorian section of the Federal Government.
I am not looking at this subject from the point of view of a naval expert, but from that of a practical man. If the college is transferred from Jervis Bay the buildings there will be practically useless. Jervis Bay is an ideal place for the training of naval officers, for the young trainees are removed from the temptations associated with city life, and are able to give their undivided attention to their work. I am afraid that this would not be the case if the college were situated near Melbourne or Sydney. According to history the hubbub caused by a flock of geese saved Borne from invasion on one occasion, and I make these remarks in the hope that my voice may be the means of saving Australia from making a serious error.
I congratulate the Government upon the general policy of the budget. This budget is without precedent or parallel. So firm a stand has never previously been taken excepting, perhaps, by Germany, in the days of Bismarck. At one time Germany depended on other countries for its manufactured goods, and, as a consequence, its people were impoverished. On one occasion the Crown Prince of Germany visited Essen, where he found the shipbuilders and others practically starving, there being no work for them because German ship-owners sent to England for the ships they required. When the matter was reported to Bismarck, he did not bring down a tariff schedule. He rang a bell and gave instructions that no orders for ships were to be placed outside Germany. He adopted a policy of prohibition. The outcome was that Germany became a great maritime nation, which built its own ships. Bismarck’s policy threw numbers of workers in Britain out of employment. In order to find work they went to Germany, taking with them their skill and their secrets. In course of time Germany built up a great navy, and became one of the great mercantile shipping nations of the world. Germany went ahead by leaps and bounds, because its wealthy people were prevented from sending their money out of the country. Had it not been for her militarism, Germany would to-day be the greatest nation in the world. The progress of Germany is an example of the wisdom of a nation supporting its own industries. The Scullin Government recently followed Bismarck’s example when it placed an embargo on the imports of certain goods from the United States of America ns well as other countries. The cities of the ‘United States of America contain numerous skyscrapers which are monuments to the folly of Australian legislators. The Singer building in New York, which would throw a shadow over the Tower of Babel, has been erected largely with money received from Australia for sewing machines, sold at a profit of 400 per cent, or 500 per cent. It is time that we manufactured more of our own requirements, instead of sending money to America to add story after story to the skyscrapers there.
I am not afraid of creating monopolies in this country, for I would remind honorable members that to-day our taxation is so high that from incomes of £6,000 or over the Treasury takes every fourth pound. I do not care what income the pastoralists of this country receive so long as the country obtains a due proportion of it by way of taxes. At death all men are equal. Why should we not make some attempt while alive to equalize matters? We should not allow some people to become millionaires while others arc unemployed and starving. After all, human beings need no more than food and clothing. In the days following the American Civil War, the United States of America had no friends in the financial world; it could not obtain credit any- where. It would’ be a good thing for Australia if we could not borrow money overseas, for then we should be forced to depend on ourselves. The country is producing more wealth to-day than ever before. What do men want with wealth so long as they have sufficient food and clothing for their requirements? It is a disgrace that, while the country is rolling in wealth, large numbers of men, women, and children should be without the necessaries of life. .
I was astounded to hear the Leader of the Opposition (Mr. Latham) say that the Opposition had no confidence in the roads policy of the present Government. The honorable member would allow the roads to get into a state of disrepair rather than that men should be employed to maintain them. It would appear that the honorable member and those who hold views similar to his would like to see men starving. Do they think that the country as a whole will become wealthier because the poor arc made poorer? More men should be employed in making and maintaining our roads. During the last four or five years, approximately £10,000,000 has been spent on road construction in Australia. Those roads are an asset to the country. There is sufficient money in Australia to provide work for every one who needs it. I ask those honorable members who think that machines should take the place of men in industry, what our position would be if the country again became involved in a war. It is unwise to attempt to crush the working men of a country, for it is to them that we look when the nation is threatened. There can be no patriotism in the hearts of men who find life so little worth living that they are tempted to commit suicide. A man whose family suffers from malnutrition, and whose home is taken from him, cannot be patriotic. Something should be done to get back from the wealthy people in the country some proportion of that which they have taken from it. I know of families whose income is £80,000 per annum. Their parents were better citizens and reared good families on incomes of £800 per annum. Some of their wealth should be taken from them and used for the benefit of the nation. During the regime of the previous Government, Australia’s adverse trade balance with the United States of America increased enormously. If we depended more on ourselves we should be a better people.
The honorable member for Forrest (Mr. Prowse) spoke of our inability to sell our goods overseas. I remind him that the best market is the home market. It is that market in Australia which has been exploited by manufacturers from overseas. We should secure that market to our own people, after which we mightseek markets elsewhere. Not long ago I saw that an American manufacturer of hosiery had an excess stock of 60,000,000 pairs of women’s stockings. If Australia had no protectionist policy, our wool industry would be less valuable than it is to-day, for the market would be flooded with goods imported from other countries. We should supply our own woollen requirements. Why does Japan buy large quantities of Australian wool? Is it not that her manufacturers may send it back to us in manufactured woollen goods on which they make a profit of 600 or 700 per cent. ? If they were unable to obtain our wool, they would be without the raw material to make those goods. They buy wool from Australia, not because they love it, but because wool is an essential raw material for their manufactories. We should encourage our secondary industries. The Sydney Chamber of Commerce has suggested a tax on tea. A tax on tea would be a tax on the poor. Australia is a teadrinking nation, largely because it has never had a tax on tea. Great Britain derives a considerable revenue each year from a tax on tea. Indeed, beer is cheaper than tea in Britain, and, consequently, in many homes there beer is placed on the table in front of the children. That is not the case in Australia.
When I first took an interest in politics, the right honorable member for North Sydney (Mr. Hughes) visited Yass to form a branch of the Labour League. I was greatly impressed with his remarks on that occasion, although I did not like his freetrade principles. I could understand his leaning towards freetrade at the time because the waterside workers, with whom he was then connected, depended on overseas trade for a living. Not many years ago there was a feeling that unless an article was imported it was no good. Today things are different. On the occasion to which I have referred, when Mr. Hughes visited Yass, there was scarcely a protectionist in the town. To-day, there is not a freetrader in it. In those days the only protectionist newspaper in New South Wales was the- Sun; to-day no newspaper, with the possible exception of the Standard, favours a freetrade policy. There is not a legislator in Australia who is’ an out-and-out freetrader. Even the honorable member for Swan (Mr. Gregory) does not advocate absolute freetrade. He describes himself as a revenue tariffist. I have never changed my fiscal policy. I admit that some harm might be done by a high tariff if, as happened some years ago, machines which were priced at £36 in America were sold in Australia to the farmers for £72. Certain persons made’ a great deal of money out of them, and it was a very profitable business. Honorablemembers opposite think that the tariff is going to create unemployment, but I cannot see how it can have that effect if it causes those things to be made in Australia which were formerly made in America and other countries. I never before heard such sophistry. The same applies to longer working hours. How can it benefit the people or reduce unemployment to increase the number of work’ ing hours? I believe that this tariff will make Australia more prosperous. I am sorry that we have not in this country a newspaper which will rise to the occasion, and defend the Government’s tariff policy. Years ago the Melbourne Age, when it dictated the policies of governments, advocated a vigorous protective policy, and as a result of its adoption, Victoria went ahead by leaps and bounds.
– What does the Age say about this budget?
– I do not know. My hopes at present are centred on The Canberra Times, the only paper which has declined to pass on the extra £d. It shows a good spirit, and it is treating the Government fairly. It is a paper with some brains behind it, only it is obsessed with the old Tory ideas. It may experience a change of heart, however, and recognize that the Labour party which, at the last election, was authorized in an unequivocal fashion by the people to govern Australia, is proceeding on the right lines.
The CHAIRMAN (Mr. McGrath).Will the honorable member show how he proposes to connect The Canberra Times with the budget?
– The Canberra Times is backing up the budget. I recall reading in that paper a leader to the effect that’ the only course open to the Government was to pursue its present policy.
– Does it advocate cutting down parliamentary salaries?
– -I have 40,000 electors in my constituency, and if my salary were cut out altogether it would not save enough to buy each one of them a packet of “ Minties.” It does not cost each elector more than 6d. for my salary, and if any of them object to paying that I shall refund it to them. This talk of reducing parliamentary salaries is merely a political quibble, and is worthy of the intelligence of the honorable members opposite who formulated the amendment now before the committee. Honorable members opposite, drawing their full salary, contrived to get Australia into its present mess, and now suggest that we, who were elected to straighten things out, should do the job at a cheaper rate. I would gladly support a proposal that honorable members opposite and those of their party who were defeated at the last election, should be made to “ cough up “ some of the thousands of pounds which were so carelessly thrown away by the last Government. They betrayed Australia in the past, and seek now to make political capital out of her troubles. If the Leader of the Opposition (Mr. Latham) thinks that he is being paid too much, if he is not worth his present salary, let him hand some of it hack to the Treasury as conscience money. We on this side of the House are like the new directorate of a company, appointed to straighten out the company’s affairs, while honorable members opposite, who represent the deposed directorate, are now suggesting that our fees should be reduced. I believe that Australia is fundamentally a prosperous country, despite those who are seeking to exaggerate the present stringency.
– How does the honorable member explain the present excessive amount of unemployment?
– It has been brought about largely by governments which are hostile to the workers. The New South Wales Government thinks of nothing but dismissing employees with the idea of locking up as much wealth as possible, so that it can make tax remissions to wealthy persons. The last Federal Government brought out large numbers of immigrants to displace Australians and create unemployment. Private employers also have been trying to create unemployment by dismissing men when they had no occasion to do so. I know of landholders and others, with incomes of £3,000 or £4,000 a year who are putting off men because they think that it is the psychological moment to throw into the labour market as many persons as possible, so “that the workers will be driven to accept less. The employers are obsessed with the idea of bringing down wages. I believe that it is a great fallacy to reduce the wages of industrial workers. They are the persons who make a country prosperous, and the business people of the community will suffer if there is any substantial reduction of wages. Rather than reduce wages, I would conscript wealth. Any one with £1,000,000 or over, and there are several in Australia, should be made to part with some of it. for the benefit of the State. The New South Wales Government has been taxing wages and salaries to get £3,000,000 for relief work. Yet one man, the owner of the Sydney Morning Herald, is reputed to be worth £5,000,000. The Government could take £4,000,000 away from him without hurting him, and it would be better to do that than to tax the wages of the workers.
We have here a budget which is calculated to benefit Australia, just as America benefited many years ago under a protective tariff, which compelled her to rely on herself, and to develop her own resources. To-day the United States of America is probably the richest nation in the world, and refuses to allow people from other countries to come in and share her wealth. I do not agree with her policy in all respects; she would dump Australian dried fruits into the sea rather than let them land, while we are buying from her motor-oars and petrol to the value of several million pounds a year. In spite of the calamity howlers, Australia has progressed very rapidly. She has made more progress since settlement first began here than the United States of America made in the same length of time. The present tariff may be slow to effect the benefits we look for, but that will be due to the fact that there are at present in the country large quantities of imported goods. For instance, the big importing companies have on hand sufficient stocks of imported timber to keep them going for a year. The right honorable member for Cowper (Dr. Earle Page) referred to the tax on petrol. In the United States of America, I understand, petrol is being retailed at 24d. a gallon. It has been disclosed that the American oil companies can land petrol in Australia for about 9d. a gallon. If that is so, and the tax of 2d. a gallon imposed here for the maintenance of roads produces £2,000,000 a year, how many million pounds a year does the American oil octopus draw from Australia when it makes a profit of ls. a gallon ? Australia pays away millions of pounds to America for petrol and oil without obtaining the advantage of any reciprocal trade, and that has been going on year after year. A sore point with honorable members opposite is that the 2d. a gallon tax on petrol is being spent on the roads, and provides employment for workers. Anything that helps to keep the wolf from the door of the workers is anathema to honorable members opposite. They advise the Government to close down this work and that work and thus bring about a state of unemployment; but I hope that the time will never come in Australia when we shall look upon the workers as some one to be impoverished or humiliated by being compelled to earn less. I suppose really it is because many of us cannot shuffle off the barbarian spirit of the olden days. We still have the propensities and instincts of the barbarians from whom we have descended. There is nothing that makes more for national greatness than a policy of helping the creators of wealth. Germany rose to be a great nation because it gave every assistance to the workers. Of course, its militarism ultimately destroyed the benefits it en joyed by pursuing that sound policy. Australia has a great future, and the budget we have before us to-day is a sure foundation upon which to build our own skyscrapers, instead of helping to build them in New York or elsewhere. It may be true that a policy of protection may create monopolies and capitalists, but by means of our probate duties the State goes fifty-fifty with the capitalist, whereas we can get nothing out of the capitalists in America. In any case a man cannot become wealthy without employing others, and everyone he employs provides revenue for the Commonwealth. The £10,000 proposed to be spent in providing baths for Canberra will not be lost. The men who will be earning it will pay taxation on the cigarettes, foodstuffs and many other things they buy with the money they earn, and the Commonwealth will get it all back again. That country is rapidly going back which has an army of unemployed to maintain. The country that prospers is one which has all its people engaged in producing something towards the national wealth.
.- I propose not to reiterate the wealth of detailed argument given by those who have preceded ‘ me on this side of the chamber,” but to associate myself with the general arguments and the policies enunciated by the Leader of the Opposition (Mr. Latham) and the right honorable member for Cowper (Dr. Earle Page, and then to analyse in greater detail the budget and the Government’s financial proposals from the viewpoint of a South Australian and the primary producers.
– Just as the honorable member did in connexion with the Wheat Marketing Bill.
– At any rate, I have not placed a primage duty on the superphosphate and cornsacks used by primary producers. The fact that such a duty has been imposed by honorable members opposite shows that their anxiety to help the farmer is less than their desire to act in consonance with the plank of their official platform relating to the socialization of industry and the means o£ production. Everyone must recognize that the preparation of a budget at a time like the present is about as unpleasant a task as one could have, because whatever is done must affect the vital interests or employment of someone somewhere in Australia. As I see it to-day, the budget is mainly to be criticized from the angle that it shows undue partiality towards one or two very big vested interests to the detriment of other and more important sections of the Commonwealth. The Labour Premier of South Australia (Mr. Hill), whom on many previous occasions I have opposed on various platforms, has commented on the Commonwealth budget. I quote the following from the Adelaide Register of the 11th July last -
A special meeting of the State Cabinet, attended by all the members of the Finance Advisory Committee, was held yesterday afternoon to consider the effects on South Australia of the new federal budget, which aims to extract an extra £1,000,000 in taxation from the State. Immediately after the meeting the Premier announced that he had written to Mr. Scullin. “ I have nothing more to say,” said Mr. Hill, “ except that Mr. Scullin’s proposals, if carried out, will place us in a very serious position.”
Because I agree and also recognize that the serious position of the people in South Australia is due to this extra taxation, I have scrutinized the budget very carefully in order to sec what section of the community has been specially shielded or looked after. I notice that one section of the community which has greeted the budget with a certain amount of approval is that represented by the Chamber of Manufacturers, in Sydney. It has passed a series of resolutions, and forwarded them to the Government.
– It belongs to the honorable member’s crowd.
– I have not been sent here to represent Sydney manufacturers, or the vested interests of John Wren or any one else, nor do I represent company promoters of any description. Among the resolutions passed by the Chamber of Manufactures in Sydney are the following : -
The Council of the Chamber of Manufactures of New South Wales recognizes the imperative necessity of ensuring the balancing of the budget for the current financial year . . This council, after full consideration, records its view that the proposals of the Federal Government, including the sales tax, embrace the only practicable means of raising the large sums necessary tofill the gap in the revenue due to reduced receipts expected from various sources.
The vested interests of this Chamber of Manufactures have been carefully looked after, not only in the budget, but also in the general fiscal policy of the Government. It measures the worth of the professions of honorable members opposite for the interests of the primary producers when we find that the only section in Australia to-day, apart from some of the secretaries of unions, which is passing resolutions in favour of the present Government’s budget, is theChamber of Manufactures in Sydney.
– That does not apply to the Melbourne Chamber of Manufactures.
– No, nor to the Adelaide chamber. I have a copy of a resolution carried at a meeting convened by the South Australian Chamber of Commerce, the South Australian Chamber of Manufactures, the South Australian Taxpayers Association, the South Australian Employers Federation, and the South Australian Stock-owners Association. The resolution is as follows: -
That this meeting, representative of the financial, commercial, manufacturing, and industrial interests, the primary producers and the general tax-paying public of South Australia, being profoundly dissatisfied,ata time when they are trying to reduce their expenditure and to meet their obligations, that the budget proposals of the Commonwealth Government, while including few economies, actually provide for a large increase in expenditure, urges the Government, before proceeding further, to appoint an independent advisory committee of experts, including a financier, an economist, and a business man to investigate the financial position of the Commonwealth Government.
I quote that to show that a chamberof manufactures in an outlying State has not been receiving the plums which have been specially reserved for manufacturers and industrialists in more favoured parts of Australia. It is in the fiscal policy of the Government that this wealthy section of the community has been so well cared for. Although some of the tariff schedules, which have been introduced at frequent intervals since this Government has been in office, have been more or less extreme than others, they generally mark a change from the protective system of Australia to what is practically a prohibitive system. When the ex-Treasurer (Mr. Theodore) was introducing his budget towards the end of last year, he said -
Although the tariff proposals will result in increased customs duties, which will benefit this year’s revenue, they are being imposed for the primary and definite object of protecting Australian industry. The Government recognizes the need to be on guard against nil attempt to make use of an inflated customs revenue as a pretext for relaxing protective vigilance.
That was a particularly tactful way of indicating that the protective policy was to be made very much more drastic. The optimistic anticipation of the then Treasurer about getting additional revenue was not fulfilled, and it is anticipated that the new prohibitive duties, which have already reduced the revenue for the past twelve months, will reduce it by very much more during the next financial year. More than half the estimated gap to be made up between proposed expenditure and, anticipated income on the old basis is due to loss of revenue through customs and excise, mainly because of the deliberate policy of the present Government. Having done all this in the interests of a special section of the community, and. with a total absence of any improvement in the unemployed situation - indeed, as regards the outlying parts of Australia, the effect of the Government’s policy upon unemployment has been to accentuate rather than, diminish it- the Government is now faced with the necessity of raising new taxation out of a very much reduced wages fund. Nearly all this extra taxation is bound to be paid, and can only be paid, at the cost of some other person’s employment. The fiscal policy of the Government may probably make some extra business for a few special beneficiaries; it may make a little extra employment in certain constituencies around Melbourne and Sydney, largely at the expense of employment elsewhere. But it has led to a considerable decrease in revenue which must be met by the imposition of additional taxation, and this, in turn, will result in further unemployment. Early last year Labour representatives of South Australia in this chamber, ana in the other branch of the legislature, despatched a telegram to the Prime Minister urging that the full amount of the grant recommended by the commission which inquired into the disabilities of South Australia, should be made available at once. The message referred to State taxation imposed during the past two years, but it has a bearing on the present position, because those paying State taxes have also to pay federal taxation. The telegram, which appeared in the Adelaide Advertiser of 29th March, 1929, reads -
On Thursday, South Australian Labour members of the Federal Parliament sent the following telegram to the Prime Minister regarding the proposed disabilities grant to this State :–Representatives Price, Lacey, Yates, and Makin, and Senators Daly, O’Halloran, and Hoare strongly urge the Commonwealth Government to make the grant to South Australia recommended by the Disabilities Commission available at mice, so that the same may be credited to this financial year. The financial position of the State is most precarious, and the taxation imposed during the past two years is the absolute’ limit the people are able to pay. Serious hardships are consequent thereupon, industry is unduly hampered, and the farming community is also suffering acutely as a result of the excess State imposts.”
The message then comments upon the inadequacy of the grant.
– Yes; but an additional £1,000,000 is now to be added to their burden. It will be interesting to hear what those honorable members who were responsible for the despatch of that message have to say in regard to the budget proposals of the present Government.
If these proposals are persisted in a large and important section of the community at present in secure employment in the Public Service will not be seriously affected. In this category I include, for the time being at any rate, Ministers and private members of Parliament. [Quorum formed.] The Leader of the Opposition (Mr. Latham) indicated the direction in which economies could be effected without in any way impairing the efficiency of the Public Service, and with his suggestions I am in entire agreement. Honorable members opposite contend that it would be unfair to ask members of Parliament and the public servants to make a sacrifice which was not required from other sections of the community. But they should remember that practically every person in private employment, and in some branches of the State services have been rationed or are working at a reduced rate. The representatives of New South Wales, Queensland, and Victoria are more conversant than I am with the action which is being taken with respect to Government employees in those States. We do not know exactly what will be done in South Australia, where a Labour Government is in office; but on July 8th, the Premier, Mr. Hill, before adjourning Parliament to consider the financial position of the State, said-
For the year ended June 30 salaries paid from revenue amounted to £1,844,034, and wages to £2,302,050, a total of £4,146,984. This represented 35 per cent, of the expenditure. The figures for the year 1929-1930 are not yet available, but they would not differ widely from those given for 1928-1929. Obviously, this item must be reduced, either by a general retrenchment, which would add to our unemployment problem, or by a general review of wages and salaries.
The Government is reluctant to suggest this action, but ‘the great reduction in the income of the State has reduced the amount available for the payment of salaries and wages. Such reduction, however, will not be so real as may at first appear, provided that it is common to the whole of Australia, as is inevitable. A reduction, combined with recent falls in profits and land values, will so reduce the cost of living that two-thirds of the reduction will ultimately be offset by the increased purchasing power of money.
That is an indication of the policy which is likely to be adopted in South Australia. The members of this Parliament should not take advantage of their position by refraining from reducing the expenditure of this legislature, while, at the same time, they assist in imposing additional taxation upon people who are already making very heavy sacrifices.
– The honorable member believes in public servants’ salaries being reduced.
– I contend that as reductions are being made in other directions every one should make a sacrifice. If instead of effecting economies, which is the proper policy to adopt, additional taxation is to be imposed, those in the employ of State Governments or in private employment will be compelled to bear a still heavier burden. The unemployment figures have increased by approximately 50 per cent, since this Government took office, and they appear to bie still increasing. The imposition of additional taxation can result only in increased unemployment and further delay the time when business stability will recover to such an extent that money can be made available for the payment of salaries or wages in connexion with public undertakings.
Another direction in which economy can be effected is in respect of grants for roads. I am rather inclined to the view expressed by the right honorable member for Cowper (Dr. Page). But I believe that in the present circumstances we should, in our endeavour to live within our means, discontinue the construction of new concrete and bitumen roads running parallel to railways which can only be regarded as a luxury. The Government is acting wisely in relieving the States of their obligations to spend any money under the Federal Aid Roads Scheme upon the construction of new roads. The State Governments, as well as the Commonwealth Government, must effect drastic economies, and one of the few directions in which this can be done is in reducing the expenditure on new roads. Out of the money derived from the Commonwealth grant, district rates and motor taxation, South Australia has been spending approximately £2,000,000 a year on the construction of new roads and on maintenance work. That is a rate of expenditure which cannot be maintained. In releasing the States from their obligation to spend the grant on new roads, the Government is acting wisely. I do, however, agree with the suggestion that the amount of the grants should be somewhat reduced.
This Government has done a good deal of cheese-paring; but at the same time it has incurred a good deal of unnecessary expense by introducing almost weekly measures providing for the payment of bounties on the production of certain commodities which have to be met to a large extent by those employed in other industries. It also proposes to spend out of loan funds £120,000 on the building of a lighthouse steamer and £10,000 on the construction of baths in the Federal Capital Territory. Such expenditure should, at the present juncture, be avoided.
From time to time honorable members opposite have suggested that those who sit on this side are inclined to be lenient to bond-holders, and to expect economies to be effected in relation to everything except rents, interest rates and land values. There is no question that land values and rents must come down. Nothing should be done to keep them at an artificially-inflated level. I do not believe that they are being so kept to-day; on the contrary, they are dropping very rapidly. It is in the interests of the nation’s financial recovery that they should come down to a reasonable level. But it is not so easy to deal with interest rates. Australia has a large overseas indebtedness, and, if any attempt were made to break the contracts into which we have entered with those who have loaned us the money, the credit, not only of the Government, hut of every institution in Australia, would be severely shaken, and it would be necessary for every transaction to be on a cash basis. Probably, when fresh loans were required by either private individuals or governments, an even higher rate of interest than that which is now being paid would be asked. The rates of interest are coming down very rapidly throughout the world. We are paying high rates for renewals, largely because of the uncertainty that exists regarding our capacity to fulfil our obligations. In the estimation of people overseas, we are not so good a risk as we were some years ago. I do not suggest that that is due to the brand of politics of those who are responsible for the government of Australia; it is rather the result of the difficulties with which we are confronted. Some people - wrongly, I believe - are apprehensive. Australia, I believe, can overcome her difficulties if she makes the attempt. Generally speaking, interest rates in Europe have fallen by 1 per cent, or 2 per cent. In regard to our internal debt, the bond-holder always makes some contribution, by way of taxation, to the interest that he receives.
– He dodges State income tax.
– That is true. But he is not free from Commonweal ih taxation, and we are dealing now with the Commonwealth budget. I notice that the company rate of taxation, which, to a large extent, is paid out of money that otherwise would be placed to reserve and be utilized in an expansion of operations and the provision of additional employment, is being increased to the same extent as the rate upon dividends and interest. So far as I can see, the Government is not making any special effort to tax the bond-holder and the receiver of rent to any greater extent than any other section. It is generally considered that indirect taxation bears much more heavily than direct taxation upon persons with small incomes. Direct taxation usually is progressive; the greater a man’s income, the higher his rate of tax. But the rate of indirect taxation, generally speaking, is governed by the goods purchased, and whether a man earns £4 or £40 a week, he pays the same rate. Under this budget, the largest increases occur in connexion with indirect taxation. The fairest indirect taxation is that which is imposed on luxuries. The bulk of the excise duties come within that category. Those are things that the taxpayer can quite easily do without if he does not wish to pay the tax. Then there is another type of tax which, apart from the tax on luxuries, is least harmful to the country as a whole; it is the tax that is imposed on conventional necessaries - commodities which, although generally recognized as desirable to enable the people to conform to the standards of living in the country in which they live, can be dispensed with without causing serious injury to their health. Tea is one of those commodities. Although it is a less desirable tax than that which is imposed on luxuries or amusements, it is less harmful than a tax on absolute necessaries.
The Government has made an effort to relieve, from the incidence of the sales tax, the commodities that are absolutely necessary to the producers and the working man’s family; but there is to be no exemption in the case of the primage duty. Commodities that are absolutely necessary to the producer, such as corn sacks, bran bags, binder twine, and different raw materials, such as rubber, which cannot be produced in this country, are to be taxed. That is a tax which it is absolutely impossible for the producers to avoid.
– We do not grow tea, yet the honorable member advocates taxing it.
– I am not absolutely advocating a tax upon tea. Economy can be effected by the use of a slightly less expensive brand of tea. But the farmer cannot avoid using cornsacks; and if he uses an inferior brand, the handling and marketing of his crop are affected. That is a distinction which honorable members will, I think, readily recognize.
But it has remained for this Government to go a step further than that. There are some commodities that the people can avoid using, but of which, in the interests of the country, they should use a greater quantity than they do. Fertilizer is one of those commodities. In most of the good farming districts of Australia, there are farmers who use adequate quantities of fertilizers; but in the wetter districts, particularly, there are many farmers and graziers who do not use nearly as much as they should. One of the reAson S that deter them is the cost. The principle of taxing that raw material is about as vicious a one as it is possible to find.
I do not propose to add to the very thorough analysis of the sales tax that has been made by those who have preceded me in this debate. It is undeniably a tax on production, and it will fall with equal severity upon the poorest and the richest section. Nor do I propose to take any action against the imposition of the primage duty on commodities like rubber, which, although they cannot be produced in Australia, do not directly concern my State or my constituency. But with regard to fertilizers and corn sacks, which are of such vital importance to the people whom I represent, and, for that matter, to the Commonwealth as a whole, I propose to move for a reduction. According to the Trade Bulletin for 1928-29, the value of sacks of various kinds. that were imported and cleared through the customs in that year was £4,000,000, while the value of the different forms of raw material for fertilizer, and of fertilizer itself, was a little short of £2,000,000. The total value of the clearances must have been between £6,000,000 and £7,000,000. When the Wheat Marketing Bill was before this chamber, the Government professed to have a special .regard for the primary producer; but the imposition of this tax upon essential material proves that those professions of regard were worth very little. If the amendment of the Leader of the Opposition is not agreed to, I propose to move -
That the first item of the Estimates be reduced by 10s., as an indication of the opinion of the committee that the primage duty of 2-) per cent. Should not be imposed upon corn sacks, wool packs, chaff, onion and potato sacks, and similar jute goods, or upon raw materials for the manufacture of Such goods, or of binder twine, or upon phosphate rock, sulphur brimstone, or other materials for the manufacture of fertilizers, or upon fertilizers.
If I cannot submit the amendment now I shall do so later, without speaking further in support of it. I hope that the committee will give that much help, at any rate, to a very sorely pressed section of the community.
.- The present budget has been variously referred to in the press and at protest meetings throughout the Commonwealth as calamitous, hunger-creating, and heartless, because of the desperate and depressing taxation to which the Government has resorted in its efforts to square the national accounts. Certainly it is the most disappointing and hopeless Commonwealth budget that has ever been presented. Surely the Government is cognizant of such protest meetings as that which took place in the Melbourne Town Hall recently. That was purely a nonparty gathering, at which every branch of the. commercial community was represented, including the Chambers of Manufactures and Commerce. Having regard to the present financial situation, the Government must give heed to the resolutions carried at that meeting offering expert advice and co-operation; or review the budget with a view to curtailing governmental expenditure.
The gravamen of the criticism of the public, and even of journals such as the Melbourne Age, which certainly does not support the Nationalist party, is that the Government has shown no tendency to reduce expenditure. Ministers have taken drastic steps to meet the critical situation by means of increased tariff duties, but they have made no business-like attempt to economize in governmental expenditure. After all, the Government of Australia is a huge business undertaking. Would any board of directors, after a year of losses, and faced with a big overdraft, put forward such a budget as this, which provides for £1,000,000 more expenditure than last year, without any serious attempt being made to cut down expenses?
We must either increase our revenue or reduce our expenditure. Our principal revenue is derived from exports. Our exports iu past years have averaged in value about £145,000,000 per annum. In 1928-29 they realized only £110,000,000, arid in 1929-30, £67,000,000, a decrease of £43,000,000. Our imports in 1928-29 were valued at £130,000,000, and in the following year, £124,000,000, a decrease of only £6,000,000, despite this Government’s efforts to shut them out. The staggering decrease in exports has come about through a collapse in our staple exports, such as wool and wheat. It is impossible to increase our export trade to its former level unless we reduce the costs of production. That means a reduction in all expenses in connexion with primary and secondary industries, and I go to the length of saying that it also involves a reduction in wages. The party opposite says that we on this side are out to force down wages ; but that is not so. [Quorum formed.] In the last Parliament, when the Maritime Industries Bill was under consideration, an honorable member asked whether we on this side stood for a reduction in wages. I said at that time that we believed in the payment of the highest wages that industry could afford; but, whether wages went up or down, economic laws would operate, and they are more relentless than any man-made laws. The lowest wages are those which force the workers to go to other countries for sustenance; the highest are those which are paid in prosperous times. Between .these levels there is room for bargaining. In order to obtain high wages trade unions have been formed, and organizers have been appointed. .Parliament has passed arbitration laws for the adjustment of the rates and conditions in industry. But if the revenue of a country falls to such an extent that high wages and high production costs cannot be paid there must be a general fall in prices. Australia is now passing through a process of deflation back to pre-war standards, and we cannot recover our former export trade without a drastic reduction in the cost of production and in commodity prices generally. Australia is in the position of a company that cannot realize the trading figures of previous years, and is, therefore, forced to curtail expenditure.
I propose to offer a few suggestions which the Government, if it really stands for the interests of the whole of the people, will take into serious consideration. A month ago, in criticizing the Government’s action in rationing employment on the training side of the Defence Department, I pointed out that it was quite fair in the present financial circumstances that members of Parliament should accept a reduction in their salaries, and I put forward other alternatives. I. suggested that since there were approximately 30,000 employees in the Public Service, with a total salaries bill of over £10,000,000, a reduction of 1 per cent, in their salaries would mean a saving of £100,000, and a reduction of 10 per cent, would result in a saving of £1,000,000.
– Yet the honorable member says that he does not believe in reducing wages.
– I submit that this is a time of stress when the budget must be balanced, and if we cannot increase our revenue we must cut down our expenditure. At the moment I am dealing only with that aspect of the financial situation ; I shall refer to others later.
– In other words, reduce wages._
– That was the parrotcry on which Labour attained office at the last election. We cannot afford to throw money away at the present time. I am not usually pessimistic about Australia; but if we are worthy of our position in this Parliament we shall see that the government of the country is carried on within the limits of the national income. If we merely pander to the cries of those who continually declare that wages must be kept up, irrespective of economic conditions, we are not worthy of the trust that has been reposed in us.
There is provision in the budget for increasing the expenditure at Canberra, excluding business undertakings here, from £365,823 to £649,805.
– That statement completely misrepresents the position.
– Then what is the increase ?
– There is a reduction in expenditure.
– If that is so, I submit that there should be a still further reduction. The Government has launched a scheme for the building of baths here because, as the Minister said in reply to a question that I put to him to-day, little children in Canberra have no facilities for learning to swim. If the Commonwealth itself is able to swim during the next two years it will be fortunate. The Government is paying £50,000 for the construction of a small section of roadway in the Territory, and there is other expenditure that could easily be eliminated.
– The party opposite was responsible for that.
– I take no responsibility for it; I would have opposed it. In any case, that expenditure was incurred in prosperous times. Some of it may have been justified and some may not; but this is not an opportune time to embark on such enterprises.
Long-range criticism of the expenditure incurred in the Federal Capital is often indulged in. I realize that Providence has been good to Canberra, but the hand of man has been rather unfair to it. Much of the money spent here has been used to good purpose. The services provided for the people and the homes in which they live reflect credit upon those responsible for them, and the city is undoubtedly one of the beauty spots of Australia. But this is not an opportune time to talk of carrying out the full programme of development, and transferring to Canberra such activities as the Patents Department and others. Money is urgently needed to carry on essential public services, and therefore further expenditure at Canberra should be suspended for the time being. If the Minister is in doubt about the wisdom of proceeding with the construction of baths or other works, he should call in independent financial advice to guide him.
We all admit that members of the Public Service are as- honest and hard-working a body of taxpayers as any in the Commonwealth; and I submit that they are not selfish. The Nationalist Premier of New South . Wales has made a Public Service salary cut and similar action is contemplated by the Labour Premier of South Australia and also in Tasmania. Why should we put the members of the Federal Public Service in the anomalous position of being sheltered from the cold blasts of necessary economy at a time like this? They should be put on the same basis as other public servants. There is room for a good deal of pruning in the Government departments. In Victoria a few years ago, when the subject of the overlapping of departments was under discussion, an independent investigation was made and Mr. Wallace Ross, an accountant of considerable experience, reported on the Government services and suggested many economies. Some of his recommendations have since been given effect, and I believe that others will be acted upon in the future. If the Government will not “ dare to be brave “ and begin reducing salaries now, I suggest that it shelter behind an independent investigation.
At one of the protest meetings held in Melbourne recently, leading representatives of the commercial world who criticized this budget offered their services in an advisory capacity to the Government, but unfortunately, the Government has so far made no move to accept that offer. The bulk of the public servants are in the PostmasterGeneral’s Department, therefore, any cut that is made in salaries should not be allowed to press too heavily on the lower paid man. There are in the Service many channels that could be explored for economies. For example, there are extraneous payments amounting to over half a million pounds. They include travelling allowance, £162,551; holiday pay, £46,976; and travelling time, £29,696. Travelling or waiting time is an avenue that might easily be explored. Senator Pearce when speaking on the Public Service Bill, said: -
In the matter of waiting time, the arbitrator, upon interpretation, ruled that officers away from head-quarters, whether iri receipt of travelling allowance or not, should be paid for time spent in waiting for a train. Here is an example: A lineman was sent from Melbourne to Warburton. He finished work on Saturday at 12 noon. The train did not leave for Melbourne till 3 p.m. That lineman must receive three hours’ pay above his salary, because he is waiting for a train during that period. Let us assume that he has been at Warburton for three days. This is what he would receive -
His salary at the usual rate.
Travelling allowance at the rate of 12s. a day from the time of departure from Melbourne to the time of his return to the city.
Travelling time for any periods, both ways, on the train before 8 a.m. or after 5 p.m. “Waiting time” as stated.
For the three hours of waiting time he was drawing a travelling allowance at the rate of 12s. a day, and under the interpretation he now gets waiting time for the same three hours.
Is it not time that we gave serious thought to the necessity for taking extreme measures to relieve the unemployment, which now represents 18 per cent, of our population. The other day one honorable member said that unemployment was world wide, and that in America there were 3,000,000 unemployed. Let me remind him that that number is an infinitesimal percentage of America’s mighty population. In a population of 120,000,000 it represents less than 3 per cent. That percentage would exist in most countries in normal times. In Australia, a land of unlimited resources, 18 out of every 100 men, even among organized labour, are unemployed. The Public Service enjoyed prosperous conditions when we had surpluses, and now that we have deficits - and this country is almost on the verge of insolvency - we should forgo some of these extraneous payments, which will create no hardship, in order to relieve unemployment, and prevent misery and want. I read yesterday in the Melbourne Herald of a woman who had actually died of starvation. That happened in a country, which, if properly governed, should be practically free from unemployment. I could point to hundreds of anomalies in the expenditure of the Government, but I shall content myself by touching on only one or two under the various headings of the budget.
The Government recently rationed the military forces. The men responsible for training and the men engaged in active work in the various units were rationed to the extent of a reduction of 16 per cent, in their salaries. The salaries of the clerical division were untouched. According to the Melbourne Herald of last week, the Secretary of the Defence Department has stated that the clerical staff has been retrenched 15 per cent. That statement is misleading and incorrect. I understand that the clerical officers concerned have in most cases been transferred to other departments in the Public Service. In some cases, they have been transferred to units such as the Royal Air Force, and have taken the place of quartermasters with technical knowledge, who have been dismissed. Preferential treatment has thus been given to public servants, who are members of an organization, as against men whose work is not measured by any industrial standard, and, therefore, do not belong to any organization through which they can complain in respect of the unjust treatment meted out to them. The most glaring anomaly of the Defence Department is the salary of the Secretary for Defence. He is paid £2,000 per annum, plus expenses, a higher salary than that of any of the generals of the highest command. The Secretary to. Defence has an assistant secretary at a salary of £1.012 per annum, and there is a finance secretary at a salary of £1,112 per annum. The military officers and noncommissioned officers have been retrenched while the clerical officers, who are dependent on the Military Forces for their employment, have been exempt. Because of retrenchment, there is less administrative work in the department. Is it not obvious therefore that there is now less responsibility placed on the clerical officers, and that their salaries could be accordingly reduced? In addition, there are many military officers who could be employed in administrative jobs. I dealt with that subject fully when I moved the adjournment of the House to discuss defence retrenchment. In 1919, the salary of the Secretary to Defence was £900 per annum. In these parlous times, is there any justification for the salary of the present secretary being £2,000 per annum? It is said that he is working under an agreement entered into by the right honorable member for
North Sydney (Mr. Hughes), when he was Prime Minister, to the effect that he is nol; lo be paid less than £2.000 per annum. If that is so, then at this time of financial stress, there should be some amendment of that agreement; either the officer should be compensated, or an adjustment made to his salary to bring it into line with that attaching to a corresponding military position.
– That agreement does not bind this Government.
– The Government should take some action to obviate any overpayment of services.
As it is necessary to balance the budget, ‘the Government has adopted various expedients to. enable it to make up a shortage which it estimates next year will amount to £14,038,770. It estimates that there will be a decrease of £5,700,000 in the customs revenue this year. I have not spoken, so far, in the tariff debate; but I wish to take this opportunity of protesting against the manner in which the Government has introduced the successive tariff schedules that have been put before us. We have had no opportunity to debate the items in these schedules, and in this regard the Government deserves the -severest criticism, for the Prime Minister (Mr. Scullin) definitely promised the Deputy Leader of the Opposition (Mr. Gullett) that honorable members would be given an opportunity to consider the schedules in detail. [Quorum formed.]
It i3 undoubtedly necessary, in the best interests of Australian trade and commerce, that the items in the schedules should be debated without delay. We have wasted weeks in discussing the Constitution alteration proposals of the Government, the Conciliation and Arbitration Bill, and the Central Reserve Bank Bill, while these important tariff matters - which affect the life-blood of the whole community - have been practically ignored. The introduction of these schedules has caused a serious dislocation in business, a great deal of unemployment, and a distressing depression in trade. Had we been given an opportunity to discuss the items, the position could doubtless have been improved, and business could have pursued its normal course. That i3 impossible under present conditions, for we do not know when new schedules will be tabled. The schedules simply reek with anomalies. This, of course, was inevitable, because of the hasty and crude manner in which they were prepared and applied. A discussion would undoubtedly have led to the correction of some of the anomalies. The November schedule contained 240 items. The December schedule was introduced chiefly to correct errors which had been discovered in the November schedule, although some new items were included in it. The April schedule was an emergency measure designed, so we were told, to correct our adverse trade balance. It provided for a surcharge of 50 per cent, on 51 items. Simultaneously with the tabling of it, a proclamation was issued which totally prohibited the importation of 78 items. The June schedule contained 140 items.
I support the cardinal principles of protection, which all persons must acclaim if they believe in the adoption of a forward policy for Australia and the development of our immense heritage. The policy I favour is that which accords with the Nationalist creed. It provides for fiscal protection for both primary and secondary industries, and industrial protection to prevent a growth of monopolies on the one hand and exploitation on the other. This policy is comprehensive and broad-visioned. It excludes, on the one hand the narrow-minded view of freetraders, and, on the other hand, the absolute and rabid prohibitionists. But this Government is attempting to bolster up a top-heavy and bureaucratic industrial system. It fears that there may be a drop in wages, and for that reason it has heaped the duties on out of all reason. There has, of course, been inevitable reaction - business stagnation, and unparalleled and widespread unemployment. The Acting Minister for Trade and Customs (Mr. Forde) told us, when the various schedules were introduced, that numbers of new industries would be established in Australia; but, so far, his expectations in this regard have not been fulfilled. Some of the companies which it was said intended to establish works in Australia have not yet purchased sites for their factories, and 1 doubt if any of them have actually commenced operations. 1 do not agree with the narrow reasoning of the freetraders - if there are any real freetraders left - who frequently show very little faith in their own people. lt is commonly said that the primary producers have been exploited by the manufacturers of agricultural implements, but those who make, or repeat, such statements do not understand the position. We know that, speaking generally, our farmers are patriotic and give a preference to their own country. What does it matter if a few persons in Australia become millionaires? It is much better to have them here where we can tux them, than to have them in other countries where we cannot do so. It is obvious, surely, that the best market the farmer can have is the home market. In Victoria, which is our most thicklysettled State, 40 per cent, of the wheat crop has actually been consumed locally. The general lines of our tariff policy, as it was applied until lately, have been approved by the leading economists. This is particularly so in regard to agricultural machinery, as the following quotation from a pamphlet on the subject clearly shows: -
Tim story of the reaper and hinder is one of the best examples of the value of protection to the Australian farmer. In 1020 the Federal Government realized that the farmers were being exploited. The duty on the binder was then merely a revenue duty of 10 per cent., but the cash price of the 0-ft. machine was £98. Manifestly the importer was profiteering grossly. The Government, therefore, approached local manufacturers and offered a duty of 45 per cent. As soon as this became public the importers raised the price to £ 1 25, presumably in the belief that the machine could not bo made here. However, local manufacture commenced in 1921 and immediately the importer’s price began to fall until to-day it is down to £71, being a reduction of £54, or over 43 per cent. The Australian maker’s price is still lower, being £08 5s.
The agricultural implement manufacturing industry has received considerably less protection than some other industries. For instance, until the introduction of the recent tariff schedules, ploughs, reaper threshers and harvesters were subjected to a duty of 22^ per cent. British, and 35 per cent, foreign, whereas manufactured metals, which include almost every manufactured article of metal, as well as much machinery, were subjected to a duty, of 35 per cent. British and 45 per cent, foreign.
The old Liberal party and the Nationalist party, with the assistance of the Country party in recent years, invariably stood for the adoption of a moderate tariff policy for Australia. That this was the wisest course is clearly shown in the book, The Australian Tariff: An Economic Inquiry, by Professors Brigden, Copland and Giblin, and Messrs. E. C. Dyason and C. H. Wickens. The three professors are expert academic economists, while Mr. Dyason is an outstanding business man, a manufacturer, as well as an authority on Australian financial matters. In these circumstances the following quotation is of particular interest : -
The evidence available does not support the contention that Australia could have maintained its present population at a higher standard of living under freetrade.
The writers also state -
The adoption of u considerable, hut not unlimited, amount of protection is justifiable on economic grounds in the circumstances of Australian industry. Hut the extreme applications of the tariff have undoubtedly been a cause of net loss. Further extensions may involve a more than proportionately increased loss.
Our conclusions on effects indicate that the total burden ‘of the tariff has probably reached the economic limits, and an increase in this burden might threaten the standard of living.
That was written in 1929, before the prohibitions introduced by the present Government were tabled. They go on to say- it is important, therefore, that no further increases in, or extensions of, the tariff should be made without the most rigorous scrutiny of the costs involved.
That is a strong indictment of the present Government. There has been no proper scrutiny of the items. Without regard to the consequences, the duties have been increased indiscriminately. The result, as predicted in the treatise from which I have quoted, is increased unemployment.
Although the Nationalist party believes in a progressive policy of protection, it recognizes that many industries labour under great disadvantages. For instance. it takes 2 tons of coal to make 1 ton of steel. Manufacturers of agricultural implements have to pay £13 a ton for pig-iron, whereas, pig-iron could be imported for £6 a ton. I have no patience with those who ask what it would cost to pension off the workers in certain industries. Those workers are essential for the development of the country. I wish also to correct a misapprehension in the mind of the honorable member for Wimmera (Mr. Stewart), who said that, in spite of freetrade, New South Wales prospered at a time when Victoria had a policy of protection. The honorable member should know that the industries peculiar to New South Wales at that time were largely of a semi-primary nature associated with timber and the like, whereas in the younger State of Victoria, under a sound policy of protection, secondary industries prospered. The first Nationalist Government was formed in 1917. The BrucePage Government went out of office in October, 1929. In 1917, Australia had 15,179 factories. That number had increased to 22,775 by 1928, an increase of 7,596, or over 50 per cent. The total capital invested in those factories increased during those twelve years from £90,000,000 to £231,000,000, an increase of £143,000,000, or 156 per cent. During the same period, the number of employees increased from 321,000 to 464,000, an increase of 143,000, or 44 per cent. Those figures show the value of a selective policy of protection. That policy was not perfect, because some of the duties were inadequate, while others were too liberal. But it was a progressive policy. Now, under the guise of a national emergency, the Government has introduced a number of prohibitions which can only be described as fanatical, and they have been clumsily handled at that.
This Government seems also to have lost sight of the fact that with Belgium, France, Germany, Italy, and Japan, the trade balance is in our favour to the extent of £8,300,000, £11,000,000, £7,000,000, £3,700,000, and £8,289,000, respectively. Under the pretence of rectifying the trade balance, the Government is exploiting the nation with its ill-considered proposals. It is opposed to any reduction of its estimated expenditure for the current year. But in spite of budgets and governments, our expenditure must be reduced. If the Prime Minister (Mr. Scullin) had done as he suggested some time ago in a ministerial statement of policy, and called Parliament together as an economic conference, there would not now be this great dislocation of trade, or so much unemployment.
It has been stated that - the various chambers of manufactures throughout Australia stand behind the Government’s proposals. That is not so in the case of the Melbourne Chamber of Manufactures, whatever may be true, as has been quoted, of the Sydney Chamber. The Melbourne Chamber of Manufactures is severely critical of the Government’s proposals, because it believes in a policy of protection which permits a certain measure of overseas competition. The Melbourne Chamber realizes that the elimination of all competition gives rise to monopolies, and also there is not the same urge to efficiency. Moreover, monopolies crowd out smaller industries and, consequently, increase unemployment.
In addition to heavy tariff imposts, there is to be a primage duty of 2£ per cent., which will add still further to the dislocation caused by the tariff schedules. Primage is collectable at the customs and is a further tariff charge. If the Government, when it took office, instead of introducing new tariff schedules, had raised the previous duties by 5 per cent., it would have realized as much additional revenue as it will now receive, without causing so much dislocation. On the basis of the imports for 1927-28, which were valued at £147,000,000, a 5 per cent, increase would have given the Government over £7,000,000 of additional customs revenue or would have kept out quantities of goods for an equal revenue. The new duties and taxes are to provide for a drop of £5,700,000. The adverse trade balance could thus have been righted without dislocating trade and commerce.
The Government is suspect also because of its lack of Empire sentiment. When the prohibitions were tabled, I asked the Prime Minister whether consideration had been given to the question of Empire preference, and was informed that this was not a fiscal proposal. That is not so. As I have already pointed out, Belgium, France, Germany, Italy, and Japan buy more from us than we buy from them. Great Britain takes 3S per cent, of our exports, France, 12 per cent. ; Germany, 8.5 per cent., and Japan 9 per cent. We dispose of 67 per cent, of our exports to those countries. The United States of America, with which we have an adverse trade balance of nearly £30,000,000 per annum, takes only 6.25 per cent, of our exports. The Government has not given proper consideration to the question of Empire trade preference. In this connexion I desire to repeat some figures which I gave in my protest on this matter in the House on a former occasion -
Not every person in Australia realizes the extent to which Great Britain purchases our products. The Empire Marketing Board lias estimated that Great Britain annually consumes agricultural products to the value of £420,000.000. Her imports of grain and flour each year are valued at £93,000,000, while the figures in respect of meat, wool, and hides and skins are, respectively, £109,000,000, £G4,000;000. and £20,000,000. In 1928 Britain bought 52,787,000 cwt. of wheat from other parts of the Empire, and 51,000,000 cwt. from foreign countries. Australia supplied only 10,233,000 cwt. of that wheat. Britain buys annually about 072,000,000 lb. of butter, of which in normal years Australia supplies about one-eighth. Importations of cheese into Britain total 300,000,000 lb. per annum, Australia’s proportion being about 7,000,000 lb. Those figures show how wide a field still exists in Britain. If we believe in Empire trade - as we must if we are wise- we should work, not to offend Great Britain, but to make her a better customer than she is now.
The result of the Government’s restrictions and prohibitions has been to create retaliation and contempt abroad, and more unemployment in Great Britain and in Australia. The Government might have considered the imposition of this primage duty months ago, but they deferred it until after the damage had been done.
If the bank rate had been increased sufficiently our adverse trade balance could probably have been corrected in a sensible and business-like way. At present the bank rate operates against us at the rate of 6i per cent. It would not have mattered if it were even higher. There is a school of thought to which Professor Copland belongs which believes that the trade balance could be corrected even by an excessive manipulation of the bank rate. A high bank rate represents a bounty on export, and makes imports more expensive. Our exports help to pay the £30,000,000 of interest which must be met. The Government has not given these matters sufficient thought. The Central Reserve Bank Bill was a step in the right direction, and I supported it in principle, but I suggested that it should go before a select committee which would examine bankers, who know more about banking and exchange than do members of Parliament. There is now in Australia an English financial authority, and no doubt good may come of his visit. I hope that when Sir Otto Niemeyer makes his report the Prime Minister will be perfectly frank, and will place the full report before Parliament, even if it cuts across his own policy. There may be something in it opposed to his own views on industrial matters, but it is vital to Australia that the public should know what this financial authority says. It is possible that he may have something to say on this subject of correcting trade balances by means of the bank rate.
I have dealt with the tariff and I wish now to return to other matters in the budget, which contains proposals for raising extra revenue. One of the proposals for doing this is the imposition of a sales tax by which the Government hopes to raise about £5,000,000. This idea is an importation from Canada, and I understand that we have a Canadian authority here to advise us as to its application. In Canada the tax was known as the nuisance tax,” because of the trouble of collecting it, and because of its interference with business generally. Originally it was part of a special war revenue act, and was fixed at 1 per cent. Here the Government, without going into the matter fully, has fixed the tax at 2J per cent., which is the full amount of the discount usually given in trade for cash transactions. In 1924 the Canadian tax was raised to 6 per cent. In 1930 it was reduced to 1 per cent, again, and under the new budget it will be removed altogether.
– I do not expect that it will be collected in Australia in ten years time.
– After ten years of sales taxes and similar legislation, Australia would probably be bankrupt. Honorable members opposite do not realize what hardship would be entailed if a condition of national bankruptcy were brought about. At present, conditions of distressing poverty and unemployment exist, but they are nothing to what will prevail if the Government goes on piling up deficits, and companies are forced out of business and have to discharge their employees because they cannot meet their commitments. That sort of thing is happening now. Excessive taxation is putting many firms out of business. The Government, in its resume of the financial situation, has stated that it is necessary to impose additional income taxation to raise £850,000, because there has been a substantial reduction in the taxable income. Companies are not associations with bags of gold stowed away. The shares of even the largest and most prosperous of them are on the market, and no doubt some honorable members opposite hold some of those shares. They are quoted on the open market, and can be bought by workers in industry. Proprietary companies are often partnerships and family affairs. All are feeling the pinch at the present time. Taxation is becoming heavier, the banks are pressing for the repayment of loans, and the conditions attached to the granting of further financial accommodation are being made more stringent. It is becoming increasingly difficult to carry on, and if taxes are increased much more many companies will go out of business altogether, and remaining capital will be invested in government loans. Thus, money would be withdrawn from industry, and the country could not recover for another decade.
The sales tax was imposed in Canada by the Liberal party, which is practically a freetrade party. It dared not impose a tariff, and the sales tax was imposed to raise internal revenue. But the present Commonwealth Government, which is the most fanatical protectionist government that ever existed, is putting on the sales tax in addition to the present excessively high tariff. More over, the sales tax will be applied in a harassing fashion. Every sale made has to be recorded, and a monthly return sent into the Taxation Department. This will tend to increase costs.
– Not every sale. This is not an over tax.
– It applies only once, I know, but sales must be recorded somewhere, and by the wholesaler. [Quorum formed.] The Government hopes to raise a further £850,000 by increased income taxation. I have already spoken of the decreased field of taxation. The Ministry apparently cannot or will not see that with each exaction the ability of industries to produce the wealth which the country so sorely needs is increasingly impaired. The Labour remedy is to take a correspondingly greater share of the diminishing income. If retrenchment in expenditure be shirked this year, why should it not be shirked next year? As incomes rapidly disappear and the rate of taxation as rapidly grows to make good the dwindling taxable field, the end is not difficult to foresee.
Another item in the budget is £150,000 for the repatriation of miners and a coal export bounty. A few weeks ago I asked the Prime Minister if he could tell me how many unemployed miners there were in Australia as a result of the trouble on the northern coal-fields, and I was informed that the House would have an opportunity to debate me matter when the budget came’ up for review. I hope that the right honorable gentleman will let us know how many miners there are to be repatriated. I take strong objection to a payment like this at a time when every penny of the people’s money has to be husbanded, particularly when the miners are suffering from self-inflicted disability. They sat down for fifteen months, when work was offering at good wages, because they would not accept a reduction of the high rates which they had previously been paid.
– That is not the reason for this grant; it is an endeavour to find some new avenue of occupation for unfortunate miners whose jobs are gone because of the change from coal to oil consumption.
– According to the press, within a few days after the resumption of work on the coal-fields, 80 per cent. of the men were engaged. If only 20 per cent. of 12,000 are still idle, why is there need to devote £150,000 towards their repatriation? In any case if they are to receive largesse such as this because they are supporters of the Government, why should not £150,000 be given to the waterside workers at Port Melbourne, who are also suffering disabilities brought about by a strike ! Personally, I think that men who listen to others who urge them on - these include members of this Government not one of whom had courage enough to tell the miners to get hack to work - are not deserving of this assistance, especially at a time when there is such distress among other sections of the community. Those other sections are now beyond the pale, and those who belong to a strong industrial organization are to be given money that can be ill spared from the Government exchequer. To me it seems to be a partisan action on the part of the Government. It is expenditure that could easily he saved. I understand that a portion of the £150,000 is to be devoted to encouraging the export of coal. But I submit that when the cost of producing coal comes down, it will again he exportable. So long as the miners indulge in strikes for the most trifling causes as they have done in the past, coal cannot be exported, and should not be subsidized by the Government.
During the past few weeks the Government has passed bills providing bounties (or sewing machines, flax and shale oil. It has also decided to spend £120,000 on building a lighthouse service ship, whereas a suitable vessel could bepurchased for one-third of that amount or the steamer now doing the work could be continued in the service. In almost endless directions money could be saved. The items I have mentioned are considerably in excess of the £4,000,000 which the Leader of the Opposition (Mr. Latham) has indicated the Government could save, starting with a reduction in member’s salaries.
Governments so often are the unwise spenders just as they are the most ineffective and extravagant of industrial managers. The taxation revenues are drawn, especially in lean years, from the capital by which industry lives and expands, and are used for purposes that are relatively unproductive. There can be no more unproductive way of spending money than by spending it on coalminers, lighthouse ships, bounties and the excessive costs to which I have referred.
In his policy statement the Prime Minister asked for co-operation. He now has the opportunity. No board of directors of any company would put forward a budget for such increased expenditure with a drop of such magnitude in revenue.’ The process of deflation is painful, but necessary and unavoidable. The evil day cannot be staved off. There are difficulties in getting an economic readjustment. Recently the Prime Minister launched an Optimists Club. He and Mr. Stuart Doyle have declared that they are optimists. I have not heard of any others belonging to the club; but possibly all Ministers are optimists. He would be a sublime optimist, beyond all worldly standards, who could contemplate this extraordinary budget with equanimity.
Assent to the following bills reported : -
Western Australian Agreement (Wiluna Gold Mines) Bill.
Commerce (Trade Descriptions) Bill.
Forestry Bureau Bill.
House adjourned at 10.49 p.m.
Cite as: Australia, House of Representatives, Debates, 22 July 1930, viewed 22 October 2017, <http://historichansard.net/hofreps/1930/19300722_reps_12_126/>.