12th Parliament · 1st Session
Mr. Speaker (Hon. NormanMakin) took the chair at 10 a.m., and offered prayers.
Pay and Allowance
asked the Minister for Defence, upon notice -
In reference to the finance member of the Naval Board, the paymaster -commander, and two lieutenant-commander paymasters (page 114 of the Estimates ) , the director of navy accounts, and 50 other officers in the finance branch of the Naval Department (page 115), the paymaster-lieutenant examiner (page 110), the 31 paymaster-commanders, lieutenant commanders and other officers called accountantofficers (page 120), the paymaster midshipman (page 121), the paymaster-commander and paymaster-lieutenant (page 125), the unnumbered paymaster lieutenant commanders and lieutenants (page 130), three paymasterlieutenants (page 134), the accountant and expense accounts officer (page 135) -
how much pay do the 106 naval officers and the unnumbered naval officers (page 130) receive (a) in annual pay, and (i) inallowances and other payments?
how many officers are employed in naval, accountancy and finance branches of the Naval Department?
are more than 106 of these officers necessary; if not, what remedy docs he propose?
– The information is being obtained, and a reply will be furnished to the honorable member as soon as possible,
Salary of Secretary
asked the Minister for Defence, upon notice -
– The information is being obtained, and a reply will be furnished to the honorable member assoon as possible.
asked the Treasurer, upon notice -
Will he supply a return showing a comparison of the costs of all Commonwealth departments for 1930-31 and 1920-21, on the basis of the current year’s Estimates, including the post office and the Commonwealth railways, and allowing for re-adjustments which have been made of work between the various departments ?
– The information is being obtained, and will be furnished as soon as possible.
– On the 24th July the honorable member for Newcastle (Mr. Watkins) asked the following question upon notice -
Is it a fact that H.M.A.S. Canberra has already to have a new gun turret; if so, will he inform the House as to the reason for this, and whether it is due to faulty construction when the ship was built?
I am now in a position to inform the honorable member that a spare turret has arrived, and will be stored on Garden Island in reserve. This is the usual proportion of spare turrets allowed for the eight (8) turrets which are in H.M.A. ships Australia and Canberra. There is no defective turret in either ship.
Safes and Strongroom Doors
– Yesterday the honorable member for Adelaide (Mr. Yates) asked the following questions, upon notice -
The following replies have now been furnished by the Commonwealth Bank -
– On the 18th June, the honorable member for Melbourne (Dr. Maloney) asked the following questions, upon notice -
I am now in a position to furnish the following information : -
– A few days ago I promised to lay on the table of the House for the information of honorable members thu report prepared by the Honorable J. A. Gunn, Director of Development, at the request of the Government, on the proposals submitted by ‘the Australian Dried Fruits Association for the stabilization of the Australian dried fruits industry. The report is now available and I lay if on the table. On the 11th July, I in formed honorable members of the con elusions arrived at in the report and intimated that I had decided to convene n conference at an early date, consisting of representatives of the Governments of New South Wales, Victoria, South Australia, and Western Australia, the Commonwealth Dried Fruits Control Board, the State Dried Fruits Board, and other organizations interested, in order that the position of the dried fruits industry might be reviewed and consideration given to the taking of any action that might be thought desirable to effect a general improvement in the future prospects of the industry. I move -
That the report be printed.
Question resolved in the affirmative.
Motion (by Mr. Scullin) agreed to-
That the House, at its rising, adjourn until Monday next at 3 p.m.
Consideration resumed from 24th July (vide page. 4689), on motion by Mr. Scullin -
That thu first item in the Estimates for Additions. New Works. Buildings, &e., under Division 1 - the Department of Defence - namely. “‘Naval Establishments - Machinery and Plant. £1,500,” be agreed to.
Upon which Mr. Latham had moved by way of amendment -
That the item be reduced by £1.
Mr. SCULLIN (Yarra- Prime Minister and Treasurer [10.5]. - I propose to say a few words on the amendment moved by the Leader of the Opposition (IV.
Latham). Australia is confronted to-day with the most difficult position that she has yet faced in her history, and as the Leader of the Government I welcome any constructive criticism, or any advice or suggestions of a helpful character. My mind, and the mind of the Government, is open to receive such suggestions. We are neither obdurate nor stubborn; but in spite of the barrage of unjust criticism that has been directed against the budget, the Government is determined to balance its accounts, and to enable Australia to face the world in a way that will show that she intends to meet her obligations. I make no complaint about the tone of the speech delivered by the Leader of the Opposition. He examined certain aspects of the budget and presented his views in respect to it, and though I do not agree with all that he said, I have no quarrel with the manner in which he addressed himself to the question; I pass by entirely the bitter attack which is being made on the budget outside of this House, because the important issues at stake are too serious to justify the spending of time in considering it. An abnormally difficult task has faced this. Government throughout its short life, and if there is one thing more than another calculated to injure the credit of this country, it is the ^wholesale and condemnatory charge that’ we are indulging in extraordinary extravagance, and are not attempting to meet the situation which faces us. I entirely repudiate such charges, and shall show honorable members before I resume my seat that my repudiation of them is justified.
The Government has been charged, in the first place, with having unwarrantedly increased the expenditure from revenue by £4,000,000 over the expenditure of 1928-29, at a time when the revenues are considerably less than they were in that year. Let me say at once, and unhesitatingly, that I agree with all those who say that economies are necessary, and that every possible penny of expenditure that can be avoided should be avoided. I have never said that the Government’s economy campaign is finished; it is being proceeded with, and will be carried as far as possible. It has also been said that the Government has effected no substantial economies, although such economies could be effected, and that it has imposed unnecessary additional taxation on the people which is crippling industry and hindering the making of necessary financial adjustments. All those charges are involved in the amendment before the committee. If any one of them is true, the moving of the amendment was justified. If any one of them can be substantiated, and it can be shown that we are pursuing such a policy, I shall gladly hand over the government of this country to any other group of honorable members who think that they can undo the wrong that it is alleged that we have done.
Let us consider these charges in detail. The statement that the expenditure from revenue has been increased by £4,000,000 over the expenditure of 1928-29 is true, as the figures contained in the budget disclose; and there never has been a more honest or clear statement of our financial position than is there revealed. But. as an offset against the increase in expenditure from revenue, there has beer a corresponding decrease in expenditure from loans. It is not a sufficient answer to that statement to say that the reason why we are not spending loan money is that we cannot get it. It is true that the Loan Council was forced, by existing circumstances, to restrict seriously the loan programmes of the Commonwealth and the States; but no representatives on the council applied themselves more assiduously than the Commonwealth representatives to the task of reducing the loan programme so that we could meet our obligations. We did not do it cheerfully. If there is a time when loan money should be spent in the country it is in a time of depression. But unfortunately we are in a position where we cannot do it. Such loan money as is available is being utilized in a manner which will spread the burdens that have to be borne as evenly as possible over the whole community. If there is one State which is suffering more than another at present, it is South Australia. That State is almost crippled financially. In order to assist South Australia, this Government has made a temporary loan of £1,000,000 to that State, because of its great need. The obligations of the Commonwealth Government, let me say do not begin and end with, the Commonwealth: this Parliament is under an obligation to take into consideration the financial position of the Commonwealth and the States alike.
I propose to consider in detail the items which have led to this increase in expenditure from revenue of £4,000,000 over the expenditure in 1928-29. I shall not indulge in tricks or legerdemain in dealing with this matter. Never in my life have I intentionally been guilty of misrepresenting one figure in the consideration of the budget or statistics, for I consider that the meanest form of misrepresentation. Nor do I charge the Leader of the Opposition with having done so. I want to place the figures clearly before honorable members, and invite them frankly and openly to say whether they think that the expenditure in any one of the directions to which I shall point should be reduced. The first item of increase is £1,224,000 in interest and sinking fund payments and exchange. The payment of that sum is, I submit, absolutely inescapable unless we intend to repudiate our obligations; and let me say right away, so that there shall be no misapprehension, that I regard the national debt as I would regard a personal debt.
Honorable Members. - Hear, hear !
– I regard the national honour as 1 regard my personal honour. There will be no repudiation of our obligations by this Government; but the burden of them will be spread as evenly as possible over all the people whether they like it or not; it will not be laid upon any one section of the community.
– It is only fair to say that the only suggestion of repudiation has come from the right honorable gentleman’s si ie of the committee.
– I am not aware that any honorable members have suggested that we should repudiate our debts; but I feel the responsibility resting upon me as Prime Minister and Treasurer of declaring definitely that there will be no repudiation of our obligations. I do not desire to impute improper motives to anybody, nor do I desire my utterance to be misunderstood in any way. We shall honour the obligation that rests upon us to pay the increase of £1,224,000 in interest and sinking fund charges.
The next increases are £1,275,761 in connexion with invalid and old-age pensions; £201,000 on war pensions, and £147,000 for repatriation services. Administration costs are down; but benefits to ex-soldiers have been increased. The cost of conducting the Post Office, omitting interest and sinking fund, has increased by £504,000; but as an offset against that the revenue at the old rates has increased by £750,000. The cost of the Federal Capital Territory shows an increase of £2S5,000. That is merely an apparent increase, as the expenditure on the Federal Capital was previously borne by the Federal Capital Commission and was not included in the budget of 1928-29. A true comparison of all expenditure shows a saving of £30,000 in administrative and other costs. Payments to and for the States have increased by £508,000, apportioned as follows: - Sinking fund, £158,000; grant to South Australia, £320,000; grant to Tasmania, £30,000. Thus there is a total increase in the amount of inescapable expenditure of £4J,145,000. I pause here to challenge any honorable member to point to one of those items and say that the extra expenditure is not inescapable.
– They have not been questioned.
– I am glad to have the assurance. My contention is that if those increases, amounting to £4,145,000, are inescapable, they ought not to be pointed to as indicative of extravagance on the part of this Government.
– The late Government was criticized for similar expenditure.
– That I deny; but I shall return to that matter. If that increase, inescapable as it is, is not chai’lenged now, and if we are to go back to the 1928-29 figures, we must take £4,000,000 off the amount expended in that year. But it must be borne in mind that for the year preceding 1928-29, the previous Government showed a deficit of about £5,000,000 on the year’s operations.
– Half that.
– There had been an accumulated surplus the year before, which brought the accumulated deficit down to £2,500,000, but the actual deficit on the previous year’s transactions was £5,000,000. One might suppose, therefore, that in 192S-29 the pruning knife was used. I have no desire to delve into history; I am merely stating bald facts. I believe ,that the Treasurer of the day, in face of that deficit, did use the pruning knife; I would have expected him to do that in all departments. Yet we are now asked, despite increasing costs in many directions, not only to face that £4,145,000 of inescapable increased expenditure, but to cut out £4,000,000, which would be equivalent to reducing the 3928-29 Estimates by that amount.
There are other increases, in the form of assistance to the States, which I do not claim to be inescapable, but which [ do consider justifiable. One is the unemployment grant of £1,000,000, and another is the grant of £150,000 for the assistance of the coal-mining industry. Added to the £4,145,000, that makes a total increased expenditure of £5,295,000 as compared with 1928-29. Of that sum the £4,145,000 is unquestioned, and the other £1,150,000 is eminently justifiable expenditure. But Ave must offset against that increase a decrease of over £1,000,000, about which little, or nothing, has been said. It has been remarked that I have criticized the extravagance indulged in in the past, and I should have expected to be confronted with similar criticism if I had been guilty of the same offence. This Government has not been in office for a sufficient time to enable it to rectify the position attributable to the . extravagance indulged in over many years. We took office in October, 1929, and only eight months remained before the close of that financial year. Eight months of unparalleled difficulties in the life of a government! Owing to the ramifications of Commonwealth administration, it was impossible immediately to call a halt in expenditure that might, be regarded as extravagant. One might as well try to stop a steam roller that was rushing down !i hill. This Government has done much to reduce Commonwealth expenditure, and it will do more: but it will make its cuts in the right direction. It will start at the top, and not at the bottom.
It has been said that I pointed to items of extravagant expenditure in the administration of the late Government, but that they totalled only £100,000. My recollection is that they amounted to about £500,000. Even accepting the suggestion of the Opposition that when I sat on the other side I pointed to extravagance amounting to £100,000 and that my Government has done nothing to stop them, my answer is that in eight months of office we have made cuts in items of expenditure amounting to over £1,000,000. I shall mention the principal items. Whether we should have done more remains to be seen; we arc still seeking to reduce expenditure in other directions. We are being condemned by the Opposition because we are making-investigations into the management of Australia House, where we believe there is extravagance. We are committed to expenditure on certain activities, such as those of the Worth Australia. Commission, that must continue for a couple of years before we can deal with them. The appointment of a Trade Commissioner to the United States of America was criticized by me. I said that it was unnecessary to spend £5,000 a year on maintaining a Trade Commissioner in. a country with which Australia did no trade. But that appointment does not expire for some time.
– What about Canada?
– The Commonwealth does trade with Canada, and there a representative can be useful. When certain contractual obligations cease, numerous other items of expenditure will be eliminated.
For most of the reductions that we have made, we have been condemned by the Opposition. We have cut £650,000 off the defence estimate. We have saved £61,000 by disestablishing the Development and Migration Commission, and » saving of £5,000 has been made in connexion with the Governor-General’s office and establishments. Other savings are as follow .–High Court, £11,000: Prime Minister’s .Department, contingencies. &c., £5,000; Public Service Board. £3,100; High Commissioner’s Office. £8,700; Treasury, contingencies, &c.. £3,000; Court of Conciliation and Arbitration and Reporting Staff, £1,200; Solar Observatory, £1,000; Trade and Customs Department, £12,000.
M.r. Archdale Parkhill. - Let us hear the trifles.
– The honorable member calls them trifles; but the items that 1 am referring to total over £1,000,000. Other reductions are as follow: - Post office - overtime, Sunday pay, and travelling expenses, £60,000 ; re-arrangement of the post office staffs and re-organization, £140,000; fittings, furniture, and repairs to buildings for ordinary departments, £19,000; grant to Association of Simplified Practices and Standards, £7,000; Health Department - Miscellaneous services, £7,200 ; “War Museum, £2,800 ; additions and new works for ordinary departments, £18,000; Territories - Sundry savings. £13,000. The total amounts to £1,028,000.
Turning to other savings, I may mention that in the Federal Capital Territory a saving in administrative costs is being made of £30,000. By the introduction of a joint electoral roll in New South W ales £6,000 will be saved. In connexion with the Commonwealth’s contribution under the Export Guarantee Act for publicity services a saving of £25,000 is being effected. The latter items alone total £61,000, bringing the total cut in expenditure to £1,089,000. All that has been done in eight months.
– Continue iiic good work!
– We shall. I have not the slightest doubt that when we make the next reduction in expenditure the honorable member will condemn us for it; but we consider that the items that I have cuumerated make a very good instalment of economies after only eight months of office.
I now turn to the suggestions of the Leader of the Opposition (Mr. Latham), whom I do credit with being the only member opposite who has refrained from indulging in generalities, and has put his proposals into concrete form. I have never seen a better example of ill-informed criticism, which has been called constructive, than the remarks that have been published in the press of this country in the last two weeks. One suggestion, which was published before it reached me, was sent to me officially by leading business men. I pass over those persons who contribute to the press over the signatures of “pro bono publico,” and the like: but I give consideration to communications from leading men in the commercial world. A suggestion that I received from the Now South Wales Chamber of Commerce was - “Borrow money to bridge the deficiency “ ! We have sat round the conference table with the State Premiers, and at the Loan Council meetings, and there we forget party matters. There, for the time, at any rate, we are Australians, genuinely desirous of promoting the country’s welfare, however far short of that ideal we may fall at other times. We try to visualize the needs of our country, and the one thing upon which we are agreed is that we must balance our budgets if the honour of Australia is to he retained. We are trying to do that.
Turning to the specific suggestions of the Leader of the Opposition, I point out that a vote for his amendment necessarily involves consideration of those items individually, in order that an intelligent vote may be recorded. . It is proposed, under the amendment, that the first item be reduced by £1, as an instruction to the Government to make a reduction of £4,000,000 in the items of expenditure enumerated. These are as follow: - Salaries, wages, allowances, and services, in connexion with the Public Service and the Parliament, £1,000,000; maternity allowance, £200,000; bounties, £146,000; road grants to States, £1,500,000; unemployment, £1,000,000; and coal subsidy, £150,000.
The. Leader of the Opposition (Mr. (Latham) did not claim that the allowances of members of Parliament and the salaries of public servants are too high. If honorable members are being overpaid for their work, let us frankly say so by resolution.
– No one has suggested that.
– Are the public servants overpaid under the awards governing their employment? If so, let us ask for a review of the awards and a reduction of salaries. But that is not suggested. What, then, is the proposal of the Opposition? We are told that hecause the Commonwealth has a deficit and the nation’s finances are at a low ebb the payments to members of Parliament and public servants should be specially reduced.
– Because ail other sections of the community are suffering.
– Where there is overpayment let us frankly reduce it, but let members of Parliament and the public servants be on an equality with other sections of the community. Every taxation measure applies with equal force to members of the Public Service and the people outside the Service. A cut of ten per cent, in the allowance of members of Parliament and the salaries of public servants would constitute a class tax of 2s. in the £1.
– That sacrifice and more is already being made by people outside.
– That is true only of the worker on the basic wage, the most lowly paid members of the community, and possibly a few others engaged in business. But there are men employed in commerce who get five times as much per annum for managing private businesses as honorable members get for managing the business of this Commonwealth.
-. - What about the Railways Commissioner in New South Wales ?
– The manager of one large drapery establishment whom I know is paid £5,000 a year. I do not begrudge that salary to him, but there are men in the Public Service with ability equal to that of managers of the best businesses in the Commonwealth. If incomes are to be reduced, let us treat all alike, in proportion to the incomes they receive. A percentage reduction of Public Service salaries would be a breach of awards. I have been criticized for saying that this could be done only by act of Parliament. The suggestion has been made that I said that Parliament was impotent in the matter. I merely said that what was proposed would involve an amendment of the act, and that the Public Service should not be singled out as a class apart from the rest of the community. I have often resisted claims that public servants should enjoy special privileges not enjoyed by other members of the community; but some privileges are justified by special circumstances. My experience of the Public Service generally, during many years of parliamentary life, first as a member of the. Opposition, and latterly as head of a government, with a more intimate inside knowledge, is that there is no more efficient and loyal body of men in Australia.
– This is too political 1
– Public servants were all right when they supported the honor- able member ; probably many of them still do. I am sorry that a partisan note should be struck when we are dealing with a. big national problem. I mentioned in my budget speech the anomaly of public servants receiving an extra £180,000 a year as a “ cost of living “ allowance when the cost of living has fallen. That matter gave the Government serious concern, but .in inquiry showed that last year, when the cost of living was rising and the basic wage was increasing in sympathy with it, the public servants were not receiving an extra allowance, because the adjustment is made on the figures for the preceding year. Next year if the cost of living rises the allowance of the public servants will come down, because it will be based on the falling figures for this year. Thus the anomaly will right itself. There is still scope for economy in the Public Service, but it is limited. One of the first decisions of the present Government was that overtime should be reduced to a minimum, and that if the volume of work necessitated the employment of extra men in order to avoid overtime that should be done. Within a fortnight of taking office I sent a circular letter to every Minister conveying that instruction, and it was acted upon. It was followed by another circular three months later, asking for a report on the extent to which overtime had been reduced. It is not possible, especially for a government new to office, to change overnight the methods of departments spread throughout the Commonwealth. Only two members of the Government had had previous ad- ministrative experience, but no body of men have ever applied themselves with greater earnestness to their work than have the members of this Cabinet. They are still concentrating on their task.
Other overtime payments will be out out, but at some sacrifice of public convenience, because in order to give conveniences to the public, departments pay a good deal for overtime and Sunday work. The Government is continuing to explore all avenues leading to possible savings. So much for the first £1,000,000 that the Leader of the Opposition would save.
The next suggestion of the Leader of the Opposition is that £200,000 might be saved by a re-arrangement of the maternity allowance. The honorable gentleman has suggested that the allowance should be limited to wives whose husbands are in receipt of not more than £6 per week. Last year, the Bruce-Page Government proposed to make the limit £8 a week, and estimated a consequent saving of £60,000. A close examination made by the department showed that the economy would be only £40,000. Now the Leader of the Opposition suggests that by restricting the allowance, to persons whose earnings do not exceed £6 a week, £200,000 would be saved. The estimate of the Deputy Commissioner of Pensions is that the economy would not exceed £120,000, out of a total of £660,000. T*he suggested restriction would increase administrative costs, because each individual claim would have to be checked, and every applicant would have to make a statutory declaration that she or her husband was not receiving more than £6 a week. “When the maternity allowance was first introduced by a Labour government, the aim was to keep it free of any suspicion of pauperism. I admit frankly that we cannot escape that to some extent in connexion with the old age pensions; I wish we could. I regard a pension as the right of the aged who have borne the heat and burden of the day; but, unfortunately, because of the millions of pounds that would be involved, we have to surround the granting of these pensions with limitations. The saving that would be effected by limiting the area of the maternity allowance, however, would be infinitesimal. I have never claimed that £5 per child is an adequate recognition of the great national service of motherhood, but it is some recognition, and it is surely’ a payment that should be gladly and freely made without pauperising the recipients.
From an economic point of view is the allowance extravagant? The money is distributed through the community. Included in the sheaf of correspondence I have received this week, was a suggestion for the imposition of a tax on bachelors. The maternity allowance is a bachelor tax. At any rate, it is a tax upon all for the benefit of those women who render the greatest service to the nation, and should we subject the great majority of applicants who are in genuine need of assistance to the indignity of inquisitive investigations solely, because a few persons who do not need the money accept it.? There is nothing to prevent those who are independent from voluntarily foregoing the allowance in this time of stress. I do not suggest that they should, and the Government does not propose to lay hands on the maternity allowance.
The third proposal of the Opposition is that bounties should be reduced by £146,000. Members of the Opposition, and particularly those of the Country party, are constantly advocating increased production, and in that they have been supported by members of the Ministerial party. There are two ways of stimulating production - one by protecting industries from the blast of foreign competition; and the second by paying bounties to support infant industries until they have gained strength, and can, by the substitution of protective duties, supply the needs of the community. I do not say that in respect of all bounties, wisdom and judgment have been shown. But the only new bounty items included in the budget are £6,000 for sewing machines, and £10,000 for flax and linseed, and an increase in the wine bounty. The other bounties were brought into existence by our predecessors. The Leader of the Opposition did not propose to reduce the bounty on iron and steel; he merely said that the whole of the amount provided in the Estimates will not be required because, owing to the depression, production will be less. If the whole of the estimated amount is not required, it will not be spent. “But,” the honorable gentleman asks, “ why tax the community to provide money that will not be required?” If more were spent than is provided for in the Estimates, the deficit will be increased. The honorable gentleman’s argument is inconsistent with his earlier criticism, of the Government for taking into revenue what he terms a windfall of £1,500,000 of accumulated income arising from the liquidation of ex-enemy properties. I do not say that in normal times that amount should have been paid into revenue. .But it was credited to revenue this year in order to avoid an extra £1,500,000 of taxation, and in the hope that brighter times will come when extra taxation will not be required.
Another proposal is that £60,000 should be saved in respect of the bounty on cotton. Are members of the Opposition unanimous in that regard? Are the honorable members for Moreton (Mr. Francis), and Wide Bay (Mr. Corser) agreeable that the cotton bounty should be reduced?
– I expressed my views last night.
– I did not hear them, and I want to test the bona fides of this proposal. The cotton bounty was not first introduced by the present government, but at the request of the Queensland Government, and on. the advice of those who investigated the industry, we have re-organized and. renewed it on, we hope, a better plan. For the sake of Australia I hope that the present Government will not be as disappointed ns its predecessors were in this bounty; I hope that we shall, be able to show results for this expenditure. If this bounty does for the industry all that is expected, it will be a wonderful thing for the country. It may be that we shall be disappointed. We may have to come to Parliament in a. few years time and admit that these measures have failed, but I trust that that will not be the case.
We come now to the bounty on wine produced for export. What of the South Australian members on the opposite side of the House? Do they want this bounty reduced ?
– Yes; if all the other bounties are reduced.
Mi-. SCULLIN.- The policy of the Government is to assist deserving industries, irrespective of the States in which they may be located. We are looking at the matter from a national point of view.
– How can the Prime Minister say that when he names individual members as representatives of divisions that are specially interested.
– I am stating the policy of the Government. If the honorable member has not been satisfied with it, he need not be afraid to express his views.
– I expressed my views last night.
– It has been pointed out by honorable members opposite tha) the bounty on wine was first fixed alls. 6d., and then raised to ls. 9d., and it has been claimed that the increase of 3d. need not have been made. The facts are that the industry represented that a bounty of at least ls. 9d. was necessary. I received four deputations, representative of both sides of the House and of the industry, and in every case a bounty of ls. 9d. was asked for. We went into the question of excise on fortifying spirit, and, having fixed the rate at 5s. a gallon, we did not feel inclined, to make it any higher. As a result of our first calculation we caine to the conclusion that ls. 6d. a gallon bounty on export wine was all we could pay; but, after going into the matter further, it was felt that we would be justified in paying ls. 9d. a gallon in order to stimulate the industry. It was decided to devote the whole of the proceeds of the excise, duty to the payment of the bounty.
– Did the Government have to press the extra bounty on the industry ?
– No; we did not. Other bounties have been granted on the manufacture of sowing machine heads, and on the production of flax and linseed. I have already referred to them. I hope that the granting of these bounties will mark the beginning of an era of prosperity for those industries. We do not propose to reduce those bounties.
The Leader of the Opposition (Mr. Latham) proposed that the road grant* to the States should be reduced by £1,500,000. I recall the bold policy of the last Government in 1925, when it proposed to spend £20,000,000 on roads, and £20,000,000 on housing. What has become of that policy?
– The position is not the same to-day. in. SCULLIN. - That is a pertinent interjection. What has become of the desire of honorable members opposite to help the States in these great national works s The answer is that the position is not the same to-day. I never approved of the Commonwealth undertaking the work of road construction, nor do I approve of it now.
– Well, get out.
– We cannot get out, because honorable members opposite, when they were in power, dug us in too deeply.
– The Prime Minister seems incapable of considering anything which might effect economies. All his proposals involve increased expenditure.
– I can make my speech better than the honorable member can make it for me. The plain facts / in regard to the road grant are these: An agreement was entered into by which the Commonwealth undertook to grant to the States £2,000,000 a year for ten years for road construction - a total of £20,000,000. Every State eventually became a party to the agreement. The Commonwealth Parliament ratified it. as also did the Parliaments of each of the States. One of the first things I discussed with the State Premiers after I became Prime Minister was the subject of this grant. Not one State was willing that the agreement should be cancelled.
– Are the States prepared to find 15s. for each £1 made available by the Commonwealth?
– All the States but one can find the 15s. by a. re-adjustment of their own roads taxation.
– For capital expenditure ?
– Yes, and I propose to show how it is to be done. The States are not willing to forgo this road grant of £2,000,000 a year. The States of Western Australia, South Australia and Queensland, which are getting a larger proportion of the grant than they contribute - it is distributed on a population and area basis - have the best of the bargain, and they do not wish to lose it. [lor]
– Parliament intended that they should have the best of the bargain.
– Yes; it was done deliberately. Those States cannot afford to forgo this grant. But when we discussed the matter with the States they pointed out that the conditions of the agreement were very severe on them in that they were required to find 15s. for every £1 expended, or £1,500,000 for every £2,000.000 for expenditure on new construction work, and, in addition, bear the whole burden of maintaining the roads from their own revenue. J. ney maintained th:.l. it was loo much to expect them in these difficult times to spend so much money on new construction, and still have to bear the responsibility of maintaining both the new and the old roads. They asked to be relieved of this obligation, and to be allowed to spend some of the grant on maintenance. We considered their proposition, and realized that it was madness to force the States into the position of either refusing the grant of £2,000,000 or of spending £1,500,000 each year on new construction at a time like this, leaving them saddled with the burden of maintaining the roads in future years.
– In other words, the States did not want to go on with the present agreement.
– No, but they were not prepared to give up the £2,000,000. In this connexion, the Leader of the Opposition suggested a course of action, but on that suggestion I join issue with him. He said that, as times were bad with a number of the States as well as with the Commonwealth, now was a favorable time to force the States to abandon the agreement which we entered into with them. Is that co-operation between the Commonwealth and the States? Can we do a thing like that, and then expect the States to co-operate with us? If we did that to Tasmania, she would succumb financially. Perhaps her representatives will deny my statement, but from the information I have been able to obtain I am convinced of its truth. What is the position in South Australia, the State which is probably the worst off financially to-day? Could that State possibly afford to forgo the grant of £228,000 it receives from the Commonwealth ? South Australia has approximately £700,000 a year for expenditure on roads. She receives £228,000 from the Commonwealth, and gets a little over £500,000 from her own motor taxation which, under the terms of the Highways Act, must be utilized for road construction or maintenance. The South Australian Government is bringing down a bill for the amendment of the Highways Act to enable £300,000 of motor taxation to be put into general revenue in the interests of the taxpayers. The people of South Australia are the most heavily taxed in the Commonwealth. I have examined the position in all the States, and no other compares with South Australia for the severity of its taxation. The representatives of South Australia have pointed out that when they take £300,000 from the proceeds of their motor taxation, it leaves them with about £170,000 to be expended on new roads. That enables them to claim the Commonwealth grant of £228,000 by making their own contribution of 15s. for each £1. All the money would have to be spent on new roads, although, at a time like this, such expenditure would be unscientific and unsound. They dare not refuse the grant, because of the thousands of unemployed in the State. What should be the policy of the Commonwealth Government, knowing as it does that it is bound by this agreement, and knowing that there never was a time less suitable for bringing pressure to bear upon the States to evade our obligation? Is it not proper for the Commonwealth Government to say to the States, “ We shall make this money available to you on conditions that will lighten as much as possible the burdens on your people?” It is proposed to make this grant to the States in such a way as to alleviate the burdens of taxation. South Australia will be able to devote part of the proceeds of her motor taxation to general expenditure, and use the. Commonwealth grant for the maintenance of roads. It would be sheer lunacy for South Australia or any other State, after spending millions of pounds during the last four years in the construction of new roads, to neglect their maintenance now.
In the circumstances, it is only right, 1 maintain, that the Commonwealth should continue to make available to the States the grant of £2,000,000 a year without requiring them to contribute 15s. for each £1 granted.
– That is an entirely new agreement. The Government is, in effect, tearing up the old agreement, and substituting a new one for it.
– It will be a new agreement. It can only be done by the common consent of the Commonwealth and the States.
– For how long will it operate ?
– For the remainder of the term of the agreement.
– That depends on Parliament.
– It depends on seven Parliaments.
– It is not merely the decision of this Government?
– It is not the decision of any government; it is the result of negotiations. Where is the sense of trying to save money by taking it out of the pockets of the State taxpayers to put it into the pockets of the Commonwealth taxpayers - the same people, the same set of taxpayers?
We come now to the grant of £1,000,000 for unemployment relief. One of the difficulties with which the States are confronted to-day is that, while they have very important public works to carry out,- the amount of loan money available for expenditure has, owing to the exigencies of the moment, been reduced. The sum of £1,000,000 which we granted before, and the further sum of £1,000,000 which we propose to grant now, will undoubtedly take the place of what would have been State loan expenpenditure. To that extent we are entitled to set off against any expenditure from revenue, the reductions made in loan expenditure. The States cannot borrow more. They can hardly raise sufficient to carry out the reduced programmes which have been placed before them. It has been suggested in this House, and outside, that it would be very much better not to raise this sum of £1,000,000 by taxation; that it should be left in the possession of the taxpayers so that it might, in the ordinary course of business, provide employment for the people. More good, it is claimed, could be done with it in that way than by making it available for expenditure by State Governments. There is something in that argument; but are we to sit with folded arms, and wait for some one to make a move in this awful crisis of unemployment? If the argument is really sound, why are the State Governments taxing the people for the relief of unemployment? I agree with the Leader of the Opposition that it is not primarily a Commonwealth obligation to relieve unemployment, and it is not one that we should ordinarily undertake. But these are not ordinary times, and we should realize that, of all times, this is one in which we should come to the assistance of the States, and play our part in the relief of the general distress. My only regret is that we could not make the grant larger.
Mention has been made of the assistance that the Government is giving to the coal-mining industry. An amount of £100,000 is being made available to provide new openings for surplus workers in an industry which has reached a serious crisis. We are endeavouring to plan a scheme under which that money will not be frittered away, but will be used for works on which excess miners will be given employment. Later, I hope to explain the details of that scheme. Then a further £50,000 is being given to assist in reducing the price of coal for export. The previous Government offered to assist not only export overseas, but also interstate trade. We are not doing that. We hope to expend that £150,000 wisely and well. We shall watch the expenditure closely, and we consider that the scheme is well justified and merited.
I shall now summarize the items the curtailment of which, the Leader of the Opposition suggests, would lead to a saving of £4,000,000. The honorable member would withdraw payments to the States amounting to £2.500,000. Would that be a saving? Would it not be tantamount to taking money from mother’s pocket and putting it into father’s pocket - taking it from the righthand pocket and putting it into the left-hand pocket? We should be big enough to visualize Australia as one people. Surely the Commonwealth and the States are one. There is not the slightest doubt that if we withdrew £2,500,000 from the States, the State Treasurers would have to increase taxation by that amount, and some of the States are not in a position to increase taxation at all. The next suggestion is to save £1,000,000 in wages, salaries and allowance to members of Parliament and the Public Service, and to that I have already referred. Then it is suggested that a saving of £300,000 could be made in respect of assistance given to industry. If ever there was a time when industry should be assisted, it is now. The next suggestion is to save £200,000 in respect of the maternity bonus. I regret to have to say it, but there is nothing practical in one of those suggestions. I should have been glad to have the assistance of the Leader of the Opposition.
– He made his suggestions in all sincerity.
– I do not doubt that. I am not questioning his honesty of purpose, and I have no quarrel with the way in which his suggestions were offered’. I contrast it with the tone of many other critics. I regret that no practical suggestion has . been made. One press comment was to the effect that the Leader of the Opposition had pointed out an easy way to save £4,000,000. It is not economy to take money from the States in order to reduce the expenditure of the Commonwealth. It is not economy to take money from industry that is badly in need of it. It is not a saving in taxation to impose a greater’ burden on one section of the community in order to relieve another.
Having dealt with the suggestion of the Leader of the Opposition, I come now to pensions. Extensive propaganda is being circulated against the payment of old-age and invalid pensions and war pensions. That propaganda I wish to repudiate. . It is suggested that these pensions should be reviewed. Let me say that they are, and should be, reviewed stringently every year. Unfortunately a small percentage of the people will always take advantage of a benevolent government, but there is no more efficient administration in Australia than that of the Pensions Department. It is suggested that pensions are received by aged persons whose families are well able to support them. That is not their fault. Should they be penalized because they happen to have children who have no filial affection? Surely they should be entitled to the full pension? But I pay this tribute to thousands of the sons and daughters of the old people of Australia. During the last eighteen months scores of aged persons, between 70 and 75 years of ago, have applied for pensions. They have refrained from applying for ten or fifteen years, but have now been compelled to do so because of their children being out of employment. Are we to penalize the whole of the pensioners because of one or two undeserving cases? Why, a few years ago it was a common taunt that the old people drank their pensions. That was said merely because perhaps one pensioner in 500 had been charged with drunkenness. I say to honorable members “hands off” the old-age and invalid pensions. I come now to war pensions.
– Why put up these bogies for the sake of knocking them down? No one suggested that the old-age pension should be- interfered with.
– That is the most unworthy insinuation that has been made against me during this debate.
– The Prime Minister is insinuating that honorable members on this side are in favour of reducing pensions.
– I am doing the opposite. I distinctly stated that I had dealt with the suggestions put forward by the Leader of the Opposition. I am speaking now of the propaganda that is going on outside of this chamber.
– The Prime Minister did not mention the word “outside.”
– I accept the explanation of the Prime Minister. He has now made the position quite clear.
– The Leader of the Opposition clearly stated that he was not suggesting a reduction in the old-age and invalid pensions.
– I am satisfied with that explanation.
– I am entitled to answer the propaganda to which I have referred. It is not mere imagination. It has appeared in the leading columns of newspapers. Quite a number of leading articles have been devoted to it. During the last fortnight I have received a sheaf of letters, suggesting that pensions should be abolished or reduced. The propaganda in regard to war pensions is more insidious than that relating. to oldage and invalid pensions. During the last three or four months I have received many such letters, and I have no doubt that previous Prime Ministers and Treasurers had the same experience. The suggestion to reduce pensions is sometimes veiled, but still it is there. Many writers have suggested that there should be a stringent review of war pensions. They claim that there are men in sheltered positions who are receiving fixed and permanent salaries, and, at the same time, drawing war pensions. Widespread propaganda against war pensions has been circulated. I hope that I shall not be accused again of electioneering. As head of the Government I am entitled to tell the people of Australia, who are being subjected to this propaganda, that it has had no effect on us. Not one man in this chamber or outside of it, not one writer for the press, would change places with these injured men just to get the benefit of their pension. Yet it is suggested that we should, to some extent, balance the budget by reducing war pensions.
With regard to taxation, there must be a general agreement among honorable members that the budget should be balanced and that, therefore, further increases in taxation are unavoidable. We are endeavouring to distribute the new taxation equitably. Much misunderstanding exists about this new taxation. It is said that the Government is collecting £11,550,000 in additional taxation in one year. The fact is that the total yield of new taxation is estimated at £11,550,000, and that replaces a diminished yield from other sources of taxation amounting to £10,068,000, the difference being £1,482,000. That increase of taxation is necessary to meet inescapable expenditure. We are not imposing this taxation lightly. No government does that. No doctor delights in inflicting pain on Ids patient, but it has to be done. We have to join in the sufferings of the people. The Leader of the Opposition (Mr. Latham) made a number of suggestions in respect of reduction in loan expenditure. He mentioned the post office, war service homes, the Federal Capital Territory, the river Murray waters scheme, and the proposed new lighthouse steamer.
– Does the Prime Minister favour the retention of 1,720 men in the Telegraph Department even after their work had ceased?
– Let me inform the honorable member that their work has not ceased. The difficulty is that money was not available to continue the work, and in the meantime we are providing money to keep these men occupied. It is remarkable how honorable members on that side complain of the Postmaster-General iri respect of the dismissal of returned soldiers. As a matter of fact, 90 per cent, of these 1,720 men are returned soldiers. They are being kept in the department. Unfortunately, batches of men here and there have had to be dismissed because of the lack of work. The majority of them are returned soldiers, because the temporary work in the department is carried out mostly by returned soldiers. We have kept these men going as long as possible, and we shall continue to do so as long as money is available for the construction of useful works. I admit that, because of our inability to raise loan moneys, there will bo further cuts, particularly in the States. One of the horrors with which we ure confronted is the growing unemployment. Honorable members opposite have tried, by quoting figures, to prove that this Government has contributed to unemployment, but the fact is that we have protected Australian industries in an endeavour to reduce unemployment.
I shall now examine in detail some of the items of loan expenditure which, it has been stated, should be reduced. Take the post office. The expenditure from loan money was in 1928-29 £3,004,000: in 1929-30, £2,770,000; and this year, £2,500,000.
That is a substantial reduction, although in some respects I regret the reduction of expenditure in the postal service. Take war service homes. The expenditure in 1928-29 was £1,670,000; in 1929-30. £1,000,000; and this year £500,000. By how much could we further reduce that expenditure? Over £300,000 of the expenditure of £500;0()0 this year represents contracts that have been carried forward. The construction pf war service homes has been severely curtailed, so there is little opportunity to make further reductions in that expenditure. In connexion with the Federal Capital Territory, the expenditure from loan was in 1928-29, £489,000; in 1929-30, £315,000; and this year, £210,000.
– What about, putting Canberra up for auction?
– I should like to put the honorable member up for auction; but, at the same time, I should not be prepared to sell him at a sacrifice. The expenditure of £210,000 this year in the Federal Capital Territory is chiefly in respect of commitments. The Leader of the Opposition was very fair in his reference to that. The proposed expenditure of £120,000 on a lighthouse steamer has already been fully discussed in this chamber. The Government is satisfied that it is a necessary work, in order to provide protection and safety along a portion of the Australian coast. The expenditure on other loan works was in 1928-29, £3,068,000; in 1929-30. £1,206,000; :md thi3 year, £797,000.
– Surely that is on account of the completion of railway contracts !
– There are a number of factors contributing to that reduction of expenditure, and I have explained them in detail in the Estimates. Surely it must be admitted that the reductions in expenditure have been drastic! I do not claim all the credit for that, because economy has been forced upon us; but, at the same time, expenditure that was formerly derived from loan is now a revenue charge. For instance, assisted passages to the extent of £20,000, which were previously met out of loan, are now to be met out of revenue; but we hope that the total amount will not bc expended. In 192S-29 over £100,000 was spent from loans on assisted passages. That has been cut out entirely. The total loan expenditure in 3928-29 was £8,231,000; in 1929-30, £5,291,000: and this year, £4,127,000 - just about half of what it was in 1928-29. I regret that it has been necessary for me to give those figures in detail; but I had no other course open to me, in view of the criticism of the Government’s financial policy.
The sweeping charge has been made by honorable members opposite that we have increased expenditure by £4,000,000, when they know full well that that additional expenditure is inescapable. The worst misrepresentation of all is that we have made no attempt to reduce expenditure, but on the other hand are piling up taxation. We were told that the estimates of departmental expenditure had been cut to the hone; yet, after a series of deficits, this Government in the brief period of eight months has been able to effect in the various departments economies totalling £1,000,000.
– The right honorable gentleman confesses that the Government is powerless to stop the rot
– I do not.
– That is the burden of the right honorable gentleman’s speech.
– It is not. The honorable gentleman does not display that understanding for which I have given him credit. I have said again and again that we have “stopped the rot” to the extent of £1,000,000 per annum, and that we hope to do more.
The big issue has not been stressed in this debate. I do not think that the Leader of the Opposition referred to it. For too long it has been ignored. It is, How shall Australia be saved from financial disaster?
– That was the object of the amendment.
– It would take more than the transfer of an expenditure of £2,500,000 from the Commonwealth to the States to save Australia from financial disaster. The drift has been going on for years and, to use the classical term employed by an honorable gentleman opposite, a rot had set in. This nation was not meeting its obligations; it was depending upon capital borrowed from other countries to meet its commitments from day to day. It was piling up the I.O.U.’s. That is what this Government had to face when it came into office. I do not make that statement in any party spirit. The Governments of Australia and the people alike got into a happy mood, and were merrily spending borrowed money.
In this connexion I want to do what I rarely do, but I am impelled to do it now because of the calumny that has been heaped upon me as the mouthpiece of this Government and its Treasurer for the time being. I have been caricatured all over this country as the apostle of extravagance and waste. I do not think that there is in Australia a man with more simple tastes, or with less desire for extravagance. In a few words I wish to show the part I have played in pointing to what was happening and the ruin that was threatening Australia. I predicted what would happen, not believing that it would fall to our lot to save Australia from it. Therefore, I hope that I may be pardoned if I make a short personal reference. I wish to emphasize the frame of mind in which I approached this matter as a member of the Opposition. I shall not delve into very ancient history, but shall begin with the year 1926, when the drift and the rot were becoming apparent Speaking in that year on the budget for 1926-27, I stressed the importance of curtailing our huge borrowing overseas, with its consequent excessive imports. I give my exact words -
From 1022 to 1926 we borrowed approximately £50,000,000 abroad, and the increase in our imports in the same period was approximately £55,000,000. . . . Those figures spell, not prosperity, but the very opposite. The state of affairs brought about by our huge importations is regrettable. Many of our factories have either closed or are working only half time. While we are paying toll to the foreigners by importing their goods, we are paying doles to our own unemployed. . . . While we were importing goods we were also bringing migrants here. In my opinion, that is an insane procedure.
In the following year I spoke upon the budget for 1927-1928. I again dealt with the adverse trade balance, and warned the Government of the consequences of it. I drew an analogy between what was happening then, and what had happen d in the years that preceded the crash of the nineties. I had gone to considerable trouble to inform my mind upon the matter, and I was indebted to a gentleman in “Western Australia who wrote a wonderful little pamphlet in relation to it.
– I believe that it was. I pointed out that from 1876 to 1891 imports had exceeded exports in the ratio of about 100 to 80. I showed that in those years large sums were borrowed abroad and that our imports were booming; and I drew the conclusion that therein lay’ the reason for the smash that occurred in 1893, when all was ruin and desolation in Australia. I went on to show that, from then up to 1922, we recovered our position ; our exports exceeded our imports, as they had to do Lf we were to remain on an even keel. I further pointed out that, from 1922 onwards, with one slight exception, our imports had exceeded our exports; the trend was continually downward, and there was an absolute parallel in that period with the position that existed in the ten years which preceded the smash of the nineties. I wish to quote from the speech that I made in 1927 to show that, as a member of the Opposition, I did not deal with the matter in a party spirit. I then said -
We should do well to confer round the table, forgetful of party distinctions, in order t.0 find a way out of our difficulties. . I have no desire to say a word that will weaken t[he credit of Australia. . . I believe that Australia has more than sufficient assets to offset every penny that she owes. But that is no reason why we should not call a halt before we go so far that we cannot truthfully make such a statement. . . Imports have been flooding this country for some years, with the result that many of our industries hare been strangled and many of our people have lost their means of livelihood.
That was the warning that I uttered in 1927, repeating the warning of 1926; but no notice was taken of it, and the drift continued. The only reply that I received from the Prime Minister of the day was that adverse trade balances did no harm, and that Great Britain had gone on for years with an adverse trade balance. The retort I made was that Great Britain, being a creditor nation, could afford that her imports should exceed her exports, but , that Australia, being a debtor nation, could not do so; she must export more than she imported if she were to remain solvent. For years we were on the road to bankruptcy.
In 1928 I returned to the attack, in my speech on the budget for 1928-29. I repeated the warnings that I had uttered in the two earlier years, and drew attention to the danger that was confronting Australia; but it was of no avail.
– In 1928-29 there was a favorable trade balance.
– It was very slight. The drift generally was in the wrong direction. The one boast of the right honorable member for Cowper was that his Government had reduced the war debt, and increased the works debt. The truth is that, whilst the debt owing in Australia was reduced by a few million pounds, the debt overseas was increased by many millions. That was where our trouble lay, and that is where it lies today. The point I make is that, in those years when we had good seasons and plenty of money was available, when the taxation burden was relieved to the extent of £1,800,000, Australia borrowed more than she had borrowed in other years. This, in effect, is what I said> - and it is apposite now -
The time will come when we will get the lean years, when the value of our exportable surplus will be down, when there will be unemployment to a greater extent, probably, than that which exists to-day. Then we shall have to pay the interest on money that is borrowed at a time when we are remitting the taxation that is imposed upon people who are well offThen we shall be forced to increase taxation in a period of depression. We ought to be borrowing money during a period of depression, and paying off our debt when we are in the midst of plenty.
That is the warning that I issued. What I then predicted has come to pass. I have no wish to set myself up as another Daniel come to judgment; but I am entitled to point to these warnings that are on record. The saving of £50,000 or £100,000, aye, even of millions, is a small matter compared with the establishment of the nation’s honour in the eyes of the world. Years ago, warnings were issued in London. Leading firms of stockbrokers sent out circulars, in which they said that we were paying our interest with borrowed money. Gradually, our reputation was becoming tarnished. It has been suggested that our credit went when the Labour party came into power. The colour of the politics of a country does not matter a scrap; what the investor looks at is the security, and the facts of the situation. This Government has taken drastic action; it had to do so. That action, to a large extent, will stop the flow of imports. Let me be quite frank. I do not claim that the reduction of imports has been due entirely to the action that we have taken ; they would have been reduced to some extent by reason of the fact that our exports had decreased, and we could not borrow abroad to keep imports at an artificial level. But we should still have been receiving goods that can be made in Australia, or that we do not really need. We have dealt with the matter as scientifically as it is possible to deal with it. We hope to approach nearer to perfection as we go on.
Very early in the life of this Government, we made overtures to both the Commonwealth Bank and the private banks. We pointed out to them that they, too, had an obligation to do what they could to rectify our position, to stave off disaster, and to save the honour of this country.
– They sent out warning after warning.
– So did I. Every financial writer issued warnings. The organization known as the Australian Industries Preservation League sent out circulars pleading with the Government, but every one of them was unheeded. The remedies that we are applying are the very remedies that make additional taxation necessary. We have curtailed imports; we have arrested the false prosperity in which we were living. It was the borrowing of millions of pounds that caused millions of pounds worth of goods to be sent to this country. Those importations enabled the previous Government to collect millions of pounds in customs revenue, and thereby to declare surpluses and to reduce taxation. We were living upon the return from borrowed money. This Government has checked that process. It had to do so, because the prices of our commodities had dropped and our income had shrunk. It is abundantly true that we are increasing taxation at a time when the people can least afford to pay it ; but that is not our fault. We are facing the position as we find it ; we are administering to the people medicine that is unpalatable.
– Only to certain sections.
– To all sections. There has never been a budget, the taxation imposed under which has been mort’ widespread. The honorable gentleman is too intelligent not to know that. It is suggested in some quarters that the people are only waiting to express their opinion at the ballot-box. I am prepared to go out at any time and meet the people on this issue. If they want to call in another doctor to administer sweeter medicine, I shall heave a sigh of relief, and say - “ Carry on.” But while the job is ours, we shall face it unswervingly.
I hope that after the meeting of the Loan Council on the 5th August I shall be able to give honorable members a little more information in regard to the whole position. We are co-operating with th<; Commonwealth Bank and the private banking companies with the object of mobilizing our exchange. Australia is. for the first time, getting right down to fundamentals with the object of meeting her interest charges in London from the revenue and production of this country. Anything that is left over can go for imports - no more, and, probably, no less, because it will be found to be little enough. To-day we must get the first call from the hanks which handle our money abroad. It is proposed that the banks shall be asked to make available in London each month a sum equivalent to our interest charges in London and America, and that, on the same day the Commonwealth and the States shall deposit with the banks a cash equivalent of that sum. It is a hard road that we shall have to travel upon, and I do not know how some of the States will get on. We shall certainly all be right up to the collar. But, as Chairman of the Loan Council, I intend to recommend the council to adopt this course, and, subject to its approval, it will be adopted. It is a bitter pill that we have to swallow; but I am sorry that the people who can most easily swallow it are the people who are squealing most. The task which faces us is huge, and the responsibilities of it, heavy. I repeat nhat I will welcome any suggestions that may help us in this serious crisis.
I have received a telegram from the Lord Mayor of Melbourne, conveying to me a resolution which was passed at a public meeting held in that city. The speeches at that meeting were not helpful. The meeting formed a committee of business men and experts to meet me to discuss the whole subject. 1 shall certainly meet the committee and listen to all it has to say. If I consider that the advice it offers to me is sound, I shall accept it; but if I think that it is unsound, I shall reject it.
At this critical period neither I nor the Government is looking for the plaudits of the press, nor are we expecting any cheers from the taxpayers. We are asking the taxpayers to take a dose of bitter medicine, and they will have to take it. There was a time when I thought that if ever it should be my lot to hold a ministerial office - never aspiring to the high and honorable office of Prime Minister of this country - I should take great personal pride in the position ; but to-day there is no time for such feeling. I am not looking for cheers, nor are my colleagues doing so. But we hope that when the day comes for us to hand over the responsibilities of government to others, or when they will be taken from us, we shall be able to look back on this difficult period of ‘ Australian history and say that we guided the ship of State off the rocks and into the harbour of safety.
– I have listened with the keenest interest to the speech delivered by the Prime Minister (Mr. Scullin) this morning. The right honorable gentleman has reminded us again that the country is passing through a most serious financial crisis. It was unnecessary for the right honorable gentleman to assure us that he regarded the nation’s obligations as he regarded his own, and the nation’s honour as his own, for his honesty of purpose has never been, nor could ever be, questioned. On the 12th March last when the right honorable gentleman submitted to this House a statement of the policy of his ministry, he said - lt is desirable to dwell for a moment on the difficult financial and economic position confronting the Commonwealth at the present time. Fundamentally we are suffering from the effects of world-wide depression accentuated by over borrowing.
He concluded his statement with these remarks -
Tlie difficulties confronting Australia are serious, and a proper realization of them should result in whole-hearted co-operation of all sections in the working out of the satisfactory solution. Indeed at the present juncture the Parliament might fittingly become an economic conference of representatives of the’ people meeting to discuss the general position.
In the budget speech which the right hon.orable gentleman delivered on the 9th July, he said -
The Govern mont is faced with a financial depression without parallel in the 30 years’ ‘ life of the Commonwealth.
He referred to the causes of this depression, and in concluding his speech, said -
I have now placed before the committee a full and frank statement of our finances - withholding nothing and exaggerating nothing.
Seeing that the right honorable gentleman has repeated this morning his statement that the Government is keen to hear any helpful criticism or suggest:ons, we are entitled to accept his assurances.
We all realize that a tremendously difficult task, and a very heavy responsibility, faces the Government. With all due respect to what the right honorable gentleman said this morning I submit that the amendment of the Leader of the Opposition (Mr. Latham) was designed solely to assist the Government to solve the problems which face it, and to avoid the creation of greater difficulties which might bring the country to financial disaster and ruin. We must all surely realize that if we maintain public expenditure at the present figure, the unavoidable added burdens of taxation which must be placed upon the people will inevitably cause an- increase in the cost of living, and an increase in unemployment. Although the Prime Minister has, himself, told us that’ the national income has been reduced by between £50,000,000 and £70,000,000 in the last year, we have been led to understand from his speech this morning that there is still much money available for expenditure. The Prime Minister in objecting to certain criticisms of his budget, has pointed out that, although expenditure has increased the increases were unavoidable. In this- connexion he referred to the increases in interest and sinking fund charges, and in the cost of old-age, invalid and war pensions. I have listened very carefully to this, debate, and I say without any hesitation whatever, and the right honorable gentleman himself freely admitted this morning, that there has been no suggestion from honorable members on this side that oldage, invalid pensions, or war pensions should be reduced; but surely the right honorable gentleman is not aware that the statement has been made by certain honorable members opposite that the Leader of the Opposition definitely advocated that war pensions, if not old-age and invalid pensions, should be reduced. In these circumstances, I think I am entitled to quote the official report in that connexion. The Leader of the Opposition said in his speech on the budget- -
There is often much entirely irresponsible criticism of government finance. I said that when I was a member of the last Government; T say it now as Leader of the Opposition. There are inescapable commitments, some of which have unavoidably increased. The most obvious of these ore certain interest and sinking fund payments. It may be observed, in passing, that one set of 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 and a few other persons, are entirely beyond the reach of Parliament itself.
I also make the following quotation from the later remarks of the Leader of the Opposition on the same subject: -
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 speech. 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 1028-29. I realize’ that appeal tribunals have increased expenditure to a certain extent in the Bepatriation Department; but I suggest that the administrative costs of the department should be scrutinized very carefully. These figures represent, in part, increased living allowance, as intimated by the Treasurer in his budget speech; but surely the number of difficult problems being dealt with by the Bepatriation 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.
Seeing that the honorable member for Bendigo (Mr. Keane) said definitely in the course of his speech last night that the Leader of the Opposition had suggested a reduction in war pensions - I do not suggest that the honorable member desired deliberately to mislead the committee - it is only fair that the attitude of the Opposition on this subject should be clearly stated. There has been no suggestion whatever by the Opposition that pensions should be reduced, although a certain amount of propaganda has been indulged in to give credence to such a statement. I have myself received representations from my own electorate protesting against any such proposal. I desire to make it quite clear that the Leader of the Opposition, and honorable members on this side of the committee, including myself, would not for a moment consider any proposal to reduce pensions, which are already small enough. The members of the Australian Imperial Force were prepared to give their services, if necessary their lives, in defence of their country. The people of Australia in overwhelming majority desire that those who suffered disabilities due to their services should he generously assisted to re-establish themselves in civilian life. I am confident that, although Australia has acted more generously towards her ex-soldiers than possibly any other country, she has not the slightest desire to reduce the existing pensions. Any move with that object would be made in opposition to the wishes of the great majority of the people. I sincerely trust that in all the circumstances no honorable member will, in the course of this debate, or at any other time, repeat the erroneous statement that the Leader of the Opposition desired to reduce pensions. I am certain that the financial position of Australia would have to be very much more critical than it is to-day before the people would consider for a moment the reduction of either war pensions or pensions that are being paid to the old people of this country, who were the pioneers and who struggled during the early days under conditions very different from those that prevail to-day.
The Treasurer said that the estimated expenditure on war pensions and repatriation was £7,957,000 for 1930-31, as compared with £7,897,289 in 1929-30. He added, “ It will thus be seen that the peak period of war pensions has not yet been reached “. Sir Neville Howse, when Minister for Repatriation and Health, who undoubtedly had a better conception of repatriation matters than most of us, because, during the war years, he was in control of the medical services of the Australian Imperial Force, stated that he considered that the peak year would be reached in 1931, and I hope that his prophecy is fulfilled. But, though I bow to his superior knowledge, I doubt that the peak will be reached next year. The expenditure on repatriation has been increased by the appointment of the appeal tribunals, to which this Parliament unanimously agreed, in order that ex-members of the Australian Imperial Force, whose applications for pensions or appeals against the assessment of their pensions had not been granted, might have some independent authority to which they could appeal. By the courtesy of the Minister I have secured the figures to the 30th June last, when the first year’s operation of the tribunals was completed. They are certainly illuminating. During the twelve months the Entitlement Tribunal received 2,487 appeals, of which 526 were allowed, 933 were disallowed, 67 were deferred, 24 were referred to the Repatriation Commission and allowed by it, 913 were pending, and 24 were withdrawn or lapsed. The fact that over 500 of the appeals were allowed means that a large number of additional pensions will have to be paid. The appeals submitted to the Assessment Tribunal numbered 2,915, of which 964 were allowed. Thus, it will be seen that the operation of these tribunals must, for the time being, increase the expenditure of the Repatriation Department.
– “What amount is involved in the 526 appeals that were allowed.
-I have not been able to ascertain the exact additional expenditure involved; but when the report of the Entitlement Tribunal, which, under the act, must be submitted to Parliament, is furnished, it will no doubt supply the figures for which the honorable member asks. I hope that the Minister will see that this report is furnished as soon as possible.
The general expenditure on repatriation has increased from £1,044,000 in 1929 to £1,125,000 in the current year. I say, again, that I emphatically contradict any suggestion that honorable members on this side “would for a moment support a reduction in the pensions payable to exmembers of the Australian Im:aria: Force, or to invalid and old-age pensioners. Whatever propaganda may he indulged in outside this Parliament, it should be made quite clear that members of this National Parliament, irrespective of their party views, have no sympathy with such a proposal.
The people of Australia welcome the Prime Minister’s assurance that the Government is determined to balance the budget, and take all necessary steps to ensure the honouring of our obligations both at home and abroad. The present financial position of the States and the Commonwealth places on every Parliament an inescapable obligation to balance the budget, if it can possibly be done, and it is incumbent upon every citizen to keep his expenditure within his income. Never in the history of the Commonwealth has there been a more urgent and definite demand that we, as a people, should face our difficulties with courage and determination, and with a willingness to make personal sacrifice. Australia has always been regarded by other nations as a country that honours its obligations, both at home and abroad, and the people will be wholehearted in their support of this or any other Government in its determination not to become a defaulting nation.
The budget, unfortunately, discloses a gap of oyer £14,000,000 between the estimated expenditure and the estimated revenue for the current year, on the existing rates of income, expenditure and taxation. In order to bridge the gap, the Government proposes to increase taxation to the extent of £12,500,000, and use the accumulated income from the sale of ex-enemy properties amounting to one and a half millions. I remind the Prime Minister again that the Leader of the Opposition, in moving his amendment, appreciated the fact that these are not ordinary times. Therefore, members of the Opposition feel that the maintenance of the present rate of expenditure must impose a burden of taxation upon the people which, in a time of reduced income, will undoubtedly increase costs, and cause further unemployment. The Prime Minister has made reference to the various reductions in expenditure that his Government has brought about. He maintains that in eight months of office it has reduced expenditure by £1,089,000. The main reduction is associated with the Defence Department. The right honorable gentleman drew attention to this reduction in the budget speech, and said that he did not consider that any further reduction in that direction could be made without seriously affecting the efficiency of the Defence Force. He said -
Drastic cuts have been made in the Defence Department. A reduction of £150,000 was made in the appropriation for the year just closed, and a further reduction of £500,000 is being made in this year. It will be impossible to make further reductions without resorting to drastic retrenchment of the personnel, and seriously impairing the whole defence organization.
I was glad indeed to hear the Prime Minister make such a definite statement regarding our national defence obligations. I shall briefly quote from the last report, which was laid on the table yester day, of the late Inspector-General of the Australian Military Forces, Sir Harry Chauvel -
In spite of much talk of disarmament and many peace gestures, the most powerful nations of commerce, with the exception of Great Britain, are increasing their expenditure on armaments, and, so far as they are concerned, the result of successive disarmament and anti-waragreements has been an immense increase in armaments. Since the Washington Conference in 1922, the total annual expenditure of the United States on her Army, Navy, and Air Force, has increased from £115,000.000 to approximately £157,000,000. The Appropriation Bill now before the United States Senate for the year 1931 shows a further increase of £6,000,000 on army activities, not included in the enormous figures already given. France, in the same period, has increased her army expenditure, including Air Force, from £33,000,000 to £58,000,000, while the army expenditure of Italy has been increased from £18,000,000 in 1923, to £29,000,000 in 1929. Similarly all the large powers, such as Germany, Russia, and Japan, show in their annual budgets an ever-increasing expenditure for armament.
The attitude of the United States on the question is clearly stated in the Armistice Day speech of President Coolidge. President. Coolidge said on Armistice Day, 1928: “All human experience seems to demonstrate thata country which makes reasonable preparation for defence is less likely to be subject toa hostile attack, and less likely to suffer a violation of its rights which might lead to war. To be ready for defence is not to be guilty of aggression. We can have military preparation without assuming a military spirit. It is our duty to ourselves and to the cause of civilization, to the preservation of domestic tranquility, and to our orderly and lawful relations with foreign peoples to maintain an adequate Army and Navy. The position of France is that disarmament must be accompanied by guaranteed security. Otherwise, she provides for her own security by armament.”
It appears, therefore, that the nations still find themselves compelled to depend on their own strength for security, since security by agreement is obviously unattainable at the moment, and that gratuitous gestures in favour of disarmament are limited to the British Empire alone.
Under all these circumstances I consider that a revision of Australian defence policy is urgent; but, as this cannot logically be considered apart from a general imperialdefence policy, it would appear that a general revision is necessary. At the moment, so far as the dominions are concerned, they are only definitely responsible for their own local defence, though they are committed to an undefined, and more or less voluntary, contribution to the sea defence of the Empire, which is, at the same time, the accepted responsibility of the Home Government.
The position requires defining in order that the Australian Government may frame its own defence policy. It is quite obvious that the provision of adequate naval forces is beyond the financial capacity of Australia,, but as she is so dependent upon sea defence, it is equally obvious that she should contribute what she can afford towards it, having in view her primary responsibility for providing the necessary land and air forces for her own local defence. This latter has in the past been considered to include the provision of defended ports to enable ships of the Royal and Australian Navies to operate in these waters. It is a question whether the cost of the defences of certain of these ports should not be a portion of Australia’s contribution towards sea defence.
In any case it appears to me that there is a clear cut issue which should be definitely defined, at least as far as Australia is concerned, between her responsibilities for her own local defence and her commitment towards the sea defence of the Empire. This commitment was originally £200,000 out of a total defence expenditure of £1,532,090. Since the inauguration of the Royal Australian Navy,, it has grown to £2,107,191 or practically half of the defence vote. It will be readily understood that this rapid growth of our commitment has seriously affected our provision for local defence, which is our primary responsibility.
In this connexion the following figures are of interest: -
Owing to the unavoidable overhead charges in connexion with the maintenance of a separate navy, it appears to me a question well worth consideration as to whether the method of Australia’s contribution to sea defence is not more costly than she can afford.
I have wondered more than once whether our naval policy should not be seriously reconsidered. While possibly a majority of the people for sentimental or other reasons may maintain that we should keep up our navy, there is much to be said for the recommendation of Sir Harry Chauvel that this matter should be carefully reviewed.
The amendment moved by the Leader of the Opposition suggests that the expenditure for 1928-29 should not be exceeded during the current financial year, and that, therefore, the expenditure proposed in the budget should be reduced by about £4,000,000. The Prime Minister this morning dealt in detail with the suggestions made by the Leader of the
Opposition, and contended that the reductions he proposed should noi or could not be made. But I hope that the right honorable gentleman does not mean that it is not possible to effect some savings. Surely expenditure can be reduced in some directions, in view of the extreme financial position of the Commonwealth and the States and the tremendous responsibility that rests upon this Parliament to avoid financial ruin. The Prime Minister referred to similar requests for reduction in expenditure in past years by the then Opposition, of which he was leader. He did not on those occasions fully specify the items to which the reductions should apply; he merely proposed certain reductions amounting to approximately £100,000. I was glad to hear him give credit to the present Leader of the Opposition for having specifically mentioned in his amendment the directions in which savings could be effected. That there are inescapable commitments is undeniable, and some of them have increased, and will continue to do so. There is an enormous burden of £30,000,000 annually in respect of war debt, and the payment of pensions and repatriation services ; and in addition many millions of pounds have to be paid under statutory appropriations which cannot be controlled by the administration. Members of all parties appreciate the difficulties mentioned by the Prime Minister, and the criticism of the budget, and the proposed amendments have been put forward with a full realization of the seriousness of the position, and appreciation of the fact that unless we reduce our expenditure in accordance with the shrinkage of the national income, increased cost of living, and unemployment will be unavoidable. The criticism of the Opposition is intended to be helpful ; that any party should take advantage of a national dilemma to get a political advantage is unthinkable.
In regard to the Government’s taxation policy,, the proposed sales tax is regarded by the commercial community as the most’ serious feature. Few, if any, merchants and manufacturers to-day are making a profit of 2-J per cent, on their turnover; the majority of them are incurring losses, and if they have to pay the sales tax it will ruin them; they” will have to close their establishments, and many additional thousands of persons will be thrown out of employment. Undoutedly the tax will have to be passed on, and combined with the primage duty, will mean a considerable increase of the cost of all goods before they reach the consumer. The objections to it are summarized in the following letter published in the Sydney Morning Herald of yesterday : -
Mr. Scullin stated in the House that the sales tax is to become operative on August 1. The commercial community is surely entitled to know how the tax is to be applied. Apparently only wholesalers and manufacturers are to pay the tax. The point that requires immediate elucidation is exactly the method to be adopted. Will it be legal to add i per cent, to the bottom of every invoice, and account to the Treasury for all such additions, or must the i per cent, be provided out of the nominal sale price. Incidentally no wholesaler is making 2 per cent, net out of gross sales. In any case this extra impost must be passed on, the only point is how.
When the bill is presented to Parliament an attempt will certainly be made to rush it through the Representatives as quickly as possible. But there are many points that will require most careful watching if the incidence is to be equitable quite apart from the obnoxious nature of the tax itself.
What steps are to be taken with regard to large retail direct importers? It was originally stated that they would be taxed at the Customs House. But the only figure that would be available for taxation would be cost price on the invoice. It would result, therefore, that a wholesaler and retailer each importing the same article, costing, say, 20s., and on which the duty and landing charges amounted to 00 per cent., would contribute quite different amounts. Presumably the retailer would pay 2-J per cent, on 20s., whereas the wholesaler would be taxed 2£ per cent, on 20s. plus 12s. charges, plus profit, or on a moderate estimate, 40s. One would pay half as milch as the other on the same article. That would not be fair.
Another most iniquitous feature is that this charge is leviable on goods sold by a wholesaler at an absolute loss, and many sales have been made, and will still have to be made, at a dead loss. It is not overstating the position to say ‘that all business is being harassed, and made’ more difficult because of the uncertainty, and the sooner a definite pronouncement is made the better. I am, etc., - “Wholesaler.” Sydney, July 22.
That letter indicates the perturbation of the business community, and their uncertainty as to how the tax will operate. I am afraid that it will prove a most complicated tax, and difficult to collect.
I assure the Government that in supporting the amendment moved by the Leader of the Opposition, honorable members on this side of the chamber are animated only by a desire to assist the Government to cope with the existing financial position, the .seriousness of which the Prime Minister has emphasized.
.- The attitude of the members of the Opposition to the measures proposed by the Government to right the difficult position of the country is inexplicable. Their attitude reminds one of the historic incident in the life of Marie Antionette. Witnessing a demonstration by the hunger-stricken mob of Paris, who rent the air with cries for bread, she sought from an attendant in the Royal Palace an explanation, and being informed that the hunger-stricken people had no bread to eat, naively asked, in her child-like ignorance and simplicity, “ Then why don’t they eat cake “ ? Members opposite are incapable of realizing the desperate plight of the unemployed. When fully employed the meagre incomes of these people are barely sufficient to provide for them the normal necessaries of life. Now, when they are without work or income, they are expected to live upon the savings accumulated during their period of comparatively regular employment. The Leader of the Opposition proposes to curtail expenditure upon works upon which a considerable army of men are at present employed ; in other words, his remedy for unemployment is to increase the army of idle men and women. The proposal is as fatuous, puerile, and hopeless as the naive reply of the French princess. The attack upon the budget has been almost entirely devoid of anything in the nature of constructive criticism. The puerile drivel of the honorable member for Henty (Mr. Gullett) ; the Pecksniffian cant, humbug, and insufferable priggishness of the honorable member for Warringah (Mr. Parkhill) ; the calculating, relentless frigidity of the honorable member for Kooyong (Mr. Latham) ; the pompous pedantry, unctuous vanity, and selfsatisfaction of the honorable member for Perth (Mr. Nairn), whose attitude was that of a schoolmaster imparting a lecture to a class of recalcitrant scholars; the petulant childishness of the honorable member for New England (Mr. Thompson) ; and the financial omniscience of the right honorable member for Cowper (Dr. Earle Page), afford no glimmer of hope for the workless in our midst. By established custom I must refer to honorable members opposite as honorable members, even while entertaining for them feelings of the utmost loathing and contempt. Their goodwill I do not court; their illwill leaves me unmoved. I shall not he one whit less happy because of the absence of their friendly greetings. If I am met with knitted brows and lowering looks, I shall console myself by reflecting that their friendship is of no value, and can well be dispensed with.
The budget statement submitted to this House by the Treasurer shows evidence of careful compilation and diligent research. It sets out vividly the financial difficulties confronting the National Government, and it points with unerring accuracy to dangers that must inevitably overtake this Commonwealth unless we are heedful of the signs and portents which bid us take warning. The Commonwealth has been going its careless way, blissfully unconscious of the dangers that are immediately ahead.
Fortunately, a change of government occurred at the psychological moment, and we have now a Government in office that recognizes the imperative necessity of arresting our progress towards disaster. The criticism levelled by the honorable members opposite has been, for the most part, pointless and useless.
From this charge even the Leader of the Opposition is not exempt. His speech was barren, spiritless, entirely devoid of constructive proposals. He suggested that we should abandon the Federal Roads Aid Agreement, under the specious plea that the States had not fulfilled their part of the contract to supplement the money received by a contribution of 15s. from their own resources for every £1 advanced by the Commonwealth. That is merely an attempt to shift the burden of responsibility without in any way providing a solution of our difficulties; besides being a most dubious ethical proposition. The honorable member failed to mention that this agreement, solemnly entered into for a period of ten years, is a legacy from his own Government, and was entered into quite unnecessarily as a piece of political bribery. There was an overflowing treasury, consequent upon soaring customs revenue following on a will orgy of overseas borrowing by the States, aided and abetted by the Federal Government. Apparently the honorable gentleman is quite unconcerned about the men engaged in road construction and maintenance who would lose their employment if this source of supply should suddenly cease because of the repudiation of the agreement by the Federal Government. The Opposition would have raised most vehement protests had such a proposal emanated from the Government-
– Is the honorable member arguing on the principle of ” Honsoit qui mal y pense.” or that of “Dim et mon droit “ f
– If the honorable member will speak in English, I shall reply to him.
The Opposition would not have been slow to turn the situation to their political advantage by pointing out that the Federal Government was appropriating to its own use revenue raised for a specific purpose on behalf of the States, the result being to throw men out of employment at a time when the finances of the States were in a most serious condition, and they were almost at the limit of their taxable resources. Apparently the honorable gentleman has made this proposal hoping that it will not be entertained. I seriously question his sincerity.
An analysis of the budget statement shows that the Government has every reason to congratulate itself upon its success in effecting economies, and reducing expenditure. Whilst it is true that the financial year closed with a deficit of £1,407,164, the revenue from customs was £2,675,609 less than the estimate, due largely to the action taken by this Government to rectify our adverse trade balance. Old-age and invalid pensions were responsible for an unforseen increase in expenditure of £330,000. The increase of the number of pensioners was the largest of any previous year, largely because of the prevailing depression and absence of employment forcing those who had reached the required age to make application for pensions. Had is not been for these factors, the Government would have closed the financial year with a handsome surplus. The Government might very easily have turned a deaf ear to the cry of the workless and the hungry in our midst. And it might have increased the army of unemployed and intensified their misery if its only motive was to show a surplus at the end of the financial year. It preferred, however, to show a little humanity, and made available the sum of £1,000,000 to the States for road works to provide employment. Had the Government not followed this course, it would, even allowing for the drop in customs revenue, and the increase in pensions, have finished the year with a deficit of less than £500,000. Further, if the Government had felt disposed to wash its hands of all responsibility for the unemployed, the increased expenditure for the year 1930-1 over that of 1929 30 would be reduced to less than £100,000, which, when other contemplated economies are effected, would have produced a surplus.
The method employed by the Govern.ment to balance the budget meet with my approval. I have only one suggestion to offer, and that is on the matter of primage duty on imports used in the primary industries: such imports as jute goods and the raw material, for the manufacture of artificial manures. The Government has already given practical proof of its sympathetic interest in the welfare of the primary producers. It is appealing to them to render material aid in adjusting our adverse trade balance by increasing our export trade, and I, therefore, appeal to the Government to exempt these essentials of our primary industries from the payment of primage duties. I am certain that my appeal will not fall on deaf ears.
What is wrong with this country that she finds herself in her present predicament? Many theories have been advanced from time to time, and honorable members opposite would lay the blame at the door of the present Government for its failure to effect economies by reducing salaries in the Public Service, and the allowance of members of Parliament.
It is not, however, the cost of the Public Service that has brought about the present position. If all the proposals of the Opposition were given eject, it would not result in a saving of more than a few thousand pounds, whereas our liabilities run into millions. Many of our troubles have been inherited from governments which existed before the Commonwealth Government was called into being, and would still have existed if there had never been any Commonwealth Government. Liberal borrowing and lavish expenditure of money distributed as political largesse to importunate supporters seeking to placate the clamorous demands of their constituents have characterized past Administrations, and were a feature of their policy long before the Labour party appeared in the political arena. Much of this expenditure could be justified had it been prudently undertaken, but prudence Was not a virtue of either the last Government or of its prototypes - the old Liberal and Conservative Governments. Let me quote one or two examples of their extravagance. Generally speaking, no provision was ever made for sinking funds for loans, nor was any allowance made for the depreciation of wasting assets. The capital cost of the Victorian railways is £74,000,000. According to the report of the Victorian Auditor-General, £16,000,000 of these railway assets have entirely disappeared. In the words of the honorable member for the Northern Territory (Mr. Nelson) they have become rust and old junk. The Victorian railways must earn interest on this £16,000,000 of dead capital. This sum capitalized at 5 per cent, represents a charge of £800,000 per annum. Had proper provision been made for a sinking or depreciation fund, those railways instead of being a charge on the revenue of the State, would have been a valuable asset, and even in this financial year, with a deficit ‘of £800,000, they would have paid, not only working expenses, but also all interest charges. That is another example of financial mal-administration on the part of a Victorian Nationalist Government. That’ Government expended some £4,500,000 in building schools out of loan money. In that way the annual interest, burden on the people of that State was increased by £250,000 per annum. These buildings earn no interest, and are rapidly deteriorating; later they will have to be pulled down and replaced by modern structures. When that is done, the people of Victoria will still have to bear the interest burden on the original capital expenditure. That policy was initiated by a Nationalist Government, to obviate the imposition of additional income taxation to the extent of £450,000 per annum, and to enable that Government to announce publicly that it has not increased taxation to the extent that taxation has been increased in other States, particularly those in which Labour Governments for the time being ruled. What has been the effect of this policy? To obviate the necessity for raising £450,000 in additional income taxation, the Victorian Nationalist Government incurred a charge of £250,000 per annum. Actually a saving of 1:200,000 was made in respect of income tax, but it saddled the present and future generations of that State with a permanent liability. Could financial folly and stupidity be more pronounced. Yet the members of that Nationalist Government, were supposed to be- financial experts and business men. It is true that a belated attempt has recently been made to rectify this position by the adoption of the Financial Agreement arrived at between the Commonwealth and the States. That agreement meets with my approbation, and the credit for initiating it must be given to the Bruce-Page Government. But that altered policy was introduced too late to save this country from the disastrous effects of past financial policies and follies. To-day we are . faced with the stupendous task of finding £55,000,000 per annum to meet interest charges upon our public debt. The honorable member for Corangamite (Mr. Crouch) has pointed out that we must pay off £1,000,000 per week, working all Monday and part of Tuesday throughout the ye’ar to meet our obligations.
The financial position has grown so acute that even those responsible for the financial debauch of past years have become alarmed at the tremendous bur den which industry is called upon to bear. For it is upon industry that charges must be levied to meet these obligations. Intent upon preserving class interest, and regarding as sacrilege any encroachment on rents, interests and profits, our opponents are clamouring for a reduction in production costs. They vigorously protest against what they term artificially maintained standards of wages and living in Australia. One would assume that the workers of Australia are not. doing their duty. Reference to the Year-Booh discloses astounding facts which I have not previously heard mentioned in this chamber. The value added in the process of manufacture in Australia is as follows: - In 1926- 1927, £162,325,273; in 1927-1928. £167,402,772 ; an increase of £5,077,499.’ The number of employees engaged in the manufacturing industries of Australia was- In 1926-1927, 467,247; and in 1927- 1928, 464,196, a decrease of 3,051. Yet the value added in the process of manufacture in that year was greater than in the preceding year by £5,077,499. The value added in the process of manufacture increased from £347 to £361 per employee. That increase may, to some extent, be discounted, because bakeries were, in 1927-1928, included for the first time in these returns; but that is notsufficient to warrant this extraordinary discrepancy. Even including bakeries, there were 3,051 fewer employees in industry; yet the value added in the process of manufacture greatly increased during the same period. These facts have an extraordinary significance and indicate that, despite the reduction in production costs, fewer persons are finding employment in the manufacturing industries. Not only have 3,051 employees been dismissed, but the boys and girls who reached working age in 1927-. 1928 have been excluded from our manufacturing industries. Evidently, the lowering of production costs is of no assistance to the worker. Their position is becoming more precarious, notwithstanding the increase in their efficiency. The more wealth produced and the greater the output, the less are the opportunities for regular employment. Production has outstripped consumption. The suggestions of the Leader of the Opposition (Mr. Latham), as contained in the amendment that he has moved, provide no solution of the difficulty. If given effect, they would aggravate the unemployment problem. I am prepared, however, to put my finger on one item of expenditure in respect of which a saving equivalent to that suggested by the Leader of the Opposition could be effected, although I do not suppose that one member of the Opposition would be in favour of it. I suggest that we should eliminate the expenditure of £4,000,000 for defence purposes. That expenditure is absolutely unnecessary. If our financial position demands the elimination of all wasteful and useless expenditure, here is an avenue of economy that might well be exploited by honorable members opposite. If they will move for the elimination of defence expenditure, I shall be prepared to vote with them even against the Government.
– Is the Government prepared to accept that suggestion?
– The honorable member would not be prepared to support it in any circumstances, so it is useless for me to answer his interjection. This country will have to consider seriously its war and defence expenditure. We are rapidly approaching the position of other countries in respect of defence expenditure. Almost 70 per cent. of the British budget represents an obligation in connexion with the prosecution of past wars and the preparations against future wars. InFrance the defence expenditure is about the same as that of Great Britain. In America 72 cents of every dollar of revenue is devoted to defence. More than 50 per cent. of the expenditure under the present budget is devoted to war debt, pensions, repatriation and preparation for future contingencies. According to information furnished to me by the Treasurer, we still have a war debt of approximately £300,000,000. We made provision up to the 31st December, 1929, for the payment of £207,000,000 in interest, and approximately £84,000,000 in pensions; and we have received less than £4,000,000 by way of reparations from Germany. Our total expenditure for defence from the 1st July, 1919, to the 30th June, 1930, was £51,925,169. That, of course, included interest and sinking fund payments. Of what earthly use was the expenditure of that vast sum of money.For all the benefit that it conferred on us, it might just as well have been thrown into the sea.
Sitting suspended from 12.45 to 2.15 p.m. [Quorum formed.]
– Attempts have been made by a section of the press to prove that our present difficulties do not arise in any way from our war commitments. But it must be admitted that the whole of those commitments are a direct charge on the industries of the people. Our war debt is a dead debt; it is wholly unproductive. It imposes upon industry annually a liability of £30,000,000. Most of our other loan expenditure has made, and does make, some contribution to our interest liability. Whilst it may be true that our ordinary public debt is more than three times as great as our war debt,. the dead weight that the community has to carry in respect to it does not impose anything like so grievous a burden upon them.No country with a little more than six million people has ever been called upon to carry such a burden as this country is carrying at the present time. So far as I am concerned, if economies are to be effected it will not be at the expense of the people. I refuse to admit for a moment that the wage standards of our people are higher than they should be. On the contrary, I contend that the standard of the workers in this and every other country is too low. Consumption must be increased to keep pace with a greatly accelerated rate of production. The problem of unemployment is world-wide ; it manifests itself in a highly industrialized as well as a non-industrialized country. Low wages cannot, and will not, save the workers of any country. It is an inescapable fact that, whether wages be high or low, the workers of all countries are subject to periods of industrial and financial depression, want and penury, due largely to the growth of a non-producing, rentier class, who have invested their money in Government securities. The Government must not, of course, lay its sacrilegious hands upon the sacred temple of rent, interest and profits, so as to adjust the finances. Although I have expressed approbation of the financial agreement into which the Commonwealth has entered with the States for the eventual extinction of our public debt, in the present circumstances I am prepared to advocate the suspension of that agreement for a period of two years, pending a return to something like normal conditions. If necessary, I would appeal to the people of this country to sanction such a suspension. According to the budget statement ..of the Prime Minister and Treasurer, the amount available for the redemption of Commonwealth and State debts for the year 1930-31 is estimated at £10,221,363. In view of our financial liability, and our inability to obtain accommodation overseas, that money should be utilized in carrying out public works. Our war .debt could be extinguished by methods other than those that are now being adopted, without imposing any additional taxation. The Note Issue Board could be empowered to purchase £10,000,000 worth of 6 per cent. Commonwealth securities. A special fund could be created for that purpose. It is estimated that money invested at 6 per cent, will double itself every twelve years. By that method, the war debt could be extinguished in less than 60 years, and the whole of our public debt in 100 years, without the imposition of taxation. I realize, of course, that such a method will be denounced on the ground that it is an inflation of the note issue. I point out, however, that the value of the notes then in circulation would not be greater than was the value of those in circulation during the war years. At the present time the value of the notes in circulation is from £14,000,000 to £16,000,000 less than was the case during the war period. The effect of the issue by the Note Issue Board of notes to the value of £10,000,000, and their investment in government securities would be to make fluid capital to that amount which is now frozen in those securities, enabling the banks to provide for business undertakings credit which they are unable to provide at the present time. I sincerely hope that, while he is overseas, the Prime Minister will make a serious effort to obtain from the British Government better terms than now prevail for the eventual extinction of our war indebtedness to that Government, and for the payment of interest.
In 1921 the Commonwealth Government made with the Imperial Government an agreement for the eventual extinction of our then indebtedness of £92,000,000, by the payment of interest at the rate of 5 per cent., and the establishment of a sinking fund of 1 per cent. That was intended to extinguish our indebtedness in 35 years. Australia, to its eternal credit be it said, was the first of the nations that engaged in the war to fund its war indebtedness; and as a consequence she obtained less favorable terms than did other countries subsequently. Under the arrangements that were made by the Imperial Government with the French and Italian Governments, the former cancelled a large amount of the war debt owing to it by both of those nations. France’s debt of £600,000,000 was r’educed by £373,000,000, leaving a balance of only £227,000,000. No less than £422,000,000 of the £500,000,000 owing by Italy was cancelled by the British Government, leaving a balance of only £78,000,000, upon which a very low rate of interest is being charged. The treatment accorded to France and Italy is markedly in contrast with that meted out to Australia. Surely, if generosity is to be shown to any country, it ought to he extended to the British dominions, which incurred huge war debts out of a spirit of loyalty to the Empire. Australia’s proportion of reparation payments is ridiculously low in comparison with that of France and Italy. Not only did Great Britain incur its huge war debt in defence of the integrity of French soil and the restoration to her of the provinces of Alsace and Lorraine, but it cancelled a large amount of her war indebtedness. France showed her appreciation and gratitude during the war by charging the British Government £200 for each journey made by the British hospital train over French railways in the conveyance of the sick, the maimed, and the wounded, from the battle-fronts to the hospital bases, although the locomotives, the rolling-stock, and the whole of the equipment were provided by the British Government. Australia is entitled to be treated on an equality with France and Italy.
I am definitely and unequivocably opposed to the proposals of the Leader of the Opposition (Mr. Latham). They are fatuous, extreme, and exceedingly puerile. Is it nothing to him that their adoption would curtail useful work, which at present provides employment for a large army of men? Does he want to multiply by the score the cases of destitution and malnutrition that are all too prevalent at the present time ? The secretary of the Melbourne Hospital stated in the press recently that a new type of case had presented itself for treatment at thai institution. Many applicants for admission, according to this gentleman, are suffering, not from any disease, hut from under-nourishment and malnutrition. Does the honorable gentleman wish to see multiplied the case of a Mrs. Brill, of North Melbourne, a young married woman of 23 years of age, who gave birth to a child which died because the mother was under-nourished, and she herself collapsed from hunger and died shortly after admission to the Melbourne Hospital ? It is true that, in the press to-day, it is stated that hunger was not the cause of the lady’s death; but I have not the slightest doubt that, if it were not the direct cause, it was at least a big contributing factor. I have no compunction about asking those who can afford to pay to do so. I should refuse to make the poor responsible for the sustenance of the poor ; the burden should be borne by those whose income and whose financial position in society enable them to make a reasonable contribution to the relief of the desperate condition of their less fortunate brethren, and still leave them with sufficient to enjoy, not only the necessaries, but also many of the comforts of life.
I wholeheartedly congratulate the Treasurer upon the budget statement that he has presented to this Parliament. He has faced his unenviable task with courage and determination. He has critically surveyed the economic conditions and the financial resources of the Commonwealth. He has sought to place the burden upon the shoulders of those who are able to bear it. That burden has been fairly and equitably distributed. All must contribute; none may escape. Our opponents would have us believe that the workers almost entirely escape taxation. In Stead’s Review for January, 1930, there is an article entitled “ What the untaxed pay in taxes “, and I propose to quote extracts from it. This process of indirect taxation makes it difficult to ascertain with mathematical accuracy the actual amount paid by the workers. We can, however, make a fairly reliable estimate of the indirect taxation that is levied upon the people. The article in question points out that the great mass of the people do not pay land taxation, and then goes on to say -
But people whose earnings are on or about the basic wage pay far more in taxation than the amounts that are passed on to them by those from whom the taxes are collected. Directly and indirectly, they pay more, in proportion to their incomes, for the upkeep of the State than is paid by many a man in receipt of several thousands a year. The bigger the wage-earner’s family the heavier the exactions. Within the British dominions no tax that itlevied, probably, is more severe upon the working man with a family than the special impost to enable Australian exporters to supply cheaper butter to the peoples of Europe. This impost raises the price of each pound of butter sold in Australia by 4½d. . . The rich man, especially if he be unmarried, can afford to bc indifferent. He has a bill of fare so varied that the price of butter is hardly si factor. In the working man’s home bread and butter is the basic diet. It is served at every meal, and forms the . chief part of every luncheon carried to school or workshop. A large working family that uses, say, six pounds of a butter a week pays in the butter tax alone no less than £5 17s. a year, or £1 ls. 4d. mort than the federal tax on an income of £500 a year, after deducting all exemptions.
If a basic wage earner and his family are in the habit of drinking beer or spirits, or of smoking cigarettes or tobacco, however moderately, their taxation bill discloses a heavy penalty. The excise on beer, for instance, is ls. Od. per gallon. A simple calculation will show that if the whole family drink one pint of beer a day between them they will pay in excise about £4 a year. If that daily consumption be only half a pint, they will pay, of course, only £2.
The writer, after referring to the taxation which the so-called “ exempt “ worker is required to pay on his butter, beer, spirits, cigarettes, tobacco, and amusements, in revenue customs duties, and in municipal rates and water and sewage rates, which are estimated to amount to £45 8s. 6d., concludes his article in the following words : -
In round figures, each wage-earning householder pays in taxes according to this modest estimate about 17a. Gd. per week. All the big income, land, motor and other taxes that are added to the prices of his goods as working expenses in the business are additional. The wage-earner, it will be seen, has not been allowed even the doubtful luxury of keeping a dog. An officer in the Government Statist’s Department estimated roughly some time ago that the family man with an income of £9 a week paid in taxes each year about £G6 10s., but the calculations were obviously too low, except for a teetotaller and non-smoker. In estimating taxation actually paid per head, there is, of course, no such being as an average man. Payments vary widely according to habits and circumstances, but enough has been written to show that no class is exempt from heavy taxation, and that the wage-earner has to stand, well up to the collar with the affluent.
Yet it is at the expense of these people, the great wage-earning section of the community, who live upon incomes sufficient to provide for only the hare necessaries of life, that honorable members opposite would economize,. So far as I am concerned, their effort to do this will have my uncompromising opposition. I shall not be a parly to any attempt to place additional responsibilities upon the shoulders of the workers. *_Quorvmx formed. *
– Those who believed that the accession to office of a Labour Government in the Commonwealth sphere would mean a reduction of taxation, and of expenditure on government services generally, have learned a bitter lesson through the introduction of this budget. The protests against the budget proposals, which have been made throughout the length and breadth of Australia, have been justified. We are faced with- the fact that additional taxation is being imposed this year to the extent of £14,000,000 to enable the functions of government to be carried on. This is a taste of what is likely to recur yearly if the Labour party continues to occupy the treasury bench. I do not suggest, however, that the present financial difficulties of Australia are entirely due to politics or the administration of this or any other Government. They are due iu no small degree to the war and its aftermath, and to influences over which Australia has had not control. If we had noi to pay £30,000,000 in interest every year on money which was borrowed for war and repatriation purposes we should bt’ in a far better position than we are in to-day. We must, therefore, remember when we are examining this budget, that the war and its effect upon the world’? markets have had a great deal to do with the creation of our difficulties. In addition to that, the expenditure of loan money by the State has been an important factor in bringing about the present stringency. During the seven years that the BrucePage Government administered the affair* of this country it increased our total loan indebtedness by only £13,000,000. while in the same period the States increased their loan indebtedness by more than £207,000,000. It cannot, therefore, be honorably and truthfully said that the previous Government was recklessly extravagant. During its period of office it effected a reduction in administrative costs equal to 9d. per head of our population. Nor can it truthfully be said, as the previous speaker has alleged, that the previous Government incurred much unnecessary debt, which has made necessary increases in taxation. As a matter of fact, the Bruce-Page Government reduced taxation almost every year that it was in office.
We have heard a good deal about our adverse trade balance, but except in relation to the United States of America, the position is not nearly so bad as some people think. Our trade position with the United States of America is totally unsatisfactory. for during the last ten years over 20,000,000 sovereigns and bullion have had to be exported to that country to pay for the goods which we have imported from there. In these circumstances I submit that the endeavour of the Government to rectify our trade balance by tariff revision has been altogether misdirected in regard to the United States of America. The Government has actually penalized countries which have purchased our primary products, and allowed to go unpenalized the United States of America, which takes every step possible to prevent the entry of Australian primary products into America. If a vessel trading between America and Australia has any Australian foodstuffs left on board when she gets within a radius of three miles of the coast of the United States of America, they have to be dumped overboard in order that they may not enter into competition with American foodstuffs. America is draining Australia of her gold, and yet is allowed to continue her trade with us without any serious additional tariff restrictions, while Great Britain, which, for a considerable number of years, has purchased 50 per cent, of our exported primary products, has been heavily penalized by the latest tariff schedules. Belgium also has been unfairly penalized, for while she buys 6.15 per cent, of our exported goods, we receive only .63 of our imports from her. The position of France is also unsatisfactory from her point of view, for while she has been buying 10.59 per cent, of our exported products, we have been buying only 2.62 per cent, of our imports from her. In these circumstances it is not surprising that France should have adopted retaliatory measures against us because of the unreasonable tariff policy we have adopted in regard to her. In this connexion the following report, which appeared in the Sydney Morning Herald on the 16th July, is interesting: -
The position of Germany is also such as to cause dissatisfaction in that country, for while Germany buys 8.78 per cent, of our total exports, we obtain only 2.89 per cent, of our imports from her! It is not to be wondered at, therefore, that she has increased her tariff restrictions against Australian butter, wheat, meat, apples, and other foodstuffs. The adoption by Australia of the stupid and harsh tariff proposals contained in the schedules which the Government has recently tabled, must inevitably lead these countries, which in the past have been good customers of ours, to discriminate against us to the detriment of our growers of meat, wheat and wool and our butter producers.
It is the adoption of our present tariff policy which has made necessary in no small degree the imposition of the primage duty, and the unfortunate sales tax, which will be a heavy impost upon the people of Australia. We have not dealt harshly with the United States of America, although she has supplied us with 23.66 per cent, of our total imports, and has taken from us only 6.25 per cent, of our exports. In 1927-28 the United States of America took from us goods to the value of £6,953,566, and gold and bullion to the value of £2,001,257, while we received from her goods to the value of £35,005,736. The trade of the United States of America with us was worth less to us in that year than our trade with Japan; it was worth only half as much to us as our trade with France; and less than our trade with Belgium. Yet we stupidly continue to give her such trade facilities as are extended to valuable trading countries. If we entered into friendly agreements with countries that are already providing markets to the advantage of Australian producers we would assist to rectify the adverse trade balance and save the community generally by keeping out goods from the United States of America until that country is prepared to trade with us.
The honorable member who has just resumed his seat referred to our war loan, and suggested that Great Britain had not “played the game” with Australia in comparison with her treatment of France and other countries who were our allies in the late war But the country that is chiefly responsible for the unfortunate state of the world to-day is the United States of America, which has shown a determination to grab every ounce of gold, and every farthing of interest, on which it can lay its hands. Britain was compelled by that country to back the bills of the allies; but it was impossible for Britain to be responsible for the whole of the indebtedness of Australia, unless the United States of America accepted her proposals. Mr. James Gerard, who was American Ambassador at Berlin during and after the war, said -
The children of the allied .powers will be coming to Washington 60 years from now with sacks of gold as the symbols of a conquered people bearing tribute.
Britain offered to cancel all the debts owed her by other countries to the extent of £2 for every £1 she owed the United States of America if that country would wipe out the £1 against Britain. The United States of America refused and demanded money and interest. As the United States Congress admitted, when the loans were advanced, the money was to be used “for the security and defence of that country.” The action of America is largely responsible for our present financial difficulties. “We are taxed to the extent of £30,000,000 a year on account of war loans, which have made America rich, and other countries poor. The national income of the United States of America was £37,259,000,000 in 1912, and £64,160,000,000 in 1922. In that period its internal debt was reduced to the extent of £1,680,000,000, while Australia accumulated some £600,000,000 of debt, and it lost more men in the field than did America. If America had done the manly thing by Great Britain and the allied countries we should not have been in the sorry position in which we now find ourselves. A prominent member of the American bar, Mr. Fredk. W. Peabody, in a petition presented to the President at Washington, stated -
In the first year Britain loaned her allies ten billion dollars, and recruited 4,000,000 volunteers. For food we demand payment and interest. We are the richest nation the world has ever known. England is embarrassed as never before. With 1,000,000 unemployed she carries her own burden of debt, and has resorted to taxation almost confiscatory. She is dependent for her revenue upon her trade, and our tariff wall practically excludes her from trade with us. Yet we demand of struggling England, not only the four billions we let her have, but seven billion dollars in interest, when we have no moral right to one farthing from England.
The honorable member, who referred disparagingly to Britain, would have shown a more patriotic spirit if he had lain the blame at the door of the country that is really responsible for our troubles. Britain did all she could to cancel war debts and only collects enough to pay what she owes the United States of America - money borrowed to enable Britain to fight during a period in which America was unprepared and unfit. The legal authority, to whom I have just referred, went on to say -
England proposed cancellation of all war debts at a net cost to her of six billion dollars, inasmuch as the nations owe her that amount, over and above what she is said to owe us. We declined the proposal and demanded the utmost farthing; and England now agrees to forgive her debtors all they owe her in excess of the amount we require of her. A striking contrast that.
During, and after, the war period, when Britain’s man-power was depleted, and its industries were suffering, the United States of America built up its motor and other industries, and filled Australia with the products of them.
– The money borrowed from America was used in the purchase of goods from that country.
– Yes ; used in feeding the troops that were defending America, and for military equipment and munitions. Some of it was spent in providing convoys for the 4,000,000 American troops who were brought across the Atlantic, because it was considered that that work should be entrusted to the British Navy. Every penny of that money has to be repaid to the United States of America, with interest, although the soldiers of the
United States of America entered the trenches eight months before the war ended.
The Leader of the Government made an admirable contribution to this debate; but it was the speech of a party leader. Ke told us that he had advised the late Government to beware of borrowing abroad, and that the warning had been unheeded; but why did he not give that advice to the State Labour Premiers? He spoke of conferences of Australia’s leading politicians, at which they had reviewed the financial situation from a non-party point of view. If he had directed that advice to Labour Premiers, the benefits accruing from the formation of the Loan Council might have been enjoyed years before that reform was accepted by the States. One great benefit of that change in our financial policy is that the national debt will be discharged in 56 years, and that accomplishment, stands to the credit of the Bruce-Page Government, whose action- has been applauded throughout the world. Why did not the present Prime Minister advise the honorable member for Dalley (Mr. Theodore), when he was in office in Queensland, to curtail borrowing? While that honorable member was in charge of the Treasury in Queeusland, he increased the debt of that State from £56,000,000 to £102,000,000; but, during the six and a half years when the Bruce-Page Government was in office, the total indebtedness of the Commonwealth was increased by only £13,000,000.
– I call attention to the i tate of the committee.
Bells having been rung and Mr. R. Green having left the chamber-
The CHAIRMAN” (Mr. McGrath).I request the Serjeant-at-Arms to bring back the honorable member for Richmond.
Mr. R. Green having returned and quorum formed-
– I submit that, in committee, I am entitled to leave the chamber after a quorum has been called for.
– That is not so. Standing Order No. 34 states -
When the attention of the Speaker, or the Chairman of Committees, lias been called to the fact that there is not a quorum of members present, no member shall leave the chamber until the House has been counted by the Speaker.
– The last Government actually reduced the total debt per head of population from £69 to £59. The Treasurer did not give his predecessor credit for having increased oldage and war pensions, established an entitlement tribunal which assures to the soldiers a greater measure of justice, in creased the payments to the States, provided money for roads, and provided funds for advertising in overseas markets, thus increasing, our exports and adding many thousands of pounds to the pockets of the primary producers. Since the Labour party assumed office the cost of government has increased. Although he accused the previous Government of having been a reckless spendthrift, the present Treasurer is budgeting for an increase of taxation by £5,544,000 as compared with last year. In 1928-29 the Bruce-Page Government collected, including post office revenue, £61,577,000. The present Treasurer is estimating to receive in 1930-31 £67,122,000 including £1,500,000 of additional postal revenue. The Leader of the Opposition has suggested that that amount might be reduced by £4,000,000, and the Prime Minister has replied that such a reduction could be effected only by the cutting down of certain Commonwealth services, including invalid and old-age pensions. I would oppose any reduction in invalid, old-age, or soldiers’ pensions. Apart from the £4,000,000 mentioned by the Leader of the Opposition, there is an increase of taxation by £1,500,000 and savings’ in the Defence Department amounting to £885,000, making a total of £2,383,000 over and above the amount available to the Government in 1928-29. No proposal has been made by any honorable member that the old.age and war pensions should be reduced. The suggestion that that is desired byhonorable members on this side is unfair.
Because of its tinkering with the tariff the customs revenue decreased by £8,000,000 during the first eight months of the Labour regime. For the whole twelve months the Treasurer expects to lose £12,000,000. In addition, the Government’s stupidity is alienating the friendship of nations which were good customers for Australia’s primary produce.
A suggestion has been put forward to reduce the salaries and wages of public servants and the parliamentary allowance by £1,000,000. Such a sweeping policy would be unfair. Public Service economy boards have reduced staffs in the Postal Department: and in my own electorate the pruning knife has been used so severely that I am not prepared to suggest any further reduction in that department. I believe in the principle of arbitration, and surely if . economies and reductions are possible in other departments, they can be effected without resorting to a straight-out cut of 10 per cent., which would seriously affect the smallest paid officers. These are not the people who should be sacrificed. N or do I believe that the undertaking of the Commonwealth to assist the States in the construction of roads should be dishonored. The £2,000,000 per annum which this Parliament has agreed to pay to the States for ten years is a reasonable commitment, as well as a contractual obligation, and is appreciated, by the people of the States. I am aware that because Victoria does not receive grants in proportion to its population there is opposition in that State to the main roads grant. But road development is essential in country districts to improve the facilities for getting primary produce to market and to make easier the lot of the man. on the land. For this reason I oppose the suggestion to cancel the £2,000,000 road grant to the States.
I am not in agreement with the contention that the Commonwealth Government should not grant £1,000,000 to the States for the relief of unemployment. If, as has been contended, the Commonwealth is as much responsible as are the
States for unemployment, relief of distress is partly an obligation of this Parliament. A contribution of £1,000,000 will be acceptable to the States, and more so to the unemployed, and I shall not cast a vote to deprive those unfortunate people of the opportunity to provide food and clothing for themselves and their families. I am not in favour of starving the -unemployed in order to avoid increase:! taxation. The .advance should be made without any conditions.
The bounty payments have been ap proved by both Houses of this Parliament and therefore should stand. The BrucePage Government provided £900,000 to be expended over five years in paying bounties on the production of cotton. Only £180,000 of that sum was spent. The fund may, therefore, be said to hp in credit £720,000. The present Parliament; has agreed to provide £800,000 over a period of five years, which involves an increase of only £80,000 on the amount voted in previous years. It would not be fair to reduce that bounty, and I shall not vote for the suggestion that the cotton bounty should be reduce;
The Leader of the Opposition has proposed to reduce the first item by £1 as an instruction to the Government to curtail expenditure by £4,000,000. If I support the amendment it will be only as a protest against the present Government’s maladministration in respect of the tariff and other matters, which has rendered necessary increased taxation in the form of primage dues, sales tax, income tax anc!, customs duties, which will impose a hardship on the people. The last Government was accused of having borrowed and spent recklessly; but its record in regard to loan expenditure, in comparison with the proposals of the present Government, is highly creditable. When Mr. Bruce was Treasurer in 1922-23, he reduced the income tax rates by slightly more than 10 per cent, and increased the exemption from £100 to £200. In 1924-25, the Bruce-Page Government reduced the rates by 10 per cent, and increased the exemp– tion from £200 to £300. In 1925-20. income tax rates were further reduced by 13 per cent., and, in 1927-28, by 10 per cent., and the minimum was reduced from fi to 10s. This is a record of steady reduction of direct taxation, thereby making more money available to industry. Whatever criticism may be directed against the Bruce-Page Government, its financial administration was certainly not at fault. It reduced the land taxation by 20 per cent, in 1922, and by another 10 per cent, in 1927-28. Let us consider the loan position. By 1928 the war debt had been reduced by £39,673,728 while the works debt had been increased by only £47,618,226. The total increase in the Commonwealth debt for the whole period, both works and loan, was only £13,000,000, while during the same period the State debts had increased by £207,000,000. It has been stated by honorable members opposite that during the period from 1922 to 1928 the Commonwealth debt increased by £7S,058,591, but they forget, or omit to point out, that £70,000,000 of that sum represented loans raised on behalf of the States. When wo consider the debt per head of population, we find that the record of the last Government is equally favorable. In 1922, the war debt was £60 9s. per head of population; in 1928 it had been reduced to £47 ls. 3d. The total Commonwealth debt was reduced during the same period from £66 4s. 3d. per head to £59 15s. 10d., yet the last Government has been accused of pursuing a policy of reckless borrowing. Honorable members opposite have censured the Bruce-Page’ Government for leaving a deficit when it went out of office. They should be prepared to admit, however, that during the period that Government was in office surpluses to the amount of £11,500,000 were applied to the reduction of war debt, to defence expenditure, and to the payment of old-age pensions. It was unfortunate that there should have been a deficit of £5,000,000 for the last two years of the last Government’s regime, but that was due almost entirely to a reduction of customs revenue. In 1927-1928 this reduction amounted to £2,105,748, and in 1928-1929 it was £2,241,000. I maintain that the financial administration of the BrucePage Government was prudent and businesslike.
In regard to the tariff, I, naturally, support the protection of those Austra- lian industries which are likely to be of benefit to the country. However, I do not think that any coterie of interests in Sydney should have power to dictate the tariff policy of this Government as a group of manufacturers has been recently doing. They have secured all the tariff amendments they have asked for without their requests being referred to the Tariff Board. Yet sections of the primary producers have had requests before the Tariff Board for twelve months without receiving attention. The pork producers have been seeking assistance for that period or longer, but no decision has yet been given to them. Yet the big Sydney manufacturing interests are able to get their applications granted by the Government without any delay whatever. The Bruce-Page Government, in the interests of Australian manufacturers, granted concessions under by-law items of the tariff in eases in which it was evident that no injury would be done to established Australian industries. As an indication of the extent to which this system was availed of, I may point out that in 1929, under item 174, 700 different machines, machine tools and appliances were admitted free under British preference, and at 10 per cent, duty under the general tariff. For the year 1927-1928, 316 by-laws were gazetted under this item, covering admission at concession rates of specific machines and appliances.
– That is still being done when the articles cannot be manufactured in Australia.
– I do not say that it is not being done. I am only pointing out that the last Government made it a part of its tariff policy to give assistance in this direction to manufacturers. There is still room for reform. Only the other day there was brought under my notice the fact that an essential dairy requisite which could not be obtained here had to pay a duty of 60 per cent. Similarly, road-making authorities have to pay 60 per cent, duty on machines which are not manufactured in Australia.
– The honorable member said that the Bruce-Page Government had put millions of pounds into the pockets of the primary producers. It did not, apparently, assist them to the extent of allowing free entrance to the articles mentioned by him.
– The items mentioned were increased by the present Government. I said that the Bruce-Page Government had put millions of pounds into the pockets of the primary producers by opening up for them new world markets. I now say that, as the primary producers have to hold those markets against world competition, nothing should be done here to increase their production costs. I regret that the Government has found it necessary to impose an additional £14,000,000 taxation on people who are already overburdened by State taxation. I urge upon the Government the necessity for reducing and not increasing expenditure whereever possible.
.- Speeches on the budget are generally important, and often illuminating. It has become almost a custom now for the Opposition to seize the opportunity of the budget debate to move a resolution which may almost be described as a motion of want of confidence. In this case, it appears to me, that the motion of the Leader of the Opposition is almost 100 per cent, political eyewash, and is inspired by the fact that it has become almost a part of parliamentary practice for the Opposition to oppose everything that a government brings forward. [Quorum formed.] When the Prime Minister (Mr. Scullin) took office, his Government inherited a huge debt both in Australia and overseas. In March of this year he pointed out to this Parliament and to this country the serious position in which Australia found itself, and he asked for the co-operation of all parties. He told us of our adverse trade balance, and of our heavy indebtedness. As has been stated many times, the last Government found in the Treasury when it took office a very substantial surplus, and left this Government a very substantial deficit. The present Government was unfortunate in assuming office at a time when the economic position in Australia was worse than it had ever been before in the country’s history. It has been said that it is necessary to balance the ledger. That statement,, when first made some months ago, met with the general approval of the press of this country, but since the budget has been introduced, the Government’s taxation proposals have been misrepresented and distorted. An increase in taxation must be unpalatable to the general community, and no sane government would increase taxation unnecessarily. In view of the financial depression, the people must be prepared to suffer and to pull together, so that we may once more balance our ledger and place Australia on the high road to prosperity.
The application of additional taxation should be equitable. One section of the community should not bear a greater burden than another. This Government has made an heroic attempt to improve Australia’s finances. In addition to levying additional taxation, it has increased the tariff. I am not a wholehogger for protection, as are many other members supporting the Government, hut perhaps that is because I realize that the incidence of the tariff affects parts of Australia differently, and because I represent a constituency in South Australia on which the incidence of the tariff falls somewhat severely. I am a whole-hearted federalist. I believe that there should be one Parliament in Australia, and that the National Parliament. The Labour party platform provides for the abolition of State Parliaments, or full legislative powers for the Commonwealth Parliament. But as these institutions exist, and State utilities have to be maintained, the Commonwealth Government should not levy taxation which presses more heavily on one State than it does on another, and be compelled to compensate those States in some other way. This additional taxation will be a terrible blow to the smaller States. The tariff has been increased to protect Australian industries^ and to increase avenues of employment. But it must be remembered that the manufacturing industries of Australia are centred in the eastern States, and, therefore, any benefits under our system of tariff protection arc confined only to the eastern States. To that extent the tariff has had a detrimental effect upon an agricultural and pastoral State such as South Australia. The effect of the tariff upon State finances was dealt with in a book entitled The Australian Tariff, which is an economic inquiry by J. B. Brigden. M.A., D. B. Copland, M.A., D.Sc; E. C. Dyason, D.Sc, B.M.E.; L. F. Giblin. M.A.; and C. BT. Wickens, I.S.O., F.I.A.’, F.S.S. An extract from that publication reads -
The unequal effects between States are probably the most embarrassing consequences of the tariff, but they have their roots in the unequal effects between industries, which are natural and inevitable consequences of tariff protection. Were Australia one small, compact economic unit, in which the benefits of protection were thoroughly diffused, in which une common tax system operated, and in which development expenditure was equally shared, differences between areas would be less important. But with our diverse geographical conditions and our federal system of government this is not the case. . . . The geographical differences between the States account for differences in aptitude, and the benefits of increased production have been transferred from areas and States having natural aptitudes for export industries to areas :md States having natural aptitudes for the protected industries. The tariff has, therefore, materially affected the relative prosperity of the different States.
That statement correctly sets out the relative positions of the States under the tariff. Direct benefits are conferred upon the eastern States, in which the manufacturing industries are situated. Those States are, therefore, in a better position t.o bear the increased burden of taxation than are the smaller States, which are already suffering under our tariff policy.
– The position will right itself in time.
– I am referring to the present time. If given the opportunity, T should vote to-morrow for the abolition of State Parliaments, but while they exist, they must be given every opportunity to function properly and efficiently.. South Australia is in a parlous position. I represent an extraordinarily large constituency in that State, and I am well aware of the harsh effects of the tariff.
I admit that South Australia’s financial position has been brought about largely by the railways rehabilitation scheme.
– That is the principal reason for the unsatisfactory position of that State.
– I admit that.
– Did not a Nationalist Government of South Australia import a railways commissioner from America?
– Yes. The rehabilitation scheme was undertaken at a time when motor transport was beginning to make its presence felt. It was a mistaken policy, particularly in view of the fact that the railway systems of Australia are on the decline. Many of the buildings that have been constructed are really unnecessary. It is said that the tost of that scheme was £12,000,000. In any case, an enormous interest bill has to be met. Year after year South Australia has had semi-droughts. The experience of droughts extending over such along period is unprecedented. Those droughts have seriously depleted the finances of that State, and the additional taxation now being levied will increase its burden almost to breaking point. According to the Year-Booh the taxation per head in 1928-29 was, in New South Wales, £5 10s. 9d. ; Victoria, £4 ls. 3d. ; Queensland. £5 Ils. lid.; South Australia, £6 10s. Id. ; Western Australia, £4 4s. lOd. ; and Tasmania, £5 2s. 8d. In the year 1926-27 South Australia was, per head of population, the fourth highest taxed State in the Commonwealth. In the following year it was the highest-taxed State, and in 1928-29 the tax was £1 per head of population more than any other State. A heavy burden is now being borne by its people, and because of the effect of the tariff the Government of South Australia is not in a position to impose the additional taxation, necessary to carry on its ordinary functions. Therefore, when that State approaches the Commonwealth for assistance, I ask honorable members to bear in mind the facts of the case; not to regard it as a beggar, but to concede that to which it is entitled.
TARIFF SCHEDULE (No. 3) 1930. Timber Duties.
. -I more -
That the Schedule to the *Customs Tariff* 1921-1930 as proposed to be amended by Tariff Proposals be further amended as hereunder set out, and that on and after the twenty-sixth day of July, One thousand nine hundred and thirty, at nine o'clock in the forenoon, reckoned according to standard time in the Territory for the Scat of Government, Duties of Customs be collected in pursuance of the Customs Tariff as so amended. That in this Resolution " Tariff Proposals " means the Customs Tariff Proposals introduced into the House of Representatives on the following dates, namely : - 19th June, 1930 ; and 9th July, 1930. That, execpting by mutual agreement or until after six months' notice has been given to the Government of the Dominion of New Zealand, nothing in this Resolution shall affect any goods the produce or manufacture of the Dominion of New Zealand entering the Commonwealth of Australia from the Dominion of New Zealand.
In the tariff schedule that was tabled on the 19th June last, certain increases of duty on timber were proposed. Those increases were based upon, and were prac tically in accordance with, the recommendations of the Tariff Board. No increase was suggested in the duty on Oregon logs, and sawn Oregon in large sizes. Since that schedule was tabled, representatives of the Australian timber industry have placed before the Government certain facts, and made certain requests. They have pointed out that the effect of there being no increase in the duty on oregon has been to negative the advantage that it was expected would be gained by the increase in the duty on baltic; the reason given being that, whereas the Australian sawmillers expected to be able to substitute Australian timbers for imported baltic, Oregon is being used.
I may also say that representations with respect to this matter have been made by numerous deputations representative of the sawmillers and the workers engaged in the industry, as well as those who are associated with what may be termed kindred industries. Honorable members connected with all parties also have urged an amendment of this particular section of the tariff schedule; and representations on the matter have been made by at least five of the six States of the Commonwealth.
The timber industry is of vast importance to the Commonwealth. I was very pleased to find, during my absence from Australia, that even in the great metropolis of the world, London, Australian timber is being used extensively. Some of the principal architects in London are including it in their specifications for some of the finest buildings that are being erected, in which it will be used for decorative and furnishing purposes. In Canada, also, Australian timber is used to a considerable extent, f have it on the authority of Mr. Malcolm, the Minister for Commerce in Canada, who is associated with very large furniture works, that some of the Australian timbers are among the finest veneer woods to be found in the world, and that there is room for a big expansion of our trade in timber with that dominion. In a communication that I received recently from the Prime Minister of Canada, I was informed that it is quite likely that one of the Ministers of that great dominion will visit Australia. It is hoped that in the not distant future, we may be able to enter into a reciprocal arrangement with Canada, and thereby do with her even greater trade than we have done in the past.
The tariff schedule that I have just laid on the table proposes that the duties on Oregon shall be brought into line with those on other timbers except redwood and western red cedar. The duty on Oregon logs will be increased from 5 per cent. British preferential, 5 per cent, intermediate, and 10 per cent, general tariff, to 10 per cent, 30 per cent., and 30 per cent, respectively. The duties on undressed sawn oregon will be increased as follows: -
Twelve inches by 10 inches and over-, from 8s. to 12s. Od. per 1.00 super, feet.
Twelve inches by G inches and less than 12 inches by 10 inches, from 8s. to 14s. per 100 super, feet.
Seven inches by 2) inches and less than 12 inches by G inches remains at 14s.
Less than 7 inches by 24 inches remains at 15s. 6d.
Timbers other than redwood and western red cedar will, under the general tariff, be as follows: -
Twelve inches by 10 inches and over will remain at 12s. Gd. per 100 super, feet.
Twelve inches -by 6 inches and less than 12 inches by 10 inches increased from 12s. Gd. to 14s.
Seven inches by 2) inches and less than 12 inches by 6 inches remains at 14s.
In sizes less than 7 inches by 2i inches remain at 15s. Gd.
It is also proposed to revert to the rate of ls. per 100 super, feet under item 291 il for timber foi’ use in the manufacture of boxes as prescribed by departmental by-laws, instead of 2s., as proposed in the June schedule. A memorandum has been prepared for circulation among honorable members, showing the rates of duty under the 1921-28 tariff, as well as under the resolution of the 19th June last and the present schedule. I submit this schedule with every confidence, because I believe that it provides a means of saving our great Australian timber industry. I hope that our efforts will bring considerable prosperity to that industry, which is now declining, so that the wheels of the mills will be kept in motion and thousands of men will he employed continuously throughout the Commonwealth.
The following paper was presented: -
Quarantine Act - Regulations amended - Statutory Rules 1930 No. 80.
Motion (by Mr. Scullin) proposed -
That the House do now adjourn.
.- I desire to comment upon the procedure adopted by the Government in the introduction of tariff schedules. I realize that it is impossible to give notice of proposed changes in the tariff - that is obvious to all honorable members who have any acquaintance with the necessities of the revenue. But, at the same time, without discussing a matter that appears upon the notice-paper, I believe that I shall be in order in animadverting upon the procedure that has been followed. Here we have a third schedule dealing with the same item introduced within a period of nine months. On each occasion, it has been said that the proposals are introduced in the full confidence that they will assist the timber industry of Australia. The Opposition is prepared to assist that industry, but it has been given no opportunity to consider or discuss the tariff variations. It is most objectionable, and against the public interests that there should be these constant tariff changes, unaccompanied by an adequate explanation as to the necessity for the alteration.
– I desire to associate myself with the honorable the Leader of the Opposition in his protest against the way in which these tariff alterations are effected, particularly with regard to the timber industry. Everybody knows that for weeks, Parliament House and the Canberra hotels have been haunted with men, allied with the timber interests, who have been endeavouring to obtain concessions and reductions in the duties on oregon.
– Order! The honorable member is not in order in debating that subject.
– I shall endeavour to keep within the Standing Orders. The procedure is most objectionable. The action- of the Government is increasing building costs, so that that industry is practically at a standstill in Australia, and prospective homebuilders in the middle and working classes are denied an opportunity to build homes for themselves, and provide employment for others.
– Order! The honorable member is anticipating discussion on the tariff.
Mr. ARCHDALE PARKHILL.Actually I am anticipating it by eighteen months.
– The honorable member will not be in order in doing so.
-] protest against the manner in which these items have been brought down, and venture the opinion that before the House vises we shall find a means of ventilating the matter.
.-] add my protest to what has been said about the manner in which the Government continually alters the tariff and gives this House no opportunity to discuss its action; I refer particularly to the proposal of new timber duties this afternoon. All sorts of stories have been whispered about the country, and some have actually been printed in the press, as to the wire pulling and log rolling that is taking place to bring about concessions and increases of the timber duties.
– Order ! The honorable member must realize that he is not in order in reflecting upon this House or any member of the House.
– I do not vouch for the accuracy of those statements, but they have appeared in print. It is highly desirable that an early opportunity should be given to honorable members thoroughly to debate this matter. When speaking on the subject of tariff reports recently, I specifically stated that I had not met anybody who had questioned the personal integrity of the Minister for Trade and Customs. I repeat that statement now. However, it is in the interests of Parliament that these matters should be subjected to the fullest discussion, and cleared up at the earliest possible date. I add my request to that of the Leader of the Opposition (Mr. Latham) and the honorable member for Warringah (Mr. Archdale Parkhill), that that opportunity may be afforded to honorable members.
Question resolved in the affirmative.
House adjourned at 4. p.m.
Cite as: Australia, House of Representatives, Debates, 25 July 1930, viewed 22 October 2017, <http://historichansard.net/hofreps/1930/19300725_reps_12_126/>.