House of Representatives
21 November 1940

16th Parliament · 1st Session

  1. House of Representatives
  2. 16th Parliament
  3. 1940

Mr.speaker (Hon. W. M. Nairn) took the chair at 2.30 p.m., and read prayers.

page 64

MEMBER SWORN

Mr. Archie Galbraith Cameron made and subscribed an affirmation of allegiance as member for the electoral division of Barker.

page 64

QUESTION

ENEMY RAIDERS

Mr CURTIN:
FREMANTLE, WESTERN AUSTRALIA

– Is the Minister for the Navy in a position to furnish any information concerning the report that an enemy raider has been operating off Fremantle, and that a merchantman has been attacked?Whatsteps have been taken by the Royal Australian Navy to meet this development?

Mr. HUGHES.Iamnotinaposition to make a statement in connexion with this matter. No definite information is to hand, but, acting upon instructions, a cruiser of the Royal Australian Navy has been detailed for action in the area in which the raider is alleged to have appeared. Beyond this, I am not in a position to supply the honorable gentleman with any information, but I shall do so the moment it comes to hand.

Later:

Mr CLARK:
DARLING, NEW SOUTH WALES

– Can the Minister for Air tell me why, when its position was disclosed, one of the flying-boats used on the overseas service was not sent to detect and shadow the raider which recently attacked a British vessel in the Pacific?

Mr McEWEN:
Minister for Air · INDI, VICTORIA · CP

– I am not familiar with the circumstances to which the honorable member refers.

Mr Clark:

– The Minister knows that a raider was there and that its position was disclosed.

Mr McEWEN:

– I know that a raider was in the South Pacific some months ago, butI am not aware that its position was disclosed other than that the Turakina reported that it was being attacked. If the honorable member is able to reduce his question to more explicit terms I shall undertake to ascertain what information is available and to advise the House.

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SINKING OF H.M.A.S. GOORANGAI

Mr HUGHES:
Minister for the Navy · North Sydney · UAP

– by leave - I have to announce, with great regret, that H.M.A.S.Goorangai, a minesweeper of 223 tons, was sunk after a collision with a merchant ship about nine o’clock on the night of Wednesday, the 20th November, near Queenscliff, in Port Phillip Bay. There were three officers and 21 potty officers and men on board, and it is regretted that no lives were saved. The next of kin have been informed by telegraph.

Within ‘two and a half minutes of the collision having taken place, the boats of the merchant ship were lowered and an intensive search was instituted for survivors. The Queenscliff lifeboat, a military launch, and fishing boats, in addition to naval craft, were quickly on the scene and assisted in the search. The army authorities at Queenscliff helped greatly by searching the shores of the bay adjoining the scene of the accident, to determine whether any of the personnel had reached the shore. All possible steps were taken to get rescue craft to the spot as. quickly as possible, but it is probable that the Goorangai sank immediately on being struck. An inquiry will be held into the occurrence as soon as possible.

During the fifteen months of the war the. Royal Australian Navy has been mercifully free from heavy casualties, and I deeply regret that this severe disaster has occurred. On behalf of the Government I extend to the bereaved heartfelt sympathy in this sudden tragedy.

The Director of Navigation is conducting a preliminary investigation to-day, and it is probable that a formal Court of Marine Inquiry will be held on the return of the merchant vessel from Sydney next week.

A notice to mariners has been issued by the Director of Navigation, warning shipping away from the wreck.

I have received the following message from His Excellency the GovernorGeneral : -

Please convey to relatives of officers and ship’s company’ H.M.A.S. Goorangai my profound sympathy in their tragic bereavement.

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ROYAL AUSTRALIAN AIR FORCE

Engagement in Egypt.

Mr McEWEN:
Minister . for Air · Indi · CP

– by leave - I am proud to inform the House that fighter pilots of a

Royal Australian Air Force unit have fought, and won, their first air battle of the wai’.

I have received advice that four of our pilots on active service in the Middle East have been victorious in a sharp encounter with numerically superior Italian forces. Our men before Hying single-seater fighters’ back from a patrol. Near one of the most advanced posts in the western desert of Egypt, they sighted a large formation of Italian fighters and immediately attacked. Although outnumbered, they shot down five enemy aircraft. Victory, however, was not won without cost, and I regret to announce that, as the result of the engagement, Squadron-Leader Peter Ronald Heath has been reported missing, and is believed to have been killed. If these fears are confirmed, I am sure that this House will sympathize with his widow and children in Melbourne, and his father at Muswellbrook, New South Wales; but I feel, too, that they will gain comfort from the knowledge that he gave his life for hi3 country.

The Australian unit in the desert sector where the engagement occurred has the honour to hold one of. the most forward air-force posts in the M’iddle East, theatre of operations. The first of its pilots to attack the Italians have done their duty well against considerable odds.

Whilst ‘this success is ‘ in ‘ line” with the successes of other British airmen who have encountered aircraft of the Italian air force, it is satisfactory to know that Australian-trained pilots are maintaining an ascendancy in the air. In doing so, they are proving themselves worthy successors of the Australian Flying Corps.

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QUESTION

DIRECTOR OF LABOUR,

Mr ROSEVEAR:
DALLEY, NEW SOUTH WALES

– I ask the Minister for Labour and National Service whether any appointment has been made to the vacant position of Director of Labour? If not, is it the intention of the Government to make an appointment?

Mr HOLT:
Minister for Labour and National Service · FAWKNER, VICTORIA · UAP

– No appointment has been made ‘to the position of Director of Labour formerly held by Mr. Chifley, now a member of this House. The matter of a new appointment to the position is at present under consideration.

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QUESTION

APPLES AND PEARS

Mr GUY:
WILMOT, TASMANIA

– Will the Minister for Commerce inform me as to what arrangements are being ma.de for the marketing of the apple and pear crop during the coming season? If no definite arrangements have yet been made, will the right honorable gentleman expedite a decision in order that . the growers may know what steps are necessary?

Mr ANTHONY:
Minister without portfolio assisting the Minister for Commerce · RICHMOND, NEW SOUTH WALES · CP

– In the absence of the Minister for- Commerce, I shall answer the honorable member’s question. ArrangementS;.are being considered, and it is expected .that finality will be reached possibly in the next day or so in regard to a new acquisition scheme for 1940-41.

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QUESTION

AIR PATROL OF SHIPPING ROUTES

Mr BARNARD:
BASS, TASMANIA

– In view of the recent sinking of two ships off the Australian coast, and the subsequent admission by the Minister for Air that Bass Strait had not been patrolled from the air during the eighteen days prior to the sinkings, will the honorable gentleman give to the House the assurance that greater care will be exercised in future in the patrol of shipping routes? Does the honorable gentleman propose to make a statement to the House in regard to the matter?

Mr McEWEN:
CP

– The honorable member’s question is founded upon- incorrect premises. I did not make a statement that no patrol of Bass Strait had been made during a period of eighteen days. However,’ as this is a matter of considerable public and parliamentary interest I shall make a statement this evening on the adjournment covering the issues involved.

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QUESTION

WOOL SCOURING

Mr SHEEHAN:
COOK, NEW SOUTH WALES

– In view of the frequent public references by members of the Government to the necessity for conserving shipping space because of the possibility of a greater shortage of shipping than hitherto, I ask the Minister for Commerce whether the Government will give consideration to the issuing of regulations to compel the scouring in Australia of all wool grown here, and thus reduce the amount of space now being occupied by wool cargoes?

Sir EARLE PAGE:
Minister for Commerce · COWPER, NEW SOUTH WALES · CP

– The Govern- ment will give consideration to the honorable member’s suggestion.

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QUESTION

WHEAT INDUSTRY

Mr SCULLY:
GWYDIR, NEW SOUTH WALES

– Is the Minister for Commerce able to give me any indication whether a further payment of 6d. a bushel will be made upon wheat in the No. 2 pool, and, if such a payment is to be made, when it may be anticipated?

Sir EARLE PAGE:
CP

– The Government is at present in consultation with the Treasury, the Wheat Board and the Commonwealth Bank regarding both the payment of a further advance on No. 2 wheat pool and the initial payment in respect of wheat delivered from the coming harvest.

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QUESTION

DROUGHT RELIEF

Mr GUY:

– Is the Treasurer in a position to give details concerning the allocation of the amount of £2,750,000 which the Government has agreed to make available to the States for drought relief? I also desire to know -whether, in .making the allocations, consideration will be given to the granting of special relief to orchardists in Tasmania who have suffered severely from the ravages of hail storms and frosts?

Mr FADDEN:
Treasurer · DARLING DOWNS, QUEENSLAND · CP

– I ask the honorable member to be patient. Thi subject will be dealt with in the budget speech.

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QUESTION

RELIEF OF FRUIT-GROWERS

Mr FROST:
FRANKLIN, TASMANIA

– I ask the Assistant Minister for Commerce .when I may expect a reply to the request I made to him last Tuesday on behalf of the small fruitgrowers of southern Tasmania who had their crops destroyed by the severe climatic conditions that prevailed at the end of October? Does the Minister intend to request an official of the Commerce Department to furnish -first-hand information concerning the serious position of these growers, some of whom have lost the whole of their crop ? As the position of these producers is so serious I wish to know whether immediate steps can be taken to afford them -relief?

Mr ANTHONY:
CP

– The whole matter in respect of which the honorable member made representations to me early this week is under consideration. An investigationwill be made of all the circumstances to see what the Commonwealth Government can do. I remind the honorable gentleman, however, that responsibility in a matter of this kind must also be carried by the State authorities.

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QUESTION

SHIPBUILDING

Mr WATKINS:
NEWCASTLE, NEW SOUTH WALES

– As it is now eight months since theTownsendReport on shipbuilding was presentedto the Government, I wish to know when the document is likely to be made available to honorable members? If it is to be withheld for a still longer period I desire to know the reasons for such action.

Mr HARRISON:
Minister for Trade and Customs · WENTWORTH, NEW SOUTH WALES · UAP

– The report referred to by the honorable member is a departmental document intended to furnish information to the departments concerned. If, after full consideration has been given to it, the Government decides that it may be made available to honorable members, I shall see that it is tabled.

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QUESTION

EMPIRE AIR TRAINING SCHEME

Mr JAMES:
HUNTER, NEW SOUTH WALES

– In view ofthe important part being takenin the present war by air force personnel, I ask the Minister for Air whether he will make a statement to the House in explanation of the reasons why many men who volunteered for the Air Force and passed their examinations have not yet been called up? ‘The men not called up immediately were issued with a medallion to indicate that they had volunteered. Some of them have been wearingtheir medallions for six months, with the resultthat they are now nearly worn out. “Will consideration be given to the issuing of a second medallion to replace the one already issued if the men cannot be called up in the near future?

Mr McEWEN:
CP

– The position to which the honorable member has referred arises from unavoidable limitations to the number of men who can be trained in a specified period. This is determined by thenumber of aircraft and also other training facilities available. It was well known when the Empire Air Training Scheme was inaugurated that it would notbe possible to place in immediate’ training the large number of men who so promptly volunteered for this service. It was decided as a matter of policy that, rather than place a brake upon the rate at which men would be enlisted in the Air Force, they should be examined and, if passed, placed upon a reserve list. Those who could not be immediately taken into training were informed of the circumstances and requested not to leave their regular employment until they were advised to do so. They were told that, in some cases, considerable time would elapse before they could be called up for service. The circumstances which I have outlined were unavoidable mainly owing to the limited number of aircraft available.

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QUESTION

INTERNAL AIR SERVICES

Sir CHARLES MARR:
PARKES, NEW SOUTH WALES · NAT; UAP from 1931

– Will the Government take into consideration the desirability of assuming control for the duration of the war, of all the internal air services in Australia?

Mr McEWEN:
CP

– That question obviously involves a major matter of policy to which I shall direct the attention of the Government.

page 67

QUESTION

MILITARY HOSPITALS

Mr CONELAN:
GRIFFITH, QUEENSLAND

-WilltheMinister for the Army inform me who is responsible for approving of sites for military hospitals? I also wish to know who was responsible for choosing the site for a military hospital at Greenslopes? Who cancelled the approval and who subsequently re- approved of the site? Who was responsible for giving wrong levels in relation to this site?

Mr SPENDER:
Minister for the Army · WARRINGAH, NEW SOUTH WALES · UAP

– I cannot furnish the honorable member, offhand, with the information that he desires.I know that there were variations ill relation to sites. I shall investigate the matter and let the honorable member have a reply later.

page 67

MORTGAGE BANK BILL

Mr RANKIN:
BENDIGO, VICTORIA

– In view of the serious financial position of the primary producers and their trouble in getting accommodation, can the Prime Minister tell me whether it is intended to introduce the Mortgage Bank Bill this session?

Mr MENZIES:
Minister for Defence Co-ordination · KOOYONG, VICTORIA · UAP

– I am not able to make a statement about that at present but I am proposing to discuss it with my colleagues.

page 68

QUESTION

WATERSIDE WORKERS FEDERATION

Mr WARD:
EAST SYDNEY, NEW SOUTH WALES

– When does the Prime Minister expect to be able to make a statement in reply to the representations made by the Waterside Workers Federation about the setting up of a form of appeal for those members of the federation who were refused permission to work on the waterfront or who, having been issued with permits, subsequently had them withdrawn ?

Mr MENZIES:
UAP

– I expect tobe able to make a statement on that in the course of a few hours.

page 68

QUESTION

BRITISH WAR CABINET

Mr McCALL:
MARTIN, NEW SOUTH WALES

– In view of the widespread belief that Australia is not exercising sufficient influence in the formation of Empire policy, but is merely endorsing decisions made at Downing Street, does the Prime Minister agree with the statement made recently by Viscount Elibank in the House of Lords? Viscount Elibank said -

We should acknowledge what the Dominions have done in relation to population and financial resources. . . . The Australian High Commissioner,Mr. S. M. Bruce, would be an admirable addition and a valuable asset to the War Cabinet.

Mr.MENZIES.- Naturally, I am not able to give details of those matters, but I assure the honorable member that, if he were familiar with the course of communications between the Commonwealth Government and the British Government, he would not think that we were failing to make our contribution to the problems of policy.

Mr McCALL:

– Does the Prime Minister consider that it would be an advantage to Australia and the Empire war policy as a whole if Mr. Bruce or a Minister from this Parliament wereincluded in the British War Cabinet?

Mr MENZIES:
UAP

– On all these matters involving the machinery of consultation and discussion, I have pursued the course of directing any observations I have to the British Government. No good purpose would be served by my debating them publicly here.

page 68

QUESTION

ARMY BUTTONS

Mr FALSTEIN:
WATSON, NEW SOUTH WALES

– I desire to ask the Minister representing the Minister for Supply and Development whether it is a fact that the Department of Supply and Development has let a contract to a Japanese manufacturer in Japan for the supply of 40,000 gross of army buttons when there are Australian manufacturers who have the labour and idle machinery necessary to fill such a contract? Will the Minister also say what other contracts the Department of Supply and Development has let to Japanese manufacturers ?

Mr SPENDER:
UAP

-Ishallconveythe questions to the Minister for Supply and Development, and, in due course, the answers to the honorable member.

page 68

QUESTION

SOLDIERS’ DEPENDANTS

Mr WILSON:
WIMMERA, VICTORIA

– Does the Minister for the Army know that much hardship is being suffered by dependants of members of the Australian Imperial Force and other units of the armed forces because of the cheese-paring policy in regard to allotments to those dependants? Will the Minister take some steps to see that the cause of that hardship is removed and a more liberal policy administered?

Mr SPENDER:
UAP

– I find difficulty in answering a question couched in such general terms. If specific examples are conveyed to me I shall investigate them.

page 68

QUESTION

DARLEY MILITARY CAMP

Mr POLLARD:
BALLAARAT, VICTORIA

– Can the Minister for the Army tell me who is responsible for forcing members of the Australian Imperial Force stationed at the Darley Camp to march five miles from the Bacchus Marsh station to the camp when they return from leave? Will the Minister allow those men to make use of the transport facilities which are available and for which they are prepared to pay?

Mr SPENDER:
UAP

– I have already indicated that on my next visit to Melbourne’ I propose to go to the Darley Camp and investigate the complaint.

page 68

QUESTION

OLD-AGE PENSIONS

Mr BRENNAN:
BATMAN, VICTORIA

– I ask the Prime Minister whether this day or recently he or any other Minister has received a deputation representative of old-age pensioners generally as to an improvement of their rate of pension? If so, has he or any other Minister been able to promise relief to that deserving class of the community?

Mr MENZIES:
UAP

– I have not myself been able to receive a deputation. Whether one of my colleagues has actually received one up to now I do not know, but the whole problem has received consideration by the Government in connexion with the formation of the budget.

page 69

HOUSING AT WOLLONGONG AND PORTKEMBLA

Mr.LAZZARINI.-Aproposofthe statement by the Minister for Social Services that, although we were at war, he did not propose to take a holiday from his social responsibilities, especially the housing problem, will the Minister pay a visit to Wollongong and Port Kembla in order to make himself personally acquainted with the tragic housing shortage in those areas with a view to providing homes so necessary for the people there?

Sir FREDERICK STEWART:
Minister for External Affairs · PARRAMATTA, NEW SOUTH WALES · UAP

-Itis my intention to visit the centres mentioned by the honorable member for W erriwa.

page 69

QUESTION

POWER ALCOHOL

Mr RIORDAN:
KENNEDY, QUEENSLAND

– Can the Treasurer say whether the committee which was appointed last August to investigate proposals for the expansion of the power alcohol industry has yet completed’ its inquiries? If not, can he state when it is likely to do so, and whether the report is likely to be presented to Parliament at an early date?

Mr FADDEN:
CP

-I ca n assure the honorable member that the committee is carrying out its investigations as expeditiously as possible, and that its report will be presented without delay.

page 69

QUESTION

FLAX INDUSTRY

Mr GUY:

– Will the Minister repre senting the Minister for Supply and Development state why the flax-growers have no direct representation on the Flax Production Committee? Is it not the policy of the Government to give representation to the primary producers on all such committees, thus making for better understanding of the needs of the industry? Will he take the necessary action to give the flax-growers direct representation?

Mr SPENDER:
UAP

– I shall convey the honorable member’s inquiry to the Minister for Supply and Development and see that a reply is furnished.

page 69

UNOCCUPIED FRANCE

Australian Representation

Mr EVATT:
BARTON, NEW SOUTH WALES

– Can the Minister for

External Affairs say whether there is any direct channel of communication between the Australian Government and the Government of unoccupied France? If not, what government is looking after the interests of those Australians who are still there?

Sir FREDERICK STEWART:
UAP

– I suggest that the honorable member place his question on the notice-paper. During the next day or two I hope to make a statement which will cover the subjectmatter of the honorable member’s question.

page 69

QUESTION

BRITISH OFFER TO MOSCOW

Mr CALWELL:
MELBOURNE, VICTORIA

-CantheMinister for External Affairs state whether the Commonwealth Government was consulted before the British Ambassador to Moscowmade certain proposals to the Soviet Government on the 22nd October last, and does the Commonwealth Government approve of those proposals?

Sit FREDERICK STEWART.Obviously, that is a question which should be placed upon the notice-paper. It is too wide in its terms for me to answer it without notice.

page 69

QUESTION

WET CANTEENS

Mr JAMES:

– Will the Minister for the Army state why permission was given for wet. canteens in Australian Imperial Force camps, while a similar concession hasbeen denied the men in militia camps? Wliy are militiamen denied the privileges enjoyed by ordinary citizens?

Mr SPENDER:
UAP

– For a number of reasons which I do not propose to elaborate now, but which I shall state on some subsequent occasion, the Government decided that wet canteens should be permitted iu’ Australian Imperial Force camps. A condition of the decision was that the provisions of the Defence Act should apply to militia camps. Those provisions,’,- which have been in force for a considerable time, provide that militia camps shall he dry.

page 70

QUESTION

EMPLOYMENT IN MUNITIONS WORKS

Mr ROSEVEAR:

– Is the Minister representing the Minister for Supply and Development aware that it is most difficult for applicants for employment to obtain access to munitions annexes because of the presence of military guards? ‘ Will he consider setting up a central office in Sydney where those employers who desire labour may get into touch with men who desire work?

Mr SPENDER:
UAP

– I shall discuss the matter with the- Minister for Supply and Development.

page 70

QUESTION

OIL CARTEL

Mr BEASLEY:
WEST SYDNEY, NEW SOUTH WALES

– Will the Minister representing the Minister for Supply and Development make available all relevant documents relating to the setting up of a cartel for the control of oil and petrol in Australia? Will he state whether the arrangements made have been acceptable to all the distributors, including the independent companies as well as the major companies?

Mr SPENDER:
UAP

– I shall discuss the matter with the Minister for Supply and Development, and make a statement at an appropriate time.

page 70

QUESTION

JAPANESE REPRESENTATIVE IN AUSTRALIA

Mr FORDE:
CAPRICORNIA, QUEENSLAND

– Has the Minister for External Affairs received any definite information from the Japanese Government regarding the identity of the person whom it is proposed to appoint as Japanese Minister to Australia? When is it expected that he will take up his duties here ?

Sir FREDERICK STEWART:
UAP

– We have not yet received that information, though we are hoping to do so at an early date.

page 70

QUESTION

SHIPBUILDING

Mr HOLLOWAY:
MELBOURNE, VICTORIA

– Will the Minister for Trade and Customs inform the House what has happened to the Townsend Report on shipbuilding? Just what is the position at the present time with regard to the proposal for building cargo ships?

Mr HARRISON:
UAP

– I direct’ the attention of the honorable member to the answer, given to a question asked by the honorable member for Newcastle (Mr. Watkins) earlier to-day. Regarding the second part of the honorable member’s question, I shall have inquiries made.

page 70

QUESTION

AUSTRALIAN ADVISORY WAR COUNCIL

Leakage of Information

Mr LAZZARINI:
WERRIWA, NEW SOUTH WALES

– Will the Prime Minister state the nature of the secret information which, according to press reports, was disclosed by some member of the War Council? Were any steps taken to find out who was responsible?

Mr MENZIES:
UAP

– The information referred to was contained in a statement which appeared in sections of the press, and had to do with the forthcoming budget. I took such steps as were possible, but was not able to ascertain who was responsible.

page 70

QUESTION

FREE RAILWAY PASSES FOR SOLDIERS

Mr CLARK:

– I ask the Minister for the Army whether it is possible to make provision for the granting of free passes to soldiers on garrison duty so that they may visit their homes when on leave?

Mr SPENDER:
UAP

– The matter of railway, passes for members of the services is at present under consideration, and I hope to be able to furnish the honorable member ‘with an answer to his question some time next week.

page 70

QUESTION

RESIGNATION OF DEPUTY COMMISSIONER OF PRICES

Mr WARD:

– Can the Minister for Trade and Customs furnish information concerning the reasons which actuated Mr. McCullock, Deputy Commonwealth Commissioner of Prices in New South Wales, to resign his position?

Mr HARRISON:
UAP

– I shall have inquiries made and -if the information can be made available I shall let the honorable member have it later.

page 71

MAGNESIUM

Mr.FROST. - Is the Prime Minister in a position to make a statement in regard to the production of magnesium from the dolomite deposits in Tasmania?

Mr MENZIES:
UAP

-Inaturallycannot make a statement offhand that would be sufficiently informative. Ifthe honorable member will allowme to do so, I shall make a statement to the House in regard to the matter at some future time.

page 71

QUESTION

QUESTIONSWITHOUT NOTICE

Mr MENZIES:
UAP

– I ask honorable members to defer further questions until to-morrow.

page 71

CHAIRMAN OF COMMITTEES

Motion (by Mr. Fadden) proposed -

That thehonorable member for Forrest (mr. Prowse) be appointed Chairman of Committees of this House.

Motion (by Mr. James) proposed -

That the honorable member for Grey (Mr. Badman) be appointed Chairman of Committees of this House.

Mr BADMAN:
GREY, SOUTH AUSTRALIA · UAP; CP from 1940

.- The honorablemember for Hunter (Mr. James) has acted without my authority or approval. I was not informed that he proposed to nominate me and, in view of the circumstances, I refuse to accept nomination.

Mr SPEAKER:

– The question is-

That the honorable member for Forrest (Mr. Prowse) be appointed Chairman of Committees of this House.

Question resolved in the affirmative.

page 71

QUESTION

GOVERNOR-GENERAL’S SPEECH

Address-in-Reply.

Mr. Beck, for the Committee appointed to prepare an Address-in-Reply to His Excellency the Governor-General’s Speech (vide page 25), brought up the proposed address, which was read by the Clerk.

Mr BECK:
Denison

.- I move -

That the following Address-in-Reply to His Excellency the Governor-General’s Speech be agreed to -

We, the House of Representatives ofthe Parliament of the Commonwealth of Australia, in Parliament assembled, desire to express our loyalty to our Most Gracious

Sovereign, and to thank Your Excellency for the Speech which you have been pleased to address to Parliament.

It is extremely doubtful if a motion of this kind has ever beforebeen moved in such serious and critical circumstances as those which confront Australia and the Empire to-day. This great Empire of ours is at death-grips withthe most unscrupulous and powerful foes with which it. has ever had to contend.

This country has just emerged from the turmoil associated with the holding of general elections to decide who shall represent the people in the new Commonwealth Parlia-‘ ment, elections which, havingregard to the international situation, should never have been held. The elections have resulted in what is almost a political stalemate which will make the task of governing this country infinitely more difficultthan ever before. The elections have shown that the people of Australia are practically evenly divided in their views as to what form of government they are to have for the next three years, but, with the exception of one State, the electors have shown that they have confidence in the parties sitting on this side of the House. I regret to say that the electors of the State which is known generally as the Mother State of Australia have not shown the sanity exhibited by the electors scattered throughout therest of Australia. I believe that in returning three members to the Government side in place of one in the old Parliament the electors of Tasmania showed a return to sanity such as has never been seen before in this country. Tasmanians are very proud of their record, and, no matter what may be said by the unthinking to the contrary, I venture to say that we in Tasmania are quite a civilized community.

In presenting their case to the people during the election campaign the parties on this side of the House had to contend with every handicap. They were sniped at by the press in some States, and every opportunity was taken to belittle the efforts of the Government, handicapped as it was by its inability to inform the people fully of its war measures lest valuable information should be divulged to the enemy.

I believe that no Prime Minister Las ever %een confronted with a heavier task than that presented to the present Prime ‘Minister (Mr. Menzies) since the outbreak of the war. Yet he has met with obstructions from every quarter. The loss of three of his most valuable colleagues in the Cabinet in an unfortunate air disaster only a little while ago was a national calamity. In spite of these handicaps, however, the Prime Minister is prepared to carry on to-day with that indomitable spirit which has characterized his services to the nation in the past.

Our first task is to win the war, and I am sure that honorable members opposite and the people generally are just as anxious that Australia shall play its part in the defence of the Empire as are honorable members on this side of the House. The failure to secure a national government has, however, retarded our war efforts. All that we have been able to achieve so far is an Advisory War Council which, in my opinion, is a poor substitute indeed for a national government. Is it any wonder, then, that the electors in most of the States are becoming impatient at the way in which our politicians are treating this matter?

The most momentous budget ever presented, in this chamber is to be brought down to-day, and in view of the general desire to learn its contents as quickly as possible, I do not propose to speak on this subject at any length. Honorable members will appreciate that they will have as much freedom to express their views during the budget debate as they will have in speaking to this motion. I hope that they will realize that we have been sent here to do an important job and that the sooner we get to work on it the better it will be for the nation. Our best course is to start immediately on our consideration of the budget papers.

I should like to discuss many matters but, except in the case of one or two questions of vital importance to Tasmania, I shall await another opportunity to do so in order that the business of the Parliament may not be delayed unnecessarily. I urge the Government to give immediate attention to the representations I have made on these subjects, the first of which is the apple and pear acquisition scheme. Tasmania exports more fruit to overseas markets than any other State. It is the pioneer State of the apple and pear industry and is therefore affected most by the acquisition scheme.

Another matter relates to the magnesium industry. There is a shortage of aluminium in Australia, but it has been reported that only a few tons of magnesium are required annually. That is not the case. The requirements for defence purposes alone amount to 300 or 400 tons per annum. All that is sought by the company which is attempting to exploit the dolomite deposits of Tasmania is a guarantee from the Commonwealth Government of a market for a proportion of its output.

I suppose that’ no speech by an honorable member representing a Tasmanian electorate would be complete without a reference to the famous Sandy Bay rifle range. Our representations in connexion with this range have been treated jokingly, but’” we are determined to press the matter. No other city in the Commonwealth would have been so forbearing as to permit such a state of affairs to continue. It is no exaggeration to say that the Sandy Bay rifle range is a bar to the development of the best residential area in Hobart. That district must be made available soon as a residential suburb.

Mr Rosevear:

– Where does the honorable member suggest that the rifle range should be established?

Mr BECK:

– I do not propose that it should be shifted to any other site at present. In peace-time the only persons who use the range are members of rifle clubs, and they are not able to use it at the present time because most of the rifle shooting practice must be carried out on miniature ranges. The military authorities do not require the range at the present time. The Government could afford to be gener.ous and dispose of this range, which is retarding the development of the best residential district. It is impossible to obtain good building sites in Hobart to-day; yet there are hundreds of acres of land adjacent to the rifle range suitable for building purposes. I shall not detain the House longer. We have been sent here to do an important job and we should not spend too much time in speaking to this motion while that job is awaiting our attention.

Mr ABBOTT:
New England

– I second the motion proposed by the honorable member for Denison (Mr. Beck).

No parliament of this Commonwealth has ever met at a more critical period of the country’s history. I believe that I express the views of all Australians when I say that we have the greatest admiration for the tenacity and courage with which the people of Great Britain are to-day resisting the most murderous and bloody assault that has ever been made upon ,a civilian population in modern times. I wish to pay a humble tribute to Their Majesties the King and Queen for the way in which they are sharing the dangers and tribulations of their people. Their actions have cemented into the hearts of the British race the love and esteem in which they are held ; those feelings are entertained in all free countries. Their Majesties have shown great sympathy for the people in the terrible times through which they are passing.

As we have seen this world battle increase in fury, as the crown of thorns has been pressed harder and harder upon the brow of Britain, as we have heard of British men, women and children being blown to pieces by aerial bombs and threatened by starvation, and as our lifelines of commerce through the Mediterranean, and the eastern Atlantic have been seriously endangered by the long-range bombers of Germany, we have felt the greatest respect and admiration for the unity with which the people of Great Britain are facing the enemy. Threatened as they are, they return blow for blow and stand firmly united in the grim struggle in which they are engaged.

But what is the picture in Australia? I congratulate the Commonwealth Government - and. here I disagree with the honorable gentleman who proposed, the motion now before the House - upon having held the Commonwealth elections. In every democracy it is the right of the people from time to time, even if they are engaged in a war, to decide who shall be entrusted with the government of their country. Although, at the recent elec tions, the people did not endorse fully the policy of the Government parties, they certainly did not endorse fully the policy of the Labour party. The electors so cast their votes that the party representation in this chamber is divided equally between the Government parties and the two Labour parties, whilst there are two members who have sworn allegiance to neither side. I fought my campaign for election to this House mainly on the plank that there should be a united nilparty government in Australia ; and the electors gave a plain intimation to the leaders of all political parties that they desired the formation of a united government at the first opportunity; but the majority, of them, I believe, were grievously disappointed when they learned that this had -not been done.. I do not experience the same feeling of dismay at the formation of the Australian Advisory War Council as does the honorable member for Denison. Anything in the way of co-operation is better than nothing at all, and I hope that this baby will grow into a stalwart all-party government.

One of the terrible disabilities of democracy appears to be that the people never -realize the dangers that threaten their State until a common sacrifice brings all parties together. I refer to the length of time that elapsed in Great Britain between the outbreak of war and the formation of a united government. Britain was bombed, yet months went by before a national government was formed. I was in Paris early in 1938. I had the feeling then that I was in a house divided against itself. It seemed that every body was willing that sacrifices should be made ; but every body felt that those sacrifices should be at the expense of others. The “ right “ refused to bear its share of taxation., and attempted to preserve all of its privileges. The “ left “ likewise would not make any sacrifice, but endeavoured to preserve it3 privileges. In the end, the Nazis conquered Prance, and thereafter neither section had any rights.

The position in Australia to-day is largely akin to that which existed in France in 1938. Groups of persons are attempting to preserve their peace-time condition’s. When the petrol-rationing proposals were brought down, there was a storm of protest from those who thought that their interests might be damaged. Other persons are complaining about the severity of taxation. Strikes are occurring throughout Australia, because the workers feel that profiteering is being practised. Some companies are making enlarged profits. In view of. these circumstances, is it not time for the whole of the parties to combine in a government, and straighten the matter out? The entire cross-section of Australian political opinion should be represented in the national government to-day. A federal election would afford no solution of our present problems. It would not matter what party was in power, the section that was not represented would necessarily be very suspicious of the actions of the Government. It has’ been suggested that it is always necessary to have in Parliament a strong Opposition to act as a watchman over “the Government, to oppose its policy, and to impose a check on its actions. I believe that, with a government consisting of all parties, Parliament itself would assume the position of the Opposition and become the watchman over the Government, to see that it gave effect to the wishes of the whole of the people with all the energies at its disposal. Another factor which appeals to those of us who have just been elected to this House, and who probably are not as politically minded as we might be, is that in a government of such a type, party alinements would tend to disappear and patriotism- would take the place of party-ism. An enormous amount of the work of Parliament in war-time necessarily must be done by regulation under the National Security Act. I fear that the Australian Advisory War Council as at present constituted offers no solution of the problems of the Government, because it cannot sit the whole of the time with the Government, and circumstances might compel the Government to act suddenly and quickly without having time to consult this body. You could not have individual groups bringing pressure to bear on a government that was representative of all parties; that function should be exercised only by the Parliament itself. Any section that was not represented in the Government would suffer very seriously by reason of the lack of that representation. The workers of Lithgow, Port Kembla, and Wollongong are suffering,” and will continue to suffer for many months, because they are not represented in the Government of the Commonwealth. If the Labour party had been represented in the Government, I do not believe that it would .have permitted the existing conditions to arise.. I am not blaming the Government, because necessarily it cannot be as cognizant of the conditions which exist in these areas as are those who are particularly looking after the interests of the people in them. Representation in an all-party government should be according to the strength of the various parties in the House of -Representatives. Although there was said to be a swing towards Labour in the electorate of New England, I, an untried new man, was able to obtain a majority of over 10,000 votes, a reduction of the previous majority by only 300 votes, mainly on the policy that there should be a united government. That is the policy which the people want. Throughout my campaign I advocated the election of the Prime Minister and the Deputy Prime Minister by secret preferential ballot of members of the House of Representatives, and suggested that the Prime Minister and the leaders of the different parties should then decide between them the personnel of the Ministry. In the event of a difference of opinion between any of the party leaders on the ground that some of the men proposed for ministerial office might prove to be incompatible, it would be the duty of the Prime Minister, as the elect of this House, to decide who should be appointed. In the Canberra Times yesterday the Leader of the Opposition (Mr. Curtin) is reported to have said that the workability of Parliament depends upon the capacity of both sides to move towards each other. That newspaper also published a leading article in which it stated that, before a government of all parties was formed, a settled policy should be evolved. I consider that the first matter to be decided is the principle which the people of Australia, want to have adopted, namely that there shall be united government. Then it would be the task of the Australian Advisory War Council to settle, by means of a compromise through each side approaching closer to the other, the policy on which all parties could work together for the benefit of the whole of the Commonwealth, in the struggle in which Australia is engaged. If any party felt bound to abide by the decisions of outside bodies, it would be the duty of that party to summon those bodies and impress upon them, the fact that, in the interests of Australia as a whole, it was their duty to allow their representatives to join in such a government. I do not suggest that any party should be asked to massacre its policy. There should be some common ground on which all parties could meet for the defence of their nation and the homes of our people.

In a Avar like the present one, there must be a total effort so that as soon as possible the initiative may be completely taken and the enemy may be sought out in his strongholds and destroyed. A war can never be won by remaining on the defensive, but only by preventing the enemy from attacking and destroying him. Therefore, I congratulate the Government upon having sent troops to the Middle East, and particularly upon the way in which it has supplied equipment and munitions overseas, thus in some degree repairing the terrible losses suffered at the evacuation of Dunkirk. But a balance must be struck between assisting the overseas forces in the Empire effort, and protecting vital industries which are the very heart blood of the munitions effort of Australia. Many of us have been worried by reason of the lack of necessary defence preparations in some of the mast vital parts of Australia. I agree that guns of large calibre may not .be available at the present moment properly to equip such places, but there is nothing to prevent the installation of secondary batteries of smaller calibre. There is no bar to the Government putting the roads in such order that the quick movement of troops would be possible. In an area that might be completely cut off by water, bridges could be constructed, over which troops could swiftly advance to repel a mechanized unit. There is nothing to prevent the erection of permanent fortifications in anticipation of the arrival of large calibre guns, or guns of the smaller types. The Minister for Defence Co-ordination (Mr. Menzies) well knows the areas to which I refer, and I shall therefore be no more specific. I suggest to him and his Ministers that the earliest consideration should be given, to this matter. When, we realize that apparently a German armed raider has been able to approach to within’ one mile of the coast of Australia and lay mines, Ave do not need very great imagination to realize also the further possibility of a swift raider com ing right up to our coast, landing mechanized units, and destroying some of our most vital industries.

The fate of Australia will bc determined very largely in the Middle East or in the eastern Atlantic unless the bombing of Britain’s lifelines by long distance bombers can be stopped. Already one can hear the wolves howling around the lion at bay. If that lion is seriously wounded other wolves will dash in to the attack so as to be present at the kill and obtain a portion of the carcass. The only possible insurance for Australia in the event of such a contingency would bo to have adequate docking facilities for capital ships. If honorable members will consider the circumference of the Pacific, and note the situation of naval bases, they will realize that Australia desperately needs a naval dock capable of accommodating capita] ships. America has the great naval base at Pearl Harbour, backed by bastions at Los Angeles, and further to the north by the naval base that is being constructed in Dutch Harbour, Alaska. Down the other side of the Pacific there are a Soviet base at Vladivostock, the Japanese bases, the British base at Singapore, and Cavitte in the Philippine Islands. On the southern arc of the circle- there is no naval base with capital ship docking facilities. I again suggest that the Prime Minister take up with the Imperial Government the matter of the possibility of bringing to Sydney the floating dock taken to Singapore to act as a substitute while the. graving dock there was being constructed. It would fulfil at Sydney the same purpose that it served at Singapore, while our graving dock was being built at Port Jackson, and would add greatly to the naval defence of the Commonwealth.

My reasons for suggesting that the clock should be brought tq Sydney are that the new graving dock is to be built in Sydney, that there are not many ports in the Common wealth capable of accommodating the floating dock, and that Sydney already has some protective fortifications.

I wish to make some observations concerning our internal position. While wars are won on battle fronts, they are often lost on home fronts. Among the factors which may lead to defeat on the home fiont are : serious price rises, heavy increases of interest rates, and unemployment. If these conditions assume serious proportions the morale of the people is sure to be affected, for discontent will spread and the Avar effort of the nation will become paralysed. We had frequent demonstrations of such happenings during the last war’. I myself saw a great nation defeated, not only by defeat of its armies but also by the collapse of “its home front. Russia collapsed in this way during the last war, and France has collapsed through these causes in the present war.

The Commonwealth Government is to be warmly congratulated upon the action it has taken to control retail prices throughout Australia since the outbreak of the war. A glan’ce at the results of the action taken in Australia in this regard compared with the results of action taken in Great Britain to achieve the same ends, shows that the Commonwealth has a. great deal to be proud of in this connexion. The collaboration between the Treasury and the Commonwealth Bank in regard to the control of interest rates during the same period has also been very good, and interest rates have been well controlled throughout Australia.

In regard to unemployment the position is not so happy. The Government has been able to do a great deal in connexion with the manufacture of munitions in Australia, but in at least one direction practically nothing has- been accomplished. I suggest for the earnest consideration of the Ministry the implementation of a policy designed to extend our munitions-making industries throughout the rural areas of this country. At present there is not, so far as I know, a single munitions annexe in the’ country districts of New South Wales. There has been some talk of providing annexes in these areas, but so far no buildings have been erected. When I made inquiries on this subject last week I was informed that there would be difficulty in establishing projects of the kind at once in’ consequence of the shortage of tools. It was stated, however, that this shortage would probably be rapidly overtaken in the new year, so I presume that the development of the annexe programme may be expected within the next two or three months. .However, in view of the terrible and devastating effect of the drought in our rural areas, there is urgent necessity, in my view, for encouraging the formation of companies and the establishment of works for the manufacture of munitions in annexes in appropriate rural areas. The authorities should at once investigate possible -sites and take steps to allow the companies to erect the requisite buildings. If this action be taken now it is probable that the buildings will be ready only in time for the installation of the machinery and equipment when it can be made available. The adoption of a building programme of this kind in country districts would bc of great value at the present juncture, for it would absorb many unemployed people and cause to be circulated a good deal of money in districts where conditions are very difficult at the moment.

The practicability of using small workshops and garages in country districts for the manufacture of certain types of munitions and equipment for the Army should be investigated. - I have been informed by an association of automotive operators in Sydney that no inquiry has been made to ascertain what facilities qf this description are available in rural areas. I have also been told that small workshops and garages have not been given any information concerning the form of the components required for munitions in order that they may indicate their ability to participate in such work. The Government should detail a properly qualified engineering officer to investigate the whole position in this regard, with the object of making full use of small workshops and garages for the manufacture of munitions. Action of this kind was taken in Great Britain, during the last

Avar with excellent results.

In conclusion, I believe that as long as this Empire, of which we are a part, holds together, as long as its units fight as one man and as long as Australia can maintain its unity and, better still, if it can go on under one single government, we shall conquer and destroy the enemies of freedom and liberty throughout the world. As the Speech of His Excellency refers, in its concluding passages, to Divine Providence, I shall add that it is the prayer of every man in Australia who loves his country that there may be unity here, and’ that each party will be prepared to move .substantially towards the policy of the other party, so that we may establish one strong government of all parties and put forward a maximum national effort of the whole people to end the war quickly and let us get on with the work of peace.

Debate (on motion by Mr. Evatt) adjourned.

page 77

SPECIAL ADJOURNMENT

Motion (by Mr. Menzies) agreed to -

That the House, at its rising, adjourn until to-morrow at 10.30 a.m.

page 77

SUSPENSION OF STANDING ORDERS

Motion (by Mr. Menzies) - by leave - agreed to -

That so much of the Standing Orders bo suspended as would prevent, before the Address-in-Reply is adopted, the appointment of the Committees of Supply and Ways and Means, the consideration of Governor-General’s Messages transmitting Estimates, and the introduction of the budget, and resolutions and bills consequent thereon.

page 77

COMMITTEE OF SUPPLY

Motion (by Mr. Menzies) agreed to -

That the House will, at a later hour this day, resolve itself into a committee to consider the Supply to be granted to His Majesty.

page 77

COMMITTEE OF WAYS AND MEANS

Motion (by Mr. Menzies) agreed to -

That the House will, at a later hour this day, resolve itself into a committee to consider the Ways and Means for raising the Supply to be granted to His Majesty.

page 77

ESTIMATES 1940-41

Messages reported transmitting Estimates of Revenue and Expenditure for the year ending the 30th June, 1941, and recommending appropriation accordingly.

Ordered to be printed and referred to Committee of Supply.

page 77

BUDGET 1940-41

In Committee of Supply:

The CHAIRMAN (Mr Prowse:
FORREST, WESTERN AUSTRALIA

– In taking up the duties of Chairman of Committees at the beginning of this Parliament, I wish to thank honorable members for having once again honoured me with the appointment.

Mr FADDEN:
Treasurer. · Darling Downs · CP

– I move -

That the first item in the Estimates raider division I. - The Senate - -namely., “Salaries and allowances, f 8,170” be agreed to.

When the Prime Minister (Mr. Menzies) brought down his budget in September, 1939, he said he had the unhappy distinction of presenting to Parliament a £100,000,000 budget for the first time in the history of the Commonwealth. It is my unfortunate task to introduce a budget of £150,000,000. These figures relate to the revenue budget only. There is even a. more striking increase on the loan estimates which will be referred to later.

Last year’s budget was only a partial war budget and taxation was relatively light. This year we must meet the impact of a rapidly increasing war expenditure which will require the diversion of about 20 per cent, of our resources from peace to war.

The planning and preparation of a wartime budget call for courage and judgment - judgment that we may see the financial problem of war as a whole and in its right relation to the physical realities which constitute our war effort, and courage that we may face the task boldly and not be led away in false pursuit of the easy way.

The need for courage to face such a task is evident. No ingenuity can -make the financing of such a total anything but a grievous burden, and I am obliged to lay before honorable members taxation proposals which represent the heaviest financial impost ever placed upon the people of Australia.

Before coming to the details of the budget for 1940-41, I shall review briefly the financial results of 1939-40.

Financial Year 1939-40

The budget which was presented in

September, 1939, had been prepared in time of peace and was of necessity tentative. New taxation to the amount of £8,500,000 was approved, including some measures announced after the budget. In November, 1939, the Acting Treasurer presented revised estimates of revenue and expenditure in the light of war conditions, together with an outline of the general financial policy which it was proposed to follow. In such a year of change it is not surprising that the final results differed in some important respects ‘from the revised estimates.

On the revenue side the chief variation was in Customs and Excise, which it was estimated in November would yield £45,360,000. This represented a reduction of about £3,000,000 from the earlier budget estimate because on the outbreak of war imports had been interrupted and the future was uncertain. With the protection of the British navy our overseas trade was restored and the flow of imports was increased by heavy orders placed in anticipation of future difficulties of supply. As a result, the actual revenue was £53,825,000. Although import licences, which were introduced in December, imposed restrictions on goods from non-sterling countries, they did not become effective for several months because of the large quantity of goods on order at that time.

Other revenue items, excluding the selfbalancing item flour tax, resulted in a net improvement of approximately £2,620,000, of which income tax accounted for £1,530,000 and sales tax £776,000. Details of the actual revenue and expenditure for the past year are given in Table 1 where they can be compared with the revised budget estimate. Apart from customs revenue, which I have just explained, the improved receipts reflected the strongly rising level of income and consumption despite the dislocation due to the war.

In the revised budget, provisionwas made for a contribution of £13,780,000 towards defence and war. services. Later in the year, when it was known that further revenue would be available, additional estimates for war services amounting to £9,000,000 were passed by Parliament. The actual expenditure from the budget was £24,283,000. The expenditure from Loan Fund amounted to £28,814,000 and from Trust Fund £2,017,000, bringing the total expenditure on defence and war services to £55,114,000. The expenditure in Australia was £45,229,000 and overseas £9,885,000.

The year closed with excess receipts of £2,928,000. This was partly due to increased taxation which was imposed in May. The whole of this sum will be devoted towards meeting war expenditure in the present year and an Appropriation Bill will be brought down at an early date.

Apart from loan expenditure for war services already referred to, the only other items of loan expenditure in 1939-40 were £1,883,000 for Post Office works and £750,000 in respect of farmers’ debt adjustment.

Public Debt

Internal Loans

During 1939-40 two public loans were raised in the Australian market. The first in March, 1940, was for £18,000,000 issued at par with interest at 3&3/8percent. per annum for five years, or 3&5/8percent. per annum for 10-16 years. Approximately £8,000,000 was for defence purposes; the balance being for the ordinary loan programmes of the Commonwealth and the States. The second loan was solely for war purposes and was raised in May, 1940, for £20,000,000 at par with interest at 2¾ per cent. per annum for 5 years, or 3¼ per cent. per annum for 10-16 years. Both loans were fully subscribed.

In addition, a special loan of £12,000,000 was provided in December, 1939, by the Commonwealth Bank in conjunction with the Australian trading banks. Of this special loan, £2,000,000 was for defence works of low priority and the balance for works and other purposes of the Commonwealth and the States.

In March, 1940, war savings certificates with a term of seven years were made available to the public. The face value of certificates sold to 30th June, 1940, amounted to £7,636,000 and sales since then have brought the total to over the £15,000,000 mark. The response of the public has been most gratifying and I would specially mention the valuable work of war savings groups in factories, shops and offices. There must be saving by all sections of the community, and it is only by organization in groups that full scope can be given to savings in the lower incomes. The individual will also benefit by the increased security his savings will give him in the post-war period.

Interest-free Loansand Gifts.

To the 30th June, 1940, the citizens of Australia made available to the Commonwealth Government for war purposes the sum of £3,864,000. The amount has since reached £5,100,000. These sums are free of interest and are repayable at varying dates after the end of the war. In addition gifts by citizens for war purposes have been received to the extent of £585,000. The Commonwealth Government greatly appreciates the patriotic spirit of all who have contributed by these means to Australia’s war effort.

Debt Redemption

During the financial year ended June, 1940, £11,041,000 was provided for out of sinking funds, for redemption of public debt, of which £4,934,000 was on account of the Commonwealth and £6,107,000 on account of the States.

In the present financial year the receipts of the sinking fund will amount to £13,000,000, of which £6,200,000 will be payable to the Commonwealth sinking fund and £6,800,000 to State sinking funds.

Aggregate Australian Public Debt

The aggregate public debt of the Commonwealth and the States at the 30th June, 1940, was -

These figures represent an increase over the debt at the 30th June, 1939, of-

Practically the whole of the increase of Commonwealth debt is due to the war.

Economic Review

In his financial statement in November, 1939, the Acting Treasurer drew attention to certain adverse factors in the economic situation. Low exportprices and the decline of private investment in Australia had led to a recession which was reflected in some increase of unemployment and in the declining liquidity of the trading banks. Added to these factors was some inevitable dislocation of normal economic activity after the declaration of war. Appropriate action was taken by the Commonwealth Bank to relieve the position, and the Government’s immediate economic andfinancial policywas designed to stimulate economic activity and so increase the level ofemployment and the national income. At the same time, it was necessary to ensure that these increases were directed towards activities associated with the war effort.

In keeping with these plans to stimulate the economy, the Government refrained from increased taxation. Additional stimulus was also obtained from the specialloan (already referred to) of £12,000,000 from the Commonwealth Bank and the trading banks. At the same time machinery was set up to enforce restrictions upon imports and upon private investment as partof the policy of diverting our resources from civil to war purposes. These measures became increasingly effective as the general level of activity rose.

I think it may fairly be claimed that this policy has been justified by its results. Since the beginning of the war civil employment has increased by about 80,000, or about 4 per cent. of the working population, despite the enlistment in the various forces of more than150,000 men from the wage and salary earning groups. There are still some unemployed, but the task of bringing them into work becomes progressively more difficult and now calls for special measures of training, transfer and rehabilitation rather than general financial stimulus.

This increased employment, together with the improved prices for our export products, which resulted from the contracts with the United Kingdom Government, has contributed to raise the since then have brought the total to over the £15,000,000 mark. The response of the public has been most gratifying and I would specially mention the valuable work of war savings groups in factories, shops and offices. There must be saving by all sections of the community, and it is only by organization in groups that full scope can be given to savings in the lower incomes. The individual will also benefit by the increased security his savings will give him in the post-war period.

Interest-free Loansand Gifts.

To the 30th June, 1940, the citizens of Australia made available to the Commonwealth Government for war purposes the sum of £3,864,000. The amount has since reached £5,100,000. These sums are free of interest and are repayable at varying dates after the end of the war. In addition gifts by citizens for war purposes have been received to the extent of £585,000. The Commonwealth Government greatly appreciates the patriotic spirit of all who have contributed by these means to Australia’s war effort.

Debt Redemption

During the financial year ended June, 1940, £11,041,000 was provided for out of sinking funds, for redemption of public debt, of which £4,934,000 was on account of the Commonwealth and £6,107,000 on account of the States.

In the present financial year the receipts of the sinking fund will amount to £13,000,000, of which £6,200,000 will be payable to the Commonwealth sinking fund and £6,800,000 to State sinking funds.

Aggregate Australian Public Debt

The aggregate public debt of the Commonwealth and the States at the 30th June, 1940, was -

These figures represent an increase over the debt at the 30th June, 1939, of-

Practically the whole of the increase of Commonwealth debt is due to the war.

Economic Review

In his financial statement in November, 1939, the Acting Treasurer drew attention to certain adverse factors in the economic situation. Low exportprices and the decline of private investment in Australia had led to a recession which was reflected in some increase of unemployment and in the declining liquidity of the trading banks. Added to these factors was some inevitable dislocation of normal economic activity after the declaration of war. Appropriate action was taken by the Commonwealth Bank to relieve the position, and the Government’s immediate economic andfinancial policywas designed to stimulate economic activity and so increase the level ofemployment and the national income. At the same time, it was necessary to ensure that these increases were directed towards activities associated with the war effort.

In keeping with these plans to stimulate the economy, the Government refrained from increased taxation. Additional stimulus was also obtained from the specialloan (already referred to) of £12,000,000 from the Commonwealth Bank and the trading banks. At the same time machinery was set up to enforce restrictions upon imports and upon private investment as partof the policy of diverting our resources from civil to war purposes. These measures became increasingly effective as the general level of activity rose.

I think it may fairly be claimed that this policy has been justified by its results. Since the beginning of the war civil employment has increased by about 80,000, or about 4 per cent. of the working population, despite the enlistment in the various forces of more than150,000 men from the wage and salary earning groups. There are still some unemployed, but the task of bringing them into work becomes progressively more difficult and now calls for special measures of training, transfer and rehabilitation rather than general financial stimulus.

This increased employment, together with the improved prices for our export products, which resulted from the contracts with the United Kingdom Government, has contributed to raise the

since then have brought the total to over the £15,000,000 mark. The response of the public has been most gratifying and I would specially mention the valuable work of war savings groups in factories, shops and offices. There must be saving by all sections of the community, and it is only by organization in groups that full scope can be given to savings in the lower incomes. The individual will also benefit by the increased security his savings will give him in the post-war period.

Interest-free Loansand Gifts.

To the 30th June, 1940, the citizens of Australia made available to the Commonwealth Government for war purposes the sum of £3,864,000. The amount has since reached £5,100,000. These sums are free of interest and are repayable at varying dates after the end of the war. In addition gifts by citizens for war purposes have been received to the extent of £585,000. The Commonwealth Government greatly appreciates the patriotic spirit of all who have contributed by these means to Australia’s war effort.

Debt Redemption

During the financial year ended June, 1940, £11,041,000 was provided for out of sinking funds, for redemption of public debt, of which £4,934,000 was on account of the Commonwealth and £6,107,000 on account of the States.

In the present financial year the receipts of the sinking fund will amount to £13,000,000, of which £6,200,000 will be payable to the Commonwealth sinking fund and £6,800,000 to State sinking funds.

Aggregate Australian Public Debt

The aggregate public debt of the Commonwealth and the States at the 30th June, 1940, was -

Practically the whole of the increase of Commonwealth debt is due to the war.

Economic Review

In his financial statement in November, 1939, the Acting Treasurer drew attention to certain adverse factors in the economic situation. Low exportprices and the decline of private investment in Australia had led to a recession which was reflected in some increase of unemployment and in the declining liquidity of the trading banks. Added to these factors was some inevitable dislocation of normal economic activity after the declaration of war. Appropriate action was taken by the Commonwealth Bank to relieve the position, and the Government’s immediate economic andfinancial policywas designed to stimulate economic activity and so increase the level ofemployment and the national income. At the same time, it was necessary to ensure that these increases were directed towards activities associated with the war effort.

In keeping with these plans to stimulate the economy, the Government refrained from increased taxation. Additional stimulus was also obtained from the specialloan (already referred to) of £12,000,000 from the Commonwealth Bank and the trading banks. At the same time machinery was set up to enforce restrictions upon imports and upon private investment as partof the policy of diverting our resources from civil to war purposes. These measures became increasingly effective as the general level of activity rose.

I think it may fairly be claimed that this policy has been justified by its results. Since the beginning of the war civil employment has increased by about 80,000, or about 4 per cent. of the working population, despite the enlistment in the various forces of more than150,000 men from the wage and salary earning groups. There are still some unemployed, but the task of bringing them into work becomes progressively more difficult and now calls for special measures of training, transfer and rehabilitation rather than general financial stimulus.

This increased employment, together with the improved prices for our export products, which resulted from the contracts with the United Kingdom Government, has contributed to raise the

These figures represent an increase over the debt at the 30th June, 1939, of-

national income generally. It lias been estimated that the national income increased’ from £7SS,000,000 in 1938-9 to £863,000,000 in 1939-40, an increase of more than 9’ per cent. Considering the fact that the year opened with some evidences of a recession, this must be regarded as a highly satisfactory position. - On the financial side similar evidence of improvement exists. Despite the heavy flow of imports, a high level of export income and some inflow of capital combined to give us a small but welcome increase of our London funds. This, in conjunction with the policyapplied by the Commonwealth Bank, has led to a sharp improvement of the liquid position of the trading banks.

The Government’s policy has been steadily directed towards low interest rates. Since the war yields on Government securities have fallen on the average by 1 per cent., while rates on treasury-bills, bank deposits, and overdrafts have been reduced.

Price control, introduced by the Government at the outbreak of war, continues to operate successfully in preventing profiteering and safeguarding the interests of the Australian .consumers. Despite the substantial rise of the cost of imported goods and an increase of 25 per cent, of export prices, the “ all-items “ index of retail prices in Australia has risen by less than 5 per Gent, during the war. The Government greatly appreciates the manner in which the business world in general has co-operated in carrying out the policy of price control.

The OUTLOOK for 1940-41.

We thus entered. 1940-41 with a much more active economy than l:hat with which we began the previous year. . There are, it is true, certain disturbing features. Drought conditions have adversely affected the prospects of some rural industries - particularly wheat. Nevertheless, we hone for an export income comparable with the record figures of 1939- 40. Internally there will be an increasing war expenditure and probably some further though smaller increase of national income.

I shall now deal with the estimated revenue for- 1940-41 and the budget expenditure omitting defence and war services. This will reveal the amount that it is expected will be available from the budget for war purposes on the basis of existing taxation. . The real problem of war finance will then be presented.

Estimated Revenue 1940-41

On the basis of rates of taxation which were in general operation in 1939-40 - that is the rates prior to May - it is estimated that the total revenue for 1940-41 would be about £105,000,000. This estimate allows for a substantial fall of customs revenue from the actual receipts of 1939-40, because imports for last year were abnormally high in anticipation of difficulties of future supplies and the full effect of the licensing restrictions on imports from non-sterling countries was not felt until after the year had closed. In May last, in anticipation of the budget of 1940.-41, additional taxation for war purposes was approved by Parliament, which it is estimated will produce an increased revenue this year of about £14,000,000, a figure which is a little below the May estimate. The estimated revenue for 1940-41 on the basis of taxation now in force is therefore £119,000,000. Details of this estimate are given in Table 4.

The customs and excise estimate is £48,800,000 compared with actual receipts last year of £53,800,000. On the one hand allowance has been made for a substantialfall for the reasons just given, and on the other hand, I have taken into account the extra revenue that will be received from the increased duties imposed in May.

Income tax is estimated to yield £20,750.000, an increase of about £4,000,000 over last year. Sales tax is estimated at £17,000,000, an increase of approximately- £5,000,000. For land tax there is also an increase of £1,500.000. These increases’ are due almost wholly to the higher rates of taxation imposed last May.

Import Licensing

I have referred to the effect on customs revenue of import restrictions through import licensing. The licensing of imports from non-sterling countries was- introduced in December, 1939, but, because of the large volume of goods on order, initial restrictions did not become fully effective for some time. Additional restrictions have been imposed from time to time and the cumulative effect of those announced up to the 1st October, is to prohibit goods which in1938-9 were imported to the value of about £A.11,000,000. In addition, imports of newsprint, petrol and raw silk are indirectly reduced by the rationing schemes applied to those commodities.

The issue of licences for goods not specifically prohibited is in general limited to 100 per cent. of the value of imports in1938-9. Since prices have risen sharply this means a reduction of the actual volume of the imports concerned.When allowance is made for this, it will be clear that imports from nonsterling countries have been sharply curtailed and that had a licensing system not been imposed the drain on non-sterling exchange would have been substantially greater.

At the same time the Government has had continuously under review the effect of its restrictions on the internal economy and by introducing the restrictions gradually has given time for the necessary adjustments to be made. Notwithstanding the savings of dollars already effected, the pressure on the Empire’s reserves is still marked and further restrictions may well become necessary.

Estimated Expenditure 1940-41 (other than Defence andWar Services).

I do not propose to deal with items of expenditure in detail, but certain important changes call for some explanation.

Invalid and old-age pensions are expected to cost £17,100,000 compared with £16,459,000 last year. This increase is rather less than normal - a fact which reflects the improvement of employment and incomes during the past year.

We propose to spend an additional £90,000 on the work of the Council for Scientific and Industrial Research. This includes the establishment of a National Standards Laboratory and a Chair of Aeronautical Research, which are important to our war effort. The development of the work of the council is a source of satisfaction to the Government. The rapid expansion of industry to meet the demands of modern war has raised many technical problems and it is gratifying to see the way in which the activities of the council have been redirected to deal with them.

Provision has been made, in the Estimates for the establishment of the Australian Legation in Japan. It is anticipated that the legation will be in existence before the end of December and the estimated cost for this year is £29,200.

A Ministry for Labour and National Services has just been created, of which we have great expectations. There has not been time to re-arrange the Estimates so as to show the projected expenditure of the new department, but the necessary alterations will be embodied in Supplementary Estimates.

On public works of a civil character we propose to spend £5,596,000 compared with £4,976,000 in 1939-40. These amounts include £2,000,000 and £1,883,000 respectively for loan works for the Post Office. On Civil Aviation works the expenditure is estimated at £763,000, including £175,000 from Trust Account, compared with £339,000 last year.

Our war expenditure includes £21,000,000 for defence works. In carrying out these works we are cooperating as far as possible with the State governments.’ This co-operation is part of a general plan to co-ordinate the Defence and State civil works programmes in order to secure a maximum allocation of resources to war purposes and at the same time to maintain and improve the employment positionin the States. This plan for works coordination was instituted by the Loan Council, which appointed a CoordinatorGeneral of Works to collaborate with officers in each State in the preparation of a works plan.

The total amount to be made available from all sources by the Commonwealth for works is approximately £30,000,000. Details of this amount are given in Table No. 2.

In addition to the works included in the war programme itself, the Government has approved plans for works mainly connected with internal transport which would be essential if there were any serious interference with coastal trade. Some of these works will be carried out at the cost exclusively of the Commonwealth. Others, where the works themselves are of ‘clear economic, value to the States in which they are to be carried OUt will be ‘financed jointly by the States and Commonwealth - the exact allocation of financial’ responsibility being a matter for negotiation1 after report hy the Co-ordinator-General of Works. These’ works will add about £6,600,000 to the works programme during .the next two years, for which the Commonwealth will cany full responsibility for about £1,200,000 and partial responsibility for the remainder.

Payments to States, apart from the normal payments under the Financial Agreement, will be varied in accordance with the report of the Grants Commission, which has been adopted by the Government and which has been tabled for the information of -members.

The grants recommended compare with those for the previous year thus -

In respect of the grant to Western Australia for 1939-40, the figure I have quoted- £595,000 - was the net grant after deduction of a special advance of £136,000 which was made in 1937-8 on account of drought relief. The normal grant for 1939-40 was therefore £7.31,000, as compared with the proposed grant of £650,000 for the present year.

The Government will bring down measures shortly to give effect to the recommendations of the Grants Commission.

Provision is made in accordance with legislation already approved by Parliament for £150,000 to be paid to the States for the encouragement of the gold-mining industry.

Under the apple and pear acquisition scheme for 1939-40 it is now estimated there will be a loss of approximately £750,000. As the Government has guaranteed the scheme, provision is ‘being nra de in the budget to meet this loss.

The total expenditure from revenue for all purposes other than defence and “war services is estimated at £S4,S53,000 com- pared with £84,702,000 in 1939-40. A summary will be found in Table No. 3. I may add that, with regard to ordinary departmental and works expenditure, the Estimates ‘have been closely scrutinized so that the maximum amount will he available from the ordinary budget for war pur-poses.

With an estimated revenue of £119,000,000 on the basis of existing taxation, and civil expenditure £S4,S53,000, the amount available from revenue for defence and war purposes will be approximately £34,000,000.

The Wheat Industry

During the past year the Government has been much concerned with the problems of the wheat industry. It has established an Australian Wheat Board to control, market, and store the almost record harvest of 210,000,000 .bushels, of which 195,500,000 bushels were acquired by the board. It also arranged with the Commonwealth Bank to finance the marketing of the crop, and substantial advances were made to growers. Considering the difficulties, satisfactory progress has been made in disposing of the crop.

Despite these actions there remained the clear need for concerted action by the Commonwealth and State Governments to evolve a’ plan for the industry. Conferences were held between Commonwealth and State Ministers in August,’ 1939, and’ October, 1940, without any agreed solution being reached.

The - Government has now adapted a plan for the stabilization of the wheat industry during the war, based on the control of production and the elimination of marginal production. This will be’ authorized under National Security Regulations. The Government will’ guarantee a price for the duration of the war, beginning with the .1941-42 harvest, of 3s. lOd. a bushel f.o.b. bagged wheat, on a marketed crop not exceeding, 140,000,000 bushels. No financial provision is necessary in this year’s budget, but there will be considerable financial responsibility in future years. Details of. the plan will be placed before you by my colleague, the Minister for Commerce.

In view of the widespread hardships being inflicted on rural producers by the present drought conditions, the Commonwealth Government has approved a. special’ loan programme under which loans will be made available to the mainland States for sustenance and operation advances to drought-stricken farmers. The loans will be allocated as follows: -

Repayments by States will be over four annual instalments commencing after three years. The Commonwealth will meet the full interest for the first year and half the interest for the next six years. “War Finance 1940-41.

I now turn to our main problem - that of war finance for 1940-41.

Last year war expenditure, in round figures, amounted to £45,000,000 in Aus-‘ tralia and £10,000,000 overseas, or a total of £55,000,000. (In using the term war expenditure I refer to all defence services relating to the present Avar.)

In May last, when new’ taxation was brought down, the expenditure for 1940-41 in Australia alone was estimated at £79,000,000. Following the collapse of France, our commitments have been practically doubled and the latest estimate of expenditure in Australia is. £143,000,000. Expenditure overseas is estimated at a further £43,000,000, bringing the total to £1S6,000,000.

This tremendous increase in our obligations within a few months faces us with a completely new task of finance for which the proposals brought down! last May are of necessity quite inadequate.

At this point it is appropriate for me tomention that the Government has decided to increase the allowance for dependent children under sixteen years of age from ls. to ls. 6d. a day. This increase will apply to the children of members of the military .and air forces on “ special force “ rates of pay, and naval ratings. This will entail an additional commitment of £1,000,000 per annum, and “ as the increased payment will operate from the 2St.h November additional expenditure of £600,000 will be involved this financial year. The necessary provision has been made in the estimates of war expenditure from ‘revenue.

Overseas War Expenditure

With regard to overseas war expenditure, with which I shall d’eal first, our . capacity- to meet such expenditure depends not only upon our power to tax or to borrow in Australia, b,ut also upon Australia possessing sufficient funds in London to provide the means of payment.

At tlie outbreak of war the Govern- , ment held in London the proceeds of the £A.7,500,000 loan for defence floated in June, 1939. It was realized, .however, that, apart from this amount, the London funds of the Australian banking system at that time were insufficient to enable us to contribute substantially to overseas expenditure.. Accordingly an arrangement was made under which the United Kingdom Government agreed to make finance available up to £A.15,000,000 by way of loan to meet our war costs abroad up to December, 1940 - the terms of the loans to be identical with those on which the United Kingdom Government itself borrowed the money. It was understood that the position would be reviewed in November, 1940, in the light of the position of our London funds and balance of payments at that time, and the matter is now receiving attention.

Thanks to the -improvement in our London funds position last financial year, and to the fact that our control of imports is now becoming fully effective, we shall be able to make & substantial contribution to ‘ overseas war costs from our own resources before the end of this financial year. The amount of the contribution will depend upon- our trade balance. It will be financed by the Commonwealth Bank, which will receive Australian Government securities in exchange for the sum provided from, sterling funds for overseas war expenditure/ I am sure that honorable members will agree with me that in order to keep, our external debt to a minimum, and to accept fully the obligations for the war effort which we have undertaken, it is desirable that we should make as large a contribution to these overseas costs as our circumstances permit.

War Expenditure in Australia.

The expenditure in Australia for 1940-41 is estimated, as I have stated, at £143,000,000. I am satisfied this is not an over-estimate. In the month of May last the expenditure was £6,000,000. Since then ‘ it has increased month by month and iii October it reached £11,200,000, and it is expected to reach £1 5,000,000 a ‘ month before next June.

In November, 1939, the Acting Treasurer described the Government’s financial policy as “ a balanced programme of taxation, borrowing from the public, and borrowing from the banking system. The balance between these three methods of finance must change from time to time and the determining factors will be largely economic “. To that statement of policy the Government strongly adheres.

In May, 1940, the Treasurer pointed out that economic conditions had made it possible up to that time to rely very largely on central bank action, and to carry out the defence programme without much diversion of spending power from private pockets to the Government. The economy required more money to function at fullest activity, and this money had been supplied partly by higher export income and partly by the Commonwealth Bank

By May, 1940, however, the country had attained a high level of business activity, and the warning was given that for the future the emphasis must he shifted away from banking loans. . Taxation and public loans would have to be the main sources of war finance.

Nevertheless estimated war expenditure in May was still small. Furthermore to avoid taking spending power from the people before it was needed, the Government limited its taxation proposals to what was necessary tq meet expenditure which would certainly be incurred in the next financial year. The collapse of France completely changed the position and since May our commitments have more than doubled. It was, however, necessary to . delay presenting detailed financial plans. Only experience could show how rapidly our expenditure could in fact be stepped up and until that was known a realistic estimate of finance actually necessary remained impossible. “We are now able to make that estimate. War expenditure is rising in accordance with the expectations of the war departments and we can count on it rising to £15,000,000 a month in the next few months. We have now for the first time to face up to the full magnitude of our programme of fighting forces, equipment and munitions.

Credit expansion must be used to the full up to the limits of safety; but this is not a time when we can look with safety to any considerable further expansion of credit. Money is now plentiful. Even at the present slack season of the year, the cash reserves and deposits of the trading banks are high and will become higher. Employment has so increased that there is little of our normal labour force unemployed, and what is still unemployed cannot be easily or quickly brought into productive activity. Prices are rising steadily though slowly. Civil consumption, except in a few direction’s, has not fallen below peace-time levels,, but has rather increased.

Further we are already committed to a considerable expansion of credit in the near future. Some of last year’s credit expansion has been dammed up in rising Treasury ‘ balances. This year those balances will be spent and will have their full effect on incomes and the liquid assets of the banks. A substantial part of the advance by the Commonwealth Bank for last year’s wheat crop is still outstanding. The financing of the new crop by the Commonwealth Bank will involve a further expansion of credit, until the crop can’ be marketed. Similar, if smaller, expansions are certain to be involved in marketing other primary products.

It is a fair inference then that we shall have as much expansion as is required to finance the fullest productive activity and probably more than is healthy. It is quite certain that any considerable further expansion for the purpose of Avar finance could result only in a serious and continuing rise of prices. ‘

Expenditure in Australia by the Government on’ war, or anything else, must come in some way from the pockets of the people. It may come by loans, where a man willingly gives up spending power in the present in return for spending power in the future. It may come by a system of taxation designed to take from each nian according to his ability to pay. It may come by expansion of credit whereby spending power is taken from the community by rising prices. When business is slipping back and prices tending to fall, expansion of credit may only help to keep prices stable-. At other times, expansion of credit is a concealed tax of so much in -the shilling on every shilling in the community - £ flat rate tax, irrespective of income, which is unquestionably not an equitable form of taxa tion. It makes no attempt to’ apportion the burden according to ability to pay. Indeed it bears most heavily on’ those with fixed incomes or wages and salaries which lag behind the rising cost of living. Above all, it depreciates the value of small savings - in insurance policies,, savings bank deposits and the like. The Government’s financial policy is a liberal one but it stops short at reckless measures which would have such inequitable results and could only end in financial and economic collapse.

My conclusion is that we must net rely on expansion of credit for our. war finance. This is not to state positively that we shall not get assistance from it, but only that we must not count on it in advance. It is certain that we do not want more expansion1 than is now going on, and is inevitable in the immediate future. But the effects on our economy of all kinds of war-time control, including the impending taxation, cannot be predicted with certainty. The scope for credit, expansion must be estimated ‘anew from time to time, in view of the circumstances at that time. With a great increase in future productive activity, expansion with safety may again be possible. Activity is now very high by normal standards but the possibilities of war-time acceleration are difficult to limit. Re-employment of the unemployed can help only to a limited extent and that slowly. There are other much greater possibilities. People hot usually wanting productive employment, retired people and women particularly may come into the field. Still greater are the possibilities for every one of working harder, more intelligently and more efficiently. There is room for more skilful and more economical administration of all kinds of business, for eliminating waste and useless activities both as producers and consumers. A good deal is already being done in this way. Farmers, for example; are maintaining a very large output in spite of the loss of farm labour to the fighting forces. How much further it will go will depend on our .outlook as individuals under the strain of war. It can. not be predicted. But any great increase in productivity would tend to reduce prices, and would, justify a corresponding expansion of credit to keep employment full and maintain, a stable level of prices.

These developments are possible and we may hope for them. But we cannot count on them. Any such opportunities for the safe expansion of credit will, you may be sure, be eagerly seized by the Government. But Ave cannot gamble on them. As they materialize, we will act on them. My business now as Treasurer is on the one hand to take a conservative view of Avar expenditure, and on the other hand to provide a sure and safe means of financing it on a sober estimation of probabilities.

Further expansion of credit, then, is not to be counted on as a means of war finance. We are left with two implements, borrowing the savings of the community and taxation. Loans will depend on the willingness and capacity of the people to save, and may be increased by organized effort, particularly through

Avar savings certificates. Whatever can be done in these ways will leave a very large gap to be filled by additional taxation.

To fill this gap completely and certainly at this stage so as to cover all possible emergencies would entail too large and sudden increases in taxation. We can endure very heavy taxation, as the people of Great Britain are enduring it, but we must have a little time to adjust our way of life to the strain. From the circumstances of the case, the full strain comes oh us here very suddenly. We must pass in a few months from what is not very different from a peace-time economy to what must approach a full war-time economy. It will

De wise to ease the transition as much as possible.

I am therefore budgeting only for defence expenditure which is inevitable, and am not making provision for additional war commitments which may well have to be met. The war budget this year is also being -eased by cash balances of £28,000,000 which were in hand on the 1st July last; and -no cash balance will be carried forward at the end of the year. And I am taking the most hopeful view possible of the extent to which our people will voluntarily increase their savings and lendings to the Government. By this procedure, I - am able to keep down the proposals for additional taxation to an amount which though very heavy is npt too large to be taken in one bite by a people resolutely at war.

My estimate of expenditure may prove too low and the estimate of loans may turn out to be over-optimistic. Iri either event we may have further to increase taxation. In any case the position must be reviewed before the close of the financial year. It may be that a gap will emerge between expenditure and available finance which will have to be bridged by temporary accommodation from the ‘ Commonwealth Bank. But the Government adheres to its resolution to preserve the value of money and to resist any inflationary rise of prices. If the position is threatened by any such temporary help from the Central Bank, the Government will not be slow to take the necessary corrective action through taxation or other appropriate measures.

The Loan Market

Past experience is little guide to the possibilities of the loan market. A number of factors will’ increase them much above pre-war levels. Incomes have increased and are still increasing. Ger1 tain restrictions of consumption, e.g., through import licensing and petrol rationing, have reduced consumption and facilitated saving. The control of investment is, to an increasing .degree, directing savings into Government loansOn the other hand, heavy additional taxation will diminish the flow of savings.

A special -addition to loan funds comes through war savings certificates. Good work has been done in encouraging . sav-. ing for this purpose and considerable expansion is possible.

With stricter control of investment and consumption, and a further drive for war savings certificates, loan funds may be considerably increased. On a hopeful view of these possibilities, I estimate as follows : -

The raising of this large sum of £S0,000,000 will be possible only with strong support from all classes of the community - private persons in all walks of life, commercial and trading companies, insurance, banking and financial institutions generally.

Proposals for War Finance in Australia:

The proposals of the Government for financing war expenditure in Australia may now be set forth as follows : -

The Government proposes to bridge this gap by additional taxation.

Taxation- Proposals

The task of the Government is there-‘ fore to frame proposals to raise an additional £31,000,000 in the remaining seven months of this financial year. The general principles followed will, I hope, be acceptable to all parties, though there may be differences of opinion as to their application in detail.

In the first place, the Government believes the individual, income tax to be the fairest and most effective method for. collecting from each individual according to his ability a contribution to the cost of the war. Since, however, the undistributed profits of companies escape this taxation, they must be subjected to’ some additional levy, which will supplement that upon individual incomes.

Secondly, it is the Government’s view that taxes upon the necessaries of life are to be avoided because they fall heavily upon the family and because they add, directly or indirectly, to costs of production. Taxes upon luxuries are free from these objections; but it is not easy to frame an acceptable definition of luxuries, except as to a few items such as tobacco and alcohol, which are already taxed almost to the point at which no more revenue could be derived from higher imposts.

While these are the guiding principles, we must, in practice, take into account other things - paramount amongst which is the need for new revenue.

After full consideration of all avenues of taxation the Government now proposes to obtain additional revenue in 1940-41 from the following sources : -

Brief particulars of the proposed taxes will now be outlined. Further particulars will be given when the separate bills and resolutions are presented to the committee.

In come tax - Individuals. general increases.

The scale of taxation proposed will yield £26,000,000 of revenue this year, compared with £10,000,000 from the scale imposed in May.

Income tax on individuals has hitherto been only a minor element in Commonwealth taxation. Even last year it produced only 9 per cent, of total taxation, revenue. If income tax is to become a. major instrument of war taxation, it is obvious that radically different standards of taxation must be adopted.

Hitherto the Commonwealth income! tax has applied predominantly to the higher incomes, on which State taxation is also heavy. A moderate contribution has been drawn from middle incomes and; from lower incomes - under £400 practically nothing. To make the tax an’ efficient and equitable war-time instrument it is clear the field must b& broadened into incomes under £400, which account for . 70 per cent, of the total personal incomes in Australia. It is necessary to obtain a moderate contribution from this- field and a greatly increased yield from the middle incomes, whilst- at the same time the taxation on higher incomes is carried to the limit.

The assessments under the scale of taxation now proposed are estimated to yield £33,000,000 in a full year, and the distribution” of this sum is as follows: -

It will be noted that higher incomes account for 11 per cent, of total incomes, middle incomes for 19 per cent, and lower incomes 70 per cent.

Collections within this financial year will be less than the assessments and it is expected they will reach £26,000,000, or £16,000,000 more than the scale of taxation imposed last May.

In framing the scale, it has been kept in. mind that there was only half a year for the taxpayer to make the necessary economies and savings to meet the greatly increased tax. In the case of wage and salary earners arrangements will be made for taxes to be collected at tlie source since regular periodical contributions avoid the hardship of lump sum payments.

The statutory exemption is reduced from £250 to £150. Effective taxation may be said to begin with the single basic wage-earner, from whom is asked a contribution at the rate of ls. in the £1 on his earnings for the remaining half of the financial year. This is, of course, equivalent to 6d. in the £1 spread over the whole year’s income. It may be noted that the New Zealand national security tax is ls. in the £1 over all income without exemption.

The deductions on account of wife and dependent children are maintained at their old value. The effect is that for a married man with two children, no tax is asked until hia earnings exceed £6 a week.

Prom these beginnings, the rate of tax increases steeply. For low incomes, the proposed rates are much lower generally than those imposed by the States. At middle incomes they rise above them progressively with the greatest proportionate excess at about £3,000.

The taxation rates imposed by States have been respected in framing -the proposed federal rate. This has very considerably hampered Commonwealth taxation at all points of the scale, because of the great variation in State rates. It is a matter for consideration whether under the increasing pressure of war we shall be able to maintain this principle. Some greater uniformity in State income taxation may become a war-time necessity.

Taxation of higher incomes has, I have said, been pushed to the limit. Under the conditions in which increased taxation is now proposed, with only half the year for the taxpayer to make the necessary economies, I have taken 14s. in the £1 .as the reasonable limit to the effective rate of Commonwealth and State taxes combined. abolition’ OF rebate in ‘respect OF dividends.

It is proposed to obtain a further addition to individual income tax by abolishing the present rebate of tax in respect to dividends on which company taxation has already been paid. A good deal could be said in favour of a complete rebate of all company taxation, but considerations of revenue and of administrative difficulties make that quite out of the question at the present time. It is proposed as a war-time measure to discontinue the rebate with the hope of reconsidering the whole question when the urgencies of war finance are behind us.

The abolition of the rebate will add £1,700,000 to the collections of individual income tax from the proposed scale this year.

Income Tax - Companies

The proposals provide for increased taxation on companies by means of (a) war-time company tax; and (&) tax on undistributed profits. war-time company tax.

The Government has decided to make a special war-time levy on the profits of companies graduated according to tho percentage of profits in relation to capital employed. The proposals generally will be on the lines of the measure which was introduced to Parliament last session. It is estimated that the additional taxation to be obtained will .be £4,250,000 in the current year and £5,300,000 in a full year. tax on undistributed profits.

The proposed increase of taxation of individual incomes requires as its complement some increased taxation of undistributed profits of companies;

A tax on undistributed profits was enacted in May of this year. The tax was at the rate of ls. in the £1 and was to be assessed oil the taxable income after the allowance of special deductions, dividends distributed, and a general exemption of 25 per cent, of distributable income.

It is now proposed to withdraw the exemption of 25 per cent, of distributable income and to increase the rate of tax from ls. to 2s. in the £1. The estimated yield from the proposed tax in this financial year will be £2,000,000 as compared with £450,000 under the present legislation, or an increase of £1,550,000.

The withdrawal of the 25 per cent, exemption will apply to public companies only. Private companies will not be affected by this additional impost as they will be subject to the higher rates of tax to be imposed on individuals whenever a sufficient distribution of the profits does not take place. total taxation of companies.

These additions will bring the total taxation of companies in Australia to a very high figure. The Commonwealth, State and overseas taxation on these companies will amount to about £32,000,000 on an estimated income of £93,000,000, or 6s.8d. in the £1, whilst dividends will be taxed without rebate in the incomes of shareholders. I doubt if it is wise to put such a load permanently on company enterprise, which plays a large part in the industrial development of Australia, and only the urgent need of revenue has necessitated the increases now proposed as a war-time measure.

Sales Tax

For many years it has been a principle of sales tax to exempt from it as far as possible the necessaries of life and goods used in primary production. To that principle my Government adheres. It has not been possible to carryoutthe principle in its entirety because of the practical difficulties encountered in separating necessary goods from other goods in certain groups, such as clothing. However, these exceptions have been kept to a minimum.

It is now proposed to enlarge the field of goods subject to taxation and to classify the goods included into three sections according to the urgency of the needs they satisfy. On these sections it is proposed to levy differential rates of tax at 5, 10 and 15 per cent. respectively. In this way more revenue can he raised without increasing heavily the taxes on more essential goods.

The introduction of differential rates will impose more work on taxpayers and create administrative difficulties. The Government considered this alternative preferable, however, to an increase of the general rate above 10 per cent.

It is proposed to obtain a further £3,400,000 from sales tax, or a total for the year of £20,400,000.

The additional amount will be obtained in the following manner : -

  1. By bringing back into the taxable field goods, at present exempt, of an estimated value of £47,000,000. These goods will, with one exception, bear tax at the relatively low rate of 5 per cent. The exception, which includes goods of an estimated value of £4,000,000, will bear tax at the general rate of 10 per cent.
  1. By increasing the general rate from 8&1/3percent.to 10 per cent. This rate will apply to a field of an estimated value of £181,000,000.
  1. By increasing the rate of tax to 15 per cent. on goods of an estimated value of £21,000,000 which satisfy less urgent needs.

For a full year the sales tax thus amended is expected to yield £23,800,000 as compared with £17,000,000 on the present basis.

Customs and Excise

The proposed additional duties of cus toms and excise embrace what may be called luxury items. The additional revenue to be obtained for the remainder of this year is estimated at £4,200,000. Particulars of the duties will he made known to honorable members when my colleague, the Minister for Trade and Customs,tables the appropriate resolution.

Taxation Proposals Summarized

Under the proposals which I have just announced it is anticipated that the additional revenue to be obtained this year will be £31,100,000. The measures approved by Parliament last May are now estimated to produce approximately £14,000,000. The total additional war taxation for 1940-41 is therefore £45,100,000.

The proposals are summarized in the following table : -

It will beseen that the total amount involved, viz., £45,100,000, is made up of direct taxation £28,450,000 and indirect taxation £16,650,000.

There will, however, be substantial decreasesof the estimated collections under other items of taxation, particularly customs duties. When allowance has been made for these and other minor changes the increase of estimated total taxation this year compared with actual collections last year is £36,314,000, viz.-

If we put State taxation in 1940-41 at £55,000,000, we get £181,000,000 for total taxation, or about 20 per cent. of estimated national income for 1940-41. Does this alarm you? Let me remind you that in 1932-33, in the depth of the depression, taxation was 17 per cent. of national income. We stood up to that taxation, despite the depression, and staged the spectacular recovery, economic and financial, of the last seven years. Are we going to be more faint-hearted now, at a time of great material prosperity, when, in the words of my honorable friend, the Leader of the Opposition -“ Self-government is at stake; the rights of peoples are at stake ; the hope for peace and decency on earth is at stake “?

Budget Summary

The budget may now be summarized as follows: -

War Expenditure

It is appropriate at this point to show how it is expected that the estimated war. expenditure for 1940-41, viz. £1S6,000,000, will be financed.

Loan Estimates

Apart from loan expenditure on war the only other items of expenditure from loan1 are .Post Office works and Farmers’ Debt Adjustment which will involve £2,000,000 an’d £500,000 respectively compared with £1,900,000 and £750,000 in 1939-40. Loan estimates may therefore be summarized thus : -

Legislation

Legislation .to give effect to the proposals which have been outlined in this statement will be brought down at an early stage.

Conclusion

To-day the British Empire is engaged in a grim struggle against tremendous forces of evil. The brunt of this struggle is being borrie by Great Britain herself in the face of great odds. She is fighting for her own existence, for our existence, for the existence of . all free peoples. She is fighting for the survival of democracy against world domination by aggressor dictators.

This is the most grim and tragic of wars. It is taking a sad toll not only of the lives of our fighting forces but also of the lives of our seamen and civilians who have been victims of a war savagery hitherto unknown. Its destruction of’ property goes on daily. In the midst of this grim spectacle in Europe there stands out the heroism of the British forces and the determination and courage of her people.

So far Australia has been spared the horrors of war but what the future holds none can predict. On the fate of this war depends the fate of Australia and the future of every man, woman and child in Australia. Our war effort must be an all-in effort. Let there be no misunderstanding. There can be no self defence in isolation. “Whether . our war effort takes shape here or overseas it must be part of one common plan.

That is a picture of what this war is and what it means. It has been my task to present another picture. An “all-in” war effort involves other costs which must be paid for. There are differences of view as to how the burden can best be spread, ‘but there is no easy path. Every one must make his contribution to our national premium for our future safety.

If we win, and we must win, we shall at least be in a position to start afresh on the path of social welfare. We shall all.be much the poorer, but we can build up again to new heights of well-being and social justice.

We have first to win the war. There will soon be 400,000 men in Australia giving up their whole time to fighting or making munitions or equipment, and the rest of us must support them and their families, in a decent standard of living while they are so engaged. How to do that is the. financial problem which I have been dealing with to-day. The proposals of necessity mean giving up something substantial on the part of the great majority of the people of Australia. The effort required does not look heroic in comparison with the tasks falling on our fighting men. But it is a task complementary to the other and just as essential. I can have no doubt tha.t in this, equally with the fighting jobs, now that the call has come, Australia will be there. I am confident that in asking the people of Australia to accept higher taxation and . to support the large war loans we will issue they will respond willingly. With that confidence I submit these proposals for your consideration.

Progress reported.

Tables used in Budget Speech of 1940-41.

page 92

TABLE 1.- FINANCIAL YEAR 1939-40

page 94

TABLE 4. - COMMONWEALTH REVENUE

Estimated Revenue 1940-41, based on rates oftaxationasamendedinmay,1940, comparedwithactualrevenue1939-1940.

page 94

PAPER

The following paper was presented : -

The Budget 1940-41. -Papers presented by the Honorable A. W. Fadden, M.P., for the information of honorable members on the occasion of the Budget of 1940-41.

Ordered tobe printed.

page 94

SALES TAX(EXEMPTIONS AND CLASSIFICATIONS.) BILL 1940

Motion (by Mr. Fadden) agreed to -

Thathehaveleave to bring in a bill for an act to amendthe Sales Tax Exemptions Act. 1935-39, as amendedby the Sales Tax exemption’s Act 1940.

Bill brought up,andreadafirsttime.

Second Reading

Mr FADDEN:
Trea surer · Darling Downs · CP

– by leave - I move -

That the bill be now reada second time.

This bill is part of the legislation necessary to give effect to the proposals outlined in the budget speech with regard- to sales tax. Those proposals, briefly restated for the convenience of honorable members contemplate -

  1. The withdrawal from the exemption field of goods of an estimated annual value of £47,000,000, and the imposition thereon, with one exception which I shall explain later, of tax at the rate of 5 per cent. ;
  2. The separation from the present taxable field of a carefully selected group of goods, considered in existing circumstances to be less essential than the general run of goods, of an estimated annual value of £21,000,000,and the imposition thereon of a tax at the rate of 15 per cent. ; and
  3. The raising of the general rate on the goods remaining in the general field, from 8&1/3percent. to 10 per cent.

From these proposals, the Government expects. to obtain an additional £3,400,000 in the 1940-41 financial year.

For a proper appreciation of the proposals, it will be necessary to examine the measure now before honorable members in conjunction with resolutions for amendment of the rate of sales tax which I shall moveat a later hour this day.

The present schedule to the Sales Tax Exemptions Act will, if this measure becomes law, be replaced by three schedules. The first will contain particulars of goods’ which will still be exempt. The second will contain particulars of goods which it is proposed should bear tax at a rate of 5 per cent. The third will contain particulars of goods which it is proposed should bear tax at the rate of 15 per cent. The remainder of the goods sold or consumed in Australia will bear tax at the 10 per cent. rate.

With regard to the proposal to widen the field by withdrawing some exemptions,I may say that there has been a fairly widespread demand for some change of the incidence of sales tax which would abolish the large number of exemptions and reduce the burden of classification by vendors. The proposals for changes of the basis of levying sales taxation have been many and varied, and have ranged from a multiple turnover tax to a tax imposed on every retail sale made. After a careful examination of the various suggestions, the Government is convinced that the present form of sales taxation is to be preferred to tax of any other type yet tried out in the various countries of the world.

Perhaps the most persistent demand has been for the maintenance of the present form of tax, coupled with abolition of all exemptions, so that the tax might be spread over all goods consumed in Australia and a comparatively low rate of tax be maintained.

The Government does not intend to adopt that course. Exemptions from sales tax are based upon certain welldefined criteria, which may be briefly stated as follows: -

  1. The goods are basic foodstuffs.
  2. They are primary products.
  3. They are primary producers’ machinery, or materials of production.
  4. They are goods used in industries which in peace-time it is necessary and desirable to foster.
  5. They are goods used in activities relating to religious, philanthropic, benevolent, educational or medical and surgical activities.

The Government considers that the total withdrawal of the exemptions falling into the first, second and third of these categories would so disturb the nation’s economy as to cause harm greatly outweighing the advantages tobe derived from ease of classification and the relatively lower rate. However, the Government believes that from groups 4 and 5 a limited selection can be made upon which a relatively low rate of tax can be collected. A schedule has accordingly been compiled, including goods of a sale value of approximately £47,000,000, which it is proposed should be brought back to the taxable field. It is proposed that the whole of the goods comprising the field, with one exception, will hear tax at the relatively low rate of 5 per cent. The exception is boots and shoes of a awholesale value in excess of 15s. a pair. These have been allowed to fall into the class of goods upon which the general rate of 10 per cent. is payable. The exception is considered to be justified because of the retention of exemption for boots and shoes of all kinds, the wholesale value of which does not exceed 15s. a pair. Out of the total estimated sale value of all boots and shoes of £8,000,000, more than one-half will still be exempt. The exemption is expected to cover all boots for ordinary purposes, all children’s boots and shoes, and men’s and ladies’ shoes of the less expensive and elaborate type. The more expensive hoots and shoes and slippers will be taxed at the general rate of 10 per cent. The additions will bring the valueof the taxable field to approximately £251,000,000. Of the total goods which it is estimated will be consumed in Australia, amounting to £565,000,000, no less than £314,000,000 will still be exempt.

I think that even a cursory survey of the nature of the goods in this list will convince all reasonable persons that the scope of the tax cannot be widened to any appreciable degree greater than is already proposed.

There may, of course, be room for differences of opinion with regard to some of the items which the Government has included in the second schedule for taxation at 5 per cent. They are all goods for which undeniable claims to exemption can be made in times of peace; hut standards formulated in peace-time have tobe adjusted to war-time necessities, and- the .Government feels that, having preserved’ the principle of preference by imposing only half rates, it has not acted harshly in bringing those goods again into the taxable field. Consequent upon the re-introduction of sales- tax on spectacles, eye glasses and lorgnettes, it will be necessary to provide a special sale value upon which tax on these goods should be paid. ‘ This is necessary in order that the value of skilled services not associated with the production of the articles “concerned may not be’ made subject to tax. This matter is appropriately provided for in a proposed amendment of regulation 18a, and the sale value proposed is. that which operated prior to the exemption of those goods, namely, 33-j per cent, of the total amount charged.

It is appropriate at this stage also to say that it is proposed to increase- the. sale value of made-to-measure clothing. This sale value is calculated at present at 50 per cent, of the total charge made to the customer, and in many case’s has been found to. be less, than the total cost of production pf the goods. It is proposed by regulation to increase the sale value to 665 per cent, of the total charge made for the goods.

For taxation at the relatively high rate of.’ 15 per cent., the . Government has chosen goods ‘ which’ are considered to supply less urgent needs than those contained in the other schedules to the act, or those upon which the general rate will fall. Particulars. of these goods will be found in tlie proposed third schedule. One of the chief necessities to be borne in mind in arranging .the details of this group is the need for certainty, and accordingly,, wherever possible, goods have been described by the names under which they are- traded in commercially. This course has been followed in preference to the much easier method of describing groups of goods by generic terms, for the reason that, in the latter course, specific - classification is placed primarily upon - the taxpayer, with penalty taxes for failure to classify the goods correctly, as well as, in many cases, inability to recover the difference in tax from those purchasing from him,

Owing to the degree of secrecy which necessarily has had to be observed in the compilation of this special schedule, and to the adoption of the specific in preference to the generic definition of goods, it may be found that the list is incomplete, notwithstanding the fact that every care has been exercised in its preparation, [f this should prove to be the case, the Government will not hesitate to . ask Parliament at a later date to amend the. schedule so as to preserve the principles upon which it has been compiled. : I do not. propose at. this stage to make any specific references to the individual items comprising, the .schedule ; they will,, it is thought,, be - self-explanatory. If any further information is desired by honorable members on particular items, it will be given when the hill is in the committee stage.”

It is proposed- that the new schedules shall become operative from to-morrow in respect of ‘ all goods the subject of transactions which attract liability; including the importation of goods. An amendment .will -be introduced in the machinery act to prevent sales tax from becoming payable on goods which, up to the 21st November, 1940, were exempt from tax ‘but which, on and after, the 22nd November, 1940, will become subject to tax if those goods had passed, the normal taxing point before’ the 22nd November, 1940, In other words, tax will not be payable by a retailer or a retailer- wholesaler on goods sold by retail which, prior to the 22nd November, 1940, were exempt and had been treated as stock for sale by retail, or had been placed in a common stock for sale by retail or wholesale as the occasion arose.

Goods sold by retail, which have already borne tax at the rate hitherto in force, will riot be subject to further tax because of any increase now proposed. There are provisions in the machinery measures which will fully protect vendors of goods who are required to pay tax on goods at the new rates. Such vendors will be able to recover from customers who have not paid when the bills become law. If the bills do not become law, the vendors will be able to obtain refunds of the additional tax paid by them.

An appropriate amendment of the machinery act will shortly be introduced which will permit agreements or contracts entered into in relation to goods previously exempt to be varied so as to cover the additional tax payable or the additional costs borne on account of these amendments, as the case may be.

In commending the bill to the favorable reception of honorable members, I would urge that in their consideration of the individual items comprising the respective schedules, they do not lose sight of the fact that what would be a proposal not to be contemplated in times of peace becomes an inescapable necessity in time of war.

Debate (on motion by Mr. Forde) adjourned.

page 97

TARIFF PROPOSALS 1940

Customs Tariff Amendment (No. 1), Customs Tariff (Special War Duty);

Customs Tariff (New Zealand Preference) Amendment (No. 1), Excise

Tariff Amendment (No. 1)

In Committee of Ways and Means:

Mr HARRISON:
Minister for Trade and Customs · Wentworth · UAP

– I move - [Customs Tariff Amendment (No. 1).]

That the Schedule to the Customs Tariff 1933-1939 be amended as hereinafter set out, and that, on and after the twenty-second day of November, One thousand nine hundred and forty, at nine o'clock in the forenoon, reckoned according to standard time in the Australian Capital Territory, Duties of Customs be collected in pursuance of the Customs Tariff 1933-1939 as so amended. [Customs Tariff (Special War Duty).] That, in addition to the Duties of Customs collected otherwise than in accordance with the Act passed to give effect to this resolution, there bc imposed on and after the twenty- second day of November, One thousand nine hundred and forty, at nine o'clock in the forenoon, reckoned according to standard time in the Australian Capital Territory, on all goods (other than goods covered by Items 18, 19, 23 and 229 (c) in the Schedule to the Customs Tariff 1933-1939) entered for home consumption on or after that date, a special war duty of Customs at the rate of ten per centum of the amount of the Duties of Customs so collected on such goods. [Customs Tariff (New Zealand Preference) Amendment (No. 1).] That the Schedule to the Customs Tariff (New Zealand Preference) 1933-1934 be amended as hereinafter set out and that, on and after the twenty-second day of November, One thousand nine hundred and forty, at nine o'clock in the forenoon, reckoned according to standard time in the Australian Capital Territory, Duties of Customs be collected in accordance with the Customs Tariff (New Zealand Preference) 1933-1934 as so amended. [Excise Tariff Amendment (No. 1).] {: type="1" start="1"} 0. That the Schedule to the Excise Tariff 1921-1939 be amended as hereinafter setout, and that, on and after the twenty-second day of November, One thousand nine hundred and forty, Duties of Excise be collected in pursuance of the Excise Tariff 1921-1939 as so amended. 1. That, where any goods hereinafter specified - {: type="a" start="b"} 0. were, on that date, subject to the control of the Customs or to Excise supervision, or in the stock, custody or possession of, or belonged to, any distiller or manufacturer thereof, and Duties of Excise were paid thereon before that date, additional Duties of Excise be collected thereon equal to the amount (if any) by which the Duties of Excise so paid are less than the Duties of Excisewhich would be payable thereon if the Duties of Excise had not been so paid. These tariff proposals are complementary to the budget and incorporate all budget tariff proposals not passed by Parliament and ' covered by validation acts passed before the last Parliament was prorogued. There has been a general expectation on the part of the public that increased duties would be imposed for war purposes on such stock taxation commodities as beer, spirits and tobacco. That expectation is being realized and all consumers of these commodities will have the satisfaction of knowing that by their use of these products they are making a direct contribution to war finance for the payment of munitions and war equipment. The huge amount required for war expenditure necessarily imposed upon the Government and its expert tax-gatherers the need for a most searching investigation into the possibilities of obtaining increased revenue. An examination of the tariff proposals now presented will show clearly the results of the detailed investigation that has been carried out. In the past the maximum revenue yield obtainable was the major principle on which rates of customs and excise duties were based, though there may have been some slight departure from this principle for protectionist or other good reason. Under war conditions, however, this principle has not been our sole guide. We have had to take into consideration such other factors as - {: type="a" start="a"} 0. Desirability of reduction in consumption in order to ease pressure on overseas exchange, more /particularly dollars; and diver- sion of portion of the individual's income to war purposes ; and 1. Desirability of imposing increased taxation on goods likely to be in short supply, matches being a case in point. The principal alterations of duties now being imposed are - 9d. per gallon increase of customs and excise on beer. 12s. per proof gallon increase of customs and excise on spirits. ls. 6d. per lb. increase of customs duties on tobacco leaf for the manufacture of tobacco. 2s. per lb. on leaf for cigarettes, but, as imported tobacco leaf will be exempted from special war duty and primage, the net increase will be ls. per lb. on leaf for tobacco and ls. 4d. per lb. on leaf for cigarettes. 2s. per lb. increase of excise on manufactured tobacco. 2s. 9d. per lb. increase of excise on cigarette. The customs duties will be increased by similar amounts plus a further sum to offset the additional duty that will be paid by Australian manufacturers on imported leaf. Imported manufactured tobaccoes will, .therefore, be subject to an increase of duty of 2s. 8d. per lb. and imported cigarettes of 4s. per lb. ½d. per book of 60 increase of customs and excise on cigarette papers. ls. 6d. per gross boxes increase of excise duty on matches. The new rate of 2s. per gross boxes will be four times the present rate, and there are commensurate adjustments in the duties on imported matches. A new excise duty of1s. per lb. has been imposed on carbonic acid gas when used for aerating beverages other than beer. This will affect mainly aerated waters and soda fountain drinks. I do not propose to give in detail at this stage the old and new rates of duty on the commodities affected. Honorable members will find such particulars in the summary of alterations that has been circulated. But some special features of the increased duties are worthy of mention. The new tobacco duties represent an increase of 2d. per oz. on tobaccoes containing the ruling blends of imported and Australian leaf, and l½d. per oz. on wholly Australian leaftobaccoes. This has been achieved partly by increased customs duties on imported leaf, and partly by increased excise duty on the finished product. Duties on cigarettes have been dealt with somewhat similarly, but the additional impost is much more severe. Imported tobacco leaf has been exempted from primage and special war duty. This action has been taken because of the serious administrative difficulty that has been encountered in the past in arriving at the refunds of the *ad valorem* primage duty on stems discarded from various batches of imported leaf, each of a different value. The increases ofthe ordinary customs rate on tobacco leaf include an amount designed to offset the loss of primage and special war duty of approximately 6d. per lb. on leaf for the manufacture of tobacco and 8d. per lb. on leaf for the manufacture of cigarettes. It will interest the tobacco-growing industry to know that the net increase of duty on imported leaf, and likewise the margin in favour of the grower, is1s. per lb. on leaf for tobacco and1s. 4d. per lb. on leaf for cigarettes, making a total tariff protection of 5s. per lb. on leaf for tobacco and 7s. 2d. per lb. on leaf for cigarettes. This does hot take into account the differential excise of 8d. per lb. operating in favour of wholly Australian leaf tobaccoes. The excise duty on matches has been quadrupled and will now be 2s. per gross boxes each 60 matches. This rate is still much below those of the United Kingdom and Canada, which on equivalent packaging are 5s. 2d. and 4s. 8d. per gross boxes respectively. The duty on carbonic acid gas will principally affect the consumer of soft drinks, who has, up to the present, escaped the incidence of excise taxation. The duty of1s. perlb. on this gas will represent about one-farthing on a large bottle of aerated water. The net additional revenue expected to be received during the current financial year as a result of these duty increases is as follows: - The increased revenue for a full year would be £7,200,000. Progress reported. SALES TAX BILLS (Nos. 1a to 9a) 1940. {:#subdebate-49-4} #### In Committee of Ways and Means: {: #subdebate-49-4-s0 .speaker-F4T} ##### Mr FADDEN:
Treasurer · Darling Downs · CP -- I move - {: type="1" start="1"} 0. That in lieu of the rate of tax imposed by the Sales Tax Act (No. 1 ) 1930-1940 sales tax be imposed upon the sale value of goods, manufactured in Australia by a taxpayer and on or after the twenty-second day of November, One thousand nine hundred and forty, sold by him or treated by him as stock for sale by retail or applied to his own use, at the rate of - {: type="a" start="a"} 0. in respect of certain of those goods to be classified by the Parliament - five per centum; 1. in respect of certain other of those goods to be classified by the Parliament - fifteen per centum; and 2. in respect of such of those goods as are not classified by the Parliament for the purposes of the legislation passed to give effect to paragraphs (a) and (b) of this Resolution and on the sale value of which it is not provided by the Parliament that sales tax shall not be payable - ten per centum. 1. That in lieu of the rate of tax imposed by the Sales Tax Act (No. 2) 1930-1940 sales tax be imposed upon the sale value of goods, manufactured in Australia and sold on or after the twenty-second day of November, One thousand nine hundred and forty, by a taxpayer who purchased them from the manufacturer, at the rate of - {: type="a" start="a"} 0. in respect of certain of those goods to be classified by the Parliament - five per centum; 1. in respect of certain other of those goods to be classified by the Parliament - fifteen per centum; and 2. in respect of such of those goods as are not classified by the Parliament for the purposes of the legislation passed tothe effect to paragraphs (a) and (b) of this Resolution and on the sale value of which it is not provided by the Parliament that sales tax shall not be payable - ten per centum. 2. That in lieu of the rate of tax imposed by the Sales Tax Act (No. 3) 1930-1940 sales tax be imposed upon the sale value of goods, manufactured in Australia and sold on or after the twenty-second day of November, One thousand nine hundred and forty, by a taxpayer not being either the manufacturer of those goods or the purchaser of those goods from the manufacturer, at the rate of - {: type="a" start="a"} 0. in respect of certain of those goods to be classified by the Parliament - five per centum; 1. in respect of certain other of those goods to be classified by the Parliament - fifteen per centum; and 2. in respect of such of those goods as are not classified by the Parliament for the purposes of the legislation passed to give effect to paragraphs (a) and (b) of this Resolution and on the sale value of which it is not provided by the Parliament that sales tax shall not be payable - ten per centum. 3. That in lieu of the rate of tax imposed by the Sales Tax Act (No. 4) 1930-1940 sales tax be imposed upon the sale value of goods, manufactured in Australia and sold to a taxpayer who has, on or after the twenty-second day of November, One thousand nine hundred and forty, applied those goods to his own use, at the rate of - {: type="a" start="a"} 0. in respect of certain of those goods to be classified by the Parliament - five per centum: 1. in respect of certain other of those goods to be classified by the Parliament - fifteen per centum; and 2. in respect of such of those goods as are not classified by the Parliament for the purposes of the legislation passed to give effect to paragraphs (a) and (b) of this Resolution and on the sale value of which it is not provided by the Parliament that sales tax shall not be payable - ten per centum. 4. That in lieu of the rate of tax imposed by the Sales Tax Act (No. 5) 1930-1940 sales tax be imposed upon the sale value of goods, imported into Australia by a taxpayer on or after the twenty-second day of November, One thousand nine hundred and forty, at the rate of- {: type="a" start="a"} 0. in respect of certain of those goods to be classified by the Parliament - five per centum : 1. in respect of certain other of those goods to be classified by the Parliament - fifteen per centum; and 2. in respect of such of those goods as arc not classified by the Parliament for the purposes of the legislation passed to give effect to paragraphs (a) and (b ) of this Resolution and on the sale value of which it is not provided by the Parliament that sales tax shall not be payable - ten per centum. 5. That in lieu of the rate of tax imposed by the Sales Tax Act (No. 6) 1930-1940 sales tax be imposed upon the sale value of goods, imported into Australia by a taxpayer and, on or after the twenty-second day of November, One thousand nine hundred and forty, sold by him or applied by him to his own use, at the rate of - {: type="a" start="a"} 0. in respect of certain of those goods to be classified by the Parliament - five per centum ; 1. in respect of certain other of those goods to be classified by the Parliament - fifteen per centum; and 2. in respect of such of those goods as are not classified by the Parliament for the purposes of the legislation passed to give effect to paragraphs (a) and (b ) of this Resolution and on the sale value of which it is not provided by the Parliament that sales tax shall not be payable - ten per centum. 6. That in lieu of the rate of tax imposed by the Sales Tax Act (No. 7) 1930-1940 sales tax be imposed upon the sale value of goods, imported into Australia and sold on or after the twenty-second day of November, One thousand nine hundred and forty, by a taxpayer not being the importer of the goods, at the rate of - {: type="a" start="a"} 0. in respect of certain of those goods to be classified by the Parliament- five per centum; 1. in respect of certain other of those goods to be classified by the Parliament - fifteen per centum; and 2. in respect of such of those goods as are not classified by the Parliament for the purposes of the legislation passed to give effect to paragraphs (a) and (b) of this Resolution and on the sale value of which it is not provided by the Parliament that sales tax shall not be payable - ten per centum. 7. That in lieu of the rate of tax imposed by the Sales Tax Act (No. 8) 1930-1940 sales tax be imposed upon the sale value of goods, imported into Australia and sold to a taxpayer who has, on or after the twenty-second day of November, One thousand nine hundred and forty, applied those goods to his own use, at the rate of - {: type="a" start="a"} 0. in respect of certain of those goods to be classified by the Parliament - five per centum ; 1. in respect of certain other of those goods to be classified by the Parliament - fifteen per centum; and 2. in respect of such of those goods as are not classified by the Parliament for the purposes of the legislation passed to give effect to paragraphs (a) and (b) of this Resolution and on the sale value of which it is not provided by the Parliament that sales tax shall not be payable - ten per centum. 8. That in lieu of the rate of tax imposed by the Sales Tax Act (No. 9) 1930-1940 sales tax be imposed upon the sale value of goods in Australia, including goods which have gone into use *or* consumption in Australia, leased by a taxpayer to a lessee on or after the twenty-second day of November, One thousand nine hundred and forty, at the rate of - {: type="a" start="a"} 0. in respect of certain of those goods to be classified by the Parliament - five per centum; 1. ) in respect of certain other ofthose goods to be classified by the Parliament - fifteen per centum; and 2. in respect of such of those goods as are not classified by the Parliament for the purposes of the legislation passed to give effect to paragraphs *(a)* and *( b )* of this Resolution and on the sale value of which it is not provided by the Parliament that sales tax shall not be payable - ten per centum. One purpose of these motionsis to increase the general rate of Sales Tax from 8&1/3percent.to10percent.Honorable members have already been informed, in connexion with the bill to amend the Sales Tax Exemptions Act, of the considerations which actuated the Government in deciding to increase the rate rather than to attempt the withdrawal of exemptions on a sufficient magnitude to allow the present rate to be maintained. It is unnecessary for me here to recapitulate the reasons for that decision. It will be sufficient for me to say that the increase was decided upon only after other possible means of obtaining the required revenue had been thoroughly explored and examined. A second purpose of the motions is to provide differential rates for application to two other classes of goods. The first class comprises goods previously exempt but which, in the existing circumstances, it is considered can be brought into the taxable field without materially departing from the major principles upon which exemption from Sales Tax has been hitherto granted. For this class of goods it is proposed to apply the relatively low rate of 5 per cent. and, as has been previously explained, the goods to which this rate will apply are as set out in the proposed Second Schedule to the Sales Tax (Exemptions and Classifications) Bill. The second class of goods comprises items already subject to tax but which, by reason of the fact that the needs they satisfy are less urgent or important than those satisfied by the ordinary goods of commerce, might well hear a rate greater than that applicable to the general goods of commerce. For this class of goods it is proposed toapply a rate of 15 per cent. and the goods to which this rate will apply are specifically set out in the proposed third schedule to the Sales Tax (Exemptions and Classifications) Bill. This is the first occasion in the history of sales taxation in Australia in which any attempt has been made to differentiate between taxable goods so faras rate is concerned. Bate differentiation has been avoided in the past, not because of any view that a varying burden could not be justified, but simply because it was realized that the extra classifications involved would increase the difficulties of taxpayers in the compilation of returns and place an added burden upon the administration in interpreting and policing the legislation. The alternative confronting the Government, however, appeared to he an increase of the general rate beyond 10 per cent., an alternative which it earnestly wished to avoid. The Government chose, therefore, to adopt the system of differential rates in the belief that the taxpayers upon whom the additional duties of dissection will fall will accept the additional burden as a necessary and inevitable result of the extraordinary revenue requirements of the day and will prefer that course to a high general rate which might tend to depress sales. It is proposed that the new rates shall come into operation as from tomorrow. This accords with the usual procedure when a change of rate is contemplated and is designed to prevent the dislocation of trade which would occur should there be delay between the date of the announcement of the Government's intentions and the date when those intentions became effective. There are provisions in the machinery of the existing law which fully protect vendors of goods who are required to pay the additional tax due to the imposition of the higher rates. Vendors will be able to recover the additional amount from any customers who have not paid it when the bills become law. If the bills do not become law, vendors will be able to obtain refunds of the excess amounts paid by them. There are also provisions in1 the existing machinery acts which will enable vendors of goods previously taxable to recover the additional amount payable from their customers and contractors to recover the additional cost of materials. Contracts and agreements are deemed to be altered accordingly. Steps will be taken to introduce an appropriate amendment of the machinery act to provide that contracts or agreements entered into by vendors who become liable for additional tax or contractors whose costs of supplying materials are increased by the taxing of goods previously exempted may be varied to enable the additional amount payable to be recovered by the vendor or contractor. The new rates will apply to all taxable transactions and operations in goods effected or done on and after Friday, the 22nd November, 1940, and will apply also to goods imported on and after that date. Even with the increases now proposed the highest rate in Australia is still below what is referred to in Great Britain's purchase tax as the reduced rate, viz., 16f per cent., whilst the basic rate in Great Britain, viz., 33-J per cent, is more than three times as great as the proposed Australian general rate of 10 per cent. Progress reported. *[Quorum formed.]* {: .page-start } page 110 {:#debate-50} ### SWAN ELECTORAL DIVISION {:#subdebate-50-0} #### Issue of Whit {: #subdebate-50-0-s0 .speaker-10000} ##### Mr SPEAKER: -- I have to announce that I have issued a writ for the election of a member to serve the Swan Electoral Division in the State of Western Australia in the place of the Honorable Henry Gregory, deceased. The dates in connexion with the election were fixed as follows: - Issue of writ, Thursday, the 28th November, 1940; nominations, Saturday, the 7th December, 1940; polling, Saturday, the 21st December, 1940; return of writ, on or before Saturday, the 18th January, 1941. {: .page-start } page 110 {:#debate-51} ### ADJOURNMENT Royal Australian Ais Force : Sea Reconnaissance Duties - Distribution of Naval Strength: Enemy Raiders - Scrapped Steel RAILS at Newnes - Export of Scrap Metal. **Mr. MoEWEN** (Indi- Minister for Air) [5.46]. - I move - >That the House do now adjourn. At question time I was asked in substance by the honorable member for Base **(Mr. Barnard)** whether I was correctly reported in saying that there had been no aerial reconnaissance over Bass Strait during the eighteen days prior to the sinking of a ship recently in those waters. I replied that that was not an accurate report of any statement made by me, and I undertook on the adjournment to make a statement setting out the facts associated with the issues raised by the question, which I now do. The impression in the mind of the honorable member for Bass and, I have no doubt, in the minds of other people, has undoubtedly been promoted by the report of an interview which I gave to a certain newspaper that sought information from me in connexion with the sinkings and in connexion also with the activities of the Royal Australian Air Force. I shall make some observations regarding that matter before I set out the facts about the aerial reconnaissance. I approach this particular issue with the basic policy that the people should be given as much information as is consistent with the public interest. If, however, information given to a newspaper is promoted to an unwarranted degree of sensationalism or distorted from its proper perspective, the effect is to mislead rather than to inform the readers of the paper, and, in such circumstances, any Minister desiring to give the maximum degree of information consistent with public policy is liable to be driven back to the practice of giving the minimum degree of information rather than the maximum. I gave certain information which was asked of me in connexion with this particular matter and naturally that information was published in the context of a report in a newspaper, not fully, but substantially accurately. The condensation and paraphrazing for the purposes of publication, however, gave a certain inflexion, which conveys an impression somewhat different from that desired to be conveyed by me. Furthermore, in the report, all of that information was surmounted by heavy black headings - for them I accept no responsibility - which, I believe, convey to the mind of the average reader a wrong impression of the facts themselves, of the relative importance of the facts, and of the general picture of the circumstances which I wished to convey to the newspaper concerned and to the public. I was asked when the last air force flight was made over the area where the first ship was sunk by mines. I replied that I did not know, but that it was not of any appropriate consequence, as mines under water could not be detected from the air, and that this area would never be ventured into in daylight by any enemy mine-layers. Nevertheless, I would inquire when, as a matter of fact, the Air Force had last flown over the area. Then, in the course of half an hour of conversation, I pointed out that any mine-laying attempted by any vessel would most certainly be at night, followed by a quick dash back to the open ocean. Aerial reconnaissance could be applied only to the detection of such activities by keeping under observation that part of the ocean which a. mine-laying vessel could reach and be in during the daylight hours of the succeeding day. Thus aerial reconnaissance to detect minelaying vessels involved daylight patrol not merely of the actual trade channels, but also of an area of ocean from 150 to 200 miles wide to the seaward of any trade channel. The sea lanes of trade constantly used around the Australian coast are many thousands of miles in length. It is this great margin to seaward of those actual trade lanes in which it would be necessary to detect any enemy minelayer. This involves so vast an area of ocean that it is obvious that we have not enough aircraft suitable for seaward reconnaissance to have all of those areas under continuous and comprehensive surveillance. My interviewer said that he was fully able to appreciate that point. He was told without any disclosure of details that certain areas were the object of regular reconnaissance flights and that obvious duties of a special character were carried out, amongst which were mentioned the very evident duties of clearing reconnaissance for convoys and vessels engaged on special missions and the investigation from time to time of reports of unidentified vessels, or other special missions. This information presented what I believe will be accepted as a reasonable, but undetailed, picture of the seaward duties of the Air Force. I was then asked again, I take it, as a matter of interest, when the last flight had been made over the area where the first sinking took place. In the meantime, I had secured this information, and I said that a flight had taken place over the area on the 20th October, and pointed out that it was not at all related to preventive measures in connexion with the general subject under discussion. I was astonished later to see this date quite unjustifiably promoted to a. major point in what I think can only be described as a sensational report of an interview which was granted for the purpose of imparting information. The display of the date of that flight and a heavy heading " Not enough planes to guard mined area " had the effect of presenting a completely distorted picture of the activities and capacity of the Royal Australian Air Force in connexion with these special duties. I assure honorable members that the Royal Australian Air Force is most active and industrious in discharging its manifold duties, amongst which the subject under discussion is counted on as one of high importance. Consistent with the retention of adequate numbers of aircraft to meet special calls and a reasonable employment and servicing of operational aircraft, the maximum use of our seaward reconnaissance planes is made to ensure the safety of all shipping in Australian waters. Additional aircraft suitable for seaward reconnaissance of various types are at present on order in America and deliveries will add to our existing squadrons in the comparatively near future. At the same time, we are manufacturing in Australia operational aircraft of ft type capable of carrying out these duties and, in fact, intended in part to be employed for that purpose. It would not be possible for me to give an assurance that in these seas we can be completely assured of immunity from the effect of enemy action, and I do not believe that honorable members would desire me to mislead them in that regard. Every protective step and precaution has been taken, and will be taken, which is within the resources of the loyal, industrious and capable members of the Royal Australian Air Force. {: #debate-51-s0 .speaker-009FQ} ##### Mr CURTIN:
Leader of the Opposition · Fremantle -- This is a matter of some moment. It involves the question of how far the Air Force is at present equipped to make certain that enemy vessels are not operating in Australian waters within areas which would make such operations a grave menace to interstate and overseas shipping. I feel that things could be better done than they are being done at present. I feel that there has been too wide a dispersion of units of the Royal Australian Navy, having regard to what has been said about the strength of the Royal Australian Air Force. Admittedly the work of the Air Force is limited by the material at its disposal. It is of no use at this stage to rely upon what we might get in the way of aeroplanes from other countries. At the moment we can rely only upon what we have, and the Minister for Air **(Mr. McEwen)** has just told us that what we have is not adequate for the protection of our vast coastline. That seems to make it imperative that the Government should immediately consider the disposition of units of the Australian Navy. The Navy is also part of the defence forces of Australia. While I offer no general criticism regarding the use of the Navy J I direct attention to the fact that in recent weeks the position has changed materially from what it was when the war began and the first dispositions of the Royal Australian Navy were made. Close to the chief port of a neighbouring dominion, the sort of thing has happened which has now occurred to two vessels in Buss Strait. I do not think I am violating any confidence when I say that there were apprehensions that an enemy raider was in the vicinity of the Australian coast before these mines were discovered. That, at least, can be accepted as a statement which I would not make if I did not really believe it. To-day, I put a question to the Minister for the Navy **(Mr. Hughes)** which was related to this very subject, and had to do with a report that had reached me concerning what I shall describe as the presumed activities of an enemy vessel off the coast of Western Australia. I recognize, as the Minister does, that you cannot do more than you can do with the Air Force, but I put it to him that he must make up for the inadequacy of the Air Force by a better utilization of the units of the Australian Navy in Australian waters. I make no comment on the general question of the pooling of resources for the defence of the British Commonwealth of Nations, but it must be plain that the Dominion of New Zealand and the Commonwealth of Australia are being singled out for enemy attention with the obvious purpose of frustrating our attempts to help in the war. Once our seaways were mined and our ships destroyed, we should be prevented from transporting foodstuffs overseas for the use of our kith and kin who so greatly need them. Moreover, Australia is exporting steel to places where it is needed in the general pooling of Empire effort. If those exports could he prevented, the effectiveness of our contribution would be greatly reduced. However, even worse is implied. If the enemy is able to mine our waters, the next step may be to raid our ports, and some of our ports are obviously of vital importance in the production of munitions. The Minister has informed us that, although the newspaper report publishes question and answer, it is, in substance, substantially true. I understand that the Minister does not challenge its accuracy, but objects to the emphasis and inflexion given to it. He deprecates it as an alarmist report, but not an untrue one. Therefore, I maintain that, until the Air Force is sufficiently well equipped to be able to defend our coasts against enemy action of this kind, it is necessary to make the requisite use of the Australian Navy for this purpose. If that should involve a re-arrangement of the units of the Navy, I merely point out that the necessities of war have brought us to that state of affairs, and 1 invite the Minister to submit my suggestion to the next meeting of the War Cabinet. {: #debate-51-s1 .speaker-JNX} ##### Mr BARNARD:
Bass -- I am indebted to the Minister for Air **(Mr. McEwen)** for having made this statement, based as it is upon the subjectmatter of a question which I asked earlier in the day. The Leader of the Opposition **(Mr. Curtin)** has rightly pointed out that if the Air Force is unable to maintain an effective patrol, this should be done by units of the Navy. The Minister, replying to my question earlier to-day, said that it . was based upon wrong premises. From the report which the Minister has since made, it seems that my argument was not based on wrong premises, but rather on points which the Minister thought were emphasized unduly. {: .speaker-009MB} ##### Mr McEwen: -- That is not quite the position with regard to what I considered to be the wrong premises of the honorable member's question. The honorable member asked was it a fact that no air force reconnaissance had been conducted over Bass Strait during the period of eighteen days. The statement which I have made indicates that no flight had taken place over one defined point during that period of eighteen days. That is the difference I make. It would not be .in accordance with, the facts to say that no air force reconnaissance had taken place over Bass Strait during the eighteen days. {: .speaker-KX7} ##### Mr Ward: -- It is a distinction without a difference. {: .speaker-JNX} ##### Mr BARNARD: -- If it is not a distinction without a difference, it is certainly one of those small niceties. {: .speaker-009MB} ##### Mr McEwen: -- I think it is most important. {: .speaker-JNX} ##### Mr BARNARD: -- There is no doubt that it is most important, but it is a nicety in distinction which does not satisfy mc. I am concerned, of course, with my own State, which has peculiar difficulties. Owing to its geographical isolation, we have to depend almost entirely on sea-borne transport for communication with the mainland. It is true that our first-class mail matter is carried by air and that passengers also can use this form of transport, but the fact re mains that, following the sinking of two vessels in Bass Strait some weeks ago, Tasmanians were isolated as regards general merchandise and second-class mail matter. If such interruptions to shipping are to be repeated ^Tasmania's position, particularly with regard to foodstuffs, will become acute in ta> very short time. Anybody who has even a limited knowledge of the extent of the- Australian coast must realize the difficulties of policing it from the air, particularly in view of the size of our air force. However, the Minister has certainly not satisfied me on the question of patrolling the shipping lanes between Tasmania and the mainland. When discussions on the defence of the Commonwealth have been held here in years gone by, it has been frequently claimed that Tasmania was not in the picture, and that there was no need to prepare for the defence of Tasmania which, according to alleged experts, was not in a vulnerable position. I do not think anybody will deny that that has been the argument used by military authorities with regard to Tasmania, and supported by Ministers. But Tasmanians have been awakened with a start by the happenings in Bass Strait only a few weeks ago, when two vessels were sunk and shipping between Tasmania and the mainland was suspended. My immediate concern, and the reason that prompted me to ask a question in this House earlier to-day, is the importance and urgent necessity of the Government taking appropriate action to ensure that reasonable shipping facilities will be maintained between the State of Tasmania and the mainland. We want some satisfactory assurance from the Government that action will be taken to maintain that shipping either by the use of naval forces, the Air Force, or both. The Bass Strait shipping lanes must be freed from mines that may be sowed by a raider. I hope that the Minister for Air, or some other Minister will not leave the matter there without giving some satisfactory assurance to Tasmanians with regard to this importantmatter. {: #debate-51-s2 .speaker-KX7} ##### Mr WARD:
East Sydney .- I desire to bring a matter of great importance under the notice of the Government. Certain happenings at Newnes in New Sou th Wales, where the Commonwealth Government and the State Government of *New* South Wales have given concessions Tinder an agreement with the National Oil Proprietary Limited, have been ^brought under my notice. My information is that one of the assets taken over 3>y that company was 32 miles of railway track, which I, understand runs within the area held by the company under lease. The Commonwealth Government has advanced a considerable sum of money to the company in order' to- finance its undertaking and, as security, I take it that the company has undertaken to preserve the assets. I have heard that, despite the fact that some years- ago a committee held an inquiry and' recommended in its report that this* piece of" railway track be reconditioned and used for transport purposes, the company; having decided" to pump the oil out by means of a pipe line, hasdisposed of: the railway track to a scrapiron merchant who is now tearing up the. lines. 1 understand further that a. considerable portion of. tlie track has already *"been* removed, and is now being shipped' *to* the East, in fact to Japan, along with, other scrap metal which the merchant" lias obtained, such as disused locomotives; which lie in a considerable quantity inthat portion of New South Wales. Two very important aspects ars: first, that a company which has entered into an agreement with the Commonwealth and State Governments is disposing of par.t of the assets upon which, the Governments concerned made advances - I' am working on the assumption, that the company has so acted without the authority of either, government because I would be amazed to know that official sanction has been obtained - and, secondly, that the metal which has been obtained as the result of the scrapping of this track, is being shipped to the East. We have just listened very attentively to a statement made by the Minister for Air **(Mr. McEwen)** with regard to the difficulty of protecting this country, and surely it is a very wrong policy for the Government to be permitting the shipment of materials, which may be used for -the purposes of war, to a potential, if -not actual, enemy country, that has already allied itself with the Axis Powers. "Yet the fact is that the Government is permitting that traffic. It is serious indeed' to find that public assets are being destroyed by private companies for the purpose, of obtaining a certain amount of' financial return for themselves, and at the same time, the safety of the people of the Commonwealth, is being jeopardized by the sale of these goods .to a. possible enemy country. Will the Minister givesome assurance that .the Government will make inquiries into the circumstances of this matter and give a report as early, and as fully as" possible to this House ? {: #debate-51-s3 .speaker-009MB} ##### Mr McEWEN:
Minister for Air · Indi · CP -- *in. reply-.* - I assure the Leader of the Opposition **(Mr. Cur.tin)** that* the disposition of the Royal Australian Navy is under the consideration of the Government. I am1 in a position toassure the House that there is nothing., in the disposition of the units of the Royal Australian Navy which places- any> difficulty in the way of readjustment; and that the circumstances of war will be met by a- redisposition- of the naval units' as occasion arises. As requested by theLeader of the Opposition, his- remarkswill be brought to the notice of the War Cabinet. I should like to assure the honorable' member for Bass **(Mr. Barnard)** that, while I am not in a position, and no doubt never will be, to disclose the detail's of the operational activities of the Royal Australian Air Force. the very fullest consideration will be given, and the highest importance attached, to the employment of that force in safeguarding the channels of trade between Tasmania and the mainland. I am not in a position to reply with knowledge to the points raised by the honorable member for East Sydney (Mr: Ward). I shall see that they are brought to the notice of the appropriate Minister and that proper consideration is given to them. Question resolved in the affirmative. {: .page-start } page 114 {:#debate-52} ### PAPERS The following, papers- were presented : - >Commonwealth Bank. Act - Balance-sheets of Commonwealth Bank and Commonwealth Savings Bank and Statement of the Liabilities and Assets of the Note Issue Department, as at 3~0th June, 1940; together with Auditor-General's Reports thereon. > >Apple and Pear Organization Act- Second Annual Report of the Australian Apple and Pear Board, for year 1939-40, together with Statement by Minister regarding operation of Act. > >Australian Imperial Force Canteens Funds Act - Twentieth Annual Report by the Trustees, for year 1939-40 (includingthe **Sir Samuel** McCaughey and P. S. Watson Bequests) . > >Canned fruits Export Control Act - Fourteenth Annual Report of the Australian Canned Fruits Board, for year 1939-40, together with Statement by Minister regarding operation of Act. > >Commonwealth Grants Commission Act - Report of the Commonwealth Grants Commission on applications made by the States of South Australia, Western Australia and Tasmania, for Financial Assistance in 1940-41 from the Commonwealth under Section 96 of the Constitution. > >Dried Fruits Export Control Act - Sixteenth Annual Report of the Dried Fruits Control Board, for year 1939-40, together with Statement by Minister regarding operation of Act. National Security Act - National Security (Prices) Regulations - Declarations Nos. 36-46. Wine Overseas Marketing Act - Twelfth Annual Report of the Australian Wine Board, for year 1939-40, together with Statement by Minister regarding operation of Act. Air Force Act - Regulations - Statutory Rules 1940, Nos. 165, 220, 241. Arbitration (Public Service) Act - Determinations by the Arbitrator, &c. - 1940 - No. 23. - Australian Journalists' Association. No. 24 - Amalgamated Postal Workers' Union of Australia. No. 25 - Commonwealth Temporary Clerks' Association. No. 26 - Amalgamated Postal Workers' Union of Australia. No. 27 - Professional Officers' Association, Commonwealth Public Service. Bankruptcy Act - Rules - Statutory Rules 1940, No. 212. Census and Statistics Act - Regulations - Statutory Rules 1940, No. 179. Commonwealth Bank Act - Treasurer's Statement of combined accounts of Commonwealth Bank and Commonwealth Savings Bank at 30th June, 1940, together with certificate of the AuditorGeneral. Commonwealth Electoral Act and Referendum (Constitution Alteration) Act - Regulations - Statutory Rules 1940, No. 163. Commonwealth Electoral (War-time) Act - Regulations - Statutory Rules 1940, No. 178. Commonwealth Public Service Act - Appointments of G. N. Carey, C. L. Hancock, T. B. Payne, Department of the Interior. Regulations - Statutory Rules 1940, No. 247. Commonwealth Shipping Act - Commonwealth Shipping Board - Cockatoo Island Dockyard - Balance-sheet and Liquidation Account, 29th February, 1940, with AuditorGeneral's report. Customs Act - Proclamations prohibiting the Exportation (except under certain, conditions) of- Bran and Pollard (dated 31st October, 1940). Chronometers. Chronometer watches (dated 23rd October, 1940). Cut Rabbit Fur (dated 20th September, 1940). Flax and flax products (dated 10th September, 1940). Matches and vestas (dated 20th September, 1940). Wireless Transmitting Apparatus and parts thereof (dated 23rd October, 1940). Regulations- Statutory Rules 1940, Nos. 168, 203, 210. Customs Act and Commerce (Trade Descriptions) Act - Regulations - Statutory Rule's 1940, Nos. 216, 226. Dairy Produce Export Charges Act - RegulationsStatutory Rules 1940, No. 180. Defence Act - Regulations - Statutory Rules 1940, Nos. 183, 184, 185, 186, 199, 204, 211, 237. Defence Act and Naval Defence Act - RegulationsStatutory Rules 1940, Nos. 209, 225. Invalid and Old-age Pensions Act - Statement for year 1939-40. Judiciary Act - Rule of Court, dated 28th October, 1940. Lands Acquisition Act - Land acquired - For Administrative purposes - Darwin, Northern Territory. For Defence purposes - Albany, Western Australia. Cheltenham, South Australia. Dysart, Victoria. Elizabeth Bay, New South Wales. Leongatha, Victoria. Longreach, Queensland. Mount Martha, Victoria. North Fremantle, Western Australia. Point Cook, Victoria. Puckapunyal, Victoria. Richmond, New South Wales. Rosemount, Queensland. Salisbury, South Australia. Seymour, Victoria (2). Victoria Park, Western Australia. For Postal purposes - Carlton, Victoria. Caul field East, Victoria. Clyde, Victoria. Coburg, Victoria. Geelong, Victoria. Granville. New South Wales. Konong Wootong, Victoria. Port Kembla, New South Wales. Red Hill South, Victoria. Swan Marsh, Victoria. Unley, South Australia. Watson's Bay, New South Wales. Willoughby, New South Wales. Meat Export Control Act - Regulations - Statutory Rules 1940, No. 205. National Security Act - National Security (Aliens Control) Regulations - Orders - Aliens Employment. Enemy Aliens' Communications. National Security (Capital Issues) Regu- 1 ations-Orders - Declared Pastoral Companies. Exemption (3). National Security (General) Regulations - Orders - Control of Overseas Postal Communications (No. 1). Control of Overseas Postal Communications (Prisoners of War). Control of Wireless Receiving Apparatus. Post and Telegraph Censorship. Prohibited places (2). Taking possession of land, &c. (43). Use of land (15). National Security (Prices) Regulations - Orders Nos. 140-267. National Security (War Service Moratorium) Regulations - Order - Form of notice requiring information. Regulations - Statutory Rules 1940, Nos. 166, 169, 170, 171, 172, 173, 174, 175, 176, 177, 187, 188, 191, 192, 193, 194, 200, 201, 202, 206, 207, 208, 213, 214, 215, 218, 219, 221, 222, 223, 227, 228, 233, 234, 235, 236, 239, 242, 243, 244, 245, 246. Naval Defence Act - Regulations - Statutory Rules 1940, Nos. 182, 195, 196, 197, 217, 240. Navigation Act - Regulations - Statutory Rules 1940, No. 238. Northern Territory Acceptance Act and Northern Territory (Administration) Act- Ordinances of 1940 - No. 12 - Licensing. No. 13 - Lottery and Gaming. No. 14 - Native Administration. No. 15 - Mining. No. 16 - Darwin Administration. No. 17 - Slaughtering. No. 18 - Darwin Rates (No. 2). No. 19 - Criminal Law Amendment. No. 20 - Interpretation. Regulations - 1 940 - No. 9 (Mining Ordinance). No. 10 (Health Ordinance). Nos. 11, 12 (Aboriginals Ordinance). Northern Territory Representation Act and Commonwealth Electoral Act - Regulations - Statutory Rules 1940, No. 167. Papua Act - Ordinances of 1940 - No.5 - Papuan Antiquities. No. 6 - Postal Rates (Defence Forces) (No. 2). No. 7 - Supplementary Appropriation, 1939-1940. No. 8 - Royal Papuan Constabulary. No. 9 - Port Moresby Water Supply (Preliminary Works). No. 10 - Liquor. No. 11 - Appropriation, 1940-41. No. 12 - Ordinance Interpretation. Regulations - Statutory Rules 1940, No. 231. Patents Act - Regulations - Statutory Rules 1940, No. 198. Poet and Telegraph Act - Regulations - Statutory Rules 1940, Nos. 230, 232. Science and Industry Endowment Act - Report by the Auditor-General on the accounts of the Science and Industry Endowment Fund for year 1939-40. Science and Industry Research Act - Regulations - Statutory Rules 1940, No. 224. Seat of Government (Administration) Act -Notice of variation of plan of lay-out of City of Canberra and its environs, dated 9th September, 1940. Transport Workers Act - Regulations - Statutory Rules 1940, Nos. 189, 190. Wireless Telegraphy Act - Regulations - Statutory Rules 1940, No. 181. House adjourned at6.22 p.m. {: .page-start } page 116 {:#debate-53} ### ANSWERS TO QUESTIONS *The following answers to questions were circulated: -* {:#subdebate-53-0} #### Petrol Storage {: #subdebate-53-0-s0 .speaker-KHL} ##### Mr HOLLOWAY:
MELBOURNE, VICTORIA · FLP; ALP from 1936 y asked the Prime Minister, *upon notice -* {: type="1" start="1"} 0. Has he been requested by representatives of Port Melbourne and district to have the oil storage tanks of the Commonwealth Oil Refineries Limited removed to a less thickly populated area? 1. If he has not yet been approached, will he receive a representative deputation to hear reasons why such a change should be made? {: #subdebate-53-0-s1 .speaker-N76} ##### Mr Menzies:
UAP -- The answers to the honorable member's questions are as follows : - {: type="1" start="1"} 0. Correspondence has taken place between the municipal authorities at Port Melbourne and the Commonwealth Government regarding the removal of oiltanks of the Commonwealth Oil Refineries Limited to a less populous area. 1. The representations submitted have received very full consideration and a reply has been furnished setting out the Government's views thereon, consequently it is not seen that a deputation would serve anyuseful purpose. If, however, there are fresh aspects which it is desired to bring forward I shall be glad to arrange for a member of the Ministry to receive a deputation in connexion with the matter. Beef Sales at Werbibee. {: #subdebate-53-0-s2 .speaker-KHL} ##### Mr Holloway: y asked the Prime Minister,upon *notice -* >In view of the decisions arrived at by the Port Melbourne, South Melbourne and Williamstown Municipal Councils urging the Commonwealth Government to use its powers under the National Security Act to have the ban upon the sale of beef from the Melbourne and Metropolitan Board of Worksfarm at Werribee removed,has the Prime Minister given any consideration to theserequests, and, if not, willhe do so at his earliest convenience so that the people in the metropolitan area may get beef at a reasonable price ? {: #subdebate-53-0-s3 .speaker-N76} ##### Mr Menzies:
UAP -- Consideration has been given to the matter, but as it is one concerning health administration under the control of the State Government of Victoria, the Commonwealth Government does not propose to take action in the direction suggested. Old-age Pensions. {: #subdebate-53-0-s4 .speaker-KHL} ##### Mr Holloway: y asked the Treasurer, *upon notice -* {: type="1" start="1"} 0. Will he inform the House if, when framing the budget, he took into consideration the justice of adjusting the amount of old-age and invalid pensions to compensate pensioners for the greatly decreased purchasing power of their pensions due to the increased cost of living? 1. If not,will he give consideration to this matter as soon as possible? {: #subdebate-53-0-s5 .speaker-F4T} ##### Mr Fadden:
CP -- The answers to the honorable member's questions are as follows: - {: type="1" start="1"} 0. The Government, in framing the budget, took into consideration all relevant factors. 1. See answer to No. 1. AustralianNationalsinNew Zealand: Military Service. Mr.Rosevear asked the Prime Minister, *upon notice -* {: type="1" start="1"} 0. Does the Government's decision not to attempt to interfere with the administration of the laws of New Zealand with respect to the New Zealand Government's decision to refuse to allow Australian-born citizens to return to Australia, and the New Zealand Government's further decision to conscript those persons for military service, apply with equal force to persons who went uninvited to New Zealand, and those who were recruited in Australia by a New Zealand Minister under a contract of promise of work? 1. Is the Government's attitude in this matter to be taken as complete abandonment of the usual protection provided for Australian citizens in dominion and other countries? {: #subdebate-53-0-s6 .speaker-N76} ##### Mr Menzies:
UAP s.- The phase of the matter referred to by the honorable member is being inquired into.

Cite as: Australia, House of Representatives, Debates, 21 November 1940, viewed 22 October 2017, <http://historichansard.net/hofreps/1940/19401121_reps_16_165/>.

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