House of Representatives
22 February 1949

18th Parliament · 2nd Session

  1. House of Representatives
  2. 18th Parliament
  3. 1949

Mr. Speaker (Hon. J. S.Rosevear) took the chair at 3 p.m., and read prayers.

page 515

DISTINGUISHED VISITOR

Mr SPEAKER:

– I desire to inform the House that the Right Honorable R. Anthony Eden, M.C., Deputy Leader of the Opposition in the United Kingdom House of Commons, is within the precincts of the chamber. “With the concurrence of honorable members, I shall invite him to take a seat on the floor of the House, beside the Speaker’s chair.

Honorable Members. - Hear, hear !

Mr. Eden thereupon entered the chamber, and was seated accordingly.

page 515

HOUR OF MEETING

Motion (by Mr. Chifley) agreed to -

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

page 515

SNOWY RIVER SCHEME

Mr.FRASER. - Can the Minister for Works and Housing say when the physical work on the Snowy River diversion scheme will begin? How many men will be employed on the job this year? Will the sites of the existing towns of Adaminaby and Jindabyne be submerged, either wholly or in part ? If so, when will this be done? Will alternative towns be built? What labour force will be required for this great national work when it is in full swing?

Mr LEMMON:
Minister for Works and Housing · FORREST, WESTERN AUSTRALIA · ALP

– The physical work on the undertaking will begin some time next spring. A part of the town of Adaminaby will be inundated, and it is proposed that a new area shall be constructed to replace it. That will be necessary, I believe, in approximately seven years’ time. The town of Jindabyne will have to be re-built on another site, but that will not be necessary for some years, as that locality is one of the last to be involved in the scheme. Much of the work on the scheme will be highly mechanized, and it is expected that when construction is in full swing approximately 2,000 or 3,000 men willbe employed.

Mr FULLER:
HUME, NEW SOUTH WALES

-Seeing that the Snowy River scheme will be one of the greatest national undertakings ever to be attempted in Australia, involving an expenditure of about £200,000,000, will the Minister for Information arrange to have a film made of the construction operations ?

Mr CALWELL:
Minister for Immigration · MELBOURNE, VICTORIA · ALP

– I understand that the Snowy River scheme will be the biggest of its kind ever to be undertaken by the Commonwealth, acting in conjunction with State governments, and I shall be happy to arrange through the Department of Information for the making of a film as suggested.

Mr HUTCHINSON:
DEAKIN, VICTORIA

– I ask the Minister for Works and Housing whether a direct approach has been made to the Government by the Tennessee Valley Authority, offering its co-operation in the

Snowy River scheme ? If so, has the Government considered the form of assistance or co-operation that it would like to receive from the Tennessee Valley Authority? If no direct approach has been made, will the Minister ascertain where the press reports regarding offers of co-operationby the Tennessee Valley Authority to the Australian Government emanated, and whether it is possible for the Tennessee Valley Authority to provide engineering or other assistance that would contribute to the success of this big undertaking?

Mr LEMMON:

– The Australian Government has not received any direct approach from the Tennessee Valley Authority offering its co-operation and assistance in the Snowy River scheme. However, I did read in the press a news item bearing a Washington dateline which stated that the Tennessee Valley Authority had indicated that it would be prepared to assist the Government in carrying out the undertaking. No doubt we could learn much from that great and successful undertaking, which was carried out by the American people to control a large river and develop the Tennessee Valley. I do not see that any good purpose will be served in instituting inquiries to ascertain the source of the report that the Tennessee Valley Authority has offered to assist Australia with the Snowy River scheme.

page 516

QUESTION

SECRET INFORMATION

Alleged Leakages from Official Quarters.

Mr ARCHIE CAMERON:
Postmaster-General · BARKER, SOUTH AUSTRALIA · ALP

– I ask the Attorney-General whether, during his recent absence overseas, a certain occurrence in this House that came to be known as the “ secret documents case”, was brought to his notice, andwhether, as he has not launched any prosecutions in connexion with the allegedly forged or stolen documents, the Opposition is entitled to assume that it is a case of the perfect theft or the perfect forgery?

Dr EVATT:
Attorney-General · BARTON, NEW SOUTH WALES · ALP

– A prosecution is actually pending at the present moment over a matter in the same category as that mentioned by the honorable member. I have no information to give to the honorable member on the particular matter that he has mentioned except that inquiries in connexion with it are not yet complete.

Mr LANG:
REID, NEW SOUTH WALES

– Will the Attorney-General say whether subsequent inquiries made into the case of C. K. Downe, of 141 The Boulevarde, Punchbowl, one of the socalled members of the Australia First Movement, have shown that there was a grave miscarriage of justice? Has an examination of Downe’s military record in the Australian Imperial Force shown that actually, during the holding of the royal commission’s inquiry, Downe was a member of a commando unit and was later transferred to the cipher section of Military Intelligence? Did he actually remain a member of the Australian Imperial Force during his period of internment, and receive his full pay, and was he refused a court-martial on the grounds that there was no evidence to justify any charge? Has the Minister, in a letter dated the 22nd July, 1948, informed Downe that it has been established not only that he served well as a soldier but also that his loyalty and discretion were beyond question ? If so, does the Government propose to take any further steps to ensure that proper reparation is made to Downe and others who suffered miscarriages of justice?

Dr EVATT:

– All of the cases of internment of members of the Australia First Movement were considered by Mr. Justice Clyne, sitting as a royal commission. It is quite true, as stated by the honorable member, that a letter was written by me in relation to Downe upon the recommendation of the appropriate authorities. The writing of the letter was dictated by a sense of justice to the man concerned and I believe that it accurately stated the position and was in accordance with evidence that was not placed before Mr. Justice Clyne. If the honorable member will put his question on the notice-paper I shall give him a complete answer later,

page 516

QUESTION

MR. J. HEALY

Mr BERNARD CORSER:
WIDE BAY, QUEENSLAND

– Will the Attorney-General say whether the Commonwealth Investigation Branch has made any inquiries into the activities of a man named Healy, and his recent and past advocacy of industrial trouble? Is this man identical with the Mr. Healy who is u member of the Stevedoring Industry Commission? If so, does the AttorneyGeneral consider it right that this individual should be a member, and continue to bo a member, of such a body?

Dr EVATT:
ALP

– A question on this matter was asked me in the House last week, and a full answer to the honorable member who asked it will be forthcoming in a day or two. I have nothing to say regarding it in the meantime.

page 517

QUESTION

NORTH ATLANTIC PACT

Mr DUTHIE:
WILMOT, TASMANIA

– Will the AttorneyGeneral say whether, from his knowledge of the proposed North Atlantic Pact, he would regard it, if it comes into being, as a military alliance of the Western Powers and, as such, whether it could further world peace?

Dr EVATT:
ALP

– I regard the proposed North Atlantic Pact, which is not yet in force, as a defensive arrangement permissible under the Charter of the United Nations by the powers proposing to be parties to it, and therefore as a secondary support of the United Nations and in that sense a buttress to world peace.

page 517

QUESTION

INDUSTRY

Incentive Payments

Mr HUTCHINSON:

– Will the Prime Minister give consideration to inviting a cross-section of prominent industrialists and employers to discuss with the Australian Labour party and the Australian Council of Trades Unions the proposed plan for the adoption of a system of incentive payments for workers in industry?

Mr CHIFLEY:
Prime Minister · MACQUARIE, NEW SOUTH WALES · ALP

– The reason for the appointment of the committee referred to by the honorable member, which is composed of representatives of the Australian Council of Trades Unions, the federal executive of the Australian Labour party and the Parliamentary Labour party was to obtain some uniformity of view concerning important industrial matters that arise from time to time so that the

Government would have the advantage of hearing the collective views of those bodies in preference to receiving individual representations from them. Concerning the suggestion made by the honorable member that a meeting of employers and employees should be convened, I think that the bodies that would require to be represented at any such meeting would be the Australian Council of Trades Unions, on behalf of the trade unions, and the chambers of commerce and manufactures on behalf of the employers. The honorable member will recall that on a previous occasion representatives of those bodies met in conference, and at a later stage it was suggested that another similar conference be convened. However, no request has been made by the employers for another conference, and, indeed, none came for a considerable period from the Australian Council of Trades Unions. The Government is quite willing at any time to discuss industrial matters and to examine the situation, provided that the Australian Council of Trades Unions and employers’ organizations are agreeable. However, I consider that a committee constituted on the lines suggested by the honorable member, and including representatives of the federal executive of the Australian Labour party and the Parliamentary Labour party, would be, in a large measure, a political body. I think that it would be far better for representatives of the employers and employees to meet together, and the Government is prepared to consider such a proposal.

page 517

NORTHERN TERRITORY

Sir EARLE PAGE:
COWPER, NEW SOUTH WALES

– Can the Minister representing the Minister for Health say whether hi9 attention has been drawn to the report of a statement made by Dr. Webster, a member of the Legislative Council of the Northern Territory, of Tennant Creek, concerning the maladministration of the health services of the Northern Territory-

Mr SPEAKER:

– Order ! The gentleman referred to by the right honorable member has no right to have his criticism of the administration of the Northern Territory introduced to this House. The right honorable gentleman knows that he cannot introduce argument in the course of a question, and he certainly cannot introduce another person’s argument by proxy.

Sir EARLE PAGE:

– Will the Minister make a statement concerning the chaotic conditions of the health services in the Northern Territory which has resulted in the loss of several hundred lives? Can he 9a.y what steps have been taken to correct the situation?

Mr HOLLOWAY:
Minister for Labour and National Service · MELBOURNE, VICTORIA · ALP

– I did see a press report of the statement mentioned by the right honorable member, and my colleague the Minister for Health, Senator McKenna, has also seen the report. I am assured that he will make a statement concerning it in due course.

page 518

QUESTION

TINPLATE

Mr HOWSE:
CALARE, NEW SOUTH WALES

– Can the Prime Minister inform me of the present position concerning tinplate supplies in Australia? Is sufficient tinplate available ‘for the canning of exports as well as for local requirements? I refer particularly to the Food for Britain scheme, which, I understand, had to be suspended a few months ago because of scarcity of tinplate. Can the right honorable gentleman say what the present position is in that connexion?

Mr CHIFLEY:
ALP

– When I visited London last year the situation in relation to tinplate was most difficult. Under a system of end-use rationing, which means that manufacturers of canned foods are not allowed to use small 8-ounce tins, we need about 107,000 tons of tinplate. At the time of my visit there was only about 84,000 tons in sight. Representatives of the Commonwealth departments involved joined me in a discussion of the matter with the President of the Board of Trade, Mr. Harold Wilson, who pointed out that the real difficulty was the shortage of steel. In order to overcome that difficulty he suggested that it might be possible for Australia to export some steel to Great Britain. In fact, the Broken Hill Proprietary Company Limited has a contract with British manufacturers for the supply of steel, and endeavours have been made to meet that demand. Members of the British Government and of the Board of Trade were particularly helpful, and it is hoped to obtain sufficient tinplate from the United Kingdom, supplemented by some from the United States of America, to make sufficient tinplate available in Australia under end-use rationing to permit the export of canned food to continue without interruption. The secretary of the Food for Britain organization, which has interested itself in this matter, telegraphed me last week, and arrangements were made by the Minister for Commerce and Agriculture for the secretary of his department to meet a representative of the organization in Sydney this morning. I have been informed that a satisfactory arrangement has been reached whereby enough tinplate will be available to meet requirements.

page 518

QUESTION

GOLD

Mr HAMILTON:
SWAN, WESTERN AUSTRALIA

– Can the Treasurer say whether there exists a policy instrument or instruction from the management of the International Monetary Fund or the International Bank for Reconstruction and Development directing that member nations shall not encourage the production of gold within their territories ?

Mr CHIFLEY:
ALP

– I do not know of any instruction about the production of gold. So far as I know, all countries are free to produce gold in whatever quantities they choose, but it is generally understood that the fund will exercise some control over the price paid for gold. As the honorable member knows, the United States of America is the only country that will buy gold in unlimited quantities, a fact which places it in a dominant position in determining the price of gold. If the United States of America is not prepared to pay a higher price, I assume that its influence on the management of the monetary fund would be very great in that regard. It is true that various arrangements have been entered into which it would take too long to describe in an answer to a question. For instance, the monetary fund has given permission for a subsidy to be paid to encourage the production of gold in Canada. This permission was given very reluctantly, and it was clearly indicated that it was not to be regarded as a precedent. I understand that a subsidy is also being paid on the production of gold in Rhodesia. Arrangements have been entered into by South Africa for the sale of gold for industrial purposes, for use only by goldsmiths, &c, a specified quantity being released for this purpose each week or fortnight. As I have said, no instruction has been issued to reduce the production of gold, but a very clear indication has been given by the United States of America that it will not be a party to increasing the price of gold.

page 519

QUESTION

DRESS FOR SCHOOL BOYS

Mr FRASER:
EDEN-MONARO, NEW SOUTH WALES

– In view of a move in some schools under Commonwealth control to insist on boys wearing collars and ties, coats, full-length socks, and shoes, will the Minister for the Interior give an assurance that shirts, shorts and sandals will be regarded as suitable wear for Australian boys in summer time?

Mr JOHNSON:
Minister for the Interior · KALGOORLIE, WESTERN AUSTRALIA · ALP

– Although I saw a reference in the press to the matter of clothing worn by school children in Canberra, I am not aware of any move of the kind mentioned by the honorable member. According to the newspaper article the subject was raised at a meeting of the Parents and Citizens Association of Canberra, and reference was made to children’s dress by thehead-master of Canberra High School. The matter has not been referred to me, but if it is I shall consider it fully and make a decision.

page 519

QUESTION

MELBOURNE TOWN HALL

Lecture on Russia.

Mr GULLETT:
HENTY, VICTORIA

– Is the Minister for

Information aware of the attempts being made by the Australia-Soviet House organization in Melbourne to obtain the use of the Melbourne Town Hall for a pro-Russian lecture to be delivered to the public by Mr. Rodgers? Has the right honorable gentleman read the list of those who supported the application, and is it not a fact that they are all either Communists, fellowtravellers, officials of Communistdominated unions, or misguided clergymen ?

Mr CALWELL:
ALP

– I saw the list of eighteen clergymen who supported the request on their own behalf and that of five others who could not attend the deputation to the Melbourne City Council. They spoke in support of the protest against the council’s refusal to make the Melbourne Town Hall available tomorrow to Mr. John Rodgers, who is a son of a former member of this House, and who has just returned from a tour of Russia. The matter is one for decision by the Melbourne City Council in the exercise of its powers under the Local Government Act of Victoria. I do not wish to express any opinion on the merit or otherwise of the action of the Melbourne City Council, or the merit or otherwise of the request of the applicants. All I know is that the action of the Melbourne City Council was commented on very severely by the Melbourne Sun in a leading article yesterday morning, which amazed me greatly.

page 519

QUESTION

MANUS ISLAND

Mr ANTHONY:
RICHMOND, NEW SOUTH WALES

– During last weekend statements based on cables received from the United States of America, allegedly from official sources, appeared in the press, contradicting the statement relating to Manus Island that was made in this House last week by the Minister for External Affairs. The newspaper reports stated that, although the Americans had been prepared to spend £300,000,000 on the development of Manus Island, they were prevented from so doing because the Australian Government had raised various objections. “Will the Minister inform the House how much truth there is in this assertion, and will he also make available to members of the Opposition, particularly the Leader of the Opposition and the Leader of the Australian Country party, any documents or papers relating to this vital factor in Australia’s defence?

Dr EVATT:
ALP

– During the week-end I saw a press report of a cable relating to this matter, but the meaning of it, as I read it, was precisely the reverse of that suggested by the honorable member. It was to the effect that the statements made on behalf of the Australian Government here were correct, and that the United States of America had not offered to make a contribution to the establishment of a base on Manus

Island. Indeed, that is the fact. No offer was made. I shall confer with the Prime Minister with regard to the making available of certain papers. Personally, I have no objection to that being done. A perusal of them will show that the Government has pursued a consistent course of the utmost comradeship with the United States of America, always aiming at a Pacific or regional pact. I repeat unequivocally that no offer has been made by the United States at any time to expend such a sum of money as that mentioned by the honorable member. Manus will be established as Australia’s most forward base.

page 520

QUESTION

AUSTRALIAN-DUTCH RELATIONS

Mr HARRISON:
WENTWORTH, NEW SOUTH WALES

– I ask the Minister for External Affairs whether the Netherlands Minister in Canberra has protested against statements made by the Minister for Immigration concerning the Dutch, and has asked whether such statements expressed the views of the Australian Government. If so, does the Government propose to direct that Minister to retract his statements, or, alternatively, does it endorse the statements as expressing the views of the Australian Labour Government? Has the British Government expressed concern at the deterioration of relations between Australia and the Netherlands following the statements made by the Minister for Immigration?

Dr EVATT:
ALP

– I shall answer the second part of the question, first. No such concern has been expressed by the United Kingdom Government at any time. In regard to the first part of the question, I was asked a question to the same effect last week by an honorable member opposite and I then said, and I repeat now, that any conversations that took; place - and conversations did take place - between the Minister for. the Netherlands and myself were on a basis of complete confidence. I shall not break that confidence and I do not think that the Minister, for the Netherlands has broken it. Therefore, questions of this kind are based on pure speculation-

Mr Harrison:

– Surely the Minister must reply to the question. The House and the public are entitled to know whether such a protest was made.

Mr SPEAKER:

-The Minister need not reply to any question.

Dr EVATT:

– I shall reply to the question, Mr. Speaker. As a responsible Minister, when I am asked questions about personal conversations between representatives of a foreign power and myself, such conversations being conducted on a confidential basis, I do not reveal the nature of such conversations without the consent of both participating parties. I have not revealed the nature of the conversation to which the honorable member has referred and I am certain that the Minister for the Netherlands has not done so.

Mr Harrison:

– Is not the House entitled to know the policy of the Government in this matter?

Dr EVATT:

– It is not entitled to know the terms of a confidential conversation.

page 520

QUESTION

CIVIL AVIATION

Swansea Aerodrome - TransAustralia Airlines.

Mr DUTHIE:

– Will the Minister for Civil Aviation examine the possibility of re-opening the aerodrome at Swansea, on the east coast of Tasmania, the licence of which was cancelled in 1939? If the aerodrome is re-opened the Tasmanian aero clubs will be able to use it as a link between Cambridge, Western Junction and St. Helens, and a freighting service could be instituted in the future. I point out that very little work is required to make this small aerodrome serviceable.

Mr DRAKEFORD:
Minister for Air · MARIBYRNONG, VICTORIA · ALP

– I shall cause an examination to be made of the possibility of utilizing the Swansea aerodrome. I understand that the licence was withdrawn because the aerodrome did not comply with the present day requirements. In view of the representations made by the honorable member, I shall be glad to have the matter looked at again with a view to ascertaining whether effect can be given to his request.

Mr TURNBULL:
WIMMERA, VICTORIA

– I ask the Minister for Civil Aviation whether it is a fact that Trans-Australia Airlines presents a serial entitled The Blue Danube over many radio stations weekly? What is the cost of such broadcasts, and are they a paying proposition?

Mr DRAKEFORD:

– I believe that it is correct that Trans-Australia Airlines is conducting a broadcast session each week, and I understand that it has been awarded the “ Oscar “, which is the honour bestowed on the best performance given over the air. As Minister for Civil Aviation, I do not attempt to interfere with the business arrangements of TransAustralia Airlines. That organization is responsible for conducting its own affairs. However, I understand that as a result of the broadcasts advertising TransAustralia Airlines and the excellence of its services, its trade has been greatly increased - a fact that is exciting considerable jealousy among the other aviation companies.

page 521

QUESTION

ARMED FORCES

Recruiting

Mr ARCHIE CAMERON:
ALP

– I have noticed certain statements in the press regarding the enlistment in the United Kingdom of personnel for the Royal Australian Navy and the Royal Australian Air Force. I ask the Minister for Defence whether these statements are correct and whether the Government has not profited by a study of the fate of other countries which failed to provide for their own defence from their own manpower resources?

Mr DEDMAN:
Minister for Defence · CORIO, VICTORIA · ALP

– It is true that provision has been made for the recruitment from the United Kingdom into the Royal Australian Navy and the Royal Australian Air Force of certain technical personnel and personnel with specialist qualifications. For example, provision has been made for the recruitment in the United Kingdom of a number of doctors for the Royal Australian Navy. The honorable member will realize that in view of the present shortage of doctors in Australia, that is the correct step to take. The same conditions apply to any other class of personnel being recruited in the United Kingdom for either the Royal Australian Navy or the Royal Australian Air Force.

page 521

QUESTION

DOLLAR DEFICITS

Mr HUTCHINSON:

– Can the Prime Minister make any statement on the progress being made to correct Australia’s adverse trade balance with other countries? If not, will he make such a statement at as early a date as possible? Can he hold out any hope that petrol rationing may be relaxed in the near future ?

Mr CHIFLEY:
ALP

– In the financial statement which I presented to the House last week, I mentioned that Australia’s position with respect to dollar deficits had improved. That does not mean that we shall be able to provide sufficient dollars to meet all our commitments. Consequently, we shall be obliged to call upon the British Treasury for some dollars to enable us to meet our deficit. I pointed out that the figures with respect to trade between the two countries indicated that we would strike a balance over the year. However, we are now in February and one cannot say what will happen before the 30th June next. I also pointed out that, in addition, we have to meet a great number of commitments in respect of licence-fees, rentals and dividends, and that no estimate of the total of those commitments can be made at the moment. I cannot add to what I said in my financial statement except to say that we have been able to reduce what appeared to be the prospective dollar deficit for Australia. Some of the colonies have not earned as many dollars as we had hoped they would do. The result is that the overall position outside the United Kingdom which, of course, participates in Marshall aid, is not more favorable than we anticipated it would be. Although Australia improved its position either by increasing its earnings or by reducing its dollar expenditure, the same cannot be said of some other British countries which, up to date, are not holding as many dollars as we had hoped they would do. When the House is debating the financial statement I shall deal at greater length with the matter raised by the honorable member.

page 521

QUESTION

ROADS

Mr HOWSE:

– I draw the attention of the Prime Minister to a request made by the Central Education Bureau, which consists of many public bodies, that the

Australian Government should make funds available to the States in order to enable shire councils to carry out repairs to roads used by school buses. Will the right honorable gentleman make funds available for this very worthy purpose?

Mr CHIFLEY:
ALP

– The Australian Government provides funds to the States for road purposes under conditions which are clearly defined. Under the Federal Aid Roads and Works Agreement, certain grants are made to the States which may expend such funds as they themselves decide. In addition, a sum of £2,000,000 is provided annually to the States for distribution to local government bodies, particularly in. sparsely populated areas. Further, States may make certain claims with respect to their statutory disbursement, which is paid out under a formula devised to cover such payments by the Australian Government to the States. The Australian Government does not propose to engage in any dealings with local government authorities with respect to the construction and maintenance of roads except when such work is related to defence. We propose to deal entirely through the States with respect to any special assistance which local government’ bodies may require.

page 522

QUESTION

UNITED NATIONS

Mr ARCHIE CAMERON:
ALP

– Will the Minister for External Affairs inform the House whether Russia and some of its satellites have failed to subscribe to or participate in the debates of certain ancillary and subsidiary organizations of the United Nations? Will the Minister also state whether those institutions have suffered as the result of the absence of Russia and its Communist friends?

Dr EVATT:
ALP

– The answer to the first part of the honorable member’s question is “ Yes “, and the answer to the second part is “ Probably, or perhaps “.

page 522

QUESTION

WAR AND SERVICE PENSIONS

Mr FRANCIS:
MORETON, QUEENSLAND · NAT; UAP from 1931; LP from 1944

– Last week, the Prime Minister, in reply to a question, indicated to me that although he had rereceived representations for an increase of the pensions payable to ex-service men and women from ex-servicemen on this side of the House and from Mr.

Eric Millhouse, K.C., and Mr. Neagle, who are president and secretary respectively of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia, he was not prepared to provide for such increases. Will the right honorable gentleman now indicate to the House the reasons for his refusal, with particular reference to the increased cost of living?

Mr CHIFLEY:
ALP

– I do not think that any reference was made last week to representations by honorable members on the othersideofthe House in support of an increase of pensions for ex-service men and women. Although it is true that I have received deputations from some honorable members opposite, who are ex-servicemen, in regard to pension matters, the honorable member did not say anything about that last week. He asked whether I had received representations from ex-servicemen’s organizations, and I said that I and two other Ministers bad met Mr. Millhouse and Mr. Neagle, of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia, who had presented a 36-point request. On going through the list, we found that a number of those requests had already been granted. I told the honorable member that I had promised to consider the representations that had been made but that I would make no promises of any kind. I do not propose to enter into a discussion about a matter which was debated in this House when legislation was passed recently to provide for pension increases.

page 522

QUESTION

FINANCIAL STATEMENT 1948-49

Debate resumed from the 15th February (vide page 242), on motion by Mr. Chifley -

That the following paper be printed: -

Financial Statement by the Right Honorable J. B. Chifley, M.P., Treasurer.

Mr MENZIES:
Leader of the Opposition · Kooyong

– Last week the Treasurer (Mr. Chifley) presented to the House a financial statement of great importance and of great interest. This week we shall proceed to discuss that statement and, no doubt, various points that emerge from a consideration of it. I direct my attention particularly to-day to one important aspect of our economy that was referred to in very clear terms in the right honorable gentleman’s statement. Indeed, what he said about it was so important that it deserves some emphasis and some further consideration. Two processes have been going on in Australia in the last few years, since, let us say, the peak of taxation in 1945. The first of those processes has been a steady reduction of taxation, a reduction which has gone a long way and which, when measured in percentages, has been so large that when I look back to the last election I am like Warren Hastings, and so is the Leader of the Australian Country party (Mr. Fadden), because we are astonished by our own moderation. But, while that process of tax reduction has been going on, another process, an increase in the price level, has been going on with ever-increasing momentum. The Treasurer’s statement showed quite plainly that he had considered the one and was disturbed about the other. The truth is, of course, that if the price rise is sufficiently active we may very well find ourselves in a position in which tax reductions are, in effect, cancelled out by increased prices, so that, in the net result, the ordinary citizen will find himself no better off, and perhaps worse off. That situation is worth examining closely. Price increases as measured by the “ C “ series index are readily ascertainable. I have seen figures from two or three sources. They have slight variations, but the variations are of no moment and they tell substantially the same story. I shall put the situation to the House in simple form. Starting from the middle of 1945 - I shall not go back to the days before or during the war - the increase of the price level, as shown in the “ C “ series index for 1945-46 was a little less than 2 per cent. In 1946- 47 it was 2i per cent, and in 1947-48 it was 9 per cent. In the June quarter of 1948 the increase was at the rate of 10 per cent, a year and in the second quarter of that year it was at the rate of between 9 and 10 per cent, a year. If we assume that that rate of increase will continue for the rest of 1948-49, and I am afraid that that is a reasonable assumption, we discover that since the middle of 1945 there will have been a toal increase of the price level of approximately 22£ per cent. I do notwant to be charged with having made a false statement because of a half per cent, or something of the kind. I have taken these figures out as best I can in a limited time. I think it is substantially fair to say that there has been an increase of the price level of 22£ per cent, since the middle of 1945, as measured by this commonly used “ C “ series index. If we consider the case of a taxpayer who is in receipt of a salary of, say, £800 a year, with a wife and dependent child, and assume that his salary has not been increased since 1945, we find two things. They are both very material to his position and particularly to the position of people in the middle income ranges who are receiving incomes or salaries. First, a man with a wife and one dependant child, earning £800 a year, has had a taxation saving through the reductions that have been made. At the peak of taxation, he was paying £207 a year in taxes and under the new proposals which have just been introduced by the Treasurer he will pay £63 a year. From the point of view of money saved on taxation and money left in his pocket, he will be £144 a year better off than he was at the peak of taxation. That may be called a profit item. In the meantime, however, because of the increase of the price level and the consequent fall in the value of money, which is a much more accurate way of expressing it, because rising prices mean falling money values, his £800 a year has fallen to approximately £650 a year.

Mr Chifley:

– In most instances, such a man would have had increases of salary.

Mr MENZIES:

– I am coming to that. If I am to establish this comparison, I must make the assumption that his salary has remained the same. His £800 a year in 1945 is now worth £650 a year. Therefore, he is £150 a year worse off in purchasing power and £144 a year better off in taxation liability. On that assumption, the whole of his taxation reduction has been cancelled out by the decline in the value of the pounds in which he receives his salary. That is an extremely significant state of affairs. The Prime Minister has very properly pointed out that that position will have been modified if the taxpayer’s salary has been increased. In many instances, salaries have been increased, but I am sure that the right honorable gentleman and all other honorable members will agree that, of all -forms of income, the fixed salary is the one that is least responsive to these changes. People who are in receipt of salaries of £800 a year do not commonly have their salaries adjusted because of some increase of the price level. Such salaries do not fluctuate with the automatic regularity with which the normal wage level will fluctuate under certain circumstances. Salaries of £800 a year are, for the most part, less flexible than incomes higher in the income scale and also less flexible than wages which are adjusted from time to time under some automatic arrangement. It must always be remembered when considering the position of salaried people that their position is not a flexible one financially. Consequently, there must inevitably be many thousands of people in Australia who are in the position that I have illustrated. They are paying less taxes than they paid previously, but the purchasing power of the pounds in which they are paid has been reduced. The one benefit has been cancelled out by the other disadvantage. That seems to mc to be an extremely important consideration. All that it means is that the reductions of tax - and I agree that they have been most substantial - have, in some instances, particularly in relation to that middle stratum of the community that is so profoundly important to the nation from a social point of view, failed to counteract the rise of prices. Of course, as subsidy removals progressively find their full effect - and they have not yet found their full effect - so the position will become progressively worse. Therefore, I say to the House that the rise in prices, that is, the inflationary ‘movement that is now taking place, is undoubtedly a major problem and when I say that, I am not saying anything controversial, because in the Prime Minister’s own statement and in what he has had to say for some time past, that very proposition has been stated. There we have a major problem, in which both .sides of the House have a common interest, whatever may be said by extreme partisans outside of it. We all know perfectly well that every constituency represented in this House contains many thousands of people who have a vital and pressing interest in the problem to which I have referred. Now, the rise in prices, like so many other things, has been exemplified by certain champions outside. I have commonly heard it said, particularly during by-election campaigns when passions run high, that the rise was really the fault of the States; that when the prices control was handed back to the States after the last referendum the whole trouble began; and that we could thank the inefficiency of the States and the decision of the people at the last referendum for the increased prices.

Mr George Lawson:

– And the Opposition.

Mr MENZIES:

– Y es, the Opposition, and, if you like, myself in particular. I thank you. I have heard those statements, but I was delighted to notice that whatever might be said by some people on this matter, the Prime Minister himself did not put it in that way, because he made in the course of his statement an observation - -and I have no mental reservation about this - of great good sense. The right honorable gentleman stated -

At the same time, costs and prices have been rising at an. increasing rate. In part this follows from the release of price and cost influences which were held back during the war and early post-war years by controls and offsetting measures such as subsidies, but which had sooner or later to be allowed to pass into the economic system.

In other words, the Prime Minister was saying, “ I realize that all those emergency provisions had, normally, to pass into the economic system, and, therefore, that all those factors were bound to have their influence in pushing up prices “. The Prime Minister also said -

More significantly, however, it reflects the continuing lack of balance between total demand and the supply of goods.

Later, he said -

No possible rate of increase in supply, however, could have kept pace with the rise of nearly 50 per cent., which has taken place in national income during the past two years.

That poses the problem quite fairly. Here we have an enormously increased national income, not merely through increased wage rates and increased salaries, both of which are translated into terms of national income under our system of calculating it, but also, of course, through the prices that the world is paying us for the goods that we have been selling to the world. Those prices in most instances are far beyond anything of which we previously dreamed and represent increases of 200 per cent., 300 per cent, and, in some instances, 400 per cent, over pre-war prices. With that enormous increase of the national income, it was inevitable that there would be terrific pressure on the price level, particularly as supply, at the moment, is incapable of accommodating itself to demand. That basically is the reason for the pressure on the price level, and it is quite silly for anybody to say that it is something that began with the handing back of power to the States, and that it is, in some way, due to the inefficiencies of State administration. Let me recall the figures that I mentioned earlier. After all, the referendum was held only in May of last year, and control of prices did not go back to the States until the end of the third quarter of 1948. Yet, in 1947-48, a period in which the Commonwealth was in command of prices, the price increase measured by the “ C “ series index, was 9 per cent., and, in fact, in the following quarter, it increased to 10 per cent. The increase has not been at any greater rates since the States took over. In other words, whatever we see now in increased prices is the result of circumstances which were producing their effect inevitably at a time when the Commonwealth was in charge of prices control, and which have merely continued to produce that effect now that the States have control of prices.

I want to say at once that I challenge the wisdom of the Prime Minister’s action following the referendum. I was not here when it happened, but I think that to accept the referendum decision as immediate notice for the Commonwealth to quit was quite absurd. That was not the issue at the referendum at all. Every one who discussed the referendum discussed it on the footing that the Commonwealth’s tem porary powers arising from the war were continuing, and the only question -was whether permanent power over this matter should be placed in the hands of the Commonwealth. Yet, instead of that, when the decision was given, this problem was tossed over to the States with indecent haste, at a time, mark you, when the price level, under Commonwealth control, was already rapidly rising. It was inevitable that the States would have to get together hurriedly temporary staffs, which would make it very difficult to get the best people to do the jobs. The States were confronted by the most tremendous administrative difficulties. I have discussed that matter merely to point out that it is inherent in everything that the Prime Minister has said and in the record of the price level in Australia, that the question of State price control has nothing whatever to do with the increases that we are now experiencing. We must look elsewhere for the causes, and make up our minds what we are prepared to do about them.

What are the real causes of the increases of the price level or the fall in the value of money? I do not wish to engage in an academic discussion for which I am not qualified, but the reasons are not very far to seek. They are fairly well established. I do not think they are even a matter of argument among people of different political complexions. In the first place, we have had so far an inadequate productive effort. Much has been said about full employment. It is sometimes discussed in this House as if it were the conscious result of a specific policy adopted by the Government. That, I venture to say, is completely untrue. Full employment at the present time is the inevitable consequence of certain economic facts, culminating in one factor - our enormous export income for which no government in Australia can claim credit, but which world circumstances have produced - and coming down at the other end to the great internal demand for goods and services. Full employment is inevitable as long as those conditions exist. But, splendid as it is to be able to say that there is no unemployment in the country, full employment does, unless certain steps are taken, tend inevitably to reduce productive effort per head of working population, and it is of no use to pretend to ourselves that that is not true. The spur to work is absent because there are plenty of jobs to be had. It is only human nature that Ave do not get the maximum productive effort per head when the pressure on ;i worker to keep his job has been removed by economic circumstances.

If we are to counteract that very human tendency - and it would be mere humbug to pretend that the tendency does not exist - we must, as a nation, devise ways and means of introducing real incentive into an economy based on full employment. It is because the Prime Minister sees that need just as clearly as I do that he has of late been directing some of his public statements to the subject of incentive schemes, which we, on this side of the House, have discussed publicly for a very long time. I am quite well aware of the old battles over schemes for incentive payments to workers and of the old hostilities of certain trade unions to payment by results. These hostilities were based upon a fear that incentive payments would lead to “sweating” of labour; and that wage rates would be flit as earnings grew under an incentive system. There was always a fear that a man who took part in an incentive scheme would ultimately be asked to work harder for a wage that had progressively increased as the amount of work increased. The answer to that argument is, I have always believed, based on the power of our industrial laws to give minimum protection to the worker. No industrial tribunal is helpless in the face of attempts to cut wage rates. It is perfectly competent for any industrial tribunal to say that there shall be no sweating of any man, that a man shall have the minimum protection to which he is entitled, plus the real advantage of the extra work produced by an incentive plan. Incentive schemes are as various as can bo. One craft, where work is purely repetitive in character, may lend itself to straight-out piece rates. Another may require an entirely different system. In fact, 50 different industries in Australia might require 50 different kinds of schemes. But what all industries require’ most of all are not commands from Parliament, but a proper approach to the problem by both sides concerned in each particular industry. There must be a real approach by employers on the basis that if there is to be increased effort resulting in increased output and extra profit, the employee, as well as the shareholder, must be given his share of the extra profit. In the same way trade union representatives, when dealing with employers, must put out of their minds the old prejudices and be more concerned to work for the adoption of some scheme of incentives that will increase the output of each particular business and give unionists a growing share in the resulting profit. Increased output will tend to reduce the prices of products to the consumers, including the workers who produce those products. Incentive schemes require to be closely considered and carefully safeguarded. Such schemes can be adopted with success in Australia if there is a real reservoir of goodwill, frankness and co-operation upon which the employers and employees can draw during their negotiations.

There is a second factor which has caused prices of commodities to increase. I refer to the adoption of the 40-hour week. It was inevitable that a reduction in the working week must increase the prices of commodities. We cannot very well have a 40-hour week without increasing the cost of production and diminishing output. Wages have been unpegged but I do not quarrel with that at all. There is no doubt that by the end of the war the wage-level had lagged behind most other monetary considerations in this country. There was a powerful case for the unpegging of wages, just as now there is a powerful case for a complete revision of the basic wage. But by unpegging wages and instituting a 40-hour working week we have done two things that must inevitably tend to drive up prices and that can be counteracted, in terms of prices, only by a vastly increased productive effort. As the flow of production falls far short of the amount of money available to buy goods, prices inevitably have increased. I am making those points to show that increased prices were the natural concomitant of the Government’s actions regarding wages and working hours, and are certainly not justly to be laid at the door of the unfortunate State governments that have in the last month or two been made responsible for one aspect of the problem.

There is another factor operating, although I do not know how far its effects can be gauged with accuracy. I should certainly like to see the Prime Minister get some of his authorities to investigate this particular factor, which is the distribution of labour. I have a very strong feeling that although we have full employment we have also, to some extent, a maldistribution of labour. Our grave shortages are in the products of our basic industries - coal, iron and steel - which will not become any the less acute aswe develop shipbuilding along the lines foreshadowed last week in connexion with another measure. It must be agreed that in our basic industries, including primary production, we are undermanned. Yet there has been an enormous expansion of employment in what an economist has described as “tertiary industries”, that is to say, such industries as road transport, but that has not also occurred in the basic industries, upon whose production and prosperity all the consequential activities of the community depend. “We have only to think of the recurring problem of the grave shortage of coal which is caused by many things, including an inadequate man-power force in the mines, to realize that it means delays and interruptions of production which result; in further shortages in other industries, and those interruptions inevitably increase the cost of commodities and tend to raise the general level of prices.

The next factor - not in order of merit, but as it occurs to me - is the record prices received for our export commodities, which have increased by 200, 250 and even 300 per cent, on pre-war prices. The impact upon our economy of those increased prices, which have occurred because of the world’s necessity, has been tremendous. The shortage of commodities throughout the world has conferred on us - if we care to regard it in that way - the great, good fortune of being at the sellers’ end of a sellers’ market.It has frequently been suggested that now is the time, when prices are high, to secure the full advantage of stabilization plans and guaranteed prices, and I have no doubt that it is, because the present high prices may not last forever, and one does not need very much prescience to realize that the time may come in this country when prices will fall to unprofitable levels. If that occurs schemes for supplementing prices will be “ in the air”. In the meantime, while we may accept this immeasurable piece of prosperity, we should face up to the fact that it can itself become the means of our undoing unless we can meet the great demand overseas for our products by a correspondingly enormous increase of vigorous production within our own shores. Otherwise, no power on earth - certainly, no government and no Prime Minister - can prevent the price level from affecting our economic stability.

The last matter to which I shall refer is the withdrawal of price subsidies, upon which I propose to spend a little time. Price subsidies were introduced during the peak of the war effort when it was determined to fix a price ceiling in order to maintain complete stability of price levels. In the course of the debate on the 24th June, 1943, on the Additional Estimates 1942- 43, the present Treasurer (Mr. Chifley), when explaining the reason for the scheme, stated -

On the 12th April, the Government announced its new policy of price stabilization, involving the stabilization of the basic prices of raw materials, fuel and transport; steps to secure adequate production at reasonable prices of essential commodities like clothing, meat and vegetables; and an over-all ceiling on the prices of all goods and services at every stage of production and distribution. Under the new policy it is intended that the price level shall be stabilized round its present position, and that the practice hitherto adopted under price control of allowing prices to rise in accor dance with unavoidable increases of costs shall be abandoned.

Later, after referring to Canada and other countries, he said -

Two main advantages accrue from this method of price control. In the first place, subsidies will permit the stabilization of retail prices generally, and this will be reflected in a new stability in the Commonwealth Statistician’s “ C “ series index which measures retail prices and by which wages are adjusted.

I Iia ve taken the time of the House to quote those passages because they contain a clear statement of the original design. Subsidies were intended to aid the buyer by keeping the price level stable, and were designed to stablilize the cost of living in this country by keeping the basic wage stable. In brief, subsidies were, to a large extent, directed to subsidizing the wage level so that it might be kept stationary. It follows, of course, by parity of reasoning, that if, in due course, subsidies are withdrawn, the forces that tend to raise wage levels must operate; and that is exactly what has happened. The original intention has disappeared, because we cannot have it both ways. An increase of prices entails an increase of wages, which is quite inevitable and proper; but up go costs, and prices become involved in what, for many years, has been termed a “ spiral of cost and prices “. Exlension of time granted.] I thank the House for its indulgence; I had not intended to be so long. I was discussing the effect of the withdrawal of subsidies, and I have quoted the original statement of government policy on subsidies in order to illustrate the inevitable effect of their withdrawal, which is that costs under the “ C “ series index increase, and so up go wages, and up go costs. After the referendum on rents and prices was taken the Prime Minister withdrew subsidies, i am not in a position to say off-hand the total amount involved in the withdrawal of subsidies, but in the 1.94S-40 budget, which was the last presented to the House, the right honorable gentleman estimated that expenditure on subsidies would be reduced during tho current financial year by £25,000,000. At any rate, one may assume that the withdrawal of commodity subsidies has resulted in the withholding of many millions of pounds. The list of commodities and services on which subsidies were paid included potatoes, whole milk, raw wool, raw cotton, yarns and textiles, household drapery and linen, crockery and interstate shipping freights. All those items, which I have selected at random, have a profound bearing on the cost of living, and mention of them will serve to recall to honorable members the purpose of the subsidy system and its specific relation to the cost of living.

The criticism of the inevitable increase of the price level which the withdrawal of subsidies was bound to produce has come not from one political party - and, frankly, I do not know that I regard this as a party political problem, and, in any case, nothing that I have said in the last 40 minutes has had any party flavour about it, because these are national problems - but from Labour as well as nonLabour administrations. The Minister who administers prices control in New South “Wales, Mr. Finnan, said some severe things about the decision to withdraw price subsidies. He forecast a basic wage increase from 10s. to £1 weekly if Commonwealth subsidies were withdrawn. He expressed the opinion that English sheets would go up by 80 per cent., pillow slips by 38 per cent., and tea towels by 20 per cent. He was illustrating his contention by referring to the increased cost of household linen, which is a very important matter to the average housewife, because linen wds extremely scarce during the war and people are increasingly obliged to replenish their household stocks. On all those things the increase of prices has been inevitably steep, and may be expected, in the absence of some new circumstance, to be progressive. I have mentioned subsidies and prices because I want to ask by way of conclusion whether if there had been no referendum, and the Commonwealth was still administering prices control under its war-time powers; and whether if the Commonwealth had won the referendum, and could continue to administer those controls under permanent’ powers, it could have dealt with these factors in any way other than by subsidy? The Commonwealth could not have got rid of the 40-hour week, or the effect of unpegging wages. It could not have got rid. by any means not now possessed, of the surplus purchasing power arising from our increased export income. There was one way and one only, and that was by the payment of subsidies. Now, the subsidies have been withdrawn. Apart from continuing the subsidies, there wa9 nothing the Commonwealth could have done that the States cannot do, and are not willing to do. Why were the subsidies withdrawn? The answer given is that it would have been financially unsound for the Commonwealth to be raising many millions of pounds and to be paying the money over to the States, 30 that the States could subsidize prices which were not controlled by the Commonwealth. That is a financial argument of great purity, and I compliment the Treasurer on having been Treasurer so long, and retaining his financial chastity. But what about uniform income taxation ? Does not the Commonwealth raise all income tax, and then pay back part of it year by year to the States on terms which enable them to exercise full control over the money, and to determine how it shall be expended? ft is impossible to distinguish between revenue raised under the uniform taxation system, and reimbursed to the States, and revenue collected by the Commonwealth and paid over to the States so that they, in turn, may subsidize prices. The Government’s argument begins by being attractive, but it does not stand the. first examination by analogy.

Therefore, I emphasize the point that if prices are rising to-day, and they are, the rise is taking place in pursuance of a process which was well established before the Commonwealth gave up control. The rate of increase is no greater, find the biggest single factor in bringing about the increase has been the abandonment of subsidies by the Commonwealth. The Commonwealth has said, in effect, “ We will withdraw subsidies, but we will furnish the States with no funds with which to replace them “. Price increases due to that factor may, therefore, be laid entirely at the door of the Australian Government.

Mr BURKE:
Perth

.- The financial statement which we are now considering sets out the financial position of the Commonwealth, and outlines the Government’s proposals for a reduction of taxation. The speech of the Leader of the Opposition (Mr. Menzies) was reasoned and constructive. It is true, of course, that he attempted to shield his own political party from the responsibility that it, should shoulder; but it is also true, as f have said, that his approach to the subject was reasoned and constructive. He was, however, somewhat naive in suggesting that when members of the Opposition saw the Government’s proposals for taxation reductions they realized that the Leaders of the Liberal party and the Australian. Country party had been unduly modest in the promises of tax reduction which they had made during the last election campaign. It is true that the Opposition leaders promised fairly substantial reductions, and it is also true that the taxation remissions of the Government have exceeded the promises of the Opposition. We should not forget, however, that the Opposition leaders, in addition to promising substantial reductions of taxation, made other promises which, if honoured, would have added more than £100,000,000 to Australia’s social services bill. For instance, they promised to abolish the means test, and to provide child endowment for the first child. It was because of those twin promises to reduce taxation and to increase expenditure, that Labour members severely criticized the policy of the Opposition. On the other hand, the Labour party, through its leader, the Prime Minister and Treasurer (Mr. Chifley), promised to reduce taxation as and when circumstances permitted. That was politically honest, and as it has proved, it was also attractive to the Australian people. I hope that political parties will not forget the lesson then taught, and that in future elections they will not bid against one another for votes in a political auction that can have no good effect on the country, or I believe, on the parties themselves.

The Leader of the Opposition discussed taxation at length, and he generously admitted that the Government’s proposed taxation reductions were generous. He also discussed prices. It is certainly true that prices have risen and are still rising. That is a hard fact which confronts the Government and the people of Australia. I agree that had the Australian Government retained power to control prices, it would have been hard, perhaps impossible, to have kept prices from rising; but it is also undeniably true that the task has become much harder now that control has to be exercised by six separate States administrations. It was on that ground that we opposed the proposal of the Opposition to transfer prices control to the States, and we believe that the transfer has done a great disservice to the Australian people. The Leader of the Opposition said that, even though the Government’s proposal to retain control over prices was defeated by a large majority at the referendum, there was no reason why the Commonwealth should have immediately relinquished control. On that point I join issue with the right honorable gentleman. During the referendum campaign, I frequently quoted his own words on the subject of the Commonwealth’s defence powers. During the debate on uniform taxation he said something like this - “It passes the wit of man to understand just what the defence power of the Commonwealth means. At least, it passes my wit to understand what are the limitations of the defence power. It means exactly what the High Court may determine from day to day in the particular circumstances of the time.” The Government was faced with a grave problem. No legal advisers, not even so eminent a lawyer as the Leader of the Opposition himself, could say when the High Court might declare null and void the regulations under which the Commonwealth was exercising control over prices. Had the court so acted, prices would have risen immediately, and it would have been impossible to regain control of them. It was vital in that situation that the Government should allow time for the taking over by the States of the administration of prices control, in order to keep down the rising price level in this country. That was done. It was not a hasty decision. Every possible assistance was extended to the States. Undoubtedly the Commonwealth played its part well, and the respective State governments have since done their best. Of course there are differences of opinion in the States, which makes for weaker prices control than that exercised under a centralized system. In this connexion I remind honorable members that the Premier of Victoria recently declined to implement a decision agreed upon by the States relating to margins of profit.

The right honorable gentleman also pointed out that rising prices nullify very substantially the taxation concessions that has been given. That is largely true, although in certain instances the people have been totally relieved of taxation. Over a broad field it is true to say that rises in prices are far more harmful to-day, and can be far more harmful in the future, than was the weight of taxation at its peak during the war. I contend that the principal reason why prices are rising in this country, and throughout the world, is that vast accumulations of money are in the hands of the people. Furthermore, the production of goods both in Australia and abroad, is not yet able to cope with the greatly increased demand. It must be remembered that whenever personal income tax is reduced the effect is to place in the hands of the taxpayers and the community in general a large sum of money, thereby increasing the amount of money available for the purchase of goods, but the quantity of goods available to the people is not thereby increased. It may be argued that the reduction of taxation increases incentive, in the community to produce more goods. However, that contention has not been borne out since the war ended, either in Australia or in other countries throughout the world.

The right honorable gentleman referred to the removal of subsidies and the effect that that had had upon prices in Australia. I remind honorable members however that over a long period members of the Opposition and sections of the Australian community have demanded that price subsidies should be removed. The Citizens’ Rights organization in Western Australia has expressed the view that price controls also impose a heavy burden on taxpayers, because it renders subsidies necessary. According to a publication that I have read, subsidies are expected to cost £.19,000,000 this year, and this is regarded as a major reason for continuing high taxation.

It has been argued that we have merely been hiding the inflation that has existed by the payment of subsidies. The Government continued the payment of subsidies in respect of items of particular interest in the Australian way of life where the amount of money that the payment of the subsidies would entail from year to year could be controlled.

Whilst the price level in Australia has risen considerably, and is continuing to rise, it is also true that the economy of this country is sounder than that of most of the allied countries in the world to-day. I cite the allied powers because it is only with them that we can make comparisons. Prices have not risen in Australia to the degree that they have risen in the United States of America, the United Kingdom and other allied countries. 1 point out that Australia is particularly vulnerable in relation to rising prices because of the enormous proportion of its total production of goods that it exports. It is evident that increased production must be achieved in Australia to combat the effect of rising prices. That, of course, may be an oversimplification of the facts. The export of vast quantities of such commodities as meat, wool, wheat and butter increases the strain on Australia’s price level. By implication the right honorable gentleman admitted that to be so. Although large quantities of goods are being exported, I remind honorable members that there has not been an appreciable increase of the volume of goods available for purchase by people in this country to absorb the additional money at their command. I stress that greater productive efforts are required in Australia, as was pointed out by the Treasurer (Mr. Chifley) in the financial statement that he issued recently. It has been shown that the only way in which to cope with the acute shortage of manpower in this country is by the pursuance of a vigorous and intelligent immigration policy. Such a policy is being implemented at present by the Minister for Immigration (Mr. Calwell).

The purpose of taxation is to meet the ordinary commitments of government, and to encourage the production of goods and provision of services in the community. Although the Leader of the Australian Country party generously conceded that the taxation cuts made have been substantial, he contended that the Australian Government was still collecting too much in taxes from the people of this country; but no one has ever suggested what services to the Australian people should be reduced. It is unwise and unsound to make a bold and general approach to the matter of governmental revenue and to suggest that too great an amount is being taken from the people, unless members of Parliament and other critics are willing to particularize about the goods and services that should be reduced or removed from the people. It has been contended that the army of public servants in this country is unduly large, and that substantial reductions of income tax could be made possible by the reduction of the strength of the Public Service. On the other hand, of course, the Government almost daily receives requests for an extension of postal, telegraphic, and other services. Another reason for maintaining taxation at a comparatively high level is to remove or lessen the strain on the prices level in Australia. Apart from the increase of our productive effort, the levying of personal income tax is, I believe, the most valuable weapon with which to attack the rising price level. The major purpose of income tax to-day is to hold back the rising spiral of prices. For that reason it may not be economically wise to reduce income tax and social services contribution by £36,500,000 per annum, as the Treasurer now proposes ‘ to do. In making tha.t decision, however. the right honorable gentleman very wisely extended his savings campaign. For many years the burden of taxes imposed on the people has been very heavy - indeed, it has been onerous - and the people are entitled to some measure of relief. If the amount to be remitted to the taxpayer is reflected, or partly reflected, in the savings of the people resulting from the savings campaign, and the money is not used to swell the already large sums available for the purchase of goods in short supply, much good will result. When income tax is being reviewed the whole range of taxation should be considered. I do not believe it to be wise at election time to criticize the volume of taxation; rather should elections be fought on the principles upon which taxes are based. Income tax does not reduce the flow of goods available to the community and in many ways it is the most suitable form of taxation. On the contrary indirect taxation, such as the sales tax, the payroll tax and the like, is definitely harmful to the business community and oppressive to the people generally. Before additional remissions of income tax are made indirect taxes of the kind I have mentioned should be substantially reduced or, if possible, abolished. By and large the financial statement submitted by the Treasurer is a comprehensive document. Ft covers the dollar position which is perplexing the world to-day. It deals with the problems of Germany and of Western Europe and also with Australia’s economic position generally. It demonstrates the wise approach to the problems confronting this country that has always characterized the work of the Treasurer since his first appointment to that portfolio nearly eight years ago. The right honorable gentleman has cause to be proud of his achievements and Australia, in the future, will have reason to be glad of the policy pursued by him during his term of office in two successive Labour Governments. That policy will ensure that future governments, whether they be Labour governments or otherwise, will find Australia in a much sounder position than that which existed after the end of World War I. The Government has resisted the urge of honorable members opposite that it should borrow to meet its commitments. It has adopted the unpopular alternative of taxing the people to pay for the goods and services that it should provide for them. In this respect the Treasurer has pursued a sound policy which will prove to be of great benefit to this country and will undoubtedly be endorsed by the electors when next we face them.

Sitting suspended from4.44 to 8 p.m.

Mr FADDEN:
Leader of the Australian Country party · Darling Downs

– The Financial Statement which the Treasurer (Mr. Chifley) presented to the House on the 15th February last represents his interpretation of the information by which honorable members must bo guided in studying the financial trends since he introduced his budget in September last and in assessing the wisdom or otherwise of effecting reductions of the taxes now inflicted upon the people. The statement lacks the positive approach to our internal financial problems which the Parliament and the people are entitled to demand. In the light of our experience during the seven months of the financial year which have already expired, the right honorable gentleman has given a totally inadequate re-survey of governmental expenditure in respect of the current financial year as a whole. One would expect that such a supplementary financial statement would contain as comprehensive and up-to-date an outline as possible of the nation’s financial situation. However, although the Treasurer is waging a costly so-called anti-inflation campaign, featuring appeals to the people to spend less, he has failed in this statement to give any indication whatsoever of proposed economies in governmental expenditure. It is futile for him to attempt to restrain spending by individuals and the community at large when, at the same time, he has given no evidence of any real attempt by the Government to cut down its expenditure. It is obvious that he does not intend to use the revenue disclosed as surplus over and above that which he anticipated in his September budget to make such adjustments as are immediately necessary in order to arrest the appalling increase of living costs, which, of course, involves the lowering of the standard of living of the community. His only reason for submitting this meagre and unsatisfactory statement is to relieve the anxiety of taxpayers as to what they can expect in the future; that is, he has merely indicated tax reductions in prospect instead of reductions that should be made retrospectively. Apart from the proposed reduction of £50,000 in enter- tainments tax, the anticipated surplus revenue is to be hoarded up, and thus the long-suffering taxpayers and consumers are to be deprived of benefits which could and should begiven to them immediately.

However, in the light of past experience and the Treasurer’s stubborn resistance to timely and adequate tax reductions, it is undeniable that the reductions which he now promises can be made without detrimentally affecting the Government’s revenue position. Again, he reveals his pessimistic approach by under-estimating revenue whilst overestimating expenditure. The reductions now promised are merely belated refunds of money unduly extracted from the taxpayers, and this concession is in keeping with the Treasurer’s policy of “too little, too late “. The Treasurer, in the policy be has applied and expounded, has mistaken inflation for prosperity and confused high wages with high living standards, whilst mounting production costs have been mistaken as evidence of a greater volume of production. But, worst of all, having deluded himself in that way, he endeavours, in accordance with bis socialistic beliefs, to delude every one else that he can expend the taxpayers’ money better than can the incomeearners themselves, whilst, at the same time, he does nothing to arrest evermounting living costs. Most of the nation’s present economic difficulties spring from the inescapable fact that the Treasurer’s tax reductions are always a couple of years too late. If he had implemented a realistic policy of tax reductions after the general elections in 1946 the country would not have experienced the production shortages and high living costs which are features of the daily life of every Australian. The Treasurer cannot be excused for having maintained unduly heavy tax rates for so long.

There are three main reasons for the proposed reductions of taxes which are to operate as from the 1st July next. The first is that they are the outcome of bad budgeting which has been a feature of every post-war budget which the Treasurer has presented to the Parliament. He has consistently under-estimated revenue and over-estimated expenditure with the result that he has overtaxed the community for too long. The second reason is the withdrawal of price subsidies amounting to £25,000,000 which the people will have to provide out of their belated reductions of taxes. The withdrawal of those subsidies has detrimentally affected the living standard of the people. The third reason for the proposed tax reductions is, of course, purely political. It is obvious that they have been withheld until the approach of the general elections in an endeavour to increase the popularity of the Labour party and in an effort not only to divert attention from rising living costs, but also to place the blame for such a state of affairs upon the State governments. The annual cost to revenue of the proposed reductions is calculated by the Treasurer at £36,500,000. Upon close examination, however, the relief to be provided is more apparent than real. In the first place, that amount is largely offset by the withdrawal of subsidies amounting to £25,000,000. Secondly, the taxpayers will not enjoy any real benefit from the proposed reductions in the present financial year. I doubt very much whether they will experience this relief in full measure until the financial year ending the 30th June, 195.1.

The Government, despite the buoyancy of its revenues, has given no indication of providing relief in the field of indirect taxation excepting a small reduction of entertainments tax amounting to £50,000 in the current financial year. It has given no indication of reducing the present high customs and excise duties, pay-roll tax, sales tax, petrol tax and other miscellaneous imposts all of which, of course, tend to keep up living costs and costs of production and the prices of food, and such luxury necessaries as tobacco, liquor and matches, and to increase the costs of clothing and housing which are now soaring. The many glaring sales tax anomalies that have been consistently pointed out by honorable members on this side of the House have been totally ignored. Obviously, the pay-roll tax adds to the cost of living, and, together with the sales tax on nails, fittings and the like, increases the price of every house that is built. The Treasurer does not promise relief in any of those instances, although the eight different sorts of indirect tax that he has levied will, according to his own admission, exceed his estimate of £185,000,000 for this financial year.

The Treasurer has claimed repeatedly that during his term of office he has made considerable tax concessions, which aggregate hundreds of millions of pounds. Even before the latest alleged reduction of £36,500,000, the Treasurer claimed that tax concessions since 1948 amounted to £13S,000,000. On the contrary, however, in the four years commencing 1944-4’5, revenue from taxes has increased annually, the respective yields being

£336,000,000, £351,000,000, £374,000,000

and £414,000,000. The estimate for this year, which is likely to be exceeded, is the record figure of £431,000,000. This experience, I submit, is a direct vindication of the taxation policy which the Opposition parties have advocated when successive budgets have been presented to the chamber. With every reduction of rate, the yield to the Treasury has improved. A reduction of rates has been followed by an increased volume of production, and, consequently, of taxable capacity. Our financial history in the post-war period lias proved that the withholding of tax cuts until the latest possible time has robbed Australia of many millions of pounds worth of production, a speedier post-war recovery, and a lower cost of living.

The contention that tax concessions confer upon taxpayers great benefits amounting to many millions of pounds is, in all the circumstances, utterly unsound. The earnings of a taxpayer do not belong to the Treasurer as of right. How, then, can he by the mere act of repaying what he should never have received, or refraining from collecting what he never owned, or assisted to earn, claim with such self-justification that he has thereby conferred substantial tax concessions? Consequently, it is ridiculous to argue that he confers tremendous monetary benefits every time there is a reduction of tax rates. If a footpad fails to find a roll of notes in my wallet for the very good reason that I left them at home, how can he successfully plead for clemency at his trial by urging that he saved me a considerable sum of money? In like manner, the latest proposed concession of £36,500,000 per annum, even when after a long delay, it comes into full operation, a year or two hence, is purely a myth, because the money never belonged to the Treasurer and he never will have any moral claim to it.

I come now to a White Paper, entitled “ Taxation and the Economy “, which was compiled by and on behalf of the Treasury in order to endeavour to justify the Treasurer’s taxation policy. The purpose of the authors was to resist or to prove the wisdom of resisting reductions of tax. The White Paper, which was presented to the House, expounded at length the views of the Treasurer on the Government’s tax policy and its effect on post-war Australia. That document, in addition to being the foundation for the tax proposals in the present financial statement, was compiled for the express purpose of justifying the long delay in making tax concessions, and emphasizing the wisdom of not making them earlier. Therefore, I intend to examine briefly some of the Treasurer’s views as expressed in that document. The claim is made that heavy taxation has prevented inflation, but full details are then given that prove the high incidence of inflation at present in our economy. Notes in the hands of the public, according to the Treasurer, have increased since 1939 from £33,000,000 to £173,000,000, whilst savings bank deposits have increased from £246,000,000 to £6S1,000,000. According to the Treasurer, those figures indicate an enormous growth, amounting to £1,000,000,000, in the cash resources held by the community since 1939. In other words, the Treasurer states that the figures show the serious extent of inflation that has resulted from, the Government’s financial policy. The White Paper does not vindicate that policy in any way. The document also shows the extent to which the Treasurer has been able to “ cash in “ on those inflationary tendencies. The Treasurer has repeatedly claimed that taxation has not discouraged enterprise. According to him, industry has expanded vastly since the war, the national income has risen and there is full employment in Australia. At the same time, excuses are given in that White Paper for the serious shortages of goods. It is alleged that materials are scarce, equipment and overseas supplies are short, working hours have been reduced, and the drive for expansion has caused bottle-necks. Although the tax liabilities of most people with family responsibilities have allegedly been slashed to almost one-half, tax receipts are admitted to be higher in the aggregate than ever before. From those paradoxical statements the following strange but true results emerge: - First, although taxation policy has allegedly prevented inflation, all the elements of serious inflation, as the Treasurer has proved, are present in our economy. Secondly, although industry has expanded vastly and employment is higher than ever before, the production of all goods’ is so slow, and materials are in such short supply, that the demand for them cannot nearly be met. Thirdly, although the Treasurer has been so generous with tax concessions, he is still collecting more taxes than ever before, besides profiteering officially from all increases of wages.

The basis of the Treasurer’s policy seems to be that taxes had been so reduced, so many concessions had been granted and incomes had risen so greatly that the net income, after taxes have been deducted, has substantially increased. That is alleged to be the real test of the weight of taxation, and of the Government’s taxation policy. Such contentions are far from sound in an inflationary economy. The taxpayer is far more concerned with this question : Does the amount that is left to me now enable me to buy as much, value for value, as the net amount left to me before the war allowed me to purchase? If it does not, then heavy taxes, instead of saving the taxpayer from inflation, have contributed to a lower standard of living for his family, and the general community. In the United States of America, a worker has to spend two and a quarter hours at his job in order to earn sufficient money with which to purchase a shirt. In Australia a worker requires four and three-quarter hours to do so. The American worker has to be on the job ‘for nine minutes in order to earn sufficient money with which to buy a packet of cigarettes, hut the Australian worker has to be engaged for 34 minutes. In order to earn the price of a sedan car, an Australian must work 560 days, whereas his American counterpart needs to work the equivalent of only 155 days. The following is the result of a survey of food costs carried out on behalf of a Melbourne newspaper about the time when Taxation and the Economy was published : -

Yesterday I bought ingredients from the lowest-priced goods offering for a main meal for five. Here arc the costs, with the pre-war comparison -

Five forequarter mutton stewing chops, 2s.6d. (pre-war,1s, 5½d.).

Medium-sized cabbage, 2s. (pre-war, 4d.).

Bunch of three carrots, 9d. (pre-war, 3½d.)

Five cooking apples,1s.11d. (pre-war, 10d.).

Total cost without potatoes or bread, 7s. 2d., as against 2s.11d. pre-war. Then, of course, there is the higher cost of gas (if any) for cooking.

For every1s. increase of the basic wage, the Treasurer reaps at least an extra £1,000,000 in direct and indirect taxes. That amount of £1,000,000 lowers the standard of living by being paid to the Treasury instead of being spent, as was intended by the High Court, to compensate for the higher prices of goods caused by inflation. At the 30th June, 1948, the loaded average basic wage for Australia was £5 14s. a week. In August it had increased to £5 16s. a week, by November it had risen to £5 19s. a week, and now, according to the information supplied to me, it has reached the level of £6 2s. a week. With every increase of wages there is an increase of payroll tax and sales tax. One government source has estimated that indirect taxes increase by 10 per cent, of the amount of any wage increase. Thus the wage-earner is not only worse off than he was before the war but he also becomes progressively worse off with every increase of the basic wage. The Treasurer is directly and specifically to blame for that condition.

The White Paper goes on to deal with concessions. We were informed by the Treasurer in his financial statement that entertainments tax is to be lifted from amusement park entrance-fees where the charge is less than1s. The tax on blankets has been lifted, and tax on ice creams, aniseed balls and other confections has come down from 5s. to 2s. in the £1. But there is still a federal marriage tax of 10s. on a £2 wedding ring. A concessional allowance is granted for a de facto wife who looks after a taxpayer’s children even if she has other sources of income. Such concessions naturally apply only to a very limited number of people. A taxpayer may have no use for wedding rings, sweets or ice cream, but if he asks for a concessional allowance for his legal wife who has other sources of income he meets with a blank refusal. According to the White Paper, a man earning £6 a week, with a wife and two children, would have paid a total of £4 in income tax for the year 1938-39. To-day. the Treasurer states, a man in that position pays no tax and is better off as a consequence. Would the remission of a mere £4 a year income tax compensate such a man, comparatively well-off in 1938-39, for the increases of over 100 per cent, in clothing costs and over 40 per cent, in the general cost of living, as well as for the deliberate withdrawal, for purely political reasons, of subsidies that were formerly paid on necessities such as potatoes, milk and clothing, and the fantastic increase of housing costs? Such a man, I submit, would prefer to go back to the 1939 standards, even though he had to pay £4 a year income tax. However, he is in a far better position than is the poor fellow with a wife and two children who is alleged in Taxation and the Economy to be getting £4 a week. That man pays no tax, according to the Treasurer. If he existed in fact, be would have nothing with which to pay taxation ! He pays no taxation even if he earns an additional £1 a week in overtime, the Government claims. If anybody needed an extra £1 a week, that man would need it to support four people in these days. The truth is that the examples chosen to bolster up the Government’s case are completely unrealistic and exist mostly in the imagination of the Treasurer. The Commonwealth Statistician is realistic, for he says that in November, 1948, there were 2,408,200 wage-earners whose average wage was £8 6s. Sd. a week. Incidentally, in June, 1948, there were 2,374,000 wageearners whose average wage was £7 19s. lOd. a week. Those figures show that nearly a quarter of a million wageearners gained a wage increase averaging 6s. lOd. a week.

I come now to the subject of indirect taxes. The only indirect tax concession announced by the Treasurer in his latest statement is £135,000 for a full year in entertainments tax, which will affect the current budget by only £50,000. However, he has claimed that tremendous sales tax cuts have already been made at a cost of £2S,000,000 annually. What are the receipts from sales tax? To the nearest £1,000,000, they amounted to £30,000,000 in 1944-45, the last war year, and £34,000,000 in the first post-war year. Last year, 1947-4S, they amounted to £35,000,000, and the estimate for the current year is £38,000,000. Those figures illustrate the well-known game of giving with one hand and taking away with the other. The fact is that goods cost more to buy and that consequently moretax in the aggregate flows into the Treasury. “ You shall have more and bigger concessions”, says the Treasurer, “ provided that I get bigger and better tax returns “ ! As I have pointed out,, for every reduction of the individual rate of tax, there has been an increase of the quantum of tax received. The situation in relation to customs and excise duties is similar. In that field, the large sum of £4,000,000 was given away by the Treasurer for this financial year “ to reduce costs and encourage enterprise “. We find that, in order to get the benefit of the reduction, we have to use torches, buy soft drinks, or cook our meals on primus stoves because the concessions “ to encourage enterprise “ consist in the abolition of excise on dry batteries, carbonic acid gas and methylated spirits. Let us examine the only sales tax concessions that have been granted during the present, financial year notwithstanding the buoyant revenue from the tax. We no longer pay any sales tax on mittens, muffs, puggarees, puttees, spats, turbans, kilts, elastic pants and waders. That should afford great relief to the family man’s budget! There are still heavy sales tax impositions on wedding rings, toilet soap, toothpaste, soap washing powders, matches, toys, electric irons, mattresses, pillows, ice and thousands of other household items. No specific relief has yet been promised by the Treasurer in respect of these items in the new financial year. No attempt has been made to remedy the glaring anomalies in connexion with the incidence of sales tax that have been pointed out from time to time.

I shall now deal with some of the income tax concessions that are pointed to with pride in the White Paper. Let us look at the choice selection of income tax concessions that are in operation during this financial year. Under the heading “ Concessions “ there are to be f found such items as the exemption from tax of unemployment and sickness benefits, special allowances paid to ex-servicemen who are substantially incompetent for suitable work, and special allowances paid to exservicemen who are awaiting employment. What generosity ! It may be that some economists, by a stroke of unaccustomed genius pointed out that if such allowances were taxable they would have to be increased in order to cover the tax, that more tax would be payable on the amounts by which they were increased, and that it would be like a dog chasing its tail. The Treasurer claims that during the past, two years the national income has increased by nearly 50 per cent. In Taxation and the Economy he gives the :actual case history of a fitter without dependants who lives in Melbourne. It will be seen that this single fitter, who has earned £7 or £8 a week for the last three years, is far luckier than is the man referred to on the following page, who has to keep his wife and two children on £4 a week. Perhaps the reason for the difference is that the former is an actual case whilst the latter does not exist. I have pointed out that the average over-all wage for 2,408,200 earners last November was £8 6s. Sd. Let us get back to our fitter. It is stated that his earnings increased by 21 per cent, and that his net income available for Spending increased by 32 per cent. That does not go very far towards helping him to meet the 100 per cent, increase of clothing costs. Whereas with his 32 per cent., the fitter could buy a working shirt before the war, he can now buy one-third of a shirt, and doubtless, the shirt will be a Dedman tailless shirt. The next example that is given is that of a man who is married, with two children, and earns a constant £400 a year. The Treasurer points out. that this man now gets 14s. a week more in his pay envelope than he did five years ago, but, as it costs him approximately £2 a week more to live, wherein lies the advantage?

We are. told that the Government’s policy ha* resulted in full employment. That, of course, does not include the overtaxed individual taxpayer, who works only three days a week, because the Treasurer takes the rest, and he does not propose to “work for Chifley” or the man who takes four months’ holiday each year for the same reason. It does not include the striker who goes off his job for a few weeks at a time, or the waterside worker, who is so pampered with double time and treble time that he works mostly only during the week-ends. Then we are told by the Treasurer that production is increasing and is being assisted by the Government by all possible means, such as through the Joint Coal Board, the placement of migrants, and so forth. Doubtless, that is why country people have no barbed wire, wire netting, galvanized iron, steel plate, coal, tractors, houses, motor cars, fowl feed, or supplies of a thousand and one essential goods that are needed to increase production. That is why we still have butter rationing. That is why shipping tonnages have decreased compared with the figures for pre-war years. We are told that the increased sales tax collections show a greater business turnover and that the increased receipts from the pay-roll tax reveal that there, are higher salary and wage earnings, lt is alleged that enterprise has never been more active. That must surely refer to socialized enterprise, because every honorable member opposite is pledged to extinguish private enterprise. That is the policy which Labour has actively pursued since the end of the war and which it re-endorsed at the end of last year.

It is claimed that company profits and the investment market point to the wisdom of the financial policy that has been pursued by the Government. * Extension of time granted.’]* Tt is asserted that, employment is at a maximum, that production is shooting up and that enterprise is more active than ever. Nevertheless, it is admitted that there are grave shortages of goods. There must be something wrong somewhere. Many people believe that high taxes are drying up investible funds. The Treasurer has contradicted this by a public statement that share prices for major enterprises are so high that the return from money invested in them is actually lower than the yield from gilt-edged securities. He has claimed that fact as a justification for his financial policy, but it obviously proves that the people would rather receive a lower return from investments in private enterprise than invest in the loans of a socialist government. What, else could it prove? That shows that there has been a remarkable public repudiation of socialized labour and a pronounced leaning towards private enterprise. If it develops much further, there will be no funds in the savings banks and the Government will have to extend the principle of compulsory loans, or special accounts, from the trading banks to obtain its loan finance. The Government has in fact, although not consciously admitted the unpopularity of its policy with the investing public, which is the most sensitive economic barometer. It is alleged in the Treasurer’s financial statement that local production has increased. The actual items are not specified, but evidently they do not include gold, lead, zinc, copper, coal, steel ingots, meat, butter, piping, wire, tinplate, sorghum, tractors and thousands of other items. The insidious influence of the Communists is not even mentioned, but everybody is alleged to have profited by the economic stability that has been ensured by the Government’s firmness in refusing to make necessary tax reductions in time. The Government made sure that there would be no money left to pay for the goods that were not there to buy. We are told that Labour resisted the popular cry for tax cuts until Australia’s economy was stabilized and expanded and had become as sound as that of any other country. That is the guiding light of Labour’s philosophy. The real socialistic core of the Labour platform pre-supposes that the Government can spend the taxpayers’ money better than he himself can. If it is inflationary for the public to spend instead of save, it is equally inflationary for Labour to waste money by spending it on unprofitable socialistic enterprises such as the acquisition of the private banks. A £1 note does not acquire a special anti-inflationary sanctity because the Treasurer instead of the taxpayer spends it. The Government touch does not inject into money an extraordinary virus which deprives it of its inflationary tendency. On the contrary, the Government will get far less value for £1 than would private enterprise, and it is equally undeniable that a housewife would get far more value for her £1 note than will the Labour Government. The disastrous history of State enterprises in Australia will prove that more than adequately if any proof be required.

I come now to the conclusion and summary of my observations. The financial policy pursued by the Treasurer is demonstrably unsound for the following reasons : -

  1. Consistently bad budgeting has resulted in an underestimate of revenue, and an overestimate of expenditure.
  2. The Treasurer’s budget estimate of a deficit, although made only nine months before the end of the financial year, has been completely wrong. Instead a substantial surplus will result.
  3. Tax cuts have been so long delayed that post-war recovery and living standards have been jeopardized.
  4. Tax cuts have been made more according to political opportunism than to national necessity.
  5. “Still-life” methods of financial prediction have been adopted instead of the moving picture panoramic view which would enable future revenue returns and expenditure requirements to be foreseen with some degree of accuracy.
  6. Socialistic philosophy, financed mainly by funds extracted compulsorily from private enterprise, has been adopted as the means of postwar recovery.

I sum up my remarks by saying that inflation does not mean prosperity ; that paper money, flowing freely from the Treasury, and not backed by honest toil, will never raise the standard of living ; and that the quadrupling of the national income cannot bring any good in its wake unless the production of goods is sufficient to satisfy the demand for them. Unless the individual is given some incentive to work, such as a higher living standard, or a hope for better conditions and a future with reasonable personal freedom from financial oppression, the vicious circle of high nominal wages and low man-hour production will never be broken. The Treasurer’s financial policy, with the hoarding of secret reserves, the surpluses that he has extracted from the tax paying community, bad budgeting, and too-long delayed tax cuts has contributed immeasurably to the present deterioration of our standards. The prospective policy outlined in the Treasurer’s financial statement gives little, if any, hope for the future. I am confident that, whatever this Government has achieved can be bettered by a more practical and realistic approach to financial problems generally, with due regard to economy with efficiency, and the fostering and encouragement of individual effort and enterprise as opposed to socialism. In other words, whatever this Government has accomplished, or can accomplish, in the interests of the taxpayers and the consumers in this country, the Opposition, should it become the Government of this country, could do very much better.

Mr DEDMAN:
Minister for Defence, Minister for Post-war Reconstruction and Minister in charge of the Council for Scientific and Industrial Research · Corio · ALP

– To the man in the street, financial policy sounds technical and remote, and I am confident that the man in the street will have the greatest difficulty indeed in following the lines of policy that the Leader of the Australian Country party (Mr. Fadden) would like this country to adopt. Early in his remarks, the right honorable gentleman likened the Treasurer (Mr. Chifley) to a thief. Any member of the community, and particularly a member of Parliament who himself has been a Treasurer of the Commonwealth, who likens the present Treasurer to a thief does not deserve to be listened to by the public of this country.

Mr Fadden:

– I rise to order. I have never, in any circumstance, likened the Treasurer to a thief, and I demand that the Minister’s allegation be withdrawn. 1 did not make the statement, I did not imply it, nor do I think it.

Mr DEPUTY SPEAKER (Mr Clark:
DARLING, NEW SOUTH WALES

– I ask the Minister to withdraw his statement.

Mr DEDMAN:

– I withdraw the statement because I have been asked to withdraw it and I must conform to the usages of the House, but when honorable members read the speech of the Leader of the Australian Country party in Hansard they will find that what I have said is correct.

Opposition members interjecting,

Mr DEPUTY SPEAKER:

– Order ! The Leader of the Australian Country party was heard in silence, and I insist upon the Minister being heard in silence also. I warn honorable members against interjecting.

Mr DEDMAN:

– Every financial statement made in this chamber should be subjected to the closest examination and investigation, but both the Leader of the Opposition (Mr. Menzies) and the Leader of the Australian Country party have treated the document now under discussion in a most superficial manner indeed. Consideration of financial policy begins with an estimate of the need for certain services, and the amount of money necessary to provide those services. Neither the Leader of the Opposition nor the Leader of the Australian country party has said much about expenditure. Indeed, there is very little to say because this House approved of the Estimates of expenditure last September.

Mr Rankin:

– The Minister means that caucus approved.

Mr DEDMAN:

– This House and the Parliament approved the proposed expenditure. There has been very little alteration of the estimate of expenditure necessary to provide the services which, in the Government’s opinion, this country needs. It is true that there have been some slight variations of the estimates but they are scarcely worth mentioning. Admittedly the Government will not expend quite as much as the budget estimate because labour and materials are not available to-day for certain classes of work which we thought we should be able to carry out in the current financial year. So, this financial statement has not been made necessary by any changes in the Estimates of expenditure. It has been necessitated because present revenue trends, if allowed to continue, would result in a surplus over the budget estimate at the end of the year. So, this statement relates almost entirely to reductions of taxes, and therefore, reductions of the revenue that the Government will have at its disposal. I desire to say at the outset that the rates resolution that will be dealt with subsequently will give effect to the greatest tax reductions in the history of Australia. The reductions that have been made by this Government since the peak period of taxation, will total about £200,000,000. Yet the Leader of the Australian Country party suggests that this Government has been dilatory in giving taxation relief to the people. It is true that when the Government found, by an examination of the revenues coming into the Treasury, that it would have more money than was required for the current year, it had to make a decision about what was the right thing to do. By not introducing the present measure the Government could have continued to tax the people at existing rates - and there are many people who would hold that that would have been anti-inflationary in its effect. The Government, however, had informed the people during the budget debate, that all that it intended to raise by way of revenue to meet expenditure was £511,000,000. I believe that the Government having found that the revenue at its disposal would be more than that sum, has taken the right course, by introducing the present measure.

Mr Archie Cameron:

– The reductions will not become effective until the next financial year.

Mr DEDMAN:

– That is correct. There are other aspects of the matter that I should like to discuss. After listening to the remarks of the leaders of two Opposition parties I find that many of the observations that I desire to make are related to certain matters that these two right honorable gentlemen have mentioned. I shall first make a few remarks on the observations of the Leader of the Opposition. He said that the proposed tax reductions were offset Ky the fall in the value of money. It is true that prices in Australia have risen, but it is also true that they have not risen to anything like the degree to which they have risen in other comparable countries. The percentage price rise in the United States of America or in the United Kingdom is at least double the percentage price rise in Australia. The Leader of the Opposition also attempted to convey the impression that the value of the tax reductions, both past and proposed, have been counterbalanced by the fall in the value of money. That statement is quite untrue. I shall quote from a document referred to by the honorablemember for Perth (Mr. Burke) during the budget debate. The following statement appeared in the monthly summary for July, 1948, of the National Bank, of Australasia Limited : -

From these calculations it would appear that the real income per head of population, that is, the income in terms of goods and services, has improved to the extent of about 14 per cent, of pre-war levels.

The calculations referred to are calculations of the pre-war national income and the present value of money. That statement was made after a complete examination of figures dealing with pre-war wagerates, pre-war prices and pre-war national income in comparison with the national’ income for the year 1947-4S. It appeared in a journal that is, by its very nature,, biased against the Labour party, yet it completely refutes the implication of the Leader of the Opposition that’ the tax. reductions have been offset by the fall in money values. The right honorable gentleman then went on to say that the administration of price controls by theStates was not responsible for the risein prices. It may not be wholly responsible, but at least some of the responsibility for the rise in prices is dueto the fact that, as a result of the prices referendum last year, the Australian Government had to transfer price control to the governments of the States. Price rises have not occurred just because some of the State governments do not want to control prices. That some State governments desire to do somore effectively than others do is made quite obvious by statements that appear in the press from time to time about differences of opinion betweenState Ministers who administer price controls. I am not setting out to criticize the State governments, even those whichdo not desire a tight control of prices tobe retained. All that I am saying at themoment is that the Labour party made it quite clear during the referendum campaign that it was quite impossible for theState governments to control prices as effectively as the Australian Government could control them. Increases in prices,, therefore, are, at least partly, due to the- result of the referendum. One presumes that the arguments of honorable members opposite against the continued administration of price controls by the Australian Government had some effect on the public, persuading it to register that result. I repeat that that, in part, is the reason for the rise In prices and the fall in the value of money to which the deader of the Opposition has referred.

L shall now draw attention to the statement of the Leader of the Opposition that full employment is not a conscious result of government policy. That may be the opinion of the right honorable gentleman, but I say, on the other hand, that there is a great deal of evidence that full employment is indeed a conscious result of the Government’s policy.

The Leader of the Australian Country party has stated that Australia would not be facing the inflationary situation it faces to-day had the Government made tax reductions earlier. That statement, of course, is sheer nonsense. Any one who knows anything about the effects of taxation as an anti-inflationary measure will realize immediately that the right honorable gentleman’s statement is utter nonsense. I shall not content myself with making that statement without producing evidence to support it. Every economist in the world believes that taxation is an anti-inflationary measure. Let. us look at the example of the United States of America, where, because the President had a hostile majority in Congress, prices control was abandoned too early and tax reductions wore made, also too early. As I have already indicated, the rise in prices in the United States of America has been very much greater than in Australia. That example proves that the statement <>f the Leader of the Australian Country party is, indeed, utter nonsense. President Truman, in presenting his budget proposals to the United States Congress in January last, said that he proposed to raise 4,000,000,000 dollars in new taxes to be levied mainly on business. What has happened in the United States of America is that the President, who now has a majority of supporters in the legislature, is taking the necessary steps to undo the damage done by a previously adverse majority which insisted on remov ing prices control and on making reductions of taxes at a time when that could only have had the effect of increasing the inflationary trend in that country. I am in complete agreement with the statement made by the Leader of the Opposition on his way back to Australia that if the electors of Australia could have been transferred to the United States of America for the last American presidential elections the supporters of Labour in this country would have voted for Mr. Truman and the supporters of the non-Labour parties would have voted for Mr. Dewey. Mr. Truman, who, as we know, was elected President, is now undoing some of the wrongful acts of those who previously had a majority in the United States Congress and were opposed to his policy.

Returning to discussion of the matter of full employment and the statement of the Leader of the Opposition that full employment was not the conscious result of government policy, I assert that financial policy affects employment to a greater degree than does any other factor. It is because of the policy implemented by the present Prime Minister, even while he was Treasurer in the Curtin Administration, that we have been able to maintain full employment in Australia. Comparisons were made by the Leader of the Opposition and the Leader of the Australian Country party of industrial conditions in this country with those in the United States of America, particularly concerning the respective rates of production, but I remind honorable members that press reports, which, in this instance, I believe can be assumed to be true, disclose that there are 3,000,000 persons unemployed in the United States of America. If President Truman had been able to carry out his financial policy, which is similar to that of the Prime Minister of this country, there would not be 3,000,000 unemployed in that country to-day. I emphatically deny the statement of the Leader of the Opposition that full employment is not the conscious result of government policy. The right honorable gentleman went on to make some observations on the effect of full employment on the community. He said that it tended to reduce per capita production. Tn other words, he was repeating the arguments that we have heard time and again in this chamber, that in order to maintain high rates of production there must be a considerable amount of unemployment. The idea is that the workers, fearful of losing their jobs and their security, will work the harder.

Opposition members interjecting,

Mr DEDMAN:

– I wrote down the remarks of the Leader of the Opposition when he made them. My version of them is practically verbatim, and if honorable members opposite care to read Hansard to-morrow morning they will find that my version is correct. The right honorable gentleman said that we need some incentive to replace the incentive of fear - fear of losing their jobs. When the Leader of the Opposition stated that proposition he was not advancing any new contention, because we all know how the workers were exploited in the past. The right honorable gentleman has always been lukewarm about the policy of full employment. Of course, other people also hold the same views, particularly those who are connected with private banks. I propose to read the report of a statement made by Professor Hytten, who is the economic adviser to the Bank of New South Wales. That statement is on all fours with the assertion made by the Leader of the Opposition to-day. Indeed, all that the right honorable gentleman said to-day could be taken from the script of a gramophone record marked “ His Master’s Voice “. According to the Sydney Daily Telegraph of the 14th January, 1949, Professor Hytten, who addressed the annual congress of the Australian and New Zealand Association for the Advancement of Science, stated -

The present full employmentin Australia could best be described as “ over-full employment”. It had caused scarcities of goods and services because demand had expanded, but production had not expanded sufficiently to meet it. Full employment had removed the threat of unemployment - one of the main factors compelling high output.

That is exactly the argument that was advanced by the Leader of the Opposition to-day. The report continues -

Professor Hytten said the results of full employment, which manifested themselves in rising costs, threatened to throw out of balance the economic structure and, despite high incomes, reduced effective demand. “ This situation could well produce a business crisis like the 1930 depression-

Honorable members will note the attempt to instil fear into the minds of the people of this country. The report continues - “… which would persist until business re-adjusts its costs,” he added. Professor Hytten said that during the 1920’s unemployment in Australia was6 to 11 per cent. - reasonably full employment. In the best of these years there was probably 6 to8 per cent, unemployment.

That is evidently the objective of the private banks, and, therefore, also of the political parties opposite. The report continues - “ It should not be impossible to attain the conditions of the 1920’s as a fairly stable level of employment “, he said. “ Complete stability is not attainable, nor is it a very desirable aim “. Professor Hytten said there were11 2,800 unfilled jobs in Australia last October. The main problem arising from the labour shortage was lack of discipline among workers. A slackening of effort had increased costs and had resulted in inferior work in some industries. Employers tended to hoard man-power. Professor Hytten said high taxation could help correct the problems of boom years when there was over-full employment. But taxation was effective only if it was not used to reduce the floating debt . . .

The remainder of his statement does not deal with the matter of unemployment or full employment, and, therefore, I do not propose to read it.

Let us examine the implications of Professor Hytten’s statements. One assumes that he has the support of the Leader of the Opposition, who has adduced exactly similar arguments, when he stated that we should aim at an unemployment rate of from 6 to 8 per cent. What would be the effect of such a proportion of unemployed in the community ? It means that between 200,000 and 400,000 workers would be unemployed-

Mr Fuller:

– That is the policy of the Opposition parties.

Mr DEDMAN:

– Undoubtedly, that appears to be their policy, and it seems to be very closely related to the policy of the private banks. I say to the people of Australia that the Government is pursuing its banking policy, and intends to continue to pursue it, until that policy is implemented, because the maintenance of full employment depends on whether or not the Government’s banking policy can be implemented. The Leader of the Opposition and Professor Hytten are advocating the unemployment of between 200,000 and 400,000 workers in this country. Apart from the humanitarian aspect, and the distress and suffering caused by unemployment on such a large scale, the argument in favour of a pool of unemployed cannot be justified even on economic grounds. The standard of living in any community is governed by the pool of goods and services available, and this, in turn, is determined by the total volume of production. The Leader of the Australian Country party says that, in order to ensure maximum production by the great bulk of the workers, it is desirable that there should be at any one time up to 400,000 persons unemployed. I point out that full employment would have to be responsible for a tremendous decrease of the rate of productivity over the total of 4,000,000 workers- and that is generally regarded as the number of our working population - in order to cause as much loss as must be occasioned if 400,000 workers were making no contribution at all to the pool of goods and services. I do not admit that there must necessarily be a decline of the rate of individual production under a system of full employment, but even if there were such a tendency, the loss of production occasioned thereby could not be anything like so great as the loss resulting from having 400,000 persons unemployed. As a matter of fact, I believe that most workers in Australia give of their best even when there is no threat of unemployment, and in this respect they set an example which managements, in many instances, might follow.

The Leader of the Opposition and the Leader of the Australian Country party referred to the effect upon the economy of the country of high prices for the primary products which we sell overseas, and the Leader of the Australian Country party recently issued a press statement on the subject. The Leader of the Opposition failed to deal exhaustively with the subject because, if he had done so, he would have had to mention certain proposals that have been made to cure the situation, and then he would have had to come down on one side or another, something which, apparently, he did not want to do. It is true that the primary producers are obtaining very high incomes, which is largely due to the fact that overseas prices for primary products are high. However, before discussing the proposals that have been mentioned in the press from time to time to deal with the situation, I point out that the excellent position of the primary producers to-day is not, by any means, entirely due to the high prices which they are receiving for their products. Prices have been high for only the last three years. During the early pr.rt. of the Labour Government’s term of office, overseas prices for primary products were not so high. Indeed, certain kinds of products were a glut on the market. In the early part of the war, it was impossible to sell our wheat, and were it not for the Commonwealth Bank, which advanced large sums of money to cover the marketing of on: products, the position would have been very serious indeed. I do not think that the country people realize the debt that we owe to that great institution. In order to ensure that our primary products would be properly marketed, the Commonwealth Bank advanced from time to time no less than £400,000,000. I think that the primary producers should back the Commonwealth Bank to a greater degree than they generally do, because of the great service which it rendered to them during the war. i have put the proposition that the excellent position of the primary producers is not entirely due to high prices. This is borne out by an investigation which was made some time ago of the financial position of a representative group of country properties in order to find bow their position compared with that of some years ago. The figures, which go back to 1920, are very interesting. They show the registered mortgage indebtedness on 39 properties totalling 48,900 acres. In the year 1920, the registered indebtedness was £26,400. Year by year the indebtedness rose until, in 1932, it was £51,600. It continued to increase year by year until, in 1940, it reached the peak figure of £91,500. From 1941 onwards the picture changed. Instead of continuing to increase, the registered indebtedness on those properties decreased from year to year. By the end of 1941, it had decreased to £82,300, and for the succeeding years the steady decline is shown in the following table: -

Those figures tell a story. It is that, so long as anti-Labour governments were in power, the mortgage indebtedness of the properties increased step by step from £26,400 in 1920 to a total of £91,500 in 1940. Then, from the year the Labour Government took office, but before prices of primary products increased, the indebtedness began to decrease until, at the end of 1948, it stood at only £18,500. One reason for that, of course, is that the Government, by its financial policy, reduced interest rates all along the line.

Mr ACTING DEPUTY SPEAKER:
Mr. Lazzarini

– The Minister’s time has expired.

Mr ARCHIE CAMERON:
Barker · ALP

– “We have listened to one of the usual disquisitions of the Minister for Post-war Reconstruction (Mr. Dedman) and I shall take him up on several of his contentions. I shall start at the point at which he referred to the politics of the United States of America, and see where he lands himself. He commenced by saying that full employment was the conscious result of government policy. He then went on to tell us that if the present Labour Government and its supporters were in the United States of America they would be supporting President Truman, and that if we of the Opposition were there we would be supporting Mr. Dewey. Although I do not know how he arrived at that conclusion, I shall let that go. He went on to say that under the Truman administration to-day, there are over 3,000,000 unemployed in that country and that if the Truman policy were put into operation there would be no unemployment in the United States of America.

Mr Dedman:

– I did not say anything of the kind.

Mr ARCHIE CAMERON:

– I suggest, that the Minister have a look at the proof of his speech to-morrow.

M r. Dedman. - I did not say that.

Mr ARCHIE CAMERON:

– I ask the Minister also to have a look at the Hansard record of a speech made by him some time ago, when he declared that socialist States cannot be created if thousands of little investors and ordinary working men are allowed to own their own homes.

Mr Dedman:

– That is quite untrue. I have not made any such statement in this House or anywhere else. As it is untrue, I ask that it be withdrawn.

Mr ARCHIE CAMERON:

– I heard the statement.

Mr Holt:

– We all heard it.

Mr Dedman:

– When I was speaking the Leader of the Australian Country party (Mr. Fadden) said that a statement that I had made was untrue, whereupon Mr. Deputy Speaker requested me to withdraw it, which I did. The honorable member for Barker (Mr. Archie Cameron) has now made a statement that I say is untrue and, as I was called upon to withdraw a statement which was claimed to be untrue, I now ask that the honorable member for Barker be directed to withdraw his statement which I claim is untrue.

Mr. ACTING DEPUTY SPEAKER (Mr. Lazzarini). - The honorable member for Barker must withdraw the statement.

Mr ARCHIE CAMERON:

– The Minister says that the statement is untrue. Many honorable members of this House heard the statement and Hansard recorded it. The Minister tried to explain the statement on the following day, but he could not do so because it was made in this House in the presence of many honorable members.

Mr Dedman:

– I ask that the statement be withdrawn because it is untrue. The honorable member is simply proceeding to say that in his opinion it is true. That is not a withdrawal; I ask for it to be withdrawn because it is offensive.

Mr McEwen:

– What is offensive?

Mr Dedman:

– It is offensive because it is untrue.

Mr ACTING DEPUTY SPEAKER:

– Order ! The honorable member for Indi (Mr. McEwen) must resume his seat. I suggest to the Minister that he should ask leave of the House to make a personal explanation.

Mr Dedman:

– I take the point that when I was speaking-

Mr ARCHIE CAMERON:

– The Minister is not entitled to make a personal explanation, while I have the floor.

Mr Dedman:

– I am taking a point of order. A few minutes ago when I was speaking I made a statement which the Leader of the Australian Country party said was untrue, and on that ground he asked that it be withdrawn. Mr. Deputy Speaker insisted on my withdrawing the statement merely because the Leader of the Australian Country party had said that it was untrue.

Mr Fadden:

– It was untrue.

Mr Dedman:

– The honorable member for Barker has made a statement which I say is untrue and I ask that it be withdrawn. What is sauce for the goose is sauce for the gander. As I was compelled to withdraw a statement that the Leader of the Australian Country party had said was untrue, I claim that the honorable member for Barker should likewise be compelled to withdraw a statement that I say is untrue.

Mr McEwen:

– I desire to speak to the same point of order-

Mr ACTING DEPUTY SPEAKER:

– Order! The honorable member must not interrupt the Chair. I understand that earlier this evening the Leader of the Australian Country party claimed that something that the Minister had said was untrue.

Mr Dedman:

– The right honorable gentleman said that it was untrue.

Mr Fadden:

– And offensive.

Mr ACTING DEPUTY SPEAKER:

– Does the Minister claim that the statement made by the honorable member for Barker is untrue and offensive?

Mr Dedman:

– Yes.

Mr ACTING DEPUTY SPEAKER:

– Then I ask the honorable member for Barker to withdraw the statement.

Mr Archie Cameron:

– I submit, Mr. Acting Deputy Speaker, that you cannot make two rulings on the one point of order.

Mr ACTING DEPUTY SPEAKER:

– I have not done so.

Mr Archie Cameron:

– With respect I claim that the Chair has done so.

Mr ACTING DEPUTY SPEAKER:

– Order! The honorable gentleman must not argue with the Chair. I have suggested a course for the Minister to adopt. It appears that the position which arose when I was not in the chair was on all fours with the incident that is now before the House. I ask the honorable member for Barker to withdraw the statement and not force the Chair to take drastic action against him.

Mr Archie Cameron:

– With respect I point out that the point of order has nothing to do with you, Mr. Acting Deputy Speaker, as you were not in the chair on the previous occasion. The Chair has suggested that the Minister should make a personal explanation. I am referring not to a statement that was made tonight, but to something that was said over three years ago, and which is recorded in Hansard. It is not a matter of something that has happened to-night. The discussion in which the Leader of the Australian Country party was involved earlier this evening related to something that happened in this chamber to-night. I have referred to something that happened in this chamber years ago, and on which there can be no controversy at the moment. I say, therefore, that I am entitled to refer to the matter that took place then, and that the Minister cannot take a point of order or ask for an apology for something that was said in a previous parliament.

Mr McEwen:

– I desire to speak to the same point of order. If a ruling is given by the Chair as requested by the Minister, that the honorable member for Barker must withdraw a statement merely because the Minister says that something which he quotes is untrue, then-

Mr Scully:

– The Minister said that it was offensive.

Mr McEwen:

– The Minister said that it was untrue, and therefore that it was offensive.

Mr Scully:

– The Minister claimed that it was both untrue and offensive.

Mr McEwen:

– If such a ruling is given by the Chair, then it must inevitably follow that any member of the House will be entitled at any time to stand in his place and say that something stated by another honorable member is untrue and ask for a withdrawal. That would bring about a fantastic position in debate. If a ruling of the Chair establishes the right of any member at any time to interrupt an honorable member who is speaking and claim that what he says is untrue and demand a withdrawal, we could not have deliberative debate at all. I submit respectfully that the Chair should rule that the Minister’s correct course of action is to make a personal explanation later.

Mr ACTING DEPUTY SPEAKER:

– The Chair has heard quite enough on this subject.

Mr Holt:

– I wish to speak on another aspect of this matter.

Mr ACTING DEPUTY SPEAKER:

– The Chair does not want any direction from any honorable member in this matter. Since I have been a member of this House the position has been that if any statement which an honorable member on either side of the House makes is deemed to be offensive, it must be withdrawn. I did not rule that the Minister should make a personal explanation. I merely suggested that as a course of action that he could take. However, he demands a withdrawal of the statement, which he says is offensive. The honorable member for Barker must therefore withdraw it.

Mr Holt:

– The Minister has not said what words were offensive to him. I say that the language used was correct parliamentary language and that there was nothing offensive in its terminology. At a later stage the Minister claimed that the statement was not merely untrue but also offensive. I submit that if an honorable member makes a statement in words couched in decent English it cannot be claimed that the words are offensive in themselves. The Minister has not said in what way the words are offensive to him and the House is entitled to’ a ruling on the point that I have raised.

Mr ACTING DEPUTY SPEAKER:

– The Chair will not listen to any further argument on this matter. I have already given the ruling of the Chair in regard to it. I ask the honorable member to conform to the directions of the Chair by withdrawing his remark to which exception has been taken, and then to proceed with his speech.

Mr Archie Cameron:

– The statement which I quoted was made on the 2nd October, 1945, and is reported in Hansard.

Mr ACTING DEPUTY SPEAKER:

– Order !

Mr Archie Cameron:

– I have a right to state my case. If I withdraw the statement that I quoted, which is recorded in Hansard, by so doing I admit that I made a statement which was not true. I did not make an untruthful statement. The words that I have quoted are on record. The Minister unsuccessfully tried to explain his way out of his predicament on the 3rd October, 1945. He cannot explain his way out of it now. The only course to be followed in accordance with the Standing Orders and the procedure of this House if the Minister objects to what he said on the 2nd October, 1945, is, that he should make a personal explanation. I cannot withdraw a statement which is a quotation. The Minister himself must be responsible for that statement.

Mr Dedman:

– What the honorable member said is not recorded in Hansard.

Mr Archie Cameron:

– According to the Hansard report the Minister said -

The Commonwealth Government is concerned to provide adequate and good housing for the workers; it is not concerned with making the workers into little capitalists.

I cannot withdraw a statement based on that quotation from Hansard.

Mr Dedman:

– That is not the statement which the honorable member made earlier this evening.

Mr ACTING DEPUTY SPEAKER:

– That is so. It is not the same statement.

Mr Dedman:

– It is of an entirely different character.

Mr Archie Cameron:

– I, and other honorable members of this House heard that statement made. I cannot withdraw what I heard and what is recorded in the official record of this House.

Mr ACTING DEPUTY SPEAKER:

– The honorable member knows that the words he attributed to the Minister were quite different from what the honorable member quoted from Hansard. He has put a totally different construction on the Minister’s words. I shall not listen to argument on this matter any longer. The Chair has given its ruling and will stand by it. If the honorable member doe9 not withdraw, I shall take action.

Mr Archie Cameron:

– I do not want to go out of the House at this moment, and having regard to the position confronting me, I shall, in deference to you, Mr. Acting Deputy Speaker, withdraw the statement complained of, and repeat what I heard in this House. I shall quote what is in Hansard. What I heard in this House was that the Minister was not going to create a socialist State by making thousands of little capitalists by allowing workers to own their own homes. Honorable members on this side of the House heard that statement.

Mr Dedman:

– That statement is quite untrue. It is not what is recorded in Hansard. It is offensive to me and I ask that it be withdrawn.

Mr ACTING DEPUTY SPEAKER:

– The honorable member is repeating his offence. He must either withdraw or resume his seat.

Mr ARCHIE CAMERON:

– I shall resume my seat.

Mr THOMPSON:
Hindmarsh

– I am sorry that the level of debate in this House has reached such a low ebb that some honorable members are unable to debate the matters placed before us without indulging in objectionable personal remarks. I regret that certain honorable members so frequently misconstrue the words of others and, when objection is taken, refuse to withdraw the offending words. This afternoon, the Leader of the Opposition (Mr. Menzies) paid a wonderful compliment to the Treasurer and the Government of this country because he could not find anything in the Treasurer’s financial statement upon which he could, base any con structive criticism of the Government’s financial policy. I listened with interest to the speech made by the Leader of the Australian Country party (Mr. Fadden) on this subject, but I found that it consisted of a tedious repetition of the old time-worn criticisms that have characterized his speeches on financial matters in the past. Apparently the role of the Opposition in this Parliament is not to advance constructive suggestions but to endeavour to delude the people into believing that the Government has been recreant to its trust. The right honorable gentleman referred, to percentage reductions of taxes and drew a comparison between what taxpayers were called upon to pay some years ago and what they will pay in this financial year. The Leader of the Opposition, who had preceded him, spoke in a somewhat similar strain. The ordinary citizen of Australia is concerned not so much with percentage reductions as with the amount of tax which he has to pay and whether the Treasurer is able to balance his budget. In the financial statement which he presented to the Parliament the Treasurer (Mr. Chifley) showed clearly that the revenue would be very much greater than he had anticipated. What appears to be worrying honorable members opposite is the belief that the Treasurer did not make reductions of taxation early enough. They contend that the reductions foreshadowed in the financial statement which we are now considering should have been made long ago. Had that been done, the finances of this country would not be as sound as they are now. As the result of the wise policy adopted by the Treasurer, we have, as it were, something up our sleeve. The statement reveals to the people the soundness of the financial policy pursued by the Government. After examining the figures relating to reductions of taxes, the Leader of the Opposition said that both he and the Leader of the Australian Country party had been too modest in their pre-election promises in relation to taxation remissions. Less than three years ago, the Leader of the Opposition said to the people, in effect, “ If you return the Liberal party to office we shall reduce taxation by 20 per cent.” The Leader of he Australian Country party went even better and said, in effect, “ If the Australian Country party is returned to office and I am appointed as Treasurer of the Commonwealth, I shall reduce taxes by 30 per cent.” Now the Leader of the Opposition says that both he and the Leader of the Australian Country party were too modest. Let us compare the promises made by them with the statement made by the Treasurer during the election campaign. So far from promising that taxes would be reduced by any given percentage, the Treasurer merely said that the taxation position would be reviewed from time to time and that deductions of taxes would be made as the circumstances permitted. The Leader of the Opposition cited the tax payable by a man with a wife and one child whilst the Leader of the Australian Country party cited that payable by a man with a wife and two children. I propose to deal with the position of a taxpayer coming within the latter category. Whereas a man with a wife and two children with an income of £300 a year or, approximately £6 a week, which is roughly the basic wage to-day, paid tax amounting to £17 8s. during the war, he does not pay any income tax to-day; and, of course, he will not pay any tax after these reductions are implemented as from the 1st of July next. A man with a wife and two children with an income of £350 a year or, approximately, £7 a week, paid tax amounting to £31 2s. during the war whereas his tax now amounts to £3 15s. and as from the 1st of July next it will be reduced to £2 4s. Since the war period his tax has been reduced by over 90 per cent. Yet honorable members opposite, during the election campaign, promised a reduction of only from 20 to 30 per cent. [Quorum *formed.] I thank the one member of the Liberal party and the four members of the Australian Country party who were in the chamber when the bells ceased ringing. It is noteworthy that those honorable gentlemen should remain in the chamber when a Government supporter is participating in a debate on the Government’s taxation proposals, because not infrequently practically no member of the Opposition parties remains in the chamber on such an occasion.

Mr McDonald:

– I rise to order ! The honorable member is not correct when he says that it is usual for Opposition members to absent themselves from the chamber when a Government supporter is speaking.

Mr. ACTING DEPUTY SPEAKER (Mr. Lazzarini). - The honorable member has not raised a point of order.

Mr Harrison:

– I rise to order. The remarks just made by the honorable member for Hindmarsh (Mr. Thompson) are offensive to me and I ask that they be withdrawn.

Mr ACTING DEPUTY SPEAKER:

– The honorable member is being facetious.

Mr Holt:

– I rise to order. Is the honorable member for Hindmarsh in order in reflecting upon the conduct of proceedings in the House?

Mr ACTING DEPUTY SPEAKER:

– The honorable member for Hindmarsh has not reflected upon the conduct of proceedings in the House.

Mr THOMPSON:

– I simply expressed my thanks to the one member of the Liberal party and four members of the Australian Country party who had remained in the chamber during the ringing of the bells. Reverting to my comparison of the reductions of income tax which have been implemented by the Government, I shall examine the position of a man with a wife and two children who usually earns from £1 to £2 overtime weekly. The Opposition parties have displayed much anxiety for the welfare of taxpayers in that class. In the great majority of cases the income of such a taxpayer would not exceed approximately £500 a year. Indeed, I believe that not too many workers to-day are earning in excess of that amount. Whilst such a taxpayer paid tax amounting to £80 16s. during the war period, he now pays £21 9s., and as from the 1st July next his tax will be reduced to £141s. Compared with war-time rates that citizen’s tax has been reduced by this Government by 82.6 per cent. It is significant that we do not hear very much to-day from Opposition members about the desirability of abolishing uniform income tax and returning to the dual system of State and Federal income tax. To-day, a taxpayer with a wife and two children with an income of £300 a year does not pay any tax whatever, but his wife receives the benefit of £26 a year child endowment in respect of the second child. Prior to the introduction of uniform income tax that taxpayer did not have to pay any federal tax, but in the respective States his State tax was as follows: - New South Wales, £10 16s.; Victoria, £9 4s. ; Queensland, £14 8s. ; South Australia, £13 14s.; Western Australia, £8 16s., and Tasmania £13 6s. In the face of those facts the claim advanced by the Opposition parties that present rates of tax are’ hindering the development of the country is entirely unfounded. Even the figures that the Leader of the Australian Country party has quoted, showing that more than 2,000,000 persons receive, on an average, remuneration amounting to about £8 a week, indicate that taxation is not adversely affecting the economy of the country. Before the introduction of the uniform income tax, a man with a wife and two children in receipt of an income of £350 a year was liable to pay tax as follows: In New South Wales £21, in Victoria £18, in Queensland £23, in South Australia £25, in Western Australia £20 and in Tasmania £24. Nearly all that money was collected by the States. Under the Treasurer’s new proposals, such a taxpayer will pay a tax of only £2 4s. per annum. Some workers receive wages and overtime payments amounting to approximately £10 a week. Before the introduction of the uniform income tax, such a worker incurred the following tax liability: In New South Wales £57, in Victoria £50, in Queensland £62, in South Australia £62, in Western Australia £62, and in Tasmania £5S. When the new proposals operate, such a worker will be required to pay tax of £14 per annum. Honorable members opposite frequently complain that employees in industry will not work overtime because of high taxation on their earnings, but the figures that I have quoted reveal clearly that a man with a wife and two children in receipt of £500 a year, including wages and over time, will pay tax of only £14 a year. The complaints by members of the Opposition in the past about high taxation have thus recoiled on them.

The Leader of the Opposition most adroitly omitted to mention this subject when he was referring to taxation. The right honorable gentleman definitely believes that a surplus of labour is an advantage to the national economy. I listened most carefully to his speech, and heard him state that no one could deny the fact, which, he said, was obvious to all, that conditions of full employment meant reduced production by individuals. The right honorable gentleman proceeded to state that we require a provision to counteract that reduction, and he proposed a system of incentive payments. After having referred to taxation and prices, he endeavoured to show that incentive payments would lead to increased production and that our position would thereby improve. Some people cannot understand why the leaders of trade unions and members of industrial organizations are fighting against the introduction of incentive payments. What is their objection to the system? Honorable members must realize that, directly production overtakes demand, the producer of goods has to compete for markets with other producers of similar goods, and profits decline. Honorable members opposite talk glibly of the law of supply and demand. Directly over-production occurs, manufacturers will compete with one another to secure markets for their boots, furniture, and other goods that they make in their factories. The manufacturer who cannot readily sell his goods will reduce his prices. That will lead to a reduction of profits and, I suppose, to the suspension of incentive payments. I understand and sympathize with the view of trade unionists who object to the system of incentive payments. I am not one of those persons who is blindly opposed to incentive payments, but I am also not one of those who believe that the introduction of the system will immediately produce all the beneficial results that we earnestly desire. We should never forget the experiences of the primary industries. Wheat prices in the past have fallen, not when crops have failed, hut when Over-production has occurred. Before the leaders of the trade unions will agree to the introduction of incentive payments, they must be confident that their members have no cause to fear the system. During the debate on international affairs last week, we heard frequent references to the need for ensuring the security of nations. In the past, the average working man did not enjoy security in employment. The Minister for Post-war Reconstruction (M.r. Dedman) has pointed out that for a period, unemployment in Australia ranged from 6 per cent, to 12 per cent. Men with jobs constantly feared that they would become unemployed. At present, proposals for the introduction of incentive payments will not appeal to the average worker, unless the system is accompanied by adequate safeguards. We must demonstrate to employees the need to give a fair return for their wages. Our experience with incentive payments has not been a happy one. A big business man in South Australia, who came to this country from England in order to engage in a heavy industry, took over a former munitions establishment, and said to me, “If the workers will only adopt the system of incentive payments, everything here will be much better than it is “. He proceeded to refer to the additional income that the workers in Great Britain were able to earn since the adoption of incentive payments in that country. He significantly did not make any reference to the period before the outbreak of World War II. when millions of workers were unemployed in Great Britain, and those who had jobs were not encouraged with incentive payments to increase production. The system is good when manufacturers are not able to secure adequate supplies of goods to meet the demand of purchasers, but once industries begin to over-produce, employers will not be keen to continue incentive payments. Probably, they will begin to retrench.

A rather slighting reference has been made to the decision of the Treasurer in reference to the entertainments tax. Members of the Opposition have complained that taxes imposed by the Government as emergency measures in order to meet the costs of war have not been discontinued since the war ended. The Leader of the Australian Country party belittled the lifting of entertainments tax from charges of less than ls. at amusement parks. I remind the right honorable gentleman that entertainments tax on such charges was made necessary by the exigencies of war, and was imposed by the Government in order that it could obtain the greatest possible amount of revenue from the people in order to finance our war effort. Now that the Government is in a position to remove that impost, and has honoured its obligation, it is being accused of having done too little to lighten the people’s burden 1 The Government has also decided to exempt from entertainments tax all charges up to 15d. made in connexion with sports, in which human beings participate. The Commonwealth has been paying large sums of money to the States for some years in order to promote national fitness and to encourage the development of open air sports. This tax exemption will also help to advance the cause of national fitness, and I compliment the Government upon making that decision.

The Government’s policy in relation to dollar funds is a sore Dont with the Opposition. It is well known that the Government has decided to keep the value of Australia’s imports from dollar countries down as near as possible to the value of our exports to those countries. That is a positive policy which will aid Great Britain during its present troubles. Although members of the Opposition have often said that the Government is not doing enough to help the Mother Country, they now criticize this policy, which will relieve the British Treasury of some of its dollar fund difficulties, and claim that we should increase the volume of our imports from the United States of America. When the Minister for Post-war Reconstruction spoke earlier in. the evening about the reduction of the amount of registered mortgages from £91,000,000 to £18,000,000, one honorable member opposite interjected, “Why not get on with the national debt?” Yet members of the Opposition want the Government to borrow more money from the United States of America so that we may import goods from that country. That would increase our national debt. The financial policy of the Government is indeed vastly different from that of the leaders of the Opposition parties. I say without fear of successful contradiction that, if the Opposition parties gained power in this country, they would soon revert to the old system of borrowing from overseas countries and increasing our national debt as it was increased in the past. The financial policy framed by the Treasurer and adopted by the Government has been the means of helping Australians in every walk of life. In order to demonstrate the truth of my assertion I need only refer to the position of any man who is buying his home to-day or who has a mortgage on his farm, and to the interest charges that he is required to pay. When the Minister for Post-war Reconstruction referred to the reduction of the amount of registered mortgages from £91,000,000 in 1940 to £18,000,000 in 1948, I was sorry that he did not also make a comparison between interest charges in 1940 and those in 1948. Interest rates have not been reduced because the banks or business concerns wanted to reduce them. They may have been compelled to make some reductions as the result of competition for loan business, but the financial policy of the Government has been chiefly responsible for the fixing of lower rates. Thepeople of Australia will not quickly forget the assistance that they have received in their financial affairs from this Government. I appreciate that when the Commonwealth was in control of land sales, many persons who asked members of this Parliament to assist them to gain approval for the sale of properties objected to the actions of Treasury delegates in refusing to approve of mortgages. Land sales control has since been transferred to the States and no doubt many people are now complaining about their treatment by State authorities. However, the policy in relation to real estate transactions was laid down by this Government, and people in Australia to-day, generally speaking, have reason to be thankful for the effects of that policy. I hope that it will be possible for the Government to plan for the reduction of the burden of sales tax before the budget for 1949-50 is introduced. The burden of indirect taxes is still fairly heavy, although most essential commodities are now exempt. I shall not refer to mittens and puttees, as did the Leader’ of the Australian Country party.. Removal of sales tax from such items is not of much interest to anybody. The Treasury gained little revenue from that source. In fact the cost of collection may have been greater than the income. Sales’ tax now applies principally to luxury goods. The Leader of the Australian Country party spoke of sales tax on toilet soaps. He did not mention ordinary household soap or say that it is not subject to sales tax. Evidently the Government considers that toilet soap should not be exempted while it is forced to continue drawing revenue from sales tax. However, I hope that the Treasurer will he able to promise greater relief when: he announces his budget proposals for, 1949-50. Up to date, the right honorable gentleman has made no optimistic forecasts, but I have no doubt that he will grant relief whenever possible. I have much pleasure in supporting the Government’s financial policy and in asking the. people of Australia to support it, because; it has operated in their interests.

Debate (on motion by Mr. Lang) adjourned.

page 551

PAPERS

The following papers were pre sented : -

Commonwealth Bank Act - Appointment-

D. J. H. Woods.

Lands Acquisition Act - Land acquired for postal purposes -

Alderley, Queensland.

Carrum Downs, Victoria.

Dulacca, Queensland.

Woolloongabba, Queensland.

House adjourned at 10.8 p.m.

page 551

ANSWERS TO QUESTIONS

The following answers to questions were circulated: -

War Service Homes

Mr Hughes:
NORTH SYDNEY, NEW SOUTH WALES

s asked the Minister for Works and Housing, upon notice -

  1. Is it a fact that to-day, 30 years after the cessation of World War I., there is still a number of ex-servicemen of that war paying-off arrears on sums borrowed from the War Service Homes Commission for the building of homes?
  2. Is it a fact that, in some of these cases, men have already paid back to the commission (in principal, interest, insurance and sinking fund) considerably more than the original gum borrowed, but are still faced with further payments because the principal, as such, has not been repaid in full?
  3. If so, and since it was surely not the intention of the Government to harass exsoldiers in this way, will he have a report made of all such cases, and, if found satisfactory, consider (a) writing off the amount still outstanding, or (b) writing down the amount or (c) making it free of interest?
Mr Lemmon:
ALP

– The answers to the right honorable gentleman’s questions are as follows: -

  1. Yes. The policy under the War Service Homes Act has been to assist applicants who have become in arrears due to circumstances over which they have no control by permitting them to liquidate those arrears over lengthy periods.
  2. Yes. In all cases in which loans bearing interest are repaid over lengthy periods the actual payments by the borrower exceed the amount of the loan. The maximum period of repayment under the War Service Homes Act is 45 years for other than a widow or widowed mother for whom the period is 50 years. If applicants take full advantage of these periods then, even with the low rate of interest payable under the War Service Homes Act, the total payment would naturally exceed the original loan. Applicants are entitled at any time to discharge their liability without penalty interest. The insurance premium is paid for a very wide cover under the insurance provisions of the act and does not form part of the payment in reduction of the loan. The rate of premium is less than half of that charged by tariff companies. Payments to sinking fund earn interest at the same rate as is charged on the loan and are, in effect, a reduction of the loan.
  3. Neither the granting of an extended period for the payment of a loan nor permis sion to an applicant, who has fallen into arrears to reduce those arrears over a lengthy period could be regarded as harassing the applicant in any way. It must be remembered that over the years the applicants in most cases have had the use of the homes whilst paying an amount per week far less than they would be required to pay as rent for a similar home. The original act provided for repayment of the loan over a shorter period than is now permitted, viz., a maximum of 25 years in the case of a timber house and 37 years in the case of a brick house and the rate of interest was then considerably higher than it is now. It should not be overlooked that only a percentage of returned servicemen obtain their homes under the War Service Homes Act and others obtain finance through other organizations. It would not be reasonable to (a) write off the amount still outstanding, or (b) write down the amount, or (c) make the amount free of interest, without extending these concessions to all returned servicemen, both from the first world war and the second world war, and the Government does not propose to take any steps in this direction.

Bricks

Mr Davidson:
CAPRICORNIA, QUEENSLAND

n asked the Treasurer, upon notice -

  1. Will he have a statement prepared giving the following information in respect of the years 1938-39, 1940-47 and 1947-48 regarding the brick industry: - (a) Number of employees (excluding working owners); (b) bricks produced; (c) value; (d) value of production, including tiles, &c. ; (e) value of bricks per thousand, (f) wages paid, and (g) percentage of wages to value of production?
  2. How many bricks were produced by the Government brickyard at Canberra in 1946-47 and 1947-48, and what was the cost of production in those years?
Mr Chifley:
ALP

– The answers to the honorable member’s questions are as follows : -

  1. Brick and tile works in Australia -
  1. Government brickyard,. Canberra -

Galvanized Iron.

Mr Dedman:
ALP

n. - On the 16th February, the honorable member forWilmot (Mr. Duthie) asked a question in regard to supplies of galvanized iron for Tasmania. The Minister for Shipping and Fuel has now supplied the following information in regard to the shipment of steel products from Newcastle and Port Kembla to other States: -

As at the 17th February, there were approximately 45,000 tons of steel products including galvanized iron at Newcastle and Port Kembla awaiting shipment for all States. Against this shipping has been allocated for 30,000 tens. So far as Tasmania is concerned all stocks at Newcastle for Launceston, Devonport and Burnie have been lifted whilst it is anticipated approximately 300 tons for Hobart will be lifted in the near future. AtPort Kembla there is approximately 300 tons for Hobart and approximately 600 tons for other Tasmanian ports concerning which allocation of shipping is now being arranged by the combined traffic committee.

Cite as: Australia, House of Representatives, Debates, 22 February 1949, viewed 22 October 2017, <http://historichansard.net/hofreps/1949/19490222_reps_18_201/>.

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