Senate
11 November 1915

6^th Parliament · 1^st Session

1. Senate
2. 6^th Parliament
3. 1915

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• MINISTERIAL STATEMENT
  • Later -
• QUESTION
  • ARSENAL, CANBERRA
• QUESTION
  • EXPEDITIONARY FORCES
• QUESTION
  • NAVAL COURT MARTIAL
• QUESTION
  • MUNITIONS FACTORY AT BEACONSFIELD
• QUESTION
  • FINANCIAL ASSISTANCE FOR THE STATES
• QUESTION
  • FRUIT CROP
• QUESTION
  • GERMAN AGENT
• QUESTION
  • WIRELESS SYSTEMS: INQUIRY
• QUESTION
  • GILGANDRA RECRUITS MARCH
• PAPERS
• WAR LOAN BILL (No. 3)
  • Second Reading
• REFERENDUM (CONSTITUTION ALTERATION) BILL (No. 2)
• INCOME TAX BILL (No. 2)
  • Second Reading
• REFERENDUM (CONSTITUTION ALTERATION) BILL (No. 2)
  • Second Reading
• SUPPLY BILL (No. 4) 1915-16
• SUPPLY (WORKS AND BUILDINGS) BILL (No. 4) 1915-16

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The President took the chair at 3 p.m., and read prayers.

page 7418

MINISTERIAL STATEMENT

Conduct of Business : The Prime Minister: Supply.

Senator PEARCE:
Minister of Defence · Western Australia · ALP

– I ask the leave of the Senate to make a statement regarding the conduct of business and the Prime Minister.

Leave granted.

Senator PEARCE:

– I desire to inform the Senate that the British Government have invited the Prime Minister of the Commonwealth and, I understand, the Prime Ministers of the other selfgoverning Dominions, to visit Great Britain at an early date, and that he proposes to accept the invitation, and will shortly leave for England. It is the intention of the Government to ask for additional Supply for twomonths, and to arrange for an adjournment of both Houses as soon as the. businessnow before them is completed. The Senate, will be called together by. notice from the President.

Later -

Senator KEATING:
TASMANIA

– Can the Minister say what relation the -submission of another Supply Bill will have to the time when the session will -probably be adjourned?

Senator PEARCE:
ALP

– The statement I made means, I take it, that at the latest Parliament will not adjourn beyond the date for which Supply is granted, but that an earlier meeting will be determined by the circumstances. If any occasion should arise to necessitate a reassembling, Parliament will be called together at a date earlier than the expiry of the time for which Supply was granted.

Senator Keating:

– I understand that, but what I wish to know is whether we are to have another Supply Bill before we rise.

Senator PEARCE:

– Yes; it will be introduced and passed to-day.

page 7419

QUESTION

ARSENAL, CANBERRA

Senator STORY:
SOUTH AUSTRALIA

– Has the Minister representing the Minister of Home Affairs reversed the decision of his predecessor in regard to the location of the proposed arsenal at Canberra, and, if so, what extra cost will be incurred, and will any delay be occasioned by the alteration? Which site was recommended by the Arsenal Committee, and what are the reasons for the alteration? I desire to know whether the Minister will obtain the desired information as early as possible this afternoon, in order that we maybe able to discuss the matter before the Senate rises.

Senator RUSSELL:
Assistant Minister · VICTORIA · ALP

– I shall endeavour to supply the information to the honorable senator at a later hour of the day.

page 7419

QUESTION

EXPEDITIONARY FORCES

Number of Enlistments: Minors

Senator TURLEY:
QUEENSLAND

– Can the Minister of Defence supply the Senate with the numberof persons ‘who haveoffered for enlistment in each military district, and the numberof those . who have been accepted ?

Senator PEARCE:
ALP

– It is impossible tosupply the numberof those who ‘have offered their services, . because at some depots norecord -was -kept of thosewhose offers were rejected. Forsomeconsiderable . time . a . preliminary -medical examination was carried out in practically every country town, and quite a number ‘of men were rejected. Therefore, it is impossible to obtain the information.

Senator Turley:

– Can you ascertain the number of those whose offers have been accepted ? ‘

Senator PEARCE:

– Under the present system it will be possible to get a record. The number of those who have been accepted up to the present time is over 170,000.

Senator TURLEY:
QUEENSLAND · ALP

– Can you ascertain the number for each military district?

Senator PEARCE:

– That is possible.

Senator Turley:

– Can you get the information during this afternoon?

Senator PEARCE:

– No, because it will be necessary to telegraph to each military district for a return.

Senator McDougall:

– Quite a number of men have been rejected in one military district and accepted in another.

Senator PEARCE:

– I may intention that at given intervals a return is sent in. I suggest that, as probably Parliament will not be sitting for : some time, it may be advisable to have a special return sent in.

Senator Turley:

– Oh, no.

Senator PEARCE:

– If the honorable senator feels interested in -the question I shallendeavour to let ‘him have a copy ofthe nextreturn.

Senator Turley:

– Hear, hear! Can you let me have a copy of the last return, which is in the office’?

Senator GRANT:
NEW SOUTH WALES

-Can the Minister of Defence furnish to the Senate a statement showing , the number of persons under twenty-one years of age who have enlisted ?

Senator PEARCE:

– It would be possible, but I submit to . the Senate that when . the ‘administrative work is being carried on at high pressure it isnot advisable to divert the attention of the staff from the despatching of troops and supplying them to the compilation of such returns, -which, however useful and interesting, would not advance the equipment of troops, their payment, and various other matters.

The PRESIDENT:

– I remind the Minister thathe isnot entitled to argue in his reply.

Senator PEARCE:

– It would be possible toobtainsuch a return, -but I task the honorable -senator not to press ..hisrequest.

page 7420

QUESTION

NAVAL COURT MARTIAL

Case of Surgeon J. G. Sheet

Senator KEATING:

– Last night the Minister of Defence was good enough to say that he would make inquiries into the case of a naval court martial in respect to a medical officer, an account of which appeared in the Age recently, and to which I referred in connexion with the last Supply Bill. Will he be in a position to state the facts of the case before the Senate adjourns?

Senator PEARCE:
ALP

– The secretary for the representative of the Government in the Senate telephoned to the Navy Office this morning, and the following statement has been supplied by the Naval Secretary -

I beg to inform you that Surgeon Jack Garland Skeet was tried by court martial on board H.M.A.S. Penguin, at Sydney, on 28th October, 1915, on a charge of desertion from H.M.A.S. Tarra on 19th October, 1915. The destroyer flotilla was under orders to leave Sydney on active service on that day. Surgeon Skeet was given leave until 4 p.m.; he was the only surgeon with the flotilla. Surgeon Skeet failed to join his ship at the appointed time, and was accordingly tried for desertion. The Court found him guilty, and sentenced him to be dismissed with disgrace from His Majesty’s service.

On consideration of the evidence and the circumstances surrounding the case, the Minister for the Navy, on the recommendation . of the Naval Board, has approved of the sentence being mitigated to dismissal from His Majesty’s service; that is, the words “with disgrace “ are eliminated.

The fact that Surgeon Skeet’s appointment had not been confirmed does not remove him from liability under the Naval Discipline Act. He was gazetted a surgeon on probation in the Naval Forces, and although he had applied to be allowed to resign, his resignation had not been accepted, owing to the shortage of surgeons. Section 13 of the Naval Defence Act provides that “Except in time of war, an officer may, by writing under his hand, resign his commission at the expiration of any time, not being less than three months from the date of the receipt of the resignation. The resignation shall not have effect until it has been accepted by the Governor-General.” Surgeon Skeet’s : resignation had not been so accepted, and he was distinctly subject to the Naval Discipline Act.

page 7420

QUESTION

MUNITIONS FACTORY AT BEACONSFIELD

Senator O’KEEFE:
TASMANIA

– Has the Minister of Defence any information to give the Senate with regard to a request from the Premier of Tasmania asking him to appoint an expert to inquire into the suitability of the buildings at Beaconsfield for the manufacture of munitions?

Senator PEARCE:
ALP

– A suggestion was received from the Premier of Tasmania that we should utilize buildings at Beaconsfield for the manufacture of munitions, and a reply was sent pointing out that it is the intention of the Government to locate its Munitions Factories at the Federal Capital; also intimating to the Premier of Tasmania that the Munitions Committee would be “willing to assist in every way any persons who wished to utilize such a building for the purpose.

Senator O’KEEFE:

– I am afraid the Minister did not quite understand my question. I wanted to know if the Government would send an expert over to report as to the suitability of the buildings, so as to guide the State Munitions Committee as to whether they would go on with the proposal or not.

Senator PEARCE:

– I do not think that a request of that kind was received from the Premier of Tasmania, but I shall look into the matter and let the honorable senator know.

page 7420

QUESTION

FINANCIAL ASSISTANCE FOR THE STATES

Senator MILLEN:
NEW SOUTH WALES

– Yesterday I asked the Minister of Defence if an agreement had been arrived at between the Commonwealth and the States regarding a reported application by the States for financial assistance from the Commonwealth. The Minister, in reply, said that he was not then in a position to give a complete answer, and I would like to know if he is now in a position to do so.

Senator PEARCE:
ALP

– I am informed by the Treasurer that some matters are still the subject of negotiations, but the Treasurer is hopeful that they will soon be brought to a successful termination.

page 7420

QUESTION

FRUIT CROP

Senator O’KEEFE:

asked the Minister representing the Prime Minister, upon notice -

1. Has the Government considered the necessity or advisability of making an arrangement with the fruit-growers of Australia for the export and marketing, and giving advances against the fruit stored or shipped, similar to the arrangement made with the wheat-growers?
2. If not, will the Government consider the question promptly?

Senator PEARCE:
ALP

– The answers are -

1. No.
2. Yes.

page 7421

QUESTION

GERMAN AGENT

Senator MILLEN:

asked the Minister of Defence, upon notice -

If it is true, as alleged in the Sydney press, that permission has been granted to the German Commercial Agent to return to Germany; and, if so, is the permission unconditional, or has it been given conditionally upon the exchange of a British subject now interned in Germany?

Senator PEARCE:
ALP

– This matter is at the present time the subject of negotiation with the British Government.

page 7421

QUESTION

WIRELESS SYSTEMS: INQUIRY

Senator KEATING:

asked the Minister of Defence, upon notice -

1. In connexion with the proposed Royal Commission of inquiry into the dispute between Mr. J. G. Balsillie, Federal Engineer for Radiotelegraphy, and theRev. Father Shaw, of Sydney, relative to their respective wireless systems, does the Government propose to provide counsel for Mr. Balsillie?
2. If so, will it also furnish counsel for Father Shaw?

Senator PEARCE:
ALP

– The answers are - 1 and 2. There has been no suggestion of, or request for, counsel for either party. Counsel, if supplied for one party, will be supplied for the other.

page 7421

QUESTION

GILGANDRA RECRUITS MARCH

Senator McDOUGALL:

– Is the Minister of Defence aware that the Gilgandra recruits’ march will terminate at Sydney to-morrow, and that it has proved very successful, having started with twentyfive recruits and finishing with 300 ? Is it the intention of the War Committee to extend this form of recruiting throughout the Commonwealth?

Senator PEARCE:
ALP

– So far as that particular method of stimulating recruiting is concerned, the War Committee will leave it to the recruiting committees of the State War Councils in different States, believing that they, being on the spot, are best able to judge as to the best means of securing the desired results.

page 7421

PAPERS

The following papers were presented: -

Statement by the Prime Minister relating to the Scheme agreed upon by the Representatives of the Commonwealth and the States for dealing with the new Wheat Crop.

Ordered to be printed.

Defence Act 1903-1015. - Regulations amended, &c. - Statutory Rules 1915, Nos. 200, 208, 200, 210, 211, and 212.

Northern Territory. - Report of the Administrator for 1914.

page 7421

WAR LOAN BILL (No. 3)

Second Reading

Senator RUSSELL:
Assistant Minister · Victoria · ALP

– In moving -

That this Bill be now read a second time,

I need only draw attention to the fact that on 12th August last Mr. Fisher submitted a financial statement with which I feel sure all honorable senators are familiar. Since then there has not been any great change in our financial position. ‘ That statement to which I refer showed that we had received from the British Government £24,500,000, and I understand there is still about £1,900,000 to come at the end of this month. We have also borrowed a little in excess of £13,000,000 in Australia, and there is still £23,000,000 to be found to enable the Commonwealth to meet its liabilities up to the end of the financial year. The Estimates submitted in August proved to be approximately correct, with, perhaps, the exception of the Defence Department, which spent more than was anticipated. The expenditure in this Department may be compared to a snowball, which grows as it rolls along.

Senator Bakhap:

– Is that amount estimated to be sufficient to finance the expenditure to the end of June, 1916 ?

Senator RUSSELL:

– Yes; and that estimate still stands good in the opinion of the Treasurer. We have decided to endeavour, as far as possible, to meet this £23,000,000 in Australia by loan. We are asking under this Bill for authority to raise £18,000,000, and under the previous Act we still have authority to raise another £6,750,000, making a total of £24,750,000 which we can raise to cover our full financial liabilities up to June next. The best advice available is to the effect that it will be possible to raise £10,000,000 within Australia early next year, and so we propose asking, not for the full £18,000,000 at, once, but for £10,000,000 on extended instalment payments up till about May, with power, as in the last case, to accept any amount offered in excess. We recognise that, with our limited market, it is not advisable to ask the people of the Commonwealth to give the whole of the money in a lump sum. The other way enables some of the money to be put in circulation again through the expenditure of the Defence Department, thus avoiding any sudden dislocation of trade and commerce. The loan is based on the same principles as the last, and the conditions are practically the same. The Commonwealth Bank will act as our agents-, a commission of.”¼ per cent. will be allowed to recognised stockbrokers, the banks will help us to float the loan without fee or charge-, and: no exchange will be charged on payments made in connexion with the loan, but in that regard we have made one- slight alteration. Under the previous Act, scrip or stock could be taken up in any part of Australia, and the instalments could be paid into any branch of the Commonwealth Bank and transmitted direct to the1 Treasury, Melbourne, without exchange. In future the instalments will have to be paid in the State in. which the application, is made - an alteration which, has been found absolutely necessary for business reasons. Inscribed stock and bonds will be interchangeable as under the first Act, and the denominations will run from £10 in the case of bonds in multiples- of ten, and from £100 in the case of- stock in multiples of £100. The exact periods for. the payment of instalments have not yet been fixed, because in that matter we shall have to be guided by the condition of the money market, and the way the crops come in and are forwarded to the world’s markets. We have to meet £74’,000,000’ this financial year, and our proposals will enable- the- Commonwealth’ to- meet’ all its financial obligations up- to 30th June next.

Senator Stewart:

– What will your total debt be then ?;

Senator RUSSELL:

– I can give the amount approximately;- but there is always’ a dispute as to whether the note issue ‘and- the money obtained from the banks should be- included as part of the public debt.

Senator Stewart:

– It has to be paid.

Senator RUSSELL:

– Undoubtedly ; but it is not a pressing liability, and other arrangements not yet thought of may quite possibly be made later to meet it. The total debt of the Commonwealth is as follows : - Commonwealth inscribed’ stock purchased by the Treasurer out of Trust Funds, £4 580,000; Commonwealth inscribed stock and bonds-, £13,389’,440 ; Commonwealth Treasurybills £2.964,552 ; loans from, the British Government, £21,15-7,894. I need! hardly draw attention to- the fact that this last liability is- set off by the loans which we have granted to the States’.

We have further to include in our indebtedness the balance, of the Northern Territory loan taken over from South Australia, £3,026,615, and the balance on the Port. Augusta railway, £.1,916,63.6.. These figures, give a. total of. £47,035,139-, and are exclusive of the note issue and of the £l0,000,000’ we received’ from the banks. We have to add an amount of £10,777,161 in respect of the properties transferred from- the States to the Commonwealth, bringing’ our total indebtedness up to- £57,81-2,301. There can be no. doubt that the. total note-issue is a debt, but the amount it represents will not all have to be redeemed as a debt, because there will’ always be a certain proportion of: our notes in circulation,. The total note issue represents £43,000,000.

Senator ALBERT GOULD:
NEW SOUTH WALES · FT; ANTI-SOC from 1910; LP from 1913

– That includes notes to the value of £10,000.000 issued to the banks.

Senator RUSSELL:

– As against the total, note issue we have- £10;000,000 in gold received, from the banks.

Senator Stewart:

– We- have £14,000,000 in gold.

Senator RUSSELL:

– I am speaking of the. £10,000,000 in gold received, from the banks.

Senator Millen:

– What is the total gold reserve to-day against our note issue?

Senator RUSSELL:

– It is about £16,000’,000. If honorable senators will deduct the £10,000,000 in notes issued’ to the banks from the. total note issue of £.43, 000’, 000’, they will discover, our liar bility on this account. We are not liable at the same time for the £10,000,000 in notes issued to the banks, and the £10,000,000 in gold received from the banks in exchange for those, notes, since the. one amount balances the other.

Senator Lt Colonel Sir Albert Gould:

-The £10,000,000 in gold received from the banks is included, in the gold reserve of £16,000,000?

Senator RUSSELL:

– Yes. We have, apart, from the transaction with the banks, notes in- circulation to the value of £33,000,000, less £6,000,000 in gold. This leaves us with a clear liability in respect of our note issue of £27,000,000. Against this liability, of course., we have the best gild-edged securities in the world in the shape of Commonwealth inscribed stock and State and other securities in Australia.. Summing- up the whole matter, the position may be regarded as fairly satisfactory. The Government have at all times .been .generously accorded the best financial advice .to be obtained in Australia in connexion with their financial propositions. The banks have .given evidence of .-a genuine desire to generously co-operate with the Commonwealth Go- vernment, .and help the Commonwealth through its difficulties. There has never at any time been anything wanting on their part, or any failure to generously give to the Commonwealth Government the fullest .possible financial information. We are to-day taking steps to meet our obligations to -the end of the .financial year. On the best advice we can obtain, there will .be no .difficulty in .doing .so, I ask the Senate by passing .this measure to .give us the necessary authority to continue to -carry >on the Empire work in which we ‘are ‘at present engaged.

Senator MILLEN:
New ‘South Wales

– Honorable senators mill have heard with pleasure, and will probably indorse the statement tff the Assistant Minister, that there will be no difficulty about financing the ‘Commonwealth for the present financial .year. I am not aware ‘that any one lias expressed doubt as to our capacity to do that, but the figures to which w.e .have just listened, and the facts within our own knowledge, -must bring it home to us that our hour .of -difficulty will not occur in this financial year, but during the period which will follow., , ano more particularly if the war .should ‘still continue to be raging. In dealing with this Bill, it is not necessary that we should -consider the particular -terms of the measure. It is to all intents ‘and purposes an extension of a similar Bill which we .passed two months ago., and will have the sam e effect as if we had been asked to alter the amount provided for by that measure from £20,000,000 to £38,000,000. One or two things were, however, said by the Minister to which ;some attention should be directed. I am .sure we were all .glad to hear the very .frank acknowledgment of .the assistance rendered by the banks of Australia. We all appreciate that. We .recognise that that assistance has been offered in .the -true spirit which should animate individuals and corporations at the (present .time. We can appreciate the Assistant Minister’s references to the matter more .particularly -because there has been a .tendency - which is happily -becoming less pronounced as facts -axe -revealed by ici-r- cumstances - to ‘denounce these corporations in terms which are not ‘complimentary to them. 1 appreciate, as I think -the public will do, the ‘very fair recognition by the .Assistant Minister .as to ‘the par* played by the banks in connexion with the financing of the present war.

Senator Gardiner:

– The banks also appreciate the ‘part played by the Government towards them.

Senator MILLEN:

– I am not aware that the banks have ever denounced the Government as some supporters of the Government have denounced the banks.

Senator Russell:

– I think there is a general recognition that we are “ all in it together.”

Senator MILLEN:

– That is so, and I merely say that I welcome the declaration of the Minister on the point for the reasons .1 have given- One “thing which the remarks of the Minister .bring home to us very clearly is that it is -only now that Australia is .commencing to shoulder ite financial responsibilities in regard to the war. Up to the present the great -bulk of the expenditure upon military .preparations has been defrayed :from money .received through the Imperial Government. Even now we have yet to receive a balance of about £2,000,000 of the English loan. Only -a very small proportion of the .amount received from the loan which we have ourselves floated in Australia has so far been spent. Practically up to the present time we have been depending for military expenditure upon money obtained through the Imperial authorities. The Minister -has made it quite clear that we have now reached the time when Australia is called upon to meet her financial obligations out of the proceeds of ner own loans or taxation. The financial position will consequently become one of increasing gravity to the people of this country. It brings home to us a little more directly that the financial position cannot be too seriously or too “frequently considered. In dealing with this -aspect of the case, .1 should like to obtain an explanation of what appears to be .something in the -nature -of a contradiction that is involved in two of -the statements which the Assistant Minister has made. In the .first place, he referred to our military expenditure as .partaking of something of the ^character -of a snowhall, which was increasing in volume as it ^progressed. .That .remark .suggests that our military -expenditure is steadily mounting. I confess that I experience a difficulty in reconciling that statement with the honorable gentleman’s further announcement that the estimate of our expenditure presented to Parliament some few months ago is being supported, and stands good to-day.

Senator Russell:

– But the British Government are undertaking certain works for us at the front, for the carrying out of which we are liable, though the bill is not yet to hand.

Senator MILLEN:

– If the estimate submitted to Parliament in August last stands good to-day, it seems to me that when the Assistant Minister declared that our military expenditure resembles a snowball, he was speaking metaphorically.

Senator Russell:

– Before half the present financial year has expired we shall have to meet the bill.

Senator MILLEN:

– Then the estimate did take note of, and allow for, the snowball character of our expenditure.

Senator Russell:

– Yes.

Senator MILLEN:

– The Assistant Minister also referred to the possibility of some arrangement being made with those who are interested in our note issue. That statement appears to suggest that it is proposed to alter either the present basis of our note issue, or the arrangement already existing between the Government and the banks in respect of that portion of our note issue which the banks have taken up. If there is any such alteration in contemplation it would not be out of place if the honorable gentleman informed us of the fact.

Senator Russell:

– There is not.

Senator MILLEN:

– If the Assistant Minister was merely speaking speculatively, his announcement may be allowed to pass without further comment. But if there is in contemplation a material alteration either of the present basis of our note issue, or of the arrangement which now exists between the Government and the banks, he might go a little further, and inform us on the point.

Senator Russell:

– The matter has not been discussed.

Senator MILLEN:

– I thought that possibly the Assistant Minister’s announcement contained a suggestion of some movement in the direction I have indicated. I wish, now, to say a word or two in respect of our note issue. Everybody recognises that within certain limits a note issue is perfectly safe. But there is a tremendous danger in a note issue which is inflated to an undue extent. After having listened to the figures presented by the Assistant Minister, I can see either that we shall be brought face to face with something little short of a crisis, or some other arrangement will have to be made with the banks. The honorable gentleman has told us that by the end of the current financial year notes to the value of £46.000,000 will have been issued by the Treasury. Against that issue we shall have a gold reserve of £16,000,000. But included in that gold reserve is the £10,000,000 which the Commonwealth will have to repay to the banks in redemption of the £10.000,000 worth of notes which they have taken up. When the banks undertook to advance the Commonwealth £10,000,000 in gold, it was understood that those notes were not to be presented for payment until after the termination of the war. That means that the banks will be free to present them upon the conclusion of the war.

Senator Russell:

– Forty-six million pounds will represent the maximum note issue at the end of the present financial year.

Senator MILLEN:

– According to the printed report of the Treasurer’s speech, it is anticipated that bv the 30th June next the note issue will have been expanded to £46,000.000, against which £16,000,000 in gold will be held by the Treasury.

Senator ALBERT GOULD:
NEW SOUTH WALES · FT; ANTI-SOC from 1910; LP from 1913

-Colonel Sir Albert Gould. -But there are still £2,000,000 or £3,000,000. in gold to be received from the banks.

Senator Russell:

– The gold reserve on the 30th June next is estimated at £16,800,000.

Senator MILLEN:

– That sum includes the gold which the banks have yet to hand over to the Treasury. It has always, been understood - and the statement has never been contradicted - that the arrangement between the banks and the Commonwealth in respect of the advance made by the banks will terminate on the conclusion of the war. I do not say that five minutes after the termination of the war, but within some reasonable period, the Government will be called upon to pay to the banks £10,000,000 in gold in redemption of the notes which are now held by those institutions. If that be so, as on the 30th

June next we shall have in the Treasury only £16,000,000 in gold, it is obvious that after the advance by the banks has been repaid, the gold reserve will be reduced to £6,000,000, against a note issue of £36,000,000.

Senator Russell:

– The banks will give us time in which to make some reasonable arrangement.

Senator MILLEN:

– I have already said that I do not assume that five minutes after the declaration of peace the representatives of the banks will be sitting on the Treasury door-step. Their past conduct justifies the belief that they are as keenly anxious as is any section of the community to help the Government. But within some reasonable period after the cessation of hostilities the banks will be in a position to ask the Government to redeem their pledge. When they do so, the gold reserve in the Treasury will be reduced to £6,000,000, against a note issue of £36,000,000. It is quite clear that that position is an intolerable one.

Senator Gardiner:

– As the banks get their gold, that gold will take the place of the notes which are now in circulation.

Senator MILLEN:

– My honorable friend has no guarantee of that. It may be that the demand for gold elsewhere will cause the banks to export it. But until we know the circumstances with which the banks will then be confronted, it would be idle to speculate as to what may happen. It seems to me, however, that even now the state of affairs which will then prevail calls for serious consideration. The possibility of the Commonwealth being confronted with £36,000,000 worth of I.O.U’.s, and having only £6,000,000 in gold with which to meet them, needs only to be stated to show that it is calculated to create a very serious difficulty, unless we take steps in advance to provide for it. Even now it is not too early for those who are charged with the conduct of our financial affairs to be considering the why and the wherefore of this problem, and the course of conduct which they are then likely to adopt, for to me it seems the keystone of our financial arch. If anything goes wrong with the note issue; if anything inthe nature of uncertainty sets in; if in the slightest degree there is a depreciation in the value of the notes in passing from hand to hand, it will mark the downfall of the whole financial structure in Australia, and no one, I am sure, wants that to come about. That is all I propose to say_ on this measure. Its principles having been discussed on an earlier occasion and discussed also with the knowledge that, although we had approved of the issue of authority to borrow £20,000,000, it would have to be supplemented by other drafts on the public. This Bill is one of those drafts. Although I recognise that every additional loan we ask from the public is likely to make it perhaps a little more difficult to obtain an increased amount, still I express the hope that the response to this application will be not only as encouraging as the response to the last application, but even better.

Senator Lt.-Colonel Sir ALBERT GOULD (New South Wales) [3.52].- I desire to call the attention of honorable senators to the position which th© Government ‘occupy, particularly in regard to the banks. Not only did the banks agree to lend £10,000,000 to the Commonwealth in exchange for their notes, but the proposal which the Government have in hand for financing the harvest will involve a further demand on the banks to the amount of about £14,000,000. It is imperative upon the Government to provide the money for the farmers on the basis of the payment of 3s. per bushel for the wheat, instead of leaving them to make their own arrangements as previously, with the buyers or the banks. I recognise that the times are by no means normal, and that although there are many matters which we would feel inclined to condemn very strongly in ordinary times, we can afford to suspend our judgment for the time being, trusting that, having -got the opportunity of taking counsel, the Government will be advised by the leading financiers in a way which will be marked with success. I trust that whatever advice the Government may receive from that quarter they will accept with confidence. It has to be borne in mind that, although the Treasury has issued notes to the value of £46,000,000, not more than £12,000,000 worth of the notes are in circulation amongst the people. The normal circulation is, I understand, £11,000.000 or £12,000,000, leaving £34,000,000 of notes in the banks. These notes cannot be sent to any place out of Australia in lieu of coin. If the banks have in their possession £36,000,000 worth of notes which have takenthe place >of gold, it cuts down the borrowing resources of the country.

Senator Russell:

– I think that the notes are used a good deal for exchange purposes.

Senator Lt Colonel Sir ALBERT GOULD:

– The banks have to keep certain moneys available in the bank pool, but exchanges are now made by means of the large Australian notes. These notes are taking the place of the gold which used to be in the coffers of Che banks, or if not there, which had been advanced to men engaged in industrial occupations ; and mercantile pursuits. The invariable experience has been . that where gold is not the medium of ‘exchange it gets away from the . country, and goes where it is demanded, so that ultimately there is not only a depreciated currency, but the prices of commodities are found to be very -much higher. There have been laid down one or two rulesor laws which have been verifiedby experience in countries relying ona paper currency instead of on a gold standard. The Government should always realize that the men carrying on the industries of this country must be in a position to obtain money at reasonable rates, and by that means give employment and insure prosperity to the country. We are pledged to carry . on the war . to the fullest extent of our power, even to the exclusion of everything which might be consideredof great interest to the people of this country. But we do not want to placeourselves insuch a position that the Government will be compelledto abandon everything except the prosecution of thewar . It is known that the States need large sums, and . are appealing to the Commonwealth Government to finance them. . If the Commonwealth is going to finance the States to the extent of . £8,000,000or £10,000,000 -during the present year, how is -the money to be raised ? Our expenditure for this year is set . down at £74,000,000, . and the ordinary . income . at about £26,000,000, showing . a deficit of from . £.48,000,000 to £50,000,000. This . deficit wehaveto provide for by loans. If we have to add to . our debt £10.000,000 in order to finance . the States - for they cannot raisethe money at Home - it will . place . an additional . burden on theCommonwealth. -It is wellknown that -our expenditure -has been increasing by leaps -and hounds. Accord ing tothe statistics, during . the last few years it has increased by nearly 100 per cent., while the population has increased by only 14 per cent. In 1905 the public indebtedness -of the States was £230,000,000, and in 1914 it had increased to £317,000,000, while theordinary -expenditure of the States had increased enormously within the last five years. We are almost approaching an orgy of extravagance, but the Government have not yet endeavoured to stop the annual increase. In the present year the increase in expenditure -ofthe Commonwealth for ordinary purposes will amount to about £3,000,0.00.

Senator Grant:

– Where do you suggest that retrenchment should commence?

Senator Lt Colonel Sir ALBERT GOULD:

– Everybody asks that question. The men in the Treasury know where a beginningcould be made better than do honorable senators, seeing that they possess an inner knowledge of the wholebusiness. It is our duty to point out what we think is an undue and inflated expenditure, ‘and then -‘an obligation lies on the Government to see in -what direction they can reduce expenditure. Certainly “we should not increase the expenditure. Large numbers of men have been withdrawn from Government employment to go to the war. Why should it benecessary toput other men in (their places? Whyshould not the Government allow matters to be carried on with the reduced numbers? I do not know the number of men in the Public Service, but suppose thatthe number is 10,000, and that 500 are withdrawn for . another purpose. W’hy should500 men be put in their places ? Why not realize that these menhave . other work todo ? When we come to consider the requirements of the country generally, we -find that a bountiful harvest must demand . a large amount of labour. It should not be regarded as a duty -of the ‘Government to -mop up ; all the men inthe country., -to the detriment of private industries. It seemstome at timesthat honorable senators are obsessed with the idea that the oneand great object to be attained is to find . a Goverrament billet for -every man, and, as such -a billet is generally looked -upon as considerably . easier thanprivate employment, nearly -everybody naturally wants -to secure : an appointment to . the Public . Service. -At this particular time the Government : ought to try to conserve the money of the taxpayers, and to draw upon them as little as possible, always bearing in mind that the- more- money there is available for general purposes, the more opportunities will there be for the development of the country by the individuals who are not in Government billets. I am aware that the- Government are confronted with a very hard task. The desire of the Opposition is to- warn Ministers to be careful, and to observe every possible economy in carrying, out their duties to the country. It is all very well to be able to borrow and spend money, but the day of reckoning will come round eventually, and then the Government will have. to. face a difficult position, and perhaps cause muchhardship to. the people. Senator- Millen has pointed out that the agreement made with the- banks is that as. soon as the- war is over the Treasurer- shall repay 10.000,000 sovereigns! for the notes they hold. It is: very evident that when the war is over he will have to tell the banks that they must defer their demand for the repayment of their gold, and then the banks; will ask, “ Are we to issue the notes throughout the country to individuals- who- will have the- right to present them at the Treasury, and demand gold in’ exchange?” The banks may not do it.. They are just as much interested in the success of this war and the prosperity of this country as every individual is.

Senator Russell:

– It does not neces- sarly follow, because we will have a period of twelve months after the war to repay the advances to the banks..

Senator Lt Colonel Sir ALBERT GOULD:

– But that will be a very short time in which to raise £10,000,000 to pay one debt. I have no doubt, however, that the spirit which the banks have shown- hitherto, and which, I believe, commercial enterprises have also shown in this crisis, will be observed to the very end. But I do not wish anything- to be done to the detriment of the people who are endeavouring- to- promote the industries of this country generally. While it is very- desirable to have plenty of employment, in a, time of trouble and difficulty we must conserve our resources, so that by practising economies- in our public services, as- well- as in our private affairs, we may be in a oosition to face any emergency that may arise within the next two- or three years. We have to look ahead. We must not imagine that, because- we- have plenty of> money to-day, our- resources are inexhaustible, for however wealthy this country may be, its resources in. the- way of obtaining ready money from the- people are not absolutely inexhaustible. The position occupied by Great Britain accentuates this truth. Hitherto, we have regarded Great Britain as, the country from which we may borrow money for all’ bur needs, but quite lately the Government of the Mother Country appealed to the various States not to ask them for money for public works just at present; moreover, they have themselves’ found it advisable to raise a loan in- America.

Senator Mullan:

– Not because they were short of cash. That loan was negotiated to- balance Great Britain’s exchanges.

Senator Lt Colonel Sir ALBERT GOULD:

.- That may be- so, but the fact remains- that Great Britain is taking- precautions to maintain her financial position-, and to meet the cost of the- war, which, it is- now estimated, is over £4,000,000 a day. So far as- we can- judge-, there is- nothing in sight to justify us in- believing- that our war expenditure will be reduced at an early date. On the- other hand, it will probably be» increased. Great Britain has a limited population, something like 45,000,000 people,, and; they are largely financing the- Allies- in. connexion with this wax. The Mother Country has practically told the Commonwealth that she cannot, and will not. finance expenditure for public works at present, and that the most she can do is to- assist us in financing our war expenditure. Therefore, if we say to the States that the Commonwealth will finance them in their ordinary expenditure on public works with money which we are obtaining- from the Imperial Government for war purposes^ we will be committing a fraud, upon the Mother Country.

Senator Senior:

– Is there not a material difference- in money circulated; in the States and money expended in countries outside the States?

Senator Lt Colonel Sir ALBERT GOULD:

– I hardly follow the honorable senator’s interjection. We are committed to a very large expenditure, estimated by the Government at £50,000,000 for the twelve months, and ifthe war continues for another year, that will probably mean another £50,000,000 at least. In fact, I fear we shall have to provide a very much larger sum as our share of the burden.

Senator Senior:

– But there will not be a drain on our finances from outside Australia.

Senator Lt Colonel Sir ALBERT GOULD:

– Possibly not, but there will be a drain on our finances nevertheless, and we shall have to meet it whether the money is spent here or outside Australia. Every war involves enormous expenditure, and if we win, what shall we have to show for it? We shall be able to say, of course, that we have defeated a wicked foe that desired to reduce us practically to a position of slavery, and that we have managed to preserve our liberty and the liberty of other nations. In some respects, it is not a very tangible asset, and yet it is, because, while we may not be able to show an actual return for our expenditure, we shall nevertheless be in a position to work out our destinies according to our own ideas. I would urge, however, that the greatest care be exercised in regard to the whole of our expenditure, so that at the expiration of this war our resources will have been so conserved that we shall be able to face the situation much more confidently than otherwise would be the case.

Senator STEWART:
Queensland

– There is one aspect of the matter before us which I think deserves a great deal more attention than it has received, or indeed is likely to receive. On all hands, we hear a wailing in regard to the amount of debt which we are unfortunately compelled to pile up at the present time, and I agree that it is exceedingly unfortunate that we should be placed in that position. But we must either raise money to fight the enemy, or abandon the war, and I do not suppose any one will advise the latter. I certainly do not. But I view with dismay, not only the rapidly amounting debt, but the huge accumulation of interest which will have to be paid upon that debt, and I ask myself : Is it right the people of Australia should be saddled with interest upon money borrowed from a certain section of the people for the defence of Australia’s property and their property? I know I am advancing an idea which has not yet been mooted, I believe, in financialcircles.

Senator Bakhap:

– You threshed this question out pretty well the last time we had a Loan Bill.

Senator STEWART:

– It has always been the custom to raise money from the capitalist for the purpose of carrying on war, and to pay him the interest demanded upon that money. But we have overturned many old ideas in our time, and I think it is quite on the cards that we have in this old custom something which is not only wrong in itself, but which is opposed to the best interests of the community. Here is the position. In Australia, we have certain people who are lending money to the Government to defend their property, their lives, and their liberties; we also have men going to the front, sacrificing everything they possess, risking their lives, abandoning their occupations, and giving up all their prospects of advancement in civil life to defend the lives and liberties, as well as the property, of the people of Australia. If that is the case, if the young men of Australia are doing this, surely it is not asking too much if we suggest that the people who possess capital should advance money to the Government to carry on the war without pledging the Government to pay interest for that money in perpetuity ? This is a perfectly fair proposition to place before those people in Australia who have money to spare. The Government know who those people are, because a census of the possessions of the inhabitants of Australia was taken a very short time ago.

Senator Lt Colonel Sir Albert Gould:

– The honorable gentleman has not patented his proposal, I hope.

Senator STEWART:

– I do not know that I desire a patent for the idea, because it may not be original.

Senator Keating:

– The honorable senator, I presume, does not want to have a monopoly of it, either?

Senator STEWART:

– No. I realize that the more people talk about it the better it will be for the principle I am advocating. I am very serious on this question, because I believe it to be one of overwhelming importance to Australia. Our debt is on the border of £100,000,000, which will involve an annual payment of somewhere about £4,500,000 as interest, and if the war continues, as it may, for another year or two years, the debt will increase accordingly, and our interest bill will ad- vance all the time. This interest will be a severe tax on the people of this continent. I am not objecting to it because it will be severe; I am objecting to it on principle, and I say that the resources of Australia should be as available for its defence as are the flesh and blood of Australia. I say that just as the Government are inviting men to go to the front to fight, and it may be to die, for Australia, so the Government ought to invite the people who are possessed of wealth to place that wealth, or a percentage of it, to be fixed by the Government, at the disposal of the nation in this crisis of its history. The Government, through the war census, know the resources of every individual in the Commonwealth, and could, if necessary, call on each man to contribute an amount proportionate to his possessions. This would save the community the payment of a huge amount in interest. Not only so, but it is the duty of those who possess means to place them at the disposal of the nation.

Senator Millen:

– As , a loan?

Senator STEWART:

– I did not say as a gift.

Senator Turley:

– If they go to the front also, would you still call on them to contribute their wealth?

Senator STEWART:
QUEENSLAND · ALP

– Yes ; the life and possessions of every man in the Commonwealth ought to be at its disposal. If a man has only his life to offer, he can offer no more. If he has possessions in addition, he ought surely to be called upon to offer both if necessary.

Senator Turley:

– Then you are in favour of conscription ?

Senator STEWART:

– If necessary to the safety of the country, I favour the conscription of men and possessions. This Bill will impose on posterity a burden which it ought not to be asked to bear.

Senator Millen:

– Your proposal for a forced loan would still put the burden on posterity.

Senator STEWART:

– The principal would have to be repaid; but, in addition, we are imposing on the people now living, . and on their descendants, a burden of interest which they should not be asked to carry, for our resources should all be available to the Government without any interest. If my life and possessions are in danger, I cannot complain if I am called upon to give up all I have for the defence of the country, without payment of any kind. I am putting forward a new idea; but new ideas are spreading, and this one is well worth considering. I shall move in Committee an amendment on the lines I have indicated, although I have no hope of carrying it; but at least the seed will have been sown, and I hope that some day it will bear fruit. I believe that we shall very soon see the folly and injustice of paying huge interest on money borrowed from people to defend their own property. It is probably true that if we do not offer interest we shall not get the money; but if people will not come forward voluntarily, the Government, knowing each man’s possessions, should levy on him in proportion to what he possesses, on a graduated scale. A man owning £1,000,000 can afford to pay 10’, or even up to 50 per cent. of it, whereas a man owning £1,000 may feel a payment of 5 or 10 per cent. a burden.

Senator Bakhap:

– All wealth is not fluid.

Senator STEWART:

– A great proportion of our wealth is fluid, and, with the assistance of the Commonwealth Bank, a lot more could be made fluid. With careful management, the difficulty suggested by Senator Bakhap could be overcome.

Senator Turley:

– Would you make the minimum the same as the income tax ?

Senator STEWART:

– I cannot go into details. I have simply stated a broad principle.

Senator Senior:

– Of a property tax.

Senator STEWART:

– It is not a tax, but a temporary levy. When we want money to defend, not only the property, but the lives and liberties, of the people, they have no right to ask us for interest, and we have no right to pay it.

Senator Bakhap:

– What if, owing to the duration of the war and the drain on our resources, we are compelled to ask these people to defer the time of receiving back their principal?

Senator STEWART:

– What if we are not able to pay them their interest?

Senator Turley:

– Why not call it taxation straight out?

Senator STEWART:

– It is not taxation.

Senator Ready:

– Why not call it conscription of wealth?

Senator STEWART:

– I have already done so.

Senator Bakhap:

– Why not call it the robbery of the rich to relieve the necessities of the poor?

Senator Ready:

– Senator Bakhap, the warm conscriptionist, evidently does not believe in the conscription of wealth.

Senator STEWART:

– My proposal is certainly not robbery.

Senator FINDLEY:
Victoria

.- On the first Loan Bill, I said I believed in equality of sacrifice, but that there waa to be no equality of sacrifice on the part of those who would receive interest on the loan, as they would be in a far better position than thousands of their fellow citizens who were not able to advance money to the Government. But the Government, and the majority of both Houses, felt it necessary to offer special inducements to make the first loan a substantial success, and we were all pleased that it was successful. It is not to be expected, therefore, that the conditions of this loan will be any worse for investors than those of the first, and I am not at all satisfied that the present rate of interest will obtain for future war loans.

Senator Turley:

– Do you think it will be loss ?

Senator FINDLEY:

– Not by any means.

Senator Turley:

– Does the honorable senator think it will be less?

Senator FINDLEY:

– I do not, by any means. No one can foretell how long the war will last. Shortly after the outbreak of the war, men high in the financial world of this State, and whose opinions I value, really thought that it was impossible for the war to last for any length of time. They believed that the expenditure of human life and money would be such that the war must speedily be brought to an end. Being interested in a small matter at ‘ the time, I consulted a financial man who knew much more, I thought, than I was likely to do as to how affairs in the financial world would stand. He advised me not to do at the time what I proposed to do, because the war, in his opinion, would be over in at least two months from that date. That was six months ago.

Senator McDougall:

– Where was he - at Yarra Bend?

Senator FINDLEY:

– No; he occupies a very high position in the financial world in this State.

Senator Millen:

– That does not avoid Senator McDougall’s question.

Senator FINDLEY:

– Speaking seriously, the gentleman to whom I refer is as much mentally all there as is any hon orable member of the Senate, but he was very much astray in his forecast as to the duration of the war, as many other financial authorities have been.

Senator Millen:

– As regards the duration of the war, there have been no more hopeless prophets than the financial authorities.

Senator FINDLEY:

– The war has quite upset the opinions expressed by the financial experts of the world.

Senator Millen:

– Because they kept their eyes on the till, and did not read history.

Senator FINDLEY:

– Some people have not infrequently quoted these experts when the Labour party have had financial propositions to put before the people. They have been the guides, philosophers, and friends of our political opponents in all matters of finance, but, the world over, they have been widely astray in forecasting the duration of the war. No one can say how long it will last, but we can say, as a National Parliament, irrespective of party - because in regard to the war there is no such thing as party in Australia - that we are one in our determination to see the war through, no matter whether this is the second or the twenty-second loan that will have to be floated. When we talk of the flotation of money in order that we may play our part in the world’s struggle in which we are engaged, some honorable senators call attention to the expenditure that is going on in different directions. They say that we cannot hope to be in a stable condition unless something drastic in the way of retrenchment is attempted. A certain newspaper in this State, with a very large circulation, but whose opinions are as changeable as the weather we have been experiencing during the last five or six weeks, has recently been making suggestions, and telling the State and Federal Parliaments what ought to be done. It has said that reform should be effected here, there, and everywhere, and one of its pet reforms is to do away with the expenditure incurred in the printing of Hansard and other publications authorized by Parliament from time to time. Nothing would please this paper better than the stoppage of Hansard and the curtailment of publication of parliamentary papers and documents. Nothing would please me better than to see Hansard, as a publication, enlarged, im- proved, made more attractive, and embodying all the advertisements that are at present inserted in the newspapers that are clamouring on this occasion for the curtailment of Government expenditure in this direction.

Senator Turley:

– Would you have Hansard illustrated!

Senator FINDLEY:

– I am serious in regard to this matter. I am not going to outline a scheme now for the information of the honorable senator, but let honorable senators intrust me with the editorship of the publication, and I will show them what I would do with it. A number of people take the suggestion in regard to the stoppage of Hansard somewhat seriously.

The PRESIDENT:

– I ask the honorable senator not to pursue that matter at length, as it has not the remotest connexion with the Loan Bill.

Senator FINDLEY:

– Only thiB, sir, that you have permitted the discussion to take a somewhat wide range. When I was in the chamber a moment or two ago I heard Senator Gould call attention to the expenditure that is going on in the various States. He emphasized his point of view that the Commonwealth should exercise caution, because if public expenditure was continued in the States, we should have further appeals to the Commonwealth on their behalf for assistance by way of loans. The honorable senator was not stopped in the course of his remarks, but if you say that I was out of order in what I was saying I shall not continue to refer to the matter.

The PRESIDENT:

– I did not say that the honorable senator should not refer to the matter with which he was dealing, but I asked him not to make an extended reference to it, because it has no bearing upon the subject-matter of the Bill.

Senator FINDLEY:

– I was going to make an extended reference to many other things which have been said and unsaid by the A ne newspaper in respect to public expenditure, and proposed to link those references up with the subjectmatter of the Bill.

The PRESIDENT:

– The honorable senator will not lose his opportunity to say what he desired to say because of my ruling. He will have other opportunities to refer to those matters before the sitting closes.

Senator FINDLEY:

– I am aware that I can talk about all things in heaven and earth on the Supply Bill, but I thought I was in order in speaking as I was speaking on this Bill. I may later on say what I intended to say on the Supply Bill. In connexion with this Bill, I again express my regret that the rate of interest, as agreed upon in the first War Loan Bill, was so high. That means, I presume, that the same rates and conditions will have to be observed in connexion with this new war loan, and later on. if further loans are found to be necessary, it may be that we shall have to face a rate of interest in excess of that now being paid.

Senator O’KEEFE:
Tasmania

– I support the Bill because it is absolutely necessary that the Commonwealth should have this money to meet the expenditure incurred because of the war. Though we may hope that it will not be so, it is very probable that we shall require a great deal more loan money before the war is over. We have to incur heavy expenditure, not only for the carrying on of the war, but for the ordinary development of Australia, and the carrying on of the ordinary annual services of the Commonwealth. It is difficult to separate expenditure due solely to the war from other expenditure which must be incurred, and which but for the expenditure due to the war might be met out of current revenue. There is one large source of expenditure which will have to be faced, to finance a proposal to which I may be permitted to make a passing reference, as I shall be unable to be present when the Supply Bill is being discussed. One of the greatest and most statesman-like schemes that has ever been evolved from the brain or brains of any man or men in charge of the affairs of Australia has just been brought to fruition. I refer to the great scheme by which the wheat-growers of Australia are to be financed while their wheat is awaiting exportation because of unavoidable delay in transport due to the shortage of freight. The carrying out of this scheme will involve the expenditure of a large amount of money which might be provided for from the ordinary annual revenue but for the expenditure which is due to the war. Great as the scheme to which I refer is, it does not, in my opinion, go far enough. Every one must recognise the enormous benefits which are likely to accrue from it to the poorer class of wheat producers in Australia, but there is another class of producers who will be placed in just as unfortunate a. position, owing to the shortage of shipping space, as the wheat-growers are likely to be. I refer to the fruit-growers of. Australia.

Senator Findley:

– What has this to do’ with the Bill ?

Senator O’KEEFE:

-I asked leave to make a passing reference to the matter, as I shall be unable to discuss it. on the1 Supply Bill.

The PRESIDENT:

– I ask the honorable senator to make no further reference to the matter:

Senator O’KEEFE:

– I recognise, sir, that you have allowed- me a good deal of latitude which I have taken advantage of only because I shall not be present when the Supply Bill is being debated. In reply to a question- which I had on thenotice-paper to-day, I. was informed’ that this matter, so seriously affecting the fruit-growers of Australia, will receive consideration from the Government, and I. hope that their consideration of it will be prompt. I hope that the fruitgrowers of Australia - will be accordedsimilar treatment to that which has been meted out to our wheat-growers. If one? section, of our producers is deserving of prompt consideration owing- to a shortage of shipping freights, the- section which- I have indicated is equally deserving of similar’ consideration.

Senator Lt Colonel Sir Albert Gould:

– And why not our wool-growers?

Senator O’KEEFE:

– Our wool-growers scarcely occupy the- same position, inasmuch as their product does not suffer from any lack of storage. Our fruitgrowers must secure a certain shipping space within a limited period, otherwise that space would be of no use to- them. If they do- not receive consideration from the Commonwealth at the present juncture they are likely to be placed at the mercy of a band of speculators. In making these remarks I recognise that I have travelled somewhat outside the scope of the Bill, but I have done so- because I shall not have another opportunity of referring- to this matter before the adjournment of Parliament. In regard to the measure itself, whilst we may, equally with Senator Stewart, view with dismay the rapidly mounting public indebtedness of Australia, what can we do in the circumstances? We must have the money we require to finance the war.

Senator Turley:

– Senator Stewart says that we should take- it from the capitalists without paying them interest for it.

Senator O’KEEFE:

– I do- not subscribe) to that doctrine. Probably Senator Stewart would be’ one of the first to cry out, if it- were put into operation. We must get the money we- require to prosecutethe was to a successful conclusion, and it seems: to me that there1, is only one. way of. getting: it. I admit that there is- a great deal in the argument which has been- advanced, that our- wealthy mem might have exhibited a. little more patriotism than they have done by accepting a- lower rate of interest than, the Commonwealth is being, obliged to pay upon its war loans. They ought tohave been prepared to accept the normal rate of interest - that is, the rate that would have prevailed) had there been no war raging.. I think that the: Commonwealth, is probably paying from½ per cent. to- 1 per cent., more for the loans it is floatingthan it would have been required to pay in ordinary circumstances.

Senator Bakhap:

– But it is not paying nearly as much as Great Britain an France have had to. pay in America.

Senator O’KEEFE:

– That circumstance cannot obscure- the fact that our moneyed’ magnates would have exhibited more- patriotism if they had exacted a lower rate of interest from the Commonwealth. Of course, the proposal that they should be asked to finance the war free of interest is an absurd one. I hope that this will be the last War Loan Bill which will be submitted for our consideration, but, should the European conflict continue, I shall’ be obliged to extend my whole-hearted support to any similar measure which may be presented in the-‘ future.

Senator FERRICKS:
Queensland

– I would have- much- preferred the exact rate of interest that will be payable under this Bill to have been- set out in express terms. In other words, I would have liked it to include- all the collateral concessions which are being made under it. Subscribers to this loan will, for example, be exempt from the payment of both Federal and State income tax, under an arrangement made between- the late Treasurer and the Premiers of the States. These concessions make the interest that will really be payable under the Bill, not 4½ per cent., as is stated, but 5 per cent. It would have been much better had the

Government fixed a rate of interest which would have excluded the. granting of any such concessions. During the. course of this debate something has been said in reference to the rise in the price- of money. I do not think I am overstating the position when I say that a couple of years ago the normal price of money was 3½ per cent;. Then it gradually increased until it reached 3¾ per cent. Under this Bill’, the rate of interest will, in reality, be slightly in excess of 5 per cent. Consequently there has been a jump of 1½ per cent- from the normal rate of a couple of years ago, and of per cent. from the more recent normal rate.

Senator Turley:

– Before the outbreak of war the rate was 4 per cent.

Senator FERRICKS:

– But the price of money thenwas dictated by the fact that preparations for war were being made all over the world. The jump from the normal rate of interest of a couple of years ago represents an increase in the price of money of 42 6-7ths per cent. That is the amount by which the moneylenders have increased their rate in the course of a few years. Since the outbreak of the war they have advanced the interest charge for the loan of their capital from 3¾ per cent. to 5 per cent - a jump of 33 per cent. In other words, those who possess the capital of Australia, in conjunction with their international trust ramifications throughout the civilized world, have gone on strike, and have increased the price of their commodity by 33 per cent. For their action in so doing they are termed patriots and martyrs. Yesterday a colleague asked me- whether a man in receipt of 10s. per day, who had an opportunity of securing 12s. per day, was not justified in hanging out for the larger rate. I was compelled to admit that he was. But, as I then pointed out, the difference between the two cases is. that a man who insisted upon receiving the higher rate would, in the event of a strike, be described as a seditionist,. whereas the individual who jumps up the. price of money in a period of national emergency is designated a patriot.

Senator Bakhap:

– The moneyraised for war purposes was offered1 to the Government on their own terms.

Senator FERRICKS:

– That is what I am complaining about. When the previous War Loan Bill was under con sideration in this chamber I expressed my disapproval of the action of the late Prime Minister in gathering about him the so-called financial experts of Australia, and soliciting their advice. These gentlemen launched their proposals–

Senator Stewart:

– He asked them what they would advise, and naturally they advised him to do that which suited themselves best.

Senator FERRICKS:

– Exactly. They were in a position to do so. The advance of 33 per cent. which they have made in the rate of interest since the outbreak of the war is a pretty substantial one. When it is stated that the banks have been most reasonable in their dealings withthe Commonwealth, we ought not to forget the reverse side of the picture. What would have happened if the banks had put up the price of money still higher, so that the Commonwealth would have been unable to do what it has done since the outbreak of the war? Upon whom would the responsibility have fallen? Most certainly upon the banking interests of Australia. If they had tied up money in that fashion-

Senator Bakhap:

– It is not as easy for the banks to tie up money as the honorable senator seems to think.

Senator FERRICKS:

– They have tied it up by advancing the interest rate for the purposes of our war loans from 3¾ per cent. to 5 per cent. During the course of this debate reference has been made to the action of the banks in advancing 10,000,000 sovereigns to the Commonwealth in return for an equivalent proportion of our note issue. For having done so, they have been greatly lauded in the press. The fact seems to have been entirely overlooked that the Associated Banks did not immediately hand over 10,000,000 sovereigns to the Treasury, but that they have provided that sum gradually as the issue of Commonwealth notes required it. I gathered from the statement made by the Assistant Minister this afternoon that most of the gold which the banks undertook to advance is now in the Treasury. But if those institutions, had not entered into some such arrangement, may I inquire who had the most to lose ? Was it the people in general, or the financial corporations themselves?

Senator Bakhap:

– Would not the people who have been employed by the State Governments in consequence of these financial operations, have lost something also ?

Senator FERRICKS:

– I think that we would have got the money elsewhere at that time. The Liberal party, and the honorable senator, repeatedly assailed the issue of the Australian notes.

Senator Bakhap:

– I have never said a single word against their issue.

Senator FERRICKS:

– I am pleased to hear that statement.

Senator Bakhap:

– On one occasion, you tried to twist one of my utterances here, and very improperly, indeed.

Senator FERRICKS:

-I can assure the honorable senator that the party with which he has been associated for years had railed against the issue of the Australian notes, and that is why I say that no special bowing down to the banks should be made for what they have done during the currency of the war. I protest against their jumping up the price of money by 33 per cent. during that period. They have gone on strike to that extent. They are making the people of Australia pay that percentage more for their money. When Mr. Justice Heydou was speaking at Sydney, the other day, about some men having gone on strike, he said that it made him doubt whether a free Constitution was a good thing when he saw men coming out on strike for higher wages during the currency of the war. I wonder if he says that a free Constitution should not be allowed to the money-lenders of the Commonwealth for having gone on strike to the extent they have done, as outlined in the conditions which will operate under this measure? In moving its second reading this afternoon, the Assistant Minister stated that the commission of¼ per cent. allowed on the last occasion to recognised brokers will be allowed again, while the Associated Banks aredoing the work for nothing. This is more in keeping with the spirit which should actuate the banks. I think that Mr. Fisher, or whoever was responsible for the first proposal, made a mistake.

Senator Russell:

– I might mention that the broker is just as keen as you or I are on the non-unionist.

Senator FERRICKS:

– The brokers, I know, have a very exclusive union. Having had some association with mining- fields, and a little contact with brokers, I am able to judge of them commercially, and, like everybody else, they are out for all they can get. I am not objecting to the brokers getting a commission, but to the action of the Government in allowing the system to operate in the previous Bill and repeating it in this measure. ‘ The Age of the 15th October contains an account of the annual meeting of the Melbourne Stock Exchange, under the presidency of Mr. W. J. Roberts. According to the report, nearly £4,000 had been raised directly through the Stock Exchange of ‘ Melbourne on behalf of (“he various patriotic appeals. The members - I do not know their number - showed their patriotism to the extent of directly being responsible for the contribution of £4,000 to the patriotic funds.

Senator Russell:

– It was not limited to that.

Senator FERRICKS:

– That is the statement in this report.

Senator Russell:

– I know of at least ten brokers who have gone to the front, and the Brigade which marched through our streets yesterday was led by a broker.

Senator FERRICKS:

– I am speaking about their cash contribution.

Senator Russell:

– There is more than cash connected with the war.

Senator FERRICKS:

-The Age says-

The report of the committee stated there had been a general feeling of confidence in the financial position, notwithstanding the war and the drought. The committee paid a tribute to those members who had gone to the front, and congratulated Colonel Tivey, D.S.O., V.D., who would leave in command of the 8th Infantry Brigade, probably in about a month. In all, twenty-seven sons of members of the institution had joined the Forces of the Empire. Altogether nearly £4,000 had been raised directly through the Stock Exchange of Melbourne on behalf of various patriotic appeals.

It now turns out that some members of the Exchange have sent sons to the front. I do not know that that is a credit which should be claimed solely for the brokers, but, even if it were, the fact remains that, after subscribing £4,000 to various patriotic funds, they were responsible for obtaining subscriptions to the last war loan to the amount of £2,250,000.

The chairman, in proposing the adoption of the report, paid a tribute to the gallantry of the Australians at Gallipoli, and all the soldiers of the Empire. More especialy did he desire to join in the universal admiration of the magnificent work of the Navy in keeping our shores inviolate and the seas of the world free for our commerce. (Cheers.)

The chairman, continuing, referred to the splendid success of the Commonwealth war loan. Members of the Exchange were directly instrumental in obtaining applications for over £2,250,000 of this issue.

It will be found, I think, that the commission they received for obtaining that sum amounted to £5,625. The ‘position then is that members of the Exchange subscribed £4,000 to the patriotic fund, and within two months got back £5,625 for their money. That is the extent of their patriotism. In my opinion, the Government are making a mistake in allowing a commission to the members of the Stock Exchange. If the brokers were not prepared to render any services without payment their assistance was not needed when the banks had undertaken to transact the business for the Commonwealth. It was almost apparent - the assumption, anyhow, is a most reasonable one - that these gentlemen were in the happy position of being able to get friends who intended to subscribe to the war loan to do the business through the instrumentality of the Stock Exchange. Is it not quite reasonable to assume that a broker would say to a friend, “You might as well put the business through my office, as we will get a commission of % per cent.”? When a man in the street gives 5s. to a patriotic fund he does not get back, within a month or so, 7s. for his contribution. If he is called a hero for giving the money the same publicity is, not given to his act as is given to the act of the men who were directly instrumental in obtaining subscriptions to the war loan. The principle of the commission to the brokers is wrong, and I sincerely trust that the Government will consider that aspect. If the Assistant Minister can show me a justification for their attitude I shall be very pleased to hear what it is. There may, of course, be a justification. It certainly was not stated in the honorable senator’s secondreading speech on the last occasion, nor was it given this afternoon in his more restricted speech. If there is a reason foi giving the commission to the members of stock exchanges - for making a present of £5,000 in one case - not only the Senate, but the people outside, who are doing so much for the prosecution of the war, ought to be told what it is. It might be edifying to Mr. Justice Heydon, of Sydney, to be asked whether he approves of a free Constitution for the brokers when he objected in effect to a free Constitution for men who asked for a higher rate of wages in time of war. I trust that this matter will be seriously looked at, and that we shall not swallow blindly everything which has been said regarding those who are supposed to be great financial experts. The admissions made here this afternoon, by even the Leader of the Opposition, that the financial experts have proved themselves all at sea in regard to their war prophecies, ought to be. a warning to us not to swallow blindly all that they say. If it is intended to raise money in the future we should not be content to allow the financial experts to frame the conditions. It will also be informative to me to know if any arrangement was made by which the financial experts, who control the money supplies of the Commonwealth, imposed a restriction on the Government in regard to their taxation measures. I trust that the Assistant Minister will make a brief reference to that matter in his reply

Senator BAKHAP:
Tasmania

– Like my leader, I am glad to hear that the Prime Minister has received an invitation from the Imperial authorities to visit the centre of the Empire. I have no doubt that men of his acute intellect, when they enter into conference with Imperial statesmen, will do a good deal to dissipate the mists which undoubtedly exist, and through which Imperial statesmen, as well as many persons in Australia at present, see only very darkly. I give this measure my hearty support. I hope that those in Australia who have money to invest, be they large capitalists or be they people with only small means, will see the desirability of coming to the assistance of the Commonwealth through the medium of this new loan, just as earnestly and enthusiastically as they did two or three months ago in connexion with the first local subscription of any size which was called for. I am moved to make a few remarks on what previous speakers have said in connexion with the payment of interest. In the first place, we are not at war in order to deify in any way the principles of anarchy. We are at war to secure to ourselves those principles of liberty on which we have built up our Imperial Democracy, if I may use the phrase, to the pitch it has attained. Honorable senators who talk about the conscription of wealth - which, in their mouths, is only a euphemism for outright confiscation - hardly understand what they are talking about. The rights of property is one of the rights of man. That is one of the principles upon which civilization has been built up, and if honorable senators are not in agreement with me, I refer them to the study ofPaine’s work, The Eights of Man.

Senator Stewart:

– What would the Kaiser do about property?

Senator BAKHAP:

– What are the Turks doing ? Does the honorable senator wish the Australian Commonwealth to do what the Turkish Government are doing at this juncture?

Senator Stewart:

– No.

Senator BAKHAP:

– Then let him hold his peace. The honorable senator, I believe, has considerable possessions, but I am not advocating that they should be forcibly taken from him.

Senator Stewart:

– I am quite willing to give up some.

Senator BAKHAP:

– Of course the honorable senator is. Heis compelled to give up some of it by a wellordered process of taxation, and if he is prepared to give more, the Commonwealth Government will accept it, and they will mark their sense of his patriotism by paying him for the use of it. He is, however, forced to part with some of it in the form of taxation, which is really a conscription of wealth. Some honorable senators do not seem to distinguish in regard to these matters. The honorable senator who preceded me, Senator Ferricks, apparently holds the view that the subscription of money for interest is something that is invariably beneficial to the individual who offers his money on loan. How is it, then, that the American magnates, those men who are so fond of money, and who had an opportunity the other day of getting a cool £6,000,000 per annum if they gave the Allies another £100,000,000- for be it remembered that the British and French Governments desired to float an American loan of £200,000,000, and only secured £100,000,000- how is it that the American financiers did not take that opportunity of securing another £6,000,000 per annum? Does not the honorable senator, who talks about the banks tying up money, know that bank directors, individually, are very often poor men ? Does he not know that they are the custodians of the interests of those who place money at their disposal ? And were not some of the largest subscribers to our war loan a few months ago insurance offices? Could they have given money to the Commonwealth free of interest?

Senator Ferricks:

– Are they justified in increasing . the price of money 33 per cent. ?

Senator BAKHAP:

– The price of money has gone up all over the world. It is absurd for the honorable senator to talk about the resources of the world being tied up. What does Pierpont Morgan say, and what do the great financial magnates of the world say on this subject? They declare, of course, it is impossible to tie up the money markets of the world. And, manifestly, it is impossible. Honorable senators, if they had the responsibility of government placed on their shoulders, would realize surely that if they talked about taking over the wealth of the community, and paying no interest for it, they would be talking just so much idle “ flapdoodle.” Now, I do hope that the capitalists of Australia, if they have wealth in fluid form, will produce it, and subscribe to loans as long as the Administration from time to time deems it necessary to place them upon the market to enable us to prosecute this war to a successful conclusion. We must win this war. I believe we are going to win it. I have never wavered in my opinion in regard to our ability to bring this conflict to a successful conclusion. But I am more than ever convinced that a much greater effort is necessary than any we have hitherto made. Very few honorable senators, in their references to our responsibilities and liabilities, can refrain fromsome comment on what they regard as the great extravagances and liabilities of the States. In essence, the State liabilities are altogether different from the liabilities now being imposed on the people of the Commonwealth in the prosecution of this war. Honorable senators know that the States, in almost every case, are asking for money to build roads to open up country upon which settlement will speedily follow. They are asking for money to build railways which, perhaps, in every case, will not pay as well as might be anticipated. Only very rarely do the railways fail to pay some interest on cost of construction, and, no doubt, as the population of Australia increases, even those railways and public works which hitherto have not been as successful as the State authorities anticipated will become eventually profitable undertakings. I have in my desk here a work issued by the Commonwealth Statistical Department, in which appears a statement acknowledged to be paradoxical, viz., that Australia’s progress is largely due to Australia’s debt. That is manifestly true. My friend, Senator Turley, yesterday said that, in the course of our development, transport was being diverted from the waterways to the railways systems of the Commonwealth, and the Commonwealth Statistician points out that Australia’s debt has. been largely occasioned because the Commonwealth is singularly destitute of navigable inland waterways. To bring my reference on this subject to a close, I will say there is nothing in kind between the liabilities of the States and the Commonwealth liabilities, that are so rapidly increasing as the result of this war. I am very much afraid also that our war expenditure is going to be considerably increased, because of what I may call our “ To-morrow- willdo ‘ ‘ method of making war. We have declared that we will assist the Empire to the last man and the last shilling. That sentiment has my cordial approval. But if this war lasts, if it is protracted, as it probably will be, our expenditure will be very much greater in the long run than it would be if we made a more determined effort than we have made up to the present. I have spoken on this phase of the matter from time to time, not because I have reprobated what the Commonwealth is doing, but because I had hoped it would do a very great deal more. There is certain information at my disposal, which perhaps other honorable senators have not had made available to them, and I say that if this war is continued for any length of time, if it lasts even one-third of the time occupied by the wars against the French Republic and Napoleon, our Empire will be a practical exemplification of the line, “ Fate has fixed upon the victor half undone.” Even the conqueror in a struggle may himself receive a mortal hurt. The world is not as it was. During the Napoleonic wars Great Britain was about the only country that had its coal and iron resources moderately well developed. After the seven-years’ war, subsequent to 1753, it secured almost the whole carrying trade of the world. Great Britain’s maritime supremacy was established. Although, happily, her maritime supremacy to-day is greater than ever it was, we have to remember that the rest of the world is not as it was a century ago. At the present time there are nations - her competitors in the field of trade - whose citizens are openly stating that they hope the European war will last five years, because by that time the trade supremacy will have drifted, not from Great Britain or Germany only, but from the whole European world elsewhere. It is for that reason, therefore, that I urge the Administration, as far as my humble efforts will permit me, to put forward every possible effort to assist the Empire in prosecuting this war, not only to a successful, but to a speedily successful, issue. I have no doubt that we are going to triumph in the struggle. Our enemy, to use a metaphor taken from the ancient gladiatorial arena, is “ in the net of the retiarius,” and will be despatched with the same weapon as the gladiator with the net despatched his fallen foeman, namely, the trident. The trident is in Great Britain’s hands, and it is with the trident that we shall despatch our foemen, the Germans. I have said that this struggle must not be too protracted, and for that reason I hope the Prime Minister’s visit to the Old Country will be educational, not only to the Imperial statesmen, but to the Prime Minister himself; for, notwithstanding my appreciation of his undoubtedly great natural ability, it seems to me that he, as well as many more Australian leaders of thought at the present time, fall short in their comprehension of what is necessary to enable us to do our proper part in this great world struggle. A very much greater effort is necessary. It may be that I am trespassing on the latitude which you, Mr. President, very frequently so kindly allow to me in regard to this matter; but I have promised that I will not be too lengthy in my remarks. Indeed, I am almost at the point of sitting down. I want to say, however, that the necessity is borne in upon me daily of doing all I can to convince honorable members of this Parliament, and the people of Australia, that they must make a greater effort, though that greater effort will necessitate a larger loan expenditure than we have incurred up to the present time. Returned soldiers from Gallipoli are to be seen in the streets of this Australian city to-day haranguing the people, and telling them that if they had been better supported at Gallipoli, if there had been a greater number of Australian troops sent to the front, success would have been achieved before now. It is not pleasant that returned soldiers should be able to reproach the people of the Commonwealth about the insufficiency of the national effort made up to the present time.

Senator Guy:

– Do you believe them, in the face of what has been said here?

Senator BAKHAP:

– I do. I believe that if our Australian troopscould win positions which it was declared ten times their number of other troops could not retain, they could have won through if they had been sufficiently supported. It is self-evident that very much more would have been achieved if more of our men had been there. We are continually being told that we are doing something very remarkable in the way of national effort, but this I do not subscribe to, because our assistance, although substantial, has not been of so great a volume as our resources should have been able to afford. Day after day the very men who’ went forward and upheld our standard at Gallipoli, with so much honour to Australia and themselves, are, although not publicly, indulging in recriminations with regard to the limited number of troops that we have sent forward. It, therefore, behoves us to get very busy, because this making of war by driblets does not satisfy me. The Minister of Defence tells us that 100,000 men have gone overseas, but he does not say that, as our Forces have sustained 30,000 casualties, there cannot be at the front at present an effective Australian force of 70,000 men. Only a small proportion of the wounded are able to go back immediately, and a considerable number of our troops are on the water, so that it is more than probable that the Australian Force now in the actual firing line represents only a fraction of the number who are said to have been transported overseas. I would urge the Administration, whose war measures I have supported in every particular up to the present, to realize the necessity of making a more speedy and greater effort. If they do, they will receive from me a measureof support which, although it may not be ofany particular value to them now, may later on be found more valuable than they individually or col- lectively anticipate.

SenatorMULLAN (Queensland) [5.38]. - Senator Bakhap seems quite alarmed at the prospect of the capitalists of Australia being asked to do something for their country by disgorging some of their money without return in the shape of interest. As it is their money we are chiefly defending, it is not unreasonable to ask that portion of it should be expended in the defence of their own property. There is no parallel between the rate of interest offered here and the rate offered by England on the £100,000,000 loan raised recently in America. That sum was wanted, not so much because England was in need of cash as because the balance of exchange between England and America was largely in favour of America, and had to be adjusted. The way to do it was for England either to sell its American securities to America or to deplete itself of its gold and send it to America, or to raise a loan. The financiers adopted the last-named plan as the wisest, and the loan was raised practically for exchange purposes only. In the circumstances, the financiers of Wallstreet could dictate their own terms, and did so. They are not philanthropists, and consequently, when they had the opportunity, they made a substantial sum out of England over the transaction. I shall support Senator Stewart’s amendment in Committee to free this loan from interest, because the capitalists of Australia have played a very small part, so far, in helping the nation. In fact, the greater our necessities, and the more alarming our situation, the higher their rates of interest become, and they are really benefiting by the war, instead of suffering like the rank and file of the people.

Senator Turley:

– It is not only the men who have no money that are going to the front.

SenatorMULLAN. - Senator Stewart answered the honorable senator’s interjection in his speech. We want both men and money to carry on the struggle, and if the capitalist is not prepared to come forward voluntarily with his wealth, as the rank and file are with their lives, it is our duty to compel him to play his part in this great struggle. I intend to move in Committee to relieve the Commonwealth from the obligation to exempt stock and bond holders in the war loans from State and Federal income taxes, stamp duties, probate duties, and other forms of Commonwealth taxation borne by other citizens. There should be no discrimination in the taxation of the financially fit. When this loan is ratified we shall have authorized the raising of £38,000,000 at 4£ per cent., which means an annual interest charge of £1,710,000. Taking 2s. 6d. in the £1 as a fair average flat rate for Federal taxation on income derived from property, this represents an annual exemption of £213,750 for Federal income taxation alone. The State income tax, at an average of 6d. in the £1, represents an additional exemption of £42,750, making a total present to the bond holders in our two war loans of £256,500.

Senator Russell:

– Two and sixpence is too high for the flat rate of the income tax.

Senator MULLAN:

– I averaged it, but even if the exemption totals only £200,000 it is far too much. Bear in mind that this is an exemption only of the richest, because the poorest cannot share in the loan. That is not the way a democratic Government should finance the country. Adding the exemptions for stamp and probate duties, the total exemption becomes enormous.

Senator Russell:

– There are no exemptions from probate duties.

Senator MULLAN:

– Undoubtedly there are, for under this and the last Act a man can “ tumble in “ depreciated stock at par in discharge of his just liabilities. Moreover, these loans represent only the first £38,000,000. We may ultimately find our war loan liabilities at the £100,000,000 mark, and on that basis we should be exempting from their just liabilities the richest people in the community to the extent of £675,000 per annum. That is an enormous impost on the poorer people, who will have to make up the deficiency. We are making also most inadequate provision for a sinking fund. Under the Inscribed Stock Act we provided for a sinking fund of i per cent, per annum, but, as the last loan is to mature in ten years, we shall have paid off at that rate only a little over 5 per cent, of the whole indebtedness in that period. The object of a sinking fund is to provide us with sufficient money to redeem a loan when it matures. In the Naval Loan Act of 1909 provision was made for a sinking fund. It was recognised that the ships to be constructed out of the money borrowed would be worthless in about twenty years.

Senator Russell:

– What naval loan does the honorable senator refer to?

Senator MULLAN:

– I refer to the Naval Loan Act passed by a Liberal Government in 1909, and which was subsequently repealed by the Labour party. That Act included a provision for a sinking fund of 5 per cent., so that in a period of twenty years, the life anticipated for the ships, their value would be made good by the fund. In this case, no such pro- “ vision is made. When this money is expended, that is all there will be about it. We shall have the honour and prestige of the country preserved if we win in the war, but we shall have no tangible asset to redeem these loans. We have no right (o put posterity in pawn, and we should do something in our own time to meet the obligations we incur. The way in which this should be done is to make provision for a substantial sinking fund to enable us to redeem these war loans when they mature. If we do not adopt this course we may be faced with another war when these loans mature, and it will then be necessary for us to borrow further money at rates of interest which the necessities of the hour will demand. I hope that, in connexion with these war loans, the Government will take care that the dates fixed for their maturity will not approximate to each other. Unless care is taken in this regard, we shall find the Commonwealth unnecessarily harassed by having to finance the redemption of too many loans during the same year. Queensland Governments in the past made huge blunders in this way, with the result that that State last year was called upon to make provision for the redemption of an enormous accumulation of loan money to the extent of something like £13,000,000. I hop© that the Commonwealth Government will not repeat that kind of blunder, but will so arrange the dates of the maturing of their loans that, if possible, there will be an interval of two or three years between them. I have nothing further to say on the second reading of the measure, as I shall have to discuss it again when moving certain amendments in Committee.

Senator SENIOR:
South “ Australia

– A great deal has been made, in the course of this debate, of the extent of our indebtedness. Some honorable senators seem to regard it with a degree of apprehension. Figures have been totted up, and we have been told that

Australia is so many millions sterling iu debt. It is very easy, but it is not wise, to disregard a debt of this kind ; but it is, at the same time, possible that some people are obsessed with the idea that the indebtedness of the Commonwealth is something to be alarmed at. .1 should like to point out that the major portion of our indebtedness has been incurred in the prosecution of the war, and should be regarded in much the same light as an insurance premium. We are called upon at the present time to defend Australia. Though the enemy is not close to our shores, we are as surely fighting Australia’s battles in this war as if we were contending against invaders of our shores. We ;are compelled, by force of circumstances’, to take “our part in the war, and the expenditure “we incur for the purpose is to ‘be regarded in the .same light as a premium paid for insurance against fire. We are, by expenditure in the prosecution of the war, insuring the Commonwealth against robbery. It is right that the difference between the internal and external expenditure of loan money should be marked’. The prosperity created by internal expenditure may be looked to to provide the Commonwealth, in the form of ‘Customs and other taxation, with a sum about equal to the interest charged upon the money borrowed. This cannot be said of the expenditure outside the Commonwealth of money forming part of our loan indebtedness. Senator Millen has referred with some force to our note issue, and it has been shown that, setting the gold received from the banks against the £10,000,000 in notes issued to the banks in exchange, we “have a gold reserve of about £6,000,000 to set against the balance of the note issue .amounting to about £32,000,000. But the point has not been stressed, as I think it should be, that -our note issue for the purpose of external exchange and commerce is practically as useful as gold. It is scarcely fair in the circumstances to -emphasize the difference between our gold reserve and the value of our notes in circulation. Senator ‘Stewart referred to the man who subscribes his life for the defence of the country, and the man who subscribes his coin for its defence. The position of the two men is widely divergent. The man who offers his life offers all he has, and may lose everything, but the man who takes up stock -bonds -or Treasury-bills in ‘con- nexion with our war loans is not .in the same category at all. I feel inclined to remove the halo which some people would put around his head. Nothing done to which profit attaches is deserving of .the sacred name of patriotism. To invest in the stock of .a war loan, which is a giltedged security, can .scarcely be described as patriotism. If even the -worst -occurs, and the investor loses principal as well as interest, he has still life left and the portion of his wealth that he has not so invested. On the .other hand, the man who gives his life in the defence of the country loses all. I do not see how we can credit men who are receiving ever 5 per cent, for their investments in our war loans with patriotism. Some honorable senators seem to think that Hae utterances of Senator Stewart border on the recommendation of confiscation, but the use of money which is necessary for the safety .of the Commonwealth can scarcely be called confiscation. Even if the money were requisitioned by the Commonwealth., never to be returned, :and to bear no interest, the sacrifice raa. the part ©f the person from whom the money was received “would foe trifling compared with that of the man who gives his life for the ‘Commonwealth. But when Senator Stewart .suggests ‘that this should be regarded ‘as & loan without interest, I am scarcely inclined to follow him, because the time .has scarcely yet come when we require to adopt such a course. When such a time does arrive, those who are -desirous of being called patriots may lay some claim to the title by surrendering .their scrip without the payment of interest ‘or principal. I did not hear tail tha* was said by Senator Bakhap, but, in his opening remarks, he seemed to suggest .that the State and Commonwealth Governments have no rights with regard to property. The Government, whether of a State or of the Commonwealth, is the elect of the people. It is a small Committee, selected by -the people to conserve their interests, and whether this Committee -takes money from people by way of taxation, or in the way suggested by ‘Sena-tor Stewart, it is not taken to serve the personal interests of its members, but the wider interests of the -whole -of the people. In any circumstances that ‘Committee is absolutely in the hands of the electors. If its members -do wrong, undoubtedly the electors will visit them with punish- ment whenever the opportunity for so doing presents itself.I fail to see any reason why we . should voice the term “conscription,” If Senator Bakhap wishes to fee consistent, he will admit that the conscription of wealth should precede the conscription of the manhood of this country.

Senator Bakhap:

– What is taxation but conscription?

Senator SENIOR:

– There is a vast difference between ‘the two things, because the Government of a country cannot be carried on byany other process than that of taxation. There is no question of conscription in that.

Senator Bakhap:

– The honorable senator does notbelieve in the cost of government being ‘met by the voluntary offerings ofthe people?

Senator SENIOR:

– I am afraid that there would be too many Scotchmen. The principle underlying all taxation is . that it should press most heavily upon those who are best able to bear it. Senator Bakhap has inquired whether there has not been -something like voluntarism in this war. I admit that there has been. But he is the very gentleman who has affirmed thatthe voluntary system has signally failed. ‘He has a motion upon the business-paper dealing with that very matter. Seeing that he is such an ardent believer in the conscription of the manhood of the country for the purposes of this war, he should also favour the conscription of wealth. I venture to say that if we win the war in which we are now engaged the expenditure of £100,000,000 or £200,000,000 will scarcely be felt in Australia in ten years’ time. It has been said by Senator Stewart that we should shoulder the whole burden of our war expenditure, and that we should not transfer any portion of it to posterity.

Senator Stewart:

– I did not say that.

Senator SENIOR:

– Then I misunderstood the honorable senator. I -hold that if we preserve to our children ‘the liberty that we enjoy, they may fairly be called upon to bear some portion of the burden that has been incurred in maintaining that liberty. I do not believe that the flotationof this loan will weaken the finances of Australia, ‘whilst as a contribution ‘from the people of this country, it will be a small one if it only brings us appreciably nearer to the successful ter mination of the conflict which is now raging.

Senator RUSSELL:
Assistant Minister · Victoria · ALP

– Senator Ferricks appears to be particularly interested in the part ‘which brokers will play in connexion with this loan. He seems to -think that they shouldact as voluntary agents for the Commonwealth. If I -understand the position of the average broker aright, he is an individual -who makes a study of his particular business, and I imagine that he will not be overpaid when he receives a commission -of only¼ per cent. Our experience of -the first “Commonwealth war loan taught us that ‘something like 40 per cent. of that loan was brought to the Treasury per medium -of the ‘brokers.

SenatorFerricks. - I quite believe it.

Senator RUSSELL:

– The brokers sometimes act as advisers to men who control money. Therefore, the recommendation of the recognised brokers of Australia is a very important factor when we wish to make a success of a loan. Outside the money which was invested in our first war loan by the recognised financial institutions of Australia, the most important part was -played by the brokers.

Senator Ferricks:

– Did not the bankers advise their clientsjust as did the brokers, and did they not, therefore, do the same work for nothing if

Senator RUSSELL:

– Certainly. But surely there is a vast difference between a banker and broker. The latter is a commission agent, pure and simple, and if he is discharging his legitimate functions in life, I do notseewhy he should not be paid his commission because there is a war in progress . any morethan that any other section of “the community , should forego payment for services rendered.

Senator Ferricks:

– Banking institutions are also commission agencies.

Senator RUSSELL:

– But the banks to-day have a very common interest -with the Commonwealth. They have a good dealat stake in ‘connexion with the solvency of ‘the Commonwealth, so that all the obligations are not upon one side. In my opinion, ‘the ‘brokers have met us in a very reasonablefashion. The practice of their organization is to levy a charge of 10a. per centum in connexion with a loan of this sort. ‘They are, however, charging only 5s.per centum. Like some of the munition workers, they have agreed to suspend the rules of their organization on this occasion. I take no exception to the remarks of Senator Gould, but he appeared anxious to convey the impression that the whole success of our financial scheme was entirely dependent upon the banks. I wish to say that the Government greatly appreciate all that the banks have done. The latter have been ready to co-operate with them in every possible way. But the bankers of Australia have not been asked to draft our loan policy for us. As a matter of fact, we have never consulted them in reference to our policy. After that policy had been framed we did seek their advice as to the amount of money that was available in Australia, and we did invite them to freely criticise our policy, and to point out its weak spots. We have received from them many helpful suggestions, but never have they been asked to draft a policy for us. The £10,000,000 in gold which the Associated Banks advanced to the Commonwealth has been of very great assistance to us. It has enabled us to extend our note issue considerably, but one of the finest things ever done in this country was the declaration by the Commonwealth Government, in the early days of the war, that it was willing, not only practically to guarantee the banks, but to advance them notes in exchange for 33 per cent. of their value in gold.

Senator ALBERT GOULD:
NEW SOUTH WALES · FT; ANTI-SOC from 1910; LP from 1913

-Colonel Sir Albert Gould. - How many of them took advantage of that offer?

Senator RUSSELL:

– That is hardly a fair question. Even if I had the detailed information, I would not be prepared to divulge it. I do not believe that any unit in the community can be injured financially without all being more or less injured. We recognise our common difficulties, and I believe that the banks are prepared to help us, whilst we, in our turn, are eager to help them. Senator Stewart seems particularly keen upon securing the loan that is contemplated under this Bill free of interest. We all sympathize with the object which he has in view, but regret that we cannot apply the doctrine which he advocates. It seems to me that the application of that doctrine would amount practically to repudiation. Senator Mullan has intimated that, in Committee, he intends to submit an amendment to give effect to Senator Stewart’s idea. In this connexion I desire to say that we are making an honest effort to pay the principal involved in this loan out of a sinking fund of 10s. per centum per annum. Senator Mullan’s proposal, on the other hand, is to repay investors in the loan their own coin in the form of twenty annual instalments of 5 per cent.

Senator Mullan:

– I do not propose anything of the kind. I referred to what was done in the case of the naval war loan of 1909. I was not dealing with my own proposal at. all.

Senator RUSSELL:

– We are establishing precedents in Australia, and I believe that our first war loan was floated on better terms than those obtained by any other Government involved in this war. The recent loan in Russia was floated at 95, and that at 6 per cent. We in Australia are a long way ahead of that position, and, after all is said and done, whatever the theories of individual senators may be, we have to raise the money, and get it at once. No voluntary system would achieve our object. A forced loan would provide the money, but is this Parliament prepared to move in that direction ? It is not prepared, I think, to sanction forced service, let alone a forced loan. Therefore, our only alternative is to conform to the existing system. It may be a bad system - I do not approve of it altogether - but it is the only system we have at our command to-day for inviting voluntary contributions to a loan at the market rate for money, and I believe that the rale fixed in this measure is not a penny above the market rate. I ask honorable senators not to unduly take up time in Committee. We are very anxious to give them all a holiday, and I think they will recognise that we in turn are entitled to a little relaxation. I invite them, therefore, to be as brief as possible with their arguments, and to assist us to get the Bill through rapidly.

Question resolved in the affirmative.

Bill read a second time.

In Committee:

Clause 1 agreed to.

Clause 2 -

The Treasurer may, from time to time, under the provisions of the Commonwealth Inscribed Stock Act 1011-1015, or under the provisions of any Act authorizing the issue of Treasurybills, borrow moneys not exceeding, in the whole, the amount of £ 18,000,000.

Senator STEWART:
Queensland

.- I move-

That the following words be added: - “but, notwithstanding anything contained in the above-mentioned Commonwealth Inscribed Stock Act 1911-1915, no interest shall be paid or payable on the sum or sums borrowed under the provisions of this Act.”

I do not intend to go over at any length the arguments I used on the second reading in support of this proposition. I am well aware that it is a new idea in financing the war.

Senator Lt Colonel Sir Albert Gould:

– It is a very attractive thing to people who have money !

Senator STEWART:

– I wish to point out to the honorable senator that there is not anything attractive about war. If he was over there in the trenches, I do not think that he would enjoy the position very much.

Senator Lt Colonel Sir Albert Gould:

– Just as much as the honorable senator would.

Senator STEWART:

– If the honorable senator would only have a look at the men who are coming back from Gallipoli every day, and see them maimed and broken - a number of them incapacitated, I should say, for life - he could not come to any other conclusion than that war is a desperately serious business. I think that it ought to be serious for everybody. It ought to be serious for the capitalist as well as for the man who has no capital, but who offers his life in the service of his country. We have heard time and again that capitalists have been known to promote war, and I believe that there is something in the statement. Any one who has watched the statistics of the world, and observed how rapidly surplus wealth grows and grows, must have come to the conclusion that now and again arrives a time when the capitalist is at his wits’ end to find investments for his surplus accumulation. War gives him that opportunity. There is nothing under Heaven which wastes capital so quickly as war does. But it is not wasted so far as the capitalist himself is concerned. Every farthing he invests for the purposes of war brings a continual income to himself and his descendants. It forms a constant burden upon the community to whom the money is advanced. For instance, money which was advanced to the British Government during the time of the Napoleonic wars has not yet been repaid, and the descendants of the lenders or their assignees are now drawing interest for that money. We can only, come to this conclusion: that the capitalist, the large capitalist more particularly, instead of suffering from the results of war, in a great number of cases benefits. There cannot be the slightest doubt that at the present moment capitalists, whether singly or in groups - the large holders of credit - are benefiting very materially. There never was a period in history - at any rate, in modern history - when money commanded such’ a high rate of interest. And the security, I think, in most cases, is ample. We may discount very largely the hardships which are imposed on capitalists in connexion with war. I wish to come back, however, to the principle I have laid down, and it is that the money which the Australian capitalist has advanced to the Government is to be spent in defending his own property. Any man who proposed, in the ordinary relations of life, that, if a man’s property were to be saved for him by the people, he should offer money to them at a fixed rate of interest to be used for that purpose would be scoffed at and derided. But that is exactly the position which is held by the capitalists in connexion with the war. Some honorable senators seem to think that there would be a great deal of difficulty in connexion with my proposal. I do not see any need for difficulty. The Commonwealth has all the means necessary for the levying of a forced loan, if my honorable friends like to use that term. It has tabulated, I am sure, the resources of every man of substance in its territory. The Statistician knows exactly where to put his hands on the persons who are possessed of sub-, stance, and all that the Parliament would have to do would be to fix the rate which each holder of property would have to pay in proportion to the amount owned and held by him. The rest, I have no doubt, would be easy. I do not wonder at Senator Russell being in sympathy, with the idea. It is such a plain, straightforward, common-sense idea that no one who is impressed at all by the ordinary principles of justice could fail to sympathize with it. But we want something more than sympathy. The only thing which stands in the way of this idea gaining ground is that it is a new one. It is something new in the way of raising money for war purposes ; but that ought not to be an impassable barrier. In Australia we have done a number of new things.

Sitting impended from 6.30 to 8 p.m.

Senator STEWART:

– I have no desire to keep the Committee any longer in connexion with this matter. I have said all I can say in support of my amendment, and I now leave it to the Committee.

Senator MULLAN:
Queensland

– In supporting the amendment, I want to say I realize fully what it involves. After all, this would not be a loan, and it is just as well to disabuse our minds on that point, and that the public should know what we are out after. It will practically be a levy, because everybody knows, and nobody knows better than Senator Stewart, that if we were to issue a loan to which no interest were attached no one but the real patriots would apply for our bonds. Then, as the result of our failure to raise money in that way, it would be necessary to levy a wealth tax to that extent, I am quite prepared to subscribe to that doctrine.

Senator Stewart:

– Why not give the patriotic capitalists that opportunity?

Senator MULLAN:

– That is exactly what I am going to do. If the capitalists failed to subscribe, we could then do our part by levying upon them. And I think that it is quite fair. The rank and file of the community, as I have stated already, have done their part, but the capitalists of Australia, as a body, have done practically nothing so far, except what they have been compelled to do…

Senator Stewart:

– They have put their money into a good thing.

Senator MULLAN:

– As the result of the war, they have had offered to them better investments than ever before. No Commonwealth stock, indeed for a long time no State stock, was ever offered at 4½ per cent., plus the numerous perquisites attached to this Commonwealth loan, so that the capitalists are better off than ever before. As Senator Ferricks pointed out, the capitalist, as the result of the war, has increased his rates by 33 per cent. There is a howl about the working man if he gets a 5 per cent. or 10 per cent. increase of wages, but we hear no howl of indignation against the capitalist if he extorts an additional 33 per cent. for the use of his money. It is high time, therefore, that something was done to relieve those least able to bear the burden and have it placed on the right shoulders. I have much pleasure in supporting the amendment and all that it involves.

Senator STEWART:
Queensland

– I wish to say, before this amendment goes to a vote, that I am anxious to give the capitalists of Australia the opportunity of subscribing to these loans upon the terms mentioned in my amendment. A number of people have come to the conclusion that they will not do it, but I am not so sure about that. At least, I will give the capitalists of this country the benefit of the doubt.

Senator Bakhap:

– That is about all you will give them.

Senator STEWART:

– I will assume that the capitalists, seeing the difficulties and dangers in which their country, and, consequently, their property and everything that is dear to them, are placed, will realize how just it is that the resources they possess should be placed at the disposal of the Commonwealth. Honorable senators who are opposed to the amendment have come to the conclusion - I do not know what warrant they have for doing so - that the capitalists will not subscribe to those terms; that unless they get 4½ per cent. the country may go hang ; and that, so far as they are concerned, the Kaiser with his troops and his Prussian system of government may come here to-morrow. I do not believe anything of the kind. I believe the capitalists are just as patriotic as we are. In any case, I am quite prepared to give them an opportunity, and if they fail to subscribe, then we can call upon the resources of civilization to take from those gentlemen that which they are not prepared to offer voluntarily. I just wish to explain, before the amendment goes to a vote, that I want to give those people a chance to prove their patriotism.

Question - That the words proposed to be added be added - put. The Committee divided.

AYES: 3

NOES: 19

Majority…… 16

AYES

NOES

Question so resolved iri the negative.

Amendment negatived’.

Senator MULLAN:
Queensland

.- I move -

That the following words be added: - “Provided that the provisions of sections 62a, 52b, and. 52c of the Commonwealth Inscribed Stock Act 1011-15 shall not apply to the loan raised under the authority of this Act.

Under section 52a the holder of Commonwealth War Loan stock will be exempt from stamp duty or “ other tax under any law of the Commonwealth or a State,” which would include even a wealth tax, although he may own millions. Under section 52b his interest would be exempt from State and Federal income tax - a most iniquitous provision.

Senator Russell:

– Section 52a refers only to taxation on the bond, or document itself.

Senator MULLAN:

– That matter is very arguable, as will be found when it is tested in the Courts. It is monstrous that the richest men in the community, who are best able to bear the brunt of the war, should be exempted to the extent proposed, leaving the poorest to make up the deficiency. I showed this afternoon that the holders of this stock will receive an income of £250,000 which cannot be touched by any form of taxation, and that if the War Loan reached £100,000,000 their exempt income would reach £675,000 per annum. Whenever opportunity offers I shall move an amendment on the lines I have indicated, for it is iniquitous to place the man with a colossal fortune beyond the reach of the tax-gatherer. He is getting the highest rate of interest that the Commonwealth has ever given, and can snap his fingers at the Government, while the manhood of Australia is giving up its life on the hills of Gallipoli to defend his wealth.

Senator RUSSELL:
Assistant Minister · Victoria · ALP

– I trust the Committee will reject the amendment. Since the matter was last before us, I have looked into the meaning of sections 52a and 52b of the Inscribed Stock Act 1915, and the best legal authorities inform me that 52a applies only to taxation on the instrument or bond itself, and is intended simply to prevent State taxation of Commonwealth stock; 52b only exempts the interest from Federal or State income tax. Money must be obtained to continue the war. One way to raise it is to borrow it at the current rate of interest; the alternative is to confiscate wealth. The Government do not see their way to adopt the second course, nor do they think that Parliament or the people wish to adopt it. Consequently, we must borrow at current rates. Australia is obtaining money for war purposes to-day at lower rates than any other, country involved in the war. We are, therefore, making, the best bargain possible under existing conditions, and I urge the Committee to accept the Bill as it stands.

Senator STEWART:
Queensland

– I support the amendment. I doubt whether those who oppose it ‘know what they are doing. They are creating a privileged class within the Commonwealth. If Great Britain had a Labour Government, they would not be paying 4$ per cent, for their money there. They would be doing what we are advocating - conscripting money as some of them propose to conscript men. The policy of exempting the rich of Australia from taxation, for that is what this Bill really means, is either a policy of despair or another attempt to “ grease the fat pig.” The great bulk of the Commonwealth War Loan has been taken up by the very richest of our people, who had money free for investment. They are a very small minority, for most of the people with small savings invest their money continually as they get it, and never have large sums lying idle in the bank to draw upon. The War Loan has, consequently, been subscribed principally by big corporations, such as banking and insurance companies, and by wealthy citizens. These are the people whom we are asked to exempt from taxation. If we take the burden of taxation off the backs of one section of the community, we must put it on the backs of another. If this taxation is not to be imposed upon the rich, I ask honorable senators to say who will have to pay it. It is going to be wrung out of the bone, sinew, and blood of the workers. If honorable senators shut their eyes to the fact that that is what is going to happen they will get a rude awakening later on. Is this Committee, composed as it is, prepared to exempt the richest people in the Commonwealth from taxation, and compel the poor to make up that taxation? When the ex-Prime Minister wished to obtain money he called in the financiers of the Commonwealth as his advisers.

Senator Mullan:

– The men who are interested in keeping the rates of interest high.

Senator STEWART:

– The men who are interested in getting the highest possible price for their money.

Senator Millen:

– The men without whose assistance he could not have floated the war loan.

Senator STEWART:

– It was like handing a sheep over to a number of wolves to ask the ex-Prime Minister to confer with those gentlemen. The poor lamb went to the slaughter, and was slaughtered and swallowed in due form.

Senator Russell:

– That statement has no basis. How many times does the honorable senator want it denied?

Senator STEWART:

– I do not care how often the Assistant Minister denies it. It was made public property. The ex-Prime Minister invited the representatives of the banking interests of the Commonwealth to confer with him, and I have not the slightest doubt that he took their advice. He admitted on one occasion that . he knew very little about finance.

Senator Russell:

– He never admitted the statement the honorable senator has attributed to him.

Senator STEWART:

– I have read the right honorable gentleman’s admission in the public prints that he took the advice of the people he asked to meet him. I have no doubt that they told him that he must offer 4½ per cent. interest, and that he must exempt interest on the loan from State and Federal taxation, or else he would not get the money. Why should we create a privileged class in Australia? The people who will subscribe the biggest part of these war loans are people well able to bear taxation. They are the richest people of the Commonwealth, and whether individuals or corporations, they are men of large substance. In whose interests is the money being spent? In whose interests are our young men going to Europe to fight? It is in the interests of these very people who are proposing to extract the last ounce of blood out of the Commonwealth in the shape of interest and exemption from taxation. How is the country to be run? How do we raise the money to carry on the government and pay interest on our loans ? It is no wonder that the Ministry should propose what I call an extortionate income tax. They are compelled to do so. People who have only moderate incomes have to pay an extortionate rate of income tax in order that other people, many of whom are very rich, may escape this form of taxation in respect of incomes derived from investments in Commonwealth loans. The rich people of the Commonwealth should bear a fair share of the cost of government, whether they have invested their money in Commonwealth bonds or not. One of the first principles laid down by the Labour party, when it sprang into existence about twenty-five years ago, was the readjustment of the incidence of taxation. At that time the great bulk of the taxation of the country fell upon the poor. One of our great objects as a party was to remove that burden from the shoulders of the workers and place it on the broad, strong backs of the rich. But now, when in this Commonwealth Parliament we have a Labour Government with a majority in both Houses, a mandate from the country, and all the rest of it, we find that principle trampled underfoot, scorned, despised, rejected. It almost makes one despair of Democracy. Either we are sincere or we are not. If it is our desire that the rich should escape taxation, let us frankly say so. Do not let us be hypocrites. Do not let us blazon it forth on our platform that we are out to re-adjust the burden of taxation, and to remove it from the shoulders of the poor to the shoulders of the rich. Let us be honest, and admit that we believe, as did the old politicians, that the more a man has the more easily should he escape bearing his fair share of the cost ofgoverning the country. Honorable senators should support the amendment. There is no reason under Heaven why investors in these war loans should escape taxation upon the incomes they derive from them. This concession is offered to them as a bribe to induce them to subscribe to the war loans. I think I have successfully shown that the money obtained for the purpose of carrying on the war should be obtained without the payment of any interest whatever, and without the granting of any privilege. Men who are unable or unwilling to give their lives should regard it as a privilege to be able to give their possessions to the service of the country. Instead of that, the Government propose in this Bill to give such men privileges denied to any other sections of the community, and which will have to be paid for by the hard-working people, and by the people who probably in the near future will be the more or less impoverished workers of Australia. Every one who gives the matter the slightest consideration must come to the conclusion that when the war is over, and for a number of years after it is over, the condition of the working class in Australia will not be anything like so good as it has been for anumber of years past. Not only will that be the case, but the burden of taxation will be very much heavier than it has ever previously been in the history of this contiment. Yet in the face of that, under this Bill it is proposed to create a class the members of which will be able to step out proudly, free from a very considerable amount of the taxation which must be imposed. I am opposed to that, and will support the amendment.

Senator FERRICKS:
Queensland

– One of the effects of the exemptions from taxation provided for under this Bill that appeals to me very forcibly is that which they are likely to have upon the general industries of the Commonwealth. I can leave the mover of the amendment to reply to what the Assistant Minister has said, but even accepting his assurance that the exemption from stamp taxation refers only to the documents and instruments of these Commonwealth loans, the fact that interest upon them will be exempt from State and Federal taxation raises a serious question. At no distant date the Commonwealth will have to review the per capita payment at present made to the States, and the State Parliaments will, in consequence, be called upon to seek other sources of revenue. The money paid into these war loans will be exempt from their taxation proposals.

Senator Stewart:

– These people are to be constituted an aristocracy.

Senator FERRICKS:

– There is no doubt that,financially, they will be “ on velvet.” It appears to me also that they willbe able to escape a Commonwealth tax upon wealth if, in future, it should be found necessary to impose such a tax as the result of the enormous outlay which, apparently, must continue for some considerable time in carrying on the war. In the circumstances it will pay people to take their money out of ordinary industries and convert it into war loan stock. That will not be a good thing for a young nation that is striving to become self-contained. It must be a matter of pride that, since the outbreak of the war, Australia, young as she is, should have been proved to have been self-contained to such an extent, but I am of opinion that, if in the past, our secondary industries had had the benefit of a Protective Tariff, Australia would have been shown to be even more self-contained than she is at the present time. It should be our business to make this Commonwealth as self-contained as possible by the establishment of further industries, but I am afraid that the inducements offered for the investment of capital in these war loans are so attractive that the result is likely to be detrimental to the promotion of the industries of Australia.

Senator Millen:

– The honorable senator says “so attractive.”

Senator FERRICKS:

– Yes. If we are to accept the contention of the party to which Senator Millen belongs, restrictive legislation, high rates of wages, and short hours have so encroached upon the profits of industries that there is a danger that capitalists will stampede out of them, and I point out that these attractions for the investment of money in war loans is, in the circumstances, likely to have an important bearing upon our industries in the future. We have heard much of the necessity for equality of sacrifice. I could not help being struck with a statement, made by a manufacturer whose factory was taken over by the Defence Department on terms advantageous to himself. He said, “ We realize that we are at war, and must do our bit here as well as the men in the trenches.” That man was a manufacturer who was getting higher profits than he ever obtained before.

Senator Millen:

– Why did the Government allow him to do so 1

Senator FERRICKS:

– I am finding fault with the Government for the terms upon which they are floating their war loans. I have found fault with them for not making the Federal land tax effective as a revenue producer, for not having imposed a wealth tax, and for not having so framed the income tax as to produce a return up to 5s. in the £1 on incomes beyond a certain amount. It now appearsthat a man with an income of £7,000 a yearwill be required to pay 3s. 2d.in the £.1.

Senator Millen:

– Scandalously moderate., is it not ?

Senator FERRICKS:

– In the circum- stances, it is. That a man who is in receipt of £7,000 a year shouldbe called upon to contribute only 3s. 2d. in the £1 by way of income tax isscandalous.

SenatorRussell. -There is nothing to prevent itbeing -increased -to !5s. ‘in the £1.

Senator FERRICKS:

– This exemption -meansa loss of revenue of £210,000 annually. ‘When I reflectupon -therefusal of the Government to proceed withtheir land tax -proposals, and to impose a wealth -tax to enableus to finance this war, I am forced to the conclusion ‘that they are ‘”’ wet-nursing “ the capitalist. 1 ‘never expected to see aLabour ‘Government doing that.

Senator Russell:

– What justification has the honorable ‘senatorfor that statement.?

SenatorFERRICKS.- The Assistant Minister stated this afternoon that the Commonwealth was borrowing at a cheaper rate than is any other country engaged in the war. That is true enough if we regard the interest payable as ‘amounting to only 4½ per cent. But that rate represents -only the nominal, and not the actual, rate of interest that will be payable under this Bill. Whilst the –party to which I belong is content to enact legislation of this kind, Labour principles’ will receive very scant consideration. The action of the Government suggests the influencewhich was exerted by so-called financial experts on the late Prime Minister. If we are going to receive our financial inspiration from those who control the capital of ‘this -country, it will be a poor look-out for the people. I hope the amendment will receive favorable consideration, and, if there be any reasons why it should not “be carried, I should like to hear them.

Senator Bakhap:

– Has the honorable senatorgot , a bushel bag ready ?

Senator FERRICKS:

– I do not think it will require a very deep bag to hold those reasons. . The Assistant Minister has advanced no valid argumentwhy these exemptions should be granted.

Senator MILLEN:
New South Wales

– Though I am not to be won -over to the predatory ideals which have been set up this evening, I think that this debate has not been without some profit and instruction. I have no intention of supporting the amendment, but I desire to point out that there -willbe under this Bill - just as there will be under our first War Loan Act - a -very distinct . injustice inflicted upon smaller investors. Ostensibly the -measure is designed to extend equal consideration to every subscriber to our war loans, in that an exemption is to be granted ‘to income earned from the investment.But really what we say to the small investor is, “’ You shall get no exemption at all, because you pay no income tax.” This exemption is tantamount to the payment of a bonus, and consequently the smaller investor will receive no bonus. But when we come to the man who is slightly better off - the individual whose investments reach the point at which he receives £500 or £600 a year by way of income - we require him to , pay a small income tax. Being practically a middleman, he will -receive a middlesized bonus. But to the big investor, who is possibly paying anything up to ‘3s. 99. in ‘the £1 in income tax, we say, ‘” Because you are a wealthy capitalist, and because we are a Labour Government, we intend to grant you this bonus.” I pointed out this inequality when the first War Loan Bill was under consideration, but at was impossible to get the dominant party in this chamber to correct any mistake for which the Government were responsible.

Senator Guy:

– How would the honorable senator adjust it?

Senator MILLEN:

– By allowing a flat rate of exemption, which would insure justice to all. There was something like hypocrisy in the verbal efforts that were made here to secure an opportunity for the smaller investor. Honorable senators clamoured that the bonds should be made as low as £5, so that small subscribers might participate in the loan. Yet we offered those subscribers no bonus. But, whilst I hold that the War Loan Act is inequitable, in -that it grants a bonus to the large investor and withholds it from the small subscriber, it is impossible to effect an alteration now. If an amendment were made at this stage, what would he our position in respect of that portion of our first war loan which has not yet been floated?

Senator Stewart:

– It is never too late to mend.

Senator MILLEN:

– It is too late for the Labour Government to mend in this particular. To effect the alteration desired by Senator Stewart would mean extending to the people an invitation to invest in two distinct classes of stock. To put the matter plainly, £7,000,000 of the old loan would be offered to them at 4½ per cent. with exemption from income tax., and another loan of £20,000,000 would be offered to them without that exemption. Senator Stewart is Scotch by birth and Scotch by instinct. Can any honorable senator picture him hesitating for a moment as to which loan he would invest in?

Senator NEWLANDS:
SOUTH AUSTRALIA · ALP; NAT from 1917

– He would be the patriot who would be after the interest, the honorable senator thinks?

Senator MILLEN:

– To-day hehas said agreat deal about consistency, and there is no reasonwhy, instead of lecturing us upon our duty as legislators, ho should not set us a noble example. He has advocated the raising of loans without interest, and there is no reason why he should not himself grant a loan to the Commonwealth without interest. I repeat that the Government could not hopeforsuccess if they placed upon the market the £7,000,000 of -our first war loan which has not yet been subscribed, and which carries with it exemption from the payment of income tax, whilst simultaneously inviting subscriptions for a new loan ‘of£20,000,000 without that exemption.

SenatorStewart. - If we have made a mistake, ought we not to correct it?

Senator MILLEN:

-We cannot do so in this instance. A serious blunder has been committed in the way in which the exemption has been granted. But, evidently, the interest payable under the old loan plus the bonus to which I have referred was not more than a fair market value for the money that we required. Proof of this is to be found in the fact that, (although the Government only asked for a certain portion of the first loan, they intimated that they were quite prepared to accept the full amount of £20,000,000. If that loan had been such an attractive proposition, one would assume that the capitalists of Australia would have offered, not £13,000,000, but £40,000,000. Yet, what are the facts? Although the loan was well advertised from one end of Australia to the other - although notices were posted in public buildings inviting subscriptions to it - only £13,000,000 out of the required £20,000,000 was subscribed.

SenatorFerricks. - That was not a bad return, seeing that only £5,000,000 were asked for.

Senator MILLEN:

– But in normal times State loans which have been offered in the Old Country have been subscribed twice over, simply because money was plentiful, and the terms attaching to those loans were good and attractive.

Senator Ferricks:

– The response that we got to our first war loan was not a bad one.

Senator MILLEN:

– The fact that only £13,000,000 was forthcoming proved that the terms attached to it were not as attractive as the honorable senator alleges. If they were, what hope have we of getting £20,000,000 if we abolish the exemption.? Unless we are prepared to . adopt the principle advocated by Senator Stewart - that of compulsory loans without interest - and I venture to say that the Committee is not yet educated to the height of -doing that, we must pay the market value for money.. Nobody who has the slightest knowledge of what is taking place to-day, either in the channels of small or large investments, will assume that people cannot do better with their money than invest in this war loan. There are, it is true, certain institutions such as insurance companies and the banks which must keep fairly large sums in semi-liquid securities. These loans naturally appeal to them. But to the ordinary small individual, who wishes to turnover his capital, the return promised from our war loans is quite insignificant. If honorable senators indulge in a modest investment, they look for something better than 4½ per cent., plus exemption from income tax. If they were taking shares in a joint stock -company, they -would not be content to accept 4½ per cent.

Senator Mullan:

– When they invest in joint stockcompanies, -they are very often looking fordisaster.

Senator MILLEN:

– And they balance the chance of disaster against the chance of that increment which often flows from public effort.

Senator Ferricks:

– When a man invests in a joint stock company, his idea is to make money. Is that the idea underlying subscriptions to our war loans ?

Senator MILLEN:

– Certainly not. Any number of persons have invested money in those loans well knowing that they could do better elsewhere. They have done so to show their whole-hearted loyalty to the Empire in this war.

Senator Ferricks:

– Then why was not the full amount of £20,000,000 subscribed in the case of our first war loan ? Was there not sufficient patriotism in the community ?

Senator MILLEN:

– Perhaps there was not sufficient money. We are now about to go upon the market to purchase the money we require to carry on the war, in just the same way as we purchase boots for our soldiers, and I have not heard any one suggest that the man who makes the boots should offer them at less than cost price. We have to buy our money in exactly the same way, and, when all is said and done, we buy, not the sovereigns, but the boots and clothes for the soldiers. We have to pay for the money somewhere near the market rate or we shall not get it. If my honorable friends on the other side were to do what they once sought to do, and that is, fix, in a measure, a rate which was below the market rate, either they would not get the money, or sufficient of it, or they would have to do, as they have already done, and that is, strike out the low rate and allow the Treasurer to fix a higher one. That has already happened in the experience of this Parliament and of the party to which my honorable friend belongs. I suggest to those honorable senators who take a view which I think that even their colleagues will probably regard as extreme, that we are face to face with a practical proposition. This is not the time to indulge in any theories. The Government have to carry on the war, and therefore to raise money. I venture to say that if the war continues for another year my honorable friends will look back with something like regret at the very modest rate of interest attached to this clause.

Senator RUSSELL:
Assistant Minister · Victoria · ALP

– I regret that

Senator Stewart should practically assert that the Government are not responsible for this policy, but that it was dictated by the bankers. I think that if we were to ask them to define a policy for us, they would most respectfully decline to interfere with the government of this country. They have never attempted in any shape or form to interfere. They were not called in until the prospectus for both Conferences was printed.

Senator Mullan:

– I think that you are quite wrong.

Senator RUSSELL:

– The duty which the bankers readily and courteously undertook at our invitation was to express an opinion as to what amount of money was available in Australia.

Senator Mullan:

– Did not the bankers meet Mr. Fisher in conference long before this loan was contemplated ?

Senator RUSSELL:

– I had the opportunity of going to both Conferences with Mr. Fisher.

Senator Mullan:

– Where was the advance of gold to the Commonwealth arranged between the bankers and Mr. Fisher ?

Senator RUSSELL:

– At a Conference held months before.

Senator Mullan:

– Mr. Fisher met the bankers several times prior to the matter of this loan. .

Senator RUSSELL:

– Not in connexion with the terms of the war loan. I did not wish the assertion to go forth that the Government invited the bankers to fix a policy. We took that responsibility, and asked for the co-operation of the bankers, and for certain advice, which was readily given, and for which we are thankful to them. I do not wish Senator Millen to get the idea into Hansard that, somehow or other, we are granting a special privilege to the wealthy man. I understand that his complaint is that, because of the exemption from income tax, a man with’ a larger investment in the war loan will get a greater exemption than will a smaller man. I am not so sure that he will. The honorable senator said that we could not offer this loan except on favorable terms. That is an admission that, were it not for the exemption from income tax, we would have to pay a higher rate to make it equivalent to what it is to-day.

Senator Millen:

– Then you would be giving a higher rate to the smaller investor than to a big investor.

Senator RUSSELL:

– But we are giving a heavier rate to the smaller man. Take the case of two men who invested some money in the war loan. A man who invested £1,000 gets an exemption from income tax. Another man might have had £7,000 or £8,000 worth of property before he invested £2,000 in the war loan, and consequently he gets a bigger rate of exemption. If it is admitted that we have to increase the rate of interest by 1 per cent, because of no exemption from income tax, surely the big investor who has the largest amount of stock will get the greatest proportion of the extra 1 per cent. Now, have we any option in this matter? Are honorable senators who object to the exemption prepared to affirm that this Parliament has the power to tax State bonds? I am not prepared to say that it has. I believe that it will need reference to the High Court to determine that point; but the general opinion is that this Parliament does not possess that power. The money market is open to the States as well as to the Commonwealth. If we have no power to tax State bonds, it practically follows that where the States gave 5 per cent, we would have to offer 6 per cent, or be beaten in the appeal to the market. That would not be a very satisfactory position for the Commonwealth to be in, and, therefore, T think that there is every justification for the exemption. It is sound that it should apply equally. It is a bit too late to be theorizing. We are in the midst of a war, and we must get money; therefore I ask honorable senators to allow the Bill to go through as it is.

Senator MILLEN:
New South Wales

– I am surprised that anybody in this chamber should dispute my contention that the remission of a graduated income tax does mean an unequal concession to investors according to whether they are big or little. It seemed to me so obvious that I am surprised that any one, even for the purpose of getting it into Hansard, should venture upon a denial. I intend to put a simple case for the consideration of honorable senators. Leaving out the question of other property, I will put the case of two men who have only an investment in the war loan. Now take the case of a person who invests £100, and whose whole income is represented by the return from the investment. When does he get more than 4i per” cent. ? He receives no bonus, because, not being liable to income tax, it is only a shadow to tell him that he is exempt from it. Take the case of a man who invests in the war loan an amount which yields him an income of £1,000 a year. He would be immediately liable, but for the exemption, to an impost of from 8d. or 9d. in the £1. Therefore he receives a return of 4J per cent., plus 8d. or 9d. for each £1 which is paid to him by the Commonwealth, There is at once a difference to the detriment of the smaller man. The higher we take the scale the greater is the tax which the investor would have to pay but for the exemption. It means that the greater is the bonus which is given to him.

Senator Russell:

– Suppose that wo had no exemption, and that we increased the rate by 1 per cent., would not the man who invested £1,000 get £10 extra, and the other only £1 extra?

Senator MILLEN:

– That is perfectly fair; but in this case the Government tell one man that he will get a return of 4& per cent, for his money, another man that he will receive £4 ils. per cent., and another man that he will get £4 15s. per cent. That is the effect of the remission of a graduated income tax.

Senator Russell:

– I do not think that there is any doubt that we would have to give 1 per cent, extra but for the exemption from income tax.

Senator MILLEN:

– If the exemption granted under this clause is equal to I per cent., it practically means that the subscribers to the war loan are largely men with enormous incomes. It would have been better to strike a flat rate, say, of 5 per cent, for the sake of argument, and apply that all round with no exemption from income tax. It would have meant that the smaller investor would receive the same interest on his money as the large investor; but in this case, to use the words addressed to the Committee by Senator Stewart, it has been a case of “ greasing the fatted pig.” It is impossible to alter the clause now; but I point out that serious detriment to the Bill, in the hope that when we are called upon later to sanction similar measures an effort will be made to insure the same return to the smaller investor as will be vouchsafed to the larger one.

Senator FERRICKS:
Queensland

, - Senator Millen endeavoured to justify the exemption, even at this late stage, by what he termed the market price of money. That is a matter about which we hear a lot in these times. People tell us that the price of money, like the price of commodities, labour, and everything else, is controlled by the law of supply and demand. Perhaps, like the price of -commodities, the price of capital is controlled in that way ; but the point is, who controls the supply ? We have evidence, in the increase of the market rate from 3$ to 5 per cent., that those who control tile supply of money have a supervision over the supply and demand. When they are able to control the supply, they have everything. That is going on commercially in the case of every commodity which is used in Australia, and more so since the outbreak of the war. Our contention was that the inducements offered under these conditions are very attractive. Wo got a very strong confirmation from Senator Millen a few minutes ago, when he said that they were not very attractive because better terms can be got outside; and in proof of his remark he quoted the fact that only £13,000,000 was subscribed to a war loan of virtually £20,000,000, although an instalment of only £5,000,000 was asked for. That, I think, was a splendid response. I do not wish the idea to go out to the world, as a sort of “ stinking-fish “ cry, that the people of Australia are not satisfied with that return, because I, for one, am perfectly content. It has’ been stated repeatedly that probably we shall have to pay a higher rate for money in the near future if the war continues, and that even if it does not continue for a long time yet the after effects will be so severe that the price of money must go up. It was, probably, for that reason that those people who can control supplies refrained from launching out for the whole of the £20,000,000 at the first time of asking. It appears to me that, if the Commonwealth’ Government, under Labour control, are going to continue in this attitude, although we have heard’ so much about the last shilling and the last man, it will not mean that the last man will be called up and the last shilling spent, but in actual practice that last shilling is to be made out of the war. Senator Mullan ‘s amendment is a protest against these exemptions, and if the Labour Government continue to give better terms to the man on top, they are going a good deal of the way to assist in making’ the last shilling out of the war, instead of seeing that the last shilling is spent on the war.

Senator BAKHAP:
Tasmania

– It has been well said that an ounce of practice is worth a ton of theory. No one really knows what are the lending resources of the Commonwealth; it may be that they are not very copious. Senator Ferricks has told us that the response to the first request for £5,000,000 was very substantial. So it was; but, at the same time, had the resources of Australia been as great as some people imagine them to be, the whole £20,000,000 should have been subscribed. It is quite evident, however, that some of those who subscribed to the first issue will be unable to subscribe to the same extent again, and those financial institutions which furnished some of the larger items in the last subscription list will not be in the same position when the next loan is offered. Hitherto the Treasurers of Australia have not thought it wise to apply to the local money market to any great extent for money required for internal development. Shortly after the war broke out, I said that by the time it was over the war debt of Australia would be at least £130,000,000; and speaking now, in a spirit of hope, I still believe that, if we are to secure that unqualified victory which we all look for, the conflict will be so protracted that our war debt will reach that amount. That being so, and there being no full volume of knowledge available as to the lending powers of the people of Australia, it would be very injudicious and extremely unwise to withhold any of those inducements to the subscription of capital necessary to prosecute this war, particularly in view of the fact that we found it necessary to offer those inducements in connexion with the first issue of £5,000,000 a few months ago. We .may consider ourselves very lucky if we are able to get this large sum of money in the Commonwealth, because we are not of our own volition appealing to the people of this country for that money. We are doing so because we have been enjoined by the Imperial authorities to seek money in Australia, and, therefore, this theorizing about subscribing to war loans without interest - a thing that is not suggested in any other country in the world - is really a suggestion from politicians who ought to dwell in the Kingdom of Cockaigne. I hope that the debate will not be prolonged.

We must have the money, and it would be madness to withhold any of those inducements that are likely to make the loan successful.

Question - That the words proposed to be added be added - put. The Committee divided.

AYES: 4

NOES: 18

Majority……14

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Clause agreed to.

Clause 3 agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Standing and Sessional Orders suspended, and Bill read a third time.

page 7453

REFERENDUM (CONSTITUTION ALTERATION) BILL (No. 2)

Bill received from the House of Representatives.

Standing and Sessional Orders suspended, and Bill read a first time.

page 7453

INCOME TAX BILL (No. 2)

Second Reading

Senator RUSSELL:
Assistant Minister · Victoria · ALP

– In moving-

That this Bill be now read a second time,

I have to state that it is simply designed to correct a very apparent error existing in the existing Act. It was the intention of Parliament that income tax on property should be levied at a heavier rate than on income from personal exertion, but it has been found, where income is derived from both property and personal exertion, the total mixed income is assessed at a rate lower than that upon personal exertion. On an income of £7,600 wholly from personal exertion the tax is £997 10s. On a similar income wholly from property the tax is £1,405 4s. On a mixed income of £7,600, of which £4,100 comes from personal exertion and: £3,500 from property, the tax would be, under the present faulty Act, £313 18s.1d. on the first and £422 14s. on the second,, or a total of only £736 12s.1d. This gives an advantage of £260 7s.11d. over the wholly personal exertion income, and of £66811s.11d. over the wholly property income. A man with an income of £1,000,. of which £500 came from personal exertion and £500 from property, would have a very low rating for each section of his income, whereas, if it all came from one source or the other, he would pay on rates graduating up to £1,000. The mistake is a very evident one, the principle is simple, and I trust the Senate will readily accept the Bill.

Question resolved in the affirmative.

Bill read a second time.

In Committee:

Clause 1 (Short title).

Senator FERRICKS:
Queensland

.- Will the Bill apply to the reserves of a company accumulated prior to the last financial year?

Senator Russell:

– That matter will come under the Income Tax Assessment Bill.

Clause agreed to.

Clause 2 -

Section 4 of the Income Tax Act 1915 is amended by inserting after sub-section (2.) thereof the following sub-section : - “ (2a.) Where the income of a taxpayer consists of income from personal exertion and income from property the rates of the income tax shall be :

In respect of the income from personal exertion - the rate that would have been applicable if the total taxable income of the taxpayer had been derived exclusively from personal exertion; and

in respect of the income from property - the rate that would have been applicable if the total taxable income of the taxpayer had been derived from . property.”

Section proposed to be amended : - 4. (1) The rate of the income tax in respect of income derived from personal exertion shall be as set out in the first schedule to this Act.

The rate of the income tax in respect of income derived from property shall be as set out in the second schedule to this Act.

Senator MILLEN:
New South Wales

– I recognise at once the necessity for the amendment of the Act, because it was inequitable that persons with mixed incomes should escape paying a fair amount in comparison with others, but the Bill goes to the other extreme. Under it a man with an annual income of £1,000 - £500 from each source - will be charged on each part of his income at the rate leviable on a full income of £1,000. At present a man with an income of £1,000 wholly from one source gets the benefit of the lower rate of tax on the first few hundreds of his income, but that will be denied under this proposal to a man with a mixed income of £1,000, as he will be called on to pay the £1,000 rate on both sections.

SenatorFindley. - Although he has not a thousand of either.

Senator MILLEN:

– In the endeavour to stop a gap in the principal Act we are asked to levy an unfair impost on the recipients of mixed incomes, who form a large proportion of the taxpayers.

Senator RUSSELL:
Assistant Minister · Victoria · ALP

– I have figures showing that on a total income of £1,000, of which £500 is from personal exertion and £500 from property, the tax is £10 3s.1d. plus £12 0s.1d., total £22 3s. 2d. If taxed wholly on personal exertion it would be £28 2s. 6d., and if taxed wholly on property £43 17s. 9d. There is, therefore, an advantage in the first case of £5 19s. 4d., and, in the second, of £21 14s. 7d.

Senator Millen:

– What is the rate on an income of £1,000 from personal exertion and property respectively?

Senator RUSSELL:

– The rate is 6¾d. on personal exertion and 8½d. on property, approximately.

Senator GARDINER:
Vice-President of the Executive Council · New South Wales · ALP

– The average rate is, roughly, 7d. for each £500, but I cannot see that the difference in the amount has any bearing on the principle of the Bill. Senator Stewart and ether honorable senators seem to think that there are capitalists in Australia who are anxious to lend money to the Commonwealth without interest. If the honorable senator will set them an example by investing £10,000 in the war loan on that condition, I am prepared, without consultation with my colleagues, to make the daring promise thathis offer will be accepted.

Senator STEWART:
Queensland

– It is extraordinary that some honorable senators are unable to discuss a public question without . bringing the private affairs of individuals before the Senate. It shows how barren they are of resource and argument. Senator Gardiner thinks that I might take up £10,000 worth of the war loan, draw the interest, and repay it into the Treasury. If I did that, it would benefit nobody. No one knows better than does the honorable senator that a reform brought about in voluntary fashion by a few isolated individuals is not a reform at all. If the advice he has given is good enough for me it should have been good enough to apply to every individual in the country, but when Senator Gardiner was given the opportunity to apply it in the last bill considered, he was not prepared to do so. In discussing that Bill, I pointed out that one of its results would be to free the largest capitalists in Australia from income taxation on incomes derived from investment in the war loan, and that other people would have to bear the burden which they escape. We have an instance of this under the Bill we are now considering. The Assistant Minister has said that, under this measure, a man having an income of £1,000 a year - £500 from personal exertion and £500 from property - is to be charged income tax at the full rate for £1,000 on each £500 of his income. That is what the Bill before us provides for, and it is exceedingly unfair.

Senator Turley:

– Will he be given the benefit of two exemptions?

Senator STEWART:

– He will have only one exemption. If he were given the benefit of two exemptions, it would not be so bad. It seems to me that, as Senator Millen has put it, the Government got themselves into a tangle in connexion with the first income tax measure, and they are now getting into a worse tangle. The proposal now made is not fair at all, and the Government should devise some more equitable means of dealing with the matter.

Senator RUSSELL:
Assistant Minister · Victoria · ALP

– I have now worked out the taxation upon an income of £1.000 under the different conditions to which I have previously referred.On a mixed assessment under the existing Act, the tax on the £500 derived from personal exertion would be £10 3s.1d., and on that derived from property £12 Os. Id., or a total of £22 3s. 2d. Under the new system the tax would be £31 15s. 5d., or an increase on a mixed income of £9 12s. 3d.

Senator Stewart:

– That is almost 50 per cent, increase.

Senator RUSSELL:

– Yes.

Senator Findley:

– Why should he be called upon to pay that taxation when we fixed a flat rate.

Senator RUSSELL:

– He is called upon to do that because, under the existing Act, instead of treating the assessment as one it is cut into two, half from the property and half from personal exertion, and this has the effect of bringing both halves of the income under the lower rate of tax. Instead of a man being taxed on the rate of an income for £1,000, he is taxed at the lower rate on £500 for each half of his income. Under the existing Act a man with an income of £1,000 wholly from personal exertion would pay £28 2s. 6d. Under the mixed assessment he would pay £31 15s. 5d. On the mixed assessment, he would therefore pay £3 12s. lid. more than he would pay on an income wholly derived from personal exertion. That is clearly in accordance with the intention of the original Act, which was to make the tax heavier on incomes derived from property than on incomes derived from personal exertion. Upon an income of £1,000 wholly derived from property, the tax would be £43 17s. 9d. ; on a mixed assessment it would be £31 15s. 5d., or a reduction of £12 2s. 2d. It appears to me that this accomplishes scientifically what was the original intention of the existing Act.

Senator FINDLEY:
VICTORIA · ALP

– The figures submitted by the Assistant Minister are interesting, but I remind honorable senators that when the original measure was before the Senate we agreed to the principle that the tax upon incomes derived from property should be higher than the tax upon incomes derived from personal exertion. In addition to affirming that principle, we fixed flat rates, so that the average citizen, upon making inquiry of the Taxation Department, might readily learn what he would have to pay.

Senator Keating:

– We did not fix flat rates, but curved rates.

Senator FINDLEY:

– We agreed upon a graduated scale by which the tax might be readily estimated.

Senator Russell:

– That can be done under this Bill.

Senator FINDLEY:

– That is so, but it must be done in a way that was never contemplated when the first measure was before the Senate. I do not believe that any honorable senator thought that if a man had an income of £1,000 a year - £500 from personal exertion and £500 from property - that income should be taxed as though he received £1,000 a year from each source. Under the existing Act, the taxation upon such an income would be on £500 nt the rate fixed for incomes from personal exertion, and on £500 at the rate fixed for incomes derived from property.

Senator Turley:

– Does the honorable senator believe that the taxpayer should be taxed as if his income of £1,000 were solely derived from personal exertion.

Senator FINDLEY:

– I do not, and if this Bill will remove anomalies its introduction may be justified. There, however, seems to me to be no warrant where a man has an income of £1,000, derived in equal parts from personal exertion and property, for charging him income tax as though he were in receipt of an income of £2,000- at the rate of £1,000 for the £500 derived from personal exertion, and at the rate of £1,000 for the £500 derived from property. That kind of thing was certainly never intended when the first Bill was introduced. If anomalies have crept in, it is regrettable that those who are responsible for the drafting of the principal Act were not more careful, because, according to them, those anomalies are of so grave a character that some persons in the community would be seriously disadvantaged thereby. I do not intend to oppose the Bill, but I am sorry that these difficulties were not foreseen prior to the introduction of the original Act.

Senator SENIOR:
South Australia

– The Assistant Minister has complained of the injustice which would have been inflicted by the principal Act, in that it would have enabled a person pay- ing taxation on a mixed income to avail himself of the lower rate in respect of both portions of that income. According to the honorable gentleman, a man so circumstanced will not, under this Bill, pay the lower rate in respect of either portion of his income, but will have to pay on the higher rate in respect of both portions.

Senator Turley:

– That will cause him to pay slightly more than he would be called upon to pay if his whole income were derived from personal exertion.

Senator SENIOR:

– That follows in any circumstances.

Senator Turley:

– It does not follow - that is the trouble.

Senator SENIOR:

– Let us take the case of a man who has an income of £500 a year from personal exertion and a similar income from property. Under this Bill he will be compelled to pay the higher rate in respect of both portions of his income. Now, if the Commonwealth would not have received its due under the principal Act, shall we not be diverging from the intention of that measure if we prevent him from receiving the advantage of the lower rate in respect of any portion of his income? The remedying of an admitted evil by inflicting a fresh injustice is scarcely what we had in view when we agreed to the principal Act.

Senator KEATING:
Tasmania

– This is a very small Bill, and after listening to the Assistant Minister’s exposition of it, and noting the kind of unanimity with which we all view its meaning, I can only say, “ Heaven help the taxpayer ! “ Hitherto it has been the boast of the Commonwealth that its legislation has differed from that of the States in its clarity, in its simplicity, and in its being understandable to the man in the street. But whatever reputation it may have enjoyed in that regard, we undoubtedly sacrificed when we passed the Income Tax legislation. I know that some of the most skilled and competent accountants in the community are at sixes and sevens as to the meaning of our income tax legislation. They have devoted days and nights to its study in order to qualify themselves to makereturns for clients - for firms, individuals, and companies. Yet that legislation, in its intricacy and uncertainty, completely baffles them.

Senator Findley:

– The formula is quite simple.

Senator KEATING:

– It is. When we were discussing the principal Act I pointed out the need for providing readyreckoners, and the Minister stated that that matter. would be or had already been taken into consideration. To me, it is abundantly clear that honorable senators themselves are not certain as to what we shall accomplish by this Bill. The Assistant Minister has quoted certain instances for the purpose of illustrating the unfair incidence of the tax at present.

Senator Millen:

– Did the honorable senator hear the explanation by the VicePresident of the Executive Council?.

Senator KEATING:

– I did. I listened with great interest to it, and I congratulate the honorable gentleman upon the skill which he displayed in the disadvantageous circumstances in which he found himself. Since he addressed himself to the question there has not been much light thrown upon it.

As I understand the position, it is. that if a man is deriving an income of £1,000 a year from one source he is subject to a certain tax, the rate in respect of which is laid down in the principal Act. If, however, he derives his income from two sources - a portion from personal exertion and another portion from property - he is taxed in respect of each portion as if it constituted his sole income. The Bill now before- us is designed to alter that, and to tax him in respect to each of those separate portions as if his income from personal exertion were £1,000 a year and his income from- property were £1,000 a year. Thus, if he derives an income of £400 annually from property and an income of £600 from- personal exertion, he will be taxed on the £600 at the same rate as is a man who receives £1,000 a year from personal exertion. In like manner he will be taxed on the £400 which he derives from property at the same rate as will an individual who is receiving £1,000 a year from property. In these circumstances he will not be entitled to any deduction in respect of the lower incomes, either from property or personal exertion, to which otherwise he- would be entitled. In attempting to remedy a recognised omission, it seems to me that we are jumping to the other extreme, and are merely making confusion worse confounded.

Clause agreed’ to.

Title agreed to.

Bill reported without request.

Standing and Sessional Orders suspended; report adopted.

Bill read a third time.

page 7457

REFERENDUM (CONSTITUTION ALTERATION) BILL (No. 2)

Second Reading

Senator GARDINER:
Vice-President of the Executive. Council · New South Wales · ALP

– In moving

That this Bill be now read a second time, it is unnecessary for me to enter into a long explanation of its provisions.. It will he remembered that a few months ago certain measures were passed through this Parliament empowering us to take a referendum of the electors with a view to clothing the Commonwealth with greater constitutional powers. Since then the State Governments, under sub-section 37 of section 51 of the Constitution, have consented’ to grant us the powers for which we asked in the Bills to which I have referred, with some exceptions. Those exceptions are not of very great importance. There are two Bills in which alterations are proposed to be made.. One of these relates to industrial matters. When effect has been given to the agreement between the State Governments and the Commonwealth, the difference between the powers which will have been conferred upon this Parliament and. those which we sought to have conferred upon it by means of the referendum will not be very great. When the Commonwealth has been vested with the powers which the States propose to confer upon it, section 51 of the Constitution will read -

The Commonwealth shall have power to legislate in respect to industrial matters for employment and unemployment, strikes and locks-out, for the maintenance of industrial peace, and for the settlement of industrial disputes,

Although these powers are, perhaps, not so wide as those which we originally asked for, and are to continue only for the duration of the war and twelve months after its- termination, the Government, considering that they were sufficiently wide for the purpose of conducting the business of this country during the war, agreed -to accept them. In regard to the railways, there has also been a limitation of the desired powers, and that is that the Commonwealth shall not interfere with the management and control of the railways, or with the fares and freights. That, I think, honorable senators will agree, constitutes the difference between the powers which will be conferred, I hope, by the State Parliaments and the powers which I had hoped would be con ferred’ if the referenda proposals were submitted to the electors. On the advantages or disadvantages of this measure I do not intend to comment. If I may be permitted to express my personal: view, I am very sorry indeed that the people are not to be given an opportunity, once and for all, of settling the. vexed question of what additional powers this Parliament shall have.. I do not agree at all with the view that our engagement in the prosecution of this great war would have made any material difference as regards the people bending their energies and going to a vote to settle these questions. But even that has no bearing on the subject at issue. There was unquestionably a very widespread feeling in the community that it was undesirable to have even a semblance of a difference between sections of the people of Australia at such a time as this. Although I do not agree with that view, I think that I can express my satisfaction that even the section which disagreed with me must be more than satisfied with the compromise which has been arrived at. Personally, I believe that the States will carry out their agreement - I sincerely hope that they will - but if they do not they will prevent this Government and this Parliament from exercising some very just and necessary powers which we have sadly lacked during the period of the war. I hope that these powers will be promptly conferred on the Government by the States, and when the war is over, and a period of one year has passed by, it will remain for the Government, or whatever party may be in power then, to say whether an extension of those powers is necessary. Personally, I believe that when the war is over, the people of Australia will desire this Parliament to have for all time the powers which are to be conceded now by the State Parliaments, and if the war should last as long as many of us fear it will, I venture to say we shall be rapidly reaching the time when there will be in Australia only one Parliament with sovereign powers. Probably it is entering into the realm of argument to talk in that way, and on what is a business measure I had better refrain from further expressing my personal opinion. In view of the money which will be required to conduct the war if it is continued ; in view of the difficulties which may arise from five or six distinct borrowing authorities approaching the money market at the one time, I venture to say that a continuation of the war for a long period will bring home to the people the necessity of having one supreme sovereign Parliament in Australia, and that the Federal Parliament. I move the second reading of the Bill, believing that it is a compromise as to which both sides, or all parties to it, may express satisfaction or dissatisfaction, as it pleases them. But as regards the fact that anything like a party difference is set aside during the period of the war, no matter how strongly we may feel on these proposals, I think that we can all express our satisfaction that to the outside world Australia will not be presented as a country showing any great feeling of partisanship. I congratulate all parties to the agreement upon having achieved that result.

Senator MILLEN:
New South Wales

– I cannot refrain from expressing more than ordinary surprise at the extraordinary admission made by the Minister. In asking the Senate to accept this Bill he said mat he himself, expressing bis personal opinion, regretted the course of action which rendered its passage necessary. It is extraordinary, in my conception of Cabinet solidarity, that a Minister should invite the Senate to accept a measure committing his Government to a course of action which he plainly tells us he thinks is wrong.

Senator Gardiner:

– Do not misunderstand me. What I wished to convey was that I hoped that the people would have an opportunity to settle the questions, once and for all.

Senator MILLEN:

– I took down the Minister’s words. He said that he regretted it.

Senator Gardiner:

– I still regret it.

Senator MILLEN:

– I am only pointing out that the Minister asked the Senate to assent to a Bill that implies a course of public action which he regrets, but to which he is making himself a party. I hail the abandonment of the referenda proposals at this juncture with unqualified pleasure. I am supported in that view by the utterance of the Prime Minister when he made the announcement elsewhere. In that I think, he advanced the strongest possible reason as to the undesirability of a contest of this kind. Speaking from memory, he affirmed that the referenda would have meant that things would have been said and done which should be left unsaid and undone at this time. In that one sentence alone there was a frank admission that the contention which has all along been advanced by a very large section of people, that it was extremely undesirable to plunge the community into the consideration of controversial matters of this kind-

Senator Findley:

– He said “ in view of the agreement arrived at.”

Senator MILLEN:

– There was no qualification as to that statement; it was an expression of pleasure that the possibility of undesirable things being said had been removed, and I shared that pleasure. As the Minister observed, this is no time, nor, I submit, is it the place, in which to discuss the consequences that must flow from the action which the Government have taken. The Opposition was not consulted, nor has Parliament had an opportunity to consider this agreement. It is an agreement arrived at by a number of gentlemen who constitute the Government of the Commonwealth with the Premiers of the States. It is an agreement between them only, and therefore the responsibility must rest with those who made it.

Senator Findley:

– And with those honorable members of the Opposition, too, who did not desire any exhibition of party feeling at this period.

Senator MILLEN:

– I am not aware that the Opposition has ever been consulted as to whether it approved of the agreement or not.

Senator Findley:

– They did not want the referenda ; they wanted a cessation of party strife.

Senator MILLEN:

– The Opposition has never ceased to proclaim, in season and out of season, that it was extremely undesirable to proceed with the referenda proposals at this juncture. I do not suppose that any member of our party will hesitate in still proclaiming that view. Personally, I regard this measure as a mere postponement of the time when there must be a final appeal to the people on this matter; but I do hope that when that time comes there will be an appeal to them to pass their Constitution under proper review. This measure is an expedient only. I do not propose to discuss it more than to reaffirm that it is a postponement, and not a final settlement of the issue. I hope that I have made it clear, in spite of the interjection from Senator Findley, that it is obvious that those who have in no sense been consulted as te the agreement arrived at cannot be held as responsible for its terms nor as expressing approval or disapproval of it.

Senator MULLAN:
Queensland

– I have no desire to speak on the merits or demerits of the Bill, but I propose, in Committee, to try to restore to the preamble the reason why it is expedient to abandon the referenda. The third paragraph of the preamble reads -

And whereas it is expedient that the writs for the submission of the said proposed laws to the electors be withdrawn, and that no further proceedings be taken in relation to such submission.

That gives no reason as to why it is expedient, but when the Bill was originally introduced in the other House that paragraph of the preamble read -

And whereas in pursuance of an agreement made between the Prime Minister of the Commonwealth and the Premiers of the several States, it is expedient that the writs for the submission of the said proposed laws to the electors be withdrawn, and that no further proceedings be taken in relation to such submission.

The paragraph in that form showed why it was expedient not to proceed with the referenda. I would not have consented to its withdrawal but for the fact that an agreement was made which satisfied me. I want it set forth in the preamble why I am satisfied with the Bill, and I shall require to hear a good reason to the contrary before I consent to the passage of the preamble in its present form.

Senator KEATING:
Tasmania

– In so far as this measure provides for the abandonment of the proposed referenda, fixed for the 11th December next, it has my unqualified and hearty support. Until this Bill was introduced to Parliament the position was that the people were about to be invited, under section 128 of the Constitution, to give consideration to a number of proposed amendments. Those amendments had been dealt with in the other House and here; they were being forwarded to the people, and the necessary machinery was being set in motion to get a register of their views as to whether or not the proposals, or any of them, should be incorporated in the Constitution. The procedure which was being taken was perfectly legitimate and constitutional. I shared with others the view that it would be impolitic to invite the people to give consideration to these proposals if they could not give to them that particular attention which it was necessary such matters should receive. Since then an arrangement has been entered into between ‘ the Cabinet of the Commonwealth and the Premiers of the several States, and the introduction of this Bill is the outcome. The passage of this measure through Parliament will secure for the Commonwealth political peace upon those proposals during the war and for a period afterwards, and, in so far as it does that, it has my heartiest indorsement.

As to the circumstances which have occasioned this Bill, I can only say, as I have said on previous occasions more than once in this Senate and elsewhere, that the Premiers in Conference assembled constitute a body unknown to the Federal Constitution. They have powers, certainly, as Premiers, each within their respective States; but, as far as the Federal Constitution is concerned, the Premiers’ Conference is a body unknown. Early in the history of the Federal Parliament I took exception to the Premiers’ Conferences of those days assuming powers in relation to Federal matters which I did not think they should assume. I believed then, and I have had occasion since to hold that belief even more strongly, that the position of this Senate in the Constitution was being ignored by successive Premiers’ Conferences. This Senate is the States’ House in the Constitution in relation to all matters Federal. In relation to all matters that, in the Constitution, are committed to the Commonwealth Parliament, this House is, and should be, the House representing the States, and I, for my part, did resent, and always will resent, any action calculated to undermine the position of this branch of the Commonwealth Legislature.

Senator Pearce:

– Why did you not resent it in the last Parliament?

Senator KEATING:

– I have always resented it.

Senator Pearce:

– You did not resent it then.

Senator KEATING:

– The position in relation to the Constitution referred to by the Minister is not parallel to that with which I am dealing now. I am speaking of a body entirely outside the Constitution doing anything calculated to undermine the position of the Senate. So far as the other matter was concerned, there was a Federal Government in power taking a certain course of action for which it was responsible, and it was clearly then within its legitimate powers and within the ambit of its responsibility. I am now speaking of the Premiers’ Conference, which recently adopted a certain course, resulting in the presentation of this measure. I realize that we are now securing that internal political peace which is so desirable. The measure before us is only one for the withdrawal of these writs, and, as I said before, that course has my heartiest indorsement.

There is one thing, however, I would like to say in relation to the Minister’s remarks in connexion with the exercise of these powers. The Minister said that the withdrawal of the proposals from the people, and the carrying out of the agreement entered into between the Commonwealth Government and the Premiers of the States, will mean that this Parliament will be endowed for the period of the war and twelve months afterwards with those powers which are necessary for the proper prosecution of the war. I believe that, without any such agreement, and without any amendment of the Constitution whatever, this Parliament and the Commonwealth Government have all the powers that are necessary for the prosecution of this war.

Senator Findley:

– There is a division of opinion about that.

Senator KEATING:

– I am quite aware of that fact, but it does not in the slightest degree shake my confidence in my own opinion, which, I know, is held by very many eminent persons in the community.

Senator Findley:

– Take the Judges of the Supreme Court of Victoria. They said that we do not possess the power., and when we appealed, the High Court said we did.

Senator KEATING:

– The honorable senator has misinterpreted the decision. Parliament and the Commonwealth Government, in my opinion, have all the necessary power to carry on the war* Now I recognise that we shall have, by expressed grant as it were, powers which I think we already have by implication in the Constitution. But as far as the granting of these powers in expressed form is concerned, .according to the Minister it seems to be intended as an instalment, so to speak, of what is to come, in the sense that it will be only temporary in character, whereas what is to come will be enduring, if the Minister is correct in his presage of the future. The extension of the powers of this Parliament permanently and under normal conditions in the direction indicated by this agreement, and by the amendments which were about to be submitted to the people, would to a great extent strip from the Federal Parliament its Federal character. We would be giving to the Federal Parliament the character of a Parliament in a more unified community, and to the extent that we did that, we would be removing the justification for this Senate, the States’ House, and removing also the justification for that equality of representation which was secured for the States in this branch of the Federal Legislature when they entered into the Federal union.

Senator Gardiner:

– The people would survive if this Senate did not exist.

Senator KEATING:

– I have no doubt about that ; but I think it my duty at this juncture, and while this matter is before the people of Australia, to put my views on this aspect of the matter before them. I am only mentioning it for that purpose. In so far as we lessen the Federal character of the Commonwealth Constitution, to that extent do we remove the justification for equality of representation in the Senate. I sincerely hope that in any future action which may be taken by the Parliaments or the people of Australia, they will be mindful of this circumstance.

Senator BAKHAP:
Tasmania

– I am pleased that a measure has come before the Senate having for its object the withdrawal of the writs issued by the Governor-General in connexion with proposals which have been submitted to the people twice before, and on each occasion rejected. Let me say, however, that the reason for my congratulation is somewhat different from those which have been mentioned by other honorable senators who have spoken on this subject. I am opposed to the holding of any poll at the present time, because I think that a third poll in connexion with these proposals within four years is a straining of the principles of the referendum.

Senator Findley:

– What about the double dissolution ?

Senator BAKHAP:

– Have we had three double dissolutions within four years ?

Senator Findley:

– We would have had if you had had your way.

Senator BAKHAP:

– Australia, as I have frequently said, is one of the world’s continents, and the principle of the referendum should only be applied occasionally to a continent. ‘ We cannot have a referendum every week, every month, or every year. I am pleased, therefore, that the referendum proposals are not to be submitted at this juncture. One of the most important reasons why they should not be submitted is that we have in many of the States at the present time recruiting campaigns, and the holding of the referendum campaign would not be consonant with anything like an organized attempt to secure recruits for the Australian Expeditionary Forces, although I do not believe that the political campaign would have interfered with recruiting as much as some people imagine.

Senator Guy:

– Would not a general election have the same effect?

Senator BAKHAP:

– No, because in an ordinary State election there could be no issues connected with the conduct of war. According to figures supplied by the Minister of Defence, we would have about 110,000 Australians overseas at the date of the referendum poll, if this measure had not been introduced.

Senator Grant:

– How many of those have no votes?

Senator BAKHAP:

– I venture to say that in all probability 90 per cent, are voters of the Commonwealth.

Senator Findley:

– And 70 per cent.’, if appealed to on the question of the referendum, would say, “Go on with it, and good luck to you.”

Senator BAKHAP:

– I might also say thai 70 per cent., if appealed to, would favour the adoption of the principle of compulsory service. Now I would like to

S60 fit full attendance of Australians at the poll when such a momentous matter as the alteration of the Constitution is being decided.

Senator Findley:

– When some of those men who have won the Victoria Cross have come back, would you advocate that they be given votes?

Senator BAKHAP:

– The honorable senator’s curiosity is understandable, but I do not intend to satisfy it at this juncture. I am pleased that the Bill has been introduced for three reasons, namely, that it is undesirable to use too often the principle of the referendum, that it is undesirable that the political campaign should interfere with recruiting, and that it is undesirable to alter the Constitution in the absence of bo many Australians on active service.

Senator Ferricks:

– You were opposed to the Bills going to the people when practically all our soldiers were here.

Senator BAKHAP:

– Decidedly; for I have always argued that proposals for the alteration of the Constitution should be submitted independent of a general election, and I hope that if they are again submitted at any time an honorable arrangement will be entered into between both parties of the Legislature for their free ventilation in public, and for a decision to be arrived at not on the occasion of a general election. I have previously congratulated Ministers for not bringing these proposals in as the corollary of a general election. Notwithstanding the reiterated opinions of Ministers and members supporting them, I absolutely deny that the passage of these measures, which were conceived five years ago, is necessary for the prosecution of the war. The intention, when they were introduced, was to utilize them wholly in connexion with the peace policy of the Labour party, and I challenge any honorable senator opposite to point to a single syllable uttered in the previous campaigns to show that these powers were necessary for the prosecution of the war. We are now told that it is necessary for this Administration, governing a population of about 5,000,000, and making an effort much extolled by themselves to assist the Empire, to secure these powers, at this juncture, for the prosecution of their warlike endeavours. The United States of America, even in the very throes of a struggle on which the existence of the nation as an entity depended, never asked the States to surrender such powers as we are asking our States to give us. That nation, which will probably play an important part in the settlement of the present world-wide dispute, has a Constitution from which ours was, to a large extent, copied, a Constitution which, in a little over a century, has enabled a population of a little over 3,000,000 to grow to 100,000,000, forming one of the most potent of the world’s nations, and one of the mightiest of its manufacturing peoples. I look upon the people who urge the granting of these powers to the National Parliament as essential for the prosecution of our share of the war as uttering something which they do not believe to be true. I am not one of those who have objected to the submission of these proposals to the people because of the malignant political conflict that would have been engendered. I have too high an opinion of the” Australian Democracy to believe that Australians entertain such malignant feelings towards one another because of their political differences that only evil effects would have ensued from the referenda campaign. What would the Democracy be worth if the result, after an experience of half a century, was to make Australians fly at each other’s throats over this matter? What would really have happened is this: We should have had a good deal of frothy talk on hundreds of platforms throughout the Commonwealth; people would have gone to the polls soberly and sensibly, and next day would have accepted the verdict and gone about their businesses on just as friendly terms as before. I fight honorable senators opposite fairly vehemently on the platform. There is a considerable political gulf between myself and them; but with one or two exceptions, in which the matter is made personal - and there are always miserable fanatics in every party - considerable evidences of friendship are to be seen existing between myself and practically all the members of the party which I oppose, and I deprecate the idea that the submission of the referenda proposals would have resulted in something approaching civil war. In South Africa, where racial differences divided the people, and where a little over a decade ago the different races were confronting each other with arms in their hands, a general election was recently held, and the heavens did not fall. Men who then bore arms against the power of England are now loyal to the Empire, leading the King’s Armies to conquest in that portion of the globe. The prediction that we should have had a malignant political conflict if the referenda were submitted has been too much stressed. We should undoubtedly have had a political conflict, but it would have left no lasting mark on the minds of the electors. I have never advocated the dropping of the referenda because I feared a conflict approaching civil strife, but I hail the step that has been taken at this juncture for the reasons I have adduced. Honorable senators know what my opinions are. I recognise a clean line of demarcation between State and Federal functions. A section of the Constitution has been invoked - I believe constitutionally - and the matter is now within the ambit of the State Legislatures. We, on this side, have not been consulted, and we, therefore, take no responsibility. The State Legislatures have full powers of consent and estoppel. I am not going to offer my advice to them at this juncture, but am content to wait, realizing that each State Parliament contains men of political honesty and courage who will not weakly bow to what some people think to be the popular opinion of the moment, and which, even if it is of the moment, may be quite different to-morrow, but will exercise their legislative powers and privileges according to their own discretion and judgment. I leave the issue to them, and, not having been consulted on the matter, personally disclaim all responsibility so far as the desirability of vesting these powers in the National Legislature is concerned.

Senator GARDINER:
Vice-President of the Executive Council · New South Wales · ALP

– Senator Millen appears to think that my remarks indicated a difference of opinion with the rest of the Cabinet. I expressed regret that the people were not to be given the opportunity of settling the question once and for all, but I expressed no regret at the compromise that is so satisfactory to every one else. Senator Keating and Senator Bakhap seem to think that these powers are not necessary for the Government in the conduct of the war.

Senator Keating:

– I do not say they are not necessary. I say I think the Government have them already.

Senator GARDINER:

- Senator Bakhap denied that the powers are necessary. Unfortunately, we have not the powers we require to conduct efficiently the business of equipping our men to take their places in the war. In one of the woollen mills providing clothing for the troops, a strike ‘ has been going on for some time, but the Commonwealth has no power to interfere, because it is a strike entirely within a State, and is, therefore, a matter for the State to settle by its arbitration legislation.

Senator Keating:

– By what power have you commandeered the output of the mills?

Senator Pearce:

– Does Senator Keating want us to commandeer the mills themselves ?

Senator GARDINER:

– There are latent and extraordinary powers that we can exercise, but does Senator Keating advise us to use them in a matter of that kind ? If he does, he is just as much prepared to flout State authority as any one who ever suggested taking the- powers from them. If there is a dispute in the iron foundries in Melbourne, would Senator Bakhap advise us to exercise those extraordinary powers, and take the foundries over? No Government will use those extraordinary powers except in the last resort. If these industrial matters can be settled by the Government obtaining power to deal with industrial disputes in individual States, that will be a much more common-sense method than to exercise extraordinary powers about which, if we did use them, honorable senators opposite would be the first to complain. I do not believe the people want us to use any extraordinary war powers, nor have we used them yet, especially as we can under this agreement obtain in a common-sense way the right to deal with industrial “disputes in the factories that are working for us. We were compelled to requisition the output of different factories because the persons running them would not make the least concession in regard to the factories being visited by Labour organizers during the dinner hour. I acknowledge that members of the Opposition have supported the Government generously on many war measures, but I assure them that we want these powers because they are very necessary during the present war.

Senator Keating:

– Your argument really means, not that you want the power, but that you want the nerve.

Senator GARDINER:

– We have not the power to get the work we want out of the iron foundries unless we declare martial law. Senator Mullan has announced his intention to move an amendment to insert words which the Government thought were necessary when drafting the Bill, but which were removed after discussion in another place. He is quite within his rights in desiring to express in the Bill the fact that an agreement has been entered into between the Government and the State Premiers, but there is really no occasion to emphasize it here, because three Parliaments have already emphasized it by introducing measures to give effect to the agreement, and all the Premiers have made public the fact that the agreement has been entered into. I do not suppose that anything I may say will induce Senator Mullan to let the matter rest if he thinks he is doing right, but it is really not of sufficient importance to put in black and white in this Bill in the closing hours of the session. It has been published in the press, and the fact that the agreement has been made has been acknowledged in the State and Federal Parliaments. Nobody disputes it, and the honorable senator may well let this measure go through as it stands instead of taking action which may lead to its being passed between the Senate and another place until a final agreement is arrived at.

Senator Ferricks:

– Can the Minister give any reason for the excision of the words.

Senator GARDINER:

– It is our business, I think, to work as amicably as we can with honorable members in another place.

Senator Millen:

– We do not know of any excision from this Bill.

Senator Ferricks:

– Yes, we do; because we have a copy of the Bill as introduced in another place.

Senator GARDINER:

– Certain words which appeared in the Bill as originally introduced have been struck out. It is not a matter of importance that they should be included, and I ask Senator Mullan not to press his desire for the amendment of the measure.

Question resolved in the affirmative.

Bill read a second time.

In Committee:

Clause 1 and 2 agreed to.

Preamble.

And whereas it is expedient that the writs for the submission of the said proposed laws to the electors be withdrawn, and that no further proceedings be taken in relation to such submission :

Senator MULLAN:
Queensland

– The explanation offered by the VicePresident of the Executive Council for the alteration made in the original draft of this Bill was very far from convincing. I do not know why the Government should be anxious to suppress the fact that the abandonment of the referenda is due to an agreement arrived at between the Prime Minister and the Premiers of the several States. That this is a fact is shown by the Minister’s statement that Bills have already been introduced in the State Parliaments, which indicate that there is such an agreement. Why should we not say so in this measure?

Senator Pearce:

– Why not go further, and say also that the Bill has been considered by the Caucus.

Senator MULLAN:

– I do not wish to go further. The Government, in their wisdom, about an hour ago went as far as I propose to go. In the last half-hour they have changed their minds, but I have not changed mine. In my opinion, we should state in this Bill why it is expedient to abandon the referenda. I would not consent to abandonment but for the agreement. I know that it exists, and it is better that that should be stated in black and white in this Bill. The Vice-President of the Executive Council would find it difficult to offer any reason for the excision of the words which appeared in the original draft of the measure. His only reason for objecting to their inclusion at this stage is that that would render it necessary that the Bill should be returned to another place for further consideration. If we were entering upon an adjournment of the session to-night, there might be some force in that objection, but as we are not doing so, there will be ample time if the Bill be amended here to have the amendment considered by another place. I owe a responsibility to the people of my State for consenting to the abandonment of the referenda. I have agreed to it in the belief that it will suit the purpose of the party to which I belong.

Senator Guthrie:

– The honorable senator has the Prime Minister’s statement of the reason, and that should be good enough for him.

Senator MULLAN:

– It would be much better to have it set out in this Bill. The alteration has been made merely to placate some fastidious individual in another place. I moveThat after the word “ whereas “ the following words be inserted: - “in pursuance of an agreement made between the Prime Minister of the Commonwealth and the Premiers of the several States “

Senator Guthrie:

– Some of the States, not the several States.

Senator Lt Colonel Sir Albert Gould:

– Western Australia was not represented.

Senator MULLAN:

– The concurrence of the Government of Western Australia was given to the agreement. The fact that Senator Gould quibbles about the matter should be an additional reason to induce the Vice-President of the Executive Council to accept the amendment.

Senator FERRICKS:
Queensland

, - I shall not require more than two minutes in which to express my opinion on this matter. This is the first time since I have been a member of the Senate that I have known a Bill which has been amended in another place brought down here in its amended form and introduced without the Minister responsible for its introduction . stating the reason which actuated the Government in accepting the amendments agreed to in another place. I think it is due to honorable senators that, in connexion with this Bill, they should have been taken into the confidence of the Government to that extent. The fact that honorable senators were not informed as to the grounds which actuated the Government in departing from their original intention in the drafting of the measure is, in my, opinion, a reflection upon the Senate.

Senator GARDINER:
Vice-President of the Executive Council · New South Wales · ALP

– I have risen merely to inform Senator Ferricks that there has been no departure from the ordinary procedure in the introduction of this Bill. When I introduce a Bill in the Senate, I do not make it a hard-and-fast Government measure in every line and phrase. Legislation is not possible without concessions; and frequently, in taking charge of a Bill in the Senate, I have made concessions to honorable senators even when I have had some doubt that those who favoured an amendment of the measure under consideration were right. I can assure Senator Ferricks that on this occasion there was no intention to slight the Senate. It is an accidental circumstance that honorable senators have not been supplied with a clean Bill showing no amendment. I make this explanation that the honorable senator may be assured that there has been no change on this occasion in the usual method of procedure

Senator MULLAN:
Queensland

– I am a member of the party which in this Parliament takes the full responsibility for the acceptance of ‘the agreementfor the abandonment of the referenda. The members of the other party in this Parliament are not responsible for its acceptance,because they wore not consulted.

Senator Guthrie:

– They will be if they vote for this Bill.

Senator Bakhap:

– Nothing of the. sort.

Senator MULLAN:

– It is ‘ perfectly clear, from statements made in another place . and in this chamber, that there is one party only concerned in this matter, and that is the Labour . party. They alone in . this Parliament . are responsible for the acceptance of the agreement. It is this fact which necessitates a slight departure from the lines laid. down by Senator Gardiner. In my view, the -members of the Labour party should insist upon setting out in this Bill the reasons why they have agreed to, the abandonment of the referenda. I hope . that, notwithstanding any irritation which it might cause honorable members in another place, the Minister will see the wisdom of agreeing to the amendment.

Question - That the words proposed to be inserted be inserted - pat. The Committee divided.

AYES: 5

NOES: 14

Majority … … 9

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Preamble agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Bill read a third time.

page 7465

SUPPLY BILL (No. 4) 1915-16

Bill received from House of Representatives.

Motion (by Senator Pearce) agreed to -

Thatso . much of the Standing and Sessional Orders be suspended as would prevent theBill being passed . through all itsstages without delay.

page 7465

SUPPLY (WORKS AND BUILDINGS) BILL (No. 4) 1915-16

Billreceived from House of Representatives.

Standing and SessionalOrders suspended, and Bill read a first time.

Senate adjourned at 11.21 p.m.

Cite as: Australia, Senate, Debates, 11 November 1915, viewed 22 October 2017, <http://historichansard.net/senate/1915/19151111_senate_6_79/>.