Senate
4 December 1930

12th Parliament · 1st Session



The President (Senator the Hon. W. Kingsmill) took the chair at 3 p.m., and read prayers.

page 944

QUESTION

CHRISTMAS RECESS

Senator BARNES:
Assistant Minister assisting the Minister for Works and Railways · VICTORIA · ALP

– I shall endeavour to get the information to-morrow.

page 945

WHEAT INDUSTRY

Advance of 2s. a Bushel.

Senator BARNES:
Assistant Minister · Victoria · ALP

by leave - I desire to inform the Senate that, following representations by the Government extending over some weeks, requesting that a first advance be made by the Commonwealth Bank to wheat-farmers at the rate of 2s. a- bushel at country stations, which would be equal to approximately 2s. 6d. f.o.b., the Commonwealth Bank has now decided to make an advance to pools and organizations at the rate of 2s. a bushel f.o.b. on wheat of the present season’s crop, which is equal approximately to ls. 6d. a bushel at country railway stations.

I also wish to summarize very briefly the history of the negotiations leading up to that decision. Two days before the conference of representatives of the wheat industry, held in Canberra on the 12th of November last, the Acting Minister for Markets (Mr. Forde) interviewed the chairman of directors and the Governor of the Commonwealth Bank and urged that an advance of 2s. a bushel at railway sidings be arranged. The reply received was that a first payment of this amount could not be made, even if guarantees were forthcoming from the Commonwealth and State Governments. This intimation was conveyed to the members of the conference. On the 22nd November, the Acting Minister for Markets interviewed the chairman of the board of the Commonwealth Bank (Sir Robert Gibson) iu Melbourne, and urged that favorable consideration be given to the suggestion to pay a first advance of 2s. a bushel at country sidings. At the conference between members of the Government and the Commonwealth Bank board in Melbourne, last Monday, the 1st December, very strong representations were made by the Cabinet in favour of a first advance at the rate of 2s. at country sidings, or 2s. 6d. f.o.b., as it was considered by the Government that that advance could bc made without any risk of loss to the bank. The Commonwealth Bank has since considered the representations of the Government, and the following telegram has now been received from the chairman of the board : -

The bank board yesterday evening decided to fix the advance to wheat pools at 2s. per bushel f.o.b., subject to usual conditions as between wheat pools and bank.

While the rate of advance which the Commonwealth Bank is prepared to make is less than that desired by the Government, and is viewed with disappointment by many wheat distributing organizations, it represents a definite amount, and it is hoped that at a very early date the position of the world’s market in regard to wheat will so improve as to bring about an increase in this advance. The Government will continue to do everything possible, having regard to the present financial stringency, to assist the wheatgrowers in the marketing of their present season’s crop.

Senator LYNCH:
WESTERN AUSTRALIA

– In view of the statement just made that the farmers of Australia are to be guaranteed approximately ls. 6d. a bushel at railway sidings, and of a previous ministerial announcement in this Parliament that they would get 4s. a bushel at sidings, I .wish to know what has become of the balance of 2s. 6d. ?

Senator BARNES:

– I do not know that any promise was made that 4s. would be paid, but I remember distinctly that a bill which was not passed by the Senate guaranteed the farmers 4s. a bushel.

page 945

QUESTION

QUESTION DISALLOWED;

Senator CHAPMAN:
SOUTH AUSTRALIA

– I should like to direct a question to the Minister representing the Minister for Trade and Customs, and with the indulgence of the Senate I should first like to read a couple of short paragraphs from a letter I have received from South Australia.

The PRESIDENT (Senator the Hon W Kingsmill:
WESTERN AUSTRALIA

– It is not permissible to make a statement before submitting a question. Questions are asked for the purpose of gaining and not giving information.

page 946

QUESTION

LAND TAXATION

Senator E B JOHNSTON:
WESTERN AUSTRALIA

asked the Minister representing the Acting Treasurer, upon notice -

  1. In view of the heavy fall in the value of agricultural, pastoral and other land throughout the Commonwealth, will the land tax for the current year be assessed upon the present depreciated value of land?
  2. If necessary, will legislation be introduced to enable this suggestion to be carried into effect?
Senator DALY:
Vice-President of the Executive Council · through Senator Barnes · ALP

– The answers are -

  1. Land tax will be assessed for the current year, in accordance with the law, upon the capital sum which the fee-simple of the land might be expected to realize if offered for sale on 30th June, 1930, on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of the act, the improvements, if any, did not exist.
  2. No further legislation is required.
Senator E B JOHNSTON:

asked the Minister representing the Acting Treasurer, upon notice -

  1. Is it a fact, as reported in the West Australian on the 27th ultimo, that the Taxation Department has written to the Wyalkatchem Road Board, stating that, for purposes of taxation, “the valuation of the whole of the properties in the district has been increased by 25 per cent.”?
  2. Is it a fact that wheat is the main product of the district mentioned, and that in existing circumstances land values should be reduced at least 50 per cent. for taxation purposes throughout Western Australia, instead of being increased 25 per cent.?
  3. Are similar increases of land valuations being made in other parts of Western Australia to-day?
  4. Will the Government have all valuations of land reduced immediately to accord with existing market values ?

Senator DALY (through Senator Barnes). - The answers are -

  1. Inquiries are being made.
  2. This cannot be stated without a careful examination Of all evidence relating to market values of land.
  3. Inquiries are being made.
  4. The law requires tax to be paid on the market value, as described in answer to Senator E. B. Johnston’s earlier question of this date.

page 946

QUESTION

INFLATION

Senator PAYNE:
TASMANIA

asked the Minister representing the Prime Minister, upon notice -

  1. Is it a fact, as reported in the Melbourne Herald of the 2nd instant, that, though

Cabinet is divided on the question of inflation, Ministers are unanimous in advocating some scientific expansion of credit?

  1. If this is so, is not expansion of credit, whether scientific or otherwise, inflation?
Senator DALY:
through Senator Barnes · ALP

– The honorable senator’s question involves a matter of Government policy, in regard to which it is not the practice to make statements in reply to questions.

page 946

QUESTION

PAPER-PULP INDUSTRY

Senator PAYNE:

asked the Minister representing the Prime Minister, upon, notice -

Is it the intention of the Government tomake a statement, before Parliament concludes its session this year, that may assist the early establishment of the paper-pulp industry in Tasmania?

Senator DALY:
through Senator Barnes · ALP

– Negotiations are being actively pursued between the Governments and the interests representing the paper-pulp industry in Tasmania, and the Senate will be informed as early as possible of the result of these negotiations.

page 946

QUESTION

MILITIAFORCES

Senator SAMPSON:
TASMANIA

asked the Minister representing the Minister for Defence, upon notice -

  1. What was the actual strength of the Militia Forces on the 30th June, 1930?
  2. What was the actual strength of the Militia Forces on the 31st October, 1930?
  3. Is the Minister satisfied with the progress of recruiting?
  4. What was the percentage of efficiency for the year ended June, 1930?
Senator BARNES:
VICTORIA · ALP

– The answers are -

  1. 27,093.
  2. Returns are now rendered quarterly. The latest return received was for September, and the strength at that date was 27,993.
  3. Yes.
  4. Seventy-eight per cent.

page 946

PETROL PEICES

SenatorCOOPER asked the Minister representing the Prime Minister, upon notice-

Is it a fact that the Government has ordered an investigation to be made regarding the price of petrol in Australia?

If so, is the investigation completed, and is the Minister in a position to make a statement regarding this matter?

Senator DALY:
through Senator’ Barnes · ALP

– The answers are -

  1. Yes.
  2. The investigation is not yet complete.

“WHEAT-GROWING INDUSTRY.

Price or Wheat - Sales Tax on Flour.

Senator LYNCH:

asked the Leader of the Government in the Senate, upon notice -

  1. Has the Government noticed a statement in the press to the effect that a mass meeting of wheat-growers, held lately at Perth, passed resolutions declaring that owing to the low price of wheat most farmers were faced with ruin ?
  2. In view of this serious position, what action, if any, does the Government propose to take ?

Senator DALY (through Senator Barnes). - The answers are -

  1. Yos.
  2. As a result of representations made by the Government to the Commonwealth Bank, the bank has decided to make an advance on wheat to pools and organizations at the rate of 2s. per bushel, f.o.b., equal to ls. 6d. per bushel at country stations. As the Government has no funds, and cannot get the necessary finance from the Commonwealth Bank to pay a guaranteed price, it regrets that it is unable at present to grant any monetary assistance to the wheat industry.
Senator LYNCH:

asked the Leader of the Government in the Senate, upon notice -

  1. Is the statement in the press correct which set out a proposal for imposing £7 4s. per ton on all flour locally consumed, the proceeds to be applied as an increase on the price of all marketable wheat, and also that the Government would give the suggestion further consideration ?
  2. If so, what action can the Government take, and when does it propose to take such action ?

Senator DALY (through Senator Barnes). - The answers are -

  1. A recommendation was made at the conference which met at Canberra on the 12th November that a sales tax at the rate of £7 4s. per ton be made on flour for local consumption, the proceeds of the tax to be distributed as a bonus among wheat-growers in proportion to the quantity of wheat produced during the present season. The Commonwealth Government was unable to accept the proposal, as it would have been well nigh impossible to administer the scheme.
  2. Attention is invited to my reply to the honorable senator’s previous question, intimating that the Commonwealth Bank “ has now decided to make an advance on wheat at the rate of 2s. per bushel, f.o.b., equal to about ls. Gd. per bushel at country stations. The present financial stringency prevents any monetary assistance being granted to the wheat industry by the Commonwealth.

page 947

QUESTION

FINANCIAL STATEMENT

Debate resumed from the 3rd December (vide page 892), on motion by Senator Daly -

That the paper be printed.

Senator CARROLL:
Western Australia

– Some weeks have elapsed since this unwanted foundling first made its appearance in this chamber. I remember the day well. No one - not even any supporter of the Government - was enthusiastic about it. The paper before us purports to be a statement of the Government’s financial policy as amended from time to time. Whether it will be the last statement of policy which the Government will present to us, I do not know.

I was grieved yesterday to hear some honorable senators, under cover of speaking to this motion, ‘make strong attacks upon a gentleman who came here at the invitation of the Government to advise it in regard to the financial position confronting the country. He came here and gave of his best. Nevertheless, during his stay with us, and for some time after his departure, some supporters of the Government, and indeed, some members of the Ministry, denied that he had been invited here by the Government. It was only after certain events had taken place in Australia that the Acting Prime Minister (Mr. Fenton) issued a statement in which he admitted that this gentleman came here to assist the Government on its invitation. One honorable senator yesterday attacked what he described as “ Sir Otto Niemeyer’s proposals.” I remind him that those proposals having been adopted by the Government are no longer Sir Otto Niemeyer’s proposals. They now form the policy of the Government, and when honorable senators attack Sir Otto Niemeyer’s recommendations, they are, in fact, attacking the Government they profess to support.

The statement before us contains a number of extracts from the budget speech delivered in July last. It also refers to a resolution unanimously adopted by the Loan Council in August when the Prime Minister represented the Commonwealth Government. That resolution reads -

That as the loan policy of the Commonwealth and States is wrapped up with the balancing of the budgets, representatives of the Commonwealth and State Governments should meet in Melbourne on Monday, 18th August, with the object of balancing the budgets.

At the conference between the Prime Minister and the Premiers of all the States on the 21st of August last the following resolution was unanimously adopted : -

That the several Governments represented at this conference declare their fixed determination to balance their respective budgets for the financial year 1930-31, and to maintain a similar balanced budget in future years. This budget equilibrium will be maintained, on such a basis as is consistent with the repayment or conversion in Australia, of the existing internal debt maturing in the next few years.

That is what Sir Otto Niemeyer advised the Government to do. Whether we agree with his advice or not, we must admit that at one time the- Government accepted it. I am, therefore, surprised that Government supporters in this chamber have joined with a number of Government supporters in another place to condemn these proposals!

Honorable senators supporting the Government frequently refer to “ the class to which we belong; the section of the community which we represent “. In my opinion, there is no distinct wage-earning class in Australia. There is nothing to prevent any man who to-day is working for wages from working for himself tomorrow, or from employing others th, day after. Probably there are. very few senators who have not at some time or other been wage-earners. I worked for many years for wages on mines and elsewhere. It is wrong to attempt to foster class consciousness by referring so frequently to the wage-earning class. Rather should we foster the idea that every person has “equal rights to be a ‘wage-earner or an employer of labour.

Senator Rae:

– Or that all should be millionaires.

Senator CARROLL:

– I take it that the honorable senator’s great pursuit in life is happiness. From what I have read of’ millionaires - and all I know about them is from reading - they are, as a class, very unhappy men.

Throughout this document, there are references to the legacy of debt inherited by the Government from its predecessors in office as a result of their unwise administration and extravagant spending of public money. Seeing that every government in Australia, whether Nationalist or Labour, is in a bad position financially, it is useless to blame governments for our present unsatisfactory position. Without in any way attempting to excuse any government, past or present, I suggest that no government could have survived long had it acted differently from the way it did act in the days of reconstruction after the war. Every government was forced by the people into an orgy of extravagance. Indeed, the only complaint against some of them was that they did not go far enough. The public urged that more and still more money should be spent. Had any government attempted to curtail repatriation expenditure! - which has perhaps been the greatest drain on public finances - it would have been turned out of office at the first opportunity presented to the electors. Each age has its own besetting sin, and if there is one that belongs peculiarly to this age more than another, it is that of blaming the other fellow for any trouble that may be affecting the world. We are always spotless; the other fellow is invariably the one who has got us into the mess. It is consistently claimed that governments, no matter what brand of politics they may espouse, are the cause of the trouble of the moment; never is it attributed to the people who elect and maintain those governments. Time after time, in Parliament and elsewhere, individuals publicly denounce’ governments for their alleged extravagant administration, knowing that their statements will be recorded in Hansard and the press, and absorbed by the people. Publicly stigmatizing the Government, privately they run to its Ministers, pat them on the back, and solicit their favours. We should be honest and accept our share of the blame for; the trouble. In times when the country was in a good position, and money easily obtainable, we spent it profligately. Now, when our creditors ask, “ What about that little debt of ours ?”, we respond, “ These governments have put us in a position of penury. Had it not’ been for them we should be able to pay you.” Let us face the music, stand up to the position like men, and meet our obligations. From my little experience of life I have learned that there is no crooked or twisted way of gaining prosperity, by the evasion of public responsibility and indebtedness. The only was is the honest way. No matter how it hurts, we should play the man and meet our obligations. If it is necessary to obtain an extension of time, why, let us frankly explain the position to our creditors. I am confident that if that is done the pressure will be relieved.

The position of a nation differs in no way from that of an individual. If an individual finds himself with a diminished income, he does one of two things, or, perhaps, a little of both. He endeavours to increase his income; if he cannot do that, he reduces his expenditure. He is wise enough to realize that he cannot continue to indulge in whisky and cigars, at the same time denying himself an adequate ration of bread and meat. But luxuries must be reduced to a minimum.

I have no wish to he unfair, but I believe that this Government has not made that effort to reduce its expenditure that is demanded by the needs of the moment.

Senator Rae:

– It has not cut wages sufficiently, I suppose?

Senator CARROLL:

– Never mind about wages. Wages account for but a minor portion of our national expenditure. I wish to goodness the honorable senator could lift his mind to a higher plane, and realize that that is but one of many angles to a very difficult problem. Every man has a right to obtain the best remuneration that he can in return for the labour that he sells, but when he is faced with the plain fact that the wages he demands are not available, what is he going to do to re-adjust matters ? I should be very pleased to learn of any untouched fountain pf wealth, some Fortunatus’s purse, waiting to be tapped, but, candidly, I do not believe such a thing exists.

When one realizes that the sources of income of the people of Australia have been depleted by 50 per cent, at one fell swoop, one must conclude that it is ridiculous to blame anybody for the pinch that we are feeling. The Minister in charge of the Senate made a statement with regard- to the wheat industry. Wheat has been one of Australia’s great staple crops, an asset upon which the nation has- always relied to a great extent. Year after year Commonwealth Governments have imposed burdens upon that industry and their cumulative effect has overtaxed the capacity of the industry. This is particularly so in such times as the present. Only a day or two ago a duty of £2 10s. a ton was imposed on fencing wire. Is it any wonder that in these circumstances the farmers see no ray of hope? The Minister expressed the devout hope that the price of our products will increase overseas. We echo that hope in all sincerity. While that is a factor which is beyond our power to control, we can control the cost of production, and ease the burdens that have been piled upon our important basic industries. The producers of wool, another of our great primary industries, never have, in the past, sought support from a government. Their industry has suffered the burdens placed upon it by natural and artificial conditions and has won through. But now that important industry is also in a precarious position. At last it turns to the Commonwealth Government, urging that something should be done to assist it; that a bonus should be paid on every pound of wool produced. I have just received a telegram from the south-west of Western Australia, soliciting my co-operation in that request. E believe that I speak for that industry when I say that those engaged in it would far rather be relieved of the heavy burdens that have been piled on it than ask for transitory assistance in the form of a bonus. I urge the Government to lighten the load that it and its predecessors have placed upon the primary industries; but I realize that I am practically asking for the impossible.

Reverting to the claim that appears in this supplementary financial statement, that the Bruce-Page Government was responsible for the financial position in which the country finds itself-

Senator Dunn:

– Which is quite correct.

Senator CARROLL:

– I was in Perth when the Prime Minister (Mr. Scullin) and the Minister for Markets and Transport (Mr. Moloney) passed through, en route to London. The Prime Minister was too ill to attend a civic reception that was tendered to him at His Majesty’s Theatre, Perth, and he was represented by the Minister for Markets and Transport. I was honored with a seat on the platform, and was close enough to the honorable gentleman to hear quite distinctly everything that he said, so that I am not under any misapprehension as to his statement. He said that, in order to give effect to its policy, this Government had deliberately thrown away £12,000,000 in customs revenue. Then the Minister went on to explain that having done that the Government was forced to exploit fresh avenues of revenue to recoup itself for the losses sustained. He offered no criticism of the financial policy of the previous Government. The Minister spoke of the sales tax as one new source of revenue, and congratulated the people of Australia upon the fact that never previously had a new tax met with such universal approval. This statement, I remind honorable senators, was made at a time when the newspaper press was flooded with protests from all classes in the community against the imposition of this tax, and complaining of its anomalies. No one seemed to know from day to day what it meant or how it was going to be applied, and daily fresh rulings were being broadcast by the Commissioner of Taxation. If that was the reception given by the people to a form of taxation which, according to the Minister for Markets, had received universal approval, I wonder what would have been the attitude of the people under the imposition of a new tax which had not their approval. Since the occasion to which I refer, the sales tax has been increased, and additional customs and excise duties have been imposed. I say quite openly that it is a fallacy for the people of Australia to think that the Federal Parliament, through its legislation, rules this country. It is now twelve months since the Scullin Government came into office. During that time it has brought down numerous tariff schedules and we have not been given an opportunity to deal with any one of them.

Senator Lynch:

– In all, fourteen.

Senator CARROLL:

– I venture the opinion that, before Parliament is given an opportunity to consider the Government’s tariff policy, the number of schedules will have been substantially increased. The Constitution provides that the power of the Parliament to impose taxation through customs and excise shall be exclusive. Since the Scullin Government came into office it has collected customs and excise duties under varying tariff schedules which this Parliament has not had an opportunity to consider. No one can say when we shall be invited to approve or disapprove of the Government’s tariff policy, but since we have waited for so long I suppose a little further delay will not make a great deal of difference.

I wish to impress upon the Ministry and honorable senators the urgent necessity for governmental expenses to be reduced to the lowest level compatible with the rendering of efficient service to the community. In view of the fact that the incomes of the great industries upon which we depend for our national safety have been reduced by more than 50 per cent., it is the obvious duty of this Government to take the necessary action to meet the altered conditions. The Ministry should come right out into the open and declare its determination to do the right thing. I well remember the first meeting of this Parliament in Canberra in May, 1927. “We were told then that this was the first Parliament in the Commonwealth, and that the eyes of the English-speaking world were upon us. Naturally, we felt rather proud of our position among the nations of the world at that time. It is, therefore, somewhat humiliating now to realize that, after all, the Federal Parliament is not the paramount governing authority in the Commonwealth; that the measures to be presented to it, and its deliberations on matters of moment, were held in abeyance pending the verdict of the people of New South “Wales in a recent State election. The Government should have been courageous enough to stand by its determination to give effect to the agreement entered into’ by the right honorable the Prime Minister (Mr. Scullin) with the Premiers of the various States, before he left Australia, to take all measures necessary to balance the budget. That pledge has not been honored. The people of Australia may overlook some of the misdeeds of this Parliament, but they will not forget or forgive the action of this

Government in declining to do the right thing in their direct need.

Senator LAWSON:
Victoria

.- So much has been said during the course of this debate that there is little one can usefully add; but I desire to make a few general observations on the position as I see it. This is, I understand, a special emergency session. It was called pursuant to the Melbourne conference resolutions which embodied the terms of an agreement on the financial situation made between the Prime Minister and the Premiers of the various States. That agreement followed a series of conferences with Sir Otto Niemeyer, representing the Bank of England, and Sir Robert Gibson, the chairman of the Commonwealth Bank Board, at which every aspect of the financial position of the Commonwealth was fully considered. It bears the signature of the right honorable the Prime Minister of the Commonwealth (Mr. Scullin) and the signatures of all the Premiers of the States representing every brand of politics ; and we have been called together pursuant to that agreement, in order to pass financial measures which will assist in restoring budget equilibrium.

We all know the dire need of our country. Industries are languishing. There is a lack of money, and public finance is in a state of hopeless disorder. The key to the whole situation is public finance. We shall not restore financial stability or bring about that feeling of confidence which is so essential until public finance is adjusted and we have continuity of policy in regard to financial matters. The people whom we represent are looking for leadership. They are bewildered and harassed; they are in doubt and perplexity. I do not desire to sound a pessimistic note or to pose as a Jeremiah, but I see disquieting symptoms. I have abundant faith, however, in the recuperative qualities of Australia, in its citizenship and in the character of its people. I believe that, given a lead along a courageous path, the people are prepared to follow it, but I look in vain for that courageous lead. I presume that honorable senators a’gree that we are in a period of great financial stress, if not approaching a crisis, and what we want in a period of crisis is a definite and not a vacillating policy. The people have a right to expect what those of us who have been nurtured in British traditions of Parliamentary Government look for, and that is unity of command, Cabinet solidarity, which is a basic principle of representative government. They have a right to expect the Government to speak with one voice and to give a definite lead. Until we have that we cannot restore confidence or financial stability.

But we have confronting us the amazing spectacle of honorable senators closely associated with the Government repudiating by implication, if not directly, an agreement to which the Government is a party and attacking the person who was primarily responsible for the promulgation of that agreement. With a leadership of that kind, what can we expect from the community, but doubt, perplexity, confusion? A principle in which you, Mr. President, have been nurtured is that of Cabinet solidarity - the Government speaking as one man and acting unitedly. In a time of military difficulty, as the soldiers in our chamber will explain, there must be unity of command; there must be purpose and determination and concentration of effort.. You must know exactly what your objective is and must devise the be3t means of arriving at it. But here we have a captain, the right honorable the Prime Minister, who has temporarily surrendered his command while away on Government business on the other side of the globe, and members of his Cabinet who appear to owe no particular loyalty to any leader. They do not appear to be able to follow consistently the declarations of the leader of the Government or the Acting Prime Minister (Mr. Fenton), but seem to be at liberty to act according to their own sweet will, and to speak at random in an utterly irresponsible fashion. Unless, in place of all this . confusion, we can restore confidence by having a definite policy and a clear line of action, and particularly a clear indication from the Government that it is prepared to lead the people along a definite line, we shall never find financial salvation; we shall never put the public finances on a proper basis, or restore them to a state of system and order.

What boots it to discuss at this stage who is responsible for the present position? There are economic factors beyond the control of any Government that are partly responsible for it. But what does it matter? Here we are an allegedly united people in a state of great financial difficulty. Some are more pressed than others, but obviously the position is calling for drastic remedies, earnestness, resourcefulness, fixity of purpose and definite leadership. I cannot find that definiteness of leadership in the responsible Government of this country to-day. I do not know what the Government wants us to do. I do not know where it proposes to lead the people. Is it really going to honour the Melbourne agreement, and seek to restore budget equilibrium? Is it making an honest and concerted effort to that end or is it endeavouring not to do those things which will offend its political supporters? Is it influenced by a consideration for the wellbeing, honour and credit of Australia or by political considerations in the policy or lack of policy which it has announced ? I do not know whom I am to follow. I understand that the Nationalist party is only too willing to give support to any party that is prepared to take its courage in both hands and lead the people out of this financial morass. Our party is prepared to make the necessary sacrifices in order that the interests of Australia may be placed above party considerations. That should be the attitude of all of us.

Senator Daly:

– Then why did the Nationalists in the Victorian Parliament move a motion of want of confidence in the Labour Government ?

Senator LAWSON:

– I am not answering for the Victorian Parliament at the present time, but I have no doubt that if a party in that Parliament moved a motion of want of confidence, it did so on the ground that the measures which the Victorian Government was proposing were not adequate to meet the situation.

Senator Sir William Glasgow:

– The Victorian Government was not complying with the Melbourne agreement.

Senator LAWSON:

– In many respects the Victorian Government is making a courageous effort to honour . that agreement, and I give credit to the Premier of Victoria for the fact that he has declared that the agreement must be honored and the budget balanced. I do not commit myself to agreement with all the methods Mr. Hogan has employed, but he has. said that his signature has been given to the agreement and that he proposes to honour it.

Senator Dunn:

– Without consulting his party.

Senator LAWSON:

– As an individual and Premier of the State, Mr. Hogan signed the agreement, and has since said, “ That pledges my personal honour “. He is endeavouring to carry out the agreement in that spirit. Mr. Scullin signed the agreement, and if there be anything in Cabinet solidarity or Cabinet loyalty, every member of his Government should be standing right behind him in honoring it and in carrying out its terms.

Senator Daly:

– Hear, hear!

Senator LAWSON:

– I am gladto hear the Vice-President of the Executive Council saying, “ Hear, hear “ ! I do not doubt his loyalty to his chief, but when I find members of the Cabinet travelling hither and thither throughout New South Wales condemning, in unmeasured terms, the Melbourne agreement, I say, “ What a travesty of responsible government “ !

Senator Daly:

– They are not condemning the agreement, they are criticizing the interpretation placed upon it.

Senator LAWSON:

– But when I find those criticisms couched in terms which are most offensive to a distinguished guest, I ask myself, “What is responsible government coming to in this country”? Such actions are subversive of all the principles of parliamentary government, and of a responsible executive in which I have been trained to believe.

SenatorRae. - Times change !

Senator LAWSON:

– I know that times change, but it is very difficult for one to accustom one’s self to the abrogation of principles well founded by tradition, which have a utilitarian purpose, and which, as my experience in administration has shown, are the wisest to he observed if leadership or continuity of policy are to be attained. If there is to be satisfaction in the command of a team, there must be unity and solidarity.

Senator Dunn:

– There is solidarity in the Labour party.

Senator LAWSON:

– I have seen in that party many evidences of lack of solidarity.

Senator Dunn:

– I can assure the honorable senator that its solidarity is 100 per cent.

Senator LAWSON:

– My criticism is based upon statements which I have read in the public press and upon circumstances which I have noted as a result of personal observation, and I very much doubt the solidarity of the Labour party. I certainly doubt the solidarity of Cabinet, and I cannot see any evidence of definite agreement in regard to a policy which is to save this country.

We have met for a financial session. I have taken part in emergency sessions of Parliament, and have found them characterized by a spirit of determination, concentration, earnestness1 and zeal. 33ut during this so-called emergency session, we have drifted on and on in a vague, vacillating and indefinite way. How long have we been, sitting? What has been done ? One would think that there was no crisis, no emergency, no need to meet the financial situation. The actions of the Government have been characterized by hesitancy, delay, and vacillation. Long before Parliament was summoned, it was obvious that the finances were drifting, and that the position called for immediate remedy and drastic action. Yet time was allowed to slip by. Instead of taking their courage in both hands and saying, “ Parliament must meet, irrespective of whatever elections are taking place in any of the States, so that it may have the earliest opportunity to deal with ‘ appropriate remedies to meet the present situation’”, Ministers hesitated. “He who hesitates is lost “. And that is what has happened. Instead of being strong and courageous, Ministers delayed. They listened to the voice of the tempter and finally, when they called Parliament together, presented a financial statement which is obviously a compromise between the conflicting factions in Cabinet and the party. The public still remains without definite leadership in this hour of crisis.

We cannot get financial order in this country until public finance is straightened out. As I have already said, public finance is the key to the whole situation. All along the line there will be embarrassment and difficulty and, in some instances, bankruptcy - all those privations that our people are called upon to suffer - as well as the dread spectre of unemployment which haunts us all. And these are what it is our duty to cure. We ought to be able to deal with them above party considerations or party manoeuvring. We ought to be able to concentrate in a united effort towards finding adequate solutions for the present difficulties. I have no right to speak for the Nationalist party, to which I belong, but I feel confident that if the Government would approach the position in that spirit, honorable senators of my party would meet the Government more than half way in an endeavour to apply appropriate remedies to the present situation. Surely any remedies proposed should involve certain principles. Senator Carroll referred to domestic economy, and pointed out what a private individual would have to do in the event of his income suddenly diminishing while his expenditure remained at the same level. Such a person would have to drastically economize. There is no difference in principle between the individual and the nation. It is absurd to be imposing burdensome and confiscatory taxation upon the people at a time like this. These heavy burdens are being imposed at a time when the incomes of the people have been diminished, and when they are less able to bear added responsibilities. It may be necessary to increase taxation. I believe in every effort being made to balance our budget; but before there is any increase in taxation, such as is proposed, there should be evidence of substantial economy. It is absurd to say that greater economy than that proposed by the Government cannot be effected. The Government is proceeding as it would in normal times, as if everything were all right. Just as private individuals have to economize in times of depression, so governments should do likewise, without, of course, sacrificing efficiency.

Senator Dunn:

– Did the Bruce-Page Government exercise economy?

Senator LAWSON:

– I am not discussing the previous Government at present. T point out that there is an urgent cry for economy in public expenditure. Certain services have to be maintained in a state of efficiency, but the principle which the people expect us to support is one under which economy precedes increased taxation. Petty economies are of no value ; we need something of a substantial nature which will aid the country at a time of crisis. If it is a question of imposing additional taxation, surely the principle which should find expression in our legislation should be that of equality of sacrifice. There should not be any sheltered persons in the community. No one wishes to bring men ‘below the bread and butter margin, or to deprive them of the basic wage which they ought to receive.

Senator Dunn:

– Who are the persons in sheltered positions?

Senator E B Johnston:

– Members of Parliament have been sheltered for a long time.

Senator LAWSON:

– Yes, as members of this Parliament, we have, up to the present, been in a sheltered position.

Senator Dunn:

– Does the honorable senator include public servants?

Senator LAWSON:

– In some instances, yes. There should be equality of sacrifice, according to the ability to bear the burden.

Senator Hoare:

– Can it be said that members of Parliament, who are here to-day and gone to-morrow, occupy sheltered positions?

Senator LAWSON:

– They are sheltered to the extent that up to the present their emoluments have not been interfered with. When, forced by necessity, we now reduce our own allowances, there is not nearly the credit due to us, as a Parliament, that would have been ours if this gesture had been made when we first saw the financial crisis approaching. The saving involved is infinitesimal; but as a recognition that the people had suffered in their private incomes, that there had been a diminution in the national income, and that nearly every person was suffering through his pocket, such a lead by this Parliament at that time would have been more valuable than it is at this eleventh hour.

Senator Rae:

– To be effective we should have gone down to the basic wage?

Senator LAWSON:

– I do not say that.

Senator Rae:

– I do.

Senator LAWSON:

– I differ from the honorable senator. We are suffering a percentage reduction which, if made earlier, would have been more valuable, as it would have shown the people that we were prepared to accept our share of the responsibility.

Senator Hoare:

– It would have been an example.

Senator LAWSON:

– Yes, example is better than precept.

Senator Rae:

– That is why I am opposed to reductions. I believe in keeping up wages.

Senator LAWSON:

– The honorable senator holds views which are diametrically opposed to the political convictions which I have held for many years. I respect the honorable senator’s opinions, and I presume that he will give me credit for my convictions, which are as honestly held as are those of the honorable senator. Finally, I again appeal to the Government to give the people a lead. If it does it will find that under courageous leadership the people will follow it along the hard path, even though it may mean considerable sacrifice.

Senator O’HALLORAN:
South Australia

– During the discussion on the financial statement presented by the Vice-President of the Executive Council (Senator Daly), the Government has been besieged with requests to adopt different courses of action, and overwhelmed with advice from honorable senators opposite, who have endeavoured to show in which direction its policy is wrong and why theirs is right. Because the Government has refused to accept this advice it has been condemned; but I think that any unbiased person, who considers all the circumstances, will admit that the Government is doing its best to grapple with the situation. In considering the situation from different aspects we should not lose sight of the most important factor - the responsibility for the position with which Australia is at present confronted. No honorable senator opposite has said that it is the fault of this Government or of the party which it represents. No one will have the temerity to say, in view of the short time in which this Government has been in office-

Senator Sampson:

– This Government has been in office for twelve months.

Senator O’HALLORAN:

– The honorable senator may have forgotten the circumstances under which this Government came into office. Surely he will not charge this Government with responsibility for the economic depression and the lack of budget equilibrium which exists.

Senator Sampson:

– Was the previous Government responsible for the depression ?

Senator O’HALLORAN:

– It showed a lack of foresight by failing to take action when the financial depression was approaching. The previous Government is also responsible for the accumulated deficit with respect to our internal budgetary position.

Senator Sir William Glasgow:

– If the honorable senator read the financial statement submitted to Parliament he would see that that is not so.

Senator O’HALLORAN:

– That document discloses that during the regime of the previous Government there was a steady drift in the finances of the Australian nation. The Bruce-Page Government inherited a surplus of £7,500,000 in 1922, but when it was defeated in 1929 it left a legacy of debt or commitments amounting to £6,500,000.

Senator Sir William Glasgow:

– And paid £14,000,000 into the national debt sinking fund in excess of the statutory requirement.

Senator O’HALLORAN:

– The finances of the Commonwealth went to the bad during the Bruce-Page regime to the extent of £14,000,000. Senator Carroll said that a nation, like an individual, should live within its means. If the late Government had recognized that fact much earlier the position would not have been as bad as it is to-day. According to the trade bulletin published by the Commonwealth Statistician, there was a continuous drift in our overseas position during the period the late Government was in power. Prom 1923 to 1929 the adverse balance in overseas trade, including bullion and specie, was £42,236,685, and as ships’ stores established a credit of £15,801,394, a net debit in our overseas trade balance of £26,000,000 remained. That is to say that during that period Australia imported goods to the value of £26,435,287 in excess of those which we exported. That, however, is an unimportant portion of the story. The great tragedy is that during that period there were huge commitments for interest overseas which could be met only by the exportation and sale overseas of Australian products. The interest payable abroad during the same period was, approximately, £154,000,000, so that during prosperous years the Commonwealth failed to balance its accounts with the outside world to the extent of £180,000,000, or at the rate of £30,000,000 per year, while the Bruce-Page Government was in office.

Senator Sir George Pearce:

– The honorable senator is including interest on State debts, over which this Parliament has no control.

Senator O’HALLORAN:

– I am dealing with the relationship of the Commonwealth with the outside world. It is the duty of this Parliament to prevent the States doing anything detrimental to our relations with the outside world. This adverse trade balance was met by the flotation of loans abroad. Of a total overseas debt of £572,000,000, approximately £180,000,000 has, in recent years, been used to balance our trade position. There has been a release of credits in Australia which, to some extent, counterbalances that expenditure. The great difficulty which we have to face is the dead weight of interest indebtedness overseas, a considerable proportion of which was incurredby the Bruce-Page Government. The internal budget difficulty and the external trade difficulty, to which I have referred, existed when the present Government took office. When the late Government assumed control of the Commonwealth, Australia had a favorable trade balance with the rest of the world, due largely to there being an accumulation of primary products, which were sold at high prices, and also because of the operations of Bawra. Had those credits been properly used, the adverse trade balances would not have been created. When the balance of trade set against Australia, it was the duty of the then Government to take prompt steps to correct it.

We are told that the Government ought to unpeg exchange. Why did not the late Government do so between 1924 and 1929, when the exchange difficulty assumed big proportions? Why did it continue its policy of borrowing abroad, and of keeping exchange at such a low level, that it deprived the primary producers of Australia of many millions of pounds?

Senator Sir George Pearce:

– The Government did not control exchange in 1924; but it does to-day.

Senator O’HALLORAN:

– What greater control over exchange has the present Government than the late Government had?

Senator Sir George Pearce:

– The Acting Treasurer’s statement shows the position with regard to exchange.

Senator O’HALLORAN:

– The law controlling banking is exactly the same to-day as when the Bruce-Page Government was in office.

Senator Sir George Pearce:

– The honorable senator forgets the legislation passed soon after the present Government came into power.

Senator O’HALLORAN:

– It is true that we passed legislation relating to the export of gold; but the influence of gold exports on the exchange position is limited. The principal exchange factors are the credits created abroad by the sale of our wool and wheat and other primary products. Gold production and export is an almost negligible factor in determining the exchange position.

Senator Sir William Glasgow:

– Supposing the exchange position were reversed, would it not be possible to adjust it by a transference of gold?

Senator O’HALLORAN:

– That has been done in the past; it was done in the early days of the late Government’s administration.

It has been urged that the present Government should grapple with this problem in the traditional way. As that means that it should follow the policy of the late Government, which landed Australia in her present difficult position, is it to be wondered at that the present Government has refused to accept such advice? When I charged the late Government with extravagance, the right honorable the Leader of the Opposition (Senator Pearce) asked me to enumerate some items of expenditure which I regarded as extravagant. I shall refer to one item, to which I have referred repeatedly since my election to this chamber - the expenditure on assisted migration. Whenever that question was raised, the reply of the late Government was that there was room in Australia for millions of people, and that we should spend money to bring them here. The following table shows the cost of the passage money of the assisted migrants who arrived in Australia between 1923, and 1929 : -

In those nine years the Commonwealth expenditure for passage-money for migrants amounted to £1,482,318.

Senator Sir George Pearce:

-The best investment we ever made.

Senator O’HALLORAN:

– Forthe same period the cost of the London organization was £256,311, and that of the Australian organization £336,184.

Senator Sir George Pearce:

– It was money well spent.

Senator O’HALLORAN:

– During those nine years, for the greater portion of which the Bruce-PageGovernment was in office, over £2,000,000 was expended in bringing work-seekers to this country. For the most part they were men and women without capital or ability to create occupations for themselves, many of whom to-day are numbered among the unemployed.

Senator Cooper:

– Many of them have made good.

Senator O’HALLORAN:

– The honorable senator knows that every mail brings letters from these unfortunate migrants asking to be repatriated to the Old Country. Many of them, who despair of obtaining employment in Australia, are paying their passages back to England. I have always urged that there should be no assisted migration to Australia until opportunities have been created for the successful absorption of the migrants in industry. Those opportunities were not created while the immigration policy was being given effect to. If, instead of spending £2,000,000 in bringing migrants to Australia, the Government had expended it in building up Australian industries, those industries would have acted like a magnet and attracted the right kind of migrant. Despite the protests of the then Opposition, the late Government continued this policy. To the extent that that policy has assisted to bring about the present unsatisfactory state of affairs, honorable senators who supported it must accept responsibility.

Senator Sir George Pearce:

– The migration policy of the late Government is not the cause of the present unemployment.

Senator O’HALLORAN:

– During the period to which I have referred, 220,000 assisted migrants were brought to Australia. That is approximately the number of unemployed in Australia to-day.

Senator Sir William Glasgow:

– Does the honorable senator suggest that no migrants should have been allowed to enter this country?

Senator O’HALLORAN:

– No government should spend money in forcing migration beyond the capacity of a country to absorb migrants. This forcepump system of building up our population by holding out tempting baits in the form of assisted passages and training schemes has inflated the population of Australia beyond the country’s natural capacity to absorb workers. As a result unemployment is rife. The present Government has definitely reduced expenditure on migration. It has set itself against bringing out work-seekers to compete in an. already over-crowded labour market.

Senator Sir George Pearce:

– Nevertheless, unemployment has increased to 20 per cent, of the population since the present Government took office.

Senator O’HALLORAN:

– The present position is not the creation of this Government, nor is it the outcome of a change of policy in relation to migration. The depression from which Australia is suffering is world-wide. It is the result of the operation of that policy in which honorable senators opposite believe. I have heard that it is sometimes desir- able to take one poison as an antidote for another; but I have not heard of any doctor prescribing a stronger dose of the poison from the effects of which a patient is already suffering.

Senator Sir George Pearce:

– What has the present Government done to improve the position ?

Senator O’HALLORAN:

– It is because the steps which the present Government is taking to deal with the situation differ from those followed by the previous Government that honorable senators opposite criticize them. It is quite within the province of the right honorable senator and his colleagues to criticize the Government. They are merely acting according to their own lights. And, by so doing, they are doing a service to the people of Australia, because they are demonstrating that this Government is at least not perpetuating the traditional policy of indifference which has landed the country in its present difficulties.

We have been told that this Government has pursued a policy of extravagance. In what direction has it been extravagant during the time it has occupied the treasury bench? It has reduced expenditure on the ordinary services of the Commonwealth by some £2,250,000, despite the assurance of Dr. Earle Page, when he presented his last budget in another place, that his Government had used the pruning knife to the utmost, and had drastically cut departmental costs to the bone.

Senator Sir George Pearce:

– This Government is spending £4,000,000 more per annum than did the Bruce-Page Government.

Senator O’HALLORAN:

– I shall examine the figures, for the instruction of honorable senators opposite and the information of the general public. The last budget for a complete year that was presented by the Bruce-Page Government was that for the period ended the 30th June, 1929. Revenue expenditure . for that year amounted to £63,77S,746, and loan expenditure £7,735,103, making a gross expenditure of £71,513,S49. Now let me take the proposed expenditure of this Government, according to its budget, of which this financial statement is supplementary. Revenue for the year will amount to £66,300,000, and loan expenditure £2,600,000 ; a total of £68,900,000, or, approximately, £2,500,000 less than the amount expended by the Bruce-Page Government during the last financial year that it held office.

Senator Sir George Pearce:

– That might go down at a public meeting, but not here.

Senator O’HALLORAN:

– I remind the right honorable senatorthat it was he who introduced the custom of including both revenue and loan expenditure when examining the financial position of the nation. I submit that it is necessary to take cognizance of the two items. During the term of office of the Bruce-Page Government, when the loan expenditure of the Commonwealth, and particularly of the State Governments, was excessive, quite a considerable proportion of the country’s income was derived from customs and excise duties. This Government is not so fortunate in that respect. I shall deal with some of the items which have led to the increase in revenue expenditure since the presentation of the BrucePage budget on the 30th June, 1929. The actual increase in expenditure from revenue provided this year, compared with that for the year ended the 30th June, 1929, amounts, in round figures, to £2,745,000. Of that amount, £1,000,000 represents increases in old-age and invalid pensions. Portion of that increase is due to additional population, but, in the main, it is attributable to the consequences of the prevailing depression. Many people who were able to subsist on their own resources, or who were supported by their families, have now been forced to fall back on the provision made by the Commonwealth Government in the form of old-age pensions. There has been an increase of nearly £200,000 in pensions to exsoldiers, and a very considerable increase in the interest bill of the Commonwealth, also a special grant of £330,000 to South Australia. A further sum of £1,000,000 was originally provided in the Scullin budget for the relief of unemployment in the States, but the other State Treasurer’s have generously foregone the bulk of that amount in order that it may be used to assist the much harassed Treasurer of South Australia, the most unfortunately placed State at the present time. I am aware that that subject will be discussed when a bill is later introduced into this chamber, and I shall say no more at this juncture, except that the people of South Australia appreciate the generosity of the Commonwealth, and the generous spirit which prompted the Treasurers of the other States to forgo that money in order that it might be used to help South Australia. Those commitments, which had not to be provided for by the BrucePage Government in its budget, total far more than the additional expenditure from revenue of £2,750,000, which is proposed in this budget.

Some honorable senators opposite, and particularly Senator Cooper, levelled at the Government a charge that it was raising £12,000,000 from additional taxation this year. It is doing no such thing. It does hope to raise a little extra revenue from that source - from memory about £1,750,000 - but the bulk of the taxation which the Government has been compelled to impose is to replace other forms of revenue which it has had to forgo. Senator Carroll quoted a statement allegedly made in Perth by the Minister for Markets (Mr. Parker Moloney) when that gentleman was en route for the Imperial Conference, that the Government had deliberately closed certain channels of revenue in order to balance its external trade position. The Government had no alternative. It has had to ask the people of Australia to make good, from some other source, that which was lost in that direction. A comparison of the taxation which this Government proposes to levy for the current financial year will disclose that it is slightly lower than that levied by the Bruce-Page Government in the budget to which I have referred. I think that the total direct and indirect decrease amounts to 7s.11d. per head of population.

So much for the criticism that has been levelled at the Government. This Government has practised economy, and has done all that it possibly can in the limited time at its disposal to bring about that budget equilibrium which is so enthusiastically advocated by honorable senators opposite; an ideal about which they were not so greatly concerned when they sat on this side of the chamber a little over twelve months ago. It is wellknown that our national income has been seriously .depleted as a result of the fall in the prices of wool and wheat. Various estimates have been made by public men, by members of Parliament and by others, that that loss ranges from £30,000,000 to £100,000,000. I calculate that the actual loss is in the vicinity of £55,000,000 to £65,000,000 for this year.

Senator Sir George Pearce:

– What about the fall in the price of metals? Wheat and wool are not the only commodities that have fallen in price.

Senator O’HALLORAN:

– The actual difference would be about’ £60,000,000, including all commodities. One factor has to be taken into account when considering the effect of that on the national income. It is how that income, derived from the sale of wheat, wool, metals and other commodities, was used in bygone days and whether any change has been made in the mode of expenditure. In previous times, a very substantial portion of the national income was used to purchase luxuries from abroad, such as motor cars, grand pianos and pianolas. The huge annual commitment for fuel on which to run motor cars is also a drain on the national income. If people have the money with which to buy such luxuries, imports of that nature cannot be stopped. Unfortunately, motor cars and the fuel with which to run them are not produced in Australia, although we hope that something will be done to develop our shale oil industry and thereby render us independent of oil supplies from other parts of the world. A very large portion of the national income was also used in previous years to purchase from abroad commodities which could be, and are at present being made in Australia. One has only to glance at the huge drop in customs revenue to realize that in this respect there has been a very substantial decrease in the drain on our national income. To-day, the nation is producing many commodities which it previously paid people on the other side of the world to produce. To that extent ive are better off. That provides a measure of employment in Australia and circulates among our own people money that was formerly circulated among the people of other countries.

This policy has been continued by the present Government with considerable vigour - some honorable senators opposite seem to think with altogether too much vigour.

Senator Sir George Pearce:

– As the honorable senator will discover when next he appears before his constituents.

Senator O’HALLORAN:

– My constituents are under no misapprehension concerning my views on protection. As regards the commodities which can be economically manufactured or produced in Australia, I am a prohibitionist. I believe that most of our staple requirements in the form of clothing, ordinary timber manufactures, boots and shoes, as well as a number of other lines which, for many years, have figured largely in our list of imports, can be’ produced in Australia at a cost that will compare favorably with the prices of the imported commodities. The manufacture of blankets may be cited as a case in point. Until the tariff on woollen goods was increased by this Government our importations of blankets were very heavy.

Senator Payne:

– From 80 per cent, to 90 per cent, of Australia’s requirements in blankets have been manufactured in the Commonwealth for many years.

Senator O’HALLORAN:

– I repeat that, for the last five or six years, our imports in blankets have been considerable. But to-day, as a result of this Government’s policy, importations have ceased, and the prices charged for Australian blankets compare more than favorably with the cost of the imported article. I am informed that with the introduction of a slightly greater measure of mass production and a little better organization, it should be possible for our manufacturers of blankets to market their product overseas.

Senator Payne:

– They have had practically a monopoly of the Australian market for the last ten or twelve years.

Senator O’HALLORAN:

– This Government, by the enforcement of its tariff policy, is giving Australian secondary industries a chance to establish themselves on a sound basis. Unfortunately, because of the prevailing depression, they are not able to expand to the extent that would have been possible, if this opportunity had been made available to them in former years of good seasons and high prices. This is one reason why the effect, on employment of this Government’s tariff policy, is not as pronounced as it was hoped it would be. But in the discussion of this problem we should consider what the unemployment figures would have been if the Government had not taken somewhat drastic action to safeguard Australian industries. Many would have been closed down and our employment difficulty would have been much more serious than it is to-day. Advocates of freetrade, and there is still a limited number, appear to ignore the effect of such a policy upon our secondary industries. Honorable senators opposite are continually referring to the value to the Commonwealth of our great staple industries. We, on this side, admit that sustained production of wool and wheat on an economic basis means much for the prosperity of this country. But an examination of the figures, to be found in the Commonwealth Year-Book for 1929, will disclose that our secondary industries are responsible for a considerable proportion of the wealth produced in the Commonwealth, and they must also be credited with providing employment for large numbers of operatives who, in their turn, are consumers of the products of our primary industries. The number of persons employed in our secondary industries in 1929 was 464,000, the wages paid to them amounted to £91,000,000, the value added to the raw materials in the process of manufacture was estimated at £167,000,000 and the value of the total output of the secondary industries for that year was £417,000,000. Practically the whole of the raw material used in our secondary industries, valued at £159,000,000, was produced in Australia. It is estimated, further, that the production of these raw materials required by our secondary industries gave employment to another 300,000 persons.

Some years ago the Bruce-Page Government appointed an Economic Advisory Committee of experts to inquire into and report on the economic effects of the tariff. After a careful investigation the committee came to the opinion that under freetrade conditions approximately one-half of the secondary industries of the Commonwealth would have been eliminated. As a result, the national income would have been reduced by £129,000,000 per annum because we should have been obliged to pay that sum to manuafcturers in other countries for the production of commodities which under our system of protection, we now manufacture in this country, and the persons employed in those secondary industries would have been obliged to turn their attention to other avocations. I think we may safely assume that they could not have been fully absorbed by our primary industries.

Senator Sir Hal Colebatch:

– What did that Economic Committee say about the present protective policy of the Commonwealth ?

Senator O’HALLORAN:

– The present policy was not in operation, so the committee could not offer any opinion concerning its effect upon industry generally.

Senator Sir Hal Colebatch:

– But what did the committee say about the protective policy which was then in force ?

Senator O’HALLORAN:

– In the main, it endorsed that policy.

Senator Sir Hal Colebatch:

– On the contrary, it declared that unless the tariff was reduced, it would bring down the Australian standard of living.

Senator O’HALLORAN:

– I repeat that after considering the relative benefits of freetrade and protection as applied to industry in Australia, in the main the committee endorsed the protective policy of the Commonwealth. If this policy were modified to any material extent, we should have to look to other sources for the necessary revenue to carry on the administration.

Senator Sir Hal Colebatch:

– The present prohibitive policy of this Government does not bring in any revenue.

Senator O’HALLORAN:

– But I am speaking of the general effect of our tariff policy, and my remarks have particular reference to arguments adduced by one or two honorable senators opposite, who urged that we should abandon protection and revert to a policy of freetrade.

This Government has done what it set out to do. It has checked the flood of imports, and has done something to stimulate our secondary industries. By its action it lias prevented a further drift in the national income to the extent of approximately £30,000,000 or £40,000,000. We propose to pursue this policy, because we believe that only in this way will it be possible to reach budget equilibrium. Obviously it is impossible to balance the budget while we have an army of about 200,000 unemployed. The Government has been criticized because it believes that it is impossible to balance its budget unless it can ensure the profitable employment of the great majority of those who are at present out of work. The history of these attempts in some of the States to balance budgets, demonstrates the truth of what I am saying. In my own State, for example, we all remember the enthusiasm with which a young Treasurer, who swept the polls in 1927, set to work to square the State ledger. We had a special session of Parliament for that purpose; but at the end of the financial year, despite heroic attempts on the part of the Treasurer to secure economies, and despite also the burdensome taxation which was imposed upon the people, the deficit was the greatest in the history of South Australia. Since then there have been successive deficits, which to-day threaten to overwhelm the State Treasurer. That attempt to balance the budget was responsible for increased unemployment in South Australia at a time when the problem was almost negligible in the other States, and unhappily the position in that State is so acute to-day that about 60,000 people are living on rations provided by the Government. This number includes about 20,000 wage-earners, who, although willing and anxious to work, are unable to find employment. They are costing the State in relief £14,500 a week.

I invite honorable senators opposite to demonstrate how it is possible to balance budgets when unemployment is so acute in all the States. These workless people, besides being a burden to their government, are themselves non-taxpayers. It is estimated that every adult person, by indirect taxation through the customs, contributes between £6 and £7 to the Commonwealth revenue. Obviously, the 60,000 persons who are living on rations in South Australia are not contributing their quota. Their expenditure on necessaries of life and other commodities has been curtailed by probably 50 per cent., so that on a conservative estimate the loss to the Commonwealth Government, from this source alone, is, at least, £150,000 a year. The State Government is also losing heavily through reduced income taxation and other charges. This Government is endeavouring by the exercise of wise economy and by increasing the Commonwealth revenue wherever possible, without making taxation too burdensome on the people, to achieve a measure of financial equilibrium - if not to actually balance the budget to at least get within striking distance of doing so, and at the same time cultivate an ability to increase employment by which the number of taxpayers may be increased. In that way the burden may be spread over more shoulders and made to fall lighter on the individual. That is the only sound policy to be adopted by any government in getting Australia out of its financial difficulties.

We are asked, “ How are you going to do this?”; and we have been subjected to quite a lot of criticism because, among other things, it has been suggested by us that a measure of credit expansion may be practised. I propose to show that there is nothing terrible in the measure of credit expansion propounded by members of the Labour party, and that experience shows that the prophecies made to-day will prove to be false, as were those which were made when a previous Labour government was taking the initial steps to establish the Commonwealth Bank, and to issue Australian notes. One wonders why some of these criticisms were not levelled at the governments which controlled Australia during the war, because if ever there was a material inflation of currency in Australia, it occurred during that period. It is, therefore, advisable in examining this subject to consider what occurred during the war and see whether the prophecies made to-day are in any way substantiated by the experience of the war years. We are told to-day that there are three objections’ to a policy of credit expansion; that if credit is expanded we shall not be able to find profitable work to do; that the cost of living will be increased; and that a tremendous burden will be imposed upon the export industries. I shall deal with these seriatim.

Dealing with the first objection, that profitable work could not be found from the credit made available, I venture to say that a restriction of the circulation of the monetary power of Australia has been responsible for a great deal of the unemployment that exists to-day, and that if steps were taken to loosen credit a definite move forward in the absorption of our people in profitable employment and increased production would follow. In South Australia we have had three years drought over the whole of our pastoral areas, and in some districts it has continued for five years. The result is that holdings have been denuded of stock, improvements have fallen into a state of disrepair, and what was formerly a great and prosperous industry is to-day in a very parlous condition. Twelve months ago, while the drought still continued, we told ourselves - and we fondly believed that we were telling ourselves the truth - that as soon as the drought broke there would be a material improvement in the prosperity of the State. The drought has broken, and to-day there are fields of luxurious fodder waving in the wind where twelve months ago there were dust holes producing something most unpleasant to face in the form of daily dust storms that made the lives of the people in those areas a veritable hell upon earth. But from an economic stand-point the State is no better off to-day with its fields of grass than it was with its dust holes, because there is no money available for restocking. [Extension of time granted.] Pastoralists have not been able to restock their holdings. Honorable senators opposite say that it is useless to re-stock thém: because wool cannot be produced at present day costs. They say that, unless working costs can be reduced, the woolgrowing industry must go by the board. My opinion is that at prevailing values for sheep these holdings can be profitably restocked, and that even with low prices ruling, wool can be profitably produced. But nothing can be done until the holdings are restocked. In the north, north-west and north-east of South Australia the restocking of these holdings would lead to the direct employment of between 1,000 and 1,500 men who were formerly employed on the properties, and the seasonal employment of many others who were engaged at shearing, and in many other directions in days gone by.

Among those who have been chosen to fill the role of advisers to the Government, and say that wages must be reduced, are many chairmen of directors of stock and station firms, and directors of banking institutions. What contribution have they made towards the rehabilitation of the pastoral industry? When the price of wool was high during the war, and when stock was bringing high prices, the former raised their commission rate for the sale of wool by a fraction of 1 per cent., and for the sale of stock by 1 per cent., and they have not yet brought down those rates. Ear from making any sacrifice to rehabilitate the pastoral industry or reduce costs, which they are imploring others to do, banking institutions have recently raised their overdraft rates by 1 per cent. . That is their contribution towards the rehabilitation of the industry. In the face of such hypocrisy are we to stand idly by and do nothing to endeavour to rectify the position ? Are we to allow these financial institutions, which undoubtedly do control Australia at the present time, to maintain their control and drive the country to the verge of national insolvency, if not actually into that pitfall? Or should we not take some steps, not to annihilate these people or impose any injustice upon them, or deprive them of anything which is their legitimate right, but to compel them to recognize their responsibility to the community just as the community recognizes its responsibility to them? That, put briefly, is the policy which the Labour party proposes to pursue, and which, if adopted, would, in my opinion, solve our difficulties in this country.

The second objection raised is that an expansion of credit would lead to an increase in the cost of living. At the beginning of the war the Australian note issue was approximately £9,500,000’. By June, 1915, it had increased to £32,000,000, and at the end of the war it was as high as £55,500,000. Was there any talk of inflation then?

Senator Sir Hal Colebatch:

– Yes.

Senator O’HALLORAN:

– Was there any criticism of the action of the authorities responsible for the control of the Commonwealth Bank?

Senator Sir Hal Colebatch:

– Every one recognized that they could not help what they were doing.

Senator O’HALLORAN:

– I am glad to hear my friend make that admission.

Senator Sir Hal Colebatch:

– Every one recognized the danger of what was being done, and that we should, subsequently, have to pay for it.

Senator O’HALLORAN:

– The note issue continued to increase until 1921, when it was £58,250,000. At that time the population was about 5,500,000 and the note issue per head of the population was thus, approximately, £11. On. the 30th June last the population of Australia was, approximately, 6,500,000, and the note issue by then had been reduced to £45,000,000, or approximately £7 per head of the population. If the figures for the last year of the Bruce-Page Government are taken the comparison is even worse. The note issue was then £42,000,000, or a little over £6 per head of the population. In considering this deflation of the note issue we have also to consider how the other available monetary wealth of Australia is held; that is to say, how the nation’s working capital is distributed. We find that the fluidity of the monetary wealth of Australia has been reduced by over 50 per cent, since 1921. In that year we had £13,000,000 more notes in circulation than we have to-day, but, in addition to that the monetary wealth of Australia wa3 much more fluid than at present. The amount in the trading banks on current account was £128,000,000, and ,the amount on fixed deposit was £119,500,000. There was thus a balance in favour of current account over fixed deposits of ‘ £8,500,000. On the 30th June last the amount in the trading banks on current account was £103,500,000, and the amount on fixed deposit was £206,500,000, the balance being in favour of fixed deposits to the extent of £103,000,000. From 1921-30 there was thus a tendency to withdraw the nation’s working capital out of those avenues where it could be used to provide employment or help in wealth production and place it in avenues where it could not be so readily accessible for those purposes. I venture to say that that factor has had a great deal to do with the prevailing unemployment in Australia.

Senator Sir Hat Colebatch:

– Why was it done?

Senator O’HALLORAN:

– I take it that it was done because of the very attractive rates of interest that were being offered for fixed and permanent investments, as against the lower rate of return in industry generally.

Senator Sir Hal Colebatch:

– It is because investments in industry have been found unprofitable.

Senator O’HALLORAN:

– I do not think that” that is correct. The return from a permanent investment has become too great in comparison with the profits derived from industry, and unless a readjustment can be made there is little hope for this country. The road to readjustment is not along the lines suggested by honorable senators opposite, but is to be found in the policy of this Government. If, as we have been told, inflation means high prices, why did not the increase in the note issue of £3,000,000 during the past twelve months increase the cost of living in Australia? The reverse has been the case. Instead of the living costs increasing there has been a decrease of approximately 15 per cent, in wholesale prices during that period. There are two schools of economists today. One holds to the belief that monetary power should really be the master of production and trade and commerce as it is to-day, and the other that it ought to be its servant. The only school entitled to consideration is the latter.

Senator Sir Hal Colebatch:

– Does any one suggest that money should be the master of the situation?

Senator O’HALLORAN:

– Yes. The opinions expressed by honorable senators opposite including Senator Colebatch strongly suggest that- they believe in maintaining the present system under which money power is undoubtedly the master of production and trade and commerce in this country. It is the policy of this Government to loosen those shackles and to relieve the burdens which have been placed upon industry in Australia ; but the policy has been condemned by Senator Colebatch and those with whom he is associated.

We are told that we have to deflate and to continue doing so. Let us see where this policy of deflation will lead us. The Government has turned a deaf ear to the pleas of honorable senators opposite, and has refused to take the advice which has been tendered to it so freely during the debate because they know the effect of such a policy.

Senator Sir Hal Colebatch:

– That policy was adopted at the beginning of August.

Senator O’HALLORAN:

– The deflation policy which has been pursued, has brought about a tremendous fall in property values, equities have been destroyed, and businesses have been ruined to such au alarming extent that if we continue the present policy much longer Australia will be unable to meet its commitments.

That brings me to the last point I wish to make. The Labour party wishes to honour the Melbourne agreement and to balance our budget; but it realizes that in the existing circumstances it cannot be done in one year. The orthodox methods have failed and will continue to fail until national insolvency confronts us. Do honorable senators opposite realize that if we deflate to the 1919 basis, it will take all the revenue collected in taxation at the present rate to meet the interest on our public debt, leaving nothing for the maintenance of those great services which are now provided by the Commonwealth and the States?

Senator Sir William Glasgow:

– But this Government is not reducing expenditure.

Senator O’HALLORAN:

– The policy of this Government is to restore currency equilibrium and to provide sufficient credit to enable the people of this country to engage in profitable production. Numerous suggestions have been made in this connexion. Some say that the fall in world prices is due to overproduction, and some to other causes. The most informative article I have read on this subject is by Sir Henry Strakosh who very definitely points out-

Senator Sir Hal Colebatch:

– The honorable senator, is not quoting that gentleman as an authority on note inflation ?

Senator O’HALLORAN:

– No. Sir Henry Strakosh supports the opinion that we hold : that world depression is due to those fundamental difficulties in the present financial system which we are endeavouring to correct.

Senator Sir Hal Colebatch:

– The Government which the honorable senator is supporting is to put the whole world right!

Senator O’HALLORAN:

– The fundamental difficulty of the present financial system is due to the fact that the gold supplies are mis-controlled by the Bank of France, and by the Central Bank of the United States of America, with the result that trade depression is rampant in almost every country and is now spreading to those which I have just mentioned. Senator Colebatch asks if this Government is going to put the whole world right. We are not the custodian of world politics and world conditions, but only of those which affect Australia. We do not believe in allowing our people to be reduced to the level of slaves, because the world at large proposes to do something which, in our opinion, is economically unsound. We are going to maintain those conditions which have been established in this country. The latest support which we have received - and we have received a good deal from eminent authorities - comes from Sir James Mitchell, the Premier of the State of which Senator Colebatch is such a distinguished and illustrious representative in this chamber. According to a report published in the Adelaide Register of the 22nd November, Sir James Mitchell said that -

The deflation movement had got out of hand in Western Australia. The value of property had fallen from the peak of £250,000,000 to about £175,000,000, rendering it impossible to carry on trade in the ordinary way.

He contends that deflation has got out of hand. That is what honorable senators on this side say. We contend that some means of restoration must be adopted to provide for balancing our budget over a longer period. The present low prices for wheat and wool will not be permanent.’ There are already signs that the price of wool will improve in the near future, and it can be definitely asserted that we cannot continue to produce wheat at the prices now prevailing. This Government has been condemned because, in effecting economies, it has not attacked the wage principle which has been, definitely established as a result of the application of the policy of the Labour party. Because we believe that the Australian people support that policy, we shall not attack the conditions enjoyed by a .great mass of the public servants. We have been told that we have been delinquent in our duty to the community. Lot us see what those who are supposed to occupy sheltered positions in the Public Service are receiving. The minimum and maximum salaries of certain, ern.ployees in the Postal Department are as follows:- Postmen, £212 to £244; mailsorters, £212-£295; telegraphists, £232-‘ £306; linesmen, £233-£257. Is it ‘suggested by honorable senators opposite that no less than £1,000,000 should be taken from men who are earning from G200 to £300 per annum, “and who can reach the maximum only after giving their life in the service of the nation?

Senator Sir George Pearce:

– We do not suggest tha,t reductions should be made only in that department, but that the whole Service should contribute in some way.

Senator O’HALLORAN:

– During periods of prosperity those engaged in private employment received substantial increases and bonuses out of the large profits derived by their employers, while these employees were on a fixed rate

Senator Sir George Pearce:

– They received increases every year.

Senator O’HALLORAN:

– They are receiving a lower wage than those performing similar work outside. Moreover, their duties at times necessitate travelling at inconvenience and expense, which reduces their small remuneration. What are the extra emoluments they receive? For the whole of the Postal Department, which embraces the bulk of the Public Service, the extraneous payments for the year 1928-29 were £573,000, or an average of approximately £18 per employee. We are not going to attack the standard of these people, because we believe that their wages or conditions of employment should not be arbitrarily altered by this Parliament. Many of the postal employees and other public servants had to wait for years to obtain a determination from the Public Service Arbitrator or any such tribunal. In these circumstances, they should not be subject to arbitrary action by this legislature. We intend to adhere to the principle of arbitration, which, if departed from, will lead to many complications.” If we admit the right of Parliament to interfere with the basic wage standards established by arbitration tribunals when the country is in a bad way financially, then we must admit the, right of Parliament to interfere with those standards in times of prosperity. Do honorable senators opposite argue that the National Parliament should become a wage-fixing machine? The Governmentbelieves that its policy will free Australiafrom the difficulties which beset it to-day,, and that the way to budget equilibrium and prosperity lies in the employment of our people so that they may earn incomes’, and, consequently, become taxpayers. It believes that the restriction of credit i3 in a measure responsible for the present depression, and that the position can be relieved by an extension of credit facilities. Senator Sir Hal Colebatch has admitted that there was inflation during the war. Yet we succeeded in getting through.

Senator Sir Hal Colebatch:

– The trouble is that we continued the inflation after the war, and now we have to pay the penalty.

Senator O’HALLORAN:

– Why is it that the magic works in times of war and not in times of peace?

Senator Sir Hal Colebatch:

– It will work only for a little time, either in peace or in war.

Senator O’HALLORAN:

– It worked for five years to provide the sinews of war. Why can it not now work to turn our metals and timbers into instruments for increasing the wealth of the country so that employment mav be found for nil?

Senator Sir Hal Colebatch:

– At best it is only a temporary expedient which has to be put right later. Every country inflated during the war ; those which kept up the inflation became bankrupt.

Senator O’HALLORAN:

- Sir Henry Strakosh does not advocate inflation ; but he points out that the currency of a community must conform to its production and demands.

Senator Sir Hal Colebatch:

– And that it must be a world movement.

Senator O’HALLORAN:

– Are we in Australia to sacrifice everything while we are waiting for the world to move ? Even if the bridge we build is only a temporary structure, it will be sufficient to carry us over the stream. The world will soon be forced to move. Goods are piling up in the world’s warehouses, not because there is too much wealth in ‘the world, but because there is too little. There are men and women who desirework,but cannot find it; there are thousands who starve in the midst of plenty. The Labour party does not stand for a continuance of these conditions. The Government will prevent old-world conditions from being established in this young country. Just as the prophecies of the evil effects of the application of the former policy were proved to be incorrect, so will the prophecies of to-day also prove to be wrong. The Government will show that it is capable of restoring employment to the people and prosperity to the nation.

Senator Sir WILLIAM GLASGOW (Queensland) [5.40]. - I should not have spoken had it not been for some remarks made by Senator O’Halloran in the early part of his speech. The honorable senator criticized the late Government’s financial policy; he charged it with haying been extravagant in the expenditure of both loan and revenue moneys. The BrucePage Government came into power in 1922, in which year the loan indebtedness of the Commonwealth amounted to £364,839,590. At that time a Labour government was in office in Queensland, which State had then a public debt of £85,691,228. The public debt for all the States at the 30th of June, 1922, amounted to £519,537,643. At the 30th of June, 1929, the loan indebtedness of the Commonwealth stood at £377,621,572 ; that of Queensland had increased to £113,355,041, while that of all the States had increased to £726,406,490. During those seven years the public debt of the Commonwealth increased by £12,781,982 ; that of Queensland by £27,663,813. and that of all the States by £206,868,847.

Honorable senators will see that the increase for Queensland was more than double that for the Commonwealth. Those figures show that, compared with the Queensland Labour Government, the Bruce-Page Government was not extravagant in the expenditure of loan money.

Let us now look at the position from another stand-point - that of the debt per head of the population. At the 30th of June, 1922, the per capita debt of the Commonwealth was £65.539; that of Queensland £108.659 ; and that of all the States £93.439. Seven years later the per capita debt was £59.251, £122.564 and £114.202 respectively. Thus it will be seen that, whereas under the BrucePage Administration the per capita debt of the Commonwealth decreased by £6 5s. 10d., that of Queensland increased by £13 18s.1d., and that of all the States by £20 15s. 3d.

Now let us examine the honorable senator’s charge that the Bruce-Page Government was extravagant in its expenditure from revenue. That Government went out of office in October, 1929. Its expenditure from revenue during 1928-29 was £4,000,000 less than the estimated expenditure of the present Government for this year. On the 21st of November, 1929, the Scullin Government, in order to make up a shortage of revenue, introduced new taxation proposals, which involved an estimated increase of revenue from customs amounting to £2,750,000. Further additions to the revenue from the same source were estimated at £1,200,000. It imposed a super tax on incomes, which was expected to yield an additional £1,285,000 and from the liquidation of ex-enemy properties, it anticipated receiving £1,200,000. The total estimated additional revenue from the sources mentioned amounted to £6,435,000. The budget proposals introduced by the Treasurer in July last included an estimated increase of revenue from various sources amounting to £14,050,000. I emphasize that these were the proposals of a Government which when its members were sitting in opposition, charged the late Government with having imposed excessive taxation on the people. Rather than make a genuine effort to reduce expenditure, the present Government preferred to levy an additional £14,050,000 on the people. It certainly reduced expenditure . in one direction, for it cut down the defence expenditure to the bone; but the savings in other departments are practically nil. The Government’s action is a breach of its promise to. the Premiers of the States, at the conference held in Melbourne in August last, to reduce expenditure by £4,000,000. It has kept that promise only to the extent of reducing departmental expenditure by £65,000, thus placing the burden of balancing the budget solely on the taxpayer.

Senator O’Halloran said that the Government would not ask those public servants receiving less than £725 per annum to make any sacrifice.

Senator Rae:

– Do they not pay their share of income tax?

Senator Sir WILLIAM GLASGOW:

–Public servants in receipt of salaries in excess of £’725 per annum are being specially taxed, whereas those whose remuneration is less than that amount are not asked to make any special contribution. Other sections of the taxpayers are being called upon to make very heavy sacrifices; indeed, many of them have difficulty in making ends meet. Next year their capacity to pay taxes will probably have disappeared, for they will have no income to tax. Let me point out the serious position of the woolgrowers of this country. The following table shows the returns from the fleece of each sheep from 1922 to the present time : -

The difference between 5s. 6d. and the higher rates which have been obtained during recent years all comes out of the pocket of the grower. It is all very well for honorable senators opposite to talk of the sacrifice made by public servants. The public servants of this - country are a sheltered community. In their own interests they should make a contribution to assist the Commonwealth in its present difficult position. Senator O’Halloran drew attention to an extract from the report of the British Economic Commission. The following paragraph is drawn from the same source: -

Seeing that Australia is not isolated and is dependent to a large degree upon overseas market, the seriousness of the position lies in the fact that the cost of production in competing countries has declined while the costa in Australia generally have risen - thus increasing the already wide margin of difference between the costs in overseas countries and those in Australia.

That is the difficulty in Australia. The value of all commodities has fallen, but the cost of production has remained high. It is impossible to continue producing all of our important commodities, wool, wheat, metals, &c, if that condition of affairs is to continue. The cost of production must fall, and the burden should fall evenly over the grower, the worker, and all who are responsible for the transport of the goods to market. I shall also quote from a speech made by Mr. Collier, at that time Premier of Western. Australia, at the Premiers Conference, held in Canberra in May, 1929. Mr. Collier said -

We find to-day that, because of our relatively high costs of production, we are unable to compete with the other countries -of the world. 1 venture to say that if we have a severe drop in the prices of our staple products, such as wool and wheat, associated with a bad season or two, Australia will be faced with the greatest crisis in its history. The cost of production must undoubtedly be reduced.

Senator O’Halloran:

– Hear, hear! Reduce interest.

Senator Sir WILLIAM GLASGOW.That is the usual cry: “Let the other fellow come down.” Interest will be reduced if confidence is restored, but that can be achieved only by resolute action on the part of the Government. Why is it that to-day New Zealand can borrow in the London market at 4i per cent, while Australia cannot borrow at all? South Africa can also borrow at a. favorable rate on the overseas loan market. Why is it that stocks of similar denomination

Senator O’Halloran:

– Because of the utterances of the honorable senator and those who share his views.

Senator Sir WILLIAM GLASGOW:

– It is because of the vacillating policy of this Government; because, instead of carrying out the decisions upon which it determines in its wisdom, it follows the dictates of caucus. Actually the Ministry is not representative government. It is merely the mouthpiece of caucus.

Senator Rae:

– Does not the honorable senator carry out the instructions of the Consultative Council, which finds the election funds for him and his colleagues ?

Senator Sir WILLIAM GLASGOW.I carry out the instructions of no outside body. I am here to represent the people who elected me, and to do my best for Australia. The honorable senator’s party organization browbeats certain representatives from his State and makes them mould their policy in conformity with its own ; he is dominated by the organization to which he belongs.

The PRESIDENT:

– Order ! I think honorable senators would be wise to vacate that field of debate.

Senator Sir WILLIAM GLASGOW:

– There is no doubt that the Government formulated certain proposals in accordance with the determinations of the Premiers Conference that was held in Melbourne a few months ago, and that those proposals were jettisoned by caucus. That is the reason for the lack of confidence in Australia on the part of overseas investors. The country is not being governed by the Government in power, but by a Soviet.

Senator Sir George Pearce:

– That is evident from this supplementary financial statement.

Senator O’HALLORAN:
SOUTH AUSTRALIA · ALP

– The honorable senator is guessing.

Senator Sir WILLIAM GLASGOW.As Senator .Colebatch, stated, the first portion of this statement embodies portion of the original proposals of the Government, but the second part, which emanates from the extremist wing of caucus, supersedes the remainder of those proposals.

Senator Barnes:

– Does the honorable senator wish us to believe that the Opposition has not a caucus?

Senator Sir WILLIAM GLASGOW.Certainly it has a caucus.

Senator Barnes:

– And are not the honorable senator and his colleagues bound by its decisions?

Senator Sir WILLIAM GLASGOW:

– Certainly not. That was apparent from the manner in which some of my colleagues criticized and voted against the Government during the Bruce-Page regime. We have now been in session for more than a month, and the only bill that the Government has brought down in this chamber is one which sought to impose an embargo on galvanized iron ! That is conclusive proof that the will of caucus predominates, and that the Government is a negligible factor. I am confident that if it would take heart and pursue the policy that it knows to be right, there would be an improvement in the value of our stocks, and the confidence of the investors in Australia would be restored. The investing public merely require to be assured that the Government is doing the fair thing, by keeping its expenditure within reasonable limits. The Government is entitled to impose a certain amount of taxation, but the exorbitant impositions that it contemplates will ha,ve ,ii serious adverse effect on the welfare of the nation. They will eventually operate to the disadvantage of those whom the Government is trying to protect, as the finances of the country will become worse and worse until, in addition to a salary reduction, there will be considerable retrenchments in the Public Service.

I have conclusively rebutted the statement of Senator O’Halloran that the Bruce-Page Government was more extravagant than is the present one. That would be utterly impossible. I sincerely hope that, instead of concentrating upon the dissemination of political propaganda, the Government will seriously set about readjusting the fortunes of Australia.

Senator LYNCH:
Western Australia

– Before a paper so important as this is printed it is as well that I should say a few words upon its contents. In the first place, we know that this supplementary budget would not have seen the light of day were it not for the fact that the finances of Australia took a turn for the worse immediately after Parliament last went into recess. It was thought that there would be no need to call us together again until 1931, but the calculations and pious hopes of the Ministry were confounded, and the drift continued. It is quite clear that “ something is rotten in the State of Denmark”. “What is it? There is nothing wrong with our country. It is as fertile and as well blessed by a benign Providence as it has been at any time since the white man set foot upon it. The climate is all right; the seasons, too, are all right. The difficulty must rest with the people. In the early ‘nineties Australia went through just as perilous times as those which now confront it. Then there was a very serious curtailment of credit, prices of agricultural produce were deplorably low, financial institutions were unable to square their ledgers, and employment was rife. But the position was quickly adjusted, because the people of those days were of stronger moral fibre than are the people of to-day. What is the matter with the people of to-day? Just this: They have been listening, all too obligingly, to a band of social reformers who have sprung into existence like mushrooms, almost over night, fanatics who. haveinculcated in the minds of the general public the delusion that we are about to witness the birth of a new era. They have been directed to this new Garden of Eden just over the hill with a finger post at the bottom, and have been told that all that is necessary for them to do to enjoy its fruits is to claim more and more of their share of the products of industry than they have been receiving in the past. Whence came this band of reformers no one can say. All we know is that they came from all points of the compass, from lands where they were no longer wanted, and have been advising the workers to combine for the purpose of getting more and still more of the fruits of industry regardless of what becomes of that industry. Strange as it may seem, this pernicious doctrine is still being preached on every hand. Even the Prime Minister (Mr. Scullin) - that poor, lone man who departed from these shores on an important mission a few months ago, leaving behind him ministerial colleagues who were unable to stand up to the agreement which he made - even he told the workers of this country not so long ago that their share of the fruits of industry should be increased.

SenatorRae. - Hear hear !

Senator LYNCH:

– Despite the obvious approval with which Senator Bae has received my remarks, I maintain, and will prove, that the organized worker has had more than his fair share of the deal when compared with the unorganized one, and even when compared with the man who risks his money in the enterprise.

SenatorRae. - The honorable senator cannot prove that.

Senator LYNCH:

– In the sense that I have implied before, the organized worker, I repeat, has been getting more from industry than has been his due.I know, of course, that in saying this, I am taking my political life in my hands. With me this is not a new experience. It is easy for Senator Rae to speak of the worker - with a capital “ W “ as high as the roof of this chamber - it is easy for him and those who think with him to persuade the organized workers of this country that they have been, and are being, ill-treated by industry, and that they must organize to squeeze more out of it. But that very attitude and policy are responsible for the misery of to-day. Such attempts as these have landed us in our present position. Prices for our primary products are now so low that it will require the united efforts of the whole of the people to right the situation that confronts us. But we have passed through similar crises before in the history of this country, the only noticeable difference to-day being evidence of an entirely different spirit in the industrial field, as compared with that in earlier years. I invite Senator Rae to search the records dealing with the prices paid for our primary products. If he does, he will find that, at one stage in our history, wheat was as low as ls. 8d. a bushel in Victoria. We have not reached that level yet. Wool also was sold as low as 7d. a lb. We are close to, if not right at, that position to-day. There were no throngs of unemployed then, nor were there free food depots. As I have said, there was a different spirit abroad in those days. The people faced the situation courageously with the result that the crisis was hardly precipitated before the means to meet it were adopted and the country was on the up grade. The Australian citizen of those days, true to the spirit of his forefathers, faced the situation with a firm determination to overcome his difficulties, with the result that the depression was lifted in short order.

To-day, a crisis of great magnitude faces us, but because the pioneering spirit of our forebears has oozed out or been sadly watered down, to meet it is a totally different proposition. To-day we have the spectacle of State Governments being in danger of having their cheques returned marked “ n.s.f . “, simply because this Government and its supporters will not face the realities of the situation. So I say that there is nothing wrong with this country - nothing wrong with its productivity or the seasons - but there is something very much wrong with the spirit of its people. They have been listening over-long to the false voice of those “ sooner “ reformers, who have come among us within the last fifteen or twenty years. I say it with regret that they have listened to the advice of these people to their own undoing. What is urgently needed now to put Australia again on the road to prosperity is hard thinking, not foolish thinking; hard work, and not slack work; hard saving, and no more extravagance. We want these things very badly. Especially should we take good care to avoid the printing press and the oil can which some people would use to lubricate the financial machinery of the nation for the production of wealth. History teaches us that wealth created in this way will be so much waste paper in the end. We cannot expect to return to prosperity along this path. It lias been tried, before and proved to be a false road. In fact, it is a roguish road. Honorable senators on this side, who have been warning the people of the dangers that confront them, are not blind to the teachings of history. They know that these alternatives to hard work, honest thinking and frugality have been tried and found wanting.

Senator Sir GEORGE PEARCE:

– Those who advocate that course are trying to bluff the unemployed.

Senator LYNCH:

– Of course. They suggest the adoption of this expedient because they know that the honest truth about the situation is unpalatable and unacceptable. This is why they have the advantage of honorable senators on this side. They rely, apparently, upon a seemingly inexhaustible fund of human credulity when they appeal to their supporters in these terms.

One of the previous speakers in this debate referred to the recent New South Wales elections. What a perfect farce it is to speak of that thing as an election. In truth it was a public auction. The credulity of the public was put up for auction to the highest bogus bidder. One candidate said, “I will give so and so.” He had his “ buttoners “ in the crowd, with the result that when he promised the farmers 5s. 6d. a bushel for their wheat, another man went one better by offering 3s. 6d., and the upshot was’ that the promised price went up to 7s. 6d.

Senator Rae:

– Nothing of the sort.

Senator LYNCH:

– The low level that has been reached in this country is such as almost to make one feel ashamed of the country.

Senator Rae:

– The honorable senator ought to -be ashamed of himself. .

Senator LYNCH:

– I am not. The honorable senator ought to be ashamed of himself. I have always earned my living honestly. I have never roamed all over the country with a performing goose!

The PRESIDENT (Senator the Hon W Kingsmill:

– Order !

Senator Rae:

– If that is intended to apply to me, you are a liar; that is what you are - an infernal liar!

The PRESIDENT:

– Order! The honorable senator must withdraw that statement.

Senator Rae:

– Unless Senator Lynch withdraws his statement, I shall not withdraw what I have said. When he suggests that I have ever been a cheat he is a liar !

The PRESIDENT:

– Order! If the honorable senator does not withdraw I shall have .to name him.

Senator Rae:

– Very well, Mr. President, name me. I shall not withdraw. What Senator Lynch said was a ‘flagrant and villainous lie.

The PRESIDENT:

– I direct the attention of the Minister in charge to the fact that Senator Rae has repeatedly disobeyed the order of the Chair. I name him and now ask the Minister to take action.

Senator Barnes:

– The incident has come as a complete surprise to me. I hope, however, that Senator Rae will withdraw and so render further action unnecessary.

The PRESIDENT:

– The honorable senator may now, if he wishes, make an explanation, but he must not repeat his offence.

Senator Rae:

Senator Lynch inferred, by his statement concerning me, that I went about the country with a performing goose under my arm.

Senator Lynch:

– What did you say before that?

The PRESIDENT:

– Order! The honorable senator must not interject. In fairness, Senator Rae must not be subject to interruption when making an explanation.

Senator Rae:

Senator Lynch based his statement upon a scurrilous and anonymous pamphlet issued during the last elections. The whole thing was most disgraceful. It contained a false accusation against me. The honorable senator must have known it at the time. Nevertheless, he repeated the statement for the purpose of annoying me.

The PRESIDENT:

– I point out to the honorable senator that it would have been just as effective and less offensive if he had said that Senator Lynch’s statement was inaccurate. Does the honorable senator withdraw his statement?

Senator Rae:

– I accept your advice, Mr. President. I now say that Senator Lynch’s statement was wilfully inaccurate.

The PRESIDENT:

– The honorablesenator must pay attention to my direction. He must withdraw the offensive epithet which he hurled at Senator Lynch.

Senator Rae:

– Very well, Mr. President, I withdraw it.

The PRESIDENT:

– The honorable senator withdraws unreservedly?

Senator Rae:

– Yes.

Privatebusiness taking precedence after 8 p.m.,

page 971

BOUNTY ON GOLD PRODUCTION

Debate resumed from the 3rd July (vide page 3625) on motion by Senator McLachlan -

That in the opinion of the Senate a Committee of Experts should be appointed to consider and report upon the advisability and economic soundness of paying a bounty on the production of gold to be employed exclusively in meeting obligations in respect of Australia’s overseas indebtedness. and (on motion by Senator Barnes) adjourned.

page 971

EXPORT OF MANUFACTURED GOODS

Debate resumed from the 12th November (vide page 169) on motion by Senator Sir George Pearce -

That, in order to assist Australia to redress the overseas trade balance, the Senate is of opinion that the Government should give consideration to the formulation of proposals, by which the manufacturing industries of the Commonwealth could be encouraged to export manufactured goods to overseas markets. and (on motion by Senator Barnes) adjourned.

page 971

BEAM WIRELESS

Penny a Word Messages - Report of Select Committee.

Debate resumed from the 3rd July (vide page 3624) on motion by Senator Herbert Hays -

That the report from the Select Committee appointed to inquire into and report upon the desirability and commercial possibility of sending messages from Australia to England over the Beam Wireless at1d. a word, presented to the Senate on 14th August, 1929, be adopted.

Senator O’HALLORAN:
South Australia

– This matter has been before the Senate on several occasions, and on each occasion I have resumed the debate and asked leave to continue my remarks, in view of the fact that certain negotiations were being undertaken which would have a very important bearing on the report of the select committee. As, according to the latest information I have received, these negotiations have not yet been completed by the Prime Minister in Great Britain, I again ask leave to continue my remarks at a later date.

Leave granted; debate adjourned.

page 972

QUESTION

FINANCIAL STATEMENT

Debate resumed from page 971.

Senator LYNCH:
Western Australia

– Honorable senators will remember that my old friend, Senator Rae, and I had a few words before the dinner adjournment. In the heat of debate one is tempted to step beyond the boundary line of prudence, and I wish to say now that if I said anything that wounded Senator Rae’s feelings, I withdraw the words and apologize to him. If he so desires, I shall request that all mention of the matter be expunged from the records of the Senate. As I understand that it will facilitate business, I ask leave to continue my remarks at a later date.

Leave granted ; debate adjourned.

page 972

PAPER

The following paper was presented : -

AuditAct - Transfers of amounts approved in Councilby the person administering the Government of the Common wealth of Australia - Financial Year 1929-30 - Dated 24thNovember,1930.

page 972

PATENTS BILL

Second Reading

Senator BARNES:
Assistant Minister · Victoria · ALP

– I move -

That the bill be now read a second time.

This is a very simple and noncontroversial measure providing for increasing the charges for the services which the Patents Office renders the public. Since this office was first established in 1903 it has grown considerably. Its chief item of expenditure is the cost of examination of applications for patents and the cost of printing. There are about 1 00 employees and the work they do is astonishing. I had occasion to do some business in the office the other day in connexion with a patent a young man was trying to put through and I got an excellent idea of the work which they do. Incidentally I learned that the staff was delighted that it was not to be transferred to Canberra. The main purpose of the bill is the revision of the fees payable in connexion with the granting of patents. These have remained unaltered since the first Patents Act in 1903. It will be realized that since that date costs of administration have increased, and accordingly a scale of charges deemed to be reasonable in 1903 is quite insufficienttoday. Printing costs £14,000 a year; double what it cost in pre-war days. In 1904 four examiners were employed whereas to-day 36 are necessary. This is, however, not an index to the increase in the number of applications for patents. The number of applications received annually is only a little more than double the number received 20 years ago, but the necessity to employ nine times as large a staff to deal with only double the number of applications is attributed to the increased scope of the searches to be made, a factor which will continue until the provision in section 60 of the act, under which specifications more than 50 years old are, in certain circumstances, not a bar to a patent, comes into full play as applied to specifications filed under the Commonwealth act. While it is not desired to impose any unnecessary tax on inventions, it is considered that the granting of a patent should, in the present time of financial stress, bear some small share of the burden. The Government is anxious to spread the burden over as wide a field as possible. The immediate increases which are provided for in the bill will be payable by persons who apply for patents after the date of the commencement of the act, but the increase which is provided for in regard to renewal fees will not come about immediately. It will take effect in five years because the first renewal fee under the bill is to be payable on the expiration of the fifth year of the period of the patent. I understand that a fee of £1 is paid on the submission of an application and that upon the granting of the patent, a further fee of £2 is paid and the patent has a currency of sixteen years, but another fee has to be paid at the end of five years and if it is not paid the patent lapses. No additional revenue can be expected for the next five years from renewal fees. The fees which may be expected to produce some additional revenue within those five years are -

  1. 1 ) A fee of £2 payable on lodging a complete specification after a provisional specification, and
  2. Where a complete specification is filed in the first instance, a fee of £3 as against the fee of £1 which is at present in force.

The present scale of fees is defective in that it provides for a fee of £1 only on any application up to but not including the stage of the acceptance of the complete specification, when the scale provides for a fee of £2. If, however, the office on examination of the specification as to prior patenting or as to novelty, rejects the application, no additional fee is payable. In such cases the fee of £1 is quite inadequate. The principal cost to the office in connexion with dealing with applications for patents is the cost of examination, and a complicated invention may quite conceivably occupy the attention of an examiner for a long period. It is therefore proposed that, in addition to the acceptance-fee now payable, a fee shall be payable on lodgment of the complete specification. It is considered that, as the first of the renewal fees will not be payable until five years from the date of the patent, it is reasonable that additional revenue should be derived from this source. Presumably, a patentee will in the ordinary course have had a reasonable time in which to exploit his invention, and the fee then to be paid would presumably be from receipts from the monopoly which he enjoys. It seems reasonable that in such cases the patentee should be asked to make an additional contribution to the Consolidated Revenue. The department is to give persons who have sufficient intellect to invent something of service to the community a sufficienttime in which to exploit their invention. I have been informed by the department that most of the inventions are submitted by comparatively poor men. A patent was recently applied for by a young working tradesman which stood every test, and which, under ordinary conditions, would have sold readily; but at the present time, when so many are afraid to put their hands in their pockets because of the possible presence of a death adder, it is difficult to sell anything. The only other alterations for which this bill provides are in the form of Letters Patent. The first is to substitute the Commonwealth Arms for the Royal Arms, and the second to substitute the present for the old form of the King’s title. I do not think that there is anything controversial in the measure, which has been framed in an attempt to enable the Patents Office, which is conducted for the convenience of the public, to obtain more revenue than at present. The Government cannot afford to employ a staff of 100 under the present scale of fees, as the work involved in dealing with every application, many of which are rejected, is very heavy. In the circumstances the Government is of the opinion that fees more in keeping with the service rendered should be paid by those who apply for patents.

Senator Sir GEORGE PEARCE (Western Australia) [8.18]. - I am under the impression that it was the intention of the previous Government to introduce an amending measure of this nature. It is a fact that the cost of administering the patents branch has increased tremendously since 1903, and even under the rates now proposed Australia will be one of the cheapest countries in which to patent an invention. It is also apparent, as the Assistant Minister (Senator Barnes) said, that the principal cost is in the initiationof a patent. The fees now proposed will not in any sense recoup the department for the cost of conducting searches. The fee which is to be paid subsequent to the application-fee is higher, because such a fee would be payable only after the invention had proved to be a success. In these circumstances I do not think there will be any opposition to the bill.

Question resolved in the affirmative.

Bill read a second time, and reported from committee without amendmentor debate.

Report adopted.

page 973

NATIONAL DEBT SINKING FUND BILL

Bill received from the House of Representatives, and (on motion by Senator Barnes) read a first time.

page 973

INCOME TAX ASSESSMENT BILL

(No. 2).

Second Reading

Senator BARNES:
Assistant Minister · Victoria · ALP

– I move -

That the bill be now read a second time.

The principal object of this bill is to alter the basis of the general deduction allowable in respect of income derived from property. The proposed alteration is one of the Government’s three proposals to obtain additional revenue from income tax. The other two proposals, which will be contained in theIncome Tax Bill dealing with rates of income tax, are -

  1. to increase last year’s rate of tax on income from personal exertion by 15 per cent. (in lieu of the 10 per cent. imposed last session), in the case of taxable incomes exceeding £500; and
  2. to impose a super tax of7½ per cent. (1s. 6d. in the £1) on all interest, rents, dividends, royalties and all other income from property.

As regards the proposal in this bill for the alteration of the general deduction from property income, it may be noted that at present there is a general deduction of £300 from the total net income, whether that income is derived from personal exertion or property or from both sources. That deduction diminishes by £1 for every £3 by which the total net income exceeds £300, so that the deduction disappears where the total net income is £1,200. It is not proposed to alter the existing law in the case of incomes derived wholly from personal exertion.

In the case of incomes derived wholly from property, it wasoriginally proposed that the deduction should be £100, diminishing by £1 for every £1 by which the income exceeded £100, and hence disappearing at £200. After the introduction of the bill in another place, the Government decided to increase the deduction to £200, diminishing £1 for £1 so that it would disappear at £400. During the debate in committee, the Government agreed to alter the rate of diminution to £1 by every £2 by which the income exceeds £200, with the result that, under the bill as it now stands, the deduction from property income will disappear when the net income from that source reaches £600.

In the case of income derived partly from personal exertion and partly from property, a deduction for each of the two sources of income will, in the first place, be calculated on the assumption that the total income is derived from that source, and the amount so calculated will be reduced to the same proportion of that amount as the income from that source bears to the total income, namely -

These alterations of the general deduction are provided for in clause 3 of the bill. Apart from a provision to remedy a drafting oversight in clause 5, the remaining provisions of the bill are either -

  1. incidental to the alteration of the basis of the general deduction ; or
  2. incidental to the proposed super tax of1s. 6d. in the £1 on income from interest, rents, dividends, royalties, and other income from property.

The provisions incidental to the alteration of the general deduction are contained in clause 4, which empowers the Commissioner to call for returns from persons deriving income from property, and whose total income is £200 or over. As regards the proposed super tax, clause 2 will prevent shareholders, who, under the Bates Bill, will be exempt from the proposed super tax on dividends paid out of income upon which the super tax is paid by the company, from obtaining, in addition to that exemption, a rebate of the super tax paid by the company; while clause 5 is designed to prevent mortgagees from passing on their liability for income tax on mortgage interest to their mortgagors. The last-mentioned clause amends section 94, which applies only to mortgages of land, and as the result of a decision of the High Court it is unable to achieve its original purpose. The proposal to impose a tax of ls. 6d. in the £1 on all interest makes it important that the section should be made effective, and also that it should be extended to apply to mortgages of every kind - -every charge, lien or encumbrance to secure the repayment of money upon which interest is payable.

Honorable senators are well aware of the serious position which confronts this country. They know that it is now almost impossible for the Commonwealth to carry out the resolution passed at the conference of Premiers held in Melbourne in August, and balance its budget this year. The Government is, however, making an honest attempt to as nearly as possible balance its budget. The taxation proposals of a governmentare never popular, whether the imposts be heavy or light. There seems to be a natural disinclination to pay taxes ; the person who runs along to pay his levies before they become due is indeed rare. The position which faces us is, however, so critical, that the Government feels that every citizen should do his share. It has, therefore, searched for means of increasing its revenue; but it has endeavoured not to make the burden of taxation intolerable. It will extract as much from the people as it feels it can legitimately ask tl em to pay, so that it will get as near as possible to balancing its budget. We are all more or less agitated about the country’s financial position; but recriminations will not get us very far. We should work together as citizens whose desire is to serve their country, rather than act as partisans in politics. I commend the bill to the Senate.

Debate (on motion by Senator Pearce) adjourned.

page 975

SOUTH AUSTRALIA GRANT BILL

Second Reading

Senator BARNES:
Assistant Minister · Victoria · ALP

– -I move -

That the bill be now rend a second time.

This bill proposes to give some assistance to South Australia, whose financial position is worse than that of the other States, chiefly because of the droughts from which the central State has suffered in recent years. South Australia’s wealth is derived principally from wheat, sheep and cattle. The cattle country is in the north of the State, where the droughts have been most severe. The wheat belt is chiefly confined to the middle districts of the State, which, unfortunately, have not escaped the droughts. In good seasons the northern portion .of South Australia produces large quantities of grain ; but for three years there has been practically no crop there. Consequently, the revenue of the State has fallen considerably. The previous Government recognized the claims of South Australia and agreed that’ a grant of £1,000,000, spread over a period of three years, was justified. South Australia has suffered from over-borrowing more than the other States have done. The Government of South Australia also claims that that State suffers serious disabilities as a result of federation, although I do not know that the Commonwealth Government admits that claim. We frequently hear complaints from the States that they have suffered by reason of federation; but, personally, I should regard as a backward step any attempt to get back to pre-federation conditions. Rather do I hope that the time will soon come when there will be a federated Australia, with but one Parliament controlling it. Of course, matters of local administration would be left to the States. In 1929 a royal commission investigataed the position of South Australia under federation, and recommended a grant of £500,000 a year for two years. The late Government proposed that South Australia should be assisted to the extent of £1,000,000, spread over three years. That proposal was contingent on the Red Hill to Salisbury railway being handed over to the Commonwealth. As honorable senators know, that railway would provide a more direct route between Adelaide and Port Augusta than that now traversed, and would save passengers nine hours of unnecessary travelling. After the present Government came into office, Parliament agreed to a grant of £1,000,000 being made to South Australia, £360,000 to be paid in 1929-30, £320,000 in 1930-31, and £320,000 in 1931-32. Notwithstanding this assistance, the position of South Australia in 1929-30 was much worse than in previous years; its deficit for that year amounted to £1,625,000 as compared with £275,000 for 1927-2S, and £931,000 for 1928-29. At the August conference of Commonwealth and State Ministers, held in Melbourne, a resolution was passed that all governments should balance their budgets for this year. The Premier of South Australia stated that, despite increased taxation and economies, he would require a further £1,000,000 to balance his budget. The other States agreed to help South Australia; and subsequently a further resolution was passed under which they agreed to forgo certain grants from the Commonwealth aggregating £850,000; and the Commonwealth agreed to pay that sum to South Australia. I believe that that has ‘been done. It was agreed at the Melbourne conference that the Commonwealth and South Australian Governments should confer regarding the balance of £150,000 required to complete the £1,000,000 requested by South Australia. It was contemplated at the time that that amount should be made good, if possible, by South Australia, or alternatively by South Australia and the Commonwealth, acting conjointly. No definite arrangement has yet been made and the matter is still in abeyance. It has not been possible for the Commonwealth Government to examine the budget proposals of South Australia thoroughly to see whether this sum could be provided by South Australia herself. Moreover, the position of the Commonwealth has become more difficult iu the meantime and the new budget proposals will not secure a balanced budget for this year. It would seem wrong for the Commonwealth to increase its deficit merely to balance the budget of South Australia, but the matter will be further investigated before the 30th June, 1931. The Government has requested the Public Accounts Committee to inquire into the claim of South Australia for further assistance from the Commonwealth. That body, which was appointed by the Commonwealth Parliament, is well qualified to examine this problem exhaustively, and to report the actual position to the Government. The first review of the South Australian budget showed a deficit of approximately £3,000,000. Measures to balance the budget included the following: -

It will be noted that South Australia has budgeted for a grant from the Commonwealth of £1,000,000, whereas that now proposed is £850,000. As already indicated, no definite arrangement has yet been made to cover the difference of £150,000. Since the budget was presented certain arbitration awards have been made which, it is anticipated, will result in further savings. I believe that rates of pay are being reduced, a procedure which is unpalatable to me.

I have clearly indicated the position ofSouth Australia. Unless help is granted to that State, it will be in a desperate plight. The purpose of the hill is to allow it to adjust its own affairs, and to save it from becoming a mendicant; to enable it to hold up its head on terms of equality with the other States. There is promise of better seasons in South Australia and, with reasonable prices for its stock and produce, there is every likelihood of that State regaining a satisfactory financial position. Although for the moment the price of wheat is exceptionally low, authorities hold out the hope that, while perhaps it may not bring the price that was contemplated by the wheat Marketing Bill, it will return a satisfactory profit to the producers. The hill should commend itself to honorable senators on both sides of the chamber.

Debate (on motion, by Senator Sir George Pearce) adjourned.

page 977

INCOME TAX (SALARIES) ASSESSMENT BILL

Second Reading

Senator BARNES:
Assistant Minister · Victoria · ALP

– I move -

That the bill be now read a second time.

This measure is a very distasteful one, because it proposes to tax salaries.

Senator Sir George Pearce:

– It has already been subjected to rather severe criticism in another place.

Senator BARNES:

– It has, and I suppose the process will be repeated in this chamber. The bill has been introduced in accordance with the decision of the Government to impose a tax on the salaries of members of Parliament and Ministers, and also of higher-paid Commonwealth officials. The first group comprises parliamentary allowances and salaries, and, in this instance, the tax will apply to the allowances of all senators and members. In the case of the Speaker of the House of Representatives, the President of the Senate, the Chairman of Committees, and the Leader of the Opposition in either House, the tax will apply to the salary attaching to the office which he holds. The officers in the second group will include every public servant whose salary exceeds £725 per annum, and is paid from the Commonwealth public account or the North Australia Commission Fund, unless the officer concerned is employed by the Commonwealth in any territory which is not part of the Commonwealth, and where the revenues are raised within that territory for its own purposes. This group embraces officers of the Development and Migration Commission, the Council for Scientific and Industrial Research, the Commonwealth Railways, the War Service Homes Commission, the Repatriation Commission, the North Australia Commission, the Naval, Military and Air Forces, and the Public Service generally, as well as the High Commissioner, and the CommissionerGeneral in the United States.It does not include officers of the Commonwealth Bank, the Commonwealth Shipping Board, the Dried Fruits Control Board and the Commonwealth Oil Refineries. The Administrator of Norfolk Island and the administrators and officers of the Papuan and New Guinea services are also excluded. It does not affect any person whose salary is not paid directly from the public account, as, for example, officers of a semi-governmental institution such as the Amalgamated Wireless Australasia Limited.

Officers who have been rationed in any financial year on or after 1st July, 1930, will not be subject to the tax during that financial year. Should there be cases in which the amount of rationing is not equal to the amount of tax it will rest with the administration to see that the same sacrifice is made by rationed officers as is made by others. Generally speaking, the rationing which has taken place so far is at least equal to the tax which it is proposed to levy.

The basis of the tax is expressed in a separate taxing bill, which provides for the following taxes: -

On allowances of senators and members - a tax of 10 per cent. of those allowances;

On allowances and salaries of Chairmen of Committees and Leaders of the Opposition, in both Houses - a tax of12½ per cent. of those allowances and salaries ;

On allowances and salaries of Ministers, the Speaker of the House of Representatives and the President of the Senate - a tax of 15 per cent. of those allowances and salaries.

On salaries of Commonwealth officials -

  1. where the salary exceeds £725, but does not exceed £1,000, a tax of 10 per cent. of salary, but so that no salary is brought below £725 ;
  2. where the salary exceeds £1,000, but does not exceed £1,500, a tax of12½ per cent. of the salary, but so that no salary, is brought below £900 - the net income remaining after payment of tax on £1,000 - and
  3. where the salary exceeds £1,500 a tax of 15 per cent. of salary, but so that no salary is brought below £1,312 10s.- the net income remaining after payment of tax on £1,500.

The tax will be deducted at the source from each payment of salary or allowance and will begin with the first payment of salary after the 1st December, 1930, but only in respect of salary earned after that date.

It is possible that the salaries of some Commonwealth officials may fluctuate during the course of a year, and in order that the amount of the tax shall be definitely ascertainable in respect of each payment of salary in such cases, it has been found necessary to provide that the annual salary, for the purposes of the rate of tax to be applied to each payment, shall be calculated at the rate of the official’s salary at the time of the payment. The salary of a taxpayer who is a Commonwealth official is defined to mean the annual remuneration paid to the official in respect of the office occupied by him, and any annual allowance paid in respect of any duties performed in addition to those of that office.

Although, technically speaking, the salary or allowance of any person affected by the tax remains unaltered, the practical effect of the tax is to reduce that person’s salary or allowance. In the circumstances, it is considered that the salary of any person, to the extent that it is subjected to a reduction by way of tax, should not form a part of his income for the purposes of ordinary income tax, or of any other form of taxation of salaries or allowance.

The subject is a very controversial one. Members of Parliament have been criticized because of their alleged disinclination to tax themselves while being prepared to tax everybody else in the community. They are subjected to considerable criticism chiefly because the general public does not understand the peculiar circumstances which attach to the occupation of a member of Parliament, Parliamentary representatives are put to agreat deal of expense which does not apply to those who follow other occupations, and their position is a very precarious one, giving no security of tenure. An honorable senator might remain in. office for his full term of six years, while a turn of the wheel of fortune might bring about a double dissolution and terminate his appointment within a month. However, members are a philosophical lot, and endeavour to accept without undue complaint anything that fate has in store for them. This measure imposes a pretty severe tax upon members of Parliament, and it is a definite indication that the Government is endeavouring, as far as possible, to spread the burden of taxation evenly over the community.

Senator Sir George Pearce:

– With one exception, the public servants.

Senator BARNES:

– They are subjected to State taxes and many other forms of expenditure, but they certainly have security of tenure. I commend the bill to honorable senators.

Debate (on motion by Senator Sir George Pearce) adjourned.

page 978

ADJOURNMENT

Duty on Oregon.

Motion (by Senator Barnes) proposed -

That the Senate do now adjourn.

Senator CHAPMAN:
South Australia

– I desire to bring under the notice of members of the Government and the Senate representations which have been made to me from the South Australian Master Builders and Contractors Association in connexion with the duty on

Oregon. The position is set out in the following extract from a letter which I have received from the secretary of that association, under date 1st December, 1930 : -

We again approach you in reference to the duty on imported Oregon. The building trade in this State is at a standstill, and rents have fallen to such an extent that Lt will be impossible to stimulate trade whilst we are adding on extra charges. We have practically no bush mills in this State, and Oregon must be used for roofing, &c. We do not know of any work where hardwood has replaced oregon, and given extra employment in the mills . . No extra employment has been given to employees in bush mills in this State, but extra unemployment has been caused by this overloading, which means about £16 per house, which has to be carried for all time.

The position is well known to most honorable senators. Oregon costs approximately 4s. per 100 super feet in the country of origin, and the present rate of duty is 12s. 6d. per 100 super feet, a duty of between 300 per cent. and 400 per cent. In 1927 the Tariff Board, with evident reluctance, recommended that the duty on Oregon be increased to 5s. 6d. per 100 super, feet, but the Government of the day increased it to 8s. I, and many other honorable senators, strongly protested against this action. That duty was operative until the 26th of July of this year, when the present Government increased it to 12s. 6d. per 100 super. feet. The tariff schedule which imposes this excessive duty has not yet been brought before Parliament. Strong representations have been made to the Government by honorable senators, and also by honorable members in another place, who have pointed out that a large number of timber firms have been seriously affected by the increased rate. Some time ago several’ firms in South Australia sent their representatives to Canberra to place the position before the Government, but their representations were ignored.. By collecting this duty without the approval of Parliament, the Government is acting the part of a despot of the worst type. Its action also is a gratuitous insult to this chamber, which should be given an opportunity to discuss the numerous tariff schedules that have been laid on the table from time to time since the accession to office of this Government. I am firmly of the opinion that the Senate will not pass this particular duty. On the 10th June last, the quantity of oregon in stock or afloat was estimated at 63,000,000 super, feet. On this subject the Tariff Board reported -

After having given their utmost consideration to the matter from all aspects, the board is of opinion that an increase in the present rate of duty -

It was then 8s. per 100 super, feet - on undressed oregon in sizes 12 inches x S Inches or over would be neither justifiable nor desirable.

Yet, in the face of this recommendation, the Government, on the 26th July, tabled a schedule carrying an increased duty of 4s. 6d. I may add that the then ruling rate of 8s. was a compromise approved by the trade; but, as regards the last increase of 4s. 6d., the Leader of the Senate (Senator Daly) admitted that only one timber firm had made a request to the Government. Those firms which held large stocks of Oregon have benefited from the imposition of the increased duty; but other firms, with depleted stocks, are at a disadvantage. They are compelled to pay the. higher rate, and are, therefore, unable to compete on even terms with business rivals. It has been stated that the gain to firms with stocks on hand amounted to £150,000. It may interest honorable senators to know that the firm which approached the Government with a request for the increased duties had previously opposed any such action. We heard allegations of “logrolling “ over the business, but the Leader of the Senate has stated that only one firm approached the Government. I have spoken to the representatives of several firms which had small stocks of oregon on hand when the new duty was imposed, and they have advised me that the additional duty which they are called upon to pay means that their price for

Oregon loses them orders which otherwise they would be able to secure. Some of these firms are now threatened with ruin. If they are forced out of business, a considerable number of men will lose their employment. Now the builders, in their turn, are complaining bitterly about the added cost of building. We are told that for the average worker’s home the increased cost, due to the duty, works out at about £16. Since the workers must eventually pay more for their homes, costs of production will be increased at a time when nearly every one agrees that, if Australia is to recover from the present depression, costs should come down. Senator Colebatch drew attention to this matter some weeks ago. The honorable senator realized that, although Western Australia has practically an unlimited supply of hardwood, and presumably might benefit from the duty, it is impossible to use that class of timber for certain building construction. I strongly protest against the increased duty, and I urge the Government to take early action to remove, it. We are all liable to make mistakes. In this matter the best course for the Government will be to admit its mistake and rectify it at the earliest possible date.

Senator BARNES:
Assistant Minister · Victoria · ALP

Senator Chapman has complained very feelingly about the injustice, as he describes it, pf the Government’s action iri increasing the duty on imported Oregon. I remind honorable senators that representations with regard to this matter were made from many quarters.

Senator Sir HAL COLEBATCH:
WESTERN AUSTRALIA · NAT

– The representations came chiefly from timber merchants who had big supplies.

Senator BARNES:

– The honorable senator is wrong. Some of the firms which he has in mind may have had fair supplies of Oregon when the increased duty was imposed. The requests came chiefly from bush timber-millers and organizations of employees, who urged that the tariff onoregon should be increased so as to prevent it from competing with local timber for certain classes of work. The Government’s aim, in increasing the duty, was to encourage the use of Australian timbers in all work for which it is suitable.

Senator Chapman:

– At a conference of all parties interested, the duty of8s. was accepted as a compromise.

Senator BARNES:

– With the information at its disposal, the Government considered that 8s. per 100 super feet was not sufficient to meet the situation, . so it imposed the rate now in force.

Question resolved in the affirmative.

Senate adjourned at9.16 p.m.

Cite as: Australia, Senate, Debates, 4 December 1930, viewed 22 October 2017, <http://historichansard.net/senate/1930/19301204_senate_12_127/>.