Senate
8 April 1935

14^th Parliament · 1^st Session

PETROL ROYAL COMMISSION : REPORT
EXTRADITION TREATIES
LEGAL PROCEEDINGS CONVENTIONS
PAPERS
TARIFF BOARD REPORT
QUESTION
- INTERNATIONAL SITUATION
QUESTION
- RED HILL TO PORT AUGUSTA RAILWAY
QUESTION
- DEATH OF THE HONORABLE DAVID WATKINS
QUESTION
- RETURNED SAILORS AND SOLDIERS
NAVIGATION BILL
SALES TAX ASSESSMENT BILL (No. 1) 1935
SALES TAX ASSESSMENT BILL (No. 9) 1935
SALES TAX BILL (No. 9) 1935
SALES TAX PROCEDURE BILL 1935
- Second Reading
PATENTS BILL 1935
- Second Reading
LOAF (FARMERS’ DEBT ADJUSTMENT) BILL 1935
- Second Reading
THE BANK OF CONFIDENCE
- Lyons-Page
HELPING THE FARMER
HOUR OF MEETING

The President (Senator the Hon. P. J. Lynch) took the chair at 3 p.m., and read prayers.

page 872

PETROL ROYAL COMMISSION : REPORT

Majority Report by -

Hon. John Gunn and

Arthur Justin Hancock, Esq., F.I.C.A.

Minority Report by -

Ernest Lamb, Esq., K.C., Chairman.

page 872

EXTRADITION TREATIES

Accession of the Commonwealth.

The accession of the Common-wealth, including the Territories of Papua and Norfolk Island, and the Mandated Territories of New Guinea and Nauru, to these conventions came into force on the following dates.: - Iraq, the 31st August, 1934; Poland, the 4th January, 1935.

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LEGAL PROCEEDINGS CONVENTIONS

Accession of the Commonwealth.

The accession of the Commonwealth, including the Territories of Papua and Norfolk Island, and the Mandated Territories of New Guinea and Nauru, to these conventions came into force on the following dates: - Denmark, the 28th February, 1935 ; Finland, the 1st March, 1935; Turkey, the 3rd March, 1935; and the Netherlands, the 8th April, 1935.

page 873

PAPERS

The following papers were presented : -

Air Force Act - Regulations amended - Statutory Rules 1935, No. 32.

Northern Territory Acceptance Act and Northern Territory (Administration) Act - Land Tax Ordinance - Regulations.

page 873

TARIFF BOARD REPORT

Senator McLACHLAN laid on the table the report and recommendation of the Tariff Board on steel tubular poles.

page 873

QUESTION

INTERNATIONAL SITUATION

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA

– Is the Minister for External Affairs in a position to make a statement concerning the present international situation in Europe before the Senate terminates its sittings?

Senator Sir GEORGE PEARCE. - by leave - Senator Duncan-Hughes intimated last week that it was his intention to-day to ask me a question on this subject, and I thought it advisable to have prepared a comprehensive statement on European affairs, believing that, although honorable senators read the cabled newspaper reports of the progress of events, it is desirable that they should have before them a complete picture of the situation to-day so that they may be better able to understand future developments.

The honorable senator, in requesting information on the general situation in. Europe, has raised a matter of paramount importance at the present time. As a member of the League of Nations, and as a signatory of the Kellogg Pact, Australia, and indeed, none of the dominions, can remain disinterested in European affairs. Unrest, instability, war or the threat of war, in any part of the world to-day has wide repercussions, and the years since the great war have emphasized how dependent is our wellbeing and happiness on general peace and international understanding in other parts of the world.

To enable us to appreciate broadly what is happening in Europe at the moment, it -is advisable to recall that, arising out of the experiences of the world war, there grew an overwhelming conviction that definite action had to be taken to prevent another such calamity, and as the policies expressed in the armaments race preceding the war had been regarded as one of its contributory causes, the settlement at the Versailles Conference included measures for the general limitation of armaments. As a first step, the armaments of the defeated powers were drastically reduced, and by article 8 of the League of Nations Covenant the signatories agreed that the maintenance of peace required the reduction of national armaments to the lowest point consistent with national safety. The nations accepted the principle that they ought to settle their disputes by th* pacific means provided in the Covenant, and that security should be assured, not by the weight of armaments, but by collective measures against any declared aggression.

In the realm of naval disarmament, a considerable measure of success was achieved at the Washington conference in 1922, when the five principal naval powers, Great Britain, the United States of America, Japan, France and Italy, agreed to reduce and limit battleships and aircraft carriers. Subsequently, limitations applicable to light vessels were agreed to at the London Conference of 1930 by Great Britain, the United States of America and Japan. The beneficial results of these two conferences lasted until last year, when the question of naval disarmament again became acute owing to the provision in both treaties for a conference in 1935 to determine the form of new agreements before the expiration of the treaties in December, 1936. On the initiative of Great Britain, preliminary conversations were held last year in London between the interested powers. The demand of Japan for equality of ratios with Great Britain and the United States, proved a stumbling block, and proceedings were adjourned on the 19th December last without tangible results. Although it had been generally anticipated, the notice of termination by Japan at the end of December, 1934, of the “Washington agreement, introduced into the situation a disquieting factor which particularly affects Australia, and when the United States of America and Japan both announced large increases in their current ship-building programmes, fears were raised of a new and disastrous competition in naval armaments between these powers.

Despite these recent events, it is indisputable that the Washington agreements proved a success over a considerable number of years. This is regarded as being largely due to the fact that agreement on naval disarmament was accompanied by a political settlement on Pacific and Far Eastern questions. Where there is no initial political accord, the possibility of obtaining agreement on disarmament is almost negligible. This is clearly illustrated by the negative results of the almost continuous study and negotiation for the reduction of land and air armaments during the last decade.

One of the inevitable legacies of the war was that of two overmastering motives - on one side mistrustful apprehension, and on the other impatience with the fetters imposed by the peace treaties - which find vocal expression in the rival demands for security and -equality. Expressed simply, one group demands that security by guarantees and by insistence on the status quo and that adherence to peace treaty settlements must be attained before disarmament can be agreed to. The other group believes that a substantial measure of disarmament will automatically bring about security, and that any agreement on disarmament must be based on complete equality of rights. The whole difficulty has been to reconcile these two conflicting views.

Germany gave notice of withdrawal from the League, and actually withdrew from the Disarmament Conference, in October, 1933, because it considered Geneva methods were inadequate for the solution of the problem, and because it was confronted with the suggestion that it should be subjected to a probationary period of several years before the equality of rights it claimed would commence to operate. Germany then embarked on a policy of re-armament and from this time on the topic of disarmament was changed to re-armament. As an outcome of the general fear and mistrust engendered, practically every State embarked on a policy of increased armament expenditure, and this in turn lessened the possibilities of reaching an early decision.

The imminent danger of unrestricted competition of armaments caused Great Britain to redouble its efforts to secure agreement. Although a draft convention had been accepted as a basis of discussion in 1932, and agreement had been reached with regard to the abolition of chemical warfare and civilian bombing, wide differences pf opinion, both as to principles and details, along with the prevailing instability, precluded any hope of a general agreement.

On the 29th January, 1934, Great Britain presented a note to the Main Powers setting out the position which had been reached,’ and the lines on which agreement seemed possible, and warned the Powers of the chaos which would ensue if the armament race, which was so clearly evident, gained momentum. In the debates in the House of Commons on this note the Government spokesman said that time was the essence of any convention, and that if no agreement could he reached, Great Britain would be forced to reconsider its own defence position. The Secretary of State for Foreign Affairs said - “ We are the one Great Power that set an example by unilateral reduction of armaments, and this country has disarmed to the edge of risk In this respect, it might be noted that between 1926 and 1934 the expenditure of the United Kingdom on naval armaments had decreased by 16 per cent., while in the same period increases by other main Powers were from 10 to 197 per cent.

In April, 1934, the German Government stated that it was prepared to accept the British Memorandum as a basis of a convention, subject to certain modifications. At this time, Germany was prepared to limit her army to 300,000 men, and probably would have accepted a lower figure, was agreeable to international supervision over its armaments, and in respect of air machines desired 50 per cent, of the strength of France. It appeared possible that France would be disposed to discuss a new plan on some such basis, but the publication of the German defence estimates in April, 1934, which showed an increase from £51,000,000 in 1933 to £77,000,000, confirmed French opinion that Germany was determined to re-arm rapidly, despite the peace treaties. In a reply to a British note on 10th April, 1934, France refused to state what minimum guarantees it would be prepared to accept as a basis, and said it was now idle to discuss guarantees. In my statement on Friday on the Report of the Fifteenth Assembly of the League of Nations, I indicated the steps which have been taken by the Disarmament Commission since that date.

We come now to more recent events. Since June of last year, France has been endeavouring to obtain acceptance of its proposals for the Eastern Locarno Treaty of Mutual Guarantee, generally referred to as the “ Eastern Pact “. This proposal is one of regional assistance designed to guarantee the frontiers of the States concerned by common action against any aggressor, and is intended to bring in France, Russia, Czechoslovakia, the Baltic States, Poland and Germany. Germany, on being approached, expressed agreement with the underlying principles of mutual guarantee, but stated that it could not participate in any kind of international security system so long as the other Powers contested Germany’s equality of rights with regard to armaments. -

Poland also is hesitant about the acceptance of this Pact. Because of its geographical position it would ‘be almost impossible for Poland to avoid Being drawn into any conflict, arising in Eastern Europe, and by virtue of its non-aggression treaties with both Russia and Germany, it does not wish to sign any new pact which might estrange either of these Powers.

In January of this year a development having an important bearing on the general situation was the Rome Agreement between France and Italy, which marked a distinct advance in the cause of European peace.

A year ago Italy and Germany were in accord, but the Nazi propaganda in Austria, the events which led up to the death of Herr Dollfus, and the uncertainty arising out of the German rearmament, brought about a complete change of mind in Rome. That the two nations, France and Italy, who had been estranged since, the Great War settlement, and whose policies and interests both in Europe and North Africa had constantly clashed during the last twelve years, should have embarked on a treaty of amity and a significant new friendship, was regarded in Europe as a valuable contribution to a general settlement. The agreement provides for common action against any nation endeavouring to interfere with Austria’s independence, and for opposition to any change in existing frontiers through violence. The treaty also settles the long-standing dispute over their respective North African colonies, and gives Italy certain concessions in the Abyssinian Zone. The privileged status of Italian nationals in Tunisia is to be continued for a number of years, and Italy will also acquire a piece of the Sahara to the south of Libya. By another declaration the two governments hope to guarantee, by a multilateral agreement open to signature by all States contiguous to Austria, and subsequently by all States which are interested, the independence and integrity of Austria and neighbouring States. The wish has been expressed that all the central and. south-eastern European States would adhere, and that Germany would become a party to both this and the Eastern Pact.

France and Italy were anxious that the United Kingdom would participate directly in this so-called Danubian Pact, but the United Kingdom was of the opinion that the declarations of February and September of 1934 made it quite clear to Europe that France, Italy, and the United Kingdom would consult in case of need on the Austrian situation. While the new proposed pact had the approval and sympathy of the United Kingdom, the British Government stated that it could not undertake fresh commitments in Central Europe.

The next main step in the efforts to secure peace in Europe took the form of conversations between Great Britain and France, who, in a joint communique issued on the 3rd February, 1935, stated they had- agreed ‘ that neither Germany nor any other Power whose armaments has been defined by the peace treaties was entitled by unilateral action to modify those obligations and limitations, but that, if by means of security pacts a general agreement could be reached between Germany and the other Powers Concerned regarding armaments, then the abrogation of Part 5 of the Treaty of Versailles would form part of a general settlement, it being understood that Germany’s return to the League was also essential.

An important part of the AngloFrench communique was the suggestion for an international Aerial Agreement - regional agreements of mutual assistance for Western Europe, in case of aerial aggression on the part of any of the signatories. By this proposed agreement, the parties would undertake to give immediate aerial assistance to any signatory who might be the victim of unprovoked aggression. The idea underlying the plan is an extension of the Locarno “ Treaty of Mutual Guarantee “ of 1925, by which France, Germany and Belgium agreed not to go to war with each other, but to submit all disputes between them to peaceful settlement, while all five signatories pledged themselves, severally and collectively, to guarantee the maintenance of the territorial status quo, particularly the Franco-Belgian-German frontiers, established by the Treaty of Versailles. Italy and Belgium were favorably impressed by the Franco-British proposals, but, as in the case of the Borne Agreement, the attitude of Germany was the predominant factor. The German reply, which was made available on the 15th February, 1935, was to the effect that Germany concurred with the desire to assure peace in Europe, was desirous of more thoroughly examining the recommendations, and welcomed the suggestion for an aerial Locarno, but expressed the desire to clarify preliminary questions of principle by means of separate conversations with the governments concerned before taking part in any multilateral negotiations.

Germany stated that it was desirous of entering into a direct exchange of views with the British Government. Practically nothing was said about the Eastern Pact, the Danube Pact, the Armaments Convention, or Germany’s return to the League. Germany also informed His Majesty’s Government in the United Kingdom that it was awaiting fresh proposals concerning disarmament, and that the return to Geneva would only be the last step after its requirements has been satisfied. In accordance with this suggestion for direct conversations, arrangements were made for the Minister for Foreign Affairs (Sir John Simon) and the Lord Privy Seal, Mr. Anthony Eden, to visit Berlin, and subsequently for visits to Moscow, Warsaw, and Prague, with the object of promoting understanding and paving the way for a general peace settlement plan which would be acceptable to all powers. On the 11th March the British White Paper on Defence policy was published. This paper emphasized that peace on a permanent footing is still, as ever, the principal aim of British foreign policy, since the main defence of the Empire depends upon the maintenance of peace; but events have proved that such aims cannot be achieved by unilateral disarmament. After indica.ting the means pursued by the British Government for the preservation of peace, the paper went on to state that the fact- that causes of friction do exist and that nations are still prepared to use force must be faced. Consequently, adequate defences are required to protect the Empire, its trade routes and the food supply of its peoples. Risks have been deliberately run to secure peace, but the British example has not been followed by other nations, and it has now been decided that adequate armaments are necessary to preserve peace, to maintain security, and to deter aggression.

Then came the German announcement of the 16th March of the adoption of conscription, to provide an army of 500,000 men organized in 36 divisions. This declaration, following an official intimation of the creation of an air force, disallowed under part 5 of the Versailles Treaty, introduced new circumstances and caused widespread consternation. The United Kingdom, in a note, protested against these decisions, and drew attention to the London communique and the German reply, indicating a desire to clarify the position. The note added that His Majesty’s Government in the United Kingdom was unwilling to abandon any opportunity to promote a general understanding, and asked if the visit to Berlin for the purposes agreed on was still desired. The German Government, in reply, expressed its wish for the arrangements to stand, and as a consequence the tension was eased considerably.

As honorable senators are aware, the visits to the capital cities mentioned took place last week, but they will appreciate that it would be inadvisable to indicate the outcome of the conversations, in view of the delicate situation still obtaining, and because His Majesty’s Government in the United Kingdom was, in fact, the confidant of the powers concerned. Honorable senators will also realize that the United Kingdom Government has not, and, indeed, cannot have at this stage any new disarmament policy. The whole situation has altered, and questions previously regarded as settled are again in the melting pot.

The main concern of the United Kingdom at this moment is to obtain the views of the respective governments on the proposals mentioned in this statement, namely the Eastern Pact, the

Danubian Pact, Aerial Locarno Pact, and armaments, and to ascertain the requirements in respect of what are regarded as adequate security measures. Such a survey is necessary prior to the conference to be held at Stresa, in North Italy, between Italy, France, and the United Kingdom, and as a preliminary to the important debates at Geneva on the 15th April, whenFrance will formally raise the subject of German re-armament.

I trust that this broad survey will give to honorable senators a better picture of the present position, and enable them to follow more clearly future developments.

page 877

QUESTION

RED HILL TO PORT AUGUSTA RAILWAY

Senator DALY:
SOUTH AUSTRALIA

– Has the Leader of the Government in the Senate any statement to make as to the conference between the Governments of the Commonwealth and South Australia regarding the construction of the Red Hill to Port Augusta railway ?

Senator Sir GEORGE PEARCE.A statement will be made when the bill is presented to the Senate.

page 877

QUESTION

DEATH OF THE HONORABLE DAVID WATKINS

Senator Sir GEORGE PEARCE (Western Australia - Minister for External Affairs [3.21]. - by leave - I move -

That the Senate expresses its profound regret at the death of the member for Newcastle, the Honorable David Watkins, places on record its appreciation of his notable public service, and tenders its sincere sympathy to the members of his family in their bereavement.

I regret to have to inform the Senate of the death of the Honorable David Watkins, which took place yesterday.

The late Mr. Watkins had a lengthy period of parliamentary service in both the Federal and State spheres. He was a member of the Legislative Assembly of New South Wales from 1894 to 190l, and, on the establishment of federation, was elected to the House of Representatives as member for Newcastle. That constituency he represented continuously from 1901 until the time of his lamented death.

Mr. Watkins was a member of several select committees, and also served as a member of the Royal Commission on the

Bonuses for Manufactures Bill 1902. During the years 1908-09, 1910-13, and again from 1914 to 1916 he was ministerial Whip. He was also Opposition Whip during 1909-10 and 1913-14. When the delegation visited Papua in 1911, he was chosen as its chairman, and was similarly honoured when he visited England with the delegation which proceeded to that country in 1916, at the invitation of the United Kingdom branch of the Empire Parliamentary Association. The deceased gentleman was well known to us all, and was highly esteemed. His career in both State and Federal politics was exceptionally long, and I am sure honorable senators have learned of his death with the deepest regret.

On behalf of honorable senators, I desire to convey our sincere sympathy to the members of the late Mr. Watkins family.

Senator BARNES:
Victoria.

– I second the motion. Many years have passed since I first met Mr. Watkins, and long before our meeting I knew much of him and his work on behalf of the industrialists of Australia. He was a big figure in the Labour movement of New South Wales in its early and strenuous fightingdays, and the people of Newcastle showed their confidence in him by returning him first of all to the State Parliament in 1894, and later to the Parliament of the Commonwealth. He thus served them continuously as their representative for 40 years. We all respected and admired him as a genial personality and a genuine good fellow. I and my party join with honorable senators opposite in offering our sympathy to his bereaved relatives.

Question resolved in the affirmative, honorable senators standing in their places.

page 878

QUESTION

RETURNED SAILORS AND SOLDIERS

Effects of War Service

Senator COLLETT:
WESTERN AUSTRALIA

asked the Minister representing the Minister for Repatriation - upon notice -

In regard to the recently published statement of the chairman of theRepatriation Commission concerning the alleged psychological condition and physical deterioration, as a result of war, of those who served in the Commonwealth Forces sent abroad, and to the Minister’s reply thereto -

Has the Minister read the later pronouncement of Lieutenant-Colonel C. A. Courtney, late principal medical officer of the Repatriation Commission, as reported in the. Melbourne Star of 30th March?

If so, will the Minister consider the advisability of appointing a committee of qualified persons for the purpose of examining the position and reporting on actual conditions, so that, if necessary, provision may be made for individuals who, by reason of. their service, are handicapped in their endeavours to enter avenues of normal employment.

Senator McLACHLAN:
SOUTH AUSTRALIA · NAT

– The Minister for Repatriation has supplied the following answer to the honorable senator’s questions : -

The statements made by the former principal medical officer of the Repatriation Commission have been read. The chairman of the Repatriation Commission has been asked to refer the question to the present medical officer and then submit a report covering all phases of the matter.

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on. motion by Senator Sir George Pearces) read a first time.

Second Reading

Senator Sir GEORGE PEARCE:
Minister for External Affairs · Western Australia · UAP

[3.40].- I move-

That the bill he now read a second time.

This bill and the three other measures dealing with the sales tax with which the Senate have just dealt are of a cognate nature, and I suggest that it will be convenient if the second-reading debate on the bill now before the Senate be taken to cover all of them.

The PRESIDENT (Senator the Hon. P. J. Lynch). - Over a number of years it has been the practice of the Senate to deal with cognate bills in the manner suggested. I propose to allow a similar course on this occasion.

Senator Sir GEORGE PEARCE.This legislation arises because the High Court decided, on the 13th December, 1934, that second-hand goods, are not subject to sales tax. After careful consideration of that judgment, the Government decided to provide authority to retain the tax collected on such goods prior to the date of the judgment of the High Court, and to abandon future taxation of such goods, except in regard to leases. .Consequently, sales tax will not be collected on second-hand goods sold after the 13th December, 1934, and any tax paid since that date will be refunded.

Of the three bills introduced in this connexion, the Sales Tax Procedure Bill will prevent refunds of tax collected prior to the 13th December, 1934, except in any case in which the tax was paid currently and the taxpayer can establish that the tax was not passed on to purchasers of the goods. Sales Tax Assessment Bill No. 1 will expressly exclude second-hand goods from the scope of the tax, and will prevent the principle of the High Court’s decision being applied to goods which are not second-hand. Sales Tax Assessment Bill No. 9 will ensure the taxation of leases, other than hirepurchase agreements, of second-hand goods.

It is not proposed to allow refunds generally, because it was the intention of Parliament that second-hand goods should be subject to sales tax. That was expressly stated by the Government of the day when the first sales tax legislation was introduced. Furthermore. the Supreme Court of New South Wales (Searl’s case, 9 N.S.W. W.N. 195) decided on the 16th September, 1932, that the law required the payment of tax upon sales of second-hand goods. In view of that decision, it was the clear duty of the Commissioner of Taxation to collect tax upon such sales until the subsequent judgment of the High Court.

If refunds were allowed generally, the amount involved would be £250,000. The Government is not in a position to permit this loss of revenue. Furthermore it must adhere to the principle that it is entitled to determine sources of revenue and to . protect those sources of revenue, wherever necessary, against loss by reason of judgments arising from any technical failure of the legislation to effectuate the intention of Parliament. There are very many precedents fo.r this. There are certain constitutional and other legal difficulties in the way of providing a suitable amendment of the law to legalize the future taxation of second-hand goods. Although these do not, perhaps, present an insuperable obstacle, any attempt to overcome them would probably introduce other weaknesses in the structure of the law, and would certainly add to its existing complexities. These circumstances, coupled with complaints of the alleged inequitable incidence of the taxation of such goods, and the partial evacuation of the field of the tax on such goods in October, 1933, have induced the Government to abandon the future taxation of second-hand goods.

The proposed legislation may be criticized in that, although it prevents refunds of tax paid in the past, it does not seek to provide for collection of tax unpaid prior to the date of the High Court’s judgment. This is a matter that has received very full consideration. Any attempt to legislate for the recovery of such unpaid tax would be attended by precisely the same difficulties .as have just been mentioned as being in the way of authorizing the future taxation of second-hand goods. Having regard to this fact, and also to the fact that the amount involved is relatively inconsiderable, being principally confined to the cases of the litigants and persons associated with them, the Government does not propose to authorize the recovery of the unpaid tax. A further provision of the Sales Tax Procedure Bill is designed to limit the general right to refunds in similar classes of cases arising in the future. The court might rule, on. technical grounds, that certain goods are not “ manufactured “ goods, and are, therefore, outside the scope of the tax, although they have always been regarded by the department as taxable, lt is proposed that, in such cases, refunds will be limited to persons who successfully test their opinion that the goods are not “ manufactured “ goods, by exercising rights of objection and appeal, or by refusing to pay tax and thus becoming defendants in actions for recovery of the tax, or by paying the tax under protest, as provided in the bill, and bringing action for recovery of the tax so paid within six months after payment. The bill actually extends the rights of such persons, but prevents the benefit of anyfavorable judicial decision being applied to other persons. It is considered that limitation of refunds in such a manner is amply justified, and is, in fact, essential, in regard to any form of indirect taxation, because the tax is imposed in the contemplation that all taxpayers will pass it on. The bill does not limit rights to refund in cases whore tax ho? been wrongly calculated, or has been wrongly paid in respect of goods which are exempt.

The Sales Tax Assessment Bill No. 1 contains a declaratory amendment of the provisions of section 73 of the Sales Tax Assessment Act (No. 1) 1930-1934, which define the power to make regulations. This amendment is designed to obviate any inference that the principle of the High Court’s decision in regard to second-hand goods applies to wholesale sales of new goods by persons who are principally retailers. The bill also defines “ goods “ to exclude second-hand goods, so as to make it clear that the amendment of the regulation-making power is not an attempt to overcome, in the future, the decision of the High Court in regard to second-hand goods.

The Sales Tax Assessment Bill (No. 1) also provides for an exemption of goods manufactured in Australia and exported by the manufacturer, even if the goods are not sold after export. Another provision is for the omission of sub-section 3 of section 26, in regard to certain rebates on raw materials, so that this particular provision may be placed with other allied provisions in the sales tax regulations. Certain penalty provisions are also to be amended to bring them into line with the lass severe penalties provided for in the Sales Tax Procedure Bill.

Sales Tax Assessment Bill No. 9 defines “ goods “ to include second-hand goods. This course is necessary because goods leased become second-hand goods, so that the taxation of short-term leases for a negligible consideration upon a proportionately low sale value would exhaust the power of taxation of such goods, unless leases of second-hand goods are made taxable. Furthermore, the bill seeks to provide for the taxation of any leases of goods on the full wholesale value of the goods where the Commissioner forms the opinion that the goods are leased for a short-term only to relieve the taxpayer from liability under any other Sales Tax Assessment Act in respect of those goods. In the absence of any such provision, registered persons could arrange for short-term leases of new goods to prospective buyers at a nominal consideration and thus, after paying tax upon a proportionately low sale value, escape further tax by selling the goods as second-hand.

It is intended that leases of secondhand goods under hire-purchase agreements shall, however, be exempt, because such agreements are, in substance, agreements for the sale of goods. The bill will further legalize payment of tax on goods leased under hire-purchase agreements in the month following that in which the agreements were entered into. This is in conformity with the practice followed in the case of ordinary sales of goods.

Senator Barnes:

– Would the tax be imposed on a machine hired with the intention of purchasing, although a hirepurchase agreement had not been entered into ?

Senator Sir GEORGE PEARCE:

– It would depend upon the facts associated with the sale, which might indicate that it was purchased in an attempt to avoid the sales tax by nominally leasing it for a short time, when it would be classed as second-hand. In such cases, the tax could be imposed. If it were a bona fide hire-purchase transaction, it would not come under the provisions of the law.

Debate (on motion by Senator Barnes) adjourned.

page 881

PATENTS BILL 1935

Second Reading

Senator BRENNAN (Victoria- Acting

Attorney-General) [3.53]. - I move -

That the bill be now read a second time.

At present a committee isreviewing the working of the Patents Act with a view to the submission of proposals for any amendments of the act which may be found necessary. Any such amendments would no doubt find their place in, a more comprehensive measure than the one now before the Senate. The bill has been introduced, not for the purpose of improving the act in piecemeal fashion, but for effecting an urgent and necessary amendment of the act in relation to the courts before which applications under the act may be considered. In several sections of the act, provision is made for the hearing of certain applications by the High Court or the Supreme Court. In section 30, the Supreme Court only is mentioned. The expression “ Supreme Court “ is defined in’ section 4 to mean the Supreme Court of the State in which the Patents Office is situated, or a judge thereof. As honorable senators are aware, the Patents Office is now no longer situated in any State, but in the Territory for the Seat of Government, and, in consequence, it becomes necessary for the definition. “ Supreme Court “ to be altered. Accordingly, clause 2 proposes that the definition be amended, and the result of such amendment would be that the “ Supreme Court “ would be defined as meaning the Supreme Court of the

Australian Capital Territory or the judge thereof. As I have already stated, applications under section 30 of the act can be made only before the Supreme Court, whereas in several other sections the High Court also has jurisdiction to hear the applications referred to in those sections. Section 30 relates to applications for the rectification of the Register of Patents, and it seems desirable that the High Court should be empowered to entertain such applications. It is, therefore, proposed that section 30 be amended by inserting the words “ the High Court or “ before the words “ Supreme Court “. The proposed amendment of section 30 would have the effect of bringing that section into harmony with the rest of the act in respect of the courts beforewhich certain applications may be made. The amendments proposed are merely formal, and do not interfere with the general purpose of the act.

Question resolved in the affirmative.

Bill read a second time.

Clause 1 agreed to.

Clause 2 (Definitions).

Senator E B JOHNSTON:
Western Australia

– Will applications of a simple nature, and which were previously heard in the Supreme Court of a State, now have to be dealt with at Canberra? Matters of importance involving an all-Australian decision should perhaps bo brought before the High Court. Will this measure cause unnecessary inconvenience and expense to applicants by compelling them to come to Canberra instead of having their applications heard in the State in which they reside?

Senator BRENNAN:
Acting Attorney-General · Victoria · UAP

– As the High Court sits in all the capital cities and applications may be brought before that court, the expense or inconvenience of applicants will not be increased. .

Senator Sir George Pearce:

– Can application be made to a Supreme Court of a State?

Senator BRENNAN:

– When the Patents Office was situated in Victoria, application could be made to the Supreme Court in that State, but now that the office is in Canberra, applicants cannot approach that court. The transferof the

Patents Office to Canberra has necessitated this amendment of the law.

Clause agreed to.

Clause 3 agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Standing and Sessional Orders suspended.

Bill read a third time.

page 882

LOAF (FARMERS’ DEBT ADJUSTMENT) BILL 1935

Second Reading

Debate resumed from the 5th April, 1935 (vide page 810) (on motion by Senator Sir George Pearce) -

That the bill be now read a second time.

Senator BARNES:
Victoria

.- I do not propose to offer any opposition to the passage of this bill. Everybody in Australia is aware of the unfortunate circumstances of the farming community. The bill defines a3 farmers those engaged in farming, agricultural, horticultural, pastoral, or grazing operations, and includes dairy-farmers, poultry-farmers, bee-farmers and viticulturists. The Leader of the Senate (Senator Pearce), in his second-reading speech, stated that there were 230,000 people engaged in these various callings. The bill is to provide £12,000,000 to be distributed through State governments to those rural producers who are in difficulties. Many of those farmers may not be in such circumstances as would bring them within the scope of this bill, but how far will a mere £12,000,000 go when distributed between the others? The report of the Royal Commission on the Wheat Industry discloses that there are 70,000 people engaged in wheat-growing in Australia, and that they owe £140,000,000. The commission further estimates that it would cost another £10,000,000 to rehabilitate the machinery required to carry on wheat-growing operations. In other words, these 70,000 growers are in debt to the amount of £150,000,000. How far can this bill help them out of their desperate position? During the last election campaign, it was stated by the Prime Minister (Mr. Lyons) that the Government proposed to raise a loan of £20,000,000 for the assistance of wheatf armei’3. That promise was broadcast all over Australia. At the time, Labour senators said that the promise made by the Government was warranted by the unfortunate circumstances of the wheatfarmers. It was said that this money wa3 to be provided for the benefit of wheat-growers exclusively; but now the Government is firmly in the saddle, it asks Parliament to provide, not the £20,000,000 which it promised, but only £12,000,000, and that amount is to be distributed amongst farmers of all descriptions.

If the 70,000 wheat-growers are subtracted from the total of 230,000 farmers defined in the bill, there will remain 160,000 people whose needs have never previously been under consideration so far as I know. How far the £12,000,000 to be provided under this bill, or even the £20,000,000 promised by the Prime Minister would go in enabling wheatfarmers to get out of their debt of £150,000,000, I do not know. But, on top of the 70,000 wheat-farmers, 160,000 other farmers have been included in the bill, of whose debts we know nothing at all. Although the position of the wheatfarmers was inquired into by a royal commission which revealed the deplorable state of their finances, no inquiry has been conducted to ascertain the financial position of the other growers who come under this bill. If such an inquiry were held, I do not doubt that we would find that the 230,000 farmers are in debt to the amount of about £500,000,000. How far will this £12,000,000 go to lighten the burden of such a staggering indebtedness? Relatively it is but the widow’s mite. It would appear that the Government is going about its business in the wrong way, and is endeavouring, in effect, to put a poultice on a wooden leg. A solution of the problems of the rural producers will not be found until we get down to basic causes. The grower cannot find a market for his produce. The demand overseas for many of the foodstuffs we produce is diminishing, and the local market is contracted by the widespread unemployment amongst our own people. Many thousands of people have not the means to purchase even the necessaries of life. Recently a strike took place amongst the sustenance workers in Victoria.

The PRESIDENT (Senator the Hon. P. J. Lynch). - Order! The honorable senator must connect his remarks with the bill.

Senator BARNES:

– I am saying that this bill is not a permanent remedy in that it will do nothing to find markets for the primary producers, and so enable them to get on their feet. The conditions out of which the strike arose have a direct bearing upon the plight of the farmers who are to be relieved by this legislation. The producer cannot find markets, because so many of our people cannot afford to buy the produce of the land. I ask the Senate to ponder the conditions of hardship revealed in the following appeal : -

We, the unemployed, in Ballarat and Victoria, have reached the stage where we can no longer exist on the present miserable “ sustenance rates,” and have now taken determined action to secure for ourselves and our wives and children a decent standard of living.

Repeated promises have been made by many political parties, that we would be given employment, and after four years of promises, we again face hardship this winter.

The present allowance of 12e. per veek for a man, 8s. for a woman, and only 2s. 6d. for a child is’ utterly inadequate for human needs.

Out of that miserable pittance, the recipients have to find rent, clothing and food. How can a man buy butter and bread or pay rent out of so small an income? A good Australian, willing and able to work, and ready to do his best to help carry on the affairs of this country, is offered by his grateful country 27s. 6d. a week to keep himself, his wife and three children. Yet we wonder why there is a diminished local market for our primary products. We cannot have a prosperous country while men work for starvation wages which prevent them from buying the necessaries of life produced by the farmers. If a man were receiving, not a sustenance dole of 27s. 6d., but a wage of £4 10s., a market for the produce of the farmer would be created. In assisting the primary producers, while at the same time allowing tens of thousands of would-be workers to remain unemployed, the Government is putting the cart before the horse. Until the Government finds work for the people the rural industries cannot be restored to a state of prosperity. The report of the Royal Commission on the Wheat Industry shows that amongst the disabilities of the farmers are the prohibitive interest rates. With wheat selling at ls. Sd. a bushel, it is impossible for the farmer to carry on when he has to meet an interest burden which represents a charge of from 3d. to ls. lOd. a bushel of his production. At the last general election the Labour party offered to the farmers a guaranteed price of 3s. 9d. a bushel for wheat for home consumption. We promised that if we were returned we would see that proper provision was made for the marketing of their products by collective effort, and also that for all wheat sold in thi3 country they would receive a. remunerative price. Unfortunately we were not able to give effect to our pledges because our party was not successful at the polls.

I have had brought under my notice a very striking example of the need for assistance to be given to farmers. A few years ago a farmer owned a property valued, stocked at £20,000 on which there was a first mortgage of £5,000 at ii per cent. This mortgage, which was held by a trustee company, fell due in 1930, in which year, as honorable senators will recall, prices dropped considerably and conditions generally were chaotic. Finding himself able to raise only £2,600 on his property he wrote to the company pointing out that he could meet a little more than 50 per cent, of the mortgage and asking for a renewal of the balance. The reply which he received was as follows : -

We refer to previous correspondence and to your application for a loan of £2,300 on security of your property . . . and beg to advise having received valuation thereof . . . at £3 10s. per acre . . . The matter has been considered by the ‘trustees by whom I have been desired to inform you that subject to your signing on approved mortgage we are willing to lond you the amount for which application- has been made, for the terra of three years, with interest at the rate of S per cent, per annum.

That illustrates one reason why our wheat-growers cannot prosper, and it is, I suggest, a reason why other primary producers also are in difficulties. It points to the need for intervention by the Government with the object of reducing interest rates if our primary producers are to get out of their present difficulties. This bill will have application to 230,000 primary producers who, with their wives and families, represent .a not inconsiderable percentage of the population of Australia. Notwithstanding all that may be said to the contrary, I believe it is possible to provide all the people in this country with work at reasonable rates of wages without being required to pay 8 per cent, or for that matter any rate of interest on the money. All the Government requires to do is to utilize the credit of the country. There should be no idle men in Australia. Nothing could be more stupid than to continue an economic system which compels ablebodied men to lounge at street corners in idleness instead of being put to work planting forests, constructing sewers for provincial towns, and carrying out the numberless other public works that could be undertaken to meet the demands of a growing population. Only a few days ago I read of the achievements of a man who had been elected mayor of a city in Austria largely because of the policy which he enunciated for the employment of the people. In a comparatively short time after taking office, and simply by utilizing the public credit, in a sensible way, he was able to put all the people to work on the necessary public undertakings and housing schemes for the convenience of the citizens. There is no reason why a similar policy could not be put into force in Australia. In all the States there is need for new or improved roads and bridges; there are tourist resorts to be beautified, and a large number of other works are required for the development of this country, all of which could he put in hand by merely utilizing the public credit. President Roosevelt has just been authorized to continue with hia policy of providing work for the people of the United States of America. for years millions of pounds worth of gold has been pouring into that country and because of the dislocation of international trade relations it has been shut into a vault where it is practically worthless.

If we are to get out of this slough of despond into which the people of Australia, in common with the people of all countries, have been plunged, we must look facts in the face and not be afraid to experiment in financial policies. Only a few days ago a visitor to some of the Melbourne slums was astounded at the evidence there of misery and degradation.

We have been told that Australia cannot sell its wheat because Germany, Prance and Italy, which formerly were good customers for our primary products, are now, by force of economic circumstances, endeavouring to provide for their own requirements. Great Britain is similarly, and for the same reason, giving its attention to a policy of economic nationalism. During the war the people in the Mother Country Were on the brink of starvation, and would have suffered great privations but for the action of the then Prime Minister of Australia (Mr. Hughes) who bought ships wherever they were for sale, and transported Australian wheat for the use of people of Great Britain and the allied armies.

Because European countries are now endeavouring to meet the local demand from within their own borders, the overseas market for Australia’s primary products has been very much restricted in recent years, a.nd it seems to me that the time is coming when we shall be obliged to give our attention to production for use and not for profit. We have in Australia, the soil, the climate and the manpower to produce all that we require for ourselves, and to feed millions of people overseas.

I shall support the second reading of the bill. My one regret is that it does not go a little further and guarantee to the wheat-grower a better home market for his product. But the wheatfarmers are not the only people in this country who are in need of assistance. Every man willing to work should have the right to apply his energy to the building up of the nation.

Senator E B JOHNSTON:
Western Australia

– I intend to support this bill for ‘the provision of £12,000,000 for the reduction of farmers’ debts, because during the last few years the majority of our farmers have not been able to pay their working expenses. The Government might well have gone much further and brought forward legislation for the reduction of both debt and .interest burdens which are pressing heavily upon primary producers, particularly in the newer districts. When the farmers’ debts were incurred prices overseas for primary products were much higher than they are to-day. At that time farmers were getting from 4s. to 5s. a bushel for their wheat. Now with wheat at, from 2s. to 3s. a bushel and with wool at the present depressed prices it is impossible for them to meet their liabilities. At the last elections, candidates of the United Australia party in the eastern States; the Nationalist party in Western Australia, and the Country party, promised that, if returned, they would support a comprehensive scheme for rural rehabilitation and debt relief. The royal Commission on the Wheat Industry estimated the debts of the wheat-growers of Australia at £150,000,000. The woolgrowers, according to the Wool Committee’s Report, owe another £140,000,000, while other farmers and producers in the agricultural, pastoral and allied industries probably owe, inclusive of their liabilities to State governments and government instrumentalities, another £200,000,000. Within the last few days I have heard two ex-Treasurers of the Commonwealth, Dr. Earle Page and Mr. J. H. Scullin, at different times, give it as their considered estimate that the whole of the debts owing by the agricultural, pastoral and kindred industries, approximate £500,000,000. The amount for which this measure provides is, therefore, very small in comparison with the debt. The plan submitted to us under this bill will give only very partial relief to those lucky farmers who are fortunate enough to come under its operation. Many creditors will not voluntarily cancel the debts due to them for the estimated few shillings in the £1 if they think that by holding out they will receive 10s. in the £1 or the full amount of the farmers’ obligations to them.

– No, but that it should provide the £20,000,000 which was promised the farmers from one end of Australia to the other by the United Australia party and Country party. If the whole £12,000,000 went to the wheat-growers - and that is not intended - it would not average £300 for each of them. If only one half went to the wheat-growers it would mean less than £150 each and even then that amount under this scheme would he spread over a period of three years. Under this bill I fear that many farmers will not escape with less debts than the creditors think the whole of their assets are worth and that even after the debt adjustment has been made they will be left with very little equity in their properties unless the prices of wheat and wool improve in the markets of the world.

It may be accepted that by bringing forward this measure the Government has abandoned the very comprehensive scheme recommended by the Royal Commission on the Wheat Industry for the financial reconstruction of that industry. The Wheat Commission’s scheme is set out in part8 of its second report and is adaptable to all of the rural industries. The commission recommended that the Commonwealth should found a fund from which payments would be made, on the recommendation of the court, to be established for the following purposes: -

For the working expenses of any approved scheme for carrying the farmer on.
Loans for developing and improving the farmer’s property or to utilize it in more profitable forms of production.
Loans for the purchase and replacement offarmer’s plant and machinery, and
This is very important - for the suspension and, over a period, for the compulsory reduction of all debts including secured debts.

Secured debts do not come directly under this legislation. A scheme of reduction based on such lines would have done more to rehabilitate the rural industries than will be obtained by this bill. I appreciate this legislation, but think the Government could have gone much further in the direction in which it is aiming by accepting the recommendations of the Royal Commission on the Wheat Industry. Such a policy would more adequately conform to the preelection promises made by the Prime Minister (Mr. Lyons), the Leader of the Country party (Dr. Earle Page), and the Minister (Senator Pearce) with regard to rural rehabilitation. I emphasize the point that this measure is welcome, but more direct and valuable assistance could have been given for the money provided by adopting the Wheat Commission’s very comprehensive scheme and recommendations. The present legislation in no way meets the pre-election promises of the honorable gentlemen I have mentioned. The farmers were promised complete rehabilitation, not merely an inadequate measure of partial debt relief such as we are now considering. The present bill in no way covers the promise of the Government in regard to the amount to be made available, nor in regard to the direction in which the farmers and others concerned were to be assisted. I complain further that these debt relief proposals contain restrictions which were never mentioned during the election campaign. In some States they exclude a large proportion of the farmers and a proportion most sorely in need of relief from the Commonwealth, so far as their secured debts are concerned. I have in mind those settlers whose debts are due very largely to governments or their instrumentalities, such as the Agricultural Bank of Western Australia and similar institutions throughout the Commonwealth. Such farmers include soldier settlers and those in the group settlements.

This legislation provides for £12,000,000 to be spent over three years. The scheme put before the electors by the United Australia party and the Country party in their election propaganda throughout Australia provided for what was called a £20,000,000 rural rehabilitation policy. It was advertised as such. I have before me a copy of the Primary Producer, issued in Western Australia, dated the 6th September last. This newspaper circulates very widely among the farmers of the State, and the issue to which I refer would have gone into every farmer’s home on the eve of the election. I may add in passing that the advertisement which appeared in the Primary Producer, and which I am about to quote, appeared in various other newspapers published throughout Australia, and I have no doubt that it was similarly displayed. In this case a huge advertisement extending over several columns reads: “On

September 15th cash this cheque.” Then following in cheque form the words: -

page 887

THE BANK OF CONFIDENCE

Pay 50,000 Farmers the Sum of Twenty Million Pounds.

Lyons-Page

£20,000,000.

Very good and proper advice was also given the people how to vote for Collett, Johnston and MacDonald, the joint team for the Senate, and for the Nationalist and Country party candidates for the constituencies of Perth, Fremantle, Swan and Forrest. The advertisement concluded with the words “Keep Australia Safe,” and the statement that it was “ authorized by A. J. Monger and J. M. Macfarlane, Joint Campaign Council, 62 A.M.P. Buildings, Perth.” We have in Western Australia over 25,000 farmers, and they certainly did their best to follow the advice given in the advertisement - to keep Australia safe, by voting in the direction indicated, and also to secure the £20,000,000 in cash so plainly promised for their industry. There was no reference in the advertisement to the exclusion of more than half of these farmers so far as concerns their mortgage debts which are due to the Agricultural Bank and the Soldier Settlement and Group Settlement, Branches. We now find, however, that the amount for which this bill provides will give only 3,250 farmers out of 25,000 in Western Australia an average of £400 each - and that will not be in cash. Yet we read in the advertisement “ On September 15th cash this cheque.” Those words suggested to me, and every one else, that the assistance was to be given promptly, and in cash.

Dr. Earle Page, in his policy speech, and also others, emphasized the point that if the assistance to be forthcoming was to do the work it was wanted to do - the work of buying up these debts at a very considerable reduction - it must be in cash. Instead of £20,000,000 originally promised, only £12,000,000 is to be provided, and is to be spread over three years. I foresee for the administration very serious difficulties in making compositions with creditors in respect of debts that the farmers owe seeing that the money will not be forthcoming this year, but will be spread over a three-year period. There are also group settlers and soldier settlers who shouldbe considered. They and many of the poorer mixed farmers and wheatgrowers are carrying on almost entirely by means of money obtained on mortgage from the Agricultural Bank on the security of all their assets. Many have few other creditors, and yet we find that the whole of that deserving section, comprising more than one-half of the settlers of Western Australia, are, contrary to the promise made by Dr. Page, entirely excluded from the scheme. As the Leader of the Senate is aware, £20,000,000 was promised, and I hope that, in his reply, he will tell us when the remaining £8,000,000 will be made available. He promised that the sum to be granted by the Commonwealth would be expended by the State governments in different ways, outside the adjustment of debts altogether. Unless the remaining £8,000,000 of the £20,000,000 promised is made available, I am afraid that a great many electors who were influenced by the advertisement advising them to cash a cheque for £20,000,000 on the “ bank of confidence “ will come to the conclusion that the title should have been “ the bank of confidence tricks “ !

Senator E B JOHNSTON:

– The facts speak for themselves. As a Senate candidate, my name was associated with that advertisement, and I am doing my best to see that the Government redeems its promise. Naturally, I am glad that the rural industries are to receive £12,000,000 from federal sources. That is a 60 per cent. fulfilment of the promise made, even though the payment will be spread over three years. On this occasion, the Government has done better than a previous government did in 1931, when it failed to keep its promise that 3s. a bushel f.o.b. would be paid to the wheat-farmers under the provisions of the “ Wheat Advances Act.” The default on that occasion meant a loss of nearly £7,000,000 to the wheat-growers of this country. They were not given one farthing of the substantial amount guaranteed to them by an act of this Parliament. The promise of £20,000,000 was not merely confined to a number of advertisements, for a statement made by the Prime Minister (Mr. Lyons) during the last week of the election campaign, was described by the Bulletin in the following terms: -

The Prime Minister (Mr. Lyons) during the last week of the campaign made the following unabashed bid for farming support: “We intend to borrow large sums - £10,000,000, £15,000,000, possibly more - to relieve the primary industries of the burden of debt which they arc carrying. When we see how much money we can obtain, we intend to consult the industries themselves as to the best way of using it.

It is true that the Commonwealth Government did consult with the Government of Western Australia, and that the latter made definite proposals as to the manner in which it would like the money to be expended. To those proposals, however, the Commonwealth Government said, “ No. We will provide money only for debt relief, and even then we shall exclude all debts to State governments “.

Although a representative of Western Australia, the Leader of the Senate (Senator Pearce) did not visit his own State during the election campaign. Nevertheless, the right honorable gentleman took an active part in the campaign in other States. Moreover, he was assisted by a good publicity officer, who from time to time sent lengthy statements regarding the policy of the Commonwealth Government to Western Australia, where they were published in the newspapers. On the 31st August, a fortnight before the election the West Australian contained the following: -

page 888

HELPING THE FARMER

Federal Government’s Plans

States to Divide over £10,000,000.

Adelaide, 30th August

The Minister for Defence (Senator Sir George Pearce ) , in an address to-night at Jamestown, gave details of the Federal Government’s plan for the rehabilitation of primary industries. He said that the expected cost was between £10,000,000 and £15,000,000, and the chief objective was to put primary producers in a position to be able to compete in the world’s markets.

Because a large number of primary producers could not carry on successfully under present conditions, and there was no immediate prospect of an effective increase in prices of produce, he said, it was proposed to use the credit of the Commonwealth to raise money for rural relief. What suited one State would not suit another, and it was proposed to deal with each separately, through State governments. Each State government would be asked to put forward its own proposition, based on what was considered most suitable to its particular circumstances, the Commonwealth finding the money.

Honorable senators will observe that the Commonwealth was to find the money, and would consult with the State governments as to the manner in which it would be expended. That was done; but the Government of Western Australia submitted proposals only to have them rejected. The statement by the right honorable gentleman continued -

In some States, for instance, reduction in railway freights might be one means for providing relief, while in another a scheme for bulk handling of wheat might be proposed, or some form of assistance based on export.

Notwithstanding that promise, the bill before us provides that the money to be voted by the Commonwealth shall be expended only in granting relief from certain debts; debts owing to State governments or State instrumentalities, which constitute the great proportion of the debts owing by farmers in Western Australia, are excluded. The report went on to say -

The Minister said he believed that if this was carried out, farmers would be able to weather the storm, and a lessening in costs of production would be the test of their suitability.

I agree with him, and I hope that the right honorable gentleman will accept an amendment to give effect to his belief at that time. The statement in the West Australian continued -

Although the Government felt that primary production had been greatlyassisted bya reduction in taxation, removal of duties and grants to wheat-growers, fruit-growers, and others, it believed that that was not enough, and for some time had been working out this definite plan of relief.

The Government spent time in working out its policy by consulting the State governments. After consulting the State governments-

Senator E B JOHNSTON:

– The right honorable gentleman will not deny that he said -

What suited one State would not suit another, and it was proposed to deal with each separately, through State governments. Each

State government would be asked to put forward its own proposition, based on what was considered most suitable to its particular circumstances, the Commonwealth finding the money.

With reference to your Government’s proposals for the rehabilitation of the primary industries,I desire to inform you that, while the proposed monetary grant is acceptable, its practical benefit to this State at the present juncture will.be largely nullified by the limited purpose for which it may be utilized.

At the conference of Ministers held at Canberra on December 3 and 4, the Minister for Lands, representing my Government, stressed the point that the grant couldbe used to much greater advantage in this State in providing horse-power, fencing material, water supplies and for the replacement of wornout machinery.

These are regarded as the more immediate urgencies of rural rehabilitation, whereas the Commonwealth proposals simply embrace a partial conditioning of debts, while quite overlooking the enormously influential part that Government instrumentalities in this State have played in the development of its primary industries. My Government is of opinion that the preliminary grant of £225,000 which it is proposed to allocate to this State for the compounding of debts would be of little immediate benefit, whereas if this sum was made available for the commencement of a comprehensive scheme of rehabilitation, it would be of practical utility in enabling many farmers to continue in productive occupation of their holdings. Waning industry would be reinvigorated and the provision of fencing and water supplies would enable many growers who are dependent solely on wheat to adapt their holdings to mixed farming. One of our State’s major problems is its large number of partially improved farms. The period 1920-30 was one of exceptional activity in land settlement in this State. The advent of the depression found a very considerable number of settlers in the process of farm building with moneys borrowed from the Agricultural Bank. With the stoppage of bank advances through lack of capital, development has been more or less at a standstill, and it has now become a question of providing further capital for the establishment of these farms, or of facing the loss of the moneys already advanced to them. My Government, while appreciating the financial assistance which the Commonwealth is willing to render, is definitely of opinion that this State should be permitted to utilize the moneys in the way it considers will best serve the interests of the primary industries of this State, enabling it to take into consideration the more urgent requirements of an adequate scheme of rehabilitation. Such a scheme would embrace: -

Provision of horses on unequipped and tractor-powered farms.

Re-adaptation of wheat lands of low productivity to mixed farming, necessitating the provision of fencing and water supplies.

Compounding and writing down of private and government debts.

With regard to the latter, it must be emphasized that no scheme of debt reduction would meet the situation in this State which excluded Crown debts. Approximately 50 per cent, of the aggregate amount owing by primary producers is due to the Agricultural Bank, which, in its amending legislation, passed during the last session of parliament, has been given the power - in agreement with other creditors - to write off, postpone or compound debts owing by its borrowers. The Agricultural Bank has already given substantial relief to a considerable number of its clients.

The Acting Prime Minister (Dr. Earle Page) telegraphed the following reply -

The proposals contained in your letter of February 22 concerning the Commonwealth assistance for rural debt adjustment have been carefully considered by the Commonwealth Government. The fundamental object of the Commonwealth proposal was and is to provide financial assistance for farmers’ debt relief and it is clearly impossible for the Commonwealth Government to agree to the fund being used for purposes other than that for which the proposals were originally framed. The assistance which you desire to render to the farmers other than by way of a composition of debts cannot, therefore, be provided out of the Commonwealth fund. In view of this, it is regretted that the Commonwealth finds itself unable to agree to your proposal in this regard. Concerning your further suggestion that Crown debts should be entitled to participate in the Commonwealth fund, your attention is invited to a recommendation of the December conference that no payment shall be made in respect of debts due to a State, and to the terms Qf the Commonwealth proposals which were communicated to you on February 1 and 3. The question of debts due to State authorities has received most careful consideration and the Government regrets that it finds itself unable to agree to any variation of its modified proposals on this matter

On 11th March, Mr. Collier sent the following telegram to the Acting Prime Minister : -

If your telegram of the 7th. represents your unalterable decision, my Government must agree. I desire, however, to stress the necessity for consideration of the special needs of our primary industries. The individual relief derivable from a partial conditioning of debts is relatively unimportant compared with the major benefits accruing to all sections of the community if the grant is used in a general scheme of rehabilitation. Maintenance of production by replenishment of plant and power and adaptation of holdings to diversified farming is of paramount importance to the adjustment of old debts.

Dr. Earle Page again telegraphed a refusal to alter his decision. The request of the State Government that debts due to it should be included in this legislation was reiterated, but again it was rejected by Dr. Earle Page who, in his policy speech, on the 14th August had specifically stated that the proposed farmers’ debt adjustment scheme would provide for the writing down of debts due to the Crown. Dr. Earle Page, in that speech, said -

It is useless approaching any creditors with a composition or arrangement involving scaling down the debt without being able to offer an immediate consideration. The chief class of immediate consideration will, of course, be cash

Cash was promised; not a reduced amount spread over three years. He continued - and this is an essential when dealing with unsecured creditors. Others available would include power to offer and effect a writing down of Crown dues; power to offer secured creditors quarterly interest payments at a rate agreed upon over specific periods; power to offer guarantees on behalf of the Crown.

– Yes. As a representative of Western Australia I repeated the promises made by the Prime Minister (Dr. Earle Page) and the Leader of the Senate (Senator Pearce), and I am now complaining because specific promises are not to be honoured. I do not know why the rural rehabilitation plan has been altered and restricted to the disadvantage of the farmers, and particularly those in a State such as Western Australia, where settlement is comparatively recent, and where the Government has assisted one half of the farmers. The form of rural rehabilitation which I expected to be adopted, and which I promised the electors, was that set out in the policy speech of Dr. Earle Page. The scheme, in its present amended form, is more beneficial to mortgagees, including large ‘financial institutions, than it is likely to be to the farmers, who were satisfied with the proposal which the Government placed before the electors in the first instance. If the request to assist farmers indebted to the Agricultural Bank, who constitute more than half the farmers in the State, were agreed to the grant to Western Australia would need to be doubled. To-day I received the following telegram from Mr. Troy, the Minister for Lands in Western Australia: -

Agricultural Bank principal debts, thirteen rail lion six hundred thousand pounds; number of settlers, twelve thousand eight hundred and eighty-three. More than fifty per cent, of total farmers’ debt represents advances for improvements, machinery, stock super cropping.

This is a very important measure, involving certain principles which should have been thoroughly discussed in the House of Representatives, but unfortunately the bill was bludgeoned through that chamber with the assistance of the gag and many honorable members anxious to speak to it were not given an opportunity to do so.

The PRESIDENT:

– The honorable senator must not refer to debates which have taken place in the House of Representatives during the current session.

Senator BROWN:

– One would think that when dealing with a bill involving the expenditure of £12,000,000 all honorable members would have been given ample opportunity to express their opinions. Prior to the election Dr. Earle Page went about the country speaking grandiloquently of the rural rehabilitation measures that would be brought in if he and his party were returned to office. Reading and listening to his speeches one would think that if he were returned to office some measure of justice would at last be done to the farmers. We on this side of the Senate are in accord with any effort to assist the farmers, but at the same time we say that other sections of the community suffer equally with the farmers through the failure of the present economic system. As a result of the precedent being established by this measure, it is possible that some of those sections will approach the Government to have extended to them the same consideration as is being shown to farmers under this bill. It has been rightly said by the Leader of the Opposition (Senator Barnes) that this measure is but a feeble attempt to meet the situation. Senator Johnston has informed us that the total indebtedness of the farming community is approximately £500,000,000. The Government is asking Parliament to vote only £12,000,000, and proposes to spread the distribution of the relief over a period of four or five years. The first instalment will be £1,500,000.

In connexion with this scheme the Commonwealth will incur an additional interest liability of £400,000 a year. This legislation practically cuts across the principles of federation. The Commonwealth Government raises money by taxation in the various States and then, because primary producers are in difficulties, it brings forward this measure, which provides £12,000,000 to he disbursed by the States over a number of years under certain conditions. The bill does not, as Senator E. B. Johnston has pointed out, allow States governments to determine how the money shall be spent; it provides that it shall be utilized for the benefit of the farmers’ creditors - to enable farmers in difficulties to arrange for a composition of their debts. The Commonwealth finds the money, but denies to the States the right to say in what way it shall be expended. This is an aspect of the measure which I hope the Leader of the Government in the Senate will discuss when he is replying to the second-reading debate.

The bill shows clearly that the Government and its supporters, who, we understand, believe in private interprise, have been forced, by economic circumstances, to accept a form of hybrid socialism. Individually, Ministers and their followers are opposed to socialism as an economic system ; yet for some years this Government and previous governments have been handing out doles and subsidies, making provision for the employment of workless people on relief works, and manipulating exchange. Yet, when we on this side urge that the Government should go a little further, and instead of giving to private enterprise the advantages of socialism, it should extend the principle- to embrace all the people, Ministers and their supporters suggest that we are suffering from a form of political madness.

The Douglas credit system, which advocates a national dividend for all, has been discussed in this chamber on many occasions, and has been laughed to scorn by ministerialists. Supporters of the Douglas credit system urge that there should be such a distribution of the purchasing power per medium of dividends for all, that consumption would equate production. Although this principle is opposed by honorable senators opposite, who are most vitriolic in their denunciation pf anything that emanates from that monetary school, they are prepared, from time to time, under economic pressure, ,to endorse schemes to hand out doles, subsidies, and all manner of assistance in forms which run counter to the principles of the political school to which they belong.

The bill is not designed to give money to farmers to purchase machinery or seed or to pay for the labour required to work their farms. It is a proposal to s&t aside the sum of £12,000,000 to be disbursed over a period of four years, and utilized for the assistance of a limited number of farmers - about 30,000. The manner in which the money is to be utilized by the States is set out in the measure. It is to be used in such a way as to make possible the composition of farmers’ debts with storekeepers and “other unsecured creditors. The farmer himself will not see one penny piece of this £12,000,000.

I have examined closely the illustrations cited by the Acting Prime Minister (Dr. Earle Page), when moving the second reading of this bill in the House of Representatives, and I was struck by the fact that, in the first case cited, the farmer’s debts may be reduced as the result of the composition suggested, but he would lose his tractor; so in respect of the working of his property, his position would be worse after than it was before the composition. I fail to see how, by resorting to this accountancy legerdemain, the Government is going to achieve any substantial measure of rural rehabilitation.

One phase of the measure which I approve is the provision for interest-free advances to the States. This principle, I suppose, dates from the time when Jesus drove the money-changers from the temple, and is in conformity with Christian principles that discourage usury. But honorable senators should note that the Commonwealth will be called upon to pay interest on the loan, and that the yearly amount will depend on the state of the loan market. If market conditions are favorable, we may get the money at 4 per cent. On the other hand, if the time is not opportune, the loan may not be fully subscribed and the balance will be taken up by the banks, in which case little new money will be available. The bulk of the loan will be merely bank credit, for which the Government will be required to pay interest.

The State governments, in distributing the money made available to them, will set up tribunals whose function will be to inquire into the financial position of farmers applying for relief, and to recommend the amounts to be paid for the benefit of the unsecured creditors. The position of many unsecured creditors is probably just as bad as that of the farmers themselves. I have no doubt that they are in debt to various banks, so this money, portion of which may be raised by bank loans, will be handed to the unsecured creditors, who, in their turn, will .pay off their debts to the banks. If this be so, in what way will the payment back to tha banks ‘ of money issued on bank credit to unsecured creditors rehabilitate rural industry in Australia? The whole arrangement is specious humbugging of the people, and is not likely to render real service to the farmers who are in need of help.

Let us see what the farmers themselves think of this scheme. The Queensland Producer, a journal which circulates widely among all sections of primary producers in Queensland, expressed this opinion in its editorial columns on the 27th March-

Let’ us now subject the much advertised rural rehabilitation scheme to a critical analysis, and sec if the excessive optimism of Dr. Page is likely to justify his claim to the effect that the £12,000,000 grant, which be it noted is to be spread over a term of years, is really a “ substantial contribution to the solution of the difficulties of the farmer “. Having regard to the fact that the Wheat Commission’s report disclosed that the estimated debts of about 250,000 wheat-growers were stated to amount to the staggering total of £151,000,000, and that Mr. C. L. A. Abbott. M.H.R., recently submitted an estimate showing that the debts of wool-growers were nearly as much or something in the region of £140,000,000, and the Federal Government admits that “ no information was available from which to make an estimate of .the debts of all farmers “, it certainly appears that the claim of Dr. Page rests upon a very flimsy foundation. As a matter of fact, it must bo patent from a most perfunctory examination of the rural relief measures outlined, that they hardly touch the fringe of the problem, and even from the standpoint of the wheat-growers themselves, the effect in staving off absolute ruin will be practically negligible.

The writer referred to wheat-growers because certain articles dealing with them appear in the same issue of the paper. He continued -

Of course, the distribution of the sums allocated will not be on a per capita basis, but, as already stated, are “ designed to place 30,000 farmers on their feet “. From this it is reasonable to infer that the other 220,000 wheat-growers will be excluded from any participation in the grant. If this is the intention of the federal authorities, it is certain that the discrimination will provoke widespread dissatisfaction and much indignation among those growers who are to be debarred from benefiting from the money allocated to the States.

If we are going to establish the principle that the State must have Commonwealth money made available to them free of interest to enable farmers to make a composition with their creditors - it will not be debt-free money to the Commonwealth, but will mean an addition of £400,000 a year to the interest bill of the Commonwealth - why should not other sections of the people who are in difficulties receive similar assistance? I was speaking recently to a Brisbane business man, who informed me that he had been in business in Queensland for the whole of his life. and had struggled against adversity for many years, but, latterly, due to the depression, his position had ‘become so bad that he was afraid he would soon be obliged to file a petition in bankruptcy. That man, and many thousands of others whose financial position is equally insecure, will be expected to subscribe, through taxation, towards the sum to be raised by the Commonwealth Government to get our farmers out of debt. We are going to get the farmers out of debt by getting the community into debt. If, as a result of this measure of assistance, people in other industries prefer a similar request to the Government, we shall be getting one another out of debt by the medium of governmental action. The debts of those engaged in private enterprise will, in the end, become a national debt, and so will never be paid off. If this Government sees fit to give effect to such a principle, I shall offer no objection; I may be able, sooner or later, to take advantage of it myself and to demand a composition of my debts through government action. I should be pleased if I could have them removed from my shoulders to those of the community. In 1920 the Commonwealth public” debt amounted to £352,000,000, and in 1932 it had increased to £396,000,000. In 1920 the debts of the States totalled £425,000,000, whereas in 1933 they had increased to £807,000,000. If the Government feels inclined to pile debt on debt, and interest on interest, I shall not have much to say. But some day if the Government finds itself overloaded with debt, it may be disposed to repudiate, as Senator Johnston suggested when he said that he would give a reduced capita] account to these farmers. When the debt becomes too big shall we have a national composition? We had something of the sort a few years ago when we secured a reduction in the rate of interest on our loans. I read from time to time in the Queensland newspapers that private companies are requesting the courts to agree to a reduction of their capital. By means of inflation Germany practically wiped out its internal debt. There was another painful series of compositions in the United States of America in 1929, when, fol- lowing the Wall-street crash, millionaires woke up one morning to find that their fortunes had gone; banks closed their doors and many people were ruined. These several courses will be open to the Government when the debt which it is piling up becomes too big. I refer to these matters merely to show the way in which this country, is going by removing debts from private enterprise and placing them on the shoulders of the people generally. That will be the effect of this bill. In effect, it is an endeavour to use the money system in order to save private enterprise. I should like to see our monetary system used so that every one in the country and not merely a section of the people would benefit.

Senator BROWN:

We are constantly hearing from honorable senators opposite of the success of the five-year plan in Russia, a country which has abolished capitalism; but Russia cannotdo without money. In spite of the fact that we have retained the capitalistic system, we are paying for private loans only 4½ to5 per cent., and have reduced the interest on public loans to about 4 per cent. Russia, which has been described by someas the modern Utopia, is obligedto borrow money internally at higher rates of interest. Senator Brown has said that money raised by loans is fictitious.

Senator Brown:

– No. I distinguished between real money and fictitious loans.

Senator BADMAN:

-Comparison of the rates of interest payable on loans in Russia and Australia will show that the position in this country isvery much better than in theSoviet Union. The Soviet Union Year-Book for 1930 states that the first internal loan in 1924 cost the Soviet Government8per cent;the second internal loan for 1926, 8 per cent.; the third internal loan for 1927,8 per cent. ; the fourth and fifth internal loans for 1928,8 per cent. and 11 per cent. and the reconstruction loan for the same year, 10 per cent., while the internal loan of the Peoples Commissariat of Transport cost 9 per cent. The Year-Book also states -

While in other countries the financing of industry is being done through capital issues of private and joint stock companies, in the Soviet Union this function is being performed by State loans. Consequently the issue of State loans by the Soviet Union should not be considered as an exceptional financial measure, but as the normal method of financing the national economy of the union.

The figures which I have quoted show that despite all that has been said by our friends opposite in favour of the Russian system of finance, the Government of thai country has to pay considerably more for money which it requires than we pay in Australia to joint stock companies and banks.

I commend the Government for tackling this grave problem in a business-like way. The proposals contained in this bill will be of substantial benefit to farmers.

Senator FOLL:
Queensland

.- I congratulate theGovernment upon having brought in this measure which, as Senator Badman has pointed out, will make it possible for those engaged in primary industries to obtain some measure of relief from their burden of debt. It is also an earnest of the Government’s intention to fulfil the election pledge given by the Prime Minister (Mr. Lyons) and his supporters, that if returned a measure would be brought down, having for its object the rehabilitation of primary industries.

I do not intend to discuss the measure at length, but I desire to obtain from the Leader ofthe Senate (Senator Pearce) some information with respect to certain of its provisions. I direct attention in the first place to paragraph e of clause 7 which states that no payment under any composition or scheme of arrangement shall be made in respect of any debt due to a State or governmental authority. I should like to know if the term “ governmental authority “ includes the State Agricultural Bank in Queensland. That institution has made considerable advances from time to time to thefarmers in Queensland. Very often private banks have not been willing to provide finance for certain farmers, who in such circumstances have turned to the State Agricultural Bank for assistance. Although the authorities controlling that bank have endeavoured to conduct it on what are regarded as sound lines, in many cases it has been necessary, in order to prevent farmers from being forced off their holdings, to make available to them credit beyond what private institutions might regard as the safety margin. Summing up the position in Queensland, I may say that, whilst most of the “ good “ accounts are handled by private banks, many of the “ bad “ accounts - bad in the sense that the security might not be good - are with the State Agricultural Bank. If the State Agricultural Bank of Queensland comes within the definition of a governmental authority, that bank will not be able to recover any portion of the amounts owing to it. I hope that the Minister will give an undertaking to have this position investigated with a view to enabling the State Agricultural Bank to recover some of its advances.

I am glad that the Government has seen fit to bring down this measure, because of the assistance which it will render to country storekeepers. Everybody knows that country storekeepers for many years have been at their wits end because of the difficulty of recovering debts due by farmers, owing to low prices or seasonal conditions. Under this measure storekepers and others who have given extended credit to farmers, enabling them to carry on, will be able to recover some portion of the money owing to them.

I also commend the Government for including in the bill provision whereby shire councils and other local-governing bodies are brought within its provisions. Many shire councils in my own State - and I have no doubt that local-governing bodies in other States have acted similarly - have not enforced payment of rate assessments during the depression, and because of the resultant falling off in revenue have not been able to carry out necessary road construe- . tion, bridge building, and other works, which, in normal times, give employment to a large number of persons in country districts. This bill will enable them to recover some portion of the arrears owing, and put in hand works which have been postponed during the depression.

I agree with other honorable senators that, until the prices for primary products in the world’s markets rise appreciably above their present levels, we cannot hope for a return of real prosperity in our rural industries. But the bill contains proposals that will be of real assistance to our farmers, and it is a clear indication that they have hot been forgotten by the Government. I hope that it is only the commencement of a policy to be put in hand for the aid of rural industries, and that, in association with the States, the Commonwealth Parliament will continue its help to our primary producers until eventually they are on their feet again.

Senator COLLETT:
Western Australia

– Having in mind the conditions obtaining throughout the Commonwealth, I intend to support the bill within limits. It is of such importance that I feel sure that every honorable senator will lend it at least qualified support. During the last three or four years we have heard a good deal about the plight of our primary producers. Although there is general recognition of his worth as a contributor to the sum total of the nation’s wealth, I have noticed a tendency in some quarters to pit him against the man engaged in secondary industries, and the general effect of that tendency has been, I think, detrimental to both, because our primary and secondary industries are inter-dependent. The man who exploits the riches which the earth provides supplies the raw material for the manufactfacturer and, I suggest, is entitled to the same measure of protection as is given to the latter. For example, if I read the figures aright, or correctly estimate their import, the present protection given to the man engaged in secondary industries, including duties, primage and exchange, varies from 60 per cent, to 65 peT cent. If that amount of protection were halved, and half the total were given to the man engaged in primary industries, I venture to predict that his position would be very much better than it is. The total amount that has been expended by the Treasury upon the man engaged in agriculture is very small compared with that which the manufacturer has obtained from the pockets of the people themselves.

This bill aims at an adjustment of the farmers debt6. Speaking on general lines, I think the Government is right in its premise that a lightening of the burden of debt is the first step towards the rehabilitation of the farmer. The debts of the wheat-farmer we are told aggregate something like £150,000,000, but the contribution that we are proposing to make is something less than one-tenth of that sum. The money, however, is going to the quarter where it will do the most good. For instance; if I read aright the report of the Royal Commission on the Wheat Industry, onethird of those engaged in wheat-farming are able to arrange their own finance; one-third are so situated that they would be unable, in the future, to carry on upon economic lines despite any reasonable assistance that we might be able to give them, while the remaining one-third have every prospect of continuing successfully if some of their difficulties are removed. We gather that this legislation is directed towards the last-named section. Consequently, the concession contemplated is really not so inconsiderable as might at first appear. There is in the bill a provision that no portion of the money to be used shall be directed towards the payment of any debt to the Commonwealth or to any State or any governmental authority. That has already been pointed out by previous speakers. This course is necessary, if I understand the situation correctly, on account of the losses that have been sustained by more than one of the States in connexion with their land policy, and those losses would more than absorb the whole of the amount that we are proposing to make available under this bill.

I am concerned, among other matters, with the effect that this bill is going to have on soldier settlers, upon whom the Commonwealth has in past years spent a very considerable amount of money. I pointed out in a previous speech the rather peculiar position of these settlers whose indebtedness is almost entirely composed of what they owe to State govern mental authorities. I recently discussed the matter in Perth with the Assistant Minister (Mr. Thorby) while he wa3 on his way to Europe, and was assured by him that it was not intended to debar this class of settler from the benefits of this legislation. I want to emphasize the peculiarities attaching to this class of settlement. These men went on the land when land values were at their highest and the products of the land were averaging the highest price. They were the victims of the generosity of the repatriation scheme itself, because on the holdings which they took up advances were made up to 100 per cent. As the result of the depression, the soldier settler in far too many instances had no equity at all left in his property. I hope the Minister when replying to the debate this evening will indicate what is intended in respect of this particular class of settler. I hope, also, that die right honorable gentlemen will give us some information upon the position of the private trading banks and the amount of benefit that will accrue to them under this scheme. We are all aware - and I think that the Leader of the Senate emphasized the point to-night - of the tremendous amount of good that has been done by these institutions; but it seems necessary to remove any impression that the major portion of the moneys we are now asked to vote is going to be diverted to them to the detriment of a large body of equally worthy creditors. Not very long since an eminent banking authority deprecated any intervention by the Government between the banks and their clients.

In this bill, we are dealing with the agricultural industry as a whole. The new law is to be administered by the State governments, but certain lines of action are indicated from which no divergence is to be permitted. That, in a measure, is to he regretted, and I trust that even now it is not too late for the Government to reconsider its decision. I believe that a great dissimilarity of conditions exists in the various States.

Senator Sir George Pearce:

– Tremendous differences.

Senator COLLETT:

– Whether a more effective scheme than we have projected for using the money can be devised is a matter of conjecture. The State of Western Australia, of which T am a representative, owes its development during the last two decades almost entirely to the operations of the wheatfarmer. But any one who has moved about the country, and has witnessed the fight that is being waged to keep the farms going in the face of very low prices, must realize that the dearth of ready money, shrinkage of creditand the burden of past debts, have been very much felt. The industry in Western Australia is a young one, so that up till now there has been a general lack of opportunity to set aside any money for a rainy day or even to provide for the normal replacements of stock or machinery and plant. Consequently, I have no doubt that on examination of the farmers’ accounts in Western Australia it will be found that their position is aggravated in comparison with that of wheat-growers in the other States.

– I said that I was glad to find that some of their debts wouldbe paid. Are they not entitled to some assistance ?

Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932

– Of course, and particularly those who are conducting small businesses. This is not much assistance to the farmers because most of the money will be handed over to trustee companies and other financial institutions. Although it is supposed to be made available in the form of a loan very little of it will ever be repaid. The Government should adopt a comprehensive plan of public works, and by placing large numbers of men in employment increase the demand for primary produce and at the same time cause a larger amount of money to be placed in circulation. If one State should be much more prosperous than another those seeking employment immediately cross the border, as they have a right to do, and compete for whatever work is offering. Therefore one State cannot be better off than the others for any length of time. In Queensland which has expended a much larger amount of loan money on public works than any other State the position is slightly better. The only way to afford real assistance to the farmers is to raise a loan sufficiently large to enable extensive public works to be undertaken and by that means increase the demand for primary products. I should like the Government to consider whether it is not practicable to introduce a scheme under which the primary producers and not the financial institutions will benefit. The position of many producers is desperate. I know of a man in the northern rivers district of New South Wales who, before the crash, was worth £40,000, and who to-day is on the dole. This bill will at least save many farmers from fore-* closure. Unless we in Australia are determined to free ourselves from the financial shackles of the old world, and control our own financial policy, more years of depression must inevitably follow, and we shall not be able to keep the farmers on the land. Eventually they and the under-paid and wages-taxed workers will come to appreciate their true position, and the capitalistic system of society, as we now understand it, will be terminated. I regret that the Government has not made a more substantial contribution towards a solution of the difficulties confronting not only the farmers, but also the workers and the small shopkeepers, for whose welfare Senator Foll has been so solicitous. I, also, have a most friendly feeling for them, because I recognize that they are a. struggling section of the community. Friends of mine who have kept shops have found that is was not all beer and skittles. When the depression came many men who had invested their money in small businesses found themselves in difficulties as the result of giving credit to farmers and other classes of workers. If a larger and, perhaps, more imaginative proposal were adopted - one commencing with the workers and extending to the shopkeepers and farmers- it would create more happiness in the community, if only for a time. The Government of the United States of America has tried several schemes, which have resulted in failure, but that Government is now undertaking a huge scheme, involving the raising of £1,000,000,000, to assist industry generally. But Australia is behind the times, and is only beginning where others have knocked off, in endeavouring to place the national economy on a satisfactory basis by a miserable grant to the farmers. I do not ask the Government to undertake an entirely socialistic change in regard to this matter; but undoubtedly it is now doing things which would never have been countenanced by the tory or liberal governments of past years. Public opinion has responded to the demand of the times, and we are now doing things which in earlier years would have been regarded as distinctly socialistic. There is no doubt that the old-time tories would have been aghast at any proposal to give to the farmers a dole in the form of temporary relief. They would have said, “ What has become of the great principle of self-reliance, and standing up to one’s burdens? You are making of the nation a race of paupers. It is not only the workers, the men satisfied with a life of toil, and supposed to have no executive ability, who receive State assistance in times of depression. You are making the farmer the recipient of charitable relief.” That is exactly the position. The smaller the amount of relief, the more the farmer will be placed in the position of a dole-taker. We should follow the lead of the United States of America by raising sufficient maney to keep all our unemployed in work, so that our waterlogged ship of state may be made seaworthy.

Senator Duncan-Hughes:

– What kind of work?

Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932

– One work that could well be undertaken is the standardization of the east-west railway line. I was astonished to find, on a recent journey to Western Australia, that it was necessary to change trains three times in the State of South Australia. When I arrived at Perth I was asked by a newspaper interviewer my opinion of the state of affairs in South Australia. I replied that 25 years earlier I had crossed Canada from St. John’s to Vancouver, and in six days changed trains only once, and that was at Montreal. The standardization of the east-west railway, at a cost of £2,000,000, is a great national work which should be undertaken at this period.

Senator Duncan-Hughes:

– It would employ only a comparatively anal: number of workmen.

Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932

– Yes ; but if the Commonwealth raised £50,000,000, it would give employment to about 250,0000 workers for one year at £4 a week. One of the election promises on which Mr. Moore, Premier of Queensland, won an election in that State, was that he intended to spend £2,000,000 to place 10,000 men in employment for one year at £200 a year, a sum well over the present basic wage. But for reasons of jealousy, and because it fears that it would lose a little revenue if the east-west line were standardized, the South Australian Government is averse to the undertaking of this work. It is difficult to understand the attitude of the South Australian Government in view of the fact that the money would be spent in that State, and would give employment to large numbers of its unemployed residents. The £12,000,000 proposed to be provided under this bill will, in the main, go to the banks and financial institutions. That is not a proper way of easing the farmers’ burdens. It would be far better to increase the consuming power of the community by undertaking large employment schemes. Some years ago it was estimated that the nationalization of the Australian railways would cost £57,000,000, and it was said that this work, together with railway extension, would well repay Australia. “When a man has a fortnight’s holiday, or is temporarily out of work, if he is farseeing and is in possession of a home, he will put in concrete paths around the house, do some painting, and generally place his home in better order, spending the whole of his fortnight in improving his property. The same thing applies to the nation; now when there is so much unemployment is the time to put Australia’s house in order. If by raising £50,000,000, which, on a population basis, is in proportion to the sum of £1,000,000,000 being expended by the United States of America, we can place our workers in full-time employment for years, it will have that very desirable effect which we experienced when the price of wool was increased, and will be something worth while. The Acting Prime Minister (Dr. Earle Page), in introducing this bill in the House of

Representatives, said that what is necessary is to give farmers an opportunity to extricate themselves from their difficulties in anticipation of an early improvement in prices. But the bulk of the farmer’s market is in Australia itself. We consume 80 per cent, of his products, and if the lot of the worker and the trader were improved, the farmer would reap the advantage of an increased circulation of money. He would be able to increase his production, in order to get the full benefit of any improvement in world prices. I do not anticipate any such improvement in the near future; but it can be expected in the years to come, if only as a result of another world war. Although I support the bill, I regard it as merely tinkering with the problem, and I should like to see a more far-sighted policy adopted. The Government should, like President Roosevelt in the United States of America, get to grips with the problem and introduce proposals to put the people to work. If this were done there would be no need to worry about the position of the farmer.

Senator PAYNE (Tasmania [9.45]. - The measure must appeal to every honorable senator because it marks the beginning of a new era in legislative proposals. Its purpose is to give financial aid of a special character to a certain section of the community. This is the first time that we have been called upon to discuss a bill to relieve a large section of the .community from obligations which it has incurred from time to time. I disagree entirely from the statements made by Senator J. V. MacDonald and his colleagues that the root cause of the difficulties confronting our primary producers is the existing social and financial system. Nor do I agree that we should break the shackles that bind us to the Mother Country.

Senator J V MACDONALD:
QUEENSLAND · ALP; FLP from 1932

– Who said that? I referred to the financial shackles of Europe and America.

Senator PAYNE:

– Many of those who took part in this debate have suggested that because of the policy of economic nationalism now being adopted in other countries it is impossible for Australian primary products to be marketed overseas except at a loss and that is one of the causes of all our troubles.

But I put it to honorable senators opposite that economic nationalism is really the principle of self preservation applied to nations, and it is, moreover, the policy which they have been advocating for many years in connexion with our secondary industries. Great Britain for over a century has been dependent for its prosperity upon the export of its manufactures, but in more recent times the industrial development of other countries has been more marked, and the imposition of tariff barriers has created so many difficulties for the Mother Country that it has at last been compelled in self protection to give its attention to the development of its agricultural industries to provide foodstuffs. The only solution for the troubles of our primary industries is an increase ‘ of population, ensuring the local consumption of a larger proportion of the output.

Senator Brown:

– “What suggestion does the honorable senator offer for the purpose of increasing the population.

Senator PAYNE:

– I am indifferent as to the method to be employed. “We are in possession of the finest country in the world and can support a very much larger population which would provide a good home market for our primary products. Do honorable senators realize that for many years we have been producing largely in excess of our consumptive capacity and that, owing to increasing costs of production, we have been unable to export at a profit? The great majority of our primary-exporting industries have been bolstered up by bounties or subsidies, with the result that our products have been sold in the overseas market at prices much lower than they realize in Australia.

The proposals in this bill, although welcome, are merely a palliative, and because the policy of economic nationalism is finding more and more support in other countries we shall eventually be compelled to look for noi increase of population as the only way out of our present difficulties.

I am glad to know that the Government has included in the bill a provision for direct assistance to a very deserving section of the community. But there are in the measure one or two points concerning which I should like more de finite information. In giving this special assistance to our farmers we must not do injury to another section which might be equally deserving. I come from a State where the conditions of primary producers are somewhat different from those obtaining in other parts of Australia. For instance, we have no direct knowledge of many of the difficulties encountered by wheat-growers and other land workers in Western Australia, but we have troubles which are peculiar to a community engaged in mixed farming.

I feel sure that honorable senators who have preceded me will agree that in every State there are farmers and farmers - that while a great majority of the men on the land are efficient producers there are, as there must be in other avocations, men who ought never to have been on the land except as employees. This bill provides that the authority to be set up in the various States shall give relief only to those who have a reasonable prospect of making a success of their occupation. What I wish to impress upon the Senate is the fact that this debt adjustment will apply to the traders in the community who have for many years strained their resources to the utmost to enable farmers to carry on. The position of many traders is quite as bad as that of the farmers themselves. What then would be the position of a storekeeper who has incurred enormous liabilities in order to give farmers extended credit, if the authority suggested to him that he should accept 10s. or 12s. in the £ in full settlement of the money owing to him ? He might be quite willing to accept the compromise if the State authority which made the suggestion could also indicate to him how he could meet his engagements. Failing this he might quite reasonably ask if the Government intended next to introduce a Storekeepers’ Debt Adjustment Bill. Surely it is clear to honorable senators that if there is a compulsory adjustment of farmers’ debts, the effect of which may be to accentuate the difficulties of the trading community, there may be a suggestion later that the Government should introduce legislation to relieve traders of some portion of their debts. This phase of the problem should.

I think, receive serious consideration. I intend to support the second reading of the bill, and I suggest that when it is in committee those provisions in it relating to compulsory composition of farmers’ debts should receive earnest consideration, in order to prevent hardship from being inflicted on other sections of the community.

Senator Sir GEORGE PEARCE:
Minister for External Affairs · Weetern Australia · UAP

[9.41] . - in reply - Some curious theories have been propounded during this discussion with regard to debts. It would appear, from the views expressed by some honorable senators opposite, that the lender of money is to be regarded as “ Public Enemy No. 1 “. Let me put the case in this way. I am a wage earner, but I see an opportunity to get away from what our friends opposite term wage slavery and become an employer. I have in mind a piece of land, and believe that if I can obtain capital I can make a good living on it. Having secured the land I look around for the capital, and appeal to “ Public Enemy No. 1 “ for an advance to purchase stock and plant, and to cultivate the land. “ Public Enemy No. 1 “ agrees to make me an advance. At that stage I regard him as a heaven-sent benefactor.

Senator Duncan-Hughes:

– Even if you have to give him a mortgage?

Senator Sir GEORGE PEARCE.Yes, because he provides the money which enables me to make a start. Then in order to carry on until I harvest my crop I appeal to “ Public Enemy No. 2 “ - the local storekeeper - who agrees to give me credit for twelve months. At that stage I consider that “ Public Enemy No. 2 “ also is a blessing from Heaven, because without his aid I should be unable to carry on until my crop was harvested. But time passes and prices fall, and because difficulties arise from this cause, I am asked to regard as my enemies the people who have given me assistance! Another curious fallacy emerged from the debate to-day. Because I am in difficulties, a beneficent Government comes along and says to me “You owe £1,000 to Public Enemy No. 1 and Public Enemy No. 2. In order that you may have an opportunity to put in another crop, we will provide a sum of £100 or £200. With this you may arrange a composition with your creditors, and so reduce the debt owing to these ‘.public enemies’ and incidentally reduce your interest charge.” Being a farmer I also look upon the Government, at that stage, as a benefactor. But curiously enough, in this debate I am told that money made available by the Government is not available to me at all, but to “ Public Enemy No. 1” and “Public Enemy No. 2”. As a farmer I find it difficult to realize this because I reason that if, as the result of this action by the Government, my deb: is reduced by £400 or £500, I have, in some way, received a gift of that amount. I do not see why I should regard as my enemy or as a public enemy either of those parties; the party that lent me money to obtain plant and stock, the party that gave me credit for stores to enable me to get my crop in, and to take it off, or the Government that enabled me to secure a compromise with my creditors by which the amount of my debts was reduced. I suggest to some of our honorable friends opposite that they should review their judgment of these matters and look at them in the cold light of reason.

Coming to other aspects of the debate, I was very interested in some of the statements made by the Leader of the Opposition (Senator Barnes) who seems to think that the cure for the ills of our farmers to-day is that all the unemployed should be put to work. Some of his supporters appear to share the view that if that were done, the position of the farmer would become satisfactory. Let us test this theory. The average wheat crop of Australia is about 200,000,000 bushels. Of that about 50,000,000 bushels are consumed locally for bread-making, and as seed wheat. That is to say, out of every four bags of wheat produced in Australia one is consumed locally. Unemployment at the height of the depression reached 32 per cent. In other words, one-third of the workers were unemployed. Let us assume that that onethird ate no bread at all, although those of us who are aware of the splendid State organizations to cope with unemployment know they were never more efficient than they have been during the depression. But assuming that they ate no bread at all, and were suddenly put into work, the utmost they would add to the local consumption of wheat in the form of flour would be about 17,000,000 bushels. The local consumption would then amount to 67,000,000 bushels, instead of 50,000,000 bushels, and we should still have to export 133,000,000 bushels of our average wheat crop. I suggest to the Leader of the Opposition that he has not propounded a solution of this problem.

I listened also with interest to Senator Johnston, and must confess to a feeling of disappointment at the spirit which he displayed in discussing the bill. He appeared to offer a grudging acceptance of it. At one stage he seemed to be advocating that the Government should pay the debts of the whole of the farmers, including the one-third to whom Senator Collett referred as being able to make their own financial arrangements. I do not believe that is the outlook of the average farmer in Australia. I think he is just as independent as any other section of the community, and would prefer to pay his own debts if he were in a position to do so. He has no claim on the rest of the community to pay them, if he can pay them for himself. There is, however, a section of the wheat-growers that is quite unable to pay its debts. In this connexion, I remind honorable senators that the bill deals, not merely with wheat-farmers, but with all sections of the farming industry. I have heard him refer to one section, the sugar-growers of Queensland, as if it consisted of bloated capitalists. I presume he does not want any of this money to be used to pay off the debts of the sugar-farmers who, according to what he has said, ought to be in a position to make their own financial arrangements.

Senator E B Johnston:

– The Government is finding almost as much for Queensland as for Western Australia.

Senator Sir GEORGE PEARCE:

– But not much of this money will go to the sugar-farmers. I remind the honorable senator that Queensland is one of the greatest dairy-farming States of the Commonwealth, and that the position of the dairying industry is almost as bad as that of the wheat-growers. Another factor which Senator Johnston left out of account when dealing with the wheatfarmers, was that this is only part of a general scheme of rural rehabilitation which is proposed by the Government. In addition to the amount for which this bill provides, other money is being found, particularly for the wheat-grower. Senator Johnston made an attack on the Government, declaring that during the election campaign, we promised £20,000,000 for rural relief. I noticed, by the way, that in neither of the two speeches from which he quoted was any reference made to £20,000,000. He quoted a speech by the Prime Minister (Mr. Lyons) in which the amount mentioned was not £20,000,000, but a sum of between £15,000,000 and £20,000,000. He quoted also from a speech made by myself at Jamestown, South Australia. In that case I referred to an amount of from £10,000,000 to £15,000,000, and according to my teaching, £10,000,0000 is just one-half of £20,000,000.

Let us see what the Government is proposing to spend on behalf of the farmers in these three years. Last year - after those speeches were made - the Government found £3,000,000 by way of bounty on wheat, and it will have to find from £2,000,000 to £4,000,000 for the wheat-farmer in respect of the coming harvest. It has also found £250,000 by way of bounty on superphosphate, which is available for farmers to use.

Senator Payne:

– What about the fruit-growers ?

Senator Sir GEORGE PEARCE:

– It has provided assistance for the growers of citrus and other fruits. . I think Senator Badman gave the total amount. If these several items are aggregated, it will be found that in the three-years period mentioned in the policy speeches made by the Prime Minister (Mr. Lyons), the Acting Prime Minister (Dr. Earle Page) and myself, the amount found by this Government will exceed £20,000,000. Senator Johnston quoted from a speech that I made at Jamestown during the election campaign.

Senator E B Johnston:

– And a very good speech, too.

Senator Sir GEORGE PEARCE:

-I may, perhaps, be pardoned for agreeing with the honorable senator. At that time, the Government had considered the main outlines of a policy of rural recovery, and I was authorized to make that speech as indicating the lines along which the mind of the Government, at the time, was running. The general outline was given, but the details remained to be worked out. If the honorable senator will look at the GovernorGeneral’s Speech at the opening of this Parliament, he will find that it was indicated by the Government there, and also I think in the Prime Minister’s policy speech, that such a policy would require co-operation between the Commonwealth and the States. It was indicated in the Governor-General’s Speech that it was not possible for the Commonwealth itself to carry out such a policy; it would have to seek the co-operation of the States. The Commonwealth did seek that co-operation, but Senator Johnston failed to give the result of our efforts. A conference of Commonwealth and State Ministers on agricultural and marketing matters was held at Parliament House, Canberra, on the 3rd and 4th December last. The representatives of the Commonwealth and the States were as follows : -

Commonwealth. - The Right Honorable Earle Page: Senator the Sight Honorable Sir George Pearce; the Honorable T. Paterson; Senator the Honorable A. J. McLachlan; the Honorable R. G. Casey; Senator the Honorable T. C. Brennan ; the Honorable H. V. C. Thorby.

New South Wales. - The Honorable B. S. B. Stevens, Premier and Colonial Treasurer; the Honorable H. Main, Minister for Agriculture.

Victoria. - The Honorable J. Allan, Minister for Agriculture; the Honorable A. A. Dunstan, Minister for Lands; the Honorable J. P. Jones, Assistant Treasurer.

Queensland. - The Honorable F. W. Bulcock, Minister for Agriculture and Stock

South Australia. - The Honorable R. L. Butler, Premier and Treasurer; the Honorable A. P. Blesing, Minister of Agriculture.

Western Australia. - The Honorable M. F. Troy, Minister for Lands

Tasmania. - The Honorable R. Cosgrove, Minister for Agriculture

Dr. Earle Page, who opened the conference on behalf of the Commonwealth Government, said, as reported in paragraph 13, page 6, of the report -

I may say that the Commonwealth Government has, in its desire to assist in the solution of this problem, no intention of invading the States’ sphere of action so far as it is concerned with the details of administration. The Commonwealth Government is prepared, as the policy speeches of the Prime Minister and myself indicated, to make Commonwealth funds available to State authorities subject to the observance of certain general principles: -

That the State shall submit a satisfactory scheme for approval.

That the Commonwealth Government will advance, free of interest, such sums as are mutually agreed between the Commonwealth Treasury and the State authorities for the purpose of adjustment of farmers’ debts.

That the sums so advanced shall be used for the assistance of individual farmers, and not for the purpose of relieving State budgets.

That there should be such supervision of farmers being rehabilitated as to prevent their being replaced in unmarketable production.

I believe that all the States will be able to agree to those four principles.

That a sub-committee be formed, consisting of the following, to consider the formulation of a plan for rural rehabilitation and a basis of collaboration between the Commonwealth and State governments in regard thereto; such sub-committee to report back to this conference.

Then followed the names of theofficials who constituted that committee. I need not read them; it is sufficient to say that every State as well as the Commonwealth was represented. The report continues -

The sub-committee appointed in accordance with the foregoing resolution withdrew from the conference and subsequently presented a comprehensive report embodying the result of its deliberations.
This report was fully debated by the conference, and it was unanimously decided to recommend the following course of action in connexion with rural rehabilitation: -
The Commonwealth Government to agree -
1. To provide funds up to £12,000,000 over a period of years to the States free of interest to permit of the States making payments on behalf of, or advances to, farmers for the purpose of enabling them to make payments to their creditors in satisfaction of their liabilities on a composition basis.
2. Th at such funds shall not be repaid to the Commonwealth by the States, but may on repayment by the farmers be re-advanced by the States for further composition adjustments, or by agreement with the Commonwealth for such other purposes as the States consider necessary to assist farmers generally.
3. That the Commonwealth make available a first instalment of £1,500,000 up to the 30th June, 1935.

The basis of allocation is then given -

The method adopted for allocation of funds available to 30th June, 1935, should not be regarded as a precedent for future allocations. Sums made available to each State to 30th June, 1935, are to be regarded as advances on account only, and are to be taken into account for adjustment when a final allocation of the total amount made available by the Commonwealth is decided upon.

The State and Commonwealth statisticians are to be asked to recommend a final basis for allocation of the full amount made available, having regard to the rural debt situation in each State.

If any one State should not require the whole of the amount allocated to it for the period to 30th June, 1935, any excess so available may be allocated to another State should the need arise.

That, owing to the difficult circumstances existing in each State, each State be allowed to devise its own scheme for distribution and administration of the fund, and that the details of the schemes and legislation to give effect to such scheme be submitted to the Commonwealth Government for approval.

Then follow some machinery clauses, concerning the establishment of the fund, which I need not read. But I would draw Senator Johnston’s particular attention to the following resolution, which was unanimously agreed to by all the States: -

Each State to agree: -
1. To provide legislative machinery whereby a farmer may effect a composition with his creditors in satisfaction of the whole or part of his debts, and that the State may advance him money on terms approved by the appropriate State authority or pay money on his behalf to enable him to make the payments to the creditors provided for under the composition such legislation to include provision for a stay of proceedings where necessary pending preliminary investigation and negotiation.
2. To constitute an authority to administer such legislation and to provide funds for the purpose of meeting administrative expenses and short term advances to farmers for sustenance and carrying on requirements during the operation of the stay of proceedings.
3. To empower the authority to act on behalf of the Crown and to agree on behalf of the Crown under conditions set out in the State legislation to any writing down or postponement of any debts due to the Crown, and to agree on behalf of the Crown to the postponement of the Crown’s right to priority for any debt due to the Crown.
4. That advances will only be made available to farmers where, as the result of the composition, they will have a reasonable prospect of ultimately rehabilitating their financial position.
5. That advances and/or payments will only be made available to effect composition payments in respect of liabilities which it is necessary to compound to ensure the farmer remaining in production and give him a reasonable prospect of carrying on successfully.
6. That no payments under a composition scheme shall be made in respect of any debts due to the State.
7. That three trustees of the fund be appointed in each State, one of them to be nominated by the Governor-General in Council.

The bill conforms to the agreement arrived at as the result of a conference between the Commonwealth and State Governments.

Senator Sir GEORGE PEARCE.The claim put forward by the Premier of Western Australia that this scheme could be used to write down the State debts would merely mean the transfer of the liability from the State to the Commonwealth. It would certainly relieve the State budgets, but it would not relieve the farmers. This bill is intended to grant relief to the farmers, not to State Governments.

Senator Johnston seems to have a perpetual grievance, ostensibly on behalf of Western Australia. One would think from that honorable senator’s remarks that the States with the bigger populations exercise a kind of tyrannous control over the unfortunate State of Western Australia. I remind the honorable senator that it is proposed to borrow the ?12,000,000 referred to in this bill. That means that the taxpayers of the Commonwealth will be liable for the repayment of the principal amount, as well as interest thereon. The taxpayers of New South Wales will become liable for ?4,600,000, but the farmers of that State will receive only ?3,450,000 out of the first ?10,000,000. On the other hand, the taxpayers of Western Australia will become liable for only ?800,000, whereas the farmers of that State will receive ?1,300,000. Apparently this is another horrible injustice perpetrated by the federation on the unfortunate people of Western Australia! South Australia, which will become liable for ?1,000,000, will receive ?1,300,000. When an honorable senator complains of inequalities in a measure he should he sure of his ground.

Senator Badman urged that a greater sum should have been provided. I recognize that the honorable senator criticized the bill in a different tone from that of Senator Johnston. He received it as an instalment in the right direction, and in a cheerful spirit. I suggest, however, that there would be difficulties in the way of obtaining a. larger sum. Whatever the amount, it will have to be borrowed.

Senator Sir GEORGE PEARCE.All borrowing has now to be done through the Loan Council, and, unfortunately, this sum is not the only amount that must be found. The borrowing of ?12,000,000, even if spread over three years, represents ?4,000,000 a year. That sum would have to be added to the total of the amounts which each State says represents its irreducible minimum, to meet deficits and undertake public works to relieve unemployment and so on. Moreover, we are restricted to the Australian money market, and, in view of the drop in the national income by ?200,000,000 a year, it is obvious that the capacity of Australia to borrow money internally is limited by the reduced earnings and savings of the people. There is no unlimited purse into which we can dip. I suggest, further, that if we strain the money market of Australia by over-borrowing, we shall cause the interest rate to rise in which event instead of conferring a blessing on the farmers of Australia, we shall be subjecting them to a curse. Therefore, in considering the amount of money which could be borrowed for this purpose, we must bear in mind the capacity of the people of Australia to find the money and the necessity for avoiding increased rates of interest.

Senator Badman also asked who would be entitled to apply for assistance. Clauses 6 and 7 set out the procedure, which is in accordance with the resolution of the conference of Commonwealth and State Ministers.

The honorable senator referred to secured and unsecured debts. There is no differentiation in this bill, except in relation to Crown debts, many of which, are secured.

The point raised by Senator Poll in relation to the Queensland Agricultural Bank is dealt with in sub-clause 2 of clause 7. I point out that if Queensland desires to grant relief in the direction indicated by the honorable senator, there is nothing, either in the hill or in the agreement to prevent that from being done, but the responsibility will rest on the State, not on the Commonwealth.

Senator Collett raised a difficult problem when he referred to soldier settlement, but I remind him that, following the report of Mr. Justice Pike, the Commonwealth accepted a share of the total loss of ?24,000,000 by writing off about ?12,500,000.

The honorable senator also referred to the difference between the conditions in the various States. That is true, but I remind the honorable senator that in my second-reading speech, when I gave the principles upon which the statistician had arrived at his figures, I said that that officer had taken into account the very factors mentioned by Senator Collett, such as the magnitude of the rural debt in Western Australia, and the number of new settlers compared with established settlers. In the allocation of the amounts to the several States all the relevant factors were taken into consideration.

The adjustment of the debts of the farmers will give relief in regard to interest charges. If our farmers are to continue to carry on, their costs must bo reduced. No one can read the report of the Royal Commission on the Wheat Industry without realizing that interest is & very important factor in the cost of production. I do not think that the commission was able to arrive at an average cost, but it indicated that, in one State, interest represented about 8d. a bushel. The effect of interest varied from 3d. to 1s. l1d. a bushel. Every one knows with what joy we hailed a rise of1d. a bushel in the price of wheat. If we could reduce the interest charge by a quarter, or an average of 2d. a bushel, that would be a further substantial gain to the farmers.

Senator Sir GEORGE PEARCE Even if the money could be raised, it would mean high interest rates. I submit that the Government’s proposals are reasonable. They are as much as the Commonwealth can meet, and they represent a substantial contribution towards the rehabilitation of our farming population.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 to 3 agreed to.

Clause 4 -

The amount borrowed shall be issued and applied only for the expenses of borrowing and for the purpose of expenditure in accordance with this act to provide for the grant to the several States, by way of financial assistance, of moneys to be used for the payment to or for the benefit of farmers to enable them to make compositions or schemes of arrangement with their creditors in respect of their debts.

Senator E B JOHNSTON:
Western Australia

.- The statement of the Minister (Senator Pearce) of what occurred in December was very interesting, but unfortunately it does not afford much consolation to those who had to rely upon policy speeches to ascertain the Government’s intention in connexion with a general rural rehabilitation plan. As I mentioned previously, no Commonwealth Ministers were in Western Australia, and the people in that State had to be guided by the newspaper reports of policy speeches and widely distributed statements by Ministers. The speech delivered by the right honorable senator at Jamestown showed clearly the Government’s intentions in regard to the distribution of this money. The fact that, long after the election, Dr. Earle Page attended a conference at Canberra and informed State Ministers who protested and asked for something else, that money could not be found for a real rural rehabilitation plan, is little consolation to those who supported the policy outlined by Senator Pearce at Jamestown three months before. The right honorable gentleman has told us that the statements he made were at the request and with the approval of the Cabinet.

The CHAIRMAN (Senator the Hon Herbert Hays:
TASMANIA

– I ask the honorable senator to connect his remarks with the clause.

Senator E B JOHNSTON:

– My comments are relevant to an amendment which I propose to move. The Minister said -

What would suit one State would not suit another, and it was proposed to deal with each State separately and through State governments. Each State government would be asked to put forward its own proposition based on what was considered most suitable in the particular circumstances ; the Commonwealth finding the money.

Western Australia submitted its proposition, and the Premier of Western Australia, in a letter, pointed out that at the conference held at Canberra on 3rd and 4th December, the

Minister for Lands representing his Government stressed the point that the grants could he used to the best advantage in that State in providing horse power, fencing material and water supplies, and for the replacement of worn-out machinery, I move -

That at the end of the clause the following proviso be inserted: -

Provided that, with the approval of the Parliament of any State, the whole or any portion of the grant to that State may be used for -

the replacement of worn out plant and machinery;

providing horses for the purpose of working farms;

the re-adaptation of wheat lands to mixed farming by the provision of fencing (including rabbit-proof fencing) and facilities for the supply of water; and ((2) such other purposes in relation to rural rehabilitation as that Parliament thinks fit.

The Royal Commission on the Wheat Industry urged in Part 8 of its report the adoption of the policy proposed by the Government of Western Australia. The amendment is also in consonance with the policy expounded by Senator Pearce at Jamestown before the election, and with the promises made by the leaders of the two parties now supporting the Government. I trust that the committee will not oppose an amendment which is in accord with the views of at least one State government.

Senator Sir GEORGE PEARCE:
Minister for External Affairs · Western Australia · UAP

[10.40]. - The Government cannot accept the amendment. Senator Johnston is entitled to all the satisfaction he can get in showing that there is a variation between the proposals embodied in the bill and the policy put forward ‘by myself at Jamestown, and advocated by Dr. Earle Page. I admit that a change occurred as a result of the views expressed at a conference held in Canberra. When we realized the difficulties which would arise by allowing each State to submit its own scheme, the Commonwealth having to enter into a separate agreement with each State, we agreed that our original proposal would have to be abandoned. This bill embodies the principles finally agreed upon between the Commonwealth and the States at that conference, and we think that the change is in the right direction. The amendment would be an entire negation of the principles of the bill in that it provides for separate agreements with each State, a policy which had to be abandoned.

Senator DALY:
South Australia

– Can the Acting AttorneyGeneral (Senator Brennan) say whether there would be a reasonable probability of the amendment, if adopted, being held by the High Court to be intra vires the powers of the Commonwealth Parliament?

Senator BRENNAN:
Acting Attorney-General · Victoria · UAP

.- The Constitution expressly provides that the Parliament may grant money to any State upon any terms or conditions it chooses. Senator Johnston, who, as the Minister says, always drags in Western Australia, has not confined his amendment to that State. He uses the words “with the approval of the parliament of any State “. In these circumstances I do not think that we can cavil at it from the constitutional viewpoint. Whether the amendment, as my colleague Senator McLachlan, says, comes within the title of the bill, is another matter. It provides for handing over to a State the complete control of the money voted by the Commonwealth Parliament.

Question - that the amendment he agreed to - put. The committee divided. (Chairman - Senator the Hon. Herbert Hays.)

AYES: 6

NOES: 9

Majority . . 3

AYES

NOES

Question so resolved in the negative.

Amendment negatived.

Clause agreed to.

Clause 5 agreed to.

Clause 6- (1.) There shall, subject to thisact, be granted to the States specified in this section, by way of financial assistance to those States, the amounts respectively specified opposite the names of those States, for the purpose of making payments to or for the benefit of farmers to enable them to make compositions or schemes of arrangement with their creditors in respect of their debts: -

Senator E B JOHNSTON:
Western Australia

– I should he glad if the Leader of the Government (Senator Pearce) would tell the Senate how this system of distribution was arrived at.

Senator Sir George Pearce:

– The honorable senator can get that information from my second-reading speech.

Senator E B JOHNSTON:

– Copies of the right honorable senator’s speech are not yet available. In my secondreading speech on this bill I pointed out that during the last two harvests for which figures are available the States of South Australia and Western Australia cropped larger areas with wheat than did the State of Victoria. I was unable to obtain figures regarding other agricultural production and debts thereon for purposes of comparison. Having regard to the relatively undeveloped farms and the protests of the State governments, it would appear that the farmers of Western Australia and South Australia are in greater need of debt relief than are the farmers of Victoria. I certainly think that the governments of those States are entitled to at least as much money as hasbeen provided for New South Wales. It certainly seems to me a disproportionate allocation that gives Western Australia, comprising onethird of the continent only a little more than one-tenth of the total amount to be granted.

Senator Sir GEORGE PEARCE (Western Australia - Minister for External Affairs) [10.53]. - As honorable senators are aware, the allocation of this money was decided upon after consultation with the States. Following upon a conference of Commonwealth and State Statisticians, Mr. E. T. McPhee, the Commonwealth Statistician, reported as follows: -

Various suggestions were put forward by the State Statisticians for the consideration of the Commonwealth Statistician, but in my opinion no one of the suggested methods could be worked out in practice in such a way as to satisfy the reasonable claims of the representatives of all the States, or to produce, what in my opinion, would be a completely equitable allocation.

I have arrived at this conclusion after an exhaustive survey of all the statistical material available on the subject of rural debts (which is manifestly inadequate for the purpose of allocating the grant), and after detailed analysis of statistics in each State relating to pre-depression and depression values of rural production, relative total populations, farm populations, numbers of master farmers, numbers of rural holdings, and movement in prices and costs of production.

After examining this material very exhaustively, I proceeded to work out an allocation on the basis which seems to me least open to objections, either in principle or from the interested parties.

The underlying feature of this method was the estimated loss to farmers in value ofrural production due to depression prices, which losses brought about the debt difficulties. On the basis of an average or normal value of production in each State, the losses were calculated by taking the average of prices realized by farmers for a group of depression years compared with the corresponding average for a group of pre-depression years. The relative losses so ascertained for the different branches of rural industry in the several States were used as a primary basis of allocation. The final allocation was arrived at after giving weight to other relevant factors, such as changes in relative volumes of production, available data relating to debts due to the Crown and private creditors, relative proportions of land leased from the Crown in each State, &c.

I regard this method of allocation as less open to objection than any other method put forward, and I suggest that £10,000,000 out of £12,000,000 should be allocated on this basis. The remaining £2,000,000 could, for the time being, be held in reserve, and be used at a subsequent date to correct any anomalies which may become apparent when more information as to actual relative needs becomes available as the result of the future operations of the States in the field of debt relief.

The application of the method described above gives the following allocation among the States of the sum of £10,000,000 . . .

Then Mr. McPhee set out the figures which I have mentioned in my secondreading speech. The difficulty is that Senator Johnston looks upon this matter entirely from the point of view of the wheat-farmers. This bill provides for assistance to all farmers and while “Western Australia has a very large number of wheat-farmers in comparison with Victoria and Queensland, it has a comparatively small number engaged in dairying. Then there are fruit-growers, viticulturists and farmers of all kinds, who are taken into consideration in this scheme. The Commonwealth Statistician can be regarded as an impartial judge of the matter. If anomalies are found to exist later, the £2,000,000 which is being held in reserve can be used to rectify them.

– Senator Daly ought to be with me in this matter, because his State suffers to the same extent as Western Australia from the protective policy of the Commonwealth. Its contribution to the protective subsidies is £3 per head of population, or approximately £1,000,000, Western Australia on the same basis pays at least £1,300,000.

Senator PAYNE:
Tasmania

.- I direct attention to sub-clause 3, and I shall be glad if the Minister will offer some explanation of its intention. It reads -

No grant shall bo made under this act to a Stale unless or until there is in force in the State legislation constituting an authority empowered on application being made to it, and at its discretion, to take action having the effect of suspending, either wholly or in part, the rights of any secured or unsecured creditor of a farmer against that farmer.

Am I to understand that the authority has to be created by a State before it can participate in the money to be provided under this bill, and will the authority have power to suspend the rights of any secured or unsecured creditor- of a farmer?

Senator Sir GEORGE PEARCE (Western Australia - Minister for External Affairs) [11.6]. - The purpose of the subclause is to require a State to set up an authority, and in order that some creditor shall not be able to take advantage of the position of a farmer by enforcing his claim to the detriment of other creditors, that authority will have power to issue a stay order, so that negotiations may proceed with a view to arriving at a composition.

Senator E B JOHNSTON:
Western Australian

– I commend Senator Lynch for having raised the point with regard to per capita cost of the protective system. If the statisticians, when considering the allocation of the money to be provided under this bill, did not give due weight to -the incidence of the tariff on the people of the smaller States, their calculations are absurdly inaccurate. In addition to the tariff burden, the people of Western Australia have suffered definite disabilities under the Navigation Act. I did not hear the Leader of the Senate (Senator Pearce) say that consideration had been given by the statisticians to the effect of that act on the primary producers in Western Australia, although no one can deny that it has increased the cost of agricultural machinery by 12£ per cent.

Senator Daly:

– I rise to a point of order. I was quite willing to make every allowance for the President (Senator Lynch) who has not many opportunities to take part in the debate on the floor of the chamber. For this reason, I did riot object when he discussed the incidence of the tariff on primary production. But I certainly do object to Senator Johnston following the same line of argument. It is not competent for an honorable senator to discuss either the tariff or the Navigation Act on this clause.

The CHAIRMAN:

- Senator Johnston is in order in asking if the factors he has mentioned were taken into account by the statisticians, but he is not entitled to discuss generally the effect of the tariff and the Navigation Act on primary industries.

Senator Daly:

– I- invite you, Mr. Chairman, to read the title of the bill, and say whether or not it is competent for an honorable senator to discuss either the tariff or the Navigation Act. The bill simply authorizes the Government to raise money for certain purposes in connexion with the rehabilitation of rural industries.

The CHAIRMAN:

– The Leader of the Senate explained the basis of allocation recommended by the Commonwealth Statistician. Certain questions have been asked of Ministers regarding the factors taken into consideration by the Statistician. Honorable senators are entitled to make passing reference only to the effect of the tariff or the Navigation Act.

Senator E B JOHNSTON:

– One of the factors contributing to the difficulties of farmers in Western Australia is the cost of agricultural machinery. According to the late Mr. S. McKay, the additional cost in Western Australia, due to the Navigation Act, is 12½ per cent. I should like to know if the added cost, due to this cause, was taken into account by the statisticians when fixing a basis for the allocation of the money provided under this bill. If they did not do so, the whole of their figures are worthless.’ To test the feeling of the committee, I move -

That the figures “£3,450,000” be left out.

Senator PAYNE:
Tasmania

– I regret that Senator Johnston has raised this issue before the point to which I had directed attention had been cleared up. I am not quite satisfied with the reply given by the Leader of the Senate (Senator Pearce) as to the meaning of subclause 3, which empowers the authority to be constituted by a State to suspend either wholly or in part the rights of any secured or unsecured creditor against a farmer. There are only two kinds of creditors - secured and unsecured. Does this mean that if a secured creditor believing that a person who owes him money and has defaulted for years in the payment of interest is able to pay, decides to take proceedings in court, this authority may suspend wholly or in part the rights of that secured creditor.

Senator McLACHLAN:
SOUTH AUSTRALIA · NAT

– It would be at the discretion of the authority. This sort of thing is done every day. The clause is designed to enable an arrangement to be made as provided for under Parts 11 and 12.

Senator PAYNE:

– I think there ought to be provision enabling the party interested to show cause why the suspension should not take place.

Senator Sir George Pearce:

– That is a matter for the States. The States in their legislation will protect these rights.

Senator McLACHLAN:
SOUTH AUSTRALIA · NAT

– I think they have done so.

Senator BADMAN:
South Australia

Several honorable senators interjecting,

Senator DUNCAN-HUGHES:

– I think I must he getting somewhere near the mark when my observations arouse so many objections from the Opposition.

Senator Daly:

– Our only regret is that the honorable senator is not on an industrial court bench.

Senator DUNCAN-HUGHES:

– And there are different degrees within a State.

Senator DUNCAN-HUGHES:

– Yes ; but, as between States, the degree of thrift comes into consideration. I trust that the committee will reject the amendment.

Amendment negatived.

Clause agreed to.

Progress reported.

page 926

HOUR OF MEETING

Motion (by Senator Sir George

Pearce) agreed to -

That the Senate at its rising adjourn till 1 1 a.m. to-morrow.

Senate adjourned at 11.51 p.m..

Cite as: Australia, Senate, Debates, 8 April 1935, viewed 22 October 2017, <http://historichansard.net/senate/1935/19350408_senate_14_146/>.

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Senate 8 April 1935

PETROL ROYAL COMMISSION : REPORT

EXTRADITION TREATIES

LEGAL PROCEEDINGS CONVENTIONS

PAPERS

TARIFF BOARD REPORT

QUESTION

INTERNATIONAL SITUATION

Senator DUNCAN-HUGHES:SOUTH AUSTRALIA

QUESTION

RED HILL TO PORT AUGUSTA RAILWAY

Senator DALY:SOUTH AUSTRALIA

QUESTION

DEATH OF THE HONORABLE DAVID WATKINS

Senator BARNES:Victoria.

QUESTION

RETURNED SAILORS AND SOLDIERS

Senator COLLETT:WESTERN AUSTRALIA

Senator McLACHLAN:SOUTH AUSTRALIA · NAT

NAVIGATION BILL

SALES TAX ASSESSMENT BILL (No. 1) 1935

SALES TAX ASSESSMENT BILL (No. 9) 1935

SALES TAX BILL (No. 9) 1935

SALES TAX PROCEDURE BILL 1935

Second Reading

Senator Sir GEORGE PEARCE:Minister for External Affairs · Western Australia · UAP

Senator Barnes:

Senator Sir GEORGE PEARCE:

PATENTS BILL 1935

Second Reading

Senator E B JOHNSTON:Western Australia

Senator BRENNAN:Acting Attorney-General · Victoria · UAP

Senator Sir George Pearce:

Senator BRENNAN:

LOAF (FARMERS’ DEBT ADJUSTMENT) BILL 1935

Second Reading

Senator BARNES:Victoria

Senator BARNES:

Senator E B JOHNSTON:Western Australia

Senator Payne:

Senator E B JOHNSTON:

Senator Brown:

Senator E B JOHNSTON:

Senator Sampson:

Senator E B JOHNSTON:

THE BANK OF CONFIDENCE

Lyons-Page

Senator E B JOHNSTON:

HELPING THE FARMER

Federal Government’s Plans

Adelaide, 30th August

Senator E B JOHNSTON:

Senator Sir George Pearce:

Senator E B JOHNSTON:

Senator Sir George Pearce:

Senator E B JOHNSTON:

Senator Foll:

Senator E B JOHNSTON:

Senator Sampson:

Senator E B JOHNSTON:

Senator Sir George Pearce:

Senator E B JOHNSTON:

Senator Sir George Pearce:

Senator E B JOHNSTON:

Senator Daly:

Senator E B JOHNSTON:

Senator Payne:

Senator E B JOHNSTON:

Senator Daly:

Senator E B JOHNSTON:

Senator Sir George Pearce:

Senator E B JOHNSTON:

Senator Payne:

Senator E B JOHNSTON:

Senator Daly:

Senator E B JOHNSTON:

Senator Daly:

Senator E B JOHNSTON:

Senator Brown:

Senator E B JOHNSTON:

Senate
8 April 1935

Senator DUNCAN-HUGHES:
SOUTH AUSTRALIA

Senator DALY:
SOUTH AUSTRALIA

Senator BARNES:
Victoria.

Senator COLLETT:
WESTERN AUSTRALIA

Senator McLACHLAN:
SOUTH AUSTRALIA · NAT

Senator Sir GEORGE PEARCE:
Minister for External Affairs · Western Australia · UAP

Senator E B JOHNSTON:
Western Australia

Senator BRENNAN:
Acting Attorney-General · Victoria · UAP

Senator BARNES:
Victoria

Senator E B JOHNSTON:
Western Australia

Senator BROWN:
Queensland

Senator BADMAN:
South Australia

Senator FOLL:
Queensland

Senator COLLETT:
Western Australia

Senator DALY:
South Australia