14th Parliament · 1st Session
The President (Senator theHon. P. J. Lynch) took the chair at 11 a.m., and read prayers.
Minister-in-Charge of Development, upon notice -
With reference to the specialvote of £5,000 per annum for the assistance of the banana industry, what assistance is being given to the banana industry in Western Australia.
Senator Sir GEORGE PEARCE.The following reply to the honorable senator’s question has been furnished by the Minister: -
The sum of £1,500 was provided during 1935-36, and the sum of £825 is provided for the current financial year to cover scientific research in connexion with the Australian banana industry. The allocation to Western Australia during 1935-36 was £130, and it is proposed to provide £100 during 1936-37 to cover investigations into the harvesting and transport of bananas from Carnarvon.
asked the Minister representing the Minister for Defence, upon notice -
– Inquiries will be made and a reply will be furnished to the honorable senator as soon as possible.
asked the Minister representing the Minister for Trade and Customs, upon notice -
Will the Government consider the granting of a refund of the amount of petrol tax represented by the main roads grants, to fishermen who usethe petrol exclusively in the prosecution of their occupation, on similar lines to that which was in operation during the years August, 1926, to August, 1929?
– The Minister for Trade and Customs has supplied the following reply to the honorable senator’s question: -
An endeavour was made during the years 1926 to 1929 to refund the import duty collected on petrol used other than for road purposes. Owing to the administrative difficulties experienced in operating this concession,’ and also the great expense incurred in verifying a large proportion of the claims, the government of the day, on departmental advice, decided against the continuance of the concession. The same factors exist to-day, and they would apply in the same manner to the proposal now advanced by the honorable senator. Under these circumstances, the Government could not give favorable consideration to the proposal.
SALES TAX BILLS (Nos. 1 to 9) 1936.
[11.5]. -I move -
That the bills be now read a second time.
These bills are designed to give effect to the decision of the Government to reduce the rate of sales tax from 5 per cent. to 4 per cent. As honorable senators are no doubt aware, the original rate of the tax was 2½ per cent. per annum. On the 11th July, 1931, the rate was increased to 6 per cent.With the improvement of the finances during 1933, the rate was reduced to 5 per cent., and the Government now finds itself in the happy position of being able still further to reduce the rate to 4 per cent., which will operate from the 11th September, 1936. In order to facilitate the application of these acts with respect to transactions effected during the periods when different rates of tax were in force, the different rates are set out in the amending bills.
– I understand that, in accordance with a resolution of the Senate yesterday, these nine bills are to be dealt with as one measure. At this stage, I have but few comments to offer; but I should like to know the reason why the measure setting out the exemptions from sales tax is not before us.
– It has not yet. been passed by the House of Representatives.
– I feel impelled to say that, so far this session, the Senate lias had before it a jumble of matters for consideration. The subjects which have come before it are so related to the budget that they should not be discussed piecemeal. I realize, of course, that the Government has the right to decide the order of its business, but the Opposition regrets that it is forced to deal with legislation in this way. The sooner these nine bills are passed, and the Senate is able to devote its attention to other matters arising from the budget, the better the Opposition will be pleased. The Opposition welcomes the proposed reduction of sales tax, ‘because it is a form of indirect, taxation, the burden of which is not fully realized by the people who pay it; but it fears that consumers will derive little benefit from these reductions, because retailers will find it almost impossible to pass them on. On those small items which make up the bulk of the purchases of the poorer sections of the community, there is little doubt that the advantage of this legislation will not be shared by consumers.
– The sales tax does not represent 10 per cent, of the total revenue.
– A reduction of even 1 per cent, is of value to a person with a small income. The Opposition will assist to give to these measures a speedy passage.
– I shall not oppose the passing of these bills, because they give a measure of relief from taxes imposed in an emergency; but I agree with Senator Collings that it will be most difficult for retailers to pass the reduction on to consumers. The effect of this legislation, therefore, will be not to give relief to the vast mass of consumers, but practically to make a gift to the big chain stores and retailers. The Government would have acted wisely had it reduced some form of direct taxes, and thereby assisted the people who pay them. In that respect its budget proposals . fail. Apart from the purchasers of the more costly items, such as motor cars and machinery and plant, the public will derive little or no benefit from this legislation.
Question resolved in the affirmative.
Bills read a second time, and reported from committee without requests or debate.
Standing and Sessional Orders suspended; report adopted.
Bills read a third time.
In committee: Consideration resumed from the 24th September, 1936 (vide page 466).
Clause 1.1 - After section 40 of the principal act the following headings and suctions are inserted: -
Upon which Senator DUNCAN-HUGHES had moved by way of amendment -
That after sub-section 3, proposed new section 48, the following sub-section be inserted : - “ 3a. Notwithstanding anything contained in the last preceding sub-section, if an absolute majority of the members of either House of the Parliament passes a resolution (of which notice has been given at any time, after any regulations have been laid before the House) disallowing any of those regulations the regulations so disallowed shall thereupon cease to have effect.”
[11.25]. - Before the committee votes on this amendment I invite the attention of honorable senators to the serious nature of the change proposed to be made. The bill before the committee is designed to improve our legislation in respect to regulations, and if the commit! ee takes upon itself the responsibility of introducing new vital principles into the bill’ the Government will have to consider whether it will go on with it. Honorable senators are quite justified in exercising their undoubted rights to propose drastic amendments, but obviously it becomes the responsibility of the Government to decide whether it is prepared to proceed with legislation thus altered. I suggest to honorable senators, in all seriousness, that the proposal now made is a complete departure from the rule-making machinery of any British parliament, and should not be made light-heartedly, and without full consideration of its effects.
– It was not made light-heartedly.
Senator Sir GEORGE PEARCE. - Some of the amendments which have already been agreed to have been proposed without due sense of where they are leading, as I shall show later in respect of at least one amendment which has been carried. Senator DuncanHughes, in moving his amendment, quoted from a report of a committee which inquired into this subject in South Australia, and seemed to attach considerable value to the opinions of the gentlemen constituting that committee. I remind honorable senators, however, that that committee did not propose what Senator Duncan-Hughes seeks to achieve by this amendment. On the contrary, in suggesting that a regulation should be disallowable at any time, it recommended that that power should be exercised by both Houses of the Parliament, and not merely by either House as Senator Duncan-Hughes has proposed. There may be something to be said for the South Australian suggestion, because the two Houses have legislative power. The proposal now before us, however, is that, though a regulation has been in force for a number of years during which interests may have been built up on the basis of that regulation, a chance majority in one House shall be able to destroy it. I hope honorable senators, before they vote on this amendment, will realize that its effect will be to strike a blow at the stability of the statute. After all, a regulation is part of a statute and should not be capable of amendment or disallowance at any time by a. chance majority of one House. I invite honorable senators to consider the procedure trader which this matter can be dealt with at the present time under the Standing Orders of the Senate. A privilege has been taken by the Senate under its Standing Orders that does not obtain in any Other parliament in the British Empire. When any honorable senator gives notice of a motion to disallow a regulation, that motion takes precedence over all other business on the following sitting day. Honorable senators may be absent in the pursuit of their lawful occasions when notice of motion to disallow a regulation is given, and on the following sitting day a majority of the members of this . Senate may agree to the motion. At present that may be done only within fifteen sitting days; but Senator Duncan-Hughes would remove that limitation by providing that at any time, perhaps after the regulation has been on the statute-book for a number of years and considerable business interests have been built upon it, it may be destroyed. I ask honorable senators, in these circumstances, not to -agree to the amendment. If, however, notwithstanding the serious nature of this amendment, honorable senators decide to support it, the Government will have to consider seriously whether it will go on with the bill. Such a vital departure from the regulationmaking machinery of the legislature should not be made without very good reasons. Can it be said that under the present system the rights of the legislature and its control over regulations are not safeguarded? Consider the important privilege which the Senate possesses. It has the power within fifteen sitting days after a regulation has been tabled to disallow such a regulation. Moreover, the Standing Orders provide that a motion to disallow a regulation shall have precedence over all other business. The Regulations and Ordinances Committee has authority to peruse regulations and to report to the Senate; therefore the rights of’ Parliament are adequately safeguarded. Almost daily honorable senators receive copies of the regulations made, and within a specified number of sitting days any honorable senator has the opportunity to move that a regulation, which he regards as inimical to the interests of the people be disallowed. This control of the regulation-making power is very effective, but the extension now proposed is fraught with such dangers and will create such instability in law-making that it should not be agreed to. I ask honorable senators not to support the amendment.
.- The statement of the Leader of the Senate (Senator Pearce) concerning the report of the South Australian committee is perfectly correct, but I remind the committee that I went out of my way to give, in detail, what the South Australian committee ha3 proposed. I explained exactly where the alternative suggestions originated, and in reminding the committee of these things the Minister is simply doing what I went out of my way to do so that the committee could have all the facts before it. I am sure the Minister did not wish to infer that some of the facts had been withheld by me. If that is so nothing could be further from the truth. Had it not been for my speech probably not one member of the committee would have known anything of the work of the South Australian committee and its report. The Minister said that my amendment is regarded as vital; I do not regard it as vital. The Minister has also informed us that if it is carried the bill may be dropped. I would not shed a single tear if the measure were dropped forthwith. I have no particular affection for it; I regard it as unnecessary. In clause 12, sub-clause 2, a direct effort is being made by the Executive to override a decision of the Senate. The Senate rejected a certain regulation, but the clause gives to the Executive power within six months of a regulation being disallowed to make a similar regulation. That is one of the reasons for the introduction of the bill. I do not wish to over-emphasize the position. I realize that some honorable senators are somewhat concerned over my amendment, and whilst I shall not withdraw it, I do not intend to press it to a division.
– Sub-section 4 of proposed new section 48 reads -
The disallowance of a regulation under the last preceding sub-section shall have the same affectas a repealof that regulation.
Will the Assistant Minister (Senator Brennan) explain what will be the position when a regulation to repeal a regulation is disallowed.
– In proposed new section 50, the effect of the repeal of a regulation is set out, and all that is now provided in section 48 4 is that disallowance of a regulation shall have the same effect as the repeal of a regulation.
Clause, as amended, agreed to.
Clause 12 -
Provided that nothing in this section shall affect the operation of any judgment, order or conviction obtained or made before the commencement of this Act.
SenatorBRENNAN (Assistant Minister - Victoria) [11.38].- I move -
That the words been lawfully made and to have”, sub-clause 1, be left out.
Honorable senators have indicated a desire to make it quite clear that a regulation shall not impose additional liabilities upon any persons or deprive them of their accrued rights. Sub-clause 1 provides that a regulation shall be deemed to have the same force and effect as if this measure had been in force when the regulations were made. This bill now provides in proposed new section 48, sub-section 2, that -
Regulations shall not be expressed to take effect from a date before the date of notification in any case where, if the regulations so took effect–
the rights of a person (other than the Commonwealth or an authority of the Commonwealth) existing at the date of notification, would be effected in a manner prejudicial to that person.
This clause provides that -
Accrued rights will not be affected, and new regulations cannot impose additional liabilities.
– That is contrary to what we were told the other day.
– Ithinknot. I am merely pointing out what I had in my mind at that time.
– I am pleased that the Assistant Minister has moved this amendment, as it will have. the same effect as was sought in the amendment which I foreshadowed on the second reading. I thought then that the sting of this bill was in the tail, but the amendment destroys the poison.
– Senator McLeay and I pointed out on the second reading that while provision was made by this bill that no rights should be taken awa,’ and no penalties should be imposed the future, it did not apply the same principle to the past. The Government complained then that Senator McLe.. r and those who supported his view, tr ., the past should be treated in the same way as it was intended to treat the future, were adopting a most radical attitude. But the amendment now proposed by the Minister will have the same effect as was sought in the amendment which Senator McLeay foreshadowed. In other words, the Government made a tremendous fuss when this matter was first raised, but it has now done exactly what we desired.
– Not at all; the amendment foreshadowed was to strike out sub-section 2 of proposed new section 48.
– The amendment was designed to ensure that the position as to rights and liabilities in respect of the past should not differ from what would be created for the future if proposed new section 48 were carried. I am glad that the Government has proposed this amendment, which will make tho position in respect of the past just as satisfactory as it will be in respect of the future.
Amendment agreed to.
– I move -
That sub-clause “ bc left out.
This sub-clause is unnecessary. It will be recalled by honorable senators that during an earlier period of the session a regulation providing for retrospective payments to certain officers in London was disallowed. Under the provisions of the Acts Interpretation Act no regulation similar in substance to a regulation which has been disallowed may be introduced before the expiration of a period of. six months after the time of disallowance. When this bill was drafted it was the desire of the Government to rectify the position regarding the payments to the officers in London, but this could not be done within six months except by inserting an overriding provision in the act. Hence the inclusion of this sub-clause 2. Now, however, the statutory period of six months has elapsed, and, if necessary, a new regulation to regularize the payments may be made immediately. Therefore this sub-clause is not now required.
Amendment agreed to.
Clause, as amended, agreed to.
Schedule agreed to.
Title agreed to.
Bill reported with amendments.
Debate resumed from the 10th September (vide page 10) on motion by Senator Sir GEORGE Pearce -
That the papers bc printed.
– When I was able to announce to the Senate some time ago that I had been appointed Leader of the Opposition in this chamber, I stated that I should not under any circumstances be guilty of offering mere fractious opposition. I think that so far I have kept that promise. I recognize. in the budget many good features, and I realize that it will be popular to the extent that it makes concessions to many sections of the taxpayers. But, in spite of its probable popularity, I have some criticism to offer, criticism arising from the more or less obvious fact that the “basic principles which guide the political thinking of the Opposition, both in this chamber and in another place, are directly opposed to the political actions, budgetary and otherwise, of the Government. In my party there is no conflict of ideals, no clash upon basic principles. But what a contrast we find on the Government benches ! There we see a clearly defined, and often definitely expressed, conflict of interests, due to the incompatible political elements which make up the Cabinet. There is incompatibility of interest not only in the Cabinet room, but also within the two parties walch make up this Government. I. assert very definitely that no composite government of the nature of the Lyons-Page-Menzies Cabinet can embark upon a clear-cut, definitely-planned, and courageously executed policy. There must always be, as the result of the existence of competing factions within the Government and the party, dangerous indecision, abandonment of principles, sops to party factions, and fatal neglect of, and damage to, the real interests of the people of Australia. I shall indicate to the Senate some of the differences in principle which exist, and some evidence of the fatal indecision and dangerous compromise to which I have referred. The declaration made by the Prime Minister (Mr. Lyons) that “the position as a whole in Australia is satisfactory “, is not in accordance with facts. 1 should very much like to use a stronger term, but I fear that if I did, I should bc in conflict with the Chair. Such an assertion on behalf of the government of a country which has an enormous number of workers unable to secure employment - many of them in destitute circumstances - is a positive disgrace to our statesmanship. We have in our capital cities horrible shuns that are a mockery of our vaunted progress. It is not necessary to go beyond the confines of this beautiful city of Canberra in search of evidence to support this statement. We have in Australia people *’ pigging” in bag humpies, crowded lon in a room, and I say it with sorrow, we have children suffering severely from malnutrition. There is in this country a multitude of the oncoming generation unable to find work when they reach the school-leaving age, and for many there never will be a job while tho existing social order, sponsored by this Government, is allowed to continue.
We have in this country farmers hopelessly in debt to the bank and other money-lending institutions. Despite irrefutable evidence to the contrary, tho Prime Minister has declared in broadcast addresses or in statements to the press, that “ the position as a whole in Australia is satisfactory!” The right honorable gentleman makes that statement without any qualification. He does not say that the condition is satisfactory for some of the people. He asserts quite definitely that the position of Australia as a whole is satisfactory. I deny that statement, and shall give concrete examples in support of my view.
I have indicated that there aire certain vital differences between the policy of - the Opposition in this Parliament and that of the Government, as declared in the budget, and before proceeding further I wish to offer a few comments with regard to the surplus for the last financial year. A government is entitled to levy only such taxation as will enable it to meet its current obligations and future commitments. We on this side assert that this or any other Government has no right whatever to surpluses, particularly those that are not declared, but which are concealed by a process of accountancy legerdemain. We hold the view that a government should not levy taxes merely in order to close the financial year with a huge surplus. The responsibility of any government is not to make profits, but to render service. A surplus indicates either excessive taxes, starved services, or an underpaid Public Service.
We hear a great deal these times of the necessity for balanced budgets. I and all the members of my party believe in a balanced budget, and I have already indicated that our policy is to levy just sufficient taxes to ensure revenue for. the obvious requirements of the Government. I now invite honorable senators to examine the financial policy of this Government and consider to what extent it makes possible the balancing of domestic budgets - the budgets in the homes of the people - the only budgets that really matter. This Government’s policy, judged from that angle, is not satisfactory, and I impress upon honorable senators that unless domestic budgets are in balance, the position of the State itself cannot be satisfactory. I also affirm that this Government is not able to balance its budget, as the result of any considered action of its own other than the levying of excessive taxes, and I further claim that, any credit for the present financial position of the Commonwealth is due entirely to the policy of the Scullin Government, which preceded the present Administration. I anticipate that this statement will be challenged, but I am confident that it cannot be truthfully denied.
The conversion of the internal debt by the Scullin Government has, up to tho present time, saved this country approximately £74,000,000 of interest and £9,000,000 in respect of exchange charges. In one year, the saving was £16,000,000 of interest and £2,000,000 on account of exchange. Of the total, savings effected, only £8,000,000 may be attributable to any action taken by the present Government. I admit that my remarks under this head may savour somewhat of past history, but let it not be forgotten that the Scullin Government was faced with the bitterest opposition from people and financial institutions whose ideals are out of harmony with those of Labour; therefore, its achievements are the more noteworthy.
– They all helped the Scullin Government.
– After longcontinued opposition to the Scullin Government’s proposals, the financial institutions finally refused to carry the Administration any longer. Then when an attempt was made to force the Niemeyer plan upon the Commonwealth, Mr. Scullin declared that his Government would rather go to its political death than agree to those proposals. It was only later, when he found himself definitely in a “ jam from which there was no apparent escape, that reluctantly he agreed to make reductions of Public Service salaries and social service benefits, on the definite understanding that there would also be a substantial reduction of the interest hurden in respect of the public debt. The Scullin Government went out of office on that issue. But for the reduction of the interest debt and the waiving, by Great Britain, of payments in respect .of Australia’s war debt to the Mother Country, what would be the financial position of this country to-day, and what amount of additional taxes would this Government be forced to impose in order to declare this boasted surplus?
– Mr. Scullin depended upon the Opposition for support of his proposals; his own followers threw him over.
– In this debate, Senator Poll will have ample opportunity later to air his views. I hope that when he does so he will tell us what he thinks of the policy which I am endeavouring to outline, and not, as he so often does, leave us in doubt as to where he stands. 1 emphasize that the conversion by the Scullin Government of the Australian internal, debt was the greatest transaction of its kind in history, a total debt of £536,000,000 being converted into securities bearing approximately one-half the then ruling rates of interest.
A good deal has been said lately about the achievements of the representative of Australia in Great Britain in the direction of converting our overseas debt. All that Mr. Bruce has been able to do is to convert a comparatively small amount of loan indebtedness at current rates of interest. As a matter of fact, the new rates are somewhat higher than those granted by security holders in Great Britain to countries like Argentina. Yet the budget statement eulogizes the wonderful work done by Mr. Bruce, and makes no mention whatever of the more noteworthy achievements of the Scullin Government with respect to the internal debt.
On the subject of taxation, I preface my remarks by asking - why is taxation necessary? It is, I think, not inappropriate that occasionally in this chamber an attempt should he made to get down to realities. Therefore, I ask from what source do governments derive their right to tax the people? Answering this question, I express the view that every government has the right to levy taxes in order to pay for the services which it renders to the people.
– There is no taxation in Papua, I understand.
– I believe that the Commonwealth might find in Papua a useful lesson concerning the business of balancing budgets. But I do not wish to digress. I repeat that governments have the right to tax the people in order to fulfil their obligation to render the requisite national services. But governments are not supposed to serve only a portion of the population; their duty is to serve the interests of all the people, and I submit that this budget does not do that. On the contrary, it discriminates between sections of the people. It confers obvious advantages on those people who are best able to bear taxes, and does not give anything like adequate compensation to the poorer sections of the community.
One reason why taxation is necessary is that there is a serious flaw in the financial policy, not only of the Commonwealth, but also of other countries. The Labour party hopes to alter that state of affairs in Australia some day. It may interest honorable senators to know that notwithstanding that since the inception of federation, the Commonwealth has paid £900,000,000 as interest on the national debt, that debt has increased by £100,000,000. Some day a party will be in power in this country which will get back to the policy outlined in the Scriptures, whereby usury will be abolished and the people will no longer be bled white by coupon-clippers and the rentier class.
– Which party?
– I cannot flatter Senator Dein by suggesting that the party to which he belongs will ever be so humanitarian or so intelligent as to proceed along such scientific lines
If I -were asked who should pay taxes, I would reply - those who are best able to pay them, who will have the most left when the taxes have been paid, and will receive the greatest service from the activities of governments. And if asked how taxes should be graded, I would reply that there could be no fairer system than that the demand should be in accordance with the capacity to pay, the social service received, and the security conferred. Except for the wealthy section of the community, there is no security to-day. The thousands of small farmers, the great army of primary producers who are struggling against insecurity, debt, mortgages and adverse seasons; the small manufacturers and business concerns ; and the whole of the working class of this country, are faced every 24 hours of their existence with the frightful spectre of present want and future insecurity. The Opposition believes that taxation should be levied along the lines that I have mentioned, and therein lies one of the fundamental differences between the policies of the Labour party and the present Government. Unlike the Government, the Opposition does not believe in indirect taxation if it can be avoided. It believes that, so far as possible, all taxes should be imposed directly so that the taxpayers may know what it costs to govern the country, which section of the community derives the most benefit from the activities of governments, and the exact amount they are asked to contribute towards the cost of government. If the people were told these things, there would soon be an intelligent democracy in this country - a body of taxpayers who would know what they were paying and. why they were paying it - and the financial jugglery which these budget figures disclose would be impossible.
– Would the honorable senator abolish all customs duties?
– I have not mid anything of the kind, but 1 do say that the Labour party believes that more of the taxes should be imposed directly, and that indirect taxes should be kept as low as possible.
– The honorable senator and his party did not adopt that policy in connexion with the duties on cement.
– I shall have no difficulty in reconciling any action of mine with this speech. As to cement, I point out that the Labour party stands very definitely for the ‘building up of secondary industries in this country, and, therefore, it realizes the need for protective - not revenue-producing - customs duties. A Labour government would tell the people the truth about customs duties, and the amount paid to encourage the secondary industries, and would make it clear that profiteering by those industries which shelter under the tariff wall will not be permitted.
– What would it say to the match-making industry?
– I remind Senator Dein that it is always much easier to be destructively critical than to make a speech giving evidence of constructive thought. Indirect taxation provides opportunities for financial juggling such as that which is now taking place in the interests of the Government. Direct, taxation is more honest, and more courageous. People should be told what they are paying, and why they are paying it. Are honorable senators aware that during the last financial year the Government took out of the people, by means of taxation, more than ever before, notwithstanding the remissions made during recent years? Do they realize that despite the further remissions proposed in the budget, a greater sum is estimated to be received from the taxpayers this year than in any previous year. The Government finds that it cannot, carry on its activities without increasing the burden of taxation and raising loans, thereby increasing the interest indebtedness of the country. Last year the yield from all forms of indirect taxes was nearly £5,000,000 more than for the previous year, and aggregated over £i>2,000,006. The budget Estimate for the current year is £51,100,000, or nearly £4,000,000 more than the yield in 1934-35, £7,000,000 more than in 1933-34. and nearly £9,000,00(1 more than in 1932-33.
Other people besides supporters of the Labour party have criticized the Government’s budget proposals. For instance, Professor Bland, of the Sydney “University said only last week -
By the device of under-estimating income, the Treasurer was extracting an unwarranted amount of taxation . . . By the manipulation of trust funds tile Treasurer could embark on expenditure far beyond that disclosed . . . Effective popular control of public money had completely disappeared nml the passing of the estimates was of no Fe at all.
I agree with that criticism. Eugene Debs, with whom also I agree, said - l.f the hand of corporate capital could reach Old Sol, there would bc ii meter on every sunbeam.
Corporate capital is- the power behind the throne in this and every other country; it is the power which dictates the policy of the Government of the Commonwealth. All the evidence indicates that if it were possible to tax the air we breathe, or the sunshine we enjoy, the present Government would tax it.
A consideration of the earnings of the people of this country is illuminating. The latest statistics available show-
– Statistics for what year?
– The figures that I shall quote ar.e taken from the 1935 Year-Booh.
– They refer to the year 1933.
– I am of course aware that the 1935 Y ear-Book does not present figures for 1935; but the fact remains that it shows that 11.8 per cent, of the breadwinners in 1933 had no income, 30.5 per cent, received less than £1 a week; 18. 6 per cent, between £1 and £2 a week ; 11.9 per cent., between £2 and £3 a week; 9.4 per cent., between £4 and £5 a. week; and 7.3 per cent., between £5 and £6 a week; leaving 10.0 per cent, in receipt of £5 or more .a week.
– If the Labour party had remained in power the position would have been much worse.
– The honorable senator’s interjection reminds me that “ If the other dog had stopped, our dog would have won.” If the Loader of the Country party (Senator Hardy) can derive any satisfaction from those figures, he is welcome to it. I tell the honorable senator that every time I see the unemployed, the relief workers, and those in receipt of sustenance and doles, living in wretched dwellings, with no security for the future, I feel ashamed that I am in any way responsible for the government of this country.
– The figures quoted by the honorable senator relate to 1933.
– They are the latest figures available. The honorable senator cannot expect nic to supply fig.ures which are not yet available. TJ n- _ like him. I am not a compendium of all* the wisdom of the world, or a walking encyclopaedia. The statistics which I have quoted indicate clearly that 89.5 per cent, of the people of this country are not getting a fair deal, and that the remaining 10.5 per cent, enjoy benefits which all should share, but do not.
– Is the honorable senator starting a “sock the rich” campaign
– The Leader of the Country party is endeavouring to attribute to me words that T did not. say; but if he derives any satisfaction from doing so, I shall not raise any objection. If I had my way I would “ sock “ the people who can afford to pay so effectively that there would not be any people unable to pay taxes.
If at any time Senator Hardy desires to address the electors in his own electorate from the public platform on an “ antisock” campaign I shall be prepared to stand beside him and repeat what I am now saying. I have no doubt that I would carry his audience and that he would be left in the lurch.
The latest published figures in relation to earnings disclose a rather alarming condition of affairs. Whilst the incomes in the lower range have substantially” decreased the higher incomes have considerably increased. That state of affairs should be very carefully considered when the budget proposals are in course of preparation. Let us see what reductions of income tax are proposed in this budget. Although I am glad to notice that remissions are to be made - and every honorable senator will readily agree that if it is possible to reduce taxes we should do so - I am opposed to the incidence of the proposed reductions. The remissions contemplated in connexion with the various income grades are as follows: -
It will be seen how the amount of reduction increases in the higher income groups. What most matters, however, is not what is taken from the people by way of taxes or what is given to them by way of remissions, but rather how much they have left after they have been taxed. To the taxpayer with an income of £2,000 a year, the Government offers a present of £15 7s. 10d., but to the unfortunate person with £317 a year it can only make a remission of 15s. 8d. I have already said that the budget will be popular; it will be popular even among taxpayers who receive a remission of only 15s. 8d. In my opinion, however, the incidence of the proposed remission is unfair. We should say to the man on £2,000 a year “ Large numbers of the taxpayers receive only £317 a year; we propose to remit to those taxpayers £10 and in order to pay that amount we propose to add that amount to the taxes already lc/Wl upon you”.
Sooner .or later that must be done. It is inevitable that governments of the future will have to adopt a policy of taking from those who have and giving to to those who have not, in order to bring about a measure of social security in the community and to protect those in receipt of big incomes, the people who, in the words of the Old Book, “ toil not neither do they spin “. Unless the present policy of this country is reversed we shall inevitably be faced with what is happening in other countries - Fascism, involving the setting up of dictatorships, and the destruction of all liberty, or bloody revolutions such as has been brought about by communistic activities among the people of other nations.
– It is the policy of the Government to-day to impose taxes on those most able to pay.
– A few days ago I asked a question relative to a small number of government employees in the Federal Capital Territory. I asked the Minister representing the Treasurer whether it was a fact that there are 25 men in the Statistician’s Department who would derive no benefit from the restoration of salaries to public servants as announced in the budget statement. I mentioned the fact that although they were employed in Canberra and had to suffer the disabilities of the high cost of living and difficulties of accommodation associated with life in this city, they were receiving only £4 7s. a week. These men are engaged in highly skilled actuarial and statistical work. They are in fact the remnants of the census staff and were retained to do special work because of their exceptional ability. Some of them are qualified actuaries. The Minister replied that the salaries of those employees were fully restored to the normal rates in 1933 and that the salaries paid were fixed by the Public Service Board with due regard to the value of the work performed and the standard applicable to the service generally. I have not seen one of these officers and I do not know any of them : the fact that highly qualified men were being paid a miserable pittance of £4 7s. a week came under my notice accidentally. Yet we are told that the finances of this country and the position of affairs generally in Australia are entirely satisfactory. However, ££ 7s. a week is a princely income, in comparison with that of hundreds of thousands of our people.
– Why does not the honorable senator quote the unemployment figures?
– I shall content myself by saying, in reply to the honorable senator, that the percentage of unemployment in Queensland, where a Labour Government is in office, but only partially able to carry out Labour’s policy, is 8.9 per cent, as compared with an average of 12 per cent, for the whole of the Commonwealth.
I am gratified to notice that the conditions governing the payment of the maternity allowance have been liberalized.
– The maternity allowance is not enough.
– The maternity allowance will never be enough until it is paid without . regard to the financial condition of recipients. To-day it is not an allowance for maternity, but a degrading allowance restricted to people whose incomes are below a certain amount. The allowance should either be paid for maternity or abandoned. Similarly, the old-age pension should be paid for old age and not as an allowance to indigent people.
The other day I asked a question relative to the provision of funds for the Governor-General’s establishments. A definite undertaking was given by the Prime Minister (Mr. Lyons) in the House of Representatives last year that no expenditure would be incurred in connexion with residences for the GovernorGeneral outside of Canberra until Parliament had first been advised and consulted. Despite this promise, the reply given to the questions which I asked in connexion with this matter was that expenditure had been incurred in carrying out improvements at Admiralty House, Sydney. When I raised this matter before, I should, perhaps, have amplified my remarks. I want it to be definitely understood that I do not object to the cost of maintaining the GovernorGeneral’s residence in Canberra. I am desirous that his stay here should be as happy and as pleasant as possible. The Commonwealth has provided accommo dation for him in Canberra commensurate with his needs and the dignity of his position. I am heartily in agreement with that, but I maintain that not one penny should be spent on the provision or embellishment of residences outside Canberra for the use of the GovernorGeneral.
– Does the honorable senator suggest that the GovernorGeneral should live in hotels when he visits the State capitals?
– I do not know where Senator Hardy lives when visiting State capitals, but I have no difficulty whatever in securing first-class accommodation in any part of the Commonwealth, at a cost quite within my means.
For more than one reason I am pleased that it is proposed to reduce the sales tax. By the proposed reductions the Government is able to honour, at least in part, one of the promises made by its supporters when the financial emergency legislation was first enacted. Honorable senators will recall that at that time all parties were agreed that as soon as the financial position of the country warranted it, financial emergency taxation would be abolished. The proposed reduction of sales tax by 1 per cent, is an attempt to honour, at least in part, that promise. 1 should like to know, however, whether the Government proposes to take action to ensure that the benefits which will accrue from the reduction of the sales tax will be passed on to the people most in need of them. I am quite certain that a reduction of the sales tax by 1 per cent, will make very little difference to the prices of many of those low-priced articles and commodities upon which the bulk of the earnings of the average working-class family is now expended.
I do not intend to traverse in detail the Government’s proposals for the defence of this country. There are honorable senators in this chamber who pose as authorities on defence. Though some of them are thoroughly entitled to do so because of their military experience, the vast majority of them should have more regard for their limitations.
Sitting suspended from 12.1)5 to 2.15 p.m. [Quorum formed.]
– In the matter of defence any government has to be guided very largely by the advice of its expert military advisers. I wish, however, to sound a note of warning concerning the tremendously increased expenditure proposed during this financial year, which is equal to 26s. per capita. It is impossible for a nation with a population of 6,500,000 to continue under such a heavy burden. A plank in the platform of the Australian Labour party provides for the adequate defence of Australia, which should be strictly interpreted to mean defence and not offence. There is a good deal of sophistry even on the subject of adequate defence. At present practically every nation is incurring huge expenditure on re-armament, which it is said is for the -purpose of defence and not offence. If that be true there should be no urgent necessity for unnecessarily heavy defence expenditure to be undertaken in Australia. 1 was very astonished to find that in outlining the defence proposals of the Commonwealth, the Minister for Defence (Sir Archdale Parkhill) did not declare that it is the intention of the Government to ensure that not one penny of profit is to be made by private enterprise out of the manufacture of armaments or the erection of defence works. If there is one point upon which we all should agree it is that the manufacture of munitions and the erection of defence works should he undertaken by the Government, and that there should be no possible opportunity for exploitation or profiteering by private firms.
– Is that not so at present ?
– Of course it is not. In a national emergency it is only at the eleventh hour that the Government takes the work out of the hands of rascally private enterprise and handles it on its own account. Two months ago the following paragraph appeared in the Spectator, published by the Methodist Church- in Australia: -
Every lover of mankind will lament the present” siituat ion in Europe. To witness a new race in armaments, in which Great Britain and even Australia are becoming involved, and, after the lessons of the Great War. to hear responsible heads of governments talk of war and boast their determination of preparedness for it, is to make one almost despair of civilization and of humanity itself.
That is not the expression of a Labour man, but is the opinion expressed by a highly respected and extensive religious body in Australia. In the Melbourne Age of the 22nd July, the following paragraph appeared : -
Speaking at the annual consular luncheon of the Rotary Club to-day, the president (Sir Henry Braddon) said the world was spending approximately £855,000,000 annually on armaments, and this expenditure would increase. The League of Nations would have to be reconstituted 511 stronger foundations, as it was too valuable an agency to be allowed to disappear.
We all desire to protect this country against aggression, but notwithstanding the enthusiasm displayed by some over what is termed national patriotism we ought to realize that a population of 6.500.000 people is being asked to shoulder too heavy a burden. In an issue of Smith’s Weekly, published a little time ago, the following leading article appeared : -
Before Mr. Archdale Parkhill competes his negotiations with unnamed private engineering firms for the manufacture of separate aircraft parts to be assembled in the Air Force work shops, “Smith’s “ would like a say. For this paper notes that a government subsidy is likely to bc given to encourage the manufacture of these separate aircraft parts by private firms.
We all know that these negotiations are proceeding and that private firms will be given the opportunity to exploit the people. The article continued -
Here wo have the birth of a vested in West. This comes into the world as a subsidized industry. Subsidized industry will grow up to lusty proportions and, should there l-e a waT. become a private armament group, which will enrich a, few people
Private Armament firms, history shows, have a way of becoming obscenely prosperous and of breeding rapacious directorates to whom power and plunder are synonymous ,aim«. In the United Kingdom and in the United States of America efforts are being made to trace their machinations by commissions of inquiry and ins been revealed is by no means an edifying story.
Austraia has no overwhelming urge to spawn private armament factories, however deviously they may be disguised. Finn” which are hi Red on defence, as a justification for subsidy are altogether too insidious to be permitted to h» “ private “. Taxpayers are opposed to helping them to pay dividends or even to foster them into being. Their record is too notorious for Mr. Parkhill to have his innocence imposed on without vigorous and nation-wide protest. There are other and safer ways of solving the situation, a statement backed by a sound precedent of the Commonwealth Government.
I am bringing these expressions of opinion under the notice of the Leader of the Senate (Senator Pearce) because I believe that there are more effective ways in which to deal with the situation.
There are regrettable omissions from the budget now before the Senate. For example, no provision has been made to abolish unemployment, sustenance and relief work. I know that J shall be told by the supporters of the Government that a few thousands of pounds are being spent here and there on public works to relieve unemployment, and that remissions of taxes are being made to private enterprise. Private enterprise does not engage employees from philanthropic motives ; it engages only the labour necessary to meet the existing demand for the commodities being produced. Employers will not engage one additional employee until the effective demand is increased, and that cannot be done by making remissions of taxes. The only way in which to improve our economic conditions is to increase the purchasing power of the working class - the most important section of the consuming community. We cannot expect prosperous conditions until the purchasing power of the people has been increased. Stability cannot bc assured by remitting taxes paid by the wealthy sections of the community. [Extension of time granted.]
I direct the attention of the Government to the difference of opinion which now exists in connexion with the overseas air-mail service. I have not sufficient time to go into details, but I trust that in any agreement accepted by the Government it will not supinely succumb to instructions from the Government of the United Kingdom, and in that way tend to cramp or deteriorate the fine service at present operating within Australia. We all agree that nothing should be done to interfere with the splendid work which has so far been accomplished by the civil aviation branch. All aviation in Australia should be under the control of the Commonwealth Government, particularly as the development of this service has been greater in comparison with our population than in any other country. There has been remarkable immunity from serious accidents, and the number of miles flown emphasizes the success that has been achieved.
In the matter of wireless broadcasting, I consider that the time has arrived when listeners’ licence-fees should be reduced to 15s. per annum or even less. The Government should control all broadcasting services.
Unfortunately we have allowed B class broadcasting stations to get into private control, and consequently we have the privacy of our homes disturbed at all hours by wretched advertisements. All the B class stations are continually advertising one nostrum or another, if I tune in to one station, I am told that beer is the best thing for children’s constitutions; if I turn to another, I am offered a cure for tuberculosis, although we know that no really efficient cure for that disease ha3 yet been discovered. It is of no use going from one station to another because they all ave engaged in the same wretched business. Why tho Government ever allowed -these private profit-m’ongering undertakings to get control of B class broadcasting, I have never been able to understand.
With regard to the Australian Broadcasting Commission, I shall not be particularly careful in the choice of my remarks although I shall endeavour not to transgress by saying anything which is unparliamentary. Some time ago, I raised the subject of the commission, tho work it was not doing, and the nefarious work that it wa3 doing. The personnel of the commission has since been changed, and Major Conder, who should never have been on the commission, has been displaced from the position of general manager. ‘He was got rid of in some way for reasons which have not been disclosed. The fact remains, however; that shortly after I had. made accusations in this chamber against him be was removed from his position. Theoretically, the system under which the National Broadcasting Commission operates is good, but in actual practice it is a failure. At the present time nearly 1,000,000 listeners in
Australia provide the Commonwealth Government with a revenue of about £1,000,000 a year.
– The number of listeners is between 800,000 and 900,000.
– Even if that he the number the fact remains, that the broadcasting commission receives a huge income, which is spent absolutely without any check by Parliament. Why should these accounts not come before us so that we might know what is happening? The control ‘of national broadcasting is in tho hands of five people who are employed part-time. The chairman receives the ridiculously small salary of £400 a year. He must have other interests, as it stands to reason that for such a small salary he could not be expected to give the whole of his attention to broadcasting. Surely a business which has a huge revenue should have, as I recommended some time ago, a full-time director. The vicechairman of the commission receives £300 a year, which is equally ridiculous. The ordinary members of the commission receive proportionately small salaries. Is it fair that the wonderful service of broadcasting should be administered by parttime, half -paid people? The chairman prior to taking up this appointment, had no experience of broadcasting. He achieved a certain amount of fame as an accountant in a brewery, and also as Bail ways Commissioner of New South Wales. His past experience may qualify him for some of the duties of the position he now occupies, but even of that I am doubtful. The vice-chairman is a retired engineer, whose only claim to the position is the fact that his wife is musical ; perhaps that gives him some qualification for supervising broadcasting’ programmes. The three members of the commission are Mr. R. Orchard, Mr. J. W. Kitto and Mrs. Claude Couchman. I have no doubt that Mr. Orchard is an estimable gentleman, but he is- inexperienced in broadcasting. Mr. Kitto was recently retired from the Post Office. If the Commonwealth Government considers that Mr. Kitto has transcendant abilities, it, might have been expected to retain him in the postal department, but if his days of usefulness there were past, how can he be expected to make a success of broadcasting? Mrs. Claude Couchman is a bachelor of arts and she was at one time an organizer for the Nationalist party. I do not suggest that that fact should debar her from service on the broadcasting commission, provided she possesses outstanding qualifications, but nobody who knows the lady will say that she has any qualifications at all except that she has entree into certain social circles which other persons probably cannot get. As a matter of fact, her job on the broadcasting commission is merely a side-line. I do not object to these people being given positions on the commission so long as the Government admits that it is merely a depositing ground for retired public servants, men with dubious qualifications, and ladies who have rendered efficient service to the Government party in days gone by- If national broadcasting is to be placed on a firm footing these part-time, half-paid amateurs should be replaced by adequately remunerated people who have had solid experience of this work. The appointees should be above private economic considerations and the nepotism which has characterized appointments to and by the commission in the past. I could continue on this subject at great length, but I shall take another opportunity to amplify these remarks.
To summarize, I think that the budget, whilst obviously cleverly designed to catch popular approval, discloses complete bankruptcy of statesmanship on the part of those responsible for it. It shows that the Government lacks any semblance of a capacity, for nation building, and has little vision. It juggles feebly with the immediate present betraying either the Government’s disinclination or incompetence to handle current problems with any regard to building for a better future. The attitude of the Government is that things as they are are completely satisfactory. “ God’s in His Heaven ; all’s right with the world.” All is right with us. We have received our little increase, and, in passing, let me say that I am glad that parliamentary salaries have been partially restored. I have always advocated that they should be. I have said both inside and outside Parliament that I demand the full contract price for the work I contracted to do, but I am not receiving it even now.
Surely the job confronting the Government in a greatly favored nation like Australia is not difficult. This Government has opportunities which are presented to the Government of no other country. Australia has a greater variety of soils, climates and production than any other country, and within it i3 a race of virile workmen capable of doing anything they are called upon to do. Surely the problem of providing adequately for all the people within our shores, and those others whom we hope lo invite here when we are able to sustain them, is not insoluble. Let us find work for our unemployed, abolish the dole and relief work, create opportunities for our boys and girls, and end the present dreadful tragedy of youth. Let us release our primary producers from the stranglehold of the mortgage-monger, the freight thief, and the usurer. Abolish the filthy scandal of the slums with all its concomitant evils of disease and destruction of morale. The problem of guaranteeing the material welfare and physical well-being of nearly 6,500,000 of people is’ not difficult. We have every material asset needed to meet every possible need. We have the accumulated knowledge of the centuries, we are blessed with natural resources of all kinds, and the only thing we require is a bold progressive programme of collective action, instead of the futile policy of pettifogging executives which are prepared all the time to take their instructions from the great capitalist interests overseas.
– Opportunity presents itself in a budget debate to comment, not only on the Commonwealth finances, but also on the general financial structure of the nation. Through the enactment of the financial agreement, the Commonwealth has become responsible for the Stale debts, and therefore the comments I shall make on the financial position will have a national, and not merely a Commonwealth, bearing. I hope to reveal some of the lessons of the depression, and show how they may be applied to guide us in the future. Despite the opinion expressed by the Leader of the Opposition (Sena tor Collings) that the members of the Government were bereft of statesmanship, the Government can, I think, claim a high degree of that elusive quality. Any one who listened to the Leader of the Opposition must have felt that his expectations were unfulfilled when he mentioned the existing conditions of Australia. I have heard Senator Collings speak many times in this Senate, and he never fails to conjure visions of the misery of the unemployed and the under-nourishment of thousands of children, and to tell how the great masters of private enterprise are crushing their employees. It is easy to persuade some people that they are suffering an injustice. That is what the Leader of the Opposition in this chamber has been endeavouring to do. There is a remarkable discrepancy between his criticism of the budget and that of the Leader of his party in the House of Representatives. Speaking on the budget earlier in the week, Mr. Curtin said - lt would be churlish of me to deny that the .budget makes clear a very substantial recovery in the Australian economic structure. The Opposition, no less than every other section of the community, is glad that this is the case.
– Of course we are. I admitted that.
-The honorable gentleman says now that he admits it, although in his concluding remarks this afternoon he declared that the budget which, according to the Leader of his party makes clear a very substantial recovery in the economic structure of the Commonwealth, gives evidence of complete bankruptcy of statesmanship on the part of this Government. He also claims for the Scullin Government much of the credit that, properly, is given to this Government for the financial recovery of Australia. Quite conveniently he ignores the fact that the Scullin Government has been out of office for a great many years.
– Nevertheless, this Government has benefited to the amount of £74,000,000 through savings made possible by the Scullin Government.
– I turn now to consider the position with regard to taxation. I was surprised to hear the Leader of the Opposition this afternoon declare himself against the principle of high taxes, and then indict this Government on the ground that it took too much from the collective incomes of the people. I cannot help but remember also that he is one of the representatives of Queensland in this chamber, and that on other occasions, when it suited him to support his case, he has spoken with considerable enthusiasm about the position of his State, suggesting, of course, that the conditions there were the direct result of wise administration by a Labour Government. This is strange, in view of the fact that Queensland is the most highly taxed State of the Commonwealth.
– The thing that matters is the incidence of taxation. I do not object to high taxes if they are imposed on the right people.
– Let us see how the taxation burden is placed upon the shoulders of the people of Queensland - the State which Senator Collings so ardently supports. In the financial year 1914-15, the tax burden in Queensland was £1 8s. 2d. and the average for the other States was £1 8s. 3d., so all were practically level at that time. In the period 1931-35, the burden of taxation in Queensland was £60s. 7d. per capita, as compared with the average of £5 5s.1d. for the Commonwealth. Another striking comparison is that the tax burden in Queensland was 40 per cent. higher than in Victoria.
We have some right to expect logic from the Leader of the Opposition ; often we do not get it. I fail to see how he can logically indict the Commonwealth Government because, as he puts it, it takes too much by way of taxes from the people, and at the same time uphold the Queensland Government, which taxes its people much more heavily than any other State Government in the Commonwealth.
– I approve the action of the Queensland Government because it imposes taxes on the right people.
– It is obvious that Mr. Curtin does not quite see eye to eye with the honorable senator,’ because when he was speaking to the budget in the House of Representatives, Mr. Curtin said -
Furthermore, in remitting taxation, the Government increases the proportion of its total yield derived indirectly from that derived directly; it disregards to a greater extent than heretofore the principle of levying taxation on the basis of ability to pay; and in regard to income tax, both from personal exertion and from property, its policy gives a much more substantial saving to incomes of the higher ranges than to those of the lower ranges.
Later Mr. Curtin said -
Notwithstanding all of the Government’s boasts regarding the remissions of taxation already effected, the fact remains that the present Treasurer, during the last financial year, took more from the Australian public than any of his predecessors.
– I also said that.
– Yes, but the honorable senator omitted to add that it was possible for a government to take more by way of taxes collectively, and at the same time to lighten the burden on individual taxpayers, which is an important distinction.
Let us further examine the official figures, to discover the . source of the Government’s revenue. In 1935-36 collections from customs and excise duties amounted to £37,850,000, and represented 49.03 per cent. of the total revenue. Would Senator Collings eliminate that source of revenue? It could, of course, be eliminated by a total prohibition of imports; but if that were done some other source would have to be discovered. Would not a prohibition of imports be reflected in a rise of internal prices, and would not this in turn be a form of indirect taxation? The sales tax of which SenatorCollings complains is another form of indirect tax concerning which there has been much animated discussion in recent years. Last year it contributed £8,850,000, or only 11.47 per cent. of the total revenue. The burden of the sales tax is being progressively reduced, and we have had the Government’s assurance that as soon as the finances permit it will be abolished altogether.
– Let us hope that it will.
– The flour tax collections last year amounted to £900,000, and represented 1.17 per cent. of the total revenue. I come now to the amount collected by way of income tax, which was the real burden of the complaint by the Leader of the Opposition. He admitted,, when I interjected during his speech, that the policy of his party was to “sock” the rich, or, as one of his supporters said, to “ sock ‘em “, the implication, of course, being that there exists in thi3 country a group of millionaires who are not bearing their fair share of the tax burden. The figures which I am about to present to the Senate show that the richer section in this community has already been very effectively taxed.
– A man who died recently in Melbourne had £250,000 at call in his bank.
– When complaint is made that the allegedly rich people are not contributing their quota of taxes their critics omit to mention the percentage which they contribute to the revenue. The taxation returns for 1934-35 give in some details figures which should be of interest to honorable senators. The first group deals with income taxpayers having incomes up to £200 a year. In this group there were 139,482 persons whose contributions amounted to £194,000, representing 28s. a head, or 2.7 per cent, of the total income tax collected. In the next group, taxpayers with incomes ranging from £4 to £10 a week, 49,510 persons contributed £362,423, representing 5 per cent, of the total collections. The third group is of persons with incomes ranging from £10 to £20 a week - Senator Collings will not allege that these people are millionaires - and I find that 25,000 taxpayers in this category contributed £626,000, or 8 per cent, of the total collections. I come now to the group of alleged millionaires - these people who, according to Senator Collings and his friends, are not carrying their fair share of the income tax burden. I refer to individuals with incomes of £1,000 a year and upwards, of whom there arc only 17,796 in the Common.real th. They contributed last year £3,647,000, or exactly 50 per cent, of the Total of the income tax collections.
– What had they left after paying their taxes?
– In order to help his case, the honorable senator this after noon urged that this Government had failed to, as he put it, “ sock “ the rich.
– I did not say that. That was the honorable senator’s inelegant expression.
– The figures which I have given show conclusively that those people who are able to pay taxes are, in fact, carrying their full share of the burden.
I commend to Senator Collings a little book which I read when I was a small boy. It tells the story of the man who killed the goose that laid the golden egg.
– The rich in this country do not lay any golden egg3; the working classes lay the golden eggs and the rich collect them.
– With regard to the allegation of the Leader of the Opposition (Senator Collings), that the Government is slowly increasing the burden of taxation-
– I did not say slowly.
– 1 draw attention to the address of the Leader of the Opposition in the House of Representatives (Mr. Curtin), who said that the budget showed the real recovery of Australia. Docs Senator Collings think that the burden of taxation for the past two years has seriously interfered with the rate of recovery? I say that it has not. The improved position is reflected in the increased employment and the greater national income, and in many other ways. The Statistician’s figures show that individual contributions by taxpayers will be less in 1936-37 than in 1935-36. In the latter year the total taxes, both direct and indirect, were £9 8s. 5d. a head compared with an estimate of £9 ls. 4d. for the current year. Since 1932-33 the Government has remitted taxes, estimated on a cumulative basis, to amount to approximately £50,000,000.
– The lower-paid section of the community has not benefited a great deal.
– The total remissions granted during 1932-33 were £2,100,000. Of that sum about £750,000 represents remissions of sales tax. Does the Leader of the Opposition not think that those remissions decreased the hurden of indirect taxation?
– They meant very little to the working classes.
– Then why does not the honorable gentleman advocate the retention of the sales tax? In the same year the income tax burden was lightened by about £500,000. I emphasize that these remissions affected principally persons with small incomes. The total remissions granted during 1933-34 amounted to about £7,050,000, of which sales tax remissions represented £2,570,000. Does not that indicate a lightening of the burden of indirect taxation?
– Of course it does. But why not give to the Senate the figures in relation to land tax?
– Remissions of taxes in 1934-35 amounted to £620,000, and in the following year to £560,000. It is estimated, that the remissions for the current year will total £5,275,000. The total remissions for the five years ending June, 1937, are estimated at £15,605,000. The cumulative effect is a lightening of the burden by nearly £50,000,000.
– To whom did the bulk of those remissions go?
– To the indirect taxpayers.
– While the remissions of income tax, which is a direct burden on the taxpayer, represent only £5,205,000 for the five years, sales tax remissions alone total £6,740,000. Does the Leader of the Opposition still think that the Government has not lifted the indirect burden from the taxpayer?
– I thank tho Government for doing that.
– Having, I trust, convinced the Leader of the Opposition that he was wrong, I now come to the national financial structure. Unless some untoward event, such as an international upheaval, occurs, I firmly believe that Australia has entered upon a period of plenty, and is well on the path to recovery. If that assumption be correct we should heed the lesson of the seven fat years and the seven lean years in Egypt, and in the years of plenty provide for the lean years which will assuredly follow.
– There has always been plenty in Australia.
– I disagree with the honorable senator. Were the honorable gentleman the managing director of a company which was operating at a profit, he would, from time to time have to decide whether the whole of the profits should be distributed to the shareholders, or whether a ‘ cautions policy, including the building up of reserves against times of adversity, should be followed. What applies in the commercial world can apply also in national affairs. Just as the farmer in years of plenty should make provision for droughts, so the nation, in good times, should make provision to meet financial difficulties in the future. There is a tendency to forget what happened in 1930 and 1931. Honorable senators may remember that in 1931 the leading economists of this country gathered together in an endeavour to formulate a national plan for Australia to follow. To the most casual observer it was obvious that . drastic reconstruction was necessary. The most striking feature of the report of the experts was that in 1929-30 the deficits of the Australian Governments Totalled £11,130,000, and that the deficits for 1930-31 were estimated at £31,150,000, and, further, that unless action were taken, the deficits in the following year would reach £39,080,000. In the light of that information it was clear that without a definite plan for the reconstruction of the national finances and prompt action on the part of governments, Australia would face national bankruptcy. A comparison of the position of Australia at thai time with present-day conditions forces us to the conclusion that the present administration has acted wisely. Undoubtedly the best economic investment ever made by the people of Australia was the putting of the present Government into office. Financial reconstruction having been proved necessary, the Government had to consider whether it was possible to plan recovery within Australia’s own internal economy. A study of the situation made it clear that the key to the situation was the servicing of Australia’s overseas debt.
– The Scullin Government met that situation by imposing customs prohibitions.
– Although not at the time a member of the Senate, I well remember the evidence given by Sir Robert Gibson, the then Governor of tho Commonwealth Bank, at the bar of the Senate. When questioned regarding the export of gold, he said -
If it were left for me to decide, I would rather send my gold away than default. I would prefer to discharge my external obligations even if I suffered hardship.
That statement was endorsed by practically every leader of public thought. At a vital conference of Premiers in 1931 the following resolution was agreed to -
This conference denounces the policy of repudiating interest payments on the public debt as declared by the Premier ‘of New South Wales, Mr. Lang. The proposal involves a deliberate breach of contract between that Government and those who subscribed to public loans and would bring dishonour upon the nation as a whole.
I quote that resolution in order to show that the dominant thought in the minds of those responsible for rehabilitating Australia’s finances and constructing a national emergency plan was the servicing of our overseas debt. With the exception of Mr. Lang, the Premiers were convinced that, in the interest of Australia, all contractual obligations should be met. Dealing with the consequences of default the experts reported -
Unless the present drift in Austraiian finances is stopped, the end will be default. The evils which would follow such default would be immeasurably greater than any hardships which the nation need be asked to face in order to restore Australia to a sound position.
I think that every honorable senator will agree that, were it not for Australia’s external obligations, the internal readjustment rendered necessary by the fall of export prices would have been much easier. The servicing of our overseas liability was the axis of all plans of reconstruction. Therefore I suggest that in times of plenty a wise government should follow a course which will place the country in so favorable a position that when bad times come again the situation can be met without having to give too much consideration to the external position.
As honorable senators are well aware, Australia’s debt is domiciled in Australia, London and New York. Associated with it are several disturbing features. I wish to make it clear that I refer not to the debt of the Commonwealth only but to the national debt which, although it includes State debts, is, under the financial agreement, the responsibility of the Commonwealth. In 1928-29 the national debt was £1,104,000,000. By 1935-36 it had risen to £1,255.000,000, an increase of £151,000,000. If the public debt continues to increase at the same rate I venture to suggest that it will ultimately mop up the savings which have been effected as a result of our loan conversion operations. Though our conversions have been very successful, nevertheless the resultant saving of £13,000,000 will be absorbed if the national debt continues to rise. We have no reason to say that if it does continue to rise we shall be able to face the next economic onslaught with a greater burden on our shoulders than we bore in 1931.
The sinking fund was a very wise provision introduced by Dr. Earle Page for the purpose of liquidating our national debt within a period of 58 years. The principle was right, but let us consider whether its operation is successful. Are our sinking fund contributions adequate for the purpose for which the fund was created? During the period 1928-29 to 1935-36, while the national debt increased by £151.000,000, the contributions to the sinking fund amounted to only £59,918,000; in other words, during that period, in spite of the contributions to the sinking fund and its application to the debt our total liability increased by £91,836,000. To put it in another way, every £1 contributed to the sinking fund for debt redemption was outstripped by an added liability of £2. In order that we may be able to operate sinking funds on a scale sufficiently large to effect a reduction of liability I suggest particularly when we are experiencing a return of prosperity, that the Government should consider increasing the contributions. In introducing the budget for 1936-37, the Treasurer (Mr. Casey) said -
Vor 1936-37, the receipts are estimated at £0,717,000. The receipts for the national debt sinking fund for 1930-37 will approximate £9,100,000 of which £4,100,000 will accrue to the Commonwealth sinking fund and £5,000,000 to the State sinking fund. The receipts of the sinking fund, both the Commonwealth and State, are used solely for debt redemption. The greater part of the money available is used in the purchase of Australian governmental securities in the open market in Australia, London and New York.
In other words £9,000,000 is allocated according to the domicile of the debt; approximately £4,000,000 is to be sent overseas and the balance is to be used to redeem the Australian debt. I question the merits of that proposal as an efficient long-range policy. While advocating an increase of the sinking fund contributions, at the same time I consider that the fund should be used solely for the redemption of overseas loans. Honorable senators will remember that in the earlier part of my speech, I stated that the position of the overseas- debt in 1931 more or less influenced the plan of reconstruction which we had to face at that time. I now suggest that instead of distributing the redemption payments over the whole of the debt field we should apply them where they are most required, that is, in the redemption of our overseas debt. This action should follow as a result of the lessons of the depression. From a review of the figures, I am absolutely convinced that the flexibility of the Australian loan market is infinitely greater than that of the overseas loan market. I am certain that in times of difficulty it is possible to have a greater degree of flexibility in debt conversion operations in Australia than is possible overseas. In other words, in time of difficulty, there are greater possibilities for debt conversion in Australia than there are in overseas loan markets. I am advocating a complete cessation of overseas borrowing and the future domiciling of all debts within Australia. Immediately a crisis arrives, the interest rates which we are paying become common knowledge and a matter of public concern. In 1931, the overseas interest rate was £4 14s. lid. per cent., while the Australian rate was £5 6s. lOd. per cent. Those in control of the Trea sury bench then commenced operations designed to reduce the interest burden on our debt structure. Though an attack was made on the internal and overseas markets, it took us until 1936 to reduce the average rate overseas from its original figure of £4 14s. lid. to £4 ls. 3d. per cent. The figures in relation to interest payments show a gradual tapering off over the whole of that period, and demonstrate the difficulty of reducing the interest burden in respect of the overseas debt. That is not the only story, because, as part of a national policy, we may decide to manage our currency in such a way as to depart from sterling. As a matter of fact, we did that, and to-day, as a result, the rate of exchange between Australia and London is 25 per cent. When the incidence of the exchange rate is taken into account, it will be seen that instead of the interest rate on our London debt being £4 ls. 3d. per cent., it is actually £5 ls. 7d. per cent. It may be suggested that with a return to sterling that rate will be reduced. That is perfectly correct, but who would suggest that we should return to sterling? It might even be proposed that Australia should depart still further from sterling. If that happens the interest burden will correspondingly increase. The point I am making is -that the rate of interest on our overseas debt would be affected to a certain degree by the control of our own internal economy and the relation of our currency to the currency of the country in which the debt is domiciled. In contrast to our experience overseas, no great difficulty was experienced in effecting a reduction of interest rates within Australia. In 1931, the Australian rate was £5 6s. 10d., by 1932 it had fallen to £3 18s. 9d. per cent, and to-day it is £3 12s. 9d. per cent. When speaking. on the budget debate, the Leader of the Opposition in the House of Representatives (Mr. Curtin) mentioned this as evidence of good finance by the Scullin Government. That is not correct. It is only an example of the relative flexibility of the domestic and overseas loan markets. My final point is that the fall of the overseas interest rate over six years amounted to only 13s. 8d. per cent., whilst in Australia the fall in one year was 28s. Id. per cent., and in six years 34s. Id. per cent. In other words, the Australian rate was reduced by nearly three times the amount of the reduction effected in the overseas rate. Therefore, is it not reasonable to suggest that during the next four or five years we should profit by the lessons of the past and apply the whole of the contributions to the national debt sinking fund towards the reduction of our overseas debt? Why not attack the market which proves to be more inflexible in times of crisis? Most likely the Leader of the Government (Senator Pearce) will reply that we shall be unable to do that because it would affect the credit of this country overseas, and that the policy of this Government has been steadily to build up that credit. But I should like to draw the attention of the right honorable gentleman to the fact that up to 1923 practically no sinking fund was in existence, though, at that time, we had already borrowed £900,000,000. Would the right honorable gentleman contend that a decision to apply the whole of the sinking funds towards the redemption of the overseas debt would result in a national catastrophe or injure our credit overseas? I say, definitely, that it would not. Another point must be considered in regard to this matter. When we split our sinking funds, and send £4,000,000 overseas, exchange has to be paid on that sum so that the annual redemption operation overseas cost approximately £1,000,000. If instead of applying portion of the fund for the immediate retirement of overseas loans the sinking fund were steadily built up until the exchange position became more favorable, a considerable saving would result.
In regard to the New York indebtedness, I remind honorable senators that the cumulative reduction of taxes has been approximately £50,000,000. I do not begrudge that for one moment. 1. do not say that the remissions were unnecessary, but, at the same time, I sound a note of warning. We should seriously consider whether we can afford to continue to follow such a generous policy. No attempts of any kind have yet been made to effect conversions of loans raised in the United States of America, though, to-day, we owe that country £45,257,000. That debt bears an average rate of interest of 5.05 per cent., which is higher than the English rate, and considerably higher than the Australian rate. The actual rate which Australia is paying on the New York debt, however, after adding exchange, is 6.56 per cent. - a record in interest rates. Instead of allocating our sinking fund as at present, would it not be logical to use it to redeem the New York debt ? The position of Australia in the loan market of the United States of America is unfortunate, because Queensland, under a Labour government, broke all records by raising a loan on that market of £1,S43,000 at 7 per cent. That loan to-day is costing a little over 9 per cent, in Australian currency. Australia’s total annual interest bill in the United States of America now amounts to £2,272,000. In respect of the American debt of £45,257,000, we are in a peculiarly good position because we possess optional rights in respect of £10,000,000 of the total. In all our loans we should endeavour to secure optional rights, thus combining the advantages of a short-term debt with the benefits and stability of one of longterm. Over £10,000,000 of the £45,000,000 now owing to the United States of America is at borrowers’ option. We should exercise that option, and. try to clear up the New York position. We have heard a great deal from the Leader of the Opposition (Senator Collings), and also from the Leader of the Opposition in the House of Representatives (Mr. Curtin) concerning the remarkable achievement of converting internal loans in a time of crisis. I read Mr. Curtin’s speech which was very good academically, although many of his statements were inaccurate. I should like, however, to point out that any credit due to the Scullin Government for its conversion operations in Australia has been completely nullified, because it did not attempt to tackle the greatest burden of all, which is the overseas market. The reason is clear. Its administration was so faulty, and it forced our credit in London so low, that conversion became impossible. The High Commissioner in London (Mr. Bruce) has been able to convert £198,000,000, but if Mr. Scullin had been in office today we would not be able to convert one penny.
– Perhaps the honorable senator will say that the price of wheat would also be low.
– No, but if the Labour party were in office, the credit of Australia would still continue to be low. I believe that the overseas conversions carried out by Mr. Bruce have been economic from the Australian view-point. It cost Australia a lot to convert its loans in the overseas market, but when the conditions of the market are taken into consideration the conditions obtained by Mr. Bruce were the most economical that could be got. The fact remains that those conversions have been made, and that Australia has regained a certain amount of financial stability, even if we have had to pay a fairly heavy penalty for it.
I have tried to show, in my comments on the overseas position, that in any economic onslaught which Australia may experience while possessing external indebtedness, financial reconstruction or planning must more or less be subject to the servicing of such indebtedness. That was the outstanding lesson of 1931. I again suggest that as we are now experiencing more prosperous conditions we should endeavour to reduce the burden, so that when next we have to face reconstruction we shall be able to do so without having to consider that dominant factor. We can operate on the overseas market to-day to a very great degree by changing the application of our sinking fund and by launching greater redemption operations. Instead of spreading it according to where the debt is domiciled, we should apply it wholly to the reduction of the overseas debt. Would not the people of Australia have subscribed to our internal loans if the sinking fund was being applied overseas? Most decidedly they would. The yearly deposit of £10,000,000 in the sinking fund can be increased by judicious finance, particularly when the revenue is buoyant, and by increasing the amount used to improve our overseas position. An attack should first be made on the New York position, where we possess definite optional conversion rights in respect of £10,000,000, on which a high rate of interest is being paid.
The budget is particularly well and impartially prepared, and in spite of what the Leader of the Opposition may say, will benefit all classes. The Leader of the Opposition in the House of Representatives said that the budget was a clear recognition of the recovery that has taken place in Australia. That recovery is, I submit, due to the administration of the present Government.
Debate (on motion by Senator E. B. Johnston) adjourned.
Senate adjourned at 3.38 p.m.
Cite as: Australia, Senate, Debates, 25 September 1936, viewed 22 October 2017, <http://historichansard.net/senate/1936/19360925_senate_14_151/>.