Senate
13 October 1943

17th Parliament · 1st Session

  1. Senate
  2. 17th Parliament
  3. 1943

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

page 382

COMMISSION TO ADMINISTER OATH

The. PRESIDENT.- I have received from His Excellency the GovernorGeneral a commission to administer to honorable senators the oath or affirmation of allegiance. i

Commission laid on the table and read by the Clerk.

page 382

ADDRESS-IN-REPLY

PRESENTATION TO THE GOVERNOR.GENERAL

The PRESIDENT:

– I have ascertained that His Excellency the GovernorGeneral will be pleased to receive the Address-in-Reply to his Opening Speech at Government House, at 11 a.m. to-morrow. I invite as many honorable senators as can make it convenient to accompany me.

page 382

ASSENT TO BILLS

Assent to the following bills reported : -

Supply Bill (No. 2) 1943-44.

War Pensions -Appropriation Bill 1043.

page 382

DEATH OF THE HONORABLE DAVID JOHN O’KEEFE

The PRESIDENT:

– I have received from Mrs. D. J. O’Keefe a letter of thanks and appreciation for the resolution of sympathy and condolence passed by the Senate on the occasion of the death of her husband, the Honorable David John O’Keefe.

page 383

DEATH OF ME, JOSHUA THOMAS HOSKINS WHITSITT

The PRESIDENT:

– I have received from Mrs. J. T. H. Whitsitt a letter of thanks and appreciation for the resolution of sympathy passed by the Senate on the occasion of the death of her husband, Mr. Joshua Thomas Hoskins Whitsitt.

page 383

HIGH COMMISSIONER IN THE UNITED KINGDOM

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– by leave - At the request of the Commonwealth ‘Government, the Eight Honorable 6. M. Bruce, C.H., M.C., whose term of office as High Commissioner for Australia in Great Britain expired on the 6th October last, has agreed to accept a further appointment for’ one year from the 7th October, 1943. Although Mr. Bruce has already served the somewhat lengthy period of ten years in that office, it is the desire of the Government that, in the present, circumstances, he should continue in office, and. I take this opportunity to acknowledge the value of his past services to Australia. ‘ Mr. Bruce will also continue to act as the Australian accredited representative on the Imperial War Cabinet, and as His Majesty’s Envoy Extraordinary and Minister Plenipotentiary for the Commonwealth of Australia to the Kingdom of the Netherlands.

page 383

FOOD PROGRAMME

Release of Man-power prom the Army.

Senator FRASER:
Minister for Health and Minister for Social Services · WESTERN AUSTRALIA · ALP

– by leave - In pursuance of a direction given by War Cabinet, the Minister for the Army (Mr. Forde) states that arrangements are in hand for the release of serving Army personnel to enable men previously engaged in rural pursuits to return to their civil avocations. It has been, arranged that the DirectorGeneral of Man Power and his deputies in the various States will receive applications from employers and will investigate and decide on the eligibility of personnel for release subject to the concur rence of the Army authorities. In this connexion employers engaged in rural pursuits and food production should submit applications for release of personnel now serving whose services are essential to food production. In view of the vast reorganization that the Army in Australia has undergone in recent months, coupled with the spread of units over wide areas, it is essential that employers applying for men should submit the latest information concerning the unit in which the men are serving. It has been so arranged that where the particulars given by prospective employers are of such a nature that difficulty is experienced in tracing men, such applications shall not hold up those cases in which the information supplied enables a ready check-up to be made. Employers requiring personnel should, in their own interests, submit full particulars of the man required to the chairman of the local war agricultural committee or to the National Service Officer of their area. By submitting applications to these authorities only, considerable saving of time will be effected.

The Army is fully aware of the necessity for these releases, but it must be borne in mind that men on the posted strength of a unit serving in operational areas outside the mainland of Australia must necessarily remain available to the fighting forces.

Whilst the Army will endeavour to release recommended personnel as soon as possible, it must be realized by prospective employers that conditions of transport plus operational necessity will govern the numbers released. Arrangements entered into during the last few days between the Army and the DirectorGeneral of Man Power provide that before the Army can move in any way in the matter, the Director-General of Man Power and his deputies in the various States must obtain and investigate applications before submitting recommendations to the Army. On the other hand, in view of the vast spread of units of the Australian Military Forces throughout various territories it is emphasized that, whilst in the early stages the actual implementation of releases will necessarily be slow, as time progresses releases will increase in tempo. The Army has had to impose certain restrictions relative to key personnel, but despite these restrictions, the numbers required will be released within the period determined by War Cabinet. It is well at this stage to emphasize to prospective employers that men who belong to units serving outside the mainland, and who are on the mainland for the purpose of recreation leave, and/or those attending schools or courses of instruction, will be considered as serving outside the mainland, and consequently will not be released. Another important factor is that all applications for release under this scheme will be Subject to the nominated man’s concurrence in his discharge for the purpose stipulated. In other words, if he does i.ot concur, the release will be refused.

page 384

ADVISORY WAR COUNCIL

Senator KEANE:
Minister for Trade and Customs · VICTORIA · ALP

– by leave - I inform the Senate that the Advisory War Council will continue to function. The Government will be represented on it by Mr. Curtin, Mr. Forde, Dr. Evatt, Mr. Beasley and Mr.- Makin.

The leaders of the Opposition parties have advised the Prime Minister ,that their representatives on the council will be Mr. Menzies, Mr. Hughes, Mr. Spender, Mr. Fadden and Mr. McEwen.

page 384

QUESTION

NEW BUSINESS AFTER 10.30 P.M

Motion (by Senator Keane) put -

That Standing Order No. OS be suspended, up to and including Friday, the 27th October next, for the purpose of enabling new business to be commenced after 10.30 p.m.

The PRESIDENT:

– There being an absolute majority of the whole number of senators present, and no dissentient voice, I declare the question resolved in the affirmative.

page 384

QUESTION

COAL-MINING INDUSTRY

Senator McLEAY:
SOUTH AUSTRALIA

– Is it the intention of the Leader of the Senate to make a statement to the Senate in connexion with the serious position in the coal-mining industry arising from industrial disputes ?

Senator KEANE:
ALP

– I hope to be in a position to make a considered statement on this subject to-morrow.

page 384

QUESTION

BLACK MARKETING

Senator NASH:
WESTERN AUSTRALIA

– In view of the many reports concerning black marketing now appearing in newspapers, is the Leader of the Senate in a position to make a statement to the Senate concerning the methods adopted, or under consideration, to suppress such practices?

Senator KEANE:
ALP

– The honorable senator was good enough to let me know that he proposed to ask a question on this subject. I have, therefore, prepared the following answer : -

I assure honorable senators that every effort is ‘being made by the Government to prevent black marketing assuming dangerous proportions. We are fully aware of the dangers inherent in such practices, which menace the nation’s economy and war effort, and by creating artificial shortages of various commodities cause unnecessary hardship to many members of the community. At present, various recommendations are under consideration. These deal with methods of detecting offences and enforcement of the law as it now stands. Various other suggestions are under consideration, such as the adequacy of present penalties, powers of investigating officers and means of speeding up the procedure relating to prosecutions. As stated by the AttorneyGeneral (Dr. Evatt) in the House of Representatives yesterday, one of the major problems confronting those concerned with the enforcement of the law is that of ensuring the imposition of adequate penalties on conviction. It is apparent that even magistrates sometimes fail to realize the seriousness of black marketing. The Commonweath Gazette, of the 1st October, listed twelve proceedings of offences against the Black Marketing Act. The list showed that six offenders were released on bond after conviction. It has been suggested that the section of the Crimes Act making this possible should be declared inapplicable to the Black Marketing Act. The worst features of black marketing are undoubtedly the creation of artificial shortages of essential goods in acute supply and the withdrawal from circulation, for the purpose of illicit trading, of large sums of money which could be better invested in war loans. Honorable senators will realize that if allowed to go unchecked this could have a disastrous effect upon the Government’s plans for curbing inflationary tendencies.

The detection of offences often proves difficult. Unlike the person who is overcharged, or suffers some such injustice which impels him to inform the authorities, those buying on a black market are receiving goods that they could not otherwise obtain, either because they have been “ frozen “ by government order or are subject to a coupon scale. Provided that they can afford inflated prices, they thus receive a benefit, and have no incentive to report the existence of a black market to the authorities. Thi.3 problem is not, of course, confined to Australia. Black marketing assumed alarming proportions in Great Britain and in the United States of America before vigorous steps to check such nefarious practices were instituted. Information on the methods employed in those countries is being obtained by the Government. It is not believed that black marketing has yet assumed any great proportions in this country, but the Government realizes that, with increasing shortages of some commodities, it may become widespread, with disastrous results. Another proposal at present under consideration is for a wide-scale publicity campaign to awaken the public to the dangers of supporting black markets. Without co-operation from all sections of the community it is impossible to police the regulations. Intensification of investigation methods, with the more active assistance of State police, is also under consideration. So far as I am concerned, as the Minister in charge of rationing, I assure honorable senators that any proposal likely to assist in the eradication of black marketing will receive my earnest consideration.

page 385

QUESTION

AUSTRALIAN ARMY

Absence Without Leave

Senator UPPILL:
SOUTH AUSTRALIA

– Has the Minister representing the Minister for the Army seen the statement in the Sydney Bulletin of the 29th September, 1943, in which the Minister for the Army is reported to have admitted at a Labour party conference that there had been as many as 10,000 Army personnel absent without leave from .the Army at one time? Is it a fact that that number of men was absent without leave at one time and, if so, what is the Government doing in the matter?

Senator FRASER:
WESTERN AUSTRALIA · ALP

– I have no knowledge of any such statement having been made by the Minister for the Army, but I shall ascertain the facts.

page 385

QUESTION

STOCK FOOD

Senator FRASER:
WESTERN AUSTRALIA · ALP

– On the 29th September, Senator Aylett asked me a question, without notice, concerning stock food for Tasmania. The Minister for Commerce and Agriculture informs me that the Australian Wheat Board has made arrangements for supplying wheat to stock feeders in Tasmania and it i3 net anticipated that there will be any difficulty with supplies.

page 385

QUESTION

LEND-LEASE AGREEMENT

Senator JAMES McLACHLAN:
SOUTH AUSTRALIA · UAP

– On the last day of sitting I asked a question regarding lend-lease arrangements. Is the Leader of the Senate yet in a position to supply the information sought?

Senator KEANE:
ALP

– A statement on the subject will be presented to the Senate to-morrow.

page 385

QUESTION

VOLUNTEER DEFENCE CORPS

Drivers of Motor Cars

Senator AYLETT:
TASMANIA

– Can the Minister representing the Minister for the Army say whether it is a fact that members of the Volunteer Defence Corps holding rank above that of sergeant are not allowed to drive themselves in a motor car? Will he investigate this matter with a view to allowing such officers to drive themselves so that other men who now act as chauffeurs may be employed on other work?

Senator FRASER:
WESTERN AUSTRALIA · ALP

– I shall have the matter investigated but I point out that it is not always practicable for officers to drive themselves, as the motor car may have to return to enable it to be used by others.

Senator JAMES McLACHLAN.When the Minister is dealing with that matter will he also give consideration to the fact that it is quite unnecessary that drivers be employed to convey officers from their homes to work in the morning, then to morning tea, mid day lunch, and afternoon tea, and to drive them to their homes in the evening?

Senator FRASER:
WESTERN AUSTRALIA · ALP

– I shall investigate any specific case of that kind which the honorable senator submits to me.

page 386

QUESTION

LANDLORD AND TENANT REGULATIONS

Eviction of Tenants

Senator LECKIE:
VICTORIA

– I ask a question of the Minister for Trade and Customs in his capacity as Minister administering the law in regard to landlords and tenants, although, Mr. President, the question could just as appropriately be directed to you. I call attention to regulations which provide that before any tenant can be evicted suitable accommodation must be provided for him elsewhere, that consideration must be given to the size of his family, and also that where the tenancy has been for a long period it is necessary to give 90 days’ notice of the intended eviction. Can you, Mr. President, say whether the Minister has called your attention to these regulations, and do you not think that they should be carried out in the spirit as well as in the letter?

Senator KEANE:
ALP

– I have to confess that I have not consulted with you, Mr. President, on the point raised by the Deputy Leader of the Opposition. The Landlord and Tenant Regulations, which are administered by my department, provide that before a person can be evicted from a home, accommodation of a similar nature must be found for him. I understand that that condition had been fulfilled in the case to which the honorable senator obviously refers.

Senator GIBSON:
VICTORIA

– I ask the Minister for Trade and Customs why the regulations discriminate against country dwellers as compared with city dwellers in respect of the renting of properties? Whilst a person may lease a property in the city without obtaining a permit, a permit must be obtained before a person can lease a property in the country.

Senator KEANE:

– I am not aware that that is the case. I shall look into the matter and advise the honorable senator later. .

page 386

QUESTION

MAGNESIUM INDUSTRY

Senator GIBSON:

asked the Minister representing the Minister for Supply and Shipping, upon notice -

  1. What action does the Government propose to take to establish the magnesium industry in the Commonwealth ?
  2. Is it proposed to confine activity to the production of aluminium?
  3. In view of the importance of magnesium, will the Government consider the possibility of the ‘manufacture of this important light metal ?
  4. Is it not a fact that magnesium is to a great extent displacing aluminium in industry to-day?
Senator FRASER:
WESTERN AUSTRALIA · ALP

– The Minister for Supply and Shipping has supplied the following answers : -

  1. This industry is already functioning. Australian requirements of magnesium are being fully supplied at present from magnesite, abundant quantities of which are available.
  2. The establishment of the aluminium industry is the particular project which is engaging our immediate attention. The honorable senator may be assured that the Government will take such action, in relation to the establishment of any other industry, as it considers, from time to time, to be practicable and appropriate.
  3. See reply toNo. 1.
  4. No. Pure magnesium is seldom used in any position exposed to weather conditions likely to bring a.bout oxidation. It is mainly used in light alloys with aluminium.

page 386

QUESTION

PORT OF ALBANY

Development - Petrol Prices

Senator COLLETT:
WESTERN AUSTRALIA

asked the Minister representing the Prime Minister, upon notice -

  1. Is it a fact that the geographical position of the port of Albany, Western Australia, together with its great natural facilities, constitute factors of major importance in regard to the strategical defence of Australia’?
  2. Is it also a fact that, in regard to the development of the ports of Western Australia, the following amounts have been expended by the State Government since 1924: -
  1. In order to remedy this seeming neglect of Albany, and so as toaccelerate a system of decentralization associated with post-war reconstruction and development, will the Prime Minister enter into negotiations with the Government of Western Australia?
Senator KEANE:
ALP

– The Prime Minister has supplied the following answers : -

  1. The value of the port of Albany has not been overlooked in the study of the strategical defence of Australia.
  2. The Premier of Western Australia has furnished information showing expenditure on the ports mentioned by the honorable senator as follows: - Fremantle, £1,004,551 (including wharf reconstruction, dredging, &c.) ; Geraldton, £849.070 (including wharfs and dredging); Bunbury, £320,071 (including facilities for bulk handling of wheat) ; Esperance. £76.40) (including jetty work) ; Albany, £1,260. The Premier has also supplied the following particulars and comments regarding the port of Albany, viz.: The port has been provided with jetty accommodation. Albany is a natural harbour, requires no dredging and maintenance is very low. The present facilities have proved ample to meet pre-war requirements of shipping companies. When future trade developments attract more shipping the State Government is prepared to add to existing facilities. The total expenditure on Albany harbour since its inception is £214,142.
  3. The Co-ordinator-General of Works is at present obtaining proposals from State governments and instrumentalities for works which may bo suitable after the war. The State Government of Western Australia will thus have an opportunity of putting forward specific projects for consideration by the National Works Council. I shall bring the honorable senator’s question under the notice of the Premier of Western Australia.
Senator COLLETT:
WESTERN AUSTRALIA · NAT; UAP from 1937

asked the Minister representing the Minister for Supply and Shipping, upon notice -

  1. Is it a fact that fuel petrol was formerly carried by rail from Fremantle to Albany and the cost of rail transport between these two points added to the price at which the petrol was sold to users?
  2. Is it also a fact that petrol is now landed at Albany and that, notwithstanding, the cost to users remains the same as before, although it is disposed of at a cheaper rate at a point over 180 miles nearer Fremantle?
  3. If, as suggested, such an anomaly exists, will the Minister direct that an adjustment be at once made?
Senator KEANE:

– The Minister for Supply and Shipping has supplied the following answers: -

  1. Yes.
  2. Yes.
  3. There is no anomaly. The savings in rail transport in respect of petrol previously railed from Fremantle to Albany must be offset” against other costs incurred in storing petrol landed direct at Albany. The matter has already been under the notice of the Commonwealth Prices Commissioner, who has indicated that there will be no reduction in the present differential, but that the position will be reviewed at the end of twelve months, when a statement will be available, of the additional costs or savings resulting from the direct landing of petrol at Albany.

page 387

QUESTION

SURPLUS WAR STORES

Senator COLLETT:

asked the Minister representing the Prime Minister, upon n otice -

  1. Has the Government yet determined upon a plan for the disposal, at the termination of hostilities, of surplus war stores?
  2. If so, what are the conditions under which motor trucks and other power vehicles will be made available to primary producers and local governing authorities?
Senator KEANE:
ALP

– The Prime Minister has supplied the following answer: - 1 and 2. The matter is at present receiving the attention of the Government.

page 387

QUESTION

BASE HOSPITALS

Preserved Foods

Senator COLLETT:

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

  1. Is it a fact that preserved foods, notably tinned meats, arc being regularly issued at base hospitals as part of the dietary of patients?
  2. If so, is not such a course of action prejudicial to the health of the patients - especially in view of the existence in metropolitan areas of plentiful supplies of fresh foods ?
Senator FRASER:
WESTERN AUSTRALIA · ALP

– The Minister for the Army has supplied the following answers : -

  1. The normal ration scale for Army personnel provides an issue of tinned fish and meat on one day per week to enable existing stocks to be turned over. This applies to hospitals in addition to other units,but is now optional.
  2. If tinned foods are drawn it is not prejudicial to the health of patients, as additional items or special diets are ordered by the medical officer in accordance with the requirements of the patient, and such items arc not governed by the normal ration scale.

page 387

QUESTION

ROYAL AUSTRALIAN AIR FORCE

Officers Pay - Acting Rank

Senator COLLETT:

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

  1. Has the pay and/or allowances of officers of the Royal Australian Air Force, stationed in the Middle East or abroad, recently been reduced by 3s. daily, or any other amount? If so, why?
  2. If not, is any such reduction contemplated ?
Senator CAMERON:
Minister for Aircraft Production · VICTORIA · ALP

– The Minister for Air has supplied the following answers : -

  1. Royal Australian Air Force field allowance being paid to members of the Royal Australian Air Force in the Middle East concurrently with somewhat similar allowances drawn under Royal Air Force regulations was withheld for a limited period, pending clarification of an apparent duplication in payments. After review, it was decided to effect payment of both Royal Australian Air Force and Royal Air Force allowance, and retrospective adjustments have been made on that basis.
  2. Sec answer to 1.
Senator COLLETT:

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

As regards members of the Royal Australian Air Force of non-commissioned rank who may have been granted acting rank whilst on service a.broad -

Is it a fact that, on return to Australia, such acting rank is cancelled, e.g., a corporal reverts to leading aircraftman ?

If so, what is the necessity for this severe action in respect to men who have had long and meritorious service abroad?

Senator CAMERON:

– The Minister for Air has supplied the following answers : -

  1. It is a well-established principle in all defence forces that a member acting temporarily in a higher position relinquishes his acting rank when he ceases to perform the duties of the higher position. This policy has been varied, however, in the case of aircrew personnel recalled for flying duty in Australia. Those personnel retain any acting ranks, but, in accordance with Air Force regulations, all other officers and noncommissioned officers (i.e., administrative and ground staff personnel) serving overseas revert to their substantive or temporary ranks before embarkation for Australia.
  2. On return to Australia, all personnel are considered for promotion according to their order of seniority and to their suitableness for vacancies existing on establishments.

page 388

QUESTION

MEAT INDUSTRY

Mutton and Lamb Supplies in “Western Australia.

Senator COLLETT:

asked the Minister representing the Minister for Commerce and Agriculture, upon notice -

  1. Has there been inaugurated in Western Australia a system of rationing of mutton and/or lamb?
  2. If so, will not such a method of restriction of markets upset the balance of flocks and farming economy?
  3. Is it not a fact that the flocks in that State are able to provide, without rationing, more than sufficient to meet all anticipated needs of consumers?
  4. What is the system of rationing and is it being enforced in all States?
Senator FRASER:
WESTERN AUSTRALIA · ALP

-The Minister for Commerce and Agriculture has supplied the following answers : -

  1. No. The Meat Controller has inaugurated a plan of curtailment of supplies of meat to the consuming public in Western Australia as in all other States. The principal cut has, however, been on supplies of beef which, together with the restriction on the sale of fresh pork and curtailed supplies of bacon and ham, covers the over-all percentage reduction of Id per cent, aimed at in that State. The foregoing applies to the metropolitan area. There has been an over-all restriction on the killing of stock in the areas outside of the metropolitan area.
  2. The scheme as operating will not upset the balance of flocks and farming economy.
  3. The flocks in Western Australia are sufficient to provide, without rationing, more than is necessary to meet the anticipated needs of consumers but not to meet the demands which have been received by the Commonwealth Government for the Services and for export to the United Kingdom.
  4. The system of curtailment of supplies to consumers is operating in all States in the Commonwealth in the main along the same lines as in Western Australia.

page 388

QUESTION

CIVIL CONSTRUCTIONAL CORPS

Senator AYLETT:

asked the Minister for the Interior, upon ‘notice -

  1. What was the date that Mr. Summers took charge in Tasmania of the call-up for the Civil Constructional Corps?
  2. How many men have been transferred from Tasmania to the mainland into the Civil Constructional Corps since Mr. Summers took charge in Tasmania for that purpose?
Senator COLLINGS:
Minister for the Interior · QUEENSLAND · ALP

– The answers are -

  1. 20th April, 1943.

page 388

QUESTION

DAIRYING INDUSTRY

Senator GIBSON:

asked the Minister representing the Attorney-General, upon notice -

  1. Will the Minister inform the Senate whether a share farmer in the dairying industry can legally accept a share that returns him less than the fixed award rate?
  2. If a bad season reduces the return to a rate below the award to the share farmer and his employees, can he claim the award rate from the land-owner?
Senator ASHLEY:
Postmaster-General · NEW SOUTH WALES · ALP

– The AttorneyGeneral has supplied the following answer : - 1 and 2. It is suggested that full particulars of the matter on which the honorable senator seeks advice be furnished to the SolicitorGeneral as the matter is not one capable of being dealt with adequately in general terms.

page 389

SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) BILL (No. 2) 1943

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Keane) read a first time.

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- I move -

That the bill be now read a second time.

It was decided by the Government last July that further steps should be taken urgently to assist in stabilizing prices and to offset certain increases that had already occurred. One of the steps decided upon for this purpose was to reduce the rate of sales tax in respect of clothing and household drapery, from 12£ per cent, to 7$ per cent. At the time of this decision, however, Parliament had been dissolved, and it was not possible, therefore, to deal with the matter immediately in the normal way by submitting bills to amend the existing rates of sales tax. Owing to the urgency of the matter, the Government decided to authorize the reduction of the rate of tax by means of a regulation under the National Security Act. This was done in Statutory Rules 1943, No. 182. It was announced at that time that the regulation was intended as a temporary measure only, and that it was intended to seek parliamentary ratification of the reduction in rate as soon as a new Parliament was constituted. That is the purpose of this bill. The existing form of the sales tax legislation necessitates an amendment of the Sales Tax (Exemptions and Classifications) Act 1935-1943, as well as of the nine sales tax rates acts, in order to authorize the reduction of rate of tax on the goods in question.

The bill which is now submitted specifies, in a new second schedule to the Sales Tax (Exemptions and Classifications) Act, the goods to which the reduced rate of tax applies. Other bills to amend the nine sales tax rates acts will provide that the rate of tax on these goods shallbe reduced from 12£ per cent, to 7$ per cent, on and from the 21st July, 1943, which was the date of commencement of the regulation previously made for this purpose. In selecting clothing and drapery as the subject of the reduction of rate, the Government had regard to the fact that these are goods which have substantially increased in price during the war period. These goods are a substantial factor in the cost of living and it was considered by the Government that, if some effective action could be taken to reduce the prices of such goods, that reduction would have a substantial effect upon the cost of living. Clothing and drapery are general terms which cover a very wide range of articles, but it is not possible readily .to establish precisely what goods come within their scope. In any law which fixes differing rates of sales tax in respect of particular classes of goods, it is essential to have those classes of goods very clearly defined, so as to obviate confusion and administrative difficulties. It was decided, therefore, that, with certain exceptions which will be explained later, the reduced rate of tax should apply only to rationed clothing and drapery, that is, to clothing and drapery in respect of the purchase of which coupons have to be surrendered. Clothing and drapery merchants already had to classify their goods into two classes, namely coupon goods and noncoupon goods, and it was decided that the ‘ same classification should be adopted for the purposes of determining the rate of sales tax payable in respect of the goods. Coupon goods were to be taxed at 7£ per cent, and non-coupon goods at the general rate of 12-J per cent. This course is to the obvious advantage of traders, as it obviates the difficulties which would arise from any additional classification of the goods for sales tax purposes. The reduced rate was, therefore, applied to goods included in the definition of “coupon goods “ in Rationing Order No. 27, issued under the National Security (Rationing) Regulations. The reduced rate, however, was not applied to fur garments, which continue to be taxed at the maximum rate of 25 per cent., and goods which were formerly exempt from sales tax remain exempt. ‘

It is found necessary occasionally to make amendments of Rationing Order No. 27, resulting in the extension or restriction of coupon goods. Whilst it is satisfactory and convenient to adopt the definition of coupon goods in that order in its present form as a specification of the goods to which the reduced rate of tax shall apply, it is, nevertheless, possible that, at some future time, the order may be the subject of certain amendments which will not be acceptable for sales tax purposes. It may, therefore, become necessary or desirable, at short notice, to cause such amendments of the list of coupon goods to have no effect insofar as the rate of sales tax is concerned. Provision is, therefore, made in this bill that the reduced rate shall apply to coupon goods as defined in Rationing Order No. 27, as amended from time to time, subject to a power to prescribe, by regulation, any departure from those amendments which may be necessary or desirable for sales tax purposes.

In this regard, it is emphasized that this power of prescription by regulations can operate only in relation to future amendments of the present schedule of coupon goods. In the absence of any amendment of that schedule for rationing purposes, it will not be possible under the provisions of this bill to make regulations altering the incidence of the newsales tax rate of 1 per cent, upon clothing and household drapery. If, for rationing purposes, further goods are included in the definition of coupon goods, and it is considered that the reduced rate of tax should not be applied to these further goods, then it will be open to the Government to provide by regulation that these further goods shall remain taxable at the general rate of 12-J per cent. On the other hand, if, for rationing purposes, certain goods are taken out of the definition of coupon goods, and it is considered desirable that those goods should, nevertheless, remain taxable at the lower rat’of 7-i per cent., provision to that effect may be made by regulation. In order to avoid complications, it is hoped that it will not become necessary to make any departure from the list of coupon goods, but it is considered prudent to reserve the power to do so in order to enable prompt action to be taken in the event of any change of the coupon schedule which is not acceptable for sales tax purposes.

Senator McLEAY:
Leader of the Opposition · South Australia

13.42]. - Whilst I support this measure, I should like to draw the attention of honorable senators to the desperate attempt that is being made by the Government to keep down the cost of living, and to the peculiar position which will arise because of the reduction of sales tax provided for in this measure. Obviously the reduction of revenue which will .result from the passage of this bill will have to be offset in some other way, probably by the further use of central bank credit. The continuing rise of prices is causing a serious position in this country to-day, and when reading the budget speech of the Treasurer (Mr. Chifley) it is interesting to note the attempts that are being made by the Government to meet the position. For instance, an annual- subsidy of £6,500,000 is being paid to those engaged in the dairying industry, and, of course, that, amount is being paid out of revenue. I ask the Minister for Trade and Customs (Senator Keane) how it is proposed that the loss of revenue involved by the passage of this measure is to be made up?

Senator SPICER:
Victoria

– I support the bill, but, in doing so, I should like to draw the attention of honorable senators to the extraordinary conduct of the Government in the manner in which this supposed alteration of the law has been brought into operation. In July last, faced with an election campaign, the Government proceeded not by act of Parliament, but by regulation, to amend the sales taxation legislation. I have the gravest doubt about the legality of that conduct. I am reinforced in that view by the fact that the Government was not, prepared to allow this reduction of taxation to remain in force by virtue of regulation only, but has now come to Parliament with a bill aimed at giving legal force to something which it did on the 21st July. The excuse that has been offered by the Minister for Trade and Cus’toms '’Senator Keane) for the Government’s conduct is the plea of urgency. I have no doubt that there was urgency - urgency that the Government should be able to represent, to the electors of this country that it was proceeding to take steps to reduce the cost of living. So far as 1 can judge that was the only urgency that existed, and it is well that members of this Parliament should be jealous to safeguard the rights of Parliament in matters such as these. We should not regard lightly the act of the Executive in proceeding to alter the incidence of taxation by regulation. National Security Act or no National Security Act, I have always understood that this Parliament reserved to itself the right to determine the rates of taxation applicable in any particular circumstances. It would be a very serious state of affairs indeed if it became the practice of governments, just prior to a general election, to proceed by regulation to relieve certain sections of the community of the financial obligations imposed upon them by Parliament; but that is what this Government has done, openly and blatantly, and I take this opportunity to protest against such conduct.

Senator LECKIE:
Victoria

.- I take up the same position as Senator Spicer, although my approach to the matter may be a little different. On the face of it this measure appears to be quite innocent, but a closer examination reveals that it is a measure which honorable senators should not be asked to pass through all stages, without delay, and I am inclined to wonder just what the Minister for Trade and Customs (Senator Keane) thinks of the Senate. Doe3 he believe that with the Government’s brutal majority he can force whatever legislation he pleases through this chamber without giving to honorable senators an adequate explanation of it or an opportunity to examine or debate it? The explanation of this measure given by the Minister was not an accurate explanation. The honorable senator stated that the bill gave the Government power to make any altera tions by regulation; that any item could be brought under the coupon scale, but if it were not brought under the “coupon scale, it could be exempted by regulation from the provision of this bill. That is only continuing a practice which was introduced when the sales tax rates were varied. The fact is that this measure will give to the Government a free hand in the matter without consulting Parliament. In the first place, I object strongly to the attempt by the Government to force this very important measure through without providing a satisfactory explanation of its objects, or giving to honorable senators an adequate opportunity to examine it in relation to the original legislation. In his second-reading speech the Minister said -

It is found necessary occasionally to make amendments of Rationing Order No. 27 resulting in the extension or restriction of coupon goods.

The Government already has power to do that, and also to include or exclude any item at will. It seems to me that Parliament is deliberately surrendering to the Government power which it took illegally by regulation in July last. I object strongly to this procedure, because it gives to the Government and to the Minister too much authority. The Minister will be able to do just as he pleases. A sales tax bill is a taxation measure, and as such it should be subject to the will and discretion of Parliament. Its terms should not be altered without the consent of Parliament. This bill involves a departure from the principle that taxation measures should be passed by the Parliament. The Government assumes the right to say what taxes shall be imposed without consulting the Parliament at all. If the Minister specifies in detail the items covered by the schedule I shall have no objection to the bill, but I strenuously object to the Minister having power to determine such a matter by regulation. Will the Parliament he consulted before the sales tax on the various items concerned is altered in any way? This measure strikes at the root of parliamentary government.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– in reply - The Leader of the Opposition (Senator McLeay) and Senator Leckie have raised a grave issue. They contend that the alteration of sales tax effected by the Government by regulation in July last had a political significance, but there is no justification for that allegation. The Government merely desired to effect a reduction of the cost of clothing. The Opposition is well aware that by means oil subsidies the Government has already reduced the cost to the consumer of potatoes and tea. Honorable senators opposite know the serious effect that increases of the basic wage have upon government finance. Grave concern was felt by Ministers and departmental heads because of the increase of 2s. a week in the basic wage, which involved a vast increase of expenditure on the part of the Government and of industry generally. An effort was made to grapple with the situation and therefore the Government, in July last, took the action of which the Opposition now complains. I assure honorable senators opposite that the Government was not prompted by political motives. Similar action as that taken by the Government has been witnessed in Great Britain and Canada. The Government is faced with most serious financial problems and it is anxious to concentrate its attention upon their solution. Senator Leckie has referred to Rationing Order No. 27, issued under the National Security (Rationing) Regulations, and he desires to know details of the items embraced in that order. It contains many items and it is amended as the Rationing Commissioner finds necessary. It may be necessary to alter the grading of goods so that they may be subject to a lower tax. I confess that 1 do not like the fact that this matter was dealt with by regulation, but that was unavoidable, as the Government desired to stabilize the position. This was a war emergency measure and crises of such a kind are bound to occur when the Parliament is not in session. The Government took the earliest opportunity of securing parliamentary ratification of the unusual procedure which was adopted.

Senator McBRIDE:
SOUTH AUSTRALIA · UAP

– It was an unconstitutional procedure.

Senator KEANE:

– I am not a lawyer, but I would not go so far as to say the procedure was unconstitutional. Action can be taken under the National Security Act for the defence of the country and it seems to me that in this case action was taken by regulation for national defence in the wide sense of the term.

Question, resolved in the affirmative.

Bill read a second time and passed through its remaining stages without amendment or debate.

SALES TAX BILLS (Nos. 1 to 9) 1943.

Bills received from the House of Representatives.

Motion (by Senator Keane) put -

That so much of the Standing Orders be suspended as would prevent the questions with regard to the several stages for the passage through the Senate of all or several of the Sales Tax Bills Nos. 1 to fi being put in one motion, at each stage, and the consideration of all or several of such bills together in committee of the whole.

The PRESIDENT (Senator the Hon Gordon Brown:
QUEENSLAND

– There being an absolute majority of the whole number of senators present, and no dissentient voice, I declare the question resolved in the affirmative.

Standing and Sessional Orders suspended. »

Bills (on motion by Senator Keane) read a first time.

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

[4.0. - I move -

That the bills be now read a second time.

The only change in the rates of sales tax which is involved in these bills is the reduction of the rates of sales tax from 12-J per cent, to 7$ per cent, in respect of rationed clothing and household drapery. The reasons for this reduction and the classes of goods affected have already been explained in connexion with the -bill to amend the Sales Tax (Exemptions and Classifications) Act, and it is unnecessary to repeat those explanations here. The reduction of the rate has been in operation since the 21st July, 1943, by authority of a national security regulation. The approval of Parliament is now sought for this reduction.

Question resolved in the affirmative.

Bills read a second time, and passed through their remaining stages without requests or debate.

page 393

STATES GRANTS BILL 1943

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Keane) read a first time.

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- I move -

That the bill be now read a second time.

The bill has a twofold purpose. First, it implements the recommendations contained in the tenth report of the Commonwealth Grants Commission for the payment during the current financial year of special grants totalling £2,470,000 to the States of South Australia, Western Australia and Tasmania. Secondly, it provides for the repealing of the Tasmania Grants Act 1943. That act, which was assented to on the 29th June, 1943, authorized the payment of £200,000 by way of further financial assistance to Tasmania during the financial year 1942-43. The grants recommended by the commission for payment this year compared with those paid last year are as follows: -

In assessing these special grants, the Commonwealth Grants Commission has followed the same general principles as in past years. Briefly, the fundamental principle followed by the commission is that special grants are based on the principle of financial needs and are therefore determined by the amount of help considered necessary to enable ;a claimant State, by reasonable effort, to function at a standard not appreciably below that of the non-claimant States. The commission’s methods of assessing financial needs are, therefore, based on comparisons of the financial position of the States and involve also the financial relations between the Commonwealth and the States. The commission’s methods of assessing special grants take into account the effects of Commonwealth war policy, to the degree that these effects are reflected in the budgets of the States. A? the finances of the non-claimant States have been in a very prosperous condition since 1940-41, mainly because of the effect of Commonwealth war expenditure, the commission compares the financial position of the claimant States, not with the surplus budget standard derived from averaging the budgetary results of the non-claimant States, but with a balanced budget standard. I am in complete accord with the commission’s principle that it would be inappropriate to regard a surplus budget standard, which arises mainly from the stimulus of war expenditure, as a reasonable Australian standard for the calculation of special grants. No justification exists for making special grants to the claimant States which will exceed their actual financial needs.

The commission bases its assessments on the budgetary results of the States in the second year prior to that in which the grants are paid. The assessments for 1943-44 are therefore based on 1941-42, the latest year for which complete information was available. In recommending the payments to be made, however, the commission takes into account the present-day needs of the claimant States. Thus, the commission has recommended that portion of each of the assessed grants for 1943-44 be deferred until next financial year. Whilst the figures of payments I have mentioned, therefore, exclude amounts of £250,000, £500,000 and £65,000, payment of which to South Australia, Western Australia and Tasmania respectively has been deferred until next year, the figures of payments include amounts of £670,000 and £170,000 payment of which to South Australia and Western Australia respectively had been deferred from last year.

I shall now give to honorable senators a brief explanation of the commission’s assessments for each State, with particular reference to the difference between the grants paid in 1942-43 and those recommended for 1943-44. The principal feature in the commission’s calculations this year was a decline, as compared with 1940-41, in the average severity of taxation in the non-claimant States in 1941-42 relative to that in the claimant States.

In 1941-42 South Australia enjoyed a surplus of £1,290,000 after receiving a special grant. This involved a considerable improvement in the budget position of the State relative to the balanced budget standard adopted by the commission, and the grant assessed for South Australia this year was £480,000, or £740,000 less than the grant calculated for last year. Including an amount of £670,000 deferred from last year, the ‘ amount payable to South Australia this year would have been £1,150,000 ; but the commission considers that the State will not require the whole of that amount to meet its revenue needs this year. Accordingly, an amount of £250,000 is being deferred until next year, leaving an amount of £900,000 to be paid to South Australia this year.

In 1941-42 Western Australia just balanced its budget after receiving a special grant. Because of that State’s increased severity of taxation relative to that of the non-claimant States, the grant assessed for Western Australia this year was £1,180,000, or £210,000 more than that assessed last year. After including an amount of £170,000 deferred from last year, the amount payable to Western Australia would have been £1,350,000. As the commission considers that a grant of £S50,000 will suffice to meet that State’s requirements this year, an amount of £500,000 is being deferred until next year.

Tasmania just succeeded in balancing its budget in 1941-42 after receiving a special grant of £520,000. The grant assessed this year was £7S5,000, or £210,000 more than that assessed and paid last year. The increase is due mainly to a large favorable adjustment on account of relative severity of taxation in 1941-42. From the evidence available at present the commission considers that au amount of £65,000 may appropriately be deferred until next year, and recommends that a grant of £720,000 be paid to Tasmania this year.

In past years, the Government has always accepted the recommendations of the Commonwealth Grants Commission whose principles and methods of assessing special grants produce reasonable results, having regard to the needs of the claimant States and the financial stability of the Commonwealth as a whole. I am satisfied that the grants recommended for payment to South Australia, Western Australia and Tasmania should be sufficient to meet their financial needs in the present financial year.

As already mentioned, the bill also provides for the repeal of the Tasmania Grant Act 1943. I shall now give to honorable senators a brief outline of the events which render this action necessary. In September of last year the Government of Tasmania advised the Commonwealth Government that it considered that the special grant of £575,000 provided for in the States Grants Act 1942 inadequate in view of the deterioration in the budgetary position of that State since the 30th June, 1942. The Tasmanian Government, therefore, requested an unconditional payment of £200,000 by way of additional Commonwealth assistance. The Commonwealth Government referred this request to the Commonwealth Grants Commission which, in an interim report on the 25th January, 1943, deferred its recommendation until later in the financial year when Tasmania’s current financial needs could be better assessed. In its final report, dated the 16th April, 1943, the commission recommended that an advance payment of £200,000 be made to Tasmania, such advance to bc deducted from the special grant in 1944-45 in order to preserve fully the relativity in the commission’s method of assessing special grants.

On being informed of the commission’s recommendations, the Tasmanian Government lodged an application with the commission under section 6 (1) of the States Grants (Income Tax Reimbursement) Act 1942 for an increase of £200,000 in the income tax compensation authorized by that act. At the same time, the Commonwealth Government was informed that this application was made without prejudice to the advance already recommended, but (hat if the application for increased income tax compensation were successful, the advance payment of £200,000 would not be required. The commission’s report on this further application was received on the 20th June, and was immediately tabled in Parliament. The commission recommended that no increase of income tax compensation be paid to Tasmania in the financial year 1942-43. The Commonwealth Government adopted the commission’s recommendation and advised the Tasmanian Government on the 25th June that it was introducing the Tasmania Grant Bill 1943 in Parliament that day to give effect to the commission’s recommendation for the payment of an advance of £200,000. That bill became law in time to make the payment of £200,000 before the close of the financial year, but the Tasmanian Government declined’ to accept the payment giving as its reason that acceptance would involve a corresponding reduction in the special grant which would be recommended in 3.944-45.

As I have already mentioned, the commission assesses special grants on the budgetary results of the States in the second year prior to that in which the grants are paid. Thus Tasmania’s financial position in 1942-43, which caused the Tasmanian Government to make an application for further financial assistance in that year to the extent of £200,000, will form the basis for the commission’s calculation of a special grant for 1944-45. The drift in the State’s finances in 1942-43 will therefore be automatically reflected in the grant for 19414-45. Unless, therefore, the £200,000 which the commission recommended were treated as an advance to be deducted from the grant to be paid in 1944-45, Tasmania would receive £200,000 more than the amount considered necessary to meet its financial needs. That is to say, unconditional payment of £200,000 would have involved duplication of Commonwealth assistance to Tasmania in respect of 1942-43. As Tasmania declined to accept the payment of £200,000 as an advance grant, it is necessary to cancel the authority for payment of that grant and provision is therefore made in this bill for the repeal of the Tasmania Grant Act 1943.

Senator WILSON:
South Australia

.- Whilst I support the bill, I am disappointed that the Commonwealth Grants Commission has seen fit to depart from the very sound principles which it originally laid down. In its initial reports the basis adopted was that the budgetary position of the non-claimant States, and then the budgetary position of the claimant States, should be examined, and that such an amount should be paid to each claimant State that its financial standard would not be appreciably below that of the non-claimant States. In other words, a poorer State, taking into account taxation and expenditure, was to be brought as nearly as practicable up to, or not appreciably below, the non-claimant States. This year for some reason the commission has departed from that principle. Instead of taking the budgets of the nonclaimant States, all of which have very substantial surpluses, the commission has worked on the assumption that their budgets have been merely balanced. It has not recommended a sum sufficient to bring the claimant States to a financial position which is not appreciably below that of the richer States. Rather it has brought them to a position which is substantially below it, with the result that the non-claimant States, which are the rich States, are able to set aside very large sums of money for post-war reconstruction. The less populous States, Tasmania, Western Australia and South Australia, are not in a position to do that, and I express extreme disappointment that the commission has departed from its principles, which had given general satisfaction. It is noticeable that every time the commission decides to depart from its principles, it detrimentally affects the less populous States. In other words, it seems determined to let Australia develop on the basis that the rich are always going to get richer, and the poor always going to get poorer.

Senator Lamp:

– That has always been the policy of the party at present in Opposition.

Senator WILSON:

– The policy of the present Government and of the Labour party, as shown by this bill, is to widen the gap between the rich States and the poor States. Instead of allowing the poor States to build up surpluses, as the rich States are doing, so as to have a little nest egg * available to rehabilitate their fighting men when they return from the war, the commission says, “ We will let these rich States , build up their surpluses, and have this money in the kitty. We will depart from our principle, we will not take the budgets of Victoria, New South Wales and Queensland as they in fact are, but we will work on a fictitious figure “.

However, the Government has the numbers, the less populous States must have the money, and therefore we have no alternative but to support the bill. The hammer is held at our heads and we have simply to accept what is given to us, but it is most unjust and unfair that the commission should work on fictitious rather than real figures and always attempt to keep the claimant States appreciably below the standard of the others. The statement of the Minister to the effect that the object of the commission is to ‘bring the claimant States into a position which is not appreciably below that of the non-claimant States is just a myth. The fact is that the Government and the commission are determined to keep the claimant States financially a long way below the other States.

Senator LAMP:
Tasmania

.- I support the bill, but while doing so I point out that it is not merely a matter of the claimant States, Tasmania, in particular, requiring financial assistance. It is an economic question that has to be settled sooner or later. As Senator Wilson has rightly pointed out, the Commonwealth Grants Commission laid it down that the budgets of the claimant States should be brought up somewhere near the equivalent of those of the other States. I am one of those who say that Tasmania is not a poor State. It is one of the richest islands in the world.

Senator Gibson:

– Then why does Tasmania need a grant?

Senator LAMP:

– Although Tasmania is one of the richest islands in the world, if we go along as we have been doing, and allow the economic position to deteriorate, Tasmania will for all time be coming to this Parliament for grants, and special grants, as was the case this year. I have on many occasions in this chamber directed attention to the drift of population from Tasmania to the mainland States. For Victoria, South Australia and New South Wales in particular Tasmania is the educational school. We educate the lads through the State schools, the area schools and the technical schools, and then unfortunately they have to come to the mainland to secure permanent positions. The three States which benefit most are South Australia, New South Wales, and Victoria. I suggest that instead of continuing the present practice of giving State grants year after year, and the States having to ask for financial assistance, something should be done to place them on a sound economic basis so that they will not need grants. During the last two or three years considerable development has taken place in South Australia, which is in a better economic position now than it was five or six yeas ago, but what has been done in Tasmania? We had the promise that the aluminium industry would be established there. No matter how we look at the position, Tasmania has not got the finance and will never be able to get it to develop the State properly. The State is assisting to develop the aluminium industry but only in a small way. It is one of the richest islands in the world, and it only needs development and placing upon a sound economic basis to enable it to do without a grant from the Commonwealth. Tasmania has an abundant water supply, which, fortunately, is mainly in the centre of the island, where there are almost unlimited possibilities for hydro-electric schemes. Apart from the schemes which already have been developed, the following projects have been surveyed : -

The .point I wish to make is that, in addition to making grants, the Commonwealth must give to the less populous States economic assistance so that industries already established may be placed on a sound foundation, and new industries developed. Tasmania has an enormous reservoir of potential electric power which could provide power for all the railways of that State, but, so far, no attempt at electrification has been made. The argument that has been advanced against the project is that the initial cost would bc £1,500,000; no mention is made of the cost of running the railways on coal. Unfortunately, with the Tasmanian Legislative Council, as it is at present constituted, we are not able to introduce reforms which many .people so earnestly desire. In the south of Tasmania we have Hobart which without doubt is the best deep-water port in the world. Ships of any size can be brought right up to within a few hundred yards of the Hobart post office. Ko deep-water port has been established on the north coast, but there is an excellent site for one at Bell Bay, providing 34 feet or 35 feet of water. On the opposite side of the river is Beauty Point. To develop this port properly it would be necessary to construct a railway from Devonport to Beauty Point, a distance of 40 miles, and from Bangor to Bell Bay, a distance of 14 miles. Bell Bay could easily become one of the best ports in the world, but Tasmania has not the money necessary to carry out the developmental work.

Steps should also be taken to alleviate the rubber shortage in Australia by utilizing the limestone deposits at Electrona in southern Tasmania for the manufacture of calcium carbide, which is the basis of synthetic rubber. There again, it is only a matter of getting the money necessary to do the job. At Latrobe there are large deposits of shale from which firstclass bitumen can be made, and, although bitumen is required urgently for roadmaking, nothing has been done because the population of Tasmania is so small that the State cannot provide the money necessary to embark upon essential projects. It is said that heavy industries cannot be developed in Tasmania because of the transport that would be necessary between that State and the mainland.

If that be the case, then, instead of heavy industries, we must develop light industries. There is no reason why, after the war, we should not be able to produce in this country all the watches, clocks and precision instruments that we need. It is no use saying that we have not the artisans or technicians to do this work. Before the war it was said that- we could not make motor cars in Australia, but now we are making aeroplanes, and I have no doubt that Australian workmen could make watches, clocks and precision instruments as good as those produced anywhere in the world. That is an industry that could be developed in Tasmania. I have no doubt that we could do the work, and I earnestly hope that the Commonwealth Government will see the wisdom of developing the less populous States instead of endeavouring to discharge its responsibility simply by making annual grants to them.

Senator McBRIDE:
South Australia

– I support this bill, but I should like to make one or two comments about the basis of assessment adopted by the Commonwealth Grants Commission. It is claimed that the grants have been based upon a “balanced budget” standard, but I point out that in South Australia recently the Treasurer brought down a budget which envisaged a deficit of approximately £450,000. I assume that when that budget was introduced the Treasurer knew the amount of the grant which the Commonwealth Grants Commission had recommended. Therefore, in the case of South Australia at least, the proposed grant will not make a balanced budget. “We know that States are unable to estimate their expenditure accurately because of wage variations made by the Commonwealth Arbitration Court, and by other tribunals, which may bring about unexpected increases in the cost of services such as the railways, and we also know that repercussions are now being felt of the basis of allotment. of compensation to the States under the uniform taxation scheme. It was pointed out in this chamber and in the House of Representatives when that scheme was under discussion that the proposed basis of compensation was one which undoubtedly would allow at least two of the nonclaimant States to get away with a great deal more money from the Commonwealth Treasury than that to which they were justly entitled. The result is that those States are piling up huge surpluses, whereas the claimant States are depressed very much below the average Australian standard. With the position now made clear, the Government should either increase substantially the grants to those States, or, alternatively, it should reconsider the whole uniform taxation scheme. It is well known that in regard to certain social services responsibility for which has since been taken over by the Commonwealth, South Australia did not enjoy a standard as high as that obtaining in most of the other States, yet under the uniform taxation scheme those States are still receiving grants based on the assumption that the Commonwealth has not undertaken responsibilities which formerly were provided for in State budgets. I hope that the Government will give early attention to this matter because it has caused a great deal of concern. It is not my desire to hold up the payment of the grants provided for in this measure, but I urge upon the Government the necessity of reviewing at the earliest possible moment the whole question of the effect upon State budgets of the uniform tax scheme. I consider that apart altogether from the desirability of being able to build up substantial surpluses in preparation for post-war reconstruction, and the rehabilitation of our fighting men when the war is over, it is only fair that the less fortunate States should be able to enjoy the standards of living operating in the other States.

Senator SAMPSON:
Tasmania

. -I recall that in 1924 and 1925 Tasmania experienced difficult times financially, and suffered severely as a result of its membership of the federation. In those days it had many a hard struggle to make ends meet. Senator Lamp has referred .to the loss of population in that State. That has been the cause of most of its difficulties. Tasmania’s experience is similar to that of Newfoundland, where many of the best of its young men migrated to Canada, and, when I visited Canada, I was informed that there had been a considerable drift of the population of that dominion to the United States of America. The fact is often overlooked by people on the mainland that Tasmania is an island State, dependent largely on sea carriage and to some degree on air transport. All of the States should be brought as near as possible to a common level, because they are all members of one great Commonwealth. I am not surprised that Tasmania is not satisfied with the grant of £200,000. That was not a grant at all. It was a. loan, in the sense that that sum was to be made available by the Commonwealth and was to be taken from the following year’s grant, whatever the amount determined by the Commonwealth Grants Commission might be. We made a long step in advance when an independent tribunal was established to deal with the financial relations of the States with the Commonwealth, and I desire the commission to continue its good work. Irrespective of their varying physical and natural resources, the States should all be brought to one financial level.

Senator GIBSON:
Victoria

.- It seems to me that another injustice has been done to Victoria. When uniform taxation was introduced, Victoria lost £4,000,000 a year, and New South Wales and Queensland got away with it. I should like to see the social services of Victoria increased to the standard of those in New South Wales and Queensland’, but the adoption of uniform taxation has prevented that. Tasmania is not a mendicant State. It has cheap electrical power, and many industries could be established there. Tasmania can produce electrical power more cheaply than any of the other States, and, as Senator Lamp has said, it has plenty of limestone from which calcium carbide can be produced. From that chemical synthetic rubber could be produced, and only 200 tons of carbide is required a day for the production of the synthetic rubber requirements of Australia. The people of Tasmania are too slow. They allow their citizens to drift to the mainland of Australia, and engage in occupations which they should be following , at home. Tasmania has established an aluminium industry, but in my opinion the industry is obsolete already. There is no shortage of seawater f.-om which it would be possible to establish the magnesium industry. I received a reply to a question to-day which I consider unfair. It was said that magnesium is only 5 per cent, of an alloy, but the fact is the reverse. The alloy consists of 5 per cent, of aluminium and 95 p?r cent, of magnesium. The Government is proposing to expend millions of pounds on the aluminium industry, although aluminium is rapidly losing its usefulness. I have no doubt that the Commonwealth Grants Commission has done justice to most of the States except Victoria. New South Wales and Queensland are building up huge reserves at a time when those funds will be invaluable for post-war reconstruction. Victoria is not able to do that, and therefore my support of this bill is half-hearted.

Senator NASH:
Western Australia

– I support the measure, but I am disappointed that the amount to be made available to Western Australia represents an increase of only £50,000 as compared with ‘the grant made last year. I particularly regret the smallness of the increase, when I notice the sum being granted to Tasmania. I do not agree with Senator Gibson. I have been glancing at some of the figures with regard to production, as submitted in the tenth report of the commission. The claimant States, particularly South Australia and Western Australia, are not to be compared with Victoria, New South Wales and Queensland in the matter of production. In appendix No. 8 of the commission’s report I notice that for the year 1940-41 the production of New South Wales was valued at £191,817,000 compared with £178,292,000 in the previous year. Victoria’s production in 1939-40 amounted to £122,834,000, and that figure was increased in the following year to £136,508,000. That is a tremendous increase in the net value of production. In Western Australia the production for 1939-40 was £35,882,000, whilst for 1940-41 it was valued at £33,477,000. It will be seen that the position in Western Australia is the opposite of that in the eastern States where the value of production rose considerably. The only reason that I can give for that state of affairs was set out in the speech of the Leader of the Senate when he said -

As the finances of the non-claimant States have been in a very prosperous condition since 1940-41 mainly because of the effect of Commonwealth war expenditure, the commission compares the financial position of the claimant States, not with the surplus budget standard derived from averaging the budgetary results of the non-claimant States, but with a balanced budget standard.

The Commonwealth Grants Commission judges Western Australia on its financial position as set out in its budget, but I point out that that State has not benefited from Commonwealth war expenditure to anything like the same degree as have the other States, particularly the highly industrialized States of New South Wales and Victoria. It may be that in those States there are more financial geniuses than there are in Western Australia, but, whatever the reason, the fact remains that they have benefited most from Commonwealth war expenditure. That is not because there are no opportunities in Western Australia to expand war production. It may be said that, even if money were made available to make possible war production in Western Australia on a larger scale, that State has not the population necessary to carry out the work. In this connexion, I point out that the ratio of enlistments in the fighting forces to the population is greater in Western Australia than in any other State. Western Australia is justified in claiming to be the most Australia-minded State in the Commonwealth. One effect of the concentration of war establishments in the eastern portion of the continent is that Western Australia has been deprived of large numbers of workers who have migrated to the eastern States where they have secured employment.

Senator Gibson:

– Why do they not stay in Western Australia?

Senator NASH:

– One reason is the policy adopted by business houses in the eastern States. Many of them sell the same commodity at different prices in the several States. For a long time Western Australia has been regarded by many people in the rest of the Commonwealth as a purely primary producing State.

Such people fail to realize the geographical importance of Western Australia - that it is the gateway to Australia;’ that Western Australian ports are the first in Australia at which overseas vessels travelling eastward call, and the last ports from which they depart on the return journey. There are just as sound reasons why secondary industries should be established in Western Australia as there are for their establishment in other portions of the Commonwealth. Any plan for the decentralization of industries in the interests of Australia’s future safety should include the claims of Western Australia.

Although the ‘Commonwealth Grants Commission proposes to increase Western Australia’s grant for next year by £500,000, I should like that amount to be paid this year. It may be said that Western Australia is not in urgent need of that measure of financial assistance because there is practically no unemployment in that State at the present time, and also because, as the result of war expenditure by the Commonwealth, the budgetary position of the State is better than it otherwise would be, but I emphasize that the present position is not static and that Western Australia has received revenues which are not of a recurrent nature. While the nation is at war, large sums of money are being expended for purposes of destruction, but when that class of expenditure ceases with the termination of hostilities the whole Australian economy will have to be placed on another footing. It may be that at the end of the current financial year Western Australia will again show a small surplus, but it must be remembered that that State has had many deficits. Already Western Australia is faced with heavy expenditure for the rehabilitation of its railway services. There is a shortage of locomotives, although the position in respect of other railway rolling stock is fairly satisfactory. The permanent way also requires a good deal of attention. It can be said with truth that the State Government will have to expend large sums of money to put its railway system into proper order. That charge should be treated as part of Western Australia’s claim for assistance of the kind we are now considering. In the circumstances which I have outlined the Commonwealth should make available to Western Australia this year the total amount which the commission concedes is its due, instead of limiting this year’s grant to £850,000 and deferring payment of the balance. Western Australia is entitled to a greater measure of consideration not only because of its very favorable productive capacity, but also because of the fact that it expends more per capita than Queensland, South Australia and Victoria in the provision of social services. Appendix 6 of the commission’s report shows that the per capita expenditure on social services for 1941-42 from Consolidated Revenue and special funds was £3 ls. Id. in Victoria, £3 16s. 2d. in Queensland, £3 9s. 9d. in South Australia, and £3 17s. 7d. in Western Australia. This fact is most important when we bear in mind that one of the most pressing problems which will confront the Commonwealth in the post-war period will be the provision of social services. Judging by the figures I have just quoted, it can be said that Western Australia now provides social services of a higher standard than those provided in the majority of other States. Thus, Western Australia is now making a substantial contribution to this important post-war problem; and that fact should be taken into consideration when Parliament is voting grants-in-aid to the claimant States.

We have been informed of special industrial undertakings in Tasmania. I point out that the State Government in Western Australia is establishing the aluminium industry at Lake Campion. An important by-product of the industry will be potash which, owing to the present serious shortage of superphosphate, is now in urgent demand in all States. However, so far as my information goes, the State Government has been more or less hamstrung in its efforts to establish this industry. The Commonwealth has not offered the State any assistance in that direction. I visited the works a short while ago, and was told that building materials and plant required for the undertaking must be hauled by road from the nearest rail head, a distance of nearly 20 miles. I have no doubt that had the Commonwealth undertaken this work it would have extended the existing railway to the site of the works. I urge the Commonwealth to give early assistance to the State Government in order to enable it to expedite the establishment of this industry which will produce an important metal required in aircraft production, and also relieve the shortage of fertilizers throughout the Commonwealth. From these facts it is clear that Western Australia is not merely the drawer of water and the hewer of wood among the States. Western Australia is also suffering a severe disability because of the fact that the gold-mining industry has been depleted of man-power in order to meet the needs of war production.

Senator Gibson:

– Is the State Government still manufacturing agricultural implements and machinery?

Senator NASH:

– Yes. The State implement establishment at North Fremantle has the most modern engineering plant in the State. It is making a substantial contribution, not only to our war effort, but also to the progress of industry generally. I support the bill.

Senator LECKIE:
Victoria

.- I am not surprised at the extreme indignation displayed by Senator Nash concerning the treatment to be meted out to Western Australia under this measure. I emphasize that these grants are assessed by a supposedly scientific commission which has ascertained the disabilities and needs of the claimant States. However, the Government now adopts the attitude that it is better fitted than the commission to assess the financial assistance required by those States. In doing so it is, in effect, passing a vote of no confidence in the Commonwealth Grants Commission. The Government says, in effect, “ The claimant States are not entitled to all of the money recommended by the commission. We shall take no notice of the commission, but go our own way”. From that point of view Senator Nash’s indignation is quite justified.

Senator Keane:

– The Government is accepting entirely the recommendations of the commission.

Senator LECKIE:

– The fact remains that under this measure the payment of the sum of £600,000, which the commission says Western Australia is entitled to, is to be withheld until next year. With respect to Tasmania, it seems strange that the Commonwealth offered a special grant of £200,000 to that State just before the recent elections. Therefore, it cannot be said that the Commonwealth is dealing fairly with the States in this matter. It now says to each of these States, “ Your balance-sheet has been pretty good this year. We propose to give you only sufficient money to enable you to balance your budget. We are looking after you, because you looked after us at the recent elections. During the coming year you boys must spend a lot more money than you are spending now. Western Australia, for instance, has £600,000 still owing to it, and substantial amounts are also still owing to the other States. Therefore, you must spend more money than you have been able to spend in the past; and we shall make up the difference to you”. The point I make is that the Government should either adhere to the system followed in the past, or abandon it altogether. For the first time in the history of this legislation, this Government says to the claimant States that it will not give to them what the commission has recommended as their due, but shall defer portion of those amounts till next year, on the understanding that the States manage to spend more than they receive this year. Either the commission is wrong or the Government is wrong. I entirely agree with Senator Nash, who strenuously exhibited his indignation at the way in which Western Australia had been treated. Senators representing other States may do exactly the same, but personally I think that these grants are on a wrong basis. They are opening up to a very great degree the opportunity for jerrymandering with the finances. If the Government says : “ Parliament set up a commission the reports of which in the past have been agreed to in their entirety, and the grants recommended by them have been paid over to the States regularly until last year and this year, but now we do not agree with it “, the proper thing for it to do is to abolish the commission. The Government sets itself up as a higher tribunal than the commission. It says : “ The commission does not know anything about this business; we do”. It tells the claimant or mendicant States, if honorable senators wish to call them so, which are enjoying the bounty of the eastern States : “ For the future, thrift must be the last word in your vocabulary, savings must be the last thing that you can include in your budget, a proper regard for the work you do and the value you get for your money must be put into the discard “. It says to Western Australia : “ Mind you spend this extra £600,000 next year, so that your budgetary position will look bacl ; if you do, you may depend upon it that you will get not only the £600,000 which we are deferring for this year, but also what you are entitled to next year. If, however, you do not spend this money - and we invite you to spend it - we will defer it again until some future time “. That process will, I suppose, in three years’ time bring us to the next election, just before which Western Australia, South Australia and Tasmania, if they do not go bankrupt in the meantime, will receive all their deferred grants from this Government at the psychological moment.

It seems to me that the States are in a terrible hurry to have the money passed over to them, and the Government is in an equally great hurry to be put in a position to say that the State governments do not want the money. I have no quarrel with the commission, which is, I think, an honorable body, and has gone into the pros and cons of the problem in a very able way, reaching an equitable decision as to the amount of money necessary to put the States on a proper financial basis. It is not I who am criticizing the commission. It is the Government that says that the commission is wrong. It says that it intends to withhold from the three States concerned, at least for this year, about one-third of the money which the commission recommends should be paid. The whole system is wrong. If the Government appoints a Commonwealth Grants Commission, it should stand by it.

Senator Keane:

– That is what we are doing, literally and figuratively.

Senator LECKIE:

– The commission may have reported that, so far as their budgets show, the three States concerned do not need the money, but it also re ported that certain amounts were due to them. The States may have saved a little by curtailing their expenditure, perhaps by sacrificing necessary public works, as Senator Nash suggests, but the Government now says to them : “ As you have been saving this year, and have looked after your finances sensibly, we are going to penalize you for doing so. In the future we are not going to encourage you in doing that sort of thing, and unless you spend wildly and without regard to the safety of your finances we will see that the grants are deferred again “.

The bill is an invitation to the States which curtailed expenditure last year to become spendthrifts in the future. From that point of view I consider -that it is working on wrong lines. If the commission, after going carefully through the whole of the financial circumstances of the claimant States, says that a certain amount of money is due to those States, then they are entitled to it. Deferring grants constitutes to the claimant States an injustice which they should not countenance for a moment from any government.

Senator COLLETT:
Western Australia

– It is ten years since the Commonwealth Grants Commission was appointed, and I remember well the debate which took place on the bill under which it was established. It has since then done none of the things which its detractors prophesied of it at that time, except one, and that is the provision of the money, in the form of financial assistance to certain States, which was its main purpose. Its reports, as submitted from time to time, make one of the finest contributions to the financial and economic structure which any member of Parliament could wish to read. Although the commission in its search for a formula which would suit every State has from time to time shifted its basis, it has on the whole done a very good job. I say that because every government from the time the commission was appointed, has accepted its recommendations without variation. I think that Senator Leckie is slightly in error in what he said in that respect. The commission in this case has recommended the payment of £1,180,000, plus £170,000 brought over from last year, but has added that the payment of £500,000 should he deferred for the time being. Its recommendation as contained in its report, and the Government’s intention, conform exactly. I rose because my memory was stirred in respect of the debate of ten years ago.

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

– in reply - I was glad to hear Senator Collett say that the provisions of the bill embody, without any variation at all, the recommendations of the commission. It is also a fact that the grants in every case have been increased. The system of withholding some amounts until the following year has been maintained, for I think very sound reasons. A State which is not in a financial position equal to that of the non-claimant States is very reasonably treated if it is given sufficient money to carry on its activities.

Senator McBride:

– Then the Minister does not think that such States should have the same opportunity for building up surpluses as the non-claimant States?

Senator KEANE:

– Frankly, I do not. I undertake to have an examination made of the suggestion put forward by the honorable senator, that the effect of uniform taxation on the claimant States should be ascertained. That is an admirable suggestion, and the matter will be looked into at once. The whole story, I think, can be summarized in this way: We have a commission which has never been impugned by any Parliament in its life of ten years. It consists of men of outstanding capacity. Some were appointed by the United Australia party Government, although I think that Sir George Pearce was the choice of a Labour Government. Surely it cannot be suggested that Sir George Pearce’s appointment was made for political reasons? The commission is composed of an excellent group of men who are charged with a most difficult task. I agree with much of what has been said by Senator Nash and Senator Lamp. It would be far better if the claimant States were so developed that there would be no need for the payment of grants by the Commonwealth. That, however, is a long-range problem.

Senator Wilson:

– That objective will not be achieved by cutting down the grants.

Senator KEANE:

– That is not a correct statement. South Australia is getting £100,000 more this year than last year, Western Australia £50,000 more and Tasmania £145,000 more. I remind the honorable senator also that in 1941-42 after receiving a grant from the Commonwealth, South Australia enjoyed a surplus of £1,290,000. It is clear from my second-reading speech that the suggestion that the finances of the claimant States are being built up to the level of those of the other Slates is too absurd for words. In my opinion, the figures given by Senator Nash in- regard to the total value of production in New South Wales, Victoria and Western Australia, do not present a conclusive argument. I have no doubt that the time will soon come when Western Australia will absorb a large proportion of immigrants coming to this country. To me Senator Leckie’s speech was a revelation, because usually the honorable senator speaks very much to the point. I am afraid he was only facetious this afternoon when he referred to the assistance that is being given to the claimant States by this measure. I believe that I know what is actually in his mind. He considers that Victoria is providing much of this money and that it could be well used within that State. I consider that the Commonwealth Grants Commission has approached the problem in a scientific manner and has done an excellent job. Without it there would be endless acrimonious discussion, no matter what government was in power. In my opinion, the principle of deferring certain payments is excellent.

Question resolved in the affirmative.

Bill read a second time and passed through its remaining stages without amendment or debate.

page 403

LOAN BILL (No. 3) 1943

Bill received from the House of Representatives.

Standing and Sessional Orders suspended.

Bill (on motion by Senator Keane) read a first time.

Second Reading

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- I move -

That the bill be now read a second time.

This measure seeks authority for a loan appropriation of £200,000,000 for war purposes and also for the raising of an equivalent amount of loan moneys to finance war expenditure. The subject of war finance and our anticipated war expenditure for the present year has been dealt with very fully in the budget speech and therefore it is not necessary for me to traverse the ground again at any length. War expenditure for 1943-44 is estimated in the budget at £570,000,000. It is anticipated that approximately £167,000,000 of this amount will be met from revenue, leaving a balance of £403,000,000 to be provided from loan. The balance of loan appropriation available at the 30th June, i943, was £183,000,000. This amount, together with the provision in this bill and the revenue appropriation, should provide sufficient parliamentary appropriation to cover war expenditure until May next. Before that date a further war loan appropriation will be sought from Parliament.

Senator McLEAY:
leader of the Opposition · South Australia

– This is the first opportunity that honorable senators have had to peruse this measure and when the Minister for Trade and Customs (Senator Keane) replies to the second-reading debate, I should like him to give to the Senate an indication of what the Government considers to be the limit in the use of treasury-bills for war purposes. I also wish to know what interest rate is being paid on treasurybills. Having regard to the momentous problems that await solution, and the statements made in this Parliament from time to time by prominent members of the Labour party that, if millions of pounds can be provided in time of war, similar financial methods should be adopted in times of peace, the people are entitled to a statement by the Leader of the Senate as to whether he agrees that the widest possible use should be made of central bank credit in the post-war period. The Minister is iri a position to obtain the opinions of the financial experts in the Treasury. The people are asked to contribute to the Fourth Liberty Loan of £125,000,000, and many of them would do so more readily than at present if a definite assurance were given by the Government as to how far it proposes to finance the war on central bank credit. I also ask the Leader of the Senate why the term “ treasury-bills “ is employed. Is it because the Government realizes the danger of the excessive use of. bank credit and looks upon treasury-bills .as a more acceptable term? Information on those points would help honorable senators in dealing with the great financial issues which await their attention. It would be of assistance to the intelligent section of the community if loose statements to the effect that there is no limit to the use of central bank credit were corrected.

Senator LECKIE:
Victoria

.- The Minister for Trade and Customs (Senator Keane) stated that the balance of loan appropriation available at the 30th June last was £1S3,000,000, hut he did not say whether that sum had been made available through the issue of treasury-bills. I have no doubt that most of it has been* borrowed by means of treasury-bill finance. Although this bill seeks authority for a loan appropriation of only £200,000,000, the Government has already received authority to appropriate a further £183,000,000.’ The Minister should have been frank and should have told us how the £183,000,000 already appropriated under another measure had been, or would be, obtained. It seems to me that the Government is trying to hide the grave fact that much of the money required will he raised, in accordance with its policy, by means of treasurybill finance. The Minister’s explanation of the position was not quite so complete as it might have been in all the circumstances. When the people are told that the borrowing of £200,000,000 should provide sufficient parliamentary appropriation to cover war expenditure until May next, they naturally forget that another £183,000,000 is also to be borrowed, if it has not already been borrowed, by the issue of treasury-bills. I do not wish to prevent the Government from raising any of the money required for war purposes, but we should be frank with the people. The Minister has already recognized the grave danger of too free a use of treasury-bill finance and has admitted that it might lead to grave effects upon the economic life of the people. No member of the Opposition objects to the raising of all of the money actually needed to carry on the war, but we sound a note of warning that the method adopted by the Government is dangerous. The grave danger to the financial structure of Australia must be obvious. Although the Minister exercises close supervision of the expenditure of his own department, I am not sure that the expenditure of some of the other departments is so carefully watched.

Senator McBride:

– The Department of Trade and Customs collects rather than expends money.

Senator LECKIE:

– I must give some credit to the Minister, because I know that he appreciates it. The appropriation is not merely for £200,000,000, but for £383,000,000, and the danger of raising a vast proportion of that sum by the issue of treasury-bills cannot be overemphasized. The raising of these huge loans is approved by the Parliament because every available ounce of national energy is needed for war purposes.

Senator McBride:

– What about coal?

Senator LECKIE:

– More may be said on that subject later, but at the moment I am dealing with finance. I fear greatly that the borrowing of another £200,000,000 this year by means of treasury-bills will put the finances of this country into such a state that it will take a long time to get them into order again.

Senator SPICER:
Victoria

.- I should like the Minister in charge of the bill to supply the Senate with more information as to the means which the Government intends to adopt in order to raise the £200,000,000 referred to in this measure. It is true that the bill authorizes the raising of the money by two methods - by loan and by the issue of treasurybills. We seem to have fallen into the habit of assuming that those two methods of raising money for war purposes are properly described as raising money by way of loan, but I suggest that the two processes are so entirely different, and their effects also so different, that it is quite misleading to say that the issue of treasury-bills is the same as raising money by way of loan. When money is obtained from the public by means of such a loan as the £125,000,000 loam which is now being floated, we reduce the purchasing power of the people. It means that we take the money from the pockets of the people and transfer it to the coffers of the Government. That, I suggest, is properly described as raising money by way of loan. But if the other method be resorted to, if, for example, £100,000,000 of the £200,000,000 is to be raised by means of treasury-bills-

Senator McBride:

– That is probably an under-estimate.

Senator SPICER:

– It is probably not any more accurate than the estimate made by the Treasurer last year. However, let us suppose that £100,000,000 of the £200,000,000 will be raised by means of treasury-bills. In that event, not one penny will be taken from the pockets of the public. Indeed, that system will put money into the people’s pockets, for, instead of reducing the purchasing power of the people, their ability to buy goods will be increased. Having regard to the great difference which exists between those two methods of financing the war, the Senate is entitled to know what proportion of the £200,000,000 the Government proposes to raise by legitimate methods - methods which will reduce the purchasing power in the hands of the people - and what proportion of it will bo raised by means of treasury-bills. 1 know that there are members on the Government side of the chamber who have a great regard for that method of raising money, and I believe that some members of the Government think that government expenditure can be met year after year by adopting that easy method. I therefore draw attention to the report of the Commonwealth Bank Board for the year ended the 30th June last. In referring to this matter the board said -

Under the war-time banking control regulations the Commonwealth Bank has been given control over the resources and financial policy of the trading banks and has thus prevented any consequent expansion of credit based on the increase in treasury-bills discounted for war purposes. Nevertheless, the increase is reflected in increased purchasing power in the hands of the public. Since treasury-bills have this effect, their use, in view of the considerable accumulations of purchasing power which are already at the disposal of the public, should he reduced to a minimum. The future issue of treasury-bills could be reduced by an increase in some forms of taxation, by increases in the volume of loan subscriptions, as well as by the reduction of government expenditure through exercising the closest possible supervision over costs and eliminating all unnecessary items of expenditure.

Honorable senators will notice that the members of the Commonwealth Bank Board draw a sharp distinction between moneys raised by loan subscriptions and moneys raised by the easy method of issuing treasurybills. This matter is relevant to another subject which was referred to earlier this afternoon by the Minister who introduced this bill. The Minister is concerned at the prevalence of black marketing, but what, after all, is the greatest contributing factor to black marketing? Is it not the financial policy which is being pursued by the Government? That policy places in the hands of the people more purchasing power than there are goods to be bought. The real evil which the Minister has to face in connexion with black marketing is the policy of this Government, which makes black marketing possible.

Senator Keane:

– There are criminallyminded people in all sections of the community.

Senator SPICER:

– Every transaction requires both a buyer and a seller. The buyer is tempted to engage in blackmarketing transactions because the policy of the Government, has left in his pocket more money than should have been left there.

Senator Courtice:

– In what way does the policy of the present Government differ from that of previous governments?

Senator SPICER:

– When I discuss the budget I shall refer to that matter. The Government now in office is responsible for the financial policy of the country.

Senator FRASER:
WESTERN AUSTRALIA · ALP

– It accepts that responsibility.

Senator SPICER:

– I have not seen much evidence of a sense of responsibility in connexion with this matter.

Senator FRASER:
WESTERN AUSTRALIA · ALP

– During the first two years of the war, when non-Labour governments were in office, no action was taken to control the trading banks.

Senator SPICER:

– The Labour Government now has a big majority in the House of Representatives and it will soon have a majority in this chamber. I therefore hope that it will act with a real sense of responsibility in regard to the matters to which I have referred. The trouble is that the budget speech, as do most speeches made by Ministers, recognizes the facts which I have been placing before the Senate. Ministers do not dispute the principles underlying these matters. The Treasurer (Mr. Chifley) in his budget speech pronounces the same principles and points out the same danger which I am pointing out. The trouble is that the Government has not displayed a very great desire to give effect to the only policy which can obviate those dangers. I am concerned with this problem, because there is no greater danger to the social and economic welfare of this community after the war than that we should be faced with a thoroughly unstable currency.

Senator Keane:

– Could previous governments have financed the war without issuing treasury-bills?

Senator SPICER:

– I do not suggest that at all; and it is true that other countries have not been able to manage without issuing treasury-bills. However, despite what has been said in the budget speech on that subject, the performances of the Curtin Government in that respect do not compare at all favorably with what has been done in other countries.

Senator FRASER:
WESTERN AUSTRALIA · ALP

– What action was taken by the Government which the honorable senator supported during the first two years of the war?

Senator SPICER:

– During those years we did extraordinarily well. Speaking from memory, when this Government assumed office, the value of treasury-bills issued was approximately £2,000,000, whilst it is now approximately £270,000,000. I admit, of course, that in that period our expenditure has increased considerably. However, some of that expenditure would have <been avoided by a more careful government. - All of it is not represented by a real increase of the war effort. The readiness with which this Government has acquiesced in increasing wages all round is disturbing.

Senator Courtice:

– The increases of wages were granted by the arbitration courts.

Senator SPICER:

– This Government is not prepared to leave that matter to the arbitration courts. I would be very interested to learn from the Minister how much of that additional expenditure has been incurred by the creation of the Women’s Employment Board, and the fact that that body proceeded to fix women’s wages at 90 per cent, of the rates for males, and to make many of those rates retrospective. How much of that additional expenditure has been brought about by reason of that fact?

Senator Nash:

– We shall not growl about that.

Senator SPICER:

– I shall not growl about it provided that the Government, which is proposing to distribute largess on that basis, is prepared, at the same time, to accept the responsibility of raising the money necessary to meet that expenditure.

Senator Nash:

– What does the honorable senator describe as largess?

Senator SPICER:

– It would be easy to point to numerous illustrations of extravagant expenditure on the part of the Curtin Government. One of the great dangers that arise from this form of finance is that it destroys the sense of responsibility which exists if the Government is bound to raise the money that it proposes to expend. It is so easy for a government to say that it can get the Commonwealth Bank to discount more treasury-bills to the tune of millions. That process sounds so easy; and, that being so, it does not place upon government expenditure the brake which operates when a government is called upon to raise its revenue directly from the public. We must remember that ultimately the people have to provide the money which is expended by a government. I am not suggesting for a moment, and I have never said, that all the money required by the Government for war purposes should be raised by means of ordinary loans, or taxes. I concede the fact that something can be said for spreading the burden over the community to a certain degree in the form of a depreciation of the currency, because that method, to some degree, serves as a means of taxing accumulated capital.

Senator McBride:

– But it reacts mainly as a tax upon lower incomes.

Senator SPICER:

– That is so. I shall always insist that the basic principle of sound finance is that the great bulk of any money required for war purposes - and an increasing percentage of it, having regard to -the conduct of this Government during the last two years - must be raised by taxation supplemented by loan3 in the true sense, that is, loans which are raised directly from the public, and not merely represented by the discounting of treasury-bills.

Senator KEANE:
Minister for Trade and ‘Customs · Victoria · ALP

– in reply - The debate generally has not been in opposition to the measure. Senator Leckie mentioned an amount of £183,000,000 which, he said, must still be raised. I am unable to say what portion of that sum is actually in hand, but portion of it would be represented by advance loan subscriptions, war savings certificates and treasury-bills. Honorable senators opposite refer to treasury-bills as though they were something uncanny. It may be information to them to know that the British Parliament adopted the procedure of issuing treasury-bills in 1877, and that the Commonwealth Parliament followed that example in- 1914. The Leader of the Opposition (Senator McLeay) asked me to say what I considered to be a safe amount to be raised either by the issue of treasury-bills or by the use of bank credit. In view of the constantly varying conditions to-day, it is impossible to say what would be a safe margin. However, that matter is constantly under consideration by the Government, which, with honorable senators, realizes the danger of loose talk to the effect that millions can be created out of nothing. The rate of interest on treasury-bills is 1-J per cent. Senator Spicer quoted a statement made recently by the Commonwealth Bank Board that the Government could not go on borrowing money after the war, and that it could not finance its reconstruction programme on the same scale that it is now financing the war effort. That is a matter for decision by the government of the day. I suggest that, if we can provide £570,000,000 in the ensuing year for war purposes - and that sum must he provided - and, assuming that the war ends within twelve months, we shall be able to find an equal amount for the rehabilitation of the members of our armed forces and employees now engaged in war industries.

Sitting suspended from 6 to 8 p.m.

Senator KEANE:

– I refer Senator Leckie to the following passage in the Treasurer’s budget, speech: -

Total contributions to public loans, &c, last year amounted to £215,000,000. Tor this year the gap between expenditure and revenue is £403,000,000. With the current level and volume of incomes, I see no reason why we cannot expect the public of Australia to subscribe to our public loans an aggregate of £300,000,000. That would enable us to reduce very considerably our dependence on treasury-bills. “Whatever government was in power would, I suggest, have to resort to the same methods of finance as have been availed of by this Government. The Leader of the Opposition (Senator McLeay) asked what was the interest rate on treasury-bills. It is 1-J per cent. He also asked what the Government’s financial policy would be after the war, and whether it would still go on as at present. “When the war is over public works of some kind must be commenced by whichever government is in power, and I see no reason why money cannot be raised for or expended on work such as a housing scheme, which might cost £100,000,000, on water conservation, or the opening up of new areas all of which are reproductive works. “Whichever government is in power when the war is over, the people of Australia will not tolerate a repetition of what occurred in the years 1929-31.

Senator McBride:

– They had a Labour government then.

Senator KEANE:

– That Government took over a legacy from the previous government, whose credit in London had gone, whose last loans had failed, and which had closed down every public work by the time the Scullin Government came into office, by that means putting 400,000 people out of work. The honorable sena tor, if he is wise, will not revive that story, because it is very malodorous. On that occasion the Senate was asked to pass a bill for a fiduciary issue of £18,000,000. The markets for all primary products had slumped, and the Senate, in a very cowardly fashion, referred the bill to a committee, saying that there was no money for the 400,000 starving workers, thus putting them on the dole. At that time I was the member for Bendigo in the House of Representatives. Many men in my electorate were out looking for gold on 6s. a week, not 6s. a day. This generation, which has made such a wonderful war effort, will expect spending to continue after the war. I believe it can be done successfully, without undue inflation, on works which will be necessary to give the people employment.

Senator Spicer:

– How will the Government raise the money ?

Senator KEANE:

– In the same way as at present. Does the honorable senator suggest that when the war is over, if this Armageddon of unemployment which might overwhelm Australia comes, any government will stand by and say that it cannot raise the money? Such a suggestion is too stupid for words. I have said in this chamber on three or four occasions, when dealing with financial bills, that there are three methods of finance - taxation, loans and treasurybills - the last mentioned should really be included in loans. They are an acknowledged, accepted and quite sound form of finance, initiated in the British Parliament in 1877 and in the Commonwealth Parliament in 1914. We will do our best in initiating loans - and in this I think we shall have the support of every member of the Opposition and the whole of the people of Australia - to see that the Commonwealth remains solvent, and that the people supply the money to the Government, so that an effective war effort may be completed and some preparation made for the post-war period.

At the end of last month Senator Collett asked if a copy of the report of the Commonwealth Grants Commission could be made available. I understand that the printing of the report was very drastically curtailed, but if any honorable senator wishes to see a copy he can obtain one in the library.

The bill now before the Senate is an authorization to raise £200,000,000, which will be sufficient to carry on for some months. The bill is purely a machinery one, and I commend it to the Senate.

Question resolved in the affirmative.

Bill read a second time.

In committee:

Clauses 1 and 2 agreed to.

Clause 3 (Authority to borrow £200,000,000).

Senator LECKIE:
Victoria

.- Do the words “ under the provisions of any act authorizing the issue of treasurybills “ refer to an act already passed or to one that may be passed in the future? If the borrowing is not done under an act already passed, will a bill be passed to cover the amount raised by means of treasury-bills?

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- -The authorization will be under the existing Treasury Bills Act of 1914.

Senator McLEAY:
Leader of the Opposition · South Australia

– In financing the war effort, we quite appreciate that a certain amount will have to be raised by bank credit, but it is reaching figures of which we never dreamed in days gone by. The statistics before us show that at the end of June, 1943, treasury-bills raised by the Commonwealth for the war effort and for the States amounted to about £300,000,000. If we continue along those lines for another two or three years it is obvious that we may be liable for as much as £1,000,000,000 in this direction alone. Is it proposed to repay to the Commonwealth Bank at any stage the amount due on treasury-bills, or is it just to be wiped off?

Senator KEANE:
Minister for Trade and Customs · Victoria · ALP

.- The amount will be repaid just as any other loan will be. The honorable senator mentioned the amount due on treasury-bills. He will also remember that, up to the 30th June last, the expenditure on the war by the previous Government and this Government amounted to £1,107,000,000. We can safely assume that the war will last for another couple of years. We are spending at the rate of £11,000,000 a week, so that at the present rate of expenditure, that will make at least another £1,000,000,000. In answer to a recent question, Senator Aylett was told that the interest on the national debt at the. 30th June last was over £29,000,000. Honorable senators may be as inquisitorial as they like, but that will not help in solving the problem that we have to face. It will be infinitely worse after the war than it is now, because, after all, some of the money that we are spending, particularly on allied works projects will have some value after the war, but a tremendous amount is being expended on munitions, clothing for soldiers, and other commodities which will not be of much value afterwards. This problem has to be faced, and the Government must plan ahead to get over the position which confronts every one of us industrially and in every other way.

Clause agreed to.

Clauses 4 and 5 agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Bill read a third time.

page 409

PUBLIC WORKS COMMITTEE

Message received from the House of Representatives intimating that the following members had been appointed members of the Public Works Committee: - Mr. Conelan, Mr. Harrison, Mr. James, Mr. Mulcahy, Mr. Rankin and Sir Frederick Stewart.

page 409

QUESTION

ESTIMATES AND BUDGET PAPERS 1943-44

Debate resumed from the 29 th September (vide page 125), on motion by Senator Keane -

That the following papers be printed: -

Estimates of Receipts and Expenditure, and Estimates of Expenditure for Additions, New Works, Buildings, &c., for the year ending the 30th June, 1944.

The Budget 1943-44 - Papers presented by the Honorable J. B. Chifley, M.P., on the occasion of the budget of 1943-44.

Senator McLEAY:
Leader of the Opposition · South Australia

– I appreciate the frankness of the reply just given by the Leader of the Senate (Senator Keane) to the questions raised by myself and Senator Leckie during the passage of the Loan Bill, particularly in reference- to the raising of money by treasury-bills. In considering the motion now before the Senate, members of the Opposition and supporters of the Government realize that the problems are so important and serious that they are above party politics. Members of the Government who are able to get the best advice from technical officers, and secure information from sources to which members of the Opposition do not have access, should he frank, and place before us all the facts, so that these may be placed before the people. I am convinced that, many people hold quite erroneous ideas in regard to this Government’s proposals for financing Australia’s tremendous war effort. I believe also that certain statements which one frequently hears are based mainly on wishful thinking and are leading many people to false conclusions. The most striking feature of the budget is the colossal expenditure which it envisages, namely, £715,000,000, compared with approximately £100,000,000 before the war. Of that total, the war will absorb £570,000,000, and civil requirements £145,000,000. When the Menzies Government was in office, the method to finance the war by that Administration was clearly stated. We left no doubt in the minds of the people that our ‘policy was to raise the money by means of taxation, loans, and central bank credit in a balanced proportion. The Commonwealth Bank Board, and, in, fact, all other financial authorities, have impressed upon us the danger of a too extensive use of bank credit. In the current financial year the Government hopes to raise £273,000,000 by means of taxation, and £403,000,000 by means of loans and central bank credit. I am sure that every body sympathises with the Government in the tremendous task of so organizing the man-power and material resources of this country that a maximum war effort will be made. Every one ‘ appreciates the magnitude of that task, but does not the Minister for Trade and Customs (Senator Keane) think that he is being unduly optimistic when he states that £403,000,000 wall be raised by means of loans and bank credit this year, especially in view of the peculiar situation which arose last year when estimated expenditure was exceeded by no less than £122,000,000. It is of the utmost importance that the Government should raise as much money as possible by way of loans. Up to the end of June, 1943, the cost of the war to Australia had reached the colossal sum of £1,107,000.000, of which taxation had contributed 32.S per cent., loans 42.S per cent., and central bank credit and treasury funds 24’.4 per cent. Of the £570,000,000 which will be spent on the war this year, the Government proposes to raise £167,000,000, or 29 per cent., by taxation, and £403,000,000, or 71 per cent., by loans and central bank credit. In the light of the warning given by the Commonwealth Bank Board, does not the Government consider that it is treading on dangerous ground? Obviously, the Government will have to do much better on the loan market than it did last year. Analysis of last year’s figures can cause only the gravest concern. The total amount raised by way of loan, namely, £187,000,000, was actually less than the sum obtained by means of bank credit.

Another interesting feature of the budget is that, taking the figure for the year ended the 30th June, 1942, and the estimated figure for the current year, we find that expenditure on social services will have increased in that two-year period from £31,000,000 to £68,000,000. Does the Minister for Trade and Customs consider that it is sound finance to increase expenditure on social services by means of borrowed money and bank credit? We are only deceiving ourselves and the people of this country unless we face the facts. It is obvious that this method of finance does not affect only one section of the community. An analysis of personal incomes in this country shows that a great number of middle-class people are being affected.

Certain statements have been made in connexion, with the income tax rates applicable to this country compared with those applying in New Zealand and Great Britain. I have heard it said, even by members of this Parliament, that the income tax rates in Australia are higher than those in New Zealand and Great Britain. For the information of honorable senators I shall quote a table which shows that although in Great Britain income tax and compulsory saving contributions imposed upon incomes of less than £1,000 are higher than they are in Australia, on incomes of more than £1,000 a year, they are considerably lower. The figures are as follows: -

I quote those figures to demonstrate the seriousness of the position and to urge upon the Government the necessity to give consideration to the imposition of higher taxes upon the low income groups. In fact, the position is so serious that consideration should be given also to the introduction of a scheme for compulsory saving. It is obvious that when the war ends, many people, including wives of returned soldiers, who have been earning good money during the war, will not wish to continue in employment. These people will be confronted with a heavy burden of taxation. Take, for instance, the case of a person in receipt of £260 a year, the tax on which is £37. It would take nearly a year’s deferred pay of a soldier to meet that liability. The way to eliminate that problem is to introduce a scheme of compulsory saving.

Senator Nash:

– Does the Leader of the Opposition favour the payment of interest on compulsory savings?

Senator McLEAY:

– Yes. I shall deal now with the latest figures supplied by the Treasury in connexion with the esti mated national income and ths estimated personal earnings of the Australian people during the last financial year. A clear analysis of the income distribution is necessary before we can arrive at an intelligent financial policy and strike a proper balance between taxation, loans, and bank credit. I should like to correct a widely held impression that the Opposition in this Parliament represents only the wealthy section of the country and big business interests. Any one who holds that view obviously has not taken the trouble to examine the distribution of income. At a later stage I shall quote some figures which show clearly that the excessive use of bank credit has a. marked effect upon that very large section of the community known as the middleclass people. The total of personal incomes is the aggregate of the incomes of individuals and is obtained from net national income. It is produced by deducting the net income payable overseas, the undistributed company profits and direct taxes on companies, the net government income other than taxation, the investment income of charities and associations and the annual value of owneroccupied houses, and then by adding government loans interest payable in Australia. In 1938-39 the estimated personal incomes in this country amounted to £670,000,000, whilst foi- 1942-43 they totalled £1,060,000,000, an increase of roughly 50 per cent.

Senator FRASER:
WESTERN AUSTRALIA · ALP

– What is the figure for 1939-40?

Senator McLEAY:

– The estimate is £750,000,000. The estimate for 1940-41 is £810,000,000, and for 1943-42 £930,000,000. Those figures certainly represent the estimated income received, but the number of persons employed has increased during the war by almost 500,000. Owing to the extensive use of bank credit and consequent inflated values and increased price levels, the increased income is not worth so much as might appear to be the case. It i3 important to consider the most equitable way to distribute the burden of taxation among the people. The following table shows the tax payable in 1943-44 in respect of the income year 1942-43, as distributed among the various groups of income earners: -

There are very few countries where the personal exertion incomes are more evenly distributed than in Australia. The cheap criticism levelled against the wealthy classes is based on exaggeration, since only 1£ per cent, of the total income earners last year received incomes of over £1,000 per annum. When the Labour Government brought down its first budget, it, was suggested by the Opposition that, in order to enable Australia to stand up to it? financial obligations, the Labour party would be compelled to increase income taxation on persons in the lower income ranges, and it has done so. The amount of tax to be collected this year from persons receiving less than £400 a year will be no less than £50,000,000, or an increase over last year’s figures of £26,500,000. In the salary range between £401 and £1,000 a year the tax payable will amount to £39,000,000, or an increase over last year of £18,500,000. The aggregate of personal incomes in the group in receipt of over £1,000 per annum is £105,000,000, and the amount to be collected in tax is estimated at £52,000,000.

Senator Keane:

– It is worth it.

Senator McLEAY:
SOUTH AUSTRALIA · UAP; LP from 1944

– That may be, but, until the Labour party obtained control of the treasury, members of the present Government criticized those who had made a success of life. The fact that 1£ per cent, of income earners will contribute £52,000,000 in tax should convince us that the burden of taxation has fallen very heavily on persons in receipt of the higher incomes.

Senator Collings:

– That is where the burden should fall.

Senator McLEAY:
SOUTH AUSTRALIA · UAP; LP from 1944

– I have no objection to heavy taxes upon the wealthy, but a vicious tax on a small section of the people will prove detrimental. This country badly needs increased population, and people with capital should be attracted to it. Many people are prepared to come here with capital, and help in the development of the country, but excessive taxation and threats of the nationalization of industry frighten away those who should be encouraged to settle here. Something further could be done in the direction of compulsory savings and the taxation of persons without dependants, so that there will be less need to rely on the use of bank credit.

It is interesting to know that last year the savings bank deposits increased by £SS,000,000. In 1941 the deposits amounted to £255,000,000, in 1942 £282,000,000, and in 1943 £370,000,000. Those figures indicate that the Government could have raised more money by means of public loans and relied less on the use of bank credit than it has during the last year. Even now it is not too late to remedy that position. The Government has indicated in the budget that it desires to reduce the spending power of the people in order to prevent the rapid increase of prices. That would be a more effective method than resorting to bank credit.

Senator FRASER:
WESTERN AUSTRALIA · ALP

– Some of the honorable senator’s colleagues in South Australia did not give much assistance in connexion with the last loan.

Senator McLEAY:
SOUTH AUSTRALIA · UAP; LP from 1944

– I have already denied the report to which the Minister refers. Members of the Opposition will do all that they can to assist the Government in obtaining the maximum contributions to Government loans. To do other than that would be to do a disservice to this country. It is a reflection on the people of Australia that of the 3,370,000 income earners only about 10 per cent, contributed to the last loan. In the case of the loan in which the number of contributors constituted a record, only 15 per cent, of the income earners of Australia subscribed. Wars cannot be financed along those lines. It is unfair to leave the burden to the volunteers. It should be possible to raise this year, by means of public borrowing, considerably over £300,000,000.

As to the dangers of inflation and the excessive use of bank credit, I draw attention to a statement made by the Treasurer in bis budget speech. Judging by his public utterances, he does not hold the view that there is no limit to the use of bank credit. He realizes that the excessive use of that method of finance is very dangerous.

Senator Collings:

– That is not new.

Senator McLEAY:

– ‘One would think that it is when we realize to what degree some members of the Government would be prepared to make use of central bank credit. The Treasurer stated in his speech -

The danger of treasury-hill finance is that it builds up new purchasing power in the hands of the public at the very time when the Government is requiring for war purposes an increasing proportion of the production resources normally devoted to civilian use. The Government, however, has established direct controls to ensure that the excess spending power remaining in the hands of the public is prevented from causing a continuous rise of prices . . .

He realizes the danger, and sees the need for controls. The Government will admit that prices have risen, despite the good work which had been dene by the Prices Commissioner. That officer is at his wits’ end to know how to keep prices down. The controls are not sufficiently complete, because the Government has not done sufficient to assist the Prices Commissioner. Since the outbreak of war, the cost of living has risen by 25 per cent, in those items set out in the “ C “ series; outside that series, prices have, in some instances, risen 50 per cent., and even 100 per cent. I do not say that that is due entirely to excess purchasing power in the hands of the people; there have been other reasons. By not taxing the people sufficiently, the Government has allowed price control to get almost out of hand. The position is already serious, but the most dangerous period will be after the war ends. It will be necessary to continue the existing controls for some years after the war. The greater the use of credit during the war the more difficult will be the task in the post-war period.

Senator Keane:

– The Commonwealth needs greater powers.

Senator McLEAY:

– I do not think so. There are already sufficient powers to tax and to borrow, but the Government must put political considerations aside and be prepared to sink its pride and accept a policy to which it has expressed opposition; I refer to the policy of post-war credits and compulsory loans. The increased cost of living affects the majority of the people. Take, for instance, the case of a man with a fixed income of £500 a year. The increase of 25 per cent, in the cost of living means that his £500 does not purchase as much as could be bought for £400 at the outbreak of war. The new rates of tax came into operation on the 1st July. Under them, a person with an income of £500 will have to pay taxes amounting to £137. All sections of the people will be affected by the higher cost of living. Let us consider the position of those thrifty people who have invested their savings in life assurance policies. Official figures show that 3,895, 22S policy-holders have policies amounting to £560,000,000. The yearly premiums amount to £21,500,000. Actuaries have said that there is nothing which so menaces life assurance policyholders as inflation. I am discussing this matter, not on a party political basis, but in order to emphasize the disastrous effect of rising prices. Another section of the community which is hit by the increased cost of living consists of persons with deposits in savings banks. At the present time their deposits amount to £370,000,000. Primary producers also, particularly those who cannot pass on their costs, will be hit. One of the greatest problems of the post-war period will be that of reducing costs so that our primary industries will be able to export, and also that our secondary industries may develop. Returned soldiers will be among those adversely affected by inflation, because their deferred pay of 2s. a day is already worth only ls. 6d. a day. These facts should be told to the people. I believe that the Government recognizes the needs to check waste. I shall not give details of wasteful expenditure, because every honorable senator knows something of the waste that is occurring. That waste is not peculiar to the present Government; there are two kinds of government - expensive and very expensive. Anything that the Government can do to check wasteful expenditure will have the support of honorable senators generally. I recognize that it is impossible for Ministers to cheek every item of expenditure; the departments under their control are so big that no Minister can control the details. For that reason, I believe that the proposed committee to control expenditure can do useful work. I sympathize with the Government in the task that confronts it, and I urge it to take its courage in its hands and to tell the people the truth. Should it do so, it can rely -on the support of the Opposition.

Senator COLLETT:
Western Australia

– I have not previously spoken during these sittings, and so I take advantage of this opportunity to congratulate you, Mr. President, on having been elected to the high office of President of the Senate. During the ten and a half years that I have sat with you in this chamber, I have observed in you those qualities which make for the just and successful performance of the duties of the office which you hold. Authority will repose in you easily. There is one aspect which I would like to mention: in (he exercise of the authority vested in you, and in the due observance of the forms of the Senate, you have not, so far, seen fit to wear the garb which tradition associates with the chair that you occupy. Most honorable senators will agree that something is due to the institution of Parliament as well as to honorable senators themselves. If I may say so without being impertinent, I hope that your natural dignity will allow you to conform with the custom previously observed in the Senate. It is on record that when this matter was discussed in 1921, the then President agreed to revert to the custom followed by his predecessors. I also congratulate Senator Courtice upon his election as Chairman of Committees, and your deputy. In him you will have a worthy supporter; he will be your brother Jonathan. We have been told, in language which I am sure is familiar to you, that “ David behaved himself wisely in all his ways “, which led Jonathan to say, “Whatsoever thy soul desireth, I will even do it for thee”; and again, “ What I see, that will I tell thee “. I prophesy a very happy association between yourself, Mr. President, and the Chairman of Committees. I also compliment the Leader of the Senate (Senator Keane) on having been selected for that post. His knowledge, his courtesy, his good nature, as well as his tact, will, I am confident, ‘ facilitate the transaction of business and be to the advantage of the country. The Opposition also expresses its sense of obligation to his predecessor, whose eloquence and capacity for hard work have been the envy of all of us. He leaves the high office with our respect and best wishes. Although Senators Nash and Tangney are not in the chamber at the moment, I join with other honorable senators in welcoming them as representatives of Western Australia. Among those who know Senator Nash best he has established a reputation for thoroughness and fair dealing. I had not met him until we met in this chamber, but I had listened to his broadcasts. Among other things, I agreed with his thorough condemnation of communism. I am glad that there is a prospect of our being able to work harmoniously together in the interests of those .who sent us here. I do not differ from his views as to the use and abuse of radio broadcasting which he expressed in his first speech in this chamber, and I am confident that the great majority of the people would appreciate the elimination of undesirable broadcasts. In this connexion, I was grieved to hear from Labour sources in Perth a repetition of the statement concerning “ the Brisbane line “ which previously had been denied by the Prime Minister (Mr. Curtin).

Senator Tangney comes, with the vigour and freshness of youth, to an assembly where, it has been said, “ old men drowse in their beards”. She has the gift of speech; there is no reason to suppose that she is wanting in logic. All honorable senators appreciated her initial address to the Senate. There is a place for her here. We have need to enlarge our knowledge of the social structure, and I am sure, to cite Kipling, we shall learn about women from her. In any event, it is evident that she evaluates the true functions of the Senate and that, whilst we all desire to be big Australians, it is the duty of this chamber to protect the interests and assist in the development of minorities that are backward. I would say that Western Australians are not, a* a whole, yet prepared to accept a system of government based on the current political philosophy of New South Wm les. 1 was interested to hear the honorable senator repeat something heard on more than one occasion during recent months. It, would appear that there has been, by means of an insidious propaganda, an at tempt to turn aside the Government’s announced intention of securing a preference in employment to ex-service men. Speaking of the men and women now serving in the forces, Senator Tangney said -

I hope that under this new order there will be justice for all and not preference for any one section.

So do I; but I have not heard it said that no necessity exists for a system of preference to unionists. Therefore, the issue remains, and must be met.

The budget speech is a wide survey of the physical and economic effort offered and required of Australia in order to win the war. It is drawn up in terms highly creditable to the Treasurer (Mr. Chifley). They reflect his vision and confidence in the courage and determination of the people to meet a continuance of the heavy demands already made upon their strength and resources. In the postwar period there will be similar exacting demands spread over a period of years until we regain our normal poise. The money problem is great and here I do not profess to be able to offer any demonstrably sound solution. It does, however, appear to me that a man-made system may, by man, be so improved as to meet his later and greater needs. The mysteries of the Atlantic Charter, “New Order “ and “ Four Freedoms “, have yetto be solved - not by day-dreamers, but by practical men, with a knowledge of the humanities and a freedom of spirit rendering a real service to the people at large. Again I quote the Treasurer -

The Australia wo look forward to is very much the Australia wc have always known. There were many good things in pre-war Australia that wc don’t want to lose. Upon these we propose to build. There were some things which were bad. Those things wc hope to change.

The Director of Post-war Reconstruction, Dr. Coombs, has put this in another way. He said that the post-war recon struction period was divisible by two; namely, first, to swing the nation’s economic system back to peace-time conditions ; and, secondly, give reality to aspirations and ideals for which the war was being fought. I have quoted those statements because to me they are eminently sane and offer a platform upon which we should all be able to stand. Those who live with the people have no doubt that of late we have become more conscious of our social obligation.? and that in Australia, as in other English-speaking countries, conditions of life have considerably improved. Apart from the common urge of human sympathies, this change is largely due to liberal thinkers rather than to class-ridden persons who seek merely to retain abuses or replace one imperfection by another.

Senator Tangney said that we do not need pensions hut, instead, a share in the national dividend. Here I agree, but there must be a common contribution before there is a common dividend. In this regard a great step forward was made in 193S with the National Health and Pensions Insurance Acts, but, owing to opposition from non-government parties, the legislation was never given force. Viewing our present costly and varied methods of securing social amelioration, there is little doubt that we are capable of promoting a better and more widely applicable scheme, more easily administered and ensuring results more in keeping with the ratio of expenditure. Here the new Minister for Health and Social Services (Senator Fraser) has his opportunity. He has my sympathy inregard to the complexity of the problems that confront him, but I know that he will apply to the task of their solution the same earnestness and hard work that has characterized his membership of this chamber. This is not a poor country. Contrary to Senator Tangney’s statement it never was “fit for paupers to die in “. Living standards, deficient as they may have been, were always comparable with those of other countries and when caught by a world-wide depression Australia, under the Lyons administration, recovered her stability more rapidly than any other land. As Senator Nash said, “ Deeds, not words “ are required, and a government that is nothing but “ sound “ will make little headway.

The recent elections, which were held during the course of the greatest war in history, have created a situation indicative of the arrival of a new political era. It would be difficult to analyse the motives of the people in voting as they did. Some factors stand out clearly and one of these is that issues viewed by all parties as being important have been completely disregarded in making the choice’ of governors for the next three years. If we give him the role of an elector, we may acquire enlightenment from the Persian poet-philosopher who, first, to record his bewilderment, wrote - “ Myself….. did eagerly frequent

Doctor and Saint, and heard great Argument

About it and about: but evermore

Came out by thesame door as in I went.”

Then his resignation to fate - “ The moving finger writes; and, having writ,

Moves on: nor all the Piety nor Wit

Shall lure it back to cancel halfa Line.

Nor all thy Tears wash out a Word of it.”

And, finally, his consolation - “ Ah, take the Cash, and let the Credit go, Nor heed the rumble of a distant Drum!”

If honorable senators ponder over that last line it must stir uneasiness in their minds in respect of past events.

The accession to power of this Government must, no doubt, bring up again the matter of alterations of the Constitution. I ask that the approach be made with care and then only after close study so as to discover what are the real issues. If we admit that some revision is demanded by the circumstances of the times, then Dr. Evatt’s recently rejected proposals have done to the cause more harm than good. It is useless for him to lay down terms - for, remember, the States possess the powers. They originally agreed to federate for certain specific purposes and not to forfeit their autonomy. The framers of the Constitution Act, too, were big Australians.

Shortly before the elections the Prime Minister let it be known that the construction of a standard gauge line between Port Pirie and Broken Hill had a favorable priority in respect of defence and public works to be carried out. A fortnight ago the press reported that the project was likely to be deferred indefinitely. Honorable senators, who know the geography of the Commonwealth, will appreciate what this gap in the communications means to the people of Western Australia and also how much, during the past four years, its existence has prejudiced the plans for the successful defence and supplies of that State. The problems of transportation are immense as are also the inconveniences suffered by the people I represent. Apart from an assured connexion with the main sources of supply, which the building of this line would give, there is a great saving to be brought about in the time needed to travel between Perth and Canberra - a reduction by nearly half. If we must have unification, let it be the real thing without regard to the petty urban interests of Adelaide and Melbourne. I trust that the Prime Minister will not overlook the need of the people that only recently tendered him so handsome a testimonial.

I” shall now deal briefly with the production of foodstuffs. Evidently there is reason for the growing concern as to the future supplies for our own consumption quite apart from having reserves available for export, now and after the war, to countries in need. Is the Government’s proposal to re-group man-power a step towards meeting that situation? I know that the lack of means of transport is an obstacle, but it has appeared to me that we should be establishing abroad depots of food to he released when the starving countries are freed. I cannot escape the impression that in the restriction of production, and with confused ideas as to the need for rationing, we are running grave risks to ourselves as well as to our Allies.

The change in the war position, as exemplified by the operations of the last twelve months, greatly heartens us. The Prime Minister has referred to this in fitting terms, and paid that tribute due to our Allies, for assistance rendered. We endorse his expressions of gratitude. Every one will appreciate the fact that this country, as a whole, has been spared the horrors of a direct physical contact with the operations of the enemy. This salvation we can attribute, in the first instance, to our folk in the British Isles and sister dominions. In official quarters there seems to be a reluctance to express this reality. I have endeavoured (o arrive at some conception of the origin and plan of the German grand strategy for world conquest. My information .suggests that the basic idea was born of the great general staff, who farmed it out to a body of learned and scientific men for elaboration. Some years elapsed before it was completed. Politically, it comprehended an active alliance with Italy and Japan. ‘Geographically these two countries were favorably situated. Both had strong navies in addition to huge armies; Germany had not. If one looks at a map of the world on Mercator’s projection, the implications of the German plan, as known, are obvious and the dangers to Australia unmistakable and grave. But we have been saved. How? On the west by the opposition of the British armies in Belgium and France culminating in the epic of Dunkirk. By the Royal Air Force in the Battle of Britain and on all other fronts; and by the Royal Navy in the Battle of the Atlantic and in the Mediterranean. On the sea and in the air Australia was proudly represented by men and craft. On the African, southern European, Syrian and Persian fronts, the wonderful initial planning of Field-Marshal Viscount Wavell, with few nien and inadequate materials, led to the delaying actions in North Africa, Greece and Crete and the ultimate smashing victories in Abyssinia, Libya, Syria, and so on to the defeat of Italy. In these operations were three Australian services and forces from India, .South Africa, New Zealand and Canada. That is the real British Empire effort.

Then in the regions to our north, and in the Pacific where our Allies the American and Netherlands forces have so successfully operated on our flank in the Coral and Bismarck Seas and at Guadalcanal, our own troops have excelled themselves under unparalleled conditions in the drive initiated at Port Moresby and which still has momentum.

The German and Japanese nations are not yet conquered, but their plans have been defeated and Australia has thereby been saved from serious attack. Surely, honorable senators will, when they review the facts, appreciate fully a complete justification of the action of a former government in sending our forces abroad during the early part of the war. Undoubtedly, that action was the right one to take.

I would ask: Are we sure that due credit and consideration has been extended to our volunteers for all that they have done for us? They have borne the brunt of four years of war and suffered heavy casualties. We are now told that they are available to go on to the Philippines. I trust that they will bc adequately supported. Where they have been engaged, the Militia land forces have been comparable with the Australian Imperial Force. I wish that their story had been told in full. Recently, Senator Courtice made the astonishing suggestion that there was political prejudice against the Militia. How could there be? As a force it has never been adequately tried, or given the opportunity to prove itself. There are many units, performing vital roles in the offensive-defensive plan for the protection of the Commonwealth, who are bored almost to distraction because they cannot gain their one desire, that is, to join in the fight. I am, personally, jealous of the reputation of the Militia because for many years I served with it and have the honour still of being able to read my name at the head of one of the regimental lists. If our mobilization plans and “ order of battle “ are sound, then there is a fitting task for every man able to serve.

Several days ago I asked a question as to the disposal and duties of senior officers of the Army. By the courtesy of the Minister I have received the information and am grateful. But I want to say that I have a feeling that all is not well in certain quarters or that the right man is always in the right place. Personal feelings will obtrude themselves and unless the Minister for the Army is particularly discerning he may miss much. In General Sir Thomas Blarney we have a very distinguished officer upon whom it would bc presumptuous for me to comment. Then we have Lieutenant-General Sir John Lavarack, a former Chief of the General Staff and the conductor of a successful campaign in Syria ; Lieutenant-General Sir Iven Mackay, the intrepid leader of the 6th Division in

Libya and elsewhere: Lieutenant-General Sir Leslie Morshead, who commanded at Tobruk and El Alamein ; and LieutenantGeneral Sir Edmund Herring, who distinguished himself in the Middle East and is even now rendering additional great service in New Guinea.

We do not often see the names of some of these men in the press, but we have every reason to esteem our generals as well as those other ranks who serve with them. There are many other senior officers and I. am sure that the public would like to feel satisfied that the best use was being made of their great talents. En passing, I might mention that prior to the recent election a comparatively senior officer on the reserve list announced himself as a candidate for a seat in Parliament. Within a few days he received an order to submit himself to a medical board for examination as to his fitness for further service. I do not know the result of the examination but the incident was. significant and I would be easier in my mind if I were satisfied that no sinister motive lay behind the order.

It needs no special powers of observation to realize that there is need in the Army for economy both in man-power and material. I speak mainly of the lines of communication, because I have no knowledge of the present front line, but there seems to be an excess of auxiliaries and of persons in uniform who perform no proper army function. Besides, there seems to be little justification for the maintenance of two secretariats: that of the Department of the Army and again at the head-quarters of the CommanderinChief of the Land Forces. Any one who lias been a Minister knows what a secretariat involves. To remove causes for complaint, and in view. of the fact that qualified senior officers seem to be available for the purpose, I suggest the appointment of an inspector-general of services in both the Adjutant-General’s and Quartermaster-‘General’s Branches. These officers would report direct to the Commander-in-Chief. Such a course was followed in Great Britain during the last war and with the fullest justification.

I have mentioned a seeming reluctance on our part to acknowledge that which we owe to ourselves and our own race. Admittedly, the supreme direction of the war lies in the hands of Mr. Roosevelt and Mr. Churchill, with no mean contribution from Marshal Stalin. If we judge these three men by their achievements then, indeed, we set them on a high plane; but we Britishers in Australia seem to stop short of paying that tribute due to the greatest of them all - Winston Churchill, soldier, administrator and statesman, and, in his spare time, writer, painter and bricklayer, once said to he the “ mad dog of Europe “ - whose courage and genius alone saved the Empire from extinction and ourselves from great ignominy. If we emerge victorious from this conflict, as I feel sure we shall, then Winston Churchill’s name will go down in history as the most renowned Englishman of all time.

I would repeat an old story told of General Ulysses ‘Grant. A deputation told President Lincoln, who was rather a Puritan in mind, that General Grant was drunk during the Battle of Shiloh. Abraham Lincoln, who, like some of our leaders, was worried by a failure to secure desired results, inquired of the deputation the brand of whisky favoured by General Grant, so that he might make it available to other generals.

My only comment on that is : if more of Winston Churchill’s spirit were diffused amongst those who essay to he our leaders, then Australia would benefit in countless ways.

Senator ARMSTRONG:
New South Wales

– The general elections in this country are over. Having been overseas with other- members of the Australian delegation to the Empire Parliamentary Association, I did not know until we were within three or four days of reaching Australian shores whether the elections would actually take place. We had heard the news of the crisis whilst we were in England, and had been told to return home as quickly as possible; but we had received no definite information about the elections. So, honorable senators can imagine our feverish feelings as we fiddled with the dials of the radio on board ship in an endeavour to hear from Australia just what was going on. One night while we were still about 1,000 miles from the Australian coast we picked up an Australian broadcasting station, and heard a would-be Country party senator talking about the food bungling that had taken place in this country. “We thought after hearing his talk that things must be very bad indeed ; but when I reached home I was surprised indeed to sit down to one of the finest meals I had eaten since leaving this country. I asked whether the meal had been put on specially in honour of my return, or whether it was an ordinarySunday dinner. To my intense relief I was informed that it was an ordinary Sunday dinner. Whilst in London as the guests of the Empire Parliamentary Association, we stayed at Grosvenor House, which is regarded as one of the best hotels in. that city. During the first three days of our stay the food served to us was of a very low standard indeed. It was not a matter of saying what one would have for breakfast, but rather of merely ordering breakfast and taking whatever was served. After t vo or three mornings we found that we were nearly as well off without breakfast at all. It was quite impossible to obtain any of the foods that we arc used to in this country. All the food was of a synthetic nature’. For instance, sausages contained about 15 per cent, meat and the remainder consisted of potatoes, bread and flour. Scrambled eggs were, of course, made from egg powder but even then they had other ingredients added to build them up. In our first three days at this wonderful hotel, I did not see what I should call real meat. One would order a dish described on a menu by some rather intriguing name and then find that it consisted of a fish ball with very little fish in it, or a meat ball with no meat in it at all. In fact, the entire British menu appears to me to be built on a foundation of bread and potatoes. I was worried indeed. I thought that if that were the best we could obtain at Grosvenor House, where an extremely high tariff was charged, the condition of the people of England generally must be distressing in the extreme under the exigencies of rationing. At this stage I should like to pay a great tribute to the British Minister for Food, Lord Woolton, who has done an extraordinarily good job. A few days after our arrival in Great Britain we were taken on a tour which included a vir.it to Bethnal Green, one of the poorest sections of London. There in a British restaurant I saw the first real roast beef that I had seen since my arrival in Great Britain. It is true that it was so thin that it appeared to have been cut with a razor, but at least it covered the plate. We also saw served in that restaurant, rice, mustard and other commodities which are in short supply even on the Australian market. The meals cost very little, the average price being about ls. 2d. Inquiries revealed that the British restaurants had been developed from the blitz feeding system which was inaugurated in London when air raids were at their heaviest three years ago. It was found that it was not necessary for a house to be destroyed or damaged to render it useless for the preparation of meals. A hit on the road-way nearby could cause a cessation of all services, including water, electricity and gas, so that hot meals could not be prepared. For that reason mobile food canteens were rushed to blitzed areas even while raids were still iii progress. When the blitz became less severe this system of feeding the people was developed by Lord Woolton. In each municipal centre, a British restaurant has been set up where the ‘ best food available is sold at the cheapest possible price. Lord Woolton took that action because he considered the British ration to be so severe that it was necessary for almost every one, particularly manual workers, to have one meal in addition to his ration of food. The provision of canteens at all industrial undertakings employing more th an 250 operatives is enforced by law. I saw one such canteen serve 3,000 meals in eight minutes. These meals include salads which, although they are not wonderful dishes judged by our standards, contain many vegetables including beetroot, carrots, parsnips, and potatoes. The cost of a salad was only 6d. At the shipyard of John Brown and Company, at lunch time, I talked with an old man who informed me that he had been working on the Clydeside for 35 years. He said that but for the wonderful food administration in Great Britain, he would be eating his lunch in the dirt and grime of the shipyard instead of in a canteen. By law, the management of the yard had been compelled to erect a canteen. At that yard also I saw the biggest piece of beef that I had seen during my entire stay in Great Britain. I had not seen such meat even in the high class hotels where there was plenty of money available to pay for it. It was refreshing indeed to find that the food supplies of that great nation were being handled in such a way that the best foodstuffs available were spread evenly throughout the community. Although it is claimed that the health of the British people, particularly of the poorer sections of the community, is better now than it was at the outbreak of war, the fact remains that many foods which are off the British menu and have been off for some years, are in plentiful supply in this country and are taken for granted by the Australian people. For instance, in Great Britain fruit has been off the general menu since war broke out. Occasionally small shipments are received from Portugal and Spain, but these are available only to children under a certain age. A small quantity of locally grown hot-house fruit also is available. I had the great pleasure of inspecting the Covent Garden markets with the honorable member for Newcastle (Mr. “Watkins). We were shown around by an Australian who, wishing to give us something by which we would remember our visit, bought at wholesale prices two peaches, one for each of us. The price he paid was 8s. each. The same quality peaches were being retailed in the shops at from 10s. to 12s. each. Honorable senators can well imagine how many peaches at those prices find their way into the homes of the British people. Apples were on sale at from 4s. to 5s. each, and rock-melons at from 30s. to £2 10s. each. Control is exercised over the marketing of such fruits as strawberries and cherries and in that regard we found the only evidence of black marketing in Great Britain. Apparently there is an active black market for strawberries because of the fact that a low price is fixed for them. From Covent Garden we moved to Billingsgate where the great London fish market is situated. There we found that only 20 per cent, of normal supplies were being marketed. I noticed that one particular kind of fish seemed to be most plentiful and I asked a fishmonger what it was. He informed me that it was “ dogfish “. I said that it looked to me very much like shark, and he said, “ Yes, it is “. The fish was about 3 ft. 6 in. to 4 feet long, and if it was not shark, at least it was a very close relation. Apart from the “ dogfish “, we saw some halibut, turbot and salmon which, incidentally, recalls to mind the measures that are being taken by Lord Woolton to suppress black marketing. One would have thought that the highclass hotel at which we stayed would have been above such practices, but apparently it was not because the management was found to have in its possession more salmon than it was entitled to. The buyer was fined £500 and was sent to gaol for two months and the manager also was fined and imprisoned for six weeks. It appears that blacketeers in England are being heavily penalized wherever they are found. The penalties are so severe that it pays to be honest. During my six weeks’ stay in Great Britain I saw only one egg in its natural state. All egg dishes are prepared from egg powder, and as I have said, even then they are not 100 per cent. pure. Despite all these burdens the British people are facing their work and their future with a spirit which must evoke the admiration of all who see them ; but nowhere overseas did we feel the sense of security that one feels in Australia. One gains the impression that at least there is some degree of control in this country even although it may be a little elastic. In comparison with the people of Canada and the United States of America, we in this country have a solid foundation. Actually I had little opportunity to study conditions in Canada ‘because our stay there was very short and our time was fully occupied, but we stayed in San Francisco for eight days while waiting for a boat, and we had an opportunity to see for ourselves what was going on in the United States of America. It was apparent immediately that the price of food had gone beyond all control. It was nothing unusual to have to pay 2 dollars or 2$ dollars for a steak. At the present rate of exchange that would be equivalent to 12s. or 15s. According to official figures the price of food in America has increased by 64 per cent, in the last year. The United States of America has been in the war for only 22 months, but in my opinion the people of that country are in a worse position than are the people of Australia, although we have been at war for four years. The position may be summed up in this way. We in Australia are facing certain disabilities, but to my mind they are not grave. There is no real food shortage. Although the meat rationing system prevents people from having a choice of cuts of beef or pig-meat, Australia is producing more meat than ever before, and somebody is getting it. We cannot take 800,000 men from civil employment and put them into the fighting services, and also draw the food required by a large number of men from Allied countries from the same pool as that from which a population of 7,000,000 formerly obtained its supplies, without civilians being placed at a disadvantage. Yet no home in Australia is actually short of food. Not many years ago, when no war was in progress, thousands of families had to rely on a government dole, and they were not able to have a wide choice of meats. Considering the war effort of Australia certain disabilities must necessarily be suffered owing to the shortage of man-power. Some shortages are due to seasonal conditions, and these are not unknown even in times of peace. The demand for the foodstuffs being produced in this country is so great that sacrifices must be made by the civilian population. More meat, vegetables and butter are being produced in this country than ever previously, and the primary producers have rendered yeoman service to the Empire. Many of them who thought that they had retired from farm life are working harder to-day, in the evening of their lives, than they ever laboured in their youth, but they are doing it gladly, in response to their country’s call.

On the home front, factories producing civilian goods have diverted to war production 283,000 men, or 70 per cent, of their pre-war strength of approximately 400,000. Sural industry has lost 145,000 of its total of 500,000 male workers which it had in 1939. It will be impossible to distribute the available man-power in such a way as to meet all the demands for it. I am certain that it will be impossible to effect a balance that will satisfy General Sir Thomas Blarney, because his job is to maintain the establishment of the Australian Army. All that we can do is to provide for a maximum war effort until victory is ultimately won. Nearly onefourth of Australia’s 840,000 occupied women are engaged in direct war work. If we released 10,000 men from the Army next month the demand by the primary industries for man-power would not be satisfied. The honorable member for Wide Bay (Mr. Corser) asked to-day for the release of 200,000 men, but even that is far short of the r. umber required. The demand cannot be satisfied. I have found no proof of the food shortages said to be experienced in Australia, but in Great Britain I noticed that the people were making very real sacrifices and at the same time doing a 100 per cent, war job. There is no comparison between the sacrifices which Australians are making on the food front and the suffering experienced in Great Britain. If the present food position in Australia can be maintained the people will, indeed, be fortunate.

Senator SPICER:
Victoria

.- I was interested to hear the tribute paid by Senator Armstrong to the people of Great Britain and his frank recognition of the fact that they are making sacrifices incomparable with those of the people of Australia. He spoke particularly of the home front and the food front, but, had his inquiries extended to a consideration of the financial sacrifices which the people of Great Britain have been called upon to make in connexion with the war, he would have come to the same conclusion as that reached by him with regard to food and other amenities of life. I was rather astonished to find that in his budget speech the Treasurer (Mr. Chifley) said -

In genera] the hurden of Australian taxation is now as severe as in any other allied country.

I assume that the Treasurer includes Great Britain among the allied countries, but, if he does, that statement is entirely misleading. It is not true to say that the burden of taxation in Australia is as severe as that in Great Britain. I find, from a study of the budget speech delivered in the House of Commons in April of this year, that if we were to put the Australian people upon a taxation basis comparable with that of the people of Great Britain, we should have to increase our taxation by £100,000,000. If we did that we should then be able to say that the position in this country was comparable with that in Great Britain. The Chancellor of the Exchequer, in the speech delivered by him in the House of Commons on the 12th April last, said -

The total revenue I expect to receive from this additional taxation amounts to £102,000,000 in the current year and £110,000,000 in a full year. The total revenue for the current year will therefore be £2.907,000,000. Of the £5,150,000,000 for which we have to find domestic finance during the year, wo shall be providing 50 per cent, from current revenue.

That percentage compares with 48 per cent, during the calendar year 1941, and 52 per cent, during the calendar year 1942. Such a result continues to represent, I know, a very great degree of sacrifice by all members of the community, but it is worth making, for it enables us to keep our financial and economic life in that sound and healthy condition which has already, as I believe, been such a powerful aid to the war effort, and will help us so much after the war.

Senator Aylett:

-Does the honorable senator suggest that the Government should call upon the people of Australia to provide an additional £100,000,000?

Senator SPICER:

– I am making a comparison, and am referring to the misleading statement by the Treasurer. It is undesirable to lead the people to believe that they are making sacrifices equal to those of the people of Great Britain. This year we require £700,000,000 to provide for the expenditure contemplated by the Government. How is that money proposed to be raised ? The Treasurer proposes to obtain £300,000,000 from revenue. That is three-sevenths, or 43 per cent, of the total sum required. As to the balance he proposes to raise £300,000,000 from loans and £100,000,000 by means of bank credit. The true position is that, far from Australia carrying a burden comparable with that of Great Britain, we are financing our war effort from revenue to the extent of 43 per cent, of our requirements, whereas. Great

Britain is raising 56 per cent, of its requirements from that source, and in. addition, is proceeding to raise the greater part of the balance by means of loans and not by resort- to bank credit. I ask leave to continue ray remarks at a later date.

Leave granted ; debate adjourned.

page 422

PAPERS

The following papers were presented : -

Australian Imperial Force Canteens Fund Act - Annual Report by the Trustees for year 1942-43 (including the Sir Samuel McCaughey and P. S. Watson Bequests, and the Commonwealth Public Service Patriotic Fund, South Australia).

Australian Wool Board - Seventh Annual Reportfor year 1942-43.

Bankruptcy Act - Fifteenth Annual Report by the Attorney-General, foryear ended 3 1st July, 1943.”

Royal Military College- Report for 1942. Regulations - Statutory Rules 1943, Nos. 243, 244, 245, 246, 247, 249, 250.

Lauds Acquisition Act - Land acquired for Commonwealth purposes -

Cowra, New South Wales.

Devon port, Tasmania.

Essendon, Victoria.

Evans Head, New South Wales.

Footscray, Victoria.

Forbes, New South Wales.

Port Pirie, South Australia.

Sale, Victoria.

Seymour, Victoria.

Tea Gardens (Port Stephens), New South Wales.

Tocumwal, New South (Wales.

Waterloo, New South Wales.

Watsonia, Victoria.

Wodonga, Victoria.

Wynnum, Queensland.

National Security Act -

National Security (Egg Industry) Regulations - Order - Egg Industry (No. 8).

National Security (General) Regulations -

By-law - Controlled area. Orders -

Asbestos cement sheets. Control of -

Rubber (No. 8).

Rubber (Distribution of motor tyres and motor tubes).

Domestic furniture, manufacture of.

Prohibiting work on land.

Taking possession of land, &c. (396).

Use of land (40).

National Security (Land Transport)

Regulations- Order - New South Wales (No. 5).

National Security (Meat Industry Control) Regulations - Order - Meat (Return) No. 7.

Regulations - Statutory Rules 1943, Nos. 232, 239, 240, 241, 252, 253, 254, 255, 250.

Post and Telegraph Act - Regulations - Statutory Rules 1943, No. 242.

Primary Producers Relief (Superphosphate) Act- Report for period March-June, 1943.

River Murray Waters Act - River Murray Commission - Report for year 1942-43.

Seat of Government Acceptance Act and Seat of Government (Administration) Act-

Ordinance of 1943 - No. 10 - Trustee.

Regulation of 1943 - No. 5 (Building and Services Ordinance).

Sugar Agreement - Twelfth Annual Report of the Fruit Industry Sugar Concession Committee, for year ended 31st. August, 1943.

Superannuation Act - Regulations - Statutory Rules 1943, No. 248.

Superphosphate Bounty Act - Return for year 1942-43.

War Service Estates Act - Regulations - Statutory Rules 1943, No. 234.

War-time (Company) Tax Assessment Act - Regulations - Statutory Rules 1943, No. 259.

Senate adjourned at 10 p.m.

Cite as: Australia, Senate, Debates, 13 October 1943, viewed 22 October 2017, <http://historichansard.net/senate/1943/19431013_senate_17_176/>.

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