20th Parliament · 1st Session
The President (Senator the Hon. Edward Mattner) took the chair at 3 p.m., and read prayers.
page 1303
– Oan the Minister for Trade and Customs say whether there is any truth in a recent press report that several Government senators had started, or were ‘ about to start, a campaign for the disposal of Trans-Australia Airlines? Will the Minister assure the Senate and the public that no interference will be permitted with Trans-Australia Airlines, which is one of the best, if not the best, air services in the world?
– I am sorry to relate that the honorable senator’s credulity has been grossly imposed upon.
– Is the Minister for Trade and Customs aware that the large shipping companies which, in conjunction with W. Holyman and Sons Proprietary Limited, hold a controlling interest in Australian National Airways Proprietary Limited are not satisfied with the activities of that company, which has incurred a loss during the last three years? Is it a fact that the shipping companies wish to withdraw their capital from it, and, by converting it into a public company “ let the public in “ on a losing concern ? Does he con sider that tha. proposed new company could succeed only if it had a monopoly of air travel in Australia and fixed its own rates and fares? Is preparation being made for Australian National Airways Proprietary Limited to buy out Trans-Australia Airlines, and thereby give the shipping companies an opportunity to sell their equity in a losing concern to the general public?
– As I have not an intimate knowledge of the affairs of Australian National Airways Proprietary Limited and the other companies referred to by the honorable senator, I am unable to answer the questions that he has asked.
– Will the Minister, representing-‘the Minister for Civil Aviation inform the Senate whether there is likely to be any curtailment of air services in this country as a result of the Persian situation? King Island and Flinders Island are dependent upon air services fdr the carriage of mail and for passenger transportation. Will the Minister undertake that the existing services to those islands will be fully protected?
– There has been a good deal of press comment and speculation about stocks of aviation spirit. Although .’that speculation has not been as well informed as it could have been, I have not thought it wise to reply to it and cause any feeling of excitement or anxiety. It is true that the world faces a good deal of additional difficulty as a result of the closing down of the Abadan refinery, but by the re-direction of supplies, groups representing the oil companies both in the United States of America and Great Britain have done a really first-class job. Australia has not yet been short of aviation spirit. I admit there have been a few times when we have been a little anxious, but the fact is that we have not been short of supplies at any stage since the Abadan refinery closed down. I understand that there are in Australia and on water for this country sufficient supplies to meet our requirements until March or April next year. The situation is now better than it was before the closing of the Abadan refinery. I deprecate any suggestion that the closing of that refinery has created conditions which should cause us undue concern.
asked the Minister representing the Minister for Civil. Aviation, upon notice -
– The Minister for Civil Aviation has furnished the following information in reply to the honorable senator’s questions : -
A number of airline companies have not met claims made on them by the Department of Civil Aviation for air route charges, and Australian National Airways Proprietary Limited and Ansett Airways Proprietary Limited have contested the legality of these charges. The matter is now sub judice in proceedings before the High Court. However, Trans-Australia Airlines and certain other operators have promptly made payments as claims have been rendered by the department.
page 1304
– On the 24th October, Senator Piesse asked a question concerning the shipment of harvesting machinery to “Western Australia. I now supply the following information : -
The Combined Traffic Committee is maintaining a close review of the position in regard to the shipment of ‘ agricultural machinery to Western Australia, and recent shipments by interstate vessels were 480 tons of agricultural, parts and four harvesters arrived Fremantle 12th October in Borda, 210 tons of agricultural parts, thirteen harvesters arrived Fremantle 22nd October in Kooringa, 155 tons agricultural parts, sixteen harvesters and fifteen tractors arrived Fremantle 25th October in Momba. The Traffic Committee will take the first opportunity of making further shipments by interstate vessels and in the meantime the Australian Shipping Board is negotiating for consignments of harvesting machinery to be lifted by the overseas vessels Clan Macaulay and Queen Maud, both’ of which vessels arc at present in Melbourne.
– I understand that investigation of shipping operations throughout the Commonwealth is being carried out at the instance of the. Government. Can- the Minister for Shipping and Transport say what progress. has been made with that investigation,, and when a report upon it can be expected? Does the scope of the inquiry cover stevedoring operations in connexion with both overseas and interstate shipping?
– =-The SCOpe of the inquiry covers the aspects mentioned by the honorable senator. Mr. H. B. Basten, who has been in Australia for some months, has almost completed investigations at the main ports of the Commonwealth, and the Government hopes to have his report by the end of November or the beginning of December. I have heard indirectly that a full investigation, is being made of all matters relating to the turn-round of strips.
page 1304
– Some time ago, 1 raised the matter of Commonwealth registration of medical practitioners, and asked the Minister for Trade and Customs to bring it to the notice of the Government. In view of the possibility that some State authorities will register as medical practitioners new Australians who possess the necessary qualifications, and who are able to continue their studies in this country, will the Minister for Trade and Customs see that this question is brought before the next Premiers Conference for consideration?
– I think that the question asked by the honorable senator should more properly be directed to the Attorney-General. As far as I know, the registration of medical practitioners is a matter for State governments. Each. State has its own requirements and every, doctor who practices in a State must be registered with the State authorities. However, in conformity with the honor-‘ able senator’s request, I shall discuss the matter with the Attorney-General.
page 1304
– On the 24tb October last I asked the Minister for Repatriation a question in tho following, terms : -
Has the Minister for Repatriation seen, a chart issued by the Federal Executive of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia setting out the ratio between war pensions, age pensions and the basic wage in September, 1939, October, 1950, and November, 1951 ? If so, what does the Government propose to do to correct the disparity revealed in the chart?
In a statement circulated by the Minister, my question has been put in the following terms: -
asked Senator Cooper, Minister for Repatriation, whether he had received a circular .letter and war pension graph, from the President and Secretary of the Federal Executive of the Returned Soldiers* League, asking for an increase of £1 in the basic war pension rate. If so, had the Minister any comment to make.
Will the Minister explain the discrepancy between the question asked by me, and the question as presented in the statement by him, and attributed to me? .
– A mistake was made, apparently, in the statement of the honorable senator’s question that was circulated. I assure the honorable senator that the mistake was purely the result of an error, and although I cannot correct the copies that have been circulated I will ensure that the mistake is not repeated in future.
– On the 17th October I placed a question on the notice:paper directed to the Minister for Repatriation. I asked him whether it was true that *he dismissal of staff from the Heidelberg Repatriation Hospital had adversely affected disabled ex-servicemen suffering from tuberculosis. Is the Minister now in a position to answer the question; if not, when does he expect to be able to do so ?
– I expect to be able to give the honorable senator the information he has requested at least within a week.
– Is the Minister for Repatriation aware that many exservicemen who enter repatriation hospitals for treatment are found to be suffering from disabilities other than those for the treatment of which they were sent to hospital, and that in many instances, as the additional complaints are said not to be due to war service, the ex-servicemen are transferred to other institutions for operative or medical treatment and are later returned to a repatriation hospital for the treatment of war injuries? Will the Minister .give serious consideration to the plight of these men and arrange for all medical and surgical treatment that they require to be carried out in the repatriation hospital?
– There are occasions upon which an ex-serviceman is sent to a repatriation hospital for observation in order to determine whether or not he is suffering from a complaint that is attributable to his war service. The Repatriation Act distinctly prescribes that, except in certain circumstances, the Repatriation Department may treat only war-caused disabilities. It has no authority to treat complaints due to other than war causes except in the cases of totally and permanently incapacitated ex-servicemen, those in receipt of the 100 :per cent, pension, the widows and children of deceased ex-servicemen, and exservicemen whose health is in such a dangerous state that it would be unwise to move them to other hospitals. The repatriation hospital takes care of such patients until they have recovered. Where no danger is incurred in the removal to another hospital of an ex-serviceman who is suffering from non-war-caused disabilities, arrangements are made for his transfer and treatment elsewhere.
– I asked the Minister to amend the act so that all disabilities of ex-servicemen may be treated in repatriation hospitals.
– The honorable senator should have thought of that when he sat on this side of the Senate.
– Can the Minister for Repatriation say whether there is a provision in the Repatriation Act under which consideration may be given to the claims of imperial ex-servicemen in the application of the Government’s policy of retrenchment from the Public Service? If ex-members of the British Army who served in either World War I. or World War II. are not regarded as exservicemen under the Repatriation Act, despite their membership of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia, is it the practice to explain this fact to .them in England so that they may evaluate their position before migrating to this country?
– So far as I can remember, the provisions of the act are extended first to our own ex-service men and women. However, I shall inquire into the matter, and supply the honorable senator with an answer later.
page 1306
– On the 25th October, Senator Pearson asked a question, without notice, relating to the importation .into Australia of fertilizers from the Soviet Union. As promised, I have made inquiries, and the information desired by the honorable senator is as follows : -
During the course of the Economic Commission fur Asia and the Far East conference in Singapore the Union of Soviet Socialist Reeablies delegation listed the commodities which it had available for export to the Economic Commission for Asia and the Far East region in return for products of that area. Amongst the commodities mentioned were fertilizers.
The Australian delegation immediately asked tin; Soviet delegation to supply full information as to availability and prices. Specifically ~>0,n00 tons of ammonium sulphate and 100,000 tons of superphosphate were mentioned. It was recalled that Australia had previously imported ammonium sulphate from the Union of Soviet Socialist Republics.
Although the Union of Soviet Socialist Republics delegation’s reference to availability of fertilizers was made in context of bi-lateral trade agreements with certain countries in the area, it was understood perfectly by the Union of Soviet Socialist Republics delegation that *o far as Australia was concerned the market was a free one and hence no question of barter could arise. The question therefore neverarose as to whether or not the Commonwealth in return for certain quantities of fertilizers should make available to Russia any particular materials from Australia.
The Soviet delegation transmitted the request to Moscow and subsequently advised the Australian delegation that full details of prices and offerings were being compiled and would be sent to the Soviet Embassy in Canberra. Up till the present time the Soviet Embassy has not contacted me regarding the inquiry.
page 1306
– In view of the very serious threat that the Olympic Games may not be held in Australia in 1956, which would be disastrous from the Australian viewpoint, will the Minister for Trade and Customs suggest to the Cabinet that it’ arrange a conference between the Olympic Games Committee and the Premier of Victoria with a view to arranging for the games to he held in Australia in 1956?
– I shall be happy to mention the matter to the Prime Minister.
page 1306
– There has been an acute shortage of rice in “Western Australia since the beginning of World War IT., and the pearling industry, which employs mainly Asiatics, is experiencing great difficulty in obtaining adequate supplies. In an endeavour to meet the needs of that industry, wholesalers of rice have had to cut down supplies of rice to retailers, with the result that rice is seldom sold to the public. Can the Minister acting for the Minister for Commerce and Agriculture say whether it is true that Australia is exporting approximately 25,000 tons of rice a year ? If so, will the Minister ensure that the demands of Australian consumers shall be met before the exporting of rice is permitted?
– My attention has been drawn to the scarcity of rice in Western Australia and Queensland, and the matter is being investigated by my department. Reports indicate that certain firms are exporting all the rice that they process, which is contrary to an agreement that was reached by the various companies. That matter is being examined. I hope to be able to give the honorable senator a statement next week showing the quantity of rice that is now being exported and the quantity required to meet Australian demands.
page 1306
– I ask the Minister representing the Postmaster-General whether it is true that insufficient staff has been engaged for the Sydney mail branch of the Postmaster-General’s Department to meet the needs of the public during the busy Christmas period ? Is it a fact that only 200 operatives are being trained for sorting duties although 350 are required, and that the deficiency is attributable to the suspension of advertising for staff in newspapers and over radio stations? Does the Minister not consider that the dismissal of 10,000 public servants has discouraged the recruitment of additional staff to meet the
Christmas rush? What steps does the Government propose to take to ensure that the public shall receive Christmas mail on time? Is the Minister aware that industrial trouble is likely to occur if female labour is employed in the mail branches at Melbourne and Sydney, at 75 per cent, of the male rate ? Why have no steps been taken to ensure that male labour shall be recruited? Is it a fact that schools for the training of postal clerks have been interrupted, and the trainees drafted into the mail branch at Sydney to meet the staff deficiency there, with the result that suburban and country post offices will be short staffed at Christmas time?
– As the honorable senator’s questions involve considerable detail, I shall refer them to the PostmasterGeneral and obtain a considered reply as soon as possible.
page 1307
– I preface a question to the Minister representing the Treasurer by stating that last night, during the broadcast of the proceedings in the House of Representatives, I heard the Treasurer say that this Government is now gradually pulling the country out of the condition that it was in at the end of 1949, when the present Government parties came to office. In view of the Fact that those parties fought the 1949 general election on the issue of putting value back into the fi, and having regard to events that have since transpired, can the Minister say whether the statement made by the Treasurer was supposed to be taken seriously by the listening public, or whether it was merely a joke intended to lift the spirits of the harassed people?
– I have a very firm foundation on which to base my reply to the question asked by the honorable senator. That foundation is that whatever the Treasurer said is right. Regardless of what has happened to the purchasing power of the currency, living standards in Australia to-day are considerably higher than they have been for many years. The increase of earnings has been much greater than the increase of prices of commodities. Only the day before yesterday, I read an extract from an official American publication, which is issued by a bureau of statistics, to the effect that living conditions in Australia are higher than those in any other country of the world, with the sole exception of the United States of America.
page 1307
– Can the Minister for Trade and Customs state whether he has any knowledge of exploitation of the legislation that was passed by the Parliament last December to protect the Australian rayon weaving industry? Does the honorable senator agree that there is a loophole in such legislation, whereby rayon printing and finishing organizations may import cloth in the griege for finishing or printing here and then sell such cloth in competition with Australian woven rayon at a price advantage of ls’. 4£d. a yard? Is he also able to say whether the rayon printing industry has developed since December to the detriment of the Australian weaving industry ?
– The question now asked by the honorable senator is somewhat akin to one asked by him last week. I am having an answer prepared to the previous question, and I shall include in my reply an answer to the question which the honorable senator has just asked.
page 1307
– Has the attention of the Minister representing the Minister for Social Services been directed to the plight of a daughter or a son who is required to attend to an invalid widowed pensioner, and, who, at the present time, is paid an allowance of £1 a week for doing so? Will the Minister consider increasing the allowance in such cases to an amount at least equal to that paid to the wife of an invalid pensioner ?
– The question asked by the honorable senator is one that has been asked on a number of occasions and considered carefully by the department. A great many considerations arise. Such a son or daughter is frequently in a position to earn income at the same time as he or she cares for the aged or invalid parent. The matter was reviewed by the Minister for Social Services at the time the budget proposals for increased social services payments were being considered, and it was passed by in favour of other matters which, in the opinion of the Minister, were of greater urgency.
page 1308
asked the Minister representing the Minister for the Navy, upon notice -
Will he re-open the question of compensation paid to those injured and the dependants of those killed in the accident to H.M.A.S. Tarakan in 1950?
– The Minister for the Navy has supplied the following answers : - 1 and 2. I have no information with regard to the cases mentioned, other than that noticed in the daily press. 3 and 4. Compensation for injuries incurred as a result of the explosion in H.M.A.S. Tarakan has been awarded in accordance with the Commonwealth Employees’ Compensation Act, which is the only legislative authority for awarding such compensation. As that act applies uniformly to all classes of Commonwealth employees, including members of the armed forces, it would be impracticable to make legislative discrimination in favour of the victims of any particular accident. The amounts payable as compensation under the act are reviewed from time to time, regard being had to trends in wages and the compensation provided under other legislation for employees generally. Substantial increases are provided in a bill at present before Parliament.
The Department of the Navy has no discretion in the matter. In regard to the second part, the Government has decided that the Repatriation Act shall apply only to those members of the services engaged in war operations overseas..
page 1308
asked the Minister acting for the Minister for Commerce and Agriculture, upon notice -
– The answers to the honorable senator’s questions are as follows: - ;,
page 1308
asked the Minister representing the Minister for Social. Services, upon notice -
– The Minister for Social Services has furnished the following information : - 1. (a) In such cases the action taken is not entirely as indicated by the honorable senator but in accordance with the provisions of the War Service Homes Act the Minister may.. approve of the instalment payable by a widow or ‘widowed mother of an Australian soldier or by the wife of an Australian soldier who is temporarilyor permanently insane, being reduced to an amount which is considered to be within her means having regard to her financial circumstances. (b) The Minister may approve also of payments being made under the act on behalf of a widow, widowed mother or wife of an Australian soldier who is temporarily or permanently insane, in respect of current rates, taxes, insurance premium and repairs where, in the opinion of the Minister, payment of these charges would cause hardship. (c) Where ministerial, approval is given the difference between the normal instalment payable under the contract of sale or mortgage and the amount to be paid by the widow, widowed mother or wife, is charged to the War Service Homes Belief. Trust Account to which is debited also payments made under paragraph (6).
page 1309
asked the Minister for Shipping and Transport. upon notice-
– The answers to the honorable senator’s questions are as follows
page 1309
– I present the report of the Parliamentary Standing Committee on Public Works relating to the following subject: -
Proposed erection of automatic telephone exchange and postal building at Southport, Queensland.
page 1309
Motion (by Senator McLeay) - by leave - agreed to -
That leave be given to bring in a bill for an act to provide for the payment, through the Australian Wheat Board, to growers of wheat of a certain season of certain moneys in the Wheat Prices Stabilization Fund.
Bill presented, and read a first time.
Motion (by Senator O’Sullivan) proposed -
That so much of the Standing Orders be suspended as would prevent the bill being passed through its remaining stages without delay.
– There being an absolute majority of the whole number of senators present, and no dissentient voice, I declare the question resolved in the affirmative.
– I move-
That the bill be now read a second time.
This bill provides for a refund of the wheat tax paid in respect of exports from the 1948-49 wheat crop. Deliveries from that crop comprised the No. 12 wheat pool. Wheat-growers paid £12,496,000 in tax on wheat exported from No. 12 pool, and the Government has decided to refund this amount, together with interest earned upon it, to that pool. The money will be distributed to wheatgrowers, in the usual way, as a payment from the pool. The 1948-49 wheat crop was a heavy one, and deliveries from that crop to the Australian Wheat Board totalled 174,000,000 bushels. Of that quantity 115,000,000 bushels were exported, and the rate of tax payable on such exports was 2s. 2d. a bushel. When spread over the whole pool, the amount collected as export tax was equivalent to an average of ls. 5Jd. a bushel.
The No. 12 pool was the first pool to which the post-war marketing arrangements applied, as all the earlier pools were operated under National Security Regulations. The money has been held in -a trust fund on behalf of the wheat-growing industry, and it is now proposed to repay it to growers, since the amount involved is no longer needed for the purposes of the Wheat Stabilization Fund. This action is in accordance with the declared policy of the Government that excessive amounts would not be held in the fund.
A basic feature of the wheat stabilization plan is a financial contribution by the wheat industry towards its own future security. This contribution is made by growers while export prices are above production costs. The Commonwealth, on its part, undertakes that for the duration of the plan wheat-growers will receive a guaranteed price, equal to the cost of production which may he determined for each season. The Commonwealth guarantee, which applies to wheat exported, up to 100,000,000 bushels each year, is supplemented by joint legislation, enacted by all State governments, under which the same price is assured for all wheat sold for domestic use in Australia. The current wheat stabilization plan covers the period to the end of the 1952-53 wheat season, and negotiations are in progress, with the States and with wheat-growers’ organizations, for an extension of the plan.
In accordance with its understanding with the industry, the Government does not wish to hold in trust amounts which appear to be in excess of the requirements of the stabilization plan. At the present time the amount held in the fund is £35,000,000, which is made up from the joint tax proceeds of No. 12 pool, No. 13 pool and part of No. 14 pool. The operations of No. 14 pool, which covers th, 1950-51 crop, are still by no means complete.
With the repayment of tax on exports from the 1948-49 crop, the stabilization fund will hold less than two seasons’ contributions, but this is regarded as a reasonable situation. A succession of good crops in Australia has coincided with high prices for wheat exported. As a result, the stabilization fund has been buoyant, and funds have previously been approved by Parliament in respect of earlier pools. No. 12 pool is now the oldest contribution pool to the fund, and it is intended to repay the whole of the amount received from the 1948-49 crop, rather than to make a pro rata refund to. all contributing pools. This principle of first in, first out, is endorsed by growers’ organizations as the most satisfactory way of arranging refunds to the industry. Notwithstand-ing the fact that two later pools have actually contributed to the fund, I wish to make it clear that in repaying these moneys to the oldest pool the Government will be acting in accordance with the wishes of the growers in relation to the method of repayment. It is wheatgrowers’ money, and the industry has indicated that it regards this method as the’ fairest, as well as the easiest, to operate. Many growers drop out of the industry each year, and are replaced by new growers, and it is only reasonable that the fund should be built up by those who will get the actual benefit from it in the event of a fall of prices in the future.
Reference has been made to the negotiations that are in progress for an extension of the plan. Naturally, the financial provisions necessary for an extended plan must be considered fully, especially in view of some uncertainty about the future. However, the payment of the refund of tax on the 1948-49 wheat, crop is justified, since it represents an amount that is no longer needed in the fund.
The bill is evidence of the Government’s policy not to ask wheat-growers to make any more than a fair contribution to a fund to ensure stability to their industry in future years. It is presented with confidence that it will meet with the general approval of all sections of the community. I commend the measure to the consideration of honorable senators.
Debate (on motion by Senator McKenna) adjourned.
page 1311
Message received from the House of Representatives intimating that it had agreed to the appointment of a joint committee to consider such matters concerning foreign affairs as are referred to it by the Minister for External Affairs, and requesting the concurrence of the Senate therein, and the appointment of seven members of the Senate to the committee.
page 1311
– Before I proceed to the placing of business, may I say that all honorable senators are delighted that Senator Brown is again well enough to attend in the chamber. We welcome him back and we are happy to see that his health has so rapidly improved. We trust that his recovery wiil continue and that he will quickly regain the best of health.
page 1311
Debate resumed from the 25th October (vide page 1163), on motion by Senator Spooner -
That the following papers be printed: -
Estimates of Receipts and Expenditure, and Estimates of Expenditure for Additions, New Works and other services involving Capital Expenditure, for the year ending 30th June, 1952;
The Budget 1951-52 - Papers presented by the Eight Honorable Sir Arthur Fadden on the occasion of the Budget of 1951-52; National Income and Expenditure 1950-51.
– Judging from the speeches made by supporters of the budget it is apparent that they do not realize the obvious conflict between what we call politics and economics. If they did so, and were aware that the conflict is becoming more acute day after day, their approach to the budget proposals might have been very different from what it has been. The non-Labour political element in this Parliament represents the democratic idea of politics but in matters of economics, in its industrial and financial form, it favours economic dictatorship and the extending and strengthening of monopolies. For all practical purposes we are living in a rapidly developing monopoly age. Apparently that fact is not realized by many honorable senators opposite who have supported the budget.
The budget proposals are designed principally in the interests of monopolies at the expense of the workers, small business men and small companies. It is well known that taxes form the very basis of the machinery of government. Indeed, no government could carry on without the right to impose taxes. The increases proposed in this budget apply mainly to flat rate taxes. The overall 10 per cent. increase of income tax is a flat tax; sales tax and excise duties are also flat taxes. Practically all of those taxes are paid by the people in the lower income groups. The Treasurer (Sir Arthur Fadden) has said that the budget spreads the burden of taxation equitably, having regard to the economic circumstances of the time. That statement is by no means true. Indeed, quite the reverse is the case. Taxpayers in the lower income groups will pay more in proportion to the incomes they receive than will those in the higher income groups and the budget must be viewed in that light. Additional taxes are much more easily paid by those in the higher income groups than by those in the lower income groups.
Taxes may be divided into three categories - direct taxes, indirect taxes and inflation. Inflation, which is a form of indirect taxation, has been described by many acknowledged authorities on the subject as a. most corrupt and insidious form of taxation. A taxpayer knows what he pays in direct taxes. In most instances he knows also what he pays in indirect taxes; but he has no idea of the extent to which he is committed by inflation until he has to pay ever-increasing prices for all the commodities that he requires. Unchecked inflation means that money is issued considerably in excess of the value of the commodities that are being produced or the services that are being rendered. That money is issued mainly by private banks and by governments. It stimulates all sorts of speculative enterprises and undermines the confidence of the people in the currency. For example, we read every day that people are paying exorbitant prices for houses. That beyond all doubt is evidence that there is being created throughout the community a feeling that it is far better to hold real estate even although exorbitant prices have to be paid for it in terms of a depreciating currency, than to run the risk of being caught with savings should the currency collapse entirely. There is also the other point of view. If the currency collapses and has to be reorganized, the purchasing power of the reorganized currency may be equal to that of the original currency before it was depreciated.
– That is what happened in Germany.
– Yes. Inflation is responsible for the existence of a large amount of money which has no equivalent in real wealth. Here we have an obvious contradiction. Inflation is causing higher prices and greater profit, but is also increasing poverty amongst pensioners, superannuated employees and others on low fixed incomes. Unchecked inflation leads, as it did in Germany, to the sister evil of deflation, which is always followed by the closing down of industries because the currency has become worthless. The result is, of course, widespread unemployment, and what is colloquially called an economic crisis. The task of any government is to control inflation, but the present Government has made no attempt whatever to do that. If effect is given to the budget proposals, our already bad position will become worse. For all practical purposes, inflation began in Germany at the start of World war I. The German currency was further and further inflated until 1923 or 1924, when it collapsed altogether and had to be reorganized., The Germans resorted to inflation for the same reason as it has been resorted to by all governments in time of war. Rather than face public hostility because of high taxes, the common practice has been to inflate the currency ; but both inflation and high taxes reduce the purchasing power of the currency in the same manner. For all practical purposes, the inflation of the Australian currency began with the issue of 10s. notes. Until that time halfsovereigns had been in circulation, and whereas gold has an intrinsic value, notes, have not. Inflation in Australia was given an impetus by World War II., and became very noticeable in 1941. A few years before World War II., speaking from memory, the present Minister for Externa] Affairs (Mr. Casey) advocated the issuing of 5s. notes. I pointed out at the time, as president of the Melbourne Trades Hall Council, that if the Government issued 5s. notes, inflation would be accentuated. Subsequently, the proposal was abandoned.
I come now to remedies for inflation. They are drastic but sooner or later they must be faced. We cannot permit our currency to be inflated indefinitely. Any one who believes that the present trends can continue is destined to be painfully disillusioned. One of the first steps to be taken to control inflation was proposed by the Chifley Government. I refer to the control of banking and the issuing of bank credit. Secondly, instead of increasing the taxes on workers and small business people, there should be a graduated capital levy. Admittedly that would not be very popular with the Government supporters. At present, income is being taxed but there is no tax on capital although capital has been accumulating rapidly during the last ten years. In fact, the two world wars acted as accelerators to the accumulation of capital, with the result that to-day there are enormous stores of untapped wealth. Those capital accumulations cannot continue for ever ,to be untapped. Another expedient that can be adopted is Commonwealth prices control. We of the Labour party have never contended that inflation could be halted solely by prices control administered by the Commonwealth. What we do say is that Commonwealth prices control is as necessary now as it was during the war years. Prices include millions of pounds of capital charges that have never been incurred. Take for example, rent : The capital cost of houses that were built, say 70 or 80 years ago, has been recovered many times over in rent, but rents are still being charged for them. When a team of workmen build a house they are paid only once for their services. If they claimed to be paid in perpetuity they would very soon be dealt with, yet landlords are able to recover capital charges many times over! That policy has been responsible for a shortage of housing and exorbitant rents. The housing position is becoming worse and worse. Since the war no government has dealt with this problem adequately. If the Government were to say to the owners of houses, “ As you have recovered your capital costs of building, in future you may charge only sufficient rental to recover rates and your cost of maintenance “, the big financial companies and investors would not buy slum houses for investment purposes. The Government could meet the case of a working man or a widow who was dependent on the rent received from a couple of houses, by granting a pension equivalent to the rent. If that were done, obsolete slum houses would cease to exist, because they would be an unprofitable investment. The same principle could be applied to other commodities in connexion with which unwarranted capital charges have been incurred.
In connexion with prices control the Government says, in effect, that the Commonwealth Arbitration Court shall fix the amount of wages and the major monopolies their purchasing power. If the Government believes that industrial peace can be attained by that method it will be sadly disillusioned.
– Does the honorable senator consider that the worker is benefiting from the present arrangement?
– I remind Senator Maher that the worker is concerned primarily with the real wage rather than the money wage. An increase of the money wage does not increase the commodity wage. Even if the basic wage were increased to £20 a week, under existing conditions the workers would not benefit. In this connexion, the position is worse to-day than it was in 1945 after hostilities ceased.
The Government proposes to grant increases of pensions. A better gesture would have been to take the action necessary to control prices. I have suggested that there should be a reduction of indirect taxation which would increase the purchasing power of wages, salaries and pensions. However, the Government’s policy is to increase both direct and indirect taxation. It is no exaggeration to say that the budgetary proposals are designed to benefit the major monopolies at the expense of the workers, the pensioners and small trading companies.
According to a recent press report, the Treasurer (Sir Arthur Fadden) has stated that the budget makes adequate provision for defence responsibilities. I deny that. The budget has made no provision whatever for economic equality of sacrifice. Major monopolies such as Broken Hill Proprietary Company Limited, which have very big contracts with the Government, will be able to capitalize on our preparations for defence. I believe that the Treasurer has spoken with his tongue in his cheek. The right honorable gentleman is also reported to have stated that the States have been fairly and generously treated and that the budget will ensure that essential States’ works programmes shall be carried on. However, thousands of men have been dismissed from revenueproducing instrumentalities. Although the State Electricity Commission of Victoria has been working at peak production to supply the electricity required in that State, many of its employees have been dismissed as a result of the policy of this Government.
The Postal Department has always been a revenue-producing organization. Yet thousands of its employees have been dismissed. Earlier this month I asked the Minister for Repatriation (Senator Cooper) a number of questions in connexion with the dismissal of staff by the Repatriation Department. As I have not yet received replies, I am unable to comment fully in this connexion. The following report was published in the Melbourne Age of the 25th October : -
Six years after the second world war, the number of beds at Heidelberg Repatriation Hospital is insufficient to meet needs. This was stated last night by the Deputy Commissioner for Repatriation (Mr. H. C. Laussen). . . Our typing staff should have a strength of 140. We have only 62 at present.
The Government is economizing at the expense of helpless ex-servicemen. It is apparent that it is obtaining a contemptible advantage from members of the community who are least able to protect themselves. I am amazed that the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia has not taken this matter up more vigorously. I base my criticism first on what I am able to learn from individuals, and secondly, on the public statement of the Deputy Commissioner for Repatriation.
It is no exaggeration for me to say that this is an inflationary, rather than a deflationary, budget, because it will operate mainly in the interests of the major monopolies. A number of business concerns will be put out of existence because they will not be able to carry on. To the extent that small businesses cease operations, the major monopolies, by direct and indirect means, are strengthened and extended. Those monopolies constitute economic dictatorship in this country. For all practical purposes, this .Government acquiesces in that dictatorship, and, by means of political machinery, gives effect to measures that are required to extend and strengthen the monopolies. Time will not permit me to go more fully into that matter, and I do not expect all honorable senators to agree with what I say. However, I commend to honorable senators opposite closer study of the economic position than they have yet devoted to it. Whatever happens, one cannot escape the consequences of one’s actions. The budget proposals, as they are understood, are already causing a good deal of dissatisfaction, which will no doubt ultimately express itself more forcibly than by means of words.
Senator Maher made three suggestions. The first was that the number of hours to be worked should be increased; the second, that production should be increased; and the third, the freezing of wages.
– A wage ceiling.
– A very low ceiling !
– No ; stabilized at the present level.
– Let us suppose that the number of hours to be worked is increased from 40 to 44, or even to 48. The immediate effect of such an increase would be that production would also increase, but prices would not be reduced. If the labour market should again become glutted, as it was in the 1930’s there would be a complete collapse of markets and of the economy. The workers, who previously worked so hard to increase production, would again be reduced to the level of the dole. That happened in Australia, in the United -States of America and in other countries once before. About the 20th “May of this year the New York Times stated that a sudden peace would cause havoc in industry. Other American newspapers have stated that the United States of America was on the eve of a depression but that the Korean war made it possible for the country to carry on much better than it had hoped to do. Labour time is a diminishing factor in production because of the ever-increasing mechanisation of industry. Wages are based upon the cost of living figures. The freezing of wages, translated into practice, therefore means an automatic reduction of wages. That is how it works out ultimately. Wages are not, and cannot be, constant while outside authorities determine their purchasing power, while labour time on the job is a diminishing factor in production and while wages are based on the cost of living. Therefore, when it is suggested that wages should be frozen, it is also tacitly suggested that the workers should agree to an automatic progressive reduction of wages. I remind Senator Maher that those facts are known to many men in unions, who discuss them every day. If a conference, such as that suggested by the honorable senator, is to be held, it will be necessary to put before it constructive arguments.
I conclude by emphasizing again the point that I made at the beginning of my remarks. There is an ever-increasing conflict between politics and economics. Politics, in the parliamentary form, achieved an equality which exists only on election day. After election day a vicious economic dictatorship takes over. That dictatorship is responsible for inflation and for the unsatisfactory economic position with which we are faced to-day. Unless there is a more intelligent approach to that state of affairs than that made by this Government to date we shall have in this country a position similar to that which has arisen in other parts of the world, when the economy becomes practically unworkable.
– It is difficult for a layman to make definite comparisons between this budget and one of a few years ago. Since the last war the needs of the people and their ideas have changed to such a degree that only a qualified accountant or economist could form definite conclusions from such a comparison. As was to be expected, this budget, in common with those of other governments, has come in for f good deal of criticism, which merely emphasizes the fact that the nation is in a very difficult position. It is apparent that no honorable senator has the complete answer to the problem of how OU] economy may best be balanced and brought back to the stability which it enjoyed a few years ago.
Under present-day conditions, budget proposals would not be complete unless they paid a good deal of attention to the need for the adequate defence of the nation. Total warfare is a frightful business, and I do not think that any one of us would not end the possibility of it if he could do so. However, human nature being what it is, it is only wishful thinking to think along those lines. I am aware that some people do not believe that we should prepare for war. Some even say that no matter how much we prepare we would never be able to defend ourselves effectively. Such n defeatist attitude is contrary to the spirit of the Australian people. It is not their attitude to accept defeat before they begin to fight. Indeed, they have never been beaten yet. The average Australian would rather have his country prepare for war, than be forced into a war while we were unprepared according to modern standards.
It does not require much imagination to visualize the state of affairs in the world to-day, and to understand that, anything could happen at any time. We must take a more realistic view, and realize the urgency of preparing, our defences. Therefore, I fully support the Government’s defence proposals as set out in the budget.
Whilst an all-round increase of production is desirable, I regard the need to increase primary production, and particularly the production of food, as the most urgent. Work on the land has become unpopular. The over-growing population of the world, together with the declining production of food has accentuated the urgency of the problem. As for Australia, it is- hard to know where the next generation of farmers and farm workers is to come from. In farming to-day, perhaps more so than in any other activity, efficiency is necessary to success, and it is a serious matter that the efficiency of our farming operations is being impaired by the shortage of skilled labour and necessary materials. A little while ago, one State Premier panicked badly over dairy production. He said that if the dairy farmers would not increase production, he would take their farms away from them, and hand them over to others who would produce more. That was a wrong approach to the problem. The Premier was out of touch with the present situation. He was mistaken if he thought that there were many potential dairyfarmers in Australia just awaiting an opportunity to go on the land.
Many of the people left on the farms are elderly. During the war they allowed their sons and, in some instances, their daughters, to enlist in the fighting services. The parents worked the farms very competently. By working seven days a week they increased production, but now they cannot get labour to help them. They are no longer able to work as hard as they could a few years ago, with the result that the farms are not producing to full capacity. I do not know how the problem is to be solved.
One of the greatest stumbling blocks to increased production is the scarcity of superphosphate. The farmer must co-operate with nature. Certain operations must be carried out at the proper time, and the superphosphate must be applied then or much of its value will be’ lost.- It is fatal to try to raise crops without the use of superphosphate, and the farmers are’ becoming sick and tired of being held up for lack of superphosphate and other necessaries. The acute shortage of labour on the farms is hampering farming operations, and reducing food production.
I agree with Senator Cormack that we need an all-round national effort, but I cannot see how that is to be achieved quickly, or who is to inspire the people te make the effort. Members of the Opposition seem’ to place much reliance on prices control. I do not want to criticize their judgment, but I do not believe that prices control, as a general remedy, can be successful. In some instances it may achieve a certain amount of good, but in others the only effect of attempting to control prices is to drive goods on to the black market; and then the last position is worse than the first. The imposition of unduly high taxation can discourage production, but I believe that the misapplication of prices control has clone more to retard rural production than has high taxation.
Our leaders’ of a few years ago spent too much time dreaming about the “Golden Age” and the “Light on the Hill “ instead of telling the people that it was necessary to keep the wheels of industry turning. They should also have made it clear that the cost-plus system which developed during the war had outlived its usefulness. It was not a sound system even during the war, but it may have been necessary then. It is certainly unsound now. It is not accomplishing anything useful, but is tending to confuse the people.
There have been frequent references during this debate to the subject of pensions, both civil and military. Like Senator Robertson, I believe that, although much has been done to relieve the lot of the pensioners, there is much more that we can do. The present Government has effected many improvements since it came into office, and I was pleased to hear the Leader of the Opposition (Senator McKenna) pay a tribute to the Government for what it had done. We intend to keep on trying until war pensions are raised to a level that represents justice to ex-servicemen.-
Successive governments have deprived exservicemen of many hundreds of thousands of pounds which they would have received if pension rates had been adequate. The present Government has made an attempt to improve the situation, but there is still a long way to go. It will be a long time yet before pensioners receive enough to indulge in luxury spending, or until pensions have the effect of increasing, inflation. I look forward to the time when the pensions system will be reformed, arid we’ shall have something iri the nature of national superannuation. Until then, however, we must improve the present system by increasing rates and simplifying administration.
Like Senator Armstrong, I am not downhearted about the future’ of Australia. We have a great country and a great people. I have lived with them and worked with them under all sorts of conditions, and I know that in a crisis they may be relied upon to act with resolution and common sense. The people of Australia, if given a lead, will accomplish much, and I am confident that the future of Australia will be even greater than its past.
.- The budget for 1951-52 has not been given any more favorable reception than the usual run of budgets. I have yet to see a budget that has met with the approval of everybody, but I have never yet known a budget that has met with such hostility as the present one. Neither have I known a budget that has attracted so much adverse criticism in the Parliament, not only from members of the Opposition, but also from Government supporters. The Minister for National Development (Senator Spooner), who represents the Treasurer in this chamber, claimed that the budget, by providing for a surplus of £114,500,000^ would help to relieve inflation. I regret that I cannot share the Government’s confidence in its plans for the halting of inflation. The withdrawal of a large amount of money from the taxpayers will increase inflation rather than decrease it. The Government is budgeting for a surplus of about ‘ £114,500,000, but the surplus will probably be a good deal more than that by the end of the financial year. If the surplus is used, as the Government says it will be, for the financing of State and Commonwealth public works, it must have the effect of increasing inflation.
By recent legislation, and through this budget, the Government has reversed the policy which it announced when seeking a mandate from the people. It then promised to abolish all controls, to reduce taxation, and to restore value to the £1. It has been claimed by Government spokesmen that the war in Korea has prevented the Government from honouring its promises. If that be true, the Government had ample time to realize the situation, and to have announced before the last election that it proposed to increase the burden of taxation on the people. If the slightest indication of these proposals had been given, then I suggest that honorable senators opposite would not be occupying the treasury bench to-day. Absolutely no indication was given of the tremendous and unjustifiable burden that the Government proposes to place upon the people or o? the inequitable manner in which that burden is proposed to be spread over the people.
An examination of the budget proposals reveals that not only does the budget contain the imprint of the economist but that, in addition, many of its principal proposals have emanated from sources entirely outside the Parliament. I shall discuss the source of many of those proposals later, but I take this opportunity to emphasize the part played by Sir Douglas Copland in preparing the Government’s financial policy. Sir Douglas has expressed the view that an extension of the working week from 40 hours to 44 hours would benefit the country, and that suggestion has given rise, because of the connexion of its author with the Government, to a very real fear in the industrial movement that the Government proposes to attempt to influence the Commonwealth Arbitration Court to extend the standard working hours to 44. I appreciate, of course, that it is not unusual for governments to intervene at the hearing of such matters before the Commonwealth Arbitration Court, but I should like the Minister to inform the Senate exactly what attitude the Government adopts towards the suggestions put forward by Sir Douglas Copland and certain other economists.
Will the Minister indicate specifically whether the Government supports the proposal to extend the standard working hours? I understand that the Commonwealth Arbitration Court has already commenced to hear an application for an. extension of the standard hours. The trade union movement of this country is quite rightly disturbed at that development because it believes that any extension of the working week must jeopardize the policy of full employment introduced by preceding Labour administrations and accepted hitherto, even by the present Government, as a national policy.
Earlier this year Sir Douglas Copland produced a plan containing eight points that were allegedly designed to curb inflation, and that plan was undoubtedly considered by the Government before the double dissolution of the Parliament that occurred last April. The connexion’ between that plan and the budgetary proposals of the Government is obvious. The significance of only portion of the plan being accepted is explained by the statement of the Treasurer some time ago. He said then that he had some bitter medicine to administer to the people. In other words, his patients would be the unfortunate taxpayers, who would not be asked to swallow his bitter medicine in one gulp. One of the proposals advocated by Sir Douglas Copland that has been incorporated in the budget is a general increase of company tax on a graduated scale. The iniquity of the Government’s company tax proposals have been exposed by my colleague, Senator Armstrong, who pointed out that although the rate of tax on small companies that distribute a. profit of not more than £5,000 a year will be as high as 80 per cent., the rate of tax on public companies with large capital, and which earn huge dividends for their shareholders, will be only approximately 20 per cent, and, in some instances, as low as 10 per cent.
Point four of the Copland plan suggested a rise of the rates of interest and the restriction of time payment and hire purchase systems, whilst point six advised the Government to budget for a surplus by increasing sales tax and excise on certain classes, of goods that were re:ferred to as luxuries. I repeat, for emphasis, that although the Copland plan was given considerable publicity prior to the general election that followed the double dissolution of the Parliament in April last, and notwithstanding the fact that certain features of that plan have since been given prominence in the Government’s budgetary proposals, no mention whatever of any of them was made by the antiLabour parties during the last general election last April.. On the contrary, the anti-Labour parties followed their usual practice of making an hysterical appeal to the people to empower them to take steps to combat communism. Although some reference was made to the Commonwealth Bank, in the main, they professed to rely on the promises they had made at the previous general election in August, 1949. No indication whatever was given of their intention to increase either direct or indirect taxation, nor was any reference made to the proposal to increase interest rates. Incidentally, it is of interest to notice that some friends of the Government in the financial world seem to have been well informed in advance of its intentions, because they advised their clients to refrain from investing their money for awhile. Of course, those unfortunate people who supply the financial backbone of the nation by investing their modest savings in government securities did not receive any intimation of the Government’s intention to increase interest rates, and the consequence to them was that they invested their money at what subsequently proved to be inadequate and unfair rates of interest. I am convinced that if the Government had given the least indication of its intention to budget for a surplus many thousands of householders would not now find themselves in the unhappy position of having to budget for a deficit in their own accounts. Incidentally, it is obvious already that the Government’s surplus at the end of the financial year will be much greater than that expected by the Treasurer.
It is abundantly clear that many features of the Government’s policy that it has already implemented emanated directly from certain interests outside the Parliament. It is equally clear, of course, that the enormous increases of direct and indirect taxation, sales tax, and duties of customs and excise will fall most heavily upon wage and salary earners. Indeed, the staggering increase of £35,000,000 in indirect taxation alone has, in a considerable degree, been passed on already to the public in the form of higher costs of the necessaries of life, and has considerably increased the cost of living.
I invite honorable senators now to consider the damaging consequence of some of the negative qualities of the budget. Credit on home-building has been restricted, and the banks have been compelled to curtail advances to clients.. The inevitable consequence of that policy to the tens of thousands of people who have been trying to purchase their own homes will be that they must remain where they are. Even the most deserving people, including those who have abundant security to offer in exchange for accommodation, will have to forgo the purchase of the homes to which they are entitled. The new restrictions will operate similarly to retard the development of rural areas. It is significant that even the big retail stores in the cities have had to conduct sales in an effort to turn over their merchandise. They, too, are victims of the credit restriction policy of this Government.
As I have already mentioned, point four of the Copland plan provides for increases of the rates of interest, and the restriction of the hire purchase system. Although those restrictions are allegedly designed to halt inflation, .they will operate most unfairly and will penalize the ordinary working men and women of this country. The wealthier classes will not be deprived of expensive luxuries, but small incomeearners will have to forgo even the opportunity to furnish their homes decently. Motor cars, refrigerators, radio sets, vacuum cleaners and many other amenities that have become virtual household necessities to-day will be placed beyond the reach of the great majority of people. I stress the fact that those amenities are not luxuries to-day, but must be regarded as necessaries. Even a motor car or a refrigerator cannot be regarded as a luxury .to-day. Tens of thousands of motor cars are used to transport men to work every day, as any one who travels about early in the morning will observe. Of course, those vehicles are not expensive limousines, but are comparatively inexpensive vehicles of the utilitarian type which play an important part in our economy by transporting men to and from industry. The private motor vehicle to-day provides a service that is not rendered by public transport systems. We are all aware of the congestion that exists on trams, trains, buses and other transport vehicles at almost all periods during the day. Our transport systems are unable to cope with the everincreasing demands made upon them, and consequently a motor vehicle can no longer be regarded as a luxury.
In presenting the Estimates and budget papers the Minister for National Development (Senator Spooner), who represents the Treasurer in the Senate, had this to say-
The Government rejects the idea of a complete freeze over prices and costs as affording no real remedy for our present situation.
Experience has established two main facts about price control - first, that it has little value to any one unless applied to all the main commodities; second, that unless costs and, in particular, wages, are also controlled, price control can do little more than record cost increases.
Even, however, if all prices and costs were frozen, the bash: situation would not be rectified and inflation would not be conquered. Great inconvenience would be caused to industry and trade, and we would have done no more than throw an illusion of stability over a situation growing rapidly more explosive. t agree wholeheartedly with the sentiments that were expressed by the Minister in the last sentence that I have quoted; but in general his statements are misleading. In effect, he has claimed that our economy is so rigid that it cannot be subjected to control and cannot even be regulated to prevent or to minimize the effect of inflation. I agree that we cannot control inflation by the imposition of prices control alone. The Government claims that the remedy for the problem of the inflated prices of goods and services is to close the gap between the money demand for goods and the supply of goods, and to increase production in key industries. What effort has the Government itself made to increase production? Honorable senators on this side of the chamber, appreciate the need for increased production; but we contend that increased production is only one of the means by which the evil of inflation should be tackled. In effect, the Government’s answer to my question is that high prices are the natural result of demand and that demand is a natural, uncontrollable consequence of purchasing power. The Government contends that the only way to solve the problem of inflation is to draw off consumer purchasing power by the imposition of additional taxes, and it proposes to extract additional taxes from” those who are least able to pay them and to permit those with the greatest ability to pay to retain their excessive profits for so-called expansion and investment.
There are approximately 3,300,000 taxpayers in Australia. Taking into consideration marginal increases and overtime payments, it would be safe to assume that the average wage in Australia is approximately £12 a week. Persons in receipt of incomes ranging from £2 to £12 a week constitute nine-tenths of the taxpayers of Australia. Therefore, the great majority of those who will be saddled with the burden of additional taxation will be the workers and the small salary earners. In the formulation of its taxation proposals the Government has completely disregarded its obligation to spread the burden of taxes equitably. It has merely taken a shot in the dark and has said, in effect, “We shall impose an overall increase of 10 per cent, in income tax on all taxpayers “. It has completely disregarded the ability of taxpayers in the lower income groups to meet that additional commitment. The taxpayer is concerned not so much with the amount of tax that he has to pay as with what is left for his own needs and the needs of his family after he has paid his tax. It is unjust to impose on workers and small salary earners a flat 10 per cent, increase in income tax. A taxpayer who is in receipt of £15,000 a year will have no difficulty in meeting his increased commitment, but a worker is in an entirely different position. Indeed, the fortunate taxpayer with an income of £15,000 a year will benefit from this budget.
The degree to which the proposals of the Treasurer have been influenced by interests outside the Parliament is indeed astounding. As one knight to another, Sir Douglas Copland tendered certain advice to Sir Arthur Fadden. It might be unreasonable to take exception to that because Sir Douglas has given advice to governments other than the present Government. There are many organizations known by various names which are alleged to have been established to inform the public of facts relating to our economic and industrial life, to bring about a better understanding between employers and employees, and to ascertain means by which private business enterprise can best be operated in the interests of the people. Those organizations operate under various aliases, such as the Sane Democracy League, the Institute of Public Affairs, the Individual Freedom League, and the like. They are in reality the propaganda and financial agencies of the Liberal and Australian Country parties, and their purpose is to condition the public mind to accept the policies of conservative governments. There are1 some proposals in the budget that disclose their influence on the Government. Last week Senator Robertson and Senator McMullin complained of the activities of certain pressure groups. I assume that they were referring to the workers’ demands for increased wages and better conditions.
– The honorable senator’s assumption is completely wrong.
– At all events, both of them referred to the activities of pressure groups. The most active pressure groups in this country are represented by the organizations to which I have referred. The November 1950 issue of the Review, issued by the Institute of Public Affairs, clearly reveals that that organization has influenced certain proposals that are contained in the budget. Subsequent events indicate that the Government has been obedient to its dictates. After making reference to the need for the Commonwealth Arbitration Court to reach agreement with the trade unions with a view to avoiding unnecessary increases of salaries and wages, the final paragraph of an article entitled “Policy for inflation “ that appeared in that issue reads -
A policy of this kind for controlling and arresting inflation could best be initiated by a national conference called by the Commonwealth Government, at which representatives of all the main economic sections of the community should be asked to attend.
A conference of the kind suggested was subsequently held and the story of its uselessness is past history. The institute also publishes pamphlets on topical subjects. One of them, entitled “ Can We Stop Prices Rising?”, contains the following statement : -
Those forms of investment which aim to produce luxury goods and less essential goods, and those which are likely to come into production only after a longer period of time should be pruned in preference to those producing essential goods in the relatively short period.
That suggestion has been given effect under the Defence Preparations Act. The pamphlet continues -
In private industry it would seem necessary to limit the extent to which, the less essential industries could obtain finance and materials, by control over credit and capital-raising and over important raw materials and supplies.
That proposal, too, has been given effect under the Defence Preparations Act. The pamphlet further states -
Machinery exists for preparing and applying this kind of policy in the recently established National Security Resources Board, the credit powers of the Commonwealth Bank, and the renewed Capital Issues Control. I believe the Government has been far too slow in setting up the latter control, and it still remains to be seen in what ways and how promptly it will act upon the suggestions of the National Security Resources Board.
We should not, of course, ignore the possibilities of increased public subscriptions to Government loans, or purchase of savings certificates, if higher rates of interest were offered.
Probably the most effective policy reducing the pressure of consumption demand would be a high taxation policy, linked with budget surpluses. Higher income taxes leave the taxpayer with a smaller proportion of his income to spend on current consumption, and budget surpluses subtract more from the volume of spending money in the community than they add to it by government expenditure.
These forces are progressively hastening the inflationary process in Australia and in relation to them we must frame and apply antiinflationary policies with the least possible delay.
The Institute of Public Affairs is apparently not satisfied with present conditions because, allied with the Junior Chamber of Commerce in Melbourne, it has become associated with Mr. Paul Maguire in a new movement which is seeking signatures on an elaborate scroll christened “The Call”. The real purpose of the movement is somewhat shrouded in mystery. Prominent political and church leaders have been approached and asked to sign this scroll which is to be released on the anniversary of Armistice Day, the 11th November, but I have yet to learn of any approach being made to the industrial or the trade union movements of Australia for their support. Associated with the political leaders and church dignitaries supporting the movement are commercial magnates and prominent businessmen. “ The Call “ uses the same jargon as is used in the publications of the Institute of Public Affairs. The head-quarters of the movement appear to be in Adelaide. Secret meetings have been held in the past six months in Adelaide, Melbourne, and Sydney. Amongst persons prominently identified with the movement are exarmy and ex-naval officers, and wellknown broadcasting and newspaper executives, but no public meeting has been held. The organization meets behind closed doors. Its activities are rather perturbing and the Government, I believe, should watch this right wing movement just as closely as it watches left wing movements. There is nothing in “ The Call “ to disturb any one, but there was nothing to disturb any one in the manifesto issued by Hitler in 1931. The organizations behind the movement should be scrutinized very carefully. In the past, church leaders have signed what they believed to be harmless documents only to find to their amazement later that they had associated themselves with Communist organizations. Church leaders and public men should check on Mr. Maguire’s activities lest they find themselves in a similar trap. If there is a need for an appeal to the people, it should come, not from, a secret organization, but from the elected representatives of the people - the Government. Money has already been collected, and the Government should ascertain for what purpose the funds are to be used. If the organization is to be another “ New Guard the Government should take action against it just as it would act against the Communists.
I have endeavoured to show to the Senate that the budget proposals have been dictated to this Administration by outside organizations. I remember well the criticism voiced by honorable senators opposite some years ago when decisions of the then Labour Government were alleged to have been influenced by the Australian Labour party. I claim therefore that I have a right to draw attention to the activities of the organizations to which I have referred. They are masquerading as movements for the public benefit, but in reality they are influential propaganda organizations, acting on behalf of the financial interests and commercial and business groups which dictate’ this Government’s policy.
– I support the budget because I believe that it represents a genuine attempt by the Government to solve the financial and economic problems with which Australia and most other countries are faced to-day. The Government is being accused, both inside and outside the Parliament, of reversing the policy that it enunciated in 1949 and again in 1951, and with breaking promises made to the people of this country on those occasions. The truth is, of course, that the problems of administration to-day are vastly different from what they were in 1949. The Government did not know until it actually took over the reins of office, the full extent of the problems with which it would be faced, and it had not been in office for long before war broke out in Korea. When Labour relinquished office, the world was enjoying a period of temporary peace, but almost overnight it became necessary for the democratic nations to make rapid preparations for war.. Australia was asked to play its part, as a member of the United Nations, in maintaining the liberty of the South Koreans. I am sure that not one member of this chamber, regardless of his political affiliations, will argue that the Australian Government was wrong in joining in the United Nations campaign in Korea. War preparations meant a complete revision of Australia’s economy. The Government’s financial proposals bad to be readjusted. Therefore, I make no apology whatever for any discrepancy that may he found between the proposals contained in this budget and the policy speeches of the Leaders of the Government parties at the last two elections. The Government had to have sufficient courage to face the change of circumstances. Unfortunately, the budget has not been fairly presented to the people by the press of this country. I believe that the press has a duty to present to the people generally an objective picture of national problems so that the public mind may be well informed on such important issues as the Korean war. The outburst by the metropolitan press, particularly the Sydney newspapers, against the budget would have been a disgrace to the press of any country. My candid opinion is that, in the main, press criticism of the budget was offered, not in the national interests, but in the sectional interest of the newspapers themselves. A completely unfair picture of the Government’s proposals was conveyed to the minds of the people generally. The Sydney Morning Herald stated, amongst other things, that the budget would depress the investment market but in fact, the investment market reacted favorably to the budget. During the week prior to the introduction of the budget, quotations on the investment market showed a net fall of 1.32 per cent, but immediately the budget was brought down, a stronger tone prevailed and the ordinary index rose from 193.83 to 194.90. I do not deny the right of the press to offer fair criticism but, on this occasion, it has f ailed in its duty to present to the public a fair and reasonable picture. I admit that, taking it by and large, on its presentation the budget was not immediately popular. However, now that the public realizes the reasons for the proposals, most of the critics are convinced of the necessity for them. There is a general feeling that the Government was game to face unpopularity, in the interests of the national welfare. It has been claimed by the Opposition and some persons outside the Parliament that the Government has failed to do anything to arrest inflation in this country. It is not so easy to check inflation as our opponents would have the people believe. This is the first budget that this Government has been able to introduce, since assuming office, to give effect ‘to its intentions and policy. Had we attempted to implement our policy when we were in a minority in this chamber the Opposition would have had the opportunity to force the hands of the Government on the grounds that the budget was unpopular. Although this is the largest budget that has ever been presented to the Parliament, 1 believe that when the impact of its provisions become evident the people will be convinced that this Government is facing up to its responsibilities resolutely.
Some honorable senators opposite have claimed that taxation should not be increased, but that there should be more liberal increases of pensions and other benefits than those proposed. Other than the inflationary method of issuing additional treasury-bonds, the only way to meet the additional expenditure envisaged is to increase taxation. On the old rates, revenue from taxation during this year would have been about £8S1,000,000. Expenditure will be approximately £927,000,000. Therefore, if taxation wennot increased there would be a deficit of about £46,000,000.
As I have pointed out before, in prosperous times the Government should not budget for a deficit. In times of . depression there could, perhaps, be some justification for so doing. Some honorable senators opposite have claimed that although the Treasurer (Sir Arthur Fadden) has budgeted for a surplus of £114,500,000, there will be a much larger actual surplus. Whatever the surplus, it will be beneficial to the people of this country. After giving this matter careful consideration the Government decided that the correct thing to do in the circumstances was to budget for a surplus by increasing taxation. It also had in mind the necessity to draw off sufficient of the purchasing power of thi’ community to check inflation. Of course nobody likes increased taxation. I do not. like it. However, if we are to stabilize the economy of this country the facts must be faced. It was considered that th. most equitable method to increase taxation was to impose a 10 per cent, levy on individual incomes, and to increase sales tax. The Government considered that the increase of indirect taxation would also result in a movement of labour from luxury and non-essential production into essential industries. Senator Ashley claims that refrigerators are not luxuries. I agree with him. However, if I were a newly married man seeking a home, I would prefer that adequate labour should be employed in industries affecting housing rather than in the production of refrigerators and luxury items. I am sure that many people will be thankful to the Government for the action that has been taken. The Government’s first responsibility is to ensure that vital production of coal and steel is speeded up, in the interests of defence. If the Government’s proposals result in a speeding up of that production it will have performed a very great service to the community.
Some honorable senators opposite have contended that the Government should not have budgeted for a surplus. If taxation was not increased, for expected expenditure during the present financial year to conform to expected revenue, it would be necessary to cut down on essential services. Do honorable senators opposite contend that there should be a reduction of the National Welfare Fund, defence preparations, war and repatriation services, and social services? This budget will play a very big part in the stabilization of our economic affairs. We shall not get out of the mire unless every member of the community is prepared to play his part to increase production. As I have stated before, we must all be prepared to work longer and harder to overcome the present state of affairs. Unfortunately, as a result of agitation by a certain section of the community, and the application of the “darg”, there has been a general slowing down of production of our basic materials. Of course I realize that a proportion of the blame for the present position can be laid at the door of the employers. The employees are not wholly to blame. The position should be investigated, and any weaknesses of our system that are revealed should be rectified.
Much has been said about primary production. Australia is naturally a primary-producing country. Yet experts have recently warned us that it is quite probable that within the next ten years we shall experience difficulty in meeting our own food requirements. It is estimated that this year only 3,000,000 acres will be sown to wheat in this country. It cannot be claimed that the wheat-farmers are not prepared to work hard. In common with other primary producers they have experienced difficulty to maintain production as a result of shortages of essential commodities. As a result of the shortage of steel the manufacture of farming implements has been restricted. Many wheat-farmers have had to wait for three or four years to obtain new harvesters. The price of wheat, also, has an important bearing on the subject. It is not reasonable that the wheat-farmers should be expected to “ carry “ other industries. It has been suggested that the price of wheat for stock feed should be increased to 16s.1d. a bushel. Naturally, the ultimate fixing of the price will rest with the States. Now we have the pretty picture of the Minister for Agriculture in New South Wales running round Australia making a political question of this issue.
Sitting suspended from 5.45 to 8 p.m.
Debate interrupted.
page 1323
-by leave - I wish to take this opportunity to thank you, Mr. President, for your kind words of welcome this afternoon. I also wish to express my gratitude to all honorable senators and members of the House of Representatives who have been so kind to me during my recent illness. I was amazed to find that I had so many friends. From all parts of Australia I received letters and telegrams expressing the hope that I would soon be well again. Good wishes also came from New Zealand, New York, and Suva. I am most grateful. I hope that God will be good to me and that I shall have an opportunity during the next few years to do my best for my party and, of course, to place the Government parties in opposition.
page 1323
Debate resumed.
– Before the suspension of the sitting I was dealing with the decline of production in primary industries and had endeavoured to indicate some of the reasons for that decline. I had also stated that the Australian Government, appreciating that the wheat industry would not be prepared to go on indefinitely providing wheat for other industries at the expense .of the wheatgrowers, had made a proposition to the State governments to the effect that it was prepared to agree that 16s. Id. a bushel should be paid for stock-feed wheat. It was also prepared to pay a subsidy to egg producers in order to recompense them for the difference between the home-consumption price of wheat and the proposed price of 16s. Id. a bushel for stock-feed wheat. Despite the reasons for that proposition, the New South Wales Minister for Agriculture, Mr. Graham, has endeavoured to make a political issue of the matter. That gentleman has tried to prove to the community that the responsibility to support industries which use wheat for stock feed is that of the Australian Government and not of the State governments. The position is that the Australian Government considers that it is under an obligation to egg producers because the Government originally asked that egg production should be increased. In addition, an agreement for the export of eggs at a fixed price was entered into. In order toonour the terms of that agreement the Government decided to subsidize the production of eggs, should the price of stock-feed wheat be increased to 16s. Id. a bushel. Yet, the New South Wales Minister for Agriculture has endeavoured to line up his colleagues in the other States and to throw upon the Australian Government the responsibility to subsidize all the industries which use feed wheat. The Chifley Government put to the f armers of Australia a wheat stabilization scheme. However, all aspects of that scheme were not placed before the producers when they were asked to vote on it. When the scheme came into being it provided not only for home-consumption wheat for human use but also extended to feed wheat used by Australian industries. The scheme has still a period of two complete harvests to run. The present Government, appreciating that the wheatgrowers of Australia are being asked to carry an unfair burden, is now prepared to vary the scheme by giving to them the advantage of the higher price for wheat for stock feed for the last two years of the scheme. In effect, that will mean that the wheat-growers of Australia will receive the equivalent of approximately £8,000,000 a year more for the wheat that they are producing. As a result of the action of the Labour Administration, they had been deprived of that amount by means of a snide trick which was perpetrated after the stabilization scheme had been approved by the farmers.
Much criticism of the budget and the proposed expenditure during the financial year has been heard in this Parliament. It has been stated, particularly in New South Wales and Victoria, that the Australian Government has not played fair with the States. It may be remembered that at the last conference of Commonwealth and States Ministers the representatives of the State governments presented programmes for loan allocations amounting to £300,000,000. The Prime Minister (Mr. Menzies) and the Treasurer (Mr. Arthur Fadden), who understand the financial position of the country, were aware that the loan market would not be able to meet the demands of the States. After considerable discussion, the representatives of the States agreed that the amount should be reduced to £225,000,000. I say advisedly that they agreed to that reduction. Immediately the conference was over, certain Premiers returned to their States and tried to throw back on to the Australian Government the responsibility to finance the whole of the original public works programme. They stated in their parliaments that they had endeavoured to obtain sufficient money with which to carry out the programmes that they considered essential for normal development and that the Australian Government would not allow them to do so. The Australian Loan Council, as constituted, gives to the Australian Government two votes. The States have the majority voting power. Although this Government agreed to the sum of £225,000,000 being raised by way of loans, it appreciated that even that amount is beyond the capacity of the loan market of Australia. In order that the various State governments might be able to honour the commitments into which they have entered, this Government has agreed to underwrite the loan allocation. I consider that the time has arrived when the States should be prepared to shoulder their full responsibilities.
– Given the opportunity, they will do so.
– The Premier of Kew South Wales, Mr. McGirr has glibly asked for the return to the States of the right to levy income taxes. The honorable gentleman is speaking through his hat, because he certainly does not want that responsibility. I ana of the opinion that if we are to carry on as a federation the responsibility must be thrown on to the States to raise the money that they intend to expend. Certainly the States should not grasp every opportunity to accuse the Australian Government of denying them sufficient funds with which to meet their ordinary commitments. They have been given a larger tax reimbursement this year than in the previous year, in addition to which they are to receive £225,000,000 of loan money. the Commonwealth having undertaken to abstain from entering the loan market at all. Nevertheless, the State governments continue to accuse the Australian Government of hamstringing them and of refusing to allow them to develop. I.suggest that some of the State governments entered into all kinds of commitments before they approached the Australian Loan Council, and that their representatives knew ;that they had no chance o.f obtaining sufficient .money to meet those commitments. From information which I have gleaned, it is obvious that the State governments received ,a greater allocation from taxation than, they had hoped to receive. With the shortages of essential materials that exist to-day, it is, apparent that the States have no chance of carrying out many developmental works and of expending the money that has been allocated to them. I support the budget because I believe that its .proposals represent a definite attempt on the part of this Government to stabilize the economy of the country and to honour our obligations as a member of the United Nations.
– In contributing my quota to this debate I offer the opinion that since this budget has been presented, the shares of the Government ‘have deteriorated considerably. It is easy to visualize what would have happened’ had the budget been presented prior to the recent referendum on communism. I suggest that had that been done, the Government’s proposal would have been completely massacred and that it would have b.een a different story from .three States voting “Yes” and three voting “No”. I agree with Senator Ashley that the people pf Australia are horrified by this budget, which is not only unpopular, but is also unsound. It will destroy our standard of living and will stimulate the inflation which, it is claimed, it is designed to combat. In addition, it will seriously reduce the purchasing power of many people on the lower rungs of the income ladder. I refer specially to the 340,000 age pensioners, the 76,000 invalid pensioners and the 43,000 widow pensioners who are trying to balance their budgets on the miserable pittance they receive. They are not concerned with so-called luxury goods, but with the basic necessaries of life. Senator Paltridge drew a comparison between the condition of the man who used to earn the basic wage of £7 a week and the same man who now gets a basic wage of £10 7s. a week. A .single man who earned £7 a week used to pay £15 a year income tax. A single man receiving £10 7s. a -week will now pay £45 a year income tax - an increase of £30. For every shilling that the basic wage rises, Commonwealth revenue increases by £1,000,000. Thus, the increase of the basic wage from £7 a -week to £10 7s. a week resulted in an increase of Com.monwealth revenue by £67,000,000.
This budget, so far from being deflationary, -will have the effect of increasing the price of practically all commodities, and -it will- aggravate discontent in a dissatisfied and resentful .community. All the efforts of the press and the Government will not allay that discontent, which is thoroughly justified. This is the worst budget ‘that has ever been submitted during 50 years of federation. It places on the people burdens which are harsh, savage and unnecessary. Every one who paid income tax last year will pay considerably -more this year, and as Senator Ashley pointed out, indirect taxation has been increased -without regard to equity or justice. The general rate of sales tax has been increased from 8^ per cent, to 12£ per cent., whilst the maximum rate of sales tax payable on so-called luxury goods has been increased from 33-J per cent, to 66 J per cent. That is the rate of tax charged upon such items as shaving cream, razor blades, &c.
– Do not forget the lipstick.
– I am not forgetting the lipstick, nor other items of particular interest to women. They, too, are classed as luxury items, and the same outrageous tax is levied upon them. Ice cream is now a luxury. Every time a child buys an ice cream he has to pay a fine of 20 per cent, on the purchase price. This is a new way of robbing the child’s money box under the pretence of combating inflation. The tax on beer has been increased by 2d. a glass, and the price of a packet of twenty cigarettes has been increased by 3d. Company taxation, for both public and private companies, has been increased, and this must have an effect on production. Land tax has been increased, and the averaging system for the assessment of income tax on primary producers has been modified to their detriment. All this has been done by a Government which promised to reduce taxation, to put value back into the £1, to increase the .purchasing power of the worker’s wages, and to reduce the cost of living. Those were specific and unqualified promises, which have been repudiated by the Government.
The present Prime Minister (Mr. Menzies), when criticizing the last budget introduced by Mr. Chifley, the greatest Treasurer that this Commonwealth has produced, condemned it as depressing. Speaking in one of his weekly broadcasts called The Liberal Leader Speaks, he said that what the country needed was to have value restored to the £1. No doubt, he said, people thought that when the war was over there would be a substantial reduction of the cost of government, which had to be met by ordinary men or women through income tax, sales tax, excise and customs duties, all of which imposts had an important effect upon prices. Every one thought, he added, that after the war the burdens of government would be lightened, and that living standards would rise. That is what the present Prime Minister said when he criticized the Labour Government’s budget of £532,000,000. The present budget is for £1,041,000,000, which represents an increase of £509,000,000. Senator Nash properly described this budget when he called it a “hit and miss budget “. It hits the workers and misses the big vested interests, which this Government represents. As some one has said, “ It’s not the iron that ‘urts the ‘orse’s ‘oof, but the ‘ammer, 4—- ‘ammer on the 4.A 4-A road “.
I can easily visualize how the public would have voted in the last referendum if this budget had been presented before the vote was taken. Honorable senators opposite blamed the Labour party for the defeat of the referendum, but members of the Labour party opposed the Government’s proposals because they believed that those proposals constituted a direct attack on the principles of British justice. The proposals went much further than the Communist Party Dissolution Act, which was sponsored by this Government and subsequently rejected by the High Court as unconstitutional. That was the most dangerous piece of legislation ever introduced into this Parliament. It would not have been entertained for one moment by the Parliament of the United Kingdom, even by a parliament led by the Conservative leader, Mr. Churchill, because in England the principles of fair play, justice and political liberty are regarded as of paramount importance. Neither would it have been considered in the United States of America, because there the Constitution demands respect for the principles of established justice. In the United Kingdom and in the United States of America, governments do not talk of democracy and act like fascists, nor do they attempt to ostracize a section of the community because of its beliefs. They enforce the law of the land against .Communists and all other persons who break the law. The Estimates disclose that the cost of holding the referendum was £210,000, but I should be greatly surprised if the cost was not much more than that. Whatever it was, the expenditure was unjustified. The
Government knew that it had all the power necessary under existing legislation to deal with communism and Communists. If a Communist engages in criminal conspiracy there are laws under which he may be tried and, if convicted, punished. If a Communist utters seditious words there are laws under which he may be charged. If he embarks upon treasonable activities, the Constitution confers upon the Government, under the defence power, sufficient authority to deal with him. All that is well known to the Government, but it also knows that, from a political point of view, communism has paid big dividends and it wants to go on receiving those dividends. Communism was a profitable topic of propaganda for honorable senators opposite during the 1949 election campaign, when the Chifley Government was defeated. It was again used successfully by them this year in the election campaign after the double dissolution. But time marches on, and communism cannot be used successfully any longer, as the result of the recent referendum clearly showed. Many people who had been deceived by Government propaganda are now fully aware of the Government’s insincerity.
The people recognize that a situation is rapidly developing in which an economic depression will be inevitable. They see the purchasing power of the £1 declining every day. They know that this Government, because it represents certain interests, will do nothing constructive to deal with the present alarming situation. The most serious problem confronting the people to-day is uncontrolled inflation. The Prime Minister, and practically every member of the Cabinet, have said at one time or another that the first and most important problem to be dealt with is inflation, yet the Government does nothing about it. The public fully recognizes the seriousness of the problem of inflation because, paradoxically enough, at this time when the national income is higher than ever before, the economic situation of most people is becoming desperate because of ever-increasing prices. Indeed, the time is approaching when many people will be confronted with unemployment, poverty, degradation and even starvation.
One of the major mistakes made by the Government is that it has continued to talk of communism as a political evil while doing little or nothing to deal with Communists who have broken the law. As a matter of fact, the Prime Minister more or less confirmed this in a political speech delivered on the 3rd April this year. He said that his Government was pledged to wage war against Communism, but he was not speaking of attacks against individuals. The Government, he said, was determined to root out Communists from key positions, and was pledged to wage war against a set of evil ideas. Those were the words uttered by the Prime Minister himself. If we give to them the weight that they should receive because of the position occupied by the right honorable gentleman it should be only too obvious that during the last eighteen months the Government has done nothing at all except talk about waging war on a “ set of evil ideas “. As a matter of fact, that is one reason why the Government has encountered considerable difficulties, and, in particular, difficulties of a legal kind. In the Communist Party Dissolution Act the Government attempted to set out in print exactly what it was fighting. Subsequently, its enemy proved to be nothing more than a nebulous “ set of evil ideas “. Having failed to effect an entry to the Constitution through the front door, the Government then attempted to enter by the back door and to take unto itself entirely new powers. Those desired powers, to say the least of them, bore a remarkable resemblance to the sheer undiluted totalitarianism that characterized the Nazi regime. Under that regime no civil or political opportunities were left to the people, and the tenets of Nazi-ism, again according to the Prime Minister, were absolutely foreign to our civilization, our faith, our tradition and our democratic way of life. The proposals of the Government in recent referendums were so drafted that they would not have to survive the ordeal of scrutiny by the High Court. In other words, they were drafted with the express purpose of giving to the present Government exactly the same authority as that wielded by the Executive in a totalitarian regime, and were an attempt to circumvent the authority of the High Court as the appointed interpreter of the Constitution.
I need hardly remind honorable senators that at one time the Prime Minister was a great advocate of the High Court of Australia. I remember when Labour’s legislation to nationalize banking was rejected by the High Court, the right honorable gentleman exclaimed, “ Thank God we have a High Court “. He then claimed, of course, that the High Court was the defender of democracy. However, when circumstances differ, opinions differ. When the legislation that was intended to ban the Communist party, which the Prime Minister had himself assisted to draft, was rejected by the High Court, the right honorable gentleman took another view altogether of the role of the High Court.
– The Labour party was unable even to do that when its banking legislation was rejected by the High Court.
– At least we have the consolation that our legislation was not unanimously rejected by the court, and, in any event, the constitutional lawyers opposite were unable even to draft a title for their bill that would withstand the scrutiny of the High Court. Of course, we all know the outcome of the Government’s attempt to circumvent the High Court. On the 22nd September last the people showed decisively what they thought of the Government’s proposals to deal with the Communist party.
– Did the honorable senator tell any lies during the referendum campaign?
– The only lies I heard told during the referendum campaign were told by those who were opposed to the “ No “ case. I heard a good many of them, too. Undoubtedly the antiLabour party attempted to fool and delude the people into agreeing to the introduction of an era of sheer, undiluted totalitarianism.
Much has been said in this chamber about prices control. I remind the Senate that the Labour Opposition in this chamber attempted to give a lead to the nation by passing enabling legislation for a referendum to authorize the people to confer upon this Parliament complete power to regulate prices and rents in the national interest. However, when that legislation reached the House of Representatives it was placed at the bottom of the notice-paper and it has not seen the light of day since. So long ago as 1944 the Australian Labour party realized the seriousness of the economic difficulties that would confront Australia in the post-war era, and the then Prime Minister, Mr. Curtin, sought power at a referendum to transform our economy from a war-time to a peace-time basis with a minimum of dislocation. He realized even then that because of the restriction of production during the war and the large volume of money that would be in circulation after the war, it would be necessary to have some form of governmental control to safeguard the national economy. Of course, the anti-Labour parties strenuously opposed those proposals, and the exceedingly difficult economic situation that confronts them to-day, when they are in office, is very largely a legacy of their attitude then. In other words, they are stewing in their own juice, to borrow a phrase used by Sir Otto Niemeyer, who, during the depression, was the perambulating agent of international vested interests and had the impertinence to attempt to shackle the people of this country. Honorable senators will recall his message to Australians that they should stew in their own juice.
Labour has been consistent in its advocacy of the need for appropriate economic controls. In 194S the Chifley Administration, which was a very realistic administration, and was gravely perturbed by what had happened in the United States of America when prices control was abandoned in that country, passed legislation to authorize the holding of a referendum that was intended to give to the National Parliament complete power to deal with prices. The attitude of the anti-Labour parties on that occasion is well known.
– They said that the States would make a better job of prices control.
– That is so. They contended that State governments were closer to the people and that they could do a better job. In fact, they went farther and said that all controls should be abandoned because free competition would result in fair prices. The outcome of that referendum is history, but I cannot help pointing out that the acceptance of the Chifley Government’s proposals would have placed our economy on a much sounderbasis to-day. Of course, the Australian Labour party has never suggested at any time that prices control would, of itself, solve all the problems that confront us. Prices control is no more than one of a number of essential measures that must be taken.
Government supporters interjecting,
– If honorable senators opposite had confronted the problems that really beset our economy our economic position to-day would have been as sound as it was in 1948. All that the anti-Labour parties said, in effect, in 1949 was: “Let us get back to the 1939 value of the £1 “. In fact, no one realized more than did the present Prime Minister the impossibility of attaining such an objective. In 1939 wheat sold for as little as1s. 6d. a bushel, and unemployment was rife. We had 250,000 unemployed, who did not have the wherewithal to purchase anything, and it was a common sight to see hundreds of men waiting outside factory gates for the chance of a job. At that time goods were freely imported from Germany, Italy and Japan, and from certain other countries that are now behind the Iron Curtain.
– Where are the goods coming from to-day?
– J apan is now a big exporter of goods. I am convinced that the Government that the honorable senator supports will allow goods from any other country to come into Australia regardless of the effect of their entry upon Australia’s economy. It is useless for honorable senators opposite to attempt to blind themselves to the realities of the present situation. In conclusion, I repeat that this Government has completely repudiated all its promises. It promised in the most specific and unequivocal terms to reduce taxes, to restore value to the £1, to increase the purchasing power of wages, and to reduce the cost of living, but it has completely repudiated all those promises.
.- I congratulate the Government upon having presented an honest budget, and I pay my tribute to the political courage that it has displayed in attempting to restore the economy of this country without resorting to totalitarian socialization. In the circumstances that confronted the Government it was impossible to present an honest budget that would be popular. However, the Government, to its great credit, did not seek cheap popularity. Indeed, I suggest that the Treasurer (Sir Arthur Fadden) would have been recreant to his trust if he had failed to place the facts before the nation. I regard the Government’s budgetary proposals as an honest and impartial attempt to check inflation and to safeguard the savings of the people. Of course, the Government could have sought popularity by taking the line of least resistance, and it could have produced a misleading budget in order to deceive the people. If that had happened, the country would have drifted further into the morass. The Government is to be admired for risking momentary unpopularity and for having introduced proposals to deal with the seriousness of the position that confronts us. Unfortunately members of the Opposition in both Houses of this Parliament are content to play the game of party politics to the detriment of the nation or they exhibit a lack of faith in our future economic security. It is easy to be destructive - to pull down; but it is more difficult to be constructive - to build up. In effect, the Opposition says, “ We do not know what it is, but whatever it is we are against it.” Not a single constructive thought has emanated from the Opposition during this debate. No alternative to the plan proposed by the Government for placing Australia’s economy on a sound and healthy footing has been presented. Even the Leader of the Opposition in the House of Representatives (Dr. Evatt) runs away when he is challenged to debate publicly the efficacy of the Government’s proposals. It is a pity that Opposition senators do not take a leaf from the book of their Labour colleague in Tasmania, the Premier of that State, Mr. Cosgrove, who recently said -
We are living in a time when everybody shouldstrive for the promotion of more friendship, and political bickering, industrial unrest and general disharmony should stop.
What splendid sentiments! Honorable senators opposite should adopt them as their own. The Government’s proposals are designed to bring about increased production which is the answer to most of our economic problems. They are designed to curb inflation and to prevent the spiralling of prices. Inflation is by no means peculiar to Australia. I think I am safe in saying that it exists the world over; but certain happenings in Australia during the last few years have aggravated its incidence here. While I realize that no good purpose can be served by trying to lay the blame for its existence on this or that political party, I cannot refrain from saying that the McGirr Government of New South Wales, and the Hanlon Government of Queensland, in forcing the 40-hour week on this country for paltry party political purposes did it a great disservice. Following the war period, when we were striving under great difficulties to adjust our economic position those governments delivered a very severe blow to our economy. They virtually hit it right in the solar plexis We were not given a chance to recover equilibrium before that blow was struck. The Commonwealth Arbitration Court further aggravated the position by awarding the £1 a week loading on the basic wage which was described as a prosperity loading or by some other similar excusing name. The chickens are coming home to roost. Wage-earners at last realize that they are no better off than they formerly were. The true value of wages is indicated by what they will buy. To-day £5 is as good as £10 used to be if it will buy what £10 would buy in former years. Wage and salary earners now realize that their increased income has been more than swallowed up by increased costs. Those on fixed incomes are in an intolerable position. The inflationary trend has gained momentum ever since the 40-hour week was adopted. In this connexion I should like to quote a statement by the big chief of the Labour party, Mr. J. A. Ferguson, M.L.C., the federal president of the Australian Labour party. The federal executive is, in effect the supreme court of the Labour movement. Dealing with the basic wage increase Mr. Ferguson is reported to have said -
There was a time when the workers welcomed an increase of any kind. To-day, how- ever, an increase of such proportions can only be regarded as an ominous sign of hard times ahead.
I also recall the comments of one of the leaders of the industrial wing of the Australian Labour party. Mr. J. D. Kenny, M.L.C., assistant secretary of the New South Wales Trades and Labour Council, had this to say about the increase of the basic wage -
The basic wage increase will put people on fixed incomes in an intolerable position. The rise will cause great dissatisfaction among workers who receive a margin for skill, because that margin will now be destroyed.
Those are the views of the political and industrial leaders of the party represented by honorable senators opposite.
Since the budget was presented our economy has received a very rude shock by the further increase of the basic wage. That increase makes the adoption of the anti-inflation measures envisaged in the budget more imperative than ever. I am afraid that even more drastic measures will be needed to bring about stability of income and economic security for the people.
– What does the honorable senator suggest should be done?
– Senator Benn is well aware that my time is limited. He had an opportunity to tell us his story ; I ask him to give me an opportunity to tell my story in my own way.
I propose now to reply to statements made by Opposition senators about spiralling prices. I contend that prices control will provide no real solution of our present problems. Experience has shown that prices control, as we know it, is neither more nor less than a variation of the cost-plus system that was in operation during the war. What is needed is a reduction of costs brought about by increased output. In that view I am fortified by Mr. Douglas Abbott, Finance Minister in the Canadian Government, who recently said -
I reject demands for price controls to fight inflation. Even in the last war fixed maximum prices played only a small part in the Government’s attack on inflation. . . . All of us will have to forgo some of the things we want and unless and until we can increase our output to a point where we can carry both our defence and our desired standard of living. 1 am inclined to think that the result of the recent referendum has a distinct bearing on increased prices because the Communists regard it as a vote of confidence in themselves and as giving, them a mandate to continue their insidious attacks upon the economy of Australia and their advocacy of the go-slow policy which has played havoc with production. One has only to read the daily newspaper reports about strikes and threatened strikes to realize that the Communists are continuing their nefarious work. What amazes me is that the members of the Labour party should fall in behind the Communists in their violent opposition to proposals to grant to this Parliament powers to deal effectively with the subversive elements in our midst. Their attitude is all the most astounding when we realize that every Labour member in both Houses of the Parliament is pledged to support the granting of full and adequate powers to the Commonwealth Parliament. Notwithstanding that pledge, . to-day we have the sorry spectacle of Labour trailing behind the Communists in opposition to the proposals that were submitted to the people in the recent referendum. Both the Leader of the Opposition in the House of Representatives (Dr. Evatt) and the Leader of the Opposition in the Senate (Senator McKenna) have received the plaudits of Moscow for the assistance that they rendered to the Communist cause during the referendum, campaign. Et is interesting to consider the reaction of certain Labour men to the refusal by Mr. Cosgrove to take part in the referendum campaign. He was taken to task by the industrial wing of the Labour party and abused and threatened with expulsion from the Tasmanian branch of the party which has for its president no other than Senator Morrow whose attitude towards the Communists and communism is well known to all of us. In defence of his attitude, Mr. Cosgrove said -
It is true that I am the leader of a political party, and I subscribe to its platform. I am loyal to its ideals - I support its policy. But is that enough? I have other and more compelling loyalties. They include loyalty to the State, to the Commonwealth, and to the King and Empire, and above all loyalty to my fellow men, to our community as a whole.
What a splendid and loyal declaration!
– Why does the honorable senator not join him?
– It is a pity that Senator Grant does not emulate his example. Honorable senators opposite speak with their tongues in their cheeks because they know in their own minds that Australia has abounded with confidence since the Menzies Government came into office. Again history has repeated itself. Some years ago, following a disastrous period of control by the Scullin Government, the people rose in their wrath, threw that Government out of office and replaced it by the Lyons Government. The latter Government was called upon to do many unpopular things in order to restore the confidence of the people in their country. Now, after nearly eight years of socialist rule, the nation has called upon Mr. Menzies to lead the country back along the road of sanity. I congratulate the Government upon having had the courage to make decisions that must be unpopular now but which, in the not distant future, will be hailed as statesmanlike actions.
Since the budget was presented the share market, which is the barometer of public confidence, has firmed considerably; wool prices have jumped; there have been record attendances at public functions ; and there is more money in the hands of the people than ever before. ‘
– And there are more patrons at the Tivoli shows.
– There is an all-time record in betting transactions on the totalisator and with registered bookmakers at metropolitan race meetings. All of these facts show the prosperity of the people.
Opposition senators interjecting,
– Order ! These constant interjections must cease. Some honorable senators are ruining what would otherwise be an excellent evening by their constant interruptions. I ask those who have been guilty of interjecting to restrain themselves and to save their words of wisdom for their own speeches.
– As the result of action taken by this Government, production in many industries appears ‘to be improving. As an example, I shall compare production in .one or two .industries during the last complete year of Labour rule with production in the .first complete year of Liberal-Country party rule. Over that period, the output of black coal increased by 1,500,000 tons, and of brown coal by more .than .250,000 tons. Other increases were: .bricks, 37,000,000; cement, 200,000 tons; cement sheets, 3,000,000 square yards; sulphuric acid, 52,000 tons; .superphosphate, 153,000 .tons; paint, 1,500,000 gallons; enamel, 500,000 gallons, and pig iron, 280,000 tons. Lastly, .21,000 more gas, fuel and electric stoves were produced in tho first year of .the present Government’s administration than in ,the last year qf the -Chifley Government’s term of office. I could cite .further figures, but I think I ;have said enough to convince honorable senators, if they can be convinced ,at all, that there is .an air qf prosperity .abroad, and that .confidence in ;the future is increasing .because .of the activities of the present .Government. However, in spite of the production increases to which I have referred - after all they are relatively small - and -notwithstanding -the importation qf large quantities of basic commodities, the demand for capital and consumer goods is still far from be.ing satisfied.
So far, the Opposition has failed to suggest one item of proposed expenditure that could ‘be reduced. ‘Most honorable senators realize that there are inescapable commitments that all governments must face. .Even if by some accident honorable -senators opposite were to find .themselves on .the Government .benches, they ‘would .be .compelled to honour those commitments. Surely, defence of the nation is paramount. It is vital to our existence, and I am sure that if honorable senators opposite were honest with themselves they would .recognize that -the defence needs of this country must be given the highest priority. No one will .suggest that the pension increases proposed in the budget are excessive o.r unjustifiable. Will any honorable senator recommend a reduction of the proposed increases? Will any honorable senator say that work of such fundamental importance as the provision of new postal and telephone facilities should be stopped’? “Will any ‘honorable senator say that -the Snowy Mountains scheme should ‘be abandoned, housing curtailed, or ‘interest -payments repudiated ? ‘Should we refuse to continue grants to the States or -withdraw subsidy payments’? Not one item of ‘budget expenditure ‘has been seriously questioned by the Opposition. It is cockeyed for ‘honorable mem’bers opposite on the one hand to complain thai the Government is budgeting for unnecessarily high expenditure, .and, on the other hand, to urge greater expenditure than ever, They cannot “have it ‘both ways. :Senator Hendrickson. - Who ba:advocated increased expenditure-?
– Senator Armstrong -urged greater expenditure on railways arid transport generally. Senator Hendrickson himself advocated that the payment of the pension increases be made retrospective. The States are to receive very generous -treatment under this “budget. They will get £69,400,000 more from ,the ‘Menzies Government than they received from the Chifley Government. That represents an increase of approximately 60 per cent. Further for the .first time in history, the Commonwealth has under-take.n .to provide out of revenue the funds needed for the works programmes -of -the .States if loan moneys are not available. There is, however, as Senator Reid has pointed out, a deplorable .tendency on the part of some States to .place the responsibility -on the Commonwealth for .the .limitation of .their activities. The time is more than ripe for .a complete preview of Commonwealth -a-nd State -financial .relations. It is the practice of .certain State governments to make all sorts of fantastic and spectacular promises .which would involve expenditure far exceeding the financial resources of the nation and then pass the buck ito the Commonwealth and. accept , no responsibility for ‘their failure to carry, out their promises. Those promises are generally made for .party political purposes. .An unsatisfactory position will always arise when one authority .raises money and another .expends it. Obviously, an authority that expends money should be charged with the responsibility of raising that money. I emphasize, therefore, that there is an urgent need for a complete review of Commonwealth and State financial relations. Notwithstanding the hysterical outbursts of the Opposition, the more reliable and sensible elements of the community regard the budget proposals as an effective means of dealing with the problems .now facing .this country.
– That would be «bout 2 per cent, of the people.
– The honorable senator is in the percentage I have in mindthe people who are more of a nuisance than anything else. He reminds me of a little dog barking at a St. Bernard or a willy wagtail attacking an .elephant. The Government’s anti-inflation proposals include a “ disincentive “ to non-essential production, and the financing of essential works out of revenue -rather than by competing on the loan market or using central bani credit. Indeed, that is the policy that was pursued by the Chifley Government, .and it is .the policy .that has been pursued by the Governments of the United .Kingdom, the United States of America and Canada in recent years. I remind honorable senators opposite that, speaking of the budget, their outside boss, Mr,. J. “Ferguson, li.L.C., federal president of the Australian Labour party, /said -
If by accident Labour found itself in office they would have to do the same as the ‘Menzies ^Government and bring .down .a similar budget.
Why then do honorable senators opposite croak .-and moan about the action that .the Government ds taking to .curb inflation.?
– ‘When did Mr. Ferguson .say .that ?
– He said it ‘when addressing the Fabian Society last Friday week. Honorable senators opposite complain because the Government is ‘budgeting for a. surplus but their former leader, Mr. Chifley,, said in the House of Representatives on the 17th .October last -
I believe that .when a country is in .a prosperous condition it should pay its way and if possible provide an additional sum of money for cap’ita’l works and for reserves. I make no bones about the attitude of the Labour party on that matter. That is the proper and businesslike method to adopt. I am really perturbed and -indeed alarmed at -the growing spiral of inflation in this country and for that matter in other countries. .Neither this Government nor any other government can be blamed for the -inflationary elements. I hope the ‘Go vernment will do something to correct the present disturbed state of our economy irrespective of whether .such action will.be popular or unpopular.
That is exactly what the present Government is doing. It is acting in the interests of the nation, regardless of whether its actions will be popular or unpopular. The present Leader of the Opposition in the House of Representatives (Dr. Evatt), said much the same thing on the same day. Speaking in the House of Representatives, he said -
Any .person who looks at a budget from the stand-point of ite ‘being a device to arrest inflation recognizes that in a boom time it is ;S0.und governmental practice to budget for ,a large .surplus. Such procedure .skims off spending power and holds it in reserve so that it can be expended later.
That is the view of .Labour’s leader. Do honorable senators opposite repudiate him,’? He advocated the action the Government has now taken. If tax increases were to be avoided, a budget deficit of £50,000,000 would have to be faced, and the Government would have to resort to bank credit which would be inflationary and suicidal. Dealing with taxation, Senator Ashley said that taxpayers earning £600 a year paid nearly all of the tax revenue. That is quite wrong. The truth :is that approximately 77,000 tax payers are in the £501 a year to £600 a year group, and they ‘ pay approximately £10,000,000 in taxes. There -are S7,331 ‘taxpayers earning more than £600 a year, and they pay £72,79S,3-11. Even if the ‘honorable sena-tor meant, as he may well ‘have done, that taxpayers earning up to £600 a year paid nearly all of the ‘tax revenue, ;he -was still .wrong, “because statistics show that ‘tax revenue contributed ‘by people whose -incomes are up to and including £600 a year number 1,695,275 -and that they pay £64,-595.,145 a year in -taxes. The number of taxpayers whose earnings exceed £600 a year is 87,331 and their contribution is approximately £73,000,000. In other words, approximately ‘87,000 ‘taxpayers pay roughly £8,000j000 more than 1,695;275 taxpayer’s who are in receipt o’f incomes of up lo £600 -a year. Therefore, .the ;honorable senator was quite wrong.
– I rise >to (order,. Senator ‘Guy has said that I made an incorrect statement. I said ‘that -the number of taxpayers in this country was approximately 3,300,000. I specifically mentioned the group of taxpayers who earn £12 a week, and said they carried a greater burden of tax than was carried by people in the higher income groups.
The DEPUTY PRESIDENT (Senator George Rankin). - There is no point of order. If the honorable senator has been misrepresented, he may make a personal explanation at a later stage.
– I can safely say that the Menzies Government is looking after the interests of the smaller taxpayers. Under the budget proposals taxation appears to be ingeniously spread so that it falls equitably upon people whose incomes have been inflated and whose spending is forcing Australia along the path to inflation. The proposed increases favour the small income earner and the family man. A taxpayer who is in receipt of a net income of £10 a week will pay less than 4d. a week extra, and a taxpayer who is in receipt of a net income of £15 a week will pay only an additional ls. a week. As my time has almost expired, I shall leave further discussion of the budget proposals until a later stage.
– Senator Guy has praised the Menzies Government for its honesty and courage in introducing this budget. Apart from that, he very carefully refrained from discussing the contents of the budget. He talked about other things. Before I conclude I shall test the claim about the honesty and the courage of this budget. That claim seems to be in line with the claim by some misguided people that a person who commits suicide is courageous, when, in fact, he is simply wallowing in the depths of ignorance, despair, and cowardice. Last evening I heard the Treasurer (Sir Arthur Fadden) refer to this budget as an extraordinary budget. I could agree with that statement up to a point, but the fact is that that was a gross understatement of the true description of it. I shall now refer to the first and last paragraphs of the Treasurer’s budget speech. In his first paragraph he stated -
These Estimates include proposals for new expenditures and for increased rates of taxation which will he the subject of separate legislation.
In his last paragraph he stated -
We make no apology for giving you a budget which will entail sacrifice.
One might well have expected those statements to come from the lips of the treasurer of a government that had sought a mandate for new expenditures and which had asked for a mandate to impose new forms of taxation. I think it is opportune to review the history of the Government in that matter. I have a very distinct recollection that in the joint policy speech of the Government parties there was a specific and emphatic promise to reduce the burdens of government.
– Which policy speech ?
– I refer to the joint policy speech of the Government parties in 1949.
– There has been another one since then.
– I am well aware that there has been another one since 1949. In case the Attorney-General (Senator Spicer) thinks that the pledges that were made in 1949 were waived for the period that intervened between then and the next election, let me remind him that just prior to the last general election the Prime Minister (Mr. Menzies) stated -
The real political issues are precisely what they were at the last election. The one new factor is that we are asking for real power to give effect to the policy we then laid before the people. In effect, we and the Government want a real chance to do the work you told us to do in December, 1.04!). If we are now given a Senate majority we will most certainly do that work.
Does the Attorney-General still contend that the promise to reduce governmental expenditure was not reiterated in March and April of this year? Unquestionably, the Government made a specific pledge. I should like to know whether any member of the Government parties contests that assertion. If it is contested, I shall give him chapter and verse for the particular promise.
The next pledge that was made in the joint policy speech in 1949, and reaffirmed in April of this year, was that there would be a reduction of the rates of taxation. I come to exactly what the
Treasurer said himself, in his own personal policy speech. In the course of that he had this to say -
If the socialists are defeated, therefore, rates »f taxation, both direct and indirect, can and will be steadily reduced. In short, our policy is a progressive reduction of taxation on individuals and the community in general, commensurate with national economic and financial policy.
L emphasize that statement. Yet the right honorable gentleman has now produced this budget, in which he promises new expenditures and new forms of taxation. Does any body challenge that the Government made a complete and specific pledge, as Senator Nicholls stated a few minutes ago, to put value back into the £1 ?
– Yes!
– The Attorney.General challenges my assertion. He is at variance with the policy speech.
– -Read it !
– I shall do so, and I shall also read extracts from other statements.
Government senators interjecting,
– Order ! I ask honorable senators to refrain from interjecting.
– In the joint policy speech of the Government parties in 1949, this passage occurs -
The greatest tusk, therefore, is to get value back into the pound, that is, to get prices down. That is the only effective way of increasing real wages and salaries and, indeed, all monetary payments.
– Doe3 the honorable senator dispute that?
– I do not dispute that that is the way to get value hack into the £1. I am merely reiterating that this Government made a specific and clear promise to put value back into the £1. I have in my hand a sheaf of Liberal party advertisements. One contains a photograph of the Prime Minister, and reads -
First question: Will you be able to reduce the cost of living?
Answer: We regard that as our first responsibility - to increase the purchasingvalue of the Australian pound; to increase production and thus bring prices down.
Does the Attorney-General still say that there was no pledge by the Government to put value back into the £1 ? He is completely at variance with the Leader of the Government in this chamber (Senator O’Sullivan), who, time and time again, from his place at the table, has acknowledged that the Government did make such a pledge. On the 10th May, 1950, in answer to a question that was asked by Senator Nash, he said -
Much as I would like to do so, it would not be fair of me to take the time of the Senate for the whole afternoon to explain what this Government has done to carry out its pledge to restore the purchasing value of the £1 . . .
Again, on the 10th May, 1950, in answer to a question that was asked by Senator Amour he said - . . he appears to be under the impression that the Government has no formula for restoring the purchasing value of the £1. 1 assure him that it has.
Does any body on the Government side still dispute the fact that the Government made such a promise? Again, on the 16th May, 1950, in reply to a question that was asked by Senator Grant, the Minister said -
I can assure the honorable senator that the Government is fully conscious of its responsibility, and with a little cooperation from honorable senators opposite and those whom they represent we shall restore the purchasing value of the £1.
Does any honorable senator want to repudiate that there was a clear promise by this Government to put value back into the £1? There was a further promise to remove controls of all kinds. Does any body want to deny that particular pledge? I have already indicated that each of the four pledges that I have mentioned was reiterated and confirmed just prior to the general election in April of this year. They are continuing and current pledges, from 1949 to this minute. There is no escaping from that.
I shall now review the performance of the Government in relation to those specific pledges. Let us take the pledge to reduce governmental expenditure. In 1949-50, the- last year in which Labour was in office, governmental expenditure was £592,000,000. In its first ;ull year of office the Menzies-Fadden Government expended £783,000,000, an increase of £191,000,000. For the financial year 1951-52 it has budgeted for an expenditure of almost £927,000,000, an increase of almost £144,000,000 compared with last year. So that in two years this Government, which got into office on the pledge that it would reduce governmental expenditure, has, in fact, increased it by £335,000,000 in a year.
– What items of that expenditure does the honorable senator claim are not justified?
– If Senator Wright will be. patient, I shall enumerate them. At the moment I am dealing with performance in relation to promises that were made.
– Does the honorable senator claim that the Commonwealth Government is expending all that money?
– That is the expenditure that is envisaged in. this year’s budget.
– But one-third shall go back to the States.
– The States have to get their moiety of it. I come now to the proposal to reduce taxation. In its 2-1 months of office this Government has added an additional burden of taxation at the rate of £472,000,000 a year. Let me give some broad details of that amount. The increased rates of sales tax imposed last year yielded an additional £10,000,000. The wool deduction pre-payment for 1950-51 yielded another £98,000,000. Increased postal charges imposed last year yielded an additional £20.000,000. According to the Treasurer, if no new rates of taxation were imposed this year, the additional yields under those headings would aggregate £155,000,000 during this year. The new taxation rates, he tells us, will bring in an additional £45,150,000 during the remainder of this year, and in a full year, another £164,000,000. Allowing for the £20,000,000 taxation concessions approved last year, the net result is that there is increased taxation of £472,000,000 in this year.
– Has the honorable senator ever played two-up with himself?
– I must confess that I have had no such experience. The fact remains that this Government, which said that direct- and indirect taxation could- be, and would be, reduced, has now brought up more direct and indirect taxation, to the tune of £472,000,000 per annum. If any honorable senator on the Government side can controvert that assertion. I shall be delighted to hear from him.
I shall now deal more fully with the Government’s promise to. put value back into the £1. There is- a very simple test that can be applied. I have had a look at all items in the “ C “ series index for the six capital cities at the beginning of 1939. The index figure then was 920. Let me assume that the £1 of 20s. would then buy £l’s worth of goods. Exactly ten years later, when the Australian Labour party went out of office, the index figure had risen to 1415, which means that after a period of ten years, during eight of which Labour was in office, it took £1 10s. 9d. to buy goods which cost £1 in 1939. In other words, there was an increase at the rate of ls. Id. per annum. Now let us look at the 21 months of office of this Government. From 1415, which was the index figure at the 31st December, 1949, it has risen at the end of September this year, to 1943, so that after one and three-quarter years it now takes £2 2s. Id. to buy goods which cost £1 in 1939. The extra lis. 4d. represents the momentum that has been gathered in one and three-quarter years. In other words, under this Government, the loss of value of the £1 has gone on at the rate of 6s. 5d. a year, as against ls. Id. a year under a Labour government. So much for the promise to put value into the £1.
– Wages have increased to a greater degree.
– They needed to increase. I invite any honorable senator who wishes to controvert that test to stand up and demonstrate to the Senate in what way that argument is incorrect.
Let me now come to the fourth pledge that the Government made, which was to abolish controls of all kind. We have seen the lifting of capital issues control.
– And. also petrol rationing.
– Let us deal with capital issues control, which had a great effect in steadying the economy of the country. This Government swept it away within a fortnight of taking office. After all the new, diversionary activities, about which (the Government complains to-day, ,were floated, the Government again clamped down the control.
– Why?
– Because it wa3 necessary and because the control should never have been removed.
– Because war intervened in the meantime.
– Order ! I do not know whether honorable .senators have suddenly become deaf, .but they have certainly lost all .sense of decorum.
– Of humour !
– If the honorable senator persists in interjecting I shall deal with him. I am not deaf. I appeal to honorable senators to allow the Leader of the Opposition (Senator McKenna) to proceed with his speech and not to interject while he is speaking.
– I was dealing with the Government pledge to abolish controls. I had referred to capital issues control which was promptly lifted by the Government and then belatedly reimposed. To-day there is restriction of bank credit and restriction of the financial policy of banks towards individuals and companies. There is the Defence Preparations Act which gives power to Ministers and officials to rule by decree in every phase of the economy. Any infringement, either of a regulation >or of an order made by an official, is visited with the most severe penalties. The Government has indicated that it proposes to divide industry into essential, less essential and non-essential groups, to cut off the supply of materials to some industries and to close down others altogether. I do not say that it may not be desirable to do some of those things, but I point out that the Government which is doing them is the same Government which stated that it was going to remove controls. It has been said that there is a war on. I should like some one on the Government side of the chamber to tell me where the war is to-day. There is little difference between the international position as it is to-day and the cold war that raged when Labour held office. We then had all the difficulties of the Berlin airlift, and we also sent troops abroad. The atmosphere was not ‘very much different from that of to-day. The High Court of .this country stated only a few months ago that Australia is at peace and is not at war with any other country. It is true that we have sent troops to assist the United Nations forces in Korea, but does any member of the Government seriously suggest that it takes another £472,000,000 of taxes to maintain token forces in Japan, Korea and Malaya? Is there any suggestion that that is the order of expenditure? I should be astonished if any honorable senator is prepared to say that it is.
During its 21 months of office, this Government has done the exact reverse of almost everything that it solemnly promised the people that it would do . Now, with the most colossal effrontery and brazen audacity, it comes out with a budget of this nature, without explanation, and, as the Treasurer has said, without apology. It is certainly time that a responsible member of the Government had the courage and the decency to stand on his feet and say, “ We made those pledges and we are breaking them “. It is time some one gave, if not some explanation, at least some apology to the people who have been . deceived. The Government, by means of this budget, shows the most supreme contempt for the memory and the intelligence of the people of Australia. I say, with a great degree of deliberation, that a government which can act in the way that this Government has acted in presenting this budget, in breach of every promise that it made to the people on two occasions, and made as recently as April last, has lost all sense of shame, decency and honour. The only honorable course open to a government in that position is to put the budget and itself before the people of Australia.
Government supporters interjecting,
– I can well understand its reluctance to do so. However, I put it to the Senate that that is the only honorable course for it to pursue.
I come now to the Treasurer’s estimated surplus of £114,500,000. Here, again, I propose to show more deception, which is easily exposed. The Treasurer has intimated that revenue this year will be £1,041,500,000, that expenditure, will be £927,000,000, and that there will be a declared surplus of £114,500,000. He proposes to put that surplus “ where it can do least harm “. Now let us examine the undisclosed surpluses. I go first to the payments into the National Welfare Fund, which this year will be £1S5,000,000. The Treasurer proposes to draw out of that fund £13S,000,000. Therefore, there will be a surplus of £47,000,000 on this year’s operations. At the 30th June, 1951, the fund contained a balance of £150,000,000. There is a reserve of £4S,000,000 in the strategic stores and equipment fund. Last year £57,000,000 was paid into that fund hut only £9,000,000 was expended, so that there is a reserve of £48,000,000. This year the Treasurer proposes to pay into the fund £32,500,000. I doubt whether that sum will be expended, and it may well constitute an additional surplus. However, I am not including it in the figures that I am presenting to the Senate.
One hundred and six million pounds is to be expended on capital works and services, with only £4,000,000 coming from loan moneys. That is, the Commonwealth intends to borrow only £4,000,000 this year for its own purposes. All other capital works and services are to be paid for from revenue collected this year. I hear an honorable senator opposite saying “ Hear, hear ! “. It is as well that everybody should understand exactly what the Government is doing. It is building ships and airports, providing plant, acquiring land, proceeding with the Snowy Mountains project and spending £25,000,000 on war service homes - all capital projects. Some of them, such as war service homes, will involve repayment to the Government. The people of Australia this year have been mulcted to the tune of £102,000,000 for projects of that kind, some of which will last for generations. In fairness to the people who are to come after us, and who will enjoy far more benefit from them than will this generation, their cost should be spread over the next 58 years, in terms of the financial agreement.
– Where does the honorable senator want to borrow the money?
– I shall deal with that aspect of the matter when I reach it. The £102,000,000 should come from loan moneys. The items that I have cited total £461,000,000 of disclosed and undisclosed surpluses in this budget. I add to that what is certain to be an overstatement of expenditure, and what is certainly an understatement of revenue, because since this budget was presented the basic wage has jumped another 14s. from the 1st November, which will yield additional revenues for which allowance has not been made in the budget. I venture to predict that that state of affairs will continue throughout the whole of this financial year, quarter after quarter seeing further rises of the basic wage.
– Would the honorable senator favour a reverse tendency in the basic wage ?
– I think that it is essential that there should be such a tendency. If this Government were really concerned with inflation it would focus its attention on the basic wage, which is in fact the focal point at the moment.
– And do what?
– Do what the Government parties promised the electors that they would do - subsidize essential commodities. I suggest to the Government that instead of talking about production, the Prime Minister (Mr. Menzies) should carry out the pledge that he gave twelve months ago that basin materials would be controlled. If the Government concentrated upon that aspect of the economy, so that basic materials might be directed into the proper channels, there would be no need for the very grave impropriety upon which it has embarked in assassinating businesses by means of the imposition of sales tax, customs duties, excise and indirect taxes. I consider that it is completely improper to use the taxation machine for the purpose of forcing businesses out of existence. Taxation should be used to raise revenue for the proper purposes of government.
I conclude my remarks concerning the surpluses that this Government has accumulated by stating that in my opinion they run to the order of £500,000,000. In addition, the Government proposes to take from the people an additional £472,000,000 of tax for the year. In short, it has imposed a capital levy. The Minister for National Development, is reported, whether accurately or not I do not know, to have said that the Government would use the disclosed surplus of £114,500,000 only over his dead body. If he was correctly reported, I hate to think of what is in store for him, because the Treasurer made it clear in his budget speech that it might be impossible to raise the proposed total of £225,000,000 on the loan market, and he added that -
To the extent that loan raisings fall short of the loan programme the Commonwealth will need to finance the balance from its own resources.
In case there might be any doubt of his intention he added -
This is to be paid into the National Debt Sinking Fund. To the extent that these special moneys are not required for direct or indirect assistance to the Loan Council’s borrowing programmes they will be available to the commission for other purposes.
It is evident that the Treasurer had it in mind to use the surplus either directly or indirectly, to make up deficiencies in the Loan Council’s borrowing programme. Therefore, the Minister for National Development had better begin to prepare for the worst.
It is the opinion of the Opposition that this budget is inflationary rather than deflationary. When sales tax is added to the price of goods, together with the manufacturers’profit, and when excise and customs duties are added, the people will find that the cost of goods has increased accordingly. The mere fact of adding sales tax to goods, which the Government thinks are luxuries, but which most people properly regard as necessaries, must have the effect of increasing inflation. The Treasurer is not in as happy a position as was the first man, Adam, of whom it was written -
Whatever troubles Adam had
No man in days of yore
Could say when he had told a joke, “ I’ve heard that one before “.
The Treasurer said of his 1950-51 budget that it was going to cure inflation. Now, when he says that the present budget will do the same thing we are entitled to retort : “ We have heard that one before.”
– He did not say that.
– I refer the Attorney-General to the budget speech of 1950-51, in which the Treasurer said -
Because inflation tends to scatter and waste resources this budget is being planned as part of the general economic policy of the Government to restrain inflation.
– He did not say “ cure “.
– Every one who heard or read those works knows that the Treasurer presented last year’s budget as an anti-inflationary budget, and everyone except the Government’s supporters recognizes how little it succeeded. The great fault of this budget is that it disregards psychological factors, the greatest of which is that the people have lost confidence in the Government. They now recognize that specific promises on which they relied were flagrantly broken by the Government without apology or explanation, a fact which has thrown the people, both workers and businessmen, into the gravest uncertainty. Indeed, uncertainty is the dominant note in business circles to-day. Every one is uncertain of the future. Promise after promise has been made by the Government, and has been broken or has not been honoured. For instance, a year ago the Government promised to institute control of basic materials, but that promise has not been honoured. The budget, which heavily increases direct and indirect taxation, has taken the heart and initiative and enterprise out of the workers, and out of members of the business community alike.
In the economic field there are four major interests contending for labour and materials. The first is housing. From a social, material and moral point of view there is no greater need in Australia to-day than adequate housing, particularly for young people who are either just married or who want to get married. I do not suggest that the housing programme should be cut. Developmental projects may be regarded as defence measures. When we promote power and water conservation projects, when we bring new land into production, or intensify cultivation of land already occupied, we are making the best possible contribution to the defence of the country.
Immigration is imposing a serious strain on the Australian economy. I believe that immigration is good, but I am now considering it as one of the four factors which are competing for labour and materials of which, there are not enough to satisfy all needs. The courageous thing to do would be to make up our minds to cut something, and I say without hesitation that immigration should be cut substantially at this stage until the Government can do something to speed up housing and development, and to stabilize the economy. I know that immigration is good. The Government of which I had the honour to be a member initiated the immigration programme, and carried it forward on a large and successful scale, but it is time we recognized the effect which it is having on our economy.
– Would Mr. Calwell cut the immigration programme?
– I think he would, but I cannot answer for him. The budget provides for the expenditure of £1S2,000,000 on defence, plus further amounts for stock-piling. I am curious to know just how the money is to be expended. I am not satisfied that it will be expended to the best advantage, and I am conscious of the fact that the Prime Minister said as recently as last March that Australia was in no danger of invasion within the foreseeable future because no power which might threaten us had the necessary sea forces to make an invasion possible. He made the point that if we were involved in war our forces would be engaged at a distance from our shores. I invite honorable senators opposite to take notice of that statement. The Labour Government drew up a five-year defence plan under which it was proposed to expend £60.000,000 a year on developing and expanding the three armed services without imposing an undue strain on the nation. The money was to be expended on the Navy, the Army and the. Air Force, with particular emphasis on the Navy and on a highly mobile Air Force. To those who might ask me what expenditure I would cut I say without hesitation that I would cut expenditure on immigration and defence.
– Which of the services would the Leader of the Opposition, cut?
– If the Government will tell me how the money is to be expended I might be able to answer the honorable senator’s question. The approach of the Government to the economic problems of the moment may be summed up in this way: The people have too much spending power, and there are too few goods. Therefore, let us take some of the money away from the people so that their purchasing power will neatly balance the goods available. What a futile and hopeless approach that is! The obvious remedy is to increase the supply of goods. The Government should concentrate upon that. Let it give aid to the primary industries, and if it wants to use taxation for purposes not properly related to the raising of revenue, let it consider the granting of taxation rebate in fields where it wants more production. The mere taking away of the peoples’ money without increasing the supply of goods at a price that the people can pay can make no contribution to human welfare. It may make a neatly balanced economic pattern that is attractive to economists, but it can do nothing useful for the people.
The Government should have regard to prices control and profits control. The Labour party has never advocated those controls as a panacea for our economic ills, but they are necessary adjuncts to more stringent controls, and I would not burke them. We must control capital issues, and we must have control of the supply of basic materials.
– What about wages?
– I think it is also necessary to look at wages, which are an all-important factor in inflation. The trade union movement is more concerned about rising wages than is the Government. If the Government showed honesty and real courage by dealing with prices and profits, it would have no difficulty in reaching agreement with the trade union movement. I am prepared to admit that under the Constitution the Commonwealth Parliament lacks power to do all the’ things that ought to be done to check inflation. Therefore, the Government should nave the1 honesty and courage to’ ask- the people for the power it needs. The Labour Government knew that the present situation would arise, and we< asked the people to grant to the Commonwealth Parliament increased power for a limited period after the war. We know what happened,, but it would have been a very different story if the parties which, support the1 present Government had advised the people in 1948 to grant the powers then asked for.
I do not wish to conclude without referring to a significant omission from the speech of the Treasurer. Until the’ holding of the recent referendum, the Communists were blamed by the Government for every ill that beset the country. However, in his budget speech which covered twenty printed pages, the Treasurer said not one word about the Communists, but on the very first page the following statement occurs : -
Inflation, however, has other serious effects beyond the rise in prices. In large part it is the cause of the misdirected enterprise, the shortages of critical materials, the ill-balanced distribution of labour and the waste of plant capacity that are hampering industry and construction to-day.
Apparently the Communists have been laid to rest by this Government. However, I remind the Government that the High Court and a majority of the people have said, “We do not approve of the methods suggested by the Government to deal with Communists “. The defeat of the Government’s referendum proposals does not, of course, absolve it from the necessity for doing everything it can to combat the Communists. In the course of other speeches I have told the Government exactly what its powers are as expressed in judgments of the High Court, and I put it to the Government now that it is not entitled to regard itself as being absolved from its pledges. One of those pledges was that legislation to deal with Communists would be introduced and the law of sedition would be strengthened so as to prevent Communists from holding certain offices. However, no new legislation to combat communism or to review the law of sedition has been introduced by this Government, and the Government’s failure to redeem its promise must be regarded as one more broken pledge.
I conclude by saying that the* Treasurer and the Government which made all these glowing promises- have now been compelled to confess miserably that they cannot carry out those promises. Instead^ they have told the people that they must: have nasty medicine; This- budget is nasty medicine, and the people recognize it as such. The Government has told the people that everybody will have to be. hurt. The people are being hurt, and. they do not like it. Indeed, the hopelessness of the Government’s budgetary proposals reminds, me of the first line of Longfellow’s poem, which begins -
The day is done and the darkness falls from the wings of night.
If the word “ night “ were spelled with the letter “K”, the whole line would express colloquially, the views of many people who think of Sir Arthur as the author of this deplorable budget.
.- The Leader of the Opposition (Senator McKenna) has found it very convenient to forget some quite recent political history. He had a lot to say about the policy speech of the non-Labour parties that was delivered in 1949, but unfortunately his version of that speech did not correspond accurately with its contents. He endeavoured to convey the impression that the present Government has, by its conduct of affairs, forfeited the confidence of the people. Let me remind the honorable senator that so recently as April last the people of Australia demonstrated quite clearly that they had complete confidence in the present Government. In addition to giving the Government a substantial majority in the House of Representatives they gave it a majority in this chamber. At the referendum held as recently as September last, the voting figures reveal that had the political parties been engaged in a general election the present Government would have won 68 seats in the House of Representatives against 53 seats that would have been won by the Opposition. Although the Opposition party succeeded in defeating the referendum proposals, but only by the narrow majority of 50,000 votes, its success followed a campaign in which more diabolical untruths were employed than had previously been used in any election campaign in this country. It ill becomes the Leader of the Opposition to refer, as he did in detail, to statements that were made two years ago and to promises that he alleges were made by the political parties now in office. He knows something about political promises and something about the means by which propaganda can be used to mislead people, at least, during referendum campaigns. However, I shall not pursue that rather distasteful theme.
I propose now to discus3 quite dispassionately the budget proposals that are before us at present. First of all, I want to emphasize a fact to which the Opposition does not give sufficient weight, which is that the budget is not the only step that the Government has taken, or will take, to combat inflation. Nevertheless, the budgetary proposals are an extremely important weapon in the attack on inflation. As members of a federal Parliament we must always realize however, that our powers are strictly limited. Unlike the parliaments of the United Kingdom and of New Zealand the Australian Parliament can act only in accordance with the limits of authority conferred upon it by the Constitution. That being so, the most important direct contribution that any national administration can make towards solving our economic problems is usually to be found in its budgetary and financial proposals. Of course, I do not suggest, and no one will suggest, that the implementation of the Government’s budgetary proposals will entirely overcome the inflationary difficulties that confront us. The point is that those proposals do represent an honest attempt to grapple with the problems confronting us and to restrain the present inflationary trend.
– What are they?
– I do not profess to know all about them, but I am perfectly sure that honorable senators opposite have only the vaguest notion of them. Having listened to the debate on the budget that has now been going on for some weeks, I say deliberately that Labour has failed wholly to confront the realities of the situation. Throughout the whole of this debate ‘the only practical suggestion made by the members of the Opposition to deal with inflation is that we should re-introduce federal prices control. Indeed, that contention has become almost a parrot cry with them, and we are asked to believe that if this Parliament assumed responsibility for prices control all our troubles would be over. The fact is, however, is that we already have prices control in every State. In New South Wales that control is administered by a Labour Government, and 1 suppose it is true to say that prices control has been more rigidly enforced in that State than it has in any other State. What has been the result? During the most recent, quarter the cost of living has increased more in New South Wales than it has in any other State, and one consequence of that disastrous increase is that the basic wage of New South Wales has had to be increased more than has the basic wage in any other .State. Of course, members of the Opposition derive their ideas about the efficacy of prices control from their recollection of economic controls during the war. It is true that when Labour was in office during the war the system of prices control that it administered did result in prices being kept down to a reasonable level. However, the important fact which members of the Labour party perist in forgetting, is that the war-time government was able, because of the special powers that it enjoyed during a period of national emergency, to impose many other complementary economic restrictions. Let me mention one or two of them. First of all, there was control of wages. Secondly, there was direction of manpower. The supply of materials was controlled, and essential goods and commodities were rationed. Those were the controls that enabled the Government to enforce reasonably successfully a system of prices control, which served really to register the effect of the other controls. Now we are asked to adopt federal prices control as a cure-all for our troubles. Will members of the Opposition explain why they contend that Mr. Menzies in Canberra can achieve a result that is beyond the attainment of Mr. McGirr in New South Wales? That contention has only to be stated to demonstrate its absurdity.
But does the Australian Labour party really believe in prices control? After all, what was the greatest single contributing factor to the inflationary trend that has developed so rapidly during the last two years? I suggest that it was the enormous increase of the price of wool. At the end of last year Australia’s wool cheque exceeded £600,000,000. But did the Labour party at any time suggest that it would fix the price at which Australian wool would be sold so that that price would be less than the price obtained on the open market ? Not a bit of it! Indeed, when the present Government took steps last year to restrain, at least in some degree, the inflationary effect upon the whole community of the huge wool cheque received by our graziers, the Opposition said that if it goc the chance it would hand back to the woolgrowers the amount of wool sales contribution that had already been withheld by the Government. The Opposition would not be prepared to put into operation a system of prices control that would be really effective in checking the inflationary spiral.
The factors that have contributed to the unprecedented inflation that has occurred in this country during the last two years are, first, the economic effect on this country of the war in Korea, and, secondly, the huge increase of our national wool cheque. Members of the Opposition find it very convenient to forget about those matters. Of course, I can understand the indifference of the Leader of the Opposition to the war in Korea. His own follower, Senator Morrow, of Tasmania, would have us believe that the Australian troops in Korea are aggressors who are invading the country of another people and are seeking to destroy those unfortunate people. That is what Senator Morrow, the leader of the last Labour Senate team in Tasmania has repeatedly told us. I am not astonished that the Leader of the Opposition should so eagerly desire that no reference be made in this chamber to the war in Korea.
– That statement does the Minister no credit.
– The great increase in the price of wool, the greatly increased danger of war with the consequent great demand for defence preparations, increases in the basic wage made by the
Commonwealth Arbitration Court that amount to more than £1 a week - all these elements are conveniently forgotten.
– And also increased dividends.
– They result from some of the elements that I have mentioned. The Leader of the Opposition expected us to approach the consideration of the problems which we now face as though they do not exist.
I do not need to look very far to find in some sane Labour thinking, which unfortunately we do not get in this chamber, a complete vindication of everything that, the Government is doing in relation to this matter. I commend to the Leader of the Opposition and his followers in this chamber some comments that were made by their former leader, the Right Honorable J. B. Chifley, who was described to us by one of his follower.tonight as one of the greatest Treasurers that this country has ever produced.
– And probably quite rightly so.
– I am prepared to accept the truth of the statement, and 1 am sure that if Senator Sandford believes it after he has heard what I am about to read to him, he will commend the Government’s proposals. In 1948, speakin on the Appropriation Bill, Mr. Chifley had this to say -
In these highly prosperous times it should be possible to maintain taxation and other revenue at a sufficiently high level to enable the Government to meet its current expenditure and to make a very substantial contribution at least to capital expenditure and to build up reserves for days when conditions might not be so prosperous.
The last two propositions in that statement were vigorously attacked by the Leader of the Opposition when he bitterly complained that we were using revenue to meet expenditure on capital items. In 194S-49 inflation had not really come upon us.
– It would never have come upon us if Mr. Chifley’s policy had been followed.
– In those days, although we did not have a wool cheque for £600,000,000, Mr. Chifley said it would be desirable for the Government to maintain taxation and other revenue at a sufficiently high level to enable it to make a substantial contribution to capital expenditure. The remainder of his statement completely endorses the Government’s policy to budget for a surplus in a time like this. Every speech that has been delivered by Opposition senators on this budget has been diametrically opposed to the doctrine that was enunciated by their late leader.
– There is no parallel between the situation that existed when Mr. Chifley made that statement and present conditions.
– The problem now ia precisely the same as it was then. That statement was not a chance remark, for on the 24th October, 1950, Mr. Chifley is reported in Hansard, at page 1263, to have said -
My colleagues-
I assume that he included Senator McKenna -
My colleagues and I observed a simple principle of taxation which was that when a country is prosperous it should pay its way and try to put something aside.
– There was nothing new in that. Keynes made a similar statement long before then.
– I am not astonished to learn that he did so, but that fact seems to have been forgotten by honorable senators opposite. The statement of Mr. Chifley is surely relevant to the budget proposals now before us. What has the Leader of the Opposition said to-night? “Oh, no,” he said, “I shall have none of this doctrine of Mr. Chifley. It is all moonshine. It is dishonest.”
– When did he say that?
– He said that, or words to that effect, in the course of his speech to-night. He bitterly complained that we are using revenue to meet expenditure on capital works. If he believes that those capital works should be undertaken, he .must have meant that we should finance them by the issue of bank credit, because there is no other source from which the requisite money could be obtained. Honorable senators opposite cannot have it both ways. If they accept a proposition - and I suggest it is incontrovertible - that it is impossible to raise on the loan market even the amount of money required for State capital works, and also the proposition that it is desirable that the Commonwealth should undertake capital works at a cost of a little more than £100,000,000, it is obvious that if we do not pay for those Commonwealth capital works out of current income the only way in which we can obtain the money is to have recourse to the extension of bank credit. Any one who suggests that it is desirable to extend bank credit at present is fit for the madhouse. The criticism of the Leader of the Opposition, far from offering any contribution to the solution of our inflation problem, does directly the opposite. Indeed, the course that he advocates would necessarily lead to the intensification of the problem.
Another “ brilliant “ suggestion made by the Leader of the Opposition in relation to this matter was that we should keep down prices by the payment of subsidies. Already there is more money flowing round the country than there are goods and services to be bought. In those circumstances the best contribution the Leader of the Opposition is able to make is to suggest that we should subsidize commodities in order to keep prices at their present level or to depress them slightly. Where would he obtain the money from with which to pay such subsidies ?
– From the surplus.
– But the honorable senator does not believe in the necessity for a surplus; he does not believe in increased taxes, which he regards as a dreadful imposition; but he believes in subsidies. In order to keep prices down he contends that millions of pounds of government money should flow to the community to subsidize the prices of commodities. In other words, he contends that the amount of money circulating in the community must be increased without any increase of taxation. We are forced to the conclusion that the Leader of the Opposition favours a huge increase of bank credit. Any one who advocates a policy of that kind to-day would lead this country to destruction. Because the Government was determined not to take that course it was forced to exercise its influence in the Loan Council in which it has only two votes.
– Not two, but three votes, according to the Treasurer.
– At all events the States have a majority of votes in tha deliberations of that body. The Commonwealth exercised its influence in the council to reduce the inflated programmes of the States from £300,000,000 to £225,000,000 with the full knowledge that even that amount could not be secured on the loan market. If it had not done so the States could have obtained the full amount of their loan programmes only by the extension of bank credit.
I have already emphasized the fact that Opposition senators have failed to face up to the realities of the situation and that the virtue of this budget lie3 in the fact that it constitutes an honest attempt to face present conditions, to state them plainly to the people of Australia and to call upon the people to accept the burdens which are necessary to aid in the solution of our problems. The great trouble about the Labour party is, and always has been-
– Do not worry about the Labour party.
– I do worry about it. It is a great pity that that party should endeavour to mislead the people into believing that painless remedies can be found for every situation. We had some samples of that in 1931 when Labour would not face up to the realities of the situation. Labour has always sought painless remedies, but no painless remedy could get Australia out of its difficulties in the depression years. Today, honorable senators opposite talk about the evils of inflation. Persistently they call on the Government to do something to curb inflation, but when positive action is taken, they oppose it on the ground that it will impose unfair burdens on the people.
– The painless way would be to get rid of capitalism.
– There is no painless way, and the problem has nothing to do with .capitalism. The Government realizes that there is no painless remedy and that is why it has adopted the measures that will contribute most to a solution of the problem.
– This is the hardest job that the Attorney-General has ever had to do.
– There is nothing hard about it, except that half of my listeners in this chamber are incapable of understanding common sense. What are the fundamentals of the present situation ? There is, I assume, general acceptance of the proposition that our problems to-day arise from the surplus of money in the community. In other words, the purchasing power of the community exceeds the available goods and services. There are two phases of the solution of this problem. One, as the Leader of the Opposition has said, is increased production. This Government has not been tardy in its efforts to increase production, nor have its efforts lacked success. Had we received more co-operation from the Opposition a still better job could have been done.
I commend to honorable senators opposite the latest report of the Commonwealth Bank Board, which contains some very interesting information about the increased output of coal, steel, electrical power, cement, and bricks, that has taken place since this Government came into office. It cannot be said, therefore, that the Government has not made its contribution to that phase of our economic problem. Do not run away with the idea that we are satisfied with the improvement that has taken place. We are not. We recognize that increased production is the core of the problem, and that until this community is prepared to produce more than it is producing to-day per man-hour, the problem cannot be solved completely. The other phase of the remedy for inflation relates to the surplus of money in the community. That surplus has accumulated, as I have said, through fortuitous circumstances, including the substantially increased wool cheque. Many people do not yet realize that in a year Australia’s wool cheque increased from £300,000,000 to £600,000,000. That was a tremendous influx of money.
– The Government “ pinched “ most of that and spent it.
– We did nol “ pinch “ any of it, if I may use the honorable senator’s language. We provided for a prepayment of portion of the tax payable on that greatly increased income. That was all that we did, and it was some contribution, although admittedly not a very big one, to the curbing of inflation.
Opposition senators interjecting,
– Order! This is the third occasion on which I have had to ask that an honorable senator be heard in silence. There is a limit, and I trust that I can leave the matter to the judgment of honorable senators. I call upon the Attorney-General to resume his speech, and I insist that interjections shall cease.
– I was dealing with the wool tax prepayment plan, which, last year, assisted to relieve the inflationary situation caused largely by Australia’s greatly increased wool cheque. By reducing spending, the Government can assist materially to curb inflation, and certain of the budget proposals are directed to that end. The taxation proposals are designed to discourage spending, particularly spending on goods that people can do without or the consumption of which can be reduced.
– Such as washing machines and refrigerators.
– As one honorable senator very properly pointed out this afternoon, when the choice lies between houses and washing machines, houses must come first. Married people who do not have a house can have little use for a washing machine. They cannot live in it. I suggest that the budget has been designed with considerable skill to reduce expenditure on non-essentials and therefore to reduce the production of nonessentials. If that can be achieved, manpower and materials will be released from non-essential industries and become available for the production of necessary commodities. The sales tax proposals and the income tax proposals will spread the burden evenly over the community. Budgeting for a surplus is a means by which portion of the surplus money that is contributing to our economic difficulties can be skimmed off. There is nothing strange or new about that practice. It was completely endorsed, as I have shown, by Mr. Chifley, and in the United Kingdom, it has been carried much further than is proposed in this budget. The former British Chancellor of the Exchequer, Mr. Gaitskell, said in his budget speech delivered in the House of Commons on the 10th April -
The results of 1950-51 are at first sight, somewhat remarkable. My predecessor budgeted for a surplus of £443,000,000. In fact the surplus was £720,000,000.
That surplus of £720,000,000 was achieved by a Labour government, although the increase of income in the United Kingdom was not nearly so great proportionately as that with which we were faced. Our estimated surplus of £114,000,000 does not seem to be out of proportion to those figures. If budgeting for a surplus was the right medicine in Great Britain, it may well be the right medicine here. I repeat 4hat this budget is an attempt to deal honestly and courageously with the problems that face us, and I believe that the people of this country will regard it in that light. They do not endorse the criticisms that have been offered by some newspapers and by Labour members of this Parliament. The people realize that something has to be done along these lines if we are to tackle the problems that beset us. We do not claim that the budget proposals will solve our problems entirely, but we do believe that they are an essential step towards the solution of those problems. In the final analysis, the problem of inflation can be solved not by governments but by the people themselves aided and directed by governments. Every individual in the community can help to avoid the worst evils that could arise from a situation such as the present by curbing spending, particularly spending on nonessential goods, so that men and materials may be released to produce the commodities that are most needed for our comfort and welfare. Secondly, we can all make a contribution by improving the production of goods and services. As I have shown, the production of many commodities has already increased. A much greater improvement will take place under the guidance of this Government in the next two or three years. By sane budgeting we may be able to avoid some of the worst evils of inflation. It is because I believe that the budget is an honest and courageous attempt to face up to our problems that I commend it to the Senate in the hope that it will be given the endorsement of most members of this chamber.
– The Attorney-General (Senator Spicer) has vigorously attacked the Australian Labour party, and has stated that it has made only one suggestion for the stabilization of the economy of this country. He declared, quite wrongly, that Labour had claimed that prices control was a panacea for all our economic ills. Again quite wrongly, he stated that Labour had “ stood pat “ on a lone item to bring about the desired end. The Minister said that the system of prices control had only to be studied to show how ridiculous it was. He also stated that in New South Wales, where prices control is being exercised, the inflationary spiral is as acute as it is anywhere else. Therefore, on his statement, it is as evident in Western Australia and other States that have Liberal governments, as it is in New South Wales. The only States that get honorable mention in this chamber are those that are controlled by Labour governments.
Let me at once defend the proposition that prices control is ridiculous. I shall also throw back to the AttorneyGeneral the lie that Labour has claimed that prices control should stand alone. This is not the first time that I have had to stand in my place in this chamber and remind honorable senators that never at any stage has Labour advocated that prices control alone could effect stabilization of prices in this country. That was made abundantly clear when in this chamber, prior to the recent double dissolution of the Parliament, the Labour Opposition moved a motion that the people of Australia should be asked by referendum to give to the Commonwealth Dower again to control prices. The Leader of the Opposition (Senator MeKenna) has pointed out, as convincingly as I could, that at no stage has Labour contended that the re-introduction of prices control was all that was needed. The AttorneyGeneral’s argument broke down when he referred to the failure of prices control under State administration. During the campaign prior to the referendum on rents and prices in 1948, the Labour party pointed out to the people that it would be absolutely impossible for six separate States, with six different forms of government, and six different prices commissioners, to reach agreement, because goods do not stop at the boundary of a State but flow throughout Australia and, indeed, in and out of Australia. The Attorney-General has resorted to the old bogy, that as the States cannot control prices effectively, the Commonwealth could not expect to do so. The Minister cannot burke the issue that prices control was effective under Commonwealth administration. It has been a dismal failure under State administration, because some of the States never had any ambition to control prices.
– To which States is the honorable senator referring?
– I refer to South Australia, Victoria, and Western Australia. Instead, in Victoria a commissioner was appointed to de-control prices.
– Rubbish !
– In Victoria, it was decided not to control the prices of second-hand motor cars, because it was considered that if they were controlled every good second-hand motor car for sale would be taken to Victoria.
– Prices control was not dropped in Western Australia.
– Order ! Senator Willesee will address the Chair. Interjections, which are disorderly, will cease. I shall not permit the honorable senator’s speech to develop into a debate between himself and another honorable senator.
– I am sorry, Mr. President, not to have addressed you, because you are far more intelligent than the honorable senator to whom you have referred.
The Attorney-General has claimed that prices control was effective during wartime only because there was also control of wages. I wonder whether he has ever examined the system of wages control that operated during war-time. That the control of wages is the key to this issue, has been bandied backwards and forwards in this chamber this evening. I shall disprove the contention that if the basic wage trend could be reversed, something could be done about the control of prices. The basic wage is determined in relation to prices. Lel us take a wage of approximately £13 a week, which is still a good wage for workers. Moro than £10 of it is the basic wage. I ask honorable senators to forgive me for not knowing the exact amount. It varies so frequently that I cannot keep up with it. It has increased three-fold as a result of the spiralling of prices, lt has risen to its present exorbitant figure not as a result of cold deliberation by the Commonwealth Arbitration Court, or as a result of an application by a body of workers, but because of the law of the land that it must be related to prices that predominate in the market. Supporters of tho Government have said some foolish things in the past, and are now too proud to swallow thom. T know that this Government has no intention to try to remedy the present situation, but I point out that when an efficient system of .prices control operates the spiralling of wages immediately ceases.
In arbitration circles the remaining £2 or £3 of the wage that I mentioned is known as a margin. Margins are a section of the Australian economy that is severely controlled. That has not been brought about by the present state of our economy, but has formed a part of our wages system for many years. If a section of workers seeks an increase of that portion of its award, it has to go through all the formalities of an application to the court. Its representative has to appear before an arbitration court which, in the States, consists of a judge and representatives of employers and employees. The representative of the workers has to prove conclusively that there has been a change of circumstances sufficient to warrant an increase of the margin in that State. If the application is successful the court usually awards an incrpa.se nf margin from 5s. to 7s. a week. My point is that the greatest proportion of the wage, which’ has been freely mentioned to-night, is directly related to tho prices that dominate the market.
Of what use is it for Government senators to assert continually that during war-time wages were controlled ? At that period, when the “ C “ series index moved upwards the court always handed back the increase to the workers. Therefore, in effect, wages were not controlled. I have a knowledge of the working of the arbitration courts, having acted as a union advocate during, that period. The Government did not prevent unionists from seeking to rectify an anomaly in an award as the result of changed circumstances, although it was made difficult for a representative of a union to obtain an increase of the margin. It is completely false for the Attorney-General to claim that prices control was effective during war-time only because it rested on wages control. I do not know when the Government will make up its mind on the reason for the present inflationary spiral in Australia.
Swinging away from wages, the Minister claimed that the price of wool was a big factor in the present economic circumstances, and that during the regime of the previous Labour Government the annual wool cheque had increased by only £6,000,000 a year compared with the war years. He implied that almost all of the present burdens did not materialize until after Labour relinquished office less than two years ago. I do not need to refer to a report of my maiden speech in this chamber to recall that, as a very humble back-bencher, I pointed out that just after this Government entered office the annual wool cheque was five and a half times greater than the pre-war wool cheques. It is useless for the Minister to contend that if we were getting lower prices for our wool all would be well. Many factors have a hearing on the present state of affairs, including the prices that are being obtained overseas for our commodities, and the disequilibrium between the £1 sterling and the £1 Australian. I always remember the falseness of the Prime Minister (Mr. Menzies) when he said, in 1949, “ Let us return to the Liberal-Country party £1 of 1939 “. Of course there was no
Liberal party in 1939. That is one side of the coalition than canbe excluded from that false promise. The position that obtained in 1949 could not be remedied until, by effluxion of time, Japan and Western Germany got back on their feet, and until Italy and South America got away from war and resumed normal production. It is abundantly clear that the present economic times are not normal. No longer can we rely on the sweet law of supply and demand. Therefore there is need of governmental action to balance the situation. My rejoinder to the Attorney-General’s statement that the Government does not believe in prices control is that the Opposition in this chamber does not move motions unless it is convinced of the necessity for so doing. Why should not Labour desire reintroduction of prices control, in view of the sterling job that the prices administration did during war-time? Supporters of the Government should look into the mirror and face the mistakes that they have made, rather than blame the economic trend entirely for the present state of affairs.
When this Government abolished the control of capital issues it did a very great disservice to this country. The Attorney-General skated very cleverly around this issue. Of course, as a lawyer and a King’s counsellor, he is paid to get around difficult situations. The disequilibrium of incomes from sales overseas of our wheat, wool, and other commodities, was damned up and went into the hands of a few people. The Government arrogantly claimed, when it abolished capital issues control, that it had done awaywith an unnecessary control. Actually it allowed excess money to get into the hands of the few, and subsequently into luxury industries. Now, people who are foolish enough can buy luxury goods of all descriptions. But when builders seek to buy timber, cement, or asbestos, traders merely laugh at them. This is the direct result of the Government’s throwing overboard capital issued control, and thus allowing pent-up money to flow into luxury items. To-day a question was asked concerning the export of rice. Let us consider, instead, the export of timber.
Debate interrupted.
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-Order! In conformity with the sessional order relating to the adjournment of the Senate, I formally put the question -
That the Senate do now adjourn.
Question resolved in the affirmative.
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The following papers were presented: -
Australian National Airlines Act - Australian National Airlines Commission-; Sixth Annual Report and Financial Accounts, for year 1950-51.
Judiciary Act - Rule of Court, dated 15th October, 1951.
Lands Acquisition Act - Land acquired for Postal purposes at Garland, New South Wales.
Public Service Act - Appointments - Depart ment -
External Affairs - I. G Bowden, P. G.F. Henderson.
Repatriation - A. R. F. Chappie, G.E. Ross, A. Stnller.
Works and Housing- J. R. P. Cronin S. G. Gilles.
Senate adjourned at 11 p.m.
Cite as: Australia, Senate, Debates, 31 October 1951, viewed 22 October 2017, <http://historichansard.net/senate/1951/19511031_senate_20_214/>.