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Wednesday, 23 November 1938

Mr HOLLOWAY (Melbourne Ports) . - My contribution to this discussion will be brief. I do not intend to deal at all with the defence programme of the Government. I fear we have too many generals and not enough rank and file in this country, and I have no desire to enter into the competition.

I consider that the Prime Minister (Mr. Lyons) is deserving of severe blame in that the budget does not make provision for economic plannings to deal in some real way with our unemployment problem. Experts throughout the world are telling us in no uncertain voice that we are heading for another depression. The information which is coming to hand from Geneva and other centres in Europe where statistics in relation to the economic activities of all countries are collected and tabulated, cannot be interpreted in any other way. If we are heading for depression - and I believe that to be the case - this budget should have made provision for long-range plans to cope with such a situation. We should not be called noon to face another depression without adequate preparation. The honorable member for Swan (Mr. Gregory) said ho "hoped" we were not about to enter another period of depression. Hoping will not prevent us from suffering through a depression.

Mr Hutchinson - Economic conditions are improving in the United States of America.

Mr HOLLOWAY - In reply to the interjection of the honorable member for Deakin (Mr. Hutchinson), I may say that statistical information from practically every country is such as to warn us that depressed conditions are almost inevitable. The honorable member interjected while the honorable member for Werriwa (Mr. Lazzarini) was speaking, that production figures were increasing. One of the surest signs of an approaching depression is -an increase of production on one hand, and a downward tendency of employment on the other hand. If production is increasing while the wage fund of the people at large is decreasing through unemployment, depression is inescapable. Conditions now are very similar to those which obtained about ten years ago. I remember reading the report of the conference in Brussels in 1921 concerning the first plan made to bring about a period of deflation.

One of the greatest financial experts in the world, Professor August Cassel, was asked by a British delegate to the conference if he would advise the delegates whether they were, on the right track in recommending to the business people a curtailment of their activities, with the object of preventing general inflation, or .what is called inflation. Professor Cassel warned the delegates that if they began a cycle of deflation, they would cause more trouble and danger than they could possibly hope to achieve good. Once they began deflation, it would grow like a snowball. It would be impossible to stop it, and it would bring ruin and desolation to the world. The result we all know. The financiers did begin a period of deflation, and the world went through the depression which we still remember. Once the beam is tipped the wrong way, there is a general restriction of credit and a forced and artificial contraction of consumption. Values fall, and manufacturers and business people generally will buy only what they absolutely must on a falling market. When this Government came into power, with a majority in both Houses, the country was passing through the depths of the depression, but for the last five years it has enjoyed record seasons, prices have been good, and new records have been created in tax collections, including excise and customs duties. We have achieved records in this way never dreamed of twenty years ago. Yet, through all that period of comparative prosperity, the Government has made no plans to meet the possibility of a turn in the economic tide. A new budget has been brought down at a time when every one knows that a depression is beginning without any plan to meet it. The figures of our own 'Statistician prove that, apart altogether from the reports issued periodically under the authority of Mr. Butler, at Geneva. These reports express, not his own opinions, but the considered opinions of experts sitting continuously in. Geneva throughout the year. The last report pointed out that, though' production was still on the up grade, unemployment was increasing. The amount of money devoted to the wage fund was shrinking, though the value of the output was increasing. We in Australia are already feeling the effects of this. The Premier oi New South Wa,es. Mr. Stevens, said last week" that he was sure there were 100,000 men unemployed iu Australia. I feel certain that .there are at least 160,000 unemployed. In Victoria alone, there were 10,000 more unemployed in September than in March of this year. The index figure for employment in factories and workshops throughout the Commonwealth was 114 in September last year, but in September of this year it had fallen to 110. In March of this year, unemployment amounted to 8 per cent. In September, it had risen to 9.2, and, according to the latest information I can gather, it is now just about 10 per cent. That represents 10 per cent, of the trade unionists registered in the Federal Arbitration Court. We should remember that there are only 814,000 trade unionists in the whole of Australia. Of these, not half are registered in the Arbitration Court, while those who are registered are mostly skilled tradesmen among whom unemployment is less than among the unskilled workers. Even among this comparatively small group the number of unemployed was 9.2 per cent, in September last. According to the figures collected at the last census there are in Australia 2,200,000 wage earners. What would be the unemployment figures if all of those were registered, and particulars regarding unemployment among them were available? The percentage, would be very much higher if we included unskilled workers " and miscellaneous workers who are not organized at all. It is impossible to get at the real position from the figures of the Commonwealth Statistician because complete information is not at his disposal. I am sure, however, that the total number is not less than 160,000, and we know that there are 60,000 unemployed in Victoria alone. Despite the fact that £2,000,000 was collected in wage tax in Victoria during the year, and that another £2,000,000 of loan money was expended on unemployment relief, the number of unemployed in that State increased by 10,000 between March and September of this year, and the number is still increasing.

The amount of wages paid per head, and the aggregate wage fund, have been gradually going down. The process has been mure rapid this year because of the effect of deflation. In 1927, the wages per head paid to workers in factories and workshops was £208, while in September of last year it was £179. In 1927, the aggregate value of the output from factories and workshops was £420,000,000. In September of last year, it was £451,000,000, an increase of £32,000,000 ; yet the wage fund declined by £1,000,000, representing a decline from 21 per cent, of the total output to 19 per cent., and the average wage per head fell from £208 to £179. How can we expect the industrial side of the economic structure to maintain itself when the figures are working out in this way? The gap between production and consumption is getting wider and wider.

The figures published in the last report from Geneva show that in the" United States of America during the last seven years the efficiency of the man-power employed has increased by 24 per cent., while in Europe it has increased by 19 per cent. The output for each man has increased, but fewer workers are employed, and the average amount paid to each worker is less.. How then can we expect any .other result than an economic depression ?

This year, the State government asked for £18,000,000 loan money to carry out their programme of public works for the year. The Loan Council refused their request, because the Commonwealth Bank and the Commonwealth Treasurer declared that it could allow them only two-thirds of the amount asked for. Thus the period of restriction and deflation was begun. When the Premiers met recently in Canberra, the conference broke down because the Commonwealth Government told the State representatives that no additions could be made to their ordinary works programme, and that no more money could be made available, and that, instead of carrying out their ordinary public works, whatever money was available to them should be devoted to works which had a definite defence value. The Commonwealth Government should grapple with unemployment, which is becoming worse, by adding to the money for public works instead of reducing it; otherwise, we shall enter upon another period of depression. Once the snowball starts, it will take stopping.

If the Government has it in mind to suggest to the people of Australia that, because of defence needs, or any other needs, they must go through another period of sacrifice, the suggestion will not only be coldly received, hut will also fall on deaf ears. Seven or eight years ago, the people were asked to go through a short period of purgatory and to accept sacrifices to meet the emergency. That short period of purgatory has developed into a period of hell. We have not dispensed with all the emergency measures that were applied. Work for sustenance, relief work and ration work, all of them measures which were taken to meet the emergency, are still with us, in spite of the fact that last- year we were supposed to experience conditions equal to the prosperity that marked the post-war period. Indeed, the position is becoming worse. Nevertheless, when the Deputy Leader of the Opposition (Mr. Forde), at the request of many State leaders, made an appeal to the House this afternoon for the Government to make the solution of the unemployment problem its fundamental task, and to provide the means whereby the unemployed would have constant work until at least the end of the year while planning their needs for next year, the Government callously gagged the discussion. The Minister" for Works (Mr. Thorby) pointed out that this year the Commonwealth Government was providing the States with more money than it provided them with last year and in the previous year. That fact is not challenged ; but it is not the question. The question is whether the money, which is being made available, is sufficient to meet the needs of the unemployed. It is not nearly enough. If it were, there would be no need for sustenance and rationed relief work. The position that we have reached to-day is that, because of increased efficiency, which results in more production with the expenditure of less energy, private enterprise can- no longer provide sufficient work to keep the people in employment. Accordingly, it is time for the governments of Australia, particularly the Commonwealth Government, which holds the purse, strings, to take over the responsibility for keeping the people in WorK. Year after year, at leneva, conventions, such as the convention for a shorter working week, and the planning "of public wonts, are entered into by the nations in conference for the betterment of conditions in industry, but, unfortunately, this country is one of the few countries that never honours its obligations in that regard. The honorable member for Denison (Mr. Mahoney) cited Sweden as a country which has planned for the future in order to avoid unemployment. The same remarks could be made in respect of all Scandinavian countries, but not in respect of Australia.

The right honorable member for North Sydney (Mr. Hughes), who has the habit of making statements aimed at benefiting the country, but is rarely in this chamber to back them up with action, said the other day that, in spite of all the war hysteria, the greatest problem which faced the Government was that of unemployment. No man has more experience of economic problems than the right honorable gentleman and, for once, I agree with him 100 per cent. In view of his statement, it would be difficult to understand why the budget contains no remarks of similar purport were it not for the fact that, when the honorable member for Capricornia (Mr. Forde) to-day endeavoured to initiate a discussion of ways in which the unemployed could be absorbed into industry and public works, the Minister for Works on behalf of the Government, shrugged his shoulders and said that later some of the unemployed might be drafted into defence works. At the recent conference of Commonwealth and State Ministers, the Premier of New South Wales, Mr. Stevens, himself a member of the United Australia party, threw down the gauntlet to the Commonwealth Government and refused to accept any proposal which would mean the mere transfer of the unemployed in his State from one governmental project to one perhaps more related to defence than the other. He demanded more money to undertake more public works. I whole-heartedly agree with his attitude. To transfer men from one job to another does not meet the problem, because it does not result in an increase of the wages bill. Indeed, the wages bill is falling, and with every fall another period of recession becomes closer. When people run to cover and refuse to buy because they expect that prices will' fall, the num-bers of the unemployed increase, and the natural effect of this is to create still more unemployment. I warn the Government that if it determines to transfer men from works that are now in progress on a relief-work basis to defence works on the same basis, its recruiting campaign will meet with utter failure. A plan for the increase of the strength of the militia based on sweated labour must fall to the ground. I should throw my efforts behind those of the industrial organizations against it. The conditions' which operate to-day are a disgrace to a country which could afford to give higher standards of living to the people.

Mr Mulcahy - The Government does not believe in higher standards of living.

Mr HOLLOWAY - I do not think that it does. Everybody knows that a process of deflation must inevitably mean a progressive lowering of the living standards. Every particle of evidence confirms that.

I am in full agreement with the following statement which was made in his book Planned Money, by Sir Basil Blackett, a director of the Bank of England -

In the twentieth century governments are content to use a monetary system which has so conspicuously failed in the past and is admittedly certain to present us again and again with booms and slumps and all the misery and destitution which must result therefrom . . .

This Government is content to continue with the old monetary system, winch, when the banks decide that it is worth their while to curtail expenditure and force down prices and values, as they did in 1931, in order to double the value of their money, means that we shall have another period of unemployment. Sir Basil Blackett in the preface to his book, in order not to involve his colleagues, said -

I, and I alone, am responsible for the statements contained in this book.

He suggested that a local or national currency exists for the purpose of facilitating exchange on goods, and made it quite clear that what he would call the natural currency arrangement by an independent sovereign state, such as Australia, would be a local currency owing its internal purchasing value to a management by or on behalf of the state, and so managed and controlled as to retain approximately the same purchasing power from year to year, external trade being provided for by appropriate machinery which did not disturb internal stability. He meant that a country like Australia which has a Commonwealth Bank, backed by the resources of the nation arid, as was said by the first governor of the Commonwealth Bank Board, as strong as the country, has the basis upon which the currency structure should be erected. The Government, acting in conjunction with the Treasury and those controlling our banking institutions, should regulate the flow of credit and consequently the purchasing power of the community and enable it to remain stable for a period of years. Surely we have reached the stage at which such a system could be effectively developed in the interests of Australia. We should discard the old financial system which experts have told us must result in bringing about financial booms which are always followed by slumps, and have the courage and wisdom to ignore the protests of private bankers and use our own credits to meet human need 3.

The most urgent problem with which the Government is now faced is that of unemployment. It must not close its eyes to the fact that thousands of deserving people find it impossible to get work. Surely the Government will not deny that there is an acute unemployment problem! All the information that we can get is that an extensive defence programme i3 being developed and that the unemployed will be provided with work on defence schemes. History disproves that defence works relieve unemployment. The figures are increasing in every country.

Mr Anthony - What is the number of unemployed in Victoria?

Mr HOLLOWAY - According to the State Government there were 40,000 unemployed in March, and by September the number had increased to 60,000. We do not wish to decry our own country, but some of the statements made in this chamber to-night cannot be regarded as creditable to Australia. A number of visitors were in the strangers' gallery when the honorable member for Swan (Mr. Gregory) was saying things that did not place Australia in a very good light. The honorable member for Werriwa (Mr. Lazzarini) also spoke, quite truthfully, about the slums that exist in certain capital cities. Doubtless these visitors would be surprised, but they were hearing only the truth. I hate to have to tell truths which appear to be fouling our own nest, but if we do not put the position plainly before the Government and endeavour to assist these unfortunate people, they will be allowed to starve and rot. The statement made by the Minister for Defence that the unemployed will be able to obtain work under the Government's defence scheme cannot be substantiated. In the last report dealing with the problem of unemployment in Great Britain, the following paragraph appears -

The course of healthy recovery has been accelerated by the injection of vast sums of public money into the world's economic system, but this process cannot continue indefinitely. Some day, in a not very distance future, expenditure on armaments must presumably begin to be curtailed. If this should happen at a time when ordinary business is declining, the reduction of government orders, coupled with the stringency of public finances burdened by a huge debt incurred for military purposes might easily give rise to a slump of the first magnitude. It would, therefore, be folly to regard the present high level of employment as a matter for complacency. Such satisfaction as it may legitimately cause must inevitably be tempered by anxiety for the future and should be accompanied by comprehensive planning to avert the dangers with which the present situation is fraught.

That is based on the latest reports obtained from the principal countries in the world. Although millions of pounds is being spent daily for defence purposes, the situation has not improved. Only a month ago, when I was handling the industrial dispute at the Commonwealth Aircraft Factory at Fisherman's Bend in Victoria, the manager informed me that he could employ 500 more unskilled and semi-skilled men if he could get a few engineers. Expenditure on war-time activities does not help to solve the unemployed problem.

Although millions of men are engaged in the manufacture of arms and munitions, sufficient skilled men are not available. Should the work on arms and munitions cease as suddenly as it started, thousands more will be thrown on the unemployed market. The immense burden which is being placed upon the shoulders of the people in European countries in consequence of heavy defence expenditure will bring about internal disorder, and it is certain that, by international agreement, there will be a sudden stoppage of this mad race, and I shudder to think whatwill happen. Unskilled men are not wanted, and the number of unskilled workers in Britain is increasing daily. Unfortunately, persons of that type will migrate to Australia, and, although they may be quite desirable citizens in every other respect, they cannot be absorbed in Australia. All of our electricians, moulders, blacksmiths, carpenters, and builders are at work. The type unemployed in Europe is the same type unemployed here.

Mr Drakeford - The ship-builders are not getting sufficient work.

Mr HOLLOWAY - I know that platerollers and rivetters are unemployed.

Mr Anthony - Suitable migrants might assist to relieve the problem of unemployment.

Mr HOLLOWAY - Yes, suitable migrants would be of advantage, but most of the European countries retain their skilled men.

Mr Anthony - A number of Jewish engineers are on the way to Australia.

Mr HOLLOWAY - The honorable member knows why. I am in favour of a reasonable quota of Jewish refugees being allowed to settle in Australia, and there may be some good craftsmen amongst them. Bigoted animosity has possibly compelled the German Government to lose the services of engineers and other craf tsmen, but I doubt very much whether that is so.I believe that the German captains of industry have retained the services of their best men. Some years ago, when the Victorian Government wanted expert engineers at Yallourn, it was able to secure half a dozen Germans, on the distinct understanding that they were to be repatriated at the end of five years. Work, and not immigration, is what we require.

The CHAIRMAN - The honorable member has exhausted his time.. [Quorum formed.']

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