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Thursday, 17 September 1942

Mr SPOONER (Robertson) .- Last night, honorable members had the opportunity to hear the Prime Minister (Mr. Curtin) debate the financial proposals of the Government as embodied in the budget. Usually, the right honorable gentleman is clear and concise, but lastnight he entirely failed to combat the. charges that had been levelled against the budget. He endeavoured to lead honorable members into side-tracks away from the budget issues. After listening to him, I found that the impressions I had formed while I listened to the Treasurer (Mr. Chifley) deliver the budget speech were confirmed. The Government has failed to face the realities of the financial position, and I am forced to the conclusion that neither the Prime Minister nor the Treasurer is happy or satisfied with the budget.

Honorable gentlemen also had the opportunity yesterday to hear the views of the honorable member for Henty (Mr. Coles). There is undoubted evidence of political thraldom on the part of that honorable gentleman. In his two years' association with politics, the honorable gentleman has been changed from the independent soul which entered the Parliament into a slave of the political machine. I believe that in his heart of hearts he knows that this budget is wrong and is not worthy of support, but he is unable frankly to say so.

A chain of curious circumstances has led to our present financial condition. I shall not occupy much time in placing the facts before honorable members. A little less than a year ago, the budget of the Fadden Government, which was introduced in September, 1941, was challenged by an amendment of the then Leader of the Opposition which embodied a suggestion that a new financial plan should be applied to Australia. A few weeks later, the present Government submitted a new budget to Parliament which, on examination, proved to be very little different from the budget submitted by the Fadden Government, except that it dropped the plan for post-war credits. The revenue which the Fadden Government proposed to raise by that means was provided for by this Government by increased taxes on certain ranges of income. There was nothing in the new budget to suggest that a new financial plan had been introduced by the Curtin Government, although the amendment which resulted in its assumption of office provided for such a plan. Twelve months have now passed, and it has become thoroughly evident that the post-war credits plan of the Fadden Government will have to be applied to this country if finance is to be furnished to carry the war to a successful issue. It is necessary that either a member of the Government, which is responsible for the finances of the country, or some other person should have the courage to make this fact clear. The - right honorable member for Kooyong (Mr. Menzies) stated last night that before another nine months shall have passed the post-war credits policy would have to be applied. I marvelled at the right honorable gentleman's moderation. I have no doubt that during the next few months this Government will be unable to control prices or to finance the conduct of the war, unless it adopts some such policy.

Mr Calwell - What ground has the honorable member for that statement?

Mr SPOONER - I have not the slightest doubt that within the next few months funds for the financing of the war will have to be found from some sources other than those provided for in this budget. The principles outlined in the budget of 1940 remain unchanged. There are three channels through which finance may be obtained for this country. They are, taxes, loans, and national credit resources through the central bank. Very little has been said about the proportions in which money should be obtained through these channels if we are to preserve financial stability.

I suggest that there are three protruding weaknesses in the budget now before us. The first is the estimated war expenditure for 1942-43 of £440,000,000. The Treasurer warned us that this figure might be exceeded. In my view the honorable gentleman has merely given us a token figure. If the estimate had been based upon the war expenditure of the six months ended the 30th June, instead of that for the whole of the last financial year, the figure would have been much greater, and we should have been convinced that the deficiency between the amount which the Government is proposing to raise through the budget and the amount which will have to be found, would be much greater than the estimated £300,000,000. This is of great importance because of its ultimate effect upon national stability and our capacity to find the money that will be required. Although I have said that £440,000,000 is a token figure, I hesitate, as must any other honorable member, to state an amount for which any great degree of accuracy could be claimed. But if the figure were put down at £470,000,000, which I believe would be a moderate estimate, the gap between that amount and the amount which the Government proposes to raise by its budget would be £330,000,000, ' and not £300,000,000. The Treasurer would have given an air of greater reality to the budget, and would have inspired greater confidence in the people, if he had faced the position more frankly.

I shall make a few comments concerning the amount of £440,000,000. It is not sufficient to say that it should be £470,000,000 or £500,000,000. It is important to have some basis upon which to found any other estimate. I take the war expenditure for six months to the 31st December, 1941, and find that it was £123,000,000. I then take the war expenditure for the next six months, up to the 30th June, 1942, and find that it was £196,000,000. We all know that there are plans which are gradually coming into full operation. Some of them were implemented by the Menzies and Fadden governments, and others by the present Government. Whatever they may be, they are gradually developing. Larger numbers of men are being drafted into the fighting services. The number of employees in munitions factories is increasing. More raw material is being used. Expenditure generally is swelling. The Allied Works Council is steadily enlarging its activities. It is quite evident that under present conditions the expenditure must continue to rise halfyear by half-year. I would have been happier had the Treasurer (Mr. Chifley) estimated that in the half-year now current, to end at the 31st December, 1942, the expenditure would be £220,000,000, and said that during the following halfyear it would be £250,000,000, a total of £470,000,000. I believe that that would have been a very conservative estimate of what will actually be the result. We have available to us the actual expenditure for the first two months of this financial year. July and August have passed, and the actual expenditure has been £70,000,000. Every body knows that the practice in government circles is to make large contract settlements at quarter dates; that the months September, December, March and June, are usually months in which expenditure is very much heavier than in other months. This year, in the months July and August - which frequently are below the average - the expenditure has been at the rate of £420,000,000 per annum. All the indications are that the amount of £440,000,000 given in the budget will not meet the cost of the 1942-43 plan. If we accept the existing method of treatment of commitments in government circles, it is reasonable to suppose that the expenditure this year must be considerably in excess of £440,000,000.

The second weakness that I find in the budget is that there is no concrete plan for the financing of the deficiency of £300,000,000, even assuming that this may be regarded as a reliable figure - which I believe is very unlikely. If the amount be £330,000,000 or £360,000,000, so much the worse. Let us take the budget as it stands, with no concrete plan of finance. I say to the committee that the deficiency is too large to be left to chance. If, by the end of the calendar year 1.942 - only three and a half months hence - the Government should find that the deficiency cannot be met by loans, &c, r.hen there will remain in this financial year only six months within which to put inco operation a proper plan to finance the operations of the year. Any plan designed to apply to the year 1942-43 should have been thought out and should have commenced to operate at about March of 1942. The Government's difficulty to-day is that, before it will know that the money that it needs cannot be raised by voluntary finance, the time will be too late to put into operation a satisfactory plan for this financial year.

The third weakness revealed by the budget is the amount of the deficiency which the Government proposes shall be financed by what is called central bank credit. A government spokesman has announced that the Government expects to use central bank credit to an amount of £100,000,000 during this year. Do not let iis have any misunderstanding about this government spokesman. Either there is or there is not a government spokesman. If a person announces over the national broadcasting network that he is a government spokesman, and he is a fraud, it is up to the Government to take corrective action. When I hear over a national station a government spokesman make a statement that is not contradicted by the Government, I assume that he has spoken with the authority of the Government. This government spokesman has said that the Government expects to use central bank credit to an amount of £100,000,000 during this year. 1 take that to be an addendum to the budget figure which the Treasurer either intended to use, or perhaps thought best not to use, when he delivered his budget speech. By way of supplement to his statements, and in order to complete his financial forecast, a government spokesman announced on the following day that £100,000,000 was to be found by means of central bank credit. That is an optimistic figure. If my estimate of expenditure be correct, it should be £130,000,000. If other estimates of expenditure are correct, then it, must be considerably more than that. But even the amount of £100,000,000 assumes two very unlikely happenings. It assumes that the £300,000,000 can be met to the amount of £200,000,000 by borrowings, and that the total expenditure will not exceed £440,000,000. It appears to me that unless a more tangible plan of finance can be prepared and quickly put into operation, the gap that will have to be bridged by means of central bank credit in 1942.-43 will be nearer £200,000,1*00 than £100,000^.000. This- is so dangerous a position that the most courageous treatment of it by the Government is needed. I am all in favour of the Prime Minister's austerity campaign,, and will do everything that I can to further it. But it is not enough it does -not go to the root of the problem, or solve the difficulties of the Government. The most favorable response to it that can be expected will still leave Australia in a position which it will not be able to face with safety. A year ago, the Government decided to leave finance on a voluntary footing, apart from taxation. It estimates that this- year its receipts from taxation and other sources will total £249,000,000. I mention that figure because I said at the outset of my remarks that it was necessary to have a proper balance between these three contributions to the national finance - taxation, loans, and central bank credit - as only 45 per cent, of the expenditure would be raised by means of taxation if the budget were to work out according to the Treasurer's forecasts. If my other estimate of £470,000,000 be correct, it is possible that only 40 per cent, of our requirements will be raised by means of taxation. It is wrong that this country should depend for either 55 per cent, or 60 per cent, of its war finances on a voluntary effort. I put it to the Government that the parting of the ways has been reached. It can no 'longer trust the voluntary system of loan-raising to bridge the gap in our finances. If it attempts to do so, and fails, by the time the failure becomes apparent it will be too late to avoid a serious deterioration of. the financial position during the coming financial year. Moreover, it will be necessary in 1943 for the Government to retrace its steps, and to put into operation a scheme which will have a lot of leeway to make up. Therefore, I urge the Government to go back twelve months, and admit that it made a mistake when it opposed the introduction of the system of post-war credits. I believe that the people would' praise, rather than blame it for doing so. However; a scheme of post-war credits^ if introduced now, must be comprehensive: It must be complete, and ready to be- put into operation not later than the- beginning of 1943. A scheme of this kind cannot be implemented at short notice: The Government should take action now with a view to having the scheme in operation by the beginning of next year.

I desire to draw the attention, of the House to what has happened in regard to Australian finances during, the year ended the 30th June last. Parliament now has before it the first, returns' submitted by the Commonwealth Bank under the new Statutory Rule No.. 376, which came into operation on the 31st August, 1942. These returns result from the promise made by the Prime Minister (Mr. Curtin) and the Treasurer (Mr. Chifley), when I moved in the House in May last for the disallowance of regulations which relieved the Common.wealth Bank of the necessity to furnish certain returns. The new returns now available are the most comprehensive statement of Australian finances ever made available, and I invite the attention of honorable members to them They show the movement of finance through the Commonwealth. Bank, through the Note Issue Department, through the Commonwealth Savings Bank, and through the various other savings banks, as well as through the trading banks. The returns will convince honorable- members of how well the Commonwealth Bank and the trading banks have co-operated with the Government during: the past year in financing, the affairs of the nation. The scheme of cooperation between the Commonwealth Bank and the trading banks was outlined in the budgets introduced by the former Treasurer (Mr. Fadden), and the present Treasurer, but it was not until the commencement of 1942 that the nation began, to get the benefit of it. The returns show how heavily the Government has leant upon its financial supporters up to the 30th June, 1942, and make possible an estimate of the position that may be reached by the 30th June, 1943, unless steps be taken now to increase the flow of money into the Treasury, and' to lighten the load that must otherwise fall upon the centra] banking system. During the twelve months ended the 30th June, 1942, notes in circulation increased by £32,000,000 to £108,000,000. The amount has increased still further since then, but, in order "to make a comparison, I take the figures up to the 30 th June. Up to the same period, the treasury-bill issue increased by £80,000,000, bringing the total up to £127,000,000. All the bills were discounted by the Commonwealth Bank, and the proceeds have passed into circulation. Thus, £112,000,000 has gone into circulation from these two sources during the past year.

Mr Calwell - Almost all of - it was hoarded.

Mr SPOONER - You cannot hoard treasury-bills. The most that could have been hoarded was some part of the extra £32,000,000 of treasury-notes. I am inclined to discount the .suggestion that notes have been hoarded in large quantities. I believe that only a small proportion of the extra £32,000,000 of notes in circulation represents hoarded money. However, even assuming that some considerable part of the increase was hoarded, the fact remains that the hoarded notes can be released and go into circulation immediately.

Mr Paterson - They are always a potential danger.

Mr SPOONER - That is so. The Government must face the position that £112,000,000 of new money is in circulation. It is true that the base upon which the credit was issued has also expanded. The deposits in the savings banks have increased by £24,000,i000-£17,000,000 in the Commonwealth Savings Bank, and £7,000,000 in the other savings banks. The trading banks have placed on deposit with the Commonwealth Bank £37,000,000 under the heading of wartime deposits. From these two sources - increased savings and trading bank deposits - the central bank has the benefit of an increased base to the amount of £54,000,000 to help support the new money that has gone into circulation. But do not let us be misled. Both the £17,000,000 in the Commonwealth Savings Bank, and the £37,000,000 deposited by the trading banks, are deposits at call, and can be used any day in the future. If this country is faced with the possibility of inflation, those deposits will be withdrawn, and will immediately go into circulation. The savings bank figures arc extremely disappointing, particularly having regard to the light taxation imposed upon the lower incomes during last year. In June, 1942, savings bank deposits were £274,000,000, whilst a year earlier they were £250,000,000. Considering the amount of the national income, and the huge amount of money in circulation, it is a reflection on our people that deposits increased by only £24,000,000. It is sufficient to give the Government pause in regard to any schemes it may have for raising £300,000,000 by voluntary means. The tra t]l of the position is that, during last year, the Government was able to bring only £130,000,000 into the Treasury by voluntary means- £120,000,000 by loan, and les3 than £10,000,000 net by the sale of war savings certificates. The Commonwealth Bank last year was obliged to find £75,000,000 over and above the money which went into the Treasury, so that it now holds securities to the value of £250,000,000, as compared with £183,OOO,OOO in the previous year. Despite this position, the 'Government hopes to raise by voluntary loans this year £200,000,000 compared with £130,000,000 last year, and to obtain from central bank credit £100,000,000. compared with £75,000,000. I warn the Government that unless the position be taken in hand, the treasury-bill issue and the note issue at the 30th June, 1943, may total £400,000,000 compared with £225,000,000 last year. By prompt action the Government can avoid that position. But if the Treasurer allows the position to drift he will not be able to apply any correctives until too late.

This is the time for the Government to turn its thoughts to some plan for organized finance; but a thorough organization of Australian finance can be achieved only by means of a system of post-war credits to supplement the other sources of receipts which are already available to the Government. To be sound, a post-war credits scheme must apply not only to incomes but also to the revenues of State governments, semigovernmental authorities, and local governing bodies. To those who contend that the application of a post-war credits scheme on such a wide' basis would disturb the present arrangements for public and private spending, I reply that the scheme presented by the Government is unthinkable. No scheme is too drastic if it will save the nation from inflation, and help to finance the cost of the war. In any scheme for the organization of finance, there must be, in the current year, some dependence on central bank credit. That makes it all the more important to draw from other sources the utmost revenue that is possible. The Government cannot overlook the fact that it is just as necessary to organize finance for war purposes, as to organize man-power or materials.

The taxation of the lower income groups to-day is quite inadequate to provide the finance that the Government requires, and to withdraw from circulation the moneys that are menacing the price structure of the nation. I ask the Government to adopt a systematic plan of post-war credits along the lines which I shall explain. The best course would be a combination of taxation and post-war credits; but if the Government, in its lack of wisdom, decides not to increase taxation, the next best thing will be the imposition of a full range of post-war credits.

Mr Lazzarini - Suppose the post-war credits plan does not bring in sufficient revenue to meet the Government's requirements ?

Mr SPOONER - Any increase of revenue that reduces the tremendous total challenging Australia's security at the present moment will be a useful contribution. If we are to avoid inflation, spending must be reduced now. After the war, spending must be increased compared with the normal rate if we are to avoid a depression. Why can not we relate these two things, and prepare a plan that will minimize their evils? If there is too much spending by the public at the moment, and we are threatened with too little spending after the war, the Government, which advocates a policy of liberal finance, has an excellent opportunity to introduce a constructive scheme for relating these two unhealthy conditions, and creating from them a condition that will be helpful to the nation by minimizing the effects of the war.

As the result of the issue of new money since the outbreak of war, the purchasing power of the public has increased by not less than £200,000,000. In addition, prices have increased by 20 per cent., despite the controls that have been applied. The real increase of the prices of food and clothing is not less than 30 per cent., because 20 per cent. is an average which applies to all the items that are included in computing the cost of living. Some of them, such as rents, travelling expenses and amusements, remain static. If the Government persists in drawing upon the Central Bank for unrestricted credit without the restraining influence of post-war credit and a wider scheme of controls, prices will increase by at least 10 per cent. before next June. This statement may prove to be a very moderate estimate of the position. A vicious circle already exists, because wages are constantly chasing this increase. A considerable percentage of this enormous sum of £440,000,000 for war purposes is represented by the fact that the prices of supplies which the Government requires have risen under the influence of the general trend. It would be possible for inflated costs alone to add a huge sum to the war expenditure of 1943-44.

Critics of Australian finance during the depression claimed that the financial system was not used to the limit that it should have been. I was one of those critics, but I have no desire to be associated with the theorists who forget that finance, like any other structure, must have foundations. Otherwise, it will collapse. I have indicated that there should be an even more comprehensive plan of post-war credits than has been mooted in this chamber up to the present. I shall not express an opinion on the constitutional aspect, because I do think that whatever the nation needs can be achieved and will be achieved if all parties are agreeable. If it be suggested that a State government or any other statutory authority should make a contribution to the funds of the Commonwealth Government I reply that, if the figure were computed and made known, public opinion would, I believe, compel that contribution to be made.

Sitting suspended from 6 to 8.15 p.m.

Mr SPOONER - There should be instituted and put into operation a comprehensive scheme of post-war credits for the purpose of meeting at least some considerable proportion of the deficiency in the Government revenue for the coining year, so that the war plan can be financed without danger to the nation's credit. The excessive spending in Australia to-day is not confined, to the individual, but extends also to State governments, statutory authorities and local government authorities. At a time like this the financial position demands that there shall be no competition between public bodies for the spending of moneys required for the purposes which I have indicated, and that there shall be no competition that sets up a demand for man-power and materials required for the essential needs of the nation. 1 desire now to outline briefly what I had in mind when I indicated the necessity for a comprehensive plan of postwar credits that would go to' somewhat greater lengths 'than has been indicated in the past. I put it to the Government that it is not impossible to raise in Australia the sum of £500,000,000 from all sources. The budget provides for the raising from taxation and all other revenues of £249,000,000, which I shall call, for the sake of convenience, £250,000,000. I think it is acknowledged that the voluntary loans scheme, even when a post-war credits scheme is added to the demands made upon the financial system, would produce approximately £150,000,000. A post-war credits scheme on the comprehensive basis that I have indicated would raise £100,000,000. Those three sources together would produce £500,000,000. If the voluntary loan system were to produce more than £150,000,000, so much the better, but. I think that the Government is not on safe ground if it anticipates collecting a larger amount than that, particularly having regard to the demands that would be made by the post-war credits plan on certain groups of income earners. It must not be supposed that the sum of £100,000,000 can be raised from the postwar credits scheme from individuals alone. An examination of the scales of income indicates, however, that it is not impossible in present conditions to raise approximately £60,000,000 from that source. 1 suggest that it is also possible to raise £20,000,000 from post-war credits from the public companies in Australia, and a further sum of £20,000,000 from. State governments and public authorities. 1 think the value of the post-war credits scheme, as applied to public companies, would be very great in Australia, not only because of the contribution towards the present war requirements, but also because it would compel some companies, which may not have made their fair contribution to the war funds up to the present, to do so. That, of course, is the inherent weakness in any voluntary loans scheme. Companies and individuals prepared to contribute will do so, but many others equally able have not, done so up to the present. I do not think that it would be practicable to apply the postwar credits scheme to private companies, because their undistributed profits are taxed at personal rates and these personal rates would include any increase for postwar credit.

To support my contention that it is not impossible to raise £20,000,000 from public bodies, including State governments, I shall indicate to the committee the revenues of those authorities during the last year in respect of which figures are available. The revenues of all State governments from taxation, business undertakings, grants and interest recoupment totalled £158,000,000. The revenues of the semi-governmental and local governing authorities in Australia from rates and business undertakings amounted to £38,000,000. There are also revenues in ihe hand? of trusts and commissions, the Melbourne and Metropolitan Tramways Board, for example, amounting to £13,000,000. The revenues in the banda of all those authorities amounts to £209,000,000, and reduction of their expenditure by 10 per cent, would enable them to contribute £20,000,000 to Commonwealth governmental funds. I know that there may be constitutional difficulties in the way of making them contribute, but, if a properly prepared plan were evolved and each authority were advised of the amount which it should contribute, it would be difficult for any authority to resist under the conditions of to-day a request that it should contribute to Commonwealth public funds. [Extension of time granted.] I do not suggest any rigid formula by which assessments could be made upon public companies and authorities, because that is obviously a job for an expert committee, and it would probably require separate investigation of each organization; but I do say that it is possible for expenditure now incurred by those authorities to be reduced to the amount that would make such a contribution to the central fund possible. There is every reason why public bodies to-day should spend less than their annual revenues, because those revenues will be of no value to them unless the nation is able to defeat its enemies. There is also every reason why they should have additional moneys to spend in the post-war period, and those who have trained their minds to the problems that will confront this country after the war know that it will be necessary for them to expend more than would normally be the case if they were to rely upon the revenues normally available to them at that time.

Associated with these subjects is the question of the public debt. There should be to-day a stronger policy with a view to dispelling in the public mind any notion that the public debt of Australia is beyond the capacity of this country to repay. Unfortunately, that impression prevails in some uninformed quarters. It is loosely said, but it, unfortunately, affects the capacity of the Government fully to exploit the nation's resources for war loans, and I believe that there should be an organized programme to deal effectively with it. It is a form of defeatism, and it is capable of doing by insidious methods great harm to the nation. I shall not weary the committee with figures, but those who think of the possibilities of this country know that the public debt is related to the population and the productive capacity of the country. In that regard the potentialities of Australia are enormous. Even allowing for the expenditure that this country will need to incur after the war on repatriation and post-war developments, it is not impossible that, with expansion of pro duction, the public debt of this country may be expressed in a smaller figure per capita ten years hence than to-day. Those with faith and confidence in the country should not be slow to express that view to the country, and to try to encourage within Australia a different idea of the importance of the public debt from that which unfortunately exists in some quarters at present.

I should not be prepared to propose the plan I have put to the committee in regard to post-war credits and post-war reconstruction if it were not associated with a sound scheme of control so as to ensure that the expenditure shall always be kept within reasonable bounds. Indeed, I think that any sound scheme of post-war credits must run hand in hand with sound economic controls, and those controls will continue, not only during the war, but also after the war. The time is ripe for the people to be told that certain forms of economic control must be continued after the war. Rationing and price control must be extended considerably as this war proceeds. My own view is that rationing shouldhave gone to very much greater lengths before now, and during the next few months the Government will be obliged to catch up some of the leeway in this regard. I believe that control of building and investment must be continued at least during the war, and those checks, with rationing and price control, will tend to limit inflationary tendencies.

I ask the Government to overhaul quickly the activities of the Prices Commissioner in regard to profit limitation, which I regard as a harmful procedure. The proper course for the Government to follow in regard to the limitation of profits is to extend the limitations of the war-time companies tax and to take into the revenue all profits that are earned over and above some properly defined level. That should be set out in legislation. It should not rest in the power of any official to say what is surplus profit. It should be defined like the laws of taxation are defined. The proper place for any profits made over and above the limits set is the Commonwealth Treasury, and I think that that should be taken in hand now, because I regard the present procedure as haphazard and harmful' to the nation. I recently read in the press', for example, an unofficial statement, that gave the appearance of having Been inspired, to the effect that the Prices Commissioner had compelled the traders to refund to the public several millions of pounds that represented overcharges. This, I regard, as sheer folly. If there have been overcharges to that extent, that money should be' paid into the Commonwealth Treasury in order to help to finance the nation. It should not be given back to the public to increase an already overwhelming spending power.

Mr Blackburn - And to help companies to crush their competitors.

Mr SPOONER - Precisely. By refunding these moneys to the public we merely intensify Australians difficulties by adding to the spending power of the people,, which is already too great. Then, from a practical point of view, I consider it very foolish that, £or instance, there should be refunded to Jones in 1943 something that Smith overpaid in 1942. It seems to me to be strange that, after three years- of war, we still have government activities operating in different directions. There is complete lack of co-ordination between the policies of the Treasury and the Prices Commission. In my opinion, the activities of the Prices Commission should be limited to the fixation of prices and margins of gross profits. Excess profits, if any, should be dealt with by legislation enacted by this Parliament, which should set out a proper formula to be administered by the Commissioner of Taxation. A special authority should' also be constituted to handle appeals against decisions of the Prices' Commissioner. This body should have power to increase or decrease any prices' or margins fixed by the commissioner. I am confident that, in order to carry out its financial arrangements, the Government will have to extend the principle of rationing very considerably. The onus is upon the Government to educate the people in this regard, because, unfortunately, many people believe that rationing' is mad'e necessary by short supply of certain articles of merchandise, whereas that is only half of the story. Rationing arises from the need to compel people to reduce their expenditure and force money into the central fund', so' as to! reduce the demand upon the nation's man-power and services.

I see danger in the fact that present rates of taxation imposed upon some traders, whether as individuals or as private companies', are so severe that they cannot provide against the losses' that are bound to occur in the post-wax period whenprices will return to normal. I have seenmany instances in which prices of merchandise have increased since the outbreak of waT by 30 per cent, or more, and the profits of the traders have been so heavily taxed - I do not complain of that in the sense of taxation - that there remains to them little or nothing from, which to establish a reserve to provide against the fall to normal pre-war levels which will occur in due course.

Mr Jolly - Some of them pay out more than the amount of their profits for the yean

Mr SPOONER - That is so.

Mr Lazzarini - They will be lucky if they have their machinery and plant left after the war.

Mr SPOONER - The Minister has no right to say that. I deplore the tendency in this House and in other quarters to speak of all companies as though they were enemies of the nation. Those of us who watched the affairs of the nation closely during the depression period of 1930-32, and during the period of recovery up to 1936, realize how much the nation depended then on the ability of companies and trading organizations to employ people and rehabilitate the financial condition of the nation. "When the war ends, we shall again look to those hundreds of companies to put people back into employment. There will be- chaos on all sides unless these concerns be- allowed to establish funds- to provide against the losses which will inevitably result from the fall of prices in the postwar period. I deplore the allegation that all companies are leeches sucking the lifeblood of the nation, and also the statement that any company will be lucky to be in existence when the war ends. That applies to all of us, but we are determined' that we shall live. The duty is upon us to see that during the war these companies shall pay into the Treasury all the money that they have for the purpose of financing the war, and also to see that, by means of a post-war credits scheme, some money will be returned to them in order to protect them against post-war losses and help them to rehabilitate the nation by employing our people. "We shall be obliged to face depression conditions again after the war. Let us not be forced then to hold an inquest upon our methods of to-day and regret that we were not sufficiently farsighted to anticipate this inevitable condition of falling prices. The Government should plan a post-war credits scheme now. The Government of the United States of America has done so already. In recent months I have read in the newspapers accounts of what is being done in America in order to anticipate the country's need for post-war rehabilitation, while, at the same time, satisfying the immediate defence needs of the nation. The opportunity exists now for far-sighted action. I hope that the Government will not allow the chance to pass.

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