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Friday, 18 September 1942


Mr HARRISON (Wentworth) .- The honorable member for Wannon (Mr. McLeod) is very pleased with the budget. He ought to be, because he has placed his own construction upon it. As a matter of fact, the budget was designed to gull the people; and it has succeeded in gulling even the honorable member. He said that he could not see in it any signs of" inflation. That opinion is contrary to the view held by the Treasurer (Mr. Chifley), the Prime Minister (Mr. Curtin), and every other member of the Cabinet ; all of them realize that a budget cannot be compiled under existing conditions without a measure of inflation. There is a gap of £300,000,000 which has to be bridged. The Government proposes to do that by wishful thinking. As the right honorable member for Kooyong (Mr. Menzies) has stated, the Government thought of a number and hoped to double it. It is looking to subscriptions to loans and war savings certificates to justify its optimism. I am not satisfied with the budget; or is any other member who sits on this side of the chamber. On the contrary, we are disappointed with it. This is the first real budget that the present Government has introduced since it has occupied the treasury bench. T'he foundation of its lastbudget was laid for it by the government of which I was a member, but the material and mixture belongs to the present Government. Honorable members opposite know that too much sand has been used with the cement, and that the result is likely to be an unstable building. The last Government was defeated on its proposal to institute a system of post-war credits. We have prophesied that in a few months the present occupants of the treasury bench will be glad to adopt such a. scheme. Thu budget is n cowardly one, because it runs away from the major problems that are inherent in the war in which we are engaged. The Sydney Bulletin, which I hold in high regard, has said that, the Government has produced a "gutless wonder ". The budget could not be described more expressively. It is a document of completely empty spaces. The deficiency of £300,000,000 cannot be made good by the use of windy phrases. In order to attain a maximum war effort much more will be needed than the pious hopes that have been expressed by honorable members opposite. With devilish ingenuity, the Government deliberately set out to gull the public, and it has succeeded in gulling members of its own party. I have a high regard for the Prime Minister (Mr. Curtin), and enjoy the beautiful phrases that he spins. The country resounds with the wordy job of work that the right honorable gentleman is doing. He i3 acting as a foil to some of his Ministers, who have completely forgotten everything that relates to the war effort. The be-all and endall of their efforts appears to be to give effect to Labour's peace-time policy in the present time of war. The appreciation of some Ministers of the crisis through which we are passing can be gauged by their belief that they should implement a peace-time policy suited to their own ends while they are in occupation of the treasury bench. History will deal with them, if the public does not reckon with them earlier. The Minister for War Organization of Industry (Mr. Dedman), for instance, has endeavoured to socialize everything. In common with other members of my party I have attempted to consider the problems of war apart from party affiliations, believing that the war will demand of us everything that we possess, and that ultimately we may have to sacrifice all that we have secured during the last 150 years. In short, I consider that 'we shall have to transfer all our resources, either those that are idle or those that are in use, to a maximum war effort. This transfer should have been effected gradually from the commencement of the war, and should have increased in tempo with the passingof the years. Had that been done we might now have had a maximum war effort. That is not the position. The budget fails to implement plans that are essential to the times, and jeopardizes the war effort that has been achieved by the public, notwithstanding the lack of control by the Government. It threatens the solvency of this country. Control must be imposed in a time of war if we are to have a maximum war effort. It should be exercised in regard to not only minor matters but also all men, materials and money. Only when that has been done shall we achieve a maximum war effort. Let us judge the Government according to the dictum, " By their works ye shall know them ". If the aim of the controls that have been instituted is to achieve the best results, a budget of this character can be explained away. But what are the facts? Approximately 2,500,000 persons are engaged in general employment, including: those who are occupied with war work. When Australia's very life is being threatened by Asiatic hordes, not one-half of that number is engaged directly in war work. Until that position has been reached, we shall not have even a 50 per cent, war effort. War workers are not being so controlled as to ensure that they will give the maximum of which they are capable. They are being permitted to shed their responsibility. Instead of being regimented into an industrial army, as the soldiers are regimented in a fighting army, with the conditions that exist in the fighting forces, they are drawing abnormal wages. Since this war broke out the wages bill of Australia has increased by approximately £150,000,000. Most of the men engaged on war work are doing a very good job, and it is only natural for them to take advantage of the present situation to improve their conditions, if they are allowed to do so. It is here that the Government should exercise control. However, while the soldiers are risking their lives for a. "miserable pittance, the wages of munitions workers are being increased, the workers are being given the right to strike, and compulsory unionism is being introduced. In other words, the Government is pandering to one section of the community.. The workers are being encouraged to improve their industrial position by any and every means. Under this Government, a policy of opportunism is being practised. Ministers talk openly of the nationalization of industry, thus creatingunrest in the minds of the workers engaged in industry. The workers have been given the right to strike on the least provocation. Could anything be more puerile than the Government's attempt to put down industrial unrest on the coal-fields ? It brought in regulations to prevent strikes; it appealed to the miners not to go on strike, and then, under pressure, it legalized strikes. In addition to all this, the Government has permitted the wages bill to increase by £150,000,000. This brings me to the subject of rationing, because I believe that rationing was designed to prevent the spending of surplus income on nonessential things.


Mr Dedman - Not at all.


Mr HARRISON - Then why was it introduced ?


Mr Dedman - Because of the shortage of materials.


Mr HARRISON - The Minister knows that the primary purpose of rationing is to divert men and money from non-essential industries to war work. The Prime Minister, himself, has said so.


Mr Dedman - That is not true.


Mr HARRISON - I do not blame the Minister for War Organization of Industry for what has happened. In his attempts to deal with surplus income by rationing he is like the small hoy who attempts to bail out the ocean with a thimble. He has a tough job on his hands, and unless the Government helps him by taxing surplus income out of the hands of the community he has little chance of success. The Government cannot hope to reduce consumption by half measures in the way of rationing. I know that the Minister for War Organization of Industry has prepared plans for the complete rationing of goods, and this has been done, not because of a shortage of materials, but because it is the only way to deal effectively with the surplus spending power. An elementary principle of economics is that wages are paid for all goods produced. Therefore, if the Government rations goods without taking some of the wages out of the hands of the people, the effect will merely be to increase the demand for non-rationed goods, or to encourage " black " markets for the sale of rationed goods. The surplus income of the people will seek an outlet in one way or another. If this is to be avoided, the Government must ration money at the same time that it rations goods. Because of the very large, amount of money in circulation, the Prices Commissioner is experiencing great difficulty in keeping prices down. Unless the Government helps him by taxing the surplus money out of the hands of the community - and I arn thinking particularly now of that section of the community which is in receipt of £400 a year and less - the Prices Commissioner will be forced to take such action against some industries as will cripple them for all time. Industry will not carry on unless there is an incentive to do so. The hands of the Prices Commissioner should be strengthened, not by giving him authority to prosecute and have useless fines imposed on profiteers, but by giving him authority to impose fines in the same way as does the Commissioner of Taxation. Indeed, the Prices Commissioner and the Commissioner of Taxation should work hand in hand. Unless steps be taken to withdraw surplus money from circulation, the Government will be driven from one form of control to another in an attempt to stem the flood of inflation that is threatening to overwhelm every body.

Let ns now consider the Government's taxation policy. I have heard it said time and time again that the policy of the Labour party is to "soak" the rich and the middle classes. I do not propose, at a time like this, to object to " soaking " the rich. Every body should pull his weight, but I disagree with the policy of the Government in pandering to its political supporters in the lower ranges of income. Those groups which together receive 70 per cent, of the national income aro contributing only 4 per cent, to the cost of the war in direct taxation. In

New South Wales, during the depression and afterwards, a Labour government which was more leftist than is this Commonwealth Government - with the exception of a few of its supporters - imposed a wages tax. If a tax of ls. in the £1 were imposed on all wages earned in Australia, it would raise many millions of pounds for the war effort, and those who contributed it would not suffer.


Mr Johnson - That is what is hurting the honorable member - the fact that the workers are not being taxed enough.


Mr HARRISON - Things cannot be kept at boom levels all the time, especially when there is a war on. If an attempt be made to do so, something must " bust ", and that will happen very soon if the Government insists upon giving immunity to its supporters. Why does the Government do this? Is it the result of faulty reasoning? Perhaps it is. Does the Government assume that, because the national income is £1,000,000,000, and it has introduced a budget of £500,000,000, the country is making a 50 per cent, war effort financially? Surely not. Even a 50 per cent, effort would not be possible unless every one contributed according to his ability to pay. That, however, is not in the Government's programme. There is a gap of £300,000,000 in the budget, so that, although the national income is £1,000,000,000, the Government proposes to take only £200,000,000. The other £300,000,000 is to be raised by way of voluntary loans. I suggest that the Government will be compelled to draw upon the credit of the country to a dangerous extent. However, suppose the Government, by some extraordinary occurrence, were able to raise all the money it wanted by voluntary loans from that, large group of persons who earn £400 a year and leas, it would still have to pay interest on the money. In war-time, most of a nation's revenue is expended on goods which are blown into thin air, so that the result of this method of finance will be that our children, and our children's children, will be condemned to go on paying interest for an indefinite time on money borrowed for the production of goods that were made merely to be destroyed. The Government has injected credit into the financial structure of the community, and that credit must be withdrawn. Unfortunately, the money is not being withdrawn from the community, and the Government is raising interestbearing loans that will, in future years, have to be converted and reconverted.


Mr Frost - Did the previous Government intend to repudiate the forced loans that, it, intended to raise?


Mr HARRISON - Contributions to post-war credits would have been made by all salary-earners and wage-earners, and by businesses.


Mr Frost - The previous Government intended to pay interest on the post-war credits.


Mr HARRISON - The interest rate was a mere 2 per cent., which the Government pays every day on treasurybills. My remarks are directed to loans raised on the open market. Post-war credits arc substantially different from loans to which the public subscribes.

The Government Ls urging the people to achieve a maximum war effort. Unfortunately, it neglects to withdraw from circulation the vast sums that it spends upon defence. That money, which finds its way into the pockets of the workers, is accumulating so rapidly that, unless Ministers alter radically their present financial policy, inflation must overtake the country. The war effort matters little in terms of money, because money can always be obtained. The Treasurer is aware of that. But uncontrolled money, instead of being a boon to the community, will become a menace. Surplus money in the pockets of the community competes with the Government for labour and material. The responsibility of the Government is to prevent that competition ; but this uncontrolled money is one of the greatest brakes on our war effort, and constitutes a positive danger. Inspiring talks by Ministers merely confuse the people, though they serve a valuable purpose to the Government because they divert public attention from the actions of some Ministers.


Mr Dedman - What Ministers has the honorable member in mind?


Mr HARRISON - The Minister for War Organization of Industry, who is an academic socialist, and the Minister for Labour and National Service (Mr. Ward). They are the terrible twins of this Government. While the country is being fed with fair words, these Ministers are " socking " the public, right, left, and centre, with their efforts to give effect to the peace-time policy of the Labour movement. From time to time, members of the Opposition have submitted motions to disallow regulations that have been promulgated for the sole purpose of advancing the policy of the Labour party. Honorable members opposite do not deny it. By interjection, and by speech, they ask: " Why should we not implement our peace-time policy when we have the opportunity to do so?"


Mr Calwell - My complaint is that the Government is not introducing the policy of the Labour party.


Mr HARRISON - The Opposition is of opinion that the Government is using its war-time authority to give effect to the domestic policy of the Labour movement.

The budget speech foreshadows a referendum in which the Commonwealth will seek increased powers, but I doubt whether it will be wise in war-time to take the risk of dividing the people on a highly controversial issue. While Australia is at war, the Commonwealth Government, may override the authority of the States, and should not be permitted to carry over war-time control into the post-war era. In my opinion, the people do not desire it, and any attempt to seek additional powers by taking advantage of the present emergency would be neither fair nor wise. In the post-war era, private enterprise and individual initiative will undertake the reconstruction. They will succeed, where socialism would fail. Unfortunately, the refusal of the Government to adopt the system of post-war credits will leave the people without money with which to rehabilitate themselves. With money circulating freely, people are spending lavishly. Whereas soldiers will receive deferred pay, civilians will not do so, and many of them will suffer. I am highly suspicious of the Government's proposal to seek additional powers, because Ministers will use them to implement their pet theories. A solution of the post-war financial problem is a post-war credits scheme, and the Government will be driven eventually to adopt it.

From time to time, references have been made in the chamber to the difficulty which soldiers experience in purchasing supplies of tobacco and cigarettes. In my opinion, the excise on the manufacture of tobacco for the troops should be abolished. In the last war, cigarettes were distributed free of charge to the Australian Imperial Force and the British Army. To-day, the soldiers are obliged to buy their " smokes ", and they pay " through the nose " for them. Under the lease-lend arrangement, the Commonwealth has imported from the United States of America tobacco leaf for which it will not be required to pay in dollars. That manufactured leaf could he made available to the soldiers free of duty. The Government has only to satisfy the Lease-lend authorities in the United States of America that the transaction is legitimate, and the fact that tobacco and cigarettes smoked by American forces in Australia are not subject to tariff duties or excise creates an excellent precedent.

Many anomalies have arisen regarding the taxation of soldiers' pay. This morning the honorable member for Fawkner (Mr. Holt) referred to the experience of seme members of the Royal Australian Air Force a;t Darwin. They had fought in New Guinea, and in the Solomon Islands, but the Taxation Department ruled that they were not serving beyond the boundaries of the Commonwealth. That decision was ridiculous, because Australian troops who may have occupied a small island in the Pacific are not required to pay taxes. The Government should A sue, a ruling that troops who are in operational units - not operational areas - shall be exempt from taxes.

After the debacle in the Far East, I attended a dinner that was tendered to Lieutenant-General Gordon Bennett, the Officer Commanding the Australian Imperial Force in Malaya. About twenty famous war correspondents attended the function, and some of them expressed their opinions about the campaign. Each speaker paid a high tribute to the fighting qualities of Lieutenant-General Gordon Bennett, and his sound knowledge of jungle warfare. Now, that man is languishing in Western Australia, and I doubt whether the Army authorities have availed themselves of his experience for the benefit of our forces in New Guinea. One wonders why he languishes in Western Australia. He is a civilian general. He is not one of the staff corps. I do not know whether that has anything to do with his transfer to Western Australia. But all civilian generals are given a place well below the fighting line. In the la*t Avar, civilian generals were the cream of the service, and distinguished themselves. Jungle warfare has not yet finished. When we begin a counter offensive, we shall have to drive the Japanese back through the jungle through which they previously advanced.

This budget is false. The Government will have to revise it within a few months. If the Prime Minister and the Treasurer, whom I credit with having brains, are persuaded by an irresponsible minority in caucus to adhere to it. we shall suffer the worst debacle we have ever experienced.







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