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Friday, 13 October 1911


Senator ST LEDGER (Queensland) . - I wish to make a few observations on some outstanding features of what must be the financial policy of the Government, as I anticipate that there will not be much time afforded to discuss the question when the Budget is under consideration in the Senate. It will be remembered that a short time ago I asked some questions with regard to the relation between the note issue and the gold held by the banks and the Treasury, and the position of the Government on the matter. I find that notes have been issued to the value of £9,600,000. The gold held against these notes amounts to £4,683,684. The Government have disposed of this by investments in loans to the States to the extent of £4,642,500, and there are contingent and outstanding liabilities on current accounts which the Government must have amounting to £600,000. A simple sum in addition will show that the whole of the note issue is thus accounted for, I am pleased to say, exactly as it was anticipated it wouldbe by the Statute and by the Administration. But if attention is given to the figures, it will be found that they show that so far as the note issue is concerned there is not a single penny available, by reason of it or of its administration, for carrying out the huge works expenditure to which this Commonwealth Parliament is committed. I mention the fact for the reason that it is notorious that many of the Government supporters, and possibly members of the Government, believe that there is some magic in a. note issue by which it may be used or manipulated to provide, in a cheap and easy way, for the construction of public works. I take it that honorable senators opposite will soon become convinced that that is a delusion.


Senator Needham - The honorable senator said so when the Australian Notes Bill was under consideration.


Senator ST LEDGER - What did I say ?


Senator Needham - That the Act would be a failure.


Senator ST LEDGER - I give that statement an emphatic denial. I said nothing of the kind, and I am not aware that a single honorable senator on this side made the statement that the Act would be a failure. In order to refresh the memory of the honorable senator, which is growing internally somewhat hazy, I may tell him that what I did say was that there was not the slightest necessity for that measure.


Senator Gardiner - Lid not the honorable senator, in common with other members of the party to which he belongs, describe the Australian notes as " flimsies "?


Senator ST LEDGER - I never used the expression " flimsies " in or out of this Parliament to describe the notes.


Senator Ready - The honorable senator has forgotten.


Senator ST LEDGER - I have not forgotten, and I challenge honorable senators now to show that I did so, and remind them that there isHansard to refer to. I have not the slightest hesitation in saying that if I did use the word " flimsies " in connexion with our notes it was only by way of a joke, as I referred to some honorable senators opposite yesterday.


Senator Needham - The honorable senator is pleading guilty now.


Senator ST LEDGER - No; I say that, so far as my memory serves me, I never used the word, but 1 repeat that my criticism of the Australian Notes' Bill was that it was unnecessary. I hold that opinion still. The point to which I wish to direct attention is that the banks now hold the notes against the Government. It is true that the Government have received gold for them. But we have to look at the expenditure to which we are committed, and if there is one thing which not even the grossest cant or whistling by the other side to keep up their courage can obscure, it is that there is not a single one of the works to which this Parliament is especially committed, or to which past Governments were committed, that can be constructedexcept from loan money.


Senator Rae - Why?


Senator ST LEDGER - The only other method would be to construct them from revenue derived from direct taxation, and we have already exhausted that source of revenue to the limit.


Senator Rae - Nonsense.


Senator ST LEDGER - I am glad to hear that remark from Senator Rae, because I know that he believes that the resources of direct taxation are not yet exhausted, and that he has a considerable following on the other side; but I know also that if the honorable senator and those who agree with him in this matter could force the Government to give effect to their views, the Prime Minister would be compelled to admit that the tenure of office of his Government would not be worth an hour's purchase. The whole financial history of the States of Australia goes to show-


Senator Rae - Extravagance.


Senator ST LEDGER - Nonsense ; but I shall deal with that remark in a moment. The history of finance in the different States goes to show that public works cannot be carried out without recourse to loan expenditure. I am prepared to give Senator Rae his alternative, and let the party on the other side attempt to carry out the public works to which this Parliament is committed by having recourse to revenue derived from taxation, and I am confident of what the result would be. I dismiss the possibility of the Government seeking to carry out the works to which we are committed by further taxation, and that means alone, and what then is the alternative? They must borrow. That is the only alternative, and if they borrow, the banks holding our notes will have the Government at once at their mercy.


Senator Needham - Has not injudicious borrowing prevented Australian progress?


Senator ST LEDGER - I make bold to repeat what I have said here, and on many a platform, and that is that, allowing for the errors and, if honorable dilators please, the extravagance of State Governments in the past, there has been no Government expenditure on the face of the earth which has proved a sounder asset than has most of our loan expenditure. I have taken this opportunity to refer to the matter with a view to emphasize the line which must, and I hope always will, separate the financial policy of the Opposition from that continually urged by honorable senators opposite. We urge that it is only by a judicious repetition of the loan policy of the past that the States of Australia, or the Commonwealth, can successfully carry out the necessary developmental works for the advancement of the country. I repeat now what I have said before, that the £160,000,000 odd of borrowed money invested in the railways and other public works of Australia is not a debt, except technically, for . purposes of bookkeeping. Treasurers are bound to enter on the debit side of their books every £1 that is borrowed. In that sense the loan money invested in railways and public works in Australia represents a debit, but not a debt. Our railways are to-day, and have been for some little time past, paying every penny of interest on capital cost, as well as working expenses, and many are returning a substantial surplus to revenue.


Senator Rae - That is largely accounted for by further influxes of borrowed money, and indicates only a hollow prosperity.


Senator ST LEDGER - Honorable senators opposite appear to me to be always reasoning in an inverted circle. The £160,000,000 invested in Australian railways represents a revenue-producing asset, and if we borrowed another ,£150,000,000 with a similar result, it would also represent an asset to the country.


Senator Rae - Talk about reasoning in an inverted circle !


Senator Needham - Has the honorable senator ever seen an inverted circle?


Senator ST LEDGER - What I mean is that honorable senators opposite reason in a circle, and continually go back upon their reasoning. I will leave this matter and proceed to deal with another. From all the information we can gather, it would appear that the Treasurer does not intend to be tied down very much longer to the restriction requiring him to keep a reserve of 25 per cent, of gold against the issue of Treasury notes, and I say now that any serious departure from that policy will be followed by the consequence that when the Government enter upon loan expenditure they will be more at the mercy of the banks who have their notes in their tills than any State Government has ever been in the history of Australia.


Senator Ready - We shall have a Commonwealth bank to help us.


Senator ST LEDGER - Exactly ; but that is too big a subject to go into at present, and we shall deal with it only when the occasion arises. The reference to the possibility of the Government entering upon a borrowing policy at once suggests the fact that they have taken no step towards the settlement of the most pressing financial need of Australia at the present time, the consolidation and conversion of the State debts. The indebtedness of Australia amounts to nearly £250,000,000, and I remind honorable senators that one of the great reasons which induced the States to approve of Federation was the hope that a centralized and national authority having control of the Customs, and indirectly control over other sources of revenue, would, in an elastic state of the money market, be able to convert the loan debts of the States at a less rate of interest than those at which they were originally incurred.


Senator Rae - What need is there to go to the trouble to convert book entries ? The honorable senator said just now that they were nothing but book entries.


Senator ST LEDGER - If the Commonwealth Treasurer, in one of his deliverances, were to tell the bond-holders that these debts were only book entries-


Senator Rae - It was the honorable senator himself who said so, just now 1


Senator ST LEDGER - Honorable senators opposite are simply insulting themselves when they misunderstand an argument in that fashion. I said that these loans were practically book entries so far as the State Treasurers were concerned. I also said that these book entries were not so much debts as debits. My reason for making that distinction was to mark the difference between what people commonly called our "national debt," and what is really implied by the term "book entry." When you have assets of a reproductive character standing against loans, and when those assets are more than paying interest on the loans, it is not fair, nor is it sound bookkeeping, to regard those loans as debts, though it is sound to put them on the debit side of the account.


Senator Givens - Does not the honorable senator think that the State Governments have been the principal opponents of the Commonwealth in regard to the conversion of the State debts?


Senator ST LEDGER - I am not aware that that is so. It has been pointed out repeatedly that, by the conversion of the debts at lower rates of interest, there would be a saving of £7,000,000 to the respective States and, further, by the establishment of a sinking fund, it would be possible, in fifty or sixty years, to extinguish the debts altogether. That is surely a financial operation that it is desirable to accomplish. The subject has been referred to the people by referenda, discussion and criticism have taken place with regard to it, and the electors have authorized the transfer of the State debts to the Commonwealth. But, hitherto, no Commonwealth Government has had sufficient confidence in our financial soundness to put to the test statements made before we entered into

Federation, as to whether or not we can assist the credit of the States, and,' at the same time, maintain our own credit by at once promulgating a scheme of conversion.


Senator Rae - What is the use of taking over the present debts if the States are going to establish new ones immediately after ?


Senator E J RUSSELL (VICTORIA) - How would the honorable senator establish a sinking fund ?


Senator ST LEDGER - A sinking fund is established simply by the insertion of a a short section in an Act of Parliament authorizing a loan.


Senator E J RUSSELL (VICTORIA) - Does not the honorable senator anticipate being able to establish a sinking fund by savings by conversion ?


Senator ST LEDGER - Certainly.


Senator E J RUSSELL (VICTORIA) - But the honorable senator, the other day, quoted Mr. Coghlan to prove that the Commonwealth could not borrow more cheaply than could the States.


Senator ST LEDGER - How the honorable senator mixes up things ! The proposition is frequently advanced from the other side that the conversion of the State debts cannot take place until the States are restricted in regard to further borrowing.. It is said that the Commonwealth should have the money market to itself. That was what Mr. Coghlan's statement, furnished to his own Government, was directed against. I agree so far with Mr. Coghlan that, rather than attempt the conversion of the State debts at the price of restraining the States from going into the market to borrow further, I would take no action in the matter at all.


Senator E J RUSSELL (VICTORIA) - What was the honorable senator's object, then, in quoting Mr. Coghlan the other day?


Senator ST LEDGER - I do not know whether the honorable senator recollects the quotation, and how I applied it.


Senator E J RUSSELL (VICTORIA) - I have done the honorable senator the justice of reading his speech.


Senator ST LEDGER - Then, it is not my fault if the honorable senator fails to understand my point. The quotation from Mr. Coghlan was clear and distinct. At that time, a clamour was being raised against the States for their borrowings. It was urged that the Commonwealth Parliament was about to undertake the conversion of the State debts, and that the reduction of State indebtedness could not be successfully carried out unless the States were restrained from further borrowing. That has been the bone of contention throughout. I do not believe that the present Government would be allowed by its supporters to attempt the conversion of the debts, unless it secured power to restrain the States from going into the loan market. There is another matter to which I wish, briefly, to refer. This also arises out of questions which I have asked. It relates to the expenditure of the present Government upon immigration. I speak from memory, but I think that the Government has spent about £15.000, and that £20,000 is the sum which was voted for the purpose. I admit, at once, that the expenditure of the Government on immigration, in comparison with the expenditure of past Governments, reflects very creditably upon them. Expenditure in this direction is in a high degree judicious and necessary. Of the . £15,000, £5,000 was spent on publications printed in Australia and distributed elsewhere; whilst£10,000 was spent in Great Britain for similar purposes, and in connexion with the agency at the High Commissioner's office. To the further question, whether any money was spent anywhere else, the Ministerial answer was in the negative. Though there is a temptation to follow Senator Rae's remarkable utterance with regard to immigration and its relation to the Australian labour market. I do not wish to follow him. I do, however, wish to say that, when we talk about immigration to this country, we are not talking about the importation of labour only. We are talking about the necessity of bringing people of every class. To suppose that the object is to flood the labour market, is wilfully to misunderstand the position. Population is needed by Australia in the interest of her own safety. An important cablegram, which has recently been published in the newspapers, bears upon this point. We read that the Japanese Government is about to apply itself to the building of a Navy in the Pacific, which will be little inferior to the Navy of any European Power, excepting Great Britain herself. In other words, Japan intends to take the command of the Pacific if she possibly can. At present she is our ally. How long she will remain our ally we do not know. But it is no disrespect to the Japanese to say that they, and other nations, are looking with envious eyes towards this unpopulated country. We can not continue to keep Australia in this conditon for fear of Senator Rae's spectre about the labour market. The question of population, and the question of the sufficiency or the insufficiency of labour, are in no way related. We are bound, as a matter of high policy, to see to it that the population of Australia is rapidly increased. To raise 5,000,000 of people as quickly as possible to 10,000,000 or 15,000,000, is the first great task of statesmanship in this country. If we do not solve the problem, we shall continue to present Australia, with its vast unpopulated areas and its immense resources, as a provocation to every country in the world. Therefore, looking at the matter from the high national point of view, we cannot allow that policy to be interfered with by talk about the congested or uncongested condition of the labour market. Unfortunately, whether there are five millions or forty millions of people in the country, there will still be unemployed. There will always be men looking for jobs, and there willalways be jobs requiring men. I have never heard of a Government on earth, and I cannot conceive of a Government that will ever exist, that could solve that difficulty satisfactorily, so that it would be able to say that for every job there was a man and for every man a job. But the fact that there will always be some unemployed is entirely apart from the great national question that confronts us. The greatest of duties and obligations resting upon us is that the number of people in this country shall be increased as rapidly as possible. I should have thought that this argument would appeal strongly to the High Tariff party. They ought to realize how economically desirable it is to increase the population of the country. The best market we can have is our own home market. If there is anything economically sound in the Protectionist doctrine, it is that the best way of building up your home manufactures is to increase your home market. Unless we have an increased population in Australia, the Protective policy cannot be effective. The very best way to make that policy effective, from the point of view of manufacturers and artisans alike, is to develop the home market by increasing the population and so keeping up a continuous demand for our manufactures. I cannot understand any Protectionist, whether he is representative of the workers or of the manufacturers, who does not urge upon every Government incessantly the necessity of adding rapidly to the population, because the most remunerative of all users of manufactured products are the consumers in the home market.


Senator E J RUSSELL (VICTORIA) - Hear, hear; you are coming on to good ground now.


Senator ST LEDGER - I am putting the Protective policy as soundly as the honorable senator has done.


Senator E J RUSSELL (VICTORIA) - It is a pity that your votes have not been as sound.


Senator ST LEDGER - I do not suggest that that is the first and last necessity. I hope that when we do get the Tariff, which seems to be the skeleton in the closet with this Government, we shall use this very argument against my honorable friend. When I was a little more than a schoolboy I undertood the proposition which I have put. But that to me, although it is a pretty strong reason in itself, is not areason why I should go on assenting to higher and still higher duties. Even if I were economically wrong in not supporting the Protective policy of various Governments on that point, I am glad to hear from Senator E. J. Russell that on the other ground I am sound. It is almost the corollary of Protection itself that we should build up rapidly our population. I am astonished to find Protectionists on the other side who, whenever we call for further means to increase the population, try to block us and speak about the introduction of people as a deliberate attempt to flood the labour market. To speak of these two things in the one breath is to speak with a contradictory tongue. It is almost as foolish as to say to a lad in the one breath, " It is hardly necessary that you should learn to swim, but there is one thing you must never forget - you must never go near the water." The two things cannot stand together.


Senator Long - Or, to use another simile, it is like an anchor which is always in the water but never learns to swim.


Senator ST LEDGER - I hope that in this matter the Government will learn to swim. I trust that they will not give undue prominence to the vexed questions of the bringing of people into the country and occasional unemployment on the part of the worker. The two things are not necessarily correlated. If there is unemployment in the market the introduction of people who will be industrious will mean an addition to the consuming resources of the country, and will, indirectly, promote labour. Further than that, the most power ful magnet you can have for attracting capital is that of population. Capital always follows population. If the doctrine of Senator Rae is sound, how does he explain the fact that there is not a country to-day which has gone ahead faster than has Canada during the last six or seven years? And in the influx of population it is still going ahead by leaps and bounds. The rates of wages have never been so favorable to the labourer in Canada as they are to-day, when it is carrying out strongly its immigration policy. I believe that great as the resources of Canada are, they are in some respects almost insignificant as compared with our resources. If Canada and the United States of America have not suffered - and they have not suffered - from the point of view of labour and industry generally, how can it be said that if we were to bring in thousands exactly the opposite result would be produced? The fact is that on the question of borrowing money and encouraging immigration the Government are obsessed with the craven fear of being great. We on this side believe that our country can absorb millions of the finest population, and many of those millions will find in Australia as good homes as they can find anywhere on earth. They will find here a Government which will insure, not only to the worker, but to every class, as fair a chance of advancement and promotion as any other Government can offer.







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