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Wednesday, 23 November 1927

Mr DUNCAN-HUGHES (Boothby) . - I should not have spoken on this debate but for the fact that it appears to rae that at the present time, which is rather a critical period, it is desirable for those of us who have views, whether antagonistic or favorable to the Government, or smacking of both qualities, to say something of the position as .it appears to us. The Treasurer's budget speech is undoubtedly an interesting document to read. The details are well sot out in it, and it is easy to follow. I propose first to mention some of the things with which I find myself in agreement, and then say something about some with which I am not in agreement.

In regard to the financial readjustment which has taken place with the States during this year, I should have preferred to see the original proposals of the Commonwealth carried into effect. Had it been possible, I should have preferred the withdrawal of the Commonwealth from a considerable portion of the field of direct taxation in favour of the States. But as the States were so antagonistis to that proposal, the arrangement eventually come to appears to me to be satisfactory, and" to do full justice to the claims of the States. In Melbourne, speaking on the States Grants Bill, I said that I would vote for the bill because I relied on the Prime Minister dealing fairly by the States. The right honorable gentleman, in my opinion, has done so, and I have no intention of quarrelling with the terms of a readjustment which are not identical with those which I should have selected.

There are one or two other matters to which no reference has been made during this debate, but which were mentioned by the Prime Minister, in the speech he delivered when he returned from the Imperial Conference. One of them is referred to in the budget speech, and relates to the recovery of the best part of £1,000,000 as Australia's share of the reparation payments due to the Empire before the Dawes plan came into operation in 1924. I do not think that this fact has been heralded as it might have been, but it ought to be a matter of satisfaction to Australia that this amount of money, which Ave were not definitely aware avc should receive, has been recovered for us by the Prime Minister and those who were associated Avith him in England at the time.

I Avas pleased that the right honorable gentleman, when in England, took up the question of what Avas a fair rate of interest to be paid by Australia in view of the funding arrangement in respect of our Avar obligations. No one would suggest that when Ave had already agreed to pay a certain rate of interest, Ave should appeal for better terms, unless a good argument could be advanced for a reduction. We all know that Ave get a great deal more from Great Britain, particularly in regard to her Navy, than we give in return, and no Australian would be anxious to claim a reduction in interest for the sake of a saving of a fen, pounds. But I am pleased to say that the Prime Minister's claim that Australia should only pay the average rate of interest paid by Great Britain to America was readily discussed by the British Government.

With regard to the budget speech, I note Avith a good deal of interest the reference to the repeal of certain irritating taxation provisions. I need not recite these in detail, but -the improvements indicated, in the speech in respect of both land tax and income tax will be very acceptable to the general public. In Melbourne I frequently spoke in favour of the simplification of our taxation laws so that not only the man in the street, but also the farmer, might know his position, and 'might not be hopelessly mystified by all sorts of provisions almost impossible to understand. The alterations ]low proposed to be effected will be particularly acceptable to country people. I must express satisfaction at the fact that there are to be remissions of income tax and land tax, but my feeling of satisfaction in that respect is a good deal qualified by the fact that in South Australia heavy taxation is being imposed, and necessarily imposed, which will deprive taxpayers iu that State of the advantage given by the reduction of Commonwealth taxation. Other difficulties will serve to prevent the proposed reductions having the intended effect. For instance, there has recently been a Federal land tax reassessment which has caused a good deal of complaint, not only in South Australia but. in other States also, and will to a great extent nullify the effect of the proposed 10 per cent, reduction of the Commonwealth land tax. If, by law, there is a 10 per cent, reduction and at the same time by administration there is a considerable increase in the taxpayer's assessment, the net effect may be no reduction of taxation.

This is a suitable moment for congratulating the Government on its decision to sell the Australian Commonwealth Line of Steamers. It is evident that the Government is aware that the position of this Line is not the happy one that some would expect us to believe it to be. I did not speak on this subject on the Want of Confidence debate; it did not seem necessary for me to do so. I was cordially in agreement with the decision to sell the Line, although I would have made the conditions even more open than the Government proposed. The Line has been the cause of tremendous loss for many years and there has been no ascertainable profit to be derived from retaining it.

I propose now to mention one or two matters upon which I do not think the Government deserves' commendation. I do not wish to overstress criticism, but it is natural that one should emphasize points of disagreement rather than points of agreement with the Government. In my judgment, too much money is being spent in Australia at the present time by governments. and private persons. The new Commonwealth debt incurred this year amounts to £2,500,000, yet the Treasurer is distributing, from the accumulated surplus, besides the £2,000,000 set aside for the defence reserve fund, nearly £1,000,000 for objects which, although they may be deserving and worthy, are in my opinion not essential. At the present time it is not right that we should set aside money for objects which are not essential. I have said on other occasions that for years Australia has been spending too much. That tendency, I think, arises naturally. During the nineteenth century the two political parties in England were the Conservatives, who gave particular attention to foreign affairs and defence,, and the Liberals, who emphasized particularly " home reform." It appears tome that Australian governments have been trying to carry out both policies, aiming at keeping defence up to a high standard while giving effect to an extraordinarily wide and vigorous policy of " home reform." Such an effort necessarily involves heavy expenditure. Iu regard to defence, we are not doing as much as we should, and yearly the Inspector-General of the Military Forces, who is our chief adviser on military affairs, has warned us that he is not satisfied with the state of the army. Many people lose sight of the fact that the great war started thirteen years ago,, that many of those who took part in it returned not at all or in a sadly battered condition, whilst many others who came through it unscathed are now beyond the military age.

Sir Neville Howse - Their military value is diminishing every year.

Mr DUNCAN-HUGHES - Yes. Others must take their places, and we might fairly expect the younger generation to shoulder the burden of the next war. Several of our greatest military officers, including Lieutenant-General Sir Brudenell White, Major-General Blarney, and Brigadier-General Lloyd have left the service, some of them because the inducements to remain were not sufficient. Lieut.-Colonel Foster, who died a few days ago, was, I am told, a particularly able soldier. The retirement of talented and experienced officers is a great loss tothe defence forces of the Commonwealth. No doubt all of them who are alive would make their services available if they were required in time of emergency,, but it is possible that even the ablest soldier may fail to keep abreast of the- progress of military science during a few years of retirement. We should do more militarily than Ave are doing, although we have tlie satisfaction of knowing that, within the Empire, Australia's contribution per head to naval defence is second only to that of the United Kingdom. In pursuance of the policy of " home reform " we have gone very much further. For instance, Australia pays a higher rate of old-age and. invalid pension than any other country in the world. The Housing Bill, which recently passed this chamber, provided for assistance in the acquisition of homes to a maximum 50 per cent, above the cost of houses available Tinder any similar scheme in the British Empire. The wages paid to the employees on the Commonwealth Government steamers are the highest in any mercantile marine service. In. addition, there are the arbitration awards, which some industries are unable to support even with considerable government assistance in the form of high customs duties or bounties. If we observe the effect on the mining industry only, we find Mount Morgan and some of the Broken Hill mines closing down and Mount Lyell idle for the time being. I have no desire to make an unnecessarily gloomy speech, but it is proper to recognize that unemployment is already considerable in New South Wales and South Australia, and appears likely to extend. That is partly due to the economic policy laid down by Mr. Justice Higgins in the Broken Hill Proprietary Company's case. He not only declared that an industry should pay a living wage, but he propounded the doctrine that an industry which could not comply with that obligation) should not continue. Referring to that judgment in the House last year, I dissented from Mr. Justice Higgins's declaration as economically unsound. The result is that many industries have reached the stage when they cannot pay what the Arbitration Court has declared to be a living wage, and are ceasing to exist. In consequence, many men have been thrown out of work. The fact is that we have regarded ourselves as a privileged people, untouched by the vulgar finger of the outer world, and the mutterings of over- populated countries, which the honorable member for Warringah quoted a few nights ago, and the declarations of the Geneva Economic Conference, should be regarded as a warning of the external effects of our policy, as the industrial situation which I have mentioned may be of the internal results. Another indication is that Australia has .recently been forced to have recourse to the American money market for loan accommodation. If Australia must borrow, I would infinitely prefer that any external borrowing should be from Great Britain. In addition to bearing the burden of an expensive defence policy and an ambitious " home reform " policy, the country requires an enormous amount of money for even its partial development. A great deal of developmental work has been done, but, as the Treasurer reminded us, much remains yet to be done, and the doing of it will cost a . great deal of money. To these three burdens may be added a fourth - the foundation of the Federal capital at Canberra, which, to the end of last month, had cost £S,700,000. This quadruple burden is borne by a population of 6,500,000, of whom approximately only one in 28 pays - or, at any rate, a few years ago paid - any direct taxation to the Commonwealth. Thus only a very few people are carrying this four-fold burden, which falls eventually, as has been often said in this debate and before, upon wheat and wool. However, honorable members may try to ignore it, the fact remains that Australia generally, with the exception of Western Australia, has had a poor season, and although the shortage of wool may enable an increased price to be realized from that commodity, the income from our two staple products is likely to be much less this year than in previous years. After years of comparative plenty, Ave should not be depressed by one bad season, as Ave appear to be. The moment anything goes wrong, the industry concerned rushes to the Government for assistance. I have spoken occasionally against the bounty system, particularly in its application to the primary producers. Having lived amongst them and learned some of their difficulties, I have great sympathy with them, but I shall continue to oppose thepayment of bounties to them, because I regard the system as pernicious. Once a bounty is paid it is diffiicult to reduce or to terminate it. The payment of bounties tends to take away a man's personal independence, because so soon as he is in difficulties he approaches the Commonwealth Government for assistance. The Tariff Board's report this year discloses the pitiful spectacle of an enormous number, not only of our primary industries, but also of secondary industries, asking for assistance.

Mr Parsons - Principally secondary industries.

Mr DUNCAN-HUGHES - That may be so. The bounty system tends to corrupt the morale of our primary producers. Few of them are prepared to stand on their own feet. A few years ago, when the wool-growers were suffering hardships, there was immediate talk of placing the industry under control. The Minister for Works and Railways (Mr. Hill), when a private member, used to tell us with regret that the farmers of Victoria would not support the wheat pool there. The honorable member for Wimmera (Mr. Stewart) has even suggested that the only fair and proper pool is a compulsory pool. We cannot control or tamper with the wool industry. Bad seasons in wool and wheat must be reflected over the whole community, and whatever bounties are paid to minor industries will not affect the position. I suggest, therefore, that we should be careful in paying bounties, because the indications are that they have a bad effect on the recipients by lowering their self-reliance, and, at same time, from what one reads, the producers are not receiving assistance to an extent that will enable them to carry on successfully. General extravagance has arisen, and is affecting to a certain extent the Commonwealth Government, the State governments and private individuals. I, myself, do not claim to be free from reproach, and few people are; but it certainly appears that our lavish expenditure has resulted in the private individual, in addition to the producer, not being able to carry on when difficulties arise. This extravagance has been partly responsible for our unfavorable trade balance during the last few years.

Mr Gibson - Would it not have the same effect on secondary industries as on primary industries ?

Mr DUNCAN-HUGHES - I remember suggesting that theoretically the preferable scheme was to give bounties to secondary industries and not to place the primary industries in the humiliating position of asking for bounties, as they are doing now. I do not suggest that many of the objects which the Treasurer set out in his speech are not in the highest degree worthy and admirable, but it is questionable whether we have the money to indulge in such objects. Are we, in fact, storing up anything for the future? In Australia we do not store for a rainy day as a rule, but for droughts. We cannot expect present prices to continue. We must have a bad season in some years, and we are making no provision for it. The Prime Minister yesterday made an extremely fine speech. As I listened to him I was reminded of what Lord Rosebery - I think it was - wrote of the late Lord Salisbury, " the sentences flowed from him as if the springs of eloquence would never run dry." The Prime Minister detailed the various portions of the budget, and showed the practical impossibility of effecting any reduction in the items ; but surely a number of them could be reduced if it were necessary. Further, I put it to the committee that we have to consider not so much whether it is now convenient to reduce items of expenditure but whether some of them should have been proposed at all. Once expenditure on a certain work is started, it is difficult to stop it. The Prime Minister has suggested that honorable members wanted this and that item, but the responsibility for selecting them and bringing them in surely rests, not on the Treasurer, but on the Government. It is certainly not the responsibility of honorable members, who sometimes have no say in expenditure except in voting against the Government on a vital issue, or in accepting the proposals of the Government. The Prime Minister rather suggested that it was futile now to suggest that the Government should not have clone this and that. I propose to take briefly two or three things that were discussed by this Parliament during the last few years. At the time I pointed out that they would result in heavy expenditure, but no notice was taken of what I said. A speech that I made some years ago dealing with old-age pensions brought on me a good deal of criticism. On the 8th August, 1923, dealing with the budget, I pointed out that from June, 1917, to June, 1921, the oldage and invalid pensions increased from about 120,000 to 140,000, or an increase of nearly one-sixth of the total number. Taking those years to the 30th December, the increase in population was less than one-ninth. I went on to say -

So that the pensioners are increasing much more rapidly, proportionately, than the general population. In my opinion, the increase both in number and expenditure will be much larger in the future. So far, only those have become eligible who, when pensions were instituted, were of middle age. When those who are brought up with the idea that at a certain age they will be provided for by the State take full advantage of the privilege, the rate of increase must be vastly greater. This is, therefore, not the most suitable moment at which to grant an increase in old-age and invalid pensions, which, at the beginning, will mean additional expenditure of £1,000,000, and later may mean a great deal more.

What do we find? In 1922, before this Ministry assumed office, the total payment to pensioners in asylums was just under £5,400,000. For the coming year the estimate is £9,400,000, an increase of £4,000,000. I draw attention to the fact that what I prophesied has come to pass ; the number of pensioners has greatly increased. I find that for the five years from 30th December, 1921to 1926, there has been an increase of actually onethird in the number of pensioners, while at the same time there has been an increase of less than one-ninth in population. That is an instance in which this Parliament might has saved a considerable sum of money. There can be no fixed amount for pensions, whether it be 15s., £1, 25s., or 30s. Two factors should guide us: What we can afford and what other parts of the Empire are doing. Our pensions when increased to 17s.6d. were the highest in the world, and they have since been increased.

When the cotton bounty was before honorable members, I pointed out, in opposing it, that in that case money could be saved. The Tariff Board was afraid that bounties would simply be used to provide increases in the wages paid to employees. It therefore male the recommendation set out in the following paragraph : -

In its consideration of this matter, the Tariff Board was seised of the importance of making the payment of any bounty subject to such conditions as would ensure that any money paid by the Commonwealth Government in that direction shall actually be received by the growers of seed cotton, and it said : " For the reasons given, the Tariff Board is of opinion that there must be attached to the payment of any bounty such a condition as will effectively prevent State interference with the cotton industry, either in the form of increased wages or rail freights, &c. (except any increase as may be the result of an alteration in the basic wage), during such period as the Commonwealth Government may be supplying funds, through the bounty system, to assist the industry to carry on and develop. In the opinion of the Tariff Board, any such interference might vitally prejudice the successful operation of the bounty. If provision for the suggested condition cannot, by reason of legal difficulties, be made in the Bounty Act or regulations, the Tariff Board suggests that it be arranged by agreement with the Commonwealth Government and each State Government concerned, ashas been done in the case of the sugar agreement."

That seems a reasonable thing. The Tariff Board suggested that if this bounty was given it was advisable to see that it was not used simply as a means to raise wages. That was the condition to be attached to the granting of that bounty. I brought the matter up in this chamber and asked the Minister for Trade and Customs why it was that there was no such provision. I was not favoured with a reply. It seems to me that if the bounty is to be subject to a vital condition, the Government is asking for trouble by granting the bounty and leaving the condition alone.

Last year we had before us a proposal to construct a line from Bourke to Camooweal to connect with the NorthSouth line. I was the seventh speaker on the motion, and I was the first one who mentioned cost. I suggested to the House, and it was never authoritatively contradicted, that the railway would cost from £10,000,000 to £13,000,000. Those who were sponsoring the idea were calmly suggesting that this Government should foot the expense, which, properly, was the burden of New South Wales and Queensland.

Mr Killen - Where did the honorable member "obtain his figures?

Mr DUNCAN-HUGHES - I worked them out before making my speech. They were largely based on the cost of the line through the Northern Territory, though I admitted that in thise case the cost might be rather less. It appeared to me to be ridiculous that we should spend our time discussing such a proposition. An exception must be made in favour of any commitment already entered into by the Government. The agreement as to the North-South and Port Augusta-Red Hill lines had to be accepted or rejected by this Parliament, and I decided to support it. There was no vote on the question, which was passed by every one. Having accepted the measure, I do not propose to go back on that part of the agreement, about which I was least enthusiastic.

The views that I have expressed to-night are not merely my own. I shall put on record, for the purpose of this chamber and for my own purposes, what the great business men of this country are saying with regard to our present position. With them, I do not adopt the attitude that everything is rosy, that we are on a splendid wicket, and will continue to be so in the future. I say that we are in very difficult times, and that it is our duty to check extravagance. The following is a report of a statement made on the 23rd October, 1927, by Sir Robert Gibson, Chairman of the Commonwealth. Bank of Australia,

A warning that thu national expenditure had exceeded sound limits was uttered by Sir Robert Gibson, Chairman of Directors of the Commonwealth Bank, who is visiting Brisbane. He said that this expenditure had assumed large proportions in the way of indulging in luxury. This took many forms, but hu might mention motor car ownership. Those controlling the country's financial institutions, while desirous of avoiding business depression and unemployment, were called u|iou to arrest, as far as lay in their power, the drift towards inevitable disaster.

I shall also quote briefly from the reports of the Tariff Board. Here . again are men whose views may be expected to commend themselves to a great many honorable members. The 1926 reportstated -

From considerations such as 'the foregoing, the Tariff Board is strongly of opinion that the industrial unions of the Common wealth should be induced to realize the critical position into which the Commonwealth isdrifting, and the absolute necessity for preventing the wages gap from becoming still wider between the United Kingdom, the Continent of Europe, and the Commonwealth,, otherwise the Tariff Board, placed as it is in the position to take a comprehensive and intimate view of all Australian industry, can see nothing but. economic disaster ahead, and that at no distant date.

Mr Coleman - Does the honorablemember suggest that the trade unionistsare not entitled to increases when thecost of living rises?

Mr DUNCAN-HUGHES - My point is that we have been expending too much. I am. quoting the opinions of men who hold very prominent positions - men of great ability. The following extracts are from the report of the Tariff Board for this year : - . . The Tariff Board ventured to sound a warning note in its last annual report as to the danger of the tariff being used to bolster up an ever-increasing cost of production, irrespective of any consideration being given to thu ever-widening gaps between the standards maintained within the Commonwealth on the one hand, and the United Kingdom and. the Continent of Ku rope on the other. For performing this function, which the board considers to be its duty in terms of section 17 of the Tariff Board Act, it has been subjected to adverse criticism by some members in the Federal House of Parliament. ... In view of this public trust, the Tariff Board considersit obligator)' upon it, not only to refer to thisvery critical matter again, but to re-affirm and further emphasize the warning it issued, last year, being convinced that the situation has become even more ominous.

There we have the views of the Tariff Board which, for two years, has been demonstrating in no uncertain words the dangerous position in which it considers this country to be. I shall now quote Mr. T. M. Niall, chairman of directors of Goldsborough, Mort Ltd. - 1 regret to say there is nothing to indicatethat our governments - either Federal or State - are doing anything to lighten the burden of taxation, which has now grown to bea most serious handicap to industry. . . . The process of heaping burdens on primary production must have a limit. It has. already almost destroyed the mining industry, which at one time was a. large employer of labour in Australia, and it only now requires to bc carried a little further, and the wool-grower and", farmer will also be taxed out of existence. It seems to me that it is high time our politicianswoke up to the fact that the well-being of Australia is being gravel}' menaced by the policy of discouraging the man on the land.

Mr. HaroldDarling, chairman of directors of the Broken Hill Coy., said, at the annual meeting of that company - 1 regret- to report that the situation at Broken Hill is anything but bright. Metals have consistently fallen, and are now standing ait a figure which renders mining operations unprofitable. A situation has been arrived at where direct costs are too heavy. A stage is reached in mining, as well as other industries, where it is cheaper to practically cease operations and bear all overheads rather than continue full working at a big loss. Although price of metals is the chief factor responsible for the present situation, it must not be overlooked that direct and indirect costs are very heavy. lt must be obvious to most honorable members that those gentlemen are not crying out that all is miserable when it is actually bright. They are the big men of Australian commerce. What they say goes, and they do not make those statements lightly. They are men of great experience, and it is well for us to consider what these commercial men say. Mr. Andrew Williamson, chairman of the English, Scottish and Australian Bank, said in London a few days ago -

Public and private expenditure in Australia should be materially curtailed, to the benefit of the whole community. The excess of imports over exports indicate extravagance, and expenditure which menaced the ultimate wellbeing of Australia. The safe course for the community, and individuals was to balance the budget, avoid wasteful expenditure, and build up reserves. While it was recognized that tlie Commonwealth and States must borrow for a long period to develop their resources, works on which loan money was spent should l)o wisely conceived and fair value should be obtained.

On the same day, Mr. Edmund Parker, presumably chairman of directors of Dalgety and Company, in London, sounded a note of warning. He is reported as follows: -

The trend of - Australian legislation was causing anxiety for her prosperity. Apparently artificial land values and overborrowing were the causes. Living costs have been increased by too much importing, and while this might not mean much in good seasons, calculations were liable to be upset by a drought.

The city editor of the Times in commenting upon those statements adopted a somewhat more cheerful outlook. He said -

Fortunately, the potential wealth of Australia was very great. Unfavorable economic conditions would- be easily eliminated by prudent finance during the next few years.

It is regrettable to me that I have had to read statements of this description by eminent representative business men, with interests in many industries, in different parts of the world. I do not want to feel, much less to say, that our condition is parlous; but, undoubtedly, both publicly and privately Ave have been living up to, if not beyond, our income, and we need to alter our habits. I half expected that the honorable member for Gwydir (Mr. Abbott) would ask me for my policy in respect of the matter. It is not for me to give my policy, but my view is that Ave should cease all unnecessary expenditure especially of a new kind. It is easier to do that than it is to curtail expenditure along already approved lines, even though it might not be essential. a

I trust that the Government will not appoint many more commissions. According to a newspaper report which I read the other day, there is a possibility of a pastoral commission being appointed to consider, among other things, the construction of a railway from Bourke to Camooweal. I do not know the view of the pastoralists en masse on this particular subject; but I do not think that they desire any more commissions to inquire into their problems. They know and we know, their difficulties. Their chief trouble is that although they have to sell their products in the markets of the world they have to produce under Australian conditions, and pay very heavy taxation. A number of pastoral commissions have been appointed in fairly recent times in the States, and their reports are available if the Government desires any additional information as to the problems of this industry.

I am of the opinion that all proposals to increase the tariff should be resisted except in the case of industries vital to defence, or key industries. I adhere to the remarks I made on this subject last year. It might be worth while to adopt the recommendation of the Tariff Board that if there is any increase in wages extra traffic protection should be automatically withdrawn. The Government should see, in the last resort,, that the whole community does not suffer for the benefit of a small section of it, which while paid a wage based On the needs not of one but of five persons, loses, through its unions and leaders, no opportunity of claiming larger wages and shorter hours. Action along these lines would unquestionably improve our position. Unless I am very much astray iu my judgment there will be a good deal more unemployment in Australia before the end of the summer, and we should be doing our best to put our house in order, and to eliminate unnecessary expenditure, and expensive luxuries. I have kept my criticism of the Government's policy to the end of my speech, and I have no desire to over-emphasize it; but we cannot overlook the fact that we are facing difficult times, and that we shall need carefully to husband our financial resources.

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