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Thursday, 25 February 1932

Mr SPEAKER (Hon G H Mackay - Order! The honorable member for Hunter (Mr. James), and the honorable member for East Sydney (Mr. Ward) have delivered speeches on this measure, and have expressed emphatically their opinions concerning it. I ask them to show the respect that is due to a new member. The honorable member for Calare (Mr. Thorby) is as much entitled as they are to express his views, and in doing so will be afforded the protection of the Chair.

Mr THORBY - The first obligation imposed upon any individual when he borrows money, whether he acts on his own behalf or on behalf of a government, is to see that that money is expended in such a way that it will at least return sufficient to enable the interest upon it to be paid, and provision made for a sinking fund that will ultimately discharge the debt. The honorable member for Parramatta (Mr. Stewart) stated the position aptly when he said that a tremendous amount had been borrowed by New South Wales and expended on works that could not be classed as reproductive, and could not return sufficient to meet interest and sinking fund payments. The present Government of that State cannot evade its responsibility in regard to that expenditure, because it has incurred a large proportion of the liability. During the last seven or eight years New South Wales has been committed to an extremely heavy expenditure on works for which there was no justification. It is, the interest upon that expenditure which the Government of New South Wales now says it cannot pay, and the Commonwealth Government has had to pay in order to uphold the honour of Australia.

The Leader of the Country party (Dr. Earle Page) suggested that perhaps the attachment of the revenue of the Railway Department might provide a solution of the existing difficulty. Let us consider the figures in relation to that department. Approximately £141,000,000 of loan money has been expended upon railway works of one class or another in New South Wales. That huge organization earned during the year ended the 30th June. 1931, fl5,490,000. Unfortunately, the practice has been followed of making provision for everything except interest, the balance between earnings and expenditure being used to defray partially the interest bill on the money expended. Last year the working expenses of the New South Wales railways amounted to £12,372,000. Thus they absorbed the greater portion of the earnings, about £3,000,000 being left to meet the interest commitment of £7,500,000. The Premier of the State, without justification in a time like the present, has granted all sorts of concessions, which have had the effect of loading the railway commissioners with uncalled for and unnecessary expense. The employees of the department enjoy conditions that are not granted by any other railway department in the Commonwealth, such as higher rates of pay, a shorter working week, and payment based on a week of 48 hours, although only 44 hours are worked. He has not asked these men to realize that they are in an artificial position, and are living in a fool's paradise. This is one of the principal State undertakings which has brought about the financial difficulties in which the New South Wales Government finds itself today; but similar conditions exist in every other department of that State. The Government has committed the State to a huge expenditure without having made adequate provision to meet it. It has loaded industry with unnecessary costs and charges, which have directly been the means of closing down factories, driving capital out of the State, and bringing the people to a state of privation and poverty. Yet the Leader of that Government and his disciples in this House go so far as to use the unfortunate unemployed and their wives and children as a sort of smoke screen, just as the semi-savages of China did when they had not sufficient courage to face the position with which they were confronted. Nobody has greater sympathy than I have for these unfortunate women and children.

Mr Ward - That will not fill their stomachs.

Mr THORBY - I admit that sympathy will not feed them, nor enable them to escape from their difficulties; but neither will the artificial legislation that has been passed by the State, nor the repudiation which is being practised by its Government. Confidence will be re-established only when the Government is brought to its senses and, if necessary, forced to meet its obligations. The point needs stressing that it has been definitely and directly instrumental in closing down industries, by making it unprofitable for employers to engage labour, and that it has swelled the ranks of the unemployed, until to-day their number is greater and their hardships more severe than in any other State of the Commonwealth. Yet those who advocate the Lang plan tell us that these people are in receipt of the dole, child endowment, and widows' pensions. The truth of the matter is that they have been deprived of the opportunity of earning an honest living at from £5 to £10 a week, and in exchange have been given a miserable dole. These gentlemen would have us believe that they are giving something for nothing; whereas they have brought the people to a state of poverty, and forced them to seek charity from the State. .That is what we have to keep in mind in considering a measure of this description, which is designed to compel not only the Government of New South Wales, but also every government in Australia, to realize that it has an obligation to fulfil when it borrows money, that obligation being to see that the money is not expended on works such as the Sydney Harbour Bridge. The Government of the day said that the bridge would cost £5,000,000; yet, according to the report of the AuditorGeneral, over £8,000,000 had been expended upon it by the 30th June, 1931, and I prophesy that the amount will be increased to £10,000,000 before the structure is completed. A further £10,000,000 to £12,000,000 was invested in the underground railway, and £14,000,000 on the railway electrification scheme, making a total of between £30,000,000 and £40,000,000 of loan money disbursed within seven miles of the centre of the capital city of the State. Not one penny of that expenditure is reproductive at the present time, and in consequence the people of the State are subject to increased taxation. I mention the taxation because I desire to suggest to the Assistant Treasurer that an important principle might be applied in the future - if it cannot be embodied in the bill - when application is made to the Loan Council for the allocation of funds to State governments. Suppose that the money required is to be expended on a public work, such as the North Shore bridge-

Mr Holman - 'Why not use for illustration the Dorrigo railway?

Mr THORBY - I prefer to use my own illustrations, and not have them chosen for me by an ex-Premier of New South Wales. Upon the North Shore bridge £10,000,000 of loan money is. being expended under an act which provides that all municipalities and shires within a certain radius shall impose a special rate of½d. in the £1 on the unimproved capital value of their land. That rate has produced to date approximately £1,250,000, which hasbeen collected for the specific purpose of helping to pay the interest on the money borrowed for the construction of the bridge. But it is being used by the Government for other purposes. I have details of at least a dozen similar instances. Loan money has been advanced to settlers who are required to pay interest on it at the rate of 6 per cent. per annum. Again, loan money has been used for the construction of main roads, and motor-car owners in the State benefited are required to contribute directly towards the interest and sinking fund charges by way of motor registration fees. Is it not feasible to earmark such contributions for meeting the interest on the loans? I suggest that a provision, so eminently reasonable, should be enforced by the Loan Council in connexion with future advances' to governments in this direction. The New South Wales Government is collecting moneys from every possible source, paying them into Consolidated Revenue, and applying them to purposes for which they were never intended. For instance under the Flour Acquisition Act a large sum of money was collected for the. specific purpose of granting relief to the wheat-growers. But according to the report of the AuditorGeneral not one penny had been advanced to them up to the 30th June, 1931.

Mr Ward - Tell the House about the black list and the refusal of the millers to supply flour to bakers?

Mr THORBY - I will tell the House something about the coal industry. The Railway Department, which made a loss of nearly £4,500,000 last year, had to apply to the Government for £250,000 to compensate it for losses incurred in the haulage of coal and coke at less than coat. A State instrumentality is being used to grant assistance to the coal industry by charging extremely low rates, although the miners were not prepared to meet their obligations and suffer reductions which they knew were absolutely necessary to enable their industry to continue. I could give many instances of how, through lax administration, loan money has been expended without adequate provision being made for the payment of interest and sinking fund. If this bill does no more than compel governments in future to make adequate provision for such charges in connexion with loan expenditure, it will justify itself.

Mr Scullin - But it does not do that.

Mr THORBY - It will make governments realize that if they default they will be compelled to meet their obligations, and knowledge that such compulsion is possible, will make them more careful in the expenditure of loan moneys. The use for other purposes of money collected for the specific payment of interest charges approximates very closely to misappropriation of public funds.

The honorable member for Hunter (Mr. James) referred to the New South Wales moratorium. That measure does not apply to payments due to the Crown ; State revenues are still collectible in the same way as if the act had never been passed.

Mr Rosevear - Does the honorable member contend that no benefit has been conferred by that Moratorium Act?

Mr THORBY - The Moratorium Act applies to private transactions; this bill does not. The New South Wales Government has not suffered any embarrassment from the Moratorium Act, because payments due to the Crown are excluded from it. The Moratorium Act has no bearing on this particular case. If the Government of New South Wales persists in ignoring its obligations to the Loan Council, and refuses to introduce the necessary economies, the other States should not be penalized.

Mr Ward - What economies does the honorable membersuggest should be made?

Mr THORBY - I could instance a number of economies which, if made, would effect a saving of millions of pounds in governmental expenditure.

Since the State Railway Department is losing £4?500j000 per annum, there is no justification for the payment of £28,000 a year in connexion with the railway and tramway men's institute, or £1,100 a year to provide hilliard tables for the use of railway employees in the city areas. The State Government re-imburses the Railway Department to the extent of £800,000 a year to provide interest on what are known as non-paying lines. The honorable member for Parramatta (Mr. Stewart) should be fair, and give credit to the department for carrying on these developmental services. The Government has recognized that it would be unreasonable to ask the Railway Department to construct such lines and operate them at a loss, because they are necessary for the proper development of the State as a whole. I am convinced that many country railway services, which at present are showing a loss on working, are a national asset.

Mr Stewart - The Ballina-Booyong line, for example?

Mr THORBY - That proposal was a mistake. Those responsible for its construction were not concerned so much with the development of the country as with the effect which it would have upon the revenues of coastal shipping companies. But, at the moment, we are more concerned with the attitude of the Government of New South Wales to its financial obligations, and its refusal to curtail its expenditure sufficiently early to enable it to meet commitments as they fell due. It is of no use for the Government of that State to approach the Commonwealth Government at this late hour and plead that, because of financial stringency, it is unable to meet its interest payments. It should have realized its position twelve months ago, and taken the stops necessary to carry out an agreement entered into with the Commonwealth and the other States. The honorable member for East Sydney (Mr. Ward) made some references to economies carried out by the Government of which I was a member. If the present Government had continued with the policy laid down by its predecessor, New South Wales to-day would be in a better position financially than any other State.

Mr Ward - And the people would be in a worse position.

Mr THORBY - Not at all. New South Wales is in its present difficulty because all State undertakings are heavily loaded with unnecessary costs, and revenues received by the Government, instead of being applied to the redemption of loan proposals, are being paid into the Consolidated Revenue. The default of the Premier of New South Wales has been deliberate. He has openly boasted, time after time, that he is out to destroy the Loan Council, and by repudiating his obligations he has endeavoured to disgrace the whole Commonwealth in the eyes of the world.

Debate (on motion by Mr. Holman) adjourned.

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