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Wednesday, 7 December 1938


Mr LYONS (Wilmot) (Prime Minister) . - The Leader of the Opposition (Mr. Curtin) has made it clear that he accepts the declaration of the Government regarding the need for this defence programme, and that he believes that the responsibility rests on the Government to advise this Parliament and the people as to the urgent necessity for the steps that are being taken to put our defences in order. He is right in that; it is our responsibility. I am very pleased with the attitude of the honorable gentleman when he says that he accepts the proposals which the Government regards as necessary for the protection of the country. That means that the members of his party accept them also, and that is one of the things for which I have recently looked and hoped. However much we may be divided on other issues, at a time of emergency such as this - and I say that the Government is unable to give any guarantee that peaceful conditions will continue - it is a splendid thing that both sides of the House can agree on this defence programme. There may be, as was suggested by the Leader of the Opposition, differences of opinion regarding methods, and any suggestions which he may put forward will be considered by the Government and its advisers. It may be possible to accept some, while others may be found to be impracticable.


Mr Brennan - There is a fundamental difference between us, an unbridgable difference, and I dissociate myself from the right honorable gentleman.


Mr LYONS - I am aware of that, but I cannot single out every individual member on the other side of the House. I can only take the declaration of the Leader of the Opposition, and hope that it stands for the attitude of his supporters as a whole, even though there are exceptions. I am pleased to know that that is so.


Mr Brennan - Every member of this party is pledged to oppose the Government's policy.


Mr LYONS - I merely wish to make the position of the Government clear.


Mr Brennan - Keep to that. The Prime Minister is on safer ground there.


Mr LYONS - I wish to compliment the Leader of the Opposition onhis general attitude.


Mr Brennan - The Prime Minister may do so, but let him not compliment me.


Mr LYONS -I am aware thatthe statements of the Minister for Defence (Mr. Street) and of the Treasurer (Mr. Casey) last night have made it plain that a very heavy load must be borne by the people of Australia. The recognitionof this fact must make some heavy hearts in Australia, and mine among them. Itis to be regretted that it is necessary for the Government to put forward proposals of this kind. I agree with the Leader of the Opposition that, side by side with our defence proposals, we shall apply policies, the effect of which would be to enable the country to meet the obligations that will rest upon it. We cannot evade our responsibility. We must ask the people of Australia to carry this burden, andwe must consider how best to enable them to do so. It is not possible for us to reduce the programme submitted, or to lighten the burden. That is inescapable, butwe can evolve and implement a constructive policy for the nation as a whole so that the heavy expenditure on defence will not have the effect of impairing the living standards of the people. It is useless for us to deplore increased expenditure on defence.

The Leader of the Opposition quoted what was said by the Minister for Commerce (Sir Earle Page) with regard to the need to maintain our standards of living. It is necessary not only to maintain the present standards, but also to increase the number of Australian people who will have to carry the load. It is not sufficient for us to provide ourselves with the technical equipment for the fighting services, and the men and munitions immediately required. All of those things are important, but the defence of this country will ultimately be based on its ability and willingness of the people to defend it. What is required is a concerted effort on the part of every citizen. The Leader of the Opposition I think set an example in the declarations which he made in regard to defence matters generally.


Mr HOLLOWAY (MELBOURNE, VICTORIA) - The bread tax does not give the people much encouragement.


Mr LYONS - We do not want tens of thousands of men to continue to grow wheat under starvation conditions. We have to look at this matter from a constructive point of view. We recognize the load that has to be carried by a small handful of people in a vast country, and that we must have a greater population. I agree with the Leader of the Opposition that the maintenance of the Australian standard of living, which is high in comparison with other countries of the world, is one of the things which should make for the attraction of people to this country. I say, therefore, that we have to look to the future, and not be satisfied with merely developing a defence force. We must regard the defence and development of Australia as a single problem and set about the solution of it by making possible the settlement of more people in this country. The parliaments of Australia, Commonwealth and State, by social legislation have brought about a high standard of living in this country, but I say without hesitation that we cannot continue to carry the load involved in thedefence of this country unless we have a contented people, security . against economic adversity, physical fitness, and the ability and willingness among the people to defend Australia and maintain the existing methods and standards of living of which we boast, and which 1 hope we shall do our best to maintain, and, if possible, increase as the years go by. We must have such an organization and development of our economic resources as will enable the people to throw their full weight behind the fighting services. The sinews of modern war comprise the whole military, economic and human resources of the nation.

The Treasurer (Mr. Casey) and the Minister for Defence have outlined the measures which the Governmentproposes to take in expanding and strengthening the naval, military and air arms of our defence. I want to refer to the other side of the problem, and to point out the necessity to develop the nation from the aspects to which I have referred. We boast about our social legislation and standards of living. In the field of social security we have attacked our problems on many fronts. We have introduced a scheme of national health insurance, and its benefits for the people of Australia will soon become apparent, despite existing criticism of the project. We have conducted an investigation into the nutritional standards of the people. On this basis, we hope to establish longrange plans for the betterment and preservation of national health and fitness. We have contributed towards a solution of the problem of unemployed youths, and we have assisted the States in many other ways to relievo and mitigate the general unemployment problem. Recently there has been introduced in this House a proposal to strengthen the Commonwealth Bank, through which we hope to assist actively in measures to curb the severity of future economic fluctuations, and we are providing finance for primary producers and home builders. All are contributions towards developing in Australia a nation worth while and towards the maintenance and improvement even of present-day standards. In these and countless other ways, the Government is helping to strengthen the stout faith we have that in this country there is something worth defending, and pride in the country which the people are asked to defend.

The development of our economic resources is another path along which our activities must be directed. So far as these lie within the competence of the Commonwealth Parliament, we have already proceeded far. To-day the Leader of the Opposition referred to the part that Labour has played in the development of our secondary industries. I recognize the truth of what he said. I recognize also, however, that in recent years the policy of this .Government has contributed very substantially towards the development of our economic resources. That that is true is shown by the industrial statistics - statistics relating to factories, employment in factories and output of goods. As I say, so far as it is within the competence of the Commonwealth Parliament we have made our contribution. It is hardly necessary for me to refer now to the conclusions which resulted from our recent imperial trade discussions. Honorable members know that for the first time Great Britain acknowledged, or admitted, if honorable members prefer it that way, the right of this country to go straight ahead with the development of its secondary industries. That was another step towards the development of industries and the provision of opportunities for the employment of our people. In a wider field, however, we share responsibility with the States. There are some things that we can do under our own Constitution, but there are others that w-e cannot do without the co-operation of the States. It seems to the Government that many of the difficulties that confront us in regard to the development of existing industries, the creation of new industries, and the decentralization of industries are basically associated with the haphazard development which has occurred up to the present. There has been no plan to guide us. Each State has done its own particular work. It was preference for, or, perhaps, prejudice against, districts which decided where industries would be established, or where public works would be carried out as a contribution towards the establishment of industries. These difficulties are associated with the division of responsibilities for development and defence between seven parliaments. Our roads and railways have grown up, our power resources have been developed, and our factories have been built largely where immediate interests have dictated. Partly because of the casual nature of our industrial development, there has been a lack of planning and continuity in the extension of public works and services. Strategic considerations have almost completely been disregarded and national economic considerations have received scant attention in the selection and location of essential industries and public utilities. In an ordered world we could go on in this fashion without the efficient development that a plan produces, but in a disordered world, it means economic and, possibly, national suicide to do so. A re-alignment of constitutional responsibilities may well be the ultimate solution. The right honorable member for Yarra (Mr. Scullin) has referred to this aspect in this House, and it is receiving consideration. Meanwhile, however, there is an urgent need to bring the developmental and defensive policies of the State and Commonwealth Governments into line. There is urgent need for co-operation between the Commonwealth and the States. This is not a time for coercion of the States; it is the time for co-operation. The Leader of the Opposition referred in passing to this matter. I agree that when we have provided for defence works, however great they may be, there will still be a large number of men who need work. It is from that aspect that we approach the question of co-operation between the Commonwealth and the States. Recently an attempt was made to secure this cooperation, as honorable gentlemen know, at a conference at Canberra. I make no secret of the fact that the result of th° deliberations of that conference wa3 neither satisfactory nor encouraging, but I am not satisfied that something cannot be done upon co-operative lines. The Government believes that in the future there must be a combined and united attack upon the problems that confront us. We cannot drop the proposition where it was left at the conference. We still think .that it is essential that we brush aside any antagonisms that may exist, and recognize that we are all Australian people. We propose again to confer with the States, and I feel sure that the results of the next conference will be more satisfactory. We have to examine the possibility of developing this country suitably by taking steps for the establishment and expansion of industries away from the great capital cities. We need a complete and wide examination of the possibilities of increasing the number of people in Australia, and at the same time maintaining living standards.


Mr Gregory - I hope' that when the next conference is held with the States the proposals of the Commonwealth will have been placed before the State governments some time previously. On the last occasion the State Ministers were confronted with the Commonwealth proposals without having had the opportunity to examine them. It was not fair.


Mr LYONS - We recognized the extraordinary demands of defence, and we knew that the States were expending millions of pounds on works, some of which were of greater importance from a defence point of view than others. Our main objective was to reach some agreement, so that works would continue, giving the same amount of employment within each State, but so that priority would be given to those works which had the greatest significance from the defence point of view. We desire the development of this country, the decentralization of industry, and an increase of population. I say advisedly that that is essential. If we look into the future, and appreciate the load that is being placed on the people to-day, can we for one moment believe that such a mere handful of people can continue to carry so great a load? Do we not realize that the economic effect must be prejudicial unless side by side with it action is taken for the development of this country? Some years ago, when Australia was in the depth of the depression, the Government of the day called into consultation persons outside of this Parliament who could advise it regarding the possibilities of the position and the dangers then existing and those that lay ahead, as well as the remedies that might be applied for the cure- of the evil. The right honorable member for Yarra consulted with persons who had made a special study of these economic problems, and the advice and assistance then obtained were extraordinarily helpful to this country in its difficulties. I should say that, in some degree at any rate, those circumstances are again present, and that consequently we must look into the future and plan remedial measures. The Government that I lead would not hesitate to consult with persons of similar character and ability in order that, as far as possible, the future might be examined and methods might be adopted for the removal of whatever evils may lurk along the path that we are treading. I am sure that I speak for the Government when I say that I would follow such lines. I would also consult with the" States and their advisers in order that we might make provision for a constructive policy designed to increase our population and avoid some of the evils apprehended by the Leader of the Opposition in the programme that lies before us. I accept the attitude adopted by that honorable gentleman, and am perfectly sure that with a united Parliament facing the problem of defence, which is vital to the whole of the people of this country, the task can be performed adequately and infinitely more efficiently than would be possible if undertaken alone by honorable members who sit on this side of the House.

I return to the amendment of the Leader of the Opposition. The responsibility for the financing of the measures to be adopted must be taken by the Government itself. Quite unintentionally, I believe, the honorable gentleman failed to do justice - to state the case mildly - to my colleague the Treasurer (Mr. Casey), when he stated that we shall do no more than raise another substantial loan, either in Australia or overseas, in order that the expanded programme of defence may be financed. The honorable gentleman suggested that we are making no effort to call upon the wealthy section of this country to make its contributions to the requirements of the nation. At an earlier period of the session, when the budget was submitted to this Parliament, proposals were brought forward for an increase of direct taxation and the placing of additional taxes on the wealthiest members of the community. Those proposals will affect any profits which may accrue as the result of the defence expenditure, because additional taxes will have to be paid on such profits in this year and in future years. The Treasurer made it quite clear that, for the time being, he seeks approval to raise a loan merely in order to adjust the present position. It is not possible at this stage, for instance, to introduce amended proposals in connexion with direct taxation. It may well be that before the expiration of this financial year proposals designed to bring additional revenue to the Treasury to meet the existing situation will be submitted to this Parliament. That consideration must be kept in mind.

The Leader of the Opposition made a quotation from a statement by the Treasurer, which I shall complete. That statement reads -

The final allocation of the expanded programme as between revenue and loan will be decided later, when the budgets for 1939-40 and 1940-41 are brought down. Honorable members will realize that it is impossible to say at this ' stage what the budget position will be so far ahead, but the policy of the Government will bc to carry as much as possible of the total expanded programme on the revenue account for the next two years.

At a later stage, the Treasurer emphasized that by repeating it. He then said -

As previously indicated, it is not possible to make a final allocation between revenue and loan for the whole of the £03,000,000 programme, but the policy will be when the budgets of the next two years are brought down to carry as much as possible of the total programme from revenue.

This declaration is repeated more than once in the statement of the Treasurer, and it voices the intention of the Government itself. I merely say that the government making these proposals must, as the Leader of the Opposition has said, take the responsibility of giving advice to this Parliament and to this country, because of the knowledge it possesses, first of the international situation, and, secondly, of the methods to be adopted in the financing of these programmes:


Mr Brennan - :Whom are we going to fight?


Mr LYONS - That question has been asked by others. I, in the statement that I made to the people of this country, the Minister for Defence last night, and various other members of the Government on different occasions, have endeavoured to impress on the people the seriousness of the situation as we see it. Time will go on, and it may well be shown that our fears are not justified. Even though I have to recommend to the Parliament and the people of this country this programme of insurance, as it were, against possible dangers of the future, no one will be more pleased than I to learn that my recommendations were not justified. But we cannot look into the future. We can only see what is happening in the world to-day, and what has recently happened. These happenings give no sense of security to a nation which is not prepared to protect itself. That is the experience of the past. There.is. no need to refer to any particular nation. At some time it may be possible to go into greater detail in regard to these matters; but, in doing so, we may invite in respect of this country and the Empire of which it is a part .the very danger that we are seeking to avoid.


Mr Gregory - It would be madness to do so.


Mr LYONS - It would be madness to do so, and any one who asks for it and wants it is not making any contribution towards the continuance of peace in this country. I say again that we cannot expect that the Opposition as a whole will accept every detail of our pro gramme. We would disagree with their proposals, just as they disagree with ours. But it is cheering to me this afternoon to know that on both sides of this House there is an equal determination to defend this country against any danger that may happen to lie in its path.

Debate (on motion by Mr. Blackburn) adjourned.







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