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Thursday, 18 May 1939


Mr WARD (East Sydney) .- This measure has been drafted in such a vague manner that it is very difficult for honorable members to discover what powers the Government is actually seeking to acquire. The Minister (Mr. Casey) who introduced the bill said that its object is to give authority to take a complete census of the material resources and the man-power of the country, and that it is the intention of the Government to establish what will be known as a Supply and Development Department. The members of the Opposition are anxious to know whether the Government really considers that we are faced with a national emergency at the moment sufficiently grave to justify the introduction of a bill in which such wide powers are sought. So far we have had no indication from the Government that a state of emergency exists. The Assistant Minister (Mr. Holt) asked the honorable member for Swan (Mi-. Gregory) by interjection, whether he considered that a state of emergency existed in September last. We are not in a position to say whether it did or did not because the vague information supplied to this House made it very difficult for any honorable member who was not -in possession of the full facts to determine that point. If, as we have been informed, the international situation has become somewhat easier since September, there is less need for this bill to-day than there was then. Should the Government be granted these emergency powers, they will continue to operate until repealed by Parliament. I ask honorable members on this -side of the chamber to visualize what these proposals mean to those whom we represent. On the plea of providing adequate defence tor this country, the Government has been able to pass many acts of a repressive character. We may examine the bill, but we do not know the way in which the powers proposed to be sought are to be exercised. Experience tells us that we must be suspicious of a government such at this. No doubt, under this proposal, which it is claimed is for defence purposes, there will be additional expenditure. Greater activity means greater expenditure. Why is the Government taking a census of our natural resources and man-power and declining to take a census of the financial resources of the country? The extra expenditure must be met from some source. Knowing the policy of this Government, it is only reasonable to assume that the working class will be ' expected to foot the bill. We have to ask what this country can afford in the matter of a defence programme. In preparing for national development and defence there should not be any limitation because of lack of finance. I believe that the only limitation on the programme of any government for development or defence requirements should be that imposed by a limitation of man-power and raw materials. If the development of this programme resulted in a diversion to defence works, of certain labour now engaged in producing every-day requirements, it would necessarily mean a reduction of the living standards of the people. If it meant that by an extension of the defence programme the Government. pro: posed to engage additional labour - nien not now employed - on defence works, such works could be carried on without actually affecting the living standards of the people. Living standards are affected when the labour-power of the country is diverted from ordinary undertakings to defence works which are not of a reproductive character. This Government accepts the limitations imposed upon it. by the financial interests of this country. We know exactly what has happened in the last few years. The national debt is still growing larger year by year and we are, faced with a greatly increased annual interest burden. When the Government finds it impossible to meet its annual commitments out of the revenues available at the moment, it must adopt one of two courses ; it must either impose additional taxation on the wealthier sections of the community or ask the workers to make further sacrifices. We know only too well what happened in 1931-32. When the Government of the day found its budgetary position such that it was faced with deficits, it introduced schemes under which the workers were asked to make sacrifices so that the financial position of the Government could be improved. When this Government has to find the interest on our growing expenditure for defence, it will ask the workers once again to make additional sacrifices, to accept reduced rates of pay, to work longer hours, and to submit to less generous social services, instead, of finding the money by levying :i tax upon the unearned increment of the wealthy financial interests. If the

Government's 3ole purpose in bringing forward this bill is to provide for the effective defence of this country, why does it not endeavour to marshal the financial resources of this country? Why has no arrangement been made for the taking of a census to ascertain what contribution each member of the community might be able, or could be expected, to make? If the Government obtains a certain proportion of the revenue required for the carrying on of its defence programme by means of increased taxes, we know very well what will happen. The resultant increased costs will be passed on to the workers as consumers who will be called upon not only to pay a proportion of the expenditure to be met from taxes, but also to accept reduced living standards and unfair working conditions. " So far as I can ascertain, this bill gives' to the Minister wide powers not only to ascertain the resources of this country, but also to regulate conditions of employment in particular industries engaged in meeting the defence requirements of the nation. As a Labour representative, I am not prepared to give such wide, sweeping powers to the Minister so that he may be able lightly to wipe aside the decisions of tribunals established for the fixation of wages and working conditions, and to impose whatever conditions he chooses upon men engaged in the industries involved. Further, the Minister will bo given power under this bill to restrict the free move-' ment of labour from one district to another or from one industry to another. As a matter of fact he will be given unlimited power to regulate industries. Honorable members opposite talk about totalitarian states; if we continue to pass legislation such as this, it will be difficult to see the difference between the system of government in this country, and that of the dictatorship countries which members so freely criticize.


Mr Brennan - For a long time I have been unable to see any difference.


Mr WARD - As a matter of fact, I, too, am unable to see the difference. Evidently, the- Government continues its criticism of totalitarian countries because it suits its purpose to tell the general public that it is opposed to that form of government. It has always been the case that where the powers of the military have been increased the powers of the civil population have been automatically decreased. If this bill is passed, it will give such additional powers to the military authorities as to enable them to override the civil authorities. That is a serious matter for honorable members and the people generally to contemplate. With a Labour government in office there might be something to be said in favour of certain of the provisions contained in this measure. Under a Labour administration, the powers to be conferred upon the Minister under this bill would at least be exercised in a manner beneficial to the general community. I have not the same trust in the present Government.

A clause has been inserted in the bill providing for the regulation of profits. I know that that is only the sugarcoating to get the Labour Opposition in this House to swallow the bitter pill beneath it. The Minister knows, as does every other honorable member, first, that this Government has no intention to regulate profits, and, secondly, that this bill will not give it the power it says it should have to do so. The other day, the Minister, by interjection, said that the intention of the Government was to limit the profits earned by those engaged in the manufacture of munitions and defence equipment to the prevailing bond rate of interest.


Mr Street - I said that only in respect of the annexes.


Mr WARD - That is the point to which I am coming. That undertaking does not overcome the difficulty. Everybody knows that these annexes, which will be engaged in supplementing the output of defence equipment from the government workshops, will be controlled by private enterprise, and that by the mere manipulation of figures it will be possible for the controlling interests to keep the profits of the annexes down to the bond rate of interest. What powers will the Minister have to regulate the profits earned, for instance, by the Broken Hill Proprietary Company Limited, which will be supplying the raw material to subsidiary factories controlling annexes engaged in the private manufacture of armaments? The Minister knows that when the Government some time ago announced its expanded defence programme, the price of steel required for the manufacture of its defence requirements was immediately raised by approximately 25s. a ton. What power is conferred upon him by this bill to regulate the profits earned by those who will supply raw materials to private companies engaged in the manufacture of defence equipment?


Mr Martens - He will have no power whatever.


Mr WARD - That is so. He will not take into consideration the profits earned by the parent company. The Broken Hill Proprietary Company Limited has spread its tentacles all over Australia. We see its powerful influence on the government party in this House, and we know that it is extending its influence and activities year by year. It is difficult to ascertain what profits are being earned by that huge monopoly as the result of its participation in the defence programme of the Government. I ask the Minister to state specifically what arc the Government's intentions in regard to the regulation of profits. According to his own statement, the Government intends to do nothing more than regulate the profits earned by annexes to private establishments. What does the Government propose to do with respect to the regulation of prices of raw materials supplied 'to those annexes? Unless some steps be taken to regulate the prices of raw materials, the power to be vested in the Minister to control the profits of annexes will be of no avail'. As everybody knows, it is possible for accountants, by manipulation of a few figures, to keep clown the profits earned in one branch, and to show larger profits in another branch which is not under the control of the Minister. Because of that, I think we should have some further information from the Government with respect to its intentions in connexion, with the control of profits. The Opposition would like an explanation from the Government with respect to the degree to which it proposes to interfere with the working conditions of those Who will be engaged, in these particular industries. I have been told that already certain employees of the Defence Department can securely hold their positions in the various branches of the department only upon giving an undertaking that they will cease to bt members of their trade union organizations. Because of the threat of the loss of employment, those- who have retained their membership of their organizations have had to remain silent members.


Mr Street - Does the honorable member say that that is happening in our own factories?


Mr WARD - The information supplied to me is that in certain branches of the department it has been intimated to men who have accepted positions that they should resign from their industrial organizations.


Mr Street - If the honorable member will bring a concrete case to my notice, I shall have it fully investigated.


Mr WARD - Advisory committees are to be appointed under this bill. On what matters are they to proffer advice? Will they be asked to advise the Government as to what particular industries should be supported or established for defence purposes? Are they to advise the Government with regard to working conditions in any industry? It will be rather surprising, and indeed alarming, to the workers of this country, if we have as a member of one of these advisory committees a man such as Mr. Essington Lewis, of the Broken Hill Proprietary Company Limited. Yet I have no doubt that he will be appointed to one of the committees to advise the Government in regard to the conditions of employment that are to prevail in these industries, and also as to what profits should be earned by those engaged in these undertakings. It may be claimed by the Government that an invitation was extended to workers' organizations to appoint representatives to act on the various advisory committees. If the workers' organizations were to follow the advice which I am disposed to give them, they would have nothing to do with these committees. If workers' representatives were anpointed, they would be in the minority. Although their views would bo overridden by others,, the Government would use their membership of such committees as evidence that the workers themselves were parties to whatever agreements were decided upon.


Mr Street - I found that the opposite was the case only the other day when, with the assistance of representatives of workers from the munitions factories, we were able to settle matters that had been in dispute for some time.


Mr WARD - Nevertheless, that is the advice which 1 would tender to the workers' organizations if they cared to ask for it. It has been the experience of workers in the past that representation on these committees has not been very successful. For that reason they should be wary of co-operation with the Government under this measure. If it is not ti i.o purpose of the Government to lower the standard of working conditions in these industries, why should power be sought for the Minister to employ " such persons as are necessary in connexion with any factory, established or deemed to have been established by the GovernorGeneral " ; and why has provision been made in another sub-clause that " persons so employed shall not be subject to the Commonwealth Public Service Act, but shall be engaged for such periods and shall be subject to such conditions as are prescribed "?

If the Government" intends to give to these workers a higher margin than they could receive under existing agreements or awards, it would be easy for the Government to satisfy the fears of the Opposition, because it could state in definite terms what margin above existing rates should operate; but all that the Government says is that the men shall be engaged " for such purposes and subject to such conditions as are prescribed."


Mr Holt - We shall give to the House a full explanation of the measure at the committee stage.


Mr WARD - That will be necessary. Another interesting point' was introduced into the debate by the honorable member for West Sydney (Mr. Beasley), who criticized the Government for its failure to handle the problem of the oil supplies necessary for the operations of the defence forces. The Government may direct attention to certain expenditure in the way of advances to private companies to encourage the search for flow oil, but honorable members are probably still, aware of the fact that this

Government, which I regard as in every respect identical with the Lyons Ministry, was responsible for the suppression of a very important report submitted by the then Administrator of the Mandated Territory of New Guinea with respect to the discovery of flow oil close to that territory. We know that the Government suppressed that report, and that its contents were disclosed only after persistent inquiries by the Opposition. Honorable members mention suspicious activities in regard to those companies in their search for oil, and the honorable member for Barker (Mr. Archie Cameron) expressed great doubt whether the companies had been sincere in their expressed desire to discover this necessary commodity.


Mr Archie Cameron - I still hold that view.


Mr Thompson - The honorable member is not alone in that regard.


Mr WARD - One of the most alarming features of the attitude of the Government is the fact that the present Prime Minister (Mr. Menzies) is regarded in many quarters as a very dear friend of the major oil companies, and that, when he was practising law in Victoria a few years ago as a representative of those companies, he advised them to refuse to produce their books, or to supply certain information, to the royal commission which was then investigating their activities. For that reason, naturally, we cannot expect a great deal to be done by this Government which is likely to affect adversely the interests of the major oil companies.

There is talk of the limitation of profits. Let us consider whether the Minister for Supply and Development (Mr. Casey) has even shown any desire to regulate tha profits of private enterprise. In 1934, when he was Treasurer in this Parliament, certain findings and recommendations by the royal commission which inquired into the operation of Commonwealth taxation laws were made to the Government. One of these was that large-scale tax evasion was going on, and that certain financial interests were evading the payment of their just contributions in taxes by distributing a great proportion of their profits as bonus shares. Under the law as it then stood, profits distributed in this way were not taxable. The commission, recognizing that this was merely a method of evading the payment of income tax, made a recommendation to the Government that at the earliest opportunity it should introduce amending legislation to make profits distributed by way of bonus shares taxable in the same manner as profits distributed by way of ordinary dividends. The then Treasurer introduced the amending measure, and the members of the Opposition were in favour of it, because 1,VO believed it to be only right to prevent tax evasion. But then the Treasurer, having secured the passage of the measure in this chamber to the second-reading stage, proposed in committee an amendment to prevent the legislation from operating for a further six months. The Opposition was naturally anxious to know the reason for this postponement. The Minister in charge of the bill stated that certain representations had been made to him, and every honorable member knows that, within a few days, we were in no doubt as to who had made the representations, because the Colonial Sugar Refining Company had effected the largest distribution of bonus shares ever known in this country, and was able to do it without paying one penny in tax. This member of the Government, as the new Minister for Supply and Development, will be required under this legislation to regulate profits, but he could not be depended upon when Treasurer to see that those who had accumulated profits made their just contribution to the public revenues. How can members of Parliament have any confidence in the promise of the Government to regulate profits?


Mr Wilson - Does this bill make reference to the regulation of profits? ,


Mr WARD - I refer the honorable member to " Part II. - Administration ", which deals with " arrangements for ascertaining costs and for the control and limitation of profits in relation to the production of munitions ". The Minister for Defence has said that this provision applies only to the annexes to private undertakings engaged in the manufacture of munitions; but, knowing the ramifications of the large organizations which to-day control the industries engaged in the production of defence equipment, we must ask for more specific information as to the Government's intention with respect to the regulation of profits. We cannot be satisfied with the Minister's bald statement.

The honorable member for Calare (Mr. Thorby) referred to this matter last evening, and, no doubt, he can speak from experience, being the immediate predecessor of . the present Minister for Defence. He said that there were three or four companies which control the whole of the operations of those who would be supplying defence, requirements. If that be so - and the honorable member should be in a position to know - these three or four companies, by shifting their profits from one quarter to another, would make it difficult to ascertain exactly to what extent the Australian public was being exploited. We recall how difficult it has been to establish that the major oil companies are making excessive profits in Australia, because they have subsidiary companies engaged in the work of distribution. By inflation of the transport and production costs of the parent company, the profits of the distributing companies were made to appear so low as to satisfy many critics with regard to the rate of profit, but those who looked closely into the matter were satisfied that the companies did not furnish proof that the users of their products were not 'being seriously exploited. Something similar will happen in regard to this provision for the limitation of profits. It will be easy for- the Minister to say, in reply to questions submitted to him from time to time in this House, that such and such a profit has been earned, and that the Government considers that the rate, not being in excess of the bond rate of interest, is therefore not unduly high ; but the Government would not make the inquiries that should be carried out in regard to the operations of the Broken Hill Proprietary Company Limited and other parent companies which supply raw materials to their subsidiary enterprises.

Another matter for consideration is the point to which we believe that these industries should be developed. Are they to be carried on only to the extent necessary to meet Australia's requirements, or are they to be developed to the point at which an export trade could be built up, so that Australia might become the arsenal of the Pacific? Will Australia be called upon to supply defence equipment to friendly nations only, or also to help private undertakings interested in the manufacture of munitions to export their goods to unfriendly countries? Every member of this Parliament knows that the whole of the present foreign policy of this country is fashioned to meet what is termed the southward march of the Japanese. That is the fear in the hearts of a great number of Australians; but, because profits are sacrosanct in the eyes of this Government, it took action against workers who were endeavouring to prevent the exportation of raw materials required by munition manufacturers to one of our potential enemies in the. Pacific. Therefore, it is natural to assume that if vested interests find it profitable to export munitions to other countries, whether they be friendly or otherwise, this Government will consider that the manufacturers are within their rights in exporting their products to whatever quarter of the globe they choose. I am not prepared to support such a policy.

Honorable members who criticize the Labour party's idea of establishing government workshops for the sole purpose of the manufacture of defence equipment try to ridicule it by saying that it would be unprofitable for these workshops to undertake this activity. They say that at times other than those of national emergency the extensions of government workshops would prove to be "white elephants." The Government knows well that it is only by its policy of propping up private enterprise that government workshops would be reduced to that condition. The Govern.ment. by securing an amendment of the Constitution, could make it possible for many of these workshops, even in normal times of peace, to engage in the manufacture of the equipment necessary for the peaceful development of Australia, but the Government wishes to preserve the rights of its wealthy political supporters outside this Parliament. That is why it says that government workshops should not be permitted to undergo] take the manufacture of equipment for the peaceful development of this country. Therefore, the policy of using such establishments solely for the pro.duction of defence equipment should not be supported by this Parliament. But if these annexes would become " white elephants " when attached to Government workshops, how is it that they will not become " white elephants " when attached to private establishments? Much of the equipment to be installed in the annexes will be of no use for any purpose other than the production of war material. What is to happen when there is no emergency, and the Government no longer wants great quantities of munitions from the private firms? Will such firms then close down those parts of their premises devoted to the manufacture of Avar material, or will they continue to operate them to their capacity so long as they can find a market overseas for their output? We know to what lengths firms engaged in the production of

Avar materials will go to create Avar hysteria in their OWn country, and in other countries, in order to stimulate the demand for their products. We know that inquiries have been held by governments in various parts of the world into the operations of private armament manufacturers. Not long ago, the Senate of the United States of America appointed a committee to conduct such an investigation, and some startling disclosures were made in evidence given before it. Those engaged in the private manufacture of armaments recognize no national barriers. They are prepared to sell their wares to any country, and to enter into agreements with those engaged in the same trade in any other countries. According to evidence given before the Senate committee in the United States of America, the- private armament firms of that country entered into an agreement with the arms manufacturers in Great Britain to divide the world into spheres of influence in which the manufacturers of the one country would not compete against the manufacturers in the other. We know of the enormous profits made by the armament firms. We know that when the Anzacs landed at the Dardanelles, they were shot down by guns supplied to the Turks by Vickers, the armament firm in England. Why is it, then, that the Government, having all this information at its disposal, seems to believe that those who will engage in the manufacture of arms in this country- will be any different from those engaged in the same trade elsewhere? Let us take proper precautions now to check the operation of such firms before they grow so powerful that the Government cannot deal with them. That is what has happened elsewhere, and it will happen here if the Government does not act. I would rather see defence annexes to Government workshops remain " white elephants " when there was no national emergency than I would see established in Australia private armament firms that would grow to such dimensions that they could become a menace to peace, as have similar firms in other countries.

The Opposition is suspicious of the intentions of the Government in this regard. First, the Government must establish to our satisfaction that there really is an emergency. It has not done so yet. When it does so, it will have to convince us why, when it has introduced a measure for the regimentation of war materials, industry and man-power, it has not also taken steps to ascertain and control the financial resources of the country. The Labour, party recognizes that, by adopting a financial policy different from what is regarded as the orthodox one, it would be possible for any government in Australia in the present circumstances to undertake very great defence activities without adversely affecting the existing living standards of the people. This Government, however, will not adopt that policy. Up to the present the anti-Labour parties in Australia have always been fairly successful in their attempts to delude the people into believing that an economic catastrophe would engulf the country if effect were given to the Labour party's financial proposals. I am convinced, however, that eventually, as the result of the dissemination of knowledge by certain organizations, there will develop an irresistible public demand that the powers exercised by the financial interests shall be taken away from them, and exercised by the elected representatives of the people. Then, by utilizing the full resources of the country in man-power and materials, we shall be able to provide ourselves with an adequate defence system, and yet improve the general living standards of the people. I regret that so much of the time of this House in recent months has been taken up with the discussion of war-like measures, and that the Government has taken advantage of the alleged state of emergency to stifle effective criticism of its failure to carry out necessary social reforms.







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