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Thursday, 20 November 1941

Mr HUTCHINSON (Deakin) . - I shall refer to two points raised by this bill. The first is the rising cost of pensions to the taxpayers; the second relates to organizations which have begun a campaign on behalf of invalid and old-.age pensioners by endeavouring to force governments to grant increased benefits, and which claim that their efforts are responsible for any improvements that are effected. When the budget debate was in progress, a leading business man from Melbourne was sitting in the visitors' gallery behind me, and, as I left the chamber, he said to me, " Anyone who heard you fellows talking in millions would think we were a nation of 30,000,000 or 40,000,000 people." We heard that sort of talk this afternoon from both the honorable member for Melbourne (Mr. Calwell) and the honorable member for Parramatta (Sir Frederick Stewart). The honorable member for Melbourne interjected and said, " What is £20,000,000 in a budget of £322,000,000?" and the honorable member for Parramatta said, "After all, what is an additional £2,000,000 ov £3,000,000?" It is very dangerous to think in that way. There is a limit, from the financial viewpoint, to anything that we can do in this country. We arc becoming somewhat irresponsible as far as money is concerned ; we have begun to think in terms of millions of pounds, and have forgotten that the population and production of the nation are limited. Therefore, whether we like it or not, we must cut our. coat according to our cloth. If we do not do so, we shall drift into serious difficulties. We have been as generous as possible in the matter of pensions. Honorable members have not always approached the problem of social services in the proper manner; their motives have not been entirely disinterested, and political considerations have been allowed to affect their actions. In Australia to-day we are expending much more on invalid and old-age pensions than we are expending on education, for example, and education is one of the most important social services in any country. The taxpayers are required to find about £20,000',000 this year for invalid and old-age pensions alone. That amount will be increased substantially early in the new year. All sections of the Australian public should, realize that the cost of pensions is so great to-day that, on a population basis, every household consisting of a husband and wife and four children contributes £17 2s. a year to the pensions fund or £2 3.7s. a head. I invite the attention of the honorable member for Melbourne to this fact. Shortly that figure will have increased to about £18 a year. As the Prime Minister (Mr.- Curtin) has frequently adopted the per capita basis for purposes of calculation, I also, feel justified in doing so in order to emphasize the cost of pensions in this country. The money required must come from, some where. There is a. limit to central bank credit and that limit is at present a matter of concern to honorable members on both sides of this House. Having in mind present, credit expansion, it must be obvious to all honorable members that additional control will have to be applied in this country in order to avoid inflation. I have heard the Prime Minister talk on. occasions of the per capita cost of indirect taxation. Persons with higher incomes contribute more in indirect taxation than do persons on lower incomes. It cannot be argued, with truthfulness that the burden is shared equally by all sections of the community. But every person contributes, through indirect taxation, to the pensions bill. If there is a general recognition of the fact that the huge sum which Ave are expending year by year in pensions must be .provided in the main through one channel or another by the great body of .the Australian community, there will probably be less tendency to make irresponsible statements such as " What is a. million ipr two? " It should be realized also, that Ave aire involved in a Avar, the end of which Ave cannot foresee and the cost of which avc cannot estimate, but which Ave must try to meet.

Mr Calwell - Yet pensions were reduced in peace-time.

Mr HUTCHINSON - I realize that the Scullin Government had to shoulder the unhappy task of reducing pensions, Possibly that course could have been avoided to some extent had some recourse been made to the issue of central bank credits. We have progressed some distance along that road since those times. But Ave must recognize that we cannot hope to maintain our existing living standards merely by drawing upon social credit resources, or by direct taxation of a restricted class of the community. Australia's population has been divided, roughly, into three taxation groups - those receiving under £400 a. year, those receiving between £400 and £1,000 a year, and. those receiving in excess of £3,000 a year. Treasury officials have made figures available to honorable members which indicate that only about £95,000,000 of the present national income is earned by the section of the community receiving more than £1,000 a- year, and that only about £145,000,000 of it goes to the section receiving between £400 and £1,000 a year. As the total national income is estimated at about £860,000,000 a year, it will be realized that the greatest proportion of it goes to people who receive less than £400 a year. It may be assumed with safety that those (receiving the £95,000,000 a year., in the highest income group, have to pay about 60 per cent., of their income in Commonwealth, State, municipal and other taxes. Heavy imposts also fall upon persons in the £400 to £3,000 a year group. It will be impossible for' the Government to obtain much more money in taxation from the persons in those two groups, even if all they have be taken from them, and no one is suggesting that that should be done. If it were done it would involve the collapse of the existing form of society in this country. It must therefore be clear that future increases of the pensions bill of this country will have to be met, in a large degree, by persons earning less than £400 a year. Honorable members should keep this fact in mind when they talk about the ease with which we may add £l ,000,000 or £2,000,000 a year to the pensions hill. Drawing upon our credit resources will not get us out of the trouble. It is true that recourse is being had to this method of finance in other countries of the world, and that we may be justified in adopting it to some degree, for we are entitled to maintain some kind of balance with the rest of the world in these matters ; but the time may come when we shall not be able to draw upon this reservoir. Even if the Scullin Government had taken greater advantage of central bank credits a. decade ago and by that means avoided the reduction of pensions, it would certainly have had to provide extra money for distribution among the primary producers of this country, or their industries would have collapsed. It would have beenimpossible for us to maintain anything like the 1929 price levels without giving to the primary producers much greater assistance than was being given to them, for their burden of costs had already become crushing.

We must remember too that, in these days, the general community is prepared to tolerate measures of control over their financial and trading systems which probably they would not tolerate in peace-time. All of the people realize to-day that they cannot do as they like. We have been run round by all kinds of control;, but Australia, notwithstanding its recent industrial development, rema ins largely a primary producing country, and it may be assumed that after the war our primary producers will still be subject to overseas price levels in respect of their export commodities. This means that local cost levels will continue to be of paramount importance. We cannot therefore run blindly into social service obligations, involving the expenditure of millions in excess of the present figures, without causing danger to all sections of the people. We simply must realize that the cost of social services has to be paid, speaking broadly, by the whole community. In the main, the public finds the money. We cannot expect money from heaven with which to meet our bills. Under the budget now before us the Government still has to bridge a gap of £13'7,000,000 between revenue and expenditure, and that will bs no light task. Even if the money be obtained from inflation of indirect taxation, the people will still have to pay it, and the pensioners themselves will, have to pay their proportion. They will do so whenever they buy a tin of tobacco, or fruit, or other goods of that description. Years ago it was possible to buy a good pair of boots for 5s. A similar pair of boots costs 22s. 6d. to-day. Such increased costs fall upon the invalid and old-ag pensioners as well as upon other sections of the community. Inflation may seem to be an easy way out, but in fact it isnot. Unless we exercise great care we shall expand our pensions bill, and the cost of social services generally, to an enormous figure.

Mr DUNCAN-HUGHES (WAKEFIELD, SOUTH AUSTRALIA) -Hughes. - Perhaps honorable gentlemen opposite, think that the cost may be met out of reparations.

Sir Frederick Stewart - -Some other honorable gentlemen seem to be prepared to allow the pensioners to starve, if that course were adopted the only expense would be in burying them !

Mr Calwell - Perhaps the war may be paid for by reparations.

Mr HUTCHINSON - Anyone who thinks so will be doomed to disappointment. At any rate, I invite the honorable gentleman to consider my point that we cannot impose very much heavier taxes upon persons in the higher income ranges. Such sources of revenue are rapidly evaporating. Unless we are careful we shall take away all incentive to national progress.

I wish now to deal with another point on which I confess some curiosity. Several organizations have been established in recent years in order, so it is said, to take up the cudgels on behalf of the pensioners. I am told that these bodies exercise considerable skill in extracting small regular contributions from pensioners, on the ground that the money so obtained will be used to fight the battles of the contributors.

Mr Calwell - Mostly the organizations are run by undertakers.

Mr HUTCHINSON - I do not know whether that is a fact. Assuming that there are 260,000 pensioners in Australia - the figure may really be nearer 300,000 - and that. 3d. a week is extracted from 100,000 of them, a sum of nearly £65,000 a year will be obtained. Even if the contribution were 3d. a fortnighta very large amount would be accumulated'. These organizations,by the way, are operating mainly in our metropolitan areas. They do not extend their operations to country districts.

Mr Harrison - There are two organizations in some cities.

Mr HUTCHINSON - I am told that a very large organization is operating in Adelaide. The agents of these bodies wait outside the post offices on pension days and succeed in obtaining from the great majority of the pensioners contributions of up to 6d. a fortnight. If only 20,000 subscribed, the total amount would be £13,000 per annum. There is here an enormous field for exploitation by individuals who wish to run a racket. Prior to the presentation of the budget, a lady named Mrs. Huntress, and a gentleman, visited Canberra. According to press reports, they travelled first class and stayed at Hotel Canberra ; and they were rather uncomplimentary in their references to certain members of the present Cabinet.

Mr Harrison - They succeeded in getting what they wanted.

Mr HUTCHINSON - Whether they did or not, I am inclined to be generous and give credit to the caucus instead of to the Ministry; because I believe that, with one exception, the members of the Ministry believe that there is a limit to social security payments. The Government should have the matter investigated. Some time ago, a gentleman of high repute pointed out to me that a racket was involved. I am referring now to Melbourne, not to Sydney. I hope that these operations will be watched, and that the Government will come down severely and quickly if any funny business is being practised, because that could not be tolerated.

I am as keen on social services as is any member of this House. In normal times, I shouldbe prepared to advance a most comprehensive policy in that respect. Education is in the forefront. Although that problem does not very greatly concern the Commonwealth Government at present, sooner or later it will have to go deeply into it. Housing, and cheap transport, are other matters in respect of which we could do a great deal for our people. Unemployment insurance could probably be tackled immediately. But let us have some responsibility. Let us envisage, if we can, the difficulties that may lie ahead of this country, and not rush blindly into something which we may not be able to maintain in the near future.

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