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Wednesday, 16 September 1942

Mr HUGHES (North Sydney) (Leader of the United Australia party) {8.45]. - The Treasurer (Mr. Chifley) laid great stress on the size of this budget. It waa natural and proper for him to do so, for the budget is a record, and makes an interesting contrast to the budget presented to the first Commonwealth Parliament, which provided for £10,000,000 of receipts and £10,000,000 of expenditure. But the size of this budget should, not be disturbing, in itself, for it is an outward and visible sign of the wonderful progress that this country has made. However much we may differ from the Government in relation to the incidence of taxation, and the means hy which the money is to be obtained, we are agreed that the money can, and will be found. This budget provides for a total expenditure of £550,000,000, of which £440,000,000 is required for war purposes. Of that war total £140,000,000 is to be provided from revenue, and £300,000,000 from loans. The Treasurer warned us that the estimate of expenditure might be exceeded. I think this is quite probable.

As I see it, this budget has two major defects. The Opposition does not complain of the amount of taxation to be levied, but of its incidence. The taxes are not being imposed fairly. As the Prime Minister very properly reminded us the other night in his most rousing speech, which I am sure found its way in cj ihe hearts of the people, this Ls every body's war. if it is every body's war, i'very body should take a share in paying tor it. taxation should be adjusted to the means of the taxpayers. There is an irreducible minimum in relation to the standard of living which must be preserved. It is necessary to maintain the physical and moral fitness of our people. That is vital. But, subject to this consideration, every body should contribute to the war effort according to his means.

The Opposition objects to the budget, also, because it provides for the vast sum of £300,000,000 to be obtained by voluntary loans. Consider the circumstances of the people of this country. At least 1,000,000 income-earners will contribute nothing in taxation. So far as I know this is the only country in the British Empire of which that is true. Another 1,000,000 income-earners will make an almost negligible contribution to taxation. There is no justification for this. Ou'1 standards of living have been amply protected. I listened with great interest to the speech of the honorable member for Maranoa (Mr. Baker). I know something of the conditions of the people in the districts to which he referred. No words could be too harsh to describe the conditions nhat once existed in those areas, but I am dealing with the position as it is. There have been poured into the pockets of the people of Australia vast, sums of money. It is literally true today that the overwhelming majority of our wage-earners have more money to spend than they ever had before. Immense sums of money obtained from revenue and loan last year have been expended on war work and, apart from £56.000,000, more or less, which was paid for goods obtained outside Australia, all that money has gone into the pockets of the people.

Mr McLeod - And more ways have been found of taking it out again.

Mr HUGHES - It is not true to sal that the rich are becoming richer.

Mr Calwell - The right honorable gentleman would say that' that was neve* true.

Mr HUGHES - It used to be true. I was one of those - if honorable gentlemen opposite will give me some credit for it - who conducted a vigorous campaign over a great many years against that kind of thing.

Mr Calwell - The right honorable member wrote The Case for Labour.

Mr HUGHES - I did. '

Mr Rosevear - And then forgot all about it!

Mr HUGHES - I did not. The honorable gentleman who has interjected is here by the grace of God and The Case for Labour which I wrote. He would not have been here but for it.

The money spent on the war effort has found its way into the pockets, principally, of wage-earners in the lower ranges of income. Two millions and more are practically exempt from taxation. That it has not gone into the pockets of the employers or the well-to-do is proved by glancing down the taxation schedule. Take the case of a man in receipt of £5,000 a year who must by any standard be classed as a bowelless plutocrat who deserves to " get it in the neck ". What has happened to him? Before the war his income tax amounted to £800 odd a year, leaving him with £4,200.

Mr Pollard - It was not enough.

Mr HUGHES - Well, the tax he pays now is £3,300 which leaves him with only £1,700. Honorable members of this House who receive £1,000 a year will be taxed £250 a year, but they will still have £750 a year left, which is between three and four times as much as is received by many of the poor downtrodden workmen about whose unhappy lot they say so much.

Mr Pollard - It is still too much.

Mr HUGHES - Well, honorable gentlemen have the remedy in their own hands. There is something about this hypocritical concern for the workers by men who receive £1,000 a year which I find sickening. If we desire to set an example of austerity we should begin here and strip ourselves bare. That, of course, i3 a figurative remark which must be taken with reservations !

Mr Calwell - What about the man with an income of £25,000 a year ?

Mr Fadden - Such a man scarcely exists in this country to-day.

Mr HUGHES - Under the provisions of this budget, a man in receipt of £20,000 a year would pay nearly £17,000 in income tax, but he would still be able to struggle along on £3,000 as will honorable members who will still have £750 a year left to them. Incomes in the higher range are very heavily taxed, but millions of people who could and ought to be taxed pay nothing or next to nothing. I know of no other country in the British Dominions where the great mass of the workers escape with so little taxation as do those of Australia. In 'New Zealand, under a Labour administration, income taxation begins at £100,

Mr McLeod - But the workersget something for their taxation.

Mr HUGHES - In New Zealand the single man without dependants who receives £100 a year is required to pay £13 in taxation. If he gets £150 a year his taxes amount to £19, and if he gets £200 a year they amount to £25. In this country, single wage-earners without dependants who earn £200 a year have to pay only £8 in income tax. Wageearners who receive less than £200 a year pay nothing at all. It is evident, therefore, that the taxes do not bear equitably on the people. An adjustment of taxation in conformity with the circumstances of the individual is necessary.

Mr Conelan - The Government's taxation programme observes that principle.

Mr HUGHES - It does not. We come now to loans. The Treasurer, after pointing to a great gap of £300,000,000 between estimated expenditure and estimated revenue, approached the colossal chasm with an airy optimism. He said " We received £120,000,000 from loans last year. We can double that amount this year ". But why did he stop at doubling it? Why did he not say we could treble it? That would have given him a surplus of £60,000,000, and surpluses are just about as rare as seaserpents. The honorable gentleman must know, for his advisers are men of experience, that the loan market cannot be relied upon for more than £150,000,000 this year. From where is the other £150,000,000 to come?

Mr Calwell - From national credit.

Mr HUGHES - That is the answer. On this point the Treasurer said in his budget speech -

Increasing the volume of money without increasing the supply of goods for civil consumption not only creates the danger of inflation, hut also sets up serious competition between demands for civil goods and demands for war requirements.

That is the great danger. But it could be avoided easily if the Government would adopt the policy of compulsory loans advocated by the Leader of the Opposition (Mr. Fadden). Why should not loans be compulsory? Why should we have to go cap inhand to people asking them to contribute to the present Common wealth loan? Why should we not levy on every person an amount proportionate to his or her means? During the last, war, I took a wealth census. That showed clearly the way in which compulsory loans could be introduced. By such means, the Government would be assured of raising £300,000,000 I am not denying that there are limits to the capacity of this country to provide money. I say, however, that the per capita output of the workers of Australia at the moment, compares favorably with that ofthe workers of any other country in the world. The amount of £500,000,000 is colossal, but not beyond our capacity. But the workers must be maintained at a high state of physical efficiency. They must have an abundance of food. I agree with what the right honorable the Prime Minister (Mr. Curtin) said last week. At the same time, however, we must have food. I was seriously disturbed when I heard the right honorable gentleman say that he might have to consider limiting tucker rather than supply men for the Army. In my opinion adequate food supplies are essentia] to a maximum war effort and food is the basis of war. Without food men can neither fight nor work.

Mr Curtin - The right honorable member will remember that what I said was that if I had to take the risk of being short of tucker in twelve months or short of fighting men at the present time, the risk that I would take would be that of twelve months hence and not that of the present.

Mr HUGHES - Put in that way. I take no exception to the statement. All

I sa.y is that there is no reason to believe flint we have not the capacity to produce all that is necessary of munitions and of food at the present rate, and even at an accelerated rate. Returning to the question of loans, I say frankly that I cannot understand the attitude of the Government towards compulsory loans. It is illogical, and inconsistent with the basic principles of the Labour party. That party, as everybody knows, rests upon compulsion.

Mr Calwell - It does not; membership of the party is on a voluntary basis.

Mr HUGHES - I do not know what the first plank of the party is now; but when I was a member of the party the platform began with socialism, or something of that kind - and that, of course, is based upon supremacy of the State and limitation of the freedom of action of the individual. Then, too, Labour believes quite properly in unionism. Unionism is voluntary in theory, but in practice it is compulsory. It would never be able to function without compulsion. When I was in the ranks of the waterside workers, no man was permitted to work on the wharves who was not a member of the wharf labourers' union. That is true of every union which can do more than bleat. So I say that compulsion is the foundation upon which the doctrines of the Labour party have been built. That has been the case ever since Labour came into politics. But the present position is without parallel in the history of this country. Every man of military age is compelled to join the Army. Every man of any age, provided he is physically fit, and every woman, too, is compelled to work where the Government directs, at the task to which the Government puts him or her, and at the hours and for the wages that are fixed by awards made under the law. The Government swallows this camel and strains at that gnat - it conscripts labour to fight and to work but it will not agree to compulsory loans - frankly I cannot understand its attitude. It is true, of course, that when those who now occupy the ministerial benches were in opposition, and my right honorable friend the present Leader of the Opposition (Mr. Fadden) introduced n measure for the application of the principle of compulsory loans, they opposed it. I can understand that; it was natural. They were in opposition and so they opposed the Government's proposals. But now they are in office, and have done things that I never dared to do; they have introduced industrial conscription - the most odious of all - but they still balk, at compulsory loans. Whatever else may be said of honorable members who sit on this side of the chamber, although none of them dared to conscript labour, we did dare to propose compulsory loans. I want to make my position perfectly clear. I am not objecting to what the Government has done. But having done so much, why does it now hesitate to apply the principle of compulsory loans? The alternative is inflation. I know very well that some honorable members opposite, happily not very many of them, believe that it is possible, by some hocuspocus, to finance the war by means of bank credit. They believe that wars are fought with money. Their leader has reminded them times out of number that wars are fought with physical things - with men and things made' by men. If there were anything in the idea of national credit, and wars could be financed by such means, I put it to my friends who talk so glibly about it - and who, incidentally, in nine cases out of ten, are Communists, with a label that is either displayed or carefully concealed inside -the lapels of their coats - that Russia would have financed its war operations in that way long ago. Yet what is it doing? It walks the same hard road as the people of every other country. Russia finances its war out of the savings of its people, who are compelled to loan them to the government. That is a sensible way of carrying on business. Russia pays its people interest on their loans. Every body knows that money is not only a medium of exchange, but also a measure of value. In these days, when metallic money has been displaced by paper money, the relation between the quantity of money and goods available for consumption is not so clear as it was formerly ; but for all practical purposes it amounts to this: that if there is to be stability of the prices of goods there must be control over the quantity of money available. Broadly speaking, the more money in circulation, the dearer the goods ; and the more goods, the cheaper they are. In order to maintain stable price levels, control of money in circulation is essential. Too much money means inflation. In order to produce goods, labour and capital must be expended but in order to produce money, all that is needed is to print more notes or to change the figures on the note, putting " 5 " in place of " 1 ". It is very simple. Notes are poured out, but as there can be no corresponding increase of the quantity of goods, money loses its value, the people getalarmed and because prices rise, more money is printed. And so it goes on - money loses value with every additional issue of new notes. Inflation spells ruin. To those men in this country who have money in their pockets and seek to hoard it, to those who think that by putting their money in a savings bank they can escape from the consequences of inflation, I say that that is the road to destruction and disaster. Their money will remain there, but its value will disappear. The Government is carrying on the business of this country, and I am supporting it. Put unless it be prepared to make such provisions as are necessary for ensuring the success of the loans that are essential to the carrying on of the war effort, it will be impossible to fight inflation and, consequently, disaster will follow.

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