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Thursday, 17 September 1942

Mr BRENNAN (Batman) .- This budget is the fourth war budget, and as budgets, like Christmas, come once n year, that fact reminds us of the flight of time and the length of the war. I could not fail to sympathize with the Treasurer in the giant task that presented itself to him in the preparation of this budget. Although he has proceeded largely along conventional lines, from which I believe he will have to deviate before very long, I congratulate him upon his labours and upon the fact that he at least has blazed a trail for us for another year. If I venture a few words of criticism I hope that he will rest assured that they are not unfriendly, but are intended to be helpful. When I spoke in this House last week, I ventured to suggest for discussion a comparison of moral and material values. I expressed the hope when the Prime Minister said, as he has frequently done, that we were putting our all into this war, that he was speaking solely of material things, since there are some things not of a material character which, in my view at all events, are too precious to be sold at any price. The budget, to the first item of which I am now addressing myself, is largely a matter of material things. There is not much romance and there is not a great deal of room for moral philosophy in a budget of ways and means, although, of course, these loftier considerations must necessarily permeate all avenues of occupation and should, I believe, influence the Parliament of a great democracy such as we claim Australia to be. The exordium of the Treasurer's budget speech must be allowed to pass as a kind of solvent intended to prepare our quivering flesh for the surgeon's knife. As usual, the introduction contained a great deal of self-appreciation - I do not mean self-appreciation by the Treasurer, because he is one of the most modest of men, but self-appreciation of ourselves - and the usual extravagant condemnation of the enemy. I sometimes wonder whether it is possible for anybody to he as good as we are wont to consider ourselves, or as bad as the enemy is represented to be. In this world, in which by design of Divine Providence we are condemned to live our short span of life with good and bad alike, we seem to live in constant fear lest some one should be inclined to advocate the ending of this war on just terms. To my great regret the first criticism that I must offer is that the Government has thought it necessary to prosecute certain well-meaning persons who had directed some reasoned and temperate argument towards that purpose.

The Treasurer (Mr. Chifley) intimated that the major item in the accounts of the previous financial year was war expenditure, which had greatly increased to a total of £319,000,000. I intend, in these remarks, to discard, as too trifling for consideration, mere thousands of pounds. The Treasurer said that that total of £319,000,000 was £98,000,000 more than the estimate of the budget, and £149,000,000 more than the actual expenditure in 1940-41. But. we do not come to really astronomical figures until we examine the budget for 1942-43. It is estimated that this year war expenditure will amount to £440,000,000, which is £120,000,000 more than the actual expenditure of last year, although that figure was considered to be phenomenal. The Treasurer warned us, however, that the experience of last year might be repeated, and the estimate again exceeded as the result of the grim struggles that lie ahead. The cost of the war shows no sign of diminution, and the honorable member for Robertson (Mr. Spooner) this afternoon directed some intelligent argument to showing precisely why we should look for an increase, by leaps and bounds, of our war expenditure. The .aggregate national debt has now reached a total of £1,629,000,000, comprising £911,000,000 for the States and £718,000,000 for the Commonwealth. Last year the Commonwealth national debt, was £1,426,000,000, so it is advancing rapidly. Significantly, however, the State debts decreased last year ewing to the operation of sinking funds, and to the fact that the State Premiers were denied the pleasure of raising loans, which they would very much like to have raised for local purposes.

The Treasurer congratulated himself upon the result of the uniform tax litigation. I congratulate him, too. The honorable gentlemen even trailed his coat ever so gently, and with something as near to a cock-a-hoop as could be expected from a person of his temperament, he said that it was not inappropriate to report that the challenge made by four States of the validity of the income tax legislation had been resolved by the High Court in favour of the Commonwealth. It is interesting to note that the States have submitted to the inevitable, with more or less good grace, and have intimated their willingness to vacate the income tax field out of which they have been so ruthlessly pushed. The Treasurer's victory in the court was, however, somewhat pyrrhic, for on various grounds the more eminent and experienced lawyers of the court were opposed to the Commonwealth claim. When one remembers that the judgment of the numerical majority was as heavily charged with war hysteria, as was the judgment in the case of Farey v. Burnett in 1916, the decision of the court does not appear in so favorable a light. I regret the nature of the decision because, generally speaking, I welcome any judgment which implies an expansion of the power of the Commonwealth and a contraction of the power of local authorities. As all those persons know who are in the least interested, 1 am entirely favorable to plenary power residing in the Commonwealth and delegated power residing in local bodies for local areas properly designed without too studious a regard for existing State boundaries. I regret that these matters should have been decided in an atmosphere of war, and that the defence power of the Commonwealth should have been called in aid in order to amplify the Commonwealth power. I did not have an opportunity to speak on the uniform income tax measures when they were before the House, but, had I done so, I should have been inclined to submit the view that, in point of law, the State advocates were right and so, ex post facto. I range myself on the side of what I have already described as the more experienced and more eminent lawyers of the High Court. They were right, but it gives me no pleasure to say so, for I am not in favour of supporting the States against the Commonwealth. There is, however, a prescribed method for amending the Constitution. I think it is cumbrous, and that it will probably be ineffectual; but, at all events, if one is to speak as a lawyer, one must take the law as it stands. In my view the Commonwealth defence power was irrelevant and should not have been called in to support an argument to which it does not properly belong.

The budget rightly directs attention to the improvement that has been effected in social services in the increase of pensions for the aged and invalid, the provision of pensions for widows, and the extension of the benefits of child endowment, and the maternity allowance. It also mentions that well-deserved and perhaps too-long delayed increases of pay have been provided for members of the fighting services. I cheerfully congratulate the Government upon having made these improvements. The Labour movement, a3 a whole, together with the Government, merits congratulation on this point; but it must be said that they do not contribute to the solution of the cardinal financial difficulties which confront the Government. Of the amount of £440,000,000 to be provided for war expenditure this year, £390,000,000 is to be disbursed in Australia and £50,000,000 overseas. It is amazinghow cheerfully we proceed with these rollicking hundreds of millions crowding upon us, in spite of the fact that they show no promise of diminution or limit of time; It is not surprising that the Treasurer should have warned us that the experience of last year may be repeated, and the estimate of expenditure exceeded. The honorable gentleman then went on to an anti-climax, for he said that there were some people who thought the war should be financed by central bank credit, but that in that course there was great danger. But grave danger lies about us on every hand. The Prime Minister (Mr. Curtin) and other Ministers have repeatedly assured us of the gravity of the situation which faces us. They deprecate what they call the complacency of the civil population. As a matter of fact, this " grave danger " cry is a little overdone. It is a mistake for the members of any government to assume thatthey are the only persons who are conscious of the danger, and that all others are living in a fool's paradise. The mere fact that people keep a placid face and a complacent demeanour does not mean that they are not conscious of the danger, or are not anxious about the future. I consider that they are to be encouraged and congratulated in that they at least have an appearance of complacency. The particular "grave danger" in this instance is bank credit and inflation. Later in the budget, the Treasurer told us that we cannot get money by legerdemain. Nor, I venture to add can it be obtained indefinitely from the pawnshop. After all, there are some very thoughtful people whohave views in the matter of expansion of credit and are just as much entitled to at least respectful attention as are those persons who do not appear to give any serious thought to anything.

Last Wednesday night we had in this chamber what may be described as a bright programme. The big guns boomed impressively. The programme was commenced by our precarious majority - the honorable member for Henty (Mr. Coles) - or should I say a part of our precarious majority ; the other part of it is paying me the compliment of listening to me.

Mr Wilson - Does the honorable gentleman insist on its being precarious?

Mr BRENNAN - The honorable member must not pretend' to be indignant with me. I do not insist upon the word if it be at all displeasing to him. I am quite prepared to criticize the Government in a friendly way, butIcertainly should not like to feel that I had driven our majority over the gangway with one speech. Then we had the right honorable member for North Sydney (Mr. Hughes), with flashes of his old style; the right honorable member for Kooyong (Mr. Menzies), with a very considerable array of interesting and well-prepared impromtus; and the Prime Minister (Mr. Curtin) himself. All were heard to advantage.

Mr Calwell - What about the General ?

Mr BRENNAN - We have not yet heard the General. I take leave to look forward to the happy occasion when we shall hear him.

Mr Rankin - The honorable gentleman will look back on it, too.

Mr BRENNAN - The right honorable member for Kooyong made a strong speech against national credit and inflation, and, I believe, succeeded in proving fairly well that national credit is inevitable. The Prime Minister proved that the previous Government had raised very large sums by that method; not so large, of course, as a war budget, but still, easily twice as large as the very modest £18,000,000 which, in a time of peace and prosperity, the Treasurer of a government of which I was a member endeavoured to raise for the purpose of providing employment and developing this country.

Mr Martens - They nailed it by another name in those days.

Mr BRENNAN - They called it by many disrespectful and even obscene names; but it was the same thing, by whatever name they elected to call it. I admit that the war is not the best medium for the implementation of national credit.

Mr Baker - Or anything else.

Mr BRENNAN - It may be pointed out, however, that this is not a very good season for implementing serious social development of any kind. War is itself a moat uneconomic method of spending, whether the money be obtained by means of national credit, loans or taxation. The right honorable member for Kooyong was appalled to think that the treasury could hope to raise £300,000,000 by loans; because it has to be remembered that the Treasurer had stated that that very large void of £300,000,000 was to be bridged by loans, Arc. "&c." is a very expanding and pliant rubberoid for indicating what one cannot otherwise describe. But the right honorable member did point out - rightly, in my opinion, although not. to the point to which I am coining - that each succeeding loan has been harder to raise than its predecessor. That, clearly, has been our experience; and it is likely to continue to be our experience. I turn to a sound financier, so described, like the honorable member for Robertson (Mr. Spooner) for material in support of that view. He is just as satisfied as I am that beyond all doubt the costs of war will mount and that the difficulty of raising money by loan will increase from day to day. The right honorable member for Kooyong cited his own experience as a patriot and an investor. He gave the simple illustration that he had contributed what he could afford to a loan that was raised last year and that consequently he would not have as much to contribute to the loan this year. This is a sample of that elementary arithmetic that seems to appeal to the right honorable member. At any rate, he held out little tope of the gap being bridged by that means. He -then turned to the lower-paid wage-earners who at present are exempt. I submit to honorable members opposite a proposition : Whilst there is an evident desire to cut the wage-earner to the bone, is it not a fact that, on any calculation, the amount to be derived from that source, by means of taxation, cannot, in the light of the gap that has to be bridged, be more than a drop in the bucket?

This war is likely to be a long one. I do not know whether this observation may hearten the enemy. I do not think that it will ; but if it be considered likely to do so, I shall have it excised from Ilansard after the newspapers have capitalized it, as they always capitalize my speeches by publishing them verbatim. I cannot see in this, the fourth year of the war, that any intelligent observer can confidently say that we have begun to win the war ; and that, of course, is our objective. As most of the better informed and more intelligent observers frequently point out, it is likely to be a long war. Hazarding a guess, I should say that it is likely to last at least another five years. Of course, the unexpected may happen. Some nation may crack; revolutions may occur - they 'have occurred previously - and all sorts of things may happen. But all the circumstances point to the likelihood of its being a long war; and if the difficulties of raising money by loan increase with every appeal, if we shall have exhausted the possibilities of taxation to the very limit, what will be left? When we have exhausted the pool from which loans are raised - and we must already have exhausted it, if not wholly at all events to a substantial degree - what will be left but national credit? Sooner or later, we must take a leaf out of the book of the dictators. What remains to Hitler and what remains to Mussolini? Are loans being raised in China or Japan? Are they paying interest there?

Mr Archie Cameron - Yea, they are trying to negotiate for £50,000^000 now in China.

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