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Thursday, 17 September 1942


Mr BREEN (Calare) .- Once more honorable members have, had the inflation bogy depicted for them in various shapes and colours, according to the fancy of the particular story-teller, and I must confess that I am a bit confused as to which story most interests me. However, all Opposition speakers have agreed on the point that the inflation ghost is too useful to be laid. They have also agreed, apparently, that the bogy must be brought forward whenever the common people have a little more money to spend than may be necessary to provide them with the barest sustenance.

I wish to bring to the notice of the Government the circumstances of a section of the people whose additional spending power, as a consequence of the war, has not increased greatly, and cannot add to the momentum of the movement,, if any. towards inflation. I refer to the wheat-growers of Australia. In 1936 Sir Herbert Gepp submitted a report to the Government which clearly revealed the chaotic- condition in which the wheat industry was at that time. In dealing with the primary industries generally,. Sir Herbert Gepp, who made his investigations a3 a royal commissioner, said that if all the farm lands of Australia, and all the plant and stock on farms were marketed at their value at that time, the aggregate receipts would pay only 18s. in the £1 of the farmers' debts. We all are more or less conversant with the conditions- that have prevailed- in the wheat industry in the last six years owing to seasonal and economic circumstances over which the farmers themselves have had no control. It is- beyond question that the condition of the wheat industry has deteriorated greatly since Sir Herbert Gepp presented his report. This serious state- of affairs has been, contributed to by the activities of a number of people, who induced the farmers to elect them to Parliament under the title of Country party members. These individuals were able to convince the primary producers that they would look in vain to the members of the labour party for help. In fact, they persuaded the farmers that assistance could be obtained only from antiLabour politicians, and, in particular, from members of the Country party. But how did those honorable gentlemen perform their promised service to the primary producers? In the main they comprised a numerically small proportion of the anti-Labour politicians at different periods, but somehow they have managed, because of their nuisance value, to wangle for themselves the majority of portfolios in certain governments. But they have not afforded the farmers the help that was promised. Consequently many of the statements made by Sir Herbert Gepp in his 1936 report on the wheat industry are even more to the point to-day than when they were made.

Sir HerbertGepp found that under the conditions prevalent in- Australia at the time of his investigation, it cost 3s. 6d. a bushel to grow wheat and deliver it at ports for export. One item in the total of 3s. 6d. was a labour charge of ls. l-|d., which was set down as the remuneration of the farmer and such members of his family as helped him to produce his crop. On this item the royal commissioner stated -

The largest single item is seen to be labour, which has been considered in some detail both in the first report and in paragraph 79 of the present section.

He went on -

The commission considers that savings in labour might be made in individual cases, either where farmers have areas which are too small to give effective employment or where too much family labour is at present used on the farm.

He qualified that observation as follows : -

This item is one on which savings are being made during the depression; large numbers of farmers are unable to .pay their families even the low rate of wages which has been used in these computations (normally £1 per week and keep for each male adult employed ) ; many farmers are not in a position to take from their receipts the £125 in cash which the commission considers is a minimum return to the farmer himself for his work and management of the farm.

What the royal commissioner- intended to convey was that the labour' of 'the farmer, wire invested his capita-! in- his farm and gave 24 hours a day seven days a week for 365 days a year, in some instances, was worth only about £2 5s. a week. At all events, that was all that was allowed in arriving at the production cost of 3s. 6d. a bushel for wheat. The members of the so-called Country party were apparently quite prepared to accept such a state of affairs as being common to the wheatgrowing industry. In effect, they said, " We agree with what the royal commissioner has said on this point".

The position of the wheat-growers in that respect is not unlike that of persons who engage in certain other primary industries. In support of this statement, I refer honorable members to the report of the McCulloch royal commission on the fruit industry of New South Wales. In dealing with labour costs Mr. McCulloch said in that report -

Labour may be provided by the grower, members of the grower's family, permanent hired labour, and casual labour.

He went on -

At one centre an adult married man was paid £2 per week without keep.

Further on in his report he said -

It is the usual practice for growing lads to assist in many phases of orchard work; the grower's wife and/or daughters help, on occasion, particularly in packing and racking operations. For all such operations costs have been calculated as if hired labour had been employed. While the work of the grower's family may substantially decrease his individual costs to the general benefit of the homo it cannot be accepted as a basis for depreciating the general cost levels of the industry.

It is obvious, therefore, that the labour position of the fruit-growing industry reflects that of the wheat-growing industry. In dealing with one orchardist whom he regarded as efficient, Mr. McCulloch said -

I regard this man as a typical orchardist, industrious and saving, and an intelligent worker; but despite the season this man has no possibility of liquidating his debts or meeting his commitments from year to year.

We have heard in the last six months complaints from honorable members opposite who- represent farming communities. They have spoken of the chaotic condition into which that section of primary industry which is predominant in their electorates has declined. That is merely a climax to the development that has been taking place throughout the years, during which the party to which they belong helped to govern this country. They held the balance of power, and made full use of their nuisance value by blackmailing the major anti-Labour party into giving them a few portfolios. They conveniently forgot the interests of the farmer, which they pretended they would look after if they were returned to this Parliament. The people woke up to them at the last elections, and bumped many of them out of Parliament. Let us consider what contribution the primary producing section of the community can make to the loan. During the last twelve months, costs have soared. They could not meet their commitments in 1936. Every primary commodity they managed to produce plunged them deeper into debt. It would appear that one authority finances the farmer in order that he may grow a particular commodity, whilst another authority fixes the price that he is to receive. That price will not permit economic production. Yet the authority that finances him derives its power from the same central source - the government of the day. It is absolutely futile to attempt to deal with the evil piecemeal; it has to be placed on the dissecting table and treated as a whole. We cannot continue along the lines that have been followed in the past. There must be a central authority, with complete power to set the industry on its feet and establish it on an economic basis, as secondary industries have been established. The present Government has given practical evidence of its desire to establish primary industries on an economic basis. The wheat industry has been in greater chaos than any other industry. The Government earmarked a certain sum in order to stabilize, not the industry but the farmer, for the duration of the war, by guaranteeing to him a price that would enable him to meet his commitments and have a fair return for his labour. The guarantee of 4s. a bushel f.o.r. country sidings is equivalent to 4s. 6-Jd. a bushel f.o.r. ports. The Government took as a starting point the findings of the Gepp Commission. It said, " A qualified authority has examined every phase of the industry. We have to be guided by its findings, which state that it is impossible to grow wheat for less than 3s. 6d. a bushel, including an allowance of ls. l£d. a bushel for labour ". This allowance represented a return to the farmer of £2 a week. It has been doubled in the guarantee of 4s. 6-Jd. a bushel, which means that the wage to the farmer for his labour will be approximately £4 a week. That is a serious attempt to stabilize his position. The Government is following the same lines in relation to every other section of primary production ; it is stabilizing the primary producer by guaranteeing to him a price for his commodity which will enable him to produce it economically. Such an achievement will continue to be effective long after the members of the Government have been forgotten. There has been a tremendous drift of population from the primary industries. Any farmer who saw an opportunity to take his wife and family to better surroundings and to improve their circumstances, liquidated his losses, however greatly he might have been involved financially with his farm, and went into secondary industry. According to figures compiled by the Commonwealth Statistician, 211,000 persons were engaged in primary production in 1931. By 1938, the number had dwindled to i89,000. The drift of population from the country has increased from a mere trickle to a flood. If an inventory were made of the relative positions of the country and the city populations, the figures would startle us. "We have always prided ourselves on the fact that our farmers have been the backbone of the community. This country has been developed with the idea of making the average Australian a hard-working, hopeful farmer, who could change the face of the land from an arid desert to a flourishing garden. What do we now find ? The people are deserting the land, just as stock desert a paddock- after all the green feed has been eaten off it. That has been going on for quite a long time. This Government is tackling the problem along right lines. It has taken cognizance of all the information that has been provided by royal commissions and other bodies during the last 20 years, and has endeavoured to implement their recommendations. Despite the fact that it is confronted with a financial' problem the equal of which has not previously been experienced, and that Australia is threatened with invasion at any moment, it is yet prepared to face up to its obligations to the man on the land, because it realizes that he has to be looked after if Australia is to continue to be self-supporting. Reporting on this matter, the Commonwealth Statistician made the following observations : -

Any future scheme for increasing Aus. tralia's population must be linked with industrial development. The only way in which Australia can get the necessary population for the safety of the country would be by fully using all the agricultural, pastoral, fishing, mining and other resources, together with industries dependent on them.

When the Labour party sought the support of the electors three years ago, it placed before them a programme for the decentralization of industry. It realized not only the futility but also the danger to this country of concentrating all our industries in the most vulnerable positions along our coasts. Other parties had professed that they were aware of the danger of that state of affairs, but had made no effort to remedy it.

The present Government has been in office for nearly twelve months. Let us consider what it has done. Country towns which only a little while ago were spoken of as deserted villages now have modern factories that are run by electric power. These could well be emulated by many of the old-time factories that still exist in our great metropolitan areas. Men and women who have been trained to the highest degree of efficiency are producing munitions of war. A few short months ago many of them had not seen the inside of a factory. There are very few country towns which can be regarded as invulnerable from attack by sea or air that have not yet had a government factory or a subsidized private factory established, within their area. The Government has endeavoured to make good the lack of oil supplies, which is one of the unfortunate shortcomings of this country. The Government has given effect to the recommendation of the royal commission on the production of power alcohol. Four large production plants are either in operation, or about to commence. The Government is doing its best to ensure that a substitute fuel shall be available should petrol supplies be cut off. The production of munitions has increased enormously. I:i fact, overseas visitors are astounded that we have been able to do so much, not only in the production of actual munitions, but also in the manufacture of machine tools. I believe, however, that more, should be done to improve our rail communications in ease it should bp found impossible to carry supplies by sea from South Australia to the east coast.

Facilities for the production of electric power should be decentralized so that our industries could, if necessary, bc shifted back from the coast into less vulnerable areas'-. In a journal known as Australian, Goal Shipping and Steel. there is an article dealing with the method adopted in England to transfer industries from bombed towns so that production might be continued. I quote the following paragraph : -

Under an interesting semi-public organizational plan, Britain built up her electrification. In1 a typically British way the widelydecentralized power plants were not replaced by new huge centralized stations (which as itturned out under the horn bing attacks in the present war, was most fortunate for the country), hut were connected in a comprehensive scheme, the so-wl led grid.- Under this plan British power production rose from 13,000.000,000 K.W.H. to 31,000,000,000 K.W.H. between 1!)29 and 1938.

We, in Australia, are in a position similar to that which obtained in Britain just before the blitz, except that Britain had numerous power plants scattered all over the country, whereas Australia has not. Four years ago, a committee of experts drew up a plan for the decentralization of power resources in New South Wales, but that plan was not carried out. The people of various towns in. western New South Wales are now becoming aware of the danger that confronts them because they are not linked up with a powergenerating group. Some, of these towns depend upon a power supply derived from diesel engines, and we all know how scarce and expensive diesel oil is now. I quote from a letter written to me by the municipal council of one such town: -

The cost of generating power per kilowatt by coal is .17d. The present cost of diesel generation is ten times the amount.

That town is in the line of an electrical link-up, but it was not included in the scheme, despite the recommendation of the expert committee. We were content to carry on in the old way in the belief that "it could not happen here". Now, if is practically impossible to get electric cable, just as it is impossible to obtain power-generating machinery. If the power plants On the coast were destroyed wo could not establish new plants in the country because- we could not get machinery. I suggest that trie stand-by plant at the big power stations on the coast be shifted back into the country. It is bad engineering practice not to have available emergency plant of almost equal capacity to that of the principal plant. The position now is that if the plant in one town breaks down, it mutt rely upon linking up with the power resources of some other station. If our power plants on the coast should be destroyed by enemy action, the stand-by plants there would also be destroyed, and that is something, which we could fake steps to avoid.

We have been told by people who are conversant with the ramifications of high finance and the causes and effects of fluctuations in our everyday economy, that if more spending power be available to the m'ass of the people than will purchase for them the bare necessaries of life, a state of affairs called inflation will be brought about, and the money will eli ase the available consumable goods, whose owners will offer them only to the highest bidders.


Mr Abbott - When did the Treasurer say that in his budget speech?


Mr BREEN - I did not say that the Treasurer said it. I said that it was predicted by the experts who have been talking in this chamber for the last two days. The Treasurer may be suspicious that big financial interests, such as the banks, cannot be persuaded to freeze their surplus credits, and therefore has asked them to lodge a certain proportion of them with the Commonwealth Bank. Other interests will say to him: "If you do not trust the banking interests to do the right thing in time of war and avoid expanding credit, it is good enough to ask the same of the wage-earner, who may have a few shillings more than he can spend ". That may sound quite well, but let us examine it a little further. I admit that there is more spending power in the hands of the people now than there was at the start of the war,but it must be remembered that nearly 300,000 more workers have been brought into industry by the policy of the Government than were then employed. If the £25,000,000 or £30,000,000 that we fear will cause inflation is spread over those additional 300,000 workers, it represents only about £90 per head, which isthe average earning of the average worker, including all men, women and juniors employed. If that did not cause inflation in pre-war days, it is hardly likely to do so now. To discover what may cause inflation, we should look at the latest balancesheets of the big companies. The Carlton Brewery has over £315,000 in ordinary reserves, and £40,000 in a special reserve fund. The leaving of that money in thehands of the company might be a little dangerous because the company might see an opportunity for investment, and rush it on to the market. If 2s. will cause inflation when Mrs. Smith buys a few apples, what can be said of £355,000 in the hands of the Carlton Brewery when a few publicans are going bankrupt and their properties are on the market? The Australian Gaslight Company has a special reserve of £264,000, and a general reserve of £400,000; the British Australasian Tobacco Company has special reserves of £2,218,000 and an ordinary reserve of £1,417,000; the Adelaide Advertiser has reserves of £370,000 ; the Bank of New South Wales, £6,000,000; the Broken Hill Proprietary Company Limited, £4,000,000, with a special reserve of £1,000,000, and another special depreciation reserve of £500,000. If the ordinary civilian cannot be trusted to freeze the extra £5 which he has saved over a month or two, how can we trust those big institutions to keep liquid reserves, for that is what they are, amounting to hundreds of millions of pounds, unspent and in their own hands ? If it is good enough to ask the workers to put aside their savings until after the war, the large financial concerns should be made to place their reserves in pawn also until the war is over. What have the economists to say about that?

I conclude by reading the balancesheet submitted to the Taxation Commissioner by a munitions worker, one of the nouveaux riches who, we are told, have become millionaires overnight. He is a married man who lives in Orange and works and boards in Lithgow. Last year he received as a munitions worker a total of £2991s.1d., earned over twelve months at the Small Arms Factory. These statements can be verified. His budget is typical of the finances of all munitions workers in the western towns of New South Wales. He puts down board and residence at Lithgow at £2 5s. a week, or a yearly cost of £117. His next item is house rent at £1 13s. 6d. a week, totalling £87 4s. Union fees to the Australian Society of Engineers come to £2 2s.; doctor's subscription, £2 5s.; bus fares to factory, at 5s. 6d. a week, £9 6s. ; contribution to hospital and ambulance at Lithgow, £2; and train fares, Lithgow to Orange, at £1 a fortnight, £26, making a total expenditure of £245 17s. With an income of £2991s.1d., he has a balance of, roughly, £54 a year, out of which he has to keep a wife and child. If his surplus and the surpluses of all his follow munitions workers were put into compulsory loans or postwar credits, or whatever the bunch of carrots dangled in front of the worker is called, there still would not be sufficient to bridge the gap, but the millions of pounds in liquid reserves in the hands of the big companies, these nest eggs which have been put aside for the post-war period, would furnish plenty of money with which to bridge the gap, without fear of inflation after the war.

Progress reported.







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