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Tuesday, 22 September 1942


Mr MORGAN (Reid) .- This is the second record war-time budget that has been introduced by the Treasurer (.Mr. Chifley), and when we take into consideration the fact, that the expenditure which it envisages is five and a half times greater than that of our largest peace-time budget, wc get some idea of the tremendous proportions to which the problem of financing the war has developed. 1 commend the Treasurer for the manner in which he has bandied the formidable task which was imposed upon him and upon the Treasury officials who assisted him. I realize that there arc still some orthodox features in this budget, but it must be remembered that the Treasurer always has to depend upon the Government for a lead, and the Government has to depend upon the people for its .mandate. The Government still lacks n majority in the Senate. I am satisfied that the people have now been thoroughly educated on the subject of finance and that, if the Government takes up the challenge that has been issued by the Opposition, it will have a sweeping victory. The Opposition has, as usual, trotted out the usual bogys, including that of inflation. Nevertheless, when it was in office it made use to some degree of national credit. Of course, it did so very furtively, because it was afraid to associate itself openly with the protagonists of the new financial era that is just beginning. When the first Menzies budget was introduced, I said that it would ultimately break down under the weight of its own orthodoxy. My prophecy has been fulfilled, and to-day the Government, has to bridge a gap of £300,000,000. Despite what honorable gentlemen opposite may say, a considerable portion of that sum will have to be derived from national credit. In fact, long before the war ends, we shall have become accustomed to the use of national credit. Not the arguments of the theorists, but force of circumstance will compel this change. Wc shall not set foot on the road to victory until we adopt new financial methods. Since I have been a member of this Parliament, probably three-fourths of our time in this chamber has been occupied in considering means of raising the money needed to conduct the war. We are tackling the problem from the wrong direction. We should budget for objectives by fixing the numbers of men and the quantities of munitions and other materials required, and then deciding how to obtain the necessary money. Finance should be the servant of the nation, not its master, as it has been up to the present time. About twelve months ago, I pointed out in this chamber that the allied nations at that time had an advantage over their enemies of about five or six to one in man-power and about twenty to one in raw materials. The position has deteriorated since then, however, and, unless we adopt better methods of organizing and financing our campaign, it will be completely reversed. There seems to be a continual struggle between the exponents of old and new financial systems. Some of our taxation measures should have been scrapped long ago, particularly those which affect soldiers, munitions workers, members of the Public Service and others employed by the Commonwealth. There are many more people in the employ of the Commonwealth Government to-day than there were in peacetime. It is absurd that each one should be paid a salary or wage and then taxed upon that income, necessitating the maintenance of a large taxation staff. It would be much better to pay these people the net sums that they receive after payment of taxation. By this means, a great deal of man-power now employed in the Taxation Department could be released to give service to the nation in other ways. Some months ago, Mr. Ralph Clark, a Master of Arts, propounded a scheme by which, during this period of crisis, all of us would be guaranteed supplies of food, clothing and shelter by tho Government so that we could concentrate on the successful prosecution of the war without being distracted by economic worries. There is a great deal of merit in that scheme. There is nothing mystical about finance. Only recently, I read the following article in a copy of the Sydney Daily Mirror : - " The restoration and maintenance of pros perityafter the war must be accomplished by the printing of additional money", declared Henry Ford, America'sNo. 1 industrial genius, inan interview with the magazine Liberty. "T he first thing that should be done when peace comes is to issue currency to repay the people for money loaned to the Government", he said. " That money would provide purchasing power, keep industry going and provide jobs until we get squared all round".

Ford laughed at a suggestion that " printing press " dollars would mean inflation. The dollar was good all over the world, he said, because there was plenty to make it good.

He is still a pacifist and conscientious objector, claiming that the last war threw civilization back 100 years. "Things are different now", he said, when reminded that depressions usually followed wars. " If this war ended to-morrow, there would be a big gap to be filled. Right now there are shortages of many things people want - andmany of these shortages are increasing. "If the war goes on for another year or two, there will bea demand for all we can make.",hesaid. "Production is the only way to prosperity - and there isn't such a thing as over-production ".

That is the opinion of the world's most outstanding industrialist. Honorable gentlemen may have their own ideas about finance, but they should give heed to the views of this man,who has proved by his achievements that he knowsa great deal about finance. Hehas put his financial theories into practice, and has brought into being the finest industrial organization in the world. Some persons consider that, in war-time, it is not logical to use national credit to produce goods which probably will be destroyed. However, there is no sound argument against the use of national credit in times of peace, and any doubts about the wisdom of such a policy in war-time could be resolved by instituting a wealth tax or capital levy. Such a tax need not. be large, because of the vast amount of private wealth in Australia, but for those people who bad to pay the tax it would be an in- surance against the destruction of themselves and their wealth. After the war ended, those persons would still havea considerable amount of wealth. For every £1 00,000,000 of national credit issued, a similar amount couldbe obtained by means of the wealth tax.

The one would be offset against the other; the proceeds of the wealth tax would replace the wealth destroyed by war. We shall be forced to resort to some form of capital levy before the end of the war, because we shall not be able to pass the cost on to posterity as some honorable members opposite propose. They advocate the raising of money by means of compulsory loans, which will bear interest. Who will have to repay these capital sums and the interest which accrues on them? Shall we expect those fighting men who are fortunate enough to return after the war and the dependants of those who give their lives to do so? The cost of the war of 1914-18 was charged to posterity, but future generations, and the men of our fighting services who are now making great sacrifices, will not allow themselves to be loaded down in that way. The war should be paid for while it is being fought. If it be good enough for men in the fighting services to risk their lives for their country, it should be good enough for the wealthy interest in the community to contribute towards what I regard as an insurance policy, by means of a wealth tax or something of the kind, so that the costs of war may be met, as far as possible, as they are being incurred. Our national debt has increased by more than £300,000,000 since the outbreak of the war. For this reason and others thatI have stated I consider that national credit and a capital levy should be utilized to the fullest possible degree, to meet the current cost of the war.

If some such policy be applied honorable members would not be required to devote so much of their time in Parliament to the discussion of financial measures, but would be able to make their services available to the Government for other more effective duties. I consider that arrangements should be made to enable more private members to assist Ministers in their administrative work. In my opinion the parliamentary committee system which has been established has proved of value. Some criticism of this method has been offered, but I believe that the results achieved have entirely justified the experiment. Hitherto most of the committees have been engaged on special investigations which have resulted in substantial savings of money to the Government. I was a member of the Joint Committee on War Expenditure for about a month. I know that it did good work during that period, and I have every reason to believe that it is still doing good work. The outlay of public money on these committees is relatively small. I drew only 30s. in expenses in connexion, with one visit to Melbourne. Most of my service on that committee was rendered in Sydney, and that being my home town, I did not draw expenses. This committee was able to save the Government £.100,000 in one instance for it caused a certain firm to refund that amount of excess profits that it had made on a certain undertaking. Another firm refunded £48,000 for a similar reason. The appointment of private members to assist Ministers in the onerous duties which devolve upon them in consequence of war has also been effective, for Ministers have been enabled to devote a great deal more of their attention, to major matters of policy. Some members of the Opposition have given good help to Ministers in this way. I believe that a number of their colleagues who have expressed a desire to co-operate with the Government, could also assist, by following the good example that has been set.

M.r. Makwick. - A few honorable gentlemen of the honorable gentleman's own party could co-operate with the Government a little more effectively than they are doing.


Mr MORGAN - I am not my brother's keeper.

There is need for more attention to be given to the problem of production, in order to facilitate the war effort. During my travelling, particularly in Victoria and New South Wales, I have observed considerable evidence of waste in certain war industries. Man-power, equipment and materials have not always been used to the best advantage. Because of this, I have advocated that a Director of Production should be appointed, to perform duties of a kind performed by such officers in Great Britain and the United States of America. As it is impossible for Ministers to give close attention to the detailed operations of various industries, there is scope for the employment of nien with high organizing and administrative capacity to assist in eliminating waste in production. Either a Director of Production or a Production Board should be established. I am aware that a sub-committee of Cabinet has been appointed to coordinate production, but Ministers have too many other duties to perform to be able to devote to this particular activity the time that it demands. If a Director of Production were appointed, he should be given over-riding authority that would permit him to co-ordinate the activities of departments engaged in war production which are now operating in more or less watertight compartments. If such an officer learned that one factory had a surplus of material, whereas another was suffering from a shortage; or that one factory had too many machines and another too few; or that one factory had a surplus of man-power and another a deficiency of it, he could co-ordinate these various resources with great advantage to the nation. Many employers, as well as employees generally, would welcome such a move. I have known of certain factories being slack, and of employees being stood down for two or three weeks, because materials or equipment have not been available for some reason or other. The men have received their wages because the employers have not wanted to risk losing them. Under the cost-plus system, such unproductive expense has been passed on to the Government, of course. Sometimes, parts of machines have not been available to remedy breakdowns. We all are well aware that ships carrying machines and spare parts to Australia have gone to the bottom of the sea. This also has caused idle periods in certain establishments. I believe that a Director of Production would be able to readjust available supplies so as to alleviate troubles of this kind. On occasions, factory workers who have been stood down for short periods have been very fretful over this procedure. Sometimes they have not been informed of the reason why work has not been available for them and they became suspicious. The workers generally would welcome the establishment of what might be called industrial shock troops who could be moved rapidly from one factory to another as occasion demanded. It is particularly necessary !"h at some such policy should be applied in relation to sub-contractors. It sometimes happens that from 30 to 50 sub-contractors supply equipment to an establishment which is engaged largely in assembling operations. Obviously, the rate of production in such an establishment is governed by the rate of the delivery of goods by the subcontractors, and a breakdown by one sub-contractor may seriously impair the rate of, production of the assembled article. The Government should give close attention to this problem. Production committees have been appointed in various establishments in Great Britain in order to increase efficiency and output, and many workers there have co-operated most successfully with the factory management in stimulating production. I have seen many places where production committees could operate with good effect in Australia. In one establishment in my own electorate, a committee of 50 workers representative of various branches of the industry has been able to co-operate with the management in complete harmony and with marked advantage to the 2,000 employees in the factory. Whenever production is lagging, they go into the matter with the management, and try to discover the reason. If there is a shortage of orders, they try to encourage sales, because they are just as anxious that the enterprise shall be a success as is the management. If an industrial dispute occurs they confer with the management regarding it, and the matter is settled amicably, with the result that, during the last three years, there has not been a stoppage of work for even one day. This shows what can be done by effective co-operation between the management and the workers. I realize that there are some employers who frown upon anything that may tend to give the workers a say in management. One corporation recently dismissed the eight members of the production committee which had been set up by the workers. The result is that the most highly skilled and responsible workers often refuse to serve on production committees; but, if the Government recog- nized the committees officially, as does the Government of Great Britain, this difficulty would be overcome. After all, the man at the machine is often in the best position to say how efficiency can be improved. The Government is itself interested in many industries at the present time; it has financed them, and is their chief customer. Therefore, it should seek representation upon the directorates. I look forward to the time when we shall have, acting in close cooperation, the workers, the private shareholders - who will draw limited profits - and the Government as the representative of the general community. Eventually, under a system of this kind, the workers may expect to become shareholders in industry, and to participate in the profits of their own labour.

Reference was made in the budget speech to the need for reform of the Constitution, and we were told that the Government proposed to bring down legislation on this subject. I hope that, before proposals are put to the people, the Commonwealth Government will confer with the State governments. I agree with the ex-Premier of Queensland, Mr. Forgan Smith, that the Commonwealth should not take advantage of the war, and of the weak financial position of the States, to foist proposals for constitutional reform upon the country. The only fair and honest way is to discuss the matter with the State governments, which are just as anxious for a measure of constitution reform as is the Commonwealth itself. The State governments have ideas on the subject of postwar reconstruction, but they distrust central control, and they have reason to. I myself have had experience of the difficulties of trying to get anything done by a central authority far removed from the scene of action. In 1938, I visited Canberra to interview the then Treasurer, Mr. Casey, on behalf of the cooperative building societies of New South Wales. I explained to him that the societies had, up to that time, raised about £10,000,000 for housing, and were anxious to obtain financial accommodation from the Commonwealth Bank. They had tried to obtain finance from the Commonwealth Bank some time before, but had been refused. The Commonwealth Bank rate was 44. per cent.; but, when it refused the accommodation asked for, the Bank of New South Wales, which had previously offered to finance the societies at 4£ per cent., increased its rate to 5 per cent. When I put tha matter before Mr. Casey, his only response was to ask me how the societies had been able to get past the Loan Council and raise £10,000,000. He was not concerned with whether the people of New South Wales had houses. Apparently, if he had had his way, nono of the 20,000 houses which had. been erected under the co-operative building schemes would have been provided. For the last twelve months, the Granville Municipal Council has been trying to obtain a Commonwealth grant of £6,000 towards the cost of constructing a road and small bridge on the route between Parramattaroad and the site of an important munitions factory. The total cost is estimated at £12,000. The road has already been dedicated, but the council has not sufficient money to do the whole of the work, though it is prepared to defray half of the cost. I have made representations to successive Treasurers without success, and have been sent on a dizzy circle from the council to the Commonwealth, from the Commonwealth to the State government, and then from the State government back to the council, until I have despaired of ever getting anything done. While this vital work is being neglected, our enemies are finding sufficient finance to build thousands of miles of roads and. railways into the heart of Russia. The War Expenditure Committee- has reported that the proposed work in the Granville municipality is urgent; but some Treasury official behind the scenes in Canberra, who has probably never been on the ground, is able to veto the whole proposal. This is a further illustration of the harm that can result from centralized control. The governments of the various States no doubt have schemes for post-war development. Mr. Forgan Smith had plans for developmental works in Queensland, and. similar schemes have been evolved by the Government of New South Wales. There should be no great financial difficulties in the way of carrying out such works, provided a guarantee could be given by the Commonwealth Government that the necessary credits would be made available. It would not :be necessary to adopt the orthodox methods of finance. Even the honorable member for Fawkner (Mr. Holt) has admitted that national credit oau be utilized in- peace-time.

I have no doubt that the States would agree to transfer to the Commonwealth many of their powers including industrial arbitration. Disputes extending beyond the boundaries of a State are already dealt with by the Commonwealth Arbitration Court, and I contend that the industrial arbitration laws should be placed on a uniform basis. We have uniform bankruptcy law3 throughout the Commonwealth, but varying railway gauges. There is no good reason why we should not adopt uniform laws on many other matters, instead of having conflicting laws such as those operating with regard to marriage and divorce. It seems logical that the Commonwealth should exercise the residual powers and that subsidiary powers should be granted to the States. In matters of local government, the powers of the States should be increased. M\any local governing bodies pass conflicting by-laws and regulations. On one side of a street certain building regulations may operate, whilst, a land-owner on the opposite side of the same street may be called upon, under the building regulations passed by another local governing body, to pay £50 more than is paid by his neighbour.

In considering amendments of the Constitution, the Government should give consideration to the necessity for Commonwealth control of monopolies. On two previous occasions the people have refused to grant to this Parliament the right to control monopolies, but electors are now more enlightened than previously as to the insidious nature of the operations of many monopolies. I have previously pointed out how they have caused bottlenecks in industry, and ample proof has been provided in the past of their activities having caused wars. The honorable member for Gippsland (Mr. Paterson) realizes that certain bauxite deposits in his electorate in Victoria are not being developed owing to the influence exercised by the aluminium cartel. Although aluminium is urgently needed for war purposes, 'action was taken by the aluminium combine to prevent the development of bauxite deposits in Australia. The overseas cartel decreed that the local deposits were not to be developed, but that aluminium ingots from overseas would be supplied to the Australian industry. Australia, therefore, has experienced a considerable shortage of raw material for the production of the aluminium required in various war industries. Sir Ronald Charles, a representative of the British aluminium combine, visited Australia last year. When he found that the Curtin Government was determined to go ahead with the development of the local bauxite deposits, he offered to provide the plant required and also to supply the finance necessary for the establishment of the industry, which would cost £2,500,000, on condition that after the war the plant should be dismantled. That shows clearly that the overseas interests desired Australians to be merely hewers of wood and drawers of water. A representative of the Indian aluminium trust stated some time ago that after the war a catastrophic drop would occur in the price of aluminium. He was more concerned about the price of the article than the desirability of providing cheap aluminium goods for the people. Disclosures in the United States of America recently showed that the Standard Oil Company had kept back from the Navy Department the secrets of certain processes and only under pressure by a Senate committee was it revealed that the company had agreements with Industrial Gesellschaft. in Germany, and with a Japanese company, for the postwar employment of the secret processes. The position of the overseas interests was, " Heads I win, tails you lose ". They come out on the right side whichever way the war goes. A monopoly can be justified only if it operates for the good of the community, and, in order to do that, it should be under government control. I hope that the Government will incorporate in its proposals for amendments of the Constitution one for the granting of power to this Parliament to control monopolies.

Since the Labour Government has come into office some honorable members opposite have displayed a co-operative attitude towards the Ministry, whilst others have not. Their attitude is very different from that of the Prime Minister (Mr. Curtin). The Labour party gave a pledge to the people at the elections that it would cooperate in the prosecution of the war with whatever government was in power, and during the period when Labour was in opposition the present Prime Minister did not move a vote of censure against the Government. The defeat of the last Government was brought about by disruption in its own ranks. In my judgment the present Prime Minister was too tolerant and too generous, for he has not received the co-operation to which he is entitled. Despite the sniping tactics of some Opposition members, the Government has a record of which it may well be proud, a record with which that of no previous government can compare. Its merit is enhanced by the colossal nature of the task it had to undertake because of the defenceless state in which it found this country when it assumed office. Although we are still in danger of invasion, our position is much safer now than it was then. The Government's first consideration throughout has been the prosecution of the war. The appeal that it made to the United States of America resulted in a large number of men and considerable war equipment being sent to this country. Members of the Australian Imperial Force were brought back from overseas, the view of the Government being that their proper place was in their own country, fighting for their own kith and kin, when our own shores were in imminent danger. There has also been substantial improvement of the position in relation to production. Social reform measures, too, have been introduced. The people appreciate that during a period of war a Labour government is not able to give full effect to its platform. The Government has proved its sincerity by having given effect to such measures of social reform as circumstances have permitted it to implement. In fulfilment of promises made at. the last elections, it has increased the invalid and old-age pension rate, and has instituted a scheme of widows' pensions on an Australia-wide basis. Child endowment, too, was made Australia-wide as the result of the activities of the Labour party; because, when the previous Government realized that it was losing popularity in the electorates, it invoked the aid of the Labour Opposition in this Parliament in order to institute the scheme. The Governmenthas encouraged the practice of having different matters inquired into and reported upon by parliamentary committees, and is ensuring that the recommendations of such committees shall be implemented, and not shelved - as they were under previous administrations. The scheme of widows' pensions was the direct result of a report and recommendations by the Social Security Committee. That committee further recommended provisions relating to the right to work, and made other recommendations covering not only the period of the war but also the post-war period. As the result of government action, persons who are temporarily out of employment, because of the change-over from non-essential to war industries, are to receive sustenance for a specified period. [Extension of time granted.] A committee was set up to overhaul the Repatriation Act, and to recommend means by which it might be brought up to date, with provisions covering conditions arising out of the present war. I understand that the main subject dealt with has been pension rates. [ should like the committee to inquire into the administration of the act, because I" am satisfied from my experience that it is completely out of sympathy with the needs of returned soldiers. Under the old appeals tribunal, 90 per cent, of the claims submitted were rejected. One would think that expert medical knowledge was not needed to prove that the condition of which complaint was made had been the result of war service or had been contributed to by it. To the credit of the present Minister for Repatriation (Mr. Frost), when the facts were brought to his notice and the appeals tribunal had to be reconstituted this year, an entirely new body was appointed. Knowing its personnel, I look forward to returned soldiers receiving from it a much better deal than was given by the previous tribunal. I have previously mentioned the case of a soldier who was an original Anzac. He was at the landing at Gallipoli, and served for four years in the last war. In the present war, he had sixteen months' service when he sustained injury. Upon being discharged, not even a civilian suit was available for him, and he could not obtain a sustenance allowance. He was told that there was not in stock a suit that would fit him, but that he would be measured for one, and it might be ready for him in three months. This illustrates the state of preparedness of the authorities to deal with men discharged from the services. I realize, of course, that the present Government cannot overhaul the administration overnight. When this man applied for a pension, his application was refused. The facts having been brought to the notice of the Minister for Repatriation, he immediately issued a national security regulation in order to remedy the defect by providing that members of the home forces disabled during service were to be entitled to a pension. That the administration is out of sympathy with the men is shown by the fact that, although the Government had accepted responsibility, this man received the paltry pension of 8s. 6d. a fortnight on his own behalf and 6s. 6d. a fortnight for his wife and two children. He was unable to carry on because his head and foot injuries caused him to swoon at times, even in the street. Eventually, for the third time he was taken into a fighting service; but according to the latest advice I have received, he cannot continue to discharge his military duties. Many men of the Australian Imperial Force who have returned from this war are receiving similar treatment. The Government should institute an inquiry with a view to the complete overhaul of the repatriation administration in order that those who are fighting on behalf of this country may be assured that the promises that were made to them when they enlisted will be fulfilled.

During the recent adjournment of the Parliament, members of the Opposition conducted a campaign in the press. Various bogys were raised. So soon as one was knocked over, another took its place. The honorable member for Ballarat (Mr. Pollard) has furnished evidence of a deliberate plan of action. We know that challenge after challenge was issued from the other side during the last sessional period. Similar tactics are again being adopted. There would appear to be a preconceived plan, because the adjournment of the House has been moved for the purpose of disseminating data that has been collected, and this has been coupled with a press campaign and upheavals in industry. I am convinced that the trouble in the Goal-mining industry is due, not to the great body of coal-miners, but to certain people associated with the management who are endeavouring to create friction. It is true that there are a few Quislings among the workers, but "the proof of the pudding is in the eating thereof ", and the miners have shown that they are wholeheartedly behind the Government's war effort and intend to increase production more and more. As evidence of the attempt to undermine the Government by creating dissathi action in various quarters, I instance the instruction to remove the colour patches from the uniforms of returned members of the Australian Imperial Force. The colour patches were not of great intrinsic value, but they were highly prized by the men concerned. The instruction to remove them was evidence of crass stupidity, if not something worse.


Mr Holt - Does the honorable member blame the Opposition for that blunder ?


Mr MORGAN - I blame the administrators of the Army, who are not in sympathy with the present Government. The decision to remove the " Australia " badges from the uniforms of members of the Australian Imperial Force also caused friction.


Mr Holt - The instruction came from the present Government.


Mr MORGAN - The Minister can only deal with the situation that is presented to him; that is why I bring this matter forward now. Many persons holding administrative positions in this country were appointed by a previous government, and they are trying to undermine the present Government by fomenting trouble between members of the Australian Military Forces, and the Australian Imperial Force, as well as among munitions workers. Some honorable members opposite have raised the " red " bogy. The present is a most inappropriate time to criticize Soviet Russia whose people are shedding rivers of blood in a desperate attempt to stem the tide of Nazi aggression. The purpose of these catch cries is to cause disruption and to undermine the Government at a time when there should be a true spirit of harmony and co-operation among all sections of the community. Instead of rehashing their election speeches for the last ten years, or raising such, bogys as inflation and communism, honorable members opposite should co-operate with the Government in the interests of Australia. The Anglo-Soviet pact is the best guarantee that we have that there will be no political interference by either of the signatories with the other or any conflict of ideologies. The pact is an undertaking to bring about a permanent settlement of this war in order to end war, and thereby lay the foundations of an era of peace, harmony and goodwill.







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