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Tuesday, 22 September 1942

Mr JOLLY (LILLEY, QUEENSLAND) .- I listened with interest to the speech of the honorable member for Dalley (Mr. Rosevear), who correctly described himself as a candid critic, for he spent half his time criticizing the Opposition and the other half criticizing the Government. He had " a bit both ways ". Although he dealt with certain financial aspects of the budget and criticized both the Opposition and the Government in this connexion, he did not make any suggestion as to how the money required could be raised otherwise, except by some fantastic means.

My main concern in considering the budget is whether it represents the maximum war effort of which this country is capable. The position confronting Australia bo-day is so desperate that the only limitation of our war effort should be the physical capacity of the nation. !No objection is likely to be taken by this Parliament, or by the people, to the war expenditure provided for in the budget, the only question being what is the best and most equitable means of raising the colossal sum required. The Leader of the Opposition (Mr. Fadden) spoke truly when he said that the budget is too much of a gamble, because it leaves so much to chance. The budget reveals a gap of £300,000,000 which has to be bridged. The Treasurer (Mr. Chifley) says - and last year's experience supports his prediction - (that the amount may be increased before the end of the year. "We may find ourselves called upon to raise even £400,000,000. The Government proposes to raise that huge sum on a voluntary basis! I submit that that is an unsound financial policy, as it leans too much on central bank credit. It is interesting to note the degree to which we have relied on this method of finance since the outbreak of war. In June, 1939, the total treasury bills issued were valued at £60,000,000; at the end of June, 1942, their value was £138,000,000. That increase of £78,000,000 took place last year, and it is clear that, unless some definite arrangement is made, the experience of last year will be repeated this year, only to a greater degree. As I have said, the gap of £300,000,000 indicated by the Treasurer is likely to be as much as £400,000,000 before the end of the financial year. In his speech the Treasurer drew attention to the danger of inflation through too great use of central bank credit, but some honorable members opposite believe that only by the use of such credit will it be 'possible to finance the war and conduct the affairs of the country. Some time ago the Premier of one of the Canadian Provinces asked his treasury officials to investigate a certain system of social credit. After a thorough examination they reported that if the scheme worked, no one else would work. I liken central bank credit to fire and water, which, while being good servants, are hard masters.

Mr Conelan - Bank credit will not get out of control while the present Government is in office.

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