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Tuesday, 22 September 1942

Mr JOLLY - For the benefit of the honorable member for Griffith (Mr. Conelan), I repeat that treasury-bills - which represent the degree to which we lean on central bank credit - have increased from £60,000,000 -to £138,000,000 since the war began. That increase took place during the last twelve months.

Mr Conelan - "What is the gap in the budget of Great Britain?

Mr JOLLY - At the moment, 1 am dealing with the Australian budget. It must be obvious to any person who takes more than a passing interest in our financial affairs that undue reliance on new credit at a time like this, when the goods and services available are conisderably reduced, constitutes a grave danger and must result in inflation. Those are my words, but the Treasurer says the same thing in different language in his budget speech.

In addition to the £7S,000,000 of central bank credit last year, the note issue during the same period increased by £30,000,000. As I believe that this method of finance will play an important part in connexion with the war, I am of the opinion that the note issue should come more directly under the control of the Parliament. The Commonwealth Bank Act, which provides for the note issue, requires the Commonwealth Bank Board to submit a report on the note issue to the Treasurer from time to time. I suggest that the board should be required to submit a report to the Parliament also at least once a quarter. I hope that the Treasurer will take that suggestion into consideration.

If borrowing is to bc a major factor in financing the war, it should be done on a compulsory basis. There are ample funds available to meet the demands of the Government, but those funds need proper mobilizing. A compulsory system would distribute the burden more equitably. Some persons in the community contribute to war loans to the point of sacrifice, even going- so far as to borrow money for purpose, whilst others make no response at all. Persons on the lower ranges of salaries should contribute something, but under present conditions many who are in a position to contribute fail to do so. The Government should require all sections of the community to contribute according to their ability. If we are to rely on loans to any considerable degree for the financing of the war, we should resort to compulsion.

One pleasing feature of this year's war expenditure is that, for the most part, the money will be expended in Australia. The problem of financing the war would certainly have been more difficult had we not organized our industries so that it is now possible to manufacture in Australia many things which before the war were imported. The war will make the people of this country more self-reliant. f shall not deal at length with the financial position of this country, as the ground has already been well covered by other speakers. I shall merely say that, in my opinion, the Government is relying too much on voluntary contributions by the people. If we are to keep our finances in a sound position, a system of compulsory loans must be introduced immediately.

There is urgent need for a thorough overhaul of our taxation laws. It is true that in future there is to be uniformity throughout the Commonwealth in relation to income tax, but that fact makes an overhaul of the whole system of taxation the more necessary, because many of the provisions now in force were framed to meet a position when both the Commonwealth and the States imposed income tax. It is not enough bo have uniformity as between States; there must be equity as between individuals. Under existing conditions, some taxpayers are called upon to bear a heavy burden, whilst others escape lightly. Moreover, there are instances of double taxation. 1 draw attention to the heavy taxes levied on private companies which, for the most part, are owned and controlled by two or three persons engaged in a business undertaking. The application of the undistributed profits tax operates harshly against private companies, as the tax may absorb the whole of the profits and cause financial embarrassment to the company because of its inability to create reserves. I have previously cited instances of private companies which have paid in taxes more than their net profit for a year. The object of taxing the whole of the undistributed profits of a private company is that, should the company not declare a dividend and distribute money to shareholders, it would be placed on the same footing as a partnership; but I point out that a private company has to pay a flat rate of 6s. in the £1 whilst profits in the hands of shareholders are taxed at the property rate. For taxation purposes, private companies should be placed on exactly- the same basis as partnerships. I trust that the Government will be able to see its way clear, at an early date, to make a thorough overhaul of our present taxation laws, because many of the existing provisions were framed to meet the dual position of Commonwealth and State government acts.

I now direct attention to an absurdity which strains unduly our already overtaxed transport system. In Brisbane, goods from New South Wales .and Victoria have been unloaded from a ship, which then proceeds to load exactly the same class of goods for consignees in the southern States. This ridiculous condition of affairs imposes an unjustified strain upon shipping space, and causes an unnecessary employment of labour. The Minister should discuss with the Central Cargo Control Committee the problem of this wasteful interstate traffic.

As Queensland had been regarded as vulnerable to enemy attack, and therefore unsuitable for the establishment of munitions plants, I have urged that the factories in that State should concentrate on the manufacture of essential goods. Unfortunately, no organized action was taken, with the result that many essential commodities, which could be made in Queensland, are being imported from the southern States. If factories in Queensland were given this work, it would relieve the strain upon the transport system.

I shall now briefly discuss several items in the Estimates, because I know from experience that, when the general debate has concluded, the Estimates will be passed quickly, and honorable members will have little opportunity to discuss them. The vote in respect of national fitness has been increased from £18,000 last year to £72,000 for the current financial year. Although I do not object to this expenditure, I suggest that Parliament should obtain a report of the activities of this organization, so that honorable members will have an opportunity of assessing its worth. I should also like some information about the Commonwealth Grants Commission, the annual vote for which has been increased from £5,000 to £7,000. I cannot understand why, at this stage, expenditure upon the commission should be increased by nearly 50 per cent., and I am wondering whether its functions have been extended.

I take this opportunity to urge the necessity for greater co-ordination between Commonwealth and State departments regarding certain activities. For example, each State publishes a Y ear-Booh, and a good deal of the information contained in the report of the Commonwealth Grants Commission is to be found in the Commonwealth Y ear-Book. The Government should consider the advisability of abolishing this duplication by co-ordinating this statistical data. Instead of publishing seven Year-Books annually, the Commonwealth and States should arrange for the Commonwealth Government to undertake the work. That would save man-power, and reduce the cost of printing.

Mr Calwell - There has been an amalgamation in Tasmania.

Mr JOLLY - I am pleased to hear it. Economies could be effected in many other directions. For example, the Government should overhaul the various departments which, in many instances, are performing unnecessary work. Many of the reports which are being published could be suspended for the duration of the war. The British Government has already taken this action, and the Commonwealth Government could, with advantage, follow its example. The compilation and printing of such reports require man-.power, and the cost is considerable. Business people consider that, while the Commonwealth Government enforces the man-power regulations rigidly against their undertakings, it neglects to apply them to its departments. If a careful examination were made of the Commonwealth and State public services, man-power could be released for useful war-work.

This year, Australia will contribute £34,000 to the League of Nations. This sum is practically the same as that which the Commonwealth paid to the League of Nations before the outbreak of war. I should like to know whether the Government is. definitely committed to this payment.

Mr Brennan - Does the honorable member consider that Australia should withdraw from the League of Nations?

Mr JOLLY - The activities of the League, if they have not ceased entirely, have been considerably curtailed. Is there justification for continuing the contributions to the League On the pre-war scale?

Mr CALWELL (MELBOURNE, VICTORIA) - The activities of the International Labour Office are being continued. They are of great value.

Mr JOLLY - I understand that the International Labour Office is provided for in a separate vote. I am gratified to find that expenditure on the Department of Information has been reduced from £213,000 to £117,000. At the same time, I notice that the censorship section has been voted £33,000 this year, compared with £7,000 last year.

Mr Paterson - One department provides information, whilst the other suppresses it.

Mr JOLLY - I assume that some of the work previously undertaken by the Department of Information has been transferred to the censorship section. The cost of the taxation offices has risen from £382,000, in 1941, to £1,174,000 this year. This increase is due to the introduction of the uniform income tax scheme. I should like the Treasurer to inform me the exact saving that will be made as between the Commonwealth and State governments, as the result of the Commonwealth becoming the sole income taxing authority.

One of the gravest problems confronting the nation to-day is that of liquor control. The Government should take prompt action, not only in the interests of the war effort, but also to maintain the moral welfare of the community.

Mr Ward - Does the honorable member mean that the Government should nationalize the liquor trade?

Mr JOLLY - No, the Government should take over the control of liquor as a war measure. Uniform conditions throughout the Commonwealth are essential if we are to deal with the problem effectively. Under the present system of divided control, wherein State laws show a marked variation, that is not possible. The need also exists for close cooperation between the military authorities and the police. The most urgent reform is not for more legislation, but a more strict and fearless enforcement of the law. In no other walk of life would the same laxity be tolerated. The butcher, baker and grocer, who sell the necessaries of life, would bc immediately prosecuted if they traded after hours. What would be the state of our society if all our laws were broken in the manner in which the liquor laws are flouted ?

Mr Ward - Why does the honorable member oppose the nationalization of the liquor trade, which is the only way to control it effectively?

Mr JOLLY - I am not prepared, as the Minister is, to take advantage of war conditions to nationalize the liquor trade.

Mr Ward - The honorable member is "squealing" about the present conditions, but he will not take the only effective method of correcting them.

Mr JOLLY - It would be interesting to hear the views of the Minister on the matter.

Mr Martens - The views of the honorable member may be described as " fifty-fifty ". Although he supported the introduction of the uniform income tax law, he is opposed to the uniform control of the liquor trade.

Mr JOLLY - I am urging the Commonwealth Government to take control of the liquor trade as a war measure. The present vicious system places a premium on lawlessness, because the hotelkeeper who defies the law has a distinct advantage over his competitor who is prepared to play the game. The majority of hotelkeepers prefer to have the law strictly enforced. The reduction of the quantity of liquor available will only encourage the manufacture of substitutes, which will be more dangerous than the liquor itself; and strong action must be taken to prevent the growth of this menace. However, it is necessary to do something more than place restrictions on liquor if we are to improve the morale of the troops, and I urge that a more serious effort should be made to organize a more practical scheme to interest and entertain them. The atmosphere of camp life and dark cities has a depressing effect upon young men who have been suddenly transferred into a new and strange environment. The tragedy of the present conditions is that so many of our virile young men are at a loose end, and it is imperative for us to find some way by which they will be able to utilize their leisure time to better advantage. Many parents are more concerned about these influences on their sons than they are about the dangers and perils of war. Although the problem is a most difficult one we must find some alternative, which will not only provide healthy recreation and entertainment, but also inspire a saner outlook on life. I pay a tribute to the splendid work that has been done by the YoungMen's Christian Association, the Salvation Army and various church organizations. But that is not enough. Of course, those organizations experience great difficulty in raising the funds they require for their work. Parliament should take a greater interest in this matter than it has done in the past. We cannot be content with a negative attitude on the matter. It is futile to say to these young men: "You shall not go to hotels to have a drink ". We must provide means not only to interest and entertain these men, but also to inspire them with a saner outlook on life.

Sir George Bell - Who are the young men to whom the honorable member refers ?

Mr JOLLY - The young men in the armed forces.

Sir George Bell - The honorable member is reflecting upon them.

Mr JOLLY - No; I know as much about this matter as anybody else.

Sir George Bell - The members of the armed forces are not doing the excessive drinking.

Mr JOLLY - The budget makes considerable provision for a physical fitness campaign. The time has arrived when we should give serious consideration to the moral fitness of the community. This Parliament should sound a high, note on this question. No nation can be greater than the character of its men and women. I make no apology for raising this matter. I am vitally interested in it, and I know something about it from first-hand experience. I make no reflection upon the members of our armed forces. Parliament should take some responsibility in the matter. The overwhelming majority of the people agree that the liquor laws should bc strictly enforced. However, it appears that these laws have been drafted in a way that will suit another section, of the community, but are enforced in a way that will suit another section Of course, many publicans .play the game. It is only right that we should take some stand in the matter. Nobody can say that the State governments are faithfully discharging their duty in thi control of the liquor traffic. At the same time, the liquor trade is legitimate. We must respect the rights of those engaged in it. I urge Parliament and the nation to face this problem squarely. If we fail to do so, we shall not deserve to exist as a nation.

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