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Tuesday, 22 September 1942

Mr CLARK (Darling) (5:12 AM) .At this stage in our nation's history the debate on the budget should be directed more to proposals for the conduct of the war than to matters of finance, hut most Opposition speakers have regarded the budget debate as an opportunity to criticize the Government's financial proposals. Many of them have raised the old bogy of inflation, but their arguments have been answered satisfactorily by honorable members on this side. The degree to which the Government may tax the incomes of the people has rightly been referred to in the budget. The Government proposes to place the burden on those best able to bear it, but the right honorable member forKooyong (Mr. Menzies) said recently that he was in favour of taxing incomes as low as 30s. a week. If a Government composed of members now in Opposition were in power, I have no doubt that it would act on his suggestion. The references to inflation would almost make one think that we were back in the days following the war of 1914-18, when ordinary safety precautions in financial matters were not taken. With proper safeguards, such as the present Government has established, the people need have little fear of prices getting out of control, or of money losing itsvalue.

During the depression some honorable members declared that if the note issue were expanded by £20,000,000 for the purpose of financing public works, essential services and the wheat industry, the notes would not be worth the paper used in their production. The explanation which was tendered by those opponents of the use of bank credit was that a mote issue must have a substantial backing of gold. To-day no honorable member would support the contentions advanced during the depression. As those arguments were fallacious then, so the arguments to-day against the extensive use of bank credit are equally fallacious. Ample controls have been provided against inflation, which can occur only when there is fierce competition between private enterprise and the Government for materials and labour. When that competition hinders the Government in obtaining its requirements, prices must rise. Fortunately, the Government has provided sufficient controls to combat that tendency. For example, the prices of all basie materials have been fixed. A person is not permitted to build a home without first obtaining the permission of the Government. The supply of various materials and commodities to civilians has been strictly controlled. The demands of the Government for foodstuffs take precedence over those of the public. Ample protection is also provided against private enterprise competing with the Government for its labour requirements, as that can be another cause of inflation. Under the National Security Regulations, all labour, as required, is made available to the Government. Various industries have been rationalized and men have been transferred from non-essential to essential industries. In addition, proposals have been made to transfer 200,000 men and women from their present occupations in civil spheres to essential governmental works. In that way, the Government exercises adequate control over the labour market. Wages have also been pegged. ' Workers are not permitted to transfer from one employer to another, bargaining for higher wages, without the approval of the Department of Labour and National Service. The Prices Commissioner has fixed the prices of various basic commodities such as food and clothing. With all those checks on obtain ing materials and labour, together with the fixation of prices, ample safeguards are provided against the possibility of inflation, and people will not suffer as the result of the Government's financial proposals. For those reasons, we can discard the bogy of inflation that honorable members opposite have raised in an endeavour to condemn the budget. In my opinion the Government is to be complimented on its budget, though honorable members opposite have condemned the Ministry as if it was a greater enemy than the Japanese. The principal purpose of the Government has been to obtain a maximum war effort. We must hold Australia for our people. This country is one of the great democracies in the world. Australians enjoy the privilege of adult franchise, and if the system is not what they desire, they have only themselves to blame. If, at the conclusion of the war, the people still have the privilege of exercising a free vote as they do to-day, they will be at liberty to introduce any policy or " ism " that they wish. The matter lies in their own hands.

When the present Government took office less than twelve months ago, Australia's lack of defences was cause for alarm. Japan had entered the war, and our position was extremely grave. There was not one fighter plane in Australia. Without delay, the Government set about obtaining adequate air protection. In addition, the Government discovered that the Army had decided that the northwest of Western Australia, northern Queensland and portions of the Northern Territory were not to be defended against the Japanese. The Government was most dissatisfied with that strategy. It did not wish to allow the Japanese to gain in the north bases from which they could gradually extend their operations until they had complete command of the south. Accordingly, troops were sent to New Guinea, where to-day they are defending our frontiers against the Japanese menace. Our northern bases are amply defended against the aggressor. In order to carry out this work, the Government required substantial man-power to construct roads and aerodromes at the most vulnerable points, and to provide for defence in an emergency. For all those preparations, extensive works had to be undertaken immediately. Honorable members will recall that last Christmas the Prime Minister stated that the Commonwealth looked to the United States of America for greater aid. Prom that source, greater aid came to Australia. Considerable criticism was levelled against the Prime Minister at the time because he sought aid from the United States of America, but the right honorable gentleman knew that we could receive assistance more readily from that source than from any other. Fortunately, our hopes have been substantially realized, and hundreds of planes of various types now defend this country. But without aerodrome facilities, those planes would have been immobilized. The construction of the aerodromes constituted a major problem, because of our lack of suitable manpower. Accordingly, a vast army of men was called up to build aerodromes and strategic roads. Naturally, the Government was not happy at being compelled to take this course, but Ministers had to face realities. The honorable member for Kalgoorlie (Mr. Johnson) informed honorable members earlier of what took place in his constituency. Thousands of miners were transferred to defence works which were of far greater service to the nation than gold-mining. At present, gold is of no value to us. After it has been dug from the earth, it is simply buried in the vaults of the Commonwealth Bank. The Labour party is to be congratulated in its courage in transferring those miners to more useful occupations.

Large numbers of men have also been transferred from non-essential industries to the Civil Constructional Corps to build hundreds of aerodromes and strategic roads and railways. The men who were called up to do these jobs worked willingly, because the Government requested them to give of their best in the national interest. The conditions under which they are employed are a credit to the Government. Their remuneration is satisfactory, but honorable members should not overlook the fact that they are making great sacrifices, and are living in trying climates. The Government is grateful to them for their efforts, which will be one of the major contributions to the safety of the country.

The major problems of waging this var are those of labour and materials. Finance is quite a secondary consideration. The comments which honorable members hear when they visit their constituencies show that the public appreciate what the Government has achieved. In addition to defence works, adequate supplies of food must be provided for the armies in the field and the civilian population. An army will consume more food than a corresponding number of civilians, because the immediate requirements of the troops have to be met and ample reserves of stores have to be provided. In order to feed 100,000 men three, or even more, depots to provide against every eventuality might have to be established. For that reason very much more food is required to feed an army than an equal number of the civilian population. The Government has done a commendable job in that direction.

Our war-time problems are no greater than those which will confront us in the immediate post-war period. All the democratic nations are in difficulties to-day because in' time of peace they did not prepare for war. We must ensure that we shall not find ourselves in difficulties when the war is over by failing to prepare for peace before the war ends. I am particularly pleased to note that the Government intends to submit to the people by way of referendum proposals for an alteration of the Constitution in order to give to the Commonwealth wider powers than it possesses in peacetime. To-day, of course, in the exercise of various forms of war-time control, the Commonwealth has almost unlimited power. In order to defend the nation it can override the State governments. However, when that power lapses twelve months after the war terminates, the Commonwealth will find itself hopelessly handicapped if its powers under the Constitution are not widened. It shall not be able to provide effectively for the rehabilitation of the hundreds of thousands of people now employed on special war works and in munitions factories, as well as the members of the armed forces. We must make preparations now for the transfer of those people to civil life when the war is over. If this be not done, conditions prevailing after the war will be infinitely more difficult than was the case in the last depression. The Government is making arrangements along those lines. Certain officers have been appointed to carry out research work with a view to facilitating the transfer of so many thousands to civilian life. For instance, works of national importance which will require urgent attention after the war are now being tabulated. The Government has also appointed a sub-committee of the Cabinet to deal with this special problem. In addition, I believe that it intends to appoint a special Minister to handle this matter. It is much easier to organize a nation into an army, and to feed and clothe people in the mass, than it is to transfer the members of that army in batches of threes and fours to civilian life, paying special attention to the circumstances of each individual.

Bearing in mind the problems which will confront us in the immediate postwar period, I urge the Government to secure ownership of all of the vessels we are now constructing in order to ensure that we shall have sufficient shipping to transport our primary products to overseas markets. It is probable that there will be a scarcity of shipping when the war concludes; and, naturally, there will be keen competition for the shipping that remains available. Owing to Australia's distance from overseas markets, we shall have difficulty in obtaining sufficient ships to carry our cargoes overseas. We must now make provision in that direction. Overseas ship-owners will find it more practicable and profitable to concentrate in South America, because that country is so much nearer than Australia. For every cargo that can be taken from Australia to Europe, two can be brought from South American countries.

A report appeared in last Sunday's Sydney Sun dealing with the education of university students. It was suggested that, in order to enable brilliant students from secondary schools, whose parents lack the necessary financial resources, to proceed to the university, under-graduates should be paid a private soldier's rate of pay for the first two years, a corporal's rate for the third year, and a sergeant's rate for the fourth and subsequent years. The report stated that if a plan to bring brilliant students, rich or poor, to the university survived preliminary discussion, the nation's brilliant students will be enabled to proceed to the university, where they will be maintained by the State. I wholeheartedly support such a proposal. It will prove of great benefit to the nation. Today, unfortunately, too few of the brilliant students at high schools are able, owing to the limited financial resources of their parents, to proceed to the university. I recommend that proposal to the Government. I have advocated such a scheme for a considerable time.

I also draw the attention of the Government to the present rate of exchange, which is 25 per cent, on the Australian £1 . This was fixed during the depression. To-day, we sell all our exports at a discount, whilst we buy all imports at a premium. We are obliged to pay a premium of £25 per cent, on all imported material we require for our troops. Our imports index is rising much faster than our exports index. I have not the most recent figures; but a few mouths ago, when we were preparing a case for submission to the British Government for an increase of the price of wool, £160 was required to buy what could be bought for £100 at the beginning of the war, whilst we received only £127 for every £100 we received at the beginning of the war for our exports. Thus, at present, we pay substantially war-time prices for all imports whilst for our exports we receive only peace-time prices. I have seen contracts for the sale of supplies to our allies which show a loss to the Government. At the same time, when we buy goods from abroad such as cotton yarn, or tea, no loss is incurred by those who sell those goods to us. We merely make representations that we need certain commodities, and automatically we accept the prices quoted. However, when Australia sells goods abroad the purchaser generally quotes what price he is prepared to pay, and, unfortunately, it has been our practice in the past to accept those prices. The disparity between the prices we pay for imported goods and the prices we receive for exports should be considerably reduced.

On previous occasions I have advocated the imposition of a tax on capital. I prefer to call the charge a defence insurance premium. The Government has initiated a war damage scheme under which the premium is at the rate of 4s. per cent. That insurance scheme entitles people whose property is destroyed _ by enemy action to generous compensation. The principle of that scheme should be extended. A small premium, to be known as a defence premium, should be levied on all assets in the country. Income tax is levied according to capacity to pay. However, many people possess substantial assets, whilst others own only comparatively small assets. The war is being fought largely to preserve the assets in this country, and their owners should be prepared to pay a premium for the insurance of those assets through the effective defence of the country. The revenue derived under such a scheme could be used as a set-off against the loans which the Government is obliged to raise to-day. A property-owner who is able to pay the premium in cash should be required to do so; but a person who does not possess sufficient ready cash should be enabled to do so by mortgaging his assets through the Commonwealth Bank. This insurance would apply to assets of all descriptions. Where an owner is obliged to take out a mortgage, the mortgage should remain a debt on the estate, and transfer of the estate should be prohibited until the payment of the defence insurance premium is discharged. A similar principle is applied to-day in respect of the imposition of rates by municipal authorities. Municipal rates are a charge on the property, not on the individual, and, if the property is sold, the rates have to be either paid or transferred with the asset. I suggest that the rate of interest on mortgages taken out by people unable to pay cash ought to be the same as is paid by the Government on loans, namely. 34 per cent. A person whose assets were worth, say, £30,000 ought to be very willing to contribute £2,000 or £3,000 as an insurance premium. People would count themselves lucky if they came out of the war with a substantial proportion of the assets which they possessed formerly. By the means I have suggested the Govern- ment could obtain substantial funds and I commend the scheme in the hope that budgetary provision will be made for it at an early date.

Mr. BECK(Denison) [5.47 a.m.J. - I have been sitting in this chamber throughout the night awaiting an opportunity to make a short contribution to the debate. I know that there are other names on the list before mine, but their bearers have spent the night comfortably in bed, asleep on the benches, or waiting outside until what they call " a press " arrives. The budget debate, of course, provides a field for unlimited discussion of any imaginable subject, and I suppose that it has its uses, but at a time like this the budget itself should be the only topic discussed- and all extraneous matters should be omitted. It is a foregone conclusion that the budget will be agreed to. The Opposition has not the numbers to prevent its passage, although it knows that by it the country is being ruthlessly exposed to an enemy within almost as bad as is the enemy without. I content myself with expressing my disapproval. All that I have to say about the honorable member for Henty (Mr. Coles) is that it astonishes me that a man with his business experience can have so lost his sense of financial stability as to expose his country to such a menace merely for the sake of political notoriety.

Mr Calwell - That is unfair.

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