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Tuesday, 22 September 1942

Mr CHIFLEY (Macquarie) (Treasurer) (8:40 AM) . - in reply - Although I shall not attempt to traverse all the arguments advanced by honorable members in their discussion of the budget, I arn obliged to observe that a remarkable feature of the debate has been that, although the Opposition has spoken at great length about the practicability of the post-war credits or compulsory loan method of bridging the gap in the budget between estimated expenditure and estimated revenue, not one of them has indicated in any concrete fashion the degree to which the parties opposite would apply that policy. It is, therefore, just sheer financial nonsense for them to discuss the subject. In 1930, this chamber echoed with statements about the danger of inflation under very different circumstances from those which apply to-day. At that time, hundreds of thousands of men were without work in Australia and we had an abundance of goods, yet we were told that no money was available for public works and that any effort to provide it would lead to inflation. To-day our people are fully employed and practically the whole of our resources are harnessed to war production; yet still we are told that if credit be provided through the central bank inflation will follow, I have come to the conclusion that honorable gentlemen opposite are like greyhound dogs, which will chase anything that happens to look like a hare. Not one statement has been made of the amount that honorable members opposite would be prepared to raise by compulsory loans if they came into office. Wc are faced with a gap of £300,000,000 in the budget this year. Last year, when the gap was considerably smaller, the Fadden Government proposed to raise a totally inadequate sum by means of compulsory loans. Honorable gentlemen opposite have had a. good deal to say about what is happening in Great Britain under the post-war credits and taxation policy of the British Government, but only between £40,000,000 and £45,000,000 would be raised by post-war credits if a similar scale were applied in Australia. Those figures are quite reliable. In Great Britain, only 45 per cent, of the total war and civil expenditure is being raised from revenue. The honorable member for Kennedy (Mr. Riordan) was quite correct when he said that the gap between estimated revenue and expenditure in Great Britain this year would be £2,SS4,000,000. Even allowing for the fact that the British Government has the benefit of certain foreign securities, Canadian assistance and foreign balances held in London, the gap will still be £2,100,000,000.

A good deal has been said during the debate about the note issue. We have been told that it has increased by 96 per cent. Honorable members may be surprised to learn that the note issue of Canada has increased by 11'7 per cent. Much has been said, too, about the increase of the cost of living. From November, 1941, until May of this year, which is the last date for which figures are available, the increase has been just under 6 per cent. In the United States of America during the same period the increase has been just under 5 per cent., although America has not been at war during the whole of that time.

Honorable gentlemen opposite have spoken rather glibly about ways and means of bridging the gap. They should bear in mind that every country is faced with the problem which is at present confronting us. I regret to say that I can regard as only pure political cant a. good deal of the talk that we have heard. The Opposition could have said, " If we formed a government to-morrow we would be prepared to raise £200,000,000 or £300,000,000 by compulsory loans". No such statement has been made. Its proposal last year was to raise £32,000,000 by additional taxation and compulsory loans. This Government since it caine into office has imposed additional taxation of an annual value of about £75,000,000. The previous wonderful administration proposed to 'bridge a gap with £32,000,000. From the bringing down of the budget last year by the present Leader of the Opposition, to the end of the financial year, the war expenditure of this country increased by £100,000,000. Despite that great increase, the treasurybills - or bank credit - issued to assist in the financing of the war totalled £7S,000,000. As a matter- of fact, as the right honorable gentleman himself knows, taking into account all the factors, the actual expansion of credit last year totalled only £55,000,000. It is desirable that these plain facts should be placed before the committee. It is of no use to generalize. The Government does not need to be told that if money is flowing out to the public at .a fast rate and there is a large amount in circulation for the purchase of a steadily, decreasing volume of goods, there is bound to be danger of competition for the goods that are available. That is evident to the merest tyro in economic .and financial affairs. What concrete proposal has been advanced by which the Opposition would meet such a position? There has not been one, but merely a generalization concerning loans. The Government is fully alive to the position. It has adopted consumer and supply rationing, to which the previous Government did not give a thought. The list of restrictions on supply, total prohibitions, sales by licence or permit, and restriction of imports, covers 183 pages of foolscap. It is perfectly true that some of the goods so controlled are still on the market. In a limited period the most drastic system of rationing supplies has been put into operation that perhaps either this or any other country has known. The Government is fully alive to all the so-called dangers of which men- tion has been made, and has taken definite and drastic steps to rectify the position in the manner I have mentioned. It will go as far as is necessary in order to give full effect to that policy.

I am sorry to have to say that I am satisfied that some members of the Opposition, perhaps subconsciously or unconsciously, have made statements that may directly mitigate against the success of the loan that the Government is placing before the public, and thus justify their advocacy of compulsory loans.

Mr Fadden - That is decidedly unfair.

Mr CHIFLEY - The Leader of the Opposition has always been strictly fair. What will be the effect of the statements of honorable members in regard to inflation, if the public should take notice of them? Will the statements be of benefit to this country, or be likely to improve the position ? I heard one honorable member say that, the grass will be growing in the streets if the policy of the Government be continued. What is such a statement calculated to do? I cannot believe other than that it is the desire of some honorable members to- prove that compulsory loans are the only solution. The Government and the Opposition agree that a proportion of the money in circulation should return to the Treasury. The only, difference between us- is in regard to the method by which that result is to be achieved. I repeat, that the Government is fully alive to the necessities of the country and its citizens, and will take whatever steps may be necessary to keep the financial position solvent.

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