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Tuesday, 29 September 1942

Mr CALWELL (Melbourne) .-- The Leader of the Opposition (Mr. Fadden) has described this bill as a necessity. I do not believe that it is.

Mr Fadden - I said that it was a necessity, having regard to the Government's method of finance.

Mr CALWELL - And also, l may say, having regard to th-3 Opposition's method of finance. I object to both governments' methods.

Mr Fadden - The honorable member must face things as they are.

Mr CALWELL - The borrowing of money on this scale, with its attendant obligation to pay interest, will land Australia in an impossible position before many years have passed. If we have to borrow at the rate of £300,000,000 a year for another five years, we shall have a total loan indebtedness of more than £3,000,000,000, and an interest obligation approaching £100.000,000 a year.

Mr Fadden - What is the alternative ?

Mr CALWELL - If this system of finance is likely to lead the country to disaster, and I think it must, it is no tribute to the statesmanship of the honorable member for Darling Downs that he should say, "I have no alternative; what is yours?"

Mr Fadden - I did not say that. It is the honorable member who is challenging the method, not I.

Mr CALWELL - The only suggestion I heard from the Leader of the Opposition when these matters were under discussion was that, instead of raising the money voluntarily, a system of compulsory loans should be resorted to.

Mr Fadden - Not to this amount.

Mr CALWELL - I am glad to hear that admission from the Leader of the Opposition. Apparently, he does not believe that he could raise anything like £200.000,000 by compulsory loans. It may be that he could not raise more than £50.000,000.

Mr Dedman - The amount estimated by the right honorable gentleman from compulsory loans was £25,000,000.

Mr CALWELL - Perhaps that is nearer to the truth. The Leader of the Opposition had no suggestion to make for bridging the gap between revenue and expenditure other than the raising of compulsory loans, which could not provide more than a fraction of the amount required. Apparently, the financing of the deficit is to be left to chance. Like Micawber, we are hoping for something to turn up. This is not so much an indictment of the Government, as of our general outlook on the subject of war finance.

Mr Fadden - But it is the Government's method.

Mr CALWELL - The Government is simply following the methods of its predecessors in office, and if there be anything wrong with those methods, the Opposition must accept the blame equally with the Government. The Leader of the Opposition cannot have it both ways. He cannot preen himself upon his own financial methods, and then condemn the Government for applying those very methods. We appear to be just floundering along, and we shall end up with repudiation. There is not the slightest doubt of that. We shall not only have to repudiate interest payments, but we shall also have to write off the capital indebtedness.

Mr Fadden - That statement, coming from a government supporter, should greatly assist the new loan.

Mr CALWELL - The Leader of the Opposition probably hopes that the loan will fail.

Mr Fadden - That statement is unfair. I hope that the loan will succeed.

Mr CALWELL - The Leader of the Opposition hopes that the loan will fail so that he may rehabilitate his fallen fortunes. But, he will need more than that, to rehabilitate him in public esteem.

Mr Fadden - I wish the Treasurer good luck in raising the loan. Evidently the honorable member for Melbourne (Mr. Calwell) does not.

Mr CALWELL - Last year, the budget introduced by the right honorable gentleman, when he was Prime Minister, was condemned by a majority of honorable members of this chamber, and rightly so. I desire to see the credit of the nation used in a greater measure than the Government proposes to use it. I do not like the idea of passing legislation to float loans totalling £200,000,000, as if it did not matter whether the interest rate was 3 per cent, or any other figure. In my opinion, the proposed rate of interest is too high, and the burden that will be placed upon taxpayers will be too great for them to bear. If the Government will not raise the money by taxation, the Treasurer should endeavour to obtain it by way of interest-free loans. There are many well-to-do people in the Commonwealth who could lend their money without interest. Nothing is so nauseating as to hear speakers at loan rallies urging the people to invest their money in war loans, because they represent a good investment. The speakers say that government bonds are as good as anything in the industrial field or elsewhere. Many speakers, particularly those from the non-Labour side of politics take this materialistic and mercenary view of thi matter.

Mr Abbott - Is not the honorable member damning the loan with faint praise?

Mr CALWELL - Parliament is not helping the morale of the people when some are asked to fight for 6s. a day, whilst others are asked to invest their money at a good rate of interest. I object to people being told that their contributions to war loans represent a sacrifice on their part; the sacrifices of a soldier who offers his life, and those of the investor who puts his money into government, bonds, the safest form of security, are not comparable. The whole system is fundamentally wrong. Instead of raising money in this unsound manner, the Government should resort to controlled inflation. Contrary to the statements of honorable members opposite, inflation can be controlled. The use of the national credit represents a form of deferred taxation. Of course, the Opposition, being tied to the banking institutions, is not anxious to see a system of credit expansion adopted. I know that honorable members opposite do not desire the banks to be nationalized. If the Government introduced a bill to nationalize the banking institutions, our opponents might have something of which to complain. To date, they have had no reason to protest against an attempt to introduce any form of socialization. Although they have put up one or two sham fights upon compulsory unionism, no real challenge has yet been made by the Government to the edifice of capitalism. I am firmly convinced that the Allies cannot win' the war while they adhere to the capitalistic system. If production is regulated by the profit motive, we cannot have an all-in war effort, and without an all-in effort, we shall fail.

We cannot have total war while those who control the means of production, distribution and exchange dictate the quantities of goods and necessaries that they are prepared to produce. The Leader of the Opposition, who is a great defender of the present order of society, will find before the expiration of many years that the public will be ahead of him and his party, and. will insist upon the scrapping of the system which allows the present domination of the many by the few. An integral part of the capitalist system is borrowing at interest. We cannot justify borrowing at interest for war purposes. There may be some justification for borrowing at interest if the money is spent upon reproductive works that will enable the money to be repaid. But we should not borrow at interest for war purposes, and leave the burden of debt to posterity. The Commonwealth owes £167,000,000 in respect of the last war.

Mr Holt - How does the honorable member explain the policy of the Soviet Government of borrowing at interest.

Mr CALWELL - The honorable member is at liberty to explain it.

Mr Holt - The explanation should come from the honorable member for Melbourne.

Mr CALWELL - The honorable member for Fawkner is probably more closely in touch with the Russian situation than I am. I inform him that I have no intention of explaining Germany's financial system.

Mr Holt - Germany has managed pretty well under the capitalist system.

Mr CALWELL - The honorable member cannot have it both ways. He has stated that Germany has managed pretty well with its method of finance presumably because it has won many military victories.

Mr Holt -Germany and Russia pay interest on war loans.

Mr CALWELL - There is a difference between the Russian system and our capitalist system.

Mr Lazzarini - Does the honorable member suggest that we should adopt Germany's system?

Mr CALWELL - The Minister knows that I do not suggest it. I remind the honorable member for Fawkner, who talks about the success of the German finan cial system to-day, that people of his way of thinking told this country that after six months of war, Germany would be bankrupt and could not continue the struggle because its method of finance differed from the British system. Now, we are struggling along with an antiquated system which may have seemed satisfactory in other days. Our expenditure is reaching astronomical figures. The austerity campaign which was f orced upon 500,000 working people and their dependants during the depression from 1932 onwards, was a direct outcome of the system of finance that was adopted during the last war. When the right honorable member for North Sydney (Mr. Hughes) was Prime Minister, he floated loans, free of Federal and State income tax and bearing interest at rates as high as 6 per cent. At that time, people did not realize how outrageous such rates were. In subsequent years some Premiers of the States paid even higher rates of interestupon borrowed money. To-day, even 3 per cent. seems excessive.

The Leader of the Opposition advocated a system of compulsory loans upon which he was prepared to pay the workers 2 per cent. In those circumstances, I fail to see why a high rate of interest, if any interest is to be paid at all, should be paid upon present loans. I noted in the Treasurer's speech the very small amount received from persons by way of gifts or interest-free loans, compared with the huge amounts that have been invested at interest. In all this expensive propaganda issued from the Government Printing Office and circulated amongst those who from platforms urge people to invest in loans, nothing is said about the desirability of gifts, or interest-free loans. No emphasis is placed upon those matters in the speeches made by leading representatives of the Government and the Opposition. It almost seems as if those methods of assisting our war finance are frowned upon. I do not agree with the system of borrowing at interest, and I shall not be held by future generations as being one who glibly supported legislation for the raising of huge sums of money at interest and thereby placed an almost intolerable burden, on their shoulders. The principle is wrong. Whatever system may be devised to replace it cannot be worse in its ultimate effects than that part of it which forms the basis of the legislation introduced by the Treasurer and commended so enthusiastically by the Leader of the Opposition.

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