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Thursday, 20 June 1946

Mr BEAZLEY (Fremantle) .- We have had two speeches on the Supply Bill from /the Opposition, the first from the Leader of the Opposition (Mr. Menzies) and the second from the honorable member for Balaclava (Mr. White). The Leader of the Opposition talked about production and our foreign policy, which he was pleased to describe as one that was dictated by Communistdominated trade unions. Lectures on production we get more frequently from members of the Liberal party as the general elections draw near. Since the war ended 440,000 men and women have been demobilized for the Services and 147;000 have been dismissed from Commonwealth employment. So 5S7,000 men and women have gone on . the labour market. Of them, 10.963 have registered as unemployed. Those are the figures for the 31st May last. Presumably more than 500,000 men and women have gone into other employment. Yet we are asked by honorable gentlemen opposite to believe that the discouragement of pri vate .enterprise in this country is so great that employment is being retarded and that taxes, especially the taxes on companies and on higher incomes, must be eased if we are 'to have a return to normal production.

Mr Holt - Does the honorable member think production is being increased ?

Mr BEAZLEY - I do not believe that more than 500,000 men and women who have returned to industry are producing nothing. We should- look at specific items, in the budget which honorable gentlemen opposite claim is annihilating spending power. Every one agreed that all "the 600,000 men and women in the forces at the end of the war could not be demobilized instantly without creating an unemployment crisis of the first magnitude. All agreed that demobilization would have to be spread over twelve months. Conceding that, they must also agree to the payment of wages. to the men and women in the forces. So £120,000,000 had to be set aside for Army pay, £50,000;000 for Air Force pay, and £10,000,000 for Navy pay. In addition, £73,000,000 had to he found for deferred pay. In their assertions about taxation, Liberal and Country party members make no reference to those items. They, therefore, believe that they are justified. Social services cost £65,000,000 a year. Honorable gentlemen opposite, with fewexceptions, have not dared to criticize that expenditure. So, if we look at the budget, we find that, instead of it being an annihilator of spending power, the Commonwealth Government is a distributor of it. Of the 7-evenue collected, £31S,000,000 went straight back to the community in the directions I have named. That produces the paradox that, in spite of heavy taxation, the savings of the people rose in 1945 by about £10,000,000 a month. This is the community whose spending power is being annihilated by penal taxation ! The thesis propounded by honorable gentlemen opposite is that taxes must be lifted from the higher incomes if production is to be stimulated. That proposition is interestingly rejected by the leading economist of modern times, the late John Maynard Keynes. His contention is that in our economy enough incomes are generated to buy the commodities put on the market, but that the wealth is concentrated at one end of the social scale. He points out that if you give a man who has £1,000 another . £5 he saves that amount, but if you give £5 to a man who has nothing, that- £5 is immediately spent on goods. So he contended the whole aim should be to shift spending power downwards. That is undoubtedly the objective in Australia, as demonstrated in the disbursements to men and women in the servicesand on social security. The result has been an enormous demand for goods. The thesis that honorable gentlemen opposite support, namely, that the policy of the Government should be to lift taxes from the higher incomes first and to remove company taxes, has been accepted by Canada and the United States of America. Instead of having 10,963 registered unemployed as we have Canada has 231,000, and the figure is rising by 20,000 a month, and (he United State's of America has about 5,000,000. If we had the same proportion of unemployed as the United States we should have 250.000. As Keynes pointed out, one of the greatest stimuluses to production that you can possibly get is. the shifting of spending power down so as to create a propensity to buy. That creates an enormous demand for goods and, hence, production. "We all ,hear that industry is being discouraged, but, the mystery that we do not, see the men and women demobilized from the Army and dismissed from Commonwealth employment marching through, the streets clamouring for work has never been explained by honorable gentlemen opposite, because they are incapable of scientific analysis and merely abound in propagandist assertions.

The Leader of the Opposition made some statements on foreign policy and industrial matters to which I should refer. To-day, the Prime Minister made it clear that the Commonwealth could not intervene in the meat dispute in Queensland because the State Government did not desire it to intervene. Honorable members opposite are continually hinting at a policy of what they call "standing up- to the trade unions ". That expression is. never analysed. It means,-ii-f it means anything at all, the application of armed ' force to the trade unions if they continue to adopt the policy that they have been adopting. Honorable members opposite always imagine that that represents the outlook of this Australian community. In 1926, the then leader of the kind of. political party that honorable gentlemen opposite represent (Mr. Bruce) submitted to the people a referendum asking that the Commonwealth Government be given power to take over emergency trans- < port, and to dissolve associations of employers, and employees. Until then, Western Australia had never rejected a Commonwealth referendum, hut that State smashed the referendum in 1926 by a three-to-one majority - 114,000 votes to 38,000. The referendum was defeated in four of the six States; Indeed, it suffered one of the heaviest defeats in the history of referenda in the Commonwealth. In 1926 the Australian community, which was far more conservative then than it is to-day, rejected this idea of giving to the Commonwealth Governmen t power to apply armed force to trade unions, or to do any of those other things which honorable members opposite call " taking the firm line ".

I come from the port of Fremantle. When I was a , child that port was in constant industrial turmoil. Finally, the " firm line " was taken by a conservative State government. Bayonets were used on the water-front. One man .was killed and some were injured. Feeling in the town became such that the police who had been associated with that oppression dared not live in Fremantle. They had to be transferred to country districts. That is the atmosphere- created by the " firm line ". And this incipient desire to wage class war downwards, which honorable gentlemen opposite consistently evince, although they do not analyse "what standing up to the trade unions" means, is one of the disquieting features of their policy. If they should form a government, I have no doubt that the industrial upheavals which would take place in this country would make those which are now occurs ring in the United States of America look very small affairs indeed, an, the Leader pf the Opposition would then have production jammed, and all those other disabilities which he ' seeks to impute to the Commonwealth Government.

I never heard anything more trivial and slovenly than his analysis of the position in South-East Asia. Any one would think that the Sydney waterside workers were in some way responsible for the upheaval which has taken place, in Indonesia. It is nothing to the Leader of the Opposition that France is unable to re-assert itself in Indo-China, and that Great Britain is at present engaged in giving large instalments of selfgovernment to India. It is nothing to honorable members opposite that the traitors in India, who supported the Government of Subhas Chandra Bose, set up by the Japanese at Singapore, are so strongly supported in India that when they were arrested and tried for high treason they were given in no case more than a week's imprisonment. Because of the attitude which prevailed in the country, that was the kind of sentence which British courts had to impose. If honorable members opposite imagine .that they' can dismiss this racial upheaval in South-East Asia with a few trivial words, and also that supplies which no doubt Dutch women and children should be receiving will in some way dissipate the situation which has developed there, something is very wrong with their ability to estimate trends in international affairs.

Members of the Opposition and the press continually refer to the abolition of the means test. One of the strong points which the Opposition hopes to make at the forthcoming election, and for which a preliminary build-up is now being given in leading articles throughout the Commonwealth, is the means test. The argument is advanced in countless leading articles that if a contributory scheme can be established, the means test will be abolished. I have no doubt that in the course of time the establishment of a contributory scheme would have that effect; but what I cannot understand is the intellectual dishonesty of the press and spokesmen of the Opposition when they suggest that if we were to establish a contributory scheme at once, it would be a substitute for a part of the present taxation. Obviously, -every old'-age pensioner who receives a pension to-day would still have to receive it. Those old-age pensioners did not contribute in the past, so we should still be obliged to find £27,000,000 from taxation. On top of that, we should have to impose a contribution.

A compulsory contribution, to which honorable gentlemen opposite frequently refer, would come from the pay envelopes of all salary and wage earners in precisely the same way as taxation does; but these advocates pretend that it will not be deduction from the pay envelope or represent a diminution of purchasing power. They refer to it as " abolishing the means test ", thereby raising hopes in the minds of 468,000 persons who are at present eligible by age but who are not eligible by means for an old-age pension. This contributory scheme will do nothing but abolish the means test in the future. Of itself, it can do nothing to abolish the means test now. Honorable gentlemen opposite have not the honesty to say that. Norhave the newspapers which support them. If we abolish the means test and establish a contributory scheme, we shall be compelled to increase expenditure on oldage pensions from £27,000,000 to £65,000,000 a year. That will mean doubling that amount of tax, and on top of it, we shall have to impose a contributory scheme for the future. If we establish a contributory scheme, for the next ten years people who will be contributing will not have contributed sufficient for their own pensions. Consequently, we shall still be obliged to supplement the fund from taxation. We can never extract from honorable gentlemen opposite an honest statement on this subject. They do not say that the abolition, of the means test does not apply to the present aged people. No ! They hope to gain the support of 468,000 persons to whom I referred. They do not analyse the position.

Mr Anthony - The whole position was analysed when the national insurancescheme was under consideration.

Mr BEAZLEY - Honorable members opposite support what they call contributory insurance whereby no matter what one's income is, one will pay the same premium for the same insurance. Social services, which are financed out of taxation, take £375 from a man in receipt of £5,000 a year, and £5 from a man iii receipt of £200 a year. Insurance, if it were similar to ordinary private insurance, would make the same charge regardless of income, so that this contributory scheme that honorable members opposite continually hint at violates the first principle of taxation, namely, that taxation should be based on ability to pay. Secondly, it does not have the affect of shifting spending power downwards as recommended by John Maynard Keynes, but has the effect of increasing the contribution or taxation from the lower incomes.

There is another objection to a national insurance scheme to which honorable gentlemen opposite never refer. They point back with pride to the National Insurance Act of 193S, which was introduced by a government which they supported. That was actuarially worked out to give a pension of 20s. a week to a man and 15s. a week to a. woman. Let us suppose that the scheme was agreed to a certain rate of contribution in 1938. Of course, internal party quarrels among honorable members opposite prevented them from implementing the scheme, but if they had actually worked it and had imposed those contributions, the pension of 20s. a week payable to a male and 15s. a week payable to a woman would be worthless at the current purchasing power of money. When the scheme is financed out of taxation, the money is taken from the current national income at the current purchasing power of money. The oldage pension of 21s. .a week in. 1938 has now become 32,s. 6d. a week. I do not believe that that .is a .real advance, and that it has done any more than offset the decline of the purchasing power of money, but, at least, it has done that much. A contributory scheme, actuarially, would have had to be, adjusted out of taxation in order to offset the decline of the purchasing power of money associated with the war. In other words, if we had started a contributory scheme when the old-age pension was introduced in 1909, we could not possibly have maintained an adequate pension, as we have been able to do by financing pensions out of taxation. Actuarially, we would have built up schemes on a certain contribution and we would not have had the finance available to pay more than the pension which we had calculated, and the continual depreciation of the purchasing - power of money would have made that pension inadequate unless we had supplemented it out of taxation.

A great deal of nonsense is talked about the '"soundness of a contributory scheme ". Honorable members opposite referred to the collapse of pensions during the economic depression. Pensions were financed out of taxation. When revenues fell, the pension had also to fall: The circumstances of an economic depression are the circumstances of mass unemployment. Many contributory schemes operated in other countries, but. when mass unemployment occurred, people could not contribute because they Were not earning incomes, and the rates of benefits had to be reduced in precisely the same way. In other words, under circumstances of an economic depression and mass unemployment, a contributory scheme is no sounder than a scheme financed from taxation. I always find it a curious argument, whatever may be said against the means test, that a contributory scheme will provide a sounder fund than will a scheme financed from taxation, which takes £375 a year from a man in receipt of an income of £5,000 and give3 him nothing in return. At least, it does create a fund on which he cannot draw, and it is a more stable fund than one on which everybody has the right to draw. That is an argument, not against the abolition of the means test, but against -the lack of analysis which honorable members opposite have exhibited in their public utterances and which the press generally exhibits in its superficial analyses of the whole of this matter. The alleged unsoundness of the policy of financing social services from taxation is one of the most laughable pieces of newspaper pomposity that we have seen in this country. The old-age pension was introduced in 1909 and a means test was attached to it. It has been retained ever' since. Except for two years when the Scullin Government was in office, honorable gentlemen opposite were in power from 1916 until 1941. They neither changed to a contributory scheme nor abolished the means

Supply Bill[20 June, 1946.] (No. 1) 1946-47. 1685 test. Yet the Labour Government, which came into office in 1941, a month before Japan struck, and which had to expend £500,000,000 a year on the conduct of the Avar, is supposed to be the government which should have carried out these vast transformations in social services. The entire press of the country makes that assertion, and blames the Labour Government for the means test, which its predecessors (maintained for many years. As I stated, the means test has been a feature of the old-age pension scheme since its introduction in 1909. I have ceased to expect any worth-while analyses from the press on foreign policy and social services, and it is in protest against that kind of trivial superficiality that I have intervened in this debate.

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