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Thursday, 25 July 1946

Mr FADDEN (Darling DownsLeader of the Australian Country party) . - The document submitted to the Parliament by the Treasurer (Mr. Chifley) is not- a financial statement; it is nothing but an election pamphlet. It is as va'gue and general as it could possibly be, except when it launches into propaganda. Its main purpose is to camouflage and to conceal rather than to elucidate the real financial and economic condition of Australia. The meagre financial data included in the statement must be analysed most carefully before it is possible to obtain even a glimmering of the true position. The right honorable gentleman's political astuteness led him to resist all attempts to present a pre-election budget to the House. Such a document obviously would have revealed to the electors the financial morass into which the Government has plunged us. Expenditure figures will have to be more detailed in the next budget. The old stock excuse that the precise figures could not be revealed for security reasons will no longer hold water. The only reason they are withheld now is because, the security of the Labour party itself would be gravely endangered if they were fully and frankly revealed. Political Labour has always floundered on the rock of finance. The test of government is finance, and on that test alone the Government must be found wanting, as will be revealed by the disclosures I shall make. This fiscal swan-song of the Treasurer is a typical Labour financial document. On the very first page of his statement the right honorable gentleman claims overwhelming success for the Government's demobilization programme and outstanding achievements in reemployment. Both these propositions are categorically contradicted in later pages. He claimed that the vast majority of servicemen had been demobilized rapidly and efficiently in the financial year 1945-46. If that be so, why did the pay of the forces, other than deferred pay, amount to £130,000,000 for the year as against £150,000,000 for the preceding year when the war was still being waged? Why was there a decline of only £20,000,000 in the year in which the war was waged for only three months ? These figures indicate that thirteen out of every fifteen men who were members pf the forces at the beginning of July, 1945, drew their full army pay for the whole of the year 1945-46. If that be not so, some unexplained waste has occurred in service pay and allowances, to the amount of millions of .pounds. The Treasurer's second claim was that nearly 400,000 more people are engaged in civil production now than there were a year ago. If that be so one would expect to see some results ; but every housewife could answer that assertion by the simple statement that there has not been an increase of household goods on the market to substantiate such a claim. However, th«? refutation is supplied on page 10 of the Treasurer's statement where he shows the pay-roll tax collections. That tax is the most sensitive barometer of employment and production that could be devised, since it must be paid by every employer whose wages bill amounts to more than £1,000 a year. With the extra absorption of an alleged 400,000 into civil production one would expect a vast proportional increase of this tax. The wage's bill for the extra 400,000 alone would be millions of pounds a week. It will be found that the facts do not bear out the Treasurer's optimistic assertions. The pay-roll tax collections during the previous year were just over £11,000,000; this year they do not quite reach £11,500,000, which indicates that the employment position, as far as all but the smallest production units are concerned, has been almost static. The increase in the tax receipts is directly proportional to the increase in employment in all but one-man Or two-man concerns, yet the increase does not amount to 5 per cent.

Let us now deal with disposals. Much has been printed at public expense about post-war reconstruction, full employment, and the re-establishment of ex-servicemen. The truth is that Australia is stagnating and that the bold front of " ballyhoo ': exemplified in the Treasurer's statement cannot stand the scrutiny of careful analysis. As ari example of this I refer to the amount of £15,635,000 which is shown on page 10 of the statement as " Credits from disposals ". The honorable member for Warringah (Mr. Spender.) laid some stress on that figure. I say. that this is a grossly incorrect statement as it understates the true amount by at least £20,000,000. Total sales effected ' by the Commonwealth Disposals Commission 'from its inception in September, 1944, to March, 1946, are given on page 1611 of Hansard, No. 9, of the 19th June, 1946, as £45,365,367. The abstract of sales annexed to the first annual report of the commission gives the sales in the first year, to August, 1945, as £10,296,244. Consequently, for only ten months of the financial year 1945-46 sales must have been at least £35,000,000, or £20,000,000 more than the Treasurer admitted. The. Treasurer must explain where the huge discrepancy is hidden and what is happening in the disposals section of the administration.

We are asked to believe that war expenditure has' declined. The financial statement shows net expenditure of £377,950,000 in 1945-46 compared with £459,996,000 in 1944-45, but that is misleading. The amount of . £377,950,000 . is arrived at after deducting credits amounting to £74,145,000, to which "Disposals" contributed £15,635,000, and "Miscellaneous" £62,174,000, those contributions being offset by a debit of £3,644,000 in respect of other administrations. The credit of . £15,635,000 in respect of disposals should not be taken into account for the purpose of comparison of the war expenditure for 1945-46 with the war expenditure for 1944-45,. becauseof the discrepancy of £20,000,000 to which I have already referred. Therefore, that amount of about £74,000,000 of credits has to be ignored. We must go backto the position before the credits were deducted. That gives us a total war expenditure in 1945-46 of . £452,095,000. compared with £516,555,000 in 1944-45. However, wemust not leave it at that because the Government in compiling the figures for what was almost a full year of peace in 1945-46 has ignored reciprocal lend-lease. Expenditure thereon dropped in 1945-46 to £26,010,000 from £89,132,000. If we deduct £26,010,000 from the total war expenditure, in 1945-46, of £452,095,000, we get the net amount of £426,085,000, compared with £427,423,000 in the previous year when the war was at its height. The Government has tried to hoodwink the public into believing that war expenditure has been substantially cut, when the reduction is only about £1,000,000. My guess is that money that ought to have been credited to disposals has. been taken under the head of war expenditure. The war expenditure figures are a reliable guide as to the Government's inefficient administration. No one will be satisfied with the fact that the Government's war expenditure is only £1,000,000 odd in 1945-46 less than in 1944-45. The Government will have trouble in explain ing that away. It is claimed, contrary to the fact in many cases, that monthly war expenditure has been reduced. In March, 1946, war expenditure amounted to £49,000,000, but credits were juggled so effectively that an expenditure of only £10,000,000 was disclosed under that heading in the Treasury statement for thatmonth. A similar example occurs in the table on page 11 of the financial statement. Actual expenditure from revenue is given as £390,700,000 for 1945-46, whereas the expenditure was at least . £6,600,000 higher, as£6,600,000 wasthe balance in the National Welfare Fund carried over fromthe previous year and spent in 1945-46. 'But it did not appear as apart of theexpenditure for that year. That method ofaccountancy would earn a private firm official attention. In response to a recent question by me, theTreasurerstated that uncollected tax for 1945-46 amounted to the colossal sum of £42,000,000. That isthe minimum sum. Ittakes no accountof the un assessed tax which was about £30,000,000 in 1944-45, and, according to the Treasurer, might be about £50,000,000 in1945-46. These two amounts of £42,000,000uncollected tax and £50,000,000 unassessed tax provide a big reserve for the Treasurer to draw on. A vigorous tax collection policy would have enabled far greater and far more equitable tax concessions. I want the members of the Labour party to realize that that £92,000,000 is owed to the Treasury, not by wage and salary earners, for their tax is collected at the sources, but by big businessmen.

Mr Fuller - Whom the honorable member represents.

Mr FADDEN -I may represent them,butthe Government that the honorable member supports pampers themand does not collect what is due from them. No real effort was made to collect the outstanding tax. The honorable member for Warringah (Mr. Spender)put his finger on the obvious reason. When it became apparent that the income tax collections would exceed the estimateby more than £3.000,000, even without collecting arrears of assessed income tax and issuing assessments in respect of other incomes and collecting that tax, a halt was caused and a go-slow policy applied, because the Treasurer does not want to disclose to the taxpayers the degree to whichhe could reduce the income tax.

Mr Falstein - The right honorable gentleman is suggesting a conspiracy between the Treasurer and the Treasury officials.

Mr FADDEN - Never mind about that. I have stated the facts. I defy the Treasurer to dispute them. The Government estimated that it would collect £211,000,000 in income tax, and it collected £214,593,577. In addition, £42,000,000' of assessed tax is outstanding. One does not have to be a mathematician to realize how much greater the income tax concessions for this year could be. I was surprised when the Treasurer gave in so easily to the States' demand for a greater share of the uniform tax collections when, almost without a fight, he yielded to them another £6,000,000, bringing the reimbursement from £34,000,000 to £40,000,000. It is easy to see why he did so. He gave that £6,000,000 ' to the States in order that he might not have to disclose the real financial position of the Commonwealth.

The Government's method of budgeting is slovenly. Last financial year the revenue exceeded the estimates by about £17,000,000, and that does not take into account the £90,000,000 of income tax that the Treasury can collect when it exerts itself. On the expenditure side we find some strange discrepancies between the estimates and the expenditure. Deferred pay cost about £72,000,000, instead of the estimated £54,000,000. The Treasurer's excuse for that is that 450,000 persons instead of 400,000 were demobilized from the armed forces. A 12½ per cent. increase of demobilization does not account for a 33 per cent. increase of deferred pay. The Treasurer cannotexplain that discrepancy so easily.

The right honorable gentleman takes credit for his control of prices.Heclaims that price control has been a triumph of war-time administration. The official rise of retail prices is claimed by the Treasurer to be only 24 per cent. Surely he does not expect anyone to believe that that figure gives a true indication of the cost of living increase.. I do not know any housewife who would believe him. The claim is ridiculous on two counts. First, the actual rise of the cost of living is more than 24 per cent., and, secondly, the qualities, especially of clothing and footwear, have declined, and the figure of 24 per cent, must be related to that decline. Even on the Treasurer's own arbitrary figure of a 24 per cent. increase there is the plain admission that if a man could keep a wife and three children comfortably before the war he can keep only a wife and two children now on an equivalent outlay. As wages are pegged and as taxes have become increasingly severe the decrease in the standard of living of the average worker and his family is obvious. In reducing the income tax the Treasurer treated the taxpayer with family responsibilities extremely shab- bily.

The right honorable gentleman claimed that this year income tax will be reduced by £17,500,000. Even in that matter, he could not be frank. The amount of the reduction will be £8,750,000. I shall explain the reason for that. The Treasurer stated that the reduction would date from the 1st July, 1946. That means that the reduction for the year ending the 30th June, 1947, will affect only the taxes that are payable in the current financial year. Therefore, the reduction will apply only to those taxpayers who are subject to the payasyouearn system. Of the total income tax collections amounting to £155,000,000, £75,000,000 will be paid under the payasyouearn system. Therefore the reduction of tax this year will total only £8,750,000. . The tax payable on the remaining £75,000,000 will be collected after the 30th June, 1947, and that will affect the 1947-48 budget. Consequently, the House should not be deceived by the statement that tax reductions this year will amount to £17,500,000. Most definitely, they will not!

I do not propose to examine at length the new tax schedules, although they are as full of holes as is a colander. A comparison of the treatment of a man without dependants with that of a man with family responsibilities emphasizes how inequitable this scale is. The Minister for the Army (Mr. Forde) aud the Minister for Post-war Reconstruction (Mr. Dedman) made public statements regarding my attitude towards the security loan, and a recent advertisement on behalf of the Australian Labour party fraudulently claimed that the loan programme had been an overwhelming success. I propose to deal very thoroughly with recent loan raisings. The honorable member for Griffith (Mr. Conelan) gave to the House detailed figures, supplied from official sources, indicating the various classes of subscriptions to the loans raised during my term as Treasurer. Consequently, I have no hesitation in giving similar details from the same official sources regarding the last two loans raised by this Government. These- figures will come as >a shock to most people, as they indicate that each loan was substantially undersubscribed and was saved only by large direct contributions from the Commonwealth and other savings banks, exclusive of indirect subscriptions from the trading banks. In the Fourth Victory Loan, the sum of £86,370,570 was subscribed, but only £44,538,780 was contributed by individuals and companies. The Commonwealth Savings Bank and government instrumentalities subscribed £41,831,790. Had these large amounts not been pumped in at the right moment, the loan would have been a pronounced failure.

Mr Conelan - What percentage did the Commonwealth Bank subscribe?

Mr FADDEN - Those figures denote, in no uncertain manner, that 48 per cent, of the subscriptions were contributed by the Commonwealth Savings Bank and government instrumentalities. Only 52 per cent, represented genuine .subscriptions' by the public. The Minister for Post-war Reconstruction (Mr. Dedman) stated in the most blatant fashion that the Security Loan was the most successful loan that the Commonwealth Government had ever floated. Let us examine the lying and misleading nature of that statement. Subscriptions to the loan totalled £78,041,370 - an alleged over-subscription of £8,000,000. Of that amount £48,550,110 was subscribed by individuals and companies, and £29,491,260 by the Commonwealth Savings Bank and government instrumentalities. That so-called over-subscription was inexcusable, having, regard to the manner in which the money was obtained. Approximately 38 per cent, of the loan was found by the Commonwealth Savings Bank and government instrumentalities. Yet, the Minister claimed that the 'loan was an overwhelming success ! Had it not been for the banks and government instrumentalities, 1 the loan would have ' failed by nearly £30,000,000. '

When I, as Treasurer, floated a loan for £2S,500,000, an amount of £23,000,000 was subscribed by individuals and companies, and the remaining £5,000,000, or 21 per cent, by the Commonwealth Savings Bank as a wise and normal investment of surplus funds. The bank was not harassed, as it has been in later loans, to provide the £5,000,000. The second loan that I floated was for approximately £35,000,000, and the Commonwealth Bank and government instrumentalities subscribed 16 per cent.

Mr Falstein - Was the loan oversubscribed ?

Mr FADDEN - Y©3, by a few thousand pounds. '

Mr Conelan - What about the private banks?'

Mr FADDEN - I shall give the honorable member that information. To the Victory ' Loan ' the Commonwealth Savings Bank and government instrumentalities contributed 48 per cent., and to the Security Loan 38 per cent, of the subscriptions. Does the. honorable member gain any consolation from that fact? The figures in the financial statement do not disclose any subscriptions by the trading banks. Section 8 of the National Security (War-time Banking Control) Regulations states -

A trading bank shall not, except with the prior consent of the Commonwealth Bank, purchase or subscribe to government, semigovernmental or municipal loans, or purchase or subscribe' to securities listed on any stock exchange in Australia.

Mr Conelan - When was that regulation introduced ?

Mr FADDEN - It was introduced by the Curtin Government in 1942. Under those regulations, the trading banks were not permitted to subscribe to loans or acquire government securities. Let us examine this additional evidence of camouflage and deceit. A perusal of the Commonwealth Statistician's Monthly Review of Business Statistics for May, 1946, published under instructions from the Treasurer, reveals that between June, 1942, and April, 1946, government and municipal securities of the Australian trading banks, excluding treasurybills, rose from £56,000,000 to' £122,000,000. This can mean only that the Commonwealth Bank, having heavily subscribed to government loans to make them appear successful, unloaded some of the bonds shortly afterwards on the trading banks. Consequently, the trading banks' have substantially, though indirectly, put large sums of money into Commonwealth loans, and the banking control regulations have been circumvented by a technical device. What is the difference between a -straight-out subscription in cash from a trading bank, and a similar subscription through an intermediary such as the Commonwealth Bank, which holds the bonds for a few weeks and then unloads them for cash? From certain other movements, too technical to mention, it appears that the Commonwealth Bank is also allowing certain trading banks to collect their interest on the Commonwealth Bank's holdings of government bonds. \Extension of time granted.'] The possession of the bonds could pass to the trading banks, as a sort of equitable mortgage by a deposit as security for money advances. These bonds, held in escrow, as it were, obviously do not figure in the financial statements of the banks concerned. However, the salient feature of such a system would he that the banks would collect the interest while they held the bonds. I ask the Treasurer to indicate whether, as certain financial trends seem to indicate, such a procedure is, in fact, being carried on by the Commonwealth Bank in conjunction with the trading banks, and whether it has his blessing? We have been led to believe that the trading banks did not subscribe, or were not permitted to subscribe to Commonwealth Loans, yet the securities of the trading banks increased from £56,000,000 to £122,000,000 between June, 1942, and April, 1946. Where did those Commonwealth securities come from ? How have the trading banks been able to operate in this way if they have not done it by indirect means? I ask the Minister who will follow me in this debate to answer that question. Had it not been for the adoption of the methods which I have described, the last three loans floated by this Government would have been absolute failures. They were successful only by the use of the most dangerous method of the use of savings bank deposits which, undoubtedly, tends to secondary inflation. Except for the adoption of those methods, the last two loans would have been undersubscribed by £40,000,000. This cannot be truthfully denied.

I wish now to deal with trust funds. ' and this, also, is a rather technical aspect of public finance. The Treasurer estimated in. his last budget that he would expend £65,000,000 out of the National Welfare Fund on social services. In fact the expenditure totalled only £53,000,000. being less than the estimate by nearly £12,000,000. Of the amount £6,600,000 was provided from an imaginary balance in the National Welfare Fund at 30th June, 1945, which was said to total £53,073,605, of which £53,000,000 was invested in treasury-bills . and was repre,sented in the National Welfare Fund by I O U's. I explained this in detail on the last occasion on which I dealt with the National Welfare Fund. The fund was, in fact, bankrupt at that time. Where then, did the £6,600,000 in cash come from? Did it come from disposals, the proceeds for which have been camouflaged and must be related, in my opinion, to the amount of £20,000,000 with which I have already dealt? As internal treasury-bills have remained stationary during the year it is a fair question to ask the Treasurer whether some other trust fund, say, in relation to disposals, was opened with cash which was immediately absorbed by treasury-bills and an equivalent amount redeemed out of the National Welfare Fund. Is that how the £6,600,000 required in cash was provided ? It will be recalled that I explained last year that the National Welfare Fund was bankrupt in that there was no cash in it. I wish to know, also, whether the £6,600,000 caine out of the Consolidated Revenue Fund. If not, from where did it come?

I am entitled to an answer to the specific question whether this money was taken unfairly and unwisely from disposals receipts which should have been used for the purpose of making possible a true reduction of taxation. General trust funds were not too liquid at the end of 1944-45, as the total balances were £137,000,000, of which £130,000,000 was invested-£86,000,000 of it at only 1 per cent. The whole position in this respect is utterly deplorable. The Government has undoubtedly used money from the NationalWelfare Fund which we were given to understand was earmarked for social services, and it has endeavoured to cover up by using proceeds from disposals. Was it necessary for the Treasurer to curtail his social services expenditure by £18,000,000 because temporary treasury balances, which he had previously used up to the hilt, had become almost entirely exhausted?

I wish to say a few more words about treasury-bills. In his last budget speech the Treasurer indicated that treasurybills for war purposes had been issued to an amount of £363,000,000. The total shown in the Auditor-General's report at the same date for which the Treasurer gave £363,000,000, ' is given as £366,250,160. Those particulars will be found on page 12 of the Auditor-General's report. How does the right honorable gentleman explain the discrepancy? Is this just another example of the loose accounting which has become a feature of recent financial statements?

Mr Falstein - Normal financial methods have been followed.

Mr FADDEN - They would be normal for the honorable gentleman. The honorable member for Perth (Mr. Burke) said that taxation should be maintained at a high rate as a safeguard against inflation. I must remind him that the Government has thrown to the four winds of heaven every important safeguard against inflation. The Treasurer has totally ignored the basic necessity for guarding against inflation by dealing in a proper way with taxation. The right honorable gentleman has secured the passage through the Parliament of measures to impose taxation, but he has failed to collect the taxes that have been imposed. I understand that out standing tax arrears total £42,000,000. I also understand that assessments involving the payment of £50,000,000 in taxes have been made but not issued. In those items alone there is a reservoir of £92,000,000 which should have been available to the Treasurer. Had that money been collected it would have been a safeguard, to that degree at least, against inflation. But it has not been collected. I have already indicated that the dangerous use made of savings bank deposits for loan purposes tends to secondary inflation. The. third safeguard which the Treasurer has thrown to the winds has relation to the use of Government securities by the trading banks. It cannot be argued, therefore, that the Government is administering our finances in such a way as to prevent inflation.

The Treasurer stated that he would not have had time to prepare a budget before the end of August, but I have prepared one which I desire to incorporate, in Hansard.

Mr SPEAKER -What does the honorable gentleman desire to incorporate?

Mr FADDEN - A budget compiled entirely from the Treasurer's own statement. The accuracy of the figures cannot be denied, for they have been taken from information in the Treasurer's own certified statement. The tables I desire to have incorporated are on lines parallel to those which accompanied the Treasurer's statement, and they may he described as follows: -

Estimated Expenditure - Year 1946-47 vide Treasurer's Financial Statement, 12th July, 1946.

Total Expenditure, vide Table 1,

Main heads of estimated war expenditure 1946-47, vide Treasurer's Financial Statement.

Commonwealth Expenditure from Revenue - comparison of actual expenditure for 1945-46, with estimated expenditure for 1946-47.

Mr SPEAKER - Does the House give leave for the tables to be incorporated in Hansard? I point out that if leave be not granted, the right honorable member may read them within the limits of the time available to him.

Leave not granted.

Mr FADDEN - ThenI shall proceed to read them.

Sitting suspended from 6.3 to 8 p.m.

Mr FADDEN - I renew my request for leave to incorporate in Hansard the tables to whichI referred before the sus pension of the sitting.

Leave granted.

Mr FADDEN - They are these-




To be financed by -

(a)   The higher level of civil employment, more production, and probably a greater volume of imports.

According to the first table, the net decrease -of war expenditure is £150,000,000. That is accounted for by an increase of £55,000,000 in respect of certain specified items which can be perceived, and a decrease of £205,000,000 on other items. The non-war expenditure for the year ending on the 30th June, 1947, envisaged by the Treasurer, is £177,000,000, compared with an actual expenditure last year of £132,000,000, an increase of £45,000,000. According to table No. 1 compiled by the Treasurer, the total expenditure is £452,000,000. According to the financial statement which the right honorable gentleman delivered on the 12th July, this is reduced by £150,000,000 to £302,000,000 for the year ending on the 30th June, 1947. The addition of £177,000,000 raises this to £479,000,000. I direct the attention of the Parliament, and through the Parliament the country, to the fact that that expenditure of £479,000,000is only £105,000,000 lass than the expenditure of £584,0,00,000 in a full year of war, namely, the year which ended on the 30th June, 1945. The Treasurer asks the people to believe that he is reducing war expenditure by £150,000,000 from £378,000,000 to £228,000,000. That is complete deception, because the reduction will not be from £378,000,000, which is the net amount. The people are asked to disregard the £74,000,000 received from " Disposals " and other credits. The total expenditure for 1946-47 will be £405,000,000. This figure is arrived at by adding the war expenditure of £177,000,000 to the non-war expenditure of £228,000,000. The total revenue for 1945-46 was £360,000,000. According to the Treasurer -

The higher level of civil employment, more production, and probably a greater volume of imports, will be reflected in revenue, particularly indirect taxation.

The right honorable gentleman also pointed out in his statement that, at the 30th June of this year, the number of persons in civil occupations had been estimated to be 3,030,000, an increase of 15 per cent. on the 2,650,000 at the 30th June, 1945. He wants the people to believe that the productivity of Australia will be increased by 15 per cent. But ignoring that, and taking into account only last year's estimates, it will be found that the revenue exceeded the amount estimated by £17,000,000. According to the Treasurer, the total expenditure was £405,000,000 and the total revenue £360,000,000, a gap of £45,000,000. This is a deceitful document. The decrease is to be, not from £378,000,000, which is the net war expenditure, but from the gross war expenditure. I deduct from the £452,000,000 the amount of £150,000,000, and have left £302,000,000. I add £177,000,000- £132,000,000 plus £45,000,000- which produces a total of £479,000,000. Thus the gap that has to be bridged is £119,000,000, and not £45,000,000. According to the financial statement - . . Total expenditure must still exceed revenue by a considerable margin. This margin will be very much less than last year, but it will still make a substantial call upon finance from public loans.

According to the Treasurer, the margin, gap or deficiency, will be £45,000,000, whereas my margin or deficiency, arrived at on a proper basis and without deception, is £119,000,000. The Treasurer says that the gap is £108,000,000 less than the loans which had to be raised from the public last year. According to my calculations, it is only £34,000,000 less. The difference between his calculations and mine is £74,000,000. Why did he mention the net expenditure, unless he wished to deceive? His statement was not frank in that regard. He has asked the people to believe that the war expenditure will be £378,000,000, whereas it will be £452,000,000. He cannot have it both ways. The gap should be bridged thus : -

By means of a higher level of civil employment, more production, and probably a greater volume of imports; an increase of production by 15 per cent, would represent £54,000,000.

By a reduction of controllable expenditure. The Auditor-General's report reveals the degree to which this is possible.

By the use of the proceeds from " disposals ", which so far have been used illegitimately. \ By receipts for work done on behalf of other governments.

By the collection of arrears of taxes, and the, issue of dormant assessments. In this connexion there is a reservoir of £92,000,000, and the collection of only a portion of it would produce a. substantial amount.

By means of the credit in the National "Welfare Fund. At the 30th -Tune, last, the. nominal credit in this fund was £46,000,000. The money is not there actually, because the Government has replaced it with I O TPs.

Last, but by no means least, by means of loans from the public.

Recently, I told a conference of the Australian Country party in Sydney that I! could not say how taxation could be reduced until I had been able to investigate the whole position. I added that whatever the Labour party might do, the Australian Country party could do better. Never previously in the history of this country has more appalling evidence of financial irresponsibility been placed before the people. There has been deception and camouflage. Only a part of the story has been told. In fact, t do not believe that the Treasurer knows the full story. The document which the right honorable gentleman submitted to the Parliament is not a financial statement, but an election pamphlet which clouds and camouflages the real position and is nothing but a monument of deception. The only reason for a budget not being presented is that the Labour party would be greatly . endangered politically by its revelations. If the rapid demobilization of the forces that has been claimed had been effected, why was the pay of the forces for the year reduced by only £20,000,000 to a' total of £130,000,000"'? I repeat that the estimate of the Treasurer was 33$ per cent, wrong, and the offset amounted to no more than 12-J per cent. It has been claimed that 450,000 persons formerly in the armed forces have been absorbed into civil occupations, but the increase of the pay-roll tax, which is a very effective guide to production, was only £500,000. f Further extension of time granted. ] In the course of a grossly incorrect statement, the Treasurer nas understated the returns from the disposals of materials by £20,000,000. The people are entitled to a true and frank statement on the Subject of disposals. It is of no use for the Treasurer to say, in answer to a question, that £45,000,000 has been realized by the disposal of materials, when he .presents accounts which show only £15,000,000 from this source.

The figures regarding war expenditure* have been understated by many millions of pounds. Indeed, they have been manipulated in an unauthorized manner in order to conceal .the true position. I claim that war expenditure is only £1,000,000 less for this year than for the last full yea.r of the waT, and I challenge the Government to disprove my claim. Moreover, the Government 'estimates that public expenditure for the next financial year will be only £105,000,000 less than for the last year of war. Surely the people of Australia will not accept this situation, while they are called upon to bear such heavy taxation. I have used the Treasurer's own figures to prove that taxation could, and should, be substantially reduced. The right honorable gentleman has asked the people to believe that income taxation this year is to be reduced by £17,500,000, but that is not true. The reduction in respect of payasyouearn taxpayers will be only half that amount, the other half becoming effective iri the next budget. The Government established a huge organization, which put on lunch-time concerts and strip-tease acts in. an endeavour to induce people to subscribe to war' loans; but if half that energy had been put into collecting outstanding taxes, to the amount of over £90,000,000, the financial position of the Government would have been much better.

Mr Bryson - The Government got the loan money without the assistance of the right honorable member.

Mr FADDEN - It got the money with the assistance of the Commonwealth Bank, by "pinching" it from the Commonwealth Savings Bank. Taxation is the greatest safeguard against inflation, yet the Government failed to collect £42,000,000 that was due to it in taxes, whilst another £50,000,000 represents the amount which was unassessed - a total of £92,000,000.

The Treasurer's financial statement throws into relief the bad budgeting of the previous year. The right honorable member for Yarra (Mr. Scullin) would have the people believe that as soon as the war ended the Treasurer had called Ministers and officials together to consider ways of putting the country onto a peace-time footing. If. this financial statement is the record of their endeavours they were singularly unsuccessful. Income tax receipts amounting to tens of millions of pounds were deliberately excluded from the financial statement, and the reason is obvious. It was done because the Treasurer was not willing to face the State governments on the uniform taxation issue.

According to official statements, retail prices have risen by only 24 per cent., but no account is taken of the increased price of fruit and vegetables or of clothing and building materials, &c. The Government's statement will not deceive anyone, particularly the housewife, who knows that she must pay at least 74 per cent, more for clothing.

In the Fourth Victory Loan, the sum of £86,370.570 was subscribed, but only £44,538,780 was put in by individuals and companies. The Commonwealth Savings Bank and government instrumentalities Subscribed £41;S31,790, or approximately 48 per cent. Had these large amounts not been pumped in at the right moment, the loan would have been an abject failure. Over-subscription was claimed when £78,041,370 was subscribed for the Security Loan - the last loan floated: Of this amount £48,550,110 was subscribed by individuals and companies (excluding banks), and £29,491,260 by the Commonwealth Savings Bank and government instrumentalities. But for the* bank and department subscriptions, the loan would have failed by nearly £30,000,000. The Government attempted to deceive, the people by saying that recent loans had been oversubscribed.

The trust account fund was bankrupt when the last budget was presented. The figures showed that the fund was in credit to the amount of £63,000,000, but this money had been taken by the Government, and replaced by treasurybills - in other words, by the Government I O U's. The money had been used by the Government and I now ask the Treasurer where he got the amount of £6,600,000 that was charged against the fund for social services. It is obvious to me that the money came from the disposal of war' materials. The Treasurer's statement is misleading and deceptive, and compares unfavorably with the balance-sheet of a football club; yet the people of ' Australia are asked to accept it. It is a piece of mere windowdressing, and fails to explain the true financial position of the Commonwealth. It is indicative of insincerity, bad budgeting and loose administration.

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