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Friday, 26 July 1946


Mr BEAZLEY (Fremantle) .- Prior to the war a humorous book entitled A Cliche Expert Testifies of Life was published. To-day, the honorable member for Moreton (Mr. Francis) has delivered a speech which could be headed " A cliché expert deals with politics ". He has spoken of the " heat and burden of -the day" and has told us that "the baby is the best immigrant ". Indeed, he has used all the stock-in-trade of the soapbox orator which we ave accustomed to hear reverberate through this chamber whenever he speaks. I wish to draw attention to the absence from his remarks of any analysis of the financial state of the country.' Affirming that no consideration had been given to exservicemen in respect of taxes, he confined his remarks to generalities. He did not attempt an analysis of the concessions which are now given, or, in his opinion, should be given, to ex-servicemen. All he said was. that a man who had returned from service overseas should be exempt from the payment of taxes for another twelve months, and that in respect of those who had been on home service in Australia the exemption should be raised. The honorable member was not concerned with making an analysis of the financial position, but only with tub-thumping. Actually, the present level 'of taxation in Australia is largely due to the concessions that have been .made to exservicemen. The financial statement of the Treasurer showed that the item of deferred pay had increased from £9,720,000 to nearly £73,000,000. The honorable member claimed that no consideration had been given to primary producers, and little encouragement to other producers, and he rightly emphasized that production was the most important thing to-day. I point out to the honorable member, however, that the amount paid in subsidies has increased from £14,280,000 to £19,753,000. Also, war pensions and repatriation costs have risen from £3,872,000 to £8,566,000. In the course of his speech, the honorable member made some astonishing statements. He said that there had been many strikes, which had had the effect of putting people out of employment, thus impeding production.


Mr Spender - The honorable member does not doubt that, surely.


Mr BEAZLEY - No ; but one of the fundamental theories advanced by the Opposition is that, because of high taxes there is no incentive to produce. Then why do the employers want to employ the strikers if there is no incentive for them to go on producing? The honorable member's argument contains a contradiction, and there is a further contradiction, also : he said., that if heavy taxation on income were reduced production would be increased and inflation prevented. Let me point out that the taxation imposed during the last five or six years has had one curious effect; it has increased the savings bank deposits from £234,000,000 to £649,000,000. These savings represent unused spending power in the hands of the community. In March, 1944, the total volume of savings banks deposits' was "£446,046,000; in March, 1945, it was £539,990,000 ; while in March, 1946, it was £648,852,000.


Mr Francis - That is a reflection on the Government.


Mr BEAZLEY - It. may be, but the theory advanced by the honorable member was that high taxation was destroying spending power. How, then, does he explain the increased spending power of the community ?


Mr FRANCIS - Production has declined and consumers cannot purchase the goods they need.-


Mr BEAZLEY - The fact is that the money taken in taxes from the higher income groups is distributed among those in the lower income groups. The amount of. £73,000,000 for deferred pay goes straight back to the community, as also does the amount of £65,000,000 paid out on social services.

Inflation is affected not only by the volume of spending power in the hands of the community, but also by the velocity of the circulation of money. If money payments are made to those in the higher income groups, the chances are that the money will be banked, because the people in those groups .have no immediate need to consume. If, however, extra spending power is given to those sections of society which need to consume immediately, the increased velocity of the circulation of money will create pressure on prices. Whatever the defects of means tests, they do at any rate ensure that social service payments are applied.to those most in need of them, and those who will most quickly use them. I suggest that the honorable member was not honest in his advocacy of the abolition of the means test, having regard to his defence of the contributory system for social services.


Mr Francis - I advocate the contributory system.


Mr BEAZLEY - Yes, but we must face the fact that the Government which came into office in 1941, when there were 000,000 persons in the services, was not ni the position to introduce a contributory scheme. A primary requirement of such a scheme is that there shall be general stability of employment . among those to whom it applies, which is why contributory schemes have been confined, so far, to the Public Services. During the last five or six years of economic instability, there was no opportunity to introduce a contributory scheme. It is astonishing how many faults are attributed to the pre-war Labour government which was in office for only two years in a period of 25 years. That government is supposed to have been responsible for high tariffs, and for all the faults which have been ascribed to our social services.

The tax nates which the people must endure to-day on every level of income are obviously much higher than before the war. That is regrettable, but ,a community which is- facing the task of demobilization must unwind its war effort 3lowly. In Great Britain, from 1914 to 1918, the British Government itself was by far the greatest spender. In time, the whole economy of' the country was geared to government spending. In 1919, there was a sudden cessation of government spending and a sudden effort at economy. The result was, tha't while at the beginning of 1919 the number of unemployed was only 128,000, the number at the end of the.year was 2,300,000. The United States ' of America and Canada have both adopted the tactic of a. rapid unwinding of the war effort. Canada had 256,000 persons out of work in March of this year, while the United States of America had about 4,000,000 unemployed.

The sudden cessation of government spending, before there has been time to set other forms of enterprise in motion, must create an economic crisis. By tapering-off the war. effort, the Australian Government has ensured that there are fewer than 11,000 persons drawing unemployment relief at the present time. No reference has been made by honorable members opposite to the fact that although £9,500,000 was put aside for unemployment relief, only £1,114,000 has been expended to date. That is a tribute to the Government's financial policy. Government expenditure is not hoarded by the Treasurer; it is distributed throughout the whole community. It is desirable that the Government should diminish vastly its- share in the economic activities of the nation, but when 700,000 men are to be demobilized within a period of twelve months, their claims for pay, deferred pay, &c., must be met. Thus it is that taxation remains high, but it is being reduced. Concessions have been made to those in the lower income groups, but no greater concessions than have been provided for can be made to the community as a whole. If the Government had failed to meet the money claims of ex-servicemen it would have failed in its trust. If it had met those claims. to a greater extent out of borrowed money it would merely have been putting off the evil day, and the burden of payments on the money borrowed would have had to be met out of future taxation. Anybody can get cheap popularity by standing up and bellowing, "We don't like these deductions from our wages ". The vital" point is for what purpose is this expenditure to be applied? Every item specified in the Prime Minister's statement represents inescapable expenditure, and I congratulate the right honorable .gentleman upon the fact that the scientific taperingoff of government expenditure is not creating in this country the unemployment crises that exist in Canada, the United States of America, and to a lesser degree in Great Britain itself.







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