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Thursday, 2 June 1949


Mr CHIFLEY (Macquarie) (Prime Minister and Treasurer) . - in reply - I appreciate the action of the honorable member for Gippsland (Mr. Bowden) in curtailing his speech, thus enabling the 'business of the House to be expedited. The honorable gentleman could have covered a wide field. He referred to the suggested increase of postal charges and stated that improved services had not been provided. Since 1939 the number of telephones installed in Australia has increased from 661,000 to 1,005,000. Therefore, telephone subscribers are linked to 344,000 more telephones than they were in 1939. It is true that everything has not been done that we should like to do. Approximately 600 rural automatic telephone exchanges, which I regard as a great amenity in country areas, have been ordered and are being installed as fast as they are delivered. The honorable gentleman referred to the revenue earned by the PostmasterGeneral's Department. Of the total of £36,000,000, £12,500,000 is a notional figure in respect of services provided for other government departments. It is merely a book entry. In addition, the Postal Department does not contribute to the sinking fund in respect of the department's debt. The department has never paid its own sinking fund charges. The Treasury pays out approximately £2,000,000 a year in respect of that item. An honorable member asked where the profits went. During the last financial year and this year £20,000,000 has been expended on capital works for the Postal Department, and at the present rate of expenditure £12,000,000 will be expended in the next financial year. The Leader of the Australian 'Country party (Mr. Fadden) interjected yesterday that that is borrowed money, but it is not so. It is Consolidated Revenue, which means that the Postal Department does not have to pay interest on it, and also that no sinking fund charges have to be paid. That fact relieves the. department of a charge of probably £330,000 a year. Therefore, the surpluses that have been mentioned are not surpluses in total but have been used for expenditure on capital works for the Postal Department which, as I have said, has amounted to £20,000,000 in two years. A sum of £45,000,000 has been provided for a three-year programme, including £12,000,000 to enable the Postal Department to place advance orders. I do not propose to deal fully with that matter now because it still has to be determined in some respects, and the House will have a later opportunity to discuss it. Nor do I propose to deal with all the questions that have been raised during this debate. I shall reply to some of the main points only. Unfortunately, one hears the same arguments used every time such debates take place, and finds oneself repeating the same replies, until the whole proceeding becomes a sort of litany of statements and responses. I do not like that kind of tedious repetition.

The honorable member for Gippsland mentioned a statement that was made in this House. Most honorable members know my views on their so-called privileges. I consider that those privileges have been somewhat abused at various times by all parties. I, personally, have never found it necessary to say in this House anything that I am not prepared to say on any street corner, which would permit any person to take any action considered necessary, through the courts.


Mr Anthony - Does not the Prime Minister consider that his Ministers should conform to that rule?


Mr Pollard - The honorable member for Richmond does not conform to it.


Mr Anthony - I have never said anything in this chamber that I am not prepared to say outside.


Mr CHIFLEY - I am not quarrelling with the system of privileges, which was in operation before I entered politics. I am, relatively, a political amateur, and J do not profess to be experienced in those matters. Speeches made in the Parliament have always been privileged. 1 consider that a worse practice than that of honorable members making attacks, under parliamentary privilege, against other honorable members, is that of defaming persons outside the Parliament who have no right of reply. That has been done repeatedly with the full approval of honorable members opposite. The honorable member for Reid (Mr. Lang) and the honorable member for Wentworth (Mr. Harrison) used to produce one scandal a week, which proved always to be a mare's nest without even a bottom to it. At least honorable members are in a position to defend themselves against charges made against them by other honorable members.

The honorable member for Warringah (Mr. Spender) had something to say about expenditure. I consider that it would be only repetition for me, by replying to him, to cover ground that has already been covered by the Minister for Post-war Reconstruction (Mr. Dedman). The honorable member for Darwin (Dame Enid Lyons) had something to say about reconstruction policy, but the honorable member for Fremantle (Mr. Beazley) answered her effectively, so I shall not cover that ground again either.

There can be no illusion regarding the Government's attitude to prices controls and the removal of subsidies. We were completely honest about those matters. Prior to the taking of the prices referendum we told the people that, if the Government were not given constitutional power to control prices, it would not be able to continue the payment of subsidies on goods over the prices of which it had no control. The first statement that 1 made in connexion with the referendum made that perfectly clear. Some honorable members opposite, particularly the right honorable member for North Sydney (Mr. Hughes), as well as some of the Opposition's advertisements in newspapers that advised the people to defeat the referendum proposals, said that the Government would never dare to withdraw subsidies. So the lies did not come from this side of the House, but from the advertising agents and some honorable members of the Opposition. We did the democratic thing. The people's verdict in the referendum was very conclusive and we do not disagree with it. We never believed that six States could agree about any one matter. I have had some experience of trying to obtain agreement between States. I am chairman of the conference of Common.wealth and State Ministers that is held in August every year and know the difficulties of getting any six bodies, or any six men, of diverse interests to agree on any particular matter. When there is a diversity of opinion between governments it is very difficult to achieve a uniform method of administration. I repeat that there was no illusion on the part of the people about the Government's views on the referendum and its intentions regarding subsidies if the referendum proposals were defeated. The honorable member for Gippsland and other honorable members opposite have stated that the Opposition was prepared to extend the period of the defence transitional provisions, to enable the Government to continue to control prices. But the legislation containing those provisions had only to be tested in the High Court of Australia and be declared invalid, and no matter what the Opposition believed or did, we would not have had the power to continue prices control. I think that it was generally recognized, as time went on, that power under the defence transitional legislation would be challenged some time and also that with the passage of time the High Court of Australia would be bound to examine closely what were claimed to be powers held under the Commonwealth's defence power. We feared that something of that kind would happen and considered, therefore, that we should ask the people of Australia if they desired the Government to have those powers that it did not then possess constitutionally. In my first statement about the referendum, as I have already said, I pointed out that we would not be able to continue the payment of subsidies as before, unless we could control the prices of goods upon which subsidies had been paid. We kept our promise and obeyed the will of the people. I do not know why anybody should complain about that.

Several other matters were raised that I have heard raked before. One of them concerned the encouragement of workers to do more and better work. "We have been listening to that for a long time. At one time it was said that if taxes were reduced on incomes in the lower brackets everything would be all right. That has been done. Any one who studies the present scale of taxation deductions on lower incomes, particularly of taxpayers who have family responsibilities, will be surprised at the low amount of tax levied. The new scale of deductions for dependent children that will come into operation on the 1st July next makes the lowness of the rate even more pronounced. From time to time the argument has been advanced that the incentive of workers in the lower and middle in-come brackets had been destroyed by heavy taxation.


Mr White - What about indirect taxation?


Mr CHIFLEY - Indirect taxation has been removed entirely from all basic foodstuffs, all clothing, 95 per cent, of building materials, and a number of other items. I know that the honorable member for Fawkner (Mr. Holt) takes up the matter of some new food preparation that one rubs on biscuits to illustrate the fact that, according to him, the sales tax on foodstuffs has not been removed. Not long ago, when I asked the honorable member for Moreton (Mr. Francis) to tell me one basic foodstuff on which sales tax was still applied, he replied " Refrigerators ". I realize that he was talking about iron rations and not about ordinary rations. That was the only item that he could think of.


Mr Francis - I named biscuits, cakes and scones.


Mr CHIFLEY - Then the honorable member for Fawkner scurried away, and with some assistance from the Library staff, dug up the names of a number of fancy foodstuffs that are used in the making of sandwiches, hoping to prove that basic foodstuffs were taxed.

I propose now to discuss Australia's general economy. A certain measure of inflation has taken place, and I do not claim that it is entirely due to the fact that the Commonwealth lost control over prices. We know that prices rose overseas, and that was bound to affect local prices, but the loss of Commonwealth control over prices contributed greatly to the inflationary trend. I admit, of course, that higher wages, and the introduction of the 40-hour week, had something to do with bringing about a measure of inflation.


Mr Francis - Something !


Mr CHIFLEY - No one can say to what degree they contributed to it. The honorable member for Gippsland (Mr. Bowden) went so far as to cast reflections upon the Arbitration Court. I always understood that the court was sacrosanct, and free from criticism in this House. The honorable member said that the 40-hour week had been granted by the court under pressure from the Government. That was a grave reflection on the court. I take this opportunity to express the Government's appreciation of the services rendered to Australia by the late Chief Justice of the Arbitration Court, who died last night. I resent the fact that, on the day of his burial, he should be charged with having acted under pressure from the Government. He did not share the political beliefs of the Labour party, and it came as a surprise to me to hear the honorable member for Gippsland say that he had granted the 40-hour week under pressure from the Labour Government. I, like the Minister for Air (Mr. Drakeford), have had many arguments in the Arbitration Court with the late judge over industrial matters, but we never doubted his honesty or impartiality.

The chief complaint of the Leader of the Australian Country party (Mr. Fadden) seemed to be that the finances of the country were too sound. I remember that when the National Welfare Fund Bill was introduced, three prominent members of the Opposition - the honor able member for Wentworth (Mr. Harrison), the then honorable member for Parramatta (Sir Frederick Stewart) and the then honorable member for Robertson (Mr. Spooner) - shouted in unison that it was " phoney " proposition, and that the fund would be insolvent very soon. Well, the fund is now approaching the £100,000,000 mark, and no one can doubt its soundness. It is well that the public should be informed of the country's financial position. I have read in American journals articles which paid tribute to the soundness of Australia's economy. Prices have risen in Australia, but they are still below world prices, and certainly far below prices in that great capitalist country, the United States of America. Farmers know that they have to pay three times as much for wire imported from the United States of America as for locally made wire, though it is admitted that there is not enough local wire. There is inflation in the United States of America, and, indeed, all over the world. It is infectious. It has spread to Eastern countries, even to those where tens of millions of persons are unemployed. It has spread to the islands of the Pacific. When I was in England, Lord Leverhulme told me that wages paid to workers on the plantations in the islands were three times what was paid before the war. In South Africa, under a conservative government, mining costs are increasing, and in Latin America wages and costs have risen. No government has been able to prevent inflation. The Government of the United Kingdom has been paying £500,000,000 a year in subsidies in order to keep down prices, but eventually increased costs will have to appear in the nation's economy. However, I think I can claim, without undue egotism, that, having regard to all the circumstances, inflation and price increases have been less in Australia than in any other country in the world. In Australia, we have been able to control inflation, and we should have been able to do it better if the Commonwealth had not lost its power to control prices.

Another complaint against the Government is that it has financed public works, including those for the Post Office, out of revenue instead of loans. Surely there is nothing wrong with that. Is it not right that in a time of prosperity we should try to finance public works from revenue? Is it suggested that, having borrowed during the war, we should go on borrowing in time of peace? In spite of the fact that we have kept the national economy in a sound condition, and even have had surpluses though only modest ones, we have reduced our overseas indebtedness by over £110,000,000, and advanced £35,000,000 to war-stricken countries. This amount will probably be increased eventually to £37,000,000. Overseas interest rates have been reduced, which has lightened our overseas payments. We were also able to reduce interest rates in Australia. During the war, we kept bringing down interest rates, whereas, in World War I. they kept going up, so that at one time as much as 6 per cent, was paid on treasury bills with a tenure of three months. Nothing like that has happened since a Labour government has been in office. We have every right to be proud of the country's financial position.

The honorable member for Fawkner charged the Government with bleating about a depression. It is not the Government, but overseas newspapers, and economists who are judged to be experts, that are predicting an economic depression. History shows that great inflationary trends in the world are generally followed by recessions. Any one who refuses to be guided by events which have happened in the past in circumstances similar to those prevailing to-day is a fool. It is a simple and very sound banking principle that we should endeavour on a governmental basis to make our own economy completely solvent, and, asfar as possible, build up a reserve against the possibility of a recession. The honorable member raised the subject of a recession; I did not do so. He raised it in a question which he asked about the rapid fall of prices on the New York stock market. What we have tried to do is to implement a simple programme which can be easily understood. In conjunction with the States, we have set out to provide against a fall in our overseas income and overseas trade which may result from a recession abroad. Some honorable members on this side of the chamber have vivid memories of the last depression. From actual experience they know what it is to have to depend upon the dole and what it feels like, having a wife and family, to have to go out and beg for a couple of hours' work. Because of those bitter experiences, which I do not believe will ever be forgotten, it is the duty of any government to try to strengthen the economy of this country so that in the event of any recession occuring overseas we shall, as far as is humanly possible, buttress our economy to withstand the effects of a movement of that kind. "We have been told that some one in the United States of America said that it would not affect the American economy very much if 5,000,000 Americans were unemployed. My answer to that is that it might not affect the economy of well-to-do people, but it would seriously affect the economy of the 5,000,000 who were unemployed. Without indulging in heroics, we owe a duty to one another. If it is possible by legislation or administrative action to prevent a recurrence of the tragedies which followed 1929-30, any politician or any government would be recreant to its trust if it did not take steps to prevent anything like that from happening again. Let us take our minds back to 1929. I, myself, remember those days very vividly, as I am sure other honorable members do also. We lapsed into that recession with our finances completely unsound. Governments of the day were borrowing overseas as much money as they could obtain, and in 1928-29 the source of that borrowing was shut-off. Overseas investors had lost confidence and would not invest in further Australian loans. Subsequently, we were able to borrow in this country only by the grace of the private banks and at high rates of interest. When we faced the recession that occurred in 1929-30 Australia was bankrupt. That was the fact of the matter. I shall not go over the political story relating to those days or deal with the sufferings which were borne in one way or another by millions of good Australian citizens. Any government would be recreant to its trust if it were unmindful of past experiences of that kind and did not take steps to buttress our economy against a recurrence of them. Although we may be only figures moving temporarily on the stage, nevertheless, we have a great public duty to protect not only the present, but also future generations, the children of to-day. We must give some thought to Australia's future. I was delighted to learn from the honorable member for Flinders (Mr. Ryan) that the Liberals to-day have advanced somewhat upon the Liberals of the 1860's. From my experience of them, I could imagine that, possibly, they have made a slight forward movement during the last 80, or 100, years. That is about the rate at which they will progress. I have necessarily dealt with this matter in a general way; it covers a very broad canvas. However, I shall give a few illustrations to show that one is not always justified in accepting as conclusive, what appears to be so on the surface. A few years ago, Argentina was " on top of the world ", but it is not in that position to-day. Likewise, Sweden, which is a hard currency country, appeared to be " on top of the world ". It is not in such a fortunate position to-day; it is offering its goods at prices very much lower than it did previously. I am not speaking of Labour-socialist countries. South Africa was " on top of the world " two years ago. lt is one of the greatest gold-producing countries. However, 'because of lack of overseas balances, it was forced to place a heavy restriction upon the importation of dollar goods; and, more recently, it has been obliged to restrict the importation of sterling goods. Precisely the same development has occurred in many other countries. We have the anomaly provided by the experience of France. During the last twelve months that country has made rapid economic progress, but no matter how hard the French people work, or to what degree they increase their production, they still find themselves in grave economic difficulties. I shall not paint the full picture. I have said sufficient to indicate that a country which has Australia's opportunity - and many have not been so fortunate - should make every provision possible against a rainy day, that is, against a possible recession over which we would have no control. We could not do anything about a recession in other countries, hut we can prepare to protect ourselves. All that we have done has been done as our public duty. In conjunction with the States we have formulated programmes of muchneeded public works which will be undertaken as sufficient labour and materials become available. We have now proposed schemes such as the Snowy Mountains scheme and a plan for the development of the Northern Territory. We have made plans for a great advance in the productivity of this country. Those plans are not designed to benefit Australia merely this year, or next year; they will be of benefit to future generations of Australians. We have a duty to do that. The honorable member for Flinders, although he made his remarks in a kindly way, rather sneered at the opportunities in what he was pleased to call the " golden age " for Australia. I have a tremendous faith in the future of this country and in its people.


Mr RYAN - I was talking about the present.


Mr CHIFLEY - The honorable member is thinking about to-day. Therein lies at least one difference between the Labour party and the Opposition parties. We try to look forward, instead of always looking backwards. That is the basis of our immigration policy. Not so long ago many complaints were made that our immigration policy was not successful, whereas now we hear complaints that it is too successful. We propose to evolve a great plan of development for Australia and to build up our population by attracting to this country desirable citizens from less fortunate countries, and to offer not only them but also all Australians the greatest possible opportunities in the development of this land. Regardless of whether or not recessions occur overseas, I. repeat that never before in our history has Australia had the opportunity that is offered to it to-day. Already, we have enabled, first, South Australia, and, secondly, Tasmania, to increase their industrial activity. We have met with great success in that respect. I do not condemn honorable members opposite for talking about socialism. I do not need to remind the honorable member for Wakefield (Mr. McBride), who has been the most voluble on the subject, that while he is in Canberra he is living in a socialized community. Every service he uses here is socialized. He would not be able to turn on the light in his room, or even to take a bath, if it were not for the socialized services provided by the Government for the residents of this city. Accordingly, I do not take very seriously the complaints made by honorable members opposite about socialism. I repeat now what I have so often said on the hustings, that we believe in the socialization of certain activities in the interests of the people. Such a policy is by no means championed solely by the Australian Labour party. Mr. Playford, the Liberal Premier of South Australia, the State from which the honorable member for Wakefield comes, socialized its electricity undertaking. The BrucePage Government socialized the A class broadcasting stations. A Liberal government of Victoria socialized the electricity undertaking which operates throughout that State. All of those activities were socialized because the governments concerned believed it to' be in the best interests of the people that they should be placed under government control. Even conservative governments have recognized the desirability of socializing certain activities for the benefit of the masses of the people.


Mr White - The platform of the Australian Labour party pledges all members of the party to a complete programme of socialization.


Mr CHIFLEY - I have listened to that sort of statement for the last 25 years. Reference was made by some honorable members to the subject of taxation and the effect of rising prices on the wages of the workers. As I propose to issue a number of small charts showing the incidence of taxation and the effect of rising prices on wages, I shall not deal with that subject at this stage.

Reference was also made to the shortages that prevent the rapid development of our secondary industries. I am well aware that limitations have been imposed on the expansion of secondary industries because of the shortage of labour and materials but I believe that with perseverance they can be overcome. One difficulty has been that our industrial expansion has somewhat outgrown our physical capacity to meet these developments. These problems will solve themselves as time goes on. What we want, perhaps more than anything else, is a spirit of faith in our nation, not only among our industrialists but also among the workers who will have to do the donkey work. With such a spirit to spur us on, and with unlimited opportunity, coupled with an economy, the soundness of which has never previously been equalled in our history, our future is assured. The Labour Government is determined to do its best to exploit our opportunities to the fullest extent.

Question resolved in the affirmative.

Bill read a second time and passed through its remaining stages without amendment or debate.







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