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Wednesday, 5 October 1927

Senator CRAWFORD - " There is none so blind as they that won't see."

Senator NEEDHAM - Before I sit down I shall prove that there is ample evidence of the lack of the economy which has been preached so loudly and constantly by the Treasurer. Prior to his association with the Government as Treasurer he was an ardent disciple of economy; but since he has been in charge of the Treasury he has recklessly squandered the funds of the nation. A brief glance at the budget might lead one to believe that the finances of Australia are in a sound condition; but a close analysis will prove the contrary to be the case. It is true that last year there was a surplus of £2,635,597, and that the estimated surplus for this financial year is £149,381. The Treasurer has always been guilty of estimating a low surplus. Every presentation of the budget so far has shown him to have been very far out in his estimates. Surpluses recur every year; but how are they brought about? The expenditure out of loan money on works during 1921-22 was approximately £5,000,000. In 1926-27 the expenditure out of loan for works was £7,000,000, an increase of £2,000,000 since Dr. Page became Treasurer. If honorable senators will turn to page 6 of the budget for 1922-23 they -will find that during 1921-22 the sum of £2,572,000 was spent out of revenue oh additions, new works and buildings. In the following year, however, when Dr. Page became Treasurer, only £720,000 was spent out of revenue for the same purpose, while in 1926-27 the amount so expended was only £215,000. It will, therefore, be seen that during the term of office of the present Treasurer, the Government has spent more than £2,000,000 additional loan money, and a correspondingly less amount out of revenue, on additions, new works, and buildings.

Senator Crawford - During the period the Government has paid £36,000,000 off the war loans.

Senator NEEDHAM - I shall show presently that that does not improve the position. In 1922 Dr. Page; who was then a private member, said : -

There appears to be some manipulation of the loan and revenue expenditure in order to make the budget look as favourable as possible.

That which Dr. Page as a private member condemned, he has practised as Treasurer.

I shall now deal with the Government's policy of borrowing from overseas. The amount is increasing every year. In 1913 the Commonwealth debt in London amounted to £3,646,000; by 1919 it had increased to £106,000,000 and in 1921 it was £117,000,000. In 1926 it amounted to £155,000,000, in addition to which £15,000,000 was borrowed in the United States of America. Since 1922, the sum of £170,000,000 has been borrowed overseas by the 'present Treasurer.

Senator Duncan - A considerable portion of the amount was borrowed for the States.

Senator NEEDHAM - I am referring to our borrowing overseas. Not many years ago the then Treasurer of Queensland, Mr. Theodore, borrowed money in the United States of America for State purposes. He was a labour Premier, and because he dared to borrow money outside the Empire, he was charged with disloyalty to Australia and to the Empire. But there, was no charge of disloyalty when Dr. Page borrowed money in the United States of America.

Senator Reid - The conditions were vastly different

Senator NEEDHAM - Yes ; Dr. Page was not a labour Treasurer, and therefore could do with impunity what a labour Treasurer could not' do.

Senator Glasgow - It was an act of disloyalty to borrow money there at 7 per cent.

Senator NEEDHAM - It was not so much the conditions of the loan that caused the criticism as that Mr. Theodore did not borrow in London. Since the termination of the war, we have borrowed £64,000,000 overseas. Of that amount the present Treasurer has borrowed £50,000,000.

Senator Crawford - How much of it was borrowed for the States?

Senator NEEDHAM - When in London recently the Minister for Trade and Customs, Mr. Pratten, in a statement to the London Financial Times, as reported in the Melbourne Herald of the 24th June last, said : -

The excess in the importation of manufactured goods, coupled with the increasing burden of interest upon overseas debts, was wholly brought about by extravagant borrowing, which, in his opinion, could not continue indefinitely.

Mr. Prattenput his finger on the weak spot in the policy of his Government. He should see that the position is altered or retire from the Ministry.

Senator Sir Henry Barwell - Much of the money borrowed was obtained for the States.

Senator NEEDHAM - Mr. Pratten made no reference to moneys borrowed for the States. He referred to extravagant borrowing. That is the charge I make against the Government.

Senator Sir Henry Barwell - His remarks applied to Australian borrowing as a whole.

Senator NEEDHAM - In 1922 our gross public debt amounted to £416,000,000; to-day it is £461,000,000. The Treasurer makes much of the reduction of the war debt by several millions of pounds; but if we analyze the figures carefully we shall find that that reduction is mythical. In 1922 our war debt amounted to £333,000,000; to-day it is £297,000,000- a reduction of £36,000,000 But, on the other hand, " other debts " amounted to £31,700,000 in 1922, as compared with £70,000,000 to-day. Thus, although we have a reduction of £36,000,000 in connexion with our war debts, we have an increase of £38,000,000 in " other debts."

Senator Crawford - The honorable senator has included moneys borrowed by the Commonwealth for the States.

Senator NEEDHAM - Our net debt in 1922 amounted to £339,000,000; it is now £341,000,000, clearly showing that we are increasing instead of reducing our debt.

A great deal has been said about the proposed reduction of our income tax and our land tax by 10, per cent. As a private member, Dr. Page ridiculed the idea of a reduction in taxation. In 1920, when our taxation had reached its peak, he said: -

I make no complaint of the incidence of taxation..... I do not complain of its 'being* high, because, in my view, now is the time when we should tax ourselves, with the object of reducing our public debt. ,

In 1921 he went further, and said : -

The electors most know, and will know, as far as it lies in the power of the Country Party to inform them that the proposed reduction in taxation cannot continue unless there is a permanent reduction in the cost of government.

Where is that reduction in the cost of government? What has the Country Party done to bring it about? Dr. Page has clearly spoken with two voices. It is amazing how one's ideas change when one ceases to be a private member and assumes the responsibilities of office. While the Treasurer proposes to reduce the income tax and the land tax by 30 per cent., he is piling up the general taxation, which directly affects the workers. For the year 1924-25 we find 3,638 persons receiving incomes of over £1,000, and companies contributing £9,278,000 out of a total £10,296,000 income tax assessed. It will be seen, therefore, that the great mass of the people will reap very little benefit from the proposed 10 per cent, reduction. During the last five years the general taxation of the Commonwealth has increased This is indicated by the following table: -


It is evident that since Dr. Page has been Treasurer the general taxation of the Commonwealth has increased oy nearly £10,000,000 a year. In 1922 the taxation per head of the population was £9 0s. 4d. In 1926 it was £9 ls. 6d., an increase of ls. 2d. per head. To-day it is 8 per cent, higher than it was during the period of the war.

The surplus earnings of the department of the Postmaster-General for the year 1926 amounted to £362,739. When Mr. Bruce was in Perth during the recess he said that the surplus earned by the department of the Postmaster-General would be used as a set-off against the loss on the Commonwealth railways, but when Dr. Page was a private member he strongly condemned the policy of absorbing the surplus of the Postal Department into the general revenue. He said that the department should be self-contained, and that whatever profits it earned should be' devoted to extension and development of postal facilities. Nevertheless, we still find that the profits of the department are devoted to purposes entirely foreign to that section of Commonwealth activities which has earned them. To make matters worse, we are borrowing for postal extensions. Let us see how this policy operates. For the years from 1901 to 1921 the expenditure on new works, buildings, and sites for the Department of the Postmaster-General was £10,541,000 from revenue, and £1,696,000 from loan. In 1921-22, the expenditure from revenue was £990,000, and that from loan was £848,000. In 1922-23 only £221,000 was spent from revenue, while £2,288,000 was spent from loan. Since then the whole of the expenditure on new works, buildings, and sites has been provided out of loan funds.

Senator Sir William Glasgow - Does the honorable senator disagree with that policy ?

Senator NEEDHAM - It is not a sound policy to keep on borrowing.

Senator Sir William Glasgow - Is not the honorable senator aware that a sinking fund has been provided to liquidate that loan expenditure?

Senator NEEDHAM - I am aware that a sinking fund has been established in connexion with these postal works; but I do not believe in a policy of applying the profits earned by one department to meet losses incurred by other departments, while at the same time we borrow for the extension of the activities of the department that has earned the profit. In 1925-26, Dr. Page, in delivering his budget, said that the Government had approved of charging to loan a portion of the salaries and wages of permanent employees who were engaged upon capital construction. To my mind it is not sound policy to charge salaries to loan fund, and if this practice is pursued to any extent it should cease. It seems to me to be simply an excuse to pay as little as possible out of revenue. A careful study of the budget papers indicates that we should call a halt in our present financial policy, and that the sooner the economy so often spoken of by the Treasurer is put into operation the better it will be for all concerned.

I said at the outset of my remarks that the phrase -i elimination of waste " had been used frequently by the twin heads of the present Government. Let us look at the expenditure on defence. From the signing of the armistice to the 30th June, 1927, various National Governments have expended £49,000,000 on defence, including the special allocations set out in the budget. Apart from a couple of cruisers not yet completed, and a seaplane carrier in course of construction at Cockatoo Island, we have scarcely anything to show for that vast expenditure. We were told that the war in which we were engaged was a war to end all wars, and that afterwards Australia would not require to spend as much money on defence as it did before. But when we look at the expenditure we have incurred since the war, we see that there was very little in that promise. While Judge Drake-Brockman was a member of this Senate he said that we were not getting full value for the money spent on defence. I take it that he was an authority on defence matters. He had had considerable experience during the war, and we were entitled to pay heed to a statement from a_gentleman who was then Government Whip. In this regard also I put in the witness-box another gentleman whom Australia honours. I refer to Sir John Monash, stated to be one of the Empire's foremost generals. I am sure that he knows what he is talking about. Speaking last year,' he reiterated the statement he made in 1924 when he said that the position of Australia as regards defence was not as favourable as it was in 1914. Another witness in condemnation of the present system of defence is Sir Harry Chauvel. The Prime Minister has endeavoured unsuccessfully to disprove the charges made by Sir Harry Chauvel against our present defence system. It is true, as the Prime Minister stated, that we are spending more money on. defence than we have ever done before; but I should like to know what we are getting in return. According to military experts, our defence forces would not be able to defend Australia for more than 24 hours.

Senator Elliott - There is very little likelihood of war, for a time, at any rate.

Senator NEEDHAM - I trust that such is the case; but a close study of the international situation does not give one any such hope.

I now come to the question of munition supplies. It is remarkable that we are dependent upon other countries for munition supplies, despite the fact that we have in Australia, with perhaps one exception, sufficient material to manufacture all our requirements. I shall not mention particular exceptions, but the matter was discussed before the Public Accounts Committee when it was inquiring into munition supplies. During the four years 1922-23 to 1925-26, we imported over £1,100,000 worth of munitions. That is an unfortunate position in which to place an isolated country such as Australia. The attitude of the Government might be excused to some extent if the necessary materials were not available; but according to expert evidence, most of which was obtained from the Munitions Supply Department, the necessary materials to make Australia self-contained in the matter of munition supplies are available.

Senator Sir William Glasgow - We are undertaking that Work now.

Senator NEEDHAM - The Government cannot be doing all that is necessary when it is importing supplies to the value I have mentioned. *

Senator Sir William Glasgow - The necessary factories cannot all be erected at once.

Senator NEEDHAM - Perhaps not; "but the Government should manufacture a larger quantity of munitions than it is doing at present, and thus reduce the importations.

When it was proposed to construct abroad two cruisers for use in Australian waters, honorable senators on this side of the chamber said that, they were opposed to their construction, but that if Parliament decided that they should be built the work should be done in Australia. The Prime Minister supported by honorable senators opposite, said that they could not be built in Australia.

Senator Ogden - Owing to the cost.

Senator NEEDHAM - The Prime Minister did not qualify his statement in that way, and clearly stated in some of his speeches that many of the parts required would have to be imported. I notice, however, that when the right honorable gentleman was last in Great Britain he said that the next cruisers required for the Australian Navy would be built here. I have contended all along that as we have the necessary skilled workmen and material we could and should build such vessels in the Commonwealth.

I direct the attention of the Minister for Defence to our Air Force, which is a very important arm of defence. Two or three years ago Sir John Monash said that our Air Force was a sham, and I, too, believe, that as m effective arm of defence, it is of little us?. According to published reports, of the twenty machines which flew from Melbourne to Canberra at the opening of the Commonwealth Parliament, a distance of 200 miles, five crashed, which is not a good advertisement for our Air Force. At times we have been' shocked by the crashes which have occurred - particularly so by the deplorable accident in Melbourne on the day the Duke and Duchess of York arrived in that city. The Government, shortly after, appointed a committee to inquire into the cause of aviation accidents; but, unfortunately, the meetings were held in camera, and the members of the committee were officers of the department.

Senator Sir William Glasgow - The chairman was an independent person.

Senator NEEDHAM - The inquiry should have been held in public, and there should have been other than officials on the committee. Aviation plays a very important part in defence. Although it was really in its infancy during the Great War, it rendered wonderful service. It is almost impossible to visualize the importance of aviation in the event of another great international conflict. I notice from the budget figures that £2,000,000 of the surplus is to be spent on naval construction and a reserve for defence purposes, and £200,000 on civil aviation. The Air Force is of such importance for defence purposes that a much larger sum than £200,000 should be set aside for aviation purposes; I do not think that half the amount to be spent on naval construction would be too much.

Senator Elliott - Does not the honorable senator consider that civil aviation will assist defence?

Senator NEEDHAM - I am speaking of aviation generally, and its usefulness in any country. I suggest that the Government should inaugurate its own air services throughout Australia. They could be used for the benefit of the people, particularly those in the more remote parts of the Commonwealth, and in. assisting in the carriage of mails for the Postmaster-General's Department, and also passengers. As the governments of Australia, both Federal and State, practically control land transport, they should take charge of air transport. Depots could be established all over the country, and the services linked up in such a way as to benefit our commercial and military activities. While we are handling our air services in the present haphazard manner, other countries are making marked progress. The Government should pay more attention to this important service than it is doing at present. During the past year nearly £600,000 was spent on the Air Force; but in common with many other branches of defence we have not received value for the money expended. Speaking on defence matters in 1921, the present Treasurer said, "A further study of the defence Estimates shows an increase in general contingencies and fat salaries." During the five years the Treasurer has been in office there has not been any reduction in what he terms " fat salaries." In this year's Estimates provision is made for the payment of £8,500 to1 seven colonels, lieutenants-generals, &c, and £123,000 for the payment of the salaries of lieutenants-colonel, colonels, majors, &c. It would appear that our Defence Forces consist of all officers and no privates.

As honorable senators are aware, Mr. Trumble, who occupied the position of Secretary of Defence, and who carried out his duties with great ability, has been transferred to the High Commissioner's office in London, and Mr. Shepherd, who was secretary to the High Commissioner in London, has been appointed Secretary for Defence. During the last two years Mr. Trumble was paid £1,350 per annum, but prior to that he was receiving only £1,150. As Mr. Shepherd is now receiving £2,000 par annum, as against £1,350 paid to Mr. Trumble, I should like to know if the increase in the salary of the office is to be permanent. If that is the case I venture to say there are other officers in the Commonwealth Service holding equally responsible positions who are entitled to equal recognition.

Reference is made in the budget speech to the financial relations between the Commonwealth and the States, and we have been informed that an agreement has been entered into between the Commonwealth and the States under which certain moneys are to be paid to the States in lieu of the per capita payment. Prior to the introduction of legislation for the abolition of the per capita payment, the Prime Minister and Treasurer stated that it was a pernicious system for one government to borrow money and another government to spend it. If the proposals are ratified by the Commonwealth Parliament and the State Parliaments, this " pernicious " system will continue. For a period of 58 years it is proposed to pay certain sums of money to the States, so the pernicious system referred to by the Treasurer, of one Government raising money for another Government to spend, is to be continued. It is true that, during the period mentioned, the Commonwealth Government has undertaken to pay interest on State debts; but my objection is that the new agreement will not be as beneficial to the States - certainly it will not be as beneficial to Western Australia - as the per capita payments were. Western Australia is the largest State in the Commonwealth, and under the developmental schemes now in - operation its population will increase steadily. The per capita payments, if they were continued, would correspondingly increase. Perhaps the same may be said of Queensland. That State and Western Australia offer the greatest scope for land settlement, and under the per capita system both States would benefit more than they will under the new arrangement.

Senator Crawford - And yet population is increasing more rapidly in New South Wales and Victoria.

Senator NEEDHAM - That does not dispose of my argument that the per capita payments would not be a better arrangement for the States.

Senator THOMAS (NEW SOUTH WALES) - Why did not the honorable senator support the payments ?

Senator NEEDHAM - I opposed their abolition, as reference to the Hansard debates will prove. I agree that the Premiers of the States made the best arrangements possible in the circumstances.' They were in .a corner, so to speak, since this Parliament had signed the death warrant of the per capita payments. The new financial agreement has yet to be ratified by the Parliaments of the States, and by this Parliament also, and must then be submitted to the people in order to obtain their approval for an amendment of the Constitution in the direction indicated. Previous appeals to the people have demonstrated that they are not disposed, too readily, to agree to any vital amendment of the Constitution, and I am not confident that the proposed referendum for an alteration of the financial relationship between the Commonwealth and the States will be agreed to.

In his reference to Commonwealth finance, Senator Crawford said that £70,000,000 -represented borrowings for the States. If the Minister will look at page 2 of the Budget papers he will find that it is not so.

I come now to the Customs tariff. The actual revenue receipts were approximately £65,000,000. Of this amount £43,552,000 were derived from Customs and excise ; this indicates clearly on what, source the Government relies for its revenue. If by any chance the Customs revenue fails, the Government will be in difficulties. It is evident, however, that the Ministry is determined that the Customs revenue shall not decline. My view is that he tariff, is more revenue-producing than protective in its incidence. The interests of the man on the land are being overlooked. This Government is charging everything possible to loan. It is imposing high tariffs on every conceivable article that is used by farmers and roads boards in the different States.

Senator CRAWFORD - "Would the honorable senator prefer to have freetrade in agricultural implements ?

Senator NEEDHAM - I do not wish to enter into a controversy concerning the tariff at this juncture. I endeavoured to secure a reduction in the duties on farming " implements and road-making machinery, but without success ; and again

I plead for more consideration for tho man on the land. "Western Australia, which is a purely primary producing State, is launching out on a large scale to open up new agricultural areas. Land is being taken up as quickly as it is being surveyed. A great deal of agricultural machinery will be necessary for its proper development. Therefore, I say without hesitation, that high protective duties on farm implements and road-making machinery will not help the new settlers in Western Australia. They will assist industry in other States, bat that should not be done to the injury of an industry, such as I have mentioned, in Western Australia.

Senator CRAWFORD - We cannot discriminate between the States.

Senator NEEDHAM - I admit that, but by the imposition of lower duties on the implements so necessary for the development of land in the various States, we can help our primary producers. We all know what hardships they have to endure, and what difficulties confront them : it therefore should be our duty, when framing the tariff, to ease the burden as much as possible. It has always been a source of amazement to me that representatives of the Country Party allow their confreres in the Ministry to impose high duties on farm implements and machinery. Before that party became associated with the Nationalist Party, through their leader, Dr. Page, it was entirely opposed to such duties, but now it allows them to be levied without protest.

Senator Chapman - We are always voicing our protests against high duties on agricultural machinery and implements, but honorable senators opposite vote for them.

Senator NEEDHAM - I am afraid the honorable senator will have to protest more vigorously in future if he wishes to persuade the Government to ease the burden on our primary producers. [Extension of time granted.]

For the edification of Senator Crawford I should like to read the following statement, concerning our public debt, from the budget speech delivered by the Treasurer last week : -

The balance of our public debt has been contracted on account of Commonwealth works and loans raised for the States and Federal Capital Commission.

The amount of this debt at 30th


Senator Crawford - Now read the next half-dozen lines; they disclose the true position. The honorable senator said that the public debt was £461,000,000 and did not allow for a deduction on account of State debts of £120,000,000, making the nett Commonwealth debt £340,928,000. He quoted the gross instead of the nett debt.

Senator NEEDHAM - I thank honorable senators for their courteous hearing, and shall close by saying that the federal budget reminds me of the reply made by the beadle of a certain Scottish town when asked by a young Scotch clergyman what he thought of the sermon. " Weel, he said, it was read; it was badly read, and was no' worth reading." That is what I think of the Treasurer's budget.

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