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Wednesday, 2 November 1927

Senator HOARE (South Australia) . - Senator Duncan declared that there was a vast difference between the action of the Queensland Labour Government in borrowing money in New York and that of the present Commonwealth ' Government in borrowing in the same market. The Commonwealth Government was advised by the British bankers to borrow money in New York, whereas because of the high taxation it had imposed on the wealthy land-owners of Queensland, the Queensland Labour Government was told that there was no money available for it in London, and was compelled to go elsewhere to borrow. In any case, what is the difference between the money-lenders of England and those of America ? As far as I can -see whenever a big loan is to be floated, whether in England or America, they confer and fix the rate of interest to be paid by the borrower. No one can deny that a huge amount of British money is invested in American banks.

When Senator J. B. Hayes was congratulating "the Government upon its proposal to reduce the income tax by 10 per cent, he said that the people would be benefited by such a reduction. In my opinion, if the Government is anxious to give some benefit to the people who are least able to bear the burden of taxation, it should go about it in a different way. It should reduce by 1 per cent, the taxation of persons with incomes exceeding £10,000 a year, by 2 per cent, that of persons with incomes of from £9,000 to £10.000, by 3 per cent, those with incomes of from £8,000 to £9,000 and so on, gradually increasing the rate of reduction with the reduction in the income of the taxpayer down to the amount of the exemption. In that way the Government would confer a benefit upon the people who are struggling against adversity and endeavouring to get up from the bottom rung of the ladder. But I want to know how the proposed reduction will benefit the wage earner, the struggling man with a big family who is receiving a small income? Will he get his clothing, his food or his house a farthing cheaper? Will he be better housed or better fed ? In my opinion the Government is paying no regard whatever to the interests of the man who has only his labour to sell. It is putting in practice the principle of " Whosoever hath, to nim shall be given, and whosoever hath, not, from him shall be taken, even that which he seemeth to have." Every time there has been an increasein the rate of the income tax the big employers of labour have" not paid any proportion of it. Every increase has been passed on through the strata of human activities. There is a processby which the income tax filters down, and down until it reaches bedrock, the wage earner, whose shoulders are the least able to bear the burden. I am afraid that the Government's proposal to reduce the income tax will not help those people who are most deserving of help. Senator J. B. Hayes also congratulated the Government on its decision to float another loan abroad. He said that an attemptto raise a loan of £64,000,000 in Australia would mean the withdrawal of that amount from the industrial life of Australia. Apparently the honorable senator does not recognize that if we borrow £64,000,000 abroad the money must come to us in the shape of manufactured goods which are likely to compete with the industries of Australia. It means that £64,000,000 worth of goods less will be manufactured in Australia. Where are the honorable senator's thinking powers?' The honorable senator went on to say that if an attempt were made to rais*? £64,000,000 in Australia the result would be financial chaos. Similar statements were made during the early stages of the war when it was suggested that a loan should be floated in Australia. The right honorable member for Balaclava (Mr. Watt), who was then a Minister, said that it was quite impossible to raise £20,000,000 in Australia without totally disorganizing industry. Honorable senators are well aware of what happened. The Government raised the first £20,000,000 required, and subsequent amounts, without any difficulty. A good old conservative newspaper in South Australia reported .at the time that as the first £20,000,000 had been raised, everything was all right. What was meant? The inference was that immediately after the first £20,000,000 had been raised the money would commence to. circulate amongst the people, and would again reach the banks and be available for further loans. One authority said that our war obligations could be financed on a loan of £20,000,000, and showed how in his opinion it could be done. The Government not only raised the first loan of £20,000,000, but eventually floated locally loans amounting in the aggregate to approximately £280,000,000. The raising of such a large sum did not interfere with industry in the slightest degree; the factories established during the war period are still in existence, and are extending their operations. A majority of the Australian people support a protectionist policy so that we may have our own industries, in which our people may be employed; but notwithstanding this policy the taxpayers are contributing over £43,000,000 annually in th,e form of Customs and excise duties. Protection is the policy of the Commonwealth, but we continue to borrow abroad with the result that large quantities of imported goods instead of money continue to reach Australia. We have established many important industries which are a credit to the people, but we persist in borrowing from Great Britain or from America. When a loan is floated in either of those countries, British or American goods are not always sent in lieu of the money loaned. The governments of those countries may have financial relations with other countries in which the labour conditions are of a lower standard, and instead of British or American products coming in, Japanese goods may perhaps flood the Australian markets. Credit and confidence comprise the main principles of banking, and credits may be handled in such a mysterious way that almost any result may be achieved. On the security of gold bullion in Australia during the war period, which was valued at approximately £53,771,126, approximately £2S0,000,000 was borrowed. Our assets are greater to-day than they were in 1914.

Senator Elliott - Does the honorable ' senator suggest that we should go on borrowing indefinitely as we did then?

Senator HOARE - No. But I think the Government could "without difficulty raise £100,000,000 in Australia if that sum were required. In 1914 the value of our manufactured products was, approximately, £4,000,000 less than the value of our pastoral activities; but in 1924 the value of our manufactures was £30,000,000. In 1915 the number of cattle in the Commonwealth was 9,931,416, and in 1925 it was 13,279,7S5. In 1915 the number of sheep was 73,146,460; but in 1925 it had increased to 103,563,218, which figure was only exceeded in 1891, when the number was 106,421,068. For the information of the Senate, I submit the . following figures showing the value of the products of certain industries in 1914 and 1924: -


These figures show that during the period of ten years the value of the products of the industries I have enumerated greatly increased, and, therefore, our assets at the end of 1924 were of much greater value than -they were ten years previously. I believe Senator Grant said that the profits of the Commonwealth Bank excluding the Note Issue Department for the year ending 30th June, 1927, amounted to £5S0,987, a statement which met with the approval of Senator Thompson.

Senator Grant - A very fine record!

Senator HOARE - Yes; but Senator Thompson would not approve of the nationalization of banking.

When Senator J. B. Hayes was speaking to this motion, an honorable senator on this side of the chamber interjected, " Who introduced the Commonwealth land tax," to which Senator J. B. Hayes replied, " The Labour party, with the object of breaking up large estates; but it did not meet with the success anticipated." I cannot agree with that opinion, because after the passing of the Commonwealth Land Tax Act the area under cultivation increased by approximately 1,000,000 acres.

Senator Duncan - Can the honorable senator name one estate which was subdivided in consequence of the passing of the Commonwealth Land Tax Act?

Senator HOARE - I cannot mention

One at the moment ; but I know that there were some in South Australia. When the area under cultivation was increased by a million acres, additional employment was provided on the farms, and in the manufacture of agricultural implements. The railways also benefited, owing to the additional traffic offering, and in numerous instances land which had been sparsely settled provided many deserving persons with profitable employment. Moorak Estate, near Mount Gambier, in South Australia, on which only about four men were employed prior to subdivision, is now carrying a population of 500 persons. The Booborowie, Hill River, and Yongala estates, were also subdivided, with benefit to the State.

Senator Duncan - Every one was subdivided in consequence of State legislation.

Senator HOARE - No. Many large properties were' sold owing to the passing of the Commonwealth Land Tax Act.

I understand that paper currency was first introduced in Venice in 1156, and that city then became the financial centre of the world under a nationalized banking system which was successfully carried on for 600 years. But even the Bank of England temporarily closed its doors during -the war period, and according to the records private banking failures occurred in England in 1S44, 1847, 1856, 1890, and 1914. Senator Duncan spoke of the patriotism of British bankers; but I remind him that at the outbreak of the Great War they decided to close their doors because they were unable to go on. Later, they made overtures to the Lloyd George Government for financial assistance with the result that treasury notes to the value of many millions of round's were advanced to them. That money enabled the private banks not only to keep open, but six months later to loan to the British Government £200,000,000 on which they charged interest. That is how they showed their patriotism. Australia has also had her banking failures. In 1840 and again in 1891, 1892 and 1893 numbers of banks in Australia were forced to close their doors. The directors of those private banking institutions had no thought for the people who had entrusted their money to them. They met in secret and decided to write off their obligations to one another, regardless of the fact that the money which they handled so lightly belonged to the people. Not only did they do that, but they were also successful in having legislation passed which made it an offence for any one to give publicity to their action. I leave it to honorable senators to imagine what interest would have been charged by private banks during the great war, had not the Commonwealth Bank been in existence. That the Fisher Government did not avail itself of the opportunity to wipe the private banking institutions out of existence at that time stands to its everlasting discredit. The profits of the Commonwealth Bank and of the Note Issue Board, amount to over £20,000,000. That money has been re-, turned to the people of Australia. If. instead of borrowing £64,000,000 abroad, the money had been borrowed in Australia, the annual interest payment of £3,200,000 in respect of it would remain here instead of having to be sent abroad. I disagree with the policy of borrowing outside Australia. If our protectionist policy is not effective, it should be made so; otherwise let us be honest, and have no more to do with it. It would be well if Australia had more industries like those of Bond and Company in Sydney, and Bryant and May, in Melbourne. Their factories are a credit to Australia. The workers employed in them work under almost ideal conditions. Instead of borrowing abroad, we should endeavour to build up more of such industries in this country. Australia should manufacture the whole of her woollen requirements instead of, as now, sending the wool abroad and later, importing the manufactured goods. Legislation should be passed making it compulsory for Australian woollen mills, instead of disposing of their products to middlemen, to sell it to retailers in this country. That would make it possible to obtain for £6 10s., a suit which now costs ten or twelve guineas.

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