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Wednesday, 30 November 1927

Senator SAMPSON (Tasmania) . - I desire at the outset to refer to the work of the Development and Migration Commission. I have been amazed to find, both inside this chamber and elsewhere, so much hostility towards it, and the work it is endeavouring to do. Some time ago I read the following striking statement by the right honorable J. H. Thomas, a member of the House of Commons, who was Secretary of State for the Dominions in the Ramsay MacDonald Government -

We have a million unemployed. The chief reason is, of course, that emigration has practically ceased. As a matter of fact, the Dominions do not want to take our migrants. When I was responsible for emigration, there were 50,000 willing migrants on our books waiting for somewhere to go, and there was nowhere for them to go.

Could there be a more damning indictment of the bankruptcy of British statesmanship than that statement? Notwithstanding that all the component parts of the Empire belong to one great family, that in the Dominions there are enormous areas of fertile country awaiting development, and that thousands of Britishers were willing to migrate to them, the Dominions did not want them! No greater justification for the creation of the Development and Migration Commission than that statement could be found. Senator Findley would have us believe that when honorable senators agreed to the creation of that commission they expected that by waving some magic wand, it would solve our developmental problems. I remind him that assent to that legislation was not" given until the 26th September 'of last. year. A further month elapsed before the personnel of' the 'conk mission was announced. Moreover^' the commission did not take charge of the migration activities and staff in London until tlie 1st March of this year. If we consider impartially the tremendous task confronting the commission, we shall withhold any destructive criticism until further time has elapsed. So far, I have not heard one word of constructive criticism in connexion with the Development and Migration Commission. Already it has done a lot of preparatory work. One of its first actions was to get into touch with the various State authorities* The commission realized that if it was' to accomplish anything worth while it must have the active cooperation of the State Governments and their expert advisers. That could not be done in a month. In these matters the personal touch counts for much. In order to get into personal contact with those whose co-operation was essential to success, the commission has necessarily travelled a good deal. Senator Findley would have us believe that the commission has been having a series of "joy rides." From my own experience with it in Tasmania, I know that that is not so. On the contrary, I felt impelled to admonish the chairman for working such long hours, because I was afraid that he would break down under the strain.

Sitting suspended from 6.15 to 8 p.m.

Senator SAMPSON - I was referring to the outstanding features of the task set the Development and Migration Commission, and showing how necessary it was that it should secure contact with the States. In addition to co-operating with the States, it was absolutely essential that it should establish a proper connexion with Great Britain, the land from which we hope to get the bulk, if not all, of our new settlers. In these circumstances it was essential that the chairman of the commission should proceed to Great Britain. I have heard his trip to England sneeringly referred to as a joy-ride; but anyone speaking in that way has not paused to think of the object of his mission. Mr. Gepp had to visit Great Britain to consult the authorities there, and with them - go thoroughly into the terms of then agreement generally known as the £34,000,000 scheme. He also had to make a personal reconnaisance of the migration staff in Great Britain which the commission had to take over. Contact also had to be made with the voluntary organizations both in Australia and in the homeland which have been and are still doing very good work in the selection of migrants. In England these organizations have been undertaking the training of migrants, and, on this side, they have been attending to their reception and aftercare. Such organizations include the New Settlers' League, which is subsidized by the Government, and the Big Brother movement. Mr. Gepp had to 'inquire into the methods adopted for training prospective migrants in England prior to their departure for Australia. The Director of Migration in London, Colonel Manning, who has just been appointed, has recently sailed for Great Britain. Whilst in London, Mr. Gepp also investigated the wonderful possibilities of geophysical prospecting and the rural housing of migrants. Quite a number, including many educated persons, have smiled when told that the primary work of the commission is to undertake an economic survey of the resources and possibilities of development in the Commonwealth. Science, after all, is only common sense and right thinking, and in this complex world, if we are to get the best out of what the Almighty has given us, research is not an expensive luxury, but is an absolute necessity. The Development >and Migration Commission is operating in close association with the Council for Scientific and Industrial Research. One of the results of Mr. Gepp's visit to London is that the Empire Forestry Conference will be held in Australia next year. It would be unreasonable to expect immediate results, such as a large increase in the number of desirable new settlers, from the work of the commission ; because it did not assume control of the migration staff until March last, and its work involves most careful research and study which necessarily take time. The commission is saddled with tremendous responsibilities, because it must examine with meticulous ' care schemes recommended by the various State Governments desiring to participate in the £34,000,000 which has been made available by the Imperial Government to aid overseas settlement. Such an examination must occupy time, and, after investigations have been conducted, a report has to be submitted to the Commonwealth and to the British representative in Australia, Mr. Bankes Amery, who has_then to report to the British Government on the schemes submitted. Anyone reading the report of the commission will at once see the numerous and important problems with which it s faced. Personally, I think that in the short time in which it has been functioning, and considering that it has had to collect a capable staff, including various experts in different spheres, it has done wonderful work. One could noi expect it to wave the magician's wand and immediately make everything wonderful in the migration garden. It would be absurd to expect such a result. Coming nearer home, and into a smaller sphere. I can say from personal experience and in all sincerity that if the Development and Migration Commission had done nothing else, the work it has done in and for Tasmania would amply justify its appointment. It set out, as any one can read in its report, to make a thorough investigation into the economic position of that State in co-operation with the Council for Scientific and Industrial Research. I have already seen the wonderful effect its work has had upon the people of Tasmania. Any thing, that can be done by the authorities in that State to assist the commission in any way is being done. The great bulk of the people, particularly the farmers and others engaged in primary production, have realized the good work being done. The State Government, which has co-operated wholeheartedly with the commission, has already done its . best to give effect to many of its recommendations. Mention was made by the honorable senator who preceded me of the report on the financial position of Tasmania, issued by Sir Nicholas Lockyer early in 1926. That was an excellent report, but it touched only the fringe of the real reasons for the depression then existing in Tasmania. When I refer to depression I mean" not only financial depression, but also the depression in the minds of the people, because, rightly or wrongly, they considered at that time that quite a number of the Commonwealth laws were reacting upon them in their insular State, particularly the Navigation Act and our Conciliation and Arbitration Act. They felt that they were the Cinderella State far removed from the mainland and depending entirely upon sea communication.

Senator Duncan - The feeling of depression referred to by the honorable senator has been assiduously cultivated by honorable senators here.

Senator SAMPSON - I think Sir Nicholas Lockyer made an admission we have never had before - that a good deal of it was amply justified and that certain Commonwealth laws were operating to the detriment of the State. Almost before the commission was actually appointed it set about its task in Tasmania. The Prime Minister (Mr. Bruce) had promised that the whole of the resources of the Commonwealth would be placed at its disposal in an endeavour to find a way out of the financial morass in which the State found itself. Every word of the right honorable gentleman's promise, as it always has beeu in my experience, has been honored to the letter. The commission started its task at once, and I was very interested indeed to come in contact with its members and staff, some of whom are still engaged upon research work in Tasmania. Page 41 of its report, which deals with the position in that State, contains most interesting reading. The response to the recommendations of the commission by the Agricultural Department of Tasmania, which up to that time through lack of funds had been sadly neglected - it was a department in name more than in reality - has been wonderful. The work accomplished by the chairman of the Tasmanian division of the Council for Scientific and Industrial Research, Mr. P. E. Keam, who is a Tasmanian pastoralist, has been extraordinary. Agricultural bureaux have sprung up all over the island, and al. places which at first glance appeared to be almost decadent great interest and activity has been shown. At one meeting I attended in a little onehorse place at the end of the island approximately 600 farmers were present.

Monthly meetings of the bureaux are held to discuss problems in production, and this is having a wonderfully good effect there already. In my opinion, the commission has done remarkably well, considering the short time that has elapsed since its appointment. On page 22 of its report we read -

The commission is affording all possible assistance from time to time as is requested by the department. Meanwhile, investigations along similar lines are being made into many other important branches of Tasmanian activities, including rural finance, land settlement, forestry and timber, mining, fishing and allied industries, dairying, hops, manufactures, transport and tourist traffic. The question of effecting a topographical survey of the State is also being inquired into. Reports on these questions will be furnished from time to time after the necessary consultations have been held with the Tasmanian Government and representatives of interested sections of the community.

The commission must submit for the consideration of the Commonwealth Government a report as early as possible next year, embodying recommendations in regard to such further financial assistance as, in its opinion, will be necessary for Tasmania to receive fromthe Common wealth for a period of five years as from 1st July, 1928. It is giving urgent attention to this matter in consultation with the Commonwealth Treasury. The question is one of vital importance both to the State of Tasmania and to the Commonwealth as a whole.

In this connexion, it is interesting to note the position in regard to the financial balancesheet of the Tasmanian Government for the past ten years. From these figures it would appear as if there is an improvement in the financial position of Tasmania in recent years. At the same time, the duty of the commission is, in consultation with the Commonwealth and State Treasuries, the State Ministry, and responsible representatives of the State, to endeavour to examine thoroughly the exact position as it now exists, and to forecast as accurately as possible the steps, financial and otherwise, which should be taken by the State, with due assistance from the Commonwealth, to enable Tasmania within a reasonable time to be self-supporting financially and economically.

As a Tasmanian, and a good Australian, I re-echo the concluding sentence of that report. The commission is going a long way towards making Tasmania, within a reasonable time, self-supporting, financially and economically.

Senator THOMAS (NEW SOUTH WALES) - The honorable senator is an optimist.

Senator SAMPSON - I always have been, but I do not think that I am unduly optimistic in believing that with the aid of the resources of the Commonwealth, and by its own efforts, Tasmania will make good. All these investigations take time. Tn a sense, I look uponthe chairman of the commission as the custodian of industry.

As a sawmiller since the war, and as an employee for some seven years before the war in the sawmilling and timber industry in Tasmania, I am very interested in the recommendations that the commission has made with regard to it. The proper treatment of the Tasmanian forests and timbers is a vexed problem, and I was amazed when I saw in cold print in Ilansard, in the Minister's second-reading speech on the Forestry Bureau Bill, the following statement -

The shortage of sound hardwood for such purposes as railway sleepers is becoming very serious, and is hampering development.

I do not know who is responsible for that statement; but it is certainly most inaccurate, so far as Tasmania is concerned. Some of us in that State, not being able to dispose of hardwood sleepers in the Australian market, have been endeavoring to build up a trade in them with China and other parts of the East, and have sent trial shipments there. I was almost about to say that Tasmania could supply billions of them; but we could certainly turn out many millions of first-class hardwood sleepers. For the last six or seven years, the sawmilling industry in my State, and in some of the other States, has been seriously prejudiced owing to keen competition from imported hardwoods, such as Manchurian oak, Pacific maple, and Borneo cedar. During the last 12 months, importations have made it practically impossible for sawmillers to sell their furniture boards and other high-class timber, for which previously there had always been a keen demand. The industry feels that it has a just claim for an additional duty on Japanese oak, Pacific maple, and Borneo cedar. It is held that it is not in accord with the White Australia policy to allow foreign timber, produced by cheap coloured labour, to be imported tothe detriment of thousands of Australian workers employed in the timber industry. These foreign timbers enter into keen competition with Tasmanian hardwood, which, in the trade, is called Tasmanian oak. To some extent they also interfere with the sale of Tasmanian blackwood. The sawmillers press for an adequate duty on these imported hardwoods; in fact, they would like to see a super-duty imposed in order to prevent them from competing with our own beautiful timbers. Although the importations of this class of timber in the last five or six years have shown an increase of over 2,000,000 feet their value has declined. I submit that that is prejudicial to the Australian timber worker. I am not speaking of dressed timber, which simply pours into this country, or of the advisability of prohibiting it, so that Australians may do the machining themselves. I have taken out figures showing the importations into the Commonwealth of Japanese oak, in 1920-21 to 1925-26 ; but, for the purpose of comparison, I shall take the year 1920-21, whenwe imported 3,191,419 feet of that timber to the value of £148,281. That was for small sizes under 7 inches by2½ inches. In 1925-26, the total quantity of Japanese oak imported had risen to 5,767,022 feet, but the value had decreased to £11S,S47. Thus the quantity increased by 2,575,603 feet, but its value decreased by £29,434. In the larger sizes a similar position obtained There was an increase of 222,129 feet in the quantity imported, and there was a decrease in the value of £1,783. The total increase for the whole period was 2,297,000 feet, and the decrease in value was £40,727, which clearly shows that this timber is milled by colored labour - by men working from 14 to 16 hours a day. That timber is competing here with a similar type of timber milled under Australian conditions. It is not a matter of pine against hardwood; it is a matter of Japanese oak against Tasmanian oak. Probably if the chairman of the commission made a recommendation on this subject, he would be told that it was a matter for the Tariff Board, and thathe had better mind his own business. Butthe work with which Mr. Gepp has been entrusted is so comprehensive that he is, as I have already said, more or less the custodian of industry.

It has been stated that the commission is slow, cumbersome and very costly. I contend that the facts indicate that it is not very slow in its work. Let us consider its investigation of the gold-mining industry in Western Australia. The act underwhich the commission was constituted was not assented to until the 26th September, 1926, and after that a staff had to be got together. I was a member of the Joint Committee on Electoral Law and Procedure which visited Kalgoorlie in October, 1926. There we met Mr. Wainwright, general manager of the Broken Hill South Mine, two other gentlemen to whom I was introduced, and a very old friend in the person of Mr. A. W. Hutchin, of the Electrolytic Zinc Company, whose works are located at Risdon, Tasmania. These four constituted a technical committee of experts which had been appointed by the commission to inquire into the goldmining industry in Kalgoorlie. They were at work there in October, although the commission had only organized its staff a month earlier. That committee issued a very useful report. It made a thorough investigation of the industry.

Senator Lynch - There are differences of opinion in regard to the value of its report.

Senator SAMPSON - In that particular instance the commission cannot be accused of dilatoriness.

I was not surprised to hear the humorous speech that was delivered by Senator Findley. One could not expect anything else from him, because he is a steeped in and saturated with the stereotyped labour attitude towards migration. The assumption of that party is that there is work in Australia for only a certain number of people, and that any increase in population results in unemployment. I cannot subscribe to that view. For three year3 it was my duty to meet every new settler that migrated to Tasmania. Unfortunately, during that period only about 1,100 new settlers entered the State. Every new settler is a potential employer of labour, because he requires a grocer, a butcher, a baker and others to supply himwith his needs. He does not take all from a country and give nothing in return. Every one of us is, to a greater or less extent, an employer of labour. It is fallacious to argue that unemployment is made more acute Avhen the population is increased. That assertion will notwithstand a scientific or close examination. I admit that some migrants have been failures; but the great bulk of them have not. Far from having caused unemployment, they have been the means of increasing employment. The standard of wages has not been lowered because of their advent.

Senator Sir George Pearce - If the argument of honorable senators opposite was sound, a high death-rate would be desirable.

Senator SAMPSON - Exactly. I say quite frankly that this problem of the better distribution within the Empire of the British race has caused me considerable worry for a number of years. During the war I spent in the United Kingdom two fairly lengthy periods of convalescence. Being a Tasmanian-born Yorkshireman, I naturally spent a great deal of that time in Yorkshire,which, by theway, has a greater number of inhabitants than the whole of Australia. I saAv a good deal of some of the bigger cities and towns, and I hope that we in Australiawill never experiencewhat are commonplace conditions in some of them. I have in my hand graphs illustrating the distribution of the world's population. It is possible to obtain information more quickly from a graph than from a long statement. If honorable senators Avere to study these, theywould be convinced that there is something wrong with the distribution of the white-man power of the British Empire. It is extraordinary that the best brains of the Empire have so far failed to evolve a solution of the problem. It will have to be tackled. Australia must not for all time occupy a position similar to that of a kept woman. That may seem strong language, but it appears to me that it is only the providence of God and the strength of the British navy - the upkeep ofwhich is paid for by Britishers who are resident in the Old Country, and not by those who have their domicile in the Dominions - that ensure us the freedom to live in the way we think fit. The Dominions are not doing their fair share. The obvious assumption is that if a fellow Britisher desired to come to Australia, he would encounter neither let nor hindrance, but that is not the case. All kinds of formalities have to be observed. I have just read a book which has made a very great impression on me, although I do not hold with all that the writer has to say. He deals with the imperative and vital necessity of Empire migration on a scale hitherto undreamed of. Every honorable senator should read this work. It is by Professor Fleetwood-Chidell, and the title is "Is Australia "White or Yellow?" I read the following extract for the benefit of honorable senators -

The criticisms of dominions' policy are directed not less against its omissions than against its activities - the absence of a sense of stewardship in the disposal of the lands held under the British Crown and the negation of a community of interest with the parent country. These things would be intelligible in the case of foreign States owing no allegiance to Great Britain, confessing no continuity of history or relationship of common blood; but they are essentially incompatible with a united Empire.

The choice lies with the dominions, whether they will be separate entities or parts of a great whole. One thing is impossible, to secure at the same time the advantages of separateness and those of unity. Neither is it possible for an incoherent State to be strong - if its elements are so loosely combined that they may at any time fly apart; if it is admitted that any portion, consulting its private interest, may at any time break the links that bind it to the whole. No State ever maintained its integrity upon such fragile terms, and no State will ever do so in a world subject to shock and discord. The claims of General Hertzog and others of a right of secession are a sign and a cause of weakness in the Imperial fabric. Do the dominions wish to rely in emergency upon other portions of the Empire? Then they must strengthen the ties of the Empire and exalt its unity. The alternative is dependance upon their own unaided forces with such assistance as the League of Nations can afford. Are they prepared for this alternative? In the present state of the world the idea is madness.

What are the facts, summarily and dispassionately stated? A mother-country unable to find profitable work for its workmen and therefore debilitated: beyond its borders jealous, ambitious, teeming, imprisoned nations watching territories insufficiently manned for defence; territories lacking, in the judgment qf these nations, all justification . for the partiality with which they are administered. It is a situation perilous in the extreme. Unable' adequately to. defend themselves, how can tlie dominions expect Great Britain to embark upon hazardous adventures in order to maintain a condition of things which is largely responsible for her own troubles - to defend' segments boasting their independence, who at any time may carry their independence to itslogical extreme?

The choice for a few brief years lies with the dominions. If they desire to be protected by the mother-country they must serve its interests as they do their own; tlie interests are, in fact, common and inseparable. They must guard the oneness of the Empire as the guarantee of their own liberties. They must oppose the slightest tendency to diminish itssolidarity. They must go out of their way to strengthen the ties which mistaken policies have weakened, and they must do all in their power to invigorate the parent source of their security. At the same time, with twofold and even more widespread benefit, they must lessen the provocation and incitement to war thatconsist in the unemployment of vacant territories."

That sums up very succinctly the present position. The appointment of the Development and Migration Commission was at least one step forward, and a move for which we had been waiting a long time. The position in regard to migration has been more or less chaotic and subject to the whim of any government. There has been no continuity of policy. I do not say that there is continuity of policy even now; but I do say that we are likely to have a clear-cut survey of the position and an examination of tho best methods to adopt to increase the population of Australia. Migration isAustralia's best means of defence.

One cannot read the annual report of the Inspector-General of the Commonwealth Military Forces, Sir Harry Chauvel, without being appalled at the prospect. The last report is on much the same lines as those which have been i ssued during the last three or four years. Unfortunately, few people are sufficiently interested to study it and feel any concern about the situation. It indicates that the Australian army, such as it is, is in danger1 of perishing. The other day there was a tremendous pother and a frightful fuss and rumpus about the Government's proposal to get rid of seven bankrupt ships. Compared with the danger that is confronting us owing to our inadequate provision for defence, the proposed sale of the Australian Commonwealth Government Line is most insignificant. The defence of Australia is a matter of the greatest magnitude. Sir Harry Chauvel in his report states -

Therefore, notwithstanding the protection which the Naval Forces of the Empires, of which our own squadron forms only a small part, may, if circumstances be favorable, be expected to afford, it is incumbent upon Australia to provide for her own local security. Indeed, it is an accepted principle of the Imperial defence policy, that each dominion is primarily responsible for its own local defence.

No one will question the soundness of that principle. No one can foretell what may happen on the seas or in the air; it is for the dominions individually to make adequate provision for their lcoal defence. Despite our increase in population and the reduced purchasing power of money, the Commonwealth is spending much less on its military forces to-day than before the war. In 1912-13 we spent £2,277,000, and in 1913-14 £2,356,000. We then had a population of 4,900,000 people. Last vear our army cost us only £1,526,000, and our population to-day is about 6,115,000.

Senator Elliott - Those figures do not include the expenditure on the provision of munitions and arsenals.

Senator SAMPSON - At present, we have about 42,000 youths in training. I can say, without fear of contradiction, that there is no finer material in the world. I believe that last year there were 53,000 youths registered, and that we have about 160,000 liable to be called up for military training. One cannot help a feeling of regret, as one goes around the country, that all this magnificent material for the defence of Australia is allowed to lie fallow, as it were. I wish it to be clearly understood that I am not an advocate of militarism. I do not desire that we should have a large standing army, or that we should worship the pomp and circumstance, the glitter, and all the nonsense associated with continental armies. ' I have been through two wars, and I have no wish to go through another. I believe, however, that it is the duty of every man worthy of the name to prepare himself for the defence of his country and its women. To do that, under modern conditions of civilization, it is necessary for hin to undergo training for a definite period. The Minister for Defence (Senator Glasgow) is, perhaps, more conversant with the position than I am. I urge him, therefore, to impress upon his colleagues in the Cabinet the advisability of increasing the time of training for the youth of this country, and to reopen many of the training centres that have been closed for some time. The great bulk of our youths undergo training quite cheerfully. In my own State the lads who go into the annual camp at Mona Vale for the first time are anxious to come again for the next two years. They all display a magnificent spirit, and attend the voluntary parades in large numbers. In my own battalion we have classes of instruction every Wednesday and Thursday evenings, and the response on the part of the lads is most gratifying. They are keen about studying the automatic machine gun and Vickers gun, which I regard as two of the most wonderful and deadly weapons that could be ultilized in the defence of Australia. The lads give freely of their time, and are so enthusiastic that we are -able to work wonders with them. In considerin cr our defence problems we should not think in the terms .of the last war. When that war broke out the Empire was thinking in the terms of the South African war. As a matter of fact British military authorities had not learnt the lessons of the Russo-Japanese war in 1905: Consequently the British armies, at the outset, went into the field with a couple of machine guns per battalion. At the end, they had as many as 64 machine guns to each battalion. I do not pose as an expert, but I respectfully suggest that machine-gun battalions with sixwheeled cross-country motor lorries, will most efficiently and economically ensure the adequate defence of Australia if ever we are called upon to fight in Australia, which God forbid. I doubt if any hostile power could land and maintain in the field artillery of sufficient weight to crush the defence which forces, so equipped, could put up against them. The crosscountry lorries would ensure wonderful mobility for the machine-gun battalions. -The use of tanks made victory possible fbr the Allies after the break through of the German line on* 8th August, 19 IS, but I am satisfied that no fleet of tanks which any hostile nation could land in Australia could overcome a defence force equipped in the manner I suggest. Such a fleet does not exist. I trust that the Minister, who, I know, is giving serious thought to this subject, will be able to give us some encouragement. The supply of officers for any force that Australia could put in the field is quite inadequate. Those of us who served in the Australian Imperial Force are no younger. It is a long time now since the war. We are not nearly so good to-day as we were then, and naturally we are getting somewhat rusty. For my own part I think that if I heard a shell coming I would " go for my life." I doubt if my nerves would permit me to stand up to the strain. When I returned from the last war I was little better than a decrepit old man, and was more or less a nervous wreck for a couple of years. Since there are many more in my position, it is probable that we shall' be depending upon a broken reed if we look to the reserve of the Australian Imperial Force officers and men to pull this country through another war. It is important that we should make adequate provision for the training of our officers. Ample- opportunities should be provided for them to carry on their studies. Prior to the war, and, in fact, during the first year of the war, the Defence Department issued monthly a useful booklet compiled by officers of the department, and entitled the Commonwealth Military Journal. It was exceedingly helpful to officers in the study of military problems. I noticed in the Estimates for last year that the sum of £5 has been set down under this heading. I presume that the idea is to keep it in mind in the hope that, one day, it may be issued again. Compared with the good results that would follow its republication its cost would be a mere bagatelle. - I hope, therefore, that it will be re-issued at an early date. I ask the Minister also to deal more liberally with the Military District United Service Institute. That is the only place in which young officers can obtain suitable books to assist them in their trainin'g and studies. We are told that there . is no need for us to worry because we have in our midst many ex-members of the Australian Imperial Forces. I ask honorable senators to remember that the whole of the 4th Brigade of the First Division were men who had spent months of training before they were tested in battle. We shall not get that opportunity again. Our only hope is to train leaders - our potential officers and non-commissioned officers. To arm men and send them into action without trained leaders would be a crime. Such a body of men would be merely an armed mob and not a trained fighting machine. At Duntroon we have our Royal Military College - an- institution which turns out a limited number of wonderfully well trained officers of high character. The Minister knows that the training of staff officers takes time. Those of us who at any time during our service were taken from regimental duties to do staff work know how complicated the whole thing is, and how much care, study and training are necessary to make a successful military leader. Greater coordination is required in military matters than in any other sphere. With the growth of science, warfare does not become more humane; on the contrary, it becomes more ruthless and horrible, and less susceptible to rule. There are no rules in war. I admit that to maintain a navy, an army, and an air force is a tremendous task for 6,000,000 people. I do not envy the Minister his responsible task in controlling the defence of this country ; but I submit, with all due deference, that our army is absolutely starved and is in danger of perishing. The spirit is still alive, but it needs to be fostered and encouraged in every possible way. A proper system of military training does not necessarily mean militarism in Australia. I submit that compulsory military training has had a good effect both physically and morally on the youth of this country. Time after time I have had evidence of the way in which it has assisted to build character. Since I returned from Africa twenty years ago I have been connected with the defence forces as a citizen soldier, and I know, that their military training has made better citizens of many of the young men of this country. I hope that before long a great deal more will be done for our army than is now being done for it. It richly deserves it.

Senator Sir HENRYBARWELL (Western Australia) [9.4]. - I feel impelled to join in this debate because of the utterances of some honorable senators who have dealt with our financial and economic problems. They seem not to realize the true position, and to take as the cause of the trouble what is really its effect. Yesterday myesteemed colleague, Senator Chapman, said that the cause of our trouble was the high customs duties which had been imposed. There, clearly, was a confusion of ideas in relation to cause and effect.

Senator Chapman - The Tariff Board does not say that in its last report.

Senator Sir HENRYBARWELL.It does. The high customs duties are the effect and not the fundamental cause of the very serious position of Australia today, both financially and economically. When speaking last week in connexion with the Commonwealth Housing Bill, I referred to the serious financial drift which has taken place during recent years. I then dealt with one cause and was proceeding to deal with what I considered to be the remedy when the Senate adjourned. Circumstances prevented me from continuing my remarks when the measure was again discussed. Our financial position must provide food for serious thought for every thinking man and woman. Our public debt is approximately £1,020,000,000; our interest bill is over £1,000,000 a week for a population of 6,000,000 people. In view of our wonderful assets, the position would not beso serious if we were paying our way. But unfortunately we are not doing so. On the contrary, the financial drift is getting worse. That is shown clearly by our adverse trade balance, especially during the last few years, in which the drift has been very marked, amounting on the average to £35,000,000 a year. To show that it is getting worse, I pointed out that last year the adverse trade balance was approximately £47,000,000. That is the amount by which our exports failed to pay for our imports, and the interest on our overseas debt. For the first quarter of this financial year the adverse trade balance was approximately £20,000,000, our exports having failed to pay for our imports by over £13,000,000, and the interest on our overseas debts representing between £6,000,000 and £7,000,000.

Senator Crawford - Our exports are always low in that quarter.

Senator Sir HENRYBARWELL.The Minister knows that the position was totally different some years ago, and that this drift, which is of comparatively recent origin, is getting worse year by year. That that is so indicates the seriousness of our position and calls for attention by the Government. In order to face the position, it is necessary to ascertain its cause. I pointed out the other day that one of the causes of our unsatisfactory position was our over-borrowing and our extravagant and unnecessary expenditure, particularly of loan moneys. There are other causes, some of which are apparent, and some which, though not so apparent, are fundamental, and therefore more serious. Let us take, first, the apparent causes. There is, as I have stated, our over-borrowing and our extravagant and unnecessary expenditure of moneys, particularly loan moneys. Another cause - overtaxation - is to some extent being dealt with by the Government, because the budget informs us that this year there is to be a reduction of income taxation to the extent of £1,326,000, and of land taxation to the extent of £445,900. That, I take it, is the extent to which the Government is able to reduce taxation in the absence of any direct economies which it may effect. Let me now deal with a cause which, though not so apparent, is, nevertheless, fundamental - a cause referred to by no less an authority than Sir Ernest Harvey, the Controller of the Bank of England. Sir Ernest Harvey s>aid that Australia's troubles were due to the vicious circle in which prices and wages continually chased one another. That is the fundamental cause of Australia's troubles to-day; and until that cause has been remedied the position cannot be improved. The vicious circle caused by our compulsory arbitration system must be broken, or it will break Australia.

Senator Reid - How are we going to break it?

Senator Sir HENRYBARWELL.By abolishing the system. Under our system of compulsory arbitration, wages are based on the cost of living. That system is pure madness. Almost every country in the world has at some time considered the system of compulsory arbitration as carried out in Australia, and one by one all have rejected it, for the very reasons for which it has proved a failure in Australia. They have rejected it, because, if wages are based on the cost of living a vicious circle is inevitably created. If wages were fixed on output there would be no vicious circle. Start where we like, and the result is the same. During the war period there was a great increase in the cost of living. That increased cost of living entitled the workers to apply to the Arbitration Court for an increase of wages. They were successful, and the increased wages obtained increased the cost of living, and also the cost of production, causing manufacturers to apply to the Tariff Board for increased protection. The duties were increased; and, in consequence, the cost of living rose still higher, resulting in further demands for increased wages. An increase in wages necessarily means an increase in the cost of living. When the cost of. living increases the men go back to the court and ask for a further increase in wages and the vicious circle then commences over again. This leads to further increases, and also demands for additional tariff duties, which also result in demands for higher wages. That is the position which is facing Australia at present, and the drift cannot be arrested under our present system. Our economic system has been condemned by Sir Ernest Harvey, and quite recently by Sir Lennon Raws, and other economists. Every authority, except the various governments of the country, seems to realize that we cannot improve the unfortunate situation and arrest the drift, unless we remove the fundamental cause ; and that is the economic position set up by our system of compulsory arbitration, which, as I have said, is unsound, and is recognized as such by every country in the world. Honorable senators should read the reports of a special commission appointed by the American Government, and also that of a special commission appointed some time after the war by the Imperial Government, on which there were representatives of parties of every shade of political opinion. The unanimous recommendations of these commissions were against our system, which is economically unsound, and is bound to create a vicious circle which if persisted in will involve any country sooner or later in trouble, and eventually in financial disaster. The subject is so simple that I really cannot understand why any thoughtful person cannot understand it. If we base wages on the cost of living, the cost of living is increased, and if we are to protect our industries an increase in tariff duties is inevitable, which in turn also increases the cost of living. This must ultimately lead to difficulty, and possibly disaster. We have not been involved in serious trouble earlier because of the unparalleled succession of good seasons we have experienced, and the exceptionally high prices obtained for wheat and wool - our principal exports. Australia is facing financial stringency, not as the result of bad seasons or low prices, but on top of a period of good seasons and high prices. If that is our position when everything is in our favour, surely something is fundamentally wrong?

Senator Lynch - What remedy does the honorable member suggest?

Senator Sir HENRYBARWELL.To remove the cause - our present system of arbitration-

Senator Carroll - Is that the only cause?

Senator Sir HENRYBARWELL.I did not say that it was. I have already referred to other causes; but the one I have now mentioned is fundamental. I have already referred to the overexpenditure of loan moneys by Commonwealth and State governments and over expenditure of loan moneys. Is it not increased by the fact that our Arbitration Courts are carrying out a system which eternally raises wages and must continue to raise them as long as the system lasts, because the vicious circle is at work. That is the cause which stands behind.

Senator Reid - Did not the Government of which the honorable senator was once leader in South Australia borrow extensively?


Yes, because of the system of which I am complaining.

Senator Reid - Is the position in South Australia worse to-day than it was then?

Senator Sir HENRYBARWELL.It is worse to-day. Surely the honorable senator can see that the position is bound to get worse, when nominal wages are constantly being increased without the real wages being raised.

Senator Crawford - There were no arbitration courts in 1893, when nearly every bank in Australia suspended payment.

Senator Sir HENRYBARWELL.What was the cause of such suspension? A succession of bad seasons and low prices for all commodities. Is that the position which confronts Australia to-day? The honorable member knows, as well as I do, that the trouble which is facing us is due not to bad seasons and low prices, but it has come right on top of good seasons and high prices. What would be our position ifwe were faced with seasons such as caused the crisis mentioned by the honorary Minister ? What will be our position in this country if we have one really bad season such as we had in 1914?

Senator Reid - Do not wages and prices folloAV prosperity?

Senator Sir HENRYBARWELL.They do, if Ave leave matters alone, and allow economic forces to work in a proper way. We are not allowing economic forces to Avork as they should, but are endeavouring to control them. Some years ago the first President of the Federal Arbitration Court, Mr. Justice Higgins, contributed an article to an English magazine, in which he said that the arbitration system in Australia had proved that the economic forces could be controlled for the benefit of the community. We have proceeded in our arbitration system on the assumption that these economic forces do not work inevitably and inexorably to a well defined end. I think the learned judge will now admit thatwhat he then said was wrong. He thought that they could be controlled, because they were working with the arbitration system, and making possible an increase in wages. At that time industries could stand them. They were being bolstered up, as they are to- day by ever-increasing tariff duties, bounties, subsidies, grants in aid ; but for what purpose? Simply to support a position which is economically unsound.

Senator Chapman - The honorable senator admits that the tariff is bolstering up industry.

Senator Sir HENRYBARWELL.Undoubtedly, and with what result ? The Tariff Board is recommending increases in duties year after year, and a duty which protects an industry this year will not do so next year. As Sir Ernest Harvey and other authorities have said, wages, and prices are eternally chasing one another. There is a limit which we are now reaching, and beyond which we cannot go. Senator Chapman and other honorable senators apparently do not realize the fundamental cause of Australia's present financial position.

Senator Chapman - The honorable senator must realize that many employers pay more than the award rates.

Senator Sir HENRYBARWELL.Some of them do.

Senator Crawford - Last month the cost of living was lower than it was a year ago.

Senator Sir HENRYBARWELL.By how much? It may have been a penny or twopence loAver; but taking it

Aveek by week, month by month, or year by year, it is increasing, and is likely to continue doing so while the present system obtains. In order to remedy the position the production per head of population should be increased.

Senator Reid - We are all agreed upon that.

Senator Sir HENRYBARWELL.Yes, but are we increasing our productivity? We should compare the figures of to-day with those of 1911, which year was taken by the Government Statistician as a standard. What is the result? Productivity to-day is lower than it was in 1911. When one considers the wonderful improvements in machinery and labour-saving devices of every kind, the production per head of population should be considerably higher to-day than it was in 1911. Instead of being higher, it is lower. What are the Arbitration Courts doing at present when increased production is so essential? They are granting a 44- hour week in many industries and awarding all sorts of other conditions which must inevitably result in decreased production. I did not intend to contribute to the debate; but when I heard some honorable senators speaking as they did on what is the most important subject with which this Parliament can possibly deal - the financial position and the general economic situation in Australia - I felt absolutely compelled to speak.

Senator Reid - Is the honorable senator's remedy the abolition of arbitration courts ?

Senator Sir HENRY BARWELL - The abolition of the arbitration system as it operates at present in basing wages on the cost of living, which is economically unsound. Possibly we could have some other system of arbitration. The Leader of the Government in the Senate, (Senator Pearce) admitted this afternoon that the compulsory arbitration system as applied in Australia is not an unqualified success.'-' I go further than the right honorable gentleman and say that it is a dismal failure. It has been tried and proved to be economically unsound and the fundamental cause of all our trouble.

Senator Reid - The honorable senator is a Jeremiah.

Senator Sir HENRYBARWELL.I am not.

Senator Chapman - If strikes were legalized our position might be even worse.

Senator Sir HENRYBARWELL.I do not suggest that. All I say is that we have a compulsory arbitration system under which wages are based upon the cost of living, which is fundamentally unsound, creating as it does the vicious circle which makes our financial position worse than that of other countries.

Senator Chapman - How are we going to settle industrial disputes if we dispense with arbitration?

Senator Sir HENRYBARWELL.I did not even say we should dispense with arbitration; but that we should do away with the existing system which fixes wages upon the cost of living. Does the honorable senator not see that there is a distinction? It must be admitted by honorable senators that our system has been condemned by economists who have deeply studied the subject, and by no less an authority than a gentleman who was in Australia the other day. He did not say much when he was here, but when he left Australia, he referred to the fact that Australia's financial position was bad, and that the cause of all our trouble is the vicious circle under which wages and prices are eternally chasing one another.

Senator Crawford - Conditions are bad enough in the country to which that gentleman belongs, where there is no arbitration system.

Senator Sir HENRYBARWELL.Is that any argument? One expects something more ' than that from a Minister. Unless the position is dealt with the financial disaster of which the Tariff Board has warned us will overtake us. It was pointed out in the report tabled by that body only the other day, as also in its previous report, that so long as the Arbitration Court proceeds to fix wages in accordance with the cost of living, causing employers to go to the Tariff Board for increased duties, which have to be imposed in order to safeguard industries, the evil will continue.

Senator Reid - Would the honorable senator like to. see wages fixed below the cost of living?

Senator Sir HENRYBARWELL.The honorable senator who interjects does not grasp the real position. When wages are fixed according to production, the cost of living will be reduced; the nominal wages will be lower, but the real wages will be higher. Under the present system we increase the nominal wage without proportionately increasing the real wage. Judge Beeby, I think, stated the other day that, although the nominal wage had been increased tremendously since 1911, the real wage had risen by only about 7 per cent. That is perfectly true, because, by bolstering up industries with ever-increasing tariff duties, we have raised, the cost of production, and that has increased the' cost of living to such an extent that the real wages paid to-day are only 7 per cent, higher than they were in 1911. The remedy, undoubtedly, is to do away with the system under which wages are fixed, on to the cost of living. Unless we do so we cannot overcomeour financial or economic difficulties.

Senator Ogden -Why not reduce the tariff for a start?

Senator Sir HENRY BARWELL - Here is another honorable senator confusing cause and effect. The increases in tariff duties are the effect of what is done by the Arbitration Court. If we reduced the tariff first, we should have industry after industry " going under," because we should be dealing with an effect, and not with a cause. The first thing to do is to remove the cause.

Senator Carroll - Have no; industries " gone under " without reductions of the tariff?

Senator Sir HENRYBARWELL.Yes ; because the tariff has been taken to a point beyond which we cannot well go. We have been paying nominally high wages, and increasing the cost of production by high tariff duties ever growing and from time to time failing to protect industries because of the increased cost of production, have also been paying bounties, subsidies and other aids in an ever-increasing amount. But the fundamental cause of the whole trouble is the arbitration system, which fixes wages on the cost of living.

Senator Ogden - If we reduced wages, we should still have the tariff causing high prices.

Senator Sir HENRYBARWELL.I admit that, having gone on, as we have in the past, on lines that are economically unsound, we cannot suddenly cut down wages; but we can arrest the present financial and economical drift by abolishing the arbitration system under which wages are fixed on the cost of living.

Senator Ogden - What would the honorable senator substitute?

Senator Sir HENRY BARWELL - A system under which wages are fixed upon output and production. That is the way in which they are determined in other countries.

Senator Elliott - That could not be done in every industry.

Senator Sir HENRYBARWELL.The honorable senator is referring to piece-work. It can be done in every industry, but not under a piecework system. It is done in other countries. Australia is the only country that determines wages on the cost of living. When other countries considered our wonderful experiment in compulsory arbitration, under which wages are fixed on the cost of living, they decided to have nothing to do with it.

Senator Verran - The honorable senator would paya man according to the value of his work.

Senator Sir HENRYBARWELL.Yes; but nobody knows better that the honorable senator from South Australia that, at the present time, workmen are not paid according to their value. They are remunerated under an artificial system that is bad from every point of view.

The only other matter to which I intend to refer is the financial agreement between the Commonwealth and the States, which was referred to by the Treasurer in the budget speech as a permanent and satisfactory arrangement. To my mind it is neither permanent nor satisfactory.

Senator Reid - It is certainly not permanent.

Senator Sir HENRYBARWELL No; and it cannot be satisfactory when we have two States practically dependent on the Commonwealth. South Australia now says that, if it does not receive a large monetary grant from the Commonwealth, it will be unable to meet its expenditure, and even Queensland is threatening to come in for similar assistance.

SenatorReid. - Queensland is still solvent.

Senator Sir HENRYBARWELL.But not long ago the Premier of Queensland said that, in all probability, it would have to seek assistance from the Commonwealth, as other States had done.

Senator Foll - One of the dependent States closed the last financial year with a surplus.

Senator Sir HENRY BARWELL - That was done after allowing for a large Commonwealth grant. I do not think that any financial arrangement between the Commonwealth and the States can be regarded as satisfactory while certain

States remain dependent on the Commonwealth. The whole of the financial relations of the States should be reconsidered, and placed upon some basis under which the States that suffer most as a result of federation would be placed on a financial footing that would enable them to carry on governmental, affairs without being dependent on the Commonwealth.

Senator Reid - That could not be done under the federal scheme.*

Senator Sir HENRY BARWELL - It could.

Senator Sir George Pearce - Under the system of per capita payments, all the States were dependent on the Commonwealth, and, so long as the present financial relations continue, they will be dependent on the authority that pays them the money.

Senator Sir HENRY BARWELL.Not in the sense that Western Australia aird Tasmania are now dependent on the Commonwealth, or in the sense that South Australia threatens to.

Senator Foll - That is not due to the establishment of federation.

Senator Sir HENRYBARWELL.Undoubtedly it is due to the financial arrangement under federation. With at least two States dependent on the Commonwealth, and one, if not two others, threatening to become so in the near future, it cannot be said that the latest adjustment of the' financial relations is " permanent and satisfactory."

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