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Thursday, 28 November 1935

Senator J V MACDONALD (QUEENSLAND) . - Senator Leckie does not usually .speak at length, but his remarks are always interesting. He has the happy knack of saying many pungent things in a short time. To a great extent, I disagree with the honorable senator, but that may be because we have been trained in different political, schools. Senator Payne contended that further remissions of taxation would assist industry to provide more employment, and Senator Leckie said that money would be lost if paid away as- pensions. Let us suppose that more money were expended in the payment of pensions. "Where would that money go? According to Mr. Cerutty, who recently retired from the position of Auditor-General, a lot of it would be spent in the purchase of alcoholic liquor. Even so, it would assist the industry which provides alcoholic refreshment. Many persons who will not invest money in industry because of the risks associated with business, are willing to purchase stock in Government loans. That money is lost to industry. Senator Leckie must admit that the money spent in pensions and in providing work for the unemployed eventually finds its way into the pockets of the traders and manufacturers, including the manufacturers of alcoholic liquors; but, in any case, it circulates throughout the community, creating a more optimistic outlook and a belief that some day the corner will be turned and a brighter economic future opened up for this country. The present Commonwealth loan will release the wealth which the well-to-do classes of this country now have stored away in the banks, and are afraid to spend or invest in industry, because of the effects of the depression.

Senator Leckie - It is not the wealthy classes who invest in government loans.

Senator J V MACDONALD (QUEENSLAND) - I feel sure it is in the great majority of cases.

Senator Leckie - What of insurance companies ?

Senator J V MACDONALD (QUEENSLAND) - Those companies, I remind the honorable senator, make very big profits. One has only to look at the magnificent buildings which these companies have erected in the various capital cities to realize that fact. Senator Johnston- referred to an amount of £8,000,000 held in trust fund which, he said, the AuditorGeneral had revealed as having been prematurely and unnecessarily taken from the people in taxes. My objection to that particular fund is that it is derived from indirect taxes levied in a very cunning fashion. The mass of the people at all tunes object to indirect taxation. It was in order to meet the difficulties arising out of the depression that sales tax was first imposed; it has now become a modern horror. . It is an insidious tax, because it is included in the purchase price of goods. When a man buys a suit of clothes or any other articie he pays money into the coffers of the Government. That amount of £8,000,000 represents customs duties and sales tax. lt was not taken from the wealthy classes of the community. Yet the Government proposes further to reduce by £200,000 a tax that is paid by wealthy propertyowners. We claim that before any reduction of taxes is made in favour of wealthy people the sales tax should be removed, and something should be done to reduce the contributions made to the Government's coffers by the masses of the people by way of customs tax. We are against any reduction of direct taxes imposed on people who are best able to bear them, and the levying of further taxes on people least able to bear them. The whine - I cannot express it otherwise - continually heard from honorable senators opposite that money remitted by way of reduced taxes, to the wealthy classes finds its way into industry, is utter rot. A lot of this money is not spent in industry, but is stored in the banks.

Senator ALLAN MACDONALD (WESTERN AUSTRALIA) - The honorable senator does not suggest that this money is buried?

Senator J V MACDONALD (QUEENSLAND) - No. It is not buried, but it is placed in the banks, and no honorable senator can deny that during the years of depression it was kept there, because the wealthy depositors were afraid to take the risks of investing it in private enterprise, as they were not sure that it would then return them 10 per cent, or more. They preferred to get the bank rate and keep it safe. When banks and insurance companies invest money in Commonwealth loans they really do not give anything; they follow this course only when those in control think it is better to invest in such a way. They are not inclined to risk capital in industry at the present time. The people of the Commonwealth owe nothing to these people for making investments in government loans ; they do so because such a loan offers the best terms for investment that can be had at the present time. I hope that less charity will be shown to the wealthy classes bv this Government, and that more notice will be taken of the fact that money given to pensioners is immediately circulated in the community to the benefit of the community generally. Perhaps a little of this money is spent in the way suggested by the Auditor-General; it would be an extraordinary assumption that all pensioners are immune from the temptation to take an occasional drink. To those honorable senators who claim that more money should be made available to industry I point out that loan money is being devoted to public works undertakings at the present time. Fortunately for the wealthy investors in government loans, but unfortunately for the Government and the people, these investments give a. handsome return to the investors, particularly a3 they are afraid to take the risks of investing in industry. The more taxation is remitted to these people the more will money find its way into private banks; very little of it -will be invested in industry. Apparently the only way in which this money can be utilized for the general good of the community is when it is invested in Commonwealth loans raised for public works. This experience was borne out in Queensland during' the last election in that State when the Labour party swept the polls. A large number of people who had been opposed to the Labour party for over 20 years, and still are, accepted the view that the policy carried out by the Forgan Smith Labour Government in this respect over the last three years was" the best means of circulating money in the community. Whether it is spent in the payment of pensions or on public works money is rapidly circulated in the community and benefits the workers and traders generally and makes for better conditions for all classes. The adoption of such a policy explains the Queensland Labour Government's tremendous majority at the last Queensland elections when it almost annihilated the Nationalist party. Consequently, when T hear the old Tory aphorisms beingrepeated on this subject I am forced tothe conclusion that it is very difficult for some people to learn by experience.

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