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Thursday, 27 March 1941

Senator DARCEY (Tasmania) . I support the motion moved by Senator Keane. I quote the following article written by Mr. Hartley Grattan and published in Harpers magazine of August, 1940 :-

Inward social health is the firmest foundation for a sound patriotism. We must have it in full measure. Mcn will enthusiastically defend that kind of country. To build a healthy society is the greatest of the tasks before us. If wo do not face it we are lost.

That view was supported by Dr. John Dale, Chief Health Officer 'of the city of Melbourne, in an address delivered in Hobart recently. Dr. Dale should know what he is talking about, because, being a health officer, he must be familiar with slum conditions in Melbourne. The Arbitration Court and the Government's economic advisers have told us over and over again that it is economically impossible to raise the basic wage withoutcausing a great deal of trouble. That view has been held for many years by university professors and is held to-day by orthodox economists of the Ricardo school. Ricardo, who said that there was an iron law in respect of wages, held that since labour was a commodity its price fluctuated with the demand. When the demand for labour diminished, wages remained at a bare subsistence level. If the demand increased, wages would rise and workers would have more money. They would then have more children, and presently the addition to the population would bring the price of labour back to the bare subsistence level again. . Those are the ideas held to-day by economists advising governments in this country. Nassau Senior attempted to prove that hours of labour could not be reduced because the employers' profit came out of the last hour of operations. A 68-hour week was common at the time, and he said that if the last hour were eliminated, so also would industrial profits be eliminated, and the business of the nation ruined. In other words, if children in factories worked 67 hours rather than 68, panic would replace prosperity. Senior's contribution to economic theory proved that hours could not be reduced, and John Stuart Mill and other pacifists, by the famous "wage-fund doctrine", proved that, in effect, wages could not be raised. Workers joined unions and struck for a rise, and the economists said " Pure madness ". Why? Because there was a certain fund set aside out of capital for the payment of wages. It was all arranged by Heaven and arithmetic, and trade unions could do nothing about it. The wagefund theory was the stock answer of the manufacturer and the editor to the claims of the organized workmen. That theory has been blessed by economists and must be true. Observe how these " la ws " were put to tangible use, holding back improvements in working conditions for scores of years. The philosopher produced nonsense. Many classical economists had an axe to grind, and they ground it exceedingly sharp. Economists and government advisers today are receiving £1,600 and £1,700 a year for part-time jobs, and the theories' they hold are those advanced by such people as Ricardo and John Stuart Mill. It was not until 1876 that the wage-fund theory was exploded by an American economist, Frances Walker, who argued that wages were paid not out of a fund of stored capital, but out of current earnings - a theory which came closer to the facts. John Stuart Mill first popularized his wage-fund hypothesis in The Principles of Political Economy in 1848, and then, years later, he published the following statement: -

The doctrine hitherto taught by most economists (including myself) which denied it to be possible that trade combinations can raise wages ... is deprived of its scientific foundation and must be thrown aside.

That is exactly what I have said over and over again in this chamber. The day of the orthodox economist is fading and he will disappear completely before the present war is over. George Bernard Shaw defined political economy as the art of spending the national income in such a way as to bring happiness and prosperity to the greatest number of persons. Will any honorable senator opposite say that the Commonwealth Government or any of the State governments are working on those sound principles ? Can it be said that in this country the greatest good goes to the greatest number ? I say not. The greatest good goes to the few. It is only a chosen few who share this country's wealth. It is obvious that neither this Government nor the governments of the States fully understand the true principles of democracy. Senator Spicer spoke of the child endowment scheme. From what I have heard of that proposal, it will give with one hand and take away with the other. I understand that a feature of the scheme is that the income tax deduction allowed in respect of children will he withdrawn.

Senator Spicer - Only in respect of the second and subsequent children.

Senator DARCEY - It is usually the first child that is most costly to a young married couple. When a man in receipt of small wages marries, he has to furnish his home, and incur other expenditure. At the end of say, twelve months, a baby usually appears in the home and further expense is involved. The biggest blot on the proposed scheme is that no consideration is given to the effect which the scheme will have on a family. As I have said, the first child usually involves a considerable expense, and although a married couple might like to have more children on which endowment would be paid, because of the big outlay involved for the first child, they will refrain from increasing their family responsibilities. The Attorney-General (Mr. Hughes) has frequently said that the greatest danger to this country is the falling birth-rate. Is there anything in world conditions to-day to induce people to bring more children into existence?

Senator Collings - The very opposite.

Senator DARCEY - That is so. The declining birth-rate in Australia increases our danger from such countries as Japan, where the birth-rate is more than 1,000,000 a year.Statistics issued in 1937 show that rent absorbs 20 per cent. of the workers' wages. Since that time rents have increased by 40 per cent. Senator Dein has told us that it is impossible to get a four-roomed house, even in the slums, for less than 17s. a week. When I was a boy - there were twelve in our family - we had a five-roomed house and later we had tobuild a shed at the back to accommodate the boys. Our house was ofbrick right in the city and yet the rental was only 6s. a week. Of course the basic wage then was only half of what it is to-day in actual money, but the point I am trying to make is that all those supposed improvements such as reduced working hours and an increased basic wage have not increased the purchasing power of the workers. It can be proved that the basic wage to-day is not so effective as it was under the celebrated Harvester award of 1907.

Senator Dein - That is not borne out by facts.

Senator DARCEY - It was proved in this chamber by ex-Senator Sheehan, who unfortunately lost his seat at the last election. Until we get orthodox economics out of the heads of honorable senators opposite, there is no chance of getting sound legislation passed through this Parliament or of obtaining reasonable Arbitration Court awards. It will be recalled that in preference to taking direct action the workers asked for an award of the Arbitration Court. It was a wise decision. How can a judge of the court who holds a military position give his attention to the claims of the workers? It is impossible to improve the position of the workers under the present monetary system. What is given them by one hand is taken away by another. The proposal submitted by Senator Keane, if given effect, would assist the great mass of people who are doing the real work of Australia but who are compelled to live on a mere subsistence.

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