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Thursday, 3 April 1941

Senator CAMERON (Victoria) . - I support the statement of the Leader of the Opposition (Senator Collings) that the Opposition is not in agreement with the Government's policy for the raising of the loan which the bill, if passed, will authorize. To indicate the policy of the Australian Labour party I shall quote two planks in the party's platform under the heading, " Taxation and Finance " -

Naval and military expenditure to be allocated from direct taxation.

Restriction of public borrowing.

Senator McBride - The Labour party did not know when it included those planks in its platform that this country would be engaged in a great war.

Senator CAMERON - When the Labour party framed that portion of its platform it foresaw that certain interests were prepared to capitalize war so as to create an interest return in perpetuity for many persons who will take no part in the fighting. The Labour parity's policy has been supported in many quarters, because in the light of experience many are realizing that Labour's policy is right. Even orthodox financiers, as Senator Darcey would describe them, are becoming converts to Labour's policy. I quote the following from an article in Sound Finance, a monthly review published in Sydney, which appeared in the issue of the 10th March last: -

The most fundamental of all the facts in relation to the war is that the real cost must be borne now. No portion can be postponed until the years after the war, much less shifted to a generation still to come. There is no such thing ns making posterity pay.

The intention of the Government in framing the bill is that posterity shall pay interest to persons who invest their money in war loans. The article continues -

The fighting forces must be fed and clothed and their fighting equipment must be provided by us. No portion can be produced by our children (excepting those already at work) or by generations yet unborn. We cannot dispose of a. single- pennyweight of the hurden. We can distribute the burden, but only among those now living and producing or receiving income. The whole art of war finance is in distributing this burden efficiently and equitably . . .

If the whole of the war effort was financed out of taxation, it would be obvious that the whole burden was borne by the taxpayers in proportion to the taxes paid by each. For this and other reasons it would be a good thing if the whole of the war effort could be financed in that way.

If loans are resorted to, the burden is not shifted to posterity, as many - in fact, most people - seem to imagine. The lenders accept burdens which would otherwise be spread through the whole community by taxation. That does not shift the burden to generations still to come. It merely shifts the burden from the community as a whole to a section of it, the lenders. The whole burden is borne by somebody or some sections living while the war is being fought. Posterity comes into the picture only in this way: Coming generations will be made to bear taxation in order to pay interest and eventually to repay the loans to the descendants of those who lent during the progress of the war. To recognize that is to realize, not only that it is impossible to shift the burden or any portion of it from the existing community as a whole to any succeeding generation as a whole, but also that ultimately the whole of the war effort must be financed out of taxation.

I have claimed repeatedly in the Senate that the debtor section- (the workers - are being compelled to pay tribute in perpetuity to the creditor section. My last quotation from the article is the following : -

Why not rely entirely upon straight-out taxation in the first place? This should bc done to the taxable limit. But what is the taxable limit? The absolute limit is the whole of the national income less sufficient to maintain the physique and morale of the community. . . .

Why should we rely upon taxation to the utmost to finance the war? Firstly, it is the most equitable method. Secondly, it is the most certain way of withdrawing income from consumption as the output of consumption goods (due to the transfer of resources to the war effort) declines. Thirdly, it leaves no post-war problem of finding interest for bondholders. It should be obvious that if we allow war debts to grow apace, taxation will have to bo high after the war as well as during -the war period, so that the interest bill can be met.

I commend those extracts from Sound Finance, a journal which is not associated with the Labour party, for the consideration of the Ministry and honorable senators opposite. The bill provides that a sum of £50,000,000 shall be raised by loan. In other words, deferred taxation is to be paid in perpetuity by those least able to pay it. It will not be taxation based on the principle that those most able to pay will pay the most. I agree with the statement of the Leader of the Opposition that the Labour party does not accept the Government's policy of capitalizing the war in the interests of investors - not the fighters or the workers - but those people who sit at home and profess to be ultrapatriots. Not only do they wave flags, but they also control the press and the radio with the object of conveying the impression that they are even greater patriots than those who are doing the actual fighting or are carrying on essential war work. Their motto is patriotism plus profit, and the more profit they make the more patriotic they are.

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