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Thursday, 18 September 1941

Senator DARCEY (Tasmania) . - It is not my intention to anticipate the budget, but it will be generally conceded that when it is introduced the bone of contention will be matters of finance. For that reason, I bring to the notice of honorable senators some happenings at a recent meeting of the Loan Council, which was presided over by the Treasurer (Mr. Fadden). At the August meeting of the Loan Council Mr. Cosgrove, the Premier of Tasmania, moved -

1.   This Loan Council concurs in the view expressed by the State Parliaments of West Australia, South Australia, Queensland, and Tasmania, that national credit, operated through the Commonwealth Bank only, should be utilized in financing the war for the general well-being of the people of Australia.

2.   In order to give effect to this policy in a practical manner, the Loan Council recommends to the Commonwealth Government the adoption of the following principles: -

(a)   In future no subscriptions to public loans should be accepted from the trading banks nor should the trading banks be permitted to increase their holdings in Commonwealth bonds;

(b)   Public loan flotations should be limited to amounts within the capacity of the public market, as distinct from trading banks and the Commonwealth Bank;

(c)   Other borrowings should be in the form of direct advances from the Commonwealth Bank;

(d)   Adequate steps should be taken to neutralize increases in cash held by the trading banks and to prevent an expansion of trading bank advances for purposes not consistent with the Government's war policy.

3.   The Loan Council further urges the Commonwealth Government to use its wartime emergency powers to make whatever legal arrangements are required to give effect to these principles.

Mr. Fadden,the chairman of the Loan Council, ruled the motion out of order, and that ruling prevented Mr. E. Dwyer Gray, the Treasurer of Tasmania, from saying all that wasnecessary. in supporting the motion of his leader. However, he did say -

I remind the Council, further, that at the Loan Council held in Melbourne, on19th January, 1940, I moved the following motion and received no support, namely:

An approximate amount of £42,000.000 being required this council advises the Commonwealth Government to make arrangements for an extension of national credit through the Commonwealth Bank solely of at least £15,000,000, the balance to be financed by a later public loan for war purposes only after effecting the arrangements with the trading banks suggestedby the State of Tasmania.

At present, the press of Australia is misleading the public as to what national credit really means. Recently, a Sydney newspaper took me to task. I put it down to the effect of an interjection by Senator Gibson, who admitted that paragraph 504 of the report of the Royal Commission on Banking and Monetary Systems stated that the Commonwealth Bank " can " advance interest-free money to the Government, but did not say that the Commonwealth Bank " shall " do so. Of course, the Royal Commission did not use the word " shall ". What right has any commission to lay down the financial policy of the Government? The commission was engaged on an inquiry, at the termination of which it submitted certain recommendations. I wonder whether Senator Gibson, who is chairman of the Joint Committee on Broadcasting, would go so far as to tell the Government what it " shall " do regarding the future of the Australian Broadcasting Commission ?

Senator McBride - The committee will no doubt make recommendations.

Senator DARCEY - That is what the royal commission to which I have referred did. On the evidence presented to that royal commission, which was presided over by a judge of the Supreme Court of South Australia - a gentleman with a high reputation as an authority on constitutional matters - the commission reported that the Commonwealth Bank can lend money to the Commonwealth Government free of interest. The only objection to implementing that proposal is that the commission did not say that the Commonwealth Bank " shall " do so. That is an absurd argument.

Senator McBride - The honorable senator can lend to me money free of interest if he so desires.

Senator DARCEY - I remind the Minister that banks do not lend money at all ; they merely create credit out of nothing. It is time that the Minister either decided whether I am right or wrong, or held his tongue.

Senator McBride - What do the honorable senator's colleagues think about his views?

Senator DARCEY - I do not intend to take any notice of inane interjections. At the last meeting of the Loan Council, Sir Harry Brown told that body that the Commonwealth Bank could advance £25,000,000 to meet the requirements of the States. Evidently, the Commonwealth Treasurer thinks that wars are won with money, but he should know that they are won by the issue of credit.

Senator McBride - They are won with arms and munitions.

Senator DARCEY - -The Commonwealth is spending thousands of pounds in an effort to convince the people of Australia that if they do not subscribe to war loans, the output of munitions will be adversely affected. Nothing could be more absurd. The total supply of gold in the world was estimated at, $14,000,000,000 in 1939. Most of that gold was held by the United States of America, Great Britain and France, although Belgium, Holland and other small countries held various small amounts. But theremarkable thing is that Germany. Italy and Japan had not gold resourcesequal to those possessed by the small nnation of Switzerland. Surely that proves that wars are not won with money. The Battle of Waterloo has not .yet been paid for. At the Loan Council meeting, Mr. Fadden made it appear that money had to be conserved in order that the war may be won. When Sir Harry Brown, who is a most capable man, told the Loan Council that the Commonwealth Bank "can" advance £25,000,000 for the requirements of the States, Mr. Fadden =aid: "No; we want the money for the prosecution df the war".

Senator McBride - What did the Premier of Tasmania say?

Senator DARCEY - That is the trouble. We were let down by the :: heads".

Senator McBride - The honorable senator should not get out of step with all of his colleagues.

Senator DARCEY - The people should know what national credit really means. Unfortunately, many members of Parliament have only a kindergarten knowledge of the subject. In trying to placate both Government supporters and members of the Opposition I am afraid the Treasurer will fall between two fires. For three years I have urged that greater use be made of the national credit of this country, and I have successfully challenged members of the Government to controvert my statements in regard to finance generally. Only by the use of the national credit will Australia be saved from financial failure and repudiation.

Senator CLOTHIER(Western Australia [5.37]. - To-day, in answer to a question relating to the pensions of widows and dependants of soldiers, I was informed that the matter was still under (he consideration of the Government. As honorable - senators are aware" the widow's pension rate of £2 2s. a week was fixed during the 1914-18 war when the basic wage in most of the States was £3 a week. The cost of living has increased considerably since then. A recent award of the Arbitration Court in Western Australia fixed the basic wage in that State at £4 10s. 5d. In view of the greatly increased cost of living since the pension rate was originally fixed the

Government should see that a commensurate increase is made. I do not suggest that the increased rate should be based on the basic wage paid in Western Australia, but that it should be such as to compensate these unfortunate people for their added living costs. On the 2nd September at a meeting of the executive of the Soldiers' Dependants Appeal, which is associated with the Western Australian War Patriotic Fund, the following resolution" was passed : -

That this organization make early representations to the Federal Government with a view to the pensions of widows and dependants being increased owing to the high cost of living.

These unfortunate people are unable to support themselves on a pension of £2 2s. a week. I appeal to the Minister for Repatriation (Senator Collett) to use his influence in the Cabinet to see that the pensions paid to the widows and dependants of ex-soldiers are more closely related to living costs.

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