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Wednesday, 12 November 1941

Senator McLEAY (South Australia) (Leader of the Opposition) . - Having had experience in various Government departments during this war, I appreciate the difficult task confronting the members of the Ministry in wartime. I am conscious of our obligations to the people of Australia. Whilst we, on this side of the chamber, have no caucus, I can assure the Leader of the Senate (Senator Collings) and his colleagues that we shall support all measures introduced by the Government to enable Australia to make a complete all-in war effort. I assure my friends who now hold important offices in the Ministry that the war has reached a most serious stage and that the problems that lie ahead are difficult. I sincerely trust that the Government will not shirk its responsibilities and that it will not fail to do everything possible to see that we give of our best to further the cause of the Empire. The members of the Opposition consider it to be their right and privilege to offer criticism, and very candid criticism where they think it to be necessary and where they feel that the Government has fallen down on its job. Since I was relieved of ministerial office five weeks ago I have taken the opportunity to look back and to take stock of what has been said and what has been done by honorable senators opposite. Probably, we best anticipate the actions of Governments by studying what has been said by their supporters in the past. Judging by the speeches of honorable senators opposite as recorded in Hansard, three charges can be laid at the door of the Government so far as its attitude towards the war is concerned, that i3, if honorable senators opposite propose to follow in the future the policies they have outlined since the outbreak of war. Perhaps I should say that these three charges can be levelled against prominent leaders of the present Government. The first is that some of the Labour party's leaders have a poor appreciation of what constitutes Australia's front line in this conflict. I do not propose to go into detail on that point; but I urge the Leader of the Senate to give to this chamber, before Parliament goes into recess, the assurance that every effort will be made by the Government to ensure that not only adequate reinforcements for the support of our divisions now in the field are made available, but also sufficient supplies of munitions, are provided. The second charge I make against members of the Labour party is in respect of their refusal of repeated invitations by the right honorable member for Kooyong (Mr. Menzies) and the Leader of the Opposition in the House of Representatives (Mr. Fadden) to join with them in the formation of a national government. Having regard to the present serious situation, the people as a whole look upon the continuance of party political warfare in Canberra as a sordid business. The right honorable member for Kooyong made repeated offers to the Labour party to assist in the formation of a national government; but in their desire to get control at all costs they have been successful, with the support of what we might describe as one or two political misfits, in securing a majority in the House of Representatives. The third charge I make against the Government is that, after having assumed office, and having been given an opportunity to formulate a policy to meet our present difficulties, it has merely brought down a budget which was truthfully described by the Leader of the Opposition in the House of Representatives as one that might win an election but not a budget designed to give Australia a 100 per cent, war effort.

Senator Courtice - Why?

Senator McLEAY - I think that we know the reason. Any one who has studied the performances of the Labour party must regretfully acknowledge that even in war-time the Labour Cabinet is ruled by the caucus, which in its turn is ruled by outside organizations. We know that when the present Prime Minister (Mr. Curtin), as Leader of the Opposition, was invited to assist in the formation of a national government he was una'ble to come to a decision until he had consulted the Australian Labour party. Sufficient evidence is available to show that even at the party's caucus meeting, held at Canberra recently to consider a proposal to increase the rate of the invalid and oldage pensions, the caucus tail wagged the party dog so successfully that the Government is now committed to honour in the first session in the New Year its election promise to increase the rate of pension to 25s. a week plus the cost of living allowance. When one studies the policy speech delivered by the Prime Minister in August, 1940, one can easily appreciate the difficult position in which members of the Government now find themselves as the result of making all sorts of airy promises prior to the last general elections. They gave those promises, as it were, in the form of blank cheques, and now they find that those cheques must be filled in and either honoured or repudiated.

During the last twelve months the Menzies Government decided to increase the rate of the soldiers' pay by adding an allowance of 7s. a week, and, in addition, child endowment was introduced. That allowance was to be paid to a wife with a family as a house allowance. The former Government also made an additional allowance of 6d. a day to the wife of a soldier without children. It proposed to pay a further amount of 7s. a week by way of deferred pay. This Government has decided to make that allowance available in the form of active pay.

Senator Fraser - We are not promising; we are acting.

Senator McLEAY - When the Prime Minister spoke recently over the air and asked people to contribute to the War loan he made many promises; and I am sure that he will honour them. We may differ in our opinions as to whether that allowance should be treated as deferred pay or as active pay. I am satisfied that the majority of the soldiers affected would prefer that the additional payment be treated as deferred pay, making a total deferred payment of 21s. a week.

The Menzies Government also increased the rate of deferred pay from ls. to 2s. for soldiers serving overseas. It is interesting to examine the details of soldiers' pay in order to consider whether it would not be wiser to make that allowance available as deferred pay. I submit the following table for the benefit of honorable senators : -


Senator Aylett - Does not the honorable senator think that the soldiers are worth it?

Senator McLEAY - I do think that they are worth it. I have quoted these figures merely to support and justify the Fadden Government's decision that the £1 ls. should be given in the form of deferred pay. At the last general elections, the Labour party promised to increase invalid and old-age pensions to 25s. a week. Members of the now defunct non-Communist Labour party, including the two " A's " opposite, outbid their colleagues and promised 30s. a week. In view of our heavy existing commitments and even heavier future commitments in connexion with this war, this is no time to increase social services. During the five-year period from 1936 to 1941, the cost of invalid and old-age pensions increased from £12,797,726 to £17,366,335 a year1 - a difference of more than £4,500,000, and commitments in this budget will bring these payments up to the staggering total of £20,000,000 a year, which means that the increase during the past six years has been more than £7,000,000. We are informed that in a supplementary budget the Government will increase invalid and old-age pensions to 25s. a week, but I shall not say any more about that until the supplementary budget is introduced. Having regard to the cost of living allowance, and the increase of prices due to inflationary tendencies and other factors, we can appreciate what the figure will be when the war is over. The number of invalid and old-age pensioners has steadily increased from 287,235 in 1936 to 335,681 in 1941- a difference of 48,446. In view of this ever-increasing burden, the Menzies Government in its national insurance scheme provided for the payment of pensions on a contributory basis. I urge the present Government to give serious consideration to the introduction, at the earliest possible date, of a similar scheme.

It is interesting to note the very convincing comments made by the New Zealand Minister for Finance, Mr. Nash, in Sydney, on the 6th November last. I propose to quote what that gentleman said, because he has had considerable financial experience. The Labour Govern- ment of New Zealand should be given credit by the people of all parts of the British Empire, for what it has achieved. I mention this with the object of urging my Labour friends opposite to measure up to what has been done in our sister dominion. The report of Mr.Nash's speech is as follows: -

In an address to the Legacy Club to-day, the New Zealand Minister for Finance and Customs(Mr. Nash) emphasized that New Zealand was financing most of its war effort by taxation. He said that conscription was being administered in New Zealand as impartially as possible by the Government, some members of which had gone to gaol during the last war because of their opposition to conscription.

He warned Australia and New Zealanders against the danger of complacency, and expressed doubt whether the people ofeither country yet realized fully the magnitude and the possible consequences of the great issues involved in the war,

The Labour Government in New Zealand realized in 1939 that social reforms and ideals, justly regarded as urgent, must become secondary to the conduct of the war. It decided that the people who remained behind must do with less so that the men who went to fight might have more, it decided that no goods must be imported from abroad unless they were necessary to the war effort. Imports had been cut very seriously, but the people wore not suffering unduly.

I commend Mr. Nash on having had the courage to make that statement, which I think is very much to the point.

In discussing the budget I have no wish to weary the Senate unnecessarily, but, in view of the fact that provision is made for a record expenditure of £325,000,000, and for unduly high taxation in certain directions, I propose to cite comparative income-tax figures for Australia, New Zealand and the United Kingdom. This budget imposes a most vicious tax on a few people in Australia who are earning large incomes.

Senator Arthur - Large combines.

Senator McLEAY - The honorable senator is talking nonsense. I am dealing with the personal incomes of individuals. At a later stage I shall quote some figures, which should make the honorable senator realize that theoftquoted statement about a group of wealthy men ruling this country is all nonsense and contrary to facts. The following comparison of income-taxrates in this country, New Zealand, and Great

Britain, is very interesting and illuminating:


I repeat that these vicious attacks at this stage on a comparatively few people in Australia will inflict great hardship. These persons have made commitments and have contributed to Commonwealth loans, and they are again asked to contribute to loans. It is estimated by Treasury officials that of a total of 3,000,000 persons in Australia in 1940-41 who were in receipt of incomes, only 13,600 received incomes over £2,000 a year. Throughout Australia, only 2,100 persons received incomes over £5,000 a year during 1940-41. A taxpayer without dependants with an actual taxable income of £250 a year pays in income tax only half of the amount extracted from his counterpart in Great Britain and pays only threequarters of the rate applicable in New Zealand. On an actual taxable income of £400, Australia asks for £60, whereas New Zealand says"£70 please" and England gets £111. On incomes of £1,000, Australians pay £244, incomparison with £381 by the English taxpayer, or two-thirds. An example of the severity of the Labour Government's proposals in connexion with the higher grades of income, as compared with the United Kingdom and New Zealand, rates, is clearly shown in the table, where it will be seen that, in the lower grades, Australia receives considerably less, whilst, in the higher grades, it receives more than the comparable grades in the United Kingdom and New Zealand.

It is desirable to give consideration to the estimate of. the Treasury officials of the actual income in Australia for 1940-4.1 to which the proposed taxation measures will apply. The estimated distribution of individual incomes for 1940-41 includes incomes of males, juveniles and members of the forces, but excludes pensions. It is estimated that 2,709,000 persons in Australia, or 90 per cent, of the population, who receive incomes of £400 per annum or under received for the period under review £560,000,000, or 70 per cent, of the national income of £800,000,000. It is estimated that, the persons in receipt of £401 and under £1,000 per annum number 245,000. Their income is estimated at £145,000,000. The number of persons receiving incomes of £1,001 per annum and over is estimated at 46,000, and their estimated income is £95,000,000. Therefore, I say to my Labour friends that if the complete incomes of all of the people in receipt of over £1,000 a year were taken in taxes, the Government would not get sufficient money to balance the budget. The Government has taxed with the utmostseverity, up to 18s. in the £1, a small section of the people, and. has left untouched those in receipt of 70 per cent, of the national income. I suggest that the Government should have adopted the excellent features of the Fadden budget, which provided for the extraction on a sliding scale, from all sections of the community by way of post-war credits, of £25,000,000.

Senator Fraser - How much will persons on the higher incomes have left after they have paid the tax?

Senator McLEAY - I suggest, to the Minister that he should study the Melbourne Cup totalizator figures in order to got some idea on that point. The proposed collection in the nature of postwatered it was one of the best features of the Fadden budget, and before the present Government is much older it will be forced to realize that, fact. "Wages were never higher in Australia than they are to-day, and employment, figures were never more favorable. The wage-earners are enjoying better conditions now than they were before the war. I suggest that the proposal to extract, money by way of post-war credits would have been of great help to the budget and would have had a steadying influence on inflationary tendencies. Post-war credits would have been helpful to any government which had to face the grave problems that will confront Australia.

It is estimated by the Treasury that the payments this year by persons in receipt of £400 a year and under, whose total income is estimated at £560,000,000, will amount, to £3,750,000. Those receiving £401 per annum and under £1,000 per annum, whose income is estimated at £145,000,000, will contribute £9,500,000. Those receiving £1,001 per annum and under £1,500 per annum, whose income is estimated at £28,000,000, will contribute £4,750,000, whereas the small section receiving over £1,500 per annum, with an income of £67,000,000, will contribute no less than £25,750,000. Those figures relate to Commonwealth taxes alone. If we add the State taxes that will be imposed in those parts of Australia where the State taxes are highest, we see that great hardship will ' be inflicted on those persons.

I shall not go into details regarding the. excessive taxes to be imposed on- companies. During the course of this debate, honorable senators will have an opportunity to point out, the viciousness of the action of the present Government towards Australian companies. For some unknown reason, there appears to be a desire, because a few companies make large profits, to bring companies generally to a condition in which they will be unable to make progress and in which great, injustice will be done to many shareholders.

Senator Courtice - We have to win the war.

Senator McLEAY - Yes, but we should call upon all sections of the community to help in winning it. I am amazed at the unfair criticism directed against the Broken Hill Proprietary Company Limited, particularly in view of the good work that that company has done and is still doing for Australia. A prominent member of the present Government, who represents Queensland, suggested that that company should be taken over and controlled by the Labour Government. Any honorable senator from Queensland should bear in mind the hopeless mess which the Labour party in that State made of its attempts to run State cattle stations and meat and fish shops. I am pleased to know that up to date the Government has not gone any farther with the suggestion. I desire to correct the impres- sion in the minds of some Labour men that in companies like the Broken Hill Proprietary Company Limited a few persons own all of the shares. I remind honorable senators that there are 20,000 shareholders in the Broken Hill Proprietary Company Limited, and that the average holding of the10,850 shareholders in the Electrolytic Zinc Corporation Limited is under 246 shares. Out of 70,000 shareholders in the Australian trading banks, 52,000, or 74 per cent., own shares not exceeding £500 in value. [ assure my Labour friends that they are inflicting a great hardship on a number of shareholders who are possessed of very modest means. I am at a loss to understand the objection raised to companies in Australia. When the history of this war is written, one of the brightest pages in the story of Australia's development will be that relating to the expansion of its secondary industries. They were a godsend to Australia when our primary industries were in difficulties because of loss of markets. Who are the people that control these companies? Ninety per cent, of them are men of initiative and enterprise who have risen from the ranks of the employees. This young country needs such men.

The excessive taxation of companies which the Government proposes will do a grave injustice to some sections of the community. The Government's proposals are inequitable, when we compare the rates imposed on companies with the rates levied on other sections of the community, particularly as a number of small shareholders who look to dividends from companies as a means of livelihood will be affected.I shall not go into details, but I point out that the Federal tax on companies has been increased from 2s. to 3s. in the £1, that the State tax on companies in South Australia is 2s. in the £1 and varying amounts in the other States, and that undistributed profits are also raxed. Indeed, the tax that is paid is taxed again in the hands of the people who receive the dividends. If the Government will consider the cumulative effect of these several taxes it will find that they will inflict a serious hardship on numbers of small companies in Australia which find it essential to set aside a certain amount each year as reserves. In its desire to hit some of the big companies, the Government is doing a great injustice to a number of small companies and their shareholders. I shall deal later with the Government's proposal in respect of the reduction from8 per cent, to 4 per cent, of the allowable profits made under the War-time Company Tax. A comparison of prices charged by the Broken Hill Proprietary Company Limited for certain main products with the prices charged in the United Kingdom is interesting. The following table sets out the position : -


The budget contains a paragraph of five lines under the heading "Rural Reconstruction ".

The Government proposes to begin promptly inmaking effective its policy to give stability to our rural industries. The existing machinery for debt adjustmentand for the transfer of farmers from sub-marginal areas will be speeded up. Arrangements have been made to have these mutters examined at a meeting of Commonwealth and State Ministers early next month.

The Treasurer speaks of speeding up the machinery for debt adjustment and the transfer of farmers from sub-marginal areas, butI point out that those two matters are handled by the States, although the Commonwealth provides the funds. However, the budget papers do not show that any extra amount has been provided for these purposes.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - It is merely padding.

Senator McLEAY - That is so, and poor and misleading padding at that. An examination of the budget will show increased land tax, sales tax and income tax, compared with the rates proposed by the Fadden Government. If we consider the cumulative effect of all of these taxes, as well as the inflationary tendency of the budget, we can come ito no other conelusion than that the proposals of the Government will inflict a further burden on those engaged in rural industries who have not the opportunity to pass on increased costs. Many primary producers who are normally engaged in the export trade are in a most serious financial position because of shipping difficulties. The wheat farmer, for instance, has not only to pay for storing his wheat which cannot be shipped,, but he has also to bear any losses which may be due to weevils. The primary producers of this country will find small comfort in those five lines in the budget.

It is interesting to note that the present Government has decided to reduce the expenditure contemplated by the Fadden Government in respect of only two items, namely, the Department of Information, and advertisements relating to the sale of surplus primary products. The Assistant Minister for Commerce (Senator Fraser) will not be able to speak in glowing terms of the Government's- proposals when addressing the primary producers of Western Australia.

Senator Fraser - The proposals of the present Government are better than those of the previous Government.

Senator McLEAY - If the honorable senator himself and the primary producers of his State believe that that is so they are more foolish than I thought.

The present budget undoubtedly has an inflationary tendency. I do not desire, nor have I the time, to discuss that aspect of the budget now, but I remind the Senate of what has happened in the past. The gap between the expected revenue and the contemplated expenditure is £137,000,000. The Government has till the end of June next to bridge the gap. It may do so by borrowing from the people, by imposing heavier taxation on .them, or by embarking on a policy of bank credit. I was pleased to read what the Treasurer (Mr. Chifley) had to say on the .subject of bank credit, but at the same time I felt somewhat sorry for the Government's financial adviser., Senator Darcey.

Senator McBride - The Government has jettisoned him.

Senator MCLEAY - Australians war expenditure for 1940-41 was £170,000,000; the estimate for the present financial year is £221,000,000. If we are to do our utmost in this titanic struggle the Government will find a heavy financial task confronting it for the year 1942-43. The amount borrowed for all public purposes for 1940-41 was £86,000,000. This year, the amount required is estimated at £158,000,000, or £72,000,000 more than in the previous financial year. If the Government intends to rely on bank credit to bridge the gap, I foresee difficult days ahead.

Another difficulty that confronts the Government is in connexion with manpower. In this connexion I shall read from the budget speech under the heading "Financial Policy"-

Credit expansion, however, can be successfully used to finance employment of reserves of man-power to expand production of goods and materials. That is to say that any increase in the money volume must be balanced by corresponding increase in production. The extent to which increased production is possible will be determined by the amount of reserve man-power that is available. A thorough survey of that field is now in process. By organization and training many who are now classified as unemployable could he found useful employment said thus materially increase production and at the same time provide for themselves and their families.

Those members of the public who have read comments by various Ministers of the present Government will appreciate that the previous Government accomplished a .great deal in connexion with its munitions programme, its Empire Air Training Scheme, as well as its organization of the Navy and the Army, This, however, is no time to criticize our friends opposite for what they are doing to solve the man-power problem. Undoubtedly it is a difficult problem. The Treasurer says that the Government will make provision for an equitable distribution of nonessential goods, and that ".there must be a switch-over of a very large amount of production from civil needs to war's demands ". The Government has been in office for five weeks, hut I ,see no evidence of that as yet I listened to the Prime Minister appeal for contributions to the war loan during the week that the Melbourne Cup was run. Honorable senators know that a huge sum of money passed through the totalizator in connexion with the Melbourne Cup and the racing carnival generally, and I suggest that if the Government desires to divert expenditure from non-essential needs to war needs it could not do better than follow the lead given by its predecessors, and establish a scheme of postwar credits. Having regard to our commitments and the possibilities in the future, I suggest that the Government should reconsider that matter.

All honorable senators are concerned with the difficulties that lie ahead. The Opposition is concerned and will be behind the Government in all matters directed towards an all-in war effort. After all, that is the only thing that really matters. As to other matters concerning which we may be forced to disagree with the Government, the Opposition will criticize the Government's proposals where it thinks that criticism is justified in the interests of the people of Australia who have sent us here. I say, finally, that at the last general elections sixteen members now sitting in Opposition were elected by five States, not because of any airy promises that they made, but because they told the electors that their chief concern was the maximum war effort. Our leader said then that he would not make any promises, but that, if returned, his Government would do its best to win the war and to make the land we love a place fit to live in.

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