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Wednesday, 12 November 1941


Senator McBRIDE - ProfessorIles continued -

For it would be possible (if it were not for the effects on production) to finance the war in such a way that the poor would not be called upon to contribute, directly to the Government, anything at all in the form of taxes or loans - as they need not if resort were had on a large scale to bank credit. This would mean that the poor could escape making payments in money to the Government. But it would not mean that they could escape the burden. Indeed, they would bear a larger part of the burden under this method of finance than they would bear under the method of direct taxation. Inflationhas the effect of skimming off part of the real incomes of wage and salary earners and of handing it over to the rich (the profit earners) so that they would in effect have the wherewithal to pay additional sums to the Government in taxation and voluntary loans. It is thus a simple matter to ensure that the rich shall have the means to " pay for the war ", by impoverishing the poor in order that they may. In advocating finance by bank credit, the Labour party would be well advised to take heed of this distinction between paying the money and bearing the burden, and in doing so to remember that inflation is incredibly efficient in producing inequality.

The Government's effort is doomed to failure. Indeed, it will very seriously retard our war effort in many ways. The people as a whole are quite prepared to bear their fair share of the burden of the war. The rate of tax which the Government proposes to impose on higher incomes would bring forth no objection from me at all if increased taxes were to be spread equitably over all sections of income earners. However, the Government in its taxation proposals, as my leader has already said and demonstrated with figures, is completely out of step with the governments of other countries within the Empire. He mentioned New Zealand, which has had a Labour Government since the outbreak of war. At the beginning of last year I had the pleasure of meeting most of the members of that Government. It has no illusion as to the spreading of the burden over all sections of its people. Indeed, it has shown in no uncertain manner that it believes that the people of New Zealand, as I believe of the people of Australia, are prepared to do their utmost in the prosecution of the war. It has imposed a special war tax on all sections of its people, and I give credit to it for the general war effort it is making. It must be evident to this Government that its proposed taxes on higher incomes will simply dry up the source from which it must hope to draw further taxes in the future. We must realize that no one section of the community has a monopoly of patriotism. We cannot expect those on the higher levels of income to have more patriotism than those on the lower levels. The proposed intensive scale of taxation on the higher incomes will eliminate a very large number of those incomes from the field of taxation altogether, and, consequently, they will not be available in the futureto be taxed by this or any other Government. One of the most serious effects which the Government's proposed taxes will have on these people is that it will make them feel that an injustice has been done to them..


Senator Arthur - Will they go on the dole?


Senator McBRIDE - I might have expected that interjection from the honorable senator. On many occasions in this chamber honorable senators opposite, particularly the Leader of the Senate (Senator Collings), have uttered the canard that it is not the amount of tax that matters, but the amount that is left to the taxpayer after he has paid tax. That is a deliberate half-truth, because the amount that is left to the taxpayer after he has paid tax must be related to the individual taxpayer's commitments. It is simply fatuous to suggest that a man who is accustomed to an income of, say, £5,000 a year, to take a figure at random, has not to meet commitments far in excess of those which, say, a man who normally earns £1,000 a year has to meet.

I shall now comment briefly upon the effect of the Government's company taxation proposals. We have heard ad nauseam from honorable senators opposite criticism of the big companies, the so-called greedy profit-makers, the great monopolies of this country. Most honorable senators opposite know the position of those companies just as well as I do. Their statements on this point are deliberately designed to mislead certain people. They know perfectly well that the bigcompanies have enabled us to achieve our present scale of production of munitions and equipment.


Senator Cameron - What about the workers?


Senator McBRIDE - Workers are employed by small as well as big companies. Unless the worker has the requisite wherewithal and direction he is incapable by his own efforts of producing the things we require; and, unfortunately, the commodities that we require in war-time are entirely dissimilar to those which we require in times of peace. Engineering capacity which is admirably suited to civil production is in many cases entirely unsuitable for the manufacture of munitions. Thus, we have had to look mainly to the large organizations to assist us in our munitions output.


Senator Cameron - And also to our skilled workers.


Senator McBRIDE - I have already paid a tribute to the workers. I said that the munitions workers particularly have an appreciation of the seriousness of our present position. I pay tribute to them, because I have some idea of what many thousands of them are doing. However, the fact remains that unless we could have got the assistance of the large organizations and, indeed, many small undertakings -I do not exclude the small concerns - we should not have achieved our output of war production. What we need in this war are munitions and more munitions in the shortest possible time, and it is to the large companies that we must look for those supplies. It is perfectly obvious that, confronted with severe and savage taxation, these organizations, in spite of their desire to do their utmost, will not be able to contribute as much to our war effort as they have done in the past. I have a knowledge of many of these organizations. They have expended large sums on equipment in order to provide our requirements of munitions, although they realize that they will not be able to recoup themselves of that expenditure when the war is over. That expenditure will be a total loss to them. Many of those organizations are following that policy, but the Government's taxation proposals will considerably reduce their capacity for this work. It seems strange that honorable senators opposite should suggest that these big organizations are most concerned about placing themselves in a f avorable position in order to be able to take the greatest advantage of the postwar period, and at the same time urge that we should develop the smaller companies and organizations. Surely they realize that whilst the Governments taxation proposals will effect the bigger companies which I have cited the new taxes will also make it impossible for the smaller companies to progress. In that way, the Government will reduce to a considerable degree the ability of the smaller companies to help in our war effort. Yet those smaller organizations have already done magnificent work. The effects of this kind of company taxation will be bad on the bigwellestablished companies which have huge reserves, but they will be worse on small companies, many of which have just altered their production methods to meet our requirements. It will be impossible for these small concerns to continue to expand in anything like the way they would have done had taxation been kept at a reasonable level. The Government would be well-advised to disabuse its mind of these false impressions. I am confident that honorable senators opposite will appreciate the position much more clearly now that they have had an opportunity to see what is being done.


Senator Cameron - Would the honorable senator entirely exempt the small companies from taxation?


Senator McBRIDE - I should not be prepared to exempt those controlling small companies or any one else. I should endeavour to impose taxes in a fair and equitable manner, which would enable growing concerns to carry on and expand in a way which would be of some assistance to our war effort. Unless that be done, there will be a damaging effect on the wonderful development that has taken place hitherto in our engineering and allied industries during the war.

I wish to make a brief reference to another of the real dangers of this budget. It is extraordinary to me that the present Government, willy-nilly, has thrown overboard the previous Government's proposals in regard to compulsory loans. I had an opportunity to listen to the Attorney-General (Dr. Evatt) in the House of Representatives when he said that compulsory loans did not build up the post-war credits but post-war debits, but obviously future debts are increased whether loans are compulsory or voluntary. Compulsory loans have many merits and advantages, and I have not yet heard from a Government supporter, either in this chamber or in the House of Representatives, a reasoned statement of valid objections to that system. Supporters of the Labour party when in opposition, said that they were against compulsory loans, but even at that time they did not say why. Now that they have taken over the reins of government, they are attempting to be consistent, but in doing so they are intensifying their war financial problems.


Senator Cameron - Should a man on the basic wage be forced to subscribe ?


Senator McBRIDE - If people of this country had to subscribe to compulsory loans the same amount of money as the people of New Zealand have to pay in taxes, the return would be very much more than was estimated in the Fadden budget, which was opposed by the Labour party. The Labour party in this conn- try considers itself to be an advanced Labour party. Like the soldier who thought that everybody else was out of step with him, it believes that it is the one Labour party inthe British Empire which is in step, but I do not believe it, and before long honorable senators will find out that it is not others who are out of step. The refusal to introduce a compulsory saving scheme has rendered necessary the raising of extra loans amounting to approximately £20,000,000.


Senator Arthur - The Government of which the honorable senator was a member proposed to take money from girls receiving £160 a year.


Senator McBRIDE - Had the honorable senator listened to what the New Zealand Minister, Mr. Nash, said probably he would have been greatly enlightened on many points.


Senator Arthur -i enlightened Mr. Nash.


Senator McBRIDE - The cold fact is that under theFadden. budget we had to raise by way of loans, in Australia this year, five months of which have already passed, approximately £142,000,000, including £20,000,000 for the States. Incidentally I have not heard very much from a certain Labour Premier who, when the previous Government was in office, was consistently haranguing and criticizing it for the paucity of its loan allocations to the States. I see nothing in this budget which suggests that the Labour Government will be any more liberal to the States in the way of loan allocations than was the previous Government.


Senator Keane - It is an interim budget.


Senator McBRIDE - I agree with that, and the Government will soon be forced to do some of the things which it has avoided doing on this occasion. By the time a supplementary budget is presented, honorable senators opposite will have obtained a good deal of information which will assist them infuture considerations. Whereas theFadden budget provided for the raising of £142,000,000 in loans, the present budget provides for the raising of £158,000,000.


Senator Cameron - What is wrong with that?


Senator McBRIDE - If subscriptions to the present £100,000,000 loan now being floated are any indication, the Government has a first-class problem ahead of it. I say without fear of contradiction that the Government will find it impossible to raise loans on the. scale envisaged in this budget, and consequently it will be necessary to fall back upon what my friend Senator Darcey has so consistently advocated in this chamber, namely, bank credit. The Government will be judged by results, and I arn prepared to reserve my final judgment until the results are apparent.


Senator Collings - Ve shall stand or full on that.


Senator McBRIDE - The Government is more likely to fall. It is advisable that the people should know just what the position was when this Government took over the treasury bench. The Menzies Government conducted the affairs of Australia during two years of war, and in all that period, according to the latest figures available, the average increase of prices has been under 10 per cent. I mention that because it is one of the very important factors upon which the Government will be judged. It is fatuous for the Government to talk of an all-in war effort if, at the same time, it encourages rising costs and prices. Consequently, I say deliberately that this is the main factor on which the Government will be judged, and on which the success of its war effort will depend. It is hopeless to endeavour to engage in a maximum war effort if there is to be a rising pile of costs, wages and prices. The omens for the future are already not good. If reports which have appeared in the newspapers he correct - I agree that newspaper reports are not always accurate - adverse effects will soon be felt. By various -means the previous Government held costs and prices down in a way which has not been excelled in any other country engaged in this war. They have been controlled not by flatly tightening down on prices and wages, as is done in Nazi Germany, but by endeavouring first of all to control prices on a reasonable basis. Incidentally I pay a tribute to the Prices Commissioner for his valuable work, which I consider has been exceptionally successful. Secondly, prices and costs have been kept at reasonable levels by allowing arbitration machinery to decide industrial matters. It is reported - I speak only from knowledge gained through that report - that that system has been departed from already. We have been told that, the Government has agreed to a mutual arrangement between certain workers and employers on the question of wages, without regard for the effect that such an arrangement might have upon other classes of workers, and indeed upon the entire arbitration system. I refer to the reported agreement between the brick, tile and pottery interests and their employees. If this be the system under which this Government proposes to settle industrial disputes, costs will rapidly increase. Not only will there be a rise in costs, but also the effect will filter right through the whole structure of our war effort, and its cost will increase materially. The result will be the same as the effect of inflation" in any other country, namely, that the conditions of those people whom such action is designed to assist will become worse.

I have no objection to increasing the rates of pensions, but I believe that the real rate of pension is its purchasing power. I recall that a previous labour Prime Minister who had avowed that he would not reduce pensions, eventually was forced to admit that it was better to reduce pensions and maintain their purchasing power than to retain the then existing rates. I draw the Government's attention to the fact that, if it travels down the easy way, not only the pensioners, but the workers generally, will be worse off than they have been, and the hardship will be felt particularly by those sections of the community whose support this Government has made violent efforts to obtain. I refer to those persons in receipt of fixed salaries. It is assumed that, owing to cost of living adjustments, persons employed under awards of the Arbitration Court can withstand the effects of inflation. Certainly they can in the early stages, but the large section with fixed incomes has not the advantage of automatic salary adjustments to compensate for increases of the cost of living, and it will suffer first from the results which I fear from the present budget.







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