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Wednesday, 12 November 1941

Senator SPICER (Victoria) .- I am conscious of the extraordinarily difficult task which was presented to the Treasurer (Mr. Chifley) and to the previous Treasurer (Mr. Fadden) in preparing the budget proposals for this year. The task of the present Treasurer was rendered lighter than it might otherwise

Iia ve been by reason of the fact that the financial affairs of this country during the first two years of the war were conducted with great skill. That enabled us to put forward a tremendous war effort and preserve on a perfectly sound foundation the whole financial structure of this country. I take this opportunity to pay tribute to the Menzies Government for its financial policy during those two years. It has to its credit an achievement that is little short of remarkable.

Senator Cameron - It increased interest charges.

Senator SPICER - It is time the honorable senator became a little less irresponsible, since he is now 'a Minister. The truth is that, despite the large sum that is required for war purposes, interest rates have fallen since the war.

Senator Cameron - But capital charges have increased.

Senator SPICER - The fact that interest rates have fallen is due in no small measure to the wise policy adopted by the Menzies Government. I add the fact referred to by Senator McBride that, since the outbreak of war, commodity prices in this country have risen by only 10 per cent. That is another remarkable achievement. When Senator McBride was speaking, the Minister for Aircraft Production (Senator Cameron) indulged in another of those irresponsible statements to which we became accustomed when he sat on the opposition side of the chamber, but which come ill from a Minister of the Crown. He interjected " Why should prices rise at all ? " Prices have risen because costs have risen, and it is impossible to keep down the price of any commodity if the price of producing it is increasing. One of the big factors in the increasing costs that have led to increased prices is increased wages. Members of the Joint Committee on Profits have been giving attention to this matter, and have had perfectly clear proof before it that prices in

Australia, on the average, have not increased more than 10 per cent, during the war, and that wage costs are a big item in the price of many commodities. According to the Prices Commissioner, Professor Copland, who has carefully investigated the matter, wage costs have increased by more than 12 per cent, in all cases examined by him, and he expressed the view that that was a conservative estimate.

What is the task with which the Treasurer is faced at present? It is no light one. It is that of how to raise the sum of £325,000,000 from 7,000,000 people, a task which two years ago would have been thought well nigh impossible. In order to provide the colossal sum envisaged in this year's budget, the contribution from the total population of Australia will be almost £50 per capita. The first thing to be done by any one who considers such a problem is to ascertain its nature, and then to proceed to administer to the community the proper medicine. These are not the days when such a task can be undertaken without imposing sacrifices upon every section of the community.

Senator Cameron - Should not some persons pay more than £50 a year?

Senator SPICER - Some should pay more and others less; but I am surprised that the Minister should be so enthusiastic about the present budget, because ever since I have been a member of this chamber, he has advocated the collection of the whole of the income tax from persons receiving over £500 per annum. Now he is an enthusiastic supporter of a budget presented by a Government that refuses to impose additional taxes on anybody with an income of less than £1,500 per annum.

A curious feature of the budget speech is that it sets out in perfectly clear language certain principles that are perfectly sound, but the Treasurer does not implement them. He is like a doctor who, having had a look at a patient, has diagnosed the disease accurately, and knows the kind of medicine that should be given, but says, "No, I cannot give him that stuff ". The Treasurer refuses to administer the medicine which he knows the patient should have.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - Because " Dr. "Fadden has prescribed it !

Senator SPICER - That is largely the reason. It is also because the medicine is supposed to be politically unpalatable. This budget is founded on political expediency, and so far as it differs from theFadden budget, is divorced entirely from the principles which the Treasurer himself expounded.

The problem confronting us is of a twofold character. We have reached the stage where we can continue the war effort upon the basis on which we all desire that it should be continued only by diverting men and machines from civil production and seeing that they are employed in the production of goods and services for war. That position is frankly acknowledged in the budget speech. The Treasurer said that, notwithstanding any increased production that could be brought about, there must be a switch over of a large volume of production from civil needs to war demands. With that statement I entirely agree.. That is the physical side of the problem. The financial side is involved in the question as to how the burden of that diversion shall be carried by the community.

Senator Cameron - Upon the principle of equality of sacrifice.

Senator SPICER - Yes, and according' to ability to pay. Those are the principles which should be followed at present by any government; but, because the principles followed in the present budget involve the very reverse of payment according to ability to pay, I am opposed to certain features of the budget to which I intend to refer. One satisfactory way of seeing that thecommunity pays in accordance with its ability is to tax people on their incomesin accordance with the amount of those incomes. There is no fairer or more certain way of seeing th at the burden is properly distributed amongst all members of the community in accordance with their ability:

Senator Cameron - Would the honorable senator includethe basic wageearner?

Senator SPICER - Yes, if necessary. If the basic wage-earner, in order to meet the needs of war, is: to be forced like every other member of the community to make some contribution to the war effort, the fairest way to do it is to tax him, and not reach the same result by the roundabout, unfair and inequitable methods inherent in the present budget. The Leader of the Opposition (Senator McLeay) has already mentioned some phases of the problem confronting Australia. He has referred to the fact that no new burden is imposed on incomes under £400. This section of the community has an income of £560,000,000. It contains 90 per cent, of the earners of income, and comprises 70 per cent, of the national income; yet it contributes only £3,250,000 to the war effort.

Senator Cameron - It provides profits for other people, also.

Senator Armstrong - That is only by means of direct taxation.

Senator SPICER - Let us compare the presentGovernment's policy with what has been done by the Labour Government of New Zealand. Out of the same fund, from the same kind of people, that Government would obtain revenue amounting to at least £56,000,000. The New Zealand system starts with a tax of 10 per cent, or 2s. in the £1. The basic wageearner - indeed, a person earning £2 a week, which is less than the basic wage - contributes £10 out of his £100 to the war effort.

Senator Armstrong - There are not many such persons in New Zealand.

Senator Cameron - Is that the policy that the honorable senator supports?

Senator SPICER - It is a better policy than the policy of the Commonwealth Government as. set out in this budget. If it be necessary to get the money for the war effort, then that is the policy which I support.

SenatorFoll. -It is better than robbing the people by inflation.

Senator Large - That is where we join issue.

Senator SPICER - Exactly. I believe that that section of the community which has the use of £560,000,000 must bear its share. It is because I believe that it cannot, in fact, escape from its share of the burden that I believe that the money should be extracted from that section in the only fair way by which it can be obtained. Instead of diverting money from civil production to war activities by means of post-war credits or compulsory loans, as the Fadden Government proposed, this Government runs away from the task altogether. It starts with a miserable contribution, for it proposes to increase taxes by only £22,000,000. Some proportion of that amount it plans to get by means of an increased sales tax. It is amazing to find aLabour Government preferring a sales tax to an income tax based on ability to pay.

Senator Gibson - The reason is that the people can see one tax, but not the other.

Senator SPICER - It may be that the community does not see the sales tax, but it certainly feels that tax.

Senator Large - The community has always felt it.

Senator SPICER - Exactly. That is my point. Indirect taxation is the most inequitable method of taxing which can be devised.

Senator Aylett - Then why did the Government which the honorable member supported impose indirect taxation?

Senator SPICER - Because a particular government does a certain thing is not to say that indirect taxation is to be preferred to direct taxation. This Government proposes to levy indirect taxation, which falls inequitably upon people with large families, low wageearners and invalid and old-age pensioners. It does that in preference to taking the straight and honest course, and saying to the man who is earning £300 a year : " Look here, old chap, it is up to you to contribute £15 a year to the war effort". The Government has resorted to this method rather than impose direct taxation; but that is not the whole story by any means. Over £70,000,000 of war expenditure is to be obtained from " we don't know where ". The Government has run away from the problem of raising that amount of this year's war expenditure. I submit that the Government is not serious when it tells the people that it proposes to raise £130,000,000 this year by way of loan. Any man who studies this problem must come to the conclusion that the Government will not be able to raise half of that sum in this way.

Senator Aylett - We could do so if the interest rate were 6 per cent, or 7 per cent.

Senator SPICER - What a splendid idea ! Here we have a Labour senator as a protagonist of high rates of interest ! If 6 per cent, or 7 per cent, is the rate of interest which the honorable senator thinks is necessary-

Senator Aylett - I did not say that.

Senator SPICER - The honorable senator said that we would soon get the money.

Senator Aylett - The money would soon be forthcoming if the interest were 6 per cent, or 7 per cent. The people who make profits would be full of patriotism then.

Senator SPICER - The Government expects to get a large proportion of the £70,000,000 from the people earning incomes of less than £400 a year.

Senator Cameron - From those earning above that sum.

Senator SPICER - If6 per cent, or 7 per cent, interest be necessary as an encouragement, then I say that it is in that section that encouragement is necessary in order to get the money. The fact is that we raised only a little over £60,000,000 by means of loans last year. I cannot see any prospect of raising anything in excess of that amount this financial year. If my prediction be correct, it means that about £70,000,000 of war expenditure will have to be provided by bank credits. In other words - and this is the important factor - at a time when, on the Treasurer's own statement, the production of goods and services for civil purposes is decreasing, the Government proposes deliberately to increase by over £70,000,000 the amount of credit available in the community.

Senator Aylett - The honorable senator did not criticize the expansion of bank credit by the previous Government.

Senator SPICER - There is all the difference in the world between resorting to bank credit at a time when there are idle resources in the community which it is desired should be brought into production, and increasing bank credit at a time when it is proposed to decrease the production of civil goods.

Senator Keane - Why did not the honorable senator say that during the depression when 100,000 men were out of work and the Government of the day would not make a " copper " available ? Why does he not be consistent?

Senator SPICER - I am consistent. The Minister for Trade and Customs (Senator Keane) is not able to point to any speech of mine which is inconsistent with what I am now saying. I invite any member on the Government benches to turn up what I said about this subject last year. If he does so, he will see that I am repeating to-day what I said then. The sum of £70,000,000 of bank credit is to be found and distributed throughout the community at a time when our ability to produce goods and services for civil purposes is decreasing.

Senator Cameron - Nonsense ! The honorable senator does not know what he is talking about.

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