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Thursday, 13 November 1941

Senator JAMES McLACHLAN (SOUTH AUSTRALIA) . - Before addressing myself to the motion before the chair I take this opportunity to congratulate the members of the Government on their occupation of office. I trust that it will not be long before we ha ve another change of government. I mean that now that the members of the present Ministry have taken over responsibility of managing this country and have realized the seriousness of the position that confronts it, I trust that we shall get what we should have had long ago, namely, a national government. The revised budget is somewhat unique in two respects. In the first place, it demands from the public of Australia a larger sum of money than has ever been demanded before. Secondly, it was prepared by a party the spokesmen of which have told us in and out of season that greater use should be made of the national credit, and that if national credit were properly handled - and by that I take it they meant handled by themselves - it would provide the necessary funds with which to finance our war effort. On examination of the papers before us, however, we find that this budget follows very much the same lines as its predecessors. That may be due to the fact that since honorable senators opposite have been made aware of the actual financial position, they have realized that a wide departure from orthodox practice is impossible. Or are we to believe that their propaganda regarding the greater use of national credit was simply a bait for the public? We shall have to leave that question to the decision of the people. The revised budget is also unique in that it follows so closely on the heels of its predecessor. There is an old saying that comparisons are odious. That is perfectly true, but in this case I think it permissible to compare the budget now before us with that which was brought down by the Fadden Government. The Fadden budget was rejected, not by the people of this country , not by any political party, but because of the political manoeuvrings of some persons whose inordinate ambition for notoriety is far in excess of their ability to rebuild on the ruins of their destruction.

Senator Amour - Was it not due to the inability of party leaders to keep them in the fold?

Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - They had no party leaders. Through the press and from the public platform almost daily appeals are made by the Government for an all-in war effort; but apparently they are, to a great degree, falling on deaf ears. I have no desire to discourage those people who are prepared to sacrifice almost everything in order to assist their country in its hour of need. Unfortunately, however, there are too many others who are storing up treasures for themselves and making exorbitant profits out of the war. I believe that members of this National Parliament have a higher function to perform than to make appeals through the press and on the public platform for greater efforts on the part of the people. When we ask for an all-in war effort and having the power to ensure that it is brought about we have the right to expect that measures will be introduced to ensure that the burden of conducting the war is borne equitably by every member of the community. The people look to us to give them a lead in that direction. We hear a good deal these days about equality of sacrifice. I agree that at times it is difficult to give a definition of the much-used phrase " equality of sacrifice ". We use the word " freedom " every time we allude to the titanic struggle that is taking place on the other side of the world. What is freedom? There is no freedom for a slave or for a dead man. Therefore we are fighting for life itself, and life has the same value to the poor unfortunate who does not know where he is to get his next meal as it has to the millionaire. Why the budget before us should almost completely exempt about 75 per cent, of the people from bearing their full share of the responsibility for financing the war, I am at a loss to understand. Because of the fact that the Government has been in office for only a very limited period, we are prepared to make allowances in criticizing its present budget proposals. It has promised that almost in the immediate future it will announce extensions of its programme. When it does so, I sincerely trust that it will correct some of the errors which it has already committed so early in its term of office. Compared with the Fadden budget, this budget will impose much heavier demands on certain classes of taxpayers; first, because under it the taxes on lower incomes proposed by the Fadden Government will be transferred to the higher incomes, and, secondly, because the Government, is increasing expenditure. This budget can be truthfully described as a class budget. In our present difficult circumstances the Government, irrespective of party, must explore every possible avenue of raising revenue in order to meet its increasing commitments. Consequently, it is inevitable that budgets introduced at this period must contain certain innovations so far as methods of taxation are concerned. For instance, the Fadden budget included proposals for the raising of compulsory loans or post-war credits. That was a most desirable innovation, because in that way we should have been enabled to obtain a substantial proportion of our financial requirements for the prosecution of the war, and, at the same time, provide a fund for the purposes of post-war construction. By raising that proportion of revenue by taxation instead of by way of compulsory loans, we shall dry up our capital considerably, because it is evident that the source from which we have obtained the hulk of our revenue by voluntary means in the past is the higher incomes. Under this budget those incomes are to be taxed most heavily, but, at the same time, persons on the lower ranges of income are to be permitted to evade their fair responsibility in this respect. It is absolutely ludicrous for the Treasurer (Mr. Chifley) to think that he can gull the public in this way, or that he can obtain by way of voluntary contributions the funds which he expects to raise in that way from persons on the lower levels of income. Compulsory loans would also serve a further useful purpose insofar as that method of raising war finance would tend to remove the injustice under which a taxpayer residing in one State must pay considerably more than a taxpayer residing in another State, or vice versa. Honorable senators opposite profess that the basic principle of Labour's policy is equality. If that be so, why should a resident of one State be compelled to pay considerably more in taxes than his neighbour in an adjoining State? Honorable senators opposite contend that arbitration awards should operate on a Commonwealthwide basis in order that all men shall be treated alike. If that be so, why does this Government ask a resident in one State to pay more in taxes than another person simply because they live in different States ? Compulsory loans are bound to come, and the sooner they are introduced the better. They would render unnecessary much of the legislation which, apparently, the Government contemplates introducing in order to curtail public spending. Any money raised by way of compulsory loans would be so much less available to the public to spend on sports and amusements and in many unnecessary directions. Under this budget the Government also proposes to open up two new avenues of taxation. Although the amounts to be raised by this means are not very large, each method is open to criticism. I refer to the proposed alteration with respect to the incomes of married persons and gift imposts. The former will operate in this way : The "taxable income of a husband and a wife will be taxed at the rate applicable to the amount of their combined incomes. If that he just in one instance, why should not the same method be applied in respect of persons who are on Ohe lower ranges of income. Take, for instance, a husband and wife whose individual incomes do not come within the taxable field, but whose combined income would do so. Under this 'budget, those incomes are to escape the proposed tax. That, I submit, is unjust, particularly as under the present conditions of war many married women are earning incomes in employment. There must be a great number of instances in which the income of a husband escapes tax simply because of the statutory deduction of £50 allowed in respect of his wife. At the same time, his wife may also be earning a fair income but not sufficient to bring her into the taxable field. I submit that in such instances, it would be just to combine such incomes for the purpose of levying this tax. In any case, if this method of taxation is to be applied to any section of married people it should apply to all sections of married people.

I shall postpone my criticism of the principles of the proposed imposts on gifts until the relevant bill comes before us for consideration. However, two or three anomalies are apparent in that method of taxation. In dealing with taxation generally we should look not only to the present; it is imperative that we look also to the future. We hope that we shall have an opportunity to consider other budgets in the future. If the Government over-taxes higher incomes and company profits as this budget proposes, it will dry up the sources from which future revenue must he drawn. In that case I do not know where we shall laud ourselves. The proposed company tax will be almost unbearable. The Government proposes to take by way of tax all company profits over 4 per cent., whereas the present limit is 8 per cent. In this way, it will practically dry up that source of future revenue. At the same time, it will tend to destroy in the individual, the incentive to greater enterprise. The Government's company tax proposals are absurd. First, the company is taxed ; and, secondly, the shareholders are taxed. Now the Government intends to impose a third tax, an excess profits tax, in order to grab anything that might be left. The Government would have been far wiser to reduce the limit of company profits by 2 per cent, instead of 4 per cent. The lesser reduction, in itself, would have been bad enough ; but the Government's present proposal- will be almost unbearable. The Government also proposes to increase the rate of sales tax. That tax, of course, is not an innovation; but any increase of the rate of that tax by a Labour government is an innovation. I have been a member of this chamber for many years, and on each occasion on which a sales tax bill has been considered by honorable senators in that period, members of the present Government when in opposition, condemned the sales tax as being most iniquitous.

Senator Ashley - That was in peacetime.

Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - The war had already broken out when bills imposing additional sales tax were before this chamber. I shall read to the Senate several extracts from Hansard of November and December of last year. Referring to the sales tax Senator Brown is reported on page 933 to have said -

I look upon the sales tax as a tax that has caused more trouble than it is worth to the business community.

If that was the honorable senator's opinion, why does this Labour Government propose to further increase the sales tax? On page 937 of the same issue the following statement is attributed to Senator Aylett: -

I regret the Government has not found means of obtaining additional revenue without increasing the obnoxious sales tax which for many years has placed a heavy burden on the people.

Yet the sales tax is still operative. On page 939, Senator Cameron is reported as follows: -

The object of this tax is not only to obtain additional money for the purposes of war but also to withhold commodities from those who are greatly in need of them.

Does the honorable senator still wish to see those people starve, or has he changed his opinion? I believe that he has. On page 940, "the same honorable senator said -

Why then is this tax imposed? The only conclusion I can come to - I should be glad if I could be shown to be wrong - is that the tax is designed to make it possible for those who invest their capital to continue to profit from war-time industries.

I realize that Senator Cameron does not wish any one to profit from war-time industries, but apparently somebody has shown the honorable senator that he was wrong about the sales tax.

Senator Fraser - Senator Cameron may still hold that opinion.

Senator JAMESMcLACHLANYes, but five members of this chamber, including Senator Cameron, who opposed the tax, are now Ministers, and should have some voice in the policy of the Government. It is interesting to note what was said on that occasion by the then Leader of the Opposition (Senator Collings) who, until now, has always become very warm under the collar when dealing with the sales tax. The honorable senator after explaining how this unjust and iniquitous sales tax ground down the working classes and. did not give them a chance to live decently, said -

So far us honorable senators opposite are concerned these people should be satisfied with corduroy pants instead of tweeds, and flannelette underclothing instead of silk. If that is the Government policy let them proceed with it. But provided the people do not revolt in the meantime, it will not belong; before they are reduced to the standard of the loincloth and 11 few grains of rice.

I ask the honorable senator who is now a Minister, which way are we heading to-day? Arewe heading for revolt or for the " loincloth and a few grains of rice"? All budgets must be properly balanced; the expenditure side is just as important as the revenue side. A. penny saved is a penny earned. Whilst the taxpayers may be, and no doubt are, willing to contribute to war funds, they are entitled to an assurance that their contributions will be judiciously and carefully handled. This budget does not encourage that belief. People expect 100 per cent. of the money which they pay into war funds to be used in our war effort, and not expended on unnecessary articles. Unpalatable as it may be, we must realize that subscriptions to voluntary loans are falling off considerably, not by hundreds or by thousands of pounds, but by millions of pounds every few months, and that sales of war savings certificates are being reduced at almost the same rate. Undoubtedly, to some degree, the decline is due to the attitude "let the other fellow do it", but it is also due to the fact - I do not blame the present Government for this because it has been in office only for a short period - that people believe that there could be stricter control of expenditure. We have many small lenders, but they are not necessarily shallow thinkers, and when a man wishes to put £5 or £10 into a war loan, he likes to be sure that the money will (be expended on the purposes for which it was raised. In many cases, the people who purchase war bonds and war savings certificates have relatives, sons, or brothers in the fighting forces, and they like to think that the money which they contribute will be used to the best advantage. They make their contribution's to provide adequate equipment and war materials for the members of our fighting forces in other parts of the world, and not to give rises of 5s., 6s. or 7s. a week to munitions workers, who, in many cases, are in receipt of a higher remuneration and enjoy a better standard of living than the persons making the subscriptions. Such expenditure is extravagant, and I trust that the Government will investigate it thoroughly. I am not speaking in this strain merely because honorable senators opposite are now in control of the treasury bench ; I should have spoken similarly had the previous Government continued in office. There has been too much extravagance in government departments. I realize the magnitude of the task with whichwe are confronted. It is inevitable that leakages will occur, but in the past, leakages have been too frequent and too big. A considerable saving could be made in. many directions. Consider, for instance, the use of petrol. We have been told that the petrol rationing is necessary because it is an essential war commodity. We believe that, and we realize that there may be a time when adequate supplies of petrol may be a big factor in our own protection. Yet today petrol is being used by the military authorities as freely as water. We see military cars and lorries running all over the countryside, in many instances on roads which are parallel to railway lines. Hundreds of thousands of gallons of petrol are used unnecessarily in that way. The Government should also consider the use of petrol by subsidized air lines, many of which traverse routes that are adequately served by railways. Undoubtedly, some air lines must be kept in operation, but there are others, carrying only a few passengers, and receiving substantial subsidies from the Government, which compete with existing rail services. Our air lines use 3,000,000 gallons of petrol per annum. I maintain that a considerable portion of that quantity could be saved, and I hope that the Government will give the matter early attention.

Senator E B Johnston - East-west trains are booked out for three weeks in ad vance.

Senator JAMESMcLACHLAN.The fifteen or twenty passengers carried by aeroplanes on each trip would not make much difference to train bookings. It is ridiculous to use aeroplanes to carry only a few passengers thousands of miles when another service is available.

An increase of invalid and old-age pensions is unwarranted at the present juncture, when the country is so badly in need of money. Pensions should not be raised beyond the living unit provided for in the Invalid and Old-age Pensions Act. This is a time for sacrifices, and many of the pensioners would have been quite satisfied to continue at the old rate. Many of them have relatives among our fighting forces overseas, and they fully realize the seriousness of the financial situation. There is no country in the world where the old-age pensioners have been better treated than in Australia. They realize that fact, and are grateful for it. Yet the pension has been increased considerably.

Senator Courtice - By half a loaf of bread a day!

Senator JAMESMcLACHLAN.Members of the Opposition have as much of the milk of human kindness in their make-up as have honorable senators opposite. The invalid and old-age pension was originally introduced by a nonLabour government.

Senator Ashley - It was forced to do so by the Labour party.

Senator JAMESMcLACHLAN.When introduced in 1909 the pension was fixed at 10s. a week. The object was not to provide the pensioner with a living, but to assist him financially. Since then Mie pension has been increased eight times Hnd always by a non-Labour government. On one occasion the pension was reduced, but that was not done by a Liberal government. The 335,681 invalid and old-age pensioners in Australia will receive this year £19,565,000 . The wheatfarmers of Australia number 67,900, and if we allow for a farmer, his wife, one child, and one employee, we may take it that his household consists of four persons. If we multiply 67,900 by four Ave get practically the same total as the number of invalid and old-age pensioners. The Government proposes to finance the next wheat harvest. It has agreed to finance 14.0,000,000 bushels at 3s. lOd. a bushel, which means about 3s. a bushel to the farmer. The value of that wheat is £21,000,000. Therefore the pensioners are to receive almost as rauch as the value of the wheat crop of Australia.

Senator Ashley - They are worthy of every penny of it.

Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - I have not denied that they are worthy of it, but I have never placed an upset price on their votes. At the last general elections, the price of their votes, as offered by the non-Communist Labour party, was a pension of 30s. a week. The party in power to-day offered a pension of 25s. Less than a month ago, when the Prime Minister (Mr. Curtin) was criticizing the Fadden Government, he brought the price down to 22s. 6d. In order to get into office he put it up to 23s. 6d., and to-day it is pretty good buying at 25s. Yet I am told that this is a non-political matter !

I propose to deal with the budget under four headings. The first is the use of the Commonwealth Bank and the abuse of the private banks. The second point is that compulsory loans, which I should like to see introduced, have not been provided for. The third point is that this is a sectional budget which penalizes one section of the community and benefits the other. Fourthly, there is an increase of social services that should not and cannot be tolerated at the present stage in our history.

Senator Keane - Why not start the new order now?

Senator JAMES McLACHLAN (SOUTH AUSTRALIA) - It has not yet been inaugurated. In the House of Representatives recently, the Prime Minister, in reply to a speech by the right honorable member for Kooyong (Mr. Menzies), said -

Mr. Menzieshas been astray in his facts, wrong in his memory and too bizarre in his imagination.

Those words are not particularly flattering, either to the honorable gentleman who uttered them, or to the people whom the Prime Minister was criticizing. The right honorable member for Kooyong was voicing the sentiments of the Opposition and of thousands of persons outside this Parliament.

In New Zealand, a Labour Government has been in power for a considerable time, and I shall examine the position that obtains in that dominion. Let us consider my first point - the use and abuse of the private banks. The New Zealand Minister for Finance (Mr. Nash), when in Sydney recently, addressed the trade unions in these words -

Trading banks in New Zealand were doing a better job, self-controlled, than under Government authority, the New Zealand Minister for Finance (Mr. Nash) stated in a speech to union secretaries at Sydney Trades Hall.

There has been argument in our party on the question of taking over the trading banks, but in my opinion the banks are doing a better job than we could make of it.

Referring to compulsory loans in New Zealand, Mr. Nash stated in Sydney recently -

Taxation rises to 17s. Od. in the £1 on the highest incomes. In some cases it has exceeded income. War-time excess profits are taxed to the extent of 60 per cent, after other taxes have been levied.

New Zealanders who did not contribute to the dominion's war loan in 1940, according to their means, were compelled to do so. That loan bears no interest for three years, and 24 per cent, thereafter.

Speaking of sectional legislation, Mr. Nash stated -

We should not argue, or grumble, about taxation. Everybody in New Zealand pays at least ls. in the £1 towards the war. On higher incomes the tax is as much as 17s. 6d. in the £1.

Commenting on social services, Mr. Nash further remarked -

The Labour Government in New Zealand realized in 1939 that social reforms and ideals previously 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.

Therefore the remarks of the Prime Minister that the right honorable member for Kooyong was astray in his facts, wrong in his memory and too bizarre in his imagination does not apply merely to that right honorable member, to the Opposition or to the thousands of other persons in Australia, but also to the people of the Dominion of New Zealand, where a Labour Government is in office. I am afraid that the Prime Minister is like the old lady, who, when watching the troops marching past, exclaimed : " Everybody is out of step except my Jack." The Prime Minister may find that it is he who is out of step, and not the majority of the people.

The budget has been described in some sections of the press as a win-the-war budget. I do not know what its sponsors meant it to be, and I do no.t care, but it is not a win-the-war budget. which is the sort of financial instrument we need. I am not concerned about the next general elections, because if we do not win this war we shall have had our last general elections. The people of Australia should get it well under their hats that, unless we win the war, Herr Hitler will be the returning officer on the next occasion.

Senator Aylett - Does the honorable senator think that any one country could bring in a budget that would win the war?

Senator JAMESMcLACHLAN.The Government could 'bring down a budget that would help considerably in that direction.

Senator Gibson - It could bring down a budget that would cause us to lose the war.

Senator JAMESMcLACHLAN.That is so. The war can be won only by an all-in effort on the part of the whole of the people. This Parliament and the people of Australia must all get together, forget all party humbug, and be prepared to make every sacrifice, in order to retain this wonderful country that God Almighty has given to us.

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