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Thursday, 20 November 1941

Senator COOPER (Queensland) , - Small differences of opinion were responsible for the defeat of the budget introduced by the Fadden Government, and because of that defeat the Labour party now finds itself in occupation of the treasury bench. The present budget is in some respects complimentary to the previous Government. By that I mean that the structure of this budget is similar to that of the Fadden budget, but whereas the Fadden budget was built on sound foundations, this budget does not observe the same sound financial principles. I should like to make a comparison between the two budgets and hr doing so I realize that the Treasurer (Mr. Chifley) had a tremendous task in preparing a completely new budget in the short time at his disposal. I realize, also, that to' some degree he had to follow decisions arrived at by the previous Government. There is no doubt that this budget will give the people a great deal to think about. It provides for' the expenditure in one year of £325,000,000, which is an extraordinarily large .amount for a country with a population of 7,000,000. In addition, it is stated that in the near future a supplementary budget will be introduced. In preparing this budget th( Government bad to accept the advice of its military advisers as to the sums which should be expended in the war effort during the next twelve months. The irreducible minimum of war expenditure is given as £217,000,000. At this juncture I should like to point out to honorable senators opposite that the Government is in just as precarious a position as was the Eadden Government; it has a majority of two in the House of Representatives. and those two honorable members are just as likely to desert this Government as they deserted the Fadden Government. Although Senator Aylett remarked that members of the Opposition, in seeking the formation of a national government, were endeavouring to put life back into a corpse, he may find that the present Government will be forced to ask the Opposition to help it in securing a 100 per cent, war effort. I defy the Government to obtain such an effort while it is balanced on a political knife-edge, and may at any time be compelled to face the electors. Members of the Opposition will be glad to assist in carrying on the governmental affairs of this country at this difficult and critical period. The day after the present Government took office, I had a conversation with one of its supporters. As he seemed to have a worried appearance, I asked him if anything had happened to his .5on. who is serving with the fighting force.' overseas. He replied, " No. I have just had a letter from my son, who is in an officers', training school at Moascar, some distance outside Cairo, and the trend of his letter was that he was working from daylight till dark. Among those attending the school are Indians, South Africans, Australians, Britishers, Free French, and soldiers from other sections of the Allied Forces. All are working together in harmony with the one object of defeating the enemy. My son said that he could not understand why politicians in Australia who were all of one nationality were squabbling and trying to get- at. each other's throats". The' writer of that letter gave some idea of the thoughts of the men who are fighting for us overseas. They realize that we should put party politics into the background at this critical time. I suggest that if parliamentarians could pull together in the same way as the Allied troops overseas, a maximum war effort would be assured. In the event of a national government now being formed, I contend that it should be established on the basis of an electoral majority, and not on the basis of party political cunning and intrigue. In other words the decision of the people should bc sought.

The budget provides for an increase of £7,500,000 in the pay of the members of our fighting forces. I admit that that is a popular action on the part of the Government. The previous Administration realized the desirability of such an increase, and provision was made for it in the Fadden budget by means of deferred pay. There is no way in which we can assess the amount that should be paid to those who are prepared to risk their lives in the defence of this country. They are worthy of any remuneration that a generous public can give to them. I claim that the proposal of the Fadden Government to provide the increase in the form of deferred pay was an admirable one. During the last war, I enjoyed my periods of leave most of all when I had little money. The hospitality extended to the troops was so great that they suffered no serious disadvantage in not having their pockets full of cash. We should not overlook the fact that our fighting forces in the Middle East comprise troops in receipt of varying rates of pay. Australians in Cairo during the last war, were willing to pay for food double, and sometimes three times, the' prices which the British " tommies " could afford to pay. Actually, the Australian soldier was no better off financially than his British confrere. Probably, our troops overseas would prefer to have the extra pay to spend at the present, time, but many of those who served in the last war would have been glad of a lump sum on their return, to Australia to assist them in re-establishing themselves in civil life.

The increase of invalid and oldage pensions is also a very popular move on the part of the Government. This is not an increase at which we should cavil, but 1. suggest that the Government might have considered whether the extra money expended should not have been used for providing pensions for widows and orphans. The increase .to 23s. 6d. a week will cost £1,022.000 for the remainder of this .financial year, and the cost of the proposed increase next year tei 25s.' a week will be £3,100,000. This amount, would go a. long way to assist, widows and orphans in the direction indicated. I doubt whether this is an opportune time for such an increase of the invalid and old-age pension. We ha ve been told that every .penny of revenue is needed for the prosecution of the war, and we should ask whether we can afford to expend such a. large sum in increasing pensions. War requirements come first with regard not, only to expenditure, hut also planning for the post-war period. Next, to our war needs comes improved social security. The previous Government was well aware of the need for measures to improve social security, and consequently it introduced child endowment. Certain social measures could be brought down now 'whilst others must wait until after the war. Legislation providing for unemployment insurance could well be introduced at present, because employment and wages in Australia have never been at a higher level than now, and there is an excellent opportunity to establish a fund which would be of the utmost value when employment in the war industries ceases. I advocate a system of unemployment, insurance whereby the contributions to the fund would be made by the employers, employees, and the Government. The Prime Minister (Mr. Curtin) and the Leader of the Senate (Senator Collings) have stated that it is essential to use up sonic of the large floating wage fund now in Australia. By using some of that money for unemployment insurance, we need not interfere with our war effort. The prosecution of the war to a successful conclusion would still remain our first consideration. When the present Government took office it had the advantage of the experience and achievements of its predecessors during two years of wai-. In that period there had been a change-over from civil production to war activities. There was much planning and preparatory work to .be done before Australia's war industries got into full swing. Before the outbreak of war Australia had a small permanent force, and a Militia which, on paper, represented a force of 35,000 men. During the two years of war approximately 400,000 men have enlisted .for service overseas and in Australia. The raising of that force has meant a tremendous amount of organization in the preparation of camps, the supply of equipment, the training of instructors, and all the other activities associated, with the equipping and training of a modern ' army. The personnel of the Navy also has grown, and to-day the number of men in that arm of our fighting services is three times what it was when war broke out. In September, 1939, the Royal Australian Air Force consisted of two and a half squadrons, containing S22 officers and other ranks; the personnel is now eighteen times what it was then. In collaboration with Great Britain and the other members of the British Commonwealth of Nations, the Menzies Government participated in the Empire air training scheme which provides for the training of an unlimited number of air pilots. Before the present Governmnent took office, arrangements had been made for the expenditure of £60,000,000 in connexion with that scheme. The objective set before Australia at the inauguration of that scheme has been maintained'; indeed, Australia is ahead of schedule. It is only fair that the people of this country should know what the situation was when the present Government took office. I congratulate the present Minister for Air (Mr. Drakeford) in that during the short time he- had been in office, he has been able to establish a special army co-operation school. Such an institution has been needed for some- time. Present-day strategy appreciates the heed- for the fullest co-operation between the air and the ground personnel in both attack and retreat. As the result of the establishment of this school we shall be able to train men in those necessary operations.

When war broke out Australia had nine factories for the manufacture of munitions of war; in September of this year there were more than 100 annexes making munitions. The value of the munitions produced in Australia when war broke out was under £2,000,000 a year; this year the production is valued at £32,000,000. The previous Government had planned ahead, and it hoped to produce in 1941-42 munitions valued at £76,000,000. In 1939 there were only 12,000 employees in government munitions factories, compared with 58,000 in July of this year. The previous Government had made arrangements whereby the number of such employees would be increased to 170,000 by June, 1942. It is estimated that 200,000 men and women are now engaged directly or indirectly in the manutacture of munitions.

Senator Arthur - Where will those workers be obtained if the present recruiting appeals are continued?

Senator COOPER - I answer that interjection by asking where the Government hopes to get the 400,000 workers mentioned in the Treasurer's budget.

I agree with Senator Large that adequate supplies of machine tools are essential before Australia can hope to make any great advance in the production of war materials. The previous Government was aware of that fact. The men who were set the task of equipping Australian factories with the machine tools necessary for the manufacture of munitions and other war materials, including aeroplanes, had to overcome many obstacles. In 1939 only four companies in Australia were manufacturing machine tools; to-day there are 131 such establishments. A tremendous effort and a proper system of co-ordination were necessary in order to achieve that result. Senator Large, who knows a great deal more about this subject than I do, will agree that what has been achieved would have been impossible without those tools.

Senator Clothier - Some machine tools which are required cannot be obtained.

Senator COOPER - That is so, and Australian workmen will make them, but I repeat that two years ago there were only four companies in" Australia making machine tools, compared with . 131 companies engaged in that work to-day. Twelve months ago only about 10 per cent. of the machine tools required for the manufacture of munitions were produced in Australia, whereas to-day 70 per cent, of such tools are of local manufacture.By the end of December, 1943, theprevious Government hoped that all of themachine tools required would be obtainable in Aus tralia. I have no reason to fear thatthe present Government will fail tocontinue the good work begun by its predecessors

Until shortly before thecommencement of the war Australia had notcommenced to manufacture aircraft. I think that I am right in saying that Australia is the only country which hasproceeded from the manufacture of stationary engines directly to the manufacture of aeroplane engines withoutpassing through the intermediate stageofthe manufacture of motor-car engines. Australian workshops were asked to produce aeroplane engines, and they respondedby producing them. These engines are now being made in Australia by mass production methods. To the end of September last Australian factories had produced aeroplanes valued at over £.10,000,000, and had delivered over 1,000 aeroplanes to the Air Force for either reconnaissance work or training purposes. Moreover, the previous Government had made arrangements to produce 500 more aeroplanes by the 31st January, 1942. During the financial year 1941-42 Australian factories expect to produce aeroplanes, including bombers, to the value of £20,000,000. A good deal has been said about the Beaufort bomber. I am pleased to see that only yesterday the Minister for Aircraft Production (Senator Cameron) visited the works in Sydney, where he was able to see the progress that had taken place in the manufacture of aircraft. The credit must go to a previous Government for laying the foundation of this industry.

Senator Clothier - It received a great deal of assistance from the Labour party when in opposition.

Senator COOPER - That is so; but the Government of the day was responsible for the policy of the country, just as the present Government is responsible to-day.

In my opinion, the tremendous development of Australia's war industries would have been impossible without the active co-operation and the organizing experience of such companies as General

Motors-HoldensLimited, Australian Consolidated Industries Limited and the Broken Hill Proprietary Company Limited. The wonderful results that we have achieved are, in great measure, due to those well-organized concerns. In saying that, I include their employees, without whose active co-operation no industry can succeed. In these large industries there has been the fullest cooperation between employers and employees. It is interesting to note that the Broken Hill Proprietary Company Limited, at which honorable senators opposite point the finger of scorn at every possible opportunity, charging it with profiteering and with taking advantage of the needs of the country in time of war to enrich the pockets of its shareholders, madea total profit, in 1940 of £2,373,761. In the same year its distributed profit amounted to £1,282,006, upon which a tax of £1,091,755 was paid. In 1941, after a. year of war, and naturally a year of great expanding business in the production of war materials, the total profit earnedby the company was £3,513,290, ofwhich it distributed £.1,550,214, and paid in tax an amount of £1,966,076.

Senator Keane - Onwhat capital were those profits earned?

Senator COOPER - Probably the honorable senator knows more about the capital of the Broken Hill Proprietary Company Limited than T. do. I have not the figures before me. It will be seen from the figures which I 'have just cited that the tax imposed upon the Broken Hill Proprietary Company Limited in 1941 exceeded its distributed profits by over £400,000. We have also to remember that this company has already expended on machinery for use only in the production of materials of war no less than £1,500,000. We have often been told, and I think it is a fact, that the bulk of the machinery which is in use for war production will be of very little use when we reach the transition stage from war-time to peace-time activities. This is a time of great prosperity in Australia ; but we must all realize that it is a false and very dangerous prosperity. The fact that we are far removed from the theatres of war is apt to let us view with complacency the tremendous struggle that is going on overseas. At present Russia is bearing the full brunt of the onslaught of the German hordes. We have bad successes in Syria and Irak; the news from the Atlantic in the past few weeks has been much brighter; help from the United States of America is increasing week by week, and our own troops overseas, with the exception of the gallant defenders of Tobruk, are enjoying a temporary respite. All of this is apt to create a feeling of complacency which makes it difficult to bring home to the Australian people the important fact that large numbers of reinforcements are needed and that a great deal of money is necessary to carry on our war effort. We know that our troops will shortly be engaged in the Middle East, and, therefore, we should take the greatest possible advantage of this brief breathing space to build up our reinforcements and train them so that they will be fit to take the place of those who are killed or wounded when our troops once again engage the enemy. In view ofthat, a full review of the man-power position is most necessary and urgent. We should find out exactly where the available man-power of Australia can best be placed in order to further the war effort. Duplication takes place in many walks of life, and it is highly desirable at this critical stage in our history that men should be weeded out of jobs which do not give them scope for their abilities.

The proposal of. the Government to establish a long-term mortgage bank branch of the Commonwealth Bank fills a long-felt want among the country people. The sooner it is established, the better it will be appreciated by primary producers. Senator Darceymentioned that a friend of his, a Queensland farmer, hadbeenbadly treated and put of his property by the banks because he could not pay off his mortgage. His experience was entirely different from mine and from what has been told to me by many primary producers.

Senator Large - The honorable senator does not doubt the truth of whatSenator Darcey said?

Senator COOPER - Probably the hon orable senator was misinformed. I have found that the banks and financial institutions in the north-west of Queensland, the work of which I am conversant with, have greatly assisted the primary producers by writing off debts and interest accounts.

Senator Aylett - To what banks does the honorable senator refer?

Senator COOPER - I am referring to the private banks as a whole and financial brokers. The private banks have written off the debts of farmers to a much greater amount than any of the State governments.

Senator Darcey - Did the honorable senator hear the story told by Senator Johnston?

Senator COOPER - Yes ; he related his experiences. I am giving mine. My experience is that the banks and financial houses have treated extremely generously those who have played straight with them. I can produce undoubted proof that they have done that in the past and that they are still doing it. Many farmers in the north-west ofQueeusland, owing to droughts, were forced fo secure heavy overdrafts and -lost their stock through rain coming at the wrong time. They have been restocked and their commitments have been reduced considerably by the institutions that financed them.

I notice that it is proposed to reduce the vote for the Department of Information by £S0,000. I trust that this will not involve any reduction of the service provided by the News Bureau in New York. The bureau referred to has done a wonderful job for Australia and the proposal to reduce its vote is a great mistake. This budget, provides for an expenditure in 1941-42 of £324,965,000. The means to be used for the raising of this huge suan of money are much the same as those intended to be used by the Fadden Government. In this respect the structure of the two budgets is very similar, but their, foundations differ very considerably. After paying taxes at the present rates collections would amount to £164,965,000, That leaves a gap of approximately £160,000,000, of which £66,000,000 it is hoped will be raised by borrowing, as was done last year. In regard to borrowing, the difference between last year's budget and the revised budget now before us is that last year we were building up the war effort to its peak. The peak has not yet been reached, . but. we are getting very to it. This extra borrowed money could be absorbed in industry, but once the peak is reached, it is questionable whether it could be so absorbed without having a disastrous effect on the economic and financial equilibrium of industry. After the £66,000.000 has been borrowed, there still remains to be found an amount of £94,000,000, or £13 a head of the population. The income tax imposed on incomes up to £1,500 is to remain unaltered; but, in" respect of incomes in excess of £2,500, the tax is to rise very steeply to 16s. Sd. in the £1. I have nothing to say against that. I realize that the Government has to find the money by some means or other to wage the war and that the methods that it uses are entirely its own concern. Whether or not there will be repercussions is the Government's affair. The people on whom this high rate of tax is imposed will simply have to " take it". I presume that they will "take it" and carry on with a smile. I point out that from those people in receipt of incomes in excess of £2,500 per annum the Government, in what I term this conscription of wealth, will receive in taxes only £6,000,000. Wealth is more evenly divided in Australia than in any other country. An enormous amount of income in Australia will not be taxed under this budget; "but I suggest that a considerable proportion of the revenue required by the Government could be drawn from that field without causing serious disability to the people concerned. I shall deal with that aspect later. I propose now to address myself briefly to the Government's company tax proposals. This tax will operate harshly on many grazing interests which are run as companies. The profits of the grazing industry are not static. It depends for profits upon favorable seasons which are unpredictable. Very often it> happens that graziers will suffer losses for three consecutive years and in the fourth year, owing to favorable seasonal conditions, may show a profit of 20 per cent. From my reading of the budget these grazing companies will be taxed at the rate of:,78' per" cent! on profit over '16 per cent., and at the rate of 6 per cent., rising for every 1 per cent, of profit above 6 per cent, up to 16' per cent. That rate of tax will make it very difficult for such companies to recover the losses incurred in bad years. It is well known that a grazier in some years will experience losses for perhaps two or three consecutive years but he expects to make up the losses in bad years in his one good year.

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