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Thursday, 14 May 1942

Senator LAMP (Tasmania) .- The arguments- advanced by the Opposition against the proposed increase of the invalid and old-age pension are not supported by facts, for the simple reason that since the war began the cost of living has increased by more than , t lie increase of pension provided for in this measure. That statement is amply supported by figures supplied by the Commonwealth Statistician. The Leader of the Opposition (Senator McLeay) claimed that the increase was unjustified because it would cost approximately £1,000,000 a year. But what is the position in regard lo our war expenditure? That expenditure has reached the colossal rate of £1,000,000 a day, therefore this increase represents only one-three hundred and sixty-fifth part of our war expenditure for this year, and is hardly worth considering. I do not desire to advance arguments in support of the increase, because ' every one knows thai there is ample justification for it. I had hoped, however, that the Government would go a little further by amending the section of the principal act relating to life assurance policies. In that regard I am interested especially in the service pension, which is payable at the same rate as the invalid and old-age pension. At present the surrender value of a life assurance policy is taken into consideration when a pension is being granted. I know of one pensioner who was compelled to take out a life assuranee policy when he was an employee of the Bailways Department in Tasmania. The surrender value of that policy is calculated to be £200, and for that reason, the unfortunate man receives only half of his pension. He knows very well that he. has only a few years to live, and he does not wish to surrender the policy because it will be very useful to his wife when he passes away, lt is a shame that life assurance policies should be taken into consideration in that way, especially in the case of individuals who have been compelled to take out such policies. I urge- the Government to give consideration to the elimination of this anomaly.

There is another small matter relating to invalid and old-age pensions which I should like to discuss. Should a pensioner incur medical expenses, they are taken into consideration for the purposes of his pension. However, many old-age pensioners are cared for by their daughters. In a case which came to my notice recently, the father was working and was receiving a little more than the basic wage. The daughter was compelled to stay at home to nurse her mother. The consequence was that as the father was earning more than the statutory amount provided in the act, his wife could not receive an invalid pension. Had the daughter been able to go to work, she could have been bringing £3 or £4 a week into the household. I suggest that in such cases a sum representing the earnings of the daughter should be deductible from the income of the bread-winner.

I am pleased that the Government has decided to increase the service pension as well as the invalid and old-age pension. Like Senator Brand, I am one of those who believe that the time has arrived when more consideration should be given to the widows of soldiers. As I pointed out earlier in my speech, although the pension is to be increased by this legislation, the purchasing power will be no greater than it was prior to the war, owing to the increased cost of living. In view of that fact, I appeal to the Government to see whether something can be done to increase the widows' pension also.

SenatorDARCEY (Tasmania) [4.57 J. - It has been said truthfully that nothing hurts a conservative mind so much as a new idea. My experience in this chamber has convinced me that conservatism is very strongly represented among honorable members opposite. I listened with interest to the figures quoted by the Leader of the Opposition (Senator McLeay) and I wondered- why he did not realize that the present monetary system is pauperizing the nation at an alarming rate. I remember well when invalid and old-age pensions were first introduced, the conservative newspapers claimed that the innovation would result in the loss to. the community of that valuable quality of thrift, and that in the long run a pensions system would be to the detriment of the people. Senator McBride's speech this afternoon was along those lines. I contend that if we gave the people economic security under the system which I have put before this chamber on many occasions, there would be no need for pensions. It has 'been said in the course of this debate that it was a Labour Government that first reduced invalid and old-age pensions. That is quite true ; but it must be remembered that before that Labour Government came into power, the administration of the country had been in the hands of the conservative-minded Bruce-Page Government for ten years, and when the Labour Prime Minister (Mr. Scullin) returned from England, he was faced with an immense problem. He found that Australia had an adverse trade balance of £30,000,000, an empty Treasury, and the London market closed for further loans, merely because a Labour administration was in power. The conservative mind is static, even in the most dynamic situation, such, as exists nl present. It takes no cognizance of the flight of time and the great changes that time brings. That kind of mind never seems to learn anything new. Senator Lump has pointed out that this increase of the rates of the old-age pension will not bo of very great benefit to the recipients. Indeed, the pensioners will be no better off so far as purchasing power is concerned than was the case when the rate of pension was l2.s. 6d. a week, because the cost of living iia* risen so steeply . that 25s. :i week will not purchase more than the original 12s. 6d. a week. Who were the people who lost their money when the banks and insurance offices closed down in 1892? They were the thrifty people who had saved by denying themselves. They were the people who suffered in the depression caused by the banking interests whom Senator McBride represents in this chamber. I have said previously that depressions are caused only in one way, namely, by the calling up of overdrafts, and the refusal of further credits, by the private banks. Under the present system those institutions have that power, and they exercise it whenever it suits them to do so. Before an old person can draw a pension he, or she, must be proved to be of good character, and in every respect a worthy citizen. Senator McBride contends that pensions should be made contributory. That may be the only way of providing pensions under the present system; but it is quite possible under the system I have advocated in this chamber for so many years to do without old-age pensions altogether by giving to all people economic security and the means to enable them to buy all the necessaries of life, ("he purchasing power of the people i* never sufficient at any time to enable the goods produced to be consumed. I remind honorable senators of the old axiom that the only thing that justifies production is consumption. Yet, because of our present rotten monetary system all of the goods produced cannot be purchased. Lj it not time that this fact was recognized by the. Government? The enormous cost of this war is spoken of in terms of money. I repeat that wars are not fought with money, but with credit. Past wars have never been paid for, and neither will this war bo fully paid for. Many people have said to me that it does not matter how much we borrow because we shall never be able to pay back all we borrow. It will be physically impossible to pay back the enormous expenditure which will be incurred in this war. However, if we use the national credit as I have so often advocated, we shall be able to finance the war fully. The Government has recently prevented private banks from buying war bonds or advancing money to any person for that purpose. Therefore, it would appear that only two sources remain from which it will be possible to raise the money required for war expenditure, namely, taxation and the use of the national credit. The Royal Commission on Monetary and Banking Systems stated that it is possible to utilize the national credit in this way. The following statement appeared in a Sydney newspaper last Monday week: -

Since the introduction of the new financial pol icy, requiring the private trading banks to pay surplus earnings into a special deposit account with the Commonwealth Bank,, about £37,000,000 has been so accumulated, and is in thin account, carrying interest at the rate of 15s. per cent.

A Government spokesman claimed to-day that, had this money not compulsorily been deposited with the Commonwealth Bank, it would have been used in two ways -

(1)   In advances to the public by overdrafts carrying a maximum interest of 5 per cent.; or

(2)   Investment in war loans at3¼ per cent.

By advancing this money to the public, the banks would have created a tendency towards secondary inflation-

That is a new term to me. All along we have been told that if the Commonwealth Bank put money into circulation it would cause inflation. The old bogy of inflation is always raised. The statement continues - and would have been able to make large profits as the result of Commonwealth war expenditure.

Use of £40,000,000 by the banks for their own private enrichment could have resulted in a secondary inflation of about £100,000,000.

T he spokesman added that the private banks were co-operating fully with the Commonwealth Government in its war-time policy.

I think that that passage is a piece of clever bank propaganda; and I am surprised that the Government sponsored it in any way whatever.

This increase of the rate of old-age pension is long overdue. It should have been provided years ago. Only the conservative mind accepts the view that we cannot afford this expenditure in view of our enormous war expenditure. The conservative mind is incapable of realizing that wars are not fought with money but with credit. The last war is not paid for. Australia borrowed £385,000,000 on that occasion, and we have already paid back over £400,000,000 in interest, yet the greater part of the original sum borrowed remains unpaid. I am very glad to think that even in a crisis like t he present, this Government has had the necessary strength of mind to do justice to the invalid and old-age pensioners by increasing the rates. I, personally, have had considerable experience in social service work. For many years I have been a member of a social service committee in Hobart. Perhaps', I am more familiar than any . other honorable senator with present social conditions in this country. I have studied social dynamics. I have had experiences among the poor, the recital of which would make honorable senators weep. It is incorrect to say that our old people generally are in necessitous circumstances, because they failed to exercise thrift, or because they spent their money on drink, and failed to make any provision whatever for their old age. I have just pointed out that the thrifty people suffered most in the bank smash of 1892. Those people saved as much as they could, but they were caught in the crash, which was due to the present faulty financial system, under which there is no inducement for any one to save. At the last minute it is possible that all the people's savings will vanish in a bank-created depression. That has happened over and over again. Senator McBride cannot see how we can afford to pay this increase of the rate of pension. He made a pathetic appeal to the Government to tell the old people to exercise more thrift. To what degree can any person exercise thrift on an income of 25s. a week? Many old-age pensioners have told me that they cannot secure a room fit to live in at a rental under 10s. a week. That means that they have been obliged to subsist on the other half of their pension. The honorable senator also expressed the hope that the Government would, in the near future, consolidate the whole of our social services, and deal effectively with the causes of malnutrition. It is impossible to improve social conditions under the present monetary system which, itself, is the cause of such conditions. There is no effect without a cause. We must get down to fundamentals, and deal with the real causes of malnutrition and slums. Whenever one advocates social reforms the cry is raised as to where the money is to be obtained. I again emphasize that people do not realize that money does not count, either in the provision of improved social services, or in fighting wars. We can effect such improvements as are necessary by using the credit of the nation. However, under the present system we are obliged to obtain such finance by taxing people on the better homes provided for them. In England, when model villages were built to take the place of slums, it was found that the death rate among the occupants of the new houses greatly exceeded that when the same people lived in slum areas. An investigation showed that the reason for this was that, in order to pay the extra rentals and hank interest, the people were obliged to deny themselves many necessaries which hitherto they had not been deprived of. In spite of all that I have said on the use of national credit I am afraid that honorable senators do not understand the subject. National credit is based on the productive capacity of the nation. Statisticians have told us that the national production of Australia this year will be worth about £1,000,000,000. We must keep that fact in mind. I have been trying to prove to the conservative minds of honorable senators opposite how national credit can bc used, but it is hard to penetrate the barrier of their outmoded ideas. I have been trying to do so now for nearly four years. If the Government took action under its national security powers to use the national credit, the Opposition would not dare to raise any objections. There is a nation-wide demand for monetary reform. The schoolmasters have been at work, and I am one of them. I have travelled all over Australia preaching monetary reform. Every State has demanded that The Government should make use of the Commonwealth Bank in order to finance the war effort with interest-free money. Why has not that been done? It can be done, and the Royal Commission on Monetary and Banking Systems has said so. It is a fact that, when war loans are raised through the private banks, no money roaches the Treasury. The Government only obtains the right to draw cheques against the private banks for the amounts which they have contributed. The banks charge interest at the rate of 'Si per cent. If the Commonwealth Bank issued credit, it could charge interest at the rate of 5 per cent. The interest rate would not matter because the nation owns the Commonwealth Bank, and all of its profits must come back to the nation.

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