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Wednesday, 16 September 1942

Senator COOPER - Unfortunately, wages and conditions of employment in primary industries are not of the same high standard as in the munitions industry, the reason being that the former have to pay their way and cannot rely on any fairy godmother for assistance. It is true that large numbers of men have migrated to the cities because of the more attractive conditions there. There must be a more evenly balanced arrangement if the best results are to be obtained. In my opinion, the primary industries must come first because men in the fighting services, as well as those engaged in various forms of war work, must fail in the absence of sufficient food. Food is the first essential, and therefore its production must have first consideration.

Senator Lamp - A "proper balance is necessary.

Senator COOPER - In the past, there has been a lack of balance. I agree that rationing is necessary, and that it would have been better had a system of rationing been introduced earlier than it was. The first application of the system was most unsatisfactory. A 'premature announcement regarding the introduction of the rationing of clothes caused in the month of May the greatest buying rush that this country has ever known. More recently, when it was decided to ration sugar supplies, the errors associated with the rationing of clothing were largely avoided. An announcement was made on a Saturday night that sugar would be rationed from the following Monday. If the same system had been adopted in connexion with clothing, there would not have been the headlong rush to buy whatever goods were available in the shops.

The budget contemplates a total expenditure of £550,000,000 during the present financial year, compared with £420,000,000 last year. The expenditure for war purposes this year is estimated at £440,000,000. Since the present Government took office ten months ago, actual expenditure has amounted to 320,000,000, or about £98,000,000 in excess of the £221,000,000 budgeted for in respect of that period.

Senator Ashley - Does the honorable senator question the wisdom of that expenditure?

Senator COOPER - No; it has been necessary. However, it is very likely that, we shall have a similar experience this year, and that our expenditure will exceed the £440,000,000 now budgeted for. [Quorumformed.] In view of these circumstances, we must consider by what means we shall raise the money we require. The Government proposes to obtain £250.000,000 by direct taxation, and to rely upon voluntary loans producing £300,000,000. That is' the weak point in the budget. No specific provision is made to obtain the huge amount of £300,000,000 as well as, perhaps, an additional £100,000,000 which may be necessary for war purposes. Surely, the Government, cannot rely upon voluntary loans to make good so great a gap. It is in this respect that I see the red light of warning in the budget. It is the warning against inflation. That danger is very real when one considers the budgetary plans in conjunction with the Government's general financial policy. Notes in circulation on the 30th June, 1939, totalled £47,530,000, and on the 30th June, 1942, they totalled £102,614,000. 1, and other honorable senators on this side of the chamber, admit that a certain increase of the note issue has been unavoidable. To-day, many more people are in employment than was the case on the 30th June, 1939. Consequently, a greater amount of money is in circulation, necessitating an increase of the note issue. However, these facts do not justify the doubling of the note issue over that period. It is clear from the figures I have given that a very big sum in notes is held by the people privately. That money is not to be found in bank deposits; and it is not being circulated through the ordinary commercial channels. It is estimated that at least £30,000,000 in notes is held privately, whereas in normal times that money would bc passing through the banks. That is not a healthy sign, because the sudden circulation of so much money can cause inflation. There is no control over it. The balance-sheet of the Commonwealth Bank shows that for the year ended the 30th June, 1941, treasury-bills issued amounted to £48,000,000, whereas on the 30th June, 1942, treasury-bills issued increased to £138,500,000, an increase of £90,500,000 in twelve months. Insofar as that amount of £138,500,000 represents purely a credit issue by the Commonwealth Bank, it must cause considerable uneasiness, particularly when considered in conjunction with the huge expenditure now budgeted for, the bulk of which the Government merely proposes to raise by voluntary loan. These facts clearly point to the" danger of credit expansion during the next twelve months. Another very great source of danger is that whilst the spending power of the public has so greatly increased, the value of consumer goods available for purchase has greatly decreased. A considerable purchasing power is left in the hands of the people, and this expenditure is competing with the Government's war effort, because all purchases of non-essential goods represent competition with the production of goods required for the war effort. In order to make this fact clearer, I point out that whilst in 1939 about 85 per cent of the national income was expended on consumer goods and services, and the other 15 per cent on government and private capital investments, it is now estimated that by the 30th June, 1943, consumer goods and services available to the people will be cut to 45 per cent. In 1943, the public will be able to expend only 45 per cent, of the national income on consumer goods and services, as compared with 85 per cent, in 1939. In terras of money this means the establishment of a reserve pool of approximately £200,000,000 upon which the Government can draw by way of public loans. A danger there, however, arises from the fact that that £200,000,000 is still retained in the hands of the community, enabling them to compete for the purchase of that 45 per cent, of consumer goods and services as compared with pre-war times. This means that the goods are not there to be purchased, although the people have the money, and the tendency will be for them to compete against, each other to secure the limited quantity of goods offered. The figures of the turnover of the stores of the commercial public show a definite increase. The average weekly turnover for the six months pre-war was £39,762,000, and for the six months ended last February was £48,200,000, or an average increase of practically £9,000,000 per week.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - Some of that is accounted for by the increased prices.

Senator COOPER - Some of it may be so accounted for, but when we consider that the consumer goods being manufactured now and available to the public are so much less than they were pre-war, the only conclusion possible is that all the goods that have been stored up in warehouses and shops throughout the country are being bought and cleared as fast as they can be. The time will come when that reserve will be no more, and we shall come down to the actual fact that the only goods purchasable are those produced on a much smaller scale than existed pre-war, with the result that the bulk of the money will be still in the hands of the public. Then again the danger will arise of competition to purchase the goods that are left, prices will break, and inflation will follow.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - The danger is the black market.

Senator COOPER - That also is a grave danger. That is where the prices will break, because normally they are controlled. In those outside black markets they are not controlled, and goods can be sold there at whatever price they will bring.

It is also interesting to note that the weekly average bank clearances for the six capital cities of Australia in August, 1939, were £38,515,000. In May of this year the weekly bank clearances, again taken over the six capital cities, were £58,269,000, a rise of £19,754,000 per month in nine months. I admit that May was the month in which the rationing of clothes was announced. Those figures only go to show the tremendous amount spent in that month on account of the announcement that clothes would be rationed early in June. People anticipated clothes rationing by buying much more heavily. If those figures were for an average month, the position would be much worse.

Senator McBride - Did not the Minister concerned suggest that it was Mother's Day that caused the heavy buying ?

Senator COOPER - I do not think that that was the real reason. I should say that, during May, " Dedmanism. " was to a. large extent the cause of the enormous increase of nearly £20,000,000 in bank clearances, which reflect the spending power of the people.

Senator Clothier - It was only the selfish people who bought heavily.

Senator COOPER - That was one factor to which I was going to allude in order to show that we cannot expect full subscription of the loans the Government requires. Those selfish people will take up a similar attitude when they are asked to lend the Government their money. Being selfish, they will say, " No, I am going to keep my money for something else", instead of lending it to the Government.

There is no more actual new direct taxation on incomes than was proposed in the budget ten months ago.

Senator Collings - That was the Prime Minister's promise.

Senator COOPER - I am saying nothing against that. I am simply commenting on the fact that there has been no direct increase. Many larger incomes were taxed to such an extent on the previous scale before uniform taxation came in that their owners had little or nothing left, and in some cases even had to draw on their capital to meet their previous year's expenses. The happy catch-phrase of " sock the rich " has often been used, and there is no doubt that the rich during the previous twelve months were well and truly " socked " by way of taxation, until they had actually nothing left. That again is a factor which must have a great bearing on the prospect of floating loans for the conduct of the war. I shall cite the case of a grazier in western Queensland. The pastoral industry, as many honorable senators know, is very precarious. Perhaps at times quite big money is made, but for many years droughts, low prices, bush fires, and many other calamities, over which the grazier has no control, are encountered. Then there comes a year when he has a good profit, but on an average the business works out at only a very small return or no return at all on the capital invested. The case I have in mind is that of a man who went through ten years of drought from 1926 to 1936, and was just getting reasonably on his feet again. These were his taxation figures; his total income for State taxation was £10,292, and his State tax on that amount was £3,652 12s. 6d. His development tax, computed on an income of £10,039, was £376 9s. 3d. For federal income tax purposes his income was £9,877, and his assessed tax was £7,002 18s. lid. That made a total of £11,032 0s. 8d., which represented a direct loss of £740. As the taxpayer came within the provisions of section 161, which provides for a rebate of the Federal tax in cases where the aggregate taxes exceed 18s. in the £1, he obtained a rebate of £852 2s. Id. from the Commonwealth income tax authorities. However, he received no concession from the State authorities^ so that all he had left after paying taxes was £125. This is a matter which must be faced squarely. There are other men throughout Australia who have incomes of that amount on paper only. The average man in the street is quick to claim that high incomes should be taxed 'heavily, and for war purposes this is reasonable but, unfortunately, few people realize what inroads are made upon those incomes by taxation. In this, case, out of an income of £10,292, the taxpayer had only £125 left for himself after paying taxes.

Senator Collings - But that was not all the taxpayer had for himself. He did not have to live for a year on £125.

Senator COOPER - I admit that; but that is all he had left out of his' earnings.

Senator Collings - He probably paid more than that for champagne and cigars.

Senator COOPER - If I disclosed this man's name the honorable senator would realize that that is an unkind and unfair remark. The gentleman is well known to the honorable senator.

Senator A J McLACHLAN (SOUTH AUSTRALIA) - .Does he manage his own property?

Senator COOPER - Yes, and he rarely leaves it. He is one of the best sheep-farmers in Queensland.

Senator Collings - The point is that he does not have to live at the rate of £i25 a year.

Senator COOPER - Very likely not; he has food and clothing, but that is all he had left of an income of £10,292 after paying taxes.

Now, let us look at the other side of the picture. It is estimated that the proportion of our national income earned this year by individuals who are in receipt of income of £400 a year or less will be approximately £650,000,000. Dealing with excess spending in his budget speech, the Treasurer (Mr. Chifley) said -

The Government cannot allow this excess spending power to compete against the nation for the additional man-power and materials that arc vital to our defence, or to hid up for the limited goods that are available for civil use, or to operate in " black " markets and so menace price stability. The Government is determined on this and will take such measures as may be necessary to impose its will.

That is an excellent statement, but is it being fulfilled? I am sure that every honorable senator on this side of the chamber agrees that such a policy should be pursued by the Government, and that this vast amount of spending power which is left in the hands of the public should be controlled in some way. I have already shown that the spending power left in the hands of the wealthy is very little; but it cannot be denied that the spending power left in the hands of the masses of the people is very great, and has increased to a large degree during the last eighteen months. I am confident that Australia can find all the money necessary for our war effort, and I also believe that if the Government had the courage to explain the position to the people generally there would be no difficulty in obtaining the money. However, it seems that the Government is going the wrong way about it.

SenatorCollings. - Does the honorable senator doubt that the money will be forthcoming?

Senator COOPER - I do, on the lines the Government proposes, and I shall tell honorable senators the reason. [Extension of time granted.] Under a system of voluntary loans, an opportunity is given to many people to evade their responsibilities. A sum of £300,000,000 has to be found by means of voluntary loans. Let us review the circumstances of the loans which were floated in March and June of this year. There were 243,388 contributors to the loan floated in March, and it was oversubscribed by £13,000,000. In the June loan, after a. " whipping-up " of the people at the last moment, it was found that there were 192,000 contributors, and the loan was over-subscribed by £2,250,000. There, in a few months, is a warning that there will be fewer contributors to the next loan, because the available money in the hands of those patriotic people who are willing to subscribe to loans is being reduced rapidly.

Senator Collings - The bulk of loan money comes from organizations which invest the savings of the people. The money subscribed to loans by insurance companies represents the contributions of the workers to those companies.

Senator COOPER - I counter that statement by pointing out that many of those big organizations are regular subscribers. One such organization offered recently to subscribe £500,000 a month. That bears out what I say; the patriotic contributors who have invested money in loans in the past are still investing it. If the Government wishes to raise these vast sums it must seek new money from other sources. It must obtain the money from those members of the community who have it and are withholding it. In the lower income groups, there is more money than there has ever been before, and unless the Government taps that poo! of over £200,000,000 surplus spending power that I mentioned previously, it will have difficulty in obtaining the finance it requires. Many people do not realize how grave is the position of this country, one reason being because they have more money in their hands to spend than previously. I noticed in the Sydney Daily Telegraph of the 3rd September that 700 workers in South Australia had threatened to stop work unless they obtained a five-day working week. I am afraid that those workers do not realize the gravity of the situation, and unless they are compelled to make sacrifices, they will continue to say : " We have plenty of money. Why should we not work only five days a week? " Thisattitude is largely due to the strikes that take place and to the fact that some workers have ideas contrary to those of the majority of the thinking section of the community. Again I appeal for the formation of a national government. If there are unpleasant things to do, let all parties do them. If sacrifices are to be demanded, let us all ask for them, and, if there be any blame - which I do not admit - we shall all share it. The best intellects of the Parliament should be used in the prosecution of the war.

Another way to curb the high spending power of the people would be to introduce h comprehensive national security scheme. Social security, if it means anything, implies security of employment, essential food, clothing, shelter, health and recreation. This principle recognizes the right of every one in the community to a share in the benefits provided, and it also carries a responsibility for contributing to funds from which the benefits would be paid. At present, Australia; lags behind many other countries in ite social services. The United States of America, Great Britain and New Zealand are far ahead of Australia in their social legislation. In each of those countries funds for social security purposes are raised on a contributory basis. If similar provision were made in the Commonwealth a large fund could be built up, and it would not be necessary to pay out large amounts, particularly if unemployment insurance were included in the scheme. Such a scheme would be on a sound financial basis after the war. New Zealand, in order to finance its social security scheme, charges a registration fee of 5s. a year, which is collected from all youths from sixteen to twenty years of age, and from all females over sixteen years of age, plus a charge of fi a year for all males over twenty years and a tax contribution of ls. in the £1 on all salaries, wages and income. It is estimated that the cost of social services in Australia this year will total £36,500,000. Undoubtedly, the cost is increasing by leaps and bounds and there is no doubt whatever that we must soon reach a breaking point, unless some new method of financing these payments on a contributory basis is devised. This heavy and menacing charge is three times as great as it was ten years ago, and we have made no provision for unemployment and other services of a social nature. While the bulk of the community is in employment, the fund would be built up quickly. In addition to such a social measure, I believe that a system of post-war credits would be welcomed by the people. A combination of the two would make a modicum of insurance against post-war depression, not mentioning the advantages to present war finance. A. certain part of the pay of members of the fighting services takes the form of post-war credit. The soldier receives no interest on the money that is withheld from him in the form of deferred pay. Personally, I see no reason why similar provision should not be made under the general scheme of taxation. In Great Britain, a single man receiving £150 a year pays £10, which is treated as a post-war credit, and also contributes £S in. income tax.

Senator Collings - He is leading a great life.

Senator COOPER - We have to consider whether we shall have a great life to lead after the next year or two. I believe that, instead of having our eyes glued upon some Utopia after the war, we should consider whether we may be forced to live under the new order that would be imposed by the Axis powers if we lost the war. That is the new order which 1. am anxious to avoid. I am not looking for a Utopia. The position is far too serious for that. We shall be fortunate indeed if we can escape from the new order of the Axis powers. After that, we can build up our own new order, but, without sacrifice on our part, I fail to see how it is to be done. I draw the attention of honorable senators to the following table giving a comparison of the taxes paid by persons in the lower income groups in Australia, Great Britain and New Zealand: -

There are 400,000 persons in Australia with incomes ranging between £100 and £150 a year. If they were taxed at the rates payable in New Zealand or the United Kingdom they would pay to the Treasury about £6,000,000 on a basis of £15 a head. The number of persons in Australia with incomes between £150 and £200 is about 450,000. At the rates of tax payable by persons with similar incomes in New Zealand and the United Kingdom they would pay about £22 each in taxes or a total of about £9,000,000. The income group £200 to £400 comprises 1,480,000 persons. At an average of £60 a year that would represent a total of £88,000.000 in taxes from them. On the basis of the taxes in force in Kew Zealand mid the United Kingdom, those three groups of income earners would contribute £103,000,000 annually to the revenue, but the total tax collected from tl,em is only £23,500,000. In other words, on the basis on which their kinsmen in Great Britain and New Zealand in the same groups are taxed, they would pay £79,500,000 more in taxes annually. We are all in this war together, and therefore I fail to see why one group Qf individuals should be asked to pay a higher rate than is demanded of a similar group elsewhere. There should be greater equality of sacrifice. I agree with the plea of the Prime Minister (Mr. Curtin) that Australians should save more and. live more austerely, but experience has shown that it is not sufficient to ask the people to do these things. The time has come for the Government to put aside its timidity, take its courage in its hands, and tell the people what they must do. In no other way shall we get a maximum war effort.

The actions of some Ministers, particularly the Minister for Labour and National Service (Mr. Ward) have created considerable unrest among members of the community associated with commerce and manufacture, which is not conducive to obtaining the maximum output in industry. In this connexion, i shall read the following extracts from a letter which I. received recently from a person connected with a large organization in Queensland : -

There lias never been a time in the history nl the Commonwealth when there was greater need for a responsible body to raise its voice on behalf of our rights of citizenship, which are being taken from us by stealth at home under tin; guise nf necessary war measures, while we aru fighting for them abroad.

There is ample evidence, which space forbids me to detail here, that a determined effort is being made by certain extremist leaders of Labour to impose their will on the whole nf Australian industry. They obviously aim at socialism in our time, and hope to achieve it under cover of the nation's peril

Thu task of winning the war must be our prime purpose. Unless we win it, we, and all our institutions, will be swept into oblivion. Hut. it will be a sud awakening to find that we have lost, much of our liberty at home because nf our preoccupation with the war. It will, for instance., be a sorry return to our fighting men to find that, having offered all, they may resume civil work only under the direction of some union ollicia.1.

Let us frankly admit that the danger has arisen through our own neglect. We have been too occupied with other mutters, and too ready to believe that "it couldn't happen here".

Senator Collings - The honorable senator cannot point to one instance of an attempt by the Government to socialize industry, nor is the writer of the letter correct in what he says concerning the conditions which men will have to face when the war is over.

Senator COOPER - Is it not a fact that every person who is given work under the Allied Works Council must join a union ?

Senator Lamp - Does not the honorable senator believe in that policy?

Senator COOPER - No; I believe that in peace-rime every nian should be free to work where and for whom he likes. In war-time it is necessary and right that the Government, should regiment the man-power of the nation and send workers wherever it thinks fit. The urgent needs of war. however, do not give to the Government the right to compol a worker to join a trade union before he can get a job. Will the Minister say whether this policy of compulsory unionism is to continue after the war? Are our fighting men then to be denied work unless they join a union? Is that the post-war policy of the Government?

Senator Fraser - -Compulsory unionism is the policy of the medical and legal professions.

Senator COOPER - The budget makes no reference to higher pensions on account of the increased cost of living to soldiers suffering from war disabilities although increases have already been granted to invalid and old-age and service pensions to the extent of 25 per cent. I understand that a committee has been appointed to deal with this subject, and therefore I shall not refer to it at length now.

With respect to the liquor problem, I still maintain, as I suggested to the Government about ten months ago, that drinking would be greatly curtailed if " shouting " were prohibited. In addition, the hours of hotel trading in the afternoon should be altered with a view to eliminating what are generally called the afternoon sessions.

Senator Collings - Can the honorable senator name one State in which the hours of hotel trading have not been altered since this Government came into office? -Why suggest 'that nothing is being done at all?

Senator COOPER - That is not my intention. I merely suggest that the present afternoon hotel trading hours could be altered. We have heard quite a lot about these afternoon sessions. I make my suggestion for what it is worth. I recall that in Great Britain during the last war hotels were closed during the afternoon, and " shouting " was prohibited. Those measures greatly curtailed drinking for pleasure.

I am fully aware of the great responsibility which rests upon the Government at this time. I repeat that on several occasions offers have been made by the Opposition to share that responsibility, but they have been rejected. In any criticism I have made of the Government, my only desire has been to help. I have endeavoured to show how other countries in the British Commonwealth of Nations are financing their war effort. I hope that the Government will take measures to obtain the maximum result from the nation's available funds. The men and women in our fighting services are giving of their best in their endeavour to win the war. The same may be said of those who are day and night engaged in war production, and on the land, building up supplies of equipment and food. But this is not enough. We must also harness the nation's finances to the war effort. Only the Government can do that effectively. Therefore, I urge it to make adequate provision with a view to securing the maximum amount of revenue from the public in a. way that will spread the burden as fairly and equitably as possible over all sections of the community. Financial sacrifice should not be considered difficult when compared with the sacrifices that are being made by members of our fighting services. Until we secure the whole-hearted co-operation and goodwill of every section of the community, it will be impossible to obtain the maximum war effort, which this country so urgently requires.

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