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Friday, 18 September 1942


Senator J B HAYES (Tasmania) . - This budget calls for more serious consideration than any other document that has ever been brought before the Senate. It is the biggest budget that we have ever had and envisages an expenditure of between £500,000,000 and £600,000,000. Such a huge expenditure must give every one a great deal of serious thought, and I have no doubt that it gave the Treasurer (Mr. Chifley) some serious moments when he was compiling it. Probably the first thought that enters the head of any one who reads this document and grasps its importance and immensity is that we should have a national government to see it put into effect. I consider that the best intellects available on both sides of the chamber should combine to implement this document in the best interests of the people of Australia. In a matter of such great importance as this, there should be no party politics; Australia should speak with one voice. There should be no political sparring or fighting. We should not have to fight the matter out; we should think it out. If we had a national government, there is nor. the slightest doubt that we would get on much better than we are at present. In view of the responsibility which this budget places on every body, I CallnOt understand why the Government, for its own benefit, if for no other reason, does not share its burden with whoever is willing to assist. However, the Government has intimated that it does not intend to share its responsibility, and so it is the duty of every honorable senator to do his best to assist the Government in its war effort. Although actually the only thing that counts is winning the war, we have two important duties to perform. The first is to assist the Government to the fullest extent possible in its effort to raise the money for prosecuting the war, and the second is to sec that our finances are managed in such a way that they will not be beyond us when the war terminates. I believe that Australia is able, and in normal circumstances willing, to provide all the money that is necessary for the war. We have a national income of approximately £.1,000,000,000 per annum, and we have our equities and capital assets. My confidence in our ability to finance the war adequately is strengthened by the answerwhich I received to questions directed by me to the Minister representing th: Treasurer yesterday. My questions referred to the interest payable on our national debt, Commonwealth and State. I asked what interest was payable per head of the population at the 30th June. 1922, the 30th June, :1932. and 30th June, 1942. The answer was that the interest payable on our national debt on the 30th June, 1922, amounted to £7 4s. lid. per head of the population; on the 30th June, 1932, it was £8 2s. 4d.; and on the 30th June, 19412, it was £7 ls. 7d. That means that to-day we are paying more than £1 a. head less than we paid ten years ago. That fact says a good deal for the solvency of this nation. One reason for thereduction is the increased population, but I contend also that a considerable amount of credit is due -to the Menzios Government, and the then Treasurer (Mr. Spender) who insisted upon low interest rates. That- we were able tosecure such a reduction indicates that, our credit; abroad is so good that lenders are willing to advance money to thi? country at a low rate of interest. Speaking on the subject of loans, I have heard people outside this Parliament saying.. quite stupidly, that the Commonwealth Government will not be able to pay the huge interest bill on the money which it is borrowing to carry on the war. Such a pessimistic outlook can hardly be supported in view of the figures which I have quoted in relation to interest on our national debt. Those figures could well be cited in support of the campaign for the present loan, which I, for one, hope and believe will be fully subscribed. The budget reveals that, after imposing heavier additional taxes - and I consider that taxation now is practically up to its limit - there is a gap of £300j000,000 to be bridged. No doubt some of that money will be raised by means of loans - probably a large proportion of it - and I am quite sure that every member of this Parliament will be prepared, when the time comes, to assist in raising the money required. However.- when loans have been exploited to the fullest possible degree, there will still remain a gap to be bridged. That is obvious to any one who knows anything about finance and loans. The gap has been variously estimated at between £1UO,000,000 and £200,000,000. In my opinion, the main blot upon this budget is its tendency toward.; inflation. If inflation is necessary, then it should be used only as a last resort. Every recognized financial authority indicates clearly the dangers of inflation. Fear of inflation is revealed in page after page of the Treasurer's budget speech His statements are sound and obviously he believes in sound finance, but he fails utterly to provide the remedy, which, of course, is to go where the money is. We have a national income of approximately £1,000,000,000, the bulk of which goes into the hands of that group of incomeearners who are receiving moderate salaries. It is of no use asking some of these people to subscribe to loans, because we know perfectly well that they will not do so. On the other hand, other more patriotic individuals are denying themselves in order that they can support war loans, the Bed Cross and other deserving causes. It cannot .be denied that there is a large section of the community which will not give ls. to anything. For proof of this, one has only to cast one's mind back to the buying rush which occurred prior to the introduction of clothes rationing. Unpatriotic citizens indulged in an orgy of spending. Some of them said quite openly : " It is just as well to spend the money as to give it to the 'Government ". There is only one thing to do with people of that type, and that is to compel them to subscribe to loans. However, even with a. system of compulsory loans, sufficient finance might not be forthcoming and it might be necessary still to resort to the use of bank credit, but that should be done only as a last resort. Compulsory loans and moderate use of bank credit would stave off the ever-present fear of inflation. On many occasions, I have been asked - no doubt, other honorable senators have had the same question put to them - "What is inflation?" Probably the chief danger of inflation is rising prices. If any considerable measure of inflation is ever adopted in this country, the people on the lower end of the salary scale will get the worst of it. To offset rising prices, we have done a great deal in this country by means of price control, and Ave were fortunate to secure the services of Professor Copland, who has done splendid work. I have not always been able to agree with him, but I acknowledge that he has done an excellent job. However, if there is a surfeit of purchasing power competing for a limited quantity of consumer goods, then, despite all attempts at control, prices will soar. lt is extremely difficult to prevent price increases by means of legislation. I understand that official figures show that prices have increased by about 20 per cent, since the outbreak of war, but, letters re ceived from the Housewives Association - a responsible organization of women - claim that in some instances prices have increased by 100 per cent. If prices have shown a distinct tendency to rise in the face of this small amount of inflation which already operates, it is obvious that that tendency will be greatly accentuated should any greater measure of inflation be indulged in. Inflation not only makes living difficult, but it also destroys the value of all fixed equities. There is about £250,000,000 in the savings banks throughout the Commonwealth. If prices doubled, which is not an inconceivable result of serious inflation, the value of the deposits in the savings banks would be halved. The depositors would receive the correct number of notes on drawing their money, but they would be able to purchase with them only half the quantity of goods they could buy previously. When people' insure their lives they expect, when their policies mature, to have a certain sum of money; but, if cost of living should double in the meantime, the policy-holders will lose half of the purchasing power for which they have planned. Whilst I applaud the Government foi' what it has done in trying to reduce wasteful expenditure, the best way in which to do that is to take money from the people at its source and return it to them after the war, when they will be glad of it. Much wasteful expenditure that is witnessed at present could be avoided. The Government should endeavour to restrict the hours now fixed for the sale of liquor. Too much money is being expended on drink. If I were asked to reduce the volume of the liquor traffic I should first advise the Government to give to the people less money to spend. They should receive a certain proportion as deferred pay or post-war credit, and every body should be placed on the same footing. There is no excuse for the drinking of alcoholic liquors in working hours. The liquor traffic could be considerably curtailed if hotel bars were closed between 2 p.m. and 5 p.m. When a nation is at war, young men and young women should be able to find something more useful to do than waste money in hotel lounges. I also suggest that the alcoholic strength of beer be reduced. It should be possible to manufacture a wholesome and palatable beer of half the alcoholic strength of the article now sold. I am not in favour of prohibition, but the laws made for the control of the liquor traffic should be observed. Although the Government is quite properly asking the people to make sacrifices in the interests of the war effort, some people will not make many sacrifices unless compelled to do so. It is not sufficient merely to do without luxuries which were unknown in the time of our fathers. It is hardly a sacrifice to be deprived of certain amenities and luxuries of life. The only solution that I can think of is to take some of the income of the people at its source, and to treat every body alike. That would stave off the evils of inflation.

Company taxation has been carried to such a point that no further increase should be considered if companies are to continue in business. I am pleased that the Government dropped its proposal to limit the profits of companies to 4 per cent. Public opinion was so strong against the tax, and the difficulties of collecting it were so great, that the Government wisely abandoned the proposal. Many enterprises could not be carried on except as the result of the activities of companies. Take mining, for instance. It would bc impracticable to socialize a gold, silver or tin mine. Mining and industrial companies should be allowed to create reserves to enable them to carry on their operations in bad times or to enable them to expand. If we did not permit companies to make profits and provide reserves, there would be no large undertakings like those conducted by the Broken Hill Proprietary Company Limited.

No doubt a number of members of this Parliament will be expected to assist the Government by trying to induce people to subscribe to the war loans. Some folk are very well off, but they are in such a position that they are unable to subscribe to loans. They have substantial equities in properties, but they are short of ready cash. During the last war, any person who was prepared to pledge his equity, and place bonds in a bank as collateral security, could borrow money to enable Kim to subscribe to government loans.


Senator McBride - That would not bring in new money; it would result in a form of inflation.


Senator J B HAYES - There would be inflation only if people borrowed from banks without security. Take the case of a man with a property worth £60,000, on which there is a mortgage of £40,000. He has an equity of £20,000, but he is unable to subscribe to war loans. Must a person with a few pounds in the savings bank be forced to put his money into loans, whilst the individual, with an equity worth £20,000 is not called upon to subscribe? Some method ought to be evolved whereby a person with £20,000 could subscribe to loans. Although these men are actually well off, they may find difficulty in paying their taxes.


Senator FRASER (WESTERN AUSTRALIA) - The banks would not, allow such people to increase their overdrafts.


Senator J B HAYES - The banks' customers should be permitted to increase their overdrafts, if they wished to subscribe to loans. What is the difference between assets represented by land, machinery or stock and monetary assets?

I fear that this year we shall be faced with inflation of the currency to the amount of £100,000,000. The Government should institute a system of post-war credits in order to tap the reservoirs of money now available. From 70 to 80 per cent, of the national income is now out of the reach of the Government, except by the goodwill of the people, and it will never become available without compulsion. I am in favour of compulsory loans.


Senator Fraser - Does the honor-able senator believe in compulsory trade unionism?


Senator J B HAYES - No; that is another matter. Usually when the Government floats a public loan it offers 3i per cent, interest' for the long term and 2^ per cent, for the short term. If it gave subscribers another option and fixed a lower rate of interest, and held the money at call, a large number of people would be only too glad to invest their money in the loans. A prudent man will arrange to save his income tax in the year in which bis income is earned. Many people in the community have relatively large sums of money in the banks, but they are afraid to invest that money in war loans because they do not know when they may want it. If they were able to buy bonds ear-marked for war purposes, and repayable on demand, many of them would be willing to invest some of their money in such loans, in which event it would be found that a large proportion of their investments would remain undisturbed. I commend the suggestion to the consideration of the Government. I t is merely an extension of the existing practice in connexion, withwar savings certificates, which are redeemable on presentation at any bank.


Senator McBride - Unfortunately.


Senator J B HAYES - Unless some such provision be made, large sums of money in the aggregate will not find their way into war loans. Many persons purchase war certificates because they know that they can cash them if necessary; but in fact they do not do so, and the money remains in the hands of the Government My purpose in offering this suggestion is to help the Government to obtain the money it requires by legitimate means, so that it will not have to adopt methods which will be harmful. It is useless to say that we can easily get: twice as much money from the people as was obtained from them last year. There is a gap of. £300,000,000 which must be bridged; and that gap will not be closed by voluntary means. I frankly admit that I am afraid of inflation and want to avoid it.

Man power problems are causing a good deal of concern. I realize that the country must have men in the fighting services, and also that a man cannot be in two places at the same time. There are, however, some industries which are almost as essential as the fighting services. For instance, the tin-mining industry is essential to the war effort because of the loss to the allied nations of the supplies of tin which formerly came from Malaya. Quantities of tin are being obtained in Australia, but the difficulty is to get sufficient men to increase the output. Recently, I visited a tin-mine which employs over 100 men. The manager told me that he was having difficulty in obtaining sufficient men to carry out necessary developmental work, such as the removal of overburden, and the construction of dams. All the men employed in the mine were actually engaged in mining tin. He pointed out that, as the men worked in gangs, he could not: divert some of them to developmental work, so that if that work were undertaken it would mean that the actual mining of tin would have to cease for a time. The manager of another concern which is mining an important metal, the supply of which is causing the Government much concern, also said that he required more men. The farming industry also must be maintained because it is essential that supplies of food be maintained. The Government aims at an increased production of vegetables, and doubtless it knows that that industry requires a lot of man power. Unless the men required to produce vegetables are made available, the result will be disastrous. I believe that the Government is doing its best, but I do not know how far it is prepared to go in the direction of eliminating non-essential activities. I could give instances to illustrate what I mean, but it may not be fair to do so, as I do not know both sides of the story; but it appears to me that some of the jobs now being undertaken are not urgent and could wait until the war has ended.


Senator McBride - Such as the painting of ceilings in the Hotel Kurrajong.


Senator J B HAYES - I admit that it is hard on a tradesman to send him some hundreds of miles away to do other work, but hardship is inseparable from war.

The growing of flax is an important war-time industry. It should be developed on sound lines so that it may continue after the war is over. Mistakes have been made in inaugurating this industry in Australia, but mistakes are inseparable from the establishment of a new undertaking of this kind. One thing that stands out is that those who are growing flax are not being paid sufficient for their product. I live in a district where there is a flax mill which produces the finest flax in Australia. In speaking to-day, I refer, not to that particular district or mill, but to the flax industry generally. Too much money is being expended in preparing the fibre for market. Senator Aylett said that the fibre would have to bring £400 a ton to enable the ledger to be balanced. I am not prepared to contradict his statement, although I should not have made it myself.


Senator McBride - Senator Aylett, made a lot of misstatements some time a go-


Senator J B HAYES - His statement in regard to the flax industry should be investigated, because if the industry is to continue in the post-war period it must be established on sound lines. We should aim at producing fibre at a price at which it can be sold after the war. I should like the Minister to tell us how much firstclass fibre has been produced since the industry was started. The Minister may prefer to give the information privately rather than in the Senate. I should also like him to say what it has cost to produce that fibre. In giving that information I ask that he make allowance for seed, tow, and other waste.


Senator McBride - There are many grades of fibre.


Senator J B HAYES - I am aware of that. The information could be given in respect of the different grades, or the average price for the material classed as fibre could be given. Tow should not be regarded as fibre.


Senator Gibson - If the information were supplied in respect of flax ur> to the time that it reaches the retting machine, it would be all right, because the different classes are determined at a later stage.


Senator J B HAYES - I desire to know what it costs to produce fibre. I know what that fibre brings in the market in normal times. When I asked a mill manager what percentage of firstclass fibre his mill produced, he said that the information was confidential.


Senator McBride - It varies with the crop.


Senator J B HAYES - He could have given the information in respect of the mill he was managing.


Senator FRASER (WESTERN AUSTRALIA) - Was not that information contained in the report of the Joint Committee on Rural Industries?


Senator J B HAYES - I should like the Minister to supply the Senate with the information that I ask for, particularly as there are many complaints thai savings could be made.


Senator Gibson - About 75 per cent, of the money expended on the production of flax could be saved.


Senator J B HAYES - It would appear that the industry is in need of an overhaul.


Senator Fraser - ls not a copy of the report of the Joint Committee on Rural Industries available to the honorable senator ?


Senator J B HAYES - 1 have read the report, but it was issued some time ago. A report by an expert - even if he has to come from overseas - would be of great assistance. My chief concern is that this industry shall be soundly established so that it may continue in the postwar period. We shall then need all the land industries possible because many industries which now appear to be flourishing will not be so lucrative after the wai-.

I am glad that the Government has decided to continue the fruit acquisition scheme. There have been losses, but the Government has the consolation that it has saved the industry. Nevertheless, too many apples are being wasted. Recently. I visited an orchard where I saw a large quantity of apples lying on the ground. The orchardist wa3 a capable man and had produced good fruit, but he could dispose of those apples only as baits for poisoning rabbits. Senator Lamp, who has referred to this matter, had some success in arranging for apples to be supplied to soldiers in camps. I have no wish to criticize the military authorities, and I speak subject to correction, but there seems to me to be no reason why some of the military lorries, which always seem to be on the roads, could not call at various orchards and obtain apples for the men in camp. Some time ago I saw in an orchard a lot of beautiful apples which remained unpicked through lack of pickers. Those apples belonged to the Government. There were thousands of soldiers in the vicinity who would gladly have consumed more apples than were supplied to them.


Senator Fraser - Instructions have been issued to the military authorities to obtain apples from orchards for the men in camp.


Senator J B HAYES - In some districts that was not done. I hope that the Government will give consideration to the matters which I have brought forward.







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