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Thursday, 24 September 1942

Senator SAMPSON (Tasmania) . - Most honorable senators welcome the debate on the budget, because it gives to us an opportunity to air pet theories, and to offer criticism which, perhaps, we should not be able to do in the ordinary way. I shall endeavour to offer constructive criticism of the budget. We hear some extraordinary statements in a debate of this kind, and it is interesting to note the various reactions to it. One honorable senator opposite stoutly maintained that there is no such thing as the law of supply and demand. Perhaps, when he is a little older, and is able to discern things more accurately, he will come to the conclusion that that is an erroneous idea. The existence of the law of supply and demand is obvious. One might just as well say that he does not believe in the law of gravitation, In every country one sees instances of the operation of the law of supply and demand. When I was in the Old Country some years ago I paid a visit to Wales, where I saw much unemployment and misery. I visited a small village, which at that time had practically been reduced from prosperity to the brink of ruin through the operation of this law. When I was a youngster, slates were in general use in every school, and practically the whole of the supply of slates for schools in the British Empire was derived from this village, which possessed an excellent deposit of slate, ideally suited for this purpose. However, that demand ceased. Slates went out of fashion in the schools, and were superseded, for hygienic and other reasons, by the lead pencil and note-book. The cessation of that demand brought ruin to that small district in Wales. The same thing applied to the slate industry generally in Bangor. Roofing slates had been in popular use, but the fashion changed to tiles, galvanized iron and other materials. I lived in South Africa for about seven years after taking part in the Boer War. At that time one of the most prosperous avocations any one could follow in the Karoo was ostrich fanning, which was a pleasant and quite easy way of making a competence, and something more. There again the law of supply and demand began to operate, ostrich feathers went out of fashion and became practically worthless, and many people were ruined. One could cite many other instances to prove that the law of supply and demand, in the world as we know it, is inexorable, and goes on working whether one believes in it or not. I am reminded of another honorable senator, whose voice used to sweep across the chamber in the reiterated interjection : "What about a capital levy?" After all, a levy on wealth would not take us very far, because we cannot eat our cake and have it too.

With the sentiments expressed in much of the budget speech delivered by the Treasurer (Mr. Chifley) in the House of Representatives, I am in entire agreement, but, after reading those pious hopes and platitudes, I find that where I disagree with him is in the implementation of the policy which he so ably and lucidly expressed. I am convinced that the Government's loan policy to finance war wastage - because most war expenditure is wastage - even to the extent of using bank credit as its main feature, is highly inflationary. Many people say that inflation is a bogy. It is not a bogy, and I have vivid recollections of what happened in Europe, particularly in Germany, in 1923 through inflation. In that we have a sign to warn us of what inflation means when carried to extremes. This Government's policy leaves more money in the hands of people than they are economically or morally entitled to. I suggest .that inflation is with us here and now, and unless stern measures are taken to control it, we shall be heading for disaster. The stupid and senseless inflation which is now actually taking place in Australia has come about through a refusal to tax fairly the voting masses, and an unwise notion about showering money benefits on the same people. Every honest and intelligent Australian knows only too well that this country is being drained of 8s. in the £1 of national income to provide £400,000,000 for Avar this year. I suggest also that the best way to pay for war is to pay for it as we wage it. We pay for it in life, blood, labour and materials with which it is being fought, and it is only right, and wise that we should immediately pay for most of it, or all that we can, in money. I also suggest that it is all humbug and make believe to talk of the maintenance of living standards at the present day. Any one, be he a politician, a professor or just a plain fool, who says that Australian living standards are being maintained or can be maintained while we are waging alleged total war, is either a humbug, a fool or a liar. It cannot be done. We are being rationed, and rightly so, in clothes, tobacco, travel, sweets, sugar, newsprint, tea, fuel and scores of other things, but not in money, except in the case of higher incomes, which are more severely taxed in Australia than anywhere else in the British Empire. The lower incomes, which represent about three-quarters of the total incomes of the Commonwealth, are taxed directly very lightly. In this direction we are falling down on our war effort. This vast reservoir as yet untapped spending power must be brought in and used for furthering our objective, which is complete victory. This huge sum of money in the hands of people who are not paying their proper share of the war's cost, and not even lending money to the nation, is a highly inflationary force. Rationing, so far, has not checked it. But the most inflationary of all the Government's methods of finance is the use of bank credit finance. The Commonwealth Bank establishes credits on which the Government can draw to pay war accounts, simply by drawing cheques and paying a small interest rate, and except insofar as the central bank has drawn on the trading banks for their customers' deposits to help carry out this programme, no one is visibly out of pocket. I say " visibly ", but some one must be out of pocket. The money has been spent on the defence of the country, and every earning citizen of Australia should have borne his or her fair share of it.. Instead, we have record private spending and record savings bank deposits. Whilst purchases last year of war savings certificates lagged, and I am sorry to say they continue to lag, deposits in Australian savings banks are mounting at an abnormal rate. Never has the amount of £282,500,000 which represents the savings banks deposits in July last, been reached previously. It is over £8,000,000 in excess of the June total, and nearly £50,000,000 higher than (the 1940 figure. Since then, notes held by the public have increased by ££5,000,000 and there is abundance of evidence of banked-up spending power still accumulating. This I suggest, is evidence of the effect of this Government's fantastic financial policy. A country spending, as Australia is spending, over 8s. in the £1 of its income on war waste can scarcely be growing richer. It is estimated that over £400,000,000 will be spent in the current year solely on the war. Notwithstanding that, the Government hesitates to tax the people at the source, although they are already taxed severely in terms of travel, some foods, and luxuries such as beer and spirits. By this policy our money is magnified but inevitably our living standards are reduced, whereas there should be a proportionate relationship between the two. This budget is aimed at recovering from the public by means of higher .taxation, a substantial part of the flood of new spending power which is being created week by week. That growing spending power must be checked, but the Treasurer's proposals fail utterly to suggest a means of doing that. New taxation amounting to £14,000,000 is a puny weapon with which to curb the inflationary effect of a rapidly growing volume of purchasing power. New and direct taxes on luxuries and amusements are quite proper, and in my view such levies cannot be made too high, especially in view of the appeal made by the Prime Minister (Mr. Curtin) for austere living, but it is inevitable that they will have to be reinforced by an expansion of direct restriction on civil consumption. Such action, combined with appeals to the people, will help in some small measure to solve the problem, but the root of the whole matter is still left to voluntaryism, a rotten and exploded method, and one which is vague and unpredictable. The Treasurer himself admitted that in his budget speech. Obviously he has not even a vague notion where the money is to come from, but he hopes for the best. He talks of raising £240,000,000 by way of voluntary loans and I hope sincerely that the money will be forthcoming because otherwise we shall be in a very nasty jam. However, the real remedy lies in a more equitably graded levy on incomes, combined with a system of post-war credits. That method would provide the safeguard which is needed against inflation, by reducing the spending power of the public at its source. That is where this flood of spending power must be stopped. A scheme of post-war credit on the lines enunciated by the British economist, Baron Keynes, is a preferable alternative to any further increase of direct taxation. In view of the high level of industrial wages, it is considered that compulsory loans would provide an economically sound method of ensuring that middle and lower income groups would make a proportionate contribution to the cost of the war. This would! achieve two major purposes. First, it would curtail portion of the spending power of the public at a time when a curtailment of expenditure on civilian goods is essential; secondly, it would provide the individual with a nest-egg which would be available to assist him in the most difficult period of post-war reconstruction, which is where one of our main difficulties lie. We are all agreed upon that. The plain fact is, of course, that the great bulk of the nation's spending power is in the middle and lower income groups. Yet, in spite of bold words and platitudes, the Government hesitates to take such an unpopular step. Any budget that sidesteps this matter cannot be considered to be satisfactory. The higher incomes have been effectively dealt with already; it is time that those in receipt of lower incomes were asked to make their contribution, if the inflationary evils which the Treasurer so plainly fears are to be avoided. It is safe to say that this war-time budget depends almost entirely on a new spirit of national responsibility gripping this nation. The Prime Minister's austerity campaign is linked with this budget. If that campaign should fail then this budget would become a dismal flop, because it is not framed on sound principles; it is based on wishful thinking. Any one of intelligence who has studied this budget must be convinced of the need for a more disciplined way of life throughout the country. The Prime Minister is well aware of that need, but he reveals a most touching faith in the inclination of the public to discipline itself. He calls upon the people to do voluntarily and freely what the Government lacks courage to make them do, namely, give every spare .shilling to the war effort. I am satisfied that the Prime Minister and members of his Cabinet know that the only realistic and fair solution of the problem is a system of compulsory loans. The people and institutions which normally subscribe to loans cannot possibly bridge the tremendous gap between revenue and estimated defence expenditure. The pious hope that the people will stop this orgy of reckless spending simply because the Prime Minister has called upon them to do so is optimism in excelsis. Obviously, the people should stop reckless spending. The Prime Minister's appeal is in every respect just, but, after all, people are human, and that is why the Labour party opposes compulsory loans and post-war credits. It believes that such a system would be bad politics, so it adheres to its plans to obtain money from the rich. Its motto is, in effect, " Sock the man who has got the dough ". But even if that were done, and we obtained from the rich people every penny that they possess, I assure honorable senators that their contribution would represent only a small proportion of our national needs. The bulk of our national earnings is in the middle and lower income groups in which wages and salaries have increased by scores of millions of pounds since 1940. If that money is not invested in war loans, the Government's programme will collapse, and living standards will fall with it. i was sorry to see a statement attributed to the Treasurer in the press to-day to the effect that many members of the Opposition doubt that the loan will be a success. I do not know on what that statement is based, but it is a terrible thing to say. I do not believe that any man - at least no good Australian - hopes that it will fail. On what ground did the Treasurer base the statement attributed to him in the press? If the large sum of money that is accumulating in the savings banks is not invested in war loans, the Government's financial plans will collapse, and the people's living standard will collapse with it. The Prime Minister, in appealing for voluntary self-denial, evades the real issue. If he believes that the people are squandering too much money on racing, he should stop racing. He has the necessary power to do so. He was set a fine example by a " digger " Premier in one of the States, who stopped racing in South Australia almost a year ago. If the Prime Minister believes that useless dogs are consuming too much good milk and meat, and that their owners and followers are spending too much money, he should stop that senseless waste and gambling. ' People of that kind are deaf to any appeal for voluntary sacrifice. Even the Lawn Tennis Association of New South Wales asked that rubber be released in order that tennis balls may be repaired. The association thought that the cessation of tennis playing would be a national calamity. We should concentrate, not on tennis, but on defeating Japan. It would not be a very serious matter if there were less tennis playing in Australia than at present, and it may be necessary for golf to be restricted, because rubber must be conserved. It will not matter to us in the long run whether there is any golf or tennis. Most people can get, all the exercise they require by walking. If the Treasurer thinks that the use of liquor is 'being abused, and that " booze " is likely to make us lose the war if we do not further regulate its consumption, he has the remedy in his own hands. The Government could drastically cut down the supplies of liquor. I am glad that some action has already been taken in that direction. The trouble is that we have been " passing the buck" to the Premiers of the States.

Senator Keane - The Commonwealth Government imposed the restrictions.

Senator SAMPSON - The Government has a long way to go yet. The objectives of the Prime Minister are praiseworthy, but I must disagree with his way of attempting to gain them. He is too fearful and timid. I hope that the Cabinet will take its courage in both hands and do the things that are vitally necessary. Why plead with the people in a crisis such as that confronting us to-day? This is not a time to plead with the people; the Government should act. Nobody has ever adopted voluntarily the austere way of life. The Government has ample power, and I urge it to impose its will on the people fearlessly. If, in the next few months, the Government fails to inspire the people by its action, this budget must fail dismally.

I stated at the outset that I agreed, in the main, with the views expressed in the budget speech, but Mr. Chifley's words have no relation to Mr. Chifley's facts and figures. The kindest thing that can be said about this Government is that it knows nothing about finance. Some of its members were Ministers during the last depression, yet the Government is inviting a bigger and worse depression than the last one, because its budget is based on wishful thinking. The facts have been ignored. Considered in conjunction with the Prime Minister's austerity campaign, the budget is an affront to the intelligence and conscience of all good Australians. Today the Government is talking hard and living softly. That is the trouble throughout the country. We hear a lot of senseless talk over the air, and read rubbish in the newspapers, including stupid statements by responsible Ministers. Some strange and sorry stories have come to us about how the white people who were living in Singapore behaved. They had lived softly for many years, and were determined to go on living the same way, even when the Jap was hammering at their gates. Many self-righteous fingers of scorn have been pointed from Australia at the conduct which was largely responsible for the downfall of British power and prestige in Malaya. Can we yet be certain that the civilian population of this country would make a better showing in a similar test? There is little evidence of selfdiscipline amongst Australians generally. There is little evidence of it on the coalfields, on the waterfront and in the factories, and there is little evidence of it, 1 regret to say, in the Army to-day. What this country needs is self-discipline.

Senator Keane - The position on the waterfront has never been better than it is to-day.

Senator SAMPSON - I am talking about discipline, and I could tell the Minister many things that would open hia eyes. What proof have we of people being prepared to experience hard conditions when they " moan " about the rationing scheme ? Some people complain about overwork, although their hours of labour leave them leisure far exceeding that of workers in Great Britain, not to mention the workers behind the Russian front. Ministers and others, particularly the Prime Minister, reiterate the urgent need for more war equipment, but discipline which will take all the slouching, slackness and softness out of our national life, and straighten backs everywhere, is still our greatest need. That discipline we must apply ourselves; we cannot get it on lease-lend terms. We must discipline ourselves; no one else can do it for us. [t is easy to discover shortcomings in others; easy to sit in easy chairs and criticize generalship and tactics on distant battlefronts, and it is easy to agitate for a second front thousands of miles away. But it requires much courage to look into our own faults and correct them. Many things have been " funked " in Australia since the war began. We " funked " conscription, and have got into the most appalling muddle by having two armies. Politicians have " funked " risking party careers for the cause of Australian unity. We " funked " compulsory savings, and we " funked " taking effective action against gambling and the use of liquor in this country.

Senator Keane - What did the Government which the honorable senator supported do?

Senator SAMPSON -I was not here; I. was in the " wilderness ". But I was doing a war job. The popular policy has been to put off hard things, in the hope that some turn in the war would spare us the necessity for doing them. We leaned, first, on Great Britain, then on Russia, and now there is a strong tendency to lean on the United States of America.

Senator Courtice - That is unfair.

Senator SAMPSON - We are stressing our weakness at a time when we are a long way short of exerting our strength to the full. We have strength, but we must exert it.

Senator Keane - The speech of the honorable senator will not help the war effort.

Senator SAMPSON - The easy way of life, the voluntary way, which has shielded the shirker and the slacker and the waster, must be ended at once. We have clung to it far too long; and we are still clinging to it, hoping that the sacrifice of others will obviate any sacrifice on our part. If we are not to go the way of Malaya and Singapore, we must be a match for the enemy in more than equipment; we must be as hard as he is, as disciplined as he is, not only on the fighting fronts, but right through our national life. The Government has "funked" its duty; this poor wishfulthinking, sickly budget is proof positive of that "funking". There has been a lot of talk for some time about the wonderful world we are going to have in the post-war era. I say, " one thing at a time". The job that we must do first, before we talk about the wonderful world of the future, is to win the war. Voices are raised here and there - not many, I agree - against the deadly danger of the promises now being made by the foolish to the thoughtless about the new, wonderful world that is to be, in which people will not have to work much, and where every one will have plenty of everything. Each week I receive from the Old Country a copy of the Manchester Guardian. In the issue of that publication, dated the 11th May, 1942, I read a letter which was printed as a protest against folly and false hopes. It was from the Reverend E. W. Burnell, and it so impressed me that I shall read it to the Senate -

What some people realize who are not afraid to be called reactionaries or any other term of abuse which may be applied to them, isthat so much of what is suggested by the reconstructionists will fail. We shall be a desperately poor nation after this war. Our resources are being devoured at an alarming rate. We shall have to live very austerely. I think it is a shame to raise false hopes in people's minds. We had enough of that after the last war, when we were told that we were going to have a land fit for heroes to live in. Many of the people who are now so prominent in talking about reconstruction are precisely the people who are largely responsible for the fact that we were unprepared when this war was forced upon us. They were in favour of disarmament; they did all in their power to prevent, young men from enlisting. Even when we were on the brink of war they opposed conscription. Such people's judgment is therefore to be distrusted. Though potentially we maybe on the road to victory, actually the position of the Allies is very serious. Japan is knocking at the gates of India. The whole of Europe is living under the Nazi terror, and as yet we have had no really great success. " One thing at a time " is not a bad motto, and our aim, certainly at the moment, should be to win the war.

Every word of that letter is common sense. We shall be desperately poor after we have continued the struggle to the point of complete victory - not a stalemate. We must face the hard facts; we cannot " shy off " them and pretend that they are not there. We must grapple with the problems confronting us. To say that we are going to have such a wonderful world by and by, when, today, we are faced with the greatest peril this country has every known, is foolish. Let us concentrate on the job in hand. I hold in my hand a poem which was written in 1919. It is really a prophecy. It is worth reading over and over again in order to get its contents firmly into one's mind. The poem was discovered only quite recently. It was written by that great seer, singer, novelist and writer, the late Rudyard Kipling, and was published recently in the National Review. Because it is apropos of this budget, and the position in which we find ourselves to-day, I propose to read it. Its title is The Gods of the Copybook Heading's -

As I pass through my incarnations in every age and race,

I make my proper prostrations to the Gods of the Market Place.

Peering through reverent fingers I watch them flourish and fall,

And the Gods of the Copybook Headings, I notice outlast them all.

We were living in trees when they met us. They showed us each in turn

That Water would certainly wet us, as Fire would certainly burn:

But we found them lacking in Uplift, Vision and Breadth of Mind,

So we left them to teach the Gorillas while we followed the March of Mankind.

We moved as the Spirit listed. They never altered their pace,

Being neither cloud nor windborne like the Gods of the Market Place,

But they always caught up with our progress, and presently word would come

That a tribe had been wiped off its icefield, or the lights had gone out in Rome.

With the Hopes that our World is built on they were utterly out of touch,

They denied that the world was Stilton; they denied she was even Dutch;

They denied that wishes were Horses; they denied that a Pig had wings;

So we worshipped the Gods of the Market who promised these beautiful things.

When the Cambrian measures were forming, they promised perpetual peace.

They swore, if we gave them our weapons, that the wars of the tribes would cease.

But when we disarmed they sold us and delivered us bound to our foe,

And the Gods of the Copybook Headings said " Stick to the Devil you know ".

On the first Feminian Sandstones we were promised the Fuller Life (Which started by loving our neighbour and ended by loving his Wife)

Till our women had no more children and the men lost reason and faith,

And the Gods of the Copybook Headings said: "The Wages of Sin is Death".

In the Carboniferous Epoch we were promised abundance for all,

By robbing selected Peter to pay for collective Paul;

But, though we had plenty of money, there was nothing our money could buy,

And the Gods of the Copybook Headings said: "If you don't work you Die."

Then the Gods of the Market tumbled, and their smooth tongued wizards withdrew,

And the hearts of the meanest were humbled and began to believe it was true

That all is not Gold that Glitters, and Two and Two make Four -

And the Gods of the Copybook Headings limped up to explain it once more.

As it will be in the future, it was at the birth of Man -

There are only four things certain since Social Progress began:

That the Dog returns to his Vomit and the Sow returns to her Mire,

And the burnt Fool's bandaged finger goes wabbling back to the Fire;

And after this is accomplished, and the brave new world begins,

When all men are paid for existing and no man must pay for his sins,

As surely as Water will wot us, as surely as Fire will burn,

The Gods of the Copybook Headings with terror and slaughter return.

The poem contains a tremendous lot of meat. "We have seen many of the things it describes. For instance, " selected Peter " is robbed to pay for " collective Paul " ; and we are developing the new world when all men shallbe paid for merely existing and not for what they do. That poem is well worth reading - two and two do make four; water is wet and fire will burn; and all the platitudes and ranting will not alter those facts one iota. All the talk in the world will not alter the fact that this budget is running away from grim realities. But the wheels are turning; and before the end of this financial year, this problem must be faced sanely and compulsorily, not voluntarily.

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