Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Tuesday, 22 September 1942

Sir FREDERICK STEWART (Parramatta) . - After a discussion that has lasted several days, it is rather difficult for late-coming speakers to say anything that is particularly novel or original in regard to the financial statement of the Treasurer (Mr. Chifley), although one must confess that the honorable member for Melbourne (Mr.Calwell) introduced into his enthusiastic effort a great deal more novelty than realism.

One would like to believe that the story of departmental administration related by the honorable member for Dalley (Mr. Rosevear) was novel, and not typical of governmental administration in. time of war. Whilst one has a healthy distaste for repetition, of which there is far too much in this chamber, there are occasions on which the circumstances justify its indulgence. This is one of those occasions. I believe that the perils inherent in the budget proposals of the Government are capable of doing so serious an injury to the economic structure and the domestic life of the people of Australia that the warnings already uttered by previous speakers cannot be too frequently repeated. What provokes that statement? Generally, a budget contains a statement of anticipated expenditure and anticipated income. Almost invariably, those two estimates are specifically divided and totalled. Either they agree, or they show a deficit or a surplus. But the present budget has departed from that tradition. It is true that the Treasurer estimated an expenditure during the current year of £549,000,000. But the honorable gentleman took pains to tell us that that is by no means a definite figure. He reminded us that during the last financial year the estimates - which, we presume, were as faithfully and honestly prepared as those for this year have been - fell short of the actual expenditure by approximately £98,000,000, and involved the use of bank credit to an amount of £80,000,000. Even though it be true that £549,000,000 by no means represents the potential financial obligations of the country, one has not heard a word of criticism either from this side or the other side of the chamber regarding that aspect of the budget. I venture to suggest that if £549,000,000, £649,000,000 or even £749,000,000 were needed in order to ensure the safety and security of Australia, there would be no demur, either politically or from the Australian taxpayers. But the criticism advanced during this debate has been associated entirely with the provision that the Government has made or proposes to make in order to meet its obligations. The Treasurer informed us that, again departing from tradition, he proposes to raise £219,000,000 by taxation and £30,000,000 from other sources. He then naively said that the remaining £300,000,000 would be found by loans, &c. " Etcetera " is to play a large part in the financial affairs of the Government during the ensuing twelve months. The Treasurer stated that during the last financial year £120,000,000 was raised by loans and that, if the amount were doubled this year, £240,000,000 would be raised. That is perfectly correct. If the £240,000,000 be doubled next year, the amount raised will be £480,000,000; and if the same process be followed in the succeeding year, the amount raised will be £960,000,000. We need only continue that process for five or six years, and the spectre of the national debt to which the honorable member for Melbourne directed our attention will have been completely eliminated. But is it practicable? Was the Treasurer serious when he mentioned the possibility of raising £240,000,000 from loans and £60,000,000 from war savings certificates? If so, I should like to know what the Prime Minister (Mr. Curtin) meant when, answering a retort from this side of the chamber during his speech, he stated definitely that in his opinion the maximum amount that could be raised in Australia, even if compulsory loans were resorted to, would be £200,000,000. I believe that the right honorable gentleman will admit that, unless compulsory loans be resorted to, the amount raised will not reach even £200,000,000. Which of those two statements is Parliament and the country to accept? Are we to believe that the Treasury anticipates raising £300,000,000 from voluntary loans and war savings certificates, or that the ceiling estimated by the Prime Minister as being possible for the raising of loans in Australia during the next twelve months must be set at £200,000,000? If the Prime Minister be correct, the Government has definitely budgeted for the use of at least £100,000,000 of bank credit this year, even on the assumption that the expenditure be of the amount estimated to-day. I have always adopted a rather liberal attitude towards the use of the credit resources of Australia. I was shockingly disappointed, and have not yet recovered, three or four years ago, when we were told by the government of the day that the monumental piece of social legislation that was then so greatly acclaimed in this chamber had to be placed in the political ice-box because the economic structure of Australia was said to be not capable of producing £2,000,000 a year in order to implement it. That was not the only occasion on which I had felt disposed to adopt an attitude of liberal finance. But surely there is some difference between controllable and uncontrollable use of credit ! The Prime Minister stated in this chamber recently that any resort to bank credit would be an inflationary measure. Again I point to a disagreement between him and his Treasurer in this regard; because the latter, in one paragraph of his printed budget speech, drew attention to the fact that the financing of the whole of the war by means of bank credit, as some people - including a number of his own supporters - desired, would be fraught with very grave danger to Australia. Apparently, the honorable gentleman considered that in the very serious resort to the use of bank credit that he contemplates he is perfectly safe, but that he must not go any farther. Yet the Prime Minister told us that any resort - and I believe that he mentioned an amount of £20,000^000- would be inflationary! I repeat that, whilst most of the business community owes its success to ability to use personal credit to a reasonable degree, the realm of commerce and industry is strewn with the debris of enterprises and men who resorted to an uncontrolled use of credit.

Let us examine the actual proposals of the Treasurer. The honorable gentleman stated that, if the returns from war loans last year were doubled, we should raise this year £240,000,000. Does that mean that during last year, when £120,000,000 was raised, only half pressure was applied to the accelerator? On the contrary, we can recall very dramatic last-minute appeals by the Prime Minister, the Treasurer, and other Ministers, when it seemed that the last war loan was likely to fall far short of requirements. We recall the ballet demonstrations and boxing exhibitions given in Martin-place, Sydney, in order to intensify the interest of the community in the war loans. We are now told that the people contributed last year only onehalf of the sum they were capable of providing, and that whilst we raised £120,000,000 last year we are likely to get £240,000,000 this year. Then the Treasurer said that the balance of £60,000,000 might be raised by the war savings certificates campaign. He remarked that if £60,000,000 were obtained, it would be a comparatively small achievement compared with that accomplished in Great Britain. The Treasurer told us that the returns from war savings certificates last year showed a falling off compared with the previous year, and that last year the face value of the war savings certificates issued was £13,500,000. That represents, of course, only a cash value of a little over £10,000,000. Does anybody suggest, that Australia, under a voluntary system, is capable of increasing last year's returns from these certificates sixfold? Unless the Government is prepared to scrap its present proposals, and adopt some of those suggested to it, this country is likely to suffer severely from the inflation that must inevitably follow.

In refusing to increase the income tax of persons on the lower ranges of income, or to introduce a system of compulsory loans, the Government is appealing to the goodwill of a large body of income-earners who are escaping their appropriate share of the war costs. The honorable member for Ballarat (Mr. Pollard) referred to the fact that a considerable amount of income is earned by the group in receipt of less than £400 a year. He estimated the amount at £550,000,000, but I think that £700,000,000 would be nearer the mark. He said that it would be wrong to consider that sum without regard to the number of contributors. I admit that. It would be a sound argument on his part if it were suggested that the persons earning that £700,000,000 should pay tax comparable with that of persons in the higher income groups who earn that amount of income. Nobody, of course, asks that, but the Opposition contends that, whilst it is true that the attitude of the Government will probably appeal to many of those people who unthinkingly believe that they are escaping their share of national responsibility, I warn them that after all the relief they are getting is merely temporary. The deflation of the currency that must follow the tremendous use of bank credit contemplated in the budget is only an alternative method of taxing, which is more ruthless in its incidence than any considered system of income taxation that could be applied to that group. What would be the effect of a deflation of the currency? Its influence would extend, not only to those to whom the Government is appealing for their goodwill, hut it would also apply even more ruthlessly to those taxpayers who have limited and fixed incomes, such as pensioners of all classes, including the miners in receipt of pensions, who have recently come into that field.

The prudent people who have put their comparatively small savings into war loans and other investments will not participate in any of the advantages of inflation, hut will certainly share all of its disabilities. Even the people who respond to the appeal of the Government, and of the rest of us who plead with them, to invest in war loans will find their returns from that investment seriously affected. They will get £3 5s. or £3 2s. 6d. per cent., but the purchasing power of the money will have declined. I repeat the prophecy of the right honorable member for Kooyong (Mr. Menzies) that, before the end of the financial year, the Government will be compelled to retrace its steps, and discard what it now considers to be a commendable proposal. This will not be the first time that the Government has had this experience. Not many weeks have elapsed since we heard of the Government's brave proposal to impose a ceiling limit of 4 per cent, on the profits earned by various companies. This proposal was much acclaimed throughout the community by those who were not shareholders in companies. The Treasurer himself, speaking at Lithgow recently, said to his constituents that, whilst the proposal to limit profits to 4 per cent, was attractive, it had been found to be totally unworkable. 1 prophesy that a similar experience will befall the Treasurer and the Government iti its concentration on voluntary effort in order to finance the war loans.

Whilst it is true that the Government is resorting to three methods of revenue raising - and most of us" are prone to believe that taxation, borrowing, and resort to bank credit are the only methods - T direct attention to a fourth method by which some advance could be made towards the balancing of the budget. T refer to watchfulness and economy in expenditure. I know, of course, that in war-time it is most difficult to prevent wasteful expenditure. As General Sir

Thomas Blarney recently remarked, war itself is a waste ; it is difficult, therefore, to remove from those administering easy money a spendthrift complex. I was glad to hear the remarks of some members on the Government side of the chamber about the possibility of effecting economies by relinquishing some of the lavish expenditure which is characteristic of governments, particularly in war-time. But I remind honorable members of a further direction in which substantial economies could be effected. I refer to the over-generous treatment of the States in the payments made to them from the Commonwealth Treasury. Last week this Parliament considered the annual distribution to the three States which for years have received disability grants. In days gone by, when the budgets of those States really suggested that disabilities were being suffered by them under federation, one could not raise serious objection to the grants. I agree that the financial disabilities of the claimant States should be recognized, but we now find that all State treasuries are in credit. Therefore, the time has arrived when, in the interests of the solvency of the Commonwealth, the whole position should be reviewed. I direct this argument particularly to the compensation which the State governments are to receive under the uniform taxation proposals. I have no doubt at all that the committee which made the recommendations was anxious to do its utmost to break down the opposition which was inevitable from at least some of the State treasurers. Therefore it seems to me that the grants were much more generous than the circumstances warranted.

Honorable members will recall that the basis of that compensation was. the income tax collected by the various State governments during the years 1940 and 1941. If the liabilities of the States had remained static until to-day, there could be no objection to that basis, but even State governments should participate in the austerity campaign and reduce their expenditure. I shall refer to figures that apply to New South Wales, and I have no doubt that the argument will apply perhaps in a smaller degree to the other States. In 1941, the Government of New South Wales had a liability in respect of unem- ployment of £5,809,000. Its disbursements under this heading included £2,250,000 on grants, loans and advances for the relief of unemployment; £1,333,000 on food relief for the unemployed ; £91,000 on clothing for unemployed ; £603,000 on grants to the Metropolitan Water, Sewerage and Drainage Board in order to give employment and £100,000 in providing housing for the unemployed. Would anybody suggest that the Government of New South Wales is now expending even a fraction of the odd £809,000 in relieving unemployment or in similar activities? In 1941 that Government paid £1,333,000 for child endowment, of which it has now been entirely relieved by reason of the Commonwealth child endowment scheme. Those two figures alone show a total of over £7,000,000 of obligations which the Government of New South Wales had in 1941, but practically none of which it has to-day. No wonder that that government has shown a budget surplus for the year just closed of approximately £1,000,000. One asks what that surplus would have amounted to. if all of the income tax due for last year had beencollected before the end of the year, or even if, for those payments made on the 30th June, receipts dated the 30th June had been given, instead of being dated forward into this financial year; and if all the capital expenditure from revenue on the New South Wales railways had been so indicated, instead of being offset as capital expenditure. These are the methods by which State budgets are manipulated - I use the term in its better sense. Therefore, on the grounds I have stated. I believe that the compensation which the Commonwealth Government is bound to pay to the States under the uniform taxation legislation is far too generous.

The Treasurer told us in his budget speech of the achievement of the Government in improving social services. He referred to the increases of invalid and old-age pensions, and he reminded us that the Government had instituted a Commonwealthwide system of widows' pensions. I maintain, however, that it is of little use to increase pensions by 6d. a week if, at the same time, the Government's budgetary proposals have the effect of greatly reducing the purchasing power of money. Moreover, while I commend and support the Government's social service improvements, I feel that it would have performed a still greater service to the country if it could have overcome its aversion to placing social services on a contributory basis. Widows' pensions are a great boon to thousands of widows in Australia, but the scheme is of no use to at least one widow in my electorate. In a letter to me she explains that the Valuer-General has placed a value of £425 on a house which she owns, and assesses the rental value at £45 a year, or 16s. a week. The property was acquired out of the savings of this woman and her late husband, but because she owns it she is denied a pension of 25s. a week, although its rental value is no more than 16s. a week, out of which she must pay rates and taxes, and provide for depreciation, repairs, renovations, loss of rent, &c. In ray opinion, the time is overdue when the Government should revive the national health and pensions insurance scheme, to which should be added an unemployment insurance scheme. Within' the last week, I have received documents from Great Britain which show that the contributory insurance scheme in that country is providing a surplus of income over expenditure of £74,000,000 a year. What a boon it would be to our Treasury if we had in Australia a similar scheme, which might be expected to yield a surplus of between £10,000,000 and £15,000,000 a year.

I take this opportunity to express my opinion of the Government's attempt to impose compulsory unionism on the country. During the debate on this subject last week, the suggestion was freely made by Government supporters that those who were opposed to this form of industrial fascism were making a frontal attack upon the principle of unionism. Of course, they were doing nothing of the kind. To object to the Government's proposal to compel men to join labour unions is not the same thing as to object to unionism as such, or even to preference to unionists. If the purpose of the Government were merely to ensure that all workers were paid award rates, I should have no objection to its proposal, but that is not the real issue. Reference was made in the course of the debate to the action of the Government in imposing a condition in contracts for the manufacture of clothing that all employees engaged on the work should be members of the union. Not even the Minister for Supply and Development (Mr. Beasley) would argue that the action of the Government in calling upon contractors to sign an agreement with the secretary of the union was to ensure that all the employees should, receive award rates of wages. As a matter of fact, it, is compulsory under the terms of tho award for all employers to pay award rates. Judge Drake-Brockman, in award No. 484 of 1940, provided as follows: -

This award shall he binding upon the employers named in the schedule of the respondents attached hereto in respect of each and very person employed by them in the industry whether members of the Amalgamated Clothing and Allied Trades Union of Australia or not, and upon the said union and members thereof.

If compulsory unionism is the policy of the Government, it would have been more honest and dignified for the Minister for Supply and Development to impose that condition in the contract itself, instead of requiring contractors to sign an agreement with nonGovernment officials. The policy of the Government is clear enough from the action of the Director of Allied Works in insisting that all men serving in the Civil Constructional Corps shall present their union tickets. Apparently, there is a difference of opinion between the Prime Minister and the Attorney-General (Dr. Evatt) on this subject. Recently the Attorney-General gave the honorable member for Lilley (Mr. Jolly) a definite undertaking that men conscripted for work under the Allied Works Council would not be compelled to join a union, but the next day the Prime Minister controverted that statement, and now we do not know what the position is. It would appear, however, that the men are to have no choice. They have been taken from their businesses and jobs, and are being sent hundreds of miles a way from their homes, often to perform work to which they are unaccustomed, and now they are to be compelled to join labour unions.

Suggest corrections