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Tuesday, 22 September 1942

Mr RIORDAN - The Treasurer has asked for .universal sacrifice from the people. He has appealed to them to support war loans, and to live austerely. I am confident that they will heed his appeal, because they realize that manpower must be released for the manufacture of munitions, the strengthening of our defences, and for war work generally. If previous anti-Labour governments had not evaded their responsibilities, much of the urgent work that must now be undertaken would not be necessary. For example, during the financial year 1939-40 the Menzies Government did not expend £28.000,000 which had been collected for defence purposes. In the following year a further sum of £16.000,000 was unexpended. Those figures indicate that the government which was responsible for gearing the nation for war, fell down on the job. Obviously, the Menzies Government was unfit to occupy the treasury bench. Honorable members opposite have repeatedly mouthed platitudes about the whole-hearted manner in which they support the war effort of the Curtin Government, but the timely exposure by the honorable member for Ballarat (Mr. Pollard) last Friday afternoon revealed to the country that they are concerned only with attaining the plums of office. They wish to transfer to this side of the chamber for the purpose of reaping credit for the good work that has been carried out by the Curtin Administration. The letter which the honorable member for Ballarat read was marked "Strictly confidential " because the Opposition did not desire the public to know its real motives. To use the phrase of a member of the Opposition, they are playing the "diabolical game of party politics " at its worst. They talk about how they support the Government, but if the opportunity were to present itself, they would pull the Government down. Actuated by selfish motives, they desire to obtain concessions for the great institutions which have for so long exploited the people of this country. If the United Australia party were returned to office, the new government would impose compulsory loans and higher taxes in the lower range of incomes. It would expect the workers, not only to fight, but also to pay for this war.

The administration of a country may be financed, first, by taxation; secondly, by loan; and, thirdly, by the use of bank credit. Prom the beginning of this debate, honorable members opposite have advocated the introduction of a system of compulsory loans. They have embraced whole-heartedly the Keynes plan as the basis of their policy. When this scheme was incorporated in the Fadden budget, the government was defeated. The Fadden Government expected to secure from compulsory loans £25,000,000 a year. Now honorable members opposite claim that the gap of £240,000,000 between expenditure and revenue may be bridged by compulsory loans and increasing the rates of .tax in the lower ranges of income. T shall briefly examine the Keynes plan. The author is a director of the Bank of England, and his scheme has been referred to as the " infamous Keynes plan ". This plan was devised purely for the purpose of compelling those in the lower ranges of income to bear a greater percentage of the cost of the war, obviously for the benefit of those in receipt of large incomes. For two years, the plan has received prominence. Although the British Government has adopted it, the Government of the United States of America has rejected it. Whenever a budget is in the offing the antiLabour press of Australia demands the imposition of compulsory loans. The Leader of the Opposition made no constructive suggestions for bridging the gap in the budget between expenditure and revenue. The mere fact that Baron Keynes is a director of the Bank of England satisfied the right honorable gentleman that the scheme should be adopted. In my opinion, Baron Keynes's association with the bank is an indication of his political outlook. With such a background as that, it is only to be expected that his plan will be inimical to the interests of the workers. Put bluntly, the plan was merely a ruse to raid their pay envelopes. Like honorable gentlemen opposite, he believes that the workers should fight the war, and .pay for it. His plan contains no guarantee that the compulsory contributions will be returned to the contributors after the war, because they will be in a different category from the bondholders, who have voluntarily subscribed to loans. But the fact that the repayment of the money is not guaranteed does not seem to concern honorable members opposite. The purpose of the Keynes plan is to utilize the opportunities afforded by the war to smash the living standards of the workers and to deprive them of any advantages that they might derive from the increased amount of money in circulation in wartime. Money must be found to finance the budget. If it conies from the pockets of the workers, the wealthy section need not be taxed so heavily. The recent outcry against the proposal of the Government to limit the profits of companies to 4 per cent, was almost deafening; and is indicative of the outlook of the wealthy sections of the community in regard to financing the war effort. Carreras Limited, manufacturers of tobacco, showed a profit of 45 per cent. In Great Britain, taxation is higher in the lower ranges of income and lower in the higher ranges of income than is the case in Australia. Those who advocate the Keynes plan of compulsory loans desire to reduce the burden of those with substantial incomes. No one can foretell the nature of the financial system that will be in operation at the conclusion of the war, but I prophesy that the capitalistic economic order will be relegated to the limbo of forgotten things. It is utterly stupid to advocate a. system of war finance that envisages a return to contributors of even a portion of the compulsory loans. If a United Australia party government should be in office, there is no doubt as to what its attitude will be towards repayment of the money.

Sir GEORGE BELL (DARWIN, TASMANIA) - There will be no repudiation.

Mr RIORDAN - The United Australia party government will find another name for it. The supporters of that government will describe the money as a " just contribution by the workers of Australia at a time of great national crisis ". I marvel at the facility with which honorable members opposite find all manner of excuses for their inconsistencies. The right honorable member for Cowper, who attended meetings of the British War Cabinet, expects the war to last for ten years. Hitler's satellite, Rosenberg, has told the German people to prepare for a 30-year war. If we are to place any reliance on those estimates, many people will die before their compulsory loans are repaid, whilst many more will be so old that they will be incapable of deriving any benefit from the amounts deducted from their incomes. Honorable members opposite argue that a system of compulsory loans will enable the burden of the war to be spread equitably over all sections of the community. Their cry is for universal sacrifice. For the same reason they also advocate taxation of the lower ranges of income. The workers are already making a fair sacrifice. They are paying their share of the cost of the war " through 'the nose " in indirect taxes. Essential commodities have been taxed to such a degree that the cost of living ha increased by 20 per cent. That is evidence that our so-called price-fixing regulations have failed. "We could achieve real price control if we adopted the price fixation scheme which operated in Queensland for the twenty years prior to the outbreak of war. That scheme would provide a complete safeguard against inflation. The prices of beer and cigarettes have risen to an outrageous degree. We behold tobacco manufacturers making profits up to 45 per cent., robbing both the growers and the consumers. Honorable members opposite might endeavour to sell to the workers and householders the idea that the existing price fixing methods have not failed. The restriction of spending imposed by the rationing of commodities, and the total banning of the luxury goods, have afforded to a few workers the first opportunity in their lives to open a savings bank account. In the great majority of cases, however, the rising cast of living and his direct taxation contributions leave the worker without a surplus. How can honorable members opposite seriously contend that this section of the community is not bearing a fair share of the burden of war expenditure. The right honorable member for Kooyong (Mr.

Menzies) spoke truly when he declared that wages chase prices, but never overtake them. Honorable members opposite wish to prevent any further increase of wages, whilst taking, by way of compulsory loans, a considerable proportion of the workers' earnings, and, at the same time, to allow prices to continue to rise. The right honorable member for Kooyong also declared that the Government wa taking advantage of the present prices to foist compulsory unionism upon the people. Honorable members opposite arc looking for a chance to utilize the present emergency for the purpose of smashing the standards of living which the workers of this country have taken years to build up, and which are second to none in any other country. The proposals in respect of compulsory loans, and taxation of the lower ranges of income are evidence of what honorable members opposite would do if, by some means, they managed to regain the government bench. The Government declares that the wealthy sections of the community should make greater contributions to the war effort. Our object is to ensure that the people who. took every opportunity in the past to exploit the general public for the purpose of amassing wealth, shall not now be allowed merely to sit back and enjoy their ill-gotten gains. The guiding principle in national finance, and taxation is ability to pay. Apparently, honorable members opposite have discarded that principle. The interests which they represent in this Parliament fully support their argument that the cost of the war must be placed on shoulders other than their own. They do not care who pays for the war. They know that it must be paid for; but they prefer to see the washerwoman, the office boy, and the worker on the small wages make the greatest contribution. Any one who advocates a scheme of compulsory loans will, of course, receive the plaudits of the capitalist press. The wealthy section is the only section which will benefit from compulsory loans.

Honorable members opposite contend that compulsory loans will bridge the gap in the budget. It was estimated that the scheme propounded by the Fadden Government would yield £25,000,000, but honorable members opposite give no estimate of the revenue likely to he derived from the scheme which they now advocate should the Government he silly enough to adopt the proposition. .Such a scheme would bring economic misery and distress to the workers, and create conditions akin to those existing in the last depression. No room exists in our democratic life, either in peace or war, for such a scheme. The honorable member for Boothby (Dr. Price) emphasized what Great Britain was doing in the prosecution of the war. However, neither he, nor any other honorable member opposite, pointed out that on the basis of an estimated expenditure of £5,286,000,000 Great Britain's budget leaves a gap of £2,100,000,000- still to be bridged. These details were set out in a speech delivered by the Chancellor of the Exchequer, Sir Kingsley Wood, in the House of Commons, on the 14th April last. How is Great Britain going to bridge that gap? According to Sir Kingsley Wood, it will be bridged in the same way as the Treasurer proposes to bridge the gap remaining in this budget. Consequently, honorable members opposite are utterly stupid when they speak of what Great Britain is doing, and, at the same time, criticize the Treasurer for acting likewise. If the -methods adopted in Great Britain be correct they must also be correct when adopted in Australia. Obviously, honorable members opposite criticize the budget simply for the sake of criticizing it. Should the proposition they advance be adopted, it would mean that one-quarter of the national income would be absorbed in compulsory loans. [Extension of time granted."] If the Opposition's plan for bridging the gap between revenue and expenditure were adopted, the Government would have to take as a compulsory loan 5s. in every £1 of income earned in Australia; but already certain people are paying income tax of 18s. in the £1, and the utmost that could be taken from them would be their remaining 2s. in the £1, and the other 3s. in the £1 would have to be contributed by the remainder of the earners of income. The proposal is too silly for words. It would mean that finally the contribution would be nearer 10s. in the £1 of the gross earnings, leaving to the income-earner half his earnings out of which to pay his income tax and maintain himself and his family.

The budget has been described by honorable members opposite as being so inflationary in its character that its adoption must lead to financial chaos. If this budget be condemned as inflationary, the Leader of the Opposition himself stands condemned of having introduced inflationary budgets as Treasurer in the Menzies Cabinet and as Prime Minister and Treasurer last year. Honorable members opposite have attempted to draw a parallel between this budget and the calamitous inflation which occurred in Germany after the last war, but there is no parallel to be drawn between the two periods or the two countries. Germany had been defeated in the war, but the Government, deciding to play a last trump, chose to smash the German currency in order to prevent the victorious nations from exploiting the German people. The history of the world since then has been marked by economic progress, and to-day, owing to the exigencies of the time, central bank credit is being used by every warring nation. Whether we like it or not, we must follow the lead given to us and use the national credit for the national benefit, but, certainly, not for the purpose of enabling private gain, which would be the case under a government formed from the ranks of the parties now in opposition. The right honorable member for Kooyong spoke on this budget in terms which vividly reminded me of the speeches made in this chamber on the eve of the 1931 general elections, when the. fiduciary notes proposal, made on behalf of the Scullin Government by the then Treasurer! Mr. Theodore, was rejected because it was regarded as inflationary. Yet, immediately after the accession of the Lyons Government, our gold reserve was shipped overseas, and our currency was left without backing and made completely fiduciary. The people to-day are not so gullible as they were in 1931, but, apparently, honorable members opposite have not awakened to that fact. They remind me of a horse-trainer who unwisely decides that a horse, which has been resting in the paddock for ten years, is frisky enough to win another race.

Amongst the splendid schemes instituted by the Minister for War Organization of Industry (Mr. Dedman) is the rationalization of banking, under -which centres previously served by four or five branches of banks are now served by only one. Thereby the Government has established the machinery which will enable it at the first clear opportunity to apply the Labour party's policy of nationalization of banking. That day ought, to be hastened by the early lifting of the restrictions on the operations of the Commonwealth Bank which have prevented it from functioning in the manner originally intended, namely, as a people's bank, instead of, as at present, a bankers' bank. The nationalization of the Australian banking system is essential to the realization of a full war effort.

Official figures indicate that the average income earned by payers of income tax whose wages are less than £400 per annum is £210. The direct taxation paid by these wage-earners and the increase of the cost of living by 20 per cent, are an indication of the tremendous contributions that they make by way of indirect taxation to the Commonwealth Treasury. Excise from beer and tobacco nowadays exceeds the revenue derived from the income tax in 1938-39. That is conclusive proof that wage-earners in the lower ranges of incomes - and they comprise more than half of the taxpayers - are contributing more than a fair share towards meeting the cost of the war. The Opposition is demanding that further inroads be made on their resources for the sole purpose of smashing living standards.

It matters little to me whether I have beer or not, but the leaders of the armed services have frequently said that the men in the forces must have their beer and cigarettes if they are to be ' contented. The British Government has not found it necessary to limit the brewing of beer, and it is interesting to note that Lord Arnold, speaking in the House of Lords on the 12th May last, said that beer was bringing to the Treasury tremendous revenues, which were sorely needed. The Cairns brewery, which has been called upon to supply, not only the armed services, but also the civil population in a vast area, will cease operations next Thursday because of malt shortage. I should like to know what effect that will have on the troops in the northern regions. The closing down of the brewery will be owing not to the lack of water, hops or man-power, but to the unavailability of malt.

Mr Fadden - Malt is available.

Mr RIORDAN - No, not in Cairns. I specifically inquired about that in Melbourne when I came back from North Queensland. No malt means no beer. I am alarmed at the prospect that men who have been sent to the north, not only to fight, hut also to do defence work on behalf of the Allied Works Council, will not be able to get their daily glass of beer. [Further extension of time granted.] I discovered in Melbourne that, owing to man-power not being available, malt was definitely in short supply, and that consequently beer will be severely rationed towards the end of the year. The Leader of the Opposition (Mr. Fadden), by reason of the fact that he once lived in the tropics, knows what the conditions are there, and what complaints, outbursts and- outcries will come from the localities where all this defence work is being done, if no beer is available for the men. The matter is now before the Minister for Customs (Senator Keane) and is serious, because the heads of all the services agree that the troops must have beer and cigarettes to keep them contented. I hope that the Government will take whatever action is necessary to see that, so far as is possible, those living and working in the tropics shall have their supplies of beer assured to them.

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