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Thursday, 24 September 1942
Page: 869

Sir EARLE PAGE (Cowper) .- At the beginning of the fourth year of war the budget debate and the appeals of the Prime Minister (Mr. Curtin) for an austerity loan indicate that we are not yet geared in Australia for total war. In these three years the various governments in Australia have done many wise things calculated to help a maximum war effort. It is evident, however, that these are not yet integrated into a comprehensive, balanced plan. All aspects of our economic problem are indissolubly interconnected. Action which may be invaluable if it is taken as an integral part of a general plan may prove to be an impediment if it is not in balance. For instance, price fixing is valuable in keeping down prices, but by itself the very keeping down of prices may cause shortages of stocks in shops and queues everywhere.

Logistics is defined as an art of waging war so that the right material is in the right place at the right time - in a word, that everything should be in balance. This applies even more to the control of the whole national effort. It must be balanced and all leaks and avoidable waste prevented. The object of the budget, which is the Government's declaration of national policy, is to get a maximum war effort. That policy, with the machinery of the budget, affects not merely the £540,000,000 budgeted for, but also the whole use of the national income. It determines whether we shall make the wisest and best use not merely of all the money of the Commonwealth, but of all men and all war materials and of every individual's income and effort.

To get a maximum effort, obviously the first thing is to find out what is the maximum pool of all essential commodities that we can obtain in order to divide that pool up between war and civil needs. When we speak of war we must think of war on all fronts. When we think of civil needs we must think of the civil needs of all the allied peoples. We must keep the nation as a whole cheerful in spirit, and maintain its morale by supplying ample foods and essential needs. There are four factors to this end of securing a maximum pool. The first is to raise our output of everything we should be producing to the highest figure that our organization and resources permit; the second, to get from outside of Australia all we can afford of the essentials we need for a full war and a full civil effort, having regard to the shipping at our disposal ; thirdly, we must export all we can spare, especially materials of war, such as food, raw materials and manufactured munitions, to our allied comrades; and, fourthly, we must eliminate avoidable waste and duplication in governmental and private activity in order to make the maximum available for actual war purposes. From this pool the amount available for civilian consumption is the total of our production, plus our imports, less our war requirements, whether these be used locally or abroad. Priorities in shipping determine that all our exports must be allied war requirements in their widest sense. We must handle this residue for civilian consumption in such a way as to satisfy and nourish our people to the greatest possible extent, keep their goodwill in their war effort, their spirit for the fight, and their morale for the long, hard road to victory. We must realize that the quantity of goods available for civilian consumption in these hard days of war is less than in the easy days of peace, but every one in war-time is giving up something - our unfortunate prisoners of war in foreign countries their liberty, our soldiers, sailors and airmen their freedom to move as they please, and even their lives.

But while the quantity of goods and services available for civilian use and purchase is less than in peace-time the amount of money in the community and the purchasing power of the individual are greater. To link up this shortage of goods with the excess of money we must have a deliberate plan in which considerations of social justice and the rights of every section in the community have been weighed and considered. England has been forced to face this problem much earlier than we in Australia. England has found that to prevent the rise of prices from outstripping the level of wages, a minimum ration of consumption goods must be made available at a low fixed price, even though this may involve subsidizing the producers of these goods. With this must go the obvious supplementary condition that the workers should agree not to press for any further increase of wages on the grounds of cost of living increases. At the same time, there must be simultaneous withdrawal of consumers' purchasing power. It is obvious that price-fixing without restriction of purchasing power must bring about shortages in shops, and queues in which " first come, first served " is the rule, and those less able to bear hardship are the most hardly used. Thus, it is impossible to divorce the national budget from the budget of the individual, the national expenditure from the individual position. In fact, the British white papers accompanying the budget show clearly how the national income is divided between the national expenditure on goods and services and the adjusted personal expenditure of individuals.

I propose to examine three major items of national economy to show the necessity for such a plan in our present position, and how much loss in national outlay and national efficiency, and how much individual hardship, may be caused by its absence. These three items are food, transport, and the control of purchasing power. No one can be satisfied with the food position in Australia. In peace-time we made extraordinary efforts to find markets for our surplus beef, bacon, butter, mutton and lamb, apples, pears, oranges and potatoes, yet in war-time we find ourselves short of all of these commodities. In the first year of the war, we fed the people of Australia, and, at the same time, exported to Great Britain and our soldiers overseas 275,000 tons of surplus meat. In the third year of the war, our exports had declined to 100,000 tons, and in the fourth year of the war, less than 90,000 tons of export is contemplated. This decline is said to be largely due to American soldiers being in Australia, but this is absurd. I know that we could give every Australian soldier in camp f lb. of meat above his normal daily consumption, and yet the American soldier would need to eat 10 lb. of meat a day to account for the quantity that we seem to be short. Production has evidently declined, due to bad seasons and the way the industry has been handled, but this can be overcome. It is obvious that we must deal with the meat problem as a whole if we mean to keep up supplies to our British kinfolk and our forces, as well as to feed our own people. The way to do this is for the Government to acquire all meat at reasonable prices, which will enable the producers to keep going, and then to ration the Australian civilian population, feed our services, and export tie balance to Great Britain or the theatres of war that we must supply. It may be necessary in order to give the Australian public meat at reasonable prices and to maintain production by subsidizing the producers, or, what is the same in the end, to substantially reduce the costs of production. If producers were subsidized, it would be reasonable to lay down the lines on which they should carry on the industry, as I did in my wheat plan.

Mr Beasley - Are we eating too much, or has production decreased?

Sir EARLE PAGE - Production has decreased, and we are also eating too much. In addition to this, there has been a great deal of waste. The time has come for us to handle not only the meat problem, but also other food problems, as I have suggested. The whole subject of our living standards must be examined.

We can effect economies without necessarily reducing our standard of living. In spite of the war, the people of Great Britain have been provided with adequate supplies of food. The quantity of some has decreased, but the nutritional value over all has been maintained. The British authorities have paid a great deal of attention to food values and, as the result, they have encouraged the consumption of milk. They have taken steps to provide increasing quantities of milk for expectant mothers and children so that the rising generation shall not be affected by under-nourishment. Last year, Great Britain was able to increase the total quantity of milk supplied to mothers and children to 200,000,000 gallons more than was available in the last year of peace.

Mr Dedman - Does the right honorable gentleman suggest that we should consider the rationing of primary products ?

Sir EARLE PAGE - We should ration all food products with the exception of wheat. We should decide upon a definite iron ration for the people as we have done in respect of clothing. This might involve drastic changes in relation to our primary industries, and we might have to subsidize them in order to keep the farmers on the land and to provide agricultural workers with reasonable rates of pay. It is of first importance that we should have enough foodstuffs to supply our own needs and also to augment the supplies of Great Britain. Such a policy would have a twofold value, because, when the war ended, the allied nations would have accumulated stocks of foodstuffs amounting to hundreds of thousands of tons which could be used to feed the starving people of other nations. We must do something of this nature to ensure that immediately after the war we do not sow the seeds of another war. Immediate steps should be taken to rationalize all our requirements. We should determine which are essential, and which are nonessential items, and then ensure that the essential items in particular are rationed and made available at a reasonable price.If certain essential goods are available in abundance, the ration could be generous. Our people must have been eating more meat than formerly, otherwise the consumption figures could scarcely have been realized.

Mr Scully - We have been short of vegetables.

Sir EARLE PAGE - Quite so. If vegetables were rationed every body would get a fair share. It might become necessary to subsidize the production of vegetables. At any rate the Government should make sure that adequate equipment is available for vegetable production, and that proper arrangements are made for distributing the produce. Since the outbreak of war, Great Britain has become the most mechanized farming country in the world, and this has enabled larger quantities of food to be produced. At present Great Britain has 50,000 tractors operating on 500,000 farms. Comparative figures for Germany are: 70,000 tractors and 4,000,000 farms.

We must face these problems. A reduction of the cost of production by reducing costs would be equivalent to the payment of a bounty. The three main charges that primary producers have to meet are in relation to interest, transport and costs of distribution. I shall not deal, at the moment, with interest or the costs of distribution. I understand that during my absence abroad the Government took certain steps to reduce interest charges. I wish, however, to make some observations about the transport of goods, for I believe that a great deal more may be done in this direction to reduce costs. If the Government would exercise more fully the power that it already has, it could effect a substantial reduction of rail transport costs in Australia, which would help both producers and consumers. I understand that the transport regulations issued last March have been applied only to military requirements. I suggest that they be applied also to civilian needs. Definite action has been taken in this regard in Great Britain. As a result of the coordination of the transport system there, far better results have been achieved than would have been possible otherwise. At an early stage of the war the British Ministry of War Transport took steps to co-ordinate the operations of the four main private railway companies in England.We should do the same thing with our State railways. It was discovered in Great Britain that tremendous waste was occurring through uneconomic and competitive haulage. The Government appointed a central committee with an independent chairman to control activities. This committee set to work to zone production and co-ordinate transport. It cut out cross-haulage, and applied the priority system to freights. To the greatest possible degree secondary production was carried on where the raw materials were available. This plan cannot be applied always, and is perhaps a counsel of perfection, but a great deal can be done by co-ordinated effort. Although we have a much more serious transport problem to solve than had Great Britain we have not faced it with the same success. Our war-book plans provide for the complete control of rail transport for both military and civilian purposes, but all that has been done so far to implement those plans has been to produce a national railway rates-book for military freight requirements. Civilian rates remain as they were. State railway freight rates were designed to keep trade inside State boundaries, and this has caused some extraordinary anomalies. For example, the potato industry of New South Wales is carried on mainly in the Llangothlin district, which is 322 miles from Brisbane. It costs £20 to send a truck of potatoes direct to Brisbane from that locality, but if sent via West Maitland, a distance of 776 miles, the cost is only £16. It costs £2 10s. a ton to send groceries from Mount Gambier to Adelaide, a distance of 303 miles, but it costs £8 9s. 4d. a ton to send them from Mount Gambier to Melbourne, a distance of 292 miles.

Mr Beasley - Is the right honorable gentleman suggesting that the Commonwealth should operate the railways under federal powers?

Sir EARLE PAGE - During the war the Commonwealth should take complete charge of the railways. I noticed a report in the press to-day to the effect that the State governments intend to submit a claim for compensation to the Commonwealth in respect of loss said 'to have been incurred by them through the institution of the priorities travelling scheme. The fact is, of course, that during the war many millions of tons of goods have been carried over the State railways for military purposes with great financial advantage, to the State railway systems. Whatever may happen in peace-time, I consider that during the war the Commonwealth Government should go the whole hog and operate the State railways for both civilian and military purposes.

Mr Coles - Is the right honorable gentleman suggesting that Commonwealth freight rates should operate?

Sir EARLE PAGE - Yes. The railways of Great Britain are operated today by a central executive committee, with an independent chairman who is the fina] authority on charges and the like. Grafton is about 200 miles from Brisbane and the freight rate on certain classes of manufactured goods is £14 a ton. The freight for the 100 miles in Queensland is £2 10s. and for the 100 miles in New South Wales £11 10s. That does not seem to be right, considering that the cost of the line was largely defrayed with Commonwealth money. Consider the rates for wool. In competitive areas between the various States the freight is approximately £4 16s.' a ton for a distance of 512 miles, and in noncompetitive areas it is £4 lis. lid. a ton for a distance of 290 miles'. Herein there is wastage of man-power, engine-power and coal. We shall not be able to win the war if we allow leaks of this size to continue. In respect of the railways, the Commonwealth should exercise to the fullest degree the powers that it possesses. There should be absolute federal control over them, and they should be operated as a national asset and undertaking.

The Government should also ensure that the people shall be allowed a substantial ration of all the foodstuffs that they need, and should make certain that the prices charged shall be reasonable. If necessary, the primary producer should be subsidized.

If action along the lines 1 have suggested were taken, two difficult problem, would be straightened out.

Mr Beasley - Freight rates are deter mined according to costs. One of the major items of cost is capital expenditure, and another is the high interest rates paid on loans already floated.

Sir EARLE PAGE - Those factors are not responsible for the discrepancies J have mentioned. My objection is to deferential rates. During a time of war, there should not be practically as much antagonism in regard to rail carriage between the different States as there is between foreign nations. As a matter of fact, their tendency is to destroy interstate freedom of trade, which the federal system was intended to establish and maintain.

The CHAIRMAN (Mr. Prowse).The right honorable gentleman's time has expired.

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