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Thursday, 26 September 1912

Senator PEARCE (Western AustraliaMinister of Defence) . - I propose to offer a few remarks upon some of the criticisms to which the Budget has been subjected, and I also intend to embrace the present opportunity to make a statement in regard to naval development, because of the misconception which exists in the minds of some honorable senators, .and because certain misstatements have been circulated by the press which ought to be corrected at the earliest possible moment. In the first place, I wish to say a few words in reply to the criticism of Senator Stewart, and in answer to the construction which has been placed upon that criticism by Senator Vardon. It is not a fact that the Labour party have not given effect to their platform. It is an incontrovertible fact that practically every plank of the platform upon which that party went to the electors in 1903 to which effect can be given without an alteration of the Constitution has already been given effect to. The only plank of that platform which has not become law is the Navigation Bill, and the Government are pledged to pass that before the present session closes. In regard to our attitude upon the land question, there was no uncertainty as to the platform which was put before the electors, either by the Prime Minister in his opening speech, or by other members of the party subsequently throughout the Commonwealth. We declared that we were in favour of a progressive tax on the unimproved value of land, with an exemption of £5,000. That plank has been interpreted by the only persons who are authorized to interpret it in the way that they deemed right, and legislative expression has already been given to their interpretation. So that whatever Senator Stewart, or anybody else, may say to the contrary has nothing whatever to do with the case. Before that policy can be altered the electors will again be consulted. Senator Stewart was equally unfortunate in some of the remarks which he made in regard to the Tariff. The Labour party are pledged to the new Protection. That is to say, they are pledged to Protection, provided they have the power to accompany Tariff duties with protection to the worker and the consumer.

As a party they have deliberately refused to place Protection upon their official platform, unless it be accompanied by the new Protection. To that plank every member of the party is pledged. At the same time no member of the party is prevented from holding the most extreme views in regard to what is known as the old Protection. Senator Stewart is quite free, as is every member of the Labour party, to hold and express extreme views upon that matter. But, nevertheless, he is pledged to do his utmost to give effect to the new Protection. When he chides others with not doing their duty in this regard, one would naturally expect that he, himself, was perfect. He has told us that he is in favour of abolishing all revenue duties. Unfortunately he has a record, and before one starts 10 boast it is always well that one should be sure that his record is without blemish. If anybody chooses to turn to Hansard for the year 1908, pages 8067 and 8082, 8085 and 8086, he will find that Senator Stewart voted for a very high duty upon such an article as rice - clearly and distinctly a revenue duty. There was no rice grown in the Commonwealth at the time, and not a single bushel has been grown since. Upwards of £382,000 worth of uncleaned rice, upon which duty to the extent of ,£65,000 was paid, and ,£116,000 worth of rice n.e.i., upon which ^35,000 was paid in duty, was imported into the Commonwealth during 191 1. That duty was imposed with the aid of Senator Stewart's vote. So that the value of the rice, imported during the year mentioned, was approximately £500,000, and the duty paid upon its importation was £100,000. It is a revenue duty of the worst kind, because it is a duty upon food.

Senator Guthrie - Why not grow rice here ?

Senator PEARCE - Of course, we can grow anything in Australia. But, as a matter of fact, we do not grow rice, notwithstanding that there is a Himalayan duty upon it. Then, again, Senator Stewart had no compunction about voting for the imposition of a duty upon arrowroot. Although he can vote complacently for duties on such articles as tapioca flour, which are not produced in the Commonwealth, he has the temerity to lecture members of his own party because they are maintaining a Tariff which contains revenue duties. The present Government have made no secret of their intention, if they are vested with the necessary power, to introduce a system of new Protection, and to substantially alter the existing Tariff. The electors are not in ignorance of the fact that the Labour party are pledged up to the hilt to make that Tariff effective, conditionally upon their having the power to insure that the benefits of Protection shall be extended to the workers of the community, and that the manufacturers are not allowed a free hand in exploiting the consumers.

Senator Millen - That is to say, you want both. forms of Protection, or neither.

Senator PEARCE - That is to say, our present programme. We appealed to the people for that increased power, but we failed to obtain it. We intend to again appeal to the people, and, in my opinion, on the next occasion they .will answer " Yes." However, that is a matter for future history to reveal. I wish to quote a few figures, because an attempt is being made, and Senator Stewart gave voice to it yesterday, to make it appear that not only is the present Tariff not thoroughly satisfactory - I suppose we are all prepared to concede that, in many respects, it could be made more Protective - but it is thoroughly ineffective, and goods which could be made here are pouring in in an ever-increasing stream over the Tariff barrier. To those who take up that attitude I wish to commend some figures. The first Tariff was passed in 1902, and I shall take the figures for 1903, because it was then in full operation, and compare that year with the last year for which we have figures, and that is 191 1. In 1903 we imported £26,013,008 worth of dutiable goods and £11,798,463 worth of goods on the free list, making a total value of £37,811,471. During last year we imported dutiable goods to the value of £38,276,394, and goods on the free list to the value of £28,691,094, making a total of £66,967,488. Those who have quoted figures have always been careful to merely quote the total imports, and not to analyze the character of the goods; imported. The total increase in the value of the imports in the period I mentioned was £29,156,017, but of this increase only £12,263,368 represented dutiable goods, whilst imports to the value of £16,892,631, or four-sevenths of the total value, were on the free list, and, therefore, not dutiable at all.

Senator PEARCE - Was the honorable senator prepared to put tea on the dutiable list?

Senator Guthrie - Certainly not. But that is not the only thing you have motor cars on the free list.

Senator PEARCE - If the honorable senator will look through, the free list; he will find that we have a surprisingly small one when he comes to think of the large number of articles which are taxable. These figures are extremely striking. They show that four- sevenths of the total increase represent goods that are on the free list. It has to be remembered that a considerable proportion of the dutiable goods are subject to what are practically revenue duties of 5 and 10 per cent.

Senator St Ledger - Would you lower those duties?

Senator PEARCE - Given new Protection, I would be prepared to make a duty either protective or wipe it out.

Senator St Ledger - Your answer now is " an alteration of the Constitution."

Senator PEARCE - I wish to refer to a statement which I am informed has been made by the Leader of the Opposition in the Senate in the country districts of New South Wales. I am told by Mr. Foster, the member for New England, who says he can produce a newspaper to back up his statement, that Senator Millen has stated that the Fusion Government, when they retired from office, left to the Labour Government a surplus of £3,000,000.

Senator Millen - I may say at once that that is not correct.

Senator PEARCE - Mr. Foster told me that he can produce a newspaper in which that statement is attributed to the honorable senator.

Senator Millen - What I did say was that the Government is avoiding a deficit this year by drawing upon the surpluses of previous years.

Senator PEARCE - The statement which Mr. Foster assures me the honorable senator is reported to have made was, " It appears that the surplus of previous years was a surplus left by the previous Government."

Senator Millen - Some portion of it was.

Senator PEARCE - Was it left by the previous Government?

Senator Millen - By previous Administrations.

Senator PEARCE - How much?

Senator Millen - I shall repeat in the chamber directly what I said on the occasion referred to.

Senator PEARCE - The last general election took place on the 13th April, 1910 ; the financial year ended on the 30th June, 19 10, and the Labour Government assumed office in May, 19 10. Whatever the financial position of the Commonwealth was at the end of June, 1910, obviously the Labour Government could not be held responsible for it. According to Knibbs - 1 take the figures from pages 794, 802 and 809 - the revenue for that year was £15,540,669, and the expenditure, £15,991,952, showing a deficit of £451,283. If honorable senators will cast their minds back, they will remember that one of the first Bills which the Labour Government had to introduce was one to validate an action which the Labour Treasurer had to take when he came into office. He found that the commitments of the Fusion Government, and the expenditure which had to be faced before the 30th June, were such that he had to have resort to the Trust Fund in order to make up the deficit, and one of the earliest Bills introduced in the ensuing session was one to validate his action in using trust money for that purpose.

Senator Millen - These trust funds were the surpluses of previous years, I think.

Senator PEARCE - That is so, but they had not been added to by the Fusion Government, and therefore were the product of other Governments. Not only had we to do that in order to meet a temporary difficulty, but the obligation was cast upon us by that Bill to meet the current liabilities for the year, and, in addition, to restore £451,000 odd to the Trust Fund. That we were able to do, and to finish up with a handsome surplus. So much for the statements that are being made to endeavour to lead the public to believe that the greatest and weakest link in the Labour chain is that of finance. The facts are that the Fusion finance left this country with a deficit of nearly £500,000, and that Labour finance converted the deficit, in the short space of a year, into a handsome surplus.

Senator St Ledger - Will you talk about the future?

Senator PEARCE - Yes, I am going to talk about the future.

Senator St Ledger - Will you talk about the immediate future?

The PRESIDENT - Order I The Minister of Defence has a right to continue hisspeech without continual interjections from, the honorable senator.

Senator St Ledger - I know that, Mr. President, without yOU informing me.

The PRESIDENT - I wish to point out to Senator St. Ledger that when an. honorable senator has the floor, it is of nouse for him to continuously make interjections which are taken no notice of.

Senator St Ledger - Just so.

The PRESIDENT - Order ! When f stand here and address an honorable senator, I do so in the interests of order in this chamber. If Senator St. Ledger continues to interject after I .have warned him two 01 three times to desist, I shall have totake other proceedings.

Senator St Ledger - Is that a threat,. Mr. President?

Senator PEARCE - Yesterday we hada statement from Senator Gould, who was dealing with the present situation, and his remarks were typical of the general remarks, of members of the Opposition on the financial position. They quote the huge expenditure. They say, " Here is so much for Naval defence, so much for old-age pensions, and so much for something else," and having trotted out these millions they ask, " Where is it going to lead to? What is the country coming to? How are you. going to meet the outstanding liability?" Senator Gould told us that we -ought now to be laying by a nest egg for future daysHe has a pretty long record to his credit in State and Federal Parliaments. It never was typical of the regime of the party of which he is so distinguished a member,, when they flourished in the State Legislatures, to make any provision for a rainy day, and the magnificent legacies which they have left to the people of Australia are the enormous State debts, now amounting to about .£300,000,000. That is theway in which they provided for the future. As to our provision, we have challenged the members of the Opposition to lay their fingers upon, a single item, and say that it is a needless expenditure. Senator Gould says that it is the duty of the Treasurer torun his pencil through items, and to use the amount which he thus saves to meet liabilities which may occur in the sweet byandby. Let us consider the statement. Here is a country which to-day we all admit has an enormous revenue, and that revenue is being paid apparently without any hardship to the taxpayers. We can all, perhaps, disagree with some of the sources from which the revenue comes, but there it is. When money is pouring into the Treasury, and we look around this country and see the demand for expenditure in this and that direction, and find upon inquiry that it is absolutely justifiable, would ir be sound finance to borrow money to carry out the works, and to put the surplus revenue into a Trust Account, or something of that kind, for possible contingencies in the future? or, on the other hand, strike the works out altogether, and leave them as a legacy to the future. The need for them will increase as time goes on, and the demand for them will not die out. If you strike a particular work out of the Estimates this year, and refuse to provide money for it, you have not done away with the necessity for it. The probability is that the demand will face you in the future, when you have not the revenue available ; and then you will be forced to borrow. The Government have taken the wiser course. They have decided that, having the money available for necessary works, they will spend it now. If it is found in the future that the revenue is not sufficient to enable us to continue this policy, it will be for the Government to determine whether they will refuse to go on with works, or whether they will proceed with them and either impose additional taxation or borrow the necessary money. Those alternatives are always open to us. I think, therefore, that we are working on sound lines in proceeding as we are going. Now I wish as succinctly as possible to lay before the Senate the position in regard to naval expenditure. I admit that there has been some confusion, possibly because of the way in which the report of Admiral Henderson was submitted, and afterwards affected by the proposals of the Government; as well as in consequence of the figures supplied by the Budget-papers. Perhaps some misunderstanding was inevitable, because Admiral Henderson was dealing with proposals for which he could give only forecasts of expenditure, whilst we are dealing with proposals which are tangible, and for which we can furnish actual estimates. In order to make the position clear, I wish to give a brief summary of Admiral Henderson's proposals. When the Labour Government assumed office in 19 10, they found that negotiations were in progress with the Admiralty for the construction of vessels of a Fleet Unit. The Government decided to take the advice of an officer recommended by the Admiralty.

Senator ALBERT GOULD (NEW SOUTH WALES) -Colonel Cameron. - The Unit had been decided upon previously to the Government coming into office. Is that so?

Senator PEARCE - That is so; and, as I have said, when we came into office negotiations were proceeding with the Admiralty as to the construction of the vessels.

Senator ALBERT GOULD (NEW SOUTH WALES) -Colonel Cameron. - That was prior to Admiral Henderson's report?

Senator PEARCE - Yes.

Senator ALBERT GOULD (NEW SOUTH WALES) -Colonel Cameron. - Will the honorable senator enumerate the Unit?

Senator PEARCE - It is to consist of one battleship cruiser, three second class cruisers, six destroyers, and three submarines. We decided to obtain the advice of an experienced naval officer recommended by the Admiralty, so that we might have a well-defined plan upon which we could set to work. The Naval Conference of 1909 merely laid down plans for the creation of a Fleet Unit, and for the co-operation of the Dominions in respect thereto, but did not take into consideration the local provision for manning, and matters of that kind. The Labour Government also decided that of the Fleet Unit one of the second class cruisers and the three destroyers should be built in Australia. Admiral Henderson, on the advice of the Admiralty, was selected to prepare a report. His report is dated 1st March, 191 1. In regard to the construction of the vessels of the Fleet Unit, on 8th December, 1909, a cable was sent to the Admiralty asking them to arrange for the construction of the vessels. Contracts were accepted on 18th June, 1910, for the Australia, on 20th February, 1911, for the Sydney, on 25th February, 191 1, for the Melbourne. The contracts were signed by the Admiralty on behalf of the Commonwealth. The contract for the supply of material for the Brisbane was signed about the same time, and contracts for the building of the Brisbane and the three destroyers in June of this year. The time fixed for the commencement of work upon them was August. I wish to say a word or two about Admiral Henderson's report, to explain the figures which I shall give, and to show that the charge that we have not kept up to date in regard to carrying out the Admiral's recommendations is unjustified. The statement that we have not done the things which he suggested we should do is also insubstantial. In paragraph 19 of his report, Admiral Henderson says -

In order to obtain the necessary efficiency with the minimum cost, continuity of policy is essential, and the development of the Commonwealth Naval Forces must proceed on definite lines with a definite goal in view, so that each step taken will advance the completion of the whole, and the development must be regulated by her resources both in population and in wealth.

The reason why I quote that statement is this : We have been taunted several times that we have not said whether we accept the whole of Admiral Henderson's proposals or not. In that paragraph Admiral Henderson himself recognises that his proposals as a whole must be tentative, and the carrying out of them must be governed by the two factors of population and wealth. I quote from page 9 of his report his recommendations, in which he summarizes his proposals, and places them in order. He says -

I have divided my recommendations into three parts, comprising -

Part 1, the completed fleet (the goal to bc attained).

Part 2, the initial stage - requirements of the fleet unit and first seven years (the foundation).

Part 3, successive stages of development (culminating in the completed fleet).

There we have the necessary stages. This is what Admiral Henderson says as to the four eras within which the requirements of the completed Fleet should be divided -

It is recommended that the requirements of the Commonwealth completed fleet should be divided into four eras, consisting respectively of -

First era, seven years.

Second era, five years.

Third era, five years.

Fourth era, five years.

Making a total of twenty-two years. In paragraph 7, he says -

The total period of 22 years is taken as the maximum required; the higher ranks of officers cannot be obtained in a shorter period, and a period of 22 years is also convenient because it is the length of service, from the age of 18, which continuous service men in the mother navy are required to complete to be eligible for pension, and is the period which is recommended for adoption for " long service " in the Commonwealth Fleet.

It will be seen, therefore, that Admiral Henderson, in making his recommendation as to a twenty-two years' period, was governed entirely by that consideration. He himself would be the last to prophesy that in twenty-two years a battleship, as we know it to-day, would be the chief item in our Fleet. It may even be obsolete.

But, as he pointed out, he had to formulate a plan extending over a number of years, and he had to show in each era the provision that would have to be made for the next both in manning and provision. In paragraph 9 of his report, he says -

It is specially recommended that the first era should cover seven years, as this longer era will give the Commonwealth time and opportunity for devoting her energies to providing and equipping the necessary harbor establishments, naval bases, &c., as well to putting the recruiting system on a sound basis.

It is well to know the importance that Admiral Henderson attaches to those things as compared with the building of the Fleet. On page 15 of his report, paragraph11, he says -

Of the 2,501 required for the fleet unit the following ranks and ratings cannot be provided by Australia in the two years available, and must therefore be obtained from the mother country, under the agreement made at the Imperial Conference of 1909 : -

Commissioned officers, 98.

Subordinate officers, 12.

Warrant officers, 34.

Chief petty and other petty officers, 406.

Leading ratings, 305.

Other ratings, 768.

Total, 1,623.

The balance, 878, should be provided by the Commonwealth by the time the vessels of the fleet unit arrive in Australia.

Those vessels will arrive here in May or June of next year. That is the present position. The Melbourne arrives in January. The following is a statement of numbers required to be recruited in Australia for the Fleet Unit, together with a statement of the numbers available. The number required is 863. The number available is as follows - 82 A.N.F. ratings serving in H.M. ships and establishments in home waters in 191 1. 15 A.N.F. ratings sent to England in Powerful. 247 A.N.F. ratings sent to England in Challenger. 14 R.A.N. ratings sent to England in R.M.S. Ophir. 156 Ratings,recruits, now serving in Encounter. 172 Recruits now serving at H.M.A. Naval Depôt, Williamstown. 140 Boys now training in Tingira. 39 A.N.F. ratings borne in Cambria. 865 Total.

That is to say, the total available at the time the Fleet Unit arrives in Australia will be 865. Practically the total that Admiral Henderson said we should provide in two years, we have provided in less than eighteen months.

Senator O'Keefe - It shows that there is some naval spirit in Australia.

Senator Guthrie - But they are not Australians.

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