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Thursday, 14 June 1928

Mr SCULLIN (Yarra) .- I should like the Treasurer to inform the House how and where it is proposed to raise this money. The bill provides for a three months' loan expenditure of £1,920,000. The purposes for which the money is to be raised are outlined. The list contains many questionable items of loan expenditure, and I shall refer to them in committee. This bill opens up a subject that we have discussed from time to time. The Treasurer contends that we cannot borrow in Australia the money we need for public works. He has. declared that he does not think that an adverse trade balance is such a bad thing after all. That statement was contained in a report published in the press the other day of a speech he made in connexion with the Martin by-election. He said that he totally disagreed with the Leader of the Opposition that an adverse trade balance was a bad thing for the country. He forgets that money borrowed from overseas is received in the form of imported goods, and that that is one of the contributing factors to our adverse trade balance. No country in the world can remain solvent with a continuous adverse trade balance, unless it is a creditor nation. A nation with money invested abroad draws large sums annually in interest, and, therefore, can afford to import more than it exports. As a matter of fact, to keep things normal it must do that.

Mr Stewart - Our position is the reverse.

Mr SCULLIN - That is so. To keep the Commonwealth ship of State on an even keel we must export more than we import over a term of years. The Treasurer's statement that an adverse trade balance is not a bad thing for Australia is a clear indication to us that he has not a clear conception of national finance. We should seize every opportunity to impress upon the Government the need to curtail our borrowing abroad, because it necessarily leads to the importation of goods, to the ultimate detriment of Australian industries. I am not prepared to accept the statement that we cannot borrow money in Australia to carry on reproductive works. Our tremendous importations are rapidly de- 1stroying our ability to borrow money in Australia. We are lessening the capital as well as the revenue of the country when we send abroad for our requirements, both in goods and in money. We have nearly doubled our imports during the last six or seven years. Last year we imported £164,000,000 worth of goods and I venture to say that £100,000,000 of those goods could have been manufactured in Australia had our industries been properly developed. We must grapple with our financial problems, particularly that of public borrowing. We should limit it to reproductive works and not use it for some of the items that appear in the bill. It is proposed to expend £75,000 on the passages of immigrants, and that cannot by an stretch of the imagination be regarded as capital expenditure, to be met out of borrowed money.- We are borrowing money abroad and receiving imported goods in return, and we also import people from abroad, thus forcing out of employment our own men, who should be manufacturing Australian goods. We cannot have it both ways. That is one of the points which the Treasurer does not seem to be able to grasp. His tendency is to. borrow recklessly a broad, irrespective of the consequences to this country. This subject will be discussed more fully when the whole financial position of Australia is under the consideration of this Parliament. I warn the Treasurer that we cannot go on piling up debts abroad. The present position is alarming.

Mr RODGERS (WANNON, VICTORIA) - -We should have a close season for borrowing.

Mr SCULLIN - We all agree that we must develop the vast resources of this country in order to progress; but I suggest that we are trying to do something beyond our means. After all, there is no difference between the management of a nation and the management of a business. It is only a question of degree.

Mr RODGERS (WANNON, VICTORIA) - One is the aggregation of the other.

Mr SCULLIN - Absolutely. A business man knows that he can expand his business only in proportion to his ability to create or to put new capital into it. If he endeavours to develop his business faster than his capital is expanding, no matter how prosperous it is, he must fail. A Government can also over-reach itself. We are importing goods and migrants faster than we can absorb them. The utilization of new capital and new people should expand as we develop. We must not overdo this thing. We should borrow within Australia, and limit the expenditure on reproductive works to our capacity to borrow. That would overcome the difficulty in which we now find ourselves. We have borrowed money extravagantly, and now we have a financial slump. Reproductive works are being . suspended, although large sums of money have already been expended upon them. In the Capital City, foundations were laid for the administrative buildings, but all of a sudden the work ceased because of financial stringency. -That expenditure is dead money. I believe that there has been a curtailment on the work on the

River Murray locks. We have already expended millions of money on that project and, up to date, we have received no return, and are not likely to do so until the scheme is completed. That is a criticism levelled at the general policy of the undertaking. No work should be undertaken unless we can complete it within a period consistent with economy. That is preferable to putting a large number of projects in hand, locking up millions of pounds, and then curtailing expenditure before any of them are nearing completion. We should concentrate our attention on a few reproductive works at a time, so that we may receive some return as quickly as possible. When they are completed, we should turn our attention to others. We are to-day, in a. serious financial position, and doing little to improve it. We have an adverse trade balance accumulating year after year, and our public debt is also increasing. It is true that during the last four years the public debt within Australia has been reduced by £20,000,000, but during that period we borrowed' £28,000,000 abroad. The position should be reversed. I can quite understand this Government borrowing abroad in time of national emergency.

Mr RODGERS (WANNON, VICTORIA) - Canada is reducing its national debt.

Mr SCULLIN - We should follow her example. It is not my purpose at this stage to open up a general discussion on this subject, because that must take place later in the year. I have seized this opportunity to draw the attention of the Government to the seriousness of our financial position.

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