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Wednesday, 1 October 1941
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Mr CURTIN (FREMANTLE, WESTERN AUSTRALIA) - I know that the granting of an additional ls. a week to invalid and old-age pensioners would impose upon the budget an extra burden of £1,000,000 a year. I say that quite frankly so that the country may fairly understand what is involved, and know that I am not entering an unrealisticworld.

Mr Fadden - By what amount would the Leader of the Opposition increase invalid and old-age pensions?

Mr CURTIN (FREMANTLE, WESTERN AUSTRALIA) - I would increase them immediately to at least 22s. 6d. a week.

Mr Badman - The original policy of the Labour party was to increase those pensions to 25s. a week.

Mr CURTIN - The Labour party, upon assuming office, would immediately increase invalid and old-age pensions to at least 22s. 6d. a week, and if I had charge of the Treasury I would ascertain how far, having regard to all the requirements of the country, I could go beyond that figure.' I have said that I would find £6,000,000 for soldiers and their dependants. The granting of an additional ls. a week to invalid and old-age pensioners would increase the amount to £7,000,000.

Mr McEwen - The Leader of the Opposition has criticized the Government for having increased the soldiers' pay shilling by shilling. Tell us the whole story about invalid and old-age pensions !

Mr CURTIN - The Minister's colleagues, with the assistance of all the experts of the Treasury, have been engaged for ten or twelve weeks in examining all the minutiae of the economic and financial resources of the country. Now I. am asked to answer offhand, where I would get this, and how I would do that. I say to the> Minister definitely that- at least I would provide £6,000,000 for the families of soldiers, and at least I would raise invalid and old-age pensions to 22s. 6d. a week. I would he ready to incur, in the present year, for those purposes, an expenditure' of at least £7,000,000 more than the amount that the Government proposes. That is clear. I do not wish to hide anything. It would not be fair to the country for us to seek to dodge real issues. But those are two items which I would increase, as a part of the proper way in which to organize the social life of the country. And I would do these things on a basis of greater equity than is at present the case. However, the Government does not propose - to "increase invalid and old-age pensions and has adopted towards soldiers' pay a different course from that advocated by the Opposition. When I ask for improvements of the general set-up of the community, the Government says in effect that there cannot be any.

The Government also declares that we must take from the community a very large sum of money. New imposts in th budget are to increase receipts from income tax by £5,500,000, whilst loans are to bring in an additional £25,000,000. Individuals will be so taxed that the Treasury will derive from them an additional £3,000,000 ; companies will provide an extra £2,500,000. Furthermore, persons and companies are to lend compulsorily to the Government £20,000,000, and £5,000,000 respectively. Those represent the new sources of revenue from the community which the Government contemplates. The underlying idea is that by compulsory loans the community will be forced to reduce expenditure upon ' civil consumption so that greater production will be made possible for war purposes. Even the lowest ranges of income are called upon to make what is called a " national contribution ". I put it to the committee that Parliament, at this juncture, is not obliged to adjust differences which exist in State taxes unless that adjustment can be effected without impairing the physical standard of the community as a whole. The right remedy for having' seven taxing authorities is to substitute one taxing authority.

Mr Fadden - Give us the practical remedy.

Mr CURTIN - The Government, of which the honorable gentleman is the leader, is in charge of the country at this juncture. It could take the requisite steps, if it had the courage to do so.

Mr Fadden - What steps?

Mr CURTIN - The steps to bring about one taxing authority in Australia.

Mr Spender - It is a very simple proposition.

Mr CURTIN - The Government declares that its proposal is based upon its desire to adjust what would be an unfair impost upon a citizen in one State compared with that borne by a citizen in another State, because of the fact that States have varying rates of taxes. How does the Government make this adjustment? It admits that the adjustment will not be permanent, but will remain in force only during the war. At the conclusion of hostilities, the Commonwealth will owe money to the citizen who lives in a lightly taxed State. He is placed in the same category as a soldier, who will receive deferred pay. Under the Government's plan, irrespective of the State in which they reside, citizens will make a national contribution. But when the war ends, citizens in lightly-taxed States will have debts due to them by the Government, whilst citizens who are in receipt of similar incomes but who live in heavily-taxed States will not be similarly placed.

Mr McEwen - Tu Queensland, for instance !

Mr CURTIN - In Queensland, and in some other States. As the Commonwealth does not tax an income of £100 a year, I shall take as the bedrock figure for purposes of illustration, an income of £150 a year earned by a person with no dependants. In that case, the national contribution would be £31 ls. from which has to be deducted Federal tax and State tax. In the highest taxing State, the latter sum would be £7, so that the national contribution would be £41s.

Mr Spender - What a terrible thing!

Mr CURTIN - This is an example of what the Government describes as " equality of sacrifice ". A man who earns £150 a year and who has no dependants is to be called upon to pay, in this manner, nearly £1 a month.

Mr Fadden - That is on a taxable income of £150.

Mr CURTIN - The proposition is simple. The national contribution is £111s. of which the highest taxing State receives £7 ; the taxpayer's post-war credit will be £41s.

Mr Anthony - The State Government will get £7 of the £111s.

Mr CURTIN - That is so. I have taken a case which, from an arithmetical point of view, is the worst example - that of a man without dependants in receipt of an income of £.150.

Mr Fadden - Taxable income?

Mr CURTIN - No ; actual income.

Mr Fadden - Actual taxable income.

Mr CURTIN - I put it to the committee that the State taxes which have been imposed upon those in the lower ranges of income during the past ten years have, in themselves, been a great deprivation to those taxpayers. They have been excessively severe; but they were imposed for the purpose of getting this country out of a previous crisis. The poor had to carry the burden of that struggle. Why must £41s. be taken by the Commonwealth in addition to State taxation from a person receiving only £150 a year ?

Mr Fadden - Because we want to finance and win the war.

Mr CURTIN - No ; the Government gave a number of reasons. One was that it wished the people to spend less money. When we come to incomes in the range of £800 to £2,000 a year, however high the tax. however great the national con tribution, there is no obligation on persons in those categories to suffer anything that can be described as in the nature of deprivation. So far as equity of sacrifice is concerned, there is a vast difference between the burden placed on the man with an income of £150 and the man on a much higher income because, after meeting the whole of what is called the national contribution, the latter has suffered no deprivation in respect of food, housing and the ordinary amenities of life. The only restriction he has suffered is in respect of his investible margin.

Mr Fadden - What does that mean; does it not mean unemployment?

Mr CURTIN - I am now dealing only with what is called equality of sacrifice for the purposes of war. I have described war as a physical thing, and I also describe sacrifice as a physical thing. . That kind of budget which obliges one family to go without boots and does not oblige another family to go without boots does not impose equality of sacrifice, and. demonstrably, to impose a national contribution on those in receipt of incomes below £300 a year is to cause absolute deprivation of some of the essentials of life. But it does not mean the same thing to those in the higher ranges of income. What happens to the man with an income of £300 per annum who desires to send his son to a university or to pay for some other form of training? Possibly the son has enlisted in the armed forces and the father hopes to set aside something for the boy on his return. He cannot continue paying the insurance premium on his own life in order to provide capital for the son when he returns; but the man who has an income of £2,000 or £3,000 a year could do so.

Mr Paterson - The son would have his deferred pay.

Mr CURTIN - I am not denying that the deferred pay would be useful, but I am insisting that £6,000,000 could be more usefully expended now in order to maintain the standard of life of the dependants of the men in the fighting forces. We are fighting this war with physical things - with guns, with materials and men; we are not fighting it with money. It is all very well to say that the contribution of £33 from an income of £250 can be paid. Of course it can be paid; but the man who pays it cannot retain the same outlook on life as that of a man who, with an income of £3,000 a year, has to pay £1,543. The latter would still have nearly £1,500 left. We are told that there is to be equality of sacrifice, but will there be equality of purchasing power in these two men ? If both have to look for a house and one has £1,500 after he has paid everything and the other has only about £220 after he has paid everything, who will get the house ?

Mr Anthony - What about the man on £1,000 a year?

Mr CURTIN - The national contribution of a taxpayer in. receipt of £1,000 a year is £282. That still leaves him with over £700. No physical hardship is imposed on the man with an income of £700 or even £500 clear of national contribution. We may deprive such a man of an opportunity to invest for his old age; we may deprive his wife of the opportunity to give all sorts of entertainments in her home; we may rob this country of a great deal of fashionable glamour; but we are not imposing any physical hardship on a man or woman when he or she is left with a net purchasing power of over £500. The children- of such people will not be stinted of bread or the other requirements of existence. But when we step down into those categories of income receivers below £300, having regard to their obligations and the fact that so many of them are soldiers, we arc not really diverting civil consumption to military purposes, but are greatly endangering the physical capacity of the country to withstand the demands of the war, for the majority of the workers in the factories and the majority of the men in the fighting forces are in receipt of less than £400 per annum. I remind the committee that the Dominion of New' Zealand had a system of compulsory loans, but that in the last budget presented to the New Zealand Parliament there is no continuation of that policy. I find that the

Leader of the Opposition, who holds views- opposed to those of the Labour party, congratulated the Government on having abandoned it.

Mr Anthony - New Zealand has not abandoned taxation.

Mr CURTIN - I quite understand the necessity for taxation for the purposes of the war. however high it must be. But this is not a system of taxation ; it is a system under which certain persons will pay £44 per annum as a national contribution. When the war is over, the Government will repay £25 to some persons in some States and £8 4s. to some persons in other States. I do not believe in this system of compulsory loans which will bring in a total in the present year of only £25,000,000. Receipts from the sale of war saving certificates have reached a considerable sum each year. I warn the Government that the policy of compulsory loans, if adopted, will probably dry up that source. Thousands of people in Australia regularly contribute from their incomes for war saving certificates. The Government cannot expect not to lose money from that source if it imposes a national levy of the sort contemplated. In two years the sale of war saving certificates has brought £23,00,000 into the Treasury.

Mr Spender - Not a very good effort for two years.

Mr CURTIN - A very good effort, indeed ! The Prime Minister knows that war saving certificates purchased voluntarily have yielded £11,500,000 per annum. At the very best, he proposes by compulsion to obtain £20,000,000 per annum from the people.

Mr Spender - Does the Leader of the Opposition think that the purchase of war saving certificates has affected the standard of the living of the people?

Mr CURTIN - No, I do not believe that voluntary contributions in any way affect the standard of life of the community, because those who find that they have the money to spare give it, believing that to be their duty. The people of Australia have subscribed money. It must be borne in mind that, apart from the subscriptions to war saving certificates, the public of Australia has subscribed to the ordinary loans. The Prime Minister cannot tell me that there have not been very many subscriptions of small amounts to loans.

Mr Fadden - There have been.

Mr CURTIN (FREMANTLE, WESTERN AUSTRALIA) - Does the honorable gentleman then think that his compulsory savings plan does not threaten, not only sales of war savings certificates, but also the subscription of small amounts of from £50 to £100. to wai1 loans? This is a free country, and its people voluntarily come to its aid with their resources of manhood and wealth. Does the honorable gentleman, not think that he is proposing acceptance of a system which will not yield much more than the voluntary system? The honorable gentleman wants to equate, as he thinks he can, the purchasing capacity of people on the same income in different States. He wants to correct the problems of federation in order to have a more effective war campaign. He gains nothing by that effort; on the contrary he espouses a principle which can be suspected of being a preliminary step to the application in a larger measure of that very principle to the defence of the country! Having instituted compulsory savings, the Government would say, " Wo have com.pulsorily called, up loans. Why not compulsorily call up men for service overseas ? "

Mr Archie Cameron - Hear, bear!

Mr CURTIN - I fully expected the honorable member for Barker to say that, but this Government has professed time and time again to be opposed to the honorable member's ideas.

Mr Archie Cameron - This Government will have to come to that decision.

Mr CURTIN (FREMANTLE, WESTERN AUSTRALIA) - Well, I do not intend to help it to come to it by accepting the principle at this stage. It is not conscription to borrow from the public, because loans really put the assets of the rich into safer custody than would be the case if the Government did not become responsible for the ultimate repayment.

The Prime Minister has said that even with the voluntary loans, and even without doing justice to the soldiers, he is still dependent on central bank finance. He has made with the banks what he calls a' firm agreement under which they are to accept the decision of the Commonwealth Bank about the use of certain deposits. I point out that what has happened in this country since the war began is, by and large, that the Commonwealth Bank, functioning as a central bank, has advanced accommodation to the Commonwealth Government. As the result, the Commonwealth has paid money to the manufacturers who have paid it to the workers, and that money has filtered to the trading banks, whose investible funds have become available for the purpose of earning interest. Now, that fact is accepted by the Government as being true, because that is why this " firm " agreement has been reached. I find that in the year 1940-41 the trading banks' advances decreased by £17,000,000 and that government and municipal securities rose by £24,000,000. What has happened is that the trading hanks have lent less to the public and more to the Government. That may be considered, the proper thing to do. but what has happened? On the 30th June, 1940, the interest-bearing deposits of the trading banks amounted to £268,195,000 as against £268.408,000 on the 30th June last. But deposits not bearing interest have jumped from a total of £170,000,000 to £189,000,000. Thus, the banks have an additional £17,000,000 of funds on which they do not pay interest, and they have an additional £24,000,000 worth of government securities on which they are earning interest. I simply cite those examples. I say to the Treasurer and to the country that I cannot agree that because there has been an issue of credit by the Commonwealth 't to the Government, therefore, a new field of profit-earning should he opened up for the private trading banks. Without divulging anything which I believe that I ought not to divulge, I say frankly that the amount of national credit which the banking system, including the Commonwealth Bank, has made available to the

Government for the prosecution of the war during the last two years is itself complete proof that everything the banks said - and, worse, everything they did - when the Labour Government was in power from 1929 to 1931, was motivated not by sound banking practice, or by consideration for the national interest, but solely by the desire to destroy a government that they did not like. Where was the money to come from? That was the cry. It all had to come from the people.

Mr SCULLIN (YARRA, VICTORIA) - " Real " money !

Mr CURTIN - Yes, "real" money; we heard of it until we were sick of it. In those days, you could not issue credit to the nation through the banks in order to employ people at useful work; but as the honorable gentleman says, there is £60,000,000 of it in this budget? For what? To provide work for the people of Australia, or to produce assets for the future of this country ? In the sense that an insurance policy can be construed as an asset, we should say " Yes " to that. If we like to regard anything done for the safety of the country as part of an insurance programme, I should say " Yes ". But the banks could not provide such money in order to construct water supply systems, or health services for inland cities, or in order to develop Australia's wealthproducing capacity, when thousands of our men were unemployed and uncounted capital resources were idle in this land, and people were hungry because they could not get jobs of any description. With memories of those times I say that, despite the things the banks now unsay and the opposite courses they are now ready to pursue, simply because a government of the type they like is in power, this Opposition is not prepared to permit the credit of the nation, however it is made available, to become a source of parasitism for sectional private interests. Therefore, one fundamental objection which we take to this budget is that it places the national credit at the disposal of the Commonwealth Government in such a way as to permit a third party to make a profit out of it. We submit that nothing requires doing in respect of the management of national credit for the purpose of prosecuting the war which the Commonwealth Bank itself is not entirely competent to do. The honorable gentleman's " firm agreement " is not worth the paper on which it is written, because the Commonwealth Bank Board itself is too responsive to the interests that I am now criticizing to handle this matter as it should be handled. The honorable gentleman and, I think, his colleagues, know of recent discussions which certain of my colleagues have had with representatives of the Commonwealth Bank Board. I say nothing about those representatives except this - and I say it after a great deal of reflection - I do not consider that Sir Claude Reading's conception of how this country can be best served is in the best interests of Australia as a nation. I shall make no further reference to the Commonwealth Bank Board.

Boiled down, the basic differences between our views and those of the Government are that the Government does not treat the soldiers fairly; that it does not treat persons on the lower ranges of incomes fairly; and that it does not, having regard to the economies of Australia, treat the management of national credit in a truly national way - that, whereas we regard the budget as an accountancy of human values, the Government looks at it as an accountancy of material values. We do not object to the highest possible degree of taxation of all whom such taxation will not involve in any physical deprivation.

Mr Spender - A general phrase ; what does that mean?

Mr CURTIN - Let us say the greatest possible taxation of incomes of £500. or £600, and over. When the honorable gentleman was Treasurer, he tried to catch me on this same point. He then said that it was not possible to do anything, but he moved step by step towards the very proposition I had then made. I have not the least doubt that before this war is over, no person with an income of £1,000, £1,500, or £2,000 a year will be said to have that income as his personal right. If we are to fight this war collectively, we must have some application immediately of what people are describing as the "new order". But there is nothing of a new order in allowing people at the top of the income scale to meet all of their financial contributions to the war without having to go without anything requisite to their subsistence. The honorable gentleman sometimes talks about non-essential industries. If we are dealing with essentials, and we are obliged to restrict civil consumption, we must not allow the restricted supply of civilian goods to be the subject of competition between a man who has £1,500 to spend and another who has only £150 to spend. The correct way in which to treat that problem is by rationing.

Mr Spender - That is precisely what the Government is doing.

Mr CURTIN - It is the very reverse of what the Government is doing. Obviously, if one man with a wife and three children has £1,500 to spend after he has met all of his obligations under these schedules, and another man with a wife and three children has a margin of only £220, there is no equality of competition in the market for services or goods as between those two persons. The honorable gentleman has put forward a budget of taxes as though that could establish some equality of sacrifice of purchasing power for an everfalling supply of commodities. Let it be made certain that the man receiving £1,500 a year can get no more loaves of bread, no more suits of clothes, and no more wireless sets than the man earning £250 a year. That is the right way to tackle our economic problems - on the basis of reasonable justice and equal opportunity for all. We are opposed to the budget because of the principles upon which it is founded and the plan that has been formulated in order to carry it out. For this reason I move -

That all words after "That" be omitted with a view to insert in lieu thereof the following words: - "while agreeing that the expenditure requisite for a maximum prosecution of the war should be provided by Parliament, the Committee is opposed to the unjust methods prescribed by the budget, declares that they are contrary to true equality of sacrifice, and directs that the plan of the budget should be recast to ensure a more equitable distribution of the national burden."

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