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Wednesday, 24 August 1960

Mr DUTHIE (Wilmot) .- This is certainly a marking-time Budget. I should like to call it a foxhole budget, because the Treasurer has gone underground. Nobody is going to be hurt by this Budget. lt is a prelude to what is going to happen next year on the eve of the general election, since this Government has a very definite habit of turning a pre-election budget into a political budget. I am of the opinion that last year's 5 per cent, reduction of income tax, which this Budget revokes this year, will again come into force with the next budget. This reduction will be nicely returned next year. It will be the prettily coloured pill for the electors.

The Budget, therefore, is a marking-time budget. Inflation and rising costs are still the paramount enemies of our economy but, as the result of the anaemic measures contained in this Budget, the twin enemies of inflation and rising costs will continue to erode the economy as dangerously as ever. I believe that the Government has delivered a vicious blow at. inflation with a handful of feathers. The Treasurer said in his Budget speech -

As the Government sees it, then, the situation clearly requires a steadying-down in the rates of increase in expenditure.

This is a deliberate halt, in many directions, to development. How tragic is the situation when one of our greatest industries - housing - is to be hogtied in financial shackles! Nobody will object to dampening down investment in luxury lines and speculation; but any interference at all with the legitimate housing demands of our nation is an act of lunacy.

Housing is basic to family life and to national life. There are approximately 70,000 marriages each year in Australia. Immigration has put further pressure on home building. To force young married people to live with their in-laws, or in garages, is a crime in any case, and I feel that, as a result of the restrictive measures announced by the Governor of the Reserve Bank recently, and also contained in certain Government measures to restrict credit, housing is going to suffer. Merely to say, by way of excuse, that we built 80,000 houses in Australia last year, is still to consign hundreds of prospective home builders to frustration and bitterness.

We have seen some comment about this Budget in the press, which does not usually support Labour. I want to refer to only one or two press comments. The Melbourne "Age" of 17th August said in an editorial -

Its weakness is that it does not offer any assurance that the heavy burst of inflation in the past year can really be brought under control.

It is also stated -

Broadly there are no basic changes in Government policy and the restraints imposed are not as dramatic as might have been expected. The Treasurer has not made any effort to look to anything new in his approach to Budget policy . . . Mr. Holt has preferred to stick to conventional methods, and these have yet to be proved sufficient if the experience in the past is any guide.

In its editorial of 17th August the " Sydney Morning Herald " referred to the Treasurer's " second Budget ". Last night, by way of interjection, I referred to it as his "second-last Budget". The "Sydney Morning Herald " editorial stated -

His second Budget, though barren of the constructive elements which the economy needs, will go further towards performing the negative job of checking the boom than the surface figures suggest . . . The whole Cabinet must, of course, share with the Treasurer the responsibility for the negativeness of last night's effort.

The editorial also stated -

A lamentable lack of imagination in his budgeting shows up first in the fatalistic acceptance of a prospective fall of as much as £40,000,000 in his loan receipts.

Another comment was made by Brian Davis, who is the federal president of the Australian Workers Union. He reported as follows: -

It was obvious that the Government was building up a profit to present a decent Budget for election next year. The meagre increase in pensions was an insult to the sick and aged. The slight rise in company tax was ridiculous after an examination of the balance sheets of most companies.

Mr. W.D. N. Johnson, director of the Retail Traders Association of Victoria, said -

The Budget is distinguished as an unimaginative document by its paltry treatment of age pensioners, its curious sales tax decision on silver-ware and razors, and its general failure to grapple with the problems of speculative elements in the economy.

Those are just a few comments of the public as expressed in the press. The comment by the " Taxpayers Bulletin " is interesting. It states at page 3 of its issue of 20th August -

Inherently, the Commonwealth Budget is the means by which the currently available resources of the nation are divided between public and private use and in the case of public use, allocation to specific ends. There is something inherently wrong in the method of budgeting which substantially is that the Government decides what it wants to do, estimates how much it will cost and then appropriates the necessary finances. The approach should be the other way around - the Government should decide how much of its national resources can be safely diverted to the public sector and pattern its spending programme within that limit.

That, of course, is sound indeed. Mr. R. C. Taylor, the State secretary of the Australian Railways Union in Tasmania sent me a letter this morning advising that a meeting of the union's executive had passed this resolution -

That this Executive condemns the budget proposals of the Menzies Government as being inadequate and unreal in order to meet the demands of the Workers and Pensioners of Australia. Once again, those on fixed wages and incomes are being forced to shoulder the burden of inflation, without any plan by the Government to meet increasing prices of goods and commodities. In fact, the budget itself is inflationary with increased income tax, payroll tax, &c, which will inevitably increase prices.

I thought that I should read that resolution to the committee because it shows that bodies are meeting throughout Australia at this time to comment on this Budget. Their views are always worthy of consideration. The Treasurer, in this Budget, is tongue-tied on many other vital trends in our country such as the slowing-down effect of high interest rates, the question of profit inflation, the frightening growth of monopolies, the smash-and-grab takeover mania, the creeping paralysis of rising costs, the drainage of credit into high interest-bearing hire purchase, the insidious effect of land speculation on the cost factor, the enforced role of the wage-earner as the sacrificial lamb in stabilizing the economy, and the serious effect of rising costs on our rural industry which was men tioned by the honorable member for Corangamite (Mr. Mackinnon).

The following illustrations of profit inflation are taken from the " Age " of 16th August: - Meggitt Limited has paid a 12± per cent, dividend, having earned a record profit of £88,481 for the year ended 31st May. Ballarat Products Limited, biscuit makers, lifted profit from £32,613 to a new peak of £33,723 in the year ended 30th June. Victoria Holdings Limited, a new holding company for the Victoria Limited, an unlicensed hotel in Melbourne, has established an 11 per cent, dividend rate for the year ended 30th June, which was a record year. The profit of the operating company rose by more than 26 per cent, in one year, from £74,737 to £94,659. Motor Credits Limited, a hire-purchase associate of the Automobile Chamber of Commerce, lifted its profit by 36 per cent., from £105,465 to a record of £143,986 for the year ended 30th June. The Nuffield company also showed an increased profit. These profits were reported in one newspaper alone on one day in one capital city. The same pattern goes through the whole country. I have also some reports from the " Daily Mirror " of 22nd August. The first one reads -


Latec Investments Ltd., financiers, hotel and motel owners, lifted its profit by 61 per cent, to record figures in the latest June 30 year. Consolidated net profit is up from £200,175 to £323,131 after much higher provisions.

The profit of Gordon Edgell & Sons Ltd. increased by 36 per cent, in the year ended 30th June. These are fantastic figures when one considers that the Government has had nothing to say about profit inflation. Throughout Australia, this is the sort of thing that is going on. Prices are moving upwards week by week and the poor old consumer is being slugged. Profits are rising all the time and companies are making no effort whatever to steady costs. This is one of the things which the Opposition condemns in the present economic situation.

Let us look at the part played by the banks in the growth of hire purchase. We know that farmers cannot get finance from some private banks. That is to say, they cannot get it in the trading section of the bank. But they are sent to the other end of the counter, to the bank's hire purchase department and there they can get largely what they want at, of course, a much higher rale of interest. Up to February of this year the total amount owing on hire purchase agreements in Australia was £404,400,000. That has jumped to over £420,000,000. The Opposition does not oppose hire purchase. It is the poor man's mortgage. But we condemn the vicious interest rates charged. The Government says it is a State matter. It has done nothing whatever to tackle this problem of the vicious interest rates payable on hire purchase.

Costs in Australia have increased by 98 per cent, in ten years. The Government has a pathetic record in holding prices. Its main attack on this problem has taken the form of pegging the basic wage and of fighting any increase in wages. For the first time in history, the Australian Government intervened in a recent Arbitration Court claim in Melbourne. Its object was to defeat the unions in their battle for higher wages and it was successful. What justice is there in pegging wages when profit margins are quite uncontrolled? What justice is there in pegging wages and letting prices go free? To me it seems cock-i eyed to attempt to stabilize the economy in that way.

In 1953, when wages were pegged, the Government said that that would solve the problem of rising costs but it has had practically no effect. If the workers could see prices and profits controlled and stabilized, they would not object to the stabilization of wages, but they do rightly object to being made the sacrificial lamb in the economy by this Government. The Government wants to stabilize the Australian economy at the expense of one section of the people alone - the wage earners. Spiralling profits and prices causing an ever-widening gap between income and expenditure have led to the breakdown, not the stabilization, of our economy. At such a point in our history, the Budget before us is a vicious weapon which is being used against the ordinary man in the street whose wife has been forced to seek employment in order to make ends meet. To the wage earners, who comprise the vast majority in the nation, this is a cynical, cruel and crippling Budget. The Government has even withdrawn the 5 per cent, rebate of income tax which it gave last year.

Let me quote the case of one man as an example of how the average worker in Australia is being affected. Hundreds of thousands of workers in Australia are in a similar plight. The Government says this is a prosperous era. For whom is it prosperous? It is prosperous only for a very small minority of the Australian people. The following extracts from a letter written by Mr. John Moore to the Sydney " Daily Mirror " last Monday are indicative of the invidious position in which the average worker in Australia finds himself to-day -

It is quite noticeable that all the praise for Australia's alleged fine standard of living comes from people who have never had to work an eight-hour day in their lives.

Let us break down the personal budget of the average Australian worker into fair figures.

My pay is, basically, £18 7s. a week. But my pay packet contains £16 12s. 9d. when I sign for it. I have a wife and three children. This is my weekly budget-

He is getting down to bedrock now. This letter brings home to the family man all this airy fairy talk about prosperity. And this man's case is typical of that of the person who forms the very basis of our community. This is his budget -

Rent £3/6/6 (I am lucky in having a Commission home!)

Gas, light, etc. £1/5/0

Grocer £3/10/0

Insurance 10/0

Milkman £l/-/li

Bread £1/-/-

Butcher £2/-/-

That is cheap -

Greengrocer £1/10/ Fares (myself) £1/10/

That is to and from work -

Fares (school) 15/ TV HP. £1/7/6.

The only hire-purchase commitment he has is for the television set. His budget for the week totals £17 14s. lid., and although his gross wage is £18 7s. a week, his net remuneration after payment of tax is £16 12s. 9d. This man's letter continues -

No clothes ... no smokes ... no cocktail parties!

Luxuries? . . . cheap cuts of meat, shabby furniture, debts, fear of sickness.

This is the true picture of the Australian scene for the average working man.

I am not a Communist and have no determined Socialistic leanings, but I do think there is somethink wrong with a way of life that enables a select group to live in luxury without producing anything - while people who work hard and regularly are under the constant threat of poverty.

That is a splendid summary of the position in hundreds and hundreds of Australian homes to-day. That is why I say this Budget deals the working man a vicious blow.

The dangerous upward trend in prices had its birth in the loss of the prices referendum on 29th May, 1948. By that referendum the Chifley Government proposed to add five words to section 51 of the Constitution. That section gives the Parliament power to make laws with respect to certain matters. The words which the Chifley Government sought to have inserted were - (xiva.) Rents and prices (including charges):

What that Government was seeking was a reserve power to be used in times of emergency such as we are passing through now. I was a member of this Parliament at that time. In its case for the referendum, the Chifley Government stated that, if carried, the proposal would give the Commonwealth legislative power over rents and prices and would permit the continuance of protection against inflation, fair rentals, security against eviction, real benefit from wage and salary increases, fair value for money spent, protection of savings and deferred pay and full value for life insurance, superannuation and social service benefits. A further point stated in the case was -

During the two years after fighting stopped in World War I., the general level of retail prices in Australia rose by 30 per cent., food by 50 per cent., rents by 18 per cent. During the corresponding period after World War II., with Commonwealth protection continuing, the position has been quite different. Retail prices generally have risen by only 5 per cent., food by 6 per cent.; rents have remained practically unchanged.

Mr Turnbull - Now read the case against the referendum.

Mr DUTHIE - I have not the time. The case against the referendum was' the most vicious piece of propaganda ever seen in Australia. It sought to frighten the people into voting against the referendum. The really guilty ones in that case were the present members of the Government who were then in opposition. I have no doubt about that at all. Mr. Chifley issued a prophetic warning to Australia that if the Com monwealth were not given power to control prices for a certain period we would meet with unparalleled inflation in Australia. That day has come. The value has gone from wages and the value has disappeared from pensions because honorable members now on the Government side went round the country urging the people to vote " No ". The value of wages and pensions has disappeared because honorable members opposite went round the country uttering cries of " Canberra control ", " socialism ", and " adequate production and competition are the answer to high prices ". What a laugh that turned out to be! The opponents of the referendum said, " Let the States control prices ". Look at what has happened in the State sphere! The result was that 2,618,183 voted against the referendum and 1,793,712 voted for it. The majority against it numbered 824,471. The result was fairly satisfactory considering the vicious campaign that had been waged against the referendum by honorable members opposite.

What is the position to-day? The leaders of the farmers, John Citizen and the small businessmen are urging that price control be restored. They all consider that control of prices is the only way out of our present troubles. Nemesis is catching up with this country as a result of the defeat of the referendum in 1948.

Who are the men guilty of bringing about the present sorry state of affairs? They are the members of this Government and big business. The Government says that competition will keep prices down. Competition in the true sense does not exist to-day, nor does free enterprise within the real meaning of the term. Big business engages in a sham fight to-day. Big business organizations enter into agreements to charge the same prices to customers, and to charge at the highest level possible at the time. Therefore, present-day competition is a farce. Such competition as is left between manufacturers and retailers is not serious enough to hold prices down. Big business is an equally guilty party in this matter for it has become rapacious, it has engaged in blatant profiteering and it has contributed greatly to the inflationary conditions in recent years, lt has been able to do so because it was given free licence with the defeat of the referendum in 1948.

Let me now refer to the crisis in our rural industries. The wool industry in particular is in a very serious plight. Last year, the total value of our exports was £937,660,000. Of that figure, rural exports accounted for £749,000,000, or 80 per cent. Wool exports represent about 44 per cent, of the total, and it is bad for our economy that fluctuations in the wool industry should affect it so greatly and so quickly. Until we are able to increase exports from other primary industries and secondary industries, it is vital that the wool industry be kept in a sound, healthy condition.

I am gravely concerned at the decline in wool prices. They now average about 48d. per lb., the lowest they have been since 1948. At a time when costs have been at the highest level in our history, wool prices are down to the lowest level for twelve years! Mr. F. R. Howell, the Victorian member of the Australian Wool Bureau and vicepresident of the Victorian Wool and Wheatgrowers Association says that wool prices should be about 120d. per lb. to-day if the wool men are to be as well off as they were in 1948. That is what inflation has done to the wool industry. Apart from declining prices, the effect of rising costs and market manipulations has been serious. Its leaders all pinpoint the danger signs. The manufacturer and the retailer can pass on rising costs but the consumers - the wage earners, the farmers and the pensioners - are at the end of the line. They are in a cleft stick. They are completely helpless and are caught between the twin evils of inflation and price spirals. They must take these things and suffer them because they have no power to do anything about them.

Credit restrictions and high interest rates are two other evils that the farmers must face. This Budget does absolutely nothing to bring help to the farmers, including the hard-pressed wool-growers. Eighty per cent, of the wool-growers are in trouble, according to Mr. Howell, who spoke in Balmoral, Victoria, a few weeks ago. He said it was a tragedy that the wool men were not united. There are two big organizations in Victoria - the Wool and Wheat-growers' Federation and the Farmers and Graziers' Association - as well as the Australian Primary Producers Union to which members of both those organizations belong and which acts as a sort of common denominator. Until the wool industry is united in its desire for help and the form in which it should be given, it will be a long time before any adequate help will be forthcoming.

The magazine " Muster ", in an editorial published on 16th August, referred to the problems facing the wool-growers who want money for development, especially the younger men in the industry. "Muster" believes that the Development Bank is the only hope for adequate finance to increase production, bring new land into use and improve standards.

Mr Reynolds - The Development Bank will need to be more liberal than it has been.

Mr DUTHIE - Definitely. So far, the Development Bank has been a great disappointment. Referring to finance, " Muster " stated -

And the terms? Surely, with an industry on which the whole economy still rests - and will rest in the foreseeable future - something less than standard bank loan rates should be applied.

That is the vital point. The farmers should be permitted to borrow from the Development Bank at a rate of interest much lower than 6 per cent. Anything around 6 per cent, savours of Ned Kelly. Such a high interest rate is not necessary. We should be able to lend money to the farmers at 3 per cent, or 3i per cent, through the Development Bank. Then they could recover from some of their difficulties.

Mr Curtin - Ned Kelly was only a child delinquent compared with these people.

Mr. DUTHIEThat is true. Overseas markets are essential to the wool industry and other branches of primary production. The honorable member for Corangamite (Mr. Mackinnon) spoke wisely on this matter. First, our home market must be built up. The Australian Wool Bureau is doing all it can to help make wool more attractive to consumers. Synthetics are still breaking into the market; but I feel that wool will win this battle if the industry is alive to the dangers.

I have given some of the reasons why the Opposition condemns the Budget as an unimaginative and negative document. The Government has failed to face the facts of life as it is lived by the ordinary, fair dinkum Australian day by day. It keeps the pensioner in a grim state of penury. The Budget lacks vision and courage. The Government has failed to grapple with the problems of Australia to-day. I have spoken of the real problems, but they are not mentioned at all in the Budget document.

The Opposition congratulates its leader, the honorable member for Melbourne (Mr. Calwell), on the statement he made in the chamber last night when he so eloquently condemned the Treasurer for the negative character of the Budget. The Prime Minister (Mr. Menzies) had to speak to the Treasurer and stop him from interjecting early in the speech because the Leader of the Opposition was scoring so well off Government members who were interjecting. We hope the Treasurer will take note of some of the observations we have made on the Budget and even alter the document before it goes to another place.

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