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Wednesday, 25 September 1912

Senator ST LEDGER (Queensland) . - Before considering the details disclosed in the Budget-papers, I wish to acknowledge the wisdom and courtesy of the Government in giving the Senate at so early a stage of the session an opportunity to discuss our financial position, which is the most important feature of government. I intend without apology to go into it pretty extensively. It is apparent to every member of both Houses of this Parliament, and is becoming more and more patent to every citizen of the Commonwealth, that our taxation and expenditure, and our finances generally, have arrived at such a condition as to require the most careful investigation and thought that can be bestowed upon them. My views on the figures disclosed in the Budget-papers, which I have taken the trouble to examine carefully, will be recorded during this debate. I have chosen, first, a reference to the population of the Commonwealth as a starting point from which all who choose to discuss our finances may determine their course. It is really the foundation of every development, financial and otherwise. In 1901, the population of Australia was3,775,356. According to the Budget-papers, the estimated population in 1912 is 4,700,000. During that period our increase of population averaged but 1.8 per cent. per annum.

Senator Needham - Has the honorable senator the average increase for the two years during which the Labour Government have been in power?

Senator ST LEDGER - If the honorable senator had not been so quick in interjecting, he would have known that Iwas not seeking to attribute this low average to the fact that any particular Government had been in office. I have merely reduced the analysis of our taxation expenditure to a percentage form, in order that the contrast may be made more vivid. One remarkable circumstance - and it is as alarming as it is remarkable - is that during the years 1910-11, ending with the year 191 1, as compared with the years 1906-7, ending with the year 1907, the Commonwealth Government imposed additional taxation upon the people to the extent of £4,702,232. During the same period the States were able to discharge their functions by the imposition of only £208,563 of increased taxation. I submit that these figures show that the Commonwealth, so far as taxation is concerned, is coming down with a heavy hand upon the people.

Senator Stewart - Hear, hear !

Senator ST LEDGER - The honorable senator says, " Hear, hear !" It may be that his is the voice of a millionaire; but to the ordinary individual, upon whom this taxation will fall most heavily, the position is one which demands grave consideration.

Senator Stewart - I am not a millionaire.

Senator ST LEDGER - The honorable senator is always interesting and instructive, and I shall be glad to hear a full explanation from him as to what he meant by interjecting "Hear, hear!" If he meant that the imposition of this additional taxation is. to be commended, it is well that we should know it.

Senator Pearce - Would the honorable senator repeal any of our taxation ?

Senator ST LEDGER - That question is always the refuge of the Government. I intend to let the figures speak for themselves, because, when we are discussing the financial position of the Commonwealth, it is not . a very statesmanlike way of overcoming the difficulty which I have presented by inquiring, "Who did it?" or "What did you do?" My reply to the Minister of Defence is that it is not for me to say what is right or wrong in connexion with this expenditure. It is for the Government to justify their taxation policy.

Senator Pearce - Does not the honorable senator think that the people ought to know what he himself would do?

Senator ST LEDGER - When the electors choose to reinstate in power the party with which I am associated, if I can imagine myself in the position of Treasurer, there will be no delay in pronouncing what taxation shall be imposed and what taxation shall be remitted.

Senator Pearce - The honorable senator wishes the people to give him a blank cheque in the meantime?

Senator ST LEDGER - That is merely a parrot cry, which is raised by honorable senators opposite upon every conceivable opportunity. I repeat that, during the period 1910-11, which marks the accession to power of the Labour Government, additional taxation has been imposed to the extent of£4,702,232, whilst during the same period the State Governments have discharged all their functions, with the aid of increased taxation to the extent of only £208,000. It may be that the Minister of Defence will be able to show that the money thus raised has been well spent. But it is part of my duty to point out this striking fact.

Senator Pearce - What additional taxation have we imposed?

Senator ST LEDGER - I said that taxation to the extent I have indicated has been imposed. If the honorable member chooses to urge that the Opposition are to blame for that increase, by all means let him seek that refuge. But I am speaking from a point of view in which the public are becoming daily more interested. Where is the increase of taxation going to end? If it is not going to end, how are we to continue to carry on?

Senator Rae - If the honorable senator condemns it, he should suggest some alternative.

Senator ST LEDGER - I am not the Treasurer. I am merely analyzing the figures, with a view to showing their significance. Let me now present the position from a per capita stand-point. During 1906-7 our taxation amounted to £3 6s. 2d. per capita, during 1910-11 it rose to £4 3s.10d. per capita, and during 1911-12 it was . £4 7s. per 'capita. That is to say that, during the brief period I have outlined, our taxation increased 30 per cent. per capita. There is no country in the world in which the per capita taxation is higher than it is in Australia. When we find such an enormous increase in our taxation, it becomes a subject for alarm, and it is the duty of the Treasurer to point out how far he intends to proceed in this direction.

Senator de Largie - We are likely to increase the taxation which we have imposed.

Senator ST LEDGER - 1 am glad to hear that statement from Senator de Largie, who is such a very effective whip for his party. I am glad to hear it acknowledged that the party opposite contemplate more and more taxation. But surely the taxpayers have a right to have the whole position analyzed, and to receive a clear expression from the Treasurer as to how he is likely to raise the taxation, and . what effect it is likely to have on the people. The figures as to expenditure are equally significant. I am convinced that the word "alarming" is not an improper one to apply under the circumstances. In 1907-8 the Commonwealth was able to carry on with a sum of £6,162,129. In 1908-9 the expenditure rose to £6,420,398. In 1909- 30 it rose to £7,449,517. I have chosen the period 1907 to 1910 to mark that in which the Labour Socialistic Government was not in office. I come now to the expenditure required by the Commonwealth for the years in which they were in office. In 1910-11, the expenditure was ,£13,158,529. In 1911-12 it was £14,721,938, and the estimate for 1912-13, £i4,343<25°- That is to say, immediately after the accession of the present Government to the Treasury Bench, the expenditure rose from i\ millions to, roughly, 14J million pounds. In other words, the expenditure during their term of office has risen 33 per cent per annum. Let it be remembered, also, that while they have been in office the average increase in population was only 1.9 per cent. When we find expenditure going up at the rate of 33 per cent, per annum, whilst the population increases slowly, we cannot envy the position of a Treasurer who can contemplate the position with equanimity.

Senator de Largie - But look at the sort of Government we have got !

Senator ST LEDGER - That is the reason why I am making these remarks. Look at the legislation we have had from this Government !

Senator de Largie - The country is bounding forward every day.

Senator ST LEDGER - My honorable friend's countryman, and poet, Robert Burns, exclaimed, "Oh ! Lord, gie us a good conceit o' ourseld i" There are none who should take that observation more to heart than my honorable friends opposite. Take the total cost of the Commonwealth Departments during a period of about ten years. I do not intend to cast any party reflection, because the figures will show that there has been an increase of a somewhat alarming nature in the cost of these Departments. To save time as much as possible, I shall give round figures. For the year 1902 the Departments cost us £3,733,000. In 1905 the expenditure rose to £4,322,000. In 1907 it rose to £6,162,000. In 1909-10, a year which I emphasize for obvious reasons, the expenditure rose to £7,449,000. By 1910-11 it had risen to £13,158,000, and in 1911-12 to £14,736,000. For the present year the estimate is £14,343,000. That is to say, from 1901-2 to 1909-10 the cost of the various Commonwealth Departments rose about 100 per cent. Averaging the nine years, the cost was 11 per cent, per annum, whilst in 1910 to 1913 the increase was 100 per cent., or at the . rate of 33 per cent, annually, which is certainly a most alarming increase. I shall deal with the in.crease of expenditure from another point of view after I have given other figures. I desire honorable members to contemplate these figures in relation to the position outlined to us before Federation. I have shown that the cost of the Departments has risen to more than ,£14,000,000. Whenwe went into Federation, the estimated COSt, as furnished by the ablest financiers in the Commonwealth, in a document which went forth to all Australia, and was published as a reason why we should not be alarmed about the cost of Federation, was that the expenditure incurred in the exercise of the rights and powers conferred by the Constitution would amount to £300,000. In plain language, that meant that the expenditure on purely Federal service would cost no more than £300,000 additional. It was further estimated that the cost of the services transferred from the States would be £3,005,400, whilst the revenue derived from transferred services would be .£1,755,400, leaving the net expenditure at £1,250,000, making a total expenditure of £1,550,000. When we compare the actual expenditure to-day with the estimate madeby the Federal Convention just before Federation, we must be inclined to feelings of alarm. It may be that the able financiers of that time were baffled in their efforts to anticipate the future; or it may be that it was not then within the power of any financier or statesman to anticipate what our needs would be under Federation; or it may be that, at last, the Commonwealth is practically in the control of a Government which has, so to speak, taken the bit between its teeth, and is carrying expenditure up to a point which threatens to wreck the Commonwealth. The principal sources of revenue upon which the Government rely for carrying out their work are Customs and Excise. I do not think it will be seriously disputed now that the burden of Customs and Excise is largely borne by the population as a whole. Whether they receive an equivalent compensation by the institution of industries is a question which, at this stage, neither the Government nor possibly the Opposition are prepared to discuss from a full-dress point of view. But the amount of taxation received from these two sources is certainly a very heavy one. In 1906-7, we received ,£9,648,000; in 1909-10, ^11,593,000; in 1910-11, £12, 980,000; :ind in 1911-12, £14,710,000. The revenue from these sources, for 1912-13 is estimated at ,£14,511,000. It is certain that that estimate is going to be exceeded, and it is highly probable that it will equal the amount received in 1911-12, namely, £14,710,000, and probably reach £15,000,000. It is not seriously contended by any political party that this taxation is not largely paid by the whole of the population in proportion to their means and spending power. Let us now glance at the additional taxation which has been imposed by the present Government. In 1910-11, the land tax yielded £1, 370,000; in 1911-12, ,£1,366,000; and this year it is estimated to yield £1,300,000. The present Government collected from Customs and Excise and land tax in 1910-11, £14,350,000; in 1911-12, ,£16,076,000; and expect to collect in 1912-13 ,£15,811,000. I venture to say that the Government of no other country, in proportion to its population, are collecting so much taxation. I venture to say that nowhere else has a civilized Government, within a period of three years, had the expenditure and the taxation of the country mounting up so swiftly and so alarmingly. Reducing these large figures to a per capita basis, we find that, in 1906-7, the taxation from Customs and Excise alone - I am omitting now the land tax - was £2 6s. 9 1/4 d. per capita, while in 1912-13 it is estimated to rise to £3 is. 9fd., or, plus the land tax, to £3 7s- 7§ d. 6 Not only has the Customs and Excise taxation very largely increased, but, added to the incidence of the land tax, which is shared by at least two-thirds, and possibly by four-fifths, of the workers of Australia, shows, as compared with the figures for 1906-7, an increase of 54 per cent. A school-boy in finance must address himself to the question : How far is this increase of taxation to go? If we can bear, during succeeding years, this remarkable increase of taxation and expenditure, we are possibly the most wonderful country and the most wonderful people on earth.

Senator Pearce - Hear, hear !

Senator ST LEDGER - The Minister of Defence may take consolation,, in his "Hear, hear!" in that matter. ° He is not the Treasurer, and his responsibilities, probably by reason of that, lie lightly upon him. But, apart from that jeer, it is a somewhat remarkable fact that, when in either House finance is dealt with seriously, the other side will never debate the position. They will go outside, so to speak, rather than face, not us, but the figures.

Senator Pearce - The difficulty is that you will not tell us what part of the taxation you propose to reduce.

Senator ST LEDGER - That is your difficulty, not mine. Of course, nowadays, through legislation, and possibly a trend of thought, whenever a person is in any difficulty, financial or otherwise, he tries to put that difficulty" on to somebody else. We have had remarkable instances of it here in the form of legislation. Five or six times the Minister of Defence, showing that the "galled jade is wincing," has thrown out that gibe to US, "What do you propose to do to lessen taxation ? What do you propose to do to lessen expenditure?" My retort again is, " The responsibility is yours." But I shall meet the Minister upon the ground which he suggests.

Senator Pearce - We shouldered. the responsibility, and you object to what we have done, and now we want you to say what you think we ought to do.

Senator ST LEDGER - The Minister always displays his weakness by being too clever by half, and he is not going to take me off the track. It is a position which he and the Treasurer must face sooner or later, if not here, then outside. In the face of this alarming increase of expenditure and taxation, a Treasurer is not true to his responsibility who does not face the position, and who does not succeed in showing that, while the taxation and the expenditure are increasing, there are financial measures, or natural resources, which will enable political parties in these

Houses to face the position with equanimity. It may be that the Treasurer, in his brain, knows how he can go on; it may be that, in the exercise of that gigantic financial talent which he is known to possess, he may be able, at a moment which may be considered opportune to him, to reveal easily, with the wave of a magic wand, how the expenditure and the taxation may go on increasing. But I submit that the financing of no country is worked out by the wave of a magic wand. It is a matter of figures. There is no other country in the world which has ever stood the strain of increasing expenditure and taxation of this kind without sooner or later coming, if I may use the language of the boulevard, a severe financial cropper. The man who supports the Government, even the ordinary man in the street, is becoming alarmed at the position. When this statement was brought down from the Treasury in another place, in the face of these almost Himalayan figures, we ought to have had a clear and frank explanation from the Treasurer of what they meant - whether he was going to continue that strain, and, if so, how the country was to bear it.

Senator McGregor - Do not get excited.

Senator ST LEDGER - Not at all. I am afraid that the honorable senator is not content, and may I say satisfied, almost jubilant, at the helpless financial position into which the Government are drifting.

Senator McGregor - Oh, we are all right.

Senator ST LEDGER - I shall have something to say on the Budget-papers, and it is with some grim satisfaction from the party point of view that I have taken out these figures, because I think it is due to the Government, as well as to the people, that these things should be pointed out, if not rubbed in. There is another remarkable fact about this financial statement. It is a repetition of every financial statement which has been delivered by the other side. In a financial statement the Treasurer has never disclosed a surplus. It would be impossible, it would be almost treason, to infer that it could disclose a deficit.

Senator Pearce - ls not that good finance ?

Senator ST LEDGER - No, it is absurd finance, because, never in the history of the States, or probably in the history of the Empire, has a Treasurer been able time after time to forecast his revenue and his expenditure down to the last farthing, and to say that there shall be no surplus or deficit. It is utterly childish to say that any financial statement, if submitted tocareful investigation by a competent authority, will not reveal something of a surplus, or something of a deficit. In framing his financial statement, the Treasurer ought to remember that', because if his surplus is excessive, then, except for special circumstances, it is a sign that he is overtaxing, the people, while, if it reveals a deficit, it is a sign that his services are more exacting than he anticipated, and he is bound to give Parliament a full explanation of how he intends to provide for the deficit. But nosuch difficulty confronts, or has ever confronted, and if I may anticipate their future, ever will confront the other side with regard to either a surplus or a deficit, because, after the Treasurer has, with the aid of his officials, forecast the revenue and the expenditure, he is able to come down to Parliament and say, " I have balanced the accounts to the last farthing." I have no hesitation in saying that such a financial statement is on the face of it impossible, or ridiculous, or both. With such taxation as we have according to the Treasurer's own statement, we are just able tobalance the revenue and the expenditure. That means that every call which the Government has for the financial year is provided for. If that be the point of view from which he presents his financial statement, and if it does not forecast the futurebeyond that, then he is unfit for his position, and unfit to deal with the immediate and pressing financial responsibility of the Commonwealth. It is ostrich finance for the Treasurer, under the present conditions and requirements of the Commonwealth, tobalance his accounts to the last farthing, to close his books, so to speak, and tolight the Parliament for the position in which he is. That is not finance as the Commonwealth needs it. There are many commitments which must be immediately faced, and some of them if not realized may imperil the existence of the Commonwealth. No Treasurer, who takes his duty seriously, can refuse todiscuss these questions. If these matters have occurred to the Treasurer of the Commonwealth he has certainly not taken Parliament into his confidence. What are the commitments which we must immediately face? The first is the transcontinental railway, connecting Port Augusta with Kalgoorlie, the first sod of which was happily laid during the recent Senate recess. That work must be gone on with rapidly. It cannot stop at the end of the year 1912. Will the Vice-President of the Executive Council seriously contend that the Treasurer's statement gives us any idea of where the money is to come from to construct that railway? We have been informed, time and again, that it will cost between £4,000,000 and £5,000,000. We know that estimates of the cost of railway construction are frequently exceeded. As a matter of policy to which all parties are committed, that railway, once begun, must be carried out. The position in which the Treasurer is today is that he is spending every penny, and does not give even an indefinite idea of how he expects to find the money to carry out this important work. Is that a Treasurer's statement? In my opinion, it is a conscious farce, and a wilful delusion of the people.

Senator Guthrie - Does the honorable senator think that the Treasurer should bring down a statement covering expenditure until doomsday?

Senator ST LEDGER - Senator Guthrieis seeking another refuge from this storm of criticism. I am not asking about doomsday, but about work which has to be done to-morrow. I may retort upon the honorable senator by asking whether he desires that the construction of this railway should be deferred until doomsday? I know that he wishes it to be carried out as rapidly as possible. Can he tell me where the money for its construction is to come from?

Senator Guthrie - There is plenty ot money for to-morrow.

Senator ST LEDGER - That is the reply of the spendthrift. The more the figures are examined, and the oftener honorable senators opposite interject, the more clear it becomes, either that the Treasurer does not understand the financial position, or that his supporters are content, with the spendthrift, to go on spending to-day and let to-morrow take care of- itself. If that be not so we are entitled to learn from the Treasurer, or his supporters, where the money for these works is _ to come from, and where, provision having been made for them, we shall find ourselves financially. In the Treasurer's statement, and in the debate which took place in another place, no light was thrown upon these important questions.

Senator Blakey - Would the honorable senator sooner go to the three-ball man and borrow, and let the day after tomorrow provide for the payment?

Senator ST LEDGER - Here is another honorable senator trying to get in out of the wet. He asks me whether 1 would borrow, and look to the day after to-morrow for payment? I am asking a question which was asked sixty or seventy years ago, and which, probably, will be asked sixty or seventy years hence, and I meet with a reply which is the usual reply from a Government, or their supporters, when their opponents are driving home their criticism. I will answer in, I think, the words of Sir Robert Peel, " The doctor does not prescribe until he is called in." The Opposition have, in both Houses, time and again, assisted the Government to make effective measures that, as introduced, were ludicrously defective. But on matters of finance we are not called upon to inform the Government as to the measures we should take.

Senator ALBERT GOULD (NEW SOUTH WALES) -Colonel Cameron. - The honorable senator is assisting them now, by good advice.

Senator ST LEDGER - I do not think that I am called upon to go further than give the Government good advice. My speech may be more properly regarded as comment and warning.

Senator Henderson - The honorable senator does not seriously contend that this is criticism?

Senator ST LEDGER - If Senator Henderson does not understand it as such, he must blame his Maker, and not me. It is not my fault if he has not sufficient understanding to discriminate between comment and criticism. It is the figures that are talking, and not I. A school boy, knowing the figures, would understand how much of what I say is comment, and how much is warning. Senator Blakey has asked me whether I would go to the three-ball man. That is one of those absurd and ridiculous expressions which contain nothing, and whose purpose it is to play down to the prejudices and passions of those people outside who do not understand anything but Socialistic finance.

Senator Blakey - Borrowing is what trie honorable senator believed in, when he voted for the Naval Loan Bill.

Senator ST LEDGER - I do not know why a man should be asked to waste his breath in making the statement that 2 and 2 make 4. I spoke strongly, and voted in favour of the Naval Loan Bill, and, coming direct to the point, I can say, on my own responsibility, as a member of the Opposition, that I certainly should be prepared to borrow for future reproductive works.

Senator Blakey - Is a navy a reproductive work?

Senator ST LEDGER - That is a matter of the past. My remarks were directed to developmental and reproductive expenditure upon railway ' construction. I have candidly answered the honorable member, and have said that for such expenditure as I have mentioned I should at once go to the money market. Will the honorable senator tell me that he does not approve of that method, and, if so, what method he thinks should be adopted to find the money to carry out these important undertakings? It shows more markedly than anything else the utter dearth of financial ability, or the utter recklessness with which they deal with finance, that when we on this side suggest alternative methods of finance, honorable senators opposite are silent, and neither the Vice-President of the Executive Council nor any of his supporters will definitely say where they expect to raise the money for the building of these railways, and the carrying out of the various commitments to which every political party in the Commonwealth is pledged. In the Northern Territory, we are committed to a railway by some route or another from Pine Creek to Oodnadatta. The estimates for that work are, roughly, from £10,000,000 to ,£12,000,000, and some say £14,000,000.

Senator McGregor - Does the honorable senator say ,£14,000,000?

Senator ST LEDGER - I said quite plainly that that is the estimate made by some people.

Senator McGregor - Who are " some " people ?

Senator ST LEDGER - Engineers, newspapers, and others. Leaving that on one side, the estimates of the cost of this work by persons of greater or less authority run from ,£7, 000,000 to £12,000,000. In the light of past experience, we know that we shall not be likely to build that railway for less than £4,000 a mile, and, at that rate, the total cost will be very nearly £5,000,000.

Senator Guthrie - That is a long way from ,£14,000,000.

Senator ST LEDGER - Let it be so. Let us put it at that figure, and then, with the cost of the railway from Pine

Creek" to Oodnadatta, we are faced with a probable expenditure of ,£10,000,000. We have to take into consideration OU[ commitments in connexion with the Federal Capital. What provision is being madeby the Government to meet all this expenditure? So far as revenue and taxation are concerned, a limit is already reached. Two of the greatest of our national undertakings which must be carried on at once, and vigorously, if they are to serve their purpose, are left, so to speak, in the air. The Treasurer has not vouchsafed a single definite statement as to where the money to carry them out is tocome from.

Senator de Largie - We shall find the money.

Senator ST LEDGER - We know that when Caesar speaks, the whole world nods, but even Caesar should tell us how it is that when he speaks the world will nod. If Senator de Largie or the Treasurer knows where the money is to come from, why do they not take the people into their confidence? It will not be Senator de Largie or the Treasurer who will find the money. In the long run, it will have to be found by the taxpayers of Australia. It must be found immediately, and the Treasurer should condescend, now that these works have to be undertaken, to tell the people where the money is to come from. Honorable members opposite remain like dumb-driven cattle, and are unable to answer the question. This year these works will have to be proceeded with. The Commonwealth desires that they shall be proceeded with as rapidly as possible. But that course cannot be adopted without the expenditure of money, and the Treasurer has not told us where that money is to be obtained.

Senator McGregor - He wishes to surprise the honorable senator some day.

Senator ST LEDGER - In matters of finance we ought not to wait for surprises. I believe I am justified in saying that the Treasurer neither knows nor cares very much where he is to obtain the money with' which to carry out these undertakings. Our immediate commitments for the construction of railways alone amount to from ,£10,000,000 to £[12,000,000. Assuming that this money has to be raised by loan, it will mean an increased expenditure by way of interest of not less than £600,000 per annum. I believe that the Treasurer will be driven to the money market, and the sooner he confesses that fact the better. It is obvious that if he does not raise the money which is required by means of a loan, some new source of revenue will have to be tapped. The Budget-papers show very clearly that our taxation per capita is already the highest in the world. If there are new sources of taxation which the Government intend to tap, they ought to be disclosed to Parliament without delay. Yet the Treasurer has not ventured to shed one ray of light upon this aspect of the question. It is evident to everybody, either that we are in for increased taxation, or that the Government must reverse the whole of their policy and boldly ask for a loan. We want these railways to be completed within, at the most, four or five years. To say that £12,000,000 can be taken from the pockets of the taxpayers of Australia would be to announce a startling proposition, and one which the Government dare not make. Consequently, they must raise the money by the flotation of a loan. That is a difficulty which they cannot escape. Before leaving this aspect of the matter I would like to point out how our Public Service kas increased, both from the point of view of numbers and of salaries. The number of permanent officers taken over by the Commonwealth at the inception of Federation was 11,191, and the total salaries paid to them was £1,439,938. In 1903 the number of permanent public servants had increased to 11,374, and their total salaries to £1,521,051. In 1907 their number had increased to 11,763, and thensalaries to £1,694,641. In 1910, the number of permanent public officers in the employ of the Commonwealth was 13,987, and their salaries totalled £1,935, 797- On the 30th June of the present year the number of permanent Commonwealth public officers had still further increased to 17,051, and their salaries to £2,434,051. In other words, since the inception of Federation the number of permanent public officers in Commonwealth employ has increased from 11,191 to 17,051, or very nearly 50 per cent., whilst their salaries have increased from £1,439,938 to £2,434,051 - an increase of considerably more than 65 per cent. Seeing that our population has increased by only 1.9 per cent, per annum, the Treasurer ought to take heed of the warning that he must so manage our Public Service as to keep a tight hand upon its expansion.

Senator Guthrie - How many new Departments have been taken over by the Commonwealth ?

Senator ST LEDGER - Very few indeed.

Senator Guthrie - What about Quarantine and other Departments?

Senator ST LEDGER - I am prepared to make allowance for them.

Senator Blakey - And increased facilities have been granted to the public.

Senator ST LEDGER - Allowing for all those things, the fact remains that the number of our public servants, and the salaries paid to them, have increased at an extremely rapid rate. Consequently, the Treasurer requires to keep a firm hand upon the further expansion of the Public Service.

Senator Guthrie - Was there not a need for its increase?

Senator ST LEDGER - I have never yet read a financial statement in which charges likely to be made against a Government were not defended upon the ground that a certain course of action was necessary. That is always the answer which is given, and especially does it apply to the expenditure in our Postal Department. But, whatever may be the cause, the need does exist for the exercise of caution, so far as an increase in the number and the salaries of our public servants are concerned.

Senator Guthrie - Is the honorable senator prepared to reduce their salaries?

Senator ST LEDGER - The honorable senator may call me in when I am in a position to prescribe. I notice, too, that there has been a remarkable increase in the number of temporary employes of the Commonwealth during the period that the present Government have been in office. In 1906 there were 1,766 temporary employes in the service of the Commonwealth, in 1908 the number had increased to 3,220, and in 1911 to 3,867. The total amount paid in salaries to these employes is rising with almost cyclonic rapidity. For instance, in 1905 the amount paid to them was £28,481, in 1908 it was £69,754, in 1909 it had risen to £103,505, and in 1911 it had still further increased to £111,416. That is to say, the number of temporary employes between 1905 and 1911 had more than doubled, whilst the salaries paid to them had increased from approximately £28,000 to £111,000 - an increase of about 400 per cent. Let the figures speak for themselves. They do not disclose a very satisfactory condition of affairs. If it should continue, something will have to burst, and come down heavily upon somebody.

Senator Blakey - Another Black Thursday.

Senator ST LEDGER - I can use no better expression. This is Black Thursday finance.

Senator Millen - Is that the expression which the Government apply to their own policy?

Senator ST LEDGER - Exactly. When a similar difficulty confronted the French Parliament, and the King's financial advisers sought him in reference to it, his reply was, " Don't trouble. It will last my time." Thereupon his advisers inquired, "And after your time, Sire?" to which he answered, " Oh, after that, the deluge." The finances of the Government are typical of Black Thursday. Except for some reasons which we cannot yet discern, it must be evident that a Black Thursday is coming. Possibly the Government are saying to themselves, " Never mind. We have had ?i good innings. It will last our time, and, after that, the deluge and Black Thursday." But if such a catastrophe does happen, at least we shall be able to say in the future that the Opposition clearly and unmistakably warned the Government against what is almost a necessary consequence of this expenditure. What answer have we from the other side? When these figures are presented honorable senators simply say, " Well, what tax would you take off?" and make a suggestion about Black Thursday. I shall now deal with another matter revealed in the Budget-papers. I refer to the Commonwealth note circulation. We are informed, on page 68, of the circulation of these notes on the last Wednesday of certain months in the year. In December, 1910, the total value of notes in circulation was £3,389,476. On the last Wednesday of January, 191 1, the notes in circulation amounted to £3,756,694; in February, 1911, the circulation was ,£4,114,517; in March, 1911, ,£4,548,361; in February, 3912, £[10,948,472; and in June, 1912, £9,448,952.. May I emphasize the fact that those figures are worse than fallacious. They are utterly misleading. They do not reveal and are not intended to reveal, the position of Treasury notes in circulation. The Treasurer, or his officers, either do not know, or will not inform the public, that there is a vast and material difference between the issue of notes and their circula tion. I do not intend to labour that point, but merely mention it. When we are gravely informed by these figures that the circulation of notes in January, 1911, was £3,756,694, whilst in June, 1912, the circulation was £9,448,952, one can only say that either the grossest ignorance is revealed by the Treasury, or that the Treasurer and his officials must think that the public of Australia consist more or less of gulls. How could the notes which, in January, 1 91 1, circulated only to the extent of .£3,750,000, have increased in the hands of the people to £9,448,000 in 191 2? It is impossible. What is meant by these figures is that, whilst in December, 1910 - which was the last day on which the banks were allowed to circulate their own notes - there were £3,750,000 worth in circulation, the Commonwealth notes in the hands of the banks at the later date amounted to over £[9,000,000. But the Treasurer and his officials do not tell the public that the whole of these notes have not gone into circulation. They are not being used by the public. It is fair comment, under the circumstances, to say that, owing to the stupid bungling connected with the issue of Commonwealth notes, the people will not take them. We were told over and over again, " Once we issue notes with the credit of the Commonwealth behind them, they will circulate amongst the people like shelling peas." But they are not circulating. I hope that next time the Budget-papers are presented to Parliament the Treasurer will insist on his officials giving us a fair and sound statement of the position of the note circulation. Until Parliament has that information, it cannot tell to what extent the people are using the notes, which is not synonymous with saying to what extent the banks have them in their coffers. The bank note circulation in Australia in 1902 was £3,305,135. In 1907, it was .£3,563,181; and in 1910, £3,389,476. That is to say that up to 1910 the amount of paper in circulation - the amount which the public would take or wanted - amounted to about three and one-third millions. Surely the Treasurer does not want us to believe that two years afterwards the notes in circulation amounted to between .£9,000,000 or £10,000,000. I am entitled to say that in information furnished in an official document like the Budget-papers, there ought to be no confusion. The Treasurer and his officers ought not to circulate such mislead-, ing figures.

Senator Blakey - Does the honorable senator think that the Treasurer told his officers to put misleading figures in the Budget-papers ?

Senator ST LEDGER - I do not care whether he did or not. I simply say that the figures presented to us on this subject are a humbug and a delusion. On the face of them they are ridiculous. There are not £10,000,000 of notes in circulation in this country. Undoubtedly there is a great quantity in circulation. It is hard to find the exact figures. It is the duty of the officials of the Treasury to ascertain what the note circulation is. We know that today nearly £5,000,000 worth of those notes are lying in the bank tills. The public are not asking for them. We were led to believe, when the bank note issue was started with such a flourish of trumpets, that the notes would be scattered broadcast, and that every man in the country would, to use a common expression, have a " Fisher flimsy " in his pocket. But that delusion has been blown to pieces. The people are not hungering for these notes, which are, for the most part, simply lying in the banks.

Senator Needham - Would the honorable senator refuse to take an Australian note ?

Senator ST LEDGER - The fact remains that there are £5,000,000 worth of notes which the public either do not want or will not have, and which are lying in the bank tills to-day. Whether I would or would not take a Commonwealth note has nothing to do with the position. The only safe guide which Parliament can have in this matter is to watch carefully the amount of the notes which go into circulation amongst the people, and the amount of gold held in the Treasury against them. I wish to point out, by way of contrast to the amount of notes which the banks hold, the gold reserve held by the Treasury. In January, 191 1, the percentage of gold in the Treasury to notes in circulation was 32.8; in December, 1911, 48.7; in June, 1912, 45.1; on the last Monday in July, 1912, the percentage was 40.9. I am going to place these figures in contrast with other figures, and the inference that I will draw from the contrast will very probably reveal itself. I have dealt with the percentage of gold reserve to the issue of the notes under the Commonwealth. Before I take the percentage of the gold reserve to the paper issued by the banks, let me give the percentage of coin and bullion in the banks to their liabilities at call, which included something more than their notes.

Senator Guthrie - Go back to 1890.

Senator ST LEDGER - I am going back to 1902, if the honorable senator will be satisfied.

Senator ALBERT GOULD (NEW SOUTH WALES) -Colonel Sir AlbertGould. - Does he want to go back to the state of affairs at a big crisis?

Senator Guthrie - Yes.

Senator ST LEDGER - I take it thai we had a lesson in 1890 and 1893.

Senator Millen - Anyhow, in 1890, the banks had a bigger gold reserve against their notes than ever the Treasurer has held.

Senator ST LEDGER - Senator Guthrie is more or less a godsend to me by his interjections. In 1890 and 1893, a good many of the private banks had not sufficient gold reserve against their reckless liabilities. After the financial crisis of 1893 and the reconstruction schemes that followed, the banks pursued a more cautious and conservative course. I have pointed out that the financial history of Australia shows that the banks had profited by that lesson. I will now give the percentage of gold to liabilities at call during the period from 1902 to 19 rr,- when the only paper notes in circulation were those of the banks, in order to show how they had profited by the lesson of 1893. In 1902, the private banks held 51.3 per cent, of gold; in 1903, 49.5 per cent.; in 1904, 49.9 per cent. ; in 1905, 53.8 per cent. ; in 1906, 51.2 per cent. ; in 1907, 47.1 per cent.; in 1908, 50.3 per cent.; in 1909, 52.2 per cent.; in 1910, 51. 1 per cent.; and, in 191 1, 50.7 per cent. It is evident that the banks during that period were kept up by a very strong gold reserve; and it is equally clear that the Treasurer has not learnt that lesson, and that he promises to deplete his gold reserve considerably below the amount which from 1902 to 1910 all the private banks thought it necessary to preserve in their gold rooms, so to speak. When' the percentages and figures are analyzed, it will be seen that the lowest gold reserve held by the banks through that period was less than a point per cent, lower than the highest percentage which the Treasurer proposes already to preserve. The figure is significant, and also alarming, when we know that he proposes, as soon as he can get the sanction of the people, to preserve 25 per cent, of gold to paper, while his notes in circulation will be nearly trebled. I may interpolate here a somewhat significant fact. The Treasurer has announced that he intends, after a certain time, to go on with a gold reserve of 25 per cent. Now, the Government forced through a Bill giving him power to keep only a gold reserve of 25 per cent., and practically unlimited power to issue whatever paper he chose.

Senator McGregor - Do you know that the Treasurer cannot issue more than the banks ask him to issue?

Senator ST LEDGER - The honorable senator must know very well that 'the last Act only placed a restriction of 25 per cent", of gold against any number of notes that the Treasurer might issue.

Senator McGregor - He cannot issue them unless the banks take them. He can only issue them to the banks.

Senator ST LEDGER - I understand thoroughly the want of force in the objection which is thrown out by the Minister. It does not matter for a sound consideration of this important question whether the banks will or will not take the notes ; but it does matter very much to the people whether they will or will not take the notes and use them. And it becomes a serious question for the people when, in the case of any financial paralysis, with an overissue of paper and an under-reserve of gold, they hurl their notes for redemption at the Treasury in gold. That is the important point, but I was led off for a moment. The numberless interjections from the other side show how the criticism is going home. Although the Treasurer is empowered by an Act to reserve only 25 per cent, of gold against whatever notes he may issue, not circulate, he says, " I am not going to act upon my authority ; I shall seek the consent of the people before I alter the administration laid down under the first Act." I thought it was an inflexible principle of Democracy to get the consent of the people before you alter an Act, and to administer it according to their consent, but we have a democratic Treasurer - he would be insulted, I suppose, if I called him anything else - who first gets an Act altered by the will of his majority in Parliament, and then says, " I will not put the Act in force until I get the consent of the people." It is important that the Treasurer should consider whether, in the face of the high gold reserve which the banks kept during a period of, more or less, welcome and great prosperity, he is justified in diminishing the gold reserve by one-half. Further, when he finds that after he has issued about £[10,000,000 worth of paper money the people are taking less than £5,000,000 worth, and the balance is lying in the hands of the banks, surely that ought tobe a warning to him to reconsider the position created by depleting the gold reserve. And surely it is not out of place to point out here, in Parliament, as we must do to the people, the grave danger that must arise from an unlimited power to issue notes, and a discretionary power to hold against the notes a gold reserve of only 25 per cent. Then there is another important point. Assuming that the Treasurer gets the consent of the people, and a renewal of confidence, and that he administers the Australian note issue in conformity with the principles of the last Act; assuming further that the Act will come into operation during the last half of 1913, there will be a circulation of probably £[10,000,000 worth of notes, for which he need keep only 25 per cent, of gold. In other words, he will commence some time in 1913, if, by some misfortune to the country, he is retained in office, a course of administration with a further £[1,200,000 freed from the Treasury.

Senator Rae - That will be very handy.

Senator ST LEDGER - It will be very handy to play with. When you find about one-third of the gold in the control of the Treasurer, falling into his hands from a source like that, and by the means I have described, we have a right to know what he intends to do with that addition to the gold at his disposal. Does he look upon it as a source from which to pay the first call for the maternity bonus if he passes the Bill? Surely it was not beyond his intelligence to have anticipated that position, but on that matter he is absolutely silent. A great deal has been said, and possibly will be said, with regard to the note issue in the future, and one of its great defences has been that it has followed very closely the Canadian system. If the Treasurer, or his supporters, are comforting themselves in the thought that the Australian note issue is administered on the principle of the Canadian note issue, they are labouring under one of the greatest delusions.

Senator McGregor - Nobody has ever said that.

Senator Pearce - Who made such a defence?

Senator ST LEDGER - I did not say so, because I am rather too quick to be caught in that way. What I said was that one of the great defences has been-

Senator Pearce - By whom?

Senator ST LEDGER - By the Sydney Bulletin, over and over again.

Senator McGregor - It objected because it was not the same.

Senator Millen - What is the statement challenged ?

Senator ST LEDGER - My statement is that in no respect does the administration of the Australian note issue resemble the administration of the Canadian note issue.

Senator McGregor - No one ever said anything of the kind.

Senator ST LEDGER - I mention this because I wish to point out one or two things which go to show that while the Canadian Government issue their notes to a large amount they are all the time very carefully building up their gold reserves.

Senator Rae - It is a pity the honorable senator is not as careful in his statements.

Senator ST LEDGER - I have made no statement which I am called upon to' qualify or withdraw. Before the issue of our Australian notes newspapers, having some financial reputation, urged that we should follow the Canadian system.

Senator McGregor - But we do not.

Senator ST LEDGER - It was suggested to us by financial authorities outside as a model, which we might follow, or upon which, in some respects, we might improve. Financial authorities inside, as well as outside Parliament, recommended that we should follow it. I wish to refer to some remarkable differences between the Canadian system and our system in relation to the gold reserve. I quote from an article by Mr. Eckhardt, comparing the Australian and Canadian note issues, and published in the Insurance and Banking Record for 21st August, 1 91 2. Referring to the Canadian note issue he says -

The true circulation is mainly that of bank notes.

He distinguishes between circulation and issue -

The effective circulation in April, 1912, of bank notes was 86,000,000 dollars.

I ask honorable senators to mark the words the effective circulation." because the use of that term distinguishes clearly between circulation and issue. The writer is here dealing with the amount of notes in the possession of the public for redemption at the Treasury in gold at any time. He goes on to say that the Dominion notes circulation was 17,000,000 dollars. The bank note circulation still remains in Canada. The value of its circulation, according to Mr. Eckhardt, was 86,000,000 dollars, and the Dominion note circulation was 17,000,000 dollars. The banks hold large amounts of Dominion notes for clearing and for reserve purposes, but nearly the whole is represented by gold held in the Treasury. I deal with this matter as a warning, and almost an entreaty to the Treasurer to reconsider his proposal to diminish the gold reserve for our Australian notes -

Against the first 30,000,000 dollars an amount of 25 per cent, has to be held in specie, and over that amount dollar for dollar.

Assuming that this writer is correct his statement is that the Canadian Government issue a little over £6,000,000 of Dominion notes, and hold in reserve against them 25 per cent, in gold. The Government now propose to permit the Commonwealth Treasurer to issue what Australian notes he pleases, and to still remain content with a 25 per cent, gold reserve. With a bank note circulation side by side with the Dominion note which should strengthen the Treasurer's position, the Canadian Treasurer will only permit an issue to the value of 30,000,000 dollars, or £6,000,000; with a gold reserve of 25 per cent. -

On the 30th April, 1912, there was held 92,816,758 dollars in specie against 113,169,722 dollars of Dominion notes.

In other words, the Dominion Government held a reserve of gold, or its equivalent, to the extent of 82 per cent, of the Dominion note issue. That should be a striking warning to our Treasurer to be very careful about his note issue and the gold reserve held against it. The experience of private banks in Australia, and the experience and practice of the Canadian Government should warn the Commonwealth Government of the necessity for an ample gold reserve.

Senator Rae - Can the honorable senator tell us what reserve in gold was held against the private bank issues he speaks of?

Senator ST LEDGER - That is not my business now. I am dealing with the Treasury note issue, and the gold reserve held against it, and I refer to the Canadian experience to suggest how our note issue should be dealt with.

Senator Pearce - The honorable senator spoke of the reserve being in gold, or its equivalent. What was the equivalent to which he referred ?

Senator ST LEDGER - It is true that they often take State debentures, and so do the private banks, as reserves.

Senator Pearce - What proportion of the reserve referred to was represented by State debentures?

Senator ST LEDGER - I did not go into that. I take it that what Mr. Eckhardt says is substantially correct, and that the Canadian Government held a reserve against their note issue of 82 per cent, in gold, or its equivalent.

Senator Pearce - Seventy per cent, of that might be represented by debentures.

Senator ST LEDGER - The Minister of Defence may take what cold comfort he can from that, but he should not forget that the Commonwealth Treasurer proposes to content himself with a reserve of only 25 per cent.

Senator Pearce - On the same basis the Commonwealth Treasurer may have a reserve of 100 per cent., because he has the right to issue debentures up to the full amount of the issue.

Senator ST LEDGER - The Canadian Treasurer issued less than one-third of the value of the notes issued by the banks, and then was not satisfied until he had a reserve of 82 per cent, of gold, or its equivalent.

Senator Pearce - The Canadian system is entirely different from ours. /

Senator ST LEDGER - I hope the Commonwealth Treasurer will be driven to adopt it, or will, at least, be forced to adopt some of its safeguards. In dealing with the relation between Government paper and its gold reserves one cannot extend the warning too far.

Senator McGregor - The honorable senator has cut his too short, because he does not know enough of what he is talking about.

Senator ST LEDGER - Tn this matter. I know all that I am talking about. I know what the figures mean. The honorable senator will pardon me for saying that I did not come into this Parliament as an uneducated boor. I know something about these things. I may be wrong in the inferences I draw, but T know something of the significance of figures in finance.

In spite of the jeers of the other side, I am of opinion that the figures I have givens are somewhat alarming. I wish now todeal with another aspect of the Budgetpapers having relation to our Tariff and our industries. We are frequently informed by individuals holding certain fiscal opinions that the Tariff has been more or less a failure, and is unsatisfactory in ita effect upon the industries of Australia. We are told that, by reason of its unscientific nature, Australian industries are in danger. We have heard something; about '' strangled industries," and the further criticism is often made to the effectthat the worker is not getting a sufficient return from those industries, which are adirect or indirect consequence of the operation of the Tariff. Quoting from the Commonwealth Statistician, I find that thevalue of land, buildings, plant, and machinery, in 1910, used in the factoriesof the Commonwealth was £29.511,639. In 1904, the value of land, buildings, plant and machinery was £23,242,262. These figures show an increase of £6,000,000, or, roughly speaking, 25 per cent. That is not wholly unsatisfactory. We have an increase of 25 per cent., whilst the population during the same period hasbeen increased by only 6 per cent, or 7 per cent.

Senator Pearce - Then we may take it that the honorable senator is satisfied with the Tariff?

Senator Millen - Will the Minister of Defence tell us whether he is satisfied with it?

Senator ST LEDGER - I say that it is not entirely unsatisfactory. The value of the raw materials, and the output of the factories is significant in determining the progress of industry. I find that the value of the raw materials used in these factories in 1910 was £[72,722,642, and the value of the output was £120,770,674, showing an added value to the raw material after the processes of manufacture amounting to £[48,048,032.- The salaries and wages paid in 1910 represented £[23,874,959. We may take it as a fairly sound economic proposition that the return of capital and wages are paid entirely from the added value given to the raw materials after the various processes of manufacture. In other words, out of this £[48,000,000 worth of added value nearly £[24,000,000 is expended in wages. The balance represents interest on the capita] invested-

Senator Vardon - And there is depreciation.

Senator ST LEDGER - If I am erring at all, I am erring against the legitimate view of the capitalist. From these figures, it is apparent that our factory workers are receiving at least10s. out of every pound's worth of added value which is given to the raw material.

Senator Rae - Is that the honorable senator's own estimate?

Senator ST LEDGER - It is the only deduction which can be made from the figures which I have quoted.

Senator Long - What was the cost of the raw material?

Senator Millen - That is not material to the honorable senator's argument. The point is, " How much does the added value represent? "

Senator ST LEDGER - For the information of Senator Long, I repeat that £72,000,000 was the value of the raw material when it reached the factories. When it came out of them, its value was £120,000,000. It had consequently obtained an added value of £48,000,000. 1 venture to say there is no country in the world in which the worker receives 10s. upon every£1 of such added value. It is scarcely necessary to point out that the amount which the workers in our factories are receiving is slowly rising.

Senator Rae - They will want a bit more yet, and they will get it.

Senator ST LEDGER - No doubt.

Senator Pearce - The honorable senator is endeavouring to point out that the worker does not get enough.

Senator ST LEDGER - I am merely putting forward the figures for any comment which may be made upon them. I repeat that there is no country in the world in which the factory workers obtain such a return from the money which is invested in industrial enterprise, and all the jeremiads which are so frequently heard on our public platforms, to the effect that the workers are being ground down, are an absolute fabrication, and constitute an appeal to the very lowest of prejudices.

Senator Rae - The workers do not intend to be ground down.

Senator ST LEDGER - Anybody who is familiar with the proceedings of this Parliament must know that the workers, or a certain section of them, under the inspiration and guidance of a particular class of politicians, are gradually being taught the gospel that the capitalists are their irreconcilable foes, and that between them there can be no peace. That gospel is frequently preached by honorable senators opposite in many trades halls.

Senator Long - Does the capitalist invest his capital for the mere fun of doing so?

Senator ST LEDGER - The figures which I have quoted show that the worker receives 10s. out of every , £1 of increased value which is given to the raw material in our factories. It is very satisfactory to know that he is getting so much. I hope that things will be so managed in the future that he may obtain more and more. But in order that he may do so it is essential that harmonious relations should be established between himself and the capitalist, so that the latter may be induced to invest more sovereigns in his industry. The more this rational, peaceful method of working is introduced into Australia the better will it be for the worker. I do not think it is generally known to the worker that for every £1 which is invested in the industries of Australia he is receiving a return of 10s. Although I have occupied a longer time than I had intended in discussing this question, I desire, before closing my remarks, to deal with another aspect of our Tariff. I wish to consider it from the point of view of whether it is materially interfering with our industrial development. It is frequently stated outside of this Parliament that where the imports of a country exceed its exports there must necessarily be something wrong with its primary and secondary industries. I do not assent to that bare proposition, which needs to be accepted subject to many qualifications. I intend to show that the imports of a country may vastly exceed its exports and yet it may be impossible for anybody to argue that its industrial development is being retarded. Let me take our imports and exports for the three years 1909 to 1911. In 1909, our imports were valued at £51,000,000; in 19 10, their value was , £60,000,000; and, in 1911, it was , £66,000,000 - an increase of about 23 per cent. During the same years our exports were valued at , £65,000,000, £74,000,000 and £79,000,000 respectively - an increase of approximately 20 per cent. It will thus be seen that our imports and exports, from the stand-point of increase, were fairly balanced. This year there has been a turn of the tide as against our exports and in favour of our imports.

By reason of that fact it is argued with what might be called either fanatical hatred or gross ignorance that our industries must be at once attended to by some rough and drastic Tariff method. I do not subscribe to that proposition. Apart from Tariff arrangements, anybody might have anticipated that this year our imports would be greater than our exports, and that, under the continuance of conditions which have been very marked during the last year or eighteen months, our imports would exceed our exports, not by reason of our Tariff, but because of the action of the various Governments of Australia - both Commonwealth and State. There never was a period in the history of this country when the Commonwealth and State Governments were spending money so profusely amongst the masses as they are spending it to-day. The Commonwealth is spending out of revenue between £[15,000,000 and £16.000,000 annually, and the States are spending millions. Within the past eighteen months or two years the States have expended a sum of probably £[10,000,000 or £[1 2,000,000 out of loan moneys or revenues. That money was spent largely on public works. The amounts are increasing fast. The result is that money is plentiful in the pockets of the people. When that is the case, as Gladstone remarked more than once, imports rise; because, as he said, when the wine of prosperity is on the lips of the people they will buy more. Consequently, more imports are bound to come in, in spite of any Tariff, scientific or unscientific. Profuse expenditure of Government money is bound to result in increased imports. It indicates a dangerous confusion of ideas to argue that you must have a new Tariff under those circumstances, and to neglect the fact that it is the profuse expenditure of money which has necessarily led to the importation of goods. If an excess of imports over exports meant that the industries of a country were on the decline, Germany would be in a bad way. Her imports in 1911 amounted to £[477,000,000, and her exports to £[405,000,000. I believe that the same relation has existed for some time. But nobody in the Reichstag has argued that, because the imports largely exceeded the exports, the German Tariff was strangling industry. Germany is a highly protected country, and her industries are probably conducted more scientifically than any other industries in the world. The persons connected with the organization of those industries have not raised a note of alarm because Germany imported £[72,000,000 worth of goods more than she exported.. They did not say that their industries were being strangled by a set of ignorant Conservative Free Traders.

Senator Lt Colonel Cameron - Very much of the German balance goes to pay interest.

Senator ST LEDGER - That is probably the case.

Senator E J RUSSELL (VICTORIA) - Surely the payment of interest does not increase imports !

Senator ST LEDGER - If I may venture an opinion on that point, I would say that a. country like this must pay interest on loans by the difference between exports and imports. If, in a new country like ours, the exports for a considerable time did not keep ahead of the imports, it would not be long before the Government would find itself in the difficult position of having to pay interest on money borrowed in the form of gold.

Senator E J RUSSELL (VICTORIA) - Does the honorable senator indorse Senator Cameron's remark that the payment of interest is made by imports?

Senator ST LEDGER - It may be so under some circumstances. A number of facts would have to be investigated in the case of Germany before it could be determined that the Tariff, which caused an excess of imports over exports, was ineffective. Take France, which is also a highly-organized manufacturing country. In 1910 the imports were £[364,000,000, and the exports £[324,000,000. The same relation has prevailed for a number of years. But no one says that French industries are being strangled because of an unscientific Tariff. I mention these things because they are unfortunately connected with Tariff matters, and because I wish to indicate that high imports are in no sense related to the unscientific character of a Tariff. The amount of a Tariff must depend upon considerations which are entirely different, and in no way connected with the economic phenomena of exports and imports.

Senator E J RUSSELL (VICTORIA) - The honorable senator repudiates the platform of the Liberal party?

Senator ST LEDGER - I am doing nothing of the kind. What I have said I have said ; when it is- my part to justify my utterances I shall do so. All I can hope is that when my honorable friendsopposite have to deal with the same matter, they will be no more uncomfortable in their little happy home than we on this side are alleged to be. I can meet with confidence anything that I have said upon this matter in the past, and I have not the slightest feeling of trembling as to how I shall have to meet these utterances in the future. The object of my criticism has been to show that our taxation and commitments are enormous, and that we are afforded no light from the Treasury as to what is. to happen in the future. I have pointed out that our unexampled revenue is balanced by an overwhelming expenditure, which is pushed to the last farthing. The Treasurer's Budget shows no indication as to how future commitments are to be met. Already the financial ship of the Government is waterlogged, even in prosperous spas. What would happen if a storm came. Honorable members opposite are apparently too reckless, or too indifferent, to explain. There is, at any rate, the indubitable fact; whether the inference is properly drawn is another matter. We are making no provision for the great commitments for public works that stand ahead of us. We are living from day to day. Our burden of taxation is one of the heaviest borne by any people on earth. Certainly we are a prosperous people, and we are also most patient and long suffering. But experience shows that it is useless for the Government to act upon the policy, " This will last our time, and to-morrow things will be all right." Remember that the remark of the French King, " After me the deluge," was made just before the beginning of a frightful revolution. If this taxation of ours is not checked, and if care and wisdom are not shown, we are preparing ourselves inevitably for a financial crisis which will react upon every class of the community, and upon none more severely than upon the workers, whose special servants the Government and their supporters profess to be.

Senator Lt.-Colonel Sir ALBERTGOULD (New South Wales) [5.36].- There is not much inducement to speak at length on the Budget-papers, because of the way the matter has been dealt with in another place. But, at the same time, we cannot allow the occasion to pass without making some criticism with regard to the financial, affairs of the Commonwealth. Senator St. Ledger has pointed out the serious condition of affairs. We know perfectly well that the Government are increasing expenditure in a very marked degree. It is also true that there are certain commitments, involving large expenditure, which cannot be avoided. But when honorable senators on this side criticise the Government with regard to the expenditure being incurred, they are met with the remark, "What would you cut down?" There is but one reply, and that is that the Opposition are not in a position to point out definitely what commitments should be avoided. It is the duty of the Government to ascertain what revenue they are likely to derive, and what expenditure they can afford to incur in the future. It is all very well to say that this, that, and the other works are necessary to be carried out. That may be perfectly true. But there are many works necessary to be carried out sooner or later which the Government may not be in a position to carryout immediately. They must select and must deal with those works which the revenue will permit them to undertake. We might have a perfect orgy of extravagance. The Government might say that they would spend £50,000,000. But, if prudence is to prevail, expenditure must not be incurred which it is quite outside the power of the people to sustain. They must postpone such works until they can be conveniently undertaken. I feel quite sure that the members of the Government have experienced what the members of nearly every Government have experienced. I expect that they have recommended the carrying out of works in connexion with their Departments which they considered essential, and that, time and again, the Treasurer has put his pert through very many of their proposals, for the simple reason that he could not finance them. That is where Ministers have an advantage over honorable senators, because they know what works they can deal with; but if they intend to overtake all the works which are submitted to them, there can be only one result finally, and that is financial chaos. Australia is not now in the very happy position in which it was a little time back in regard to the power of obtaining money to carry out public works. It will be impossible for the present Government, or their successors, to carry out all necessary works out of the general revenue, unless they are going to destroy the source from which that money is obtained. They can only levy a certain amount of taxation, unless it is intended to crush the industries of the country and the workers. Our people are complaining to-day of the increased cost of living. Do not honorable senators perceive that the cost of living must increase year by year as the amount of taxation is increased? As a man gets a higher rate of wages, so he must be prepared to pay higher prices for the necessaries of life. We hear a great outcry about the enormous increase in rent. But will not honorable senators realize that, if it costs a man 25 per cent, more to erect a house, he must get a proportionately large increase in rent in order to make the investment pay? The tenant, of course, feels that pressure, and so it is with every industry in the country. Take the case of any tradesman. If the wages of the men who manufacture boots . are increased, naturally the cost of a pair must be greater to the user. As we increase our taxation, so we increase the cost of living to every man and woman in the country. Take, again, the Governments of the States. They are experiencing a difficulty in raising money by way of loan. Where they were able to raise money at 3 J- per cent., they find that they now have to pay 4 per cent. The Municipal Council of Sydney require £750,000 in order to meet certain commitments. They find that they cannot borrow the money at 4 per cent., although the security they offer may be looked upon as a first-class one; and the proposal is to issue a loan at a discount, which means that they will have to give more than 4 per cent, for the money.

Senator Millen - It will work out, probably, at 5 per cent.

Senator ALBERT GOULD (NEW SOUTH WALES) -Colonel Sir ALBERTGOULD.- Very likely. It should be borne in mind that this difficulty is experienced within a few years of the time when there was no difficulty in raising money at 3! per cent.

Senator McGregor - There is no import duty on money.

Senator Lt Colonel Sir ALBERT GOULD - I am not saying that there is an import duty on money, but pointing out that as the Government increase the cost of living and the amount of taxation, they will increase the difficulty of obtaining money for public works, because the money is being expended in the community, and has to earn a higher rate of interest year by year. Again, take the case of the banks. Settlers know perfectly well that, instead of being able to borrow with a fair amount of facility, there is a good deal of difficulty in obtaining a loan. They find that the value of the security is more closely scrutinized, and the amount of interest which has to be paid is higher, than it used to be.

Senator McGregor - But is it not the same in every country in the world at the present time?

Senator Lt Colonel Sir ALBERT GOULD - Not in the same marked degree as in Australia to-day, although I know that, in other parts of the world, there are difficulties. Just as we see financial stringency, arising in other parts of the world, so the Government may depend upon it that it will react upon themselves. What is the prudent course for the Government to take when they find an increasing difficulty in raising money, and a higher rate of interest being demanded? It is to reduce the expenditure as far as they reasonably can.

Senator Needham - In what respect?

Senator Lt Colonel Sir ALBERT GOULD - In every respect where they find that a reduction can take place.

Senator Millen - If he wants a specific case, give him the steam laundry.

Senator Lt Colonel Sir ALBERT GOULD - There is the case of the steam laundry. But, putting that on one side, I represent that I am not in a position to criticise every item of expenditure proposed by the Government. I am not in the inside running, so I cannot tell what is the more important and what is the less important. It is the duty of the Opposition, however, to point out, if they can, that the expenditure is being increased at a rate altogether disproportionate to the increase in the population.

Senator Long - Do you suggest that the contemplated expenditure is not placed fairly and squarely before honorable senators?

Senator Lt Colonel Sir ALBERT GOULD - I only suggest that honorable senators are not in a position to say definitely which items ought to be cut out or kept in.

Senator de Largie - Nor are you.

Senator Lt Colonel Sir ALBERT GOULD - That is what I have pointed out. When we find that the Government are increasing the expenditure to a vast extent, it is our duty to issue a word of warning. We know to-day that they propose to expend during the current year upwards of £20,000,000, and that, in order to make ends meet, they are dependent to a great extent upon Trust Funds to the amount of a couple of million pounds.

Senator de Largie - What would you have them do?

Senator Lt Colonel Sir ALBERT GOULD - Live reasonably within their means.

Senator de Largie - That is what we are doing.

Senator Lt Colonel Sir ALBERT GOULD - No. The Government will spend this year over £2,000,000 more than they will raise, and what will they do in the following year? Do they intend to increase the expenditure at the same ratio?

Senator Pearce - Do you know that the Trust Accounts were established for the purposes for which the money is being expended ?

Senator Lt Colonel Sir ALBERT GOULD - I know that they were established out of revenue derived 1 from the people in the years that are past, but there will be no opportunity for the Government to make any savings in the same way during the current year, or probably for several years to come.

Senator Needham - How would you avert this awful calamity?

Senator Lt Colonel Sir ALBERT GOULD - I am very much in the same position as Senator St. Ledger, who replied that he would be prepared to prescribe when he was called in. I feel called upon to issue a word of warning to honorable senators opposite about the position of the finances. I have recognised that there are large commitments which we cannot avoid meeting. We must provide the old-age and invalid pensions, which are responsible for a large expenditure, and also meet our large commitments in connexion with military and naval defence. It is proposed to spend money in other directions. We are committed, for instance, to an expenditure of about £4,000,000 on the construction of .a railway from Kalgoorlie to Port Augusta. Is this money to be provided out of general revenue, or is it to be borrowed ? The other day we passed a Loan Bill authorizing certain amounts held by the Treasurer to be passed over to a fund for the purpose of constructing this railway. At any rate, it is the commencement of a loan policy. Is it intended to obtain money in the open market, or to try to screw more taxation out of the people in order to meet these large commitments as years go by ? Or is it intended to dawdle over the work, and make it last for years instead of completing it within a reasonable period? Again, in the Northern Territory, a railway is to be constructed from the north to the south. There will be other enormous expenditures in connexion with the administration of the Territory, which, for years, was a consistent source of loss to South Australia. We shall have to meet these losses until we are in a position to make the Territory selfsupporting. These are very serious matters when honorable senators look ahead, and consider what the future has in store for them.

Senator de Largie - We would be serious if we had an empty purse.

Senator Lt Colonel Sir ALBERT GOULD - Honorable senators opposite are supporting a Government who are spending every penny of the current revenue, and the money which they have had in- hand from previous years, namely, £2,000,000, but who have not given the slightest indication of how they propose to provide for the future. We are aware that certain amounts are derived from Customs and Excise duties, land taxation, and coinage. These amounts, unless they are to be increased in a very marked degree, will not cover the same amount of extravagant expenditure as is going on today. Some Government will have to materially increase the taxation, or to materially decrease the expenditure.

Senator de Largie - You cannot point to a single case of extravagant expenditure.

Senator Lt Colonel Sir ALBERT GOULD - I ask honorable senators whether they are going to increase the taxation in order to get the additional revenue which will be required? The Customs and Excise revenue is over £14,000,000. Those who desire very high protective duties are crying out that they do not want revenue duties. If their request be granted, that would decrease the revenue from this source at the expense of those who will have to pay much higher prices for goods than they have been in the habit of paying.

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