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Tuesday, 10 December 1912

Senator ST LEDGER (Queensland) . - We have heard two interesting speeches on the loan policy from two distinguished members of the Government. It was quite patent to the ears of anybody, and it was exactly so intended by the Minister of Defence, that his speech should be read and taken as an apology - an apology by comparison with the past, and, through that apology, an apologetic justification for the difficult and inconsistent position in which the Government now find themselves. He began with an apology, and his. speech was an apology throughout, and a member of the party has just ended a speech with a complete repudiation. They can reconcile their position to the Senate, and also to the supporters of the Labour party.

Senator Rae - How can you call Senator Stewart's speech a repudiation?

Senator ST LEDGER - Because Senator Stewart pointed out, if I understood him properly - and I think he intended to convey it - that if the financial plank of the Labour platform were carried out as it was originally intended, there would be no borrowing at all. He has gone further, and pointed out that if the idea of paying for public works out of the unearned increment of the community - which, according to him, is easily available - were realized, there would be no necessity for any loan or borrowing policy. I think that there is no man in the Labour party in Australia to-day who is so familiar with the platform, and has been so strongly insistent on that financial plank as the basis of the financial policy of the party, as has Senator Stewart, and when we have the head of the party apologizing for the policy, and a strong supporter like Senator Stewart repudiating it practically in its entirety, the only conclusion which the Opposition and the general public can come to is that they really do not understand what their policy means, or, if they do, that they do not intend to carry it out.

Senator Lynch - Who is apologizing for the policy?

Senator Millen - Do you not think that the correct explanation is that every man is at liberty to interpret it, and to vary the interpretation according to times and circumstances.

Senator ST LEDGER - Exactly ; and now we have had a version from the Minister of Defence, as I shall show from his speech. After the handling which it has received from Senator Millen,Hansard ought to be burned. The Labour party, as well as the Liberal party, has got itself into the position in which it raids it must borrow. Circumstances have so developed - and they have developed as part of a deliberate policy on the part of the Labour party - that they must either repudiate their policy in regard to railway development in the Commonwealth or repudiate borrowing. It cannot be carried out without borrowing. Fortunately for us, Hansard remains to prove irrefutably that originally when the Labour parly came into this Parliament the thing on which perhaps they prided themselves more than anything else was their repudiation of a borrowing policy. At the first opportunity they got here they repudiated it, and forced a Treasurer, who, unfortunately, was not strong enough to resist the pressure brought upon him, to withdraw his borrowing proposals, and fall back upon revenue.

Senator McGregor - And he was prepared to eat dirt.

Senator ST LEDGER - I do not say " to eat dirt,,J because I think that there is such a thing as political necessity and political expediency.

Senator McGregor - That is what Sir John Forrest did, at any rate.

Senator ST LEDGER - What is this loan policy now but a policy of expediency, which in itself is a complete departure from that hard and fast rule of no borrowing?

Senator Lynch - Can you point to a plank in the Labour platform which forbids borrowing ?

Senator ST LEDGER - I am entitled to look at the plank in the light of the interpretation which Senator Stewart has given to it.

Senator Rae - And he deliberately said that it was his own.

Senator ST LEDGER - And, more than that, I think that on finance and many other matters Senator Stewart is just as able and lucid an exponent of the Labour platform and policy from his point of view as he is from the other. There is such a thing as expediency. The reference by

Senator Millento the declaration of Mr. J. C. Watson with regard to borrowing makes that point amply clear. On the 27th August, 1907, Mr. Watson said -

As far as I am concerned any proposal for loan expenditure -

By the use of the word " any," he was negativing " all " proposals for borrowing. I wish to emphasize his words. " As far as I am concerned," he said, " any proposal for loan expenditure will meet with strenuous opposition " - he was opposed universally to borrowing. But mark the conclusion of his statement. It shows exactly what he intended when he expressed his opposition to " any " proposal for loan expenditure.

Senator Rae - At that time.

Senator ST LEDGER - I am going to deal with that time. Let us take his statement as he made it.

Senator Millen - And not as they want to tone it down now.

Senator ST LEDGER - Exactly. The context will show that my honorable friends opposite cannot tone it down. The Minister of Defence tried to explain it away, but it is inexplicable in the fact of the clear, simple language of Mr. Watson. And his clear and simple intention could not be clearer or more emphatic than the words themselves - yes, there is one thing which is clearer and more emphatic than the words themselves, and that is the- context in which they are used. He said -

As far as I am concerned any proposal" of loan expenditure, unless the occasion be urgent, and unless the purpose be very important indeed, will meet with strenuous opposition.

In other words, any proposal for loan expenditure will meet with strenuous opposition. That is what the words are ; that is what the words mean.

Senator Millen - The strenuous opposition was not threatened to that proposal,, but to "any" proposal.

Senator ST LEDGER - To " any " proposal. To use a term in logic it was universal. What do the words, unless the occasion be urgent, mean. It is thoroughly understood that a National Government might be confronted with an emergency - with war or preparations for war - which everybody, even the strongest and' staunchest Labour member supporting the principle of unearned increment, as put forward by Senator Stewart, would hold, and very properly hold, that this principle should be relaxed.

Senator Rae - It is not merely a case of relaxing, but a case of hurrying to get it where you can.

Senator ST LEDGER - Let my honorable friend read Mr. Watson's words with that qualifying context. It is clear that what he meant was that a national emergency - a war or preparations for war, or some financial emergency such as the States were confronted with in 1893 - might require a modification of the broad principle. But the broad principle he had first laid down universally. It is clear from the words and the context, taken together, that his meaning was that there should be no borrowing for public works expenditure, but that the money should come out of the general revenue. On that line of argument, and with that explanation, it is clear that Mr. Watson boldly informed Parliament what was the loan policy of the Labour party until this Government came into power. What is the explanation given by the Minister of Defence? He has stated that the reason why the Labour party opposed the proposal of Sir George Turner at that time was that the Commonwealth Government were returning an average of £880,000 a year to the States. It would be absurd and unjust, he practically contends, when they were handing back , £880,000 a year to the States, to go into the open market and borrow money for public works. But the argument cuts both ways. When the revenues were small, possibly there was more justification for it; but there ought to be no justification, in a case where the Commonwealth get a revenue of £22,000,000 odd. When the . Commonwealth Government had control of only a comparatively small amount for carrying out urgent matters, and were returning, as they were bound to do under section 87, a certain amount of revenue to the States, one could understand why the Treasurer could use that as an argument not for tightening up the States any further, or for tightening up himself, or for going into the open market either in Australia or outside.

Senator Rae - That does not answer the position of paying away unnecessarily the surplus of the one-fourth share which he could keep, and then borrowing.

Senator ST LEDGER - My point is that with a revenue of £22,000,000 odd to deal with, the Government ought not to have to borrow in order to aid their revenue. It is inconsistent, and worse than inconsistent, to make a charge against a former Treasurer, who had only £6,000,000 or £7,000,000 to carry out everything.

Senator Findley - There is no comparison between what is being done now and what was being done then.

Senator ST LEDGER - No. There is the fact that the Commonwealth Government were tied down by section 87 of the Constitution. They had less money of their own, so to speak, to deal with. They were confronted with public works, and naturally the Treasurer at that time would, in order not to increase the pressure on himself, seek to borrow. But no such circumstances prevail now. The Treasurer is discharging practically all his obligations to the States to-day by paying back to the States only half of what Sir George Turner and his Government had to pay back under section 87. The differentiation only makes the aggravation of this loan policy, in the circumstances, all the greater. There is another consideration which is put before us, and of all people in the world, it is put before us by Senator Stewart, who is so strong on the unearned increment, and that is that a portion of this loan is to be applied to the purchase of land for a post-office at Perth. We are told that this purchase is bound to be a good bargain. This statement originally made by the Vice-President of the Executive Council has been repeated by a number of honorable senators opposite, and even Senator Stewart could not help joining in the chorus. But how can it be a good bargain unless the unearned increment is realized upon? As a matter 'of fact, this is nothing but a speculation on the improving value of the property, and if the Government are going to adopt this policy in connexion with the post-office at Perth, why should it not be followed in regard to postoffices and Customs Houses everywhere?

Senator Stewart - Do you want the Government to rent buildings everywhere?

Senator ST LEDGER - No. I do not want them to rent buildings if they do not require them. I have always held that there is no objection to borrowing for reproductive works. The defence in regard to this transaction is that it would be a good bargain in the future. In other words, from Senator Stewart's point of view, the Government are taking advantage of the unearned increment, whereas, from the other stand-point, the investment may be regarded as a speculation. The inference, from all we have heard from honorable senators opposite, is that the land will become more valuable, and that this will be a good thing for the nation. But apparently it is denied that similar investments would be a good thing for the individual. The arguments used in connexion with the Perth Post Office remind me that some little time ago the Minister of Home Affairs went to Sydney and publicly announced that he contemplated buying up Martin-place, in order to acquire additional sites for post-office purposes. He also informed the people that £1,000,000 spent in that quarter for the purpose indicated would be one of the best investments the Commonwealth could make. After his romantic scheme had been made public, the Attorney-General had his attention called to the announcement, and described it as an " Australian Night's Entertainment," and practically removed it from the sphere of practical proposals.

Senator Millen - And we have not heard anything more about it.

Senator ST LEDGER - Yes ; there was a little more - something that was rather humorous in so far as it had a bearing upon the relations existing between the Minister of Home Affairs and his colleagues. In addition to the Attorney-General, whose attitude I have indicated, the Treasurer also smiled the proposal out of court. He blew the " hifalutin " scheme to ribbons, and subsequently the Minister of Home Affairs maintained that he had just as much to say as the Prime Minister so far as the policy of the Government was concerned. He pointed out that the Caucus made the Prime Minister, as well as the Minister of Home Affairs, and that Ministers were on an equality. For the same reasons that were advanced by the Minister of Home Affairs when he proposed to spend £1,000,000 in Sydney, we are asked to approve of the expenditure of loan money in the purchase of a post-office site at Perth. Another reason that has been put forward in support of this proposal is very plausible at first sight, but is of no value when closely examined. We are reminded that we shall be borrowing from ourselves. But I would ask whether the proposal is any the better or worse on that account ? Personally, I think it would be a great deal worse for us to borrow from ourselves rather than from others, in view of the present financial conditions. There was never a time in the history of Australia when we more urgently required all the money we could get for investment in the development of our resources. We know that the Australian money market is as tight as ever it was. I admit that money is tight all the world over, but in no other country is the pressure of financial stringency being more severely felt than here. We know that overdrafts are being called in, and that advances have been practically brought to an end by the banks. It is common knowledge that every sovereign that can possibly be accumulated is being retained by the banks," and one of the worst things we could possibly do would be to go into the Australian money market for borrowing purposes. The outlook is not at all cheerful. The exports of gold from Australia from 1st January to 19th September, 191 1, represented a value of £6,163,112, whereas for the corresponding period of 191 2 the exports were valued at £10,008,197, or a difference of £3,945,085. This additional gold had to be sent out during the current year to meet our heavier liabilities, and there does not seem to be any indication of a diminution in the export of gold. For ten months of the current year we have exported gold to the Value of £8,860,167, or assuming the same proportion is maintained to the end of the year we shall have exported £10,632,000. For the corresponding ten months of 1911 our gold exports were valued at . £5,821,707, or, assuming that the same rate of exportation was maintained for the year, the total would be . £6,995,707. Therefore, during the current year we are being called upon to pay between . £3,000,000 and £4,000,000 in excess of the amount required from us during the preceding year. Now, taking the exports and imports, we find that during the first ten months of 19 1 2 the imports were valued at £65,057, 812, or, allowing the same proportion for the full twelve months, the total for the year will be £78,057,812. The imports for 191 1 amounted to £65,000,000. In other words, we are importing very heavily during the current year as compared with the previous year, and the difference will probably amount to £15,000,000.

Senator Rae - What has that got to do with the loan market?

Senator ST LEDGER - I wish to show that at present the Australian loan market is the worst one to which we could go for borrowing purposes, and that the general principles which I am putting for- ward are not in any way weakened by the statement that we are proposing to borrow from ourselves. If we must borrow, the world's market will be a better one for us than the Australian market. The figures I have quoted show how very stringent the conditions are in the local money market, and if the flow of gold continues, as at present, the Government will not be able to borrow money here, nor will they be able to obtain more money from the taxpayers, but they will be compelled to go into the open market to raise money to carry out public- works.

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