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Thursday, 13 November 1930


Senator CHAPMAN (South Australia) . - I cannot allow the motion to pass without astrong protest against the action of the Government in regard to a number of important matters. The Leader of the Opposition (Senator Pearce), has referred to the many negotiations between the Government and its supporters relating to the present crisis, andhas emphasized the vacillation of the Labour party in regard to its financial policy and its promises. Apparently, its policy is changed from day to day. Not so long ago, the ex-Treasurer (Mr. Theodore) promised that if Labour were returned to power the coal mines in Now South Wales, which were then closed down, would be re-opened within a fortnight. Supporters of this Government declared that it would solve the unemployment problem; but these, like many other promises made by the Labour party, have not been fulfilled. Instead of doing anything of a practical nature to bring about relief, the measures which it has introduced have had the effect of enormously increasing unemployment throughout the Commonwealth. The following paragraph, which appeared in the Industrial Australian and Mining Standard of the 2nd October, 1930, sets out the position clearly : -

The following figures, taken from the Quarterly Summary of Australian Statistics, issued by the Commonwealth Statistician, show the increase in unemployment amongst members of trade unions during the year 1929 and the first two quarters of 1930. The figures do not include persons out of work through strikes or lockouts, nor do they include persons who are working part time: -

 

Since that date unemployment has become even more serious.


Senator Payne - The percentage of unemployed has now risen to 20.5 per cent.


Senator Daly - That is right; unemployment is increasing.


Senator CHAPMAN - During the last election campaign supporters of the Labour party urged that the adoption of Labour's policy would mean an increase in employment throughout Australia. Recent happenings do not support that statement. The new taxation now being imposed upon all business undertakings will undoubtedly lead to an extension of unemployment. Employees are being discharged on every hand, because employers are unable to meet the tremendous charges laid upon them by this Government. The steady decline in the prices received for our exportable primary products is another factor. This Government has done nothing to relieve industry. During the last session of this Parliament the parties in opposition in another House submitted definite suggestions for reduction in governmental expenditure, but they were summarily rejected. This Government's proposals are set out on page 11 of the financial statement which is now before the Senate. Summarized, they are as follows: -

 

This new taxation must have an injurious effect upon business generally. The Government carefully refrained from asking sacrifices of its supporters, but, apparently, it singled out industry to bear the greatest portion of the new burden. In this respect, its proposals are absolutely class taxation, but, unfortunately, they will react upon the workers, who will suffer severely in the end. The Treasurer states further -

As previously stated, it is not possible to estimate with any degree of reliability what the deficit on the existing budget would be if the position were allowed to drift. With the restoration of confidence-

What prospect is there of any restoration of confidence in. the business community in the face of this crushing taxation? - and revival of trade, it is quite likely that the deficit would be somewhere in the neighbourhood of £8,000,000 or £10,000,000. The" proposals now submitted provide for an annual benefit to the budget of £8,000,000, of which £6,880,000 should be actually reflected in the accounts of this year.

Let us examine the position of some of the companies, whose difficulties were serious enough before this new taxation was adopted by the Government. The Adelaide Advertiser of the 19th September, 1930. publishes the following information relating to the position of seventeen well-known companies doing business in that city: -

INVESTORS' LOSSES.

£10,000,000 in Seventeen Companies.

How Wealth has Melted.adelaideshareholdersmakesacrifice.

Few people have any conception of the losses already sustained by what is loosely called capital as a result of the present depression. Union spokesmen have asserted passionately that workers will not consent to be singled out for sacrifice. In the article below they will discover that enormous sacrifices have already been made by others.

Investors in seventeen of the most popular companies listed on the Adelaide Stock Exchange have lost more than £10,000,000 in the last two years.

In one case, a man who retired at65 with investments, the result of thrift, which returned him £650 a year, now draws an income in dividends of only £120.

In order to ascertain the extent of the sacrifice that investors have made, a representative of the Advertiser compared present Stock Exchange prices of shares with those ruling in 1928. The 1930 figures in the accompanying table are taken from actual sales in the lust two months or are at buyers' quotations. Those for 1928 are the official Stock Exchange quotations between July and October -

 

That is what so-called capital has had to sacrifice. Yet, according to a telegram received from Darwin, the unemployed there, who were asked to clean gutters as relief work, would not do it under the rate of 23s. odd a day, and there are still men working on the go-slow policy, and workers who take up the attitude that they are the only persons who are sharing in the general depression. I do not think that the people of Australiaproperly realize what they are up against. There has been a drop of about £90,000,000 a year in our national income. Our exports in wheat and wool are valued at about £150,000,000, and there has been a drop in the price of wheat of a little over one-half, and in the value of wool of considerably over one-half. There is also loan money from overseas to the tune of £22,000,000 a year which we shall not receive in future. I estimate the drop in the national income at £90,000,000; others estimate it at £100,000,000. It means £90,000,000 less for the people of Australia to live on. For a population of 6,000,000, it means an annual loss of £15 per head, or £75 for a family of five.

I have been asked what is the way out. Some of our friends opposite think that a little inflation will not do us any harm. I am strongly and bitterly opposed to any policy of inflation by which the cost of goods would rise even higher than it is to-day. But if wages were halved and the cost of goods were halved, the working man to-day would be no worse off. The effective wage would be just about the same. I am not advocating a reduced standard of living; in fact, I do not think that at the present stage it is, or will be, necessary, so long as the working man and others give a decent output for the money they receive. But if the cost of goods were halved, the position of the man on the land, on whom Australia is dependent, would be altogether different. Years ago, with wheat at 3s. 6d. a bushel or less, and with wool about 9d. or10d. per lb., ho made his farm pay. He cannot do so to-day at those prices, because the cost of production is almost double what it was when those prices ruled. Already in South Australia a large number of men on the land have gone insolvent, and if costs of production remain as they are, and the prices for produce still remain low, a great many more of them will go insolvent. What will that mean? Already the storekeepers have financed these men up to the hilt, and if a few farmers fail - it will not take very many of them to do it - the local storekeepers will go down. I may be called a Jonah, but I see catastrophe ahead. Knowing the position of the man on the land to-day, I should be failing in my duty if I did not speak plainly. If the local storekeepers go insolvent, many wholesale houses in Adelaide will fail.


Senator Dunn - Does the honorable senator blame the Government because local storekeepers go insolvent?


Senator CHAPMAN - I blame the Government for increasing the burden of the farmer by imposing exorbitant tariffs and embargoes. Although the nominal wage to-day is practically double what it was years ago, the effective wage is practically no higher. Since the visit of Sir Otto Niemeyer, statistics have been published showing that, allowing for the unemployed, the worker to-day is actually getting less in effective wage than he was years ago, when the nominal wage was very low. But owing to high wages and high costs, the farmers and graziers cannot carry on. Nor can many men in business. They are sacking their employees, and more and more men are being thrown out of work. The remedy is not inflation, but a decrease in wages with which, of course, there must be a corresponding reduction in costs. The trouble is that the cost of goods cannot fall while we have prohibitive tariffs and embargoes.


Senator Barnes - Would not the honorable senator like this country to be selfcontained?


Senator CHAPMAN - Yes, and if the cost of production is brought down, Australia will be able to export manufactured goods, which it cannot do at the present time. Its export of manufactured goods does nor now exceed £4,000,000. I know that I shall be expected to indicate what would happen to the exchange position if tariff embargoes and prohibitive duties were removed. When a country finds that its imports are greater than its exports, its batiks raise the rate of exchange. The effect of this is to make the cost of imported goods a little higher, and that in turn means that just a little less goods are being imported by the people of that country. It also means that exports are stimulated by a premium and a little more exportation goes on with the result that the adverse trade balance is rectified in an economical and proper way. That course is followed in every country in the world, except Australia, at the present time. Every week the exchange rates are published in London newspapers. If Australia's exchange rate had been raised at the proper time, our adverse trade position would not have been so bad as it is. But what happened in Australia? I understand that the present Government has approached the banks and asked them to peg the rate of exchange, instead of allowing it to operate in anormal manner. But first of all it rushed in with tariff embargoes and prohibitions, using artificial means where ordinary means should have been adopted.


Senator O'Halloran - Why did not the previous Government, which the honorable senator supported, do what he advocates ?


Senator Sir George Pearce - The ordinary law of exchange was in full operation when the previous Government was in office.


Senator CHAPMAN - I understand that the bank rate has not been pegged until recently. What has been the effect of the prohibitive tariff and embargoes? Manufacturers have had as big an opportunity to profiteer as they had during war time. I quote the following from Smith's Weekly of the 9th August last: -







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