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Wednesday, 3 December 1930

Senator COOPER (QUEENSLAND) - I am merely quoting the figures contained in the Acting Treasurer's financial statement.

Senator Lynch - The honorable senator's figures do not include appropriations for road-making and naval construction.

Senator COOPER - I arn quoting the Acting Treasurer's figures, the accuracy of which I arn sure honorable senators opposite will not deny. By adopting such a policy that Government saved the taxpayers £840,000 a year, if interest is taken at 6 per cent.

Senator O'Halloran - The total debts incurred by that Government greatly exceeded the saving mentioned.

Senator COOPER - During the twin of office of the Bruce-Page Government, the total increases of the Commonwealth debt was £13,000,000. It is of no use for honorable senators opposite to try to confuse the public by quoting figures relating to State debts, which, in the same period, increased by £201,000,000; Queensland's contribution, I am sorry to say, having amounted to £28,000,000.

Senator Hoare - The Bruce-Page Government was left a legacy of £7,000,000 by the Hughes Government.

Senator COOPER - Allowing for that, the Bruce-Page Government was still £7,000,000 to the good after spending approximately £5,000,000 on warships for the defence of this country.

Let us examine the financial proposals of the present Government, the members of which, when in opposition, continually attacked the' Bruce-Page Government on the ground of extravagance. In the budget, presented last July, it proposed to raise by taxation an additional £12,500,000- nearly £2 a head of the population - from the taxpayers of this country. Prom that time the finances of the Commonwealth dropped behind . considerably each month. until they resulted in the astounding deficit of £6,747,000 for the first quarter of the financial year. Although the Government was aware of this drift - the monthly returns showed clearly what was happening - it made no attempt to summon Parliament to pass corrective measures until a month after the expiration of the first quarter of the financial year. Are we not justified in flaking ourselves why the Government, with its knowledge of the drift that was occurring in the finances of the Commonwealth, did not instantly call Parliament together?

Senator O'Halloran - I ask the honorable senator to quote the figures relating to the expenditure of the last year of the Bruce-Page Government, and the proposed expenditure for this year.

Senator COOPER - The proposal is to expend £4,000,000 more this year than was spent in the last year- of the BrucePage Government. Tlie only reason that we can assign for the failure of the Government to attempt at an earlier date to arrest the financial drift is that an election was pending in one of the States.

Senator Lynch - That election was more of an auction.

Senator COOPER - Apparently its attitude was, " We shall see what is the' result of the election before we deal with the finances of the Commonwealth." Its dalliance requires explaining, in view of the fact that the Prime Minister (Mr. Scullin) was a party to the following resolution passed in Melbourne at a conference that took place with the Premiers of the States on the 5 th and 6th August last : -

That the several governments represented at this conference declare their fixed determination to balance their respective budgets for the financial year 1930-31, and to maintain a similar balanced budget in future years. This budget equilibrium will be maintained oil such a basis as is consistent with the repayment or conversion in Australia of existing internal debt maturing in the next few years.

Further, if during any financial year there are indications of a failure of revenue to meet expenditure, immediate further steps will be taken during the year to ensure that the budgets shall balance.

Senator Rae - Have any of the State budgets been balanced ?

Senator COOPER - I am dealing now with the resolution to. call Parliament together immediately it became apparent that there was any drift in the finances of the Commonwealth. I maintain that Parliament should have been summoned as soon as the operations of the first quarter of the year disclosed a deficiency of nearly £7,000,000. Yet, we were not asked to reassemble for another month; and nothing of a practical nature has been done since we met. An early summoning of Parliament would have shown the people that the Government earnestly desired to balance its budget. But, instead of that, we had the spectacle of Federal Ministers and Labour members gallivanting throughout the State pf New South Wales. When, eventually, Parliament reassembled, instead of business-like proposals being advanced tq remedy the position, .government supporters wrangled with each other for a fortnight, and it was impossible to obtain any definite pronouncement of policy. This party wrangle culminated in the passing of the following resolution in caucus, at the instance of a responsible Minister: -

That legislation be passed immediately, compel ling bondholders in the £27,000,000 loan maturing in December, to hold their bonds for a further period of twelve months, interest to be paid as usual, with a proviso that persons in necessitous circumstances may receive immediate payment of small amounts by cashing their bonds at the Commonwealth, same to bc hold as non-interest-bearing security, the onus of proving that circumstances justify -payment to fall on bondholders.

The following motion was moved by the honorable member for Fremantle (Mr. Curtin), and agreed to: -

That a demand be made on the Commonwealth Bank Board to underwrite the £27,000,000 loan, failing which Mr. Anstey's motion be put into effect.

We are now witnessing the spectacle of the Cabinet-*-the leaders, or .the captains of the party-- being browbeaten and overwhelmed by the rank and file in the caucus. Rule by the forecastle was agreed to by 22 votes .to sixteen. It is humiliating for any party, any industry, or any business to be dictated to by its rank and file. If the leaders cannot impose their will on their followers, it is their duty to make way for others who can do so.

During this debate a great deal has been said and published in regard to the compulsory releasing of credits, which is regarded as. a fairy wand that, if waved, would extricate us from all our troubles. If that be so, it is extraordinary that every other country has not recognized its outstanding qualities. What exactly is meant by this phrase? From what I have been able to gather, the releasing of credits implies that there . are untold millions sterling locked up in the strongrooms and vaults of the banks of this country. Now let us endeavour to ascertain just where these untold millions are. At the end pf each quarter, the trading banks of Australia present a list of balances, technically called bank aggregates, for publication in all the newspapers throughout the Commonwealth, for the benefit of those who wish to ascertain the exact financial position of these institutions. On the 30th September, 1929, the deposits in the trading banks amounted to practically £2S0,000,000. By the 30th September, 1930, they had shrunk to, roughly, £263,000,000. Therefore, during the twelve months, the savings of the people, or the excess wealth of the nation, decreased by nearly £17,000,000. Similarly the reserve of -gold' and notes on the 30th September, 1929, amounted to, approximately £44,000,000, and on the 30th September, 1930, to approximately £36,000,000. It will thus be seen that, although the . individual income was reduced, the amount actually advanced was. greater, because the reserve was encroached upon tq the tune of, roughly, £8,000,000. Compared with the deposits, the advances :pf the banks .amounted to |93.32 per cent, on the 30th September, 192.9 ; but, by the end of .September of this year, they had increased to 98.14 cent.; and if we take into account Government securities, we find that the (percentage of advances ito, deposits was 105.6 per cent. Can any person with the slightest understanding of finance hold that the Acting Treasurer ;(Mr. Lyons) Was wrong in saying, in the course of his financial statement, that the limit of safety has been reached so far as the trading banks are concerned? A community cannot lend more than it can earn. The Commonwealth Bank has also advanced to the fullest extent on Government securities, to the trading banks and in other ways. The bulk of the £263,000,000 held by the trading banks on deposit has been lent to private businesses,wool growers, and wheat-farmers, and. used ingeneral advances made for carrying on the business of the community, and all that the banks hold for their money are, legal documents which would be useless for feeding the unemployed. They would first have to be turned into wealth before they could be used for that purpose.All that the banks actually hold in, cash is £33,000,000 in paper money and £3,000,000 in coin for the ordinary daily trading requirements of the nation. If that money were taken from them the banks could not carry on their ordinary daily trading. The same remarks apply to savings bank deposits. The trustees of the savings banks have not hoarded the money deposited by the thrifty. They have lent it out to municipalities, governments, harbour trusts and other semigovernmental concerns. They have also made considerable advances to home builders.

There does not exist any such thing as a credit which can be grasped and turned into use straight away. The credit of the nation is really only the £l,100,000,000 which Australia owes. Extended to every individual in the community, it roughly amounts to £170 per head, and represents one of the greatest credits the world has ever seen. Against, that credit we have the national wealth in the shape of minerals, lands -and buildings and over 6,000,000 healthy, strong, worthy Australians who carry on their work by means of it. We can only surmise that what the Labour party means by a compulsory release of credits is the issue of a printed slip of paper against nothing - in the ordinary language of the day,the inflation of the currency. In the Sydney Morning Herald of the 13th November, I noticed the following letter : -

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