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Friday, 17 April 1931

Senator O'HALLORAN (South Australia) . - It has been rightly said by some honorable senators who have participated in this debate that this measure is of far-reaching importance. The Prime Minister, in statements which he has made to the Australian public, has called it the "pivotal bill" of the Government's policy for the reconstruction of Australian financial and economic affairs. In its consideration three questions present themselves: First, is some such action necessary; secondly, will the proposals enunciated in the hill achieve the purpose which the Government has set out to achieve; and, thirdly, is there any reasonable or practical alternative to the scheme which the Government is asking honorable senators to sanction?

There can surely be no argument as to the necessity for this, or some similar measure, in view of the existing conditions iu Australia. For a considerable time our people have been faced with a tremendous problem. At the moment I do not intend to discuss how the blame for the creation of this problem should be apportioned, except to say that certain responsibility for it may be attributed to the governments of the past, and to the people of Australia, for not taking sufficient interest in the financial and economic questions . which required their attention. One could spend many hours in conducting an inquiry into this question of who is responsible for the unfortunate position of Australia ; but I shall not occupy time in discussing it this morning, as it has already been effectively dealt with in this debate. There is, however, an undeniable and urgent necessity that something shall be done immediately to improve our economic position.

Economists of standing are in general agreement that the depression through which we are passing is due to two causes : first, the los3 of national income owing to the fall in the value of our export commodities; and secondly, the loss of national income due to the sudden drying up of the loan market abroad, insofar as provision for the financial accommodation of Australia is concerned. There is nothing very remarkable in the fact that the external loan resources of this country are not, for the time being, open to exploitation by us. The cutting off of these resources has been an important factor in the creation of similar financial crises in this country in former days. This has been well stated by Professor Gordon Wood, of the Melbourne University, in the volume which he has recently published, and which I regret that I nave not time to quote from at length. Professor Wood follows the history of the economic development of this country during its 100 years of settlement, and shows that there have been cycles during which boom periods have been followed by periods of sharp depression. He shows clearly that the pathway of our national progress has not been uniformly smooth, but that there has been serious undulations interspersed with sharp hills and valleys. These have been caused by the unwise and extravagant expenditure of governments and individuals alike. Professor Wood has shown conclusively that at times there has been a failure on the part of those in control of the government of Australia to invest properly the credit created, and the resources provided by external borrowing, and that towards the end of every period of heavy borrowing abroad there has been extravagant expenditure both by governments and individuals. This has caused other sharp reactions such as that through which wb are now passing. Unfortunately, in addition to the cutting off of our loan supplies towards the end of 1928 - before the present Government took office, so that no responsibility for it can be placed on its shoulders - there was also a sharp drop in the price of Australian primary products.

These two factors combined have led to an unprecedented volume of unemployment in Australia. Such an experience is, however, not unprecedented in the history of older countries, nor is it unprecedented in the history of countries which are endeavouring to get back to the gold standard, and to deal in terms of real money in accordance with the traditional banking methods. Although such efforts have created and re-created similar conditions in the older countries of the world, our friends opposite tell us that we should continue to finance our affairs on the old lines. We are expected to dance to the tune called by the overseas financiers. In the midst of plenty we are expected to remain idle while men, women, and little children starve. We are told that we must cut our coat not according to the cloth which we have provided for ourselves, but according to the measurements provided by some financial tailors overseas. But this Government, in launching out with due moderation and proper caution along new financial paths, is endeavouring to do a service to the people of this country, for which future generations will thank it. On the other hand, if honorable senators opposite succeed in preventing the Government from rendering this service to our people, a day of reckoning will come for them sooner than most of them anticipate, and in a way that many of them will not appreciate.

We have in Australia something like 300,000 unemployed - able bodied men, who are anxious and willing to work for their living, and who have shown in the past that they are capable of developing this country, and of increasing its productive capacity. These people are anxious and willing to continue to build upon the great edifice erected by the pioneers, and to develop in Australia a bigger and better nation than the world has yet known. The opportunity is denied them. Some of them have walked thousands of miles in a fruitless quest for employment. For the past two years they have haunted labour bureaus in our capital cities and provincial t.owns day after day and month after month in a vain endeavour to obtain something to do, so that they may earn the wherewithal to buy bread for themselves and their families. But the system under which we live decrees that they shall not be given such an opportunity. In 1925, a conference that was held in Europe decided that there should be a return to the gold standard, but it failed to effect the necessary adjustments in the matter of war debts and fixed monetary investments. Consequently, too much is now being taken out of production to pay interest on fixed investments, and too little of the wealth that is produced is allowed to be retained for the benefit of the producers, and for the purpose of promoting expansion in industry.

Unfortunately quite a proportion of the statistics upon which I have to rely have to be taken from memory, because of the tactics employed by the Opposition to-day, but we have it on the authority of our statisticians that, two or three years ago, the amount taken out of the national income for the payment of fixed money charges in Australia approximated 17 per cent. At the end of the present financial year it will probably represent 30 per cent., while, if it con tinues to increase progressively in the next two years as it did during the past few years, the consequences will be unthinkable.

This Government has exploited many avenues in an effort to provide a remedy. Honorable senators opposite and the people whom they represent have been prolific in their advice to the Government, and have advanced many alleged cures for the evil, but the insincerity of their counsel is evident, while the way in which they constantly shift their ground is amazing. The Government has endeavoured to co-operate with the banks and to give them an opportunity to play their part in arresting the deflation that is strangling the taxable capacity of the country, which is the life blood of all governments. It has also endeavoured to provide the means to put men into employment and to lighten the burden that has been placed on the shoulders of those who are fortunate enough to retain something to do. Scheme after scheme has been presented to those who control the financial machinery of Australia, only to be rejected. The Government was told that it was impossible to make further credit available. As time passed, the people of Australia recollected that credits had been made available for the prosecution of the Great War and therefore should be made available in the present crisis. The bulk of expenses for war purposes creates a debit, but no corresponding credit, other than the laudable endeavour to protect one's, country from foreign aggression. So the people became articulate, and made it manifest that the present was an appropriate time to make additional credits available.

Here we have a young country whose vast potentialities are literally crying out for development. We have a people only too eager to engage in that development. Tactfully, our political adversaries changed their policy. They told the Government that if certain action were taken the necessary credits would be made available. Senator Greene reiterated that statement last night. Evidently, then, ample fianancial resources exist, which could be made available if those in control of them desired it to be done. But they are not to be released until this Government bends its knee to the financial heads of Australia, and adopts a policy that is not sponsored by the democracy of the country, that is not in keeping with the traditions and the destinies of the Australian race, but is merely dictated by certain gentlemen who have appointed themselves the custodians of the country's financial machine. The Government, and I personally, resent that an attempt should be made to dictate the social and economic policies of this nation. I believe that among the proletariat there is just as much common sense and intelligence, aye, and a greater desire to prosecute the development of Australia in the interests of the majority of the people, than there is among the people to whom I have referred.

For those reasons I submit that the financial policy of the Government must be given a trial. One would imagine that it enunciated something extraordinary, and hitherto untried by any other nation. Yet for many years a substantial portion of England's currency has been issued on exactly the same lines as those proposed in this bill.

Senator Foll - That is not so.

Senator O'HALLORAN - It is so.

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