1941-11-06 16 1 5 REPS 121 0 House of Representatives. 1941-11-06 Mr.speaker (Hon. W. M. Nairn) took the chair at 2.30 p.m., and read prayers. 121 distinguished visitors 121 10000 0 0 SPEAKER, Mr Mr SPEAKER - I desire to inform the House that the Right Honorable Alfred Duff Cooper, D.S.O., a member of the British House of Commons and Chancellor of the Duchy of Lancaster, is within the precincts of the House. With the concurrence of honorable members, I propose to invite him to take a scat on the floor of the House beside the Speaker's chair. Honorable Members. - Hear, hear! Mr. Duff Cooper thereupon entered the chamber, and was seated accordingly. 121 Questions 121 121 009MC 0 0 HOLT, Harold Mr HOLT - It has been stated publicly that henceforth the official channel of communication between the industrial movement and the Government shall be through either the Australasian Council of Trade Unions or the Australian Workers Union. I ask the Prime Minister whether this means that the industrial panel, which acted in an advisory capacity under the former Administration, has been dissolved? 121 009FQ ALP 1 0 CURTIN, John Mr CURTIN - Representatives of the Australasian Council of Trade Unions waited on me in Melbourne and suggested that, in order that any representations made concerning industrial conditions might have the imprimatur of authority, the Government should regard the Australasian Council of Trade Unions as the responsible body for communication to it of matters which the trade unions consider require Government attention. The representatives pointed out, however, that the Australian Workers Union, numerically the largest union in Australia, is not affiliated with the Australasian Council of Trade Unions in all of the States. They therefore suggested that both the Australian Workers Union and the Australasian Council of Trade Unions should be regarded as the responsible bodies. In the course of the discussion, the representatives reiterated the view put by the Australasian Council of Trade Unions to the previous Government regarding the composition of the trade union advisory panel. It was not suggested that that panel should be discontinued, and in fact it has not been. 121 121 JNX 0 0 BARNARD, Herbert Mr BARNARD - Press advertisements indicate that the price of ice cream has been increased. I ask the Minister representing the Minister for Trade and Customs whether ice cream is within the scope of the regulations which govern the fixation of prices. If it is, has the increase of price been authorized by the Prices Commissioner? If not, will the Minister ascertain whether the price charged is justifiable and should receive authorization? 121 JOM ALP 1 0 BEASLEY, John Mr BEASLEY - Without having precise knowledge, I believe that ice cream does not come within the scope of products which have been proclaimed for the purpose of the determination of price by the Prices Commissioner, but I shall refer the matter to the Minister for Trade and Customs and obtain from him a reply for the honorable member. 121 Report of Committee 121 JOS 0 0 BELL, George Sir GEORGE BELL - Yesterday, on the motion of the Minister for Commerce, the House ordered that the report of the committee which inquired into the operations of the apple and pear acquisition schemebe printed. I do not know whether that resolution involves the printing of the bulky evidencewhich accompanied the report. I therefore ask you, Mr. Speaker, whether only the report will be printed? 121 10000 0 0 SPEAKER, Mr Mr SPEAKER - Attached to the report were 600 pages of evidence. Following the resolution of the House yesterday I have, for reasons of economy, directed that only the report be printed. Whether the evidence also shall be published is a matter for consideration and recommendation by the Printing Committee. A few copies of the evidence are in print, and any honorable member who wishes to peruse it may make application to do so. 122 JTY ALP 1 0 CAMERON, Archie Mr ARCHIE CAMERON - I should like to know, Mr. Speaker, whether you can inform the House of the identity of the authority who was responsible for the printing of all the evidence taken by the committee on the apple and pear industry, or whether it, like the publication of our party meeting yesterday, was unauthorized, and the identity of the persons, though known, was never mentioned ? 122 10000 0 0 SPEAKER, Mr Mr SPEAKER - The investigation of this matter is outside the scope of the duties of the Speaker. 122 122 K0K 0 0 CONELAN, William Mr CONELAN - Twelve months ago, the previous Government appointed what is known as the Townsend Committee to investigate the subject of shipbuilding in Australia. Is it the intention of the Minister for the Navy to table the report of that committee? 122 KLL ALP 1 0 MAKIN, Norman Mr MAKIN - I am having the report investigated. If it be possible to comply with the honorable member's request, I shall do so. 122 122 KUN 0 0 SPOONER, Eric Mr SPOONER - Does the Treasurer contemplate the replacement of the Capital Issues Advisory Board by a new authority which will have discretionary control over issues of capital ? If so, will he see that its discretionary powers are confined to the application of definite principles incorporated, in regulations, in order that this Parliament may retain control of the policy of capital issue finance during the war? Will the honorable gentleman also, in framing the regulations, see that there is a greater degree of co-ordination between the nation's needs in respect of manpower, material and money on the one hand, and the approvals given for the use of new capital on the other hand? 188 A48 ALP 1 0 CHIFLEY, Ben Mr Chifley I have given some consideration to the constitution of the Capital Issues Advisory Board, and propose to submit the matter to Cabinet, which has not yet had time to consider it. The other suggestions of the honorable member will be given consideration in connexion with my submission of any recommendation to Cabinet. 122 Oil From Coal. 122 JVA 0 0 MORGAN, Charles Mr MORGAN - Has the attention of the Minister in charge of the Council for Scientific and Industrial Research been drawn to the press statement published to-day, that Dr. James Chapman, of Macquarie-street, Sydney, the inventor of a process for the production of fuel from coal, has stated that he is "fed up with the Canberra authorities", and has decided to take his process to the United States of America? Will the Minister make inquiries in order to ascertain whether Dr. Chapman's offer to the Commonwealth has been rejected and, if so, for what reason? In view of the general discouragement of Australian inventors, an illustration of which is the treatment of the inventor of the explosive bullet, of which mention was made yesterday, will the Minister take steps to co-ordinate in his department all investigations and tests of processes and inventions submitted by Australians? 122 KCF ALP 1 0 DEDMAN, John Mr DEDMAN - -Something in the nature of a central hoard to consider inventions was set up under the Council for Scientific and Industrial Research, but the procedure has been altered in recent times. My attention has only now been drawn to the statement published in a section of the Sydney press. I shall examine the matter and shall see that Dr. Chapman's process is submitted to the appropriate authority. Action in respect of other inventions will have to be taken by the appropriate Ministers as they are submitted . 122 KIX 0 0 HUTCHINSON, William Mr HUTCHINSON - I understand that Dr. James Chapman has been invited to visit the United States of America in order to explain his process. Will the Minister for Supply and Development state whether his department has investigated Dr. Chapman's claim, and, if so, can he give any information regarding it? 122 JOM ALP 1 0 BEASLEY, John Mr BEASLEY - Dr. Chapman wrote to me over a week ago, and I replied stating that I was interested in his process, and suggesting that he should permit' the Commonwealth Fuel Adviser, Mr. Rogers, to examine it. I stated, further, that Mr. Rogers was a public servant, and could be trusted to treat with the strictest confidence any information imparted to him.I added that I was grateful to Dr. Chapman for having placed his proposalbefore us. He replied to the Prime Minister stating that I had insulted him in my letterbecause I had suggested that inquiries he made by Mr. Rogers. In matters of this kind the Government must be guided by its experts, and there is no reason why Dr. Chapman should have misunderstood my intentions when I suggested that his proposal should he examined , by Mr. Rogers. I intend to write again to Dr. Chapman informing him that we are anxious to examine his process, but that it must be done in a manner satisfactory to the Government and to the country. 123 Drought Relief - Stabilization Scheme - Paymentstogrowers - Estimate of Harvest - Agents' Prices 123 KFW 0 0 GUY, James Allan Mr GUY - Will the Minister for Commerce state why, of the grant of £1,000,000 for drought relief to Australian wheat-growers, Tasmania has received only £622 10s. of its allotment of £10,000, whereas four of the States have been paid the whole of the sums allotted to them, and Queensland has received £15,000 of its allotment of £20,000? 123 KQB ALP 1 0 SCULLY, William Mr SCULLY When the Commonwealth Government made the sum of £1,000,000 available to wheat-growers for drought relief the sum allotted to Tasmania was £10,000, hut, when the Government, of Tasmania examined the cases of distress among farmers in that State on account of drought, it found that even on the most liberal basis only a limited sum of money could be properly expended in that direction. The Government of Tasmania placed its proposals before the Commonwealth Government, and the total expenditure in that State on drought relief amounted only to £622 10s. That indicated that Tasmania had been only slightly affected by drought. 123 KZN 0 0 LANGTRY, Joseph Mr LANGTRY - Can the Minister for Commerce give to the House a definite assurance that the present wheat stabilization plan will be discontinued after the present harvest, and a scheme founded on a bushel quota basis put into operation for the 1942-43 season? 123 KQB ALP 1 0 SCULLY, William Mr SCULLY - The Government has no intention to interfere with the wheat industry stabilization scheme during the present harvest, but, immediately the harvest has been completed, the policy of the Government will be announced. The Government favours a quota basis for the assistance of the industry. 123 JNM 0 0 BADMAN, Albert Mr BADMAN - Has the Minister for Commerce arranged finance for the payment of the first advance on this season's wheat wop? If so, what will be the amount of the advance? 123 KQB 0 0 SCULLY, William Mr SCULLY - The amount has not yet been determined, though I hope that it will be fairly substantial. Before it can be fixed it will be necessary for the Government to consult the Australian Wheat Board, and then to approach the Commonwealth Bank in order to make the necessary financial arrangements. A decision will be reached as soon as possible, and an announcement made immediately afterwards. 123 KNC 0 0 MARWICK, Thomas Mr MARWICK - Can the Minister for Commerce state what is the estimate of this year's Australian wheat crop? 123 KQB 0 0 SCULLY, William Mr SCULLY - The Government has not yet received a reliable estimate. Investigations are being made at an early date, and the Government hopes to be able to indicate the prospects for the coming wheat harvest. 123 JS9 0 0 BREEN, John Mr BREEN - Does the Minister for Commerce intend to renew the contracts of licensed receivers of wheat on the same terms as those which operated for the last harvest? Will the Minister review that section of the contract which provides for a cost-plus payment in respect of wages and materials? 123 KQB 0 0 SCULLY, William Mr SCULLY - The review of agents' prices does not come under my direct jurisdiction; the matter is controlled by the Wheat Board. If the honorable member will bring to my notice any anomalies which exist, I shall make an immediate investigation with a view to correcting them. 124 124 BV8 0 0 CALWELL, Arthur Mr CALWELL - In view of recent developments in the Pacific region, will the Prime Minister arrange an early meeting of honorable members of both Houses of this Parliament in order that service Ministers may place before them all relevant facts concerning the diplomatic, naval, and military situations of that region, and the capacity of Australia to defend itself. If such a meeting be held, will he arrange for service chiefs and departmental heads to be in attendance in order to answer questions by honorable members? 124 009FQ ALP 1 0 CURTIN, John Mr CURTIN - I shall give consideration to the suggestions contained in the honorable gentleman's question. 124 Position of Mr. McVey. 124 KNX UAP; LP from 1944 0 0 HARRISON, Eric Mr HARRISON - Will the Prime Minister state whether it is a fact that Mr. McVey, Director-General of Postal Services, has been appointed to a position in the Department of War Organization of Industry? If he has, will the honorable gentleman state what the appointment is, and will he give to the House an assurance that Mr. McVey's position as Director-General of Postal Services will not he prejudiced because of the new appointment? 124 009FQ ALP 1 0 CURTIN, John Mr CURTIN - It is intended to set up a production executive under the authority of the Ministers of Munitions, War Organization of Industry, Supply and Development, and Labour and' NationalService. The executive officer of the new body will be Mr. McVey, and arrangements have been made with the Postmaster-General's Department for him to be released for this work for a short period in order to get the organization established. His position as Director-General of Postal Serviceswill not be prejudiced, and the proposal has the approval of the Postmaster-General. 124 124 JY7 0 0 DUNCAN-HUGHES, John Mr DUNCAN-HUGHES - Will the Minister for External Affairs inform the House of the present position regarding the appointment of Dutch and Australian diplomatic representatives in Australia and the Netherlands East Indies respectively ? 124 DTN ALP 0 0 EVATT, Herbert Vere Dr EVATT - The Government hopes that an arrangement for the exchange of such representatives will be completed in the near future. A difficulty occurred as to the form of the exchange, hut we expect to overcome it and to have a Minister representing Holland in Australia in the near future. 124 124 L08 0 0 ROSEVEAR, John Mr ROSEVEAR - Will the Minister for Munitions state whether Colonel Thorpe, Director of Machine Tools, has issued a prohibition against the importation of certain machine tools for munitions purposes, on the ground that they are manufactured in Australia? Has McPherson's Limited with which Colonel Thorpe is associated, the manufacturing rights of these machines in Australia, and is it a fact that delivery of the Australian-made machines cannot be guaranteed for many months ahead, whilst deliveries from the United States of America and Great Britain can be made promptly? If these are facte, will the Minister see that the private interests of McPherson's Limited and Colonel Thorpe shall not be allowed to interrupt or delay the war effort in respect of the production of machine tools ? 124 KLL ALP 1 0 MAKIN, Norman Mr MAKIN - I shall immediately call for a report on the matter and all necessary steps will be taken to preserve the rights of Australian industry in respect of supplies of machine tools. 124 L08 0 0 ROSEVEAR, John Mr ROSEVEAR - Can the Minister for Munitions say whether a large majority of the firms who need machine tools for war production are taking advantage of the policy by which machines can be leased from the Government, instead of purchasing them? Is it a fact that a. term of the lease is a payment of 10 per cent. of the value of such machine tools per annum, which is roughly £2 a week for a machine valued at £1,000? Further, is it a fact that some of these firms work on a cost-plus system of payment for machine hours, and that they receive1s. an hour special payment for the use of machines, which allows them to recover their weekly payments in respect of such machines in the first 40 hours each week, thereby getting the machines rent-free for the remainder of the week and working them at a profit? 125 KLL 0 0 MAKIN, Norman Mr MAKIN - Certain circumstances associated with the rental of machine tools require urgent investigation, and I have already taken the initial steps in that direction. At the earliest possible date the Assistant Treasurer (Mr. Lazzarini) will review this subject in conjunction with his investigations of the cost-plus system. 125 Utilization of Services 125 KUG 0 0 SPENDER, Percy Mr SPENDER - When does the Prime Minister expect to be able to announce to the House thepolicy of the Government with respect to the employment of prisoners of war in Australia? 125 009FQ ALP 1 0 CURTIN, John Mr CURTIN - Immediately after a decision on the matter has been reached by the War Cabinet, and that will be made shortly. 125 KV7 0 0 STEWART, Frederick Sir FREDERICK STEWART - Will the Minister for the Army say whether the statement recently attributed to him is correct, namely, that should the Government find it expedient to utilize prisoners of war for work in Australia, the Government will insist on award rates being paid to them? 125 F4U ALP 1 0 FORDE, Francis Michael Mr FORDE - I said that the subject of the utilization of the labour of prisoners of war was one concerning which the War Cabinet would come to a decision before long. The matter was before the previous Government on at least two occasions. The honorable member should bear in mind that the present Government has been in office for only about a month. It hopes to come to a decision on this subject in the near future. I have not made any definite pronouncement as to the Government's policy in this matter. 125 125 KLL ALP 1 0 MAKIN, Norman Mr MAKIN - Yesterday the honorable member for Grey (Mr. Badman) asked whether the Minister for War Organization of Industry could say whether it was a fact that after the various government munition factories had satisfactorily produced 1,100 Bren gun carriers the production was to be handed over to a large motor car manufacturing company? The honorable member further asked whether it was a fact that the whole of the machinery and machine tools necessary for the production of these carriers was to be transferred to the company, and whether a contract amounting to £6,000,000 had been let to it for production of gun carriers. The honorable member was informed yesterday that his question would be placed before me. I have to say, in reply, that the Ford Company is the coordinating contractor for New South Wales in the matter of machine gun carriers, and that one-fifth of the total carrier programme has been allotted to that State. These carriers are being produced in three States, but Victoria has the largest share. As in Victoria, the distribution of the work is within the province of the Area Board of Management. Therefore, the honorable member will realize that the implication in his question has no foundation in fact. 125 125 JVA 0 0 MORGAN, Charles Mr MORGAN - Is the Minister for Labour and National Service aware that the Commonwealth Employment Bureau in Bryant House, Sydney, is being hampered by lack of co-operation on the part of various Commonwealth and State departments, and by the failure of private employers to notify the bureau of their requirements. Will he take steps to coordinate, through the bureau, the employment of workers in the munitions industry, and, at the same time, make it obligatory on Government departments and private employers to notify the bureau of their requirements? 125 KX7 ALP 1 0 WARD, Edward Mr WARD - This matter has been causing great concern to the Department of Labour. A report has been secured regarding the number of authorities which exist for the engagement of labour, and I hope very soon to be able to make a statement on the position, setting out the action to he taken to rectify the present faults. 126 126 KA9 0 0 JOLLY, William Mr JOLLY - Can the Treasurer say whether the Auditor-General has sufficient staff to make a proper check of the present huge war expenditure? 126 A48 ALP 1 0 CHIFLEY, Ben Mr CHIFLEY - So far as I know, the audit staff is adequate, although the great strain at present thrown on all departments has necessitated the working of a considerable amount of overtime. I shall inquire whether, in fact, the Auditor-General has stufficient staff at his proposal. 126 126 JVJ 0 0 MULCAHY, Daniel Mr MULCAHY - Havingregard to the prevailing shortage of houses in Sydney, and the number of ex-servicemen from the last war, and from this one, who are applying to the War Service Homes Department for houses, will the Minister for Repatriation make money available with which to provide houses for those ex-servicemen who need them? 126 JXL ALP 1 0 FROST, Charles Mr FROST - I have inquired into this matter, and find that the requirements of those who served in the last war have not yet been met in full. In addition, many of those who have returned after service in this war have applied for houses. The necessary money must be obtained from the Treasurer, and it is not always easy to get it, but I have taken steps to prepare the machinery so that, when the money becomes available, we may proceed with our housing scheme without delay. 126 Supply of Drugs 126 K0K 0 0 CONELAN, William Mr CONELAN Will the Minister for the Army ensure that chemists in military hospitals shall be allowed to prepare their own drugs and medicines instead of having to purchase them already dispensed from drug houses at greatly enhanced prices? 126 F4U ALP 1 0 FORDE, Francis Michael Mr FORDE - The honorable member's suggestion will be considered. 126 Visit of Messrs.ranney and Fairbank. 126 JTY ALP 1 0 CAMERON, Archie Mr ARCHIE CAMERON - Will the Minister for Supply and Development, at some convenient time before Parliament goes into recess for Christmas, make a statement on the visit to this country of Messrs Ranney and Fairbank, showing whether they are oil experts orwater experts, and why they visited only one field in Australia and then got out of the country as quickly as possible? 126 JOM ALP 1 0 BEASLEY, John Mr BEASLEY - This question has reference to the investigation of the Lakes Entrance oil-field. The previous Government invited Messrs. Ranney and Fairbank to visit Australia. I mention in fairness that they were invited to this country upon the advice of, and by agreement with, the Mines Department of the UnitedStates of America. They came to Australia, conducted an investigation, and presented a report. Why they did not investigate other oil projects I cannot say. I shall be pleased to make any inquiries which the honorable member desires, and I shall be at all times pleased to receive advice that would lead to the effective development of the Lakes Entrance field, or of any other field. 126 126 KSD 0 0 MCLEOD, Donald Mr McLEOD - Will the Minister for Commerce initiate negotiations with the Government of the United Kingdom regarding the price paid for Australian wool in an endeavour to obtain a price that will ensure an adequate return to the growers? 126 KQB ALP 1 0 SCULLY, William Mr SCULLY - This matter has been receiving consideration, and I hope at an early date to be able to announce the result of the negotiations. 126 126 JOS 0 0 BELL, George Sir GEORGE BELL - Can the Minister for Munitions say what the present position is in regard to supplies of galvanized iron in Australia ? Can he say whether there is a shortage of this material and, if so, can he state the reason? Is the iron which is known in the trade as terne suitable for the manufacture of containers for water and milk, and can he say whether its price approximates the price of galvanized iron, and whether it is possible to make available to manufacturers of these containers sufficient material for their needs? 126 KLL ALP 1 0 MAKIN, Norman Mr MAKIN - Galvanized iron is in short supply owing to restrictions placed on zinc. It is being made available only for defence contracts and essential services, mainly water conservation purposes, such as the manufacture of tanks, &c. Where it is required for roofing, everything possible is being done to switch users on to asbestos cement sheets ; where the material is not required for tanks, &c., terne-plate is being suggested. If galvanized iron is urgently required in Tasmania for the manufacture of tanks, &c, it is suggested that plumbers should place orders ' through their usual sources of supply, giving details of tanks, &c., on order, and for whom they were ordered, and showing the number of sheets required in each instance, so that Lysaghts may be requested to extend the appropriate priority and expedite delivery. 127 127 KZN 0 0 LANGTRY, Joseph Mr LANGTRY - Is it a fact that there is no representative from New South Wales on the Barley Board ? If so, will the Minister for Commerce take steps to appoint to that board a representative from that State? 127 KQB ALP 1 0 SCULLY, William Mr SCULLY - Investigations are taking place in regard to several boards dealing with primary products. I have found, upon investigation, that there is no representative of either Western Australia or New South Wales on the Barley Board. At the earliest possible date I shall appoint to that board a representative of each of those States. 127 127 KJQ 0 0 JAMES, Rowland Mr JAMES - Can the Minister for Supply and Development say whether it is a fact that several coal mines in the northern district of New South Wales are still closed down, and that at many other mines there is only intermittent work due to lack of trade, notwithstanding that complaints of shortage of coal have been received fromSouth Australia and elsewhere? Can the Minister justify the setting up of a Coal Commission by the previous Administration, and the payment of high salaries to members of a body which is not functioning? Is he aware that this matter is the subject of a notice of motion on the business sheet for the disallowance of certain regulations ? Does the Government recognize that no good purpose is being served by keeping the "hoboes" appointed by the previous Administration on the pay-roll when the commission is not functioning? 127 10000 0 0 SPEAKER, Mr Mr SPEAKER - Order ! The honorable member is not in order in introducing so much comment into a question. 127 JOM ALP 1 0 BEASLEY, John Mr BEASLEY - Since the present Government took office several questions have been asked as to whether certain coal mines are being worked to their full capacity. Most of these questions have had reference to mines in New South Wales, but yesterday reference was made to a mine in Queensland. I frankly admit that I am not fully conversant with the facts but I shall inquire into the matter. As to the commissioner who was appointed by the previous Administration- 127 KJQ 0 0 JAMES, Rowland Mr James - How many persons are on the pay-roll? 127 JOM 0 0 BEASLEY, John Mr BEASLEY - The previous Government appointed Mr. Mighell as commissioner. His consultants are Mr. Justice Davidson and Mr. Charles Nelson. 127 KJQ 0 0 JAMES, Rowland Mr James - Mr. Nelson resigned. 127 JOM 0 0 BEASLEY, John Mr BEASLEY - The production manager is Mr. Stanley McKenzie, and the distribution manager is Mr. Harold Leonard Williams. It is a fact that the appointment of the commission was not readily accepted by the Miners Federation. Deputations on the subject were received by the Minister of the day, and the honorable member himself tabled a motion to disallow certain regulations. I have tried to arrange a conference on this subject in order that I may reach a decision as to the best form of organization to be set up. I have made tentative arrangements to discuss the matter with the honorable member for Hunter, and representatives of the New South Wales Government and of the Miners Federation on Monday morning, and I hope that we shall be able to arrive at conclusions which will be satisfactory to all parties. 127 127 KYG UAP 0 0 PRICE, Archibald Dr PRICE - In view of the conflicting reports as to the attitude of Turkey, will the Minister for External Affairs inform the House whether or not there is any deterioration of the attitude of Turkey following on the Nazi victories in Russia? 128 DTN ALP 1 0 EVATT, Herbert Vere Dr EVATT - Reports reach the Government from day to day, but it is impossible to make a dogmatic statement as to whether or not the position is deteriorating. Any setback to the Russians is of course a setback to us. I hope that before the end of the session honorable members will have an opportunity to discuss the subject of foreign affairs generally. 128 128 JUQ 0 0 CLARK, Joseph Mr CLARK - Whilst many opportunities for employment are present in various parts of the Commonwealth, unemployment is still prevalent in other parts. Will the Minister for Labour and National Service instruct the branches of his department in various cities to prepare reports on the extent of unemployment there, and the amount of available labour? Will he also ask the Governments of the States to issue free rail passes to unemployed so as to enable them to travel to centres where employment is available? 128 KX7 ALP 1 0 WARD, Edward Mr WARD - The difficulties which confront the Department of Labour and National Service in determining the availability of labour and requirements in the various States have been accentuated by the fact that many authorities deal with this matter in the States. How-, ever, I shall be pleased to bring the honorable member's question to the notice of the branches of my department in the States, and ask them to prepare a comprehensive report upon the subject, which I shall make available as early as possible. 128 128 009MC 0 0 HOLT, Harold Mr HOLT - The Man-power Priorities Board, in its report to the Government, has embodied a considerable amount of factual material, which was the result of its researches. Whilst appreciating the inadvisability of making available to the House the full text of the report, I ask the Minister for Labour and National Service to examine the possibility of supplying to honorable members those portions which relate to the factual material, so as to enable them to form their own conclusions from it? 128 KX7 ALP 1 0 WARD, Edward Mr WARD - I shall be pleased to tak* into consideration the request of the honorable member, and shall let him know in a day or so what portions of the report can be made available to the House. 128 128 KRE 0 0 SHEEHAN, Thomas Mr SHEEHAN - Is the Minister for tie Army aware that confusion exists among military authorities who are dealing with applications for exemption from military training? Will he arrange for a central authority to handle these applications, as some authorities grant applications which other authorities refuse? 128 F4U ALP 1 0 FORDE, Francis Michael Mr FORDE - Sympathetic consideration will be given to the representations of the honorable member. 128 KEU 0 0 FALSTEIN, Sydney Mr FALSTEIN - Will the Minister for the Army consider the advisability of increasing the period of notice of call-up for militia training, so that applications for exemption may be dealt with before the men enter camp? 128 F4U 0 0 FORDE, Francis Michael Mr FORDE - I shall take that suggestion into consideration. 128 128 KNX 0 0 HARRISON, Eric Mr HARRISON - Is the Prime Minister correctly reported in the press as having stated that the Government has not yet reached a final decision regarding the Australian News and Information Bureau in New York? Before taking action, will the honorable gentleman endeavour to obtain an independent opinion about the work that the bureau has accomplished in making Australia better known in the United States of America ? 128 009FQ ALP 1 0 CURTIN, John Mr CURTIN - I shall be glad to take into account what is called " independent opinion ", but there is very little independent opinion regarding this matter. All who express opinions are interested. 128 128 KUN 0 0 SPOONER, Eric Mr SPOONER - Does the Assistant Treasurer expect that his investigation of the cost-plus system, which was announced a few days ago will occupy a considerable period? Does the fact that this investigation has passed during the last month from the Minister for Munitions to the Minister for War Organization of Industry and thence to the Assistant Treasurer indicate any softening of the harsh attitude that some of the present Ministers adopted towards the cost-plus system before the change of government ? 129 A48 ALP 1 0 CHIFLEY, Ben Mr CHIFLEY - I shall reply to the question on behalf of the Assistant Treasurer. The matter has been referred to the honorable gentleman, who hopes to present his report during next week. 129 129 KIX 0 0 HUTCHINSON, William Mr HUTCHINSON - In to-day's issue of the Sydney Morning Herald is published an article by the financial editor, in which appears the following words : - Whereas the commission emphasized the desirability of a closer control of banking by the Commonwealth Bank, Mr. Chifley'sproposals seem to be designed rather to hand matters of detail over to the Treasurer. 129 10000 0 0 SPEAKER, Mr Mr SPEAKER -The honorable member is not in order in quoting from a newspaper. 129 KIX 0 0 HUTCHINSON, William Mr HUTCHINSON - Did the Treasurer read the comment that, whilst he is giving effect to certain of the findings of the commission on monetary and banking systems, which increase his powers as Treasurer, he is departing in many respects from its recommendations? If so, what comment has the Treasurer to make upon the matter? 129 A48 ALP 1 0 CHIFLEY, Ben Mr CHIFLEY - The Government has indicated in a general way certain proposals that it has in mind for the control of banking. Beyond saying that, I do not feel disposed to reply to guesses which are made by a newspaper. 129 129 KFW 0 0 GUY, James Allan Mr GUY - When the legislation to implement the Government's policy to expand the system of soldiers' pensions comes before the House, will the Minister for Repatriation take action to provide appropriate increases of stabilized pensions for disabled soldiers. 129 JXL ALP 1 0 FROST, Charles Mr FROST - The matter is now under consideration. I understand that all pensions which are payable to returned soldiers will be reviewed. So soon as a decision is reached, I shall inform the honorable member of the result. 129 129 BV8 0 0 CALWELL, Arthur Mr CALWELL - Will the Minister for the Navy provide the Port of Melbourne with a dry dock, capable of holding a merchantman of 13,000 tons? 129 KLL ALP 1 0 MAKIN, Norman Mr MAKIN - I shall call for a report upon the matter. 129 129 JVA 0 0 MORGAN, Charles Mr MORGAN - In view of the volume of detailed work which now demands the attention of Ministers, apart from their administrative and legislative duties, will the Prime Minister consider the introduction of the British system of parliamentary under-secretaries which has operated so successfully for many years, in order to utilize the services of the rank and file of the House, and promote greater efficiency in the conduct of the war effort? 129 009FQ ALP 1 0 CURTIN, John Mr CURTIN - The matter will be considered. 129 129 KNC 0 0 MARWICK, Thomas Mr MARWICK - Is it correct that the report of the Western Australian War Industries Committee has been made available to the press, but is not available to honorable members who represent Western Australian constituencies? 129 009FQ ALP 1 0 CURTIN, John Mr CURTIN - The report has been made available to the Government of Western Australia, and certain parts of it have been made available to the press, after the excision of passages which in the interests of national security could not be published. I know of no impediment to members of Parliament obtaining copies of that part of the report which has been made available to the press. 129 KNC 0 0 MARWICK, Thomas Mr Marwick - I have been refused a copy of it. 129 009FQ 0 0 CURTIN, John Mr CURTIN - No application for a copy of that particular part has been made to me. The honorable member may have a copy of any part of the report which has been issued to the press. 130 130 KEU 0 0 FALSTEIN, Sydney Mr FALSTEIN - Has the Government yet reached a decision in respect of the recall of Sir Bertram Stevens ? 130 009FQ ALP 1 0 CURTIN, John Mr CURTIN - No. 130 130 KIX 0 0 HUTCHINSON, William Mr HUTCHINSON - Is the Minister for Commerce aware that, despite the recent increase of the export price of lamb, lamb prices have since fallen, due to lack of labour at the killing end ?Will the honorable gentleman investigate the position with his colleague, the Minister for Labour and National Services, with a view to correcting the position ? Would it not be correct to say that exporters will reap a great profit from the recent price increase in respect of lamb in cold storage or lamb bought for later delivery? Is it possible to devise means whereby the producers of lambs sold for later delivery may share in the recent price increase? 130 KQB ALP 1 0 SCULLY, William Mr SCULLY - My impression from the accounts of sales in the stock market and from other information I have received is that the prices of lamb have not fallen ; on the contrary, they show a substantial increase. In regard to the profits made by exporters who bought prior to the announcement of the new contract, it is almost impossible by regulation to guard against the producer losing the benefit of the higher price. It is possible that a number of exporters bought from the growers just prior to the revision of the contract, and so gained the benefit of the new price. Whenever in future a new contract price is arranged it will be made public immediately in order to protect the producer as far as possible. 130 Employment of Youths of Military Age 130 KJQ 0 0 JAMES, Rowland Mr JAMES - Is it a fact that as a result of collaboration between employers controlling munitions annexes and the military authorities a decision was arrived at that youths of military age would not be employed in munitions annexes? If so, does not the Minister for the Army consider that to be a form of economic conscription, and will he see that unfair discrimination of that kind shall be discontinued? 130 F4U ALP 1 0 FORDE, Francis Michael Mr FORDE - I am not aware that there was any such collaboration. I shall make inquiries and inform the honorable member of the result as soon as possible. 130 miscellaneous In Committee of Supply: Consideration resumed from the 5th November(vide page 115), on motion by Mr. Chifley - That the first item in the Estimates (Revised) under Division No. 1 - The Senate - namely, " Salaries and Allowances, £8,470 ", be agreed to. 130 N76 Kooyong 0 0 MENZIES, Robert Mr MENZIES . - I find that there are certain advantages attached to a seat in the corner. One of them is that it produces a philosophic mind, and in developing that mind I have had some entertainment and instruction, as other honorable members have, in watching the new Government. I want to compliment it on its uniformly good behaviour. I have been so much impressed by that, and by the benevolence and disarming good nature with which the Treasurer (Mr. Chifley) brought down the budget, that I find it quite a struggle to get up and criticize the budget at all. But criticize the budget I am afraid I must, because, though I am the last man to underestimate the difficulties that attended its preparation, the budget is, in my opinion, one which must in the interests of this country be criticized. In the interests of this country some of its principles must be abandoned. I am not proposing to discuss matters which seem to be of relatively small detail even though they are important; but I want to direct some attention, necessarily brief, on each point, to what seem to me to be the four outstanding features of this document. The first is its enormous use - and I use that word after consideration - of central bank credit. The second is that that enormous use of central bank credit is, as far as I can see, uncorrected by any economic measures designed to prevent inflation. The third is that the imposition of taxation by the budget is on a sectional basis, and therefore on a political basis. The fourth noticeable feature is the increase of pension payments and other social benefits. To consider each of those four matters is to consider questions of very great principle, of very great moment to Australia - and never of greater moment than now, when the fate of the war hangs in the balance, and when the whole future of this country as well as its immediate present can be drastically affected by false financial or economic doctrines. We are accustomed to talk of the war effort and war outlay in terms of money. It is inevitable that we should ; money is a convenient measuringrod ; but the real problem of handling the war effort domestically is not a problem of money so much as one of man-power, material supply and national effort. We use terms of money merely to measure or describe the real effort that is being put forth. Once we have reached full employment - and, speaking broadly, we have reached full employment in this country - once we have reached the stage where materials so far from being unused are becoming in short supply, then we have reached a point where the financing of the war is the business of diverting men and materials from one demand, from one activity, to another. This problem is essentially a problem of diversion. If one may express a truism the crux of this matter is this: if men are to be engaged in war activity those men cannot be engaged in civil activity. If materials are needed and used for war, those materials can no longer be used civilly and must be withdrawn from civil use. If services are required for war, they cannot be used at the same time for peace. It is an elementary fallacy, in my opinion, to think that the problem of diversion, which is essentially a problem of subtraction, can be got over merely by adding to the purchasing power of the community, merely by adding new credit to the credit that exists in the community. You do not perform the feat of subtraction by engaging in addition, and, once that is understood, it will become abundantly clear, not only to Parliament, but also to the people of Australia, that an attempt to solve the problem of financing the war by creating credit for that purpose, so far from solving it, aggravates it. Creation of new credit means more civil demand, more purchasing power, and a greater and almost irresistible urge on the part of the people to obtain civil goods, and to have those civil goods manufactured and supplied to them. This doctrine, that full employment is the point at which subtraction for war begins, is no novelty. It is accepted, I believe, broadly speaking, by both sides of this committee. I very well remember, if I may engage in a small reminiscence, having a long and extremely interesting talk about it in Berlin in 1938, with Dr. Schacht, then, not only a Minister, but also president of the Reichsbank Dr. Schacht told me that, although he, up to that point, had freely used central bank credit in order to develop production and employment in Germany, a month or two before the time at which we were having our conversation, he had told the Chancellor that then there was full employment of men and materials, and that from that time all the financing of the German preparation for war had to be carried out by loans and by taxation. Now, at that time, he was regarded by many people not only as a brilliant financier, as he undoubtedly was, but also as a radical financier who had performed the feat (of rebuilding Germany for the vast financial effort involved in getting ready for war. Yet he put forward a proposition, which, when it is put forward by me or my colleagues, is regarded as the last word of conservatism. It is not a question of liberalism or conservatism; it is mOTe a matter of intelligent understanding of what the problem is. Once you reach the point where you must divert men and materials for war, then your problem is a problem of subtracting them from civil activity, civil production and civil consumption. Now, in this country of ours, since the outbreak of war, paid employment has, in fact, increased by at least 420,000 people, and that is after making every allowance for enlistment in the armed forces and their replacement. It is safe to say that the over-all increase of employment since war began is of the order of 20 per cent. We, when I had the honour to lead a government, were advised, and I have no doubt that my distinguished successor has had the same advice, that the state of employment was such that the demand for men exceeded the normal supply. The best proof of that, of course, is that into the pool of employment have been drawn many thousands of women who were not engaged in any form of employment before. The demand for services is outrunning the supply of services, and therefore we have reached the point where every time the Government says, " We want a man for munitions ", it must compete with the private employer who says, " I want that man to make carpets for a house; I want him for some form of civil activity ". 132 JUQ 0 0 CLARK, Joseph Mr Clark - That does not exist to-day. 132 N76 0 0 MENZIES, Robert Mr MENZIES - I say confidently that in Australia at this moment the demand for labour exceeds the normal supply. It is quite true that any honorable member could say on individual experience, " I know of some one who seems to be a decent person but is unemployed ". I am speaking in national terms, and I say, and nobody can contradict it, that the unemployment rate, which takes no special account of unemployable people and just includes them in its scope and takes no special account of seasonal unemployment, but just includes it in its scope, is to-day the lowest rate since the Commonwealth was established. Consequently, I say that all these tilings which must be established in order to prove that we have now reached the stage of diversion or subtraction for war are present. Money, of course, can do a great deal, but at a stage like this in the history of Australia, we do well to remind ourselves that money of itself cannot create men, materials or services. It can be the (means whereby you employ men, materials or services or transfer them, but it can never be the means whereby you create them in circumstances like those existing in Australia to-day. So I say that the problem which any Australian government faces in formulating a budget in 1941 is a problem not of increasing but of reducing purchasing power for civil purposes. In the circumstances with which we are dealing, if purchasing power were not drawn off by taxes and by loans, then the abnormal war expenditure, of which every honorable member is aware, would create a flood of civil buying, and the flood of civil buying would inevitably demand a flood of civil production. 132 JLL 0 0 ABBOTT, Joseph Mr Abbott - It is being created to-day. 132 N76 0 0 MENZIES, Robert Mr MENZIES - It is being created, as the honorable member for New England interjects. We all know from our own experience of this great flood. The honorable member for Fawkner (Mr. Holt) in an interesting speech delivered to this committee last night drew attention to the increase of turnover of the great emporiums of the great capital cities of Australia. I intend to say more about that in a moment in a different connexion. I am not here to justify the economic policies of the last ten or twelve years; I am here to consider the problems of 1941, because, unless we do so, clear-headedly and courageously, we may not have any problems to consider for ourselves in 1943 or 1944. 132 KHL FLP; ALP from 1936 0 0 HOLLOWAY, Edward Mr HOLLOWAY - Or even if we do. Mir. MENZIES.- I agree, but at least, in those circumstances, we should know that we had faced our difficulties. Our first job is to face them and to face them like men. What I have endeavoured to establish is that a principal task of war finance is to withdraw a sufficient proportion of purchasing power normally devoted to civil needs, and to withdraw it by means which are at once effective and equitable. How is that to be done ? As I see this problem, there are three ways known to man and relevant at the present time which can be employed: The first is taxation - for myself, I say that the first and the best is taxation; the second is loans; and the third, which, after all, has a materiality in support of loans, is rationing of commodities. I shall deal first with the third in order to dispose of it more conveniently. I have heard honorable members, not only in this House but also outside of it, talk about rationing. I am quite prepared to say for myself that I shall give unquestioning support to any action taken by the Government to ration commodities in order to reduce the volume of money that is being expended upon them; but I must say at once, quite frankly, that I do not expect to he in a handsome majority in that attitude. In a country like Great Britain, where the people are acutely aware day by day of shipping losses, and of losses, due to enemy attacks, of all sorts of things which physically reduce the quantity of goods available, rationing will be accepted because a person will say to himself, " I know it is difficult; I know I cannot expect to be able to buy what I used to be able to buy ". But will any honorable member deny that to go to the people of Australia, whose warehouses and shops are crammed with goods, and whose great emporiums were never more supplied with stocks than they are at present, and say, " Now you must understand - " 133 KCF 0 0 DEDMAN, John Mr Dedman - What good will it do our war effort if we do not consume the goods we have in stock? 133 N76 0 0 MENZIES, Robert Mr MENZIES - The Minister for War Organization of Industry is very tender all at once about the possibility of our merchants not being able to liquidate their stocks. I am not concerned about that. What I am concerned about is this : by some means we must reduce our present volume of buying, because if we do not, our present volume of buying will lose us this war. We cannot have this volume of civilian buying in Australia and, at the same time, have the production for war which we talk about and anticipate. We cannot have it both ways; and Australia is rapidly coming to the point when it must choose between being able to buy in 1941 what it was accustomed to buy in 1939, and having a war effort not only worthy of Australia, but also calculated to enable it to do its share towards winning the war. Mr.Rosevear. - What proportion of those stocks come from overseas? 133 N76 0 0 MENZIES, Robert Mr MENZIES - I should think a substantial proportion, but by no means the bulk of them. Rationing must apply to imports and sales; it must a pply to commodities whatever their place of origin. But I say that in the present state of affairs in Australia rationing would be a difficult policy to put into operation. It would be an unpopular policy; and, with the very greatest respect for my friends who now occupy the treasury bench, and my colleagues who sat with me on the treasury bench, I do not believe that any government will, in the present temper of public opinion in Australia, successfully attempt rationing. I say that merely to dispose, for my own purposes, of the rationing problem. I am in favour of rationing; but I do not think that we talk practical politics in Australia to-day when we talk of rationing as something which in itself will be the answer to an inflationary financial policy. I turn now to the other two means - taxation and loans. What docs this budget do? It takes a graduated scale of taxation which, I believe, was already the steepest in the world, and makes it steeper still. It taxes incomes in the higher levels, literally, to saturation point. 133 KYC 0 0 POLLARD, Reginald Mr Pollard - The incomes of those who buy non-essential commodities. 133 N76 0 0 MENZIES, Robert Mr MENZIES - It will, as even my taciturn friend, the honorable member for Ballarat, will agree, serve to destroy or to weaken the incentive in people to earn large incomes by personal exertion. 133 KYC 0 0 POLLARD, Reginald Mr Pollard - We have heard that story before. 133 N76 0 0 MENZIES, Robert Mr MENZIES - The oldest stories are the best. The only good story I hear the honorable gentleman tell is the one he first told about me fourteen years ago. The moment you tax, as this budget taxes, what we are pleased to call higher' incomes, you at once reduce the incentive in many people to earn higher incomes. That may be a very good thing in time of war. Let us put that on one side; but do not forget that it will mean that your taxation returns from the higher incomes are not going to be so great as you anticipate. And do not forget that as the result of bearing down unevenly on the incentive towards great rewards, and, therefore, the incentive towards great enterprise, you are touching and weakening something that has been of great value to Australia. I know that honorable gentlemen opposite believe in a general way, in some form of socialism; and when they have made up their minds among themselves as to what sort of socialism they want, we on this side shall be able to address ourselves to that subject. But I am a completely unrepentant non-socialist and anti-socialist. 133 KCM 0 0 DRAKEFORD, Arthur Mr Drakeford - The right honorable gentleman looks like one. 134 N76 0 0 MENZIES, Robert Mr MENZIES - I have no doubt that outside of this House the Minister for Air (Mr. Drakeford) looks just as much a capitalist as I do, which is rather humorous when one comes to consider it, because neither of us has the slightest claim to be considered a capitalist. If this bearing down on the higher incomes were part of an all-round community sacrifice for war, nobody could quarrel with it. I have never hesitated to say, and I make no qualification of the statement to-day, that if, in the course of this war, we have to denude every man in this country of everything beyond a bare subsistence - if that is the price of victory - let us pay that price; but do not let us imagine that we are engaging in a national financial war effort by putting a burden of the greatest magnitude on a few people, and, at the same time, saying to the vast majority of our people that not only shall they be unaffected in point of sacrifice by this war, but they actually shall be better off because there is a war on. I do not believe that any honorable member in this House, who looks at this problem quite frankly, will deny that the vast majority of the people in Australia will, under this budget, make no contribution whatever to the financing of this war, but, on the contrary, will be better off because of the war. That, of course, is subject to one qualification to which I propose to address myself in a moment, namely, the effect which inflation will have upon their financial position. But if we put inflation to one side, it is well known to every honorable member and to the people of Australia, that the great body of wage earners in this country are earning a larger annual income to-day than they have ever enjoyed before. 134 L08 0 0 ROSEVEAR, John Mr Rosevear - What happened in 1931? 134 N76 0 0 MENZIES, Robert Mr MENZIES - Apparently the honorable member for Dalley (Mr. Rosevear) is so unhappy about 1941 that he is constantly harking back to 1931. I adjure him to go back to 1931, and to stay there so that we may get on with our discussion of the problems of 1941. I assure the honorable member that we are not fighting this war retrospectively; it is a present war, and it has present problems. I do not wish to reiterate figures which have been canvassed already in the course of this debate, but, as honorable members are aware, the total of individual incomes in Australia in 1940-41 was £800,000,000, and of that sum the total of individual incomes up to £400 a year was £560,000,000. That £560,000,000 pays only £4,000,000 to the Commonwealth in taxes. 134 KCF 0 0 DEDMAN, John Mr Dedman - That is in direct taxes only. 134 N76 0 0 MENZIES, Robert Mr MENZIES - The honorable member for Corio (Mr. Dedman) suggests that I am leaving indirect taxation out of account, but I thought that it was one of our boasts that the sales tax left the necessaries of life untouched, and that indirect taxation generally applies to luxuries, and not to those things which the basic-wage earner requires. Therefore, I am entitled to say that the £560,000,000 to which I have referred pays £4,000,000 in taxation to the Commonwealth. Will anybody suggest that that is an adequate withdrawal of purchasing power from £560,000,000, which in itself represents the greatest section of purchasing power in Australia? I remind honorable members also that that particular income group is not standing still. For instance many munition workers have passed out of the £400 a year or under class and have joined the happy band of those who earn between £400 and £1,000 a year. In spite of that constant spilling of people out of the* group, the increase of the total income of that group since the war began has been no less than £70,000,000. The fact that we are obtaining only £4,000,000 out of the £560,000,000 is important in more than one way. It is important because in order to have a balanced budget there must be an effective contribution by all those who can make one, and it is of immeasurably greater importance because of its effect on the volume of civil production and civil sales in Australia. More than once I have heard honorable members opposite talk of increased profits. I do not deny that profits have increased. I should be very surprised indeed to learn that the big emporiums of Sydney and Melbourne - I need not mention their names because we all know them very well have not made increased profits since the war began. However, the point is that these concerns have made increased profits not because they have charged higher unit prices for their goods, but because their turnover has increased enormously. Last night the honorable member for Fawkner cited figures relating to turnover, and to me their significance is that whilst the larger volume of business has made substantially bigger profits for the merchants, that increased turnover has been due largely to this untapped purchasing power of £560,000,000, which we, politically, have not dared to tax. That is the position. Unless we draw off some of that purchasing power, these increased profits will go on, and my friends opposite will continue to express horror. In effect, they express the greatest abhorrence at the result, but utterly ignore the cause. When I say that the £560,000,000 must be tapped, and that a substantial part of it must be diverted to war purposes if we are to have a war effort at all, my words may fall harshly on the ears of some honorable members opposite, but they fall like sweet music on the ears of the Treasurer because in his budget speech he said, in effect, "Yes, we recognize that necessity. We must get more from that group ". But how does he propose to do it? He proposes to do it by going out on a manful campaign to get the people to subscribe £24,000,000 instead of £12,000,000 for war savings certificates. In short, he hopes to double the sales of war savings certificates, and very meagre sales they are at present. There is no more eloquent proof of the unawareness of many people of the gravity of this war than the miserable total of sales of war savings certificates. Yet the Treasurer intends to ask the people to provide another £12,000,000 this year through that medium. Whilst I shall be quite willing to help him in his appeal, I am bound to say that it seems to me to be a very odd way indeed of creating a diversion of purchasing power. Let us ask ourselves a simple question : If it is a fair thing to divert the purchasing power of the man on £1,000 or £2,000 a year, by means of taxation, why is it not a fair thing to divert in the same way the purchasing power of the man on £400 a year ? Why is it not a fair thing to apply the same rule and the same technique to every citizen of this country? Is it that the voluntary system has become such a fetish that a great majority of the people of Australia think that it must be untouched at all costs? I do not believe that. If I went to a trade union meeting and said to the unionists, " Boys ", or " Comrades ", or whatever the correct colloquial method of address may be - at Kurri Kurri they addressed me as " You so and so" and I shall never forget it - " Do you believe in voluntary trade unionism ? ", what would the answer be ? Would they rise up and say, " You must understand that if there is one passion that informs the hearts of Australian trade unionists, it is that everything must be voluntary. We believe in voluntary voting, voluntary taxes - except for other people - voluntary membership of trades unions, and a right to do what we wish, even though caucus may have told us that we must do something different". It is a marvellous thing to discover how deep the passion for the voluntary system is when the voluntary method of obtaining a war contribution from £560,000,000 of income in Australia is calculated to be a good card to play at a general election. 135 L08 0 0 ROSEVEAR, John Mr Rosevear - Is the right honorable gentleman in favour of compulsory unionism ? 135 N76 0 0 MENZIES, Robert Mr MENZIES - I am prepared to consider it very favorably indeed. I belong to a good trade union myself, although I must say that it stipulates skill on the part of its members. I say quite seriously that I do not believe that there is a wage-earner in Australia who would refuse to pay a wages tax for the carrying on of the war. Only a few years ago Australia suffered from disastrous unemployment and, in order to help the people who were unemployed, the wage-earners of every Australian State, whether they were under a Labour, Liberal or another kind of Government, paid a wages tax of at least ls. in the £1. If a wages tax of ls. in the £1 were imposed throughout Australia for war purposes, we should obtain from this income group not £4,000,000 but £28,000,000; yet we are told that although it was a good thing for the wage-earners to pay something to help the unemployed, it is not a good thing for them to pay something to help to defend themselves and their country and to make sure that there will be trade unions and proper wages and conditions when the war is over. I do not believe that the wage-earners would refuse to pay such a tax, and I would be prepared to stand on any platform in any part of Australia, and before any audience of men who work with their hands, in order to advocate that they should contribute ls. in the £1 from their good wages to ensure that the men who are fighting for them shall be supplied with all the things that they need for fighting purposes. My time is running out, but I wish to deal briefly with the subject of loans. In the past loans have not been subscribed, notably, by small income earners, except, of course, collectively through the insurance companies and savings banks. But subscribers in the middle and higher income ranges can hardly be expected to increase their investments after this budget is approved. That statement is so obvious that I almost apologize to honorable members for having made it. 136 009FQ 0 0 CURTIN, John Mr Curtin - There is no increased tax on incomes up to £1,500 a year. 136 N76 0 0 MENZIES, Robert Mr MENZIES - That is so. 136 009FQ 0 0 CURTIN, John Mr Curtin - Are they not in the middle income registers? 136 N76 0 0 MENZIES, Robert Mr MENZIES - I do not think they are. 136 009FQ 0 0 CURTIN, John Mr Curtin - "Soars thy ambition thus so high?" Why? 136 N76 0 0 MENZIES, Robert Mr MENZIES - If the honorable gentleman imagines that he can get a substantial proportion of the loan subscriptions that he desires from incomes between £400 and £1,500 a year he is making a great mistake. I believe that personal subscriptions to public loans, which always carry relatively low interest, are made principally by people on the higher incomes. 1 must admit that I am one of those deplorable individuals whose income is above £1,500 a year. I am perfectly satisfied that my capacity to subscribe as much, or anything like as much, to war loans in the next twelve months a3 I subscribed to them during the past twelve months will be greatly diminished by this budget. It must be so. I am not complaining on thai account. I offer no complaint, personally, about any taxes that I am called upon to pay. I must, however, take into account this inevitable diminution of the flood of subscriptions to loans from persons in the higher income group, because it must influence our judgment as to how much is likely to be raised from this source. 136 KHL 0 0 HOLLOWAY, Edward Mr Holloway - We have adopted the right honorable gentleman's policy in this connexion, namely, the compulsory instead of the voluntary system. 136 N76 0 0 MENZIES, Robert Mr MENZIES - I must say that, now and then, honorable gentlemen opposite are to be found on the right foot, but they are so frequently on the wrong foot that they resemble nothing so much as men trying a new and fashionable dance. The Treasurer has indicated in his budget that he is proposing to borrow £137,000,000 in 1941-42. I have a great respect for Treasurers. Strange as it may seem, I myself have been a Treasurer. Treasurers, and the gifted officiate of the Treasury Department, who are in the background, have a positive genius for (making unpleasant things seem quite pleasant. They prepare a budget and, on looking at it, we may say, " Very good, there is no central bank credit provided for in it. Even Menzies should be satisfied with this. We are to borrow £137,000,000, and when we borrow it the gap will be bridged; we shall have diverted that money to war purposes, and so shall be able to get on with the job ". That seems interesting, until on looking back it is discovered that in 1940-41 the total loan raisings for the Commonwealth were £77,000,000, including £15,000,000 borrowed in the United Kingdom. I see no reference in this budget to any probability of future overseas borrowings. I have heard the views of some honorable gentlemen opposite on the subject of overseas borrowing, and consequently I take leave to say that our borrowings have been £62,000,000 and not £77,000,000, ae the latter figure includes overseas borrowings which are not likely to be repeated. This year the Government proposes to borrow £137,000,000. 136 KX7 0 0 WARD, Edward Mr Ward - And there will be no secret fund in that amount ! 137 N76 0 0 MENZIES, Robert Mr MENZIES - The honorable gentleman should remember that he is now, even if only temporarily, a Minister. Different positions, different rules! I shall talk to him about that afterwards. Even though I may be wrong in my prophecy concerning the voluntary loan raising system, it is still true that the Treasurer has to get £75,000,000 over and above the total amount borrowed last year. The £75,000,000 is presumably to come from the central bank. Even that is not the whole story ! In the last two years the interruption of our imports and the operations of the lease-lend provisions of the legislation passed by the United States of America have affected our overseas financial position. The result has been that our London balances have been accumulating at an almost unprecedented rate. I do not hesitate to say that we must have, in London balances, an addition to the credit base in Australia of at least £30,000,000. If we add £75,000,000 of central bank credit to the net overseas balance that is available, it will be seen that, on a modest computation, in one period of twelve months Australia will have available a central bank credit of £100,000,000. In other words, this will be a pure inflation of the credit base of Australia by £100,000,000. That sum. is greater than the total amount of the whole Commonwealth budget of three years ago. I invite honorable gentlemen opposite to consider seriously what effect this is calculated to have, unless corrected by the sternest measures, in relation to the currency and business operations of Australia. It would certainly be the greatest measure of inflation that we have known in our history. I shall put to the Prime Minister and to the Treasurer certain statements which I find in my papers. These are an anonymous, but, nevertheless, a very powerful, expression of opinion on this matter, and I should like to know whether the Prime Minister and the Treasurer are in a position to contradict them. The statements are - The effect of a credit expansion of £100,000,000 in a year would be to set a new £100,000,000 of spending power in the hands of the Government competing with the old spending power left in the hands of the public for a limitedamount of goods and services, which involve man-power, materials and equipment. The effect must be a strong rise in prices, which will have the effect of increasing the cost of our war effort and of all other government activities, and leaving a new gap to be filled. The extent to which prices would rise will depend on many circumstances, but it is clear that with an expansion of £100,000,000 in a year, the rise in prices under any circumstances must be very serious. Some honorable member whom I did not identify - I think he was a Minister - interjected, "What about price fixing?" This notion that, in the face of real firstscale inflation, you can fix prices and defeat inflation is a notion which no economist in the world, and indeed no man of business in the world, could possibly support. How can you get prices down to a pre-determined point when the rest of your policy is calculated to push costs up through the roof? Mr.Riordan. - What was done in Germany ? 137 N76 0 0 MENZIES, Robert Mr MENZIES - I wish I had enough time to tell the honorable member all about what was done in Germany. If he wants prices to be controlled as they are in Germany, then he must accept all of the consequences. One of the consequences will be that wages will be controlled from rising, as they are in Germany. Another will be that the worker who is drawing the wages will be told what his job is, and that he must stay put in that job. If the honorable member is anxious, or even willing, to adopt the German system and to have every economic factor in this country rigidly controlled, whatever the effect may be on the true standard of living or of liberty, I invite him to rise in due course and say so. But unless he is prepared to do that, I tell him that it is childish to imagine that he can increase the cost of a chair to 25s. and tell the vendor that he must sell it for £1. The fact is that the vendor will neither make the chair nor sell it. You cannot hold prices in the presence of grossly inflated costs. Two classes of people in this country have a vital interest in this problem of inflation. It has been said to me, as it has been said to all of us on a number of occasions, that inflation is just a sort of bogy-man, like the old turnip and sheet, with a candle inside the hollowedOUt turnip, which is used to frighten innocent people. Nobody who knows anything about the history of the great inflations of the world will treat inflation as a joke, and least of all will he treat it lightly if he is a wage-earner or a farmer. They are the people who have most to lose. I am not concerned about your big man, the wealthy man who has big fixed charges over his property. He puts his prices up as inflation goes on and he sees his mortgage disappearing like a mist in the hot sun. Inflation suits your rich man who lives on equities. But it is no good to the wage-earner, who finds that his wages are chasing prices week by week, and month by month. If he thinks that any system invented by man is going to make his wages overtake prices with complete regularity, he had better ask his father about what happened in the relatively mild inflation in this country 25 years ago. And what of the farmer? I am staggered when I hear of the currency that is frequently obtained in country electorates by those monetary cranks who march under the somewhat tawdry banner of Major Douglas. They say to the man on the land, " What you want to have is a freer use of the national credit " - or what I call an inflation of the currency. How is that going to help the man on the land, the man who grows wool and whose wool is sold for him at a certain price? Is he to be helped by the discovery that all of his costs of production, handling and transport are rising overnight, day by day, and month by month? Of course not. If there are two groups of people in Australia who have a vital interest in a stabilized currency and stabilized values, they are the wage earners and the farmers. I hope that neither of them will be led aside to pursue the will-of-the-wisp of inflation, merely because it seems for the time being to be an easy way out. 138 DQC 0 0 HUGHES, William Morris Mr HUGHES - Savings banks deposits total £260,000,000. How much will they be worth? 138 N76 0 0 MENZIES, Robert Mr MENZIES - That, too, is a point to be considered. The last subject with which I shall deal is that of social benefits. I wish to make it clear that I am not concerned to defend injustices. It is our job, to the limit of our capacity, whatever our circumstances may be, to root out injustices wherever and whenever they are found. The Government that I led had a record in respect of social benefits in which I feel pardonable pride; for example, child endowment, liberalized conditions of work and remuneration, and reforms of that kind. I make this reference to the work of the Government that I had the honour to lead, partly because I am still proud of it, and partly because I cannot be sufficiently grateful to the members of the new Government for the almost daily publicity they have given to the achievements of my Ministry during the last few weeks. But the real question that has to be faced, in the presence of war expenditure of the order of £250,000,000, is, whether new social benefits can be provided - not planned - while the war in which we are engaged is being waged. I listened with respect to what was said last night about the planning of benefits. Because I propound this question, it does not follow that the answer to it is that new social benefits cannot be provided; but it does follow that we must scrutinize every proposal for their creation, and ask ourselves "Is this something that we can do without while the war is on; is it something which will impair our activity in the conduct of the war ? " We shall get no credit, in the long run, if we dodge that plain question, saying " It is popular to promise new things, consequently we shall promise them The time has come when we should be prepared to face up to all of these questions, applying to them the one simple test, " Will this, however popular it may be, hinder or aid the prosecution of the war?". Although I do not for one moment challenge the good faith or the genuine and warm zeal of the Prime Minister and his colleagues in the matter of this war, I definitely challenge their judgment; because the budget, if it be applied in its present form, will set in operation competing funds, one fund seeking civil supply and another fund seeking military supply, and the results of that competition will be disastrous to the war effort of Australia. Take the old-age pension. I am sorry that I have to refer to it, and must be pardoned for doing so because the atmosphere in this corner from which I speak is still charged with it. The moment one sits here, one rises almost by instinct to put a question concerning old-age pensions. This matter was raised a. year ago, after discussion with the then Opposition on the budget of that time. Not only was it raised, but it was also related to the cost of living; in other words, we did everything that we could in order to improve and stabilize the old-age pension. If we remember that, we shall also remember and admit that an increase of the amount of the old-age pension, unassociated with the cost of living, will represent, to the extent of its amount, a subtraction from the war effort of this country, a war effort which must succeed if there is to continue to he an old-age pension in Australia. Every honorable member of this House is in favour of old-age pensions. The Leader of the Labour Government of ten years ago, not by choice but because he was driven to it by economic and financial circumstances, reduced temporarily the rate of the old-age pension, and was most unfairly criticized on that account. I shall always remember that he pointed out to the old-age pensioners with, I hope he will allow me to say, great political courage, that it was better that they should forgo for a time a portion of their pension than that they should witness such a state of ruin that the value of the pension would drop to 10s. or 12s. 6d. I shall now refer briefly to the subject of soldiers' pay. The last Government proposed to increase the emoluments of the soldiers by way of deferred pay. This Government has said, "We shall make the increase money in hand ". This issue was discussed in this chamber when the last budget was under consideration. I refer to it now only in order to make three brief points concerning it. The first is, that deferred pay will be of great value to a soldier at a time when he will need it most; not as current spending money, but as rehabilitation money. 139 JNR 0 0 BAKER, Francis Patrick Mr Baker - Ask for his opinion about that 139 N76 0 0 MENZIES, Robert Mr MENZIES - I should be quite happy to take his opinion. Scores of members of the armed forces have told me unhesitatingly that they would prefer to have money saved up for them in the form of deferred pay, than have it in their pockets. Surely there is great sense in that. It must be clear to the most besotted optimist in this country, that when this war ends we shall find not only that all of the countries engaged in it have inevitably destroyed great masses of capital, but also that they are confronted by an immediate problem caused by the relative cessation of work in munition factories. We shall then have to deal with one of the greatest problems of reemployment that either this or any other country has ever contemplated. At a time like that, it would be an advantage beyond price for men who had fought and risked their lives for us to be able to return to a place in which they had some security, in the form of accumulated pay which would tide them over the difficulties of the period. It would be far better to treat them in that fashion than to do what I am very much afraid is to be done, namely, let them fight for us, be wounded in our service, return to this country, and then be told, "You have had one war, we present you. with another; we now present you with a battle for existence, in a financial and economic state of affairs which we did nothing to provide against while you were away". [Further extension of time granted.] Our task in this war is still too lightly estimated by many people. We have enjoyed some months of respite, due to the exertions of Russia, but we have yet in front of us the most serious phase of the war. I do not belong to that happy band of people who talk of peace by Christmas, Easter, or Christmas of next year. There remains the most colossal task to which the British people have ever set their hands. Yet thousands of thoroughly worthy persons, whose motives I admire and respect, are to be heard day by day talking of the war as if it were a mere interlude before the introduction of a new order, an interlude which apparently they think must inevitably end in our favour! There is no inevitability about victory in this war, but. there is about loss and sacrifice. The one thing inevitable is that, as a nation, we shall - to use a colloquial phrase - have to go through the mill and be ground very small in order to win this war. When a home is threatened by a bush fire, the members of the family do not sit indoors arguing about the rearrangement of the furniture, unless they are comfortably or lazily satisfied that the fire will not come their way, or that somebody else will beat it out for them ; they themselves go out and beat the fames. An honorable member opposite said yesterday, " We are in favour of an all-in effort". He might have added, "so long as it is not ' all-in '. An all-in effort must not mean "all-in by Jones, and allout by Brown ". That is the real basis of my criticism of this budget. As human beings, as humane beings, all of us must think of the future. We know that we are fighting for freedom and honest dealing, and that these are to be the foundations of a better world. For God's sake, do not let us risk losing those foundations while we argue about the plans and the super-structure! I believe - and perhaps this will strike some honorable members as an old-fashioned, even an antiquated, view - that the real new order must come from the heart of man. The heart of man must purge itself of greed and cruelty; those are the evils which have produced this war. It must create a new scale of values. The materialist conception of history gave us communism. I believe that the materialist conception of life is responsible for this war to a greater degree than any other factor. The true socialist - I say it in no spirit of controversy - is not the man who dreams of government jobs for all, but the man who thinks and dreams of stern social duty for all, who asks for a way of life in which service to the community, not the size of a man's bank balance, is the true test of value, and who does not advocate a slippered and padded progress through a comfortable passage of years. The new world, I take leave to remind honorable members, is, after all, to be a world of real men. I weary sometimes of talk about the new world which appears to assume that, it will be a world in which we shall cease to be red-blooded and real men, and shall become tame mice, feeding on the communal grain. That is not the kind of new world that I visualize. I look forward to one of the character that I have described. But if we are to have that world, then we must win this war; and if we are to come out of this war in any sort of shape which will enable us to deserve and inherit that new world, every one of us, whether it be the man who lives in Bellevue Hill on an income of £15,000 a year, or the girl who earns £3 a week as a stenographer, must be prepared to say, "1 have a contribution to make ". I am not afraid to go out and say that to the people of Australia. I would ask for a sacrifice by the man who has little, just as readily as I would ask for a great sacrifice by the man who has much. "Why should any man hesitate? I believe that, whatever our virtues may be - 'and every democratic parliament has great and enduring virtues - we are sometimes too much tempted to believe that those whom we represent are incapable of rising to a. great issue. They are capable of rising to it, and I hope that we shall, raise them to it. 140 009FQ Fremantle ALP Prime Minister 1 0 CURTIN, John Mr CURTIN . - I am convinced that the committee is not surprised that the right honorable member for Kooyong (Mr. Menzies) should have made the speech that he has made from a place in this chamber other than either the treasury bench or the front Opposition bench. Obviously, it is the speech of a representative who finds himself at odds with the organic parties of this country. As Leader of the then Government, the right honorable gentleman last year sponsored a budget which provided for central bank credit, taxation, and loans. The degree to which the central bank credit predicted in that budget would be used was as uncertain as is the amount which is required now. The right honorable gentleman did not know what new developments would arise which would cause a. derangement of his budget, and this Government finds itself in the same position; it does not know what immediate developments, possibly a.n actual physical attack upon this country, may completely change the whole structure of the budget. The Treasurer (Mr. Chifley) therefore says that in the new year we shall review the financial position in the light of the conditions then existing. The Leader of the Opposition (Mr. Fadden) said yesterday that the basis of this budget, which the right honorable member for Kooyong now condemns, is identical with that which the Leader of the Opposition, as Prime Minister, introduced, when the right honorable member for Kooyong was sitting alongside him as Minister for Defence Co-ordination. 141 KNX 0 0 HARRISON, Eric Mr Harrison - He said that the basis is the same but that the specifications and materials are different. 141 009FQ 0 0 CURTIN, John Mr CURTIN - The materials are loans, taxation and central bank credit; those are the three sources from which the money will come, and they are identical with those available to every other government. There was a basis implicit in the budget of a year ago, just as there is in the present budget. The right honorable member can look back for a year, during the greater portion of which he was Prime Minister, when he saw the spiral of costs rising every day, but now he emphasizes as a prediction for the future the very symptoms which characterized the country as a result of his own administration. He warns the people of the evils to come, but blinds himself to the diseases of his own generation. He says "Do not tax the rich, because they will lose the incentive to make profits, and, as a result, production will decline and the revenues of the Government will fall. Leave the rich to their own patriotic impulses." But what of the soldiers? " If you give them more money," he declares, "they will spend it improvidently." That is what the right honorable gentlemen means. He said that they would waste their money, and cause demands for goods which would be in conflict with the demands of war. It appears that the expenditure of the poor has to be regulated, for, if left to themselves, they have no sense of the demands of patriotism. Therefore, he claims, we must tax them. and see that they have so little money left that their impoverishment will so reduce the demand for goods that the warehouses will excite no demand from the factories, and therefore, the factories can be diverted to war production. That is the essence of the right honorable gentleman's argument. Very properly, he said that he was a nonsocialist. I may add that he has very little conception of the instincts of the men and women of his own country. Any charge that the right honorable gentleman has made against this budget could equally .be made against the budget which the Parliament rejected only a month ago. As a matter of fact, the object of the Treasurer is to raise more revenue for the purposes of war than was to have been obtained under the budget brought clown by his predecessor. Less loan raising is provided for in my colleague's budget than in the budget submitted by the Leader of the Opposition. In case the right honorable gentleman has any doubt on the matter, I direct his attention to the fact that the increase of taxes provided for in the present budget is £22,400,000, whilst in the budget rejected a mouth ago, taxes were to be increased by £7,000,000, the difference between the two amounts being £15,400,000. The increased taxes are to be imposed where the burden can best be carried. It will be borne by those who are making profits out of the war, and who have high incomes in Australia. The right honorable gentleman contended that, under the present budget no tax would be imposed in respect of £560,000,000 of the national income, which, he said, amounted to £.300.000,000 last year. The total amount is higher to-day. But it is not true that persons in receipt of incomes of under £400 per auburn, aggregating £560,000.000, escape taxation. In 1941-42 that portion of the field yielded £3,300,000 in Commonwealth taxes, and £7,000,000 in State taxes, a total of £10,300,000. The right honorable gentleman may argue about the effect of indirect taxation as he likes. Customs and excise duties yield indirect taxes to the amount of £50,000,000, and the sales tax provides £26,000,000, a total of £76,000,000. The proportion of the indirect taxes paid by persons in receipt of incomes under £400 per annum can be estimated at between £40,000,000 and £50,000,000. I invite some expert analysis of that estimate. The contention that persons in receipt, of incomes under £400 per annum do not pay taxes for national purposes is so untrue that I claim that the taxes levied on the members of that group, in proportion to the requirements that have to be met by their income, have been inequitably high for years. The right honorable gentleman said that persons with incomes of under £400 a year are not now asked to pay anything. As a matter of fact, the total number of persons in receipt of incomes of £400 per annum and less is 2,709,000, of whom 1,354,000, or half of them, receive less than £200 per annum. 142 N76 0 0 MENZIES, Robert Mr Menzies - Juvenile workers. 142 009FQ 0 0 CURTIN, John Mr CURTIN - Many of them are adults. Those who get less than £300 per annum but more than £200 per annum, number 1,000,000. The gross income of persons in receipt of under £300 per annum would be about £430,000,000, not £560,000,000, and the gross income of persons in receipt of less than £200 a year would be £180,000,000. The right honorable gentleman selected the group with incomes up to £400 per annum and then argued as though this Government had left that group untaxed, but it has not. It has allowed the taxes introduced in the Eadden budget to stand on all the incomes up to £1,500 a year, and it has proposed very severe indirect taxes over and above those of the previous Government for the diversion of man-power and resources to the purposes of war production. 142 KNX 0 0 HARRISON, Eric Mr Harrison - It will all go into the cost of living. 142 009FQ 0 0 CURTIN, John Mr CURTIN - It will not; it will go into the cost level, but not into the cost of living, meaning the cost of the physical subsistence of the race. The indirect taxes proposed by the Treasurer have as their purpose, not only the raising of revenue, but also the restriction of the opportunities to purchase certain articles, so that those who do purchase them shall pay something for the privilege of doing so. Those in the middle and lower income ranges have some selective right as to what they shall spend their resources upon, but, at the same time, they are urged to save for the purpose of enabling the war to be carried on. The right honorable member for Kooyong cannot sneer at the savings of the people. He referred to war savings certificates. We know that the habit of those persons in receipt of the lower incomes is to open savings bank accounts. They are not accustomed to taking out securities, even war savings certificates. What do the savings bank deposits show for the last year? The Leader of the Opposition referred to them yesterday. They are not proof that the workers and those in receipt of low incomes have to be dragooned into saving. Increased deposits in the savings banks have been one of the means whereby the Government has been financed during the last year. All this cynical contempt for national discipline in a democracy is the worst kind of taunt. It does not fit in with a right understanding of what Australia is doing, and with what I believe the people are determined to do. They put their deposits in the savings banks because they are accustomed to do it, and because they are satisfied with the modest rate of interest that they receive. The savings banks then, as collective agencies, invest the deposits in Commonwealth loans. This saves an enormous amount of bother. It does not matter how the deposits reach the banks ; so long as the investable funds of the banks are increased, there is sound reason for the nation having use of those funds for the prosecution of the war. I do not see in that anything that savours of inflation. It appears to me to be a normal course to use the banking system as the machinery whereby individuals may invest their savings in war loans. That appears to me to be the only method of reticulation available to the great mass of those who have small savings to enable them to become creditors of the nation. Hitherto those creditors have been restricted to rich men, insurance companies or savings banks, but savings banks and insurance companies can be regarded as a pool into which the savings of the people with small incomes go. To regard those people as failing to participate in the sacrifices necessary in providing for war needs, and as lacking the patriotism that is called for from the nation, is to do an injustice to the men and women of this country. The right honorable gentleman has made four points. He stated that there the budget proposes an enormous use of central bank credit. The answer to that is that the present budget makes provision for more revenue than did that introduced by the Leader of the Opposition a month ago, and that under this budget less central bank accommodation will be required than would have been the case if the budget submitted by the Leader of the Opposition had been accepted by the Parliament. The present Government proposes voluntary loans to the amount of £137,000,000, whereas the previous budget provided for voluntary and forced loans to the amount of £147,000,000. The Fadden budget provided £68,000,000 from revenue for war purposes; the Chifley budget provides £82,000,000 from revenue for war purposes, an increase of £14,000,000. The amount of £82,000,000 which this Government proposes to And from revenue is 37 per cent, of the total war expenditure for the year. Despite these facts, the right honorable gentleman professes to find in the budget a source of inflation about which, for the first time, he has warned the Parliament. However, whatever case he may be able to make out against Mr. Chifley's budget, he could make out with greater emphasis against the budget of his colleague. We are finding more money out of revenue for war purposes, and we are asking for less by way of loan. But the right honorable gentleman objects to certain of our proposed expenditure. He says that we are finding more money for social services, and that this, together with the increased pay to soldiers and their dependants, will have the effect of increasing purchasing power, thus creating a greater demand for civil goods. I can answer that charge shortly.. One of the largest groups to benefit by increased expenditure on social services consists of invalid and old-age pensioners. I put it to the right honorable member that they are, for the most part, consumers of foodstuffs and payers of rent for the little accommodation which they have. It is incontestable that rents have risen, and in the capital cities it is very difficult to get any kind of housing accom modation at all. Because we have increased pensions, invalid and old-age pensioners will be able to buy things that this country already has in excess supply. They will buy more fruit, more butter, more bread, and more meat. Surely the right honorable member does not argue that this country is in the same plight in regard to food supplies as is the United Kingdom. What disadvantage is it that we should be physically fit at this time? The increased provision for invalid and old-age pensioners will result in reducing hospital expenditure, in reducing the amount of sickness in the country, and this in turn will have the effect of releasing the services of men and women for other purposes. We have increased soldiers' pay all round by ls. a day, but 6d. of that amount must be allocated to the soldier's family. He must increase his allotment, either to his mother, if she be his dependant, or to his wife, if she be his dependant. The soldier will have 6d. a day more to spend, and his family will have the other 6d. to spend. In addition, there will be an improvement of the rates applicable to service-men with one or more children. I acknowledge that we have, as a matter of deliberate policy, endeavoured to improve the capacity of the families of soldiers to live reasonably well while their husbands and sons fight for us overseas. We do not consider that to be a wrong thing, because those families have a first claim on the resources of the nation while it is at war. But the right honorable member says that if we tax the rich as we are doing we shall reduce their incentive to effort. Then he objects to the increased pay to soldiers and their families on the ground that it will increase the ability of those families to buy goods from shops and warehouses, and thus increase their profits. There is a limit to that, and the Treasurer has indicated in his statement that steps will be taken to control prices and to prevent profiteering. Moreover, we have taken steps, which the right honorable gentleman never took, to remove the substantial profit from war which hitherto has always flowed to big business. It is true that, in deciding where the burden of taxation shall fall most heavily, we have said, at this stage of the war, that, instead of the weight being first laid on the poor, it shall be laid first upon those who are best able to bear it, namely, those in receipt of high incomes. I do not ignore the possibility that, in the near future or, if the war lasts, perhaps in a more distant future, those who have escaped the imposition of direct taxation in this budget may have to accept an increased share of the burden; but at this stage, after carefully examining the situation, we came to the .conclusion that we should get more money in taxation for war purposes, and, therefore, we imposed increased taxes on those most capable of contributing. We decided that we should borrow less for war purposes, in accordance with the increased amount to be collected in taxes. Then we said that there were two acts of justice which had to be performed, one to the families of soldiers, and the other to the aged and invalid. Those are the fundamental distinctions between this budget and the budget of last month. The right honorable member for Kooyong spoke not one word in defence of his colleague's budget. The speech he delivered to-day was in marked distinction from that delivered by the Leader of the Opposition. The latter was fearful, not of inflation as a result of this Government's budget, but of what we might do to the banks, but the right honorable member for Kooyong did not say a word about that. The Government proposes to exercise authority over the trading activities of the private banks in order that ascending profits always earned during war-time shall return to the nation itself, and shall not be impounded by private and sectional interests. The Treasurer will explain the Government's proposals in that regard. We are well aware that between £30,000,000 and £40,000,000 of increased deposits has gone to the trading banks as a result of war finance. The issue of credit by the Commonwealth Bank to the Government, and the corresponding expenditure on munitions, has caused the money to circulate through the community, and finally to lodge in the tills of the trading banks, thus increasing the volume of their deposits, so that their investable funds are larger than they would have been if the original credit had not been issued by the Commonwealth Bank. Thus they are able to take up war bonds and treasury bills in excess of what was possible before war broke out. We say that a reasonable arrangement shall be made in regard to this matter. That was the point of attack by the Leader of the Opposition. The speech of the right honorable member for Kooyong was in condemnation of the principles of the budget upon which he had compromised with the Opposition a year ago, because expansion of bank credit was as much a feature of his budget as it is of ours. It is clear from an examination of the budget speech of a year ago that the Government of the day was then afraid that we would tackle it for not using central bank credit. Therefore, Ministers said that they would use it, that they were in fact doing so. I pay to the honorable member for Warringah (Mr. Spender) a welldeserved compliment for the manner in which he, as Treasurer, used the currency of the country in the early stages of the war in order to bring workers into action without imposing heavy taxation. That was the beginning of the use of central bank credit by the Government. Let this be said now, and placed on record: The sympathy which the honorable member expressed for my distinguished predecessor, the right honorable member for Yarra (Mr. .Scullin) would never have been necessary if the Commonwealth Bank in 1931 had done for Labour what it did for our opponents on the outbreak of war in 1939, when central bank credit was used in the national interest by the Government in a perfectly proper manner. I do not condemn what was done in 1939, but I cannot be blamed for drawing attention to the treatment received by the right honorable member for Yarra who, in worse circumstances, had the door bolted against him, while the country was forced through the misery of a depression which need not have been so serious but for the action of those who had no responsibility, and who used their power for their own ends and to defeat the Government. I agree with the right honorable member for Kooyong that at this stage money is not everything. The war must be fought with physical things, and by the organization of men and material. But I put it to bini that, for that very reason, the role of money is that of a machinery for the organization of our resources; it has no right to play the part of the ruler. The use of that machinery must not be conditioned by any extortionate charges. Money must do what is required of it within reason; it must be deliberately and capably managed, so that the interests of the nation will not be sacrificed because of any failure of the financial mechanism to enable the resources of the country to be fully used for the prosecution of the war. In the opinion of the Government, the total resources of Australia will be required for the efficient prosecution of the war. By total resources we mean everything the country possesses, man-power, womanpower, raw materials, everything that can be pressed into service, so that the maximum of equipment may be placed at the disposal of those whose task is to defend this country. Australia accepts the responsibility of being a supply depot for those of our Allies to whom we are able to furnish supplies. The Government takes no narrow view of its obligations. The situation calls for maximum co-operation between all the countries that are engaged with us in this conflict. We hope that all those countries, the United States of America, Great Britain, Canada, New Zealand, South Africa, the Netherlands East Indies, and Russia also, will cooperate in such a way that such necessary materials as we lack will be supplied by them, whilst those things which we possess will be placed at their disposal. We all are confronted with a common danger, and will share a common fate. I agree that all that we have is at stake. The right honorable member for Kooyong in his speech to-day indicated that the stake which the rich have is one that they do not value quite so highly as it ought to be valued. He seemed to think that we could rely on them to do the job voluntarily - that they ought not to be taxed, but should be asked to lend us their money. 145 KNC 0 0 MARWICK, Thomas Mr Marwick - That is the very opposite of what he said. 145 009FQ 0 0 CURTIN, John Mr CURTIN - His contention was that the lower ranges of income ought to be taxed. The right honorable gentleman said that compulsory loans were a feature of the economy of Great Britain. The system which is in operation in Great Britain allows a maximum, postwar credit of £60 a year, but the Fadden budget proposed to build up an unlimited burden of indebtedness after the war. The Leader of the Opposition (Mr. Fadden) said that deferred pay would be something for the soldiers to spend after the war. He said that he did not like to speak of forced loans, and therefore he referred to post-war credits which, he said, would build up an asset for the use of the soldier after the war. In my opinion, the injustice of the previous Government's proposal lay in the fact that a resident of Victoria with an income of £40,000 a year would have accumulated £S,000 a year in post-war credit. Under that system a man in one State would have a larger credit built up for him than would be possible to a man in another State. 145 KQK 0 0 MCDONALD, Allan Mr McDonald - He would be making a larger federal contribution. 145 009FQ 0 0 CURTIN, John Mr CURTIN - Are they not both in the same Commonwealth, and subject to the same danger? Why should a man in Victoria build up a greater postwar credit than is possible to a man in another State on the same income who pays the same amount? Honorable members opposite talk about equality of service, but not of equality of assets. The budget of the present Treasurer irons out a great deal of the difficulty associated with the post-war credit proposals of his predecessor. 145 KXT 0 0 PATERSON, Thomas Mr Paterson - It is impossible to equalize matters because taxation varies so greatly in the several States. 145 009FQ 0 0 CURTIN, John Mr CURTIN - The Government knows that .the problem is difficult, but J submit that the present Treasurer has handled it more fairly than his predecessor proposed to do. I conclude by saying that this budget is one drawn by the Labour party for the purpose of enabling Australia during this year to maintain the services of government and to conduct war. We have accepted as the figure we require for the conduct of the war the 'amount set down by our predecessors in office. Almost half of the year has expired. The Estimates of war expenditure as supplied to the previous administration were prepared by the same staffs as are available to the present Government. Moreover, the time available did not enable any drastic examination of those Estimates to be made. As I have said, we accepted the figure of our predecessors in respect of the requirements for the conduct of the war, and we then added to that sum an amount to cover increased pay to soldiers. That represents all that we have done in connexion with the provision for the war. Then we sought means to obtain the money necessary to meet that expenditure. First, we increased taxation. In total, we expect to get more money from revenue for the purposes of the war than the budget of our predecessors proposed to obtain from the same source for that purpose. Yet the right honorable member for Kooyong talks about inflation! I put it to him flatly that his facts were astray, that his memory was at fault, and that his imagination was too bizarre. 146 KUN Robertson 0 0 SPOONER, Eric Mr SPOONER .- After such a skilful and fascinating verbal duel, as has just taken place, any intervention on my part might be regarded as a rather clumsy exhibition of swordsmanship. I believe that I cannot do better than give to the House my own impressions of this budget and of the country's finances - impressions that I had formed before I had the opportunity to listen to the most interesting debate that has taken place this afternoon. I saw Government supporters sink into the very depths of despair as the right honorable member for Kooyong (Mr. Menzies) spoke; and then I saw them lifted almost to the skies as they listened to the speech of the Prime Minister (Mr. Curtin). I should be wrong if I endeavoured to intervene in that duel. I have made my own analysis of the budget and I propose to give it to the committee, uninfluenced by the speeches which honorable members have inst heard. In this, the most dangerous hour of the nation's greatest crisis, this House might reasonably have expected to consider a budget that embodied an appeal for unity among all Australians, and which reflected a purely impartial outlook upon Australia's problems. In order that a budget may meet the views and deal with the difficulties of all sections of the community at this time it must contain certain essential elements. In the first place, it must provide for a maximum war effort. That means not only the provision of sufficient funds to meet the proposed expenditure, but also the diversion of expenditure from civil purposes to war requirements. Such a budget should provide a plan by which the nation's requirements of men, materials and money, shall be systematically and gradually converted to war purposes. I am not sure that the present budget does those things. It is true that it does provide, on an arithmetical basis, for the expenditure which the departments and the fighting services will require during the coming year; but it does not proceed further, and provide the means to ensure that the money will be raised as contemplated. The second element that the budget should contain is a plan to preserve the Australian industrial system, because of the importance of that system to the war effort and to reconstruction in the post-war period. Another necessary element is provision for contributions to the social improvements that we have promised as an integral part of the postwar reconstruction. Having that need in mind, the previous Government introduced during the early part of this year a child endowment scheme. Its budget for this year contained financial provision for a whole year's expenditure in respect of child endowment. A budget should" also contain stern demands upon all sections of the people for their contribution towards the cost of the war, paying due regard to the principle of ability to pay. It should also provide for the sound use of the reserves within the country's financial system, provided that the use of those resources is accompanied by adequate checks against any inflationary tendency. Those I conceive to be the elements that this budget should contain. If any of them is missing - if the budget provides some of them but not those that are complementary to them - the budget fails. I am still of the opinion that the budget introduced into this House several weeks ago by the present Leader of the Opposition (Mr. Fadden) embodied all of those provisions. His budget contained all of the elements that are necessary in a sound wartime budget. If the Fadden Government's budget erred at all, it was because of the desire of that Government to be fair - indeed generous- in its treatment of those sections of the people whose incomes are small. That Government could reasonably and properly have imposed higher rate of taxes, or required compulsory loans to a greater degree from certain grades of lower incomes for the protection not only of the nation but also of those citizens themselves. I believe that, in a desire to be completely fair to those on the lower incomes, it proposed taxes lower than were justified by purely financial considerations. I hope that the present Treasurer (Mr. Chifley), for whom I have, as he well knows, a high personal regard, will not misunderstand me when I express the view that the budget which he has introduced lacks originality and fairness. It mimics the structure of the Fadden budget. I appreciate what has been said as to the time available to revise the expenditure Estimates; I agree that the Treasurer could not very well have done other than accept generally the Estimates prepared by the previous Government; but as to the plan of the budget and the methods of raising funds generally, the present Treasurer's budget merely mimics the budget introduced by his predecessor. But whilst the present budget does that, it departs from the Fadden budget in several important principles. It destroys the sound provisions that were at the foundation of the Fadden budget. The Chifley budget seeks to make political capital out of a national crisis, and in that respect, I entirely disagree with it. In its anxiety to gather political support, the present Government incurs risks that are inseparable from the neglect of precautionary methods in a budget of most unusual proportions, without precedent in our history. It is a budget of entirely unforeseeable proportions and conditions, and the precautions that might easily be taken in other times are even more necessary now. I go so far as to predict that this budget will be the undoing of the Government. Once again in the history of Australia, a Labour Government shows that it cannot handle the finances in a manner that is necessary if permanent and valuable reforms are to be secured. I shall now proceed to analyse what the budget does. It increases by £5,600,000 the expenditure proposed by Vue Fadden Government, without submitting any plan for financing the additional amount. I shall not criticize the purposes for which the increase is applied. As we know, the object is to grant to soldiers immediate pay instead of deferred pay, and to increase invalid and old-age pensions. But the fact is inescapable that the budget provides for the expenditure of an additional £5,600,000 without offering any plan for financing it. Whilst so doing, the budget abandons a provision, which was contained in Mr. Fad den's budget, for the raising of £25,000,000 by means of compulsory loans. That money would have assisted to finance the budget, and would also have provided the first instalment of the quick monetary circulation which will be necessary in the post-war era. While on the one hand, the new budget incurs additional expenditure of £5,600,000, at the same time it abandons compulsory loans amounting to £25,000,000 that the Fadden budget contemplated. The budget also imposes new taxes exceeding £15,000,000, over and above that which was proposed by the Fadden Government. If honorable members will balance those three items, they will discover why it is necessary for the new Government to lean upon loans to the amount of £16,000,000 more than the Fadden Government proposed. All of us know full well that there is a limit to the amount of loan money which can be raised on the market. Earlier to-day, the right honorable member for Kooyong (Mr. Menzies) stated that the amount raised in Australia last year by loan totalled £66,000,000. It is reasonable, then, to suppose that the amount to be raised by loan during the current year will be a similar sum. In that event the country must depend upon central bank credit for the amount by which the loan money required exceeds £66,000,000. That sum, I estimate, will be £71,000,000. The adjustment of those figures is one thing; but in the application of the adjustments, we encounter a difficulty which is far more important than any arithmetical calculations. In its desire to re-arrange national finance according to a political plan the Government has lifted from the shoulders of the lower income groups the modest contribution which the Fadden Government asked them to make to compulsory loans. At the same time, the Chifley budget places an additional load on industry principally; and honorable members will recognize that it is to the industrial system that those in receipt of the lower incomes are obliged to look for employment. But the most important matter of all that emerges from this rearrangement is the. effect of the decision not to adopt the system of compulsory loans, which waa an integral part of the Fadden budget. The result will be to put into circulation during this year, through the spending power of the lower incomes, an additional sum, at a time when there should be a contraction of civil expenditure. The groups of incomes below £400 a year have the greatest aggregate spending power, and make the greatest demand on consumer goods. One of the gravest dangers which I see to Australia's war effort is the immense spending power of the incomes below £400 a year, representing approximately 70 per cent, of the total income of our people. The Chifley budget aggravates that danger. To the degree to which it increases the amount available for expenditure by that group of taxpayers it increases the menace to Australia. I cannot help thinking that in his budget the Treasurer has not had the courage to impose any corrective to the influence which I have described, instead of doing the right thing, the Government makes an anaemic appeal to the people to save. That analysis represents my views upon the difference between the Fadden budget and the Chifley budget. Mr. Fad den's budget was as sound as a budget can be under the abnormal conditions and strain of war. The revised budget has departed from the earlier budget in certain important respects and the responsibility for policing it rests with the Government. But in the transfer of taxation from one section to another, the Government has embarked upon an attack upon industry which I can only describe as spiteful, and which will in time defeat its own purpose. The increase of taxation under the Wartime (Company) Tax Act is so severe and vicious that it is bound to cause individual hardship. The tax is calculated to raise this year £4,000,000 in excess of the amount that was raised during the last financial year. In order to gain that revenue, the Government will impose the tax upon many of Australia's developmental companies, and the application of the impost will eat into their cash reserves, and unnecessarily impede their operations and their capacity to employ and supply in the future. The control that will be exercised over the banking system will be harassing and will import political influences into the most delicate mechanism of our monetary system. Evidently, the Labour party has not learned from its past mistakes. A.n arrangement was entered into between the previous Government and the private banks. It may be said that the arrangement had to be negotiated and settled under difficult conditions; but the fact remains that it was settled, was sound, and would have been honoured. If it had not been honoured, the Government possessed power to impose regulations which would have compelled the trading banks to observe certain conditions. Under those conditions, there was no need to exert the powers provided by war-time regulations for the purpose of imposing licensing upon the trading banks. The Government has done a groat disservice to Australia by creating in the minds of depositors a feeling that somebody has expressed lack of confidence in the 'hanking system. As the trading banks had voluntarily made the agreement which would have done all that the Prime Minister indicated a little while ago, the action of the Government was quite unnecessary. We realize the necessity for the trading banks to deposit with the Commonwealth Bank their surplus funds so as to obviate the danger of secondary inflation. An agreement was made whereby that would be done. If any attempt had been made to evade the agreement, that would have been the time to impose regulations, or issue licences. But that occasion had not arisen, and I do not think that it would ever have arisen. The trading hank system is the back-bone of Australia's industrial organization. 149 L07 0 0 LAZZARINI, Hubert Mr Lazzarini - The honorable member has at times been very critical of the trading banks. 149 KUN 0 0 SPOONER, Eric Mr SPOONER - Whilst I may have been critical of the method of using the central banking system., I have never urged any interference with the private banking system. I am a great advocate of the Commonwealth Bank, and its use as a central banking organization, but I realize that this country can never develop properly unless it has the aid of the competitive elements provided by the private trading banks. 149 BV8 0 0 CALWELL, Arthur Mr Calwell - Would it not simplify matters if Parliament, nationalized the banking system? 149 KUN 0 0 SPOONER, Eric Mr SPOONER - I do not see what good would follow if we nationalized the banking system. A great disservice would undoubtedly be done if we were to remove the competition, which comes from the several sound trading banks, with the Commonwealth Bank. If, by nationalizing the banking system, we were to fund all their resources in one organization, we should not increase the quantum of money available or the opportunities for depositors or those who depend upon bank accommodation. Mr.Calwell. - But we should remove the profit motive from banking. 149 KUN 0 0 SPOONER, Eric Mr SPOONER - What does that mean? If, to-morrow morning, the Parliament of the Common wealth decided to nationalize the banking system, the procedure would be to issue bonds or debentures to the shareholders of the present trading banks. As compensation, the Common wealth would be obliged to pay to them the usual rate of interest payable on those securities. Therefore, the moneys which are now paid to the shareholders by way of dividends would in future be paid to the bondholders by way of interest upon their securities. The result would be the same as at the present time. The great advantage which I see in the retention of the private banking system is the specialized knowledge, that these concerns possess, of the functions of banking, and the facilities that they place at the disposal of the business community and those who use the banks generally, a service which cannot be given by one huge organization. The several trading banks which are sound and organized should be retained in order to compete with the Commonwealth Bank in the ordinary course of business. I hope the system, which now operates, should not be subjected to interference. Expenditure for 1941-42 is estimated at £221,485,000, and although the figures are now well known to honorable members, I present them again in a summarized form in order to throw a little extra light upon the position. The means of financing the expenditure comes from, first, cash balances, £2,229,000; secondly, revenue after deducting all ordinary expenditure, £82,147,000; and. thirdly, loans. £137,109,000. As has been correctly saidby the Prime Minister (Mr. Curtin) and the right honorable member for Kooyong (Mr. Menzies) the loan provision may be divided into £66,000,000 for borrowings on the market and £71,109,000 for other loans. There is no new plan in this arrangement. The revised budget is in general outline the Fadden budget without its precautions and with some dangerous variations. I put it to the committee that the success of this budget depends entirely upon the manner in which it is policed. So far the only proposal for its policing is a personal appeal to the people to save. That will not be sufficient. The only evidence available as to the extent of the savings of the people, namely, the increase of deposits in the savings banks, indicates that the savings of the people will not be sufficient to provide the surplus that will be required during the coming year. There should be some strongly implemented plan that will require more than a personal appeal to the people of this country to save. In that respect the budget has failed to indicate the manner in which reliance can be placed upon its implementation. The borrowing arrangements outlined in the new budget, though differing somewhat' in detail and amount, are similar in structure to those provided in the Fadden budget. It is proposed to raise on the market for the Commonwealth an amount of £66,000,000. and for the States, in pursuance of arrangements made through the Loan Council, an amount of £20,000,000, or a total of £86,000,000. It is also proposed that other loans which we believe will total £71,109,000 will be raised. The point I wish to make is that this Government has realized at a very early stage in its career that it can do no more for the States through the Loan Council than was done by the last Government. During the last several weeks repeated complaints have come from New South Wales as to the inadequate provision made by the Loan Council to meet the needs of that State. The Premier and the members of the New South Wales Government frequently attacked the Fadden Government and the Government which preceded it, declaring that they had been victimized because the Loan Council had provided only £20,000,000 for the requirements of the State. What have they to say about the present budget which provides the same £20,000,000 as was proposed in the budget introduced by the Fadden Government ? 150 KEU 0 0 FALSTEIN, Sydney Mr Falstein - There is to be a supplementary budget. 150 KUN 0 0 SPOONER, Eric Mr SPOONER - It is true that we have been told that a supplementary budget will be introduced next March. I am dealing with the budget as introduced by the Treasurer; I know nothing of what may be contained in a supplementary budget. As I have said, during the last several weeks of its life the Fadden Government was subjected to attack and criticism by the New South Wales Government because it was proposed that only £20,000,000 was to be found by the Loan Council for the requirements of that State. The Fadden Government relinquished office and after three weeks had passed the Curtin Government introduced a new budget which proposes to provide the same £20,000,000 as was proposed by the Fadden Government, yet the criticism levelled by Mr. McKell's Government disappears. Let us eliminate politics from this matter and remember that we are Living in a time of war. Let us realize the seriousness of these criticisms that aim at disturbing the public mind for no other purpose than the gaining of a political advantage. I submit that, having regard to the difficulties which confront us at the present time, £20,000,000 is the maximum that could be provided by the Fadden Government or by the Curtin Government. If that be the case, let us desist from further criticism of that kind. I propose now to say a few words on another important subject, namely, the duplication of taxation by the Commonwealth and the State Governments. That has been a very important question in Australia for a long while past; but constitutional difficulties surround it. It is not easy to suggest the means by which there may be uniformity of taxation and uniformity of assessment within Australia. 150 KA9 0 0 JOLLY, William Mr Jolly - It could be achieved only by unification. 150 KUN 0 0 SPOONER, Eric Mr SPOONER - Precisely, but who is to bring about unification? But for the disturbance that would follow unification and the fact that it would have to be brought in by easy stages, I would welcome it. I always understood that unification was included in the policy and platform of the Labour party. 150 DQC 0 0 HUGHES, William Morris Mr Hughes - That is so. 150 KUN 0 0 SPOONER, Eric Mr SPOONER - The Deputy Leader of the Opposition (Mr. Hughes), who was one of the founders of the Australian Labour party, confirms me on that point. To-day that aim is expressed in different phraseology, but the meaning is unaltered. 150 L07 0 0 LAZZARINI, Hubert Mr Lazzarini - It means nearly the same thing. 150 KUN 0 0 SPOONER, Eric Mr SPOONER - The honorable gentleman says that it means nearly the same thing, but my recollection is that that part of the policy of the Labour party is as nearly as possible expressed in the word " unification ". 150 L07 ALP 1 0 LAZZARINI, Hubert Mr LAZZARINI - A sovereign Common- 9 wealth Parliament. 150 KUN 0 0 SPOONER, Eric Mr SPOONER - That is so. During the early part of this year I wrote several articles urging that we should have a uniform system of taxation in Australia, even if it became necessary for the Commonwealth Parliament to use its war-time powers in order to prevent the States from exercising their taxing powers. I am advised by constitutional experts with whom I have discussed this matter that under its emergency -war time powers the Commonwealth Parliament has the necessary authority to compel the States to submit. That may be a debatable point. 151 L07 0 0 LAZZARINI, Hubert Mr Lazzarini - Subject to the restrictions in the Constitution. 151 KUN 0 0 SPOONER, Eric Mr SPOONER - However, the Commonwealth's emergency war-time powers are restricted to the duration of the war and six months thereafter. The point I have made, and which I emphasized in certain statements I have made to the press, is that if the Government will so act under its special war-time powers, and if, as we fear, the war lasts several years, it is not conceivable that the public of Australia will allow us to go back to the present chaotic conditions when the war is over. 151 KCF 0 0 DEDMAN, John Mr Dedman - Governments supported by the honorable member had an opportunity to do it during the last two years. 151 KUN 0 0 SPOONER, Eric Mr SPOONER - At least we went half-way when we adopted the system of national contributions, by which we reached equality in the assessments levied on taxpayers in all States. I remember sitting where the honorable gentleman now sits and hearing the present Prime Minister, speaking from his place on the Opposition side of the chamber, say, " If you want to get uniform taxation the only way to do it is to abolish State taxation". "When a Government led by the honorable gentleman took office I sat back in expectancy, glowing with excitement. I thought that when the budget of the new Government was brought before us some of the things that I had advocated in the past few months would come to pass. However, not only did the Curtin Government fail to introduce a measure by which there would be uniform taxation, but it also abandoned the measures which the previous Government had introduced. Apparently the Labour party's policy and platform are forgotten and we are back to where we were. The opportunity to secure uniformity is lost for 1941-42, but not necessarily for 1942-43. Seven or eight months remain before the end of the financial year and I urge the Government, if it has a constructive mind upon this matter, to go ahead and endeavour to secure uniformity of taxation in Australia. 151 DQC 0 0 HUGHES, William Morris Mr Hughes - In theory, every one is for it; in practice every one is against it. As soon as an attempt is made to bring it in, the States will oppose it and State politicians will stump the country advocating that things be left as they are. 151 KUN 0 0 SPOONER, Eric Mr SPOONER - That is so. 1 remember that when I was younger the Commonwealth Government took a referendum of the people with a view to altering the Constitution, but State governments, some of which where led by Labour premiers, opposed the proposal 151 L07 0 0 LAZZARINI, Hubert Mr Lazzarini - Some were led by nonLabour premiers. 151 KUN 0 0 SPOONER, Eric Mr SPOONER - That is true. At any rate, State politicians stumped the country against the proposal, and succeeded in defeating it. In conclusion I desire to make a few observations on the influences that are behind this budget - indeed, behind all budgets. Governments come and governments go, but influences go on for ever. It seems to me that the influences behind the budget make a quick adjustment of their opinions as to what should or should not be done. It is strange, for example, that the Labour Government to-day should depend for its present budget upon the advice of economists, some of whom were responsible for the Premiers plan of ten years ago which Labour governments and Labour members have roundly condemned ever since. 151 L07 0 0 LAZZARINI, Hubert Mr LAZZARINI - If we get rid of them, the honorable member will condemn us. 151 KUN 0 0 SPOONER, Eric Mr SPOONER - I shall not condemn the honorable gentleman and his colleagues if they make up their own minds as to policy, even though I do not agree with it. If members of the Government accept their ministerial responsibilities to the fullest degree, although I might disagree with their views, I shall not disagree with their actions. I should not disagree with a government which made up its own mind and departed from the procedure of having its mind made up and even its speeches prepared for it by economists who assist the Government. The system that operates to-day is a challenge to democracy. I speak impersonally, because some of the estimable gentlemen who make up the mind of the Government and prepare its speeches are friends of mine, but I think it wrong that they should prepare successive budgets and successive budget speeches for successive governments. If three more governments wanted three more budgets between now and Christmas Day, they could easily be accommodated by the official advisers having regard to the needs of the pressure groups which control governments. That is a condition which should not exist. It suggests lack of originality and lack of determination on the part of Ministers, and I believe that democracy requires that that condition be changed. All prudent and wise administrators need at their elbow advisers to assist them in the solution of problems, but not to formulate policy which will go out to the country as the considered judgment of governments. "When I consider that over a number of years economists and advisers are able to advise successive governments on policy, I am reminded of the American politician who said, " These are my principles, but if you do not like them they can be altered ". Similarly, taxation resolutions and measures are found for differentgovernments at short notice. Good as he may be, how could it be possible for the Treasurer within the space of three weeks, to produce not only a budget but also about twenty separate financial resolutions and their accompanying bills and dispose of the second-reading speeches on them in about two and a half hours? The conclusion which one must reach is that this country is being governed by a beaurocracy. Sooner or later, the public will awaken to the fact that there is a constant war between officialdom and the public. The official is nearer to the Minister than is the public and, therefore, always wins. This constant warfare is not good for the welfare of Australia. It is a bad condition of affairs when the public is irritated and hampered in the conduct of its affairs and the development of Australia by constant restrictions and powers which have been placed in the hands of officials because of the inability of Ministers to penetrate their departments. If the Government finds that nineteen Ministers are insufficient to permit the penetration of departments so that matters which ought to be settled by Ministers will be settled by them, additional Ministers should be appointed. [Extension of time granted.] I consider that it is necessary for a more careful statement of finances to be given to the public than has sometimes been given. In saying that I intend no reflection upon the Treasury officials, for many of whom I have high regard, but it is essential in the present state of our finances that the country should always know exactly where it stands in regard to its commitments. I take as a simple illustration the fact that whereas the Fadden budget states that cash balances on the 1st July, 1941, were "£2,000,000 (approximately) ", the budget introduced by the present Treasurer a week ago showed that cash balances on that date amounted to £2,229,000. Cash balances represent one of the elements that constitute the financing of the 1941-42 budget. In other words, if an extra £229,000 was available on the 1st July last above that shown in the cash balance contained in the Fadden budget, that much less revenue is needed to finance expenditure. 152 KA9 0 0 JOLLY, William Mr Jolly - There must have been a recount. 152 KUN 0 0 SPOONER, Eric Mr SPOONER - Cash balances are easy to determine. I agree that forthcoming expenditure must be a matter of estimate based on the best information available, but " cash balance on the 1st J uly, 1941 ", means money in the bank and cash in the possession of Treasury officials, and its amount is ascertainable to a penny. It is the job of the Auditor-General to verify the amount of the cash balances. Yet in the three weeks which elapsed between the defeat of the Fadden Government and the delivery of the revised Estimates, an extra £229,000 of cash in hand was discovered. 152 KA9 0 0 JOLLY, William Mr Jolly - What is the explanation? 152 KUN 0 0 SPOONER, Eric Mr SPOONER - There is no explanation, so far as I know. In commercial or banking practice it would be impossible to explain. I do not think that a person who tried to give an explanation would survive his endeavour. I agree that in the Fadden budget the amount was described as approximate, but it was taken into calculation in estimating what revenue would have to be raised during the year. The amount of £229,000 is important. Why, this country is conducting a royal commission about £300 ! 153 KCF 0 0 DEDMAN, John Mr Dedman - No, about the actions of certain people. 153 KUN 0 0 SPOONER, Eric Mr SPOONER - At any rate, this committee is entitled to a more considered and accurate statement of the finances and Estimates for the coming year. There should not be a repetition of the fault to which I have just directed attention. I hope to have the opportunity next week to show that the taxation measures accompanying the budget reek with anomalies and injustice which are due to the attitude of the administrators towards the public. It may be an unconscious attitude, and perhaps the administrators do not realize the hardship imposed on. industry. They may not realize the impediment to industry caused by those anomalies and injustices. The fact must not be forgotten that Australia's opportunity to conduct this war depends on the continuation of economic and financial conditions and the continued employment of the people and the manufacture of the materials required for the war. No unnecessary difficulties should be placed in the way of Australian industry. I do not overstate the position when I say that there has developed in Australia an administrative and financial Gestapo. Some day the Australian democracy will awaken to it and the people will elect a government determined to see that Ministers accept full responsibility, show originality and initiative, and administer departments as they should be administered. 153 JNR Maranoa 0 0 BAKER, Francis Patrick Mr BAKER .- In addressing myself to this budget I cannot do better than make a comparison between it and the Fadden budget. The Chifley budget had to be brought down at short notice and to a degree had to be built on the foundations already existing in the Fadden budget, but there are many fundamental differences between the two. The Leader of the Opposition (Mr. Fadden), at the start of his speech, said that several members on this side of the committee had become converts to the cause of the present banking system. Everybody knows where 1 stand as regards banking, and the charge of the Leader of the Opposition cannot be levelled against me. To show its absurdity generally I shall read an extract from a speech delivered by the then Leader of the Opposition (Mr. Curtin) at Perth on the 28th August, 1940- Three related monetary measures must be taken, so that industrial and economic preparedness, which are the essence of national defence and security, shall be assured. They are: (]) National control of banking and credit, to ensure its adequacy in putting to work the idle hands the government failed to employ in peace-time, and in using the full physical and man-power resources of the nation to carry on the war. (2) National control of interest rates, to keep to the maximum, the monetary and capital costs of the war and production and industry generally. (3) National direction of investment, so that existing activities, and proposed activities, will not be permitted to follow expenditure of capital on lines not helpful to the war effort and the post-war re-construction. The Commonwealth Bank is the logical instrument to function for effecting these monetary measures, and for providing the machinery for post-war re-construction. No government can govern, that deliberately excludes itself from the responsibility of determining monetary policy. We cannot fight this war without Government responsibility for ensuring, that nien and materials are related, and no financial impediment to such relationship can be tolerated - let alone condoned. The nation will fight with its physical resources. It must not be crippled, because nf any failure on the part of its financial machinery. That statement shows that honorable members on this side are at one with our leader on this matter, although, in the budget, he has not been able to elaborate that policy. The Leader of the Opposition joined issue with the Government mainly on four points. He said first, that the budget involved grave dangers of inflation. I regard the term inflation as a bogey. There can be little or no inflation if well-controlled expansion of credit is accompanied by effective fixation of prices. The trouble has been that in the past these two problems have not been handled conjointly. Digressing for a moment, I remind honorable members that the prices of tobacco, cigars and cigarettes rose just after this Government assumed office. The Minister for Trade and Customs (Senator Keane), promptly and wisely, rescinded the increase that had been allowed by the Prices Commissioner. The British Australasian Tobacco Company Proprietary Limited makes an annual profit of £1,000,000. That is its published profit. That organization therefore, can well afford to bear a little extra impost. Secondly, the Leader of the Opposition said that the budget failed to make provision for compulsory loans. We on this side welcome that feature of the budget, because compulsory loans are simply a form of taxation. The Fadden Government proposed to levy such loans from those who could least afford to make them. It proposed to take such loans from persons on the lower levels of income and to pay interest at the rate of 2 per cent. Who has ever heard of a loan to a Government being repaid? Such loans, obviously, would have been in perpetuity. Further, whilst persons on the lower levels of income were to receive interest at the rate of 2 per cent. on compulsory loans, the richer classes were to be free to invest in war loans at an interest rate of 31/2 per cent. The third criticism of the budget made by the Leader of the Opposition was that the Government's banking proposals were altogether too sweeping, and contained powers which would be dangerous in the hands of ignorant or unscrupulous men. Who has exercised these powers in the past? The power if issuing credit and the control of banking have been in the hands of unscrupulous persons, and that is largely the cause of our present difficulties. The fourth objection which the Leader of the Opposition raised to the budget was that it limited company profits to 4 per cent. He contended that the big companies should be allowed to make 8 per cent. on their watered stock. There has been much weeping and wailing and gnashing of teeth among honorable members opposite because no provision is made in the budget to regiment the wage-earners. However, when the Government proposes to apply compulsion to the banks we hear a different story from those honorable gentlemen. The Leader of the Opposition believes in compulsion of the wage-earners, hut advocates voluntary methods in the Government's dealings with the rich. Those are the four main points on which the Leader of the Opposition attacked the budget. His own budget was a bankers' budget. It sought to place the heaviest burden on the wage earners, and, at the same time, to place but a comparatively light load on the big profiteering companies, including the banks. In the course of this debate we have heard a great deal about the Government's failure to take full advantage of the field of taxation offered by the lower levels of income. There are 2,709,400 persons whose incomes range from £200 to £400, and total £559,000,000. Honorable members opposite contend that those incomes should be taxed. Those incomes are being taxed. They are being taxed very heavily under past budgets. At the same time, this class of wage-earner is paying heavy indirect taxation as the result of the rising cost of living. In analysing taxation, we should consider primarily the amount an income earner has left after paying tax, rather than the amount of tax paid. A man with an income of £5,000 a year may pay tax amounting to £3,000. Honorable members opposite say that that is terrible; that such a man is taxed very heavily. So he is; but he still has £2,000 a year, or, approximately £40 a week, to live on. Surely, he can manage to get three meals a day on that net income; and, if he is very careful, he can afford morning and afternoon teas as well. The contention of honorable members opposite is absurd. For the information of honorable members generally I have compiled a table showing the distribution of actual incomes of individuals for the year 1940-41, including males, females, juveniles and members of the forces, but excluding pensioners : - The total number of persons in the first three classes of incomes is 2,709,400, and their aggregate income is £559,000,000, an average of £206 4s. each per annum. This is the field of taxation about which we have heard so much from honorable members opposite who say that these people are being allowed to escape their duty. I repeat that that is not the case. These people are paying heavy tax under past budgets, and are also bearing a substantial burden of indirect taxation owing to the rising cost of living. At the same time honorable members opposite shed tears of sympathy on behalf of the persons in the last five classes of income. It is pathetic to hear that these people are taxed heavily. The golden rule of taxation is that those who are best able to bear tax should be taxed and those who are not able to bear tax should be exempt. The budget is the best which we can expect in existing circumstances. It provides an increased allowance to the old-age pensioners with a promise of a pension at the rate of 25s. a week early in the New Year. As has be said by the Prime Minister the old age pensioners will use that increase to purchase foodstuffs. Sitting suspended from 6.15 to 8 p.m. 155 JNR 0 0 BAKER, Francis Patrick Mr BAKER - I trust that one of the earliest reforms to be introduced by the Government will be the establishment of a mortgage branch of the Commonwealth Bank. At present many primary producers, including wool-growers, wheat growers, fruit-growers and others, are being pressed by the trading banks to repay their overdrafts. Apparently the private banks believing that they can obtain better interest for their money elsewhere, are treating some unfortunate farmers most unfairly. A mortgage bank should be established as soon as possible in order to provide long and easy terms to primary producers who deserve more sympathetic treatment than they are receiving at present. The honorable member for Robertson (Mr. Spooner) spoke of economists, and I gathered from what he said that he was not enamoured of these people. In fact, he sounded a note of warning. I support the honorable member's remarks, and say that we should be very careful of economists. An economist has been defined as one who knows more and more about less and less, until eventually he knows everything about nothing, and, conversely, nothing about anything. Economists have got us into the position in which we find ourselves to-day. They have been the tragedy of the world. Professor Tilden in his book A World in, Debt says - I began to speculate upon the principles that lie behind feast and famine. I turned to the economists - the political economists. What can anyone say of the economists f To consult with them for an adequate explanation of the difficulties and dangers that beset our industrial economy and the fortunes oi those who exist within it, you may as well consult the great Pyramids. What we need to-day is fewer political economists, and more common sense. So much for economists. I repeat that this budget is not a complete labour budget. It has been termed a tentative or temporary budget. We have been promised a supplementary budget early in the new year, and I trust that it will approach more closely to Labour ideals. Unless this war be won we shall lose everything, and I am satisfied that a full war effort can be obtained only by a Labour Government. In the matter of petrol rationing people in the country districts are getting a very raw deal. I shall quote to honorable members portion of a letter sent to the secretary of the Liquid Fuel Control Board, Brisbane, on the 21st August - before this Government took office - [ would refer to my letter herein of the 4-th instant under which I have forwarded you the above licence, I also pointed out that no Form 24 had been received by client. To date I have not had a reply to my letter. At 10.24 a.m. on the 4th August, 1041, I scut your department a prepaid telegrain reply paid asking for petrol to carry out urgent shearing operation!). To date 1 have not received a reply, lt is astounding that when a country like our Australia is faced with such a crisis as at the present moment your department is so lax that it will not take the trouble to reply to any correspondence or telegrams. The people in the country are working tooth and nail to bring the war effort to an efficient standard and to do all in their power to put production to its peak and are being sorely hampered by your department in its lack of understanding of the country problems of the producers, combined with an unreasonable silence on all matters I have placed before you. To date 1 have written approximately thirteen letters to your department for clients of mine in urgent need either of adjustment or petrol for essential industries, and I regret to say that to date I have received one reply only. There must be something wrong in a department which will not reply to telegrams or letters. That letter is only one of many. It was written by a solicitor who is a very estimable gentleman. Although the war has been in progress for more than two years, there has been no re-appraisement of Australian wool. When war broke out, an appraisement of 10½d. per lb. was arrived at, which, with 25 per cent, exchange, amounts to 13.4d. per lb. At the outbreak of the war of 1914-18, 27 years ago, the Australian wool clip was commandeered, and the price was fixed at 15d. per lb. Has the cost of production decreased since then? I say that it has not. I wish to make my views upon this matter quite clear. 1. do not suggest that the wool-growers should be permitted to make money out of the war. Such a state of affairs should not be permitted, but at least the growers should get a return which will guarantee to them the cost of production and an adequate living wage. I hope that the Minister for Commerce (Mr. Scully) will review the subject of wool appraisement before the end of the present year. An amended wheat stabilization scheme is also desirable. The present state of affairs is tragic. Farmers do not know what their position is. Instead of acreage being used as a basis, I hold that it would be more equitable to take the average yield over a period of years. I am confident that the Minister, who represents a large wool and wheat producing district, will investigate these matters. The apple and pear acquisition scheme is also in need of an overhaul. The time has arrived when our medical, hospital and dental services should be nationalized. Immediately war broke out, medical men, dentists and other professional men were put into uniform, given rank, and were made responsible for the health of the men in the fighting services. If such measures are necessary in war-time, surely they are also necessary in peace-time. As a matter of fact, they are more essential in peace-time, because remedial measures have to be taken to prevent the development of defects. 156 DQC 0 0 HUGHES, William Morris Mr HUGHES - Nationalization of the services to which the honorable member has referred cannot be brought about, except by an amendment of the Constitution, or by the exercise of war powers. 156 JNR 0 0 BAKER, Francis Patrick Mr BAKER - I remind the right honorable member for North Sydney (Mir. Hughes) that there must be no " cannots " in these day3. There are many things which we should do and which we shall do. Some time ago I read a report stating that of 2,000,000 recruits medically examined for military service in the United States of America, 1,000,000 or 50 per cent, were rejected as unfit. That is an. amazing state of affairs for a country which is one of the richest in the world, and which has more gold than it knows what to do with. Had those rejects been taken in hand during childhood, and given the requisite medical attention, the defects which caused their rejection would not have developed. I repeat that if it is necessary to nationalize our medical, dental, and hospital services in war-time, it is all the more essential to nationalize them in peace-time. Something should also be said about the unfortunate position of unofficial postmasters and postmistresses who, until now, have been sweated. They have done good work, given good service and worked long hours; surely the labourer is worthy of his hire. 157 KMZ 0 0 MARTENS, George Mr Martens - And they get plenty of abuse. 157 JNR 0 0 BAKER, Francis Patrick Mr BAKER - Yes, but apparently that is part of the business. I am glad that the right honorable member for Kooyong (Mr. Menzies) was granted two extensions of time this afternoon, because it gave him an opportunity to tell honorable members exactly where he stands. He spoke of fighting this war by 1941 methods. As a matter of fact., he was actually speaking as one would speak in the year 1812. He is the most orthodox man I have ever known. The right honorable gentleman said that he liked old stories. So do I. I was very much impressed by the crocodile tears shed by the right honorable member for Kooyong and by the Leader of the Opposition (Mr. Fadden), about the private banks and the people controlling them. The suggestion apparently is that whilst the workers should be regimented, dragooned and subjected to all kinds of compulsion, the rich people should be asked to give only voluntary service. The cry is "Hands off the banks. Let them do as they like ". They have been doing as they like for a long time, and where have they got us ? Both the Leader of the Opposition and the right honorable member for Kooyong adopted a lachrymose attitude this afternoon. Bitter tears almost choked them. They reminded me of the lady who wished to give her little girl a liberal education and so took her to an art gallery to show her the famous paintings. The child had very little interest in the masterpieces until they came to a picture of Christians being thrown to the lions. She burst into tears and her mother was gratified to think that the painting could have had such a profound effect. She said to the child "Isn't it terrible?", and the little girl replied " Yes, but one dear little lion over there is not getting much ". And here is another interesting little story: The latest figures show that 2,100 people in this country receive annual incomes of £5,001 or over. Their total annual income is £19,000,000, which means that their average annual income is £9,047 12s. 4.6d. Like the little girl in the other story, I say to the Leader of the Opposition and the right honorable member for Kooyong, there are 2,100 dear little lions over there getting more than £5,001 per annum and still it is not enough. Surely that is enough to make any one weep. I am also reminded of Tennyson's poem The Princess - Tears, idle tears, we know not what they mean ; Tears from the depth of some divine despair Rise in the heart and gather to the eyes In looking on the happy autumn fields, And thinking of the days that are no more. No doubt honorable members in the cold shades of Opposition look across to the treasury bench and shed "tears, idle tears ", while they are " thinking of the days that are no more ". 157 JLL New England 0 0 ABBOTT, Joseph Mr ABBOTT .- I have listened with considerable interest to the various matters raised in this debate. Government supporters claim that this is not a complete Labour budget, but to some degree it is a Labour budget. We have heard honorable members on this side of the chamber describing budgets that have been brought down as United Australia party-Country party budgets. I do not think that the test of the adequacy of any budgetshould be whether it is based upon particular party considerations. It should be whether it proposes what are likely to be effective means of drawing upon the resources and man-power of the nation in order to enable the people to throw their complete weight into the war effort. The totalitarian powers are to-day fighting against democracy with the blackest forces of tyranny the world has ever seen. I agree with the Treasurer (Mr. Chifley) who, in introducing his budget, said - To-day we are in the throes of the most deadly and devastating war that has ever been waged between nations. The Government has a full realization of the responsibility that rests upon it to carry out its duty. Before I deal with the budget I wish to make some remarks concerning the war situation as I see it. I shall also draw attention to a subject about which I had a good deal to say when the budget was brought down last year. I refer to the loss of resources by the allied nations through the fall of France, Denmark, Holland, and other countries of Europe. The position in that respect has deteriorated very greatly in the last twelve months. Many people in Australia and, in fact, throughout the democratic world, are taking it for granted that the democratic nations must win this war, but, so far, all the trumps have been in Hitler's hands and all the tricks have fallen to the German armies. There is no certainty that the democratic countries will win unless they are prepared to organize themselves as Germany has done and to make a greater effort than the Germans are making to win the war. 158 KEU 0 0 FALSTEIN, Sydney Mr Falstein - The honorable gentleman's view seems to be that in order to save democracy it is necessary to become totalitarian. 158 JLL 0 0 ABBOTT, Joseph Mr ABBOTT - My view is that we must be prepared to fight. It will not be sufficient for us to say that we are afraid to fight. 158 KEU 0 0 FALSTEIN, Sydney Mr Falstein - That story is worn out. 158 JLL 0 0 ABBOTT, Joseph Mr ABBOTT - I went to the last war and I do not think that the honorable member for Watson (Mr. Falstein) went to it. The difficulties which the British Empire is facing have been greatly increased in the last year. We are facing greater difficulties in the Middle East, where, owing to the success of the German armies, with the measure of assistance that the Italians have been able to give in Libya, we have lost a vast quantity of material. The practically complete control which the Germans have been able to hold over the Mediterranean with their Stuka bombers has forced us to take our ships by the Cape route to the Middle East. The titanic conflict in Russia has also caused an enormous demand for equipment from Great Britain and the United States of America. All this has put an added strain on our shipping resources. In addition, the large quantity of munitions which we have had to transport to Russia has affected our position. The whole of the supplies of raw materials for British factories now have to be brought many thousands of miles across the sea, whereas, previous to the collapse of the European countries, we had only to bring such supplies a few hundred miles. I refer particularly to iron ore. In the past we obtained our supplies of iron ore from Spain, France, Luxembourg, Norway and Sweden, but to-day such supplies have to be brought across the dangerous Atlantic route from the United States of America. In regard to the war position, the last great non-Axis nation in Europe and Asia has had its territory penetrated very deeply by the Germans. Hitler's armies have driven 600 miles into Russia and their rate of advance has been so rapid that I do not believe that the German losses have been such as to inflict mortal blows on the German nation. The Russian armies must have lost such an enormous quantity of equipment that, despite the gallant fight that they are making, they must have been if not mortally wounded at least almost so. The richest industrial areas of Russia, in which the heavy industries of the country were located, have now passed into German hands. To-day not only are our Empire Forces in North Africa and Iran threatened, but India itself, as well as Burma and Singapore, are on the horizon of Hitler's armies. The British nation is facing deadlier peril to-day than it has ever faced in its history. The only way by which Britain and the other democratic powers can save themselves is by throwing the full force of their strength into the fight against Germany, and by making that force greater than the force of the Germans. It is startling, and somewhat terrifying, to read in a journal like the London Economist the statement, made, no doubt, with a due sense of responsibility, that the intake into German controlled factories producing war materials of man-power for operating those factories is six times greater than the intake of man-power into the munitions factories of Great Britain. Another statement, also somewhat terrifying, appeared in The New Statesman, another British newspaper, to the effect that since the collapse of France the quantity of war material produced in that country - and I suppose this includes raw material - is greater than the quantity of war supplies sent by the United States of America to Great Britain in the period that was under review. This statement is seriously disturbing because it is followed by another to the effect that the war material coming from those French factories does not include the war supplies of Luxemburg, Belgium and the other industrialized nations of Europe which Hitler has conquered. There can be no "muddling through" in this war. Democracy must organize itself just as the German Empire has organized itself, and it must put forth a greater effort than that of the German forces. It is of no use for us to slumber, and to delude ourselves into thinking thai we can put a stranglehold on Germany by a continental blockade. Germany has burst the bonds of our blockade. Although Hitler has not the free access to the seas that he would like to have, there can be no doubt that, having penetrated into so many countries of Europe, and having been able to add the oil of such countries as Roumania to his own supplies, and having also gone so far on the way to seizing the oil supplies of Russia, he is now in a position which makes him almost impregnable. Certainly the effects of a continental blockade cannot bring disaster to him. For these reasons every nation, every dominion, every city, every town, and every hamlet must throw the whole of their weight into the battle of the democracies against tyranny. Turning now to Australia, I find that the arguments of the people concerning the war fall into two main classes. First there is the argument of those who gay that what has taken place in countries overseas cannot take place in Australia. That is one of the most fallacious statements ever uttered. I have heard many people say that this country could not possibly be subjected to air attacks from the Japanese in the event of Japan declaring war on Great Britain. I invite people who advance that view to consider that it would take only 96 hours for aircraft carriers to come down from the Caroline Islands- with aircraft which could bomb the cities and towns on the coastal plains of the Australian continent. Another view expressed frequently in Australia is that the United States of America would not allow Australia to fall a victim to an aggressor. My view is that whatever good intentions and goodwill the United States of America may have towards Australia it may be physically impossible to give Australia any assistance by naval action in order to protect it from the attack of Japanese capital ships if they should decide to enter our territorial waters. My reason for saying this is that if the Singapore naval base should fall - and it is the keystone of the whole arch of the defence of Australia and of the Southern Pacific area - there is not another dock nearer than Durban, 4,000 miles from the west coast of Australia on the one side, or Pearl Harbour, in the Hawaiian Islands, 4,000 miles from the east coast of Australia on the other side, in which capital ships could be docked for repairs or servicing. For this reason it might be physically impossible for the United States of America to use its capital ships to fight naval battles in Australian waters for the protection of Australia. It is true that a dock suitable for use by capital ships is at present being built in Sydney, and that in the future it might be available, but the dock is not ready yet. As an indication of the complacency of the Australian public in respect of the war situation, and of its failure to realize the dangers confronting this continent, I direct attention to reports which appeared in the Sydney press recently to the effect that certain residents of the Potts Point area of Sydney, adjacent to the site on which the new dock is being constructed, complained that their slumbers were being disturbed by the noise of the pile drivers working at night. Apparently these short-sighted people desire that the work of the pile drivers should cease at night so that they may slumber peacefully, and also, incidentally, retain undisturbed their deep but unjustified complacency. Apparently these people do not realize that the dock might, in the future, be their salvation. 159 KCF 0 0 DEDMAN, John Mr Dedman - They got a good answer from the Minister for Labour and National Service (Mr. Ward). 159 JLL 0 0 ABBOTT, Joseph Mr ABBOTT - I am glad if they did. 159 L07 ALP 1 0 LAZZARINI, Hubert Mr LAZZARINI - It is not only members of the general public who hold views such as those referred to by the honorable member. 160 JLL 0 0 ABBOTT, Joseph Mr ABBOTT - I should be sorry to think that such views are held by any of the honorable members of this Parliament. 160 L07 0 0 LAZZARINI, Hubert Mr Lazzarini - They are held by certain officers in the service departments. 160 JLL 0 0 ABBOTT, Joseph Mr ABBOTT - My experience with service departments does not bear out that view. The people of this country must awake to the necessity to make real sacrifices in our war effort. It is no good making frothy utterances about what we are going to do in the future; we must do our utmost now to secure our own safety and to preserve the democratic life of this continent. This is absolutely essential. Some people argue that the United States of America would be bound to assist Australia irrespective of the physical difficulties. To such persons I would put the question : Where does the chief peril of the .United States of America lie to-day? America is not necessarily in peril on her Pacific coast because a great deal of work has been done for the defence of the country from the far north in Alaska to the Panama bases. These areas are very distant from Japan. It would be necessary for the Japanese navy to take great risks to attack America. The great danger to the United States of America is that Great Britain may fall. For this reason all possible assistance is being afforded to Great Britain by the United States of America. If Britain fell Iceland would become a German base, and Dakar would be available for hostile operations against South America. It is essential, therefore, that the United States of America shall, in its own interests, do everything possible to assist Britain to defend itself. The history of great empires shows that when it became vital to defend the very heart of an empire its outposts were allowed to go, probably with the idea that at some future time, after the war was won, the outposts could be regained. The peace following such wars has, however, often been an arranged peace, and lost outposts have remained lost. Not once but often, the Prime Minister and the Treasurer have stated what they consider to be necessary for a successful war effort. On the 18th June, 1941, the Prime Minister (Mr. Curtin), who was then Leader of the Opposition, said - We have to turn Australia into an arsenal capable of producing the whole of the equipment we need . . . When all is said and done, that obligation necessitates readjustments, not only of our economic life, but also of all the ordinary vocations of our men and women. On the 1st October, when he was discussing the Fadden budget, he said - We are here concerned with how we can best and most fairly organize the nation so as to secure the greatest possible degree of efficiency in the prosecution of the war. Ohe Treasurer has said - Labour's war policy is to expand the war effort to the maximum, and to do this by using all unemployed who are physically fit and diverting labour and resources from civil to war purposes for the balance. Nobody is likely to quarrel with those excellent sentiments. But this budget does not propose to give effect to them. The Treasurer and his colleagues have baulked at taking the steps which are necessary for the purpose. In my opinion, the problems that the Government has to face are : First, that there is either full employment or a capacity for full employment in Australia at present; secondly, that there is an excess amount of spending power which is being used largely for the purchase of consumption goods; and, thirdly, that, if this purchasing power is allowed to operate freely, it will be in direct conflict with the war effort. The Treasurer himself realizes this, because he has said - On the other hand the increased volume of employment will place further spending power in the hands of the people . . . Private spending must be limited. Australia's war effort is very poor in comparison with that of Great Britain, and it must appear almost microscopic in comparison with Germany's effort. The entire volume of Australian production that has been diverted to the war effort represents only 22 per cent, of the national income, whereas Great Britain's effort at present represents 42 per cent, of the national income. We have no reason to be proud of that fact; all honorable members should agree on that point. If we are to preserve this Commonwealth from the threat of nazi-ism, we must be prepared to make far greater sacrifices than we are making, so that our national effort shall be >it least equal proportionately to that of ( treat Britain. This Government's proposals for increasing our war effort, as set out in the budget, are: First, to impose additional taxes on those who are best able to bear the burden; secondly, to conduct a national savings campaign mtd thirdly, to secure additional resources by diverting industry from the production of non-essential goods, and at the same time provide for an equitable distribution of the resultant reduced volume of non-essential goods. I am not grumbling about the extra taxation proposals, because I believe that, if we are to win this war, we shall have to band over to the Government almost the very shirts from our backs. But the Government has decided that there shall bo no i increase of the rates of taxation levied on incomes of less than £1,500 per annum. Incomes in the remaining group, above 1,500 per annum, amount to £67,000,000. The taxes levied on this section will not help appreciably to accomplish the Government's purpose of limiting private spending. As has been stated by the Leader of the Opposition (Mr. Fadden) and the right honorable member for Kooyong (Mr. Menzies), only 23,000 taxpayers of the 3,000,000 in Australia will be called upon to bear the extra burden of taxation. The remaining 2,977,000 will suffer no damping down of their consumer purchasing power from direct taxation. I admit that a certain degree of damping down will be effected as the result of increased prices caused by indirect taxation, but I agree with the Minister for Labour and National Service that this is a very doubtful way of preventing consumer purchasing power from operating to its full extent. The Prime Minister has said that war is a physical thing and that -we shall win not by creating money or book entries, but by producing the planes, tanks, shells, bullets and rifles that are necessary to destroy our foe. If we are to produce these weapons to our fullest capacity, we cannot at the same time produce all the civil goods which we were accustomed to have in peace-time. The increased taxes proposed by this Government wik have no effect on the lower and middle income groups. The national income of Australia has doubled since 1934, and it has risen by 22 per cent, since 1939. The majority of the consumer purchasing power represented by that increase lies within the lower and middle income groups, which earn about £524,000,000 annually. 161 KRE 0 0 SHEEHAN, Thomas Mr Sheehan - They chu buy only food and clothing. 161 JLL 0 0 ABBOTT, Joseph Mr ABBOTT - We may have to ration clothing. 161 K0K 0 0 CONELAN, William Mr Conelan - We are importing clothes from Great Britain. 161 JLL 0 0 ABBOTT, Joseph Mr ABBOTT - We shall have to ration those imports, too. The Fadden Government, in agreement with the Labour party, realized that it was necessary to freeze some of this consumer purchasing power, and it proposed to do so by introducing a system of compulsory loans, or post-war credits. These, with the extra taxes proposed by the Fadden Government, would have produced approximately £30,500,000. In that measure the Fadden Government's proposals affected the consumer purchasing flower of the group of incomes below the £1,500 mark. But that was not enough. The Treasurer has said that about £94,000,000 of private spending must be curtailed, and this must come chiefly from the 2,977,000 taxpayers who earn less than £1,500 a year. The Treasurer pins his faith on voluntary loans producing £158.000,000 in the current financial year. That amount is £16,000,000 in excess of the amount which the former Prime Minister believed that he could obtain from loans, and it is £73,000,000 in excess of the amount which Mr. Colin Clark, whose reputation is world-wide, expected to be derived from private savings in the year 1940-41. It is doubtful whether this vast sum of money can, or will, be derived from the private savings of the people, particularly by means of voluntary contributions. The Treasurer has said that, if the savings bank deposits of the people continue to increase as they have in the past three months, they will amount ,to £40,000,000 a year! The purchase of war savings certificates brought in £12,000,000 of revenue last year. These figures give a total of £52,000,000 of actual savings. We can call them actual savings, because they can have no inflationary effect upon the prices of goods in Australia. Savings bank deposits pass from the hands of the wage-earners straight into those banks, and the bulk of the money used for the purchase of war savings certificates also comes probably from the same class of income earners. If that money were paid into the trading banks as the result of the sale of consumption goods it would cause a primary inflation which would not be damped down by neutralizing the excess deposits in the banks. I agree with the Treasurer that the effects of secondary inflation can be damped down by neutralizing excess deposits. But a primary inflation cannot be affected in the same way. There is an enormous gap between the amount of £52,000,000 and the total of £158,000,000 which is proposed to be obtained by means of loans. That £52,000,000 represents a little over 50 per cent, of the £94,000,000 of consumer purchasing power that is required to be frozen. Therefore, it appears that between £60,000,000 and £70,000,000 worth of central bank credit will have to be issued during the current financial year. I believe that, if the credit base of Australia were increased to this extent, two things would happen. The first would be an enormous increase of the demand for consumer goods, which would have the effect that price-fixers would be unable to control the prices of those goods. They might fix prices, but the inevitable result would be that black markets would grow up outside the price-fixing organization. This opinion is held by Professor Copland, who has had experience of pricefixing since the outbreak of the war. In an address which he delivered last year to the Economic Society in Melbourne, he said that, in the face of a great excess of credit flowing into the community, all the price-fixers in the world, in all their glory, would not be able to hold prices in check. That has been the experience of price-fixers in almost every country in the world where this movement of credit has taken place. The second of these would be that there would be such an excess of credit that, unless it were neutralized in ways which I shall mention later, it would cause intense competition for man-power iu the Commonwealth. The competition by civil industry would be greater than it is to-day, with the result that labour would be drawn from the war industries and the production of the munitions factories of the Commonwealth would be reduced. The demand for consumption goods has been steadily rising in Australia throughout the war period. One has only to visit the retail stores of the different States to see the enormous amount of consumer purchasing power which is operating there, not by the 23,000 persons in the income groups over £1,500 a year, but by the mass of the Australian people. The number of employees in retail stores has risen by 5 per cent, since the outbreak of war, and retail sales in August, 1941, compared with August, 1939, rose by 35 per cent, in Sydney, 45 per cent, in Melbourne, and 26 per cent, in Brisbane, whilst the lay-by sales in Sydney and Melbourne wore almost doubled. From these figures on a map of Australia one could almost point to the centres in which the principal expenditure on munitionsmaking in this country is taking place. I am sure that the figures for Adelaide would almost top the list. The London Economist pointed out on the 3rd May, 1941, that the retail stores represent the biggest reservoir of untapped manpower in the country. I believe that the retail stores in Australia to-day represent one of our largest untapped reservoirs of man-power. We have to damp down this consumer purchasing power and enable men to be released from the stores in order that they may take their places in the armed forces or the munitions factories. The Government should take immediate steps to freeze this consumer purchasing power, particularly on the two grounds that I have laid down, namely, that it prevents recruiting for the armed forces and th* expansion of our munitions effort. Mr. Mackay, the general secretary of the Arms, Explosives and Munitions "Workers Federation, "was reported in the press this week as having said that thousands of men and women are now leaving the munitions factories for outside enterprise. Already that competition is taking place, and men and women are being attracted from munitions factories to civil enterprise. I am not breaching a confidence when I say that those of us who were on the original man-power committee were astounded at the extremely high percentage of labour turnover in the munitions factories of the Commonwealth. It is a disastrous turnover, and must be stopped if the Commonwealth is to make its greatest war effort. That an acute shortage of man-power is approaching is shown by the registrations of unemployed persons in the Commonwealth. In Victoria, the registered unemployed in the metropolitan area are said to total 453, compared with 3,906 two years ago. In the country districts of the State the number is 1,162, compared with 4,318 two years ago. In South Australia, the number has dropped from 6,797 to 1,313. Yet it has been stated that the new factories which are coming into production in South Australia will require 40,000 additional men by the end of this year ! I feel sure that the new Minister for "War Organization of Industry (Mr. Dedman) is thoroughly conversant with the facts, and will do his best to alter the present state of affairs. Unless there is planning, and complete organization, in order to divert manpower from the production of civil goods, our munitions effort will be seriously impeded. The budget does not suggest any means to overcome the position, with the exception of a rather nebulous statement which sets out that certain controls must be put into operation. The remedies applied must take the form of extreme rationing of very many commodities, in conjunction with rigid price control. There must also be much stronger regulation of investment of all types. Recently, four Sydney economists published a work entitled Australia Foots the Bill. The authors state that, basically, the job is to interpose such barriers to any other use of money that its holders will have no alternative but to buy war bonds. They also point out that detailed control of consumption is unavoidable in any major war effort. I entirely agree with them. If Australia is to make a full war effort, there is no way other than by the application of rationing schemes to a wide range of commodities. Control by price fixation does not offer a solution of the difficulty. The result of it is to hand goods to those who can afford to pay for them. It gives rise to competition for the various types of goods, and causes discontent throughout the community. Rises of prices without an increase of production of goods would take us well towards very heavy inflation, with disastrous effects, as the right honorable member for Kooyong pointed out to-day. The classes which would be hit .probably more than any other are the salaried ones, the wages of which are not increased as the cost of living rises and which are not organized in order to bring pressure to bear on governments, and particularly the primary producers, who to-day are selling the whole of their export surpluses very largely at fixed prices, which, despite statements to the contrary, it will be very difficult to induce a war-torn and stricken Britain to raise. Another great advantage of rationing is that it would allow adequate estimates to be made of the man-power and resources which could be used in civil industry and those which could be diverted to war industry. It would give control over raw materials, man-power, the spending of the community, and prices. It would enable the Government to say that the basic needs of the community could be met by the supply of so many goods, so much raw material, and so many men in the factories. The community would be issued with ration tickets sufficient to cover that supply of goods. No man would suffer greater hardship than another, but all would share equally the sacrifice involved in the lessening of the quantity of civilian goods made available. Whether a man be a millionaire or a pauper, he would get ration tickets, and until he had married his money to those ration tickets it would be dead and incapable of operating in the field of rationed goods. It is the fairest, best and most equitable way of controlling prices, consumption, production, and everything else which will help the war effort. On the 1st October the Prime Minister made to Parliament the following statement: "The correct way in which to treat the problem is by rationing; that is the right way to tackle our economic troubles, on the basis of reasonable justice and equal opportunity for all ". Yet the budget makes no attempt to implement rationing, and exhibits no desire to do that which the Treasurer and the Prime Minister have admitted is essential, but contents itself with nebulous statements and a happygolucky march towards disaster. 164 KCF 0 0 DEDMAN, John Mr Dedman - Was provision made for rationing in the budget of the Government of which the honorable gentleman was a member? 164 JLL 0 0 ABBOTT, Joseph Mr ABBOTT - It was. 164 KCF 0 0 DEDMAN, John Mr Dedman - Where? 164 JLL 0 0 ABBOTT, Joseph Mr ABBOTT - In this statement: " The correct way in which to treat that problem is by rationing", the Prime Minister said; and one of the senior Ministers of the Government (Mr. Spender) said : " That is precisely what the Government is doing". There were statements throughout that budget which clearly indicated, as the clouds in the sky sometimes indicate approaching rain, that rationing would be introduced. I believe that it would be necessary to implement rationing gradually. It could not be applied instantaneously over a wide range of commodities, because men might be drawn from the work in which they were engaged before the munitions factories were ready to absorb them. By the collaboration of the Minister for War Organization of Industry and other Ministers responsible for war production, I believe that it could be inaugurated. I hope that the Treasurer will state that it is the intention of the Government to implement rationing schemes as early as possible. Another great advantage of such schemes is that very many people, particularly in the under £1,500 a year group, would find that they had surplus funds which they could not spend. This would make them realize that they were not suffering from a shortage of money, but that their difficulties were due to a shortage of goods, of physical resources, that that shortage would not be overcome by giving them more bank notes or making credit entries in their passbooks, and that they were suffering equally with every other member of the community. There should also be far wider control of investments than is envisaged by the budget. Particularly have I in mind the cash-order companies. Embargoes should be imposed on cash orders, lay-by, and time-payment for durable consumer goods, because these methods of finance are at all times pure incentives to and encouragers of the greater use of consumption goods. The people pledge their future incomes at very high rates of interest, with the result that more goods are produced and sold through the retail stores. I hope that the Government, and particularly the Treasurer - who has made a thorough investigation of cashorder companies - will very severely restrict this form of investment. 164 KCF 0 0 DEDMAN, John Mr Dedman - The honorable member can rely upon the Treasurer doing the right thing. 164 JLL 0 0 ABBOTT, Joseph Mr ABBOTT - I have known the Treasurer far longer than the honorable gentleman, and am sure that he will do so. The Government should make every effort to keep down interest rates. If it is ready to introduce rationing schemes, it will be able to keep these rates down because there will be a surplus of cash in the hands of the public for investment in government loans, life assurance companies and other forms of investment. This will tend all the time to force down interest rates. The provision of housing is proposed in areas where there has been a large increase of population as the result of the production of war materials. I agree that housing is necessary in many of those areas. I suggest, however, that the Government should consider whether it is not possible to break up the munitions establishments into much smaller units, and to set up those units in many country towns, particularly behind the Great DividingRange, where hundreds of houses are available for workers, having become empty because of the movement of population from the country to the munitions-glutted districts of the cities. Those houses should be used before an enormous number of new houses is provided. Finally, I should like to say how very glad I am to find that the budget proposes to give effect to one of the intentions of the Fadden Government, namely, to establish a mortgage bank. I regard this as a non-party matter. [Extension of time granted.] Many of us, since the investigation carried out by the Royal Commission on the Monetary and Banking Systems, have fought both inside and outside Parliament for the establishment of such a bank. We are gratified to know that this necessary reform is to be brought about even in war-time. The primary producers particularly need the services of a mortgage bank, because of the slow rate of turnover, which occurs only annually in their industries. They, probably more than any one else in Australia, need the security of fixed interest rates and the certainty that the money borrowed by them will not be called up, but will be lent over a long period. I trust that the Treasurer, in his reply to the debate on the budget will state unequivocally that the policy of the Government is to implement schemes for the rationing of consumer goods throughout Australia, so that those engaged in civil production may be more and more diverted to war production, and that this nation may put forward the maximum effort of which it is capable. Unless that is done, we shall sink under the tyranny of Germany, and all that we hope to enjoy in the way of liberty will be taken from us. 165 JVA Reid 0 0 MORGAN, Charles Mr MORGAN .- For the greater part of the year, our time seems to be spent in deciding how we are to raise money to carry on the war and essential services. For the greater part of the period that I have been a member of this chamber, we have been talking in terms of money instead of production, whilst at the same timeour enemy has been sweeping on through Europe. The honorable member for New England (Mr. Abbott) has indicated the deplorable strategic and economic position of Australia and of the democracies in general, although they have by far a greater supply of manpower and raw materials than Germany. Yet Hitler is sweeping on, and in the last day or so we have been told that his armies are now digging in for the winter in Russia. The Germans have hundreds of miles of railways leading into Russia, and concrete dwellings, and even movable power houses have been provided to enable the Germans to live comfortably in Russia during the coming winter. Does it not occur to us that this war will be a very long one, and that something is radically wrong with our methods of financing the war? We have no hope of winning the war unless we alter our present obsolete methods of finance. The honorable member for Fawkner (Mr. Holt) gibed at the Government over the way in which our resources are being organized, although the honorable member was a member of the Ministry that has been in power during the last year or two. The honorable member for New England stated that our effort is microscopic compared with what is being done on the other side of the world. Mr. KingO'Malley, a former Commonwealth Treasurer, gave us the key to the financial situation when he said that if he were in control of the Treasury he would utilize fully the credit resources of the nation through the Commonwealth Bank. I accept him as one of the highest authorities on that matter, because he demonstrated his ability and farsightedness by establishing the Commonwealth Bank. He did not favour the orthodox financial methods that have wrecked the successive governments that are responsible for the present parlous condition of Australia.. He said that he would not waste time with budgets that called up large sums of money, a considerable portion of which was not used. When the Fadden budget was submitted, there was a surplus of £27,000,000 left over from the previous year. Mr. King O'Malley said that he would use the credit facilities of the Commonwealth Bank, and that, as money was required for wages and materials, cheques would he drawn, and the money would be constantly circulating, with the result by way of example that credits amounting to, say, £10,000,000 would probably finance war contracts throughout a year to the total amount of £100,000,000: The Leader of the Opposition (Mr. Fadden) likened his budget to that now under consideration, but I am afraid that it was a case of sour grapes. He would have preferred, had he been allowed to do so, to introduce a budget more in keeping with the fitness of things than that presented by him a month ago. His budget was one to skin the poor, whereas the new budget will skin the rich. If the Leader of the Opposition wished to get back his former athletic condition, his trainer would first endeavour to reduce his fat. He would certainly not attempt to reduce the weight of his bone, sinews and muscles. Therefore if Australia desires to increase its power to carry on the war effort, it should build up the bone and sinews of the workers, and perhaps eliminate some of the fat from the body politic by getting rid of some of the parasites that have battened and fattened on the people in years gone by, and are now continuing to do that by profiteering on war contracts. The Fadden budget was the same old wolf of orthodox finance dressed in sheep's clothing. This Parliament recognized that fact, however, and rejected that budget and the government that was responsible for it. I do not agree with every proposal in the present budget, but I realize the difficulties with which the Treasurer was confronted in having to prepare it in a few weeks with the machinery set up by the previous Administration. In the circumstances, he has done well, and the members of his staff have worked well with him in producing this budget in the comparatively short period available to them. We have been promised that a supplementary budget will be brought down early next year, and I hope that many planks of the Labour platform will then be implemented. Therefore I shall not indulge in criticism of the present budget, but I intend to offer a few constructive sugges- tions which I hope will be acted upon next year. I shall submit the list of suggestions that I have prepared, and those I have not sufficient time to deal with this evening will be discussed separately when the Estimates come before us. I consider that the suggestions that I have drawn up should be incorporated in a Labour war-time budget. I realize that in war-time it is necessary to wait until hostilities have ceased before all phases of Labour policy can be given effect, but I consider that the following are the minimum proposals that should be incorporated in a Labour war-time budget: - Utilization of the national credit - Control of Commonwealth Bank. - (a) Utilization of the national credit through the instrumentality of the Commonwealth Bank; (o) Abolition of the Commonwealth Bank Board and vesting control of the bank in a single governor, or, alternatively, three commissioners, who shall carry out the policy of the Government in accordance with the recommendations of the Royal Commission on Banking. Excess wealth - or war insurance - tax. - A graduated tax on excess private wealth and company reserves as a wartime insurances measure. Pegging of prices. - Prices of all commodities to be pegged at current levels. No increases to be made without approval of the Prices Commissioner and/or the Minister for Trade and Customs after due inquiry. Rationing of commodities. - Commodities to be rationed with a view to curtailing unnecessary or luxury spending. Pay of service men. - Pay of members of the fighting services to be increased as from date of enlistment to the equivalent of the average earnings of munitions workers. The amount beyond present allowances to be deferred and become payable in the form of a gratuity on discharge from active service. Tax exemptions and deductions. - (a) Pay of members of the fighting services and overtime of munitions workers to be free of taxation; (b) Income tax, State and Federal, actually paid by or deducted from the salary or wage of a taxpayer to be an allowable deduction in the computation of assessable income. Rectification of sales tax anomalies. -Sales tax anomalies to be rectified with a view to the ultimate elimination of this indirect and temporary form of taxation. Invalid and old-age pensionsSoldiers' pensions. - (a) Increase in invalid and old-age pensions in accordance with Labour's declared policy at last elections, pending the introduction of a proper scheme of social security; (b) Liberalizing of the provisions of the Repatriation Act and the institution of a more generous administration thereof, together with the right of appeal to ministerial authority on all claims of returned soldiers and their dependants. Company taxation and limitation of dividends. - A 100 per cent. war-time profits tax on companies and limitation of dividends generally. Control of war industries. - The Government and the workers in industry to be given direct representation on the board of management of all important war industries and associated enterprises with a view to industrial peace, greater efficiency and adequate protection of the national interests in an all-in war effort. National debt - Overseas trade agreements. - (a) All maturing loans to be redeemable at reduced interest rates with a view to the gradual reduction and ultimate elimination of the national debt. Other loans to be limited to actual savings in lieu of private bank-created credit; (b) Modification of overseas trading agreements with a view of obtaining a more equitable price for our primary products. Social reform - Post-war planning. - (a) A vigorous policy of social reform to be instituted forthwith as an essential part of and parallel with a properly planned war programme and to cover such matters as housing - with preference to munition workers and war service homes - at nominal interest rates; slum clearance; national health and physical fitness campaign; (b) Post-war planning in order to provide for a rapid changeover to a vigorous and progressive peace time programme on the termination of hostilities, with a minimum dislocation of industry and economic conditions ; (c) Producer control and co-operative farming in the rural industries and cooperation between producers and consumers in the marketing and distribution of primary products; (d) Decentralization of industry generally and opening up of coastal ports; and (e) Greater concentration on shipbuilding including a Commonwealth line of steamers; substitute fuels - especially coal and shale oil - and the development of Australia's natural resources to enable it to become in the post-war period a truly selfreliant and self-contained community - free of the domination of overseas vested interests. As to the first suggestion, I would point out. that the Commonwealth Bank, which was established by a Labour administration, and which did such wonderful work during the last war, is not now functioning as was originally intended. Under the control of that great man, the late Sir Denison Miller, the Commonwealth Bank played an important part in the winning of the last war, but when he offered to finance peace-time activities his help was declined by the anti-Labour Government then in power. After his death, the Government of the day placed the bank under the control of big business, and I hope that the present Government will restore the original method of control, either by placing it under a single governor, who will carry out the policy of the Government, or under three commissioners. There are able men in the Commonwealth public service who are well qualified to undertake this work, and there should be no need to look beyond them. 167 JY7 0 0 DUNCAN-HUGHES, John Mr Duncan-Hughes - Did not the New South Wales Savings Bank authorities carry out the orders of Mr. Lang, and what happened to that bank? 167 JVA 0 0 MORGAN, Charles Mr MORGAN - It was closed down because the United Australia party circulated false rumours questioning its solvency, and so a run on the bank was started. When the commissioner appealed to the late Sir Robert Gibson for assistance, he refused to help, though the savings bank had assets valued at £62,000,000. When a similar run started on the Commonwealth Bank a little later, and there was a queue of people from Martin-place into Castlereagh-street, Sir Robert Gibson stated over the air that the Commonwealth Bank would never close its doors. The bank kept on paying out to depositors until eventually they realized that they could do nothing with the money except lodge it in the bank again, and the run was stopped. Money should be allowed to circulate freely in exchange for goods and services. That is its true function, but to-day it is being held by wealthy persons and big financial institutions, with the result that society is in a parlous condition. Committees were appointed by the last Government to inquire into the ills afflicting our society. They remind me of a doctor who busies himself with counting the pimples on the patient's body, but who never inquires regarding his diet. Most of the troubles which afflict the world to-day, including wars, are due to the monetary system. Currency should be controlled by the Government. Just as the heart is under the control of the brain, so the banking system should be under the control of the Government of the day. The people of this country are at last waking up to the way in which the finances of the country have been controlled up to the present. The honorable member for Barker (Mr. Archie Cameron) said that, when the Government's proposals for regulating the operations of the private banks were brought forward, he would look them over. I invite him to do so, and to challenge the Government on them if he likes. The Government will accept his challenge, and is prepared to fight the issue on the hustings. Only recently, I examined the balance-sheet of the Bank of England, which is chiefly responsible for financing Great Britain's war effort. The assets in the note issue department were shown as £700,200,000. Of this amount only £200,000 was in the form of a gold reserve, whilst- the remaining £700,000,000 consisted almost entirely of government securities. How did the bank obtain those securities? On the other side of the ledger it has £700,000,000 in notes, the right to print them having been given to it by the Government. At the beginning of the last war, so shaky was the Bank of England that it closed its doors, and an issue of treasury-notes was authorized by the Government. When the bank got on to its feet again, it insisted upon being given the right to print the notes, and the Treasury ceased to do so. We have been informed that the; United Australia party Government entered into a gentleman's agreement with the private banks. Has anyone ever heard of making a gentleman's agreement with a burglar? The private trading banks made profits totalling £4.0,000,000 during the first two years of the war. 168 009MB 0 0 MCEWEN, John Mr McEwen - How about supplying some evidence in support of that very wild statement? 168 JVA 0 0 MORGAN, Charles Mr MORGAN - The facts are disclosed in the budget, having been originally brought to light by Labour members of the Joint Committee on Profits and the Advisory War Council. The regulations which are to be promulgated will compel the banks to disclose their profits, instead of covering them up as has been done hitherto. I advocate the imposition of an excess wealth tax, which may be described a.a tax on capital or a capital levy. Before this war is over, there will have to be a levy on capital. At a time when our men are offering their lives in the defence of the country, surely it is not too much to ask that the rich should give up some of the wealth they have accumulated in good times - sometimes by shady methods - as an insurance premium on their safety. If they own even a considerable portion of their wealth at the end of the war, and Australia still belongs to us and not to the enemy, they will have reason to consider themselves fortunate. Apparently, we still have millionaires in Australia, because provision is made in the budget, to tax them. For instance, the Broken Hill Proprietary Company Limited has written off £7,000,000 in depreciation. Of course, its assets have not depreciated as much as that; this is merely another way of covering up profits. During the last seventeen years, Australian Consolidated Industries Limited has paid in dividends, or put into reserves, £6,000,000 which is more than six times its original capital of a little more than £900,000. Its present capital is £7,000,000, consisting mostly of accumulated profits. These facts have prompted one Government department to report that the company has been profiteering. Wealthy concerns of this kind must be made to assist in financing the war, and the budget does something in this direction. The budget provides for an increase of the land tax, but it touches only land of which the unimproved value is more than £20,000. Even then, the rate is only 1 per cent, on the value in excess of that amount, so that a man with land the unimproved value of which was £50,000, would get off with the payment of £300. Commonwealth death duties vary from 3 per cent, to 27 per cent., and the combined 'Commonwealth and State duties still leave a millionaire's estate a residue of over £500,000, and additional gift duties have also been imposed. These are steps in the right direction, but for the financing of this war, wc cannot afford to wait for people to die or to make gifts. Those provisions are all very well for peacetime, and I hope that they will remain in force. The Treasurer should consider bringing in a graduated tax on property. If the owner does not possess liquid assets to pay the tax, the property, or some part of it, could be assigned to the Commonwealth Bank for realization after the war, and in the meantime it would become a basis for the issue of national credit. The proper way to prevent inflation is to peg prices, as has been done in Germany. Honorable members opposite are fond of citing Germany's experience after the last war as a horrid example of the dangers of inflation, but we know that the German authorities deliberately permitted inflation to go to absurd lengths as a means of repudiating war debts. Now, the German Government has pegged prices, which may not be increased without danger of incurring grave penalties. 169 JLL 0 0 ABBOTT, Joseph Mr Abbott - There is also rationing of goods. 169 JVA 0 0 MORGAN, Charles Mr MORGAN - Yes, and I am in favour of that also, as otherwise the wealthy could get all the goods they needed, while others, who needed them more, would have to go without. Surely there will be no objection to members of the fighting forces being given the same pay as munitions workers. I have nothing to say against the men making munitions, but they are protected by the men of the fighting services. Why is it that we pay the lowest rates to those who do the most dangerous work? That seems to be the principle that is followed right through. Those men are too busy to insist on their rights; but that should not lead us to deny them their rights. Many munitions workers, especially those who work a lot of overtime, receive high wages. The soldiers should get what has been promised to them in cash, and the difference between that rate and the pay of munitions workers should be regarded as deferred pay, to be paid to them when they return from the war. Most of then will need the money badly then. In this matter I am iu agreement with the right honorable member for Kooyong (Mr. Menzies) who said deferred pay would increase purchasing power after the war. I should give to the soldiers the difference between what they now receive and the pay of munitions workers, and T should make the additional rates payable from the time of enlistment. In that way the men who enlisted early would, nol; be penalized. If that were clone, every man who returned to Australia after the war would be entitled to a gratuity which, in some cases, would amount to a few hundred pounds. That would be something to tide them over any period of unemployment, or it would enable them to pay a deposit on a home or to purchase a small piece of land, or pay a deposit on a farm if they wished to go on the land. I should give this money to them as a right. They would then know that they had something worth fighting for. I would not regard the payment as a charity, or something out of which political capital could be made, as was done after the last war. That gratuity was given in order to win the soldiers' votes; but the mcn had to pay it back. 170 JY7 0 0 DUNCAN-HUGHES, John Mr Duncan-Hughes - The then Prime Minister did do something for the soldiers. 170 JVA 0 0 MORGAN, Charles Mr MORGAN - They paid for it in the long run, because in the depression they lost everything. I shall deal now with tax exemptions. In my opinion, soldiers should be exempt from taxation, as should also be the overtime worked by munitions workers, many of whom are undermining their health because of the long hours that they work. 170 KNC 0 0 MARWICK, Thomas Mr Marwick - Some of them are earning as much as £14 a week. 170 JVA 0 0 MORGAN, Charles Mr MORGAN - That may be; but in earning it they are wearing themselves out and undermining their health. They are working at high pressure, and sooner or later there will be a reaction. Many of them will be forced to take long rests in order to restore their health. 170 009MB 0 0 MCEWEN, John Mr McEwen - Would the honorable member exempt from taxation all munitions workers? 170 JVA 0 0 MORGAN, Charles Mr MORGAN - I would exempt from taxation the overtime that they earn. Many munitions workers work twelve hours a day. A man may leave home at 5 a.m. in order to commence work at 7 o'clock in the morning, but because of petrol rationing and the stupidity displayed in selecting sites for munitions factories, a lot of time is wasted in travelling. These men, unlike some former Ministers, cannot travel to and from their places of employment by car or aeroplane. They often finish at7 p.m. and do not arrive home till 9 p.m. 170 KNC 0 0 MARWICK, Thomas Mr Marwick - Many farmers work twelve hours every day. 170 JVA 0 0 MORGAN, Charles Mr MORGAN - I know that that is 30, and I have my own views as to how they should be given a fair deal. In order to show how we are treating our soldiers, I shall read from an article which recently appeared in the press - 22s. 6d. TAX CLAIM AGAINST D.C.M. WINNER'S ESTATE. The Income Tax Department's action in claiming against the estate of a deceased Digger, who died fighting in Libya, has caused a wave of resentment. Sergeant Vincent D. McQuillan, who once worked in the office of the Taxation Commissioner, won the D.C.M. in Libya and was killed in action last January. The department found that McQuillan owed 22s. 6d. tax, and a request for settlement was forwarded to him at the battlefront. That man was killed in action, but the Government was not satisfied with what he had done for his country; it presented a bill to the executors of his estate. The man's former colleagues in the Taxation Department were so disgusted that they passed around a hat and found the money themselves, rather than send the demand to his relatives. That happened not long after the award of the D.C.M. was posthumously awarded to him. 170 JTY 0 0 CAMERON, Archie Mr Archie Cameron - Military decorations are not recognized by the Income Tax Department. 170 JVA 0 0 MORGAN, Charles Mr MORGAN - That action was taken not by the present Government but by its predecessor. It is disgusting to think that a man fighting for his country on the battlefields should be presented with abill from the Taxation Department to help to pay for the war in which he is risking his life. Such an action is a sordid commentary on our present financial system. . There are anomalies in connexion with allowable deductions from many assessable incomes, which, unless rectified, will cause considerable hardship in some instances. The amount paid as taxes to a State is an allowable deduction, but Federal income tax is not allowable. A taxpayer in the middle income group may be paying 10s . in the £1 taxes, which means that half of his income does not actually go into his pocket. The next year he may have no income at all. Indeed, in some instances a taxpayer may actually show a loss. That is all very well for those who have accumulated wealth, and can live on their capital. If the income has been derived from property, a taxpayer may be able to meet the demand, but if the income is from personal exertion, the tax may cause hardship. No tax can be obtained from a person with no income. I hope that this matter will be looked into. I realize that a Hardship Board is to be set up, but there are some matters which should be dealt with in other ways. The increase of the sales tax is not strictly in accordance with the policy of the Labour party. This form of tax was forced on a previous government under the Premiers plan, which resulted from the visit to Australia of Sir Otto Niemeyer. The sales tax is not a part of the Labour party's policy. It was imposed purely as a temporary means of raising revenue in a time of great financial difficulty. Indirectly, the burden of the tax falls on the workers. 171 KNC 0 0 MARWICK, Thomas Mr Marwick - The present Government had no compunction about raising the tax to 10 per cent. 171 JVA 0 0 MORGAN, Charles Mr MORGAN - I would have preferred to see the sales tax eliminated and direct taxation substituted. Previously the requirements of invalids and cripples were free from sales tax, but the Fadden Government imposed a tax on articles designed for the alleviation of deafness, but not including articles for public use in buildings or other places; artificial eyes; artificial limbs; bandages and bandage winders; crutches; elastic bandages, knee caps and stockings; invalid chairs, invalid carrying chairs, invalid wheeled lounges and lounge chairs, invalid tricycles, including motor propelled invalid wheel chairs and invalid tricycles ; spinal carriages and other invalid hand carriages; wheeled beds of the kind used by invalids; spectacles, eye-glasses and lorgnettes, including cases and wipers, but not including goggles, sun glasses, field glasses, or similar optical goods; surgical boots, braces and irons; surgical, medical and first-aid outfits, trusses ; and umbilical belts. That was the method by which the previous Government endeavoured to finance the war. I regard the taxing of the articles needed by cripples as the lowest form of orthodox finance. I could mention a number of injustices in connexion with the sales tax. For instance, dentifrice is to be taxed at the rate of 20 per cent., which is the rate applicable to furs and other luxury goods. It does not seem right that children in an industrial suburb should have to pay the same rate of tax as is paid by the wealthy ladies of Bellevue Hill, Sydney, for the luxury goods that they buy. 171 KNC 0 0 MARWICK, Thomas Mr Marwick - A tax is imposed on the children's ice cream. 171 JVA 0 0 MORGAN, Charles Mr MORGAN - When the workers objected to an extra tax on beer and also to the additional amount claimed by the breweries, Senator Foll, who was then Minister for the Interior, said that they were holding up the war effort by refusing to drink beer. Evidently, the slogan of the Government of which he was a member was "Drink more beer, and smoke more tobacco, in order to win the war ". Surely Hitler must have laughed if he had heard of it. 171 009MB 0 0 MCEWEN, John Mr McEwen - Did not the honorable gentleman promise to make some constructive suggestions? 171 JVA 0 0 MORGAN, Charles Mr MORGAN - Yes, and I shall do so. The policy of Labour, which was enunciated during the last election campaign, included an increase of the invalid and old-age pension to £1 5s. a week. In my opinion, the Labour party was given a mandate by the people to put that policy into operation^ I look forward to the day when the pioneers of our country will receive something more than a mere pittance. I hope that the Government will introduce a proper scheme of social security, so that when men and women come to the age of retirement they will receive at least a living allowance and be able to enjoy some of the amenities of life in their declining years. I should like to deal at length with the subject of soldiers' pensions, but will leave it until some future occasion, such as the discussion of the Estimates, or a bill to amend our repatriation laws. I have been disgusted with some of the cases that have come to my notice showing the treatment of soldiers and their dependants who have applied for pensions. Obviously, the previous Administration either did not understand the act or was not in sympathy with its provisions. When the late Sir Neville Howse was Minister for Repatriation in a previous government, the Repatriation Act was amended to provide that there should be no appeal from the decision of the War Pensions Entitlement Tribunal. Former Ministers sheltered behind that provision. When cases of hardship were brought before them they would reply that they were sorry that they could not do anything because there was no appeal from the decision of the tribunal. No Minister should shelter behind a provision of that kind in order to deny justice to men who have fought for their country. I have in mind the case of a man who died recently in the Randwick Military Hospital after having spent twenty years on crutches. While fighting in Prance during the last war he lost a leg and in later years his general health declined. Although medical evidence, in addition to supporting testimony by reputable laymen, proved conclusively that his death from cerebral haemorrhage was attributable to war service, the Repatriation Department refused to grant a pension. His widow,, who has been struggling for twelve months to maintain herself and her two children, produced further evidence in support of her claim, and applied to the Entitlement Tribunal, but without success. If an appeal to the Minister were permitted, I am sure that the honorable gentleman, who has a profound sympathy for .returned soldiers, would see that justice was done in this case. War-time profits should be subject to a tax of 300 per cent., because no profits should he made out of human agony, suffering and slaughter. The most effective way in which to ensure a permanent peace is to prevent armament kings from making profits. They were the direct cause of the present war. In Germany, Hitler was financed to power by the armament kings such as Thyssen and the controllers of the Krupps works, although their infamy has since rebounded on their own heads. In Italy, Mussolini's march on Rome was financed by 'the bankers of that city. An unholy alliance existed between the armament kings and private financiers. They are the guilty men who are responsible for the present world turmoil. 172 BV8 0 0 CALWELL, Arthur Mr Calwell - Do not forget Mr. Montagu Norman, Governor of the Bank of England. 172 JVA 0 0 MORGAN, Charles Mr MORGAN - I have already exposed the policy of Mr. Montagu Norman. Ho was instrumental in closing down large shipyards in England. If they had remained in operation, the Battle of the Atlantic would now have swayed more decisively in the favour of Great Britain. Although Mr. Montagu Norman declared that he could1 not assist to finance Great Britain to rearm, he managed to finance Hitler to rearm Germany. Perhaps he thought that he was supplying the Nazis with the sinews of war to fight Russia; but, as an act of poetic justice, Germany went to war with Great Britain. [Extension of time granted.] The lag in the war effort in Australia is the result of every phase of the war administration being placed in the hands of representatives of " big business ". I shall not accuse the previous Government of being deliberately responsible for that. Perhaps it drifted unconsciously into the position of leaning upon its friends who, in the past, made liberal contributions to party funds. At the outbreak of war, the previous Government may have innocently leant upon those people for assistance. But I am satisfied that those wealthy interests have honeycombed our administration and sabotaged our war effort for the deliberate purpose of making profits out of the war and of crushing their competitors, so that when peace returns they will have complete economic control of the country. That happened in the United States of America during the last war, where " big business " exercised complete control of the economic life of the community. In the hands of a small coterie lay the control of all materials, war contracts and labour, so that no one could participate in the manufacture of munitions or war equipment without its consent. At the outbreak of war these people adopted a similar technique in Australia and in Great Britain, and the workers of both countries are justly restive about the unsatisfactory position. Recently, the press published the following news items : - "MOKE WORK" STRIKE. Fifty-four skilled engineers and the whole assembly staff of a Midlands factory engaged in war production have staged an unusual strike. They struck for more work. Most of them spent the afternoon " digging for victor-y '". They said, "We deliberately took off the afternoon because we were fed up with being idle when we should be working to our full capacity ". The men's action has brought results. They have been given enough work to keep them busy for the rest of the week, while Ministry of Supply officials have visited the factory. 173 miscellaneous 173 A conference attended by representatives of 200 engineering and allied trades and shop stewards representing 195 factories employing 174,000 people passed a resolution urging the doubling of war production. Present production was described as a scandal. One delegate referred to the "criminal lack of organization in the management of arms factories ". The workers are now awake to the true position. The lag in the war effort results from the attempts of a few unpatriotic people to profiteer out of the war and to corner business in order to further their own selfish interests. On the motion for the adjournment of the House I shall give an illustration of how one industry in my electorate is being sabotaged by influences at Melbourne. If the Government would take the workers into its confidence and appoint workers' representatives to various boards, these scandals would immediately cease. The cost-plus racket should be immediately abolished. Workers are thoroughly disgusted with the conduct of affairs. For example, the names of hoys appear on time-sheets as being in receipt of an adult's wage; but they receive only a few pounds a week, and the balance is collected by the racketeers. The workers will no longer tolerate such practices. They know that their interests are in jeopardy. Large enterprises such as Australian Consolidated Industries Limited are using the workers to produce machinery which is being exported to countries such as India and Malaya, where cheap labour abounds. Those firms are wearing the cloak of patriotism, but the only patriotism known to them is the patriotism of profits. They want no post-war reconstruction. Their plans, when peace returns to the world, envisage vast unemployment and poverty, concerning which the right honorable member for Kooyong has already warned us to-day. When the services of the workers in the munitions factories are no longer required and the troops return victorious to their homes, big business will resort to economic warfare in. order to reduce wages and conditions. It will utilize the plants which it sent to India and Malaya for the purpose of manufacturing cheap goods, which will be dumped in Australia so as to break down our living standard. If the workers knew of this plot they would not tolerate it for a moment. Some of the trade agreements which were made by the Menzies Government have proved to be most unsatisfactory. For example, the Government contracted to sell our wool to Great Britain for the duration of the war for l0d. a lb., which was the cheapest price ever paid for it. 173 JLL 0 0 ABBOTT, Joseph Mr Abbott - The agreement was not for the duration of the war. 173 JVA 0 0 MORGAN, Charles Mr MORGAN - I obtained my information from the press. I shall be gratified to learn that the Menzies Government did not commit such a grave error, because Britain sold some of the wool to the United States of America at as high as 5s. per lb. If Australia had obtained for its wool the substantially higher prices to which it was justly entitled, the money could have been used to finance our war expenditure, and we should not have been obliged to bear heavy taxation. The Government should investigate this matter immediately in order to see that the trade agreements are revised on an equitable basis. Social reforms should constitute a part of a properly planned war programme. The Government must ensure that workers are properly housed, fed and clothed so that they will be capable of giving efficient service to the war effort. At a meeting of the Erskineville Council recently, it was stated that twenty people were living in three rooms in a house in King-street. The Health Inspector, Mr. M. O. Schlenert, said - Two adjoining buildings were rented at a total rental of £2 12s. 6d. a week in return for a rental of £1 a week. It was stated that a man, his wife and eight children were living in one room for which they paid 22s. 6d. a week. Another roan, his wife, and two children paid £1 a week. If that is the best we can do for our people, we should be ashamed of ourselves. The birth-rate is all-important. Whilst Japan is planning to increase its birth-rate substantially during the next 30 years, oar birth-rate remains stationary. Statistics disclose that for every 100 women in Erskineville there are 90 children under ten years of age. In the luxurious residence of Bellevue Hill and Potts Point, Sydney, the average is only 37 children to every 100 women. We should protect the families of the workers, because we rely upon them to ensure that the war is brought to a successful conclusion. The following is a press report of an address which was delivered by Sir Geoffrey Whiskard, formerly High Commissioner in Australia for the United Kingdom, before his departure - 174 miscellaneous "We are not the only people who believe passionately in the things we are fighting for. The Germans are not fighting merely because they have been forced into it." Sir Geoffrey Whiskard, retiring British High Commissioner in Australia, said this yesterday at the twenty-fourth annual meeting of the New South Wales .branch of the Victoria League. " The Germans have a cause ", Sir Geoffrey went on. " In effect, Hitler has said to them : ' What has democracy, Christianity, and freedom done for the world ? ' " More than half the people in the world are living in shelters not fit for beasts; they are underfed, oppressed, deprived of justice and equality. "That is the result of your democracy and love of freedom." "THESE THINGS ARE VILE." " I think those things are vile," said Sir Geoffrey. " It is vile that unemployment figures should be decreased by making thousands of men make munitions to kill their fellow men. "The State is made for the individual, and not the individual for the State." " We must prove that our way of life pro- daces better results than totalitarianism. To do that we must give financial security to the ordinary man, woman and child. "Also, we must see that every one, whether born of rich or humble parents, has the same opportunities. After this war we must not sit down and think we can get on with our old life. That is what we did after the last war. " If we do it again we and our children after us will have another war on our hands and we shall lose that war." The improvement of the social conditions of the workers should not be interrupted during the war period. The Commonwealth Bank has the necessary facilities to carry out a Commonwealth-wide housing scheme. However, only recently, when representations were made that the Commonwealth Bank should finance the erection of homes for munition workers, the reply came back through certain channels that the bank was not disposed to assist in any housing schemes during the war because the members of the Bank Board believed that after the war was over Australia would once again be plunged into the depths of a depression with its consequent unemployment and poverty, and as those who were unemployed would not be able to pay for their homes the bank 'would have to repossess them. That attitude is a sorry commentary on the patriotism of those who control the finances of this country. The Government has an obligation not only to maintain the morale of the people in time of war through physical fitness campaigns and the like, but also to provide means whereby the terrific reaction from the strain of the war may be eased. Many people do not realize how their vitality is being depleted as a result of the strains and stresses imposed by the war. The strain of the anxiety imposed on the wives and mothers of our fighting men must leave its mark, and the health of our war workers who are compelled to labour almost unceasingly in order to maintain an uninterrupted flow of the materials of war must inevitably suffer. Not only will this war be more devastating in its toll of human life but I fear that it will also be followed by a recurrence of the pneumonic plague which ravaged the greater part of the world after the last war and wiped out 10,000,000 human beings. Unless the Government realizes its obligation to safeguard the health and well being of the people during the war, the consequences will be dreadful indeed. We must plan, not only for the improvement of the morale and health of the people during the period of the war, but also for the change-over period when hostilities have ended and our war workers have to be diverted from war production to civil production. I have conferred with the executives of a large number of factories in my electorate which are engaged is war production. Most of them have frankly told me that they were greatly concerned because the previous Government made no attempt to evolve plans to meet the post-war situation. I am pleased to know that the Minister for War Organization of Industry (Mr. Dedman) will be more active in pursuing the duties of his portfolio than was his predecessor. We know that there was little for the former Minister for War Organization of Industry to do because the Fadden Government had no plans for the organization of industry other than to bolster up huge monopolies at the expense of small manufacturers. The former Minister for War Organization of Industry, who was also chairman of the Commonwealth Man-power and Resources Survey Committee, knew only too well that small manufacturers who could contribute a worthwhile share to the war effort were being squeezed out of business by the huge monopolies supporting the Government. There is no reason why plans should not be evolved now to enable the changeover from war-time to peacetime production to proceed smoothly at the conclusion of hostilities. The absence of any such plan will bring about unimaginable chaos when peace is declared. [Further extension of time granted. ] Unless plans are made now for the absorption of our vast army of skilled workers into peace-time production at the conclusion of hostilities, the Government of the day will be presented with a problem, the magnitude of which cannot be anticipated. Our hundreds of thousands of workers will not permit themselves to be thrown on to the economic scrap-heap as so many were during the last depression. We should do everything possible to make Australia self-contained. Only recently the world learned of what is known as the Atlantic charter, a document signed in secrecy by the President of the United States of America and the Prime Minister of Great Britain somewhere on the Atlantic. We have had but an inkling of what it contains. Although no copy of it has been sent to the parliaments of the democracies for their confirmation, from what we have learned of its contents, it appears that there are several important matters that require elucidation. The full text of the Atlantic charter should be sub mitted to the parliaments of the dominions for consideration. The following report, which appeared in the Daily Telegraph of the 30th October last, gives some idea of the demands being made by the United States of America as the price of its assistance: - UNITED STATES OF AMERICA SEEKING BRITISH BASES Plea Accompanies Post-war Plan. Washington, Wednesday (A.A.P.). The United States of America has asked Britain to make al] British bases available to America, says American United Press, quoting reliable Washington sources. America has also asked Britain to subscribe to a five-point programme for a better postwar world, American United Press says. The programme was presented to Britain and China when lend-lease arrangements were under discussion. China has not been aSked for the use of any bases. The programme is said to be - Removal of excessive trade restriction*. Non-discrimination .in international commercial relations. Non-discriminatory use of raw materials. Agreement to regulate supplies of commodities to protect the interests of consumer nations and peoples. International finance to be arranged to aid essential enterprises and to enable the continuous development of all countries. It is understood that Britain accepted the programme as a basis for discussion. China fully agreed to it. The programme, as far as Britain is concerned, is an American attempt to implement by definite agreement the Atlantic charter framed by President Roosevelt and the British Prime Minister (Mr. Churchill). The Prime Minister said recently thai Australia would not tolerate dictation from outside. We are thankful for the assistance given to us under the leaselend legislation passed by the United States of America, but why should a tag bel placed on that aid which provides that if we accept the assistance which the United States, of America is ready to give us we shall have to allow international finance, which means American high finance, to develop the rest of the world after the war! Whilst we appreciate what the United States of America is doing to assist us, we should have a very clear understanding of the terms on which that assistance is given. We trust that those terms will not prevent us from developing our own country in accordance with our own ideals and sentiments, and that we can go our own way after the war, otherwise if we are to he chained to the chariot of high finance, all our efforts and our sacrifices will have been in vain. 176 L0G Flinders 0 0 RYAN, Rupert Mr RYAN .- Judged by what has been said by several members of the Opposition, during this debate and by the financial ideas of the honorable member for Reid (Mr. Morgan), the proposals of the Government as exemplified in the budget might be a great deal worse than they are. The budget is something like the curate's egg. Parts of the budget are quite good, but, taken as a. whole. I. regard it as fundamentally unsound. The proposed increase of soldiers' pay will undoubtedly be very popular. The last Government realized the desirability of granting such an increase but its proposals for financing it were different from those of the present 'Government. A great deal can also be said for the increase of the rate of invalid and old age pensions. It will, I am sure, be thankfully received by the country as a whole. The proposed inclusion of the South African War veterans in the scheme for the soldiers' pensions is also probably a good thing. When I say that these pensions will be popular, I must also say at the same time that there will be misgivings as to whether the actual benefits should be granted at this time. I, myself, have certain doubts about that particular aspect. These benefits, however, represent a transference of wealth from one section of the population to another, and, as such, they are not in the same category as is expenditure on the production of munitions and other commodities necessary for war purposes. Also, I think that, from, a general point of view of the social advance of this country, these benefits will be welcomed. On social security, I have definite ideas which I do not propose to give to the committee to-night. I do think that the country as a whole realizes that the one thing necessary at the moment is to get on with war activities. It is the objective which transcends all other objectives. Nevertheless, the secondary objective of this country should be the improvement of social conditions both after the war and as far as it can be achieved during the war. How far it is possible to improve social conditions now is a matter of grave doubt, but we can and should lay plans for a large expansion of schemes for social security which can be brought in when conditions permit. In regard to the budget itself, the Treasurer (Mr. Chifley) in his opening remarks, laid down general principles of finance with which every body, except financial faddists, will agree. He said - The diversion of labour and resources to war production will necessarily reduce the volume of non-essential goods available for civil consumption . . . Private spending must therefore be limited to the smaller flow of civil goods that will be available . . . Wc are, therefore, forced by the demands of war to call upon the people for further sacrifices . . . War needs must come from the collective resources of the community. With that principle, no reasonable person in this country could find fault, but when the Government puts the principle into practice, it seems to fail lamentably. The problem which we have to face at present is to make good a deficiency of something like £160,000,000 between revenue and expenditure. It is proposed that, of the deficiency, £22,000,000 should come from new taxation and the remainder from loans or, presumably, bank credit. Of the £22,000,000 to be raised from new taxes, £15,900,000 is to come from increased income tax and company tax, and of the increased income tax, £4,900,000 will come from a group of 23,000 people in receipt of incomes amounting to £1,500 or more a year. I have no objection at all to that proposal in itself, nor do I think that the people who will have to pay that tax will themselves have any complaint, because, on the whole, compared with similarly placed people in other countries, they have been let off fairly reasonably by taxation measures already in force, but, when they sign their cheques for the Commissioner of Taxation, they will surely say: "Well, I pay this amount willingly, knowing the gravity of the situation, but why are hundreds of thousands of people well able to do so making no contributions to the war ? " That comment I believe to be just. There has been a great deal of talk in this Parliament of equality of sacrifice, and the Prime Minister (Mr. Curtin), in numerous statements, both inside and outside Parliament, has said that Labour in th is war will give its all. Quite recently, the Minister for the Army (Mr. Forde), in a stirring broadcast made in Sydney, said that the Australian people would strip themselves to the skin in order that our men might fight on equal terms with the enemy. Those are grand and noble words, but I ask where in the details of the budget proposals is there any lead given by the Government to this giving of all by Labour - to this stripping to the skin by the people of Australia ? 177 K0K 0 0 CONELAN, William Mr Conelan - Take off their coats first, their fur coats. 177 L0G 0 0 RYAN, Rupert Mr RYAN - They have not done it yet. The Treasurer expressed the pious hope that voluntary loans would be forthcoming, in other words that the people of Australia would strip themselves to the skin by taking off their own clothes. I say, as has been said by other speakers on this side of the committee, that the Treasurer's hope to raise voluntary loans from the lower income classes will prove to be entirely illusory. I shall not go into the details, because they are well known to everyone, but the attitude of the ordinary man is this: He says, "I see my neighbour spending freely. Why should I contribute to these loans when everyone else is spending money as he likes?" That is the fundamental human attitude which will affect the response to loans, no matter how wide the flood- gates of oratory may be flung open in order to induce the people to subscribe. I maintain that it is entirely illusory to expect money to come in that way. Again, on the question of the equality of sacrifice. We have heard the expression used time and again by Government supporters. Could any one deny that the people on the middle and higher ranges of income have been and will be hit hard by taxation and are to-day making very serious and heavy sacrifices? Equally, could anyone deny that the ordinary men on the lower ranges of income are to-day paying practically nothing in a direct way towards the cost of this war? The ordinary men on lower ranges of income not only are making no direct sacrifice but, on the contrary, are making a profit out of this war. There can therefore be no equality of sacrifice on their part, since there is no sacrifice at all. I ask myself, therefore, what honorable members opposite mean by " equality of sacrifice ". One knows that terms have different connotations according to the minds of the persons who use them, but there is a generally accepted meaning of the words " equality " and " sacrifice ". I maintain that in none of the instances which I have given is there the equality which we all desire to see achieved in the prosecution of our war effort. My first objection to this budget is, therefore, that no equality of sacrifice is brought about by it. If we arc to employ this proposed new taxation at all - and personally I do not agree with it - let us be honest and tell the people that it is a means of bringing revenue to the country by taxing the earners of income in the higher ranges down to a lower level, leaving untouched the earners of income in the lower ranges until revenue can no longer be obtained from those in receipt of high incomes. That is an honest way of putting the matter. If we do that people who object to such action will at least understand what lies behind it. I maintain, however, that despite the degree to which we tax the higher levels of income - even if we take the whole of the incomes of the rich - 'the amount we shall thus obtain will still prove insufficient to meet the cost of the war. No matter what financial measures we may take., it is inevitable that the burden of this war must be borne by the people as a whole and not by any section of it. In view of present world conditions there can be no escape from that. My second objection to the budget is that it fails to provide a solid financial basis for development of our resources for war purposes. A gap of £1 60,000,000 is to be met partly by taxation, by which means it is expected to raise £122.000,000, and the Government hopes, with very great optimism indeed, to obtain the balance by way of voluntary loans from the public. I do not think that it is possible to make up the gap in that way. This very large deficiency will have to be made good by the issue of bank credit. The amount which was left to be made good under the Fadden Government was much too large, and I, personally, objected to that part of that budget because I thought it had too inflationary a tendency. Consequently, I object to the similar feature in this budget particularly when the opportunity to raise the money we require has now been considerably narrowed, and must, presumably, demand a large increase of bank credit. In addition to the amount which the Government estimates will be forthcoming from the issue of bank credit, we must, also make provision to meet our overseas trade balances. Against those balances which are held in London payments are made at present to primary producers in this country; and those moneys, owing to war conditions, are not represented to any great degree by imports. Thus, allowing for the amount to be made good by way of bank credit and in other directions, estimated by the right honorable member for Kooyong (Mr. Menzies) to be in the neighbourhood of £30,000,000 or £40,000,000, but which I think will possibly exceed that figure, it will be seen that there will be a large amount of fresh money in the community to balance which no physical goods or services will be provided. From that point of view the budget is fundamentally unsound. In the course of this debate certain honorable members have referred to what has been going on in Germany. Yesterday the honorable member for Kennedy (Mr. Riordan) referred to Germany's financial methods, and to-day references were made to that subject by several honorable members including the honorable member for Reid (Mr. Morgan) and the right honorable member for Kooyong. The last mentioned informed the committee of an interview he had in 1938 with Dr. Schacht. I know something about internal conditions in Germany as I lived there for some years. Therefore, I should like to give a short summary of the financial position in Germany, and to discuss the methods by which Germany has attempted to finance this war, because I believe that Germany's experience in that respect will be of use to this country, not in a positive but a negative way. We can learn certain lessons from Germany's experience in that respect, and it will be to our benefit to ponder over them. First, it is true that Germany has relied largely on central bank credit. That fact cannot be refuted. When the Nazis came into power in 1933, Germany's internal debt amounted to 11.7 milliards of' marks. By 1938, that is the time when the right honorable member for Kooyong had his interview with Dr. Schacht, and towards the end of what might be called the constructive period of the Nazi regime in Germany, that debt had increased to 30.7 milliards of marks, which is equivalent roughly to £2,000,000,000 sterling. By the end of last year, the disclosed amount of 'Germany's debt was £6,000,000,000 sterling, although it is more likely that Germany's real debt was then in the neighbourhood of £7,000,000,000 sterling. Since the outbreak of war, Germany's public debt has been mounting at the rate of £200,000,000 a month. It is true that, from 1933 to 1938, no real danger of inflation existed in Germany, for the reason that when the Nazis came into power, there were 6,000,000 unemployed in the country, and the productive power of the nation had dropped to 47 per cent, of what it had been in 1929. In addition, large stocks of materials were available in the country. By 1938, however, all the slack had been taken up, and the pinch began to be felt. During that time, the Nazis, almost concurrently with their advent to power, introduced other measures which their experience in their great depression told them were necessary. Those measures were, mainly four: The first thing the Nazis did when they came into power was to fix wages. They equated the 1929 wage rate to a base index of 100, and on that basis fixed the rate in 1933 at SO, and wages have remained at that rate ever since. Secondly, they introduced a very strict system of price control and rationing. That control was policed not only by the ordinary police as we know them in this country, but also, and far more efficiently to Germany's way of thinking, by the Gestapo, which has agents in practically every business house in the big towns in Germany. The penalty for infringement of these regulations was very severe, being death in some cases, and in others committal to concentration camps. By that means they were able to suppress what are called black markets, which always arise in countries which experience inflation and in which control is not fully effective. The Nazis' next step was to place the whole of agriculture and industry under control. The farmers were told,' and are still being told, what they must grow, how they must, grow it, and the price they must take for their product. The same thing applies to the industrialists. They are told what they must produce, how th?y must produce it, and the price they must accept. Finally, taxation in the country, which was severe before the war, has since increased by 40 per cent. In addition, everybody has to bear increased indirect taxation. On tobacco and alcohol, taxes have increased by 20 per cent. The people also have to respond to what is called a voluntary system of contribution to winter help in Germany. Everybody is expected to contribute willingly in this connexion. Those who do not contribute willingly get into trouble. One further industrial measure affects employers and employees in a particularly acute way. Employers and employees are, in fact, more or less tied together under the Nazi regime. Offences by employees and employers alike are heavily punished by the courts as violations of social duties. Employers are fined and employees are prosecuted for " wilful and malicious agitation among followers, such as to endanger industrial peace or to disturb the community spirit in establishments." The expression of discontent among the workers is punished by dismissal, and that means starvation, for dismissed workers are debarred from government assistance. The protagonists of this German system of finance have asserted that it is good. They contend that as it has met the needs of Germany for so many years it should meet our needs. There are, however, two vital points that emerge from a consideration of the position. One is that Germany has been able to avoid inflation only by the most rigid control of the lives of the people that it is possible to imagine. I do not believe that any one in this country would consent to such severeregimentation. The other is that the effect of the system has not been, as one might imagine it would be, to increase the standard of living in the country. In fact, the standard of living has been reduced considerably. It might be thought that after five years of total employment and full industrial activity the standard of living would have improved. Actually, the opposite has been the case. Wages are still 20 per cent, below the 1929 figure, and although price control has slightly raised the value of money, taxes are so heavy, and so-called voluntary contributions are so great, that the standard of living is considerably below the 20 per cent, reduction represented by the fall in wages. I had intended to devote some time to a description of a somewhat similar state of affairs in Russia, where, although the regime has been different from that of Germany, the effects have been much the same. Russia has been on what has approximated to a war footing for the last twenty years. An effort has been made to turn an essentially agricultural country into an industrial country. I shall not go into detail in this connexion. It is sufficient to say that after twenty years of this enforced change the standard of living in Russia is such that, in spite of great industrial activity, bread cards were being issued as late as 1938 although Russia in normal times is the greatest wheat exporting country in the world. I wish to impress upon honorable members two points which- stand out from the study of German affairs. The first is that if we indulge in any form of inflation in this country - and that is what a great many people are unwittingly advocating by the expansion of bank credits - we can avoid tie adverse results of such a policy only if we are prepared to adopt such far reaching and drastic measures as those which are applied in Germany. It would be of no use for us to introduce rationing if we do not fix wages and control the fixed prices in such a way as to ensure that they will remain fixed. In other words, we shall have to go the whole way or we had better not go any of it. We cannot go half way and succeed. I am. quite convinced that the simplest and, in the long run, the most successful course for us to pursue in dealing with our financial problems is to apply taxation and to raise money by loan or by some compulsory levy by the best means of persuasion that we can devise. The second thing that stands out is that it is not possible for us to have both guns and butter. Germany concentrated on guns and so could not have butter. The Government has made it clear that it realizes the necessity for guns, but it also seems to think that we can have butter as well as guns. 180 L07 0 0 LAZZARINI, Hubert Mr Lazzarini - There is no reason why we cannot. 180 L0G 0 0 RYAN, Rupert Mr RYAN - We cannot have both. The Government, and the people at large, must face the facts and be prepared to learn from the experience of other countries. lu conclusion, I emphasize that we have not yet realized the seriousness of the present situation, although the sands are running out fast. Action is required, not words. The results of defeat must surely be evident to everybody. What has happened in the conquered countries on the other side of the world is too well known to need description by me. lt would need little imagination for the people of Australia to appreciate what would happen if Great Britain were defeated. The position, as I see it to-day, is more grave than at any time since the beginning of the war. Every one who has any knowledge of the facts must agree with that statement. We shall be able to emerge into safety from our present situation only if we exert every ounce of our power in pushing forward with our war effort. The margin between victory and defeat is slight. I am not a defeatist. I believe that we shall win through; but in order to do so, we must use every ounce of vigour that we possess. So far we have not exerted ourselves to the utmost. I understand that the honorable member for New England (Mr. Abbott) compared our efforts with those of Great Britain. I feel very strongly that we have not yet attempted to make the effort which is required of us. Fundamentally, there is no difference between our situation and that of Great Britain. If Great Britain goes down, nothing can save us except our own efforts, and it may then be too late to make them. Measurement of our effort with that of Great Britain makes it apparent that we fall far short of what we might do. Great Britain proposes to expend no less than £3,500,000,000 this year. At the same rate of expenditure per head of our population, our budget this year would amount to £500,000,000, which is a great deal more than twice what the Government proposes to expend. Every endeavour should therefore be made to produce a better effort. The country as a whole has not yet awakened to the gravity of the situation. The fault possibly lies with the present Administration and its predecessors. The first task of the Government is to marshal the whole of our man-power and material resources. It should resort, not to exhortation of the people, but to definite action. An early move in this direction would have the support of not only honorable members on this side of the chamber but also the country as a whole. 180 KNC Swan 0 0 MARWICK, Thomas Mr MARWICK .- Since the introduction of the budget, I have repeatedly heard it described as a good election budget. I maintain that Australia requires, not a good election budget, but one which will marshal the whole of our material and physical resources for a total war effort. When the present Prime Minister (Mr. Curtin) moved the amendment which led to the defeat of the last Administration, he said, " This is a free country, and its people voluntarily come to its aid with its resources of man-power". I agree; but I fear for the. future freedom of this country unless many more people wake up to the fact that we are really at war. I sincerely hope that the Prime Minister and the Treasurer (Mr. Chifley) will obtain the £137,000,000 which is required to bridge the gap in the budget. They will have my full co-operation in their efforts to do so. It is of little use to assert that we are making a 100 per cent, war effort. In. the two years that this country has been at war, there has been one industrial strike after another. In New South Wales alone, over 1,800,000 working days have been lost to industries that are vital to our war effort. That is a gift to the enemy. We cannot have a total war effort while such conditions continue. I hope that the new Government will have a better run in that respect than was experienced by the previous Administration. In view of the serious trend that the war is taking, I sincerely believe that it will become necessary to conscript the whole of the man-power and wealth of this country if it is to remain free in the future. Events are moving very rapidly to-day, and if developments in the Pacific zone warrant such a course the whole of the wan-power and wealth of this country should be conscripted without a moment's hesitation. We realize the magnitude of the armaments and other resources of our enemies. If we are to meet those forces successfully, we must marshal the whole of our resources as quickly as possible. Post-war credits, or compulsory loans, was one of the features of the Fadden budget. These had a twofold objective, the first of which was quickly to divert spending power from civil consumption to the war-time needs of the country. No one can deny that wherever war expenditure is circulating in the manufacturing centres, there is a reign of prosperity such us this country has never previously experienced. It is the responsibility of this Parliament, whatever government is in power, to divert that spending power as quickly as possible to the needs of the Treasury. I wish the Treasurer every success, and 'assure him of my complete co-operation in. any attempt to divert this purchasing power from private spending to the needs of our war effort. This diversion is not taking place as rapidly as I wish. Compulsory loans would have achieved satisfactory results much more quickly. When a supplementary budget is introduced three months bence, the circumstances then existing may compel the adoption of measures along the lines of post-war credits and the transfer of manpower from civil to defence activities. I hope that, the Government will not hesitate to take whatever steps may be necessary in that direction. I arn delighted that the Government intends to establish a mortgage bank. I have been a constant advocate of this reform, and I hope that it will provide the foundation for the rehabilitation of the settlers in the hinterland of Australia. The conditions of the people in country towns to-day are deplorable. The wives and families of soldiers have drifted to the cities. The economics of war may demand that we should establish munitions factories near the sea-board where the amenities of life are available to those employed in such industries, but I maintain that we should take a long range view and extend those industries into the outback areas, as far as possible, because our greatest problem after the war will be the repopulation of the back country. In Western Australia alone there are at least 2,500 abandoned farms. I realize that there are difficulties attending primary production, owing to the shortage of shipping and the restriction of markets, but the costs of the primary producers have increased greatly since the outbreak of the war. I do not think that any farmer hopes to make a profit out of the war. Farmers generally are slipping back very rapidly, and in the near future we shall have to review the prices paid for primary commodities. It is most unfair to expect the primary producers to work at a loss in order to feed the people of Australia. Even if the bakers were given the wheat that goes into a loaf of bread they could not sell it under S-Jd. a loaf. The price of wheat plays a most insignificant part in the cost of a loaf of bread. Australia may easily build up an enormous surplus of primary products that could become a menace to future production for many years ahead. I hope that the Joint Committee on Rural Industries will visit all the rural areas of Australia and that the adoption of its recommendations will at least put those industries on a basis that will enable them to maintain the position that they occupied at the outbreak of the war at least until the war is over. When the Prime Minister was replying to the right honorable member for Kooyong (Mr. Menzies) he said that the Government watched prices going up from day to day. As a member of the Joint Committee on Profits I compliment the Prices Commissioner, Professor Copland, and his staff for the excellent job they have done for Australia since the outbreak of war. In the six capital cities of Australia the average increase in retail prices since the outbreak of war has been as follows: - Foodstuffs, 2.1 per cent.; rent, 0.9 per cent.; clothing, 32.1 per cent.; miscellaneous items, 8.9 per cent. . This is an average of 9.2 per cent. for the first two years of the war. I have taken those figures from the index series " C " of the Bureau of Census and Statistics. In Great Britain, since the outbreak of war, prices have increased by 28 per cent., and in Australia the increase has been 50 per cent. less than in the first two years of the last war. I hope that before making the alterations contemplated by the Government with regard to prices control it will consider the report of the Joint Committee on Profits. The Prices Commissioner, in his office in Canberra, is cramped for room, and if any member of the Government were to visit his quarters I. feel sure that it would be recognized that an improvement is essential. If the Treasurer finds that he cannot raise the revenue required for the war effort,, I hope that he will not hesitate to do the right thing, and, if necessary, conscript both the man-power and the wealth of this country. If we lose this war we shall sacrifice the principles for which we have fought for the last 25 or 30 years, and the members of the trade unions will lose everything for which they have struggled. Practically the whole of my people of military age are in the fighting forces. There are eighteen altogether. I desire to see my people, along with the thousands of other Australians, back in this country as soon as possible, and I contend that Australia is not doing right by allowing industrial disturbances to continue. Too many people in this country still do not realize that we are at war. We see huge crowds at race meetings, and hordes of people waiting outside city picture theatres. If the Treasurer finds that money is not coming in as quickly as is necessary, or that man-power is not being transferred from civil to war production as rapidly as it should be, I trust that he will do the right thing and see that the necessary transfer is made. Progress reported. 182 adjournment 182 Motion (by Mr. Chifley) proposed - That the House do now adjourn. 182 JVA Reid 0 0 MORGAN, Charles Mr MORGAN .- Last night, speaking on the motion for the adjournment, I mentioned the position in which the Clyde Engineering Company Limited has been placed because of the withdrawal of Government orders for the manufacture of collapsible boats, and I stated that, unless the position was rectified, a large number of men would be thrown out of employment. The Minister for Munitions (Mr. Makin) promised that he would look into the matter. I raise the matter again to-night because to-day I received the following urgent telegram from the State member for Granville, Mr. Lamb: - Unless further order collapsible boat Clyde over 100 men lose employment Several off to-morrow. Now this matter has been brought to my notice by the men employed at the works, because they are in danger of losing their means of livelihood. Last week,. I was in touch with officials of the Department of Supply and Development I made representations by letter and telegram to the Minister for Supply and Development (Mr. Beasley), but I am now informed that these have been handed over to the Department of Munitions. It seems strange that after the Minister for Supply and Development had demonstrated that he was prepared to take & firm stand in dealing with the big Melbourne business executives, the matter should now have been handed over to a new department. I was given to understand by departmental officials that the company was to be given an official order immediately for 100 boats. He expressed the opinion that it was only right that the firm should receive the order because it had pioneered the industry, and had acquired a staff of skilled workers. Now General MotorsHoldens Limited of Adelaide, which had the ear of the previous. Government, is to be given the work. It has copied the plans, and " pirated " the business. Well and good, the company is entitled to all the business it can get, but what becomes of the theory of enlisting private industry to assist in the war effort? The Clyde Engineering Company Limited conducted all the investigations leading up to the construction of these boats, and the previous Government evidently thought so well of it as to guarantee its account with the bank for £150,000. I regard this action as a deliberate attempt to sabotage the war effort and to embarrass the new Government. I am glad that a new Minister for Munitions has been placed in charge of the department, because I am convinced that, when he learns of what is going on, he will deal severely with some of those who were placed in authority by the previous Government. I am convinced that there is an attempt at deliberate sabotage, and that some fifth-column work is going on in the department. This is borne out by the fact that, although in my own electorate 3,000 men were unemployed when I was returned twelve months ago, no attempt was made by officials in Melbourne to utilize their services in the prosecution of the war programme. The Purcell Engineering Company Proprietary Limited, although well qualified to manufacture lathes urgently needed for the war effort, was refused orders because its trade rivals McPhersons Proprietary Limited and E. P. Bevan and Son, Proprietary Limited, of Melbourne, were determined to smash it and one of their directors was the Director of Machine Tools in the Ministry of Munitions. When we raised the matter in the House, a representative of the Purcell Engineering Company Proprietary Limited was sent for by high officials of the Ministry of Munitions, and told, "You keep away from Morgan and Beasley, or we will take your show over or close it down". We said, "Go ahead and take it over, and that will create a good precedent for Labour when it gets into power to take over firms such as the Broken Hill Proprietary Company Limited ". I am convinced that the threat was made because, when I was travelling by train a little while later, a high official of the department, a man who is still there, by the way, said to me : " That is a rotten show, and we ought to take it over ". I said to him : " You do, and you will see what a Labour government will do when it gets into power". This sort of thing explains why thousands of skilled workers are drifting from New South Wales to Melbourne. In New South Wales, there are 200 small manufacturers willing to assist in the war effort. Although New South Wales contributes 40 per cent, of the revenue for war purposes, manufacturers there are not given a fair share of war contracts. There is now in power in New South Wales a government willing and anxious to co-operate with the Commonwealth in every way. It has taken over the shipbuilding programme, appointed a committee for post-war planning, and a committee to investigate substitute fuels, &c. That Government cannot understand why something is not done to break the Melbourne monopoly. I shall continue to protest so long as attempts are made to sabotage the war effort, and to deprive men in New South Wales of employment. A section of the workers in the Clyde Engineering Company Limited is threatened with unemployment tomorrow, and urgent action is called for. 183 BV8 Melbourne 0 0 CALWELL, Arthur Mr CALWELL .- I desire to draw attention to an organization known as the Special Security Police which was formed, I understand, by theDepartment of the 'Army, and placed under the control of Colonel Lloyd. I believe that Colonel Lloyd is now second in command to Colonel Jones, and, to use a colloquialism, is in pickle for Colonel Jones's job as head of the Commonwealth Police Force when that officer retires next year. The Army should not be allowed to encroach on a civil department, and the Commonwealth police should continue to be controlled by the Attorney-General's Department. I suggest that Colonel Lloyd should be removed from his present position, and sent back to the Army. I understand that he is a public servant, but he is the man whom the Army authorities desired to control the Commonwealth Police Force. The Army has been anxious to obtain control of this branch for a leng time. It is antipathetic to every democratic principle that the work of the police force should be in any way influenced by the Army. I desire also toask the Minister for the Army (Mr. Forde) to investigate the prosecution launched in Sydney about a fortnight ago against two universal trainees who refused to he inoculated. I have had some correspondence with the Minister on this subject and I am not the only one who has addressed him on the matter. I have suggested in this House that the Australian Army Regulations should be amended in order to bring them into line with the provisions of the British Army Act, under which inoculation is voluntary. The two universal trainees referred to were prosecuted and fined for refusing to be inoculated. I ask the Minister to make available the recommendations of the court-martial which tried these men in order that honorable members and the public generally may understand what the court martial thought of the proceedings. I have been told that one man named Adkins died as a result of a compulsory inoculation. I ask the Minister to investigate the charge with a view to an alteration of the regulations under which the Australian Military Forces function so as to prevent a similar occurrence in the future. This is a matter upon which honorable members are receiving a good deal of correspondence from interested persons. I understand that a number of trainees have called at the offices of those who are interested in this matter of voluntary inoculation and have notified them of a number of instances, which they vouch for, which show that inoculation has had detrimental affects. These two matters are of urgent public importance, and I hope that the Ministers concerned will treat them as such and take appropriate action at the earliest possible moment. 184 DTN Barton ALP Attorney-General 1 0 EVATT, Herbert Vere Dr EVATT . - The facts associated with the first question mentioned by the honorable member for Melbourne (Mr. Calwell) are not fully known to me, but one aspect of the matter was mentioned to me yesterday. My department and the Solicitor-General have been greatly concerned at complaints affecting " Field Security Police " - which is a force under the exclusive jurisdiction of the Department of the Army. The view taken in my department is that, in regard to entries and searches - and there have been entries into homes in Australia for the purpose of search and seizure, especially in Queensland - so long as there is no actual state of war here no home should be entered except at the direction of the civil power. That is a principle which I consider should be recognized, and accordingly I am approaching my colleague the Minister for the Army (Mr. Forde) and have asked the Solicitor-General and the heads of the various departments to co-ordinate the work of security and of the police according to a plan which will give the Army authorities jurisdiction over military matters, and leave to the civil authorities the investigation and punishment of crime. I hope that the plan will bo secured. As to the officers concerned, I do not think that the honorable member stated the whole of the facts. I am not in a position to do so to-night, but I am anxious that the civil authorities and the military authorities shall have jurisdiction in their own spheres. 184 KLL Hindmarsh ALP Minister for Munitions 1 0 MAKIN, Norman Mr MAKIN . - Last night, and again to-night, the honorable member for Reid (Mr. Morgan) has expressed his grave concern in regard to the Clyde Engineering Company Limited, which has been engaged in the manufacture of collapsible boats, retrenching a number of men to-morrow because of the fact that certain orders which that firm had have been almost fulfilled, and that orders for additional collapsible boats have been given to another firm.. I fully appreciate the feelings of the honorable member in this matter, and have to-day indicated to my department that I regard it seriously. I am not prepared to allow any industrial corporation, of whatever size or influence, to gain a monopoly in any matter associated with production for defence purposes. The work must be distributed fairly. All people who are capable of rendering service by manufacturing these articles are to be given an equal opportunity to share in the work that is available. The honorable member for Reid can rest assured that I shall exercise my powers to the full with a view to seeing that a fair distribution of this and other work will be made. I hope that the action taken will be the means of meeting the situation to which the honorable member has referred. 185 JVA 0 0 MORGAN, Charles Mr Morgan - Will there be sufficient work to keep these men going? 185 KLL 0 0 MAKIN, Norman Mr MAKIN - I shall repeat my views on this subject, and I hope that before the House adjourns to-morrow I shall be able to indicate that action which will satisfy the honorable member has been taken. I take this opportunity to reply to a question raised by the honorable member for Grey (Mr. Badman) relating to Bren gun carriers. The honorable member asked whether it was true that there was a proposal to hand over to Ford Motors Limited the right to co-ordinate the whole of the work in regard to Bren gun carriers in Australia. I indicated earlier to-day that that company did possess the right - a right given to it by the previous Government - to coordinate the work in connexion with Bren gun carriers in New South Wales, which was one-fifth of the total contract, but that in three other States the work was under the direction of the Board of Area Management. Since I answered that question this afternoon, it has been revealed to me that there is some foundation for the question submitted by the honorable member for Grey. It was proposed that the Board of Area Management in Victoria would consider tomorrow some suggestion along thelines indicated. I am astounded to think that I was not consulted, but this evening I issued a firm instruction that the matter must not be proceeded with without reference to me. In the meantime, I shall certainly require a full explanation of the position, and shall review the effects of the proposal upon those who were previously engaged upon the work. The greater part of the work in Victoria has been undertaken by garages, whose normal business substantially declined as the result of certain restrictions that had been rendered necessary by the national emergency. I assure them that their right to enjoy a share of the work in future will not be prejudiced. 185 A48 Macquarie ALP Treasurer 1 0 CHIFLEY, Ben Mr CHIFLEY . - in reply- I shall ask the Minister for the Army (Mr. Forde) to investigate the matters of army administration to which the honorable member for Melbourne (Mr. Calwell) referred. 185 BV8 0 0 CALWELL, Arthur Mr Calwell - And supply me with a report? Mr.CHIFLEY.- Yes. Question resolved in the affirmative. 185 papers The following papers were presented : - Sugar Agreement - Tenth Annual Report of the Fruit Industry Sugar Concession Committee, for year ended 31st August, 1941. Lands Acquisition Act - Land acquired for Defence purposes - Bega, New South Wales. Laura, South Australia. 185 23:22:00 House adjourned at 11.22 p.m. 185 ANSWERS TO QUESTIONS The following answers to questions were circulated: - 185 185 BV8 0 0 CALWELL, Arthur Mr Calwell l asked the Prime Minister, upon notice - Is it a fact that the Department of Supply and Development has had to cancel an order with an Australian firm for the manufacture of motor engines, required for war purposes, because Australian Consolidated Industries Limited threatened action under the Motor Vehicles Agreement Act? Does the Government intend to take any further action in regard to the establishment of the industry? Mr.Curtin. - The answers to the honorable member's questions are as follows : - No such order has been placed or cancelled for any reason. The Department of Munitions some time ago had under consideration the manufacture of Army trucks in Australia and manufacturing interests were consulted with a view to pooling resources from North America and in Australia. The previous Government decided to take no action because of lease-lend developments and the large engine programme in hand for aircraft and shipbuilding. This present Government has not considered the matter. Villa wood Explosives Factories. 186 JVA 0 0 MORGAN, Charles Mr Morgan asked the Minister for Munitions, upon notice - On what basis and at what remuneration is Imperial Chemical Industries of Australia and New Zealand Limited associated in the control and management of the group of Government explosives factories in course of construction at Villawood? Was any formal agreement entered into between the company and the former Government? If so, will the Minister lay the agreement on the table of the House? If no agreement is in existence, will the Government place the concern under full Government control, independent of any vested interests? Has the construction of these factories been held up for some time because of faulty planning or other causes? If so, who was responsible? Who is responsible for the engagement of employees at these works? Will he take steps to ensure that the Commonwealth Employment Bureau, Sydney, is utilized for this purpose? 186 KLL ALP 1 0 MAKIN, Norman Mr Makin n. - The answers to the honorable member's questions are as follows : - Imperial Chemical Industries Limited of Australia and New Zealand will not be associated in any respect with the control and management of the Villawood explosives factories. No agreement for such purposes has been entered into. 3.The Villawood explosives factory is to be entirely operated and managed by the Board of Factory Administration of the Department of Munitions, the members of which are permanent officers of the Commonwealth. No. The Board of Factory Administration of the Department of Munitions. The Commonwealth Employment Bureau in Sydney has been established in co-operation with the Department of Munitions primarily for the purposes of supplying employees to the Government factories, hence it follows that the bureau will bo utilized for the purpose indicated. 186 186 JNX 0 0 BARNARD, Herbert Mr Barnard d asked the Minister representing the Minister for the Interior, upon notice - What was the number of applicants on the waiting list for houses in Canberra at the 30th September, 1941? What was the number of new residences completed during the financial year ended the 30th June last? How many houses are at present under construction, and when is it expected that these will be completed? 186 L07 ALP 1 0 LAZZARINI, Hubert Mr Lazzarini - The Minister for the Interior has supplied the following answers : - 321. 230. 58 (including five in the Royal Military College area and two for Patrolmen outside the city area). The completion of 23 is expected by the end of November, 22 in December, and 13 in April, 194,2. Munitions Production: Employment. 186 KLL ALP 1 0 MAKIN, Norman Mr Makin n. - Yesterday the honorable member for Fawkner (Mr. Holt) asked, without notice, whether it was a fact that, as alleged by the general secretary of the Arms, Explosives and Munitions Workers' Union, men were leaving munitions works to work in private establishments because of the more favorable wage rates and conditions operating there; was it a fact that at one important annexe in Victoria the number of shifts has been reduced from three to two per day on account of the departure of employees from that particular annexe; whether these departures have a serious effect on the munitions production programme, and whether the Minister was in a position to announce what action the Government proposed to take to restrict such departures. The first part of the question doubtless refers to the failure of the regulations to set effective maximum rates. However, I have no knowledge that men leave munitions establishments for that reason. Some prefer ordinary hours plus overtime to shift work. Regarding the annexe, if the honorable member would indicate the particular one to which he refers, I could be more specific, but generally variations in shifts are inevitable to some extent for technical reasons, and in all probability the circumstances outlined have no serious effect on production. 186 186 009MC 0 0 HOLT, Harold Mr Holt t asked the Minister for Defence Co-ordination, upon notice - In respect of the Royal Australian Navy, the Australian Imperial Force and the Royal Australian Air Force, since the outbreak of war what are the numbers of each service (i) killed, (ii) wounded, and (iii) made prisoners of war? 187 009FQ ALP 1 0 CURTIN, John Mr Curtin - The answer to the honorable member's question is as follows : - 187 187 JVA 0 0 MORGAN, Charles Mr Morgan n asked the Minister for the Army, upon notice - Who comprise the Board of Business Admin istration ? Are any members thereof associated directly or indirectly with any financial, commercial or industrial concerns having business relations with the Government or government contractors? What salaries are paid to the respective members ? Do any of the members hold any other government appointments; if so, what is the nature of same and the salary payable? What are the exact functions of the Board of Business Administration? 187 F4U ALP 1 0 FORDE, Francis Michael Mr Forde - The answers to the honorable member's questions are as follows : - The membership of the Board of Business Administration is - Right Honorable Sir George Pearce, K.C.V.O., chairman; F. W. Spry; Norman Myer; A. J. L. Wilson; H. F. Richardson; H. G. Brain, co-opted member for Navy matters; A. D. J. Forster, co-opted member for Army matters; and W. Sydney Jones, co-opted member for Air matters. Yes, but the letting of contracts, allotment of orders, or determination of source of supply is not a function of the board. Sir George Pearce receives a salary of £500 per annum as chairman of the board. Others do not receive salary as members of the board. Sir George Pearce, as a member of the Commonwealth Grants Commission, receives a salary of £200 per annum and a fee of £5 5s. for each day on which he attends a sitting of the commission. ' Mr. A. J. L. Wilson, who is a permanent officer of the Department of Defence Co-ordination, receives a salary of £1.316per annum as assistant secretary(sup- plies and business matters). Messrs. Brain. Forster and Sydney Jones hold office as busi ness members of the Service Boards of the Departments of Navy, Army and Air respectively. Such appointments are honorary. The other members do not hold any other government appointments. The functions of the Board of Business Administration are set out in Regulation 0, National Security (Board of Business Administration) Regulations as under - The powers and functions of the Board of Business Administration shall be as follows: - To advise concerning expenditure or proposed expenditure for any purpose connected with the defence of the Commonwealth or the prosecution of the present war, and to report as to the nature and scope of the expenditure and the organization and methods adopted or to be adopted to achieve the purpose for which the expenditure is required, and as to the possibility of effecting economies ; To report on the progress of defence preparations in relation to arms, armament, ammunition, equipment, stores, supplies and materials, and the effectiveness of the organization and methods employed in connexion with such preparations; To report generally on the business organization and administration of the departments with a view to promoting efficiency and economy; To provide for such inspections as the board considers necessary to enable it to ascertain directly the situation in regard to matters in respect of which the board is required to advise or report, and to ensure that the administration of the departments is being carried out economically and efficiently; To investigate and report on any matters referred to the board by the Department of Defence Coordination or any of the departments, or by the Minister administering any of those departments; and To submit reports on any matters which, in the opinion of the board, it is desirable to bring under the notice of the Minister. 187 187 JVA 0 0 MORGAN, Charles Mr Morgan n asked the Minister for Defence Co-ordination, upon notice - In view of the delay and the discouragement that has been shown to Australian inventors of new devices which would help Australia's war effort, such as the Owen tommy-gun, the Explo safety device, and the Wales differential, will he take steps to co-ordinate the work of investigating and testing Australian inventions with adequate protection against the influence of vested interests? 188 009FQ ALP 1 0 CURTIN, John Mr Curtin - The answer to the honorable member's question is as follows : - The Government has recently reviewed thu organization for the consideration of inventions. There was formerly a central board to deal with inventions which had been net up in response to a demand from scientific persons. After some twelve months' experience Sir David Rivett, Chief Executive Officer of the Council for Scientific and Industrial Research and Sir George Julius, the Council for Scientific and Industrial Research representative on the board, did not favour its continuance. It was accordingly decided that the Central Inventions Board should be abolished and that the responsibility for dealing with inventions should revert to the Service departments and the Department of Munitions in respect of inventions relating to their own departments. The respective Ministers are at present examining the methods of dealing with inventions -within their departments, to ensure that they are adequately considered from both the scientific and the Service aspects. Loan Conversion Commissions. 188 A48 ALP 1 0 CHIFLEY, Ben Mr Chifley y. - On the 5th November the honorable member for "Watson (Mr. Falstein) asked the Treasurer the following question, without notice : - Is a commission of 2s. Sd. per cent, payable to brokers, bankers, and agents of persons making application for loan conversions f If such a payment is made in respect of the present loan conversion - operation, will the Commonwealth be liable to the payment of sums totalling £129,000? Are the majority of the applications lodged by an ellice , boy T Will the Minister see that this practice is immediately discontinued, and that a merely nominal commission is allowed in return for the work done by these agencies? The answer to the honorable member's question is as follows: - A commission of 5s. per cent, is payable to banks and members of stock exchanges for applications lodged by or through them to the present loan. Fur many years the Loan Council has approved of payment of this commission on Commonwealth loans and it has been regarded us payment for services rendered. I cannot say what total amount will he involved in respect of the present loan because not all applications carry the commission. No commission is payable on subscriptions lodged direct with Inscribed Stock Registries and these will, it is expected, account for a substantial part of the loan. I shall arrange for the -practice to be reviewed at the next meeting of the Loan Council.