House of Representatives
12 October 1932

13th Parliament · 1st Session

  1. House of Representatives
  2. 13th Parliament
  3. 1932

Mr. Speaker (Hon.G. H. Mackay) took the chair at 3 p.m., and read prayers.

page 1083

QUESTION

INVALID AND OLD-AGE PENSIONS

Mr MAKIN:
HINDMARSH, SOUTH AUSTRALIA

– In view ofthe buoyancy of the revenues of the Commonwealth indicated by the latest returns, will the Government cancel the reduction ofthe invalid and old-age pensions, which must otherwise take effect from tomorrow ?

Mr LYONS:
Prime Minister · WILMOT, TASMANIA · UAP

– The cancellation of the instructions for the reduction of pension payments would involve an increase in expenditure which could be maintained only by continuing excessively heavy taxation upon the people of Australia. It is not the intention of the Government to maintain this excessive taxation, unless that should be absolutely necessary.

Mr MAKIN:

– Will the Prime Minister give an undertaking that the old-age and invalid pensions which are now being reduced will be restored to their previous levelbefore the Government takes any action to reduce taxation, especially taxation on income and property?

Mr LYONS:

– The honorable member must recognize that his question relates to a matter of policy, and, therefore, cannot be answered now. The matter will be dealt with in the proper way by the Government.

page 1083

QUESTION

IMPORTATION OF GLASS

Mr NAIRN:
PERTH, WESTERN AUSTRALIA

-Can the Minister for Trade and Customs state what” decision has been arrived at by the Government with regard to the prohibition against the importation of glass, firm orders for which were placed abroad prior to the imposition of the embargo; or, alternatively, will the Government permit the entry, at the old rate of duty, of glass in transit when the embargo was imposed ?

Mr GULLETT:
Minister for Trade and Customs · HENTY, VICTORIA · UAP

– It appears that, between the time of the reduction of the duty on glass and the imposition of the embargo against imports, some twenty days later, firm orders overseas for approximately three and three-quarter million square feet of glass, most of which is at present on the water, were placed by a few hundred small firms which could not get glass in this country. The Government intends to admit one million square feet . of glass before the 1st December next, and another million square feet at the present rate of duty from time to time as the Australian market can absorb it; but as the importers have obviously made speculative purchases in excess of the reasonable requirements, it has been decided that the balance of the orders must be held in bond, and when released, must pay the rate of duty then ruling. May I add that, had it not been for the exceedingly unbusinesslike methods of the Australian Glass Company, and its lack of candour in dealing with the Customs Department, the present position would not have arisen. During my administration of the Customs Department, I have never experienced more unbusinesslike and unsatisfactory methods than those of the company in question in dealing with the department.

Mr GREGORY:
SWAN, WESTERN AUSTRALIA

– Can the Minister say whether the restrictions recently imposed on the importation of glass are in accordance with the Ottawa agreement?

Mr GULLETT:

– In all the circumstances, the action recently taken in connexion with the importation of glass is not inconsistent with the terms of the Ottawa agreement.

Mr RILEY:
COOK, NEW SOUTH WALES

– In connexion with the announcement of Glass Distributors Limited of a 25 per cent, reduction in the price of plain sheet glass following the reduction of duty, is the Minister aware [hat since the announcement, tho company has restored the price to that operating prior to the 7th September, 1932? Is the Minister aware that the company has blacklisted a’ firm which 1ms been in business SO years for failing to soil glass at the fixed price? If not, will he mako inquiries into these mutters before further supplies of glass arc allowed into the Commonwealth ?

Mr GULLETT:

– I arn not aware that what the honorable member has stated has taken place, and I shall therefore be glad if he will place his question on the notice-paper.

page 1084

QUESTION

FEDERAL MEMBERS’ ROOMS, BRISBANE AND SYDNEY

Mr GEORGE LAWSON:
BRISBANE, QUEENSLAND · FLP; ALP from 1936

– During the discussion on the Estimates, I brought under the notice of the Minister for the Interior the unsatisfactory nature of the accommodation provided for federal members in Brisbane. I should like to know now if consideration has been given to the complaints then made, and, if so, what decision has been arrived at?

Mr ARCHDALE PARKHILL:
Minister for the Interior · WARRINGAH, NEW SOUTH WALES · UAP

– The honorable member, some time’ ago, directed attention to this matter, and sought information with regard to the rent paid for members’ accommodation in Brisbane.

Mr GEORGE LAWSON:
BRISBANE, QUEENSLAND · FLP; ALP from 1936

– That is a different matter.

Mr ARCHDALE PARKHILL:

– The two matters are related. The improvement of the accommodation for federal members in Brisbane is now under consideration.

Mr BEASLEY:
WEST SYDNEY, NEW SOUTH WALES

– In view of the extensive alterations that have been made to the Commonwealth Bank building in

Sydney, will the Minister receive a deputation from federal members with the object, of giving them more accommodation in that city?

Mr ARCHDALE PARKHILL:

– The accommodation provided for federal members in the various capital cities is receiving the attention of the Government.

page 1084

QUESTION

AERIAL MAIL SERVICES

Mr WHITE:
BALACLAVA, VICTORIA

– Can the Assistant Minister say when the inter-departmental committee appointed to inquire into the aerial mail services of the Commonwealth will complete its work?

Mr FRANCIS:
Minister in charge of War Service Homes · MORETON, QUEENSLAND · UAP

– I understand that the report of the committee is expected very soon.

Mr WHITE:

– Will the Minister undertake to give the House au opportunity to read the inter-departmental report on air mail services before the debate on the item in the Estimates governing the matter takes place?

Mr FRANCIS:

– I shall bring the honorable member’s request under the notice of tho Minister for Defence.

page 1084

QUESTION

AUSTRALIAN NAVY

Visit to Tasmania

Mr HUTCHIN:
DENISON, TASMANIA

– As the hitherto annual visit of Australia’s naval vessels to Hobson’s Bay during tho Melbourne Cup week will not take place this year, can the Assistant Minister give the assurance that the fleet will as usual visit Hobart during the week of the Hobart Cup and Regatta?

Mr FRANCIS:
UAP

– The details regarding the summer cruise of the squadron have not yet been arranged, but it is customary for exercises to be carried out at Hobart during Februar.y and March, and it is probable that the programme of previous years will be again observed.

page 1084

QUESTION

EXTERNAL DEBT CONVERSION

Mr HOLLOWAY:
MELBOURNE, VICTORIA

– Will the Treasurer state whether the Government has opened up negotiations with overseas financiers with a view to arranging for the conversion of -the whole of Australia’s overseas debt, so as to bring the rate - of interest into conformity with the reduced prices obtainable for our exportable commodities? If this has not yet been done, is it intended to put the matter iu hand at au early date?

Mr LYONS:
UAP

– This matter is at present receiving the direct attention of the Resident Minister in London (Mr. Bruce). The advantages to Australia of debt conversion at a lower rate of interest have not been lost sight of.

Mr MAKIN:

– Has the Treasurer any statement to make regarding the loan conversion recently arranged by the Resident Minister in London, the terms of which were so adverse-

Mr SPEAKER:

– The honorable member may not offer comment when asking a question.

Mr MAKIN:

– Can the Treasurer inform honorable members why the terms of that conversion differed so widely from those recently obtained by the Canadian Government, and from the terms upon which the British Government has just issued £150,000,000 worth of treasury-bills, namely, 2 per cent., at par?

Mr LYONS:

– I presume that the honorable member knows that the rate of interest at which the New South Wales loan was converted was 3½ per cent.?

Mr Makin:

– At 97½.

Mr Blakeley:

-Which makes the interest over 4 per cent.

Mr LYONS:

– I am not surprised to observe that honorable members opposite are annoyed that the Government has been able to convert this loan at such advantageous rates of interest. Until the conversion had been completed, honorable members opposite did not dream that it would be possible to reduce the rate of interest from 5¾ per cent. to 3½ per cent.The rate of interest previously paid on the recently-converted New SouthWales loan was 5¾ per cent.; the rate now being paid is 3½ per cent. at 97½, the actual rate of interest being £4.1s. 2d. per cent. instead of £5 15s. per cent. The terms are much better than any one could have anticipated even three weeks ago. If only we can succeed in converting the balance of our high interest-bearing loans on anything like similar terms, the result will be satisfactory to the taxpayers of Australia.

page 1085

QUESTION

CANADIAN TRADE AGREEMENT

Butter Export

Mr WATSON:
FREMANTLE, WESTERN AUSTRALIA · IND; UAP from 1931

– Can the Acting Minister for Commerce state whether it is a fact that, under the reciprocal trade agreement between Canada and Australia, the Canadian Government has authority to determine the quantity of butter which may be imported into Canada from Australia? An Australian exporter has informed me that he received an order for a shipment of butter to Canada, but was prevented by the federal authorities, acting under instructions from Canada, from executing the order:

Mr PERKINS:
Assistant Minister for Trade and Customs · EDEN-MONARO, NEW SOUTH WALES · UAP

– I understand that a certain limitation has been imposed on the quantity of butter which may be imported into Canada from Australia, but that there is every possibility of the quantity being increased.

page 1085

QUESTION

NEWNES SHALE OIL DEPOSITS

Mr JAMES:
HUNTER, NEW SOUTH WALES

– Is the Prime Minister aware that, since the Federal Government handed over the Newnes Shale Oil undertaking to a private company, operations on the field have come to a stand-still? Can he state when the company is likely to commence work again?

Mr LYONS:
UAP

– I shall obtain the information, and make it available to the honorable member.

page 1085

QUESTION

PRESS CENSORSHIP

Mr DEIN:
LANG, NEW SOUTH WALES

– Will the AttorneyGeneral state whether anything can be done to prevent publications from conducting a campaign of misrepresentation and calumny calculated to damage Australia’s good name? If so, will he take such’ action as may be necessary to enforce the abandonment of such a campaign by that lying, scurrilous and libellous journalistic scavenger known as the Labor Daily?

Mr LATHAM:
Attorney-General · KOOYONG, VICTORIA · UAP

– The law provides a remedy for libel against individuals, but not for libel against the community. In this case, the remedy must be left to those who put the other side of the case in this chamber and elsewhere.

page 1085

QUESTION

TRADE BALANCE

Mr BERNARD CORSER:
WIDE BAY, QUEENSLAND

– Has the attention of the Minister for Trade and Customs been directed to Australia’s adverse overseas trade balance as revealed by the returns for the first two months of the present financial year? Is it the intention of the Government to attempt to arrest the drift?

Mr GULLETT:
UAP

– This question should have been addressed to the Treasurer, rather than to me. I can assure the honorable member, however, that the matter is receiving the attention of the Government.

page 1086

QUESTION

JAPAN AND TIMOR

Mr CASEY:
CORIO, VICTORIA

– Has the Minister for External Affairs anything to tell the House with regard to the reputed ambitions of Japan in connexion with the island of Timor-?

Mr LATHAM:
UAP

– I have seen the various press reports relating to this matter, and have also received advice from London of the full text of the press cable, alleged to have been sent from Canberra by a. person described as a correspondent of the Daily Herald, and is somewhat fuller than the report in the local press. So far as I can ascertain, no such person exists, and certainly no person answering to that description has discussed the matter with me, or with any responsible official. As for the statement that there is anxiety in official circles, I can only say that . it is entirely untrue, and that there is no ground why such anxiety should exist.

page 1086

QUESTION

H.M.A.S. AUSTRALIA

Mr BEASLEY:

– Has the Minister any statement to make regarding the report that naval reserve men on hoard H.M.A.S. Australia are working for nothing, and that in consequence there is trouble in the naval service?

Mr FRANCIS:
UAP

– The Naval Board has not received from the Commanding Officer of H.M.A.S. Australia any report of unrest on the vessel, nor has it reason to believe that unrest exists. The newspaper report itself states that when the Australia reached Sydney, there was happiness on board. It is.-true that on the 9th of August, 1932, before the cruiser left Sydney, a petty officer was tried by a court-martial on a charge of behaving with contempt to an officer who had corrected him when giving instruction at gun drill. The charge was proved, and disciplinary action taken.

page 1086

QUESTION

UNEMPLOYMENT RELIEF

Mr ROSEVEAR:
DALLEY, NEW SOUTH WALES

– Is it a fact that the Commonwealth Works Department has secured an allotment of £10,000 from the Commonwealth Unemployed Relief grant-for New South Wales? If so, what method is adopted in arranging for the call-up of men ; is the call-up arranged by ballot, or by priority of application? Is any preference given to men living in the locality of the particular works in hand? Will the Minister arrange for the callups to be advertised in the press as is done by the Labour Department of New South Wales?

Mr PARKHILL:
Minister for the Interior · WARRINGAH, NEW SOUTH WALES · UAP

– The course followed has been- to distribute the grant among the various State organizations, while a portion was allocated for entirely federal purposes. Preference will be given to unemployed men in the immediate locality of the works to be carried out, because the cost of transferring other men from other places, and paying for the time taken to travel to and from the works, would make it uneconomic. If the honorable member will place a question on the noticepaper, or communicate with me . by letter, “I shall be glad to take into consideration any suggestions he may make with regard to the calling up of men.

page 1086

QUESTION

WAR INDEBTEDNESS

Mr LYONS:
Prime Minister and Treasurer · Wilmot · UAP

[-3.26”. - by leave - Advice has been received from the Right Honorable S. M. Bruce, Minister without Portfolio, London, that pending the settlement of the general question of Britain’s war debt to tho United States of America, the British Government has agreed that payments due from the Commonwealth Government on the 30th September, 1932, under the funding agreement shall.be postponed. When I introduced the budget on the 1st September, I pointed out that no provision had been made for obligations arising out of the war debt to the British Government, and that if the payment of interest had to be resumed, the surplus of £12,000 would be turned into a deficit of £4,900,000. It is satisfactory to know that the first, instalment of interest has been postponed by the British

Government. The amount of interest that would have been payable in the ordinary course on the 30th September was £1,960,200 sterling, or approximately £2,450,000 in Australian currency, including exchange. The sinking fund proportion of this debt is £1,628,400 a year. The British Government had previously agreed to postpone this payment for the two years 1931-32 and1932-33 and to prolong the period of repayment of the debt by two years.

page 1087

ASSENT TO BILLS

Assent to the following bills reported-

Financial Emergency Bill 1932.

South Australia Grunt Bill 1932.

Western Australia Grant Bill 1932.

Tasmania Grant Bill 1932.

Sales Tax Assessment Bills (Nos. 1-9), 1932.

Sales Tax Bill (No.6), 1932.

page 1087

DEATH OF SIR JOHN QUICK

Mr SPEAKER (Hon G H Mackay:
LILLEY, QUEENSLAND

-I have received from Lady Quick a letter thanking the House for its resolution of sympathy in connexion with the death of Sir John Quick.

page 1087

QUESTION

PACIFIC ISLAND STEAMSHIP SERVICE

Mr MARR:
Minister for Health · PARKES, NEW SOUTH WALES · NAT; UAP from 1931

– byleave - Recently the honorable member for “West Sydney (Mr. Beasley) made certain observations concerning the inclusion of Auckland as a regular port of call for the steamship Morinda, which is employed in the subsidized service between Sydney and certain islands in the Pacific. Norfolk Island is a territory of the Commonwealth, and the Commonwealth is responsible for safeguarding the interests of its inhabitants. The arrangement has been made to meet the needs of Norfolk Island, and chiefly to enable the local growers of bananas - the staple product of the island - to takeadvantage of the favorable market which exists at Auckland, as the Australian production has increased to such an extent that it is now sufficient to satisfy practically all the requirements of the Sydney market. The produce of Norfolk Island is not subject to Commonwealth customs duties, and its disposal elsewhere than in Australia is therefore advantageous to the Australian producers. The interests of the people of the Commonwealth itself have been given, and will continue to receive, close attention in connexion with this question, and the arrangement, which is of a provisional nature, will be terminated should it be found at any time that circumstances warrant that action.

page 1087

PAPERS

The following papers were presented : -

Defence Act- Regulations amended - Statutory Rules 1932, Nos. 107, 108.

Excise Act - Regulations amended - Statutory Rules 1932. No. 105.

Immigration Act - Regulations - Statutory Rules 1932. No. 103.

Insurance Acts - Regulations amended - Statutory Rules 1932. No. 100.

Invalid and Old-age Pensions Act - Statement for 1931-32.

Nationality Act - Regulations amended - Statutory Rules 1932, No. 102.

New Guinea Act - Ordinance of 1932 - No. 18 - Maintenance Orders (Facilities for Enforcement) .

Passport Act - Regulations amended - Statutory Rules 1932, No. 101.

War Service Homes Act - Regulations amended - Statutory Rules 1932, No. 104.

page 1087

QUESTION

BUDGET 1932-33

In Committee of Supply: Consideration resumed from the 9th September (vide page 380), on motion by Mr. Lyons -

That the first item of the Estimates, under Division I. - The Parliament, namely, “The President, £1,300”, be agreed to.

Mr SCULLIN:
Yarra

.- Various aspects of the budget, particularly proposals of the Government for certain economies and cuts, were discussed during the consideration of the Financial Emergency Bill. Attention was directed to the general budgetary position, and, therefore, I do not propose to repeat to-day the arguments then advanced, beyond pointing out that the latest figures publishedby the Treasury further emphasize how unnecessary and unjust are the reductions of pensions, wages, and the maternity allowance which are to be made. The figures show that for the first three months of this financial year the revenue has considerably exceeded the estimate, there being a surplus on the quarter’s operations of £2,619,000. If that rate of increase, or anything approaching it, continues, the estimates of the Government will be a long way out. I know that there are special reasons why the first month of the financial year showed improvement, particularly on the expenditure side, because the full effect of the interest reduction was felt this year, whereas it was not felt in the first month of the preceding year. But, after making all allowances, the figures indicate clearly a marked increase in the revenue over the estimate for this financial year. Notwithstanding that there is already a surplus of over £2,600,000, the Government is proceeding with its harsh measures, and these are striking fear into the hearts of the aged and infirm throughout Australia.

My intention is to direct attention this afternoon to what is the most important problem that confronts the people and the Parliaments of Australia - how to reduce unemployment. I listened carefully to the budget speech of the Prime Minister (Mr. Lyons), and have since read it, only to find that it contains not one practical proposal for dealing effectively with unemployment. Some measure of relief has been provided by the Commonwealth Government, in conjunction with the State authorities, but only relief of a temporary character. This Government, which came into office with a definite mandate from the people, promising to provide jobs for everybody, has an overwhelming majority in both branches of the legislature, and it is reasonable to expect from it, now that it has been nearly a year in office, a comprehensive plan for dealing with the paramount problem of unemployment, the seriousness of which is increasing every year.

It. cannot be denied that Australia has faced the financial crisis courageously, and that her people have accepted severe sacrifices, and the foundations of national solvency have been laid. For this a balanced trade was essential. A favorable trade balance is of the first importance to Australia, because we are a debtor nation. I have spoken on the subject of our trade balance in every budget debate for many years. I remember the debates that took place in 1926, 1927 and 192S, when I warned the Bruce-Page Government of the calamities that would befall this country if it continued to raise loans overseas at lavish rates of interest, thereby financing the importation of goods to the detriment of the industries of Australia. I warned that Government that a day of reckoning would come. It is recorded in Hansard that I predicted that the time would undoubtedly come when the value of our exportable products would fall, and Australia would experience depression, with a consequent increase in the number of the unemployed, and an increase of taxation at a- time when the people would be unable to bear it. That prophecy has, unfortunately, come true. Now I issue another warning, and it is that unless the Government takes stock of the present position, we shall have a repetition of the past experience, with all the dangers attached to it.

On the foundation of a balanced trade and a balanced budget we must reconstruct our financial edifice, and thus absorb the great army of unemployed. A sound trade balance would afford protection to Australian industries, and balanced budgets and the employment of our workless people are interwoven subjects. The Prime Minister, in his budget speech, said -

The catastrophic fall in the prices of our exportable products caught us ill-prepared to meet the blow.

That is very true, but it is also a strong indictment of the policy pursued when the honorable member for Flinders (Mr. Bruce) was Prime Minister. During that period, lavish borrowing occurred. That caused our imports to exceed our exports, and loaded Australia with an interest burden that is now weighing it down. That reckless policy left the nation illprepared to meet the blow of falling prices. The Prime Minister (Mr. Lyons), the Attorney-General (Mr. Latham) and others declare that we cannot import more this year than last year, because we shall be limited by the amount to our credit in London. In reply, I say that these gentlemen ignore the experience of the past. We were not limited by the amount of our London funds in those years when the balance of trade was markedly against Australia. Although a good deal of the excess of imports was financed as the result of overseas borrowing, we imported goods much in excess of our London funds. To illustrate what occurred, let us take the five-year period from 1925-26 to 1929-30. The excess of imports over exports in these years was £76,000,000, and we had to provide £160,000,000 for overseas interest and services, a total of £236,000,000. Our borrowings totalled £140,000,000. That left a shortage in ‘ London of £96,000,000. It was met partially by the shipment of gold reserves to the value of £35,000,000. Thus £61,000,000 still had to be accounted for. No one can say with any degree of accuracy how that amount wa3 provided. Most of it was obtained by the investment in Australia in short-term loans of the trade moneys that had piled up here as the result of the sale of imported goods. There was thus created in Australia a false sense of security, and a mistaken idea that prosperity existed. The belief was held that the investment of these moneys represented an inflow of capital, whereas it was not genuinely such. That was disclosed when a critical period in the history of Australia had to be faced, and it was found that this money was a great menace to our credit, and impeded our efforts to restore the financial affairs of the Commonwealth and the States. So I warn the Government that it overlooks the facts of history when it contends that it is not possible to import more goods than can be provided for by means of London funds. What was done in the past may be done again. Probably there never has been a time when it could be done more successfully than at present, because there is such an abundance of cheap money available in England. It would be an easy matter for manufacturers and traders overseas to take advantage of lower duties to build up their trade, by sending their goods to Australia and awaiting a more favorable opportunity for the return of their money, meanwhile investing it in our 4 per cent, stock and raising their requirements in London at a very much cheaper rate. Honorable members must’ have noticed that the British Government is embarking upon a conversion loan of £150,000,000 at 2 per cent, at par for a period corresponding to that at which our conversion loan in London was floated recently for an interest return of 4 per cent. The Prime Minister has very rightly said that the rate of interest at which our loan waa floated was considerably lower than was anticipated a little while ago; but the indications are that a large amount of very cheap money is available in London to-day. Unfortunately, however, that ia not necessarily a sign of prosperity. la reality, this cheap money is available, because there is no outlet for it in other forms of investment, on account of a lack of enterprise in industry. It is a good thing that money should be cheap, and I hope that it will remain so; but I should feel more satisfied if its present cheapness were the result of general allround prosperity instead of being due to an absence of prosperity in practically all the industries of every country in the world.

On the question of the balance of trade, I draw attention to the fact that in the first three months of the last financial year the credit balance represented by the excess of exports over imports amounted to £2,500,000. We have accurate figures for only the first two months of this year, and they disclose an adverse balance of £3,000,000.

Mr PROWSE:
FORREST, WESTERN AUSTRALIA

– What was the relative customs revenue in each period?

Mr SCULLIN:

– Revenue cannot be accepted as an accurate guide for any one month, but it is a very good guide over a period of three dr six months. The increase iri revenue is relative to the increases that have occurred in the imports. The revenue figures for September maintained the same high rate that characterized the imports for July and August. But we are now in the exporting season. The wool that, is being and is to be shipped will have a marked effect upon our exports for the balance of this calendar year, and for a period in the new year. Consequently, I anticipate a very large increase in the value of our exports for, the month of September. Although the figures are not available, a very fair estimate may be made of the imports for that month. I venture the opinion that, at the very best, the credit balance for September will not be more than £500,000. Consequently, the adverse balance for the first three months will be £2,500,000, compared with a favorable balance of £2,500,000 for the first three months of last financial year. Consequently, over that period, we are to-day £5,000,000 worse off than we were twelve months ago. That is a serious position for Australia to occupy, and it cannot be viewed with equanimity by any person.

Mr Prowse:

– Was not the export of gold responsible to a large extent for the favorable “balance to which the honorable gentleman has referred?

Mr SCULLIN:

– The Statistician includes in his figures only the new gold that has been won in the year. In that respect, it is as much merchandise as wheat. The gold reserve shipped in the period to which I have referred amounted to £35,000,000. I have not included it in my calculations. All my references to credit balances have eliminated any gold reserve exported. I do not suggest that the adverse trade balance will continue every month. That, however, is not sufficient. If we are to be a solvent nation, we must have an excess of exports over imports of very nearly £3,000,000 a month. We shall not, in the future, have gold reserves with which to meet extraordinary circumstances, and if wc again experience anything like the position that confronted us two years ago, we shall become insolvent, and unable to carry on. There is not the slightest doubt that, notwithstanding the amount of cheap money that is available in England today, we should not have obtained anything like the terms on which the last, loan was floated had we not had a favorable trade balance last year. The hardheaded investor in Great Britain knows that interest on overseas loans can bc paid only with goods. Last year we exported sufficient to pay for all our imports, to meet all our interest and other charges, and to have a balance of over £S,000,000. That, and that only, was the factor that convinced the investors overseas. No matter how cheap money may be in England, if we cannot prove to the investors there that we are going to maintain our trade balance on the lines pursued last year, and have an excess of exports over imports our credit will slump as it did before and we shall be unable to convert our indebtedness overseas on the favorable terms that we all hope for.

The action taken by my Government was the only effective one possible. Unfortunately, it has been largely reversed by this Government, which has removed the prohibitions that were placed on specially selected items, luxury goods that could be done without, or that could be satisfactorily produced here, such as potted meats, biscuits, cheese, ham, butter and fruits. The alarming adverse trade balance to which I have referred sot in almost immediately when this Government altered the policy instituted by my Administration, and if it continues it will be extremely dangerous. Will the Government pay heed to past experience or disregard those warnings, just as did the Government led by Mr. Bruce, as a result of which Australia drifted to the brink of bankruptcy? Its financial solvency was endangered, its industries retarded, and unemployment increased by tens of thousands?

It has been suggested that a higher rate of exchange would check the flood of imports when the balance of trade is adverse. If the rate of exchange is made so high as to effectively check all imports, necessary and unnecessary, it will have detrimental results to the country. Such a rate would add to the cost of the raw materials that we import, and, consequently, to the cost of production. When considering the prohibition of goods as a means of restoring our trade balance, my Government specially selected those items that we could do without or could produce here, so that the whole of our limited funds in London could be used to pay for the importation of goods definitely required by Australia. That is a most important thing to consider.

I notice that some sections .of the press suggest that we should ask the banks to co-operate in rationing the amount of exchange or overseas credit, claiming that that method- has proved most successful. I say that it has not been at all successful. There was the outside market upon which traders who wanted to import goods could and did operate, so nullifying the influence of the banks. So alarming was the position at one time that my Government seriously considered taking complete control of the importation, of. goods to Australia, under the powers conferred upon it by the Customs Act, which demonstrates that the attempts of the banks to ration exchange were feeble and ineffective. The only effective method is the prohibition of selected items.

It is well known that the Labour Government rectified our adverse trade balance, straightened out the financial position and carried through a successful conversion loan which brought the rate of interest down to 4 per cent, at a time when the return on such securities was as high as from 8 to 10 per cent, in Australia, and from 5-J per cent, to 6 per cent, in London. At the time that my government met defeat it was preparing to convert Australia’s overseas indebtedness, and previously it had advanced proposals to create employment in Australia, which, unfortunately, were defeated in another place.

There is no hope of restoring prosperity in Australia until we take drastic and progressive steps to solve the unemployment problem. While we have 400,000 men out of work, it is foolish to talk optimistically about rounding the corner, balancing trade, the budget, >*r anything else. We must first make possible the balancing of private budgets in the homes of the people. In his budget speech, the Prime Minister was very optimistic concerning the prices of stocks and shares. I ask the right honorable gentleman to place alongside those prices the tragic figures of unemployment, which are today higher than they have ever been in the history of Australia. The latest figures supplied by the Commonwealth Statistician are a record for this country.

Mr White:

– The current quarter will disclose a lower percentage of unemployment, t

Mr SCULLIN:

-I hope that the honorable member is right. At the same time, I recall press reports indicating that since this Government changed our tariff policy, hundreds of employees have been dismissed from factories. When my Government appealed to private employers to employ additional men, the answer invariably was, “ There is no market for the goods we produce.” The market was lacking because 30 per .cent, of the working population was unemployed, they with their families repre senting in the aggregate 1,000,000 persons. Those people were on a bare sustenance.

Mr Beasley:

– In addition, there were those who were rationed.

Mr SCULLIN:

– Yes; many were working only half-time. The result was that the market for our products waa greatly diminished. Until that market is restored in some measure, there can be no hope of private employers putting on more hands.

There is nothing wrong with Australia. It is rich in natural resources, in machinery, and in man power,, and is capable of producing iii abundance all the requirements of mankind. The lack of money is the only thing that stands in the way of again setting the wheels of industry in motion. Money is only a relative term. There is no doubt that through the medium of bank advances it can be provided for necessary works. If that is done when the price of goods is normal, and the effect is a rise in prices, there must be a subsequent deflation which cancels any benefit. But the same argument cannot apply in the present circumstances, when prices are low, and have been falling for the last few years. Bank advances should be made, under strict supervision and with certain limitations, to provide money for public works, and to finance private industry. Nobody will deny that there is much useful work to be done in Australia, and if ever there was a time when that work should be undertaken, it is now. There are many works which would lead to increased production and prosperity if carried out promptly by State governments. Sewerage undertakings could also be put in hand, which would lead to the improvement of the health of the community. A splendid list of public works has been supplied year after year to various conferences, but the banks would not make the advances necessary for them to be put in hand.

I suggest that this Government, which has control of both Houses of the Parliament and a mandate from the people, should seek the co-operation of the State Governments, and other public bodies, together with that of the Commonwealth Bank, in the formulation of an adequate works policy. This would be a step towards the solution of our unemployment problem. If it does so, I assure.it that it will have the hearty co-operation of honorable members who sit on this side of the chamber. I am not putting forward any wildcat financial scheme. I do not believe that we can reach our hands into the clouds anddraw down millions of banknotes, to be scattered broadly. But there is great need to-day for a liberal banking policy by which the banks would make advances to governments for public works. If such a policy were adopted, large bodies of men could be employed immediately, and a wage fund would at once be created out of which the commodities which private enterprise manufactures could be purchased. I know of no other way by which the wheels of industry can be started. Unless the wheels of industry are soon set in motion, we shall sink further and further into the slough of despond. This will cause one of two situations to arise in this country: either we shall bring into being a discontented body of men, on the verge of starvation, who will be prepared to revolt, or, worse still, we shall build up a body of men who will be quite content with the dole, and will lose their morale and their manhood for evermore. Those are the alternatives to the solution of our unemployment problem.

I was convinced by my experiences while occupying the responsible position of Prime Minister of Australia, and since then, that less than half the depression from which we are suffering is due to outside conditions. It is true that Australia was struck a staggering blow when the fall in the prices of her exportable products reduced the national income so disastrously.

Mr Hill:

– Those prices are still falling.

Mr SCULLIN:

– Unless this fall in prices is arrested we shall have to cope not only with the unemployment of factory and workshop employees, but also with that of the settlers on the lands of Australia. The depression has been seriously accentuated by those in control of finance in Australia. On the shoulders of the bankers the greatest responsibility rests. I do not say this with any desire to be abusive. The private banking companies are probably neither better nor worse than other private companies whose aim is the making of profits, but the banking companies have it in their power to withhold or release the life-blood of industry, which is credit, and as they use this power, Australia must prosper or fail. My indictment of the private banking institutions is that when times were prosperous, and the men in control of our factories and workshops and on our farms were doing well and obtaining good prices, the banks were prepared to be lavish in their advances - in some cases they oven suggested where certain enterprises should be expanded - but as soon as the slightest danger arose of their not obtaining the repayment of their advances, they rushed to cover, and called in the overdrafts granted to some of the soundest men in the community.

Honorable members opposite are interjecting, but these defenders of the banks do not want to hear the facts. Yet if they would make an investigation for themselves, and interview farmers, pastoralists and business men, they would find thatat the first suggestion of trouble in Australia, and when the first signs of depression appeared on the horizon, the banks immediately called upon their clients to reduce their overdrafts. It did not matter how sound a man was, or what margin of security he had, he was obliged to reduce his overdraft. Some of the honorable gentlemen opposite who are interjecting have intelligence enough to know that one of the worst features which has crept into banking practice in Australia is the lending of money on overdraft which should be lent on long-term advances. As a matter of fact, many people who obtained overdrafts from the banks thought that they were being granted long-term advances, and that the conditions of their advances would not be altered so long as their assets remained sound. Acting under this impression these people improved their farms, added to the equipment of their businesses, and. in the case of some working men, erected homes for themselves; but they discovered, to theirundoing, that their credit could be withdrawn in a night. The sending out of one letter was sufficient.

Mr.White. - An overdraft is usually a long-term advance.

Mr SCULLIN:

– The honorable member is fortunate if he has not discovered that it can be a very short-term advance. In many cases overdrafts have been operated on the daily balance, and a man could be required almost at a moment’s notice to repay his advance.

Mr White:

– That would depend upon his security.

Mr SCULLIN:

– I am directing the attention of the honorable member to the fact that, in the case of many advances, the margin of security has had nothing whatever to do with the withdrawal. As soon as the banks became fearful that their financial position might be somewhat unpaired, or that their balance might be reduced, they rushed to cover. Though they expanded credit very greatly in boom times, and so helped to cause the boom, they have now accentuated the depression by withdrawing credit.

A great deal of suffering could have been avoided in Australia had the financial proposals of my Government not been rejected by the Senate. Had we been able to carry through our banking bills, and later on to make the proposed fiduciary note issue, our position would have been very much better than it is.

Mr E F HARRISON:
BENDIGO, VICTORIA · UAP

– But what about those cablegrams?

Mr SCULLIN:

– They have, nothing whatever to do with the position. The honorable member’s interjection was intended to be impudent, but it will help my argument.

Mr White:

– He intended to be helpful.

Mr SCULLIN:

– That is not so. The honorable gentleman referred to a cablegram which I sent from abroad to the members of my Government on the subject of inflation. I stand by every word in that message. I said that I would not approve of a policy of advances by the banks for public works if price levels were normal. But they are not normal to-day. They are down to such a low level that there is not an economist of any repute in the world who has not advocated the lifting of price levels in order to remedy our trouble. The making of advances for public works by ihe banks instead of from savings when times are normal, leads to increases in price levels, and so to inflation, which eventually has to be paid for by deflation. We are suffering to-day because the war was fought on that principle. In a period of inflation, when prices were sky-high, people entered into contracts which to-day they find it impossible to carry out. Debtor nations, as well as individual debtors, are to-day suffering in the period of deflation which is following a period of serious inflation. A continued policy of inflation is bad, but a continued policy of deflation is worse. When -I caine back from abroad my Government suggested the adoption of a financial policy different from the wild inflation policy pursued during the war years. We proposed that the Commonwealth and private banks should advance credits to enable nien to be employed. We realized that if the money were put through the hands of working men it would undoubtedly lead to a rise in price levels; but we laid it down that price levels should not be permitted to rise beyond the 1929 level. One of the latest books written on this subject - I refer to a volume by Sir Arthur Salter, published this.y.ear - contains the statement, on page 72, that “what Australia wants is a rise in prices to the 1929 level “.

Mr Hutchin:

– How can you increase price levels without increasing costs?

Mr SCULLIN:

– Costs would be increased. But the burden would be distributed more equitably between debtor and creditor than it is to-day. At present, the farmer has to give more than two bags of wheat to meet a liability which formerly could be discharged with one bag. He cannot continue to do that.

Mr White:

– How can we raise external prices?

Mr SCULLIN:

– We cannot do so ; but we can increase internal prices, and as the bulk of the farmers’ produce i3 sold in Australia, he can obtain the benefit of an increase of internal prices. The members of the Country party contend that the primary producers would benefit by an increase in the rate of exchange; but no honorable member will deny that an increase in the rate of exchange will result in devaluation of our currency which is simply another form of inflation. I am not quarrelling with those who advocate an increase in the exchange rate, but I contend that they are proposing to start at the wrong end. Instead of adopting such a policy, we should prevent deflation.We have had a long experience of deflation, and I am surprised to find that there are more than twoor three members of this committee who are prepared to champion such a policy. We know that there are some in this community who are so hard-headed and hard-hearted that they regard this subject solely from the economic view-point, and are prepared to eliminate entirely humane considerations. Studying this subject from the economic view-point alone, in a hardhearted and businesslike, but absolutely inhuman, way, we mightsay that price’s and wages should continue to come down until the lowest possible level was reached, and we could successfully compete with the lowest wage countries in the world. But even if that occurred, there is one section of the community whose income would not come down, but would go higher and higher. I refer to the rentiers, those who live by clipping off interest coupons, without working, enjoying an income contributed by another struggling, section of thecommunity.We have only to consider the conflict that is going on in Great Britain; which is a typical capitalist country - not between employer and employee, but between the rentier and the entrepreneur- the lender and the borrower of money. London is the financial centre of the world and its views are voiced by the press of that city; but those conducting factories and other industrial undertakings in the provinces are asking that the burden of interest should be reduced, because prices are down so low that they are compelled to dismiss men by the thousand. A similar struggle is proceeding elsewhere throughout the world. There is only one way in which an adjustment can be made, and not much can be done by legislation.We are doing something in a small way by reducing interest and proclaiming moratoriums; but we have still to strive to get price levels up to a figure approaching those whichobtained when the bulk of these debts were incurred. The price levels of 1929 have been selected as those which we should seek to restore, because, although prices came down after the war, and subsequently increased a little, they remained nearly stable from 1924 to 1929. For a period of five years, the wholesale price levels in Australia, which are a better guide than the retail price levels, though the same remark applies to them, remained fairly stable. During that five years, many contracts were entered into by returned soldiers who were purchasing, homes from theWar Service Homes Department, by working men who were purchasing homes through building societies and State savings banks, and by farmers in connexion with the purchase of land. Notonly were there thesenew contracts, but many old contracts in the form of mortgage’s were renewed. The interest burden incurred during that period when the price levels were higher than now, falls more heavily on the borrower today. I do not advocate a policy that would bring us back to the price levels of the war period. . What has followed ? We have had a period of deflation, which has reduced the prices of commodities within the Commonwealth, and also nominal and real wages. Many workingmen and others who were buying their homes have had to abandon them, and others will be forced to do the same. Although the official figures show that there has been a reduction in rent, there has been no real reduction in rent in the case of those who have entered into, say, a 30-year contract. We should arrest deflation, and endeavour to secure stabilization. Some economists call it reflation. The policy of cheapness of which I have spoken will not getus out of our difficulties, even if we were prepared to accept the ruin that would follow in the wake of deflation, when the farmer would have to sell his holding, the working man give up his home, and the business man go through the insolvency court. I believe that if we got right down to the bottom - there must be a bottom somewhere - when a rise in prices took place throughout the world, there would be wonderful scope for the profiteer, such as there was during the war. To get down to the bottom would be to put millions of pounds into the pockets of the profiteers, who would derive all the benefits at the expense of other sections.

Mr Maxwell:

– Can the right honorable the Leader of the Opposition say by what artificial means prices can be fixed at a certain level?

Mr SCULLIN:

– Bank advances can be made to finance public works. We should regulate’ the advances to check a rise in prices; but that power must be placed in the right hands. Sir Arthur Salter in his work entitled Recovery, which has been published within the last three or four months, states, on page 72, that -

What the world needs now is an increase in the general level of gold prices - until it reaches the level of 1029.

That is generally agreed upon, but some honorable members will say that that means world prices. We should encourage every movement and do everything possible by international conferences and other methods to increase world prices. If that is not done, there are many economists and financiers who consider that a number of the debtor nations cannot meet their obligations and must default. Unless prices are increased, the creditor nations, who are already finding that they cannot get their interest charges repaid, will also suffer. The creditor nations are not prepared to receive goods from the debtor nations, because their own people are already out of work. Therefore, they are unable to trade. What is .true as between debtor and creditor in the case of individuals is also true as between debtor and creditor nations. I do not suggest that we in Australia can take any action that will affect the world position, except as a contribution to it as from one nation among 50. But Australia cannot remain idle, awaiting the outcome of international conferences. We can remove one-half of the depression from Australia by attending to our own conditions in the direction of increasing internal price levels.

Mr Prowse:

– Is not the disparity in the prices of commodities in Australia a great disadvantage to our progress?

Mr SCULLIN:

– It is a disadvantage, but I am pointing out that the advantages outweigh the disadvantages. The” dis advantage of that disparity is the very disadvantage that the members of the Country party wish to bring about by having an arbitrary rise in the exchange rate without any accompanying advantages.

Mr Hill:

– We do not stand for an arbitrary rise in the exchange rate.

Mr SCULLIN:

– -That is the attitude that the Country party has adopted.

Mr Hill:

– I have never adopted it.

Mr SCULLIN:

– I am referring, not to the honorable member individually, but to the members of the Country party generally. On the subject of the exchange rate, the leader of that party made, in this House, a speech that was somewhat different from one which he had made in the country a few weeks previously. I am not quarrelling with him, but merely pointing out that he is starting at the wrong end. There is no doubt that if wages and prices reached the 1929 level, or something approaching it, the lot of many of our wageearners, farmers and others, would be a much happier one. It has been said by some critics, in articles which have appeared in the press in particular, that this experiment was tried by the Federal Reserve Bank of the United States of America a few years ago; when it pumped credit into the open market in order to increase the level of commodity prices, but failed in its object. That is true, but it has been admitted, particularly by those in control in the United States of America to-day, that the bank started in the wrong way. It pumped credit into the stock market, and created a demand for stocks and shares, which really accentuated the problem of unemployment. Money was attracted from other countries into the stock market. When that money, together with many short-term loans, was eventually withdrawn it became a menace instead of an advantage. That was a proposition entirely different from the making of credit available to governments al the outset to provide for public works, because every fi of money expended in that Way would be pumped into the purchasing power of the working man. It would be spent, not in buying stocks and shares on the exchange, but in buying commodities, and in creating a buying confidence which is non-existent to-day.

One of the causes of the present depression is the withholding of money by people who have it to spend, in the hope of gaining some later advantage. If we can arrest the downward fall - and the arresting of deflation is not inflation, but stabilizations- and restore confidence in buying, the business men will restock their shelves, the wheels of industry will once more move, and the farmers will obtain better prices for their products. We can stop the downward tendency by making money available for public works for a period of one or two years. If we re-employ 50,000 or 60,000 men on public works on which formerly 100,000 men were employed, they will at once require boots, clothes and foodstuffs. They have reached zero, and once they are employed on public works a similar number of men will be given employment by private enterprise, so long as the banks are prepared to make finance available for that purpose. I do not want any honorable member to make cheap sneers at me by saying that if this proposal is so easv why stop at an expenditure of £20,000,000 or £30,000,000; why not make it £200,000,000 or £300,000.000? That would be the reductio ad absurdum method of reasoning which is supposed to be logical, but is nearly always nonsense. We have to set a limit which is sound and practicable. Wemust predetermine levels beyond which prices should not be allowed to rise.

Mr Maxwell:

– Would that apply internally or externally?

Mr SCULLIN:

– It would apply internally, because we could not affect prices externally by such means.

Mr Maxwell:

– Is there no relation between internal and external price levels ?

Mr SCULLIN:

– There is a relation, which is expressed in the exchange rate. 1 do not think that the advancing of credits to governments by banks to employ 50,000 or 60,000 people would do much more than arrest the downward fall of prices. It might cause a slight upward movement; but, if it did that, every care should be taken by those in control to ensure that when it approached anything like a predetermined price level, it should be arrested ; otherwise we shall have inflation, which is undesirable. Honorable members who contend that this cannot be done may cite other countries such as Germany, France, or Russia, in which the workers under an inflation system have carried home their week’s wages in a carpet bag. Let me say that those countries made no real attempt to control price levels, nor did they have any capacity to control them, because they were largely in a bankrupt condition. We have to compare the advantages with the disadvantages. It should not be necessary for me to stress to honorable members who come into contact with the unemployed the great disadvantage of unemployment from a national as well as a humane stand-point. That disadvantage is so colossal that it needs no stressing, and anything that we can do to alleviate it should be done, even if there are certain disadvantages, and that I do not dispute.

I shall now contrast the suggestion of the Country party with the proposal I have put forward. The members of the Country party here, in another place, and outside particularly, have, so far as one can gather from their general statements - and I have no wish to misrepresent them - stressed the need for a rise in the exchange rate.

Dr Earle Page:

– What we stressed was the necessity for making the exchange rate dependent on the different price levels ruling in various countries.

Mr SCULLIN:

– The right honorable member has said, “Let us unpeg the rate of exchange and allow it to rise”; but let me inform him that if we unpeg the exchange rate it will fall. That is borne out by the statements of the banks themselves in respect of outside operations at a lower rate of exchange. The right honorable member has said, “ Let us have a commission to determine the correct level “. One thing that we can do without a commission is to throw the market open. If we do that, the market operations will at once determine the exchange rate. The banks tried to hold exchange at a lower rate, but one bank broke away and the rate immediately increased. The mistake was in trying to hold the exchange at too low a rate. At that time the various governments of Australia were faced with deficits and the exchange to meet obligations placed a terriffic burden on government budgets. We have to watch that position carefully to-day. If our imports continue to exceed our exports as they have done during the last three months, there will be a rise in the rate of exchange.

Mr Hill:

– Is it not rather a question of the fall in the value of exports?

Mr SCULLIN:

– A fall in the value of exports is exactly the same as a fall in the volume of exports. * [Leave to continue given.]* I do not wish to appear to be elementary, but two factors operate to control the rate of exchange. One is the excess of imports over exports, and vice versa, and the other is the relative difference .between internal and external price levels. There is no general agreement as to which is the more important factor, but the opinion has been expressed in this country that as Australia is far removed from the markets of the world, with us, the trade balance is more important than a difference between price levels. That may be true, but a difference between price levels will automatically express itself in the exchange rate, unless we peg the rate of exchange. It should .also be remembered that the private banks refused to co-operate with the Commonwealth Bank in controlling exchange at £25 -per £100, fearing that they might get caught with London balances acquired at the existing rate, although one bank in particular is urging an increase of the rate, because, possibly, it has money loaned on properties that are being devalued, and may not be able to recover its losses. But as all private banks definitely refused to take their share of risk, if the exchange rate should collapse, the Commonwealth Bank is today shouldering the whole of the responsibility.

To sum up the advantages and disadvantages of a high rate of exchange, I would say in the first place, that it benefits our exporters. The whole of our exportable wheat, wool, mutton, or beef is subsidized to the extent of the exchange.

Mr Hill:

– If the rate were not high, thousands of farmers would bo driven off the land.

Mr SCULLIN:

– I entirely agree with the honorable member for Echuca (Mr. Hill). When I was Prime Minister, 1 discussed this subject with the Commonwealth Bank Board, because it was essential then that we should keep our export trade moving along steadily in order to avert national disaster. A high rate also checks imports; it enables internal price levels to rise, and the extent to which it improves government revenues is reflected in increased returns from income and sales tax. The disadvantages are that it adds considerably to the cost of all raw materials and other necessary goods imported, and adds to the cost of remitting money overseas for interest and services. It is therefore an important item in all Government budgets. To assume that a high rate puts money into the pockets of money lenders overseas, is incorrect. Dr. Maloney. - It does not put it into the pockets of the workers.

Mr SCULLIN:

– No ; but it goes into the pockets of those who have goods to export. The London investor lending money at 5 per cent, is paid in sterling £5 per annum for a £100 loan whatever may be the rate of exchange. If honorable members contrast the relative price levels for primary and manufactured goods, they must admit that the primary producer is entitled to something to make good the disparity. So I am not quarrelling with the present rate of exchange. All I say is that we should examine its advantages and disadvantages and, in view of our present difficulties, I think we should endeavour to hold it where it, is to-day, but if the tendency is upward, to allow the rise to take place.

Certain members of the Country party state that the only effect on Government revenue of an increase of 10 per cent, in the rate of exchange would be approximately £3,000,000. They arrive at this figure by estimating that our overseas interest obligations amount to £30,000,000 a year, and assume that an increase of 10 per cent, in exchange would add £3,000,000 to the Government’s budget. To prevent an increase in the cost of imported goods and raw materials, they also urge that the tariff should bc reduced by 10 per cent. Apparently they overlook the fact that a 10 per cent, reduction in customs duties would cut out primage, and result in a loss to our revenue of approximately £4,000,000.

Dr Earle Page:

– An increase in income ta_x collections would give a stimulus .to local business.

Mr SCULLIN:

– I have said that. I have told the committee that, taking account of all the circumstances, the disadvantages following an increase in the present rate of exchange would outweigh the advantages. But I should add that, if an increase in exchange followed the employment of an additional 100,000 men, the advantages would far outweigh any disadvantages that would follow from having a difference between internal and external price levels. We have to consider whether we can afford to allow 400,000 of our people to remain in idleness and on the dole. I say unhesitatingly that it is the duty of governments to attack this problem. Private employers will not make a start to produce goods merely for stock, without a profitable market. It is the Government that must lead the way.

A bank advance is the creation of credit. Such advances in normal times would mean inflation ; and in abnormal times would arrest the fall of price levels, which is now called reflation. The increased productivity of the workers would be an offset against advances, and would minimize the danger of a rapid rise in prices. But the position would need to be watched, and there would need to be a predetermined price level. If a higher exchange rate automatically follows some months behind the re-employment of tens of thousands of our workers, then, whatever disadvantages there might be - and there would be disadvantages - they would be far outweighed by the advantages.

Dr Maloney:

– We have never known the exchange rate to be so high as it is to-day.

Mr SCULLIN:

– And never before has Australia suffered so severe a depression. The whole of the balance between debtor and creditor nations have been upset. ‘ If we contrast present conditions with those prevailing prior to the war, we must realize that war debts and reparations have done more than anything else to bring about disequilibrium between the nations.

We now have to consider measures to correct the position. Our immediate task is to soften the blow and make conditions as easy as possible for our people during the next few years.

As I have stated, some of the private banks are urging a higher rate of exchange, but decline to take any of the risk. Consequently, the Commonwealth Bank is buying and selling all the exchange offering, and there is no need for outside operators. The private banks in the present crisis are. adhering to the policy which they adopted when the Commonwealth and State Governments were in a financial jamb a year or two ago. When I was Prime Minister, I had to approach the Commonwealth and private banks for assistance to help finance deficits and loan works. ‘ Treasury-bills were issued at 6 per cent. - an extremely high rate of interest - but under the Premiers plan the rate was reduced to 4 per cent. Right through those troublous times, although the private banks, which had much greater resources than the Commonwealth Bank, took a share of those treasury-bills to relieve the strain on the Commonwealth Bank, they insisted on the right to discount them with the Commonwealth Bank at any time. Thus they were able to draw the interest, and were quite willing to. carry on until danger threatened, when they could pass the risk on to the Commonwealth Bank. But I do not wish to criticize them unfairly. They played a part, though, as I have shown, a comparatively small part, in helping governments out of their difficulties. The crisis has demonstrated that we cannot rely upon private banks. They expand or contract credit to suit their purpose, and often their action merely tends to accentuate the difficulties. The Commonwealth Bank, although limited in its scope, in cooperation with the Commonwealth, and State Governments, did more to save the situation than all the other banks combined. I suggest, therefore, that if we are to deal adequately with the present problem, we must expand the Commonwealth Bank until it is the banker for all Australia. Banking, more than, anything else, is a national service, and that should be its basis-not profits and dividends.

Parliament and the Government should direct attention to the creation of work, the maintenance of favorable trade balances, the protection and expansion of industry, and the national control of banking and credit. Above all, the most important duty which lies before us is to devise measures for the employment of ourpeople. The Government has a mandate - a mandate to provide work for every one - and as it has a large majority in both Houses, its obligation is clear.The need for definite action is urgent. I therefore move -

That the item he reduced by £1.

I move this amendment as an instruction to the Government to proceed at once with the formulation of a comprehensive policy to provide work for thousands now unemployed.

Mr ARCHDALE PARKHILL:
Minister for the Interior · Warringah · UAP

– I have not very much to say in reply to the criticism offered by the Leader of the Opposition (Mr. Scullin) against the Government. In his Speech this afternoon he interested the committee, as he usually does, when he speaks upon abstract financial matters. With many of his conclusions, every one in the chamber will agree, but with others, many of lis must disagree. His speech would have been more effective if wehad not all read passages from it in the newspapers within the last week or so. The right honorablemembers remarks regarding the banks have a familiar ring, because we have read most of them already in the metropolitan newspapers.

The right honorable gentleman criticized the Government chiefly on the score of Australia’s overseas trade balance. The Opposition has emphasized this matter of the trade balance almost to the point of making it a fetish: In Labour circles one continually hears references to the trade balance as if those speaking knew all about it, whereas, in fact, they know comparatively little. It is a fact that the trade balance to-day is against Australia, but there are reasons for that. The Leader of the Opposition stated that, for the first three months of the last financial year, the trade balancewas favorable to Australia, but he neglected to point out that the embargoes imposed by his government against the importation of goods had then been in operation for sixteen months, and their full effect was being felt. It is true that there has recently been a considerable increase in the volume of imports into Australia, and this can easily be accounted for. In the first place, large quantities of goods are being imported to replenish warehouse stocks, which became exhausted during the operation of the embargoes. Moreover, this is a period of the year in which Australia derives little or no benefit, so far as her trade balance is concerned, from her overseas exports. Over and above these two reasons, however, there is the fact that the adverse trade balance is largely accounted for by the importation of petrol and oil, piece goods, &c., things not manufactured in Australia, which are coming here to meet the demand arising out of Australia’s increased prosperity, upon Avhich she is just entering. This fact may be proved by the records in Commonwealth departments. Honorable members opposite ask in chorus Avhere are the signs of increasing prosperity. In New South Wales and Victoria the number of applications for the dole has declined considerably.

Mr Ward:

– That is because dole payments are being cut out in many cases.

Mr ARCHDALE PARKHILL:

– I am speaking now of the number who ask for the dole, and people have never been noticeably backward in asking, especially the supporters of the honorable member for East Sydney (Mr. Ward). It is a fact, that there has been a noticeable falling off in the number of those applying for the dole. For the first time since the Scullin Government assumed office, the ever-increasing volume of unemployment has been arrested, and there is some sign of an improvement in the situation. All these things taken together, show that the tide of prosperity is rising, and this is due to three main factors: First, the removal of the vacillating Scullin Government ; secondly, the downfall of the Lang Government in New South Wales,with its devastating and disastrous policy; and thirdly, the putting into operation of the progressive and sane policy adopted by the present Commonwealth Government. This Government is watching the trade position overseas just as closely as are honorable members opposite. Honorable members, and the public generally, may rest assured that the Government will take no risks in matters of this kind. Everything that is necessary will be done to preserve the financial stability of the Commonwealth.

The Leader of the Opposition referred at length to what, in his opinion, ought to bo done to effect the financial rehabilitation of Australia. We have heard him on this subject before. We heard him when he first returned from Great Britain; in fact we read his remarks on the subject while he was still abroad. We heard him again on the subject during various by-election campaigns, except at one when he did not make an appearance.

Mr Baker:

– We won ‘ at that byelection.

Mr ARCHDALE PARKHILL:

– Perhaps because of the right honorable member’s absence. To-day the Leader of the Opposition, although dealing with the same subject, ha3 a different remedy. He says that what is required is to get back to the price levels prevailing in 1929. There is nothing new about that.

Mr Blakeley:

– It was enunciated by the Labour Government for the first time in 1931.

Mr ARCHDALE PARKHILL:

– It may have been enunciated at that time by the members of that Government, but it has been enunciated by thousands of others as well. Everybody uses the catchcry to-day that prices, should be restored to the 1929 level. I do not know what mystic virtue there is in the year 1929, but I admit that the right honorable gentleman was generous enough to say that he did not mind if a date six months either way was chosen. Although every one says that prices must be restored to the 1929 level, so far we have not heard any one say how that is to be done.

Mr Baker:

– The Minister has just been told.

Mr ARCHDALE PARKHILL:

– The innocent and simple-minded member for Brisbane informs us that we have just been told how it is to be done.

Mr Baker:

– I ask, Mr. Speaker, that those remarks be withdrawn. They are offensive to me, and, besides, I am not the member for Brisbane.

Mr ARCHDALE PARKHILL:

– I withdraw the statements to which the honorable member objects. The honorable member is not innocent; he is not simpleminded, and he is not the honorable member for Brisbane. He is the honorable member for Oxley.

If it were possible to restore the 1929 price levels by juggling with figures, why has it not been done before this? Why does not the Leader of the Opposition point out bow it oan be done straight away, so as to get us where we ought to be? The right honorable gentleman was Leader of the Government in 1931, but lie did not then restore prices to the 1929 level. Indeed, he went out of office without having made any effort in that direction. I listened intently to his speech this afternoon, in the hope that he would make some valuable suggestions; but, beyond quoting from Sir Arthur Salter’s book, Recovery, he- did not say much. He- dismissed the whole question by saying that, in order to restore prices to the 1929 level, conferences ‘ should be held, and everything possible done. The committee is no wiser than before the right honorable gentleman spoke as to the means by which prices are to be raised to the 1929 level. Boiled down, the right honorable gentleman’s speech was in advocacy of a policy of inflation.

Mr Scullin:

– The Minister has not represented me truthfully since he started.

Mr ARCHDALE PARKHILL:

– I repeat that the right honorable gentleman’s speech was merely in advocacy of a policy of inflation and currency control. He said that there should be an extension of credits, and then he qualified flint statement by saying that it would be foolish to carry out that policy to an unlimited degree. He said that money was to circulate until control became necessary, and then the extension of credits was to be controlled. But he did not say that the world had failed to show an instance of the successful control of inflation. On the other hand, numerous examples could be given of inflation having got out of control, bringing ruin to those responsible for it.

The right honorable gentleman also dealt with the subject of unemployment, which, the Government admits, is the. outstanding problem confronting this country to-day. But the expenditure of money by governments will never solve the problem of unemployment.

Mr Stacey:

– It will not even help to do so.

Mr ARCHDALE PARKHILL:

– Even in 1.929, when price levels were high and our prosperity great, government employees represented only IS per cent, of the workers of Australia, private enterprise absorbing the remaining S2 per cent. Unemployment will not be overcome by profligate spending by governments. Only by the restoration of confidence, which will enable private employers to engage more people, can it be overcome. The release of credits is at best only a palliative; it does not get to the root of die matter. Business men cannot be expected to extend their operations if they lack confidence.

Mr Beasley:

– It is useless to expand industries unless there are markets for their products.

Mr ARCHDALE PARKHILL:

– Those engaged in private enterprise will not expand their industries unless they believe that it will be profitable to do so. There is money in this country for the development of our industries; but it will not be released until confidence has been restored. The greatest service which the Government can render to this country is to restore confidence, for then prosperity will follow. I believe that that time is at hand; I am confident that prosperity will soon return, when much of the existing unemployment will disappear.

Mr Beasley:

– There are 400,000 men out of work to-day.

Mr ARCHDALE PARKHILL:

– I do not believe that anything like that number of men are out of work in Australia. For many months, the figure has remained practically stationary at 400,000. No one knows on what basis it was arrived at. In actual fact, the number of persons out of work is gradually becoming smaller.

In view of the remarks of the right honorable the Leader of the Opposition (Mr. Scullin) this afternoon, it may be well to refer to the cables which he sent to the honorable member for Wilmot (Mr. Lyons)- from London. In a cablegram received in Australia on the 5th November, 1930, the then Prime Minister (Mr. Scullin), after speaking of the heavy strain on the finances of the banks in financing the harvest, said -

To create credit for £20,000.000 for loan works is unsound, and I expect the banks to refuse to do so. Governments cannot deliberately coerce the administration of banks.

Mr Scullin:

– Will the Minister say at what level prices were then ?

Mr ARCHDALE PARKHILL:

– This afternoon the right honorable gentleman suggested that credits should be released. He did not mention any sum ; but referred to an amount that had been suggested in connexion with the proposal to create a fiduciary note issue. I take it that he meant about £18,000,000.

Mr Scullin:

– Of that amount £3,000,000 has already been created.

Mr ARCHDALE PARKHILL:

– In November, referring to the £20,000,000 proposal, he said -

Such proposal means permanent inflation which could not be checked, as is implied, and would demand further inflation.

To-day he says that inflation can be controlled. One would imagine that a supporter of the present Government was speaking when reading the following statement by the right honorable gentleman : -

Inflation is a desperate attempt at a remedy, and will react seriously on all sections. The first ill-effect is upon our credit. All this talk about creating credits and inflation is most damaging, and will seriously prejudice conversion maturing loans and treasury-bills. Since inflation was suggested efforts are being made here by men to withdraw their money from Australia, as they would lose by payment in a depreciated currency. Depreciation in currency would decrease values of savings bank deposits and insurance policies. Property would increase in price, and there would be a rush to sell bonds for investment in properties. Financial panic may result.

Mr Scullin:

– That is true of all inflation. I deny that it is inflation to arrest the present deflation. The Minister is arguing about something of which he knows nothing.

Mr ARCHDALE PARKHILL:

– On that occasion the right honorable gentleman expressed sound views on the subject of inflation.

Mr SCULLIN:
YARRA, VICTORIA · ALP; FLP from 1931; ALP from 1936

– I still hold the same views.

Mr ARCHDALE PARKHILL:

– Yet to-day he advocated inflation and its control, thereby contradicting what he said in the speech from which I have quoted.

The right honorable gentleman was not over generous to the members on this side in his references to the conversion of loans amounting to £560,000,000. Those loans were converted, not because of the influence of the Scullin Government. The confidence created by the fact that the conversion loan had the backing of honorable members on this side of the House was responsible, in a considerable measure, for its success,- and the right honorable gentleman might well have mentioned that in his speech. Everybody knows that prices are down to-day. The man who bought a pastoral property when wool was bringing 2s. per lb. is a loser to-day by the fall in values. So, too, is the person who paid high prices for shares a year or two ago, and has received no dividends. Similarly, a person who bought a house a few years ago, and still owns it, has on his hands property which is now at a discount. This position must be faced, but it cannot be corrected by the employment of money which has not been actually earned. No money can be honestly obtained unless it is actually earned. There are men to-day who advocate Weird methods of obtaining money from goodness knows where ; but the only way in which unemployment can be ended is by less talk and a good deal more work. Wo must face the position manfully, and with the courage that is an inherent quality Of our race. Then Australia will emerge from this depression a wiser people, but with a prosperity that will be more substantial and enduring than that enjoyed in the past.

Mr PATERSON:
Gippsland

– We are glad to learn from the budget speech and the Estimates that the Government hopes to balance its accounts on the 30th June next; but it depends for that balance first upon, action which, it is hoped, will be taken by the United States of America. It is understood that a world monetary conference is to be held before the end of this year at which it is hoped that some satisfactory arrange ment may be reached with respect to war debts. If the war debt moratorium should be extended, or if there should be an absolute cancellation of internal war debt payments, that part of the budget will not be affected. If, however, only a reduction in the rate of interest due to America results, and Great Britain cannot, therefore, wholly suspend our debt to her, the Commonwealth budget must, to some extent, be thrown out of balance. We benefit this year as we did last year by the British Government’s suspension for two years of the payment on our war debt to it, a saving of a little over £2,000,000. In regard to £4,000,000, we have to depend on hoped for action on the part of the United States of America. I was very glad to-day to hear the Prime Minister (Mr. Lyons) say that the British Government had indicated that it was prepared to suspend meanwhile the first payment for this year of our interest obligation to it. Evidently, Great Britain has some hope of action being taken by the United” States of America in the direction to which I have referred.

A striking fact which has emerged in world affairs within the last year or two in connexion with the huge international payments arising out of the war, is that, whether interest or reparations payments, the difficulties connected with them are not all on the side of the debtor. Acceptance of payment in goods on an unprecedented scale such as is required in connexion with some of these war payments has been very much feared both, on the one hand, by America, which receives the war interest, and, on the other hand, by Prance, which gets the lion’s share of the reparations payments. Both countries wish to obtain these payments, but both appear to have done everything possible to make payment impossible by repeatedly raising their tariff barriers until it has been no longer possible for the payment to be made by the only sound means available to the debtors, namely in goods. Consequently payments were made in gold, and it is the drain of gold to those two countries that has had so much to do with the fall in the purchasing power of the world, and the los3 of confidence, due to so many countries going off the gold standard. If our hopes with respect to the cancellation of our inter- national war debt obligations materialize, the big drop in the expenditure from £29,500,000 in 1930-31 to £19,500,000 for this year, a reduction of £10,000,000, “will have been achieved in two years. The saving arising out of the action of Great Britain will be nearly £6,000,00,0; some £2,500,000 has been saved by the reduction of the internal interest burden on war debt by our conversion loans, and roughly about £1,500,000 by the reduction of soldiers’ pensions and repatriation and medical services, a total of about £10,000,000.

The next biggest item in the budget is the payments to the States. These have shown a steady growth. Their refusal to diminish, however, can be viewed with a certain degree of equanimity, inasmuch as the money goes from the pocket of one government to that- of another. To whatever extent we may assist the States, their governments are likely to reduce taxation. The Commonwealth contributions to the sinking funds for the extinguishing of the debts of the States have been steadily growing. During the past five years they have been as follows : -

The amount of those contributions lias increased from £931,000 to £1,220,000, or by approximately £300,000 in four years.

Under the Financial Agreement made between the Commonwealth and the States, the Commonwealth contribution to the interest burden of the States being constant - about £7,500,000, representing about 1 per cent, on the total existing State debt of some £780,000,000- we do not share with the States in any relief gained by the conversion of State loans at a lower rate of interest. The States alone benefit by such savings. For instance, under the recent conversion in London, money formerly costing o$ per cent, now C03ts about 4 per cent., the saving of If per cent, benefiting the State of New South Wales alone. Henceforth, instead of the Commonwealth paying equivalent to 1 per cent, and the State 4$ per cent, on the amount converted, the State will pay about 3 per cent., and the Commonwealth will still pay 1 per cent.

I congratulate the Government upon the success which has attended the conversion operation. . During a debate in this chamber recently upon the advisability of the right honorable member for Flinders (Mr. Bruce) going to London as Resident Minister, to assist in this project, I remarked that if with the assistance of the right honorable gentleman we were able to obtain a reduction in interest of only 2s. 6d. per cent, many thousands of pounds per annum would be saved; but the loan has been converted at a rate which is even more favorable than most of us anticipated. A member of the Beasley group interjected that exchange would have to be paid on the 4 per cent, which is the new rate of interest; but surely honorable members must realize that if we debit exchange we must apply it to principal as well as to interest. If we say we are paying in interest 4 per cent, plus exchange, we have to admit that instead of converting some £12,750,000 sterling we converted what is- equivalent to £16,000,000 Australian money. Moreover, if we must add exchange to the 4 per cent., we must also add it to the previous 5-J per cent. The States’ interest burden has been lightened by the conversion bv more than £3,000,000.

In a speech that I delivered in this chamber ten days ago, I referred to the bank overdraft of £82,000,000 that had been incurred within the last three years by the various Australian Governments. I wish now merely to emphasize the fact, that, although there has been no external borrowing during the last year or two, the governments of Australia, with the object of financing deficits, are still borrowing from the Australian banks at practically the same rate as formerly obtained in connexion with public works. The Commonwealth hopes that this year it will “ break even “ ; but we were told by the Prime Minister (Mr. Lyons) in his budget speech, that the States will add £9,000,000 to the bank overdraft of * £82,000,000. In those circumstances, it it necessary for us to realize that every possible economy must be made. To-day, in order to get within £9,000,000 of a budgetary balance in the accounts of the Commonwealth and the States, we are staggering under a tremendous load of taxation.

Let me show the effect of that taxation upon income obtained from money loaned either on mortgages on land or for business purposes generally, compared with the lighter burden that is borne by incomes derived from government bonds. There is no doubt that the net return from Commonwealth bonds, after taxation has been paid, is the investor’s measuring stick. He looks at what he can obtain in the way of income from Commonwealth bonds after all taxation has been met, and it is only natural that he should desire to obtain a similar amount from other forms of investment, and, in addition, sufficient to recoup him for any extra taxation, and a certain sum to cover the risk and the lesser degree of convertibility into cash. I have worked out tables which show the extraordinary disparity that exists between the taxation that is levied on income derived from bonds on the one hand, and that which is obtained from property and almost every other form of investment on the other. The disparity will be apparent to honorable members if they study the following figures : -

It will be seen that, on taxable incomes of £1,000 a year and upwards, the present taxation, State and Commonwealth, reduces the net return from a 5 per cent. mortgage to less than that obtained from a 4 per cent. Commonwealth bond bought at par, while in the case of a 6 per cent. mortgage the net return is about twothirds of 1 per cent. greater. On a taxable income of £2,000 a year, the return from a 6 per cent. mortgage is twofifths of 1 per cent. greater than that from a 4 per cent. Commonwealth bond bought at par. It seems to me that, with taxation as it is at present, and accepting Commonwealth bonds as the investors’ measuring stick, it is hopeless to expect money to be made available at 5 per cent, for mortgages on land or for any other purpose, unless Commonwealth bonds rise to considerably above par, and the effective rate of interest on gilt-edged securities falls in consequence. Even at 6 per cent., the margin above the return from bonds, after deducting taxation and allowing for risk and the relative inconvertibility into cash, is comparatively small. With prices for primary products as low as they are to-day, I believe that 5 per cent. is the maximum rate that the man on the land can afford to pay on mortgage; in fact, he cannot pay that rate on too big a mortgage. Some of those who are engaged in certain forms of primary production cannot afford to ‘ pay any interest at all to-day. Money may be provided at 5 per cent, for mortgages on laud or for any other purpose only by the reduction of taxation. If the super tax of 2s. in the £1 on all mortgages of 5 per cent, or less were abolished, the disparity between the taxation imposed on the return from bonds and from other forms of investment would bo reduced by £ per cent, or more; and the net interest return from a 5 per cent. mortgage would be 4.19 per cent, on u taxable income of £1,000 and 3.78 per cent, on a taxable income of £2,000. The net return would be then .44 per cent. better than, that obtained from 4 per cent. Commonwealth bonds at par on a taxable income of £1,000, and approximately i per cent, better in the case of a taxable income of £2,000. That might be just sufficient inducement to investors to make money available for mortgages on land at 5 per cent. Nothing short of that reduction would be of any use. I remind the committee that when that special tax was imposed it was designed to obtain revenue from persons who, at the time were drawing a high rate of interest from gilt-edged securities. That 2s. in the £1 was taken off when the bonds were converted at a lower rate of interest, but it still remains on all other forms of investment. Until it is withdrawn generally, there must remain a wide gap between the price at which money can bo obtained for these purposes and the ruling rate of interest for giltedged securities.

Mr Rosevear:

– Why does not the honorable member advocate the reduction of interest on bonds?

Mr PATERSON:

– A contract has been entered into with the 97 per cent, of bondholders who agreed voluntarily’ to convert, and also with the 3 per cent, who were compelled to convert, and I hope that neither this nor any other government will break that contract. I make it clear that I am not endeavouring to submit a case for, nor am I greatly concerned about the position of, the man with ah income of £2,000. I am urging the desirability of removing taxation from these incomes, not so much with the object of assisting the individual enjoying them as to bring down the price of money, and I suggest that action might be taken to remove the super tax of 2s. in the £1 from mortgages of, say, 5 per cent. and under. That would be an inducement to persons to lend money at a lowerrate of interest, and would bring the rate of interest more into line with present earnings from bonds. -

I quite realize that this Government is torn between a desire to reduce taxation on the one hand, and its determination to balance its budget on the other. “ But the desperate financial position of a very large portion of those engaged in primary production, and especially in wheatgrowing, wool-producing, and raising lambs, calls for relief. I know that you, Mr. Chairman, would be only too ready to add that the price of potatoes has fallen, and that potato-growers are in just a3 great difficulties as the other primary producers mentioned by me.

It is useless for State Governments to pass legislation with the object of reducing the rate of interest on mortgages if the Federal Government imposes taxation which makes it practically impossible to obtain money at those reduced rates of interest. I am most anxious to see interest rates come down, and I believe that the only means by which they can be reduced is by lowering the tremendous taxation which makes such a disparity between the rate imposed on bonds and that on incomes from other forms of investment.

The position of the primary producers is so difficult that, at the first possible opportunity, the Commonwealth Government should join with the States in considering the desirability of taking some kind of concerted action to reduce taxation upon money lent for pastoral and agricultural purposes, in addition to removing the Commonwealth super tax of 2s. in the £1. In many fields it is desirable to obtain cheaper money, but everybody realizes the especially difficult position of those engaged in producing primary products, the world price of which has fallen to an unprecedently low level. Despite the optimism of the Minister for the Interior (Mr. Parkhill) the present outlook in connexion with some of our primary products is anything but promising. A prominent Melbourne business man engaged in the wheat industry told me recently that, in his opinion, only two things could prevent a large proportion of the wheat-growers from going out of business, the continuance of a bounty, or a rise in exchange.

Mr Rosevear:

– “Was that nian a wheat-grower?

Mr PATERSON:

– He is a wheat merchant and, therefore, presumably, quite as well informed in a matter of this kind as the man who grows the wheat.

Supposing exchange were to rise. The advantage of a premium on exports of wheat, wool and other commodities would be partially offset by the additional cost of imports and the additional cost of certain locally manufactured goods, the price of which rises in sympathy with the price at which competitive goods can be imported. The protective incidence of exchange should be recognized, for, without doubt, exchange has a very substantial protective incidence to-day. Take, for example, a duty of 40 per cent. against Great Britain, which is really 44 per cent, owing to the method of its imposition. The primage tax, for the same reason, is 11 per cent, and not 10 per cent., which increases, the duty to 55 per cent. Exchange on top of that makes the total duty 80 per cent., on which is superimposed the natural protection afforded by freight, marine insurance and landing charges. I need not mention the sales tax, because that tax is common to what is produced in this country as w*ell as goods imported. The time has come when some adjustment of duty should be made in harmony with the protective incidence of exchange.

It was said by the Minister for Trade and Customs (Mr. Gullett) when I mentioned this matter before, that an almost insuperable difficulty would arise in connexion with foreign exchanges, which vary considerably. The honorable gentleman pointed out, that while in the British column the rate of 25 per cent; would remain constant, and afford no difficulty, there would be trouble in connexion with duties in the foreign column. Foi instance, the United States of America has a 60 per cent, exchange, while Japan has an exchange rate with us of approximately 15 per cent. The honorable gentleman asked how the difficulty could be overcome of altering the duty so as to make it fair to both countries. Another objection taken was that manufacturers fear that if a duty were temporarily lowered because of the height of the exchange, it might never come back to the previous level. My own experience is that it is easier to increase rates than to bring them down. But neither of those difficulties would arise if, instead of dealing with the customs schedule, we amended the Customs Act so that when duties were imposed on a particular consignment on a certain day, the incidence of the exchange ruling between the country from which the goods- were imported and Australia were recognized, and a certain proportion of the duty taken off to offset the exchange. I do not suggest that the whole of the exchange should be lost in that way. I recognize that there are some manufacturers who import some of their requirements, and have to pay exchange on those’ importations. It would be for this Parliament or some technical body to decide what would be a fair reduction. I shall give an example of what would happen if a reduction of duty were made equivalent to, say, two-thirds of the existing exchange rates. The position in connexion with’ the United States of America would be that instead of a duty of, say, 60 per cent, plus an exchange protection of 60 per cent., an amount equal to two-thirds of the exchange rate of 60 per cent,, would be taken off the duty, lowering it to 20 per cent., which, plus the 60 per cent, exchange, would make a total of 80 per cent, instead of 120 per cent. In the case of Japan, two-thirds of the exchange, equalling 10 per cent., would be deducted from the duty of’ 60 per cent., leaving 50 per cent., to which must be added 15 per cent, exchange. There would be no difficulty in operating a proposal of that nature provided that the Government agreed to it.

Mr Scullin:

– Would the honorable gentleman apply that two-thirds reduction to British goods?

Mr PATERSON:

– I have taken the proportion of two-thirds merely as an illustration. The arrangement would not rob the countries concerned of the exchange benefit, but would merely reduce the amount of their duty by that figure.

Mr Scullin:

– The arrangement would affect the present preferences given to Great Britain.

Mr PATERSON:

– Great Britain would still enjoy greater preferences than it could obtain under normal exchange conditions. If such a scheme were adopted, exchange would become an effective means of closing, to some extent, the tremendous gap which exists between the price of the primary products and manufactured goods.

A good deal has been said this afternoon about getting back to 1929 levels. Actually, we have not got very far away from those levels in respect of many of our manufacturered goods. Recently, there has been a welcome drop, but not anything like so great as that in connexion with primary products. If the tremendous price gap to which I have referred were partially closed, much would be done towards putting us on the road to prosperity. Exchange would then be a factor in improving world prices of. primary products without increasing to the same relative degree, the price of the manufactured goods. It may be stated that we should get less revenue. I question that. To-day, with a 60 per cent. duty and a 60 per cent. exchange, there are probably no importations from the United States of America at those rates, and therefore, no revenue from that source, whereas, the lower rate would induce importation, and produce,at least, some revenue.

Thereare a good many other points upon which I could speak in connexion with the budget, but I do not propose to take up the time of the committee further. I hope that when Ave reach individual items I may have an opportunity of saying something upon them.

Mr BEASLEY:
West Sydney

– If we are to beguided by the remark of the honorable member for Gippsland (Mr. Paterson), and the interjections of his colleagues, to the effect that 80 per cent. of our primary producers are on the verge of bankruptcy, we must form the opinion that the position in Australia at present is most gloomy. We must also conclude that the promise made some ten months ago - that if a change of government were effected, and a measure of confidence restored, prosperitywould follow - has failed to materialize. The alleged direct representatives of the primary producers have candidly admitted that the policy that is being pursued by this Government is not conducive to the rehabilitation of Australia. It may fairly be claimed, indeed, that that policy has accentuated the difficulties that existedwhen the Government assumed office.

I have no reason to doubt the statements of the members of the Country party concerning the position of the primary producers. I have friends and relatives engaged in primary production, particularly in the State of Victoria. In conversation during the last week-end, one of these people declared to me that the position of many primary producers in. his districtwas black, indeed, and that this gloomy outlookwas caused to a large extent by the banks forcing these people to meet their overdrafts at short notice. Many people have, as the Leader of the Opposition (Mr. Scullin) has said, been put into a distinctly unfair position through the general tightening of credit. This has happened probably more in Victoria than in any other State.

A good deal has been said this afternoon about the primary producers. I believe that every party in this Parliament desires to do the fair thing by the men on the land, to enable them to meet their commitments, because it is realized that their success is essential tothe proper development of the country. But while it is desirable that the primary producers should be put in as good a position as possible, I remind our friends of the Country party in particular that it is equally desirable that those engaged in secondary industries should also be assisted.

Mr Paterson:

– If they are only as prosperous as the primary producers, they are in a badway.

Mr BEASLEY:

– We are told often enough that the city people depend upon the country people; but it would be well for some honorable members to realize that the country people are also dependent upon the city people. It would be a good thing for

Australia if the honorable members of t he Country party would encourage a broader outlook among their constituents in this regard. We hear a good deal in this chamber from time to time about the broad national outlook; but those who pay so much attention to primary production would do well if they would extend a little more generosity to other sections of the community. The result would be beneficial to the country generally. It has been said that many people in the country are bankrupt; but there are thousands of people in the cities who have never been anything but bankrupt. These people are suffering so severely in these difficult times through unemployment and wage reduction that neither I nor any other honorable member could find words to describe adequately the deplorable position in which they find themselves. Yet this Government is seeking to make still further inroads upon the little that many of the working people have left. At first it was only the workers who were attacked; but now the result of the present policy is also being felt by the primary producers. Thehonorable member for Gippsland (Mr. Paterson) has said a good deal about the necessity for recognizing the sanctity of contracts. Unfortunately, many honorable members seem to think that contracts should only be kept in regard to giltedged securities and the like. I suggest that a contract made with the workers in regard to wages and conditions is as much a contract as any of those referred to by tho previous speaker. In fact, I think that contracts in relation to wages and conditions are even more important than contracts in relation to bonds and other securities, for if the contracts made with the workers are broken, those who suffer thereby are immediately in dire distress. Yet this Government has repeatedly disregarded the sanctity of the contracts made with the workers of this country. In February, 1931, an application was made to the Commonwealth Arbitration Court for a general reduction of 10 per cent, in the value of real wages, on the ground that there had been a serious fall in the national income. No regard was paid at that time to the fact that many workers had entered into obligations to purchase homes, and had made commitments of various other kinds. It was simply argued by the Government that in order to bring about national recovery, and to cope with an acute and desperate situation, wages must be reduced.We know that employers,en bloc, requested the Arbitration Court to reduce wages, and that their application was endorsed by the various governments throughout the Commonwealth. At, that time we endeavoured to show that a contract had been made with the workers which was quite as binding as contracts associated with bonds or other financial transactions.

Mr Maxwell:

– Does the honorable member suggest that it was a breach of contract to apply to the Arbitration Court for a reduction of wages?

Mr BEASLEY:

– There can be no doubt about that, forwage contracts made between the employers and employees are for a definite term, and should not be interfered with until that term has expired. In this case the term had not expired. Successive applications have been made to the court, however, for wage reductions. Within the last fortnight I was compelled to bring under the notice of honorable members the violation of a contract made with the railway and tramway workers of New South Wales in regard to the federal basic wage. These industrial contracts are, as I have said, of such importance that they should be regarded as equally sacred with any other contract. If their sanctity is disregarded, the flow of what is the economic life-blood of the people is stopped. Obviously, people who are living from hand to mouth must have at least a certain amount of money to keep body and soul together, and anything that stems the flow of their meagre income is intensely serious to them.

The references this afternoon to the inroads that have been made upon the income of those who have invested their surplus money in gilt-edged securities, remind me that these people take very little, if any, risk at all. They do not risk anything like so much as the people who invest their money in industrialenterprise, for instance, nor do they serve the nation to the same extent as those who endeavour to build up our industries. In my opinion it would be a good thing for Australia if the investment of money in gilt-edged securities was made much less attractive than it is. It should be possible to devise a financial system which would force people with surplus wealth to make it available for industry. If this were done, we should not have nearly so many of our people unemployed, for money would be circulating in die proper quarter, and that would make work. If the money invested in bonds were placed in a current account, or if provision were made for the Commonwealth Bank to compel these people to use available surpluses of this kind, which really are the accumulation of unneeded money, a grant deal could be done to stimulate industry.

Mr Thompson:

– Industry would be stimulated if the burden of taxation were lifted from it.

Mr BEASLEY:

– The honorable member for New England talks about lifting the burden of taxation from primary production.

Mr Thompson:

– I mean industry generally - both primary and secondary production.

Mr BEASLEY:

– If the interest burden were lifted from primary and secondary industry I admit a great deal would be done to help both. We must remember that our burden ‘ of taxation is heavy, principally because of the exorbitant interest rates that we have to pay. It may surprise honorable members to realize that in the last two years the wages bill of the New South Wales railway system was about £10,000,000, while the interest bill has been £7,000,000. At first our opponents endeavoured to improve the position by concentrating attention upon the wages bill. We know that wages were reduced so seriously that the purchasing power of the people fell enormously. At the time of which I am speaking, economists, statesmen and experts of one kind and another, said that wages must be reduced. When we said that something should bo done to reduce the interest bill, we were looked upon with scorn and horror. Those who opposed our view said that the mechanism of finance was so delicate that if anything were done to interfere with the interest commitments,the results would be disastrous. But those who then opposed the alleged distinctly unpopular and unpalatable proposals which wc made, have since received them with open arms. The honorable member for Gippsland (Mi1. Paterson) had something to say about war debts. He remarked that the present budget position had been made possible only because of the relief that had been obtained from war commitments through the Hoover moratorium and exemption from certain payments to Great Britain. The honorable gentleman also had a little to say about the cancellation of war debts. Yet two years ago, any one who suggested, that war debts should bc cancelled, was called a repudiationist. It was said that our war debts were solemn obligations, which must be observed just as commercial or industrial undertakings were observed. We were told that the same sacred principles applied to those contracts as to others. But we held different views on the subject and were not afraid to declare them.

Mr Thompson:

– The honorable member and his followers talked about repudiation, not cancellation.

Mr BEASLEY:

– When our opponents are forced into a corner by the sheer adversity of circumstances they find some other term to describe what they want to do, although it is the very thing that we wish to do. Fortunately for them, they have the press of Australia to help thom to cover up their tracks. They simply change a term and ‘think that they have thereby overcome a principle. E believe and hope that most of us will live long enough to see the men who, notwithstanding ridicule and contumely, have advocated certain means of restoring our country to prosperity, accepted as our greatest patriots. We have advocated these methods of assisting both primary and secondary production, and wo have been condemned for so doing. Some of our companions have been hounded out of public life on this account. But when the history of these days is written dispassionately, those who have been denounced for advocating certain views for the restoration of prosperity will be set down as more far-seeing citizens than their opponents.

Sitting suspended from 6.15 to 8 p.m.

Mr BEASLEY:

– My next reference to the budget is in an endeavour to settle what I consider an important aspect of the policy at present being applied. The budget speech made many references to the Premiers plan, and I think the Prime Minister (Mr. Lyons) said that the proposals contained in the speech were to be regarded as a further step towards the development of that plan. Following upon the general elections in Queensland and New South Wales on the 11th June last, there was a further meeting of Premiers which, from the public view point, could be regarded as having been convened for the purpose of taking a general survey of the economic condition of Australia and determining upon the next measures to be adopted in order to meet the situation. It is not necessary for me to go into details with respect to the proceedings or decisions of the Premiers; but before going further, I should like to clear up the point whether the financial policy embodied in this budget is, or is not, a part of the Premiers plan; and in order to do so, I propose to quote from speeches delivered in the Queensland Parliament subsequent to the return of the Premier from the conference. Mr. Forgan Smith claimed to have been instrumental in modifying the Premiers plan, and declared that the policy previously followed had proved to be an absolute failure ; that it had caused more misery and suffering than previously existed, and as a consequence a new principle had been adopted. In effect, he said, the Premiers plan had been thrown overboard. I want this point cleared, up, because it is important. I want to know whether the right honorable the Prime Minister, in his budget speech, or the Premier of Queensland in the Queensland Parliament, has stated the actual position. Mr. P. K. Copley speaking on the Address-in-Reply in the Queensland Parliament said -

The pessimistic Premiers plan, which was in operation during the regime of the late Government, waa a plan responsible for despair and panic amongst the Australian people.

Then Mr. Gair, in making his contribution to the Address-in-Reply debate, congratulated the Premier upon his efforts at the Premiers conference and said “ It was like sunlight let into a dark cell.” If the budget speech delivered by the Prime Minister is “sunlight let into a dark cell “, all I can say is that it is a remarkable document from the angle from which I view it. Mr. Gair further stated -

As the Premier said at thu recent Premiers conference, if the wage reduction policy was continued as a further attack upon the workers’ wages, the purchasing power of the people would be so diminished that the business man would not make his turnover and his diminished profits would curtail the power of money.

The alleged arguments of the Premier of Queensland made the other Premiers realize that the lines upon which they had been proceeding for the previous three years were entirely wrong. The same gentleman also said that- -

Fortunately the people of Queensland wisely decided to follow the present Leader of the Government, and, as the representative of this State at the Premiers conference, lie succeeded in winning the representatives of other States over to his views.

The natural deduction to be drawn from Mr. Gair’s statement in support of the attitude of the Premier of Queensland, based, I take it, upon the report the Premier had submitted upon returning from the conference, is that drastic changes had been made in the plan.

Mr Maxwell:

– Does he say what those changes were?

Mr BEASLEY:

– Earlier references to the Premiers plan .by the speaker were to the effect that the. policy .of reducing the purchasing power of the people - in the form of either wages or social services was such that it had brought suffering and despair upon the people and consequently was entirely and .unutterably wrong. Broadly speaking, , that was the deduction to. be drawn from the report of the Premier of Queensland. That gentleman himself, speaking on the Address-in-Reply, rightly declared that the Labour party opposed the Premiers plan, which provided for arbitrary reductions in wages and social services.

Mr Latham:

– The Premiers plan was adopted by the Federal Labour party.

Mr Gander:

– The Federal Labour party has since disowned the plan.

Mr BEASLEY:

– I agree with some references that have been made regarding the vacillating attitude of the Federal Labour party to the adoption of the plan. It was adopted one day and rejected the next. I do not know exactly where some of the then leaders of the Labour party stood, but I am now quoting what was said by the leader of the Labour party in Queensland - that the plan was not the -Labour party’s plan. We in this corner endorse that. The plan was never tho policy of the Labour party.

Mr Latham:

– The Federal Labour party stood by the plan and supported it.

Mr Lane:

– The honorable member for West Sydney (Mr. Beasley) represents only a part of the Labour party.

Mr BEASLEY:

– Although I am not accustomed to making threats, I think I can safely say that the honorable member for Barton (Mr. Lane) will not be even a part of a party within a few months. The point I am making is either that some drastic changes have been made in the plan, that it has been entirely thrown overboard, or that the statements of the Premier of Queensland were wrong. Perhaps it may be as well to indicate how the Premier of Queensland viewed- the position. In dealing with the attitude of the Labour party, he said -

Labour criticism- generally has been amply justified. Not only has it failed to achieve budget equilibrium, but further unemployment has resulted with general business- stagnation. . . The Premiers plan was conceived during a period of bitter and intense political controversy: The depression complex was widespread amongst the people and deflation and retrenchment were the order of the day.

Either, the Premier of Queensland is wrong, -or the Prime Minister errs in emphasizing -the fact that certain proposals in the budget speech are logical steps towards the development of the Premiers plan.

It may be interesting to make a few comments concerning the Prime Min.ister’s review of the last twelve months’. The right honorable gentleman said “It should hearten us to continue along the same track that we have followed.” Those words may appeal to very few, I am sure; but I feel certain that persons who have made sacrifices and experienced undue suffering as the result of the policy that has been adopted in this country, have no more desire to look back upon the past two years than they have to look forward to a continuation of it. I think that I can safely say that those electors who supported honorable members opposite at the last general election are far from satisfied with the position as they now find it. They were led to believe that the present Government would, at least, hold the” position then reached and not allow it to become worse. They expected that un. employment would be relieved, and that even if old-age pensions were not restored, no further reductions would be attempted. They have, however, been sadly disillusioned. According to the quarterly figures of the Commonwealth Statistician, unemployment has reached a higher point than at any other time in our history. During the first six months this Government was . in office, unemployment increased from 28 per cent, to 30 per cent. Such is the answer to those honorable members opposite who declared on public platforms that this Government, if returned to power, would not only hold the position in the matter of unemployment and old-age pensions, but would also see that unemployment was reduced, and that pensions were restored. At least some’ of them said so. The effect of the reduction in pensions has not yet been fully felt. and I am certain that honorable’ members opposite have already been asked to assist in removing many of the - injustices which have resulted from the passage of recent legislation. It is less than a fortnight since the FinancialEmergency Bill providing for a reduction in old-age pensions was passed,’ but the people ave already realizing how they were misled by the supporters’ of the Government prior to the last general election.

The Prime Minister also declared that the policy of the Government of New South Wales was largely responsible for the unsatisfactory financial position of the .Commonwealth, and that it was necessary to take certain action in order to’ force that State into line with the other’ States, whose developmental programme, as agreed upon at the conference, was being hampered. I am pleased that ‘the New South Wales Government did not adopt the Premiers plan. Honorable members in this corner make no apology for the action of the Lang Government in refusing to adopt it. The other States, it is said, were, by the action of the New SouthWales Government, hampered in the work of rehabilitation ; yet only the week before last financial measures were passed by this Parliament with the object of granting assistance to three States which were supposed to be supporters of the Premiers plan. The grants of £1,000,000 to South Australia, £500,000 toWestern Australia and £300,000 to Tasmania were partly the result of strict adherence to the Premiers plan, and it is remarkable that those States have to ask the eastern States to support them while they carry that plan into effect. However, by the action of the Commonwealth Government, assisted by the Governor of New South Wales, the government of that State was changed, and the full significance of the Prime Minister’s reference to enabling New South Wales to co-operate with the other States in carrying out the plan is now being realized by the people. I am certain that the workers who suffered a sudden cut of the basic wage by 12s. 6d. a week now understand what that plan means. The restrictions on food relief imposed by. the present Government of New South Wales also will be appreciated by the people who are forced to rely upon government assistance. One incident that occurred in a street next to that in which, I live illustrates the callous attitudeof the State Government. Some spy declared that one recipient of the dole had secured employment for a couple of days at the meat works. Because of this alleged income, which the worker denied and the department could not prove, not only was he refused foodrelief but even his invalid child was unable to get the special food which a doctor had ordered. To justify the Government’s harsh policy, all manner of corruption is alleged against the unfortunate people who are obliged by their circumstances to ask for State relief. Another hardship is in connexion with the identification of the applicant for food relief. If he is not known to the police or some other specified authority, he is refused relief on the score that he is unidentified. Not even his registration on the electoral roll is accepted. It is. distressing to me to have necessitous men and women wait upon me with complaints that they are unable to obtain food supplies, and when I asked an official of the department what I could do to help these unfortunates, ho replied “ Send them to me and I will see what I can do “ - this after having withheld relief for a week or ten days. No doubt this restriction is part of the co-operation which the Commonwealth Government demanded of the New South Wales Government. The moaning of this co-operation will be appreciated also by those who are to suffer a 15 per cent. reduction of the childhood endowment, by the widows whoso pensions are to be reduced, and by the 3,000 railway and tramway employees whose jobs are to be abolished. The setting aside of the federal basic wage on the application of the Minister for Transport will also help the people of New South Wales to understand the effect of the change of government in that State, and the co-operation of the Stevens Ministry with the governments of the other States. I am satisfied, however, that the people who are being driven by this policy to desperation will, at a date not far distant, free themselves of the illusion that was created prior to the last general election in New South Wales, and reverse the decision they then gave.

The Prime Minister declared that all Australian Governments are now adhering to the Premiers plan. The Premier of Queensland and his supporters declare that the plan is not being followed in that State. Here is a contradiction which I would like the Prime Minister to explain. I hope that the Queensland Government is not following the Premiers plan but is remaining true to the principles of the Labour movement. Time alone will toll whether that is so, but I trust that the real Labour policy will be adopted by Mr. Forgan Smith, a policy which will prove to be of benefit to the people.

Mr Lyons:

– At the meeting of the Premiers Conference in this chamber the Premier of Queensland accepted the principles of the Premiers plan, and a motion of adherence to it was carried unanimously.

Mr BEASLEY:

– I refer the Prime Minister to speeches made on the Address-in-Reply in the Queensland Parliament when supporters of Mr. Forgan Smith declared that the Premiers plan represented a policy of despair, that it had meant ruin to the people, and that the views enunciated by the Premier of Queensland at the last Premiers Conference were like “sunlight let into a dark cell.”

Mr Maxwell:

– Nothing that the honorable member has read from the Hansard report of the Queensland Parliament contradicts what the Prime Minister has just stated.

Mr BEASLEY:

– I have mentioned this matter with a desire to have all uncertainty removed. The Prime Minister ha”, said that the Queensland Government adhered to the. Premiers plan ; supporters of Mr. Forgan Smith say that he did not do so. I want to know who is right.

The Leader of the Opposition (Mr. Scullin) has moved an amendment drawing attention to the problem of unemployment. I shall support tho amendment, but I regret that the right honorable gentleman did not take the opportunity which this debate presents to widen the scope of his protest by calling attention to other injustices which the present Government is imposing on the Australian people. Particularly do I protest against the glaring inequity of demanding from the invalid and old-age pensioners, by reducing their pensions, a sacrifice of £1,3 00,000 towards the estimated saving of £1,479,000, and at the same time lifting taxation from other sections better able to bear the burden. This is especially unjust in view of the fact that the treasury returns of revenue and expenditure for the first three months of the financial year indicate that a greater surplus than that for which, the Treasurer budgeted will be realized. I protest also against a further reduction of public servants salaries, and the refusal of the Common wealth Government to observe arbitration awards and acknowledge the principle of’ the basic wage. I protest against the failure to demand and obtain a decrease of the rate of interest on the New South Wales loan recently converted, to a rate commensurate with the terms upon which the British war debt of £2,000,000,000 was converted. It is useless for honorable members to try to gull the people further in regard to this transaction. The terms obtained from the British money lenders were less favorable than were expected, and from the point of view of the Australian people were unreasonable. Much has been said throughout the country about the great sacrifices that were being made by all sections, but thousands of people are arriving at my conclusion, that the talk of equality of sacrifice was only a catch-cry for the purpose of deluding reasonable and impartial people into supporting the Nationalist party candidates. Those who believe in - the declaration that sacrifices were to be required of all sections, now realize that the policy of the Commonwealth Government does not include sacrifices by the bondholders. The designation of the New South Wales conversion loan as a 3-1 per cent, issue is a deliberate misrepresentation, as its underwriting at £97 10s. means a discount of £2 10s. per cent, for a period of five years, bringing the yield up to £4 ls. 2d. per cent, without exchange according to the official statement of the Prime Minister. While exchange maintains its present level, the cost of the loan will be almost 5-J per cent. That is the comment of the weekly newspaper published by Windeyer, Fawl and Company on Sunday last.

I protest against, the failure of the Government to make adequate provision in the budget for the absorption of the unemployed in accordance with the definite promise of Nationalist candidates at the last general election, and its failure to grapple with the growth of unemployment, which according to the Commonwealth Statistician’s quarterly report increased from 28 per cent, to 30 per cent, during the first six months of the Government’s term of office. Regarding the references in the budget speech to the probable effect of the Ottawa Conference resolutions upon the Commonwealth revenue, sufficient evidence is already at our disposal to warrant us in protesting against the Government’s abrogation of the right of self-government by handing over to the Tariff Board for a fixed term of years the sole right to determine the fiscal policy of this country, and at the same time giving the British manufacturers an unrestricted charter to exploit the Australian market to the detriment of our own secondary industries.

We feel that the Leader of the Opposition ought to have taken advantage of this opportunity to voice a protest against these features of government policy to which I have referred. The amendment should have been much more comprehensive. There is no doubt that the general position of Australia has not improved; many sections of our people are suffering severely, and as the Premiers plan has developed one section after another has been called upon to make sacrifices. The first to suffer were the workers, whose wages have been reduced to a miserable dole, whilst hundreds of thousands are subsisting by means of food relief coupons. The next victims were business people and others who in more prosperous days had amassed small amounts of capital, but who now, through the decreased purchasing power of the community and the fall in the general level of prosperity, see their reserves being.’ gradually depleted. If the present ‘process of impoverishment continues, they too, in time, will bc reduced to the extremity of relying upon government relief. Now the indigent aged and sick are being attacked. So the policy goes on ; it is like a cancerous growth that is gradually eating into the vitals of the community, and eventually national collapse will be inevitable. Because of their environment and their more fortunate circumstances, honorable members opposite may not appreciate what is happening, but we who are acutely aware of these things take this opportunity to voice our protest against the present ruinous policy. We support the amendment, but base our protest on the broader grounds I have mentioned.

Mr HUTCHIN:
Denison

– I should prefer to discuss industrial matters free of political bias, because political influence in industry has been, one of the greatest handicaps suffered by Australia for several years. Nevertheless I feel that it is incumbent upon me to remove the doubts of the honorable member for West Sydney (Mr. Beasley), regarding the attitude of the Premier of Queensland to the Premiers plan. I was in Canberra while the Premiers Conference was in session, and, sitting in this chamber I listened to the speech of Mr. Forgan Smith. He spoke after the Premier of New South Wales, and his remarks might be said to have been an echo of those which preceded them. Indeed, I understand that privately Mr. Forgan Smith stated that Mr. Stevens had “ stolen his thunder “. The Premier of Queensland had come to the conference fresh from a general election, during which one of the principal features of his policy was the raising of an internal revival loan of £2,500,000, because, he said, the process of deflation had gone far enough and it was necessary to restore the purchasing power of the workers. At the conference the financial situation generally was discussed, and the Premiers unanimously agreed to re-affirm the plan of 1931.

The report of the conference of Commonwealth and State Ministers held at Canberra on the 28th, 29th, and 30th June last, contains the following:-

Discussion of thu motion by Mr. Lyons, and thu amendment thereon proposed by Mr. Forgan Smith, was continued.

Resolved -

That this conference alii nas its adherence to the principles of the Premiers plan of 1931, and undertakes to meet interest obligations, to continue progressively to reduce budget deficits, and to conduct public policy with a view to reviving industry, so as to restore normal employment to those of our citizens who now have neither work nor wages.

It will thus be seen that the reaffirmation of the Premiers plan was unanimous. Later, in the Queensland Parliament, when the proposed revival loan was under discussion, Mr. Forgan Smith said that there was now no need to take action, because funds had become available from another source, indicating, of course, that the Commonwealth Government, in collaboration with the various States, had made financial . provision for the relief of unemployment. I hope that the honorable member for West Sydney (Mr. Beasley) will now admit the position to be as I have stated it.

Mr Beasley:

– I was merely quoting references made to the matter in the Queensland Parliament.

Mr HUTCHIN:

– I wish to-night to speak of . arbitration and industrial relationships, and kindred matters affectingsocial and industrial life in Australia. By way of opening, I should like to refer briefly to the history of this movement, because that is necessary before one can make a comprehensive survey of the situation. It is only within the last 40 years or so that public conscience has been seriously aroused concerning the evil conditions which existed in industry. The first mention made of it in the literature which I have been able to consult was in a report submitted to the House of Lords, in 1888, by a committee which made a sweeping condemnation of sweating in what were described as home industries. I believe that many of those evils, which every person with a decent social conscience must deprecate, are to be found in certain cities in Australia. The present depression has been responsible for a substantial reversion to sweating conditions in home industries, in Sydney and Melbourne particularly. The next reference to which I direct attention comes from no less exalted a person than His Holiness, Pope Leo XIII., who, in an encyclical in 1891, said : -

Each onehasa right to procure what is required in order to live; and the poor can procure it in no other way than by work and wages. Let it be granted then, thatas a rule workmen and employer should make free arrangements, and, in particular, should freely agree as to wages.

Yet there is a dictate of nature more imperious and more ancient than any bargain between man and man, that the remuneration must be enough to support the wage earner in reasonable and frugal comfort.

The first evidence of an awakening social conscience with regard to unfair industrial conditions in Australia was the appointment, in Victoria in 1884, of a royal commission to inquire into subcontracting and sweating in home industries. In 1890, a bill was introduced in the Queensland Parliament to give effect to the principle of a living wage. In 1892, the Government of South Australia ordered an inquiry into reports of sweating in certain industries. Victoria, in 1894, passed the Shops and Factories Act, and some years later enacted legislation fixing the minimum wage in industry at 2s. 6d. per week - a figure which might appear to be some whatridiculous to-day. Another important advance in Victorian legislation was the establishment of wages boards to determine wages payable in certain trades, and to make them legally enforcible. That was the first touch of compulsion in Australian industrial legislation. South Australia followed suit, fixing a minimum wage in industry of 4s. a week, and providing for the appointment of boards on lines similar to those established in Victoria. In Queensland the minimum hours in industry in 1900 were fixed at 56 hours and the minimum wage at 2s. 6d. a week. Eight years later Queensland set up wages boards similar to those operating in the southern States, but it was not until 1.912 that the principle of compulsion -was introduced in Queensland legislation. In succeeding years, not only in Australia but also in America and Europe, there was a steady growth of public opinion favoring the fixing of a living wage in industry sufficient to enable a man to live in frugal comfort, and keep in bodily health and to fit him to do his work.

In Australia finally we had superimposed upon’ the industrial laws of the various States the Federal Conciliation and Arbitration Act. In this respect we followed the lead set by New Zealand in 1894, when conciliation boards were appointed and provision made for a court of appeal. As every one knows, the passing of the Commonwealth Conciliation and Arbitration Act led to a great deal of confusion. Numberless strikes and much litigation ensued, because the borderline between Federal and State jurisdictions was not clearly defined. High Court decisions varied according to the view taken by the personnel of that tribunal of the law governing the matter. The High Court decisions particularly concerned matters of jurisdiction: whether the dispute was one of which the Commonwealth or a State tribunal should take cognizance; whether Federal or State awards should be paramount. At one time, as honorable members will recall, industrial organizations were at liberty to accept either a State or a Federal award, whichever was the higher. It was not till recent years that the High Court enunciated the principle that federal arbitration jurisdiction should be supreme. Then there was the further point whether the Federal Arbitration Court had power to make a common rule. In this matter the High Court held against, the federal tribunal, but laid it down that federal awards were paramount, and that the court could make awards binding employers or prospective employers, or employees or prospective employees. Recent decisions have done much to remove overlapping between Federal and State jurisdictions.

From what I have said it will be seen that our Arbitration Courts have laboured under difficulties which arc not experienced by the ordinary courts of law, which have centuries of precedents and tradition to guide them. The common law of England is the growth of centuries. Justice, as we all like to think, is pure, and our judges are guided by well defined underlying principles. Our Arbitration Courts have pioneered an original field of jurisdiction and have been obliged to build up their own practice. As might be expected, in their earlier years the machinery of the courts has not run quite as smoothly as might have been desired, because the judges have been dealing, not so much with fixed principles as with social and industrial changes. Industry is really society organized to produce. Society is not stable; it is governed by no fixed principles. Ideas change, and with change come new demands which have to be met. All these things are inseparable from the march of social and industrial progress. Our arbitration jurisdiction has to try to keep pace with this march. For this reason our Arbitration Court judges are entitled to the utmost symphathy, which is not always extended to them. We should, I think, give them credit for trying to do their job impartially; but, as we know, not infrequently, they are accused of class bias by people who themselves are blinded by class bias.

Recently, it was suggested that the federal court should assume complete jurisdiction over industrial legislation in Australia. It was this suggestion that prompted me to direct particular attention to this important subject this evening, in the hope that it might lead to a profitable discussion. Recently, the Employers Federation in New South Wales expressed the view that there should be a common rule throughout Australia with regard to the basic wage, and the hours of work in industry; and Mr. Stevens, the Premier of that State, has declared that his Government is quite willing to transfer jurisdiction to the federal tribunal. But the Attorney-General (Mr. Latham) has mentioned the practical difficulties in the way of such a change, and has indicated that it is unlikely that this Government will take any action in the matter. I very much doubt that it is politically possible, let alone desirable, to transfer all industrial jurisdiction to the Commonwealth. The honorable member for Herbert (Mr. Martens) who, I know, is interested in this matter, can supply one very good reason why such a change should not be made. In Queensland, recently, when there was an application before the State court to reduce the basic wage by 8s. a week, the court deferred its decision until February next, quite unmindful of the fact that the people in the other States have already made considerable sacrifices, while Queensland, which has made such a terrible fuss about sugar, is not yet prepared to do so.

Mr Gander:

– Mr. Lang did that six months ago.

Mr HUTCHIN:

– Yes, and the people of New South Wales told him in unmistakable terms what they thought of him. Of course, the time will come when Queeusland must step into line with the other States. In the New South Wales railways case which was before the Arbitration Court recently, the court itself suggested that matters of industrial concern in connexion with railways administration in all the States were so important and complex that it might be advisable to hand them over to State tribunals. The principal, and, in my opinion, the most regrettable feature of our industrial life, is the fact that practically all election campaigns, whether Federal or State, are fought on .industrial issues. Surely, that is wrong. We had the federal election of 1929, which was really a referendum as to whether federal arbitration should, or should not, continue. I am. entirely in accord with, the decision which the people of Australia gave, on that occasion, that federal arbitration should continue. At the last election in New South Wales, the industrial issue again obtruded itself, and submerged everything else. The principal placard exhibited by the Lang group was a picture of Mr. Stevens, the then Leader of the Opposition, with the figures “£2 lis. 6d. “ placed across his f forehead. The real issue of sane finance and common honesty was pushed into the background, and this greedy and selfish cry of the wage for to-morrow became the chief election issue. Although the electors of New. South Wales were afraid of a reduction in their wages, they were more afraid of Langism, and’ so Langism received its answer. A general reduction in wages has taken place throughout Australia excepting in Queensland, and the manner in which the workers of Australia have received and abided by that reduction constitutes the logical corollary of their attitude of 1929, when they said that they stood for federal arbitration. In 1931, when the Federal Arbitration Court reduced their real wages by 10 per cent., they abided by that decision, and for that action they command my admiration. Many persons urged that the workers should indulge in regulation strikes and all sorts of nonsensical actions to thwart the verdict of the court, but in the long run not much notice was taken of them, and Australia remained remarkably clear of industrial disputes. It is a distinct feather in the cap of the Australian working man that he took- his medicine in the way he did, along with the rest.

Mr ROSEVEAR:

– He had no alternative.

Mr HUTCHIN:

– If the honorable member wishes to take credit from the working man for that action, he may do so. I do not.

I come now to the question of whether it is possible to centralize arbitration. In looking through some awards, I have found one which is deserving of special mention, and in commenting upon it, let nic say that I am not throwing stones at the jurisdiction or at the judge who made the award. What I want to show is the extent to which rigidity and stupidity may sometimes enter into the making of awards. I refer to the clothing trades award of 192S, which is binding on employers in respect of each and every person employed by them whether members of the union or not. The award is a mass of detail, occupying 50 pages of the Commonwealth Arbitration Court’s reports. It provides for 86 classifications in the gentle art of tailoring. In addition, it mentions no less than 1,080 separate and special articles of piece-work for which the prices are set out. Everything from bishop’s cassocks to military officers’ great coats and the sack suits of the ordinary man in the street is mentioned. On looking through the items, one is amazed that a court, which is really national in character, should have to go into so much detail. There are buttons on both cuff and coat, and slits here and there in a suit of clothes. I can well imagine that Judge Drake-Brockman, who made this award, must have wished that civilization had not advanced so far, and that it would have been a great relief to him had we been back in the days of Adam when the sole article of clothing was a fig leaf. This award provides for 1,080 items of piece-work. One item which is somewhat humorous, relates to an operation in tailoring known as basting. The award provides that, in the basting of trousers, the basting of the seat only is to cost 4d. Fancy a national and central arbitration court being asked to stipulate a price of 4d. for a domestic duty like that! The court also laid down conditions in rather an intimate, detailed, and unnecessary way. Chairs must have backs to them and lighting and heating must be provided. The factory must be swept each day and scrubbed every three months. It also made provision for a first-aid chest and specified in detail what it should contain.

Mr Holloway:

– Is not the honorable member in favour of the provision of a first-aid set?

Mr HUTCHIN:

– I thoroughly agree that the most up-to-date hygienic factory arrangements should be made, and I should say that I have had ten times as much experience as the honorable member in the making of such arrangements.

Mr Holloway:

– Yet tho workers had to approach the Arbitration Court in order to compel the employers to provide first-aid chests in factories.

Mr HUTCHIN:

– There was no need for the Arbitration Court to instruct the employers to do an obvious thing like that. I have no doubt that the learned judge was glad when he had given his award. It -took him months to compile it, and its compilation cost this country thousands of pounds. The only result is an award which imposes in that particular business a rigidity of operation and detail which it would be much better without.

Mr Holloway:

– That was the first case undertaken by Judge DrakeBrockman.

Mr HUTCHIN:

– It is a fine example of what should not happen under the federal arbitration system.

In Australia there are five principal groups of wage earners - those in government services and the service of public bodies ; those engaged in manufacturing and services incidental thereto; those engaged in agriculture and allied pursuits; those engaged in the mining industry ; and those engaged in industries pf a purely interstate character. The question is whether an obligation should be placed on federal arbitration in regard to each of those five groups. I am trying to luck at this issue from a practical point of view, apart altogether from polities. I consider that it is practicable and advisable that a centra] authority should lay down general standards in respect of the living wage and working hours, and that it should adjudicate in respect of purely interstate industries. But arbitration should be decentralized in respect of industries which are not of an interstate character. That is a function which should be handed back to the States or, better still, to industries themselves, so that the employer and employee may confer and settle their own disputes on the job. It is because people like honorable members opposite, whose political origin is due to union activity, are not willing to confer in this way that there is this gap between employer and employee, which, while it exists, does not permit the country to progress.

I shall now refer to the report which the British Economic Mission submitted to the Federal Government on the occasion of its visit to Australia in 1929. The members of that mission were knowledgeable men; they made a thorough investigation and passed opinions regarding our industrial problems. To many of the members of this House, those opinions are well known. The following is the gist of their remarks upon our industrial arbitration system: -

The indictment of the system of the Arbitration Courts which we have heard is a heavy one; and we feel that it is well founded on many grounds, and particularly on the ground that the system has tended to consolidate employers and employed into two opposing camps, and has lessened the inducement to either side to resort to round table conferences for that frank and confidential discussion of difficulties in the light of mutual understanding and sympathy which is the best means of arriving at fair and workable industrial agreements.

If honorable members do not agree with that statement they are blind to the real facts. We have, in Australia, because of the arbitration system which we have built up, the unfortunate spectacle of organized employees massed on the one side of industry and organized employers massed on the other side. Every endeavour to get them together has failed, and as a result the development of decent industrial relations in many of the main unions of the Commonwealth has been retarded. Lord Amulreewho was the president of the British Industrial Court for a number of years,’ in his review of industrial arbitration made this significant remark -

One conclusion, however, stands out prominently from the mere narrative^ namely, that the settlement of industrial differences, otherwise than by means of a trial of. strength, between employers and work-people is primarily not a matter of administrative machinery or legislative provision, but of goodwill and common sense.

The main point that I wish. to stress is that our industrial troubles’ will be solved, not so much by the Arbitration Courts, as by the application of goodwill and common sense. Mr. Jethro Brown, President of the Industrial Court of South Australia, as far back as 1920, said -

The Court merely prescribed minima. The hope of the future depends to a large extent upon extra judicial arrangements which, will provide for the employee a greater security of employment and a higher standard of living than can justly bc ensured or imposed by courts which have to deal, not with an individual business concern, but with industry as u whole.

We have evidence of the progress that lias been made in industrial conditions from the days of sweating in home industries, to tho day of the living wage. We can never expect to have complete agreement in industrial matters while the protagonists of socialism claim that capitalism has failed and that the workers must take over industry if they are to obtain from it that to which they are justly entitled. I have livel among the workers all my life and I know perfectly well that they do not want to control industry; that all they are asking for is a fair deal. If they want a fair deal, it is up to them to confer with the employers, and tell them what they consider is fair. They should do their part, not only to sustain the stability of their own particular industry, but also to promote industrial welfare throughout Australia. On the other hand, the employers must set an example to the workers in encouraging round table conferences. All their cards must be placed on the table, and they should use their efforts in the direction of benefiting Australian industry as a whole. If those things are not done, Australia, so soon as it emerges from the depression, will again experience the industrial strife which was rife during the ten years prior to 1929. There are signs of it already, in the recent wages dispute in the textile industry in the southern States. That industry, which was in the doldrums for some years, has gradually become more prosperous. The warehouses, owing to the depletion of their stocks, have placed steadily increasing orders with the f factories.

Mr Holloway:

– That has been the result of the tariff.

Mr HUTCHIN:

-To some extent it lias been the result of the tariff which the Scullin Government passed; but the absorption of existing supplies has been the principal factor.

Mr Riordan:

– -Does the honorable member believe in the kind of round-table conference offered to the public servants?

Mr HUTCHIN:

– I do not know much about that matter, but I do know something of the dispute in the textile industry.

For many years industrial conditions in that industry were discussed at roundtable conferences, and later the decisions arrived at were made consent awards of the court. But there came a time when the minority asserted itself and said to. the workers in that industry “ Come with us, and we will get you more wages “. They held a gun at the heads of the employers who, unfortunately, gave way. Ultimately, the matter was referred to the court.

Mr Holloway:

– Did not the present dispute occur because of a 20 per cent, reduction ?

Mr HUTCHIN:

– Because of the cost of living award the wages of workers in the textile industry were due to be reduced by 15 per cent, from the 1st July last. The union had agreed to that arrangement ; but because the drop was a severe one the minority objected to it. Arguing that because the industry was prosperous there was no need for the cut, they went back on their own agreement. If there is to be peace in industry; if goodwill and efficiency are to be maintained; if the fruits of industry are to become greater, both employers and employees must show a willingness to face the facts. If in times of difficulty an industry cannot cam. profits, and calls on its workers to make sacrifices, it should, when prosperous times return, treat its employees with corresponding consideration. If peace is to be preserved in industry, the parties concerned in a dispute should not rush to the Arbitration Court at the first opportunity, but should rather sit down together and confer about their differences. An essential element of success is a feeling of goodwill between employer and employee. What is both fair and possible should be the criteria in deciding what the workers in industry should be given. It is essential that industries make good profits in order to provide funds for the extension of business and the financing of new activities. ‘ In the interests of the workers as well as of the shareholders the profits in industry should be substantial. In the accounts of every concern provision must be made for depreciation, insurance and contingencies. Finally there comes the time when a net profit is declared. If in times of adversity all must of necessity make sacrifices then, surely when times are prosperous and profits are again made, all should sh are reasonably in the good things.

Mr WARD:
East Sydney

.- The honorable member for Denison (Mr. Hutchin) dealt somewhat extensively with the subject of management, which concerns, not only the workers in industry, but also every other section in the community. I am not convinced, as the honorable member for Denison appears to be, that the decisions of the various tribunals which decide wages and conditions in industry have been arrived at impartially. The action of certain judges confirms my opinion. It has been said that all must share in the sacrifice rendered necessary by the reduction in the national income, but some of the judges have not been willing to bear any share of the burden themselves. Judge DrakeBrockman, who was previously a Nationalist Senator, refused to make any sacrifice at all.

The CHAIRMAN (Mr. Bell).Order! The honorable gentleman is not in order in reflecting on the judiciary.

Mr WARD:

– In the Estimates, provision is made for payments to judges of our courts, and surely I am in order in referring to them. Even if honorable members are not desirous of hearing what I have to say, the people outside are. Judge Drake-Brockman, who receives, not £3 10s. a week, but £2,500 per annum, and, in addition, £2 2s. a day travelling expenses, refused to sacrifice any of the emoluments paid to him.

The CHAIRMAN:

– Order ! The honorable member must not continue to reflect on the judiciary.

Mr WARD:

– If the Chair is not prepared to permit me to continue, it must establish the fact to the public outside that it is not possible to speak the truth in this Parliament.

The CHAIRMAN:

– Order ! The honorable member is distinctly out of order, not only in reflecting on the judiciary, but also in not complying with the ruling of the Chair. The Chair is not concerned with what the public knows, or thinks, about this subject. Its duty is to see that the debate is conducted in accordance with the Standing Orders.

Mr WARD:

– I had no desire to reflect on the Chair when I en deavoured to point out that the Standing Orders of this Parliament prevent a full discussion of these matters.

The CHAIRM AN.- Order ! The honorable member himself is as much responsible for the Standing Orders as is any other honorable member.

Mr WARD:

– I have never been a member of a majority party in this Parliament.

Mr Lane:

– I rise to a point of order. Is the honorable member in order in saying that it is impossible to speak the truth in this House?

The CHAIRMAN:

– The Chair has already called the honorable member for East Sydney to order for that remark, and there is no need for the honorable member for Barton to raise a point of order.

Mr WARD:

– The Standing Orders do not allow a full discussion on some matters of importance. That I am prevented by the Standing Orders from mentioning, even without comment, the action of a judge who, while prepared to reduce the wages of the workers, is not willing to make any sacrifice himself, shows that this Parliament is concerned with misleading the people.

It is all very well for the honorable member for Denison (Mr. Hutchin) to talk about round-table conferences and agreements between employers and employees; but any one who has had experience of round-table conferences knows that while the workers are asked to lay all their cards on the table, the employers are not willing to divulge the enormous profits they made in good times. The employers expect the workers to rely on their honesty. Employers who have amassed huge fortunes at the expense of their employees would be entitled to sit at these round-table conferences. They would state their terms to the workers in a “ Take-it-or-leave-it “ at titude, knowing that, because of economic circumstances, and the large army of unemployed in our midst, they can practically impose on their employees whatever terms they desire. The Bruce-Page Government desired to destroy the system of arbitration in industrial matters. The Arbitration Court was all right from the point of view of the employer, when the country was prosperous, and indus tries were expanding, because then, the employers desired peace in industry so that production could be continuous. But to-day, .the position is entirely changed. Production is decreasing, and tho need for the Arbitration Court, from the employers’ point of view, is not so great. Indeed, the court is a hindrance to their plans, and they want it wiped out. This afternoon, some supporters of the Government said that, although the Statistician’s figures showed an increase in unemployment in the last quarter, there would bc a decrease in the next quarter. It is said that figures cannot lie, although liars can figure. Statisticians, so-called experts, and economists, can prove almost anything they set out to prove. In New South Wales to-day, a worker who is given one week’s relief work in five weeks is classified as being employed when lie applies for relief, so that his position is relatively worse than before he received the one week’s work.

The members of the party with which I am associated have no time for the Premiers plan. We knew, when the plan was ‘formulated, what sacrifices would be demanded of the people in order to comply with it. The Scullin Government is partly responsible for what is taking place to-day for it inaugurated the Premiers plan. In his budget speech, Mr. Lyons said -

It was in these circumstances, anil under Iiic pressure which compelled the resolute facing of inexorable facts, that the historic gathering in Melbourne in May, 103 J, evolved what has become known as tho Premiers plan.

The Premiers plan provided for budget equilibrium. The people were told that all sections of the community must, make sacrifices in order that budgets might be balanced. The pensioners accepted the sacrifice then demanded of them more or less willingly, believing that the principle underlying the Premiers plan was just. Now, when budget equilibrium has been obtained, they are asked to make a further sacrifice. In the press to-day, is stated that the Government has a surplus of £2,819,000 for the first quarter of the financial year. Yet the Government demands further sacrifices on the part of this unfortunate section in order, ostensibly, to balance a budget that has in reality already been balanced. It does not intend to utilize any portion of the available surplus to lighten the burdens of the old-age, invalid, and war pensioners. Provision has been made in this year’s Estimates for a reduction of the expenditure on war pensions by £500,000.

On examining the decisions reached at the Imperial Economic Conference at Ottawa, we notice that Australia undertakes to remove the prohibition against the importation of certain British goods, to remove customs surcharges, and to reduce or remove the primage duty, so soon as Commonwealth finances will permit. Any one can see readily what will happen to any surplus. The Prime Minister has already given an undertaking to the wealthy land-owners that he is prepared to abolish the land tax immediately the financial position will enable him to do so. The fate of the section of the community that I have the honour to represent in this chamber can readily be imagined. Unlike some honorable members, I do not claim to be the representative of all sections. I simply represent the real producers of wealth - the workers, including those who, though willing, have been denied the right to work. [Quorum formed.]

Some honorable members who have criticized the budget have stressed tho point that there must bc a restoration of commodity prices. It has been said that the basic wage in New South Wales has been kept at an unreal level, and that, therefore, industry in that State has been suffering; but I ask honorable members if they expect a restoration of world prices to result from the policy of wage reduction and the reduction of the purchasing power of the community. From the 31st December 1929, until recently, the basic wage in New South Wales remained at £4 2s. 6d. ; in Victoria it dropped from £4 10s. 6d. to £3 3s. 5d.; in Queensland from £4 5s. to £3 14s. ; and in South Australia, from £4 5s. 6d. to £3 3s. Instead of the reduction resulting in any increase of employment, which honorable members opposite claim always follows a reduction of wages, we find that unemployment has increased as the result of a low-wage policy. We know that it is a world problem. Even if the workers could be induced to give their services free, it would be impossible to dispose of all the goods that are produced. There are insufficient markets to absorb the present world’s production. I recently quoted figures regarding the production of coffee in Brazil, of wheat in the United States of America, and of other commodities in other countries, and I showed that it was impossible to find markets for all that is produced. I pointed out that during a certain period a ship laden with coffee left Rio de Janeiro daily, and dumped the whole of its cargo into the sea, because there was an over-production of that commodity. Honorable members think that, by reducing the cost of production, advantage will be gained by the industries of this country. They will find that other countries will retaliate, and so in the see-saw policy of keeping the workers down, they will be brought down to a standard that will eventually be below that of the Indian coolie, unless measures are adopted by the workers to prevent it. Surely wages are low enough in India and China, but does anybody suggest that those countries are enjoying an era of prosperity? That is not the way back. I make no apology for my belief that the present order of society has outlived its usefulness. The problems of the world are not to be solved merely by governments obtaining credits; they must be tackled in a scientific manner. Owing to the introduction of improved machinery in all branches of industry, wealth is being produced like water; but the people who could consume the articles that are being produced are denied the means of purchasing them. If finance were nationally controlled, and industry were so organized as to maintain the purchasing power of the people, enormous markets would be provided; but our problems are not to be solved merely by providing additional credit for private enterprise. As a matter of fact, private enterprise is bringing about its own downfall because of insane competition because it does not work on any set plan, and because it pays no regard to the requirements of any particular market. The capitalists themselves are bringing about the downfall of the present order of society.

From the view-point of the bondholders or manufacturers, the present position may appear to be favorable but it is not. We cannot hope to continue on existing lines. We have not “ turned the corner “. Theposition of the general mass of the community has never been worse than it is to-day. It is not consoling to an unemployed father of a family, or to any person who is seeking employment, to be told that to-day Australian stocks are above par. There is much talk about the success of our conversion loan overseas. Credit for that has been given to the Resident Minister in London, but I think that if anybody is deserving of praise for bringing about a reduction of interest on Australian overseas loans it is the ex-Premier of New South Wales who first made the proposal. I well remember that when Mr. Lang first suggested that our overseas interest charges should be lowered, honorable members opposite declaimed about the need for honouring contracts and obligations. We need not turn to the pages of the Labor Daily, the Red Leader or the Workers Weekly for criticism of the “success” of the latest conversion. It was pointed out in last Sunday’s Truth that Mr. Bruce had been forced to negotiate for a much more favorable interest rate than that previously offered. Honorable members may desire to know why the New South Wales Premier (Mr. Stevens) left Sydney hurriedly to consult with the Prime Minister at Canberra. They may wonder whether it was not due to the fact that the right honorable member for Flinders had failed in his mission overseas. The comment of the world’s economists, as published in the British press, bears out my contention that the terms offered were not favorable to Australia, because they say that the conversion terms eventually accepted cannot be considered as a concession, having regard to the present, state of the money market on the other side of the world. The British Government has been able to convert stock at 2 per cent. for a similar period to that for which the New South Wales debt has been converted. It may be safely assumed that our loans would have been converted at a lower rate of interest if the Resident Minister in London had not been sent overseas. But the right honorable member, who was compelled to take a subservient position in the Lyons Cabinet, had been injured in prestige, and he had to proceed to the other side of the world in order to restore his lost political fortunes. Probably after another loan conversion, which we may expect the press to applaud as a wonderful success, we shall find him returning to Australia in a blaze of glory, and honorable members opposite will no doubt find a soft corner for the present Prime Minister, so that the right honorable member for Flinders may once more bc Prime Minister.

The Leader of the Opposition suggested that it was necessary to restore the commodity prices prevailing in 1929. No doubt the right honorable gentleman firmly believes that such an action would provide a solution of the problem. He said that what was wanted to-day was not inflation but deflation; but I point out that in order to restore the 1929 price levels, some inflation would be necessary. Many honorable members believe that by stimulating primary production our difficulties would be removed. As a matter of fact, the members of the Country party realize that prices of primary products are still falling, and will continue to fall.

We find that because of the intense competition to-day for world markets, British imperialists who have invested money in secondary industries in Great Britain are desirous of crushing Australian secondary industries, and making Australia a country for the production of cheap raw materials. A further conflict of interests is due to the fact that American capital is also invested in Australian secondary industries, and it is natural that the capitalists of America will not sit idly by without protest. Conflict in the economic field eventually leads to armed conflict, and - that is a danger which the workers must guard against. One has only to mention the word “ Russia “ in this chamber, and many honorable members immediately lose their mental balance. They deprecate the importation of Russian timber, and talk of the necessity for imposing a dumping duty upon it. But I ask honorable members why they have not considered the wisdom of encouraging trade with Russia. Other countries have realized the possibilities in that direction, and are taking advantage of them and evidently on a profitable basis. Germany and the United States of America do a large amount of trade with’ Russia, and so does Great Britain, but not so much trade as she could if the privatebanks would bc prepared to meet presentday conditions in that country, and follow the example of Germany and the United States of America by granting credits up to eighteen months. British bankerswere not prepared to agree to a period longer than twelve months. The opportunities that they discarded were grasped by German industrialists and American producers; and it is a remarkable fact that the credits extended to Russia by Germany were made possible by loans to Germany by British banks. Therefore, British capital actually was used against the interests of the British people in those markets. Any one who has studied the figures knows that the quantity of Russian oil entering Great Britain is becoming greater year’ by year, and that Russian wheat is preferred to the Australian product in the British market, the argument being that if Great Britain did not purchase it, it would be forced on to other markets and would thus cause world prices to be reduced.

I have heard many honorable members argue that Australia relies wholly upon her exports of wheat and wool, and that in order that those industries may survive they must be subsidized by means of a bounty or through the agency of the exchange. What I should like to know is, if we are all leaning upon those industries, and they in turn are leaning upon us, by whom is the whole supported? The Leader of the Opposition (Mr. Scullin) said that the exchange rate was a direct advantage to primary producers. The advantage that it confers is not so great as might appear on the surface. A raising of the exchange rate would increase the return which the primary producer received for his product, but concurrently it would also add to the overseas indebtedness of the governments of this country, and make it necessary to levy additional taxation so that budgets might be balanced.. The men who are producing arc in a position to pay taxes, but the unemployed cannot do so ; consequently a big portion of the taxation that is necessary for the discharge of our overseas indebtedness is paid by the primary producers themselves. Thus it cannot be said that the raising of the exchange rate can be considered as an unmixed blessing. Yet some honorable members and others say that it ought to go higher and higher if a greater measure of prosperity is to be achieved ! I confess my utter inability to follow their line of reasoning.

The Leader of the Opposition said that in clays gone by he was, and that he still is, opposed to inflation. In ray opinion, however, the arguments that he used could not be construed in any other way than as in favour of inflation. The right honorable gentleman said that Ave could not rely on the private banks to help us in our difficulty, and that Ave ‘ must expand the scope of the Common- wealth Bank. Why did he not take that action when he had the opportunity to do so as Prime Minister of this country? When I entered this Parliament it Avas asserted by many members of the Scullin Government that I was not a Labour nian. I can at least say that I have never violated any working.c!ass principle. In the 1929 election campaign, much. Avas made of the fact that the then Commonwealth Bank Board Avas hostile to the policy of the Labour party, and was not prepared to do what that party expected of it, to give effect to that policy, Sir Robert Gibson was, the one man to whom the Labour party took strong exception, because it, believed that he was nothing more than a representative of the private banks on the Commonwealth Bank Board - the present Leader of the Opposition, and members of his party, held that belief at the time - yet, instead of doing what Avas expected of them, they re-appointed him to the chairmanship of the board. I remember the cx-member for Dalley (Mr. Theodore), speaking on the Central Reserve Bank Bill, say that that measure was never intended to weaken the position of the private bankers, but that on the contrary it would strengthen their position. Evidently there has been a rapid change of belief iu regard to what the private banks can do to rehabilitate the position of the country. The Labour party, of which. I have the honour to be a member, has always held the view that there should bc national control of finance. It is of no use honorable members saying that this and other matters must be removed from political control. Everybody knows that those who occupy positions on institutions such as the Com- monwealth Bank and the Arbitration Court hold certain political opinions, and that those opinions affect their decisions. Judges may make flowery speeches from the bench regretting that it is necessary for them to ask the workers to make further sacrifices, but they compel the making of those sacrifices while refusing to take similar action themselves.

The CHAIRMAN:

– Order ! On a previous occasion the honorable member was called to order for comments such as those that he has just made. I hope that he will not repeat the offence.

Mr WARD:

– The Minister for the Interior (Mr. Parkhill) said that the Leader of the Opposition had spoken in an abstract way. No other description can be applied to the honorable gentleman’s own remarks. He said that there were signs of a return to prosperity, and that he doubted if there were 400,000 unemployed in this country as he had never seen them iu his .travels. No one would expect the honorable gentleman to come in contact Avith unemployed in receipt of food relief, because he does .not move in such quarters. His travels take him to where there are genuine unemployed - those who receive dividends and fees and other such forms of dole. He also said that Ave should have a return of confidence. I Avas led to believe that with the return of the present Government in the Commonwealth and the defeat of Mr. Lang in New South Wales, confidence would automatically be restored. Let, us examine this matter. I have heard it said that before confidence could be regained it Avas necessary to get our men back into employment; that before we could get our men into employment Ave had to enlist the assistance of the bankers; and that before the assistance of the bankers could be obtained there had to be a return of confidence. Evidently there is a complete circle, and the Government does not know where to begin the task. It is all very well to talk glibly of a return of confidence and of there being signs of returning prosperity. Any one who cares to visit the quarters that I frequent during the week-end in Sydney will ascertain what the unemployed are suffering.

Mr Stewart:

– No, thank you.

Mr WARD:

– I assure the honorable member for Parramatta (Mr. Stewart) that I do not spend my week-ends in flats at ElizabethBay, as he does, but in caring for my constituents. He would be wise to attend to his, if he hopes to retain his seat after the next appeal to the people. We do not all possess luxurious limousines in which we may travel the country enjoying ourselves at the expense of the people, while shutting our eyes to the misery that exists in our electorates. I have no misconceptions regarding the sufferings of the unemployed. I have been one of them, and I mix with them continually. I know the demands that are made upon them. Those who talk of having made sacrifices should try the. experience of existing on the dole, and by mixing with these people learn whether there are many cases of fraud among them. If they mixed with old-age and invalid pensioners they would find that many of them are existing on two meals a day because they cannot afford a third. Yet whenever honorable members go through an all-night sitting, they have a fourth meal provided for them. I do not blame those who think differently from me; probably the environment in which they have been brought up has not been the same, and they do not understand these things as do men of the Labour party who have been among the people and have suffered and worked with them. The problem will not be solved by the making of flowery speeches, or by optimistic references to the prospects of an early return to prosperity. I say quite candidly that I am convinced that what we are experiencing is not an ordinary depression but the decay of the social order. The governments of the world will not stabilize the position by a policy of low wages and intensive competition among themselves. The party to which I belong is hopeful not of stabilizing it, but of changing society in such a way that the first care of every government will be the needs of the people and the first demand upon every industry the satisfaction of those needs. I ask honorable members, as intelligent men, whether they believe that food should be cast into the sea when there are people who need it, whether factories should remain idle when workers are crying out for boots, clothing, and shelter, and wish to be given the opportunity to keep the wheels revolving. If they can show me how it is possible to stabilize the world position in any other way than that which I have suggested, they are much cleverer than I give them credit for being.

Mr STACEY:
Adelaide

. -I wish, first, to congratulate the honorable member for Denison (Mr. Hutchin) upon the speech that he delivered to-night. The latter portion of it interested me very greatly. The adoption of his proposal would go far towards bringing together master and man in Australia. I have been a large employer of men, and have never concerned myself as to whether those whom I engaged were unionists or not. The conditions of their employment were fixed by mutual arrangement between them and me. I always gave them to understand that, should trouble arise, they should mention the matter to me and not “ tell it to the world.” I never had any difficulty in adjusting a grievance. If this principle were adopted, not only by individual employers but also by firms and companies, many difficulties would be avoided. There are factors which to-day make ‘it almost impossible for master and man to work amicably together, and party politics have been largely responsible. Frequently the elected representative of thepeople is merely a rubber stamp, the real politician being the trade union organizer. I would refuse to enter Parliament on such a basis. I hope that the suggestion of the honorable member for Denison will be adopted throughout Australia, and that much good will be obtained from it. I listened with interest to the budget speech delivered by the Prime Minister, and I congratulate the right honorable gentleman and his colleagues of the Cabinet upon presenting such a comprehensive and able document. Its contents show plainly that we on this side have honored the promises that we made to the people last December, and that it is the intention of the Government to continue on that course.

  1. also listened with interest to the cri tical speech of the right honorable the Leader of the Opposition (Mr. Scullin). He referred to the present Commonwealth surplus. That is easily explained. For the past two or three years the warehouses in Australia have had to draw heavily on their stocks, which naturally became almost depleted. The recent necessary replenishment of those stocks has been largely instrumental in bringing about the surplus mentioned by the right honorable gentleman. He claimed that the Government had made a mistake in lowering the tariff. I remind him that the Government promised the people that it would revise the tariff within reason. It has fulfilled that obligation. I also remind him that high tariffs are detrimental to our trade, and cause retaliation on the part of those on the other side of the world. In that respect, it is always well to bear in mind the words of the Scriptures -

As ye would that men should do to you, do ye also to them likewise.

When this Government assumed office Australia was on the verge of a financial catastrophe. Every fair-minded person will agree that the most serious of our difficulties have been overcome. I do not claim that we have by any means regained prosperity, but the worst has passed, and confidence in Australia has been restored. That is very strikingly demonstrated by the rise that has occurred in the value of our stocks, both here and overseas. While but a few months ago they were down at least 20 points, to-day many of them are above par. The highly successful New South Wales conversion loan just arranged by the Resident Minister in London is also a reflex of our satisfactory progress. Certain honorable members opposite have adversely hurled criticism at the conversion, but that is. to be expected.

I wish to make, a short statement regarding ‘the amendment to the Financial Emergency Bill that was moved by the honorable member for Angas (Mr. Gabb). At the time I had not the opportunity to do so. During the elections I pledged myself to support any motion for the reduction of salaries of members of this Parliament to £600. I simply honoured that pledge. I realize that a salary of even £800 is inadequate properly to sustain honorable members from the more remote States, such as Western Australia, South Australia, Queensland and Tasmania. In my own case I shall be marooned in Canberra for four months. Honorable members from New South Wales and Victoria are in a different position. However, had I been called upon to accept the position at a lower rate, or even without remuneration, I should have been prepared to do so, in an endeavour to help the nation in its time of trouble.

Mr Ward:

– The honorable member can afford to lose on the deal.

Mr STACEY:

– I cannot. I regret very much that the nation has lost the services of the honorable member for Wakefield (Mr. Hawker), as Minister for Commerce. However, the honorable gentleman made the same promise that I did, and he loyally abided by it. As a result the Ministry has been deprived of one of its most capable members, whose services Australia can ill afford to ‘lose at the present juncture. Nevertheless, I am confident that the honorable gentleman will still continue to give of his best as a private member.

I am quite satisfied that the Government has done the right thing in connexion with invalid and old-age pensions. Although much criticism has emanated from honorable members opposite on the subject, I have heard little from the pensioners themselves. It has been stated that these pensions have been reduced from 17s. 6d. to 15s. a week. That is incorrect. Under the amended act, pensioners will still continue to receive 17s. 6d. as heretofore. I have received letters from a number of pensioners in South Australia who are satisfied that what has been done is for the best. Honorable members opposite fill volumes of Hansard with vilification of the Government, merely in an endeavour to poison the minds of the people. Fortunately, the pensioners know that they receive from honorable members on this side as much sympathy as they do from honorable members opposite, and certainly more help.

Social services have cost the Commonwealth Government within £6,000,000 a year of one-third of its total income. The whole thing has become top heavy, and, perforce, must have broken down had it been allowed to continue. So the Government courageously called a halt. I sincerely trust that, it will endeavour to evolve a system of national insurance providing that all citizens may subscribe to a fund from which, when they attain the age of 60 or 65, they may draw an amount which will sustain them, without having the stigma of charity attached to the transaction. During the last 20 years, the amount paid in invalid and old-age pensions has increased from £2,000,000 to between £10,000,000 and £11,000,000 per annum. Had pensions not been reduced by the Scullin Government from £1 to 17s 6d. a week, the amount would have totalled £13,000,000 per annum, an impossible burden for so young a country. I realize that the aged are entitled to be cared for. I have here an application for a pension from a resident of South Australia, a Mr. Ali Najah, an Assyrian. This man has been naturalized in Australia for at least 45 years, has paid his rates and taxes with regularity, and has proved a good citizen. He has attained the age of 67 years, and upon applying for a pension, has met with refusal. That is wrong, and I hope that the act will be amended to meet such cases.

When we appealed to the people in December last, we promised that, if returned to power, the tariff would be subjected by us to a reasonable revision. That has been done. It will be further revised, in accordance with the Ottawa agreement, and I am confident that the result will give satisfaction to the community generally.

I shall now deal with several matters relating to the FederalCapital Territory. Earlier this year, I made some remarks in this chamber about the high cost of administration in this area, and mentioned particularly the loss of £52,000 which was incurred in the running of the hotels in Canberra during 1931. That figure is given in the AuditorGeneral’s report. I am opposed to the continuation of a policy which is so satisfactory in its results. It was a great mistake to place these hotels under government control. I advocated last February that tenders should be called for the leasing of these two establishments. I believe that if they were run by private enterprise, the results would be much better in every respect. Governments are not competent, in my opinion, to run businesses of this kind. I admit that the accommodation provided at these hotels is good, and that everything possible is done for the comfort of guests ; but the conditions otherwise make profitable operations impossible. I believe that, although the staff at Hotel Canberra numbers 51, the average number of guests is not anything like so large. If the hotel were run by private enterprise, the lessee would undoubtedly become the manager, and he would take care that his operations were profitable. What is every one’s business is no one’s business. That is the trouble in regard to government business undertakings, speaking generally. I am glad that the Government has called for tenders for the lease of Hotel Wellington and Hotel Ainslie. I believe that one of these hotels is shortly to be opened under private enterprise. It would be a good thing for the country if tenders were called for the lease of Hotel Canberra and Hotel Kurrajong. Iknow that we cannot expect to get a rental commensurate with the capital cost of these premises, and I would not look for it; but, as I said on a previous occasion, it would pay the Government handsomely to put a lessee in rent free, for the taxpayers would then be saved the heavy losses now being sustained. The system under which the hotels are run is quite wrong. A similar meal to that which costs about 4s. at Hotel Canberra can be obtained in the Parliamentary refreshment room, better cooked and better served, for 2s. In both cases it would be provided under government control There is no justification whatever for charging 4s. for a meal which can beobtained a quarter of a mile away, under the same system of management for 2s.

Mr Gabb:

– We ought to cut out the parliamentary refreshment rooms..

Mr STACEY:

– I do not say that ; but I dosaythatthepricesshouldbe the same in both places. I offer, in all sincerity, the suggestion that tenders should be called forthe lease of our hotels, and trust that the Minister for the Interior (Mr. Parkhill)will take it seriously. I entered this Parliament as a business man, and I wish to see the affairs of the Government conducted on business lines.

I am glad that £10,000 is being provided on the Estimates for the transfer of another department from Melbourne to Canberra.

Mr Dennis:

– It is a waste of money.

Mr STACEY:

– That is a matter of opinion. When Canberra became the Seat of Government, it was intended that the central staffs of all the departments should be transferred to it. I believe that provision has been made here for a population of between 25,000 and 30,000 people. It. is not fair to the business people who have established themselves in Canberra, or to the officers of the departments already here, that other departments which should be transferred, are allowed to remain in Melbourne. If all the departments ultimately intended to be located here were transferred without loss of time, Canberra would become more revenue producing.

On several occasions, I have referred in this chamber to the subject of afforestation. Since then, only a fortnight ago, I have had the opportunity, by the courtesy of Mr. Lane-Poole, to inspect the forest plantations in the Federal Capital Territory, not only on Mr Stromlo, but also much farther afield. But neither these visits nor my conversations with Mr. Lane-Poole have altered my opinions. I still believe that the authorities are trying to grow five or six trees where only one can grow really well. It is a satisfaction to me to know that, in consequence of my representations, Mr. Lane-Poole has agreed to thin out the trees on a portion of the Mr Stromlo plantation so that each tree will have a minimum spread of 16 feet. This will reduce the number of trees per acre from 500 to about 170. The effect of this policy can be closely observed in the next two years. I feel confident that it will be so satisfactory, and that the growth of the remaining trees will be so stimulated, that other portions of the area will be treated in a like manner. After visiting the area being planted beyond the Cotter river, I am convinced that the rainfall in that locality is greater than it is at Mount Stromlo, and that the soil and conditions generally are better. In that locality the trees have been planted twelve feet apart instead of eight feet as at Mount Stromlo. It will, however, be necessary to remove the lower branches of these trees for a number of years, to prevent the timber becoming knotty. I do not think that it will ever be practicable to produce in this Territory pinus insignis of the type grown in the south-east of South Australia, where the timber is equal to that grown in any part of the world ; but it should be possible to produce in the Federal Capital Territory timber of a superior quality to that now being grown. In studying afforestation from the commercial aspect, consideration must be given to the cost of transport, and in this connexion we have to remember that the timber produced in the Federal Capital Territory must be transported to cither Sydney or Melbourne before it can be of any commercial value. I think I would be safe in saying that by the time haulage is paid from the forest to the railway, and rail freight to either Sydney or Melbourne, the cost of transport will be greater than the price obtained for the timber or that at which similar timber could be obtained from overseas. If the Government intends to continue with its afforestation policy in the Federal Capital Territory, I trust that it will pay some regard to the experience of the South Australian Government in a similar venture. The pinus insignis produced in South Australia is equal to that grown in almost any part of the world, but in that State a great mistake has been made. The forests at Wyatt Park and Wirrabara are the oldest in Australia, having been planted sixty years ago. Four years ago, I was asked by the Controller of Forests to conduct an investigation into the afforestation work in that part of the State. The quantity of timber available was estimated at 80,000,000 super. feet - my estimate is approximately 40,000,000 feet- for which the Government was offered 2s. 6d. per 100 super. feet in the forest, but thought the price too low. This timber had to be transported to Adelaide before it could be regarded as having any commercial value, and as the Government thought the price offered too low, it established State timber mills to treat it, thus entering into competition with private enterprise. The mistake made in that way should not be repeated in the Federal Capital Territory. Wirrabara forest, Wyatt Park, and the Wirrabara township, constitute the three points of a triangle, all of which are 7 miles apart. The Government established a timber mill at the Wirrabara forest which is 7 miles from the township of Wirrabara, and also worked the Wyatt Park forest in conjunction with the Wirrabara forest mill. This involved cutting the timber in the forest at Wyatt Park and carting it 7 miles to -the Wirrabara forest. It was not long before the road between those two points became worn out, and the timber was then carted an additional 7 miles through the township to the Wirrabara forest, from which point it had to be carted another 7 miles to the Wirrabara township, to be loaded on trucks for transport to the city. The mill should have been set up in the Wirrabara township adjacent to the railway station, and one carting would then have been sufficient. The Government’s estimate of the production of the two forests was, as I have said, 80,000,000 super, feet, which could have been sold at 2s.’ 6d. per 100 super, feet on the spot. Had that offer been accepted, the Government would have obtained £1.00,000 for it. Instead of doing so, it erected State mills and entered into competition with private enterprise. Whan I visited the mill four years ago it was engaged in cutting standard fruit cases on which a loss of Id. per case was being made. It takes 4 superficial feet of timber in the log to cut a standard fruit case on each of -which the Government was making a loss of Id., which means that the £100,000 offered for the timber in the forest will be lost together with an additional £85,000. After a lapse of 60 years in which this timber has been growing and expense in wages and in other directions has been incurred, a loss of over £80,000 has resulted.. Some honorable members may think that it is a waste of time to bring this matter forward, but I mention the experience of South Australia so that the same mistake will not be made in connexion with afforestation work in the Federal Capital Territory. I trust that whatever government is in power when the timber is ready for marketing, an ^effort will be made to dispose of it in the most’ profitable manner. There are many thousands of acres under timber in the Mount Gambier district iu South Australia, where the mills are cutting 30 feet of timber from trees fifteen years of age. There are trees sixteen years of age in the Mount Stromlo area from which 3 in. x 3 in. limber could not be cut. I have made certain suggestions to the officer in charge of afforestation work in the Federal Capital Territory, which I hope will he acted upon. I regret that the policy adopted at Wirrabara has also been followed at, Mount Gambier. It has also been suggested that it is proposed to plant the pin-us insignis between Mount Stromlo and Black Mountain, but I trust that that will not be done, because the nature of the country is such that the trees could not possibly thrive even to the extent they have at Mount Stromlo. I have brought this matter forward in the interests of the Corammonwealth, and I hope that the Government will give it further careful consideration.

Mr HOLLOWAY:
Melbourne Ports

– I support the amendment because of its general criticism of, and protest, against, the budget, and because of the appeal it makes to the Government to reconsider the proposed reduction of pensions. Seeking a motive for tho Government’s drastic invasion of the rights of our poorest people by a reduction of pensions and the basic wage, one would naturally expect to find that, the finances of the country were much worse this year than they were last year. But an examination of the facts shows that the contrary is the case, and suggests that the Government should be extending and improving its social services rather than curtailing them. It is safe to say that the budgetary and political position is 50 per cent, better than it was this time last year, and in view of that fact I protest against the Government’s ruthless interference with social services. Having regard to the political circumstances that existed last year, the present Government is in a very fortunate position; there is no “ bad boy “ in the public life of Australia to-day, and we are assured that all governments are co-operating in the effort to restore budgetary equilibrium. That was not so last year. By the internal conversion loan the Commonwealth is saving upwards of £6,000,000 annually. A further saving is being effected by the New South Wales conversion loan recently floated in London, and we may expect greater reductions of the interest bill as the result of subsequent conversions of our war debt of over £100,000,000. All the evidence indicates that the current financial year will end with a substantial surplus. Indeed the Government invites such an assumption by granting relief in respect of taxation to certain sections. Revenue is being deliberately surrendered by the removal of primage duties and the sales tax from many of the requirements of the primary producers. I would not object to a remission of taxation that gave relief to all sections of the community; but I protest against the class nature of the tax relief which is evidenced in the budget proposals of the Government. The fact that, in addition to remitting certain taxation, the Government has promised that no additional imposts will be made supports my contention that the financial outlook to-day is better than, it was last year when curtailments of expenditure appeared to be necessary. Apart from humane considerations, the Government is unwise in following a policy which, the evidence shows, has made the economic position of the country worse that it was twelve months ago. A further curtailment of the spending power of the community, by cuts directed against the poorest sections, must make the position even worse. The Premiers plan has not produced the results that were anticipated fr,om it. I emphatically protest against the present budget because it is entirely devoid of any proposal to cope with the paramount problem of unemployment. So far from providing relief, the

Government’s policy is likely to aggravate the evil. It must be obvious that when the spending power of the pensioners was reduced last year by £2,000,000, that sum of money was immediately lost to the business people. Increased depression and business stagnation must result from any further curtailment of spending power. I pointed out, twelve months ago, that the Government’s policy of economizing at the expense of the people, who must necessarily spend every penny they receive, was economically unsound as well as inhuman. If a pensioner saves a portion of the small amount he receives, that fact alone reduces his pension, and in time disqualifies him from this form of relief. Every reduction of the spending power of the people must be reflected in increased business depression. That is proved by the experience of other countries. The signatories to the Macmillan report and the leading economists of the world are unanimous in advising a policy the very opposite to that which was initiated by the Scullin Ministry, and is being continued in exaggerated form by the present Government. Experts in all parts of the world are agreed that to restore normal conditions, price levels must be raised. That can be brought about only in the way suggested by the Leader of the Opposition (Mr. Scullin). Ministerial members have retorted that no one country can influence international price levels. It may be true that one country cannot determine international price levels, but no change can take place in the world until some country takes the initiative. The Macmillan report emphasizes that, and suggests that the objective of the Government of the United Kingdom should be to increase internal price levels, which in turn will affect international price levels. If all countries wait on each other no commencement will be made; but if Australia adopts a monetary policy directed towards raising and stabilizing internal price levels it will encourage and help other portions of the British Empire to follow that lead. There is a consensus of opinion amongst experts that unemployment, with the resultant decrease in the demand for goods and services, has become the cause, not the result or an effect of the continuance of economic instability and world-wide depression. Senator Givanni Angelli, the President of the Italian Senate, in a press interview in April last, declared that the only thing to do to relieve the present world depression was to increase the purchasing power of the people by putting the army of unemployed to work, by reducing the hours of labour in industry and by increasing wages. In this way he contended it would be possible more quickly to equalize consumption and production. He added that the views which he expressed had the endorsement of the Italian Government, which had already approached the League of Nations Labour Office with a view to securing international agreement among manufacturing countries along these lines so as to bring relief, to a suffering world. This loss of demand for goods and services in all countries is paralysing the potential consuming power of many millions of people. Senator Angelli, in the interview to which I have referred, stated that the Young plan for dealing with war debts and reparations imposed an annual burden on Germany of 145,000,000 dollars, and he estimated that the loss in consuming power for goods and services among the allied countries alone, due to widespread unemployment, was six times greater than the loss they would sustain by waiving the reparation payments demanded from Germany. Quoting the latest figures, which were not more than three months old, issued by the International Labour Office at Geneva, he showed that in the western countries there were no fewer than 25,000,000 people unemployed, and in ex-allied, countries alone no less than 12,000,000. If we add their dependants, we find that, due to unemployment in the countries mentioned, the actual number of persons deprived of their usual power of consumption is four times the actual number of unemployed. This great loss of consuming power in the demand, for goods and services of all kinds is the real crux of the world’s economic trouble.

In a discussion on the British budget in the House of Commons recently, all the speeches made and the views of all economic experts quoted, indicated that the only way to solve the problem was to re-create the demand for goods and services, and that the only way in which this could be done was to increase price levels. The speeches delivered by some honorable members supporting the Government would suggest that their views on this subject are somewhat elementary, if not childish. Apparently, some of them are under the impression that to raise the price levels.it is only necessary to urge all retail shopkeepers to re-ticket the prices of their goods, or in some other artificial way raise prices. This, of course, is nonsense, and instead of making matters better would make them worse. The only practical way to increase price levels is to get our unemployed people to work again, and provide them with purchasing power in the form of wages, which, being put into circulation, will create a demand for goods and services and stimulate private enterprise to put in motion again the wheels of industry. Because of this stimulus, the tendency would be for prices to rise and soon we should reach that much-to-be desired condition when confidence is once again restored. Confidence is purely an economic term. Between business men it means the existence of a belief that it will be possible to do business with some degree of stability. In an investor it means a belief that an investment will give a reasonable return on his outlay. Everybody who has given thought to the subject knows that no one will buy, and no one will speculate or invest in times when prices are falling because of the fear that a competitor may, 24 hours later, be able to buy or invest on more advantageous terms. Thus, with falling prices, we have slumps in business leading to general depression and, in many cases, insolvency, all because of the lack of confidence on the part of business people or investors. Deflation brings in its train unemployment, due to lack of confidence. Until the Macmillan commission submitted its report, public opinion as to the causes of falling prices had not been crystallized. Those members of the House of Commons who took part in the debate following the presentation of the report, admitted that a mistake had been made in accepting the advice of experts-the same group of financial emissaries that visited Australia and urged deflation - in the attempted rehabilitation of the finances of Austria and other European countries. Mr. Winston Churchill admitted quite frankly that he had accepted their advice, but asked to bo pardoned for the mistake which he then made. Mr. Churchill is a man of great will power. Once he makes a statement he is not likely to recant, but in this matter he does admit his error. I have reprints from the British House of Commons debates, of speeches made on this subject by Sir Robert Home, Mr. Amery, and Mr. Winston Churchill.

Mr White:

– Was not Mr. Winston Churchill referring particularly to the gold standard?

Mr HOLLOWAY:

– Yes, but he took part in the debate in the House of Commons, following the introduction of the budget by Mr. Neville Chamberlain. There are two or three points to which I should like to refer in this reprint, because they are points which we discuss with each other and about which we have differences of opinion. They are embraced in the amendment of the Leader of the Opposition which I am supporting. That amendment suggests that the only way to relieve unemployment in Australia is to make some definite attack upon the problem, and to raise prices. The Leader of the Opposition has said that the only way to raise prices is to give private enterprise and business generally an impetus from some government fund. The Commonwealth Bank is the only financial institution that is able to extend credit to the Federal Government to enable it to establish a wage fund. It is suggested that to obviate the fear which some people still have of the danger of inflation, the currency should be scientifically managed so that price levels may be stabilized, the amount of business circulating in the community to be the guide as to when prices have risen sufficiently.

Mr Maxwell:

– Would the honorable member say that the money from the wage fund should be expended only on reproductive works?

Mr HOLLOWAY:

– Yes, but of course I may differ from the honorable member as to what works may be termed “ reproductive”. Sir Robert Home, when addressing himself to the budget in the British House of Commons in April last, referred to the fear that existed in respect of a managed currency. On that subject he said -

These questions of currency always seem very remote from the ordinary life of the people, who have not had to consider them for more than 100 years, and yet the question of currency sits down at every table that is spread with a m e,il in every cottage or castle throughout the country. It very intimately concerns us in the House of Commons. Aristotle said long ago that money exists not by nature but by law. ft is the law that gives it efficacy, lt is the law which says what is legal tender. It is in this House that we make the law. We were the people who decided about our return to the gold standard. We were the people who gave authority for the amount of fiduciary issue that should bc put out by the Bank of longland. We arc the people who, only a few weeks ago, gave authority for £15,000,000 to be added to the fiduciary note issue. In fact we, God help us, are the people who have to manage this currency, under the advice and through the means of the Chancellor of the Exchequer using as his instrument the Bank of England.

That is exactly the same argument that we are using in this House. We say that this Parliament on the advice of its Treasurer and through the agency of the Commonwealth Bank should manage the currency. That does not mean that we should interfere with the details of the administration of the bank’s business. What we suggest is that this Parliament, on the advice of the Treasurer, the same as the House of Commons acts on the advice of the British Chancellor of the Exchequer, should from time to time determine the monetary policy in the interests of the economic position of the country. We should only be following the advice of the most expert coinmission that has ever dealt with this question of monetary policy. It has been said that never before has such a capable body of men been brought together to deal with this problem. The action that is now being taken by the House of Commons and other parliaments throughout the world is based on the report of the Macmillan Commission; but we in Australia are still flying in the face of that report. In reply to a question on the monetary policy which I put to the Treasurer of the previous Government, he said that there was then sitting in England the Macmillan Commission, which had almost completed its work, and that we should await its report before taking any action in regard to our monetary policy. That report has been in existence for about eighteen months, yet we are still flying in the face of it. There is nothing in the amendment or the policy proposed by its mover which counters any recommendation contained iu the Macmillan report, or the policy that is now advocated by the British Chancellor of the Exchequer. Sir Otto Niemeyer endeavoured to- put the financial house of Austria in order. Every country that has adopted the policy he has laid down has become bankrupt. As a matter of fact the whole world is strewn to-day with nations that have been financially wrecked as a result of putting into operation the deflation policy which was advocated by the financial group which sat at Brussels in 1921, and sent its emissaries all over the world to induce governments, against their will in most instances, to fall into line with the resolutions carried at that conference. They urged every government and every business activity to curtail its business operations and not to invest or recapitalize any of its previous year’s turnover, but to cut expenditure to the bone. I am not criticizing those gentlemen for what they did, because they may have been honest in their efforts to restore financial stability. I am basing my argument on the results of the operation of that policy. They called upon every business group to return to pre-war prices, wages and standards. Their idea was to stop inflation and place the economic world once again upon its feet. At that conference Professor Cassel was present, not as a delegate, but as an adviser. He listened to the debates and he heard the resolutions framed there. Copies of those resolutions were sent abroad, but very few came to Australia. I was fortunate enough to obtain one and took it with me to a meeting of the Employers Federation, in Melbourne, which dealt with the problem of unemployment. I left it with Mr. Ashworth, the president of that body. As a result of giving effect to the policy of Sir Otto Niemeyer, four or five of the Central European States and others are absolutely insolvent. Instead of applying to those insolvent States names such as we have frequently applied to some of our own

States, and such as, it has been suggested, England applies to Australia, which England never has - some English financiers have even gone to the extent of saying that Australia cannot be expected to pay its overseas debts unless interest rates are reduced - the League of Nations, England, and other prosperous nations are now collecting money through the central office at Geneva for the purpose of placing the insolvent nations on their feet. That may be because from a humanepoint of view it is right to do so, but it is also largely a matter of business. These countries are customers whose business is of value. The nations of Europe are helping one another, and talking of wiping the slate clean of reparations and debts, because they know that trade is necessary to national stability, each nation depending upon the custom of the other. They have come to the conclusion that the policy of deflation is wrong, and that the nations have lost their sense of proportion. It may be that inflation took place too rapidly, but it cannot be denied that the people were better off in those days. There was then .greater wealth, very little unemployment, and no doles or systems of sustenance. What was started then has brought ruin to the nations of the world. Professor Gustav Cassel at Brussels spoke somewhat as follows : -

If you once start -the policy of deflation, it will roll like a snowball, gaining strength and power, and you will fmd it difficult to stop. Maybe it will bring to you more trouble, more ruin and desolation than any possibility of good that will accrue.

His advice was not taken. Instead, circulars were sent to public and semi-public bodies, as well as to big companies, urging them to curtail their business operations. Professor Cassel saw the danger. His advice was on these lines-

If you determine to start this policy of deflation, I advise you to do it cautiously. There are millions of returned soldiers who are not yet absorbed in industry. If you ask them to accept lower standards too rapidly, you may bring about a revolution. If you intend to do it, you must first create the necessary atmosphere.

All over the world it has been accepted that the necessary atmosphere is the existence of large armies of unemployed, so that for every job, whether in a factory or an office, there shall be five or six applicants; that there shall be such keen competition for work that the workers will be prepared to accept a lower standard. He advised them to extend the plan over a number of years, if they brought it into operation at all. Since then whenever Professor Cassel has written or lectured he has been consistent in the advice he has given. Dealing with the advice of experts, Mr. Winston Churchill said -

It is accepted almost without dispute in England that the prime cause of all our troubles is the attempt to pay these huge sterile war debts and reparations across high tariff boundaries that will not receive goods,, and thus payment has to be made in gold. The small and limited supplies of gold, which have hitherto served as the foot-rule or measure in our affairs, have been purloined and misappropriated for a purpose for which they are wholly unequal, for liquidating these gigantic debts.

This it is which has led in three short years, very suddenly and very swiftly, upon America stopping relending to the unhealthy engorgement of gold by particular countries, which have a special benefit from reparations and war debts. It is this which has led to the consequent cornering of gold and the consequent sterilization of large portions of gold and the consequent enhancement in the price of gold, and to the automatic and simultaneous diminution in the value of everything else which is made to-day or can be made by our efforts to-morrow. There is the root evil. Out of all the tangles and clouds of argument we can see quite plainly this knotty point projecting: the artificial enhancement in the price of gold and the consequent fall in the price of everything that is measured by it. Gold is a measure. It is a measure between the efforts of one country and another, between man and man, between class and class, between the past and present; but I regret and grieve that it is a measure which has played the traitor. Poor devil; it may not be its fault; but that is the fact.

When I was moved by many arguments and forces in 1925 to return to the gold standard, I was assured by the highest experts - and our experts arc men of great ability and of indisputable integrity and sincerity - that we were anchoring ourselves to reality and stability; and I accepted their advice. I take for myself and my colleagues of other days whatever degree of blame and burden there may bc for having accepted their advice. But what has happened? We have had no reality, no stability. The price of gold has risen since then by more than 70 per cent. That is as if a 12-incli foot-rule had suddenly been stretched to 19 or 20 inches; as if the pound, avoirdupois, had suddenly become 23 or 24 ounces instead of - how much is it? - 10. Look at what this has meant to everybody who has been compelled to execute their contracts upon this irrationally enhanced scale. Look at the gross unfairness of such a distortion to all producers of new wealth, and to all that labour and science and enterprise can give us. Look at the enormously increased volume of commodities which have to be created in order to pay off the same mortgage debt or loan. Minor fluctuations “might well be ignored, but I say quite seriously that this monetary convulsion has now reached a pitch where I am persuaded that the producers of new wealth will not tolerate indefinitely so hideous an oppression.

It is plain that by cornering the gold, and increasing its value 1.9 times, the value of everything else is automatically brought down.

It is only by raising the price of everything else that we can get the ship of State back again on an even keel. In that case, Australia would benefit almost immediately, for instead of our primary producers having to send away, say, three bags of wheat for every £.1 of debt, only one or perhaps two bags would be required. That would be more on the basis of the value of wheat at the time the money was borrowed.

I support the amendment submitted by the Leader of the Opposition (Mr.

Scullin). I protest against the budget because of its brutal slashing of social services. The reduction of the wages of public servants will make matters worse instead of better. The Government, in adopting this policy, is flying in the face of the teachings of the last few years. It is obvious that the budgetary position is infinitely more favorable this year than it was last year. I do not say that Australia has “ turned the corner “, economically speaking; but the Government is in a vastly improved position to meet its commitments and to avoid deficits. The saving due to the Hoover moratorium is sure to be repeated next year, and, in my opinion, the war debt payments will never be insisted upon. The Government, in addition to promising that there shall be no further taxation, has already relieved one section of the community of several hundred thousands of pounds?’ in taxes, while it has also reduced customs duties and thereby derived itself of revenue. Such action is entirely contradictory to the reduction of invalid and old-age pensions, the wages and salaries of public servants, and the maternity allowance. This is distinctly class biased legislation. The worst feature of the Government’s proposals with regard to the invalid find old-age pensions is that they pauperize the pensioners, although the originators of the scheme were particularly careful to avoid placing any such stigma upon them. I disagree with the honorable member for Adelaide (Mr. Stacey), who said that some of the pensioners would suffer no reduction of income. The truth is that every pensioner will lose something as the result of the action of this Government. There is hardly a pensioner who does not receive some relief from relatives or friends, but under the Government’s proposals the few extra shillings that may be paid by relatives of pensioners will be taken into consideration, so that the old folk will get not a penny more than 17s. 6d. a week in all.

The CHAIRMAN:

– The honorable member has exhausted his time.

Progress reported.

page 1135

ADJOURNMENT

Primage Duty on Agricultural Machinery.

Motion (by Mr. Latham) proposed -

That the House do now adjourn.

Mr HILL:
Echuca

.- I have received the following letter from the secretary of the Tongala branch of the United Country Party: -

Dear Sir,

As you know, a10 per cent. reduction has been made in primageduty on certain agricultural machinery, and we find that some machinery firms are not passing it on to the producers. A member of our branch some time ago gave an order for a mowing machine, expecting a reduction in primage duties. He had written across the order that if any reduction in duties or taxes were made before delivery he was to get the benefit of it. A 5 per cent. reduction was made. He wrote to the Minister for Customs and found it should have been a 10 per cent. reduction. He went back to the firm, but they would makeno reduction further. He produced the letter, and the reduction was made at once. As numbers of farmers may not be aware of the alteration, and may be taken advantage of, we would like you to ventilate this matter by means of a question in the House.

Will the Government take such action as may be necessary to prevent unscrupulous firms from exploiting the man on the land by charging him with the whole or any part of the primage on machinery that has not been subject to the tax?

Mr LATHAM:
AttorneyGeneral · Kooyong · UAP

– The honorable member must recognize that a difficulty might well arise in the case of a machine or any other article which had been imported and on which primage duty had in fact been paid. I do not know that the honorable member’s correspondent is entirely fair to all traders when he suggests that there is something unscrupulous in charging a duty whichhas probably been actually paid. However, I shall see that the matter is brought under the notice of the Minister for Trade and Customs (Mr. Gullett), who may consider it proper to make a statement upon the matter.

Question resolved in the affirmative.

House adjourned at 11.0 p.m.

page 1135

QUESTION

QUESTIONS ON NOTICE

The following answers to questions on notice were circulated: -

Commonwealth Bank: Remuneration of Governor

  1. Was his attention drawn to the statementappearing in the Herald on the 23rd September last, that Mr. Montague Norman, Governor of the Bank of England, receives £2,000 per year, and as a. director an allowance of £500 per annum? 2.Is it a fact that Mr. E. C.Riddle, Governor of the Commonwealth Bank, receives £4,000 per year; if not, what is thesum?
  2. Who decides what salary the Governor will receive?
  3. Has the Governor of the bank power to pay any pension; if so, what is the limit of pension he can pay to any officer of the bank?
  4. Are there any pensions allowed for the directors of the bank?
  1. Yes. I would point out, however, that neither the Commonwealth Government nor the Commonwealth Bunk has any official knowledge of the salary of the Governor or officials of the Bank of England. The position of the Governor of the Bank ofEngland is not analogous to that of the Governor of the Commonwealth Bank. The position of the Governor of the Bank of England is really comparable with that of the Chairman of the Commonwealth Bank Board, whereas the position of the Governor of the Commonwealth Bank is that of the chief executive officer of the bank, and is comparable with that of the Comptroller of the Bank of England. 2 and 3. The salary of the Governor of the Commonwealth Bank is fixed by the GovernorGeneral in Council, and is £4,000 per annum, less reductions under the Financial Emergency Act, £1,008, or an actual salary of £2,992.
  2. No.
  3. No.

Commonwealth Oil Refineries

  1. What is the object of the Governments share control in Commonwealth OilRefineries Limited?
  2. What results canbe claimed from such share control.
  3. In view of the fact that farmers of Aus traliaare unable to secure in sufficient quantities an economic tractor fuel, and that experts assert that Commonwealth Oil Refineries could produce a satisfactory kerosene distillate at about8½ per gallon at Laverton, will the Government (if it can confirm this assertion) use the powers it possesses to see that Common wealth Oil Refineries puts such a kerosene distillate on the market.
  1. The main objectives were to ensure ample supplies of crude oil, and to establish a refinery to deal with them and such indigenous supplies as may be found in Australia or in the territories; also to provide motor spirit at reasonable prices especially for industrial needs and primary producers.
  2. The company has been successfully established, and is marketing its products in four States, InJune. 1924. when thecompany commenced distributing, the wholesale price of second-grade petrol was 2s. per gallon, on which there was a duty of1d. per gallon. At present the wholesale price of second-grade petrol is1s.9d. per gallon, on which there is a duty of approximately 7½d. per gallon.
  3. The company advises that for technical and economic reasons the suggestion is not practicable.

Is heyet in a position to supply the information asked by the honorable member for Boothby on the 20th ultimo, regarding Commonwealth Oil Refineries Limited, and the price of gasoline?

On the 28th September, the honorable member for Barker (Mr. Cameron) asked me a question without notice, regarding the rights of distributionof Commonwealth Oil

Refineries’ products in country towns. As promised, the matter was brought to the notice of the Commonwealth Oil Refineries Limited. The managing director of the company has furnished the following reply: -

It is the policy of this company to put down its own bulk depots at places where there is sufficient trade to justify this expenditure and to deliver its products in the surrounding neighbourhoods by bulk lorries. At these points where a bulk depot cannot be justified, our policy is to appoint an agent, who holds supplies of our products, mostly in barrels, and distributes them to local customers. So far as possible the company avoids the appointment as agents of petrol retailers, but in certain cases it has been obliged to appoint re-sellers through its inability to appoint any other suitable agent. Mount Gambier is a case in point where a re-seller acts as our agent. It is, however, quite incorrect to say that he has the sole rights of the sale of our products at that point, since other garages can buy from him at the same price as they could purchase direct from the company, which price will admit of their re-selling to the public through their pumps at a reasonable margin of profit.

Air Port at Broome.

Whether he will consider the claims of the port of Broome, in North-West Australia, to be declared a first port of call, co-equal with Wyndham and Darwin, for aeroplanes coming from Great Britain via Dutch East Indies and Timor ?

Wharfage Rates

  1. Is it a fact that it is claimed that wharfage rates at Fremantle are 10s.1d. per ton as against5s. per ton at Adelaide, and that suppliers of harvesting machinery from the eastern States point out that these higher rates, when applied to an 8-ft. header harvesting machine, cost £3 14s.6d. for wharfage at Fremantle, whereas a similar charge in Adelaide is but 18s. 9d.?
  2. Will he have the attention of the Premier of Western Australia drawn to this contention by agricultural machinery shippers from eastern States, so that his Government may, should they so desire, remove this anomaly?

Disarmament CONFERENCE

  1. What ..6 t] w cost to the Commonwealth of thu recant visit overseas of the honorable iiic Attorney-General t
  2. What was the individual cost of all persona who were associated with the delegation, and whose expenses were paid by the Common wealth ?

Cite as: Australia, House of Representatives, Debates, 12 October 1932, viewed 22 October 2017, <http://historichansard.net/hofreps/1932/19321012_reps_13_135/>.

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