FEDERAL POLITICS

Southland Times, Issue 21362, 7 April 1931, Page 9

FEDERAL POLITICS

NOTES FROM CANBERRA GOVERNMENT COLLAPSING. // /•/ V'- ■" '--—? K / / PROSPECTS OF ELECTION. (From Our Correspondent.) Canberra, March 25 After a chequered existence which began With a record majority in the House of Representatives the Scullin Labour Government elected in October, 1929, is beginning to collapse, and there is every prospect of an election which before many months will result, in. its ignominious defeat. The record of the Government has proved a bitter disallusionment to the tens of thousands of Australians of moderate political views who, • tired of. the seven years old Nationalist-Country Party Administration, voted Mr Scullin into office less than two years ago. The Government has failed lamentably to face the great economic and financial issues created by the depression under which Australia is languishing, and the Prime Minister, after all his bold declarations against inflation, has gone over to the ranks of the inflationists. Public opinion has turned strongly against his Government. The two by-elections which have taken place this year in New South Wales have shaken the Government badly, and its early defeat is looked for in every State. Taking office with a majority of 19 in a Mouse of 75, the Government has seen a schism develop in the Federal Parliamentary Labour Party which to date has cost it ten of its followers. Led by Mr J. A. Lyons, who was acting-Treasurer while Mr Scullin was attending the Imperial Conference in England, the Right Wing of the party has seceded and has joined with the Opposition, pledging itself to do everything possible to bring about the downfall of Mr Scullin. This group includes also Mr J. E. Fenton, who was acting-Prime Minister during Mr Scullin's absence. There has also been a Left Wing schism. A group of four members who have followed the example of the New South Wales Premier, Mr Lang, in advocating repudiation of Australia’s public debts has separated itself from the Centre section of the Labour Party led by Mr Scullin, and though to date it has voted to keep the Government in office its support has been granted on terms which most Governments would consider intolerable. After- having declared strongly against the Lang plan which is simple repudiation, the Scullin Government is now dependent upon the votes of the. repudiation group in the House of Representatives for its every existence. No previous Australian Government has suffered such a humiliation. Narrow Escapes. The Government has had several narrow escapes, and if there are any more secessions to the' Right Wing it must fall. But the general impression is that it will manage to retain office until the present Appropriation Bill providing it with funds, runs out. The Government must seek supply from Parliament in June, and it is then expected that the Senate will decline to grant supply except on the understanding that an immediate election is held. By standing firm the Senate can force a dissolution which; according to present indications, would bring the Scullin Government to an abrupt and inglorious end. Another severe blow at the Government s prestige has been the publication of secret cables which passed between the Prime Minister while he was in England and Messrs Fenton and Lyons whom he left in charge. These cables have provided the most sensational political exposure in Commonwealth history. When the Labour Caucus last November passed a resolution providing for compulsory conversion of the maturing £28,000,000 loan, Mr Scullin denounced this as repudiation, and urged the acting-Treasurer, Mr Lyons, to float a conversion loan in the ordinary way. Mr Lyons, who had already announced his intention to defy the Labour Party and to resist the repudiation resolution, succeeded in securing the amount necessary to convert the loan, Mr Scullin’s first step on his return to England was to put Mr Lyons out of the actingTreasurership and to replace him with Mr Mr E. G. Theodorli, the present treasurer who some months previously had had to leave office because of a report of a Royal Commission imputing corruption to him. These cables reveal that Mr Scullin while in England declared strongly against inflation. To-day he.is sponsoring a bill to inflate the note issue by about one third. When he heard the Labour Party was bringing pressure to bear upon the Cabinet to -secure political appointments, to the Commonwealth High Court, the supreme judicial tribunal of the nation, Mr Scullin cabled to Mr Lyons appealing to him to prevent this, and stating that he would go out of office if. these appointments were rushed through during his absence. The appointments were made, but Mr Scullin ignored his undertaking to Mr Lyons. A change of Government, will bring about immediate relief to Australia. The abandonment of inflationary schemes, and the reduction of Government expenditure, which the Scullin Ministry declines to face, will restore confidence, and by enabling Australia to raise a loan in London to fund her short-dated indebtedness there will enable the nation to begin the long and painful era of reconstruction which lies before it. Delay will only accentuate Australia’s difficulties, most of which would not have arisen had a more resolute and courageous Government been in control of the Commonwealth a, year, ago, . Abandonment of Gold Standard. Claiming that the gold' standard has ' failed and is mainly responsible for the present world-wide depression, the Commonwealth Government has introduced into the Federal Parliament a Bill to abolish the gold reserve of the Commonwealth note issue. The Currency Act provides for a minimum gold backing of 25 per cent, of the notes issued. The present gold reserve is £15,000,000, the balance of Australia’s gold having been sent abroad to meet overseas commitments. The reason given for the Government’s decision is the urgent necessity for dealing with Australia’s short-dated indebtedness in London. The Commonwealth’s £5,000,000 overdraft with the London and Westminster Bank had to be reviewed a few days later, the Treasurer explained, and in addition Treasury bills for the same amount had to be met within a couple of months to avoid public default. These [tressing obligations would absorb £10,000,009 of the gold reserve which it .was proposed to ship abroad The bill authorizes the Government to demand from the Commonwealth Bank Board the gold reserve and to ship it abroad for the purpose of meeting obligations. It limits the Commonwealth note issue to £60,000,000 exclusive of the proposed fiduciary note issue of £18,000,000. It relieves the Commonwealth Treasurer of the obligation of converting' Commonwealth notes into gold and in effect sets up a note issue of £60,000,000 entirely without gold, backing.

Fortunately for the reputation of Australia, the Bill is assured of rejection in the Senate. Together with the proposed fiduciary note issue, it will become one of the issues of the next Federal election •which is expected to take place some time in 1931. “Australia is admittedly off the gold standard,” said the Treasurer in explaining the Bill. “If she wants to return to the fold standard, it would be necessary for her to follow other countries in the decline of price levels. I do not consider it is essential for the safety and progress of Australia for us to return to the gold stand&rd which has been a failure. Gold itself has been •* subject to Violent fluctuations "and that is the main cause of the world wide depression.” ’

Mr Theodore announced that since January; 1930, Australia had shipped abroad more ! than"£28,000(000 in gold to pay her debts abroad. The production of gold in 1930 was less than £2,000,000.

; x Tho Fiduciary" Note lisue. After a violent, debate in the course of which the fate of the Scullin Labour'Go,vernment has swayed in the balance, the passage through the House of Representatives of' the Bill 'providing for a fiduciary note issue of , £18,000,000 is assured. The measure, however, will be defeated in the Senate by an. overwhelming majority. In introducing the Bill providing for the issue of the proposed new currency, the Commonwealth Treasurer (Mr Theodore) told the House of Representatives that it empowered the Commonwealth Bank Board to print fiduciary currency to be known as Treasury notes to an amount not exceeding £18,000,000. Up to £6,000,000 would be issued for the relief of distressed wheatgrowejs and the balance would be made available to the States for unemployment relief at the rate of- £1,009,000 a month. Mr Theodore explained that’it was proposed to redeem these Treasury notes from the proceeds of a loan when it was found convenient to float one. He claimed there was no novelty in a fiduciary currency such a note issue having been established in Great Britain during the war. “Australia is faced with a crisis which may be described as a breakdown in its monetary and economic system,” Mr Theodore continued. “It has illimitable productive capacity, and yet thousands of its people are starving or on the brink of starvation. The only danger about inflation is that it might lead to a collapse of the currency, but before that can happen prices would soar. Before prices ascended abnormally, the Government could step in and control the inflation. The case of Germany has been cited, but inflation tqok place there as a deliberate policy for a definite object.” The Banks Attacked.

A feature of Mr Theodore’s speech and of the speeches of most of the Government supporters was a bitter attack upon the Australian banks for the hostility with which they have received the Government’s financial policy. Mr Theodore charged the banks with being unwilling to co-operate with a Labour Government. He said they were fixed to a narrow conservative tradition. They considered the only panacea for the present situation was a wage reduction. That was unsound, unjust and unreasonable. The banks had been largely responsible for the originating causes of the economic disaster that had overtaken the world. “Who has given to a few bank presidents the sacred right to dictate the policy of the nations?” Mr Theodore asked. The Leader of the Opposition denounced the proposed fiduciary issue as deliberate and sheer inflation. He said it was the beginning of a process which would destroy Australian currency, destroy all confidence at home and abroad and render the nation incapable of grappling with the grave problems which confronted it. “Inflation is.the most certain while it is the most insidious method of wage reduction,” declared the Opposition Leader. . . It has been made clear by the Opposition which controls the Senate that that House will unceremoniously reject the fiduciary note issue measure. It is believed that the Government will challenge the Senate on this, issue during the second half of the present year by asking for a dissolution of Parliament. The general feeling among political observers is that the fiduciary note issue will never come into existence because an election on this question would result in the overwhelming defeat of the Labour Government. Has Australia Lived Beyond its Means? Extravagant living in past years is one of the main causes of Australia’s difficulties according to the Commonwealth AuditorGeneral, who reporting to Parliament states that although savings bank deposits increased by £190,000,000 between 1919 and 1929, the average increase per depositor was only’ £2 1/—“an exceedingly small sum having regard to the thousands of millions sterling of production,” he comments. “Recent events have proved conclusively that the apparent prosperity of Australia during the past decade has had a very flimsy foundation. Efforts to restore a reasonable degree of prosperity must now be made by the whole people to the exclusion of all other considerations.” The Auditor-General complains that more than £209,009,990 has been invested in motor cars by the Australian people. A large percentage of these had been purchased for pleasure on time payment by people who could not afford them. The craze of horseracing, he said, had also absorbed a large portion of the national earnings. Racing on the present scale had a most disturbing effect on the lives and work of those who were interested in and maintained this sport. Drawing attention to the wide range of existing income tax exemptions and deductions, the Auditor-General stated that 89 per cent, of adult wage earners did not pay income tax. There were 3,509,009 Commonwealth electors enrolled of whom 264,766 have no income tax. There were, at least 1,000,900 wage earners who were not being, called upon to make a reasonable contribution to the country’s burden, the Auditor-General stated. He adds: “A vast field of potential revenue is being left unexplored at a time when it is imperative that all sections of the community should make a sacrifice.” The Rising Pensions Bill. Scathing comments on the intolerable growth of the pensions burden in Australia are a feature of the annual report of the Commonwealth Auditor-General. He states that invalid old age and war pensions together with maternity allowance are being paid at the rate of £29,009,999 a year—approximately one third of the total Commonwealth Revenue. The liability for old age and invalid pensions has doubled since 1923, and attention is directed to the striking fact that twofifths of the people of pension age in Australia are' drawing pensions from the national Treasury. “These figures are extraordinary in view of the vaunted high standard .of living in Australia” the Audit-or-General states. Considering the favourable conditions which have existed almost without interruption in Australia during the last 80 years, this remarkably high percentage of indigent pensioners is not justified.”

In a striking passage, the Auditor-Gen-eral adds: “The question arises whether the present conditions under which old age pensions can be secured are not such as to sap the independence of the people; whether they do not really encourage thriftlessness and discourage provision for declining years.” The Australian system is non-contributory and that means, as the Auditor-General states, that spending goes on among a large section of the people without any thought of the future. Natural habits of thrift are undermined in Australia by the ease with which pensions can be secured, and this should be a warning to other countries against any non contributory system of pensions. s

r lhe Australian system actually discourages thrift because unless a man or woman in the lower ranks can save considerably over £1099, it pays not to save at all. A life saving of £750 for instance would disqualify for the old age pension, and would not give an equivalent of the pension of £1 a week. Recognizing that they are not benefited in their old age by saving, elderly people in modest circumstances constantly divest themselves of their property by gift to relatives in order to qualify for a pension Thus a system of artificial indigence has been created.

The liberal provisions of the Australian pensions law make no distinction between the deserving section which has fallen upon evil days and those who have led dissolute an<| lazy lives. Another effect of the pension law is that the children of to-day have freed themselves largely of the obligation of maintaining their aged parents. As a solution of these evils, the AuditorGeneral suggests adjustment of the pensions in accordance with the fall of the cost of living; propaganda to remind people of the necessity for providing for old age instead of leaning on the State; and legal enforcement of the obligation of well-to-do children to support their parents. War Pensions System too Liberal.

The Auditor-Generar draws pointed attention also to the too generous scale of war pensions in view of.the country's financial difficulties. War pensions are still in-

creasing 12 ..years after the Armistice and this is due to the granting of pensions to soldiers* wives and to children born after the war. To show the absurdity of the system he says that should a. veteran marry a woman of 30, say 30 years hence, she could draw the pension for half a century afterwards or about 100 years after the war.

The Auditor-General states that the war pension law is unnecessarily generous in permitting a soldier's widow to draw her pension two years after re-marriage. His conclusion, which is shared by all thoughtful Australians concerned with the solvency and future prosperity of their country, is that Australia cannot afford to pay £12,000,000 a year for. old-age and invalid and .£8,000,000 a year for war pensions.