Joseph Lyons
Joseph Lyons United Australia Party

Delivered at Sydney, NSW, August 13th, 1934

The election was held on 15 September 1934. The policies of the Lyons Government in response to the Depression were seen to be generally successful. The supporters of Jack Lang in the federal Parliament (Lang had been dismissed as NSW premier in 1932) continued their opposition to Labor leader James Scullin. Lyons travelled the country by air during the campaign in the plane of well known aviator Charles Ulm. The election result was a win for Lyons, with a small swing to the Labor Party. This was minimised due to the poor performance of Labor in NSW and Victoria.

The 1934 election saw the entry of Robert Gordon Menzies into Parliament. Menzies went on to become one of Australia’s most successful and enduring politicians. The UAP had won 33 seats, the Country Party 14 seats, Labor 18 seats and NSW Labor 9 seats. Key issues were employment, fiscal management, wages and rural subsidies.

Joseph Lyons, National Library of Australia
Joseph Lyons, National Library of Australia

Joseph Aloysius Lyons was born 15 September, 1879 and died 7 April, 1939. Lyons was Prime Minister of Australia 6 January, 1932 to 7 April, 1939. He was the leader of the United Australia Party. Lyons represented the electorate of Wilmot, Tas 1929 to 1939.

Elections contested

1931, 1934, and 1937

When I appeared before you in the Town Hall a little more than two-and-a-half years ago, I told you that if you would entrust the United Australia Party with power we should endeavour to do three things—restore the finances; live within our income and pay our way; and clear the road for the revival of industry.

I now appear before the people of Australia to give an account of our stewardship and to ask for a renewal of confidence.

Look on this picture!

But before recounting some of the things that the Government has done, and telling you of the things that it proposes to do, let me briefly recall the circumstances in which we took office. What was the condition of the country at that time?

The public credit was the lowest in its history. The previous Commonwealth Budget had shown a deficit for the year of ten and three-quarter millions, and State deficits were alarming. Australian stock was quoted down to £71. Interest rates were high. Industry was stagnant, and trade union unemployment had reached the perilous figure of 30 per cent.

The Voices of Confiscation and Repudiation were loud in the land and confidence had fled before them.

There was credit neither overseas nor at home, and the horrors of uncontrolled inflation were looming. Those were dark days indeed! days that were made dark in the first place by the impact of the world depression, but made darker still by by the foolish policy of the Scullin Government and the reckless conduct of the Lang Government of New South Wales. We can recall them only with a shudder.

Now look on this!

What, in contrast, is the condition of the country today? In the first place the public finances of the Commonwealth have been completely restored. In the year 1932-33 there was a surplus of £3,500,000; in 1933-34, after allowing for special assistance to the States and to distressed primary industries, there was a surplus of £1,300,000; and for 1934-35, after providing for increased grants to the States and for additional expenditure on Defence and certain public service and pension restorations, it is estimated that the year will end with a balance on the right side.

Our credit, which was at the lowest in our history, has risen to the highest. Stocks that stood at £70/18/2 in September, 1931, were standing at £112/2/6 in July 1934.

Probably no country in the world can show such impressive evidence of improvement in the public credit as is reflected in the reductions in the rates on public borrowings.

The last of the several conversion loans was probably the most successful Australian issue ever made on the London market. In the leading centres abroad Australia is no longer a reproach, but a guiding beacon. Money has cheapened and the advance rates have never been so low in Australia as they are today. Conversion loans in London, and domestic loans in Australia, have been confidently supported at progressively lower rates of interest.

Industry has taken fresh heart, and there has been an encouraging increase of activity in many directions, but notably in textiles, iron and steel, and building.

Unemployment due directly to the depression, has been cut almost in half. Factory employment has increased by about 20 per cent. Production, which was falling alarmingly, has improved in the last two years by £140 million.

The National income has risen by £60 million. The reduction in pensions and public service salaries, made necessary by the emergency conditions, have, in large part, been restored. The fear, which had half our people in a paralysing grip, has vanished; and if, today, we are not back to the enjoyment of that complete prosperity that we all hope for, we can at least say that we have approached closer to it than any other country in the world, with the possible exception of our mother country, Great Britain, whose example in unity of purpose and sanity of endeavour we have emulated.

Government’s part in the transformation

Now what part has the Government played in this great transformation? I am not foolish enough to claim that it is all due to the Governments policy and administration. I recognise that it is due in the main to the courage and sustained effort of the people themselves. I recognise also that the country has benefited by the great rise in the price of gold and in the rise in wool values—although the wool rise did not take place until last year, when the general upward movement had well begun, and its effects were somewhat discounted by the lower prices for other export commodities.

I do claim, however, that the Government by its policy of sound and honest finance created the atmosphere and maintained the conditions essential for the restoration of sound economic life.

The first thing we had to do was to rehabilitate the good name of Australia, which had been so badly tarnished by the disastrous activities of the Lang Government in New South Wales. That Government declared for repudiation and confiscation. While it remained in power it menaced the credit not only of New South Wales but of the whole of Australia. The failure of that great popular institution, the Government Savings Bank of New South Wales, jeopardised the savings of scores of thousands of people of small means; and it also created a feeling of insecurity, which had extended beyond the borders of New South Wales. The minds of the depositors were reassured by the action of the Commonwealth Bank, which assumed responsibility for their savings, and we allayed the fears of the people of New South Wales generally, and of Australia, by taking the action that led to the dismissal of the Lang Government from office. My Government framed and devised the legislation that withstood every challenge, political and legal, and forced the reference of fundamental issues to the people of New South Wales.

That election, which gave the people of New South Wales an opportunity to put an end to the devastating Lang regime, was due entirely to the action of the Commonwealth Government. You people of Sydney and New South Wales of all people are in the best position to judge of the righteousness as well as the wisdom of that “first step” of the present Commonwealth Government.

With the dismissal of the Lang Government the people of Australia breathed freely again, and the way was open for sane counsels and honest management. In the State sphere you have had the experience of the great improvement that has resulted from the policy pursued by the Government headed by my friend, Mr. Stevens. In the Federal sphere you have the evidence before you of the moral and material benefits that have accrued to Australia both at home and abroad by the restoration of confidence through the policy of sound finance and fidelity to obligations.

We have attempted nothing spectacular. We have eschewed the monetary cranks and spurned the miracle workers. We have stuck to proved methods, honest value and honest money. But if we have attempted nothing spectacular in our methods of Government, I think we are justified in claiming that our efforts have resulted in what must be regarded as one of the most spectacular economic recoveries the world has known.

I therefore feel that tonight I can look you squarely in the face and say that the pledges I gave you in this hall more than two-and-a-half years ago have been honoured. We have fought the fight. We have kept the faith.

Still far to go

While we can rejoice that we have travelled far from the dark days in which the Government took office, we are not yet, however, out of the wood. We have still a steep climb ahead before we reach the top of the hill. Unemployment has decreased, but it is still great enough to be very serious. Some of our primary industries are in a difficult condition, and will need careful husbanding against the time when world price levels for our exports regain profitable levels. We must search for new markets, and in the seeking of markets we shall have to find our way through that tangled jungle of National self-sufficiency which most countries have encouraged to grow. The public finances of the States though much improved, are still a matter of concern.

The great responsibility that rests upon the people of Australia in this election is to say whether they are going to continue the climb, with the present Government in the lead, or whether they. are going to change teams and risk a slide back into the morass out of which they have struggled.

The Scullin-Lang alternative

The present election is unusual in this respect. You have before you the parties each of which has been in office within the short space of three years. You can contrast their deeds and their demeanors. On the one hand you have the United Australia Party, which I have the honour to lead; on the other you have the Federal Labour Party, led by Mr. Scullin, and in association with it the Lang faction. Perhaps Mr. Scullin will deny that the Lang faction is in association with him—that, in fact, his party is in conflict with the declared followers of Mr. Lang.

Insofar as there is conflict, it is only a conflict between individuals for political position. At the bottom they have substantially the same programme—the same objective.

While Mr. Lang would serve out to you neat the raw spirit drawn from his own private political still in the hills, Mr. Scullin would put a sup of water with it. Now I do not impute to Mr Scullin the recklessness and irresponsibility of Mr Lang, and I do not for one moment place him in the same public category; nevertheless, I want to point out very definitely to you that the alternative to this Government is a Scullin-Lang combination.

Socialisation of credit

What is the programme of our opponents? If we ask the question we see the ghosts of two-and-a-half years ago stalking the shadows.

In the forefront of their programme is the nationalisation of banking and the socialisation of credit.

For the purposes of this election the private banks have been invested with the forbidding vestures and lineaments of the Devil-a particularly black, flame-breathing ugly rascal of a Devil—and the people are besought to get out their guns and pot him. Now this may seem to the unthinking to be an exhilarating form of sport, but I can show you that it is a sport with great hazards.

When politicians talk of nationalising banks it is very necessary that the people should understand exactly what this means in actual practice. It means something more than the nationalisation of a few trading companies or a particular industry. It means the nationalisation of a number of institutions upon which the financial stability and security of the community depend.

What are commonly called the Trading Banks are the custodians and trustees of about £300 millions of deposits from about 800,000 customers.

These depositors represent the liquid working funds of industry. The trading banks, therefore, carry a huge responsibility to their depositors, and also, and in much greater degree, to the community. Their integrity must be beyond question and their transactions must command confidence.

As trustees of the community’s funds they cannot afford to adopt the half-baked doctrines of monetary amateurs, and they cannot venture on rash experiments.

They understand only one kind of arithmetic and that is that two-and-two make four—and no more than four. If they departed from this they would go smash and bring the community down with them.

Why are banks pilloried?

Why then are the banks placed in the public pillory? Because (our opponents tell us) they have restricted credits, charged exorbitant interest, forced customers into liquidation, and hampered Governments. As a matter of fact they have done none of these things. Between 1929 and 1934 their deposits increased by only £2,000,000, but their advances increased by £23,000,000. In all the history of Australian banking the percentage of advances to depositors has never been so high as it has been during these years of depression.

Instead of forcing embarrassed borrowers into liquidation the trading banks have strained their resources to the limit to support all who have the slightest hope of carrying on. They have reduced overdraft rates to the lowest point ever reached in Australia.

Country’s sheet anchor

The suggestion that the banks have withheld their help from Governments I can only describe as indecent.

Right through the depression the banks have devoted the funds they could spare over and above the needs of their customers to the support of public finance, and their holdings of Treasury bills have exceeded thirty million pounds. In all reason, I ask you what more could these institutions have done without imperilling their own existence and the money of the hundreds of thousands of people who are doing business with them?

Speaking at a meeting in Melbourne in April of this year I used these words:

Had it not been for these financial institutions we would have been faced with complete and absolute collapse of everything worth while in our country…….. The banking institutions of Australia were the sheet anchor of this country during that period (of depression). They saved us from absolute and complete failure.

I now most emphatically repeat that statement, and it is within the knowledge of Mr. Scullin that what I say is a fact. Whereas banks in the United States of America and in Europe have failed by the thousands, our trading banks have stood up to every stress of the depression; and they never ranked higher in the confidence of their customers than they do today. Much of the imported propaganda that is being used in this election was originally directed against faulty banking systems in those countries, and has no application at all to the system that prevails in this country.

The leader of the late Commonwealth Labour Government should be the last person to attack the banks. Instead, he should be expressing his gratitude, for, without their aid, his Government would not have been able to carry on, and thus the public servants and invalid and old-age pensioners could not have been paid more than 12/- in the pound.

Scullin Proposals

What are the proposals for nationalising these institutions?

I am not very clear as to the method in the mind of Mr. Lang, but you know from experience that he has a rough hand with banks, and I imagine that he would just polish them off summarily. Mr. Scullin, however, would apply the good old monopolist method of crushing them out. His engine for crushing them out is to be the Commonwealth Bank—not the Commonwealth Bank as it is to-day under the control of an experienced, sagacious and independent Board; this Board is to be abolished—but under a single Governor to be appointed by the political Caucus, under amending legislation the details of which are not disclosed. It is contemplated that all Government business, both Commonwealth and State, and likewise all the business of semi-Governmental and of municipal bodies, is to be done with the “unshackled” institution, which is then to make short work of its private competitors by undercutting their service and interest charges, and by outdistancing them in credit expansion, until at last, having forced them to put up the shutters and close their three thousand branches throughout Australia, it will stand triumphantly in possesson of the entire banking world.

Nigger in the Woodpile

I should like to know what makes Mr. Scullin confident that other Governments and public bodies and the hundreds of thousands of private depositors will rush to transfer their business to a politically-controlled bank that cut these capers. I would remind you that in the earlier years of its career the Commonwealth Bank was an active trading bank in competition with the private banks, and it established a place for itself as such, but I have yet to learn that in doing so, it was any the less particular in its selection of securities, any more liberal in its advances, or any lower in its interest and service charges than its competitors. In other words—

It indulged in no piratical adventures, but followed the traditional lines of sound banking as it was obliged to do if it was to make a success of its business. If the Commonwealth Bank were released from the control of the Board and replaced under a competent independent Governor, it would, on resuming activity in the general trading world, act precisely as it did before. That is not Mr. Scullin’s idea and not Mr. Lang’s idea, and this is where we come on the nigger in the woodpile.

They do no want an independent Governor any more than they want an independent Board. They want a puppet who will be amenable to political pressure and who will have elastic ideas about the expansion of credits and the issue of bales of notes. That is the way this wonderful unshackled institution—the phrase is Mr Scullin's—would drive the private banks out of business, and drive the trading community out of business along with them. It is not nationalisation of banking they are after but politicalisation of banking. They want to prepare the way for crazy schemes of note inflation. That is the issue.

Menace of inflation

It is no ordinary issue. If you once open the door to this sort of thing you do not know, and Mr. Scullin does not know, where it will end.

The fate of every country that has been rash enough to enter upon the perilous path of inflation forbids the risk! Everywhere it has been tried it has left its track of ruin and desolation, and the greatest sufferers have been the working mass of the people. Does anyone wish to see in Australia the misery that came to the people of Germany, Austria and Russia when the printing presses ran hot and their notes became valueless.

I say to you again that the improvement which has been registered in this country’s affairs during the last two-and-a-half years has been made possible by sound finance and the existence of a sound banking system. Commonsense commands that you shall not at this election kick away the ladder by which you have climbed. If you do you will bring toppling down the splendid edifice of credit that it has been so difficult to re-establish. You will bring untold suffering and misery to the great mass of the people, and the wage earners will suffer most.

My advice-let well alone

Let the Commonwealth Bank alone! It is a great institution.

It has rendered great service and deserves well of the people. In the stress of the last few years it has, with the acquiescence of the private banks, advanced to its proper place as the central Bank of the Australian banking system. As such it is in a position to control the volume of credit, to manage foreign exchange, to regulate internal price levels, and to conduct loan operations. It has discharged all these functions with skill and wisdom. The fact that it has associated with its expert management an independent board of experienced men drawn from representative activities—finance, commerce, the primary and secondary industries and labour—is its strength. The men constituting that independent and experienced Board had the courage and determination to resist political pressure, which endeavoured to force them to pursue a policy that they knew to be unsound. It thus saved Australia in a great crisis. To disintegrate this banking structure, which is the product of experience and necessity, would be sheer madness.

I have enough confidence in the good sense of the Australian people to believe that at this election they will give the would-be wreckers such a salutary lesson that they will not raise the issue in this country again.

U.A.P represents all classes

I feel tonight that I can talk as a friend to all classes in all parts of Australia, not only for myself, but for the members of my Party. The United Australia Party is suitably named, because it comprises representatives of every description of country constituency and every description of city constituency. In no political organisation that Australia has known have the various classes of the community been as happily blended in a united effort for the common good.

The United Australia Party, because of its broad representation, has been able to approach the complicated problems of the day without prejudice in favour of any class. Such an approach is essential. Australia is a well-balanced community in which the numbers engaged in agriculutral enterprises on the one hand, and secondary production on the other, are almost equal. An undue leaning towards either the country or the city interests would react to the disadvantage of all.

The primary industries are the foundation of the national well-being. Their preservation, therefore, is a prime necessity.

We must always bear in mind, however, that more than 50 per cent. of the total output of the primary industries is consumed in Australia. If the secondary industries were damaged by an extreme attack on the policy of protection, the valuable home market for the products of primary industries would be impaired. On the other hand, if the policy of protection is pursued without regard to international trading considerations, the external market for our exports will be contracted.

In order, therefore that the primary and secondary industries may enjoy comparable standards of prosperity, the Government must give just acknowledgement to the needs of each. That, moreover, is the surest and soundest means of continuing the revival of employment that has been a feature of the last two-and-a-half years.

The Government has always endeavoured, even at the risk of offending some sections, to hold the scales evenly. It has set its face against extravagant demands by any class of extremists, because it has realised that a Government that does not follow this policy cannot claim to call itself a truly national Government. We believe that Australia can march forward to its destiny as the leading nation of the Southern Seas only if its ranks are welded by the ideals of a common cause.

Essential condition of prosperity

Sectional parties are prone to take extreme steps in the interests of the particular class that they regard themselves as representing. Therein lies a danger. The world has come to a rueful realisation that no nation can build prosperity for itself on the ruin of others. True prosperity for each nation depends upon the prosperity of all. It is the same in every community. It is true for Australia. The prosperity of each section of the Australian community has been improved, and can be still further improved, provided that the interests of all are blended with wisdom, restraint and understanding. That is the philosophy which has guided the deliberations and decisions of the Government that I have had the honour to lead. It is the foundation of the undeniable success that has been achieved.

I cannot hope, tonight, to expound in detail the complexities of the economic position, both domestic and international, but it is my duty to outline to you the fundamental points in the Government’s policy. At that stage it is the duty of you, the people of Australia, to ask yourselves: Can present-day economic problems safely be left to advocates of policies that are obviously extreme in conception and character.

My Government has based its economic policy on the following fundamental principles: we prefer the preservation and improvement of the existing economic structure to the adoption of wild and revolutionary schemes, which threaten disaster to the people. We aim therefore at the improvement and expansion of external markets for our export industries and at the safeguarding of the domestic market for all our industries, both primary and secondary.

Australia is a loyal part of the British Empire. The continued economic prosperity of the Empire can be fostered by a carefully adjusted exchange of trading advantages between the Mother Country and the Sovereign Dominions.

The restriction of production and export can never be willingly accepted by Australia, because it would not only most obviously check the progress of our country, but would also, in view of the determination of Australia to meet her overseas obligations, threaten the solvency of both the Commonwealth and the States.

The continued growth of economic nationalism is a menace to Australia’s prosperity. Australia must, therefore, seek mutually advantageous trading relations with foreign countries and must take steps to improve her position in foreign markets.

Until full world prosperity is restored, it is the responsibility of the more fortunate sections of the community to help those who, are still feeling the strain of depression. This aid is required by some primary producers, by some States, and by the unemployed.

The free and successful pursuit of business and industrial activity, and the restoration of employment depend on stability and confidence, not only in the public finances, but also in the sphere of private finance. There must be no political interference, therefore, with the basic principles of currency, banking, and saving.

The savings of the people must be safeguarded, and the stability of the currency must be jealously guarded.

Primary industries

Throughout its term of office, the Government has constantly emphasised the importance of the primary industries to Australia’s welfare. They provide 97 per cent. of the value of our exports. The maintenance of the volume and value of the export trade is essential to enable Australia to meet oversea debt commitments, and to establish credit to pay for necessary imports, which promote business activity and employment.

The Government’s policy is to foster the maintenance and extension of the demand for Australia’s export products, while placing in the forefront, at all times the importance of Empire Trade. The Ottawa Agreement stands out as a striking example of an effort to increase trade between groups of countries. The Empire has demonstrated to the world, that countries of diverse interests can achieve mutual benefits by increasing the volume of trade between them.

Unfortunately there is a disposition in some quarters to take extreme views on this question. One extreme section sees in the agreement a threat to Australia’s secondary industries. I shall deal with that viewpoint a little later. The other extreme section professes to see, in Empire trade, a solution of all Australia’s marketing difficulties if only Australia would reduce her tariffs still further. Both of these sections do Australia and the Empire a great disservice in pressing views that disregard the facts.

British market

Sound advocates of Empire trade, both in Great Britain and Australia, freely acknowledge that such a policy cannot of itself solve marketing difficulties regarding wool and wheat. Australia exports 90% of her wool clips, and 70% of the export is bought by foreign countries, simply because Great Britain cannot buy it all, and foreign countries are large consumers. What is more, we want them to continue so. In recent years Australia and Canada have exported annually 400 million bushels of wheat, whereas Great Britain’s total import has been only 200 million bushels.

Up to 80% of Australia’s large marketed crops of the past few years has been exported, and half has gone to foreign countries.

There are also reasons why exclusive Empire trade is impracticable at present for other commodities. Some foreign countries, which formerly bought large quantities of foodstuffs, now purchase either none at all or very little. Consequently, increased quantities of these foodstuffs have been supplied to the British market. Great Britain desires to limit these increased quantities, but is not able totally to exclude the products of foreign countries. It is plain that Great Britain requires foreign markets for a large portion of her own exports. We cannot complain of this. Great Britain is mistress of her external trade policy, just as Australia is.

We must not forget the great advantages that the preferences under the Ottawa Agreement have secured to Australia. Meat products are an outstanding instance. The fact that the largest meat distributing organisation of Great Britain has since established its business on a permanent basis in Australia, and that lines of cargo ships are being fitted out specially for the Australian chilled meat trade, is a happy augury for the development of this trade.

The export of citrus fruits to the British market has very largely increased; and the exports of processed fruits during 1934 amounted to 1,250,000 cases, or more than double the previous shipments.

It is this necessity to find oversea markets for primary products that marks the difference between the position of the primary and the secondary industries. In the case of the secondary industries there is no oversea marketing problem. But the main primary products are produced largely in excess of home requirements, and the sale abroad of this excess is of great importance to every Austrlaian, whether engaged in primary or secondary industry. Unfortunately world prices have been so disastrously low that the very existence of some of our primary industries has been threatened.

Assistance to producers

The position of these industries was so serious that it became necessary for the Commonwealth and the States to come to their assistance in various ways.

During the last three years the Commonwealth assistance in the form of grants and taxation remissions has been to the money value of £9,000,000, of which £5,130,000 was distributed among wheatgrowers and the balance among various other classes of producers. Legislation was passed last year enabling the dairying industry to control marketing and fix a reasonable home price for butter and cheese.

By this method, rendered possible by the existence of an import duty of 6d. per lb., the farmer’s return for his butter is 3d per lb. more than it would otherwise be. Of all the primary industries, wheat, upon which so large a proportion of the national income depends, has suffered most acutely, and the Government has accepted the interim recommendation of the Wheat Commission that, on the basis of a price of 3/- a bushel for wheat, free on rail at the principal shipping ports, a system of relief to the extent of £4,000,000 is necessary for the corning season. This amount will increase if prices fall below 3/- f.o.r at principal ports, and will decrease if prices rise above that figure.

Practically every primary product, except wool and other products of the pastoral industry, has been subsidised in some way or another. This system of subsidies cannot endure indefinitely. If the present depression is temporary, they may be sufficient to enable the industries to tide themselves over the difficult period. The Government is not convinced that it is necessary to act upon the basis that the conditions of recent years will be the normal conditions of the world. The Government considers that if this is so, however, some radical reorganisation must take place.

Oversea conditions fix the price of our exported products. It may be that world conditions will not improve. If this proves to be the case, it may be necessary to contemplate general schemes for home-production prices. The introduction of such methods involves some control of the industries concerned. There is a very real danger of such schemes developing either into direct control of industries by governments, or, if what is called “producer control,” be established, into a series of acute conflicts between sections of the community (producers and consumers) which may ultimately be settled only by some form of government control. The Government recognises that there is also an obvious risk of any scheme for guaranteed prices resulting in over-production and consequent failure of the scheme, with disastrous consequences to those who have been induced to enter the industry.

If conditions continue to be unfavourable to our exporting indutries, it may, however, be necessary to consider the introduction of such a scheme, in spite of its difficulties. The Government does not exclude this possibility, but hopes that it will not be necessary to take action to meet it.

The rise in the price of wool last year, however, and the recent encouraging rise in the price of wheat, show that the low level of prices is apparently not permanent and that improvement is possible. For the present, therefore, the Government proposes to continue the system of protection and subsidies in the case of primary industries.

The problem of rural debts

The Government does recognise, however, that the volume of debts of primary producers is so great in many cases as to make efficient production.

The Government proposes to raise by means of a Recovery Loan a substantial sum for the purpose of affording relief in proper cases.

It is necessary to consider carefully how, and in accordance with what principles, the money should be applied.

The powers of the Commonwealth Parliament are very limited in relation to these matters. The Commonwealth Parliament can provide tariff protection and can grant subsidies upon the production or the export of goods. The Commonwealth Parliament cannot, however, deal with such subjects as mortgage, liens, and other claims, or with interest rates, or with debts generally. Nor has the Commonwealth any control over land legislation. The Commonwealth Government has pursued a policy that has assisted toward such reduction in interest rates as has taken place since it assumed office.

The maximum bank overdraft rate to primary producers is now 5% and the Commonwealth Bank rate in rural advances is down to 4% and 3 ¾% in special Cases.

The only way in which the Commonwealth Parliament could deal with debts, whether secured or unsecured, would be by means of its power to legislate on bankruptcy and insolvency. Even if, by some ingenuity, legislation to deal with the subject under this power could be evolved, it would be resented by those who required assistance, would be objectionable in principle, and would raise difficulties in administration on a federal basis.

The policy of the Governments of Australia as a whole has been directed toward the prevention of collapse and the avoidance of bankruptcies. It would be very unfortunate, particularly at the present time, for the Government to legislate on the subject of the debts of primary producers or others by some device under the power to pass laws with respect to bankruptcy and insolvency.

Co-operation with states

The Government has carefully considered the whole position in the light of the facts that I have stated, and has come to the conclusion that the best method by which it can help toward putting primary industries on a sounder basis is by inviting the co-operation of the States. The States are not limited in power in the same way as is the Commonwealth; and they would be able to introduce and administer any system that was approved by their Parliaments.

The Government does not propose to deal with this matter by any such method as summoning a Premiers’ Conference, and hoping for agreement between the States and the Commonwealth.

What the Government proposes to do is to make money available to the States to be spent by State Governments under schemes approved by their Parliaments—provided only that the contributions of the Commonwealth are devoted toward the purpose of relief of those engaged in primary industry in cases where financial assistance will be a real help toward efficient and payable production. It is not proposed that the Commonwealth Government should review the details of State schemes; but the Commonwealth Government is not prepared merely to provide a sum of money for the States without Parliamentary guarantees that the money will be devoted to the purpose for which the Commonwealth in fact provides it. It is recognised by the Commonwealth that circumstances differ in the several States of the Commonwealth. Proposals that might be very suitable to the conditions of one State might be quite unsuitable in another State. It is for this reason that the Commonwealth Government does not propose to hold a Premiers’ Conference in order to seek general agreement on the matter—agreement which it would probably be very difficult to reach.

This scheme is particularly directed toward the primary industries on account of the special difficulties under which exporting industries suffer in Australia, and because, as the recent report of the Wheat Commission has so clearly shown, many of our people engaged in primary industry are in very grave difficulties indeed.

The secondary industries

I come now to the other great source of our national sustenance and welfare—the secondary industries of the Commonwealth. In reality, consideration of our primary and secondary industrial activities should never be divided. The two are reciprocal and interdependent. They prosper together, or they do not prosper at all.

In my policy speech of two-and-a-half years ago I gave the undertaking that any government led by me would follow an unmistakable policy of protection to all soundly economic manufacturing enterprises. I undertook that the Government would engage in no arbitrary tariff reductions, but would follow in broad principle the recommendations of the Tariff Board. I claim that those undertakings have been completely honored. It is with great satisfaction that I observe the results of this policy. The figures that record industrial activity show that, when you think of the crisis trough which we have been passing, our manufacturers have made real progress during the life of my Government. _The value of manufactured goods produced has increased from £106,000,000 in 1931-32 to £124,000,000 in 1933, and is still rising.

In the Newcastle iron and steel industry, which is a trade barometer, the production, which in 1931 had fallen to less than half of the 1928 level, was, in May, 1934, 38 per cent, above it. More than that, basic products of the industry are being produced at less than they could be imported duty free.

Factory employment increased from 336,658 in 1931-32 to 405,000 in 1933-34.

The chief credit for this fine performance lies, of course, with the manufacturers and their employees, and the efficiency, ingenuity and courage with which they have faced their task. the Government may claim that the large number of tariff reductions, which, after enquiry by the Tariff Board, it has made in the interests of the primary producers, and under the Ottawa Agreement, have been made without detriment to our secondary industries. It is surely no mean achievement to have eased the burden of the pastoralists and the farmers, to have given great benefit to British trade, and at the same time to have achieved a remarkable recovery in manufacturing output and employment. Our tariff and treaty policies have helped a multitude, and have injured none; they have re-employed many thousands of idle hands. Compare, if you care to, the value of manufacturers’ assets in plant and buildings and goodwill as expressed in Stock Exchange figures today with the same values when we came into office.

The Government has revised no fewer than 1873 tariff items and sub-items—an unprecedented Parliamentary achievement. Primage, which was expressly introduced for revenue and not protective purposes, has been reduced by £10,335,000, a great boon to our primary producers (who have been especially singled out for concession) to British interests, and to many who import raw materials for manufacturing in Australian industries.

Prohibitions and surcharges have been almost entirely swept away. In short, while maintaining and expanding all sound Australian secondary industry, and carefully protecting our manufacturers from foreign dumping, our tariff policy has been one of very widespread relief to all sections and especially to the men on the land.

For the future we propose to proceed along the same lines, except that there will be further collaboration between the Customs Department and the Commerce Department in the matter of treaty making. The Ottawa Agreement will be coming up for review and will be reviewed in a sympathetic spirit. The Government, while adhering to its policy of adequate protection for all deserving local primary and secondary industry, and while honoring its Treaty obligations to Britain, will also have regard to the necessity for safeguarding our general export trade by treaties with foreign countries that are large purchasers of our primary products.

The making of a treaty with another country is essentially a matter for negotiation, and it is not practicable to conduct negotiations of this character through the Tariff Board.

The Government, therefore, proposes to ask the new Parliament to give to the Minister power to negotiate such foreign trade treaties and, in accordance with the practice that has been adopted in many countries, to put them into force immediately, by proclamation, subject to the proviso that they must be satisfied within a fixed period by Parliament itself.

Unless this degree of elasticity is allowed it does not appear to be possible to deal with the many questions that will arise in the arrangement of trade treaties with some of our best customers. This will not preclude consultation with the Tariff Board in regard to them.

Commonwealth and States

The success of the Federal system of Government depends very largely on amicable relations between the Federal and State legislation and Governments.

Although under the Constitution the High Court is provided as the judicial authority for the interpretation of the Constitution, so as to decide the limits of Federal and Sate powers, the Constitution has also provided for an Inter-State Commission. Unfortunately the Constitution limited its powers somewhat severely, and, later, when it had been set up, a judgment of the High Court held that the Parliament could not confer effective judicial powers upon the Commission. In consequence of this judgment the Commonwealth Government of that time allowed the Commission to lapse, and it has never been re-established.

Since Federation events have shown the necessity for some such body in order to investigate matters arising between the Commonwealth and the States. For instance, the complaints of the smaller States as to disabilities suffered by them as the result of Federation have led to the appointment of several Royal Commissions and finally to the appointment of the Commonwealth Grants Commission.

These Commissions have endeavored to assess the financial loss said by the States concerned to be due to Federation.

In the course of their investigations, allegations have been made of difficulties arising as between States, notably in respect to what is called “dumping” in Inter-State trade. The Commonwealth Parliament clearly has power by virtue of Section 51 (1) of the Constitution relating to trade and commerce among the States, to control unfair competition of the kind described.

Manufacturers in the smaller States complain that whereas their rivals in the larger States have already the advantage of a large home market and are protected against unfair oversea competition and dumping, they, the manufacturers of the smaller States, have no protection against unfair dumping from their rivals in the larger States. There is no doubt that the investigation of such complaints would be a suitable function for an Interstate Commission to discharge.

The special purpose of the Interstate Commission, as contemplated by the Constitution, was to control unfair discrimination and preferences by Interstate carriers, especially State railways; and special powers were given to it in this connection. But it was anticipated that it might have a wider usefulness in relation to the administration of Interstate commerce laws generally.

The Interstate Commission was duly constituted by the Interstate Commission Act 1912. The Act charges the Commission with the duty of investigating all matters that, in its opinion, ought, in the public interest, to be investigated where they affect the production of, and trade in, commodities, the encouragement of Australian industries and manufactures, the prices of commodities, and any other matter referred to it by either House of the Commonwealth Parliament.

It is not to be assumed that the main function allotted to the Commission by the Constitution—to control unfair discrimination in railway freights—is one that is not required to-day. Complaints are often voiced that such discrimination exists and that there is no authority to control it.

The Commonwealth Government has come to the conclusion that there is real necessity for an Interstate Commission as a working part of the Federal Constitution. Although under the High Court judgment already referred to, it would have no judicial power, yet, by investigation and recommendation, implemented if necessary by legislation, much of the friction and irritation arising from these matters might be removed.

The Government proposes to re-establish the Commission with such powers as the Constitution now permits, and to consider later whether any amendments of the Constitution may be desirable in order to enable the Commission to function effectively.

The national security

I come now to the question that must rank above all others in the scale of a government’s responsibility—the national security. Our system of defence is the insurance of that security. It is easy to cheer for defence; it is easy to talk of adequate defence; but the real test is the readiness to find the funds necessary to enable adequate defence to be provided. The Commonwealth Government has energetically joined with the rest of the British Empire in supporting all movements in the direction of disarmament and peace. But the results so far have been extremely disappointing.

What, today, is the position of the Empire and the world with respect to armaments and general preparedness for war? Briefly it is this: Britain, with the full concurrence of the dominions—and especially of Australia—has for years been setting an example to all the world in disarmament, and in sincere wholesouled endeavors to minimise the possibilities of further wars. Britain, as well as Australia, has made cut after cut in her various defensive arms—in the air, on the seas, and on land. Expenditure upon armaments has been cut to the bone—cut, as it now turns out, to danger point. The sacred cause of peace, and the horrors and futility of war, have been urged by British and Australian leaders at a long series of international peace conferences, in America, in Britain, and upon the Continent of Europe.

But with what result? To the shame of all civilised peoples we have, for the present and the immediate future,laboured largely in vain. While the British nations have preached peace, and, by steady progressive disarmament, have practised peace, great foreign nations, while preaching peace, have continued increasingly to pile up further armaments and at the same time have perfected their preparedness for war. Worse than that—while foreign preparedness for war has advanced, international suspicion and unrest, and other symptoms of the conditions that make for armed conflict, have shown an alarming increase.

The Government of Australia certainly does not expect any outbreak of war. Nothing is further from our thoughts than any war in which Australia might become engaged. And I am sure, too, that that is the opinion of the British Government with respect to Britain.

But facts are facts. Would my Government be true to the most solemn and vital of all its responsibilities—the defence of the Commonwealth—if it shut its eyes to these facts, and persisted in a policy of further reductions, or if it failed, after the most exhaustive examination of the position, to adopt a defence programme that the state of the world and the rising tide of foreign armaments makes imperative?

The British Government still strives for peace and so shall we. But the British Government has been forced by stark realities into increasing its defence provisions. This is also the position in Australia.

We propose nothing extravagant. We suggest nothing which savors in the faintest degree of a spirit of militarism or aggression. We aim only at the lowest possible provision that is consistent with the protection of our Continent, its people and its assets. You are already familiar with the Government’s new proposals.

Over a brief span of years we propose to enter upon a carefully balanced scheme to recondition and somewhat increase our existing services and defences. A great deal of the money required will be found from accumulated surpluses in the Federal Treasury, and to that extent the increase will not impose further burdens on the taxpayer.

Unemployment relief

I shall have other opportunities to touch on aspects of Government policy that I have not the time to mention to-night. But I cannot conclude without emphatic reference to a subject that is never absent from my thoughts. I refer to the greatest tragedy in the world to-day and the greatest tragedy of our own position in Australia—unemployment.

The reduction of unemployment has been the principal objective of the Government during its term of office. By the general restoration of confidence in Australia, at home and abroad, by the balancing of budgets, by assisting industry, through lowered taxation, to provide more employment, by unprecedented grants to help the States in dealing with this problem, and by increasing expenditure on Federal public works, the Commonwealth Government has, during more than 2 ½ years, sought to make work for the workless an dmake possible more generous measures of relief to those for whom work could not be found.

What I have said should already be well known, but I repeat these things because it is important that the people should realise what has been done. Largely as a result of this comprehensive and persistent policy, the total number of unemployed persons has been reduced by more than 30 per cent. The amount of unemployment directly attributable to the depression has in the same time been reduced by about 50 per cent.

Despite this real improvement, however, large numbers of our workers are still idle. The truth is that until there is a general world recovery, there can be no complete return to normal employment in the Commonwealth. The Government, therefore, is concerned with the question of taking further measures to help in the solution of this tragic problem. A continuance of the conditions to which I have referred will menace the morale and the future usefulness of a great part of our population.

Hitherto the responsibility for relief of unemployment has been allowed to rest with the States. This has been the policy of all Federal Governments, irrespective of party, although all Commonwealth Governments have from time to time strained their resources to assist the States in their task.

What the Commonwealth proposes

After months of careful study of the problem, the Government has decided that, in the national interest, the Commonwealth should take a larger share in this responsibility. The States have nearly exhausted their financial possibilities in a wholehearted effort to overcome it. The task is almost beyond their resources. The Commonwealth Government proposes to increase its efforts to deal with the problem. The Government makes this announcement in the direct interests of those who are so unfortunate as to be unemployed and also in the indirect interests of every section of the community.

The Government proposes that practical and enlarged efforts to relieve unemployment with particular reference to the needs of youth, shall take precedence over other Commonwealth activities.

A conference with the State Governments will be summoned.

Our aim will be to handle the problem upon a national as well as a State and municipal basis. Instructions have been given for the assembling of all the information directly accessible to the Commonwealth. This information will be supplemented by a swift and detailed survey of all that has been and is being done by the States: and, in the light of the complete information, comprehensive co-operative planning between the Commonwealth and State Governments will follow.

Vigorous policy of works

Our idea is first to assign to a Commonwealth Minister definite responsibilities for Commonwealth action in relation to employment. It is proposed that the Minister shall be assisted by Advisory Committees in the several States. We are prepared to submit definite suggestions. One of these is national forestry, upon which a comprehensive scheme will be submitted. Australia greatly needs an extension of its forests, and this is a direction in which any effort that we make will be powerfully aided by nature herself. It should give an opportunity for the healthful employment of large numbers of youths as well as of older men. In a further effort to solve the tragic problem of the unemployed youth of Australia—which we regard as perhaps the most serious aspect of the general problem before us-we purpose to examine, in conjunction with the State Governments, any useful proposals for the training and preparation of youths for work. We must give these youths a chance to become useful citizens.

The Government has also in mind works of some magnitude, such as the unification of railway gauges between capital cities, country water storage, sewerage constructions for large country towns, and other works of like description which meet public needs.

Such works might not at once prove reproductive, but, if wisely chosen, they could not fail to prove a sound investment in the further development of Australia.

Then there are such works as the treatment of shale and coal deposits for oil. As a result of the report of the expert Committee appointed to investigate the possibilities of the shale deposits at Newnes, the Commonwealth Government and the Government of New South Wales have decided to enter into negotiations with a company for their development. For this undertaking reasonable financial assistance will be forthcoming. If success attends the operations at Newnes, attention will be given to the like development of other shale deposits, such as those at Railton-Latrobe, in Tasmania.

The problem of absorbing the workless miners on the Australian coalfields is great, and, if the extraction of oil from coal by the hydrogenation, or any other process, can be demonstrated to be pro?table, the Government will have no hesitation in providing assistance for the establishment of the industry.

I have mentioned only some of the directions in which examination may disclose opportunities in which the public credit may be utilised—either directly or in support of private initiative—to provide opportunities for employment over a wider area. If the States are prepared to join in the plan, my Government is prepared to join with the States in raising the necessary money and will undertake that the Commonwealth will contribute, upon a basis to be agreed upon, to the interest liability over the non-productive years.

A pledge of faith in Australia

The soundness of public works enterprise and assistance to approved private enterprise at this time is a matter of faith in Australia. There is no limit to the faith that the present Government has in Australia. Already this country and its people have shown marvellous resilience in the partial recovery from the lowest depths of the depression.

Australia has led all the world in her substantial escape from the general crisis, and we believe she will continue to do so. Moreover, the Government holds the view that this depression will eventually go the way of all other depressions in the past, and that the world generally, and especially the British Empire, are already showing signs of a return to happier days.

My Government believes that it would be wiser in the general interest to engage in a limited number of sound major employment works than to dissipate money upon a multiplicity of small local jobs of doubtful value. These major works would draw off the able-bodied section of the unemployed and divide and simplify the whole problem. Public works expenditure, requirements in material, and increased distribution of wages, would stimulate all secondary industry and business, and create stronger local markets for every kind of primary produce. It would increase manual and clerical employment in private enterprise, and hope and wages would come again into the homes of a great many good citizens who are now on bare subsistence.

The Government will enter upon the scheme in a spirit of generosity, impelled by a sense of inevitable responsibility, and confident that the outcome of this proper act of national and democratic justice to those who now vainly seek employment, would be beneficial to all Australians, both to-day and tomorrow.

Maternal mortality

It is a startling thought that in the Commonwealth every year between 600 and 700 women in the prime of life die in childbirth, and that a far greater number suffer chronic ill-health as a result of childbirth. It is startling, too, that in Australia the maternal mortality rate has risen in the last 30 years, and is now higher than in many other countries.

It is obvious that something more than the present methods of caring for mothers must be devised. Australia cannot allow this appalling death-rate with its attendant unhappiness, with the neglect that befalls so many of the 2000 children orphaned annually in this way, to continue.

The Commonwealth Government has no intention of overlapping the excellent work that is being done by the States, a work that is unfortunately hampered by lack of resources; but it is prepared to assist financially to extend this work if by so doing it can help to bring about a lowering of this death-rate, which is a reproach to our claims to be a progressive nation.

It is proposed, therefore, to confer with the States, the leaders of which would no doubt summon a conference of women’s organisations, of the medical profession, and of the public health authorities of the Commonwealth and States. These conferences could be asked to submit recommendations. The Commonwealth Government will then be prepared to assist in any practical scheme or schemes that may be suggested, though I wish to make it clear that there is no intention to usurp or intrude upon the functions of the State Health departments.

In this regard, we must pay a tribute to the women of Australia. Before Governments and the medical profession took much notice of the problem, the women of Australia, largely on their own initiative, had succeeded in developing organisations for the care of infants and children. The infant mortality rate has declined remarkably. The maternal mortality rate has increased, and no effort should be spared to combat anything that robs the crown of womanhood of its lustre.

Concluding words

I have now recalled to your minds some of the things that my Government has done, and I have indicated to you the general lines of policy that we will pursue if on September 15 you renew the splendid confidence that you reposed in us at the last election. I now say this to you in conclusion. The restoration of the country’s finances and its public credit at home and abroad, the revival of industry, and the resuscitation of the people’s hopes, have been brought about by unwavering adherence to a sane and honest national policy (which embraces the interests of every class and section of the comunity) and by hard and earnest work in pursuance of that policy. What we told you we would do we have done. Tonight I have told you what we will do if you endow us with the power to do it.

It now rests with you—with the people of Australia—to say whether you are going to proceed steadily along the road toward the goal of prosperity with a sound Government in the lead, or whether you are going to risk a slide back into the valley of chaos and despair.

Remember again that the alternative to this Government is a Scullin-Lang Government…Remember that in the last Parliament the Lang and Scullin groups nearly always voted together. Remember that the Scullin section voted against the measures that resulted in the dismissal of the Lang Government from Office. Realise that the measures to which they now stand committed are fraught with possibilities of general financial demoralisation compared with which their past record would be but a circumstance.

You know now from experience that confidence—confidence in the Government, confidence in the public credit, confidence in the country’s institutions—is not an empty word, but the reality upon which depends the well-being of every man, woman and child in the community.

I have no doubt that by your votes at this election you wilt loyally sustain and extend this confidence. Let our national motto be our inspiration, and let us resolve that by a continuance of sane and sound government and the pursuance of a policy of progressive development

We shall indeed “advance Australia”!