4th Parliament · 1st Session
Mr. Speaker took the chair at 3 p.m., and read prayers.
– To save valuable time, I ask the Prime Minister if he is aware that in introducing in another place a measure for the appropriation of money, namely, the Northern Territory Acceptance Bill, he is committing a breach of the privileges of this House, and is violating the Constitution. To take such a course is merely to waste time.
– I am not aware that I am doing what the honorable member complains of. Were I aware that any action or. mine would have that effect, I should not take it. If I have violated the Constitution I regret it, and shall correct what has been done amiss.
– Is it the intention of the Government to adjourn to-morrow or Thursday afternoon, so that honorable members may visit the Royal Agricultural Show?
– Much as we should like to be present at the Show, it is not the intention of the Ministry to ask the House to adjourn earlier than usual on those days.
Conversion of Notes.
– Is it the intention of the Prime Minister, when the Australian Notes Bill has become law, to establish in different parts of Australia, by administrative act, depôts where notes can be exchanged for gold?
– -I am glad that the honorable member has drawn my attention to the matter, because in an uncorrected statement appearing in Hansard I am made to say that depôts will be established by administrative act for the convenience of those who may desire to exchange Australian notes for gold. What I meant was that depots would be established for receiving old notes in exchange for new Australian notes. Obviously, to establish in each State depots for the exchanging of Australian notes for gold would be to create six offices for the redemption of notes.
– Is the House to understand clearly that no arrangements will be made for the conversion of Australian notes into gold elsewhere than at the Seat of Government?
– I do not think that a question of that kind is necessary. The usual facilities and conveniences will be given by the establishment of depots for the making of adjustments, but these will not be places of redemption. It is not intended that the notes shall be legally redeemable at six places in the Commonwealth.
– I was of the opinion, when the Bill was under discussion, that the only place in which gold could be demanded for Australian notes was the Seat of Government.
– That is so.
– But the honorable member informed us that he would establish depots in the capitals of the States where notes could be exchanged for gold by way of privilege but not as of right. Are we to understand thatdepôts will be established in the principal cities of the Commonwealth for the convenience of financial institutions and the general public desiring to obtain gold for notes?
– I have already made arrangements with a bank in one State for the cashing of all notes presented to it, unless presented for Inter- State exchange purposes. The bank is preparedto cash any Australian notes presented inthe course of ordinary business transactions within the State, and I think that a similar arrangement could be made with the banks generally.
– Can the Prime Minister see his way to make provision for the drastic punishment of persons who, by concerted action, cause a general demand for gold in exchange for the Australian notes?
– That can be dealt with if necessary by subsequent legislation. This Parliament has power to punish any one who tries to do injury to the State.
” Ship “ Room, General Post Office, Sydney - Hay Post Office Clock.
asked the Postmaster-General, upon notice -
– The Deputy PostmasterGeneral, Sydney, has furnished the following information : -
On the 17th August, I was asked, on behalf of the honorable member for Riverina, if I would see that the Hay Post Office clock was effectively lighted. I have had inquiries made, and find that the clock at the Hay Post Office was not lighted until the year 1903, when permission was given to the local municipal council to arrange for such lighting. The service not having been in operation at the time of the transfer of the Department to the Commonwealth, it does not come within the same category as that of the Melbourne Post Office clock, referred to in my remarks of the 16th inst.
asked the Prime Minister, upon notice -
Whether the Commonwealth Government has a copy of the meteorological observations made during the Shackleton Expedition to the Antarctic Circle. If so, will he cause them to be printed ; if not, will he endeavour to procure them with the object of making them available to the public?
– The Antarctic records have been handed to the Commonwealth Meteorologist, and their reduction and compilation are now being proceeded with in the Meteorological Bureau, with a view to their being printed.
Debate resumed from 16th August(vide page 1545), on motion by Mr. Fisher-
That this Bill be now read a second time.
.- The Bill to authorize the imposition of a land tax is to be read with this, its provisions having been introduced as a separate measure to comply with the requirements of the Constitution respecting money Bills. Both measures are needed to bring the tax into operation, and in speaking now we should treat them as one Bill. I should have taken formal exception to the consideration of this legislation prior to the Budget, in which its announcement would have found a proper place had it been a taxation proposal, but as taxation is only a secondary and subordinate feature, I need not dwell on that objection.
Nor shall I yield to the temptation to call attention to the astonishing taste of the Attorney-General for what is professionally and properly described as duplicity, displayed in every important Bill for whose drafting he has been responsible. The form of the measures submitted by the Government is adopted on his advice, and not one important Bill yet has borne on its face a clear statement of its purpose and character. The Surplus Revenue Bill was an extremely ingenious attempt to keep both inside and outside the Constitution at one and the same time, in order to evade the operation of the Braddon provision. The Conciliation and Arbitration Bill tried to couple an appearance of judicial decision with a dictation deciding the decision beforehand, thereby rendering it a mere form of words. In the Australian Notes Bill, under cover of a proposition relating to the currency there was proposed the raising of the largest loan - and that a forced one - ever attempted in this country. Now we have before us a measure professing to have for its object the authorization of a tax, but in reality enunciating a Federal land policy.
The Prime Minister, at the outset of his speech in moving the second reading of this Bill, claimed that there was a mandate of the country either for this or some such proposition in respect of the land. I doubt if any precise popular mandate can be proved. An examination of the returns - and they ought to include the important referendum on the financial agreement, as well as the electoral results both for the Senate and the# House of Representatives - will show that, of the number who voted, the majority in favour of the Government and its platform was relatively very small. If we take into consideration the large number of electors who did not vote, the fraction becomes proportionately less. In interpreting this mandate, therefore, one is justified in giving it simply a general character.
– The poll at the last election was the biggest that we have ever had in connexion with Federal politics.
– Because, fortunately, the population is rapidly increasing, and so are the number who vote.
– But the average was larger.
– The average was better, and my honorable friends opposite may take a large measure of credit for that increase. I do not dispute that fact, but it is not sufficiently marked to affect my point that the mandate can only be interpreted as being of a general character. It appears to me that, stated in such terms as might be accepted by men of all opinions, the mandate of the country at the recent elections was a declaration by the electors for a diminution of their powers as electors of the States, and an increase of their powers as electors of the Commonwealth. This, “ho doubt, included a proposal for Federal land taxation, and, in the minds of a. great “ number,- that land taxation probably implied some measure of land policy: On consideration, honorable members of the Labour party themselves will accept that as a- statement of the position, as -far as it -is safe to go, having regard to the multitudinous local and minor interests that affected results in many parts of the Commonwealth.
But I venture to believe that our electors had not in their minds at the time any effective estimate of the consequences of their action, so far as it meant a disturbance of that distribution of powers which is the very essence of the Federal Constitution. Many of them approved of the raising of revenue from the land. A great many of them approved the subdivision of large estates. But few, if any, paused to consider what was the warrant apparently possessed by a Federal Ministry for a proposal of this kind, or weighed the necessary consequences of seeking to give effect ‘through the central Government of Australia to a policy that hitherto has been wholly and solely under the control of the States, and which, there seems good ground for believing, was originally intended to remain with the States. Among the factors operating upon the public mind to bring about the result of the late general election, the last, it appears to me, played no important part. I should deduct from the totals a very small fraction indeed, if I were guessing how many of those who approved of the Commonwealth as well as the States dealing with the land of Australia had seriously considered what the possibilities of such a precedent would be if we have the constitutional power to create it.
On the motion for the second reading of this Bill I hope to confine myself as far as possible to general considerations, leaving details for future meditation ; and. conscious that this debate will be shared by a great number of honorable members on both sides of the House, shall make no attempt to cover the whole ground.
If we had foreseen this Bill, we should certainly have submitted to the people of Australia a preliminary question which they would have required to consider very carefully before pursuing the course they are now approving. They would then have been asked to say whether they had taken into account the consequences of centralizing in the hands of one Parliament the land policy of the whole of this continent. They would have been asked whether they had reflected upon such an unprecedented extension of the already existing powers of that Parliament, even when these are given the widest interpretation necessary to make its control effective for our purposes. We should have asked them to decide whether two land administrations over every part of Australia were desirable. We should have asked them to consider whether or not an attempt to launch an Australian land policy made by the Federal Government under its existing Constitution or anything like its existing Constitution was not bound from the outset to be costly, inefficient, dilatory, and beset with numerous difficulties. These exist in every State already, but are minimized by the fact that each State deals with “its own limited area. If the electors had realized what either a double land administration or one wholesale land administration undertaken by the Federal Government must mean, a number of them would probably have given a different verdict on this question if it could have been separately dealt -with.
If we turn back for a moment to the Federal Constitution Bill and its discussion, and thereafter to the public -criticism of the proposals submitted in 1897-9, I am safe m saying we shall find no trace of a hint even from the fiercest -critics of that measure - and many of them now sit opposite to me - of any proposition of this character. Still less was it taken into account by those then recommending and defending the Bill. The Constitution Bill was understood by the whole of the intelligence of Australia brought to bear upon it to be Federal in principle in every regard. It meant the retention to the States of all their powers intact, especially -of their lands, but of all except those expressly conditioned or taken from them.
– Until Parliament otherwise ordered.
– No; Parliament has not the power. The retention was until the people otherwise ordered. Had they been asked distinctly at the last election whether they would or would not otherwise order “in this regard, there would have been no occasion for this debate. We should have had from them our final answer. As it is, we remember that the theory accepted by both opponents and supporters of the draft Constitution was that under it the States remained intact plus a Federal Government to which certain powers were transferred for their better keeping, on behalf of the people.
In connexion with taxation a vital power as well as a vital distinction arose. The whole realm of indirect taxation, of CUStoms and Excise, was absolutely trans ferred to the Commonwealth. It was obvious that such a power must be exercised by and for Australia as a whole. The anticipation then was that, while the proportion of Customs and Excise revenue fixed by the Constitution to be allotted to the States would apply for ten years, afterwards the Commonwealth would derive its revenue in increasing proportions from the same source. At all events that source was placed wholly and solely at its disposal. We have to bear in mind at every stage of this argument that the indirect taxation of the Commonwealth being solely possessed by the Commonwealth, everything connected with it stands in a special relation, differing altogether from the relations of the Commonwealth to the States in respect to direct taxation. Direct taxation is common to both, but not indirect taxation; in that the Commonwealth stands alone and supreme. The question, whether, while raising taxation through the Customs, we can adjust it apart from merely revenue considerations, in order to establish local industries for the benefit of the community, lies between the Commonwealth Parliament and its constituents alone. The States as States have no voice in that regard. The sole control and responsibility for indirect taxation being - and it is of control I am now speaking - in the hands of the Commonwealth, that question is settled apart altogether from the States as States. When we come to the field of direct taxation, however, we are faced by an entirely new set of conditions. Here our power is shared. It is unlimited in each State, and it is unlimited in the Commonwealth as a whole. The people, whether as electors of the States or of the Commonwealth, are equally authoritative when drawing from that same source. The fact that the States share with the Commonwealth in that source of income, while they are absolutely excluded from the other, establishes a cardinal distinction “that must be kept in mind throughout the consideration of this Bill. If my argument be sound, it amounts to this : Under the Constitution, the question whether, or to what extent, or in what manner, land taxation or any direct taxation is to be dealt with is a question which the Court has to decide, reading the whole Constitution, as embodying a compact between the Federal Government and the States. That compact is, dated in one very important respect as to the apportioning of
This appears to me to be so vital that I trust the House will pardon me for taking time to dwell on it. The sole control of indirect taxation went inevitably to the Commonwealth, because the Commonwealth alone was fitted to deal with it; but direct taxation, in many respects, can obviously be more economically and adaptably imposed by the States. Whatever advantages there may be as between the two Governments, in matters of land taxation, when we consider its adaptation to particular necessities of the people and their territory, the balance of advantage is certain to be on the side ofthe States as a matter of practical administration.
– That is according to how the case is put.
– I do not see that any manner of putting the case could affect the contention that necessarily - to take the smallest State of the Union, Tasmania - any form of taxation on land allows the Tasmanian Legislature to provide for all special conditions - qualities of the soil, situation, rainfall, railway communication, or whatever you please - in such a manner as to adjust this tax closely to the circumstances of the island. But if Tasmania is dealt with merely as part of the Commonwealth, it will be practically impossible to apply its conditions on the mainland with anything like the same fitness. We cannot frame general conditions for this continent to fit in so closely and so aptly to those of Tasmania. I do not think that any wholesale conditions can apply as well as the retail would in this matter. That is my point.
Does the Constitution, or can any fair reading of the Constitution, authorize the Commonwealth to go beyond direct taxation into land policy apart from taxation? If it can, I shall not pretend to criticise it here by merely legal arguments - that will necessarily have to take place somewhere else. I propose to deal with the matter, therefore, on broader political lines, although it appears to me there certainly is a case for legal argument. There are good authorities on the other side who have already pronounced in advance on the question ; and yet I venture to maintain the opinion, with all respect to those learned authorities, that the legal case against a
When we look at this measure, the first thing we have to decide is, what is its real purpose? The old saying, “ If two men ride on horseback, one must ride behind,” is true here, as everywhere else. Now, whether we look at the proposal itself, as embodied in the Bill, or take a rapid glance at its history, we find, in either case, that the land policy comes first, and that the land taxing provisions play a second and subsidiary part. I do not propose to go back to the beginning of things; the genesis of this particular proposition lies probably even beyond the Brisbane Conference of 1908. But honorable members who have perused the official pamphlet which reported the proceedings of that Conference will notice there the freedom with which practically every speaker indicated, either that the question of the revenue to be raised was not worth considering, or that the returns must be inconsiderable - the whole object was the subdivision of large estates. Incidentally, revenue would come in no doubt, and be welcome ; but the main purpose, the driving force behind the proposition, did not lie on that side, but, in the language of present member of the Government was the “ bursting up of large estates.” The member of the Government was Senator Findley, a member of the Brisbane Conference, where others said the same thing; less explicitly. He used the familiar words, which have often been employed since.
The proposal having been launched in Brisbane under these circumstances, the present Prime Minister, in a Ministerial utterance at Gympie, in 1909, took up exactly the same theme. He said that this proposition was essential if our lands were to be developed - though taxing land in itself is not a way very likely to encourage development - and that the object of this tax was to prevent monopoly in land - an excellent object, but which does not happen to lie directly in the path of a taxing measure. At Gympie, the Prime Minister, for the first time I think, brought forward a table of rates, starting with an exemption of £5,000 and a tax of1d. and1½d., and ranging to£50,000 and all above at 4d. in the£1. There the table stopped. It is practically the same as that we now have before us up to that point. The fact that the table stopped at a tax of 4d. on estates of £50,000 and all above negatives the interpretation since given, that the 461. was merely an illustration, and not complete. I take it, when the table said that estates of .£50,000 and above that were to be taxed at 4d., that was intended to state the highest amount of taxation.
– My notes went up to 6d.
– Then the honorable gentleman kept the proposal in his notes, because the public knew nothing of it.
– The honorable member has no right to say that.
– I do not question the statement of the Prime Minister; he now goes to 6d. ; but, according to the report of the speech in the Gympie Truth, of the 22nd March, there was to be a graduated scale until estates between £50,000 and £60,000 and above that would pay only 4d. in the £1.
– All the reports were the same.
– The memorandum which was laid on the table, in May, T909, preceding practically the same Bill that we are now considering, contains not one word relating to the imposition of a tax as a tax. The first sentence refers to “a population sufficiently large to effectively develop “ our “ various resources,- and defend “ the country “ from invasion,” and so on ; this is most interesting and proper, but, as I have said, it has nothing to do with taxation or revenue.
– It is very near to it !
– Taxation is near us all, but not touched in this preface. The memorandum goes on to deal with the density of population, the necessity for the cultivation of land in new countries, and our need for settlers, and facilities for settlement on suitable lands. We are told that “ Land monopoly exists here to a greater extent than in any country in the world,” and that “ The evil is. too firmly rooted to be cured by the resumption of individual estates,” that we “ Must strike at the root of the evil,” that “Legislation is called for that will neither be local in its operations nor temporary in its effects,” that “The object of the Bill is to provide an effective remedy “ - and here, for the first time, I think, we have the word “ tax “ - “ by means of a progressive land tax on unimproved values,” with an exemption of £5,000. Clearly the whole object of the Bill is not taxation, it is land settlement, and the means employed is taxation. The memorandum goes on to say, “It is confidently expected that this will operate,” how? To fill the Treasury ? To give plenty of money ? Te fulfil the purpose of a tax? No. It - will operate as a substantial check on the unproductive and speculative holding of large areas, and will vastly increase the land available foi settlement by our own people and by the immigrants whom we wish to encourage, and whom we must have’ if we are to develop our resources and maintain our position.
– Hear, hear !
– I also say, “ Hear, hear!” But the memorandum speaks of everything but taxation as its end and aim,
– The honorable member knows that if a Bill were brought in for the purpose of bursting up estates, it would be ruled out by the Court.
– Of course ; that is mv point. The honorable member is quite right; and, therefore, this is a Bill, not for taxation, but for land settlement, and ought to be ruled out.
– It is for both.
– Don’t worry !
– It is just because of the “ don’t-worry “ attitude and doctrine in regard to the Constitution that we are in all this trouble. We have to “ worry “ until we are certain we are proceeding constitutionally, or we shall have to “worry” a great deal afterwards, and at large public expense. I do not take exception to the line of argument in the memorandum; but point out that it is an extraordinary way to introduce a tax Bill. If, as I contend at present, land taxation alone is the function of the Commonwealth, and that land policy is beyond the power of the Commonwealth until authorized by the people, the position is still more serious.
Then we come to the Prime Minister’s speech at Maryborough, in February of this year, when he pointed out again that the ground for his proposal was that the people required more land than they could at present obtain, and that those who held land for speculative, purposes should pay for the luxury.
– Hear, hear !
– Yes; but that is not the point. The purpose of this tax is to raise revenue equitably, and beyond that a tax ought not to go of set purpose. Of course, there will always be subsidiary effects foreseen or not intended, and their existence need not defeat the Bill.
– Is not the dog tax imposed to keep down dogs?
– That is a State problem. Finally, honorable members will find in the manifesto of the party, which was signed by the Prime Minister and the honorable member for Newcastle, that this measure for land taxation was to be the first measure of the session. When I ventured to remind the Prime Minister that I had expected this to be the first measure of the session, he dealt with the reminder very deftly, by suggesting that I was complaining because I could not get a Commonwealth land tax soon enough. Of course, I was calling attention to the pledge which he had given shortly before the election. This was to be the first measure of the session. I was merely expressing surprise that the Prime Minister was not fulfilling his own promise.
The manifesto proceeds, in the most open fashion, to announce that the object of the tax is to “kill land monopoly.” It is “ to shatter it at one blow,” and then comes that blessed word “ nationalization,” which was to follow in the distance. More -than this the manifesto states that the object of the tax is “to override the Legislative Councils, which are the citadels of vested interests.”
Honorable Members. - Hear, hear !
– But who gave the Commonwealth power to legislate in order to override State Legislative Councils, by means of a measure of taxation intended for the raising of revenue? If honorable members will follow me, I am endeavouring to bring them round to what, I venture to think, is a question which has yet to be answered, and that is what our endowment with power to tax actually means for the Commonwealth. The whole issue turns upon that. Honorable members opposite may wish to override Legislative Councils, and if they have the legal power to do so, their action rests between them and the electors. But if they have not the constitutional power to do so, the issue disitinctly arises not between them and the people, but between them and the Constitution. They must amend the Constitution so as to take the power they wish to exercise, if, as I contend, they do not at present possess it.
– Does the honorable gentleman contend that?
– Yes, that is my argument.
– The honorable gentleman need not waste time on that argument.
– I do not think I need occupy more time in proving from the Prime Minister’s frank admissions that all his aims in this Bill relate to land settlement, and really constitute a land policy which is nowhere conveyed to the control of the Commonwealth.
In this particular regard the proposal is to alter the Constitutions of the States in effect by overriding their Legislative Councils. This might bring us, if we attempt it by legislative enactment, directly in conflict with’ another provision of the Constitution, preserving the Constitutions of the States, which we should have no means of surmounting. Here, again, there was no attempt to disguise the fact that the object in the honorable gentleman’s mind, when recommending this piece of legislation, was for its effects other than that of mere taxation. In his first sentences, he said that it was “to promote industrial progress.” We do not promote that by taxing it. It was “ to increase social welfare.” We do not increase social welfare by taxing it.
– - Question !
– The honorable member can apply his doctrine to himself as long and as hard as he pleases, but I hope he will not attempt to apply it to the rest of us. Another object stated was to secure “ the safety “ of the country, which is only indirectly affected by the raising of taxation. It is true that the raising of funds is necessary for defence, but other things are required besides the raising of funds to provide for adequate defence, of which the finding of the money is only one part. So that out of the three grounds given for the introduction of this measure, the raising of a tax cannot be included in two of them, and only indirectly assists the third, showing that, in the mind of the Prime Minister, taxation was a very subordinate consideration. lt took the honorable gentleman seven pages of argument on questions of land policy before he gave us one page on a tax. Even then he stopped to deal with the question only for a short time, and was soon away again discussing a land settlement policy. Four-fifths of the honorable gentleman’s speech was devoted to that, and, roughly, about onefifth to the question of taxation. In the course of his remarks there were one or two points made that are worthy of consideration. The honorable gentleman was reminded, first of all, that he was discussing a land policy which belonged to the States, and then, a little later, he was brought face to face with the question of revenue. At page 1542 of Hansard, it will be found that he said -
I do desire revenue, and I have- never uttered a word to the contrary.
– Hear, hear !
– I should hope not. The honorable gentleman went on to say -
Unimproved value taxation is a sound principle, and while the incidence will tend to break up large estates and help to develop the country from an economic point of view, without any other embarrassing conditions, it is a proper kind of taxation for the purpose of raising Commonwealth revenue. Honorable members will see that the taxation applies, not only to large estates, but to city and town areas, and, therefore, could not be justified alone on the ground of breaking up large estates.
That is perfectly correct. The last phrase is an illuminating explanation of the present form of this measure. Here, again, all the objects in the minds of its framers relate to land policy, and the means of raising the funds is, as I have said over and over again, nowhere.
The Prime Minister when replying to a remark made by myself, previously alluded to on the Address-in-Reply, as to why this land tax question was not being dealt with first, and, at page 1536 of Barnard. I find that he said -
Obvious’.y the first business of the Parliament has to be” of another kind, for the financial measures were more pressing.
The honorable gentleman was quite right. The financial measures were more pressing, and this is frankly distinguished as not a financial measure, though it pretends to be. That is my whole point. There is no authority for this measure being before this House, unless it is a financial measure; yet the Prime Minister himself, while calling attention to the fact that it has a financial bearing, distinguishes it from financial measures properly so-called, and so do I.
– Was I referring to Budgetfinancial measures ?
– To Bills which had been dealt with, such as the Surplus Revenue Bill, and other such Bills, that really were financial measures. The Prime Minister made that statement, of course, perfectly well aware of the effect of what he said because, lower down, in the same column of the report of his speech, it will be found that he went on to remind honorable members -
That practically the whole of the public estate is in the hands and under the control of the State Parliaments and Governments.
That is an accurate and incontestable statement of the case as we all know it. Their lands are under State Parliaments and State Governments, we have no title to do anything with them except tax them, and yet the object of this Bill is to bring them under the control of the Commonwealth Government; and, in addition - to the extent, whatever it may be, to which we interfere with them - we exclude the State Governments and Parliaments from the complete control which they at present exercise. In various parts of his speech the r rime Minister referred to the breaking up of large estates,” “ making, more land available,” “ preventing the unearned increment going into private hands.’* References of- this kind will be found on pages 1537 and 1538 of the report of the honorable gentleman’s speech. He made a little digression, too, to indicate the failure of the Victorian Legislative Council to deal with this question as another reason why this Bill is brought forward. On page 1544 it will be found that he said that “ the object is closer settlement”; and on page 1545, he says that his principal object to bring about closer settlement is one approved by the country, and that this is the best way to give it effect.
It has been rather a heavy task to take the House through all these citations; but I thought it was necessary to endeavour to establish beyond all possibility of contradiction that, in the remarks of those who urged this legislation at the Brisbane Conference, or even earlier, and in all the speeches of the Prime Minister, or formal proposals of the party opposite, it has nowhere been represented that this is a taxation measure pure and simple.
– We all recognised it, though.
– Honorable members opposite had to treat it as a taxation measure, otherwise they could not get it on the table of this House at all; but the point is that they did it without disguise, warning the public and honorable members at every step that their real purpose was to burst up the great estates to procure closer settlement, and to take control’ of the lands of Australia. They said :.- “ We cannot do that directly, but wewill try to pass a measure which will appear to be a taxation measure, which will be a taxing measure, but will carry with it the whole paraphernalia of a State policy, so far as the subdivision and settlement of lands is concerned.
– They are inseparable.
– If they are inseparable, my argument is that, first of all, this is an undesirable and costly manner of shaping a land policy as an incident in a Taxation Bill, and, next, that there are some grave reasons for believing that it may be held to be unconstitutional. I have said that I am not dealing with the matter from a purely legal point of view, but in a general political way.
– The object of this Bill is to take the place of the honorable gentleman’s Naval Loan Act, which we have repealed.
– No, that was done by the Australian Notes Bill.
– I am glad, even at the eleventh hour, to hear a new interpretation of the real purpose of this Bill; but should have thought that those who devised this scheme at Brisbane a year before that loan would have understood their purpose, and they plainly stated it. I should have thought, also, that the Ministers who drafted and introduced the measure would know what its object was.
– Defence purposes were mentioned at the Brisbane Conference.
– That is not the same thing. As I have said, the Prime Minister’s very significant and telling phrase that we should not be justified in taxing city lands unless we did it on this plea, is worth a great deal. For one moment more, without entering into a purely legal argument, let me ask what is the provision of the Constitution conferring taxation powers upon the Commonwealth? -
Taxation; but so as not to discriminate between States or parts of States :
That is the only condition imposed upon the taxing powers of this Commonwealth. It is otherwise absolutely unlimited. I do not think that words could be suggested which would admit of a wider construction. Apart from that one condition, everything taxable in Australia is available to this Parliament or its successors when the need arises. The Commonwealth has indirect taxation wholly and solely within its own grasp. In addition to that, it has every other kind of taxation that the mind of man can devise.
– Including land value taxation.
– Yes, as taxation; but that is the point. I do not assume any qualifications whatever on that gift of power to tax given in the Constitution. But
I take it that, after all, the Constitution means what it says ; and that taxation, as the word is there used, means the raising of revenue.
Now, although the raising of revenue in any form must have subsidiary consequences, I venture to think that, in a Federal Constitution at all events, there must be a line capable of being drawn at which the power of directly achieving consequences by means of direct taxation ends. Because it is a power which we share with the States ; and there must be, somewhere, a line beyond which the pretence of taxation cannot be employed to accomplish purposes other than those specifically given to the Commonwealth. It will be remembered - indeed, every one of us knows - that the Commonwealth owes all its authority to its special endowments. Unless specially endowed, we do not possess any powers. I am free to admit that the power of taxation has been used historically so as to render it unwise that any limitation should be placed upon it. That has resulted because the taxation power was the weapon by means of which the Commons of England first asserted themselves in their struggle with the Crown, and have lately asserted themselves in their struggle with the House of Lords; and because, in the course of a long political development, the most effective weapon they have been able to employ from first to last has been in relation to grants of Supply coming under the general head of taxation. That being the case, the whole tendency of English interpretation has been to set no limit to this power unless it were absolutely necessary to do so.
I venture to think, however, that, when transplanted into a Federal Constitution, the interpretation must take a new shape. Though that may seem - and, indeed, may be - a heterodox doctrine, yet unless it be granted to some extent the Federal Constitution which we possess, as Federal, is not worth the paper it is written upon.
I now pass to the point that, being without any specific endowment, we have no authority to deal with the lands of Australia; that is to say, that apart from the special authority which the Commonwealth has to acquire land from a State, and apart from the endowment with reference to the Federal Capital, we have no such power. Indeed, the way in which our territorial power in the Federal Capital is hedged round by no means indicates a generous spirit in the Constitution in that respect.
Perhaps I ought, before dealing further with the point which I was about to develop, to look for one moment at the position of the States in contrast with that of the Commonwealth. What are the powers which the States possess, and apparently were intended to retain, in their own right? They are powers over the lands, the mines, the railways, and the water. The four great powers which they possess are those for dealing with the soil of the country; with the riches under the soil, in mines; with the railways and the roads, which are subsidiary to the railways ; and with the water, which is also their property. Now, in one section of the Constitution the water is touched ; and in several other sections - I need not enumerate them - the railways are touched. But I take it that the care with which the Federation is endowed with guarded railway rights, and the limitations in ‘regard to water supply in section 100, taken together with the whole method and manner of handling these State assets, show that amongst the things absolutely reserved and preserved from Commonwealth interference were the four subjects which I have enumerated.
It appears to me that a broad reading of the Constitution, apart from legal technicalities, will show that power over them was expressly left to the States; and further reflection will show that if they were taken from the States nothing would remain. Take from the States their control over lands, mines, railways, and water, and what remains? The States cease to exist. It may be said that they will still have control over the administration of justice and over education - admittedly an enormously important function. An honorable member behind me adds “ and local government “ ; but I take it that local government necessarily goes with the lands. I did hot mention it, because to say that lands shall be controlled by one Parliament and local government by another would be impracticable. These, I say again, are the fundamental assets which we control as electors of the States, and which we are not, in my opinion, to grasp as electors of the Commonwealth.
I come now to the same point once more, and submit it for the consideration of the House. If the taxing power can be used so as to enable us to pass measures which are really measures of land policy, dealing effectively with the ownership of land and its possession throughout the Commonwealth - if we can do that with land, we can deal with water in the same way; if we can deal with water, we can deal with the railways ; and if we can deal with railways, we can deal with mines and with everything else. It would then be possible for the ingenuity of the draftsman to devise means by which, through the taxation power, we can enter each and every province that the States hold; entering ostensibly for the purpose of raising revenue we can control and dictate practically policies affecting all their assets. We control and practically annex them. If you place the land, subject to the authority of this Parliament, so that it can be administratively controlled under a taxation measure of this sort, I do not know what line of defence there is for the States in regard to their other assets. It appears to me that if there is anything they can retain, it must be slender indeed. I contend that we are not entitled to enter with light hearts into the consideration of a Bill of this kind whose constitutional and ultimate effects will be profound. I, therefore, venture to submit this argument to the House.
I am aware, as reminded by an honorable member, that the High Court rejected a suggested interpretation of our powers over an industry by Excise duties in the harvester case, and I have a general knowledge of the other cases of this kind which have been decided by the High Court. But I do not wish to” enter into a purely legal argument here and now. Suffice it to say, that I find nothing in the judgments of the High Court which conflicts with the view that I am .now submitting. I find, of course, in those cases, not only some limitations of the powers of the Commonwealth, but clear assertions of the supremacy of Commonwealth authority in other directions. The balancing of these interpretations, however, is not a proper matter for the consideration of this House. At all events, I do not desire to discuss them. I desire honorable members to be seized with the general position as a plain man would put it to plain men, in order to ascertain whether, in point of fact, this Bill does not go too far.
The charter of the Commonwealth is contained in the Constitution; and it is fairly questionable whether a measure imposing land taxation in this manner is not one that is likely to be set aside by the High Court. It has to be remembered that this is not a matter in which Parliament in itself is supreme, but one on which, ultimately, the High Court must pronounce.
– It is very lamentable that it should be so.
– I am perfectly well aware that loading members of the honorable member’s party have openly advocated an amendment of the Federal Constitution putting aside the High Court altogether. I am perfectly well aware that they would omit certain words of section 51 “ subject to this Constitution,” so that the Commonwealth Parliament might have power to make laws for the peace, order, and good government of the Commonwealth without their being “ subject to this Constitution.” That has been deliberately supported by the Leader of the Labour party here, and supported by others.
– Even so great a man as Pitt said that Parliament must be supreme.
– Pitt was living under a unitary Constitution, and under such circumstances, his statement might receive cordial indorsement from all of us. But the whole point of my argument is that ours is a Federal Constitution. If it were not, there need be no such limitation of power. But, because it is a Federal Constitution - because there is a whole chapter in it to preserve the rights of the States, the States have to be taken into account. We require some authority to decide when we have gone beyond our powers, and when they have gone beyond theirs - there must be a High Court.
It must be remembered that the relation of the Commonwealth and the States is a reciprocal relation. The States are given certain powers. Their Constitutions are preserved to them - although it is proposed here to over-ride their Constitutions. Control over their lands is preserved to them. On the other hand, limitations are imposed upon them. The States are not permitted to raise defence forces of their own. They are not permitted to levy certain taxes. In a number of ways, they are conditioned. What should we say if one of the States imposed indirect taxation, or if another were- to raise armed forces, or to trespass on Commonwealth powers in any regard under such a transparent device as that in this Bill? We should be quick indeed to resist and resent it.
– There are two paramount powers.
– No; there are not. The Commonwealth is paramount within its own sphere, and the States are paramount with in theirs. There is also a field common toboth. If this Constitution of ours has-‘ failed to define our several bounds - and that is possible- it has failed to express the intentions of its framers. I say that is possible. We have only to look at the modern interpretation of the American Constitution to learn that even proposals definitively rejected by the very Convention which drafted the Constitution of the United States, have afterwards been read into it, and have been given legal effect by judgments of the Supreme Court of the United States. So that in these days of development in legal interpretation, a great deal is possible. It is for that reason that I have spoken only with personal confidence. Recognising the doubts that must arise in the minds of those who appreciate the elasticity of Federal Constitutions, I have not been as dogmatic as I might have been had I merely relied upon my own reading of this Constitution. So far, the High Court has maintained a well-balanced career. It has enlarged the Commonwealth scope in several directions to the aggravation of the States ; and protected the States in other directions to the aggravation of the Commonwealth. The decisions have been even-handed. But I am perfectly satisfied that, politically, unless the view which I have submitted to-day be sound, then the Federal Constitution, as Federal, no longer exists. If this Parliament possesses a power of taxation which it can apply in every field of policy hitherto reserved to the States, and is able to take control of that field, then it is absolute in Australia. A very short time will elapse before other Parliaments will disappear..
– Not a bad idea.
– I confess that the PostmasterGeneral is quite consistent. . He expressed that very view when the Constitution Bill was being fought through after the Convention. He and the AttorneyGeneral opposed that Bill because they desired to see substituted for it the platform of the Labour ten who had stood for election to the Convention- - one legislative chamber for Australia elected on a population basis and free from any control other than that of a majority of its own members.
– A good idea.
– That was the aim then, and it is still recognised by the PostmasterGeneral as a good idea. It is towards that ideal that this measure is making a long stride.
– We are consistent.
– Yes, some honorable members opposite are; and, so far, I have no fault to find with them. If we possess such power, I see nothing to prevent the Postmaster-General and the AttorneyGeneral from seeing the accomplishment of their hopes. On this subject, I cannot resist the temptation of reminding the latter that while as an interpreting lawyer he bids fair to rise, as a prophet his stock is far below par. I remember the time when he was announcing in the Domain that the Senate of the Commonwealth -mind you, the Senate which he now possesses - was to be a House of autocrats and oligarchs in which not only labour but liberalism would vainly endeavour to find a solitary representative. Sitting there enthroned in conservative majesty, they were to impose an absolute rule on the rest of our people. That was prophecy number one, and there were others of the same sort. The honorable and learned member recollects them.
– Some of them are fulfilled.
– The Commonwealth right to tax land is, as I have said, unlimited and unqualified, except as to discrimination. Double taxation is not forbidden. There may be double taxation of all kinds, it is within the competence of the Commonwealth. I hope that there will be no mistake in that regard. What I am arguing is that the double control of outside policy by means of land taxation is not a necessary incident, not a minor and inevitable consequence, but the evident purpose and object for which this Bill has been framed. That is outside the competence of the Commonwealth. I do not mean the taxation in any way, nor the policy whenever it may be inseparable from the tax. Certain consequences are inseparable, certain others are casual or incidental, but those the Government may justify. No Court can be expected to look into them. But when the policy sought to be introduced under cover of a tax is fundamental, it appears to me that if its claim can be substantiated there will be no Federal Constitution.
Passing away from the broad political aspect, let us come down to some of the practical aspects. What does this proposition imply? At present there are in Australia six Governments charged with land policy under the direction of their electors, but there is only one Government dealing with any one part of Australia so far as land policy is concerned. When the
Commonwealth Government is added to the others, it operates, of course, in every State. From this time forward there will be not only a double tax, but if a policy is tacked on to it, there will also be a double policy applied to all the lands of all the States. I fancy from the practical point of view that change is hardly likely to recommend itself, particularly to those who are charged with the development of the country.
In each of the six States there is a Lands Department. It is unfortunate that in many respects the methods, the valuations, and the administration of those Departments differ one from the other; they have only a general likeness. Now they are to be supplemented by a seventh Department over all, which, I suppose, will differ in some respects from them all. A double tax may be bad enough, but a double policy will be fatal to development, especially if it be centralized, as it must necessarily be when pushed to its full extent. Either the six State Governments should be left in charge of land policy, or the Commonwealth should assume it by an endowment of power, if asked for, and obtained from, the people, when they have had time to consider these practical conditions. I venture to say that all who have had any experience of land administration in large constituencies will realize the impossibility of the task. What is the complaint in some States to-day? It is that they are too large. Why? Too large for efficient land administration. Now you are to add a seventh which, finding the States too large, will attempt to deal with them as one whole. How will that assist the task of administration, or the developments which are being pushed forward, especially in the outlying parts? How will that encourage the opening up of country?
– That was only their excuse for shirking this responsibility.
– I do not know who shirked any responsibility.
– The honorable member said at Brisbane last year that if the States did not carry out this policy, the Commonwealth ought to do it.
– I said that if the States did not carry out land taxation, the Commonwealth would have to do so. But I am not now talking about land taxation, as I have said over and over again. I am talking of the policy which is sought to be established by means of the taxation, and to which the latter is only a means.
– That is the High Court argument.
– No j this is a broad political argument. The High Court argument will traverse all the cases which I have swept aside, and will follow them, drawing its conclusion from previous findings of the Court when read with these clauses. With them I have nothing to do at present.
Take another illustration. The introduction of this particular taxation in itself is not a simple matter. One of the most manageable countries - perhaps more manageable than any State in the Commonwealth, except, perhaps, Tasmania - for the introduction of such a system is New Zealand. We know the pains which its Administrations have taken to develop its land taxation, which they, being a unitary Government, have power to deal with in any and every aspect. We have the experience of New Zealand to guide us, so far as it applies. We have also the experience of some States of the Commonwealth j but we have to apply it over an area for which YOU cannot point to a precedent involving anything like the same strain. When has any continent been proposed to be dealt with by a similar tax? Not the United States of America. Where else would you look for such a precedent? How long, therefore, are you to allow for the development of an efficient land policy and lands administration by a centralized Government?
In the North American Review of November last there appears a striking article in reference to land taxation. One of the principal conclusions which the writer draws from an examination of the world’s experience is that there is a worldwide tendency for land taxation to pass from centralized Governments to their subordinate Governments, because it was found that land taxation, particularly in its modern shape, is much more effectively employed when it is adapted to small areas. If so, we are going against the trend of modern experience.
A land tax is, I repeat, inevitable in Australia everywhere, as it already exists in some form in five of the six States, and will, before long, exist in all. I have always been a State Land Taxer. I have no comment to make on State policies. I have spoken before with regret of their delay in dealing with this question. It has been a fatal neglect. But the subdivision of abnormal holdings, which always has been, and still is, a necessity for the progress of Australia - which, indeed, is one of its principal necessities - should be equitably obtained and deliberately and consistently carried out. In some parts of Australia there are certain lands of considerable area which are not suitable for closer settlement, and others which will be, but are not yet, suitable ; and these have to be provided for.
Any land policy, if it is to be successfully completed, requires to be dealt with locally, special areas being singled out, even within the States. Questions of communication, rainfall, and other matters must be carefully weighed, so that closer settlement may be induced under conditions which, so far as can be humanly accomplished, insure success. That means working outwards from the choice portions and those more readily reached, pushing by degrees farther and farther ahead as development takes place. But if that settlement is to be fruitful, if it is to provide encouragement to further settlement, and arouse the country to its possibilities, it will require to follow well-defined lines. Sporadic, scattered settlement - a little here, a little there, without sufficient consideration of the surroundings - is more likely to delay, by discrediting, the movement than a wellthoughtout campaign, which ought to be undertaken in all suitable districts. In other words, especially at this stage, questions of land subdivision and land settlement are, and ought to be, local questions locally handled, not merely by one State or by the other. To speak of anything as local, meaning Queensland or Western Australia - one of them a third of the size of the continent - is preposterous. Within the States special districts need to be dealt with and specific areas singled out for’ the purpose. The advocates of closer settlement - and many of the warmest of them are to be found on this side of the House - realize these facts. They see that this measure, in itself, is incapable of insuring that sort of subdivision. Where it does assure it, that implies no guarantee that it will be pursued under the circumstances most favorable to those who are undertaking the task, and most likely to justify it. All the practical members of the House with experience of country districts will support the view that only under such conditions can subdivision and settlement obtain their best opportunity. The whole essence of a successful land policy for closer settlement lies in the ability to discriminate, to make a choice, and to focus development along particular lines. The one condition imposed on our power of taxation under cover of which we are now asked to act is that it shall not discriminate. We are not allowed to focus, or to follow particular lines. We have no means of directing subdivision and development. We have to take it just as it happens to come, here or there, according to the circumstances of the present landholder, or according to his financial position, or it may be according to the seasons which make it impossible for him to carry on with a large area.
– Would the honorable member vary the tax according to the seasons ?
– I would. In closer settlement, we need to be prepared to deal with those who are taking up the land, as many of the States have dealt with their selectors - relaxing conditions when a series of bad seasons come, and assisting them to hold on until good times return again.
– There are discretionary powers in the Bill.
– The Government cannot take discretionary powers where they amount to discrimination. They will not be able to draft their conditions of discrimination effectively until- they can do openly what they are trying to do now surreptitiously - take over the whole control of lands and land policy. Then they can do all that they need. I do not believe in the proposal, because it will not work out practically. I am not worried by the theoretical difficulties of the case. Western Australia has, at present, a harder task upon it than the Government at Perth are capable of dealing with, owing to the enormous area of that State. The proposition of the honorable member for Capricornia for the subdivision of Queensland is put forward on the ground that the area of his State is thrice too large. Why too large ? One of the chief reasons why subdivisions of States are always urged is because it is necessary to discriminate and to guide and assist development in the way I have spoken of - a way which is impossible to the Commonwealth. Discrimination is prohibited under the Constitution. We have no instrument whatever to accomplish our purpose, except according to the differences in values. The Government have made an exemption of ,£5,000, and
I have understood, from the Prime Minister, that one of the reasons for the exemption is that it leaves a margin for taxation of which the States can avail themselves. The same view was put by a Labour member of the local Legislature yesterday, reported in this morning’s papers. If the intention is that the States shall be confined to that area, the taxation which will fall under the £5,000 may be, in some cases, useful to enforce subdivision; but not, I should conjecture, in many.
– Does the honorable member think that that is the purpose of the £5,000 exemption?
– It is stated to be the purpose. It is said that, by this means, the States are not entirely excluded from the land taxation field, which, so far, has been their own.
– It will be a very popular policy !
– It is not proposed that we should carry that burden. The State members will have to shoulder it. This measure is our little obligation. The only standard that we can apply is that of value above the £5,000. A great deal could be said of that exemption ; but I wish to press on. There must be uniformity everywhere in the application of the tax. While it will, to some unknown degree, bring about subdivision and closer settlement, it will inevitably punish many and penalize a few, without promoting any settlement. The anomalies will be endless, and over and over again, when aiming at the crow, you will hit the innocent pigeon, which, being the fatter bird, is not able to get so easily away.
– That is what we are after under this Bill - the fat pigeon.
– Why should the small and thriving settler be persecuted ?
– The £5,000 exemption will save him.
– The hungry bird, who is out for a large meal, and likely to get it, is the crow ; and I politely indicated that this was the bird the Ministerial party were after’; but they will, I think, hit the farmer pigeon, a much more easily satisfied domestic bird,- which is profitable to the country. The district of. the honorable member for Corangamite will give an illustration of my meaning. It contains land fetching for farming purposes, perhaps, the highest prices in Australia. Fifty or 60 acres there may take the proprietor over the £,5,000 limit, and yet that area may not be any too large for the farmer and his sons and daughters, because many of the families there are large.
– No 60 acres in that district will come under the tax, with an exemption of £5,000 unimproved value.
– I shall not argue about a few acres. Make it 70 or 80, or even 100 acres, but the land there, some of it without extensive improvements, often sells at over £100 an acre.
– Altogether too dear.
– I do not think so.
– Does the honorable member know of many who own 100 acres of that land ?
– Very few, but I hear of more than I know.
– Look at the majority they gave the honorable member for Corangamite on the 13th April, all the same.
– Yes, but if, as I suggest, they were looking at the policy only, and not seeing its indirect results, or foreseeing the constitutional revolution that we are accomplishing, that does not take us much further. Under the Ministerial plan, the only one possible for a Federal Government under a proviso against discrimination, a number of people must be taxed who ought not to be taxed at all, in this attempt to bring about subdivision. I do not think there are very many, but there are in Victoria a certain number of farmers, and I am told there are others in picked spots elsewhere, the unimproved value of whose holdings will go over the £5,000, and who yet have not an acre of land too much. They use it all for themselves and their large families. These will be taxed without any advantage except to the Commonwealth revenue, and so far from receiving encouragement for production, will be discouraged, since their land is now put to its best use.
– They will not be so foolish as to imagine that this tax will stop at the £5,000 exemption.
– If the States do not -fill up that gap. I assume it will be filled up in due course. Again, because of the want of discrimination, this tax must subdivide a certain number of estates that it is of no earthly profit to any one to have subdivided. There are a certain number of grazing estates that are low priced ; be- cause of the sparseness of herbage or variations of seasons, they carry comparatively few stock, which often require- to be moved from one place to another. This may happen with an estate which is made up of a small area in one district, good in ordinary seasons, and perhaps another area in the mountains, which is held on the chance of providing food when the other fails. Those are grazing estates which it is of no advantage to any one to subdivide or sever, but some of them may be subdivided. It will cost more to work them, the total production will be no greater, and the tax will be evaded.
– The production proves to be greater on subdivided estates everywhere.
– It will not be so in grazing areas. They may carry the man himself and his family, with two or three hands, before they are subdivided. The subdivision may perhaps put the two or three assistants on the second part, leaving the man and his family on the first, while the general interest is no further advanced. I am told that there are numbers of cases of that character in central and western New South Wales.
– I deny that it is freehold land j it is nearly all leasehold.
– We have not heard from the Attorney-General whether he is going to insist on taxing leaseholders. I understand not. All these troubles are due to the want of a power of discrimination, and need not exist under a State policy, which can establish its land conditions as it pleases. They arise from the fact that we have no guide except value, and cannot discriminate between States or parts of States for any reason no matter how cogent. That is the fatal and crippling condition which deprives us of any hope of real success.
Let us assume that the Government have proposed an amendment of the Constitution giving this Parliament the control of all land policy, and that we have the lands of Australia subject to our jurisdiction. What should we do? We should, no doubt, need a land tax, and impose it, but we should know what we needed, and we should impose the tax for no more. At present, we do not know what is needed, because we have not heard the Budget. We hear that anything and everything may be needed, but one can hardly conceive any great and new demands. This morning’s Argus publishes an estimate of the revenue to be derived. Instead of being £1,000,000, the very .careful valuation adopted as the basis of the estimate shows that it will be £2,250,000 or £2,400,000 at the least. I do not know whether the Prime Minister has yet been able to have the calculation checked, but it is certainly elaborate, and appears to emanate from people well acquainted with the conditions of the interior, lt ought, therefore, to receive full consideration. Honorable members will all agree that, first, we should know what we need, and tax no more than we need. In the next place, we should give to those whose lands are suitable for subdivision a fair opportunity to subdivide. We should pick the lands that we require, and give notice to the owners at once, allowing them a reasonably short period within which to dispose of the land in the way desired, on fair terms to themselves. We should take care, I suppose, being reasonable men, not to punish owners of land which was being put to its best use, employing all the labour that could be employed, and producing well up to its capacity. Nothing is to be gained by interfering with those holdings in a country like Australia, which has such vast spaces not tilled at all. The man who is doing the best possible with his land might well be left alone, at all events for the present. Certainly our taxation should tear Extremely lightly upon the pioneers. The land in the interior in remote districts should not be subjected to too high a valuation. We should also make a reasonable allowance where estates are subject to settlements for the education of children, or for the support of a widow and family, giving enough time to the beneficiaries to adjust themselves to the new conditions. Clause 62 alone allows a little latitude, and appears to contemplate chiefly minor official adjustments. I hope that the Government will be disposed to consider cases of undoubted hardship. I have heard of an instance in which an education which is not of an expensive kind will have to be stopped because of the Bill, and of another case in which ladies who .are very old, and past the possibility of earning for themselves, will have the small reversionary interest which they enjoy very greatly curtailed.
– Hard cases make bad laws.
– That should be no encouragement for making more bad laws, or for rushing’ into regions where, discrimination being impossible, the enacting of a bad law -is unavoidable. No attempt is made to mitigate any hardships. As this is a taxing measure, its first aim should be the collection of revenue, but that this is not its first aim is shown by the fact that the estimates of revenue and the cost of administration are left quite uncertain, being not even approximate. Could one rely on the elaborate valuation published this morning, the Treasurer will receive more money than he ought to get, and .the burden of taxation will fall inequitably. Most of the forced subdivisions now must imply sacrifices which ought to be unnecessary. The cutting up of pastoral properties, while being of little or next to no advantage to the country, will cause a diminution of revenue. City property comes off comparatively lightly, though timber and iron merchants’ yards, requiring for business purposes comparatively large ‘areas of valuable land, may be pinched without rhyme or reason.
– Some of the city properties will be hit very hard.
– I have heard of some cases involving great hardship, but it would be idle to mention them. All taxation means hardship, and being unable to discriminate, this Bill inflicts an unnecessary amount of hardship. I attach serious consideration to information received from friends engaged in farming whose estates are small, the largest not exceeding 300 acres. They view the proposal with great alarm, believing that the tax will cause a considerable reduction in values. One of them told me that the valuer of a property next to his received a letter calling his attention to the provisions of the Bill, and requiring him to make the deductions necessary to meet the proposed taxation. In that case the tax will reduce the value of the estate by about one-fourth, because it is leased from a landholder who has another estate elsewhere. One of the many causes of hardship will be that the tax will often fall on lessees, and not on land-holders. The fact that a man has leased an area from a land-holder possessing a large amount of land will make his payments larger than those of his neighbour who has leased from another land-holder not possessing so much property.
– What remedy does the honorable member suggest ?
– There must be discrimination j but on the spur of the moment I do not suggest any other remedies.’ With one of my informants I have been acquainted for twenty years. He is a wellknown farmer, and an active man in shire matters. According to him the measure is creating great alarm. Those interested in land believe that it will cause a great reduction in values, and will diminish their borrowing powers. I was surprised to learn from him’ that in the district with which he is connected a majority of the farmers have their land mortgaged. He explains the fact by stating that many of them have been adding to their properties little by little. As employes they first purchased a small piece, and with their savings added to it, mortgaging the original holding to raise money to pay for the addition. As families have increased holdings have had to be extended in order to give occupation for the sons. Men who have thus been slowly climbing from the lowest rung of the ladder find that the work of a lifetime may be imperilled by a mortgagee proving exacting, and, in any case, they will have to pay higher rates of interest when their mortgages fall due.
– Do these men possess land of a taxable value?
– Yes. Another informant, speaking of the Western District of Victoria, mentioned that a large owner had leased land to a number of farmers for a term of years, and that they would have to pay more than other farmers who had rented from a proprietor holding less land. Then there are the cases which have been published in the newspapers; and others have been sent to me by men of standing. A few days ago one was made public in which the tax will amount to 14s. in the £1 - that is, 70 per cent, on the income. On a property carrying only a sheep to four acres, it will be 50 per cent., on another of 30,000 acres, giving in ordinary years a return of 3 or 4 per cent, on its capital value, the tax will be 50 per cent. ; and on another, also a grazing estate, it will be 25 per cent. Such a tax is terrific.
– It amounts to confiscation.
– No doubt these are extreme cases, but they must not be left out of consideration. Nothing is being proposed to mitigate them. Honorable members will realize the effect of this taxation if they bear in mind that a tax of 25 per cent on their parliamentary remuneration would mean a payment of £150 a year ; a tax of 50 per cent., a payment of £300 a year ; and a tax of 70 per cent., a payment of ^420 a year. Why should the attainment of the admirable object of closer set tlement be attempted by a tax which can be applied only by creating so many hardships. It must be less effective when imposed by the Commonwealth Parliament, because we are unable to discriminate, than if imposed by the State Parliaments, which can do so? I am sure that in a House like this there will be found members who will not consider hard cases unworthy of notice.
– The honorable member’s arguments are directed against the tax itself.
– The tax should be so adjusted as to sweep away all removable hardships, leaving none that are not absolutely unavoidable. We should do our best to prevent injustice. This is not our best, because we are handcuffed by the terms of the Constitution, which forbid discrimination. That is a fatal defect of the measure. This particular tax differs from most others, in that it must be paid entirely by the present holders of land. They cannot pass it on, transfer it, or diminish it. Every purchaser of land, and every man who lends money on real estate, will take it into account. The full tax - not merely the annual payment, but that payment capitaIized - will fall absolutely on the present proprietors, practically without a month’s warning. Those who succeed them will not pay it. This is an unfortunate condition of affairs, and how it is to be met, unless we have full control of the land policy, I do not know. It might be met by giving notice and not collecting the dues for a period. I know of no other expedient by which the blow could be softened. Even then, those who possessed property, the unimproved value of which exceeded £5,000, would require to be placing it on the market all together. There would be general competition, and an inevitable reduction of prices. Even if we postponed it, the loss would be only reduced in part.
– - That is not an unmixed evil.
– It would be. We should not impose one unmixed evil, if avoidable, on even one person, in order to meet the aims of the whole Commonwealth.
– This is for the general good.
– That has been said of some crimes in history. The general good has often been doubtful, and the particular evil undoubted, remaining a very black mark on the pages of history. In passing, I assume the Attorney-General has given consideration to the proposal in this Bill for the acquisition of lands for certain defaults. It is all very well for him to point to the fact that in other Acts, under other Governments, land can be acquired in this manner; but ft is doubtful whether, under the Commonwealth Constitution, the Government can take over land in this way, so as to make it its own property. If owners of land endeavour to defeat the law by dishonest means, the Government can take them to Court and punish them. The Government may be able to sell their land to recover its tax; but whether they can acquire land is another consideration altogether. It was interjected just now that, after all, the number of those who were to suffer was only one in ten.
– Not one in twenty.
– I like to put the figures against myself in such an argument as this, and, therefore, I say that we are told that only one in ten will suffer. In other words, the ninety can direct the tax to be paid, while the remaining ten have to pay it.
– Have not the ten been doing that for a fairly long time?
– But how will it be possible hereafter to say, in heroic fashion, that the defence of Australia is to be paid by the people of Australia, when not one in ten are to pay for it ?
– I say that it should be paid by the wealth of Australia.
– Here honorable numbers opposite are picking out a particular form of wealth. I do not say that they are not justified in doing so ; but, as a matter of fact, it is not wealth that they are proposing to tax in this case.
– The honorable member would put the 90 per cent. out of the country.
– Instead of desiring to take the ninety out of Australia, I wish to bring a hundred into Australia, and to settle them on the land. Nor do I shrink from land taxation at any time we require the funds. That, however, has nothing whatever to do with the fact that the great majority of the people, including myself, are not affected by this tax, either directly or, so far as we can see, indirectly. We, the great majority, are taxing a very small minority. Instead of dealing with that small number as we should expect to be dealt with if we were of them - instead of treating them with equity and consideration, instead of allowing them to come into line with the national policy without penalizing them as well - we are rushing their heads on the block for the down stroke of the axe. They alone are to provide the only direct contribution to defence made by the people of Australia.
– Is that not more justifiable than would be the act of the ten in imposing it on the other ninety?
– In this case, as in the other to which the honorable member referred, the axiom of the greatest good to the greatest number obtains. When the position of leaseholders comes before the House, I shall call the Prime Minister’s attention to a speech by him at Kilkivan, in which he intimated that leaseholders were not to be affected. Also, that there was to be no double tax. I do not quite know what the honorable gentleman meant by his reference to “ a double tax.” I presume that he meant that there was to be no double taxation by the Commonwealth in respect of the same property.
– That no two persons having an interest in the same estate were to be taxed in respect of it. There was a political contest going on, and the people were told that we were going to have a double value taxation in respect of the same estate.
– As I understand it, the Commonwealth will not tax any two persons in respect of the same land. One will be taxed, or the tax may be divided between the two; but no two persons-
– The tax may be divided, but it will not be doubled.
– But how will that affect the income tax, to which the Prime Minister then alluded? In this Bill I see no power to allow for the income tax which a taxpayer pays on the proceeds obtained from his land. Surely the imposition of this tax, in addition to income tax paid in respect of land, would be double taxation, just as much as in the other instance. I understand that the Prime Minister, at Kilkivan or elsewhere, promised to deal with it.
– That is not so.
– The honorable gentleman said -
The Labour Conference had decided that the man who pays a tax on land values must not pay any income tax.
– That was a State Conference. I suppose that the honorable member is quoting from a letter?
– No, I am quoting from the Gympie Truth, of 22nd March, 1910.
The honorable gentleman is reported to have said -
He had been charged with hiding some part of the land tax proposals when making his first speech. At Kilkivan he had been asked ifhe proposed to tax leaseholds, and he said “ No.” He had been asked did he favour duplicate taxes, and he said “No.” The Labour Conference had decided that the man who pays a tax on land values must not pay an income tax. There was no concealment, because, if they had read the official reports of the Labour Conferences, his critics would have seen that that was the policy of the Labour party in all the States.
I take that to mean that, in imposing this tax, account would be taken of the proceeds of land assessed in respect of income tax.
– Clearly that referred to the States.
– I know that the income tax is paid to the States, but is there no intention of recognising such a payment, so that the man who has to pay income tax in respect of the produce of his land will not be required to pay a double tax under this Bill ? Are not income-tax payments in respect of the produce of land to be recognised by the Commonwealth?
– We cannot discriminate.
– We are not to discriminate as between States or parts of States. I shall not enter into an argument as to the meaning of those words, but it appears to me that, if we are to introduce Federal land taxation, the very first consideration binding upon us is to be sure that this taxation takes into account, and allows for, not future, but all existing land taxation in any State.
– How inequitable that would be to the Commonwealth.
– No; if that were done, no man would pay, on account of his land - taking the Commonwealth and the States together - more than another in the same State. If we are to require those who pay income tax on the return from their estates to continue to pay it without receiving any recognition, under this Bill we shall tax them twice over. They will be taxed once through the State and once through the Commonwealth agency in respect of the same land, and practically on the same produce. Surely that is neither necessary nor fair?
– That will not apply to all estates.
– Never mind, if it be unjust in one case, it should be met.
– Would the honorable member make a deduction in respect of municipal rates?
– In several of the States, that taxation is based on the unimproved valuation. An ideal system of unimproved land value taxation would treat Australians as Australians, and would recognise every payment, whether made to a municipality, to a State, or to the Commonwealth. It would not be possible, however, to lay that down as a principle. We should have to start from some given date, otherwise one body or the other would raise its rates to the disadvantage of the other. But, putting aside inevitable difficulties of a practical character, probably the House generally would assent to the proposition that an ideal system of taxation would relate to the unimproved values of lands all over Australia, and would make allowance for all sums paid in that way to the Commonwealth, the States, or the municipalities. We should thus secure an absolute equality of sacrifice. That is impossible under this Bill, and, indeed, is not attempted. Even then, we should not have quite fulfilled our obligations to the citizens who send us here. It would be an extremely complex task, but the taxation of the States and of the Commonwealth should be considered together, with a view of adjustment, if possible, by arrangement, so that, calculating all taxation, direct and indirect, there would be equity throughout Australia, no man paying more or less than another in proportion to the same value, at all events in his State. That is the ideal we have set before us, and, although surrounded with the gravest difficulties, it is not altogether impossible of attainment.
– It would cost more to assess the land than we should derive from the tax.
– I think not. Honorable members recognise that what I have suggested would never be carried out to a farthing or a half -penny, but it could be done on general principles in such a way that no substantial injustice would be inflicted on any citizen of the Commonwealth. Whether to the State or to the Commonwealth, they would contribute relatively, in the same circumstances, the same amount. Taxation is a national problem that ought to be dealt with in a national way, and our great disadvantage is when plunging into it in this headlong, or, shall I say, sidelong fashion, which will disturb the taxable equilibrium of the whole Commonwealth. The natural result of this agitation, if it be allowed to proceed as we have it, must be centralization. It will mean a centralization of land policy and land development that will be extremely costly, cumbrous, inharmonious, and unfavorable to the development of Australia. The opening up of new lands is not going to be fostered by a measure of this kind. On the contrary, a double system of taxation, and the attempt at a double land system, if it prove to be constitutional, must react upon the settlement of this country, upon the rapidity of its development, and, therefore, upon its prosperity. The safe way is to leave their lands to be controlled by the States, and content ourselves with a land tax which is nothing But a land tax, and does not seek to interfere in the land policy of the country ; but especially until the States surrender, or the electors deprive them of those powers, it is in the highest degree unwise to interfere. Of course, a land tax is being applied in five of the States out of six,’ and may be applied byall.
– Surely the honorable member does not call the Victorian tax a land tax? It is a sheep tax.
– I do not call the Victorian tax a satisfactory land tax. I was an ardent supporter of one Bill which sought to make a very considerable and important change in that tax when I was a representative in the Victorian Parliament ; but, unfortunately, that Bill did not become law. The present Victorian tax is most unsatisfactory, and never was anything else but a sheep tax. My notes have become somewhat scattered by answering interjections ; but if I have not conveyed myself to the House, there are many others who will deal with the subject, in one aspect or another, more exhaustively and more thoroughly than I can attempt to do. The general outline which I have given must suffice. Its object is to show that it is impossible for the Commonwealth to make the necessary discriminatory provisions to enable us to impose this tax without unwarrantable hardship; that, without those discriminations, it amounts in its incidence to a penal levy on a great variety of properties, and that these, if they were subdivided and made available for land settlement, will be scattered and dispersed, and will offer nothing like the favorable field for the advantageous planting of people on the soil which we all ardently desire, and for which this Bill is intended to administer. Without due discriminations, the proposals will be found to be full of injustices in their application to the varied conditions of Australia. How many of us know anything more than small sections of Australia, and that very superficially ? Personally, if has been my lot to travel as much as most members over the continent; and, of course, to get a certain smattering and acquaintance here and there with its circumstances. But which of us has any mental picture, when he speaks of this continent, of its enormous stretches of yet unoccupied plains, which are only partially and superficially grazed - of its immense regions towards the north, where the foot of the white man has hardly yet penetrated - of its magnificent and superb river flats, and other rich and scattered territories, some opened and some yet to be opened, with immense possibilities of wealth waiting to be realized. For these I would welcome every effort at settlement, not looking too closely or too narrowly at the means? I realize that both we, and the electors who sent us here, can scarcely be expected to pass an adequate judgment on a Bill of this sort, when we take into account how much . from the outside and afar, through what spectacles, and over what a restricted area; our vision really ranges when we speak of Australia and the problems that await settlement. None of us, not even the most ambitious, the most well-informed, and most studious, have any effective knowledge of more than an extreme fractional part of the continent; and yet here we are proposing to apply a drastic and undiscriminating method, which, however well-meant, must operate most unfairly and inappropriately ; and, I am afraid, in many parts, unfruit-fully, causing exasperation, and retarding rather than assisting the settlement Ave all desire. And there is the other contention to which I have alluded, and to which, at all events as a politician, I attach great importance as well worthy of examination and consideration from a legal point of view. If we are to admit that the taxing power possessed by us, and possessed by the States, may be used by either to encroach on the jurisdiction of the other, we have before us a period of utter confusion, which’ can only be dissolved by the establishment, of practically a unitary Government, the subordination and subdivision of the existing States and their disappearance, and finally an attempt to control this great Commonwealth from a single centre by a single administrative body. This plan appears to me to be foredoomed to failure; and, therefore, in order to put the impression which I desire to convey, in a few words, I move as an amendment -
That after the word “ That “ the following words be inserted : - “ the form of land tax outlined by the Prime Minister and provided for in this Bill is unjust in its incidence and an abuse of Federal powers.”
– That is a motion of want of confidence.
– That is for the Government to say ; and, at any rate, under existing circumstances, it does not matter.
– It is only wasting time !
– -The-honorable member is quite wrong. It will waste no time. There will be no double debate on the Bill, because the discussion will take place on this amendment.
– The amendment will not prevent a double discussion !
– No; but honorable members on this side have refused to occupy any longer period than is necessary to put their views on record. With this House, and under the circumstances, we recognise that to attempt to do more would sacrifice public time, which can be better employed, more especially as this session is supposed to be drawing to a close. This amendment challenges no land tax, not even by the Federal Government.
– This is very cute !
– It is intended to specifically challenge that form of land tax outlined by the Prime Minister and provided for in the Bill. A wise land tax will be supported whenever federally necessary. I have only cited a few injustices as illustrations. There will be many. Every day people are writing from different parts, setting forth their special grievances; but, as I am not able to examine these, and they may be taking a biased view, I have not laid them before honorable members. In any case, I think I have given sufficient illustrations of the injustice of the incidence in many respects, and have dealt, I hope, at not too great a length, with what I conceive to be, at least, several grave abuses of our Federal power. My own opinion, as a politician, and I express it without an instant’s hesitation, is that this proposal is unconstitutional. From the legal side, I have more doubt, for reasons I have given; but if it be legal, it is certainly an abuse of the Federal powers at this time, and in this way. If we desire to interfere in land ad ministration, let us frankly propose to take it over as a whole, and accept the judgment of the people in that project. That would be better than the proposed hybrid system, leaving the land partly under the States and partly under the Commonwealth, taxed on the national side, and taxed on the local side, by Legislatures with differing views contending for the body of the unhappy taxpayer. We owe it to Australia, as far as possible, to bring about unity and equity of taxation ; and that cannot be done by two jurisdictions competing in the same field, as under the Constitution they must in respect to direct taxation. Once more, indirect taxation is our own, but direct taxation we share with the Stales, which have a right to be considered on the floor of this House and in the Courts of the country. Even if this question were decided against the States, they have a right to be considered by the people who, when accepting Federation, were asked to accept a composite instrument containing within itself, quite unknown to and unsuspected by them - in its absolute taxing power - a weapon for the destruction of every provision and every qualification, and every safeguard it contains. If that can be upheld, anything can be upheld - the taxing power of the Commonwealth will stand, but everything Federal in the Constitution will fall in ruin.
– The honorable and learned member for Ballarat concluded his speech in very characteristic fashion. For some considerable time we listened to him stating, in a most inconclusive and impotent way, that what was proposed to be done by the Prime Minister ought not, for many reasons, to be done at all. Some of those reasons he gave us, and some he withheld ; but it certainly was not until, as it were, he was within sight of the goal-post, that he indicated any intention of moving an amendment completely opposed to the whole tenor of his speech. If the honorable member’s criticism impairs or is fatal to land value taxation, it is equally fatal to any Bill for the imposition of a land tax that might be brought in under cover of his amendment. I am, of course, quite unable to follow the honorable gentleman’s arguments so closely as 1 should desire; but it may be permitted to me, very briefly, to dwell on his principal objections, which, after all, can be crystallized into very few words. The honorable member objected to this measure for three reasons - one that it is doubtfully constitutional, another that it is an abuse of the Federal power, and a third, that this Government proposed it. I venture to say that the greatest of these is the last.
– The Attorney-General forgets the unjust incidence.
– Yes, there is the other objection that the proposed tax is unjust in its incidence; but that is merely an incident, which arises from the fact that we propose the tax. As everything that comes from this side is, according to the honorable gentleman, naturally unjust, while everything from his side is naturally just, it is useless to postulate justice on that side, and injustice on this - they follow inevitably. Let us take those objections dealing, first of all, with the contention that the Bill is an abuse of the Federal power. He was very emphatic on this point. It is only fair to say that I have no doubt the honorable member was also careful to qualify any direct statement on this point by other statements, equally direct. But the prevailing impression gathered from his speech was that the Bill was an abuse of Federal power. With his reservations his position appears to be this - he admits we have the power, but that we ought not to use it, or that we have not the power, and he hopes the High Court will uphold his opinion. In order” to clear up this rather unsatisfactory situation, I desire briefly to refer the honorable member to one or two statements made, not long ago, on this very subject by a man, whose opinion, I feel sure, he will deem worthy of acceptance. I do this in order to administer such a stimulant as one derives from a cold douche after a Turkish bath. When one has been lying down on the soft lounges gazing dreamily at the seductive blue and violet light melting through the coloured glass, thinking of nothing in particular, a cold douche is a very necessary and salutary thing. It brings one back to the world we live in and braces up the pleasure-deadened nerves. My honorable friend has taken us this afternoon into an economic and political wonderland. I say that most emphatically. His speech had no reference to things as they are. It had no bearing on the great and overpowering fact that Australia is today in the grip of the greatest land monopoly, in view of its population and area, that exists in the civilized world. We were treated to a philosophical dissertation upon the Constitution. We heard casually about the pioneers, the widow and children, who are to be hurt if we take action, but not one word of the deep and underlying causes that are responsible for the introduction of this measure. Those causes were responsible for the introduction of a similar measure last year. They were responsible for the turning out of office of a Labour Government before they could even discuss it. They were responsible for the overwhelming verdict given by the people in favour of the Labour party on the 13th April last. Let us then face this question as men and representatives of the people. Let us leave wonderland, and the kingdom where no man lives, and come back to the prosaic affairs of everyday life. Let us turn the cold douche of facts and common-sense upon the arguments of the honorable member for Ballarat. I wish to bring honorable members back to the GovernorGeneral’s Speech of 8th June, 1906. In discussing the Address-in-Reply to that speech, the honorable member for Ballarat made certain remarks which were reported in the first number of Hansard for that year. The honorable gentleman had not then with him all the honorable members who now sit by his side. They were then divided, some were sheep and some were goats, but who were sheep and who were goats I leave to honorable members to decide for themselves. The honorable member for Ballarat was challenged by some’ of his present colleagues as to his attitude on land valuation taxation, and explained his views. On page 76 of Hansard for 1906 he is reported thus -
I have been dealing, so far as opportunities permitted, with the land question ever since Federation, as I did before. The only way in which I can fix the day to which I am about to refer is by saying that I think Mr. Irvine was still Premier of Victoria. The Australian Natives’ Association called a meeting in the Athenaeum Hall, Melbourne - I think it was in the year 1903 - for the purpose of considering irrigation ; and, as much turned upon the land question, I took occasion then, as I have done since, to excuse myself from any comment upon the land taxes passed by the States in Australia. I surmounted the difficulty, as I have done since, by turning up some of the old speeches delivered by me in the Legislative Assembly of Victoria, which contained my views upon land taxation, land monopoly, and land generally, reading these extracts out as my then opinions - the opinions which I still hold. That was, as I say, probably three years ago.
Mr. Reid. Were those opinions in favour of a progressive land tax?
– They included a progressive land tax.
Mr. Reid. The Prime Minister’s views include that?
– My personal views always have done. I read those extracts to show that, although an Australian Minister and member, I had not altered the attitude which I had previously occupied in Victoria upon this question. Before the subject came up again, the consideration of the possibilities of immigration had brought me face to face, in a very clear and distinct manner, with the urgency of dealing with our great estates of arable land.
He then referred to a case mentioned by the honorable member for Moira of a man seeking land from State to State and unable to find it, and went on to say -
It is incontestable that such a state of things exists in several States. It is incontestable that, while that condition remains, it will be idle for us to be offering to emigrants, or wouldbe emigrants, from the Mother Country temptations to come here with such illustrations of the failure of men who know the country, and who can choose their land with wisdom, to find homes for themselves . Confronted with this additional responsibility with regard to immigration I have, in correspondence with State Premiers and elsewhere, taken every opportunity legitimately open to me of pressing upon their attention, and upon public attention, the necessity of making much more land available. Because, whether we are Federal or State representatives, there are many of us who recognise that the land question is the root of almost all other social and political questions.
There is no Alice in Wonderland about that. I continue the quotation -
Mr. Reid. The only question is in whose jurisdiction it is.
– Until the land question is settled, no question can be settled finally.
Mr. Reid. But can we settle it for the States?
– The States, or some of them, have been applying themselves to its solution with very imperfect success; and with the States still rests the responsibility of dealing with it. They are the proprietors of Crown lands, and we are not, as a Commonwealth ; though as citizens of States, we are, of course, charged in our individual States with responsibility for what is done. But what we do say - what I do say, at all events - is that, land tax or no land tax, every form of Government which Australia possesses, from the municipalities up to the Commonwealth Government, is properly usable by the Australian people in the endeavour to settle this country. And I say, sir, without criticising State legislation, State action or State inaction, that it is perfectly within the competence of the Commonwealth to enter upon and take its share in dealing with this land question when its legitimate occasion arrives. When we begin to deal with immigration, we begin to deal with the land question. The two are so closely associated that we cannot but turn from one to the other.
I regard that as a most refreshing douche of much needed cold water on the oration of my honorable friend this afternoon. It brings into activity the half-dead political nervous system of the honorable gentleman, and makes him and us realize that he was speaking with a full contemplation of the circumstances and causes which actuated this party and this Government on two occasions in bringing forward such a measure. It shows that he believed those circumstances and causes were sufficient not only to justify the introduction of the measure, but to justify it being treated as a most urgent one.
But he approved of land taxation for quite another reason. He went on to say -
Land taxation, instead of being a theoretical proposal, would become a practical proposal forced into the arena by the declaration of the Premiers that old-age pensions would require to be provided for out of some fresh source of taxation.
Here, then, under the honorable gentleman’s own hand, is a double authority for this measure. He realized that immigration and land taxation were properly the business of this Parliament, and further, that land taxation was justifiable if we required revenue in order to deal with the question of old-age pensions. We have clone that very thing. Properly, then, directly we want revenue we have a right to get it, and the honorable gentleman goes as straight as a plummet dropping down a well for land taxation.
– What the honorable gentleman has quoted is really absolutely what I said to-day.
– I quote further from the same speech -
I was bound to point out - owing to this development having taken place after I spoke at Adelaide and Ballarat - that, as I had shown at Ballarat, the land question was intimately associated with Federal finance, and with the question of immigration. That position is indisputable.
Mr. Reid. Then are we to have three taxes upon land?
– It is for the citizens of Australia to determine whether they will have one, three, or thirteen taxes upon it.
Mr. Reid was rendered almost speechless by this callous reply, and he said
Why not have a tax upon the banking incomes that people make out of land - on the mortgagees as well as the mortgagors?
And Mr. Deakin replied -
I pointed out that it was perfectly within the competence of this Parliament to deal with all forms of direct taxation, and that no form of direct taxation was likely to afford it the same opportunities of dealing with settlement and immigration as land taxation.
Here we get a further admission in the clearest possible language that we have a right to impose all forms of direct taxation.
Of course, the honorable gentleman said, during the course of this speech -
I make no promise of Federal land taxation.
I have quoted that not because it was necessary, because, of course, we all know very well that it is the usual corollary, addendum, modification, or qualification of all his speeches. It is to be found in every one of the honorable gentleman’s speeches, and its effect in this speech is - “ Notwithstanding it is a vital and urgent matter ; that the States have neglected their duty and we ought to do it, I make no promise in regard to the matter.”
But his ideas were clear enough. He knew what ought to be done, although he would not do it. The honorable gentleman went on to say -
The Federal power is ample, though many have not yet realized its scope in these directions. Beyond that I decline to be drawn at the present stage.
Mr. Reid. Why is the Prime Minister so sensitive about the inclusion of the railway servants in the Arbitration Bill being a violation of the Constitution, and so indifferent about States rights in regard to land taxation?
– When the time comes, if any land taxation proposals are submitted I shall be able to show the right honorable member a broad distinction.
– I showed it again today.
– I have been waiting this afternoon to hear that broad distinction; I have not heard it yet.
– Then it is only because the honorable gentleman was not listening.
– I come now to refer to the honorable gentleman’s remarks on land taxation in the State Parliament of Victoria. Honorable members will remember that in the speech from which I have quoted, the honorable gentleman alluded to speeches he had delivered in the State Parliament, and said he held those views now. That was 1906. I quote the following from the Victorian Hansard of 29th August, 1893. Mr. Deakin said -
The Government wanted a sum of?100,000. . That sum could be raised by means of a tax on unimprovedland value without imposing the slightest hardship on any person in the community, or substracting a single penny from the fund now used in the employment of labour, without occasioning the slightest difficulty to any trade or industry or raising the price of any article of consumption. . . . He would ask the Committee to give its vote, in the first instance, against indirect taxation and for direct taxation, and for the particular form of direct taxation which was implied by a tax on unimproved land values. Such a tax, unlike the present land tax, would fall on town and country lands alike. The great owners of land in the country districts were taxed at present, and also some who could not be considered great land-owners; but the great proprietors of ground rents in the city, the owners of metropolitan properties, contributed nothing directly on account of their lands.
Mr. Gillies. You mean vacant lands, I presume ?
– He did not mean vacant lands altogether. He meant a tax on all land in the metropolis or country vacant or not levied on the basis of the land alone exclusive of the value of the improvements.
Mr. Gillies. Then you propose to deduct the value of the improvements?
– He proposed to treat the land as if there were no improvements upon it.
Mr. Williams. And get at the unearned increment.
– That was one of the objects of a tax upon unimproved land values, which was also in the nature of an absentee tax, the experience of South Australia being that extremely wealthy absentee land-holders paid a large proportion of the tax. The community created it, and they had a right to levy a fair lax upon it. A tax upon the unimproved value of land would not, like a property tax or the present municipal taxes, discourage investments in land.
I commend that to my honorable and learned friend, who said to-day that one of the effects of this tax would be to depreciate land values. Further, the honorable member said -
He wished to emphasize the point that a tax upon the unimproved value of land would put every man on a fair footing. It would tax him on a portion of his wealth, the value of which was chiefly derived from the municipal and State expenditure incurred in his immediate neighbourhood.
Then Sir John Taverner interjected, “Would you make any exemption? “ We have seen that the honorable member believes that the Commonwealth has a right to impose this tax for immigration purposes, for land settlement purposes, and for revenue purposes. We have seen that he believes in direct taxation as opposed to indirect taxation. We have seen that, in the honorable member’s opinion, so far from such a tax being unjust, it is absolutely just, and that, so far from discouraging investments, it would encourage them. Now we come to his opinion with regard to an exemption. That is to say, to the only principle in this Bill to which he has not positively committed himself. In answer to this question of Sir John Taverner he said -
Certainly ; he would make an exemption at present that would cover about the same ground as the exemption proposed by the Government in connexion with the income tax, so that nobody who was not to be asked to pay the income tax should pay the tax on unimproved land values.
Mr. Gillies. You would get no income if the exemption were equivalent to that under the income tax.
– The honorable member made a great mistake. The ground rents paid for metropolitan properties represented a very large amount, ^2,000, ^3,000, and ^4,000 a year being paid in respect of 50-feet frontages in Collins-street. It was land of that kind he proposed should be taxed, and from which a great part of the required revenue would be derived. The rich land held in large quantities in country districts and the extremely valuable land in the metropolitan district would pay most of the tax. . . . The tax on unimproved land values was a tax on realized wealth in town and country which deducted from that realized wealth what had been the fruit of labour and the fruit of the expenditure of money. There was no more just subject of taxation.
– What was the rate proposed ?
– I do not know.
– It was a uniform rate of id. in the jQi.
– Honorable members can easily shout me down, but it will not be possible to cover up this hole. The honorable member for Ballarat proposed, in the most emphatic way, to substitute for a proposal made by Mr. Gillies to raise money by a tax which the honorable member said would oppress the trader and the consumer, a tax upon the unimproved value of land, and he proposed to impose it at such a rate as would bring in £100,000.
– Yes, from the whole of Victoria.
– There are the honorable member’s own words.
– Hear, hear ! I think they are excellent, if I may be allowed to say so.
– He proposed to impose this tax because the amount that would be realized was what was required for the State of Victoria at that particular time. He said that it was a fair and a proper tax. I want now to show that my honorable friend held that opinion almost right down to date.
– Hear, hear 1
– If the phonograph had been in existence at this time, I should have liked to put it on the table, so that I might have saved my own throat and given the honorable member the pleasure qf listening to his own voice. On 5th May, 1909, a speech of the honorable member is reported in the Melbourne Argus - a newspaper, which, as far as I know, has never been unduly harsh or unsympathetic towards him since he passed from his old party to his new one. In this speech, he said-
If the expenses of the Commonwealth could not be met from Customs and Excise, then he considered that land taxes should be levied, provided that the financial necessities of the Commonwealth were shown to require it, on such lines as to encourage settlement. The power to do this had not been exercised to any extent in any State, and, in his opinion, and he believed in the opinion of the majority of the people, it should be exercised by each State, so that land fit for settlement should be placed in the hands of those who would reap from it the best productive results. If the States neglected to exercise their power in this direction, then they should forfeit it, and the Commonwealth would properly be called on to exercise the power.
Here we have the honorable member, from the year 1893 to 5th May, 1909, holding these opinions, unimpaired by the lapse of time and by all the storms of criticism, like a veritable rock of ages. But his foundations have now been corroded by his new associates. His opinions have become honeycombed, his resolutions sapped, his purpose worm-eaten. The honorable member declared, in May, 1909, that a land tax is clearly constitutional j that it is properly applicable; that it is essential for the purposes of land settlement, immigration, and revenue ; that it ought to be imposed by the Commonwealth when a case is made out that the States have not exercised their powers; that, whether it is one tax, or three, or thirteen is for the people of this country to determine ; that it is a just tax ; that it is a tax that does not discourage investment; that it is a tax that will bear upon all sections of the community alike; that it will compel the wealthy man with a property in Collinsstreet to pay equally with the man who monopolizes great areas in the country districts ; that there should be an exemption - and that, in short, he thoroughly believed in a graduated land tax. Every principle embodied in die Bill before the House has been advocated by my honorable friend during the whole period of his political career, .from 1893 down to 5th May, 1909.
– Every sound principle.
– I come now to the question whether the proposal before us is, in fact, unconstitutional. My honorable ^ friend did not venture to give us any authority, any reasons, for doubting the constitutionality of this proposal. Indeed, he furnished us with very many for believing it to be perfectly constitutional.
He quoted the Constitution to show that our powers of taxation are plenary, subject only to one reservation : that we may not discriminate between State and State. Subject to that limitation, there is no reason for doubting that we have power to impose any form of taxation we please. There is no decision of the High Court that impairs that power in the slightest degree, nor causes it to be for one moment in doubt. The honorable member quoted a case that has been dealt with by the Court bearing directly upon this point; but that case does not challenge our plenary power of taxation at all. It only declares that we may not, under cover of a taxation measure, pass a law dealing with matters that have been reserved tothe States. We may not, for example, under cover of an Excise duty, pass a law to regulate industry. We may not, under cover of a land tax, pass an Act to deal, say, with land tenures or transfers, or with the manner in which the States shall settle people on the land. The High Court decided in Barger’s case that the Excise (Agricultural Machinery) Act was unconstitutional, because, on the face of it, the Act was not a taxation measure at all. Taxation was only an incidental object of the Bill. The real object of the Act was to regulate industry. The Chief Justice, in delivering the judgment of the majority of “the Court, laid down the principles upon which the Court - and, indeed, any Court - must act in connexion with this matter. I propose to quote the Chief Justice’s remarks, because I desire most particularly to impress upon the House and the country that nothing that the honorable member for Ballarat said this afternoon is to be taken, in any sense, as reflecting any real doubt upon the power of the Commonwealth to impose this measure of land taxation.
– As a tax, no.
– At page 35 of the report in the case of The King v. Barger, the Chief Justice said -
Attention has already been drawn to the immateriality, as far as regards the validity of an Act, of the motives or indirect results in contemplation of the Legislature.
My honorable friend for some time this afternoon dealt with the fact that on the memorandum attached to the former measure there was an allusion to land settlement, immigration, and defence, and that only incidentally did it refer to taxation. Well, that is perfectly immaterial. It does not affect the question at all. We can vote, if we like, for a duty on spirits, because we believe in limiting their use. We can vote for a tax on firearms, because we believe that firearms ought not to be used. We can vote for a tax to exclude foreign goods, because we believe in protecting native industries. But the motive at the bottom of the legislation is absolutely immaterial to the question of whether an act is valid or invalid. Continuing in this case, the Chief Justice said-
The professed purpose of an Act is generally stated in its Title. In any of the cases supposed the purpose of the Act, apparent on its face, whatever attempt might be made to disguise it in the Title, would be, not to raise money for the purposes of government, but to regulate the conditions of labour.
The Chief Justice was alluding to the Excise (Agricultural Machinery) Act, which, as I have said, although the title declared it to be a taxation measure, was obviously an attempt to regulate industry. There was no doubt whatever about that. The Chief Justice went on to say -
Again, the motive which actuates the Legislature, and the ultimate end desired to be attained, are equally irrelevant. A Statute is only a means to an end, and its validity depends upon whether the Legislature is or is not authorized to enact the particular provisions in question, entirely without regard to their ultimate indirect consequences.
The fact that taxation may produce indirect consequences was fully recognised by the framers of the Constitution. They recognised, moreover, that those consequences would not, in the nature of things, be uniform throughout the vast area of the Commonwealth, extending over 32 parallels of latitude and 40 degrees of longitude. The varying conditions of climate - tropical, sub-tropical, and temperate - and of locality - near or at great distances from the seaboard - make an effectual discrimination for many purposes between the several portions of the Commonwealth. Lest, however, the Parliament should desire to bring about equality in the incidence of the burden of taxation, or what has been called an equality of sacrifice, by discriminating between such different portions, they were expressly prohibited from doing so.
There is the answer to what my honorable friend endeavoured, for half-an-hour this afternoon, to impress upon the Leader of the Government - that he should make an allowance for land tax paid to a State, and that it should be a set-off, as it were, against the land tax imposed under this Bill. That very thing was contemplated by the framers of the Constitution, and expressly forbidden therein by them. We cannot do it. That discrimination which my honorable friend demands we should exercise, that discrimination which the almost immeasurable extent of our continent, its infinite resources and boundless capacity seems to him to imperatively call for, and the lack of which creates such insuperable difficulties as to absolutely paralyze him when the hour for action comes, is absolutely forbidden by the Constitution. He says that we cannot, we ought not to pass tins Bill ; no one law can deal justly with the conditions in Cape York, Fremantle, Port Darwin, and Tasmania. But the Constitution recognises these inequalities, foresaw their consequences, and provides for them. It declares that it is for this Parliament to make a law, and, for the States, if necessary, to make things uniform. It is for us to make a uniform law, whether its effects be uniform or not.
My honorable friend spoke about the present Government invading the prerogatives of the States, and endeavouring to do those things which we ought not to do. He has been to-day the timid and hesitating champion of the States. Only a little while ago he was the Leader of the National party. He was then arrayed against every attempt on the part of the States to invade the domain of the Commonwealth, and vigilant and jealous of her interests. The two most important decisions of the Court in which the relations between the Commonwealth and the States in regard to taxation was settled for all time, were given under his regime. He himself is directly responsible for the principle being laid down “hat the States have no immunity from taxation upon imports. That principle was laid down in the cases of *The King v. Sutton, and of the Attorney-General of New South Wales v. Collector of Customs, which were initiated under the Deakin Administration, when the honorable member’ for Darling Downs was AttorneyGeneral, established the supremacy of the Commonwealth in the field of taxation. In the former case, it was held that it was a breach of the Customs Act for the New South Wales Government to remove from the control of the Customs, without authority, wire-netting imported by that State, that the Customs” Act bound the Crown, as represented by the States, and that the Constitution takes no account of State Governments in relation to Commonwealth legislation on matters within the exclusive control of the Commonwealth Government. The second case was an action for the refund of duties charged by the Commonwealth upon steel rails imported by New South Wales ; and it was held that the
State was liable to Customs duties. There we have the whole of the law as declared, by the High Court in relation to this matter. Our position is impregnable. Wehave a right to tax where and how we. please, indirect and direct, to any extent we like, subject only to the condition that we may not discriminate between the States. Our motives are quite immaterial. There is but one real limit, and that is that the measure must not merely purport to bebut must be a taxation measure. There isnothing in our measure which can be for one moment held to invade that principle.
My honorable friend has attacked theposition from another side. It is a new and curious doctrine which we hear for the first time. This act, says the honorable gentleman, is unconstitutional, and? if not unconstitutional, then it is a violation of that subtle and immaterial thing; called “ the spirit of the Constitution.” So that we are in a regular bog. If we move in one direction, we are told” that it is a violation of the Constitution, and that the High Court will declare it tobe unconstitutional. If we move in another direction, we are told that it is against the spirit of the Constitution, and that we ought not to act, although the High Court will allow us to do so. So here- is Democracy fettered by double bonds. On the one hand, its hands and feet aretied by those fetters put round it by theConstitution. My honorable friend referred to the fact that we on this side were opposed to the Constitution Bill. We were and I am glad of it. I have never regretted that I opposed the acceptance of the Constitution. I did so because I thought it undemocratic. I would oppose the measure again if I had a chance ; and if in operation it has worked better than I expected, that does not affect the principle underlying my objection. As Macaulay said in regard to the rotten boroughs, you might defend any system for such a reason. You might defend” the very worst. The best rulers of the world have been great despots. By such a process of reasoning, you could dethrone Democracy, put it in the gutter, and select a despot to make your laws. What I said about the Constitution Bill was that it limited the powers of the people. We said so in connexion with the Financial Agreement. We declared that we would not put it in the Constitution because it would limit the rights of the people. Now, my honorable friend says that if the Constitution itself has not been violated, the spirit of the Constitution has been. I have shown that he himself did not think so on the 5th May, 1909, and apparently never thought so from 1893 down to that date. What is this spirit of the Constitution of which he speaks?
Again, he said that the electors did not authorize our proposal, that they did not know what they were doing. “ Father, forgive them, for they know not what they do!” The electors did know what they were doing, because we are here. Upon what did the election turn? Did we not say, over and over again, that the lands of this country ought to be made available for settlement, that land monopoly ought to be broken up? And did not the honorable gentleman, with all his cohorts, with all his broad sheets and, with all his journals and miscellaneous methods of approaching the free and independent electors, say : ‘ ‘ Look out. If the Labour party get in, they will tax you off your land.” Why, sir, it was these cries that deafened us on the hustings. Their outcries and denunciations created a pandemonium through the land. The people were frantically warned “against this proposal. They were told : “ Look out. If the Labour Party get in it will mean confiscation.” I can see now, in my mind’s eye, a hundred sheets of the great journals of New South Wales saying, “ The land tax means confiscation.”
So far, then, from the electors not knowing what they did in this matter, it is clear they knew very well. The people of this country have judged between us, we are here, and my honorable friends are there. In these circumstances, the Leader of the Opposition cannot claim that the people did not know what they were doing. When a contract is made under the influence of drink, it is sometimes sought to declare it null and void, on the ground that the mind of the contractor did not go with his signature. Perhaps my honorable friend would like to appeal from the electors of the 13th April to the electors of to-day. He thinks he might do better. Certainly, he could hardly do worse. But we take the liberty of believing that when the electors sent us here to impose a tax on the unimproved value of land, they meant us to go on with our policy, and we are doing so.
The position from the strict bond of the Constitution, or from that other vague and immaterial thing called “ the spirit of the Constitution,” is equally assured. There is no spirit of the Constitution other than that which serves the purpose of the people, and which keeps within the letter and the spirit of the bond. The High Court will look at the whole Constitution. In the case of The King v. Barger, the Chief Justice said that the whole of the Constitution must be. looked at, and not merely one particular section. The Constitution gives us power, and the electors have given us authority. We are thus doubly and fully armed.
I pass on now to my honorable friend’s remarks about the effect of land taxation in general, and in particular to his statement that the effect of our proposal has been already and will be to decrease land values. There may be, as he says, a case where a valuator did decrease the value, because of this proposal, but I would point out that during the last seven or eight weeks there has taken place within 250 yards of this building, the biggest sale of real estate for many years in Melbourne, and the prices there realized were excellent. That sale was held, as it were, in spite of this land taxation proposal, which was well known, which those who sold and those who bought knew quite well was as inevitable as death itself. In the face of that knowledge, on the 27th ‘ June, 19 10, the buildings occupied by the Leviathan Clothing Company, at the corner of Swanston and Bourke streets, realized £900 a foot. On the 1st June, 1837, that land was sold for less than £30 an acre. That is, the land was worth just £15. On the 27th June, 1910, the buildings occupied by Griffiths Bros., tea merchants, in Elizabeth-street, near Collins-street, and possessing a frontage of 60 feet, and a depth of 132 feet, realized £^42,300. On the same day the Queen’s Hall Hotel, in Bourke-street, with a frontage of 36 ft. 3 in., and a depth of 126 ft. 3
My honorable friend asked us to be lenient in dealing with a minority. He said, speaking of the whole community who are landless, that we are a majority, and asked, . “ Are you going to impose a tax on a minority of the people in an unjust way ? “ No, we are not. That is not our proposal. I shall show before I sit down that it is a just tax. 1 hope to be able to prove - and I trust that this Parliament, as a whole, will concede - that there is no more just system of taxation than the one that we propose. With regard to the particular instances of hardship of which my honorable and learned friend spoke, where it can be shown that a hardship is inflicted unnecessarily, I feel sure that the Prime Minister will be only too glad to do anything that is requisite to avoid it.
We were returned as a party on this very question. Nothing that has ever been brought before any Legislature has had better authority than this measure. It is the general mandate of an overwhelming majority of the people. The matter is of first importance. Its relation to the questions of immigration, defence, and land settlement is so intimate that, as the honorable and learned member said, it is impossible to separate them. We hear every day of the week outcries against the Labour party and its attitude towards immigration. I re-echo the words of my honorable friend when I say that talk of immigration which does not include some effective means of making land available for immigrants, is only empty babbling and beating of the air. The attitude of our party towards immigration, as towards defence, is the attitude of men who are in earnest about what they believe in. We believe the need of this country for more men to defend and develop it is very great, and we are doing the one thing necessary to supply that need. We are not merely talking about immigration ; we propose to proceed in a plain business-like way to make immigration possible. I speak as one who has had some experience, because, when in Wales three years ago, I found, amongst my own people, literally hundreds of men who would come to this country if it were possible for us to say to them, “ There is land for you. Come, and you shall go straight on to it.” But who can say that? No man here has authority to say it.
My honorable friend has spoken about the ill-effects of the tax. May I tell him one of its good effects? Already the very notification of our intention to impose it has done what no State Legislature and no oratorical appeals have been able to do. It has. virtually broken up three of the greatest land monopolist companies in Australia. It has broken up the Australian Agricultural Company, the Van Diemen’s Land Company, and the Midland Railway Company, who have now pooled their interests, and sent an embassy to Great Britain to make an arrangement whereby men will go on to farms already made. There is to be no going on to uncleared land, but men will be put on land cleared and fenced, with a house on it, and a tank or dam, as the case may be, and will acquire it by thirty-two years’ payments. Practically, therefore, the very shadow of this legislation has done more to promote immigration than all my honorable friend’s orations, and all the orations of all those gentlemen on the other side, have done for the last quarter of a century. There is the honorable member’s answer.
We have been told, with regard to this project, that “ We had better not do it now.” That has been the honorable member’s motto throughout his political career. His earnest prayer has ever been, “ For God’s sake, let us not do it now.” That has been the motto of the sinner from the beginning of time. It was Satan’s motto until he fell, and he has been eternally sorry he departed from his motto, and so incontinently fell into the bottomless pit. This matter cannot longer be delayed. Was there ever anything that demanded doing now so much as this one thing ? What is the position? During the last year, tha increase of population in this country by the excess of oversea arrivals over departures throughout the whole of Australia was only 12,000. This represents the fruits of the concentrated efforts of the six States in the direction of immigration. Here they have been with their closer settlement schemes, with their emissaries, and their agents, with their orations about immigration, and the quintessence of the concentrated effort of all these resulted in 12,000 immigrants ! Can it be said that the time for action has not come?
Under the proposal now before the House, Australia will receive an advertisement the like of which she has never received before. It will be a notification to the world that, at last, there is in Australia land for the people, and where there is land, there will the people come. So surely as this measure passes, and I firmly believe it will pass in its present form, there will be a steady and everincreasing flow of population of the right sort to Australia. The Labour party’s immigration policy is to be seen in and judged by this measure. It is to make adequate preparations for settlers and have abundant faith in the results. Having prepared a sufficiency of opportunity, there will not be lacking guests to sit at the table.
There is very great difficulty in finding out the precise value of the areas held by individuals throughout Australia. No statistics are available, and one might as readily endeavour to compute the number of souls in hell as find the amount of property that each person holds in this country. For some inscrutable reason these statistics have not been prepared; but, so far as one can judge by figures available from other sources, it appears that there are 3,140 land-owners in Australia the unimproved value of whose estates is over £5,000 and under £6,250 each. There are 4,926 land-owners who have estates of between £6,250 and £12,500 in unimproved value; 1,095 landowners whose estates run between £12,500 and £25,000 each in unimproved value ; and 766 land-owners who have estates of over £25,000 unimproved value each, the aggregate unimproved value of the lastnamed being £48,190,000. Roughly speaking, there are less than 11,000 persons who will pay under this tax, excluding absentees. There may be fewer than 11,000, and I think there will be, but we are unable to tell. A man may have aggregations of estates in various States, and so it is impossible to compute the number exactly. But roughly speaking, 10,000 persons own £127,000,000 worth of unimproved land values, that is to say, reckoning the unimproved value to be 50 per cent. of the total value, 10,000 persons own about £254,000,000 worth of landed interests in the Commonwealth; or one- four hundred and fiftieth of the population own threeeighths of all the landed interest of Australia.
– Does that include banks and companies?
– We cannot tell, but I am talking about persons. So far as I know companies have not been included in this estimate, because to a large extent it has been deduced from the probate returns, in which of course companies do not appear. Happily, or unhappily, they do not die. The bare telling of these facts is a sermon more eloquent than the finest oration ever delivered. One-four hundred and fiftieth of the population own three-eighths of the entire landed wealth of the country. It is said to us, “ Here is a helpless minority. Are you going to tax them? “ A helpless minority ! It is we who are helpless while things remain as they are. I ask the House to contemplate a state of things where, not 10,000 persons, but 1,000, or even 10 persons, shall own three-eighths of the entire landed wealth of Australia. That is no wild exaggeration. Already in the United States a handful of men absolutely control half of the entire wealth of the country, and the time is rapidly coming in Australia, unless we check it, when a handful of people will own three-eighths of the landed wealth of Australia. It is because that state of things is absolutely incompatible with the well-being of the country that we ask the House to assent to this legislation.
Sitting suspended from 6.30 to 7.45p.m.
– We have a continent richer in resources than almost any other - certainly fit to rank acre for acre with any equal area that we know of - and our population is but a handful. We are asked to encourage immigration, and we propose to do the only thing that will insure that - to make preparation for immigrants, and to offer inducements which will bring them here. The honorable member for Ballarat says that we are entering a province of State legislation which we should not invade. I have shown conclusively that, as recently as last year, he held a different opinion. It is abundantly clear that it is our business to make land available to the people. The State Parliaments have absolutely and admittedly failed to do this. The honorable gentleman spoke of closer settlement as a remedy for this land monopoly. Mr. Watt, the Victorian Treasurer, when introducing a Land Tax Bill last year, said -
We have inaugurated as an attempted cure a policy of resumption and closer settlement. I would ask honorable members if it has proved a cure. I do not think there is one honorable member, however he has examined the matter, whether from the country or the town point of view, who pretends at this stage of our history that the policy that we have been adopting during the last ten years is a satisfactory solution of the difficulty.
That is the admission of a gentleman who is a member of a Government which has attempted more vigorously than any other in Australia to effect closer settlement, and has undeniably failed. The futility of removing land monopoly by buying back land under closer settlement schemes is made obvious by the most cursory glance at the facts. An area of 1,405,738 acres has thus been repurchased by the States at a cost of £1,247,000, in New South Wales ; of £1,579,958, in Victoria; of £1,208,013, in Queensland; of £1,111,662, in South Australia; of £131,373, in Western Australia; and of £83,219 in Tasmania. The net result of the expenditure of millions of money and all other attempts at settlement outside the closer schemes, has been an increase in the area under crop of only 532.000 acres in five years ! The balance of the lands resumed has either not been put to use for tillage, or merely makes up a shortage caused by the falling out of cultivation of land not resumed. It is an economic mistake for a State to repurchase land at valuations generally greater than the land is worth. By repurchasing, the value of the surrounding land is increased, so that every purchase makes the remaining alienated area, more difficult of acquirement. Notwithstanding the repurchases in New South Wales between 1905-6, and 1908-9, the acreage under crop actually decreased in that period by over 100,000 acres. The Victorian Treasurer acutely realized the position. He “saw that closer settlement had failed, and that a land tax had to come. He told the State Assembly -
I would put this view in addition. If you do not take a State land tax you will have to take a Federal one. . . . - Mr. Reid said in the House of Representatives : - “ I said we had the power of direct taxation, including taxation of land. The breaking up of large estates is a matter for the political evolution of the States themselves. It is a land question, not a fiscal question; and it should be /aken up by the States. Those in the States who do not take up this question in a serious light do not deserve to hold power.” Mr. MACKEY - The large estates.
– Yes. Mr. Deakin was much more emphatic, and it is more interesting to us to know what the present Prime Minister intends to do if the States do not act.
As to the steady growth of land monopoly in spite of closer settlement schemes, these figures are eloquent : In seven years the number of the estates in New South Wales which exceed 5,000 acres has increased from 1,282 to 1,366, the number of those which exceed T 0,000 acres from 703 to 728’; and the number of those which exceed 20,000 acres from 351 to 360. In Western Australia the number of estates exceeding 5,000 acres was 147 in 1901, and 242 in 1909; while of those exceeding 10,000 acres the increase was from 74 to 102 ; and of those exceeding 50,000 acres from 4 to 6. The Victorian Land Tax Register of 2nd August, 1910, stated that there were 2,000,000 acres in the Western District held by 187 persons, and that there are 4 estates exceeding 50,000 acres each, 14 exceeding 30,000 acres each, and 77 exceeding 5,000. In New South Wales there are 104 estates exceeding 50,000 acres each. Those figures show that the States have not effectively dealt with land monopoly.
– They cannot do so.
– The honorable member is right. The honorable member for Ballarat this afternoon asked, “ Who are we, to override the Legislative Councils of the States ?” These august bodies appear for the first time in their history as the saviours of the country and the guardians of the liberties of the Democracy. He told us that we are intruding into domains which are constitutionally theirs. We say they are our domains. We say that they have not done their duty, and we must do ours. For this we are adjudged guilty of a crime against liberty and against the Constitution.
By general consent it is established that land monopoly is rampant, and that the States have proved themselves incapable of dealing with it. The people ask us to deal with it, and we must do so without delay. According to the honorable member for Ballarat - he told us this with many qualifications - some kind of land tax would be justified if we needed revenue. When a State needs revenue, it “has to get it by borrowing it or by levying taxation.
The question is, “ Are we to borrow money ?” That was the policy of the Opposition. The Naval Loan Bill stands out as a monument to the futility of its methods. 1 1 is the one thing which distinguished them. It is the only measure which they originated. It perished with them ; and is now wiped off the statute-book. They were not prepared to raise revenue to meet the legitimate requirements of the Commonwealth, and proposed instead to float a loan. That is the last expedient of weak men. The floating of a loan, in my opinion, is justified only for reproductive works, or to meet a great national emergency. Neither of those conditions can be said to be present in this case. I have said we must have more money. This Bill has a twofold object. One of these is to make the land available for the people ; the other is to raise revenue. Both these objects are perfectly legitimate, and clearly within our powers. Further, they are matters of urgency upon which we have received an unmistakable” mandate from the people. We must make land available ibr settlement, and we must raise more revenue. This Bill has been framed to carry out that twofold object; and I wish honorable members to regard it in that light. There is a great outcry, growing in volume with each succeeding day, against the harshness of its provisions. It is said that it means confiscation, and every day we hear of bands of patriotic persons who are leaguing themselves together for the express object of wiping out the party which dares to impose a tax upon the wealthy. Looking at this Bill merely as one designed to raise revenue, let us ask ourselves whether it be not a legitimate exercise of the constitutional powers of this Parliament. Here is the position : The additional revenue that we receive under the new financial arrangement is such that it will not enable us to meet our inevitable obligations ; and we must, therefore, raise more revenue. Let me show what those obligations are. They cover an extension of old-age and invalid pensions, which is clearly within our (power, is legitimately and necessarily : urgent, and involves a considerable increase of expenditure. Then, again, we have adopted a defence scheme, and the Opposition hardly dare to criticise expenditure in that direction. This year, we have to spend, in respect of one cruiser alone, a sum of ^£850,000. We propose to ask the people of Australia to pay for that cruiser ; and no one can. say that that is not a proper thing to do. We propose, also, to put our land defences in such a state that we can have a reasonable hope of repelling invasion. That will involve an additional expenditure of over £500,000, as compared with last year’s outlay. We intend to ask the people ito pay for it. We propose, further, to take over the Northern Territory. We intend to do something more than talk about that project; we are going to carry it out. To deliver an oration on the desirableness of taking over the Northern Territory costs very little; but to assume the liability and to proceed with the development of the Territory will mean a large expenditure, and we must have revenue to provide for it. We also propose to construct transcontinental railways from the north to the south, and from the west to the east; and these will involve the outlay of much money. Not that we propose necessarily to construct those railways out of revenue; but during the early years of their existence there must be a loss, and our intention is that it shall be met out of revenue. We are going to do all these things. Consequently, revenue being absolutely essential, and this party being resolutely opposed to the flotation of loans, except for reproductive works, or to meet a great national emergency, it follows that we have to get the money by additional taxation. How are we to do that? My honorable friends of the Opposition fly naturally to the Customs House, for their hands, by centuries of practice, dip into the pockets of the people with a readiness from which no amount of philosophic or economic dissertation on right principles of taxation will divert them. It is about time that the wealthy classes of this country paid a little towards the cost of its government. In no other country, so far as I know, are the wealthy treated so well as they are here. Let me turn for one moment to Great Britain, that pattern of Democratic government, that fountain from which we derive all our liberties, and that shrine at which we worship politically and nationally. What do we find there? We find that, whereas indirect taxation in this country is 75 per cent, of the whole, in Great Britain practically half of the whole is direct taxation. Only 50 per cent, consists of indirect taxation. In other words, whereas the direct taxation of Great Britain is £1 7s. 10d. per head, and indirect taxation £1 7s. 1 id. per head, in the Commonwealth indirect taxation is £2 10s. 8d. per head, and direct taxation only 16s. per head, of the population. Including local taxation, we find that in Great Britain the direct taxation is £3 os. 4d. out of £4 8s. 3d. per head of the population, while in this country only £1 1.6s. 4d., out of a total of £4 6s. per head of the population, is paid by way of direct taxation, either locally through the States, or through the agency of the Commonwealth. That is not the position as it is, but as it will be after this tax is imposed ! It is important to remember that, even when this Bill comes into operation, the total direct taxation of this country will be only £1 16s 4d. per head of the population, as against £3 os. 4d. per head in Great Britain. It will thus be seen that we are not asking the wealthy classes to pay anything like as much as they pay in Great Britain. During the last few days, we have heard some talk of the injustice of taxing absentees - of the unwisdom of turning the foreign investor against us. The foreign investor is never treated so well in any country in which he invests his money as he is in this. He is subjected to fewer restrictions, and there are fewer burdens upon him in the Commonwealth than in any other country. In the United States of America, 49-31 per cent, of direct taxation, and only 50.69 per cent, of indirect taxation is imposed. There, practically half the taxation is paid by the wealthy, whereas here we are content that the .people shall pay through the Customs House 75 per cent, of our taxation. In Great Britain, Customs taxation amounts to £1 7s. 1 id. per head; in this country, it is £2 10s. 8d. We pay more taxation through the Customs House than do the people of the United States or Germany ; more than they do in almost any country in the civilized world. Obviously, therefore, this party, whatever it may do, can never go to the Customs House for taxation ; and where should we go, rather than to the land which is the source of all wealth. and the means whereby all wealth is produced. Monopolized, as it is, by a handful of people, we now go to those people and say, “ You have the avenues through which alone we can proceed and get at the wealth of this country. You, the keepers of the gate, must pay a fair thing towards the cost of the government of the Commonwealth.” In asking, therefore, for this amount of taxation, we are asking for nothing that is not legitimately proper, and nothing like as much as the rich of Great Britain and the United States of America have to pay. And the rich men of this country will have nothing at all to complain of when the tax is levied.
Coming now to a comparison of this tax with other land taxes, let me point out
that, in New Zealand, there is, and has been for some years, a graduated land tax.. The effect of that tax has not been to drive capital out of the country ; neither has it discouraged investment. On the contrary, New Zealand is more prosperous to-day than ever she was. Whatever she suffers from,, she does not suffer by reason of her graduated land tax. I wish to remind those who may think that this tax is too severe, that the New Zealand experience has been such as to compel the Parliament to make the tax more ‘ severe upon three successive occasions. The New Zealand Land Tax Act has been amended some eight or nine times ; and on three occasions the tax has been increased. As honorable members know, there is a uniform, as well as a graduated land tax there. It is complained that the rate of the tax in this Bill is too high. As a matter of fact, the New Zealand tax upon nonbusiness premises, on amounts over £40,000, is, in some circumstances, more severe than the tax imposed under this Bill. Under this Bill, there is to be a general’ exemption of £5,000, but that exemptionwill not be enjoyed by absentees. The tax will be imposed according to the formula, of which the Treasurer spoke the other night. For each successive £1 in value there is a corresponding increase of tax. The formula is the most effective, economical, and equitable mode of applying thetax. There is no inducement to undervalue ;. it is absolutely fair, and this arrangement will enormously facilitate calculations. It works out in this way -
Comparing the tax under this Bill with the New Zealand Act, an absentee with estates of £100,000 in value will pay £2,065 I9S- 5°”> while the New Zealand absentee with land of the same value pays £1,916 13s. 4d.
This Bill imposes a tax of such a nature as will, we believe, largely put an end to land monopoly, will check the aggregation of great estates, and enormously facilitate settlement on the land. At the same time, it will bring in substantial revenue to meet the added liabilities to which I have alluded. This revenue is absolutely required in view of the urgency of old-age pensions, defence, the taking over and development of the Northern Territory, and the construction of transcontinental railways, which are matters for the immediate future; and, to quote the honorable member for Ballarat, there is no better way of providing the money for them than by imposing a tax on land values.
I hope and believe that the tax will be heavy enough to make sufficient land available for settlers. The experience of New Zealand has been that a lower rate of tax was not sufficient, and, consequently, there had to be an increase. We believe that we have begun high enough - that we have not begun too high, I am perfectly confident. There is absolute justice as the basis of this measure. No man will be called upon to pay who is not in possession of great landed estates. Every man will pay according to the value of the lands he holds.
I have now to deal very briefly with the Bill itself. It is to be remembered that the principle is the taxation of land values upon the graduated basis, and, under the Bill, the Commonwealth always taxes on the highest rate. It is a graduated tax, increasing as the estate increases; and the aggregation of a man’s estate is taxed. If a man has a block here and there, or a block in every State, these blocks are bunched together, and taxed as a whole; whatever may be his aggregate estate, he pays on the whole value. The principle that we tax on the highest rate is responsible for the provision of which the honorable member for Ballarat spoke this afternoon, and which seemed to puzzle him a little, as to the prevention of double taxation. Now, double taxation in this Bill does not at all contemplate that extraordinary position of which the honorable member spoke; that is to say, taxing by a
Commonwealth and by a State. “ Double taxation,” under this Bill, refers to cases where there are two persons liable, one for a lower rate and the other for a higher rate. The Commonwealth gets the higher rate, but it does not get that higher rate plus the lower rate, but the higher rate minus the amount of tax payable on the lower rate. That is, the Commonwealth gets one tax, and one tax only ; but it is always at the higher rate. I shall explain that in detail later; but I desire to point out that that is the principle running throughout the Bill. The other principle is that we tax everybody who has an interest in land to the extent of that interest if it is over £5,000. The honorable member for Angas said that thisis a Bill to tax the freeholder ; but we do not care whether a man is a freeholder or anything else; the question is whether he is monopolizing land. To the extent that he does so, he is retarding land settlement, and ought to contribute towards the revenue of his country. Conceivably, we might have a man with a 999-years’ lease, or with a relatively shorter lease of 99 years ; there are many leases of this kind, for instance, in the East Sydney electorate. The question whether the leaseholder or the owner shall pay, and in what proportion, is to be determined entirely by the interest they proportionately hold.
There is a distinction made in regard to the absentee, who is defined, not only as a person who does not reside in Australia, but also as one who has been absent from the country six months before the 30th June in any financial year. Provision is made to class companies as absentees when the company is registered outside Australia, or when two-fifths of the shares are there held. The definition of “ unimproved value “ is generally in accord with the definition adopted by the various States of Australia and by New Zealand. There may be a difference of opinion as to whether the definition covers the whole ground, but that may very well remain for argument in Committee, and I shall say no more than that it is an attempt to define the true economic value of the land, as distinct entirely from the improvements. A Commissioner is to be appointed to administer the Act, and to be clothed with powers sufficient to carry out his duties, which are extremely important and necessitate the considerable powers to be given him. It will not be found,
I think, that the powers given are too great. ‘ The experience elsewhere is that there is hardly one device, trick, or expedient, that has not been resorted to in order to defeat the purposes of taxation measures; and, therefore, the Commissioner, in order that the efforts of the Commonwealth may not be rendered futile, must be clothed with great powers.
I now come to the exemptions in the Bill, which are set forth in clause 12, and, generally speaking, include all the lands usually exempted in the State Acts. I shall deal with the position of Crown leases when dealing with leases in general ; but the position under the Bill is practically that adopted in the State Acts. I wish to direct particular attention to subclause b of. clause 12, which deals with land “ owned by, and used for, the purposes of a local authority or other public authority acting under any State Government,” and to point out that what is there intended is the complete exemption of all municipal lands for whatever purposes used. The authority, if any is needed, for the exemption of municipal lands is found in the express prohibition in section 114 of the Constitution, and the High Court decisions in D’ Emden v. Pedder, the Railway Employes case, and in The King v. Sutton, in which it was decided that the property of a municipality is the property of a State. Whatever may be said as to the meaning of “ State instrumentalities “ - whether that covers the excursion of a State or a municipality into a field usually occupied by private enterprise - the express prohibition of section 114 of the Constitution cannot be so limited ; and, therefore, it is to be understood that municipalities will be entirely exempt from the operation of the Bill, no matter to what purpose they put their lands.
– Will tenants in occupation of municipal lands be exempt?
– All lands held by municipalities will be exempt. Municipalities will not have to pay.
– But as to the tenants of municipalities ?
– Sufficient unto the day is the evil thereof !
– But this is all evil.
– I am dealing now with municipalities, and I say they are to be entirely exempt under this Bill.
The provisions of the Bill . dealing with returns are such as are usual and necessary. They contemplate assessments being made, returns being furnished, and valuations being made by the owners, the Commissioner, or in any other way. It is necessary for the purposes of the Government and the Commonwealth that we should get revenue this year, and it is clearly impossible that in the meantime there could be a valuation of all the lands of the Commonwealth by the Commissioner, or by any other persons authorized by him. Therefore, for the first year the assessments will largely be upon the valuations of the owners themselves. It is not to be presumed that these assessments or valuations will be accepted without question by the Commissioner. We shall deal with the valuations made by the owners of lands upon which the Commissioner will make whatever amendments he pleases, and upon which the taxpayer can take such action as he pleases in the way of appeal. But the assessment goes on pending an appeal. There is the usual provision made for the production of the assessment-book, as conclusive evidence of what it contains, and that notice of assessment shall be sent out, though the omission to give any such notice is not to invalidate the assessment.
I come now to the liability of taxpayers under the Bill. Here we come first of all to the application of the principle of which I have spoken, which runs throughout this measure of taking the tax always on the highest rate, and exempting the taxpayer from double taxation.
– - -That is only double taxation under the Bill ; it has no relation to State taxation?
– Quite so. In clauses 25 and 26 we deal with leases made before, and leases made after the passing of the Act. I had better now say what is the position of Crown lessees under this Bill. In clauses 25 and 26 it is provided that Crown lessees shall be liable to taxation. The Government have considered this question very carefully, and while they hold that as a general principle it is perfectly fair that every person shall pay according to his interest, no matter what it is - leasehold, freehold, or any other tenure - yet in the application of the principle to Crown lessees there does not seem to be a prospect of a sufficient return of revenue to warrant the imposition of the tax upon Crown lessees in the ordinary -sense of the term under the Bill. As I pointed out on Friday, the position of the Crown lessee would be that he would only pay when his rent did not amount to the full economic rent, and when the difference capitalized exceeded £5,000. While of course there are cases where, subject to such a condition, men would come under the Bill, in the vast majority of cases the Crown lessees would not come under it. The position of Crown lessees under the various State Land Tax Acts is this : In New South Wales all Crown lessees are exempt except those who have a right to purchase. Those who have a
Tight to convert their leases into freeholds are liable to taxation in that State. In South Australia the 1 aw is the same, but there is also a tax upon perpetual leases.
– Only one perpetual lease.
– The South Australian Act taxes lessees who have a right to convert. The Western Australian Act taxes lessees under all circumstances. Those who have a right to convert their leases into freeholds are treated as free.holders. Those who have not that right are treated on the principle to which I have already referred : on the capitalization of the difference between the economic rent and the rent they pay, and as the exemption in that State is ‘only £50, practically the whole of the Crown lessees of Western Australia pay a land tax.
– Only on the rent they pay to the Government?
– They are taxed upon the difference, if any, between the economic rent and the rent they pay capitalized ; that is to say, multiplied by twenty. It is therefore abundantly clear that the principle of tailing lessees is a sound one in itself, and is recognised as such by the States. The advisability of taxing lessees without a right to convert, is still under the consideration of the Government, and their decision on the matter will be announced in due time.
I come now to the application of these clauses in regard to ordinary lessees. In the case of a lease made before the passing of the Act, the lessee will pay part of the tax when his interest is such as to be a. taxable interest in the land, namely, when he pays as much less than the real annual value of the land capitalized, as amounts to £5,000 and over.
– The honorable gentleman is referring to leases of freehold land.
– Yes, to ordinary leases from private owners. In the case of leases made after the passing of the Act, the position will be that the leaseholder will pay only if he is a bigger land-owner than the lessor. I wish to explain that. The general principle of the Bill is that the lessee only pays, the tax when he is the bigger land-owner. When he is not a bigger landowner than the lessor, he will not have to pay at all. There is only one departure from that principle, and that is in the case of leases made before the passing of the Act, in which case the lessee will pay the tax if the capitalization of the difference between what he actually pays and what he should pay amounts to £5,000 and over. That is the principle that is adopted in the Western Australian law, and it appears to me to be a perfectly sound one.
With regard to the provision to prevent double taxation, that applies in eve’ y case ; mortgagors, mortgagees, equitable owners, legal owners, trustees, joint owners, and joint occupiers. Taking a concrete case : In the case of a lease made before the passing of the Act the unimproved value of which may be £1.0,000, the rent £1,000, and the lease for twenty years, the lessee pays no tax. If the unimproved value be £10,000, and the rent £900, and the lease for ten years, the lessee pays no tax. If the lease is for twenty years, and the rent £900, we capitalize that, and it is shown that the lessee’s interest is £2,000, and of course he pays no tax. If the lease be made after the passing of the Act, and the unimproved value be £10,000, the lessee never pays in any case unless he is a bigger land-owner than the lessor, in which case he pays the difference that is created by the rate being higher on the aggregate of his estate than it would be if it were on the lease merely. That is to say, if the lease is worth £10,000, and the landlord owns property of no greater value, the tax will be at the rate of about 1 1/2d. in the £:r. But if the landlord owns land of the value of £40,000, then the tax on the lease of the rest will be at the rate of a tax on £40,000, namely, about 2d. in the £r. If, however, the leaseholder’s interest from any other lands brings his aggregate possession up to about £50,000, the tax will be levied on a valuation of £50,000, and the lessee will pay the difference between what the landlord pays, and the amount of the tax on the higher rate on his assessment.
I come now to the position of mortgagees under die Bill. They are not taxed under this measure unless they are mortgagees in possession. The principle in that is, of course, the principle underlying the Bill. The objects of this Bill being fo raise revenue, and to break up large estates, it would be clearly incompatible with one of those objects to make the mortgagee pay on the whole extent of his mortgage, because there would be no inducement to break up the estate if we charged the mortgagee or owner of the land just the same, whether he were in possession or not. There is an inducement offered to him to break up his estate, if by so doing he can evade the tax altogether. Therefore, the mortgagee does not pay under this Bill, unless he is in possession. Then he pays according to his interest; that is to say, he pays his share as a mortgagor pays his share. We are assuming that one effect of this Bill will be thar large estates will be cut up into relatively smaller estates. An estate has to be over £5,000 in value before it pays any tax whatever. If a man has £100,000 worth of land, and cuts it up into twenty estates, putting band fide settlers thereon, neither he nor they will pay any tax. If he does not cut up his estate, he will pay the tax on the whole. A settler is regarded as bond fide whether the conveyance is completed or not, provided that 15 per cent, of the purchase money has been paid, and possession has been handed over. Clearly we should not encourage settlement if we demanded that every settler should have paid 20s. for every pound’s worth of land he wanted; because, obviously, that would be to impose an impassable barrier in the way of settlement.
The honorable member for Ballarat brought up the position of trustees. Under this Bill each trust estate is taxed ‘separately. If a trustee is trustee for several estates, each estate is taxed as one. Where an estate is not occupied as a joint estate but is occupied severally, or is capable of being split up, each of the particular beneficiaries is taxed as if he had a separate estate. Under these circumstances, many trust estates will escape altogether. Of course, land owned by trustees on their own account will not be included in the assessment of land held on behalf of beneficiaries. Equitable owners are treated in exactly the same way as legal owners, and the principle for the prevention of double taxation is applied. The equitable owner is treated as a secondary taxpayer, and is always liable to thededuction. Land held by a married womanfor her own use is assessed separately. Land held otherwise is treated as if it were joint owned. With regard to the position of buyer and seller, I have explained that under this Bill it does not matter whether there is any conveyance or not; two things only are necessary - first, the payment of 15 per cent, of the purchase money, although the 15 per cent, is not necessary provided the Commissioner is satisfied that the thing is bona fide; and secondly, possession.. There must be possession, and the settlement must be bona fide; those conditionsbeing fulfilled, there is complete exemption from taxation on the part of the seller.
The position is this : A jointestate is valued as if it were held by a single person; then the interest of the joint owners is taken separately and added to all’ the land held by each of them ; and thenthe estate is taxed on the highest value, and! the joint owners get the benefit of the deduction. Companies are treated as one person, except’ in a case where a shareholder’s interest in a company, together with his landed interest outside that company, would make the tax higher. Ordinarily a company taxed as one person pay.? the higher rates. We have made one exception, and one only, and that is with regard to mutual life assurance societiesLand owned by such a society is to be deemed to be owned by the society astrustee for the several Australian policyholders as beneficial holders in severalty in proportion to the surrender values of their policies, and not to be deemed to be occupied by them jointly. Provision is made for appeals against assessments ; but appeals do not affect the progress of the assessments pending the hearing.-
There is provision under the Bill, in clause 44, for the acquisition of land. My honorable friend, the Leader of the Opposition, spoke of the doubtful legality of that position. I do not think that there is anything in such a contention.. The principle is this : Once you have established your right to do a thing, you maydo everything else that is incidental to it.. Once you have the power to tax, you havethe power to do everything that is necessary to inforce the effective collection of that tax.
– That, like the honorable gentleman’s other doctrines, is generally true.. But it is not necessarily true of a Federal Constitution.
– The doctrine is true in this case. I am not concerned with the universality of the doctrine, but only with its application in this particular case. First of all, I declare that the right to tax land is undeniable. Whatever we have not a
Tight to do, we have a right to tax where and how we please. That being so, we have clearly the right to see that no one shall evade the tax which we impose. Having the right to tax, we clearly have the Tight to do everything incidental to the imposition of the tax. The Customs Act, section 161, sub-section 1, is very similar to clause 44 of this Bill. It provides that -
For the protection of the revenue against the undervaluation of goods subject to ad valorem duties, any goods entered as of a specified value may at any time before sale and delivery -to a person, who shall prove to the satisfaction of the Collector that he purchased and took delivery in good faith and without any knowledge of the entry, and subject as may be prescribed, be purchased by the Customs at their declared value with an addition of Ten pounds per centum on the amount of such value.
It is further provided that the goods so taken shall become the property of the King immediately on seizure,” and that a refund in whole or in part of any duty ;paid on the goods may be made by the Collector.
– But that is not real property ; that is a result of indirect taxation, in which the Commonwealth is supreme.
– That section is the result of the exercise of an undoubted power. We have the right to tax goods; we have the right to forfeit them; we have the right to do anything we like with them. We have not, for instance, the right to sell motor cars, but we have a right to tax them, and to take them and do what we “like with them, once there is an attempt to evade payment of the tax which we impose. And we have the same right to tax land as we have to tax goods.
– What are the Government going to do with the land if they take it?
– We might, if we chose, erect a rostrum, from which the orators of this Parliament could speak. We could erect drill halls. We could construct rifle ranges, and do a thousand and one other things which might be deemed desirable for the purposes of the Commonwealth.
We have the power to acquire land for public purposes, and to use land for any of the purposes for which it may be used under the Constitution. We might, for the sake of argument, use it for erecting public offices, or constructing dockyards, or workshops, or. for the building of anything we please.
– The Attorney-General has simply assumed the point at issue - that the Commonwealth has a right to acquire this land. The Commonwealth has the right to recover a tax which it imposes, but not necessarily any other right - no right of property.
– Well, we are getting on. Now it is admitted that we have the right to tax, but it is said that we have no right to take land. I declare that we have the right absolutely to see that the Commonwealth power to tax shall not be rendered futile. What do we propose to do? Will any one say that clause 44 of this Bill is not absolutely necessary ? What does it say? -
For the protection of the revenue ‘against the under-valuation of land, if the Commissioner is of opinion that the owner of any land has, in a return furnished under this Act, understated the unimproved value of the land, the following provision shall apply.
When a man undervalues his estate, the Commissioner, for the protection of the revenue, takes certain proceedings. The matter comes before a Justice of the High Court, and the clause says that if the Justice is satisfied that the owner has undervalued his land, and is not satisfied that the owner has not done it wilfully, then he may order that the land shall be acquired. If that be done, then other provisions apply. The provisions of the Lands Acquisition Act 1906 - shall, so far as applicable, but subject to this Act, apply in relation to the land so acquired as if it had been acquired under that Act.
– But this land will not have been acquired for public purposes.
– Why is it not for public purposes? If the Commonwealth acquires land, it may surely use it for public purposes. I venture to say that the honorable member for Hume is not looking at this matter in the proper light. I say again that we have a perfect right to acquire land in the manner I have described, and that that power is properly incidental to our right of taxation. The only thing that has to be established is our right to tax. The other follows. ‘ Part 7 of the Bill deals with the collection and recovery of the tax. It is provided that statutes of limitation shall not apply, and that the Commissioner can value property wherever it is, and shall have recourse against every holder. Clause 52 provides that the land tax shall be a first charge upon the land taxed, “provided that no such charge is to be of effect as against a bond fide purchaser, who, at time of the purchase, made due inquiry but had no notice of the liability.. Clauses 65, 66, and 67, which deal with the penalties for non-payment of taxes, are very drastic. Clause 65 reads -
Penalty : Five hundred pounds, and in addition thereto an amount equal to treble the amount of tax which would have been evaded if the value stated in the return had been accepted as the unimproved value of the land.
Clause 66 says -
Any person who, by any wilful act, default, or neglect, or by any fraud, art, or contrivance whatever, evades or attempts to evade assessment or taxation, shall be guilty of an offence.
Penalty : Five hundred pounds, and in addition . thereto an amount equal to treble the amount of the tax or assessment, payment whereof lie has evaded or attempted to evade.
Clause 6.7 provides that when a person has been convicted of an offence his land may be forfeited. It is proposed to amend the three clauses in the way set forth in the amendments of which notice has been given. Let me now point out the effect of the amendments.
– Order ! The honorable member is now going beyond the principles of the Bill.
– I am only pointing out, sir, what the effect will be when the amendments are made. At present practically there is power to fine a person £500, and treble the amount of the tax, and to forfeit his land. It is thought that the matter can be more properly dealt wilh by introducing the words ‘ ‘ or forfeiture.” In regard to forfeiture, it mustbe recollected that no penalty can be imposed, no fine can be levied, and no forfeiture can take place unless the person tas been convicted by a jury before a Justice of the High Court. If a man is convicted of deliberate fraud, then his land will be liable to forfeiture. Fraud is not less fraud because it is committed in connexion with taxation than it is in connexion with other matters. A case wilt have to be made out before a Judge and1 a jury will have to be satisfied. It is perfectly true that clause 65 puts the onusof proof on the defendant. The onus of proof is usually on the plaintiff, but whilethat is a general principle there are numerous cases where the onus probandi is onthe other side, where the matter is onepeculiarly within the knowledge of thedefendant, and in the circumstances can hardly be proved outside of him. In that case the onus should be on the defendant. The principle is applied inthe English Customs Act, section 249, of which throws on the defendant the onus of proving that the goods, seized have paid duty, and have been= lawfully imported, while under section 260 certain averments by the prosecutor throw the onus on the defendant Under section 2 of the Merchandise Mark* Act of 1887, the seller of an article bearing a forged trade mark or false description, has the onus of proving that he hastaken all reasonable precautions, and has no reason to suspect genuineness, that he gave the prosecutor all the information inhis power as to the source of the goods, that otherwise he acted innocently. It must be remembered that frequently in the course of a trial the onus of proof shifts from one party to the other. Provided that the plaintiff makes out a prima facie case then the onus of disproving that’ shifts on to the defendant. It may be fairly held that a Commissioner’s statement that he believes that the defendant has fraudulently undervalued his estate to the extent of 25 per cent, is a -prima facie case, and therefore it is fair that the defendant shall disprove that. In the case of a tax of this kind, severe penalties are essential to insure .that the revenue shall not be defrauded. The very circumstance of the incidence of the tax, the fact that during the first ‘year, or perhaps during the first two years, we shall have to rely very largely on the valuations sent in by the taxpayers, make it essential that we should have powers, latent but nevertheless at our disposal, which will enable us to punish those who have deliberately defrauded the revenue. No person who makes an honest undervaluation need have any fear. It may be said, and very properly said, that it is not easy to say what is the value of land.
That is perfectly true, but it is very easy for a man to prove that he had no fraudulent intent, and, that being so, these provisions will not apply.
– Will the honorable member say what Court will try the offence?
– It must be tried before the High Court with a jury. It is no good for the honorable member to shake his head, because that will not take him out of the High Court.
– And the honorable member’s assertion will not make things right.
– A case relating to the acquisition of land, of course, goes before the High Court, and these cases will, at all events, go before a State Judge and jury.
I come now to another matter of great importance. It is very necessary that provision should be made in the Bill to prevent landlords from passing the tax on to their lessees or tenants. I suppose that nine out of every ten leases in existence were drawn with a clause in which the lessee covenants to pay the tax. It is proposed in this Bill to safeguard the interests of lessees. When a man covenants to pay a tax, what does that mean? Suppose that I am the lessee of land, the unimproved value of which is £4,000, and which consequently is exempt from the tax, and that the lessor owns £100,000 worth of land. Am I to pay one twentyfifth of the tax which he has to pay ? Would that be fair? The whole of the lands of the landlord will be lumped together, and the tax will be levied on the whole. Does a covenant by a lessee to pay a tax amount to a Covenant to pay the share of the tax on the whole property of the landlord ?
– What is the honorable member’s answer to that question?
– My answer is that he ought to pay only that amount which he would have paid if the land he occupies under lease were the only land owned by the landlord.
– Is that provided for?
– Yes, in an amendment on the contingent notice-paper. The Bill deals with all leases made before the passing of the Act. With regard to leases made after that date, it is proposed to enact that any provision to pay the tax by the lessee shall be null and void.
– Where is there constitutional authority for making that provision ?
– Of course, we have it. Why should we not? Once we have established our right to exercise a power we may do everything which is incidental to its exercise.
– But so long as you get the money you get the tax. How is it incidental ?
– Where does the Constitution prohibit us?
– Where does it authorize us? The Commonwealth has to be authorized to do it.
– One may answer an argument by a smile here, but that will not be sufficient elsewhere. In my opinion it is perfectly within our powers to prevent an evasion of this tax by any of the methods of which I have spoken, and clearly that is a method by which the whole object of the measure could be defeated, because a landlord could pass the tax on to his tenant, and so evade payment of it.
– If you get your tax from the man who has £100,000 worth of land nobody evades the tax.
– I cannot hear the honorable member. I hope I have made perfectly clear the distinction between the two cases. In the case of leases made before the Act, we limit the liability to what we conceive to be the interpretation that ought to be put upon the covenant in a Court of law. ‘ In leases made after the Act all such covenants by lessees to pay the tax are null and void. Clearly our right is the same in both cases.. If we have not the right to limit the liability under an instrument made under a State law, we have not the right to annul the provision altogether. If one is unconstitutional, the other is too. They are both in the same case. I am satisfied that we have the power to do this ; and, in the circumstance, we propose to do it.
Shortly, the position summed up is this.. We are here as a party by virtue of the verdict of the electors. We were authorized’ to bring in this particular measure. It hasbeen before the country for over twelve months, for it is, in substance, the Bill’ brought in by the Fisher Government. Its main features were subject to an infinite number of discussions, criticisms, and reviews on the platform, in the press, and by every other means by which men canvass public opinion. The constitutional position is unassailable. We have the right to tax land, and we have the right to tax for any purpose we please. By the admission of the honorable member for Ballarat, and by general consent, there never was a better or juster method of levying taxation than land value taxation, and there never was an occasion when taxation of this kind was more necessary than the present. So far from its being one peculiarly reserved to the States under the Constitution, it is, as the honorable member has himself admitted, one that falls clearly within our sphere. We have the right to tax land, and we have the right to raise revenue by direct taxation. I have shown that we want revenue badly, and we must have it. I have shown that we ought not to go to the Customs for taxation, and that the poor and the middle classes of the country are too heavily taxed already. We pay much more now than any other people in the world do in that form of taxation. In the last two years, we have seen the price of commodities rise by 10, 15, and 20 per cent., and no movement has been made by honorable members on the other side to mitigate the effects. But now that we propose to place these additional burdens on the right shoulders - and we should never have been called upon to undertake the task were it not that the greater portion of the wealth of this country has drifted into the hands of a comparatively few people - and ask that they shall pay their fair share according to the well-acknowledged principle of taxation, that people shall pay according to their capacity to pay, and in proportion as they enjoy opportunities for wealth production, we are met by a storm of criticism, by declarations of unconstitutionality, and by solemn wagging of heads. We are met by philosophic dissertations upon the Constitution and the spirit of the Constitution. These are the only arguments that the Opposition can urge against this great reform. In the face of the strongest and most powerful vote ever yet recorded for any party in this country, given in favour of this measure, surely some better reasons than those must be advanced why this party should abandon the proposal upon which it was returned to this Parliament. We await those reasons with interest; but they are not forthcoming. When we are told that the reason why we cannot do this thing is because it is unconstitutional, we ask for one solitary solid reason why it is declared to be so. When they fall back upon vague and meaningless shrugs and innuendoes about the spirit of the Constitution, we have aright, in our turn, to smile and to brush aside these empty and meaningless platitudes and to reply that we are here to do that which we were sent here to do, which honorable members on that side lamentably failed, hesitated, or were afraid to do. We are here to do that which they advocated, but were afraid to attempt. We are here to do that which the people, having tried every other conceivable means of doing and failed, have at length turned to us and given us authority to do; and we shall do it.
– I remember having read how that -
As in a theatre, the eyes of men,
After a well-grac’d actor leaves the stage,
Are idly bent on him that enters next,
Thinking his prattle to be tedious.
So that one can understand that it is with a certain feeling of trepidation that I attempt to follow, at this hour of the night, one who is remarkable for his elusiveness, if not versatility, in debate, and who sometimes may instruct, often astounds, seldom convinces, but can always retain the attention of the audience by amusing them. I do not propose to follow the honorable member in all his somewhat extended discursions; and, as a considerable number were irrelevant, perhaps it may conduce on my part to conciseness in reply if I do not. One ought not to speak of any one who has preceded him as having been irrelevant, without offering some proof of the allegation. I shall give honorable members only two. The honorable member mentioned that I had said the other day that the basis of this Bill was taxation of freeholders, and he immediately raised a cheer by passing on to say that its true basis was the taxation of monopolies, and its object the putting an end to monopolies. I never for one moment dealt with the policy of the Bill in saying that it was based, as a matter of technical drafting, upon the freeholder. I did it merely to elucidate the point that, so far as the Attorney-General assumed, as he did, that under this Bill he was taxing Crown lessees, he was mistaken, because the primary source of taxation is the freeholder, and the secondary all those who derive from the freeholder. As the Crown cannot be a freeholder, notwithstanding that the Attorney-General thinks the contrary, there is absolutely no relevancy either in his references to what I said upon that point the other day, or in his arguments, if they are arguments, on the point to-day, by reference to some clauses in the Bill.
– Did the Attorney- . General say the Crown was a freeholder?
– He referred to the fact that I had called this a Bill to tax freeholders. The point of my reference was that it cannot tax Crown lessees, because the basic declaration is that it is a tax upon the freeholder, and as the lessees are only taxed where they take from freeholders, the Attorney-General is wrong, because the Crown is not a freeholder. Honorable members will see the irrelevancy of his reference to my remarks about the freeholders, and of the arguments with which he seeks to buttress up an opinion that he still holds, that Crown lessees are touched under the Bill. He mentioned that, under clause 26 of the Bill, certain lessees are touched, but said that Crown lessees are touched under clauses 24 and
– That seems like a quibble.
– It is not for us to put all our powers into use at once, but to exercise them when legitimate occasion arises.
– What is a legitimate occasion is a matter of opinion.
– -Yes ; and will depend upon the merits of each proposal.
– That is how the State Parliaments have shuffled out of land taxation.
– I shall not shuffle, and I do not think that the honorable member for Ballarat has done so. Although I differ from my honorable friends as to method, I share their aspirations, and before some of them had passed the perambulator stage I had written a pamphlet on the question of land taxation, and from the principles laid down in it I do not depart one iota. The honorable member for Ballarat was also quoted as having said that there may be twelve or thirteen different taxes. What was the point of that observation? That the citizens of Australia may determine whether there shall be twelve or thirteen different taxes. He was speaking of the exercise of power sanctioned by the popular voice. The people are the masters of the situation. When their approval of a policy is clear, honorable members have to give effect to it. But to emphasize a point one selects an extreme case. John Stuart Mill says that principles are best tested by extreme cases. I understood the honorable member for Ballarat to say that when the popular mandate has been given the constitutional power exists, and the expediency may arise when the financial necessities of the Commonwealth require its use. that is, when the Customs revenue is inadequate. The speech’ was made in 1909, before the arrangement with the States of a grant for ten years, which may be cancelled by an Act of this Parliament. That arrangement adds this year to our revenue something like £3,000,000 more than was thought possible two years ago. The honorable member for Ballarat spoke while the Braddon section had effect, and the proportions in which the total revenue would be divided were uncertain, and when it was thought that the revenue for the year would not reach within about ,£1,200,000 of the revenue obtained last year. We cannot divorce the text from the occasion on which the speech was made. The AttorneyGeneral commenced and ended with the suggestion that we are endeavouringoto impugn the constitutionality of the Bill. I entertain no strong doubts regarding the constitutionality of the main provisions of the measure, although I believe it to be an abuse of our constitutional power of taxation. The Attorney-General ridiculed the distinction of the honorable member for Ballarat between a constitutional and a legal power. What is understood in England by a constitutional power is a power that is absolute and real, but which expediency does not permit to be used? The prerogatives of the Crown are absolute, but they are restrained by custom. Technically, the Crown could do many things which would limit popular liberty, but constitutionally it could not. To prevent misapprehension, the honorable member for Ballarat drew a distinction between constitutionality and legality, and said that, while he thought that constitutionally we could not do this, he considered that we might, possibly, do it legally. The references by the Attorney-, General to the steel-rails case were not sufficiently apposite to any point in dispute for me to spend time in dealing with them. There was a reference to the people’s verdict, which was challenged, and to the unearned increment of Melbourne properties. I said at the beginning that certain statements made by the honorable gentleman, though clever - and I yield to none in my respect for his ability and versatility - were irrelevant. In opposition to the statement that, by reason of the bringing forward of this measure land values have decreased, what was the use of showing that thirty or forty years ago there was a certain value on the property, arid that recently it had been sold at an increase. According to that logic, although the rate of increase on the original value should have been, say, 500 per cent., as long as an increase of 1 per cent, can be shown, the answer is complete. That is the Attorney-General’s position. For at least an hour he advanced arguments of this class, which sometimes elicited a faint - and I do honorable members the credit of saying that, at times, it was only a faint - cheer from his party. I shall not say more by way of immediate reply to what has been said by the AttorneyGeneral, in relation to the speech of the honorable member for Ballarat, but shall come to the Bill itself. I shall respect what is expected of one in speaking to a motion for the second reading of a Bill ; but it may be necessary for me to refer to one or two clauses of the Bill, in order to elucidate certain points. There are two points which at once strike one in connexion with this measure. One is that its remedial provisions - those intended to make the collection of the tax effective - seem to disregard every consideration except the receipt by the Commissioner of the very last penny of the tax. The other is that as regards the question of policy we have brought home to us, for the first time since the inauguration of the Commonwealth, the effect, in operation, of the application to the same subject-matter of two similar, but independent and cumulative, powers of taxation. As to the machinery I shall be very brief. Any one honestly examining this Bill, must see that it fairly bristles with penalties, presumptions, and forfeitures. It assumes that every landholder must naturally and wilfully deceive as to the actual value of his land, and that the Commissioner to be appointed will be hopelessly at his mercy, unable himself to make, with any approximation to accuracy, or to check when made by the owner, a valuation for the purposes of the tax. Let us see whether that is justified. There is a provision in clause 14 and clause 16 that the taxpayer must send in a return including a full and complete statement of the improved and unimproved value of every parcel of land held by him, together with certain other particulars that are set out. As honorable members have gathered from the Attorney-General’s speech, there are also provisions at the end of the Bill, one in clause 44 and the other in clause 47, for compulsory purchase and forfeiture. Those provisions are, as I think has been shown, particularly drastic. “Under clause 44 compulsory purchase is to take place’, not if it is shown that there is a wilful deception, but unless the Justice is convinced that there has not been wilful deception. There is a vast difference between forcing a person, before a declaration that compulsory purchase is to take place, to prove that there has not been wilful deception on the part of the valuer, and assuming that there has been, because the Justice feels that its existence has not been disproved, although not shown. That is a provision of the Bill which indicates the sinister character of its drafting. Is this penalty at all proportionate to the risk? Let me refer to experience in South Australia - not because that happens to be the State of which I am a representative, for we ought to take national views and national experience for our guides here - but because since 1884 we have had, in South Australia a tax on the unimproved value of land. For years it was not progressive, and, therefore, as I shall be able to show, it was economically sound. It has been made slightly progressive of late.
– Since 1893.
– That is so, and the fact that it has been made slightly progressive helps me to form an estimate or two as to the possibilities of revenue under this measure. . The first point I wish to make is that in South Australia very big mistakes have been made, not only by taxpayers in their returns, but, according to the Court of Appeal, by the Commissioner of Taxes, in the assessments under the State Act. That being so, we ought to see that a fair opening for honest error is allowed in this Bill, and that there is no necessity for these penal provisions. Without attempting to argue the matter closely, I shall give a few figures in proof of my assertion. In 1885, the unimproved valuation in South Australia was £49,746,000. On appeal that assessment by the Department was reduced by ,£4,976, 406. According to the Court, therefore, an error amounting to over 10 per cent, was made. That would be a sufficient presumption, under this Bill, at least, to bring about proceedings for compulsory purchase ; but not sufficient for the prima facie assumption that the man who made it was a swindler. There must be a mistake amounting to at least 25 per cent, to warrant the latter assumption, and that assumption would exist in many cases where, in South Australia, an honest error had been made. Three years later there was another valuation, and there ought not to have been in the meantime a serious alteration in . values. There may be errors in new estimates,, but not a serious difference in land values. In 1888, however, the assessment made by the Commissioner was £32,828,568.- That is a fairly large drop from £49»746,392. in 1884.
– But at the time of the second assessment there was a severe drought in existence.
– As a matter of fact, the drought commenced about 1883. It was in existence even at the time of the first valuation.
– But the years 1887-8 were very bad ones.
Mr.r GLYNN.- Yes. There had been a cumulation of deficits, over five years, to the tune of £1,100,000. In 1882 the Treasurer of South Australia had a surplus of £52,000, if I remember rightly, and five years afterwards, owing to drought and other causes, he had an accumulated deficit of about ,£1,200,000. That brings us to the year 1887, and two years later there was a recurrence of good seasons. The point that I wished to make when interrupted was that the drop from £49,746,392 in 1884, to £32,828,568 in 1888, was a very considerable one, and that, on appeal, instead of there being a proportionate reduction, the reduction actually made amounted to only £572,164. In 1894, after there had been an intervention of two or three good seasons, the Commissioners’ assessment, instead of going up, had again to go down. His valuation for that year was £29,370,652, and even that, on appeal, was reduced by the Court to the extent of £2,209,568. In 1905, the Commissioners’ valuation was £34,313,270, and that was reduced, on appeal, by £873,804. I cannot give the figures for this year, because there has been no appeal as yet. I got an assessment yesterday in order to ascertain the probable leakage under the £5,000 exemption.
– It will be 50 per cent, higher this time.
– I think the 1st January, 1 9 10, is the date of the valuation, but, if so, the leakage is not quite so high as honorable members think. However, I do not desire to be taken away from my line of argument. I mention this matter for the purpose of making some estimate of the leakage under the £5,000 exemption, showing how foolish the Bill is from the taxation point of view.
– In thirty years’ experience, there has not been a variation of 10 per cent.
– Then why these drastic provisions? Why assume a man is dishonest unless he shows the contrary?
– This does not touch the honest man.
– A man is liable to have his property forfeited under the Bill if he wilfully makes an error of J per cent. There is no margin. What will the ordinary taxpayer do under the circumstances? He will seek to be on the safe side, and, in cases by overvaluation rob himself for fear injustice may be done through the Court. And what does the report show was possible in Australia when the returns were made on this principle on the first occasion? The first report of the Commissioner in 1885 pointed out the difficulty of making an accurate return, and stated that no assessment, formed on accepted returns, could have been made. I think that system was afterwards abolished. The extraordinary thing is that the case of the city of Adelaide shows what big mistakes may be made even by members of Parliament, whose honesty is beyond all doubt. The valuation of the city of Adelaide was more than one-third less than the latest parliamentary estimate showed; in other words, the valuation was 33 per cent. out. Yet under’ this Bill, if a man makes a mistake of 25 per cent., he is to be prima facie presumed to be a swindler and a criminal,’ and his estate is to be liable to be forfeited.
– Is a law like that to be found anywhere else in the . world ?
– I do not know. Then according to the Bill an absentee is not merely, as the Attorney-General said, one who has been out of the country six months before the date of valuation, but is one who is alleged to be absent from the Commonwealth on the date on which the assessment is made, unless he can prove the contrary. In South Australia we started by declaring that a man was an absentee only if he had been not less than two years out of the country, but that was thought too long a period, and it was subsequently reduced .to not less than twelve months. The relevancy of this reference is that in the case of companies under the
Bill every shareholder who is away is an absentee, so that it will not be easy .to show that two- fifths of ‘the shareholders are not out of the country; it will have to be shown that every one absent in England is not an absentee within the meaning of the Bill ; in other words, there will be a sort of cumulative proof through the individuals. But the point as regards absentees is that under the South Australian Act in the case of companies, with certain exceptions in favour of mutual companies or companies whose funds are disposed of for charitable purposes within South Australia, the determining point is three-fifths of the shareholders, and the others are entitled to exemption if they reside here. Neither in the case of the Australian Notes Bill nor this Bill have I sought cany information from any financial institution, but I have heard it stated in the train that some of the banking companies, who have sent £30,000 in dividends abroad, pay £70,000 a year in local salaries besides other local outlays. These banks are beneficial local instrumentalities to a very large extent, seeing that they diffuse employment and bring capital from abroad. I have never shared the heresy that capital is necessary to development, because I believe that human labour applied to land will create any capital. There was no capital in the beginning, and capital is only created by labour applied to land. But as we are anxious to keep up with modern development,, we must anticipate or expedite our development by borrowing judiciously for a while. When it is not judicious to borrow, I would stop ; and I think that the States went’ beyond the limit of judicious borrowing; and hence in this House, up to the present whenever I have voted, as a private member, at all events, I have voted against borrowing.
– As a private member !
– I did vote against borrowing, and otherwise, when a Minister, I only acted under the compulsion of what seemed to be inevitable necessity, which does not appear to exist now. But by our borrowing policy we ask these companies to come here. We solicit their capital for investment,, and by our Tariff we ask them to come within the ring fence of our protection, and establish branches, as witness the case of Nestles, Bell and Company, and others. But the moment they come out, we, under another Bill, if two-fifths of their shareholders happen to be abroad, declare them to be absentees, and penalize them for adopting a policy which, under some other of our measures, we hold to be of advantage to the Commonwealth. I do not believe that we have as yet received a single reliable statistical statement showing the effect of the Bill. During the last elections I heard statements to the effect that on £500,000,000 or £600,000,000 invested here the dividends went Home, but we must not forget that, in any case, about £200,000,000 is represented by the interest on our public, stocks. I wrote to the Department asking whether it was correct, as said by some candidates, that official returns showed a certain state of absenteeism, and the answer I received from our Statistician was that there were no such returns available for the Commonwealth, but only in the case of the South Australian Department, which showed that out of a total of £33,439,465 worth of unimproved land, only £2,728,754 worth was held by absentees. I believe that a tenth represents South Australia’s proportion, so that if we multiply that latter figure by, say, twelve, we shall get approximately the total, which the Attorney-General set down tonight at £700,000,000, though I do not know whether he meant the unimproved values of properties held by the big men. We are making, perhaps, too great a noise about absenteeism in the Commonwealth. My own opinion is that a fair land tax could put a stop to that absenteeism without any revolution, and on a fair economic basis, to which I shall refer later on. Absenteeism in South Australia is declining under the effect of such a tax, and a lighter tax than that which was advocated in the Victorian Parliament in 1893 by me honorable member for Ballarat. The point is that a lighter tax, according to the Commissioner of Taxes in South Australia, has, especially since 1894, when it was slightly increased, brought about a considerable diminution in absenteeism. So far as regards a few preliminary references to the Bill; and, now, may I ask what is the object of the measure? Is it taxation or land settlement?
– I shall try both. I shall examine it first from one point of view and then from the other. I share a good many of the aspirations so honestly held by honorable members opposite, but I have to differ from them as to the proper method of applying principles. I am not a revolutionist. I am not one of the gentlemen referred to by the AttorneyGeneral as in need of a cold douche, though I must say I did not quite understand the relevancy of the remarks he made in that connexion. But they brought to mind a distinction between revolutionary and socialistic reform made by Karl Bland. He wanted to know whether the economic transformation was to be brought about by the dreary drizzle of radicalism or by healthy socialistic effort. Evidently the revolutionaries or healthy socialistic reformers are those to whom the AttorneyGeneral was referring when he talked about the cold douche. What I say first of all is that if the object of the measure is taxation, it should not, as a matter of economic policy, be progressive. When you succeed by progression in accomplishing settlement you defeat taxation. Therefore, as a matter of policy, if taxation be the object, we should not make it progressive, because we can only succeed to the extent of our desire by defeating the object of the Bill itself, which is taxation. Besides, the High Court will be guided by what is done. It is not what we say that will influence the Court. We may have fifty placards on our Bill, and may declare what we like on the floor of this House; the Court will not look at our debates, our placards, or motives, but will look at what the Bill accomplishes. They will consider its effect, its general operation, and if they find th’at a necessary result of this tax must be a change in the prescribed order of land settlement, and in doing that to defeat it for revenue purposes, though they may not declare the Bill to be unconstitutional, they will hesitate before saying it is constitutional.
– The people will declare it constitutional. The best that could happen would be for the High Court to rule it unconstitutional.
– I do not say that they will do so.
– If they do the people will reply.
– The people, of course, can direct anything they please.
– They are beginning to learn how to direct, too.
– I say that we can always trust the people to act rightly and justly so long as they apprehend correctly. I say, as Burke said, though I forget his exact words, that where an issue is between the rulers and the people, the assumption is at least on a par in favour of the people. When they do wrong it is from error, not from design, and not through their fault. But Burke points out that that is not always the case with legislators.
– When did the people not apprehend correctly?
– They did not apprehend this matter correctly when they dealt with it on the last occasion. How could they have done so on a question of degree or amount as distinguished from land taxation, when even Mr. Watson in 1906 talked of a tax commencing at J-d., and rising to 4d. in the pound. I think that at Adelaide that gentleman made some qualification by saying that he could not, of course, dictate what the Parliament would do. I do not think that the present Prime Minister, at Gympie or anywhere else, indicated the probability or possibility of the Government proposing a rate beyond 4d., which was his limit then, and rising up to 6d., or beyond that. The people never apprehended at the time that such a proposal would be made. As to the substance of the Bill, the Court, in The King v. Barger, decided that -
In determining whether a particular law is or is not within the power of the Commonwealth Parliament, regard must be had to its substance rather than its literary form.
Chief Justice Marshall, in his judgment in the case McCulloch v. Maryland, says that a tax for any purpose which would be within the executive power of the States would be held to be unconstitutional by the Supreme Court of America. The draftsman of the measure appears to have been conscious of this, because he, unnecessarily, and only for the sake of appearance, dropped the introduction to last year’s Bill, which showed the hand of the Government. He commits this great injustice when, in connexion with the policy asserted to-night by the Attorney-General of putting an end to monopoly - which was the exordium and peroration of the honorable gentleman’s speech - he disregards the consideration of acreage in connexion with value. You may have a man with £100,000 worth of land, consisting o£, 25,000 acres, which is presumably agricultural land and ought not to be held in pasture. Upon that an economic land tax properly falls. It would effect its subdivision without a dislocation of society, and by way of reform, and not revolution. But for the sake of saving the face of this Bill a proposal is made which goes beyond our power, or, as the honorable member for Ballarat has put it, beyond the constitutional right or general expediency of the exercise of the power, into limits belonging to the States. The Government have introduced this injustice of taxing a man whose property, valued at £100,000, may consist of 200,000 acres, at the same rates as the man whose property to the same value consists of 25,000 acres, although the first may be a pioneer on the outskirts of settlement, holding land that is worth only 5s. an acre, and useful only for pastoral purposes.
– Who may be putting the land to its best possible use at present.
– I say that the draftsman was driven to this injustice by the necessity for saving, or the desire not to endanger, the constitutionality of the Bill, and so largely encroached upon the constitutional sphere of the States.
– Each is taxed according to value.
– My point is that the Government divorce the value from the acreage. As regards the object of this measure, I have quoted from Mr. Watson. On the 24th March, 1906, he said -
It has to be remembered that the motive ot the Federal land tax is not revenue at all.
And the Worker, on the 21st June, 1906, said -
The object of a graduated land tax is not to raise revenue ; it is frankly penal.
That is honest. This Bill is penal, but is it honest? That is the question. I say that progression is opposed to economic policy. It is not based upon the principle of equality.” All the economists, from Adam Smith to Ricardo, Mill, and George, base land taxation on the principle of equality, as being one of the means they suggest to bring about equality of opportunity, which should underlie the legislation of any well-regulated State. I say that if we depart from the principle of proportion in our taxation we. are violating, for an immediate advantage perhaps in politics - I shall not say in party warfare - a principle that may come against us hereafter when, to secure justice combined with expediency, we attempt to apply such principles. Now what is just? Let me take one of the greatest writers, one of the most extreme men from whom perhaps some of us may differ on the ground that he went too far, though honestly and according to his lights. Let me test this by what Henry George, that great reformer and splendid public spirit, who, if he had lived would, through character, perhaps have transformed politics, has said upon the question. This measure is a departure from Henry George’s test. He said -
With every increase of population the value of land rises; with every decrease it falls.
That is the principle. This is his conclusion -
The tax falls, then, upon those who receive from society a peculiar and valuable benefit, and upon them, in proportion to the benefit they receive.
The emphasis is on the words “ in proportion.” Those benefits are not progressive. And if that be so, what, first, is the justification for the exemption of £5,000? Secondly - except in order to display skill in formulating mathematical puzzles - what is the justification, in logic or on any other principle, for running up every £1 with a proportionate increase of taxation right up to £80,000? What grounds have been urged in favour of it? There is no justification in economics. It is against the Georgian principle, which is the strongest principle upon which honorable members opposite have relied. All that I can say is this : If the idea of the £5,000 exemption is that that is the ideal holding for this Commonwealth, and, if that is the object at which honorable members opposite aim, why should theyhave progression at all? Why should they not put the same tax on every sinner against their rule to accomplish the result of bringing about the ideal of £5,000 holdings, as being those upon which this country should be built? There may, perhaps, however, be some logical principle for this proposal. I want to be fair. Perhaps honorable members opposite have not conceived this reason themselves ; but I think it was Mr. Prendergast, the Leader of the Labour party in the State Parliament who stated - I have seen this in the press, and I think the statement was made in some debate in the Victorian Parliament - that if a tax were to commence with the large men, the exemption could gradually be brought down until, at length, the men with 50 acres were reached. Eventually, then, it would be possible to bring about holdings of about 10 acres each in this country. If that be the ideal of honorable members opposite, I can understand this proposal, because, by means of it, you force out the larger men at once, and you regard the other fellows as criminals, even if you do not tax them forthwith. That may be the assumption upon which this Bill rests; but there is no principle in it at all, though there may be a fine mathematical exercise in connexion with this principle of progression along the line of the £1. Let us see, also, from the Prime Minister’s own speech, whether we ought to disregard acreage in connexion with values. He said that the area of the alienated land in Australia was 99,693,000 acres ; that is, leaving leaseholds out of account. He said, also, that there were 38,699,000 acres in process of alienation. That gives about 137,000,000 acres. I do not know how many acres are held under general culture in this country. I do not believe that there are 25,000,000. Is that because the other lands are agricultural, but not split up, or because Australia very largely consists of a splendid coastal fringe, whilst the rest is either mineral or largely pastoral country? If that be so, why on earth should we bring in a system of taxation that treats alike all lands, absolutely disregarding their character? If honorable members look at Knibbs’ Statistical Register, they will find that only 1 acre in 193 in all the States is held under general culture, or a little over 75 per cent. of the total. Those figures alone show the absolute injustice and folly of this Bill, in bringing about a policy of land subdivision under the guise of taxation. At this stage, perhaps, I may ask leave to continue my observations to-morrow.
Leave granted; debate adjourned.
Mr. FRAZER laid upon the table the following paper : -
Defence Act - Military Forces - Financial and Allowance Regulations Amended (Provisional), Nos. 155, 156, 157, 158, 159- Statutory Rules 1910, No. 75.
House adjourned at 10.16 p.m.
Cite as: Australia, House of Representatives, Debates, 30 August 1910, viewed 22 October 2017, <http://historichansard.net/hofreps/1910/19100830_reps_4_56/>.